Heritage-Crystal Clean provides parts cleaning, waste drum disposal, Crystal Cat absorbents, oil recovery and vacuum services.

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After Joe Chalhoub became president of Heritage-Crystal Clean in 1999, the small parts cleaning company grew into one of the largest firms in the industry, CFO Greg Ray says. “He created a structure for rapid growth and it has grown steadily, to a current run rate of $100 million,” Ray says.

Today, the company is known as a leader in the environmental services market, and provides parts cleaning, waste drum disposal, Crystal Cat absorbents, oil recovery and vacuum services. Its customer base is located east of the Rocky Mountains, with a concentration in the Midwest and south-central parts of the country.

The company’s culture is focused on growth. “Because we’re focused on the goal of excellent sales growth, we realize we have to deliver excellent customer service,” Ray says. “Our field personnel understand that to realize their goals, they need to provide great customer service. We have to retain customers and attract new ones by word-of-mouth.”

Although it has “tens of thousands” of small accounts, it is committed to understanding the needs of its customer base.

Growing Strong
Many of the company’s senior staff, including Ray and Chalhoub, previously worked at Safety-Kleen Corp., a company that provided services similar to those of Heritage-Crystal Clean. In the late 1990s, Laidlaw Environmental Services conducted a hostile takeover of Safety-Kleen and released many of the senior staff.

Chalhoub, who was president of Safety-Kleen, had to observe a one-year non-compete agreement. After that, he looked around and become familiar with the family-owned Crystal Clean, which had around 1 percent of the market at that time.

Although Crystal Clean was small, Chalhoub recognized that it offered a viable platform for the launch of a significant new competitor in the industry. “He was able to go to the controlling family and work out an agreement so that the family maintained continuing ownership,” Ray says. “Then, Joe recruited experienced managers, including quite a few from Safety-Kleen.

“We developed a system that allowed field employees to focus on growth,” he continues. “Our emphasis was not on the routine and mundane things. The top priority was to go out and obtain new customers.”

Ray worked at Safety-Kleen more than a year after the takeover, and then joined Heritage-Crystal Clean at Chalhoub’s invitation. “I jumped at the chance,” he recalls. “I enjoyed working in the environmental services industry, and wanted to be at a company committed to growth and excellence. It very much felt like the right path.”

In March 2008, the company went public, a long-term goal it had worked on for over a year. Because of economic conditions, it was one of only three companies to accomplish that successfully that month, Ray says.

Being publicly traded will allow its employees to buy stock, he explains. Also, a majority of the management team was motivated to create a structure similar to Safety-Kleen, which was publicly owned. “We are excited that our employees can invest in the company that they work for,” he says.

Ray believes that the company was able to be successful with its IPO because it developed a strong track record. In the last five years, its annual revenue grew more than 20 percent each year. It was able to handle the growth because many members of the management team had prior experience running business units that had revenues from $200 million to $400 million, he says.  

As just one example, Ray identifies John Lucks, “our vice president of sales, who previously supervised a $300 million business unit he helped create at another company,” Ray adds. “While our historically high growth rate brings daily challenges, we believe that our depth of experience as managers has prepared us for this.”

Valuable Resource
The company strives to offer services with the customer in mind, with features that minimize the regulatory burden on the customer, Ray says. It also stays on top of environmental regulations so it can be a valuable resource to customers. “Our role is to be available to our customers, to provide the services they need and to help them avoid bureaucracy,” he explains.

Catherine McCord, the head of the company’s environmental, health and safety department, was a former employee of the EPA and is very knowledgeable about regulations, Ray says. “The good news is regulatory changes are typically slow to occur,” he says. “They are generally telegraphed a long time in advance, so no one gets surprised.”

The company also gets involved in the rulemaking process, Ray adds. “Our opinion is sought out by regulators about how changes in the law can impact small companies,” he says. “There aren’t too many firms that can draw on direct experience with more than 30,000 individual customers.”

For example, in recent years Heritage-Crystal Clean has provided input to regulators regarding proposed changes in manifesting requirements at state and federal levels, with the goal of streamlining the paperwork and making it easier on small businesses, he says.