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Sunday, Feb 5, 2023

SA Takes Recycling to ‘Whole Nother World’

Nears $4B, largest in North America

When people think of recycling, they’re often considering products like paper, aluminum cans or plastic bottles, according to George Adams Jr., chief executive of SA Recycling LLC.

“There is a whole nother world out there,” Adams told the Business Journal.

“The important thing is that aluminum cans and newspapers are politically correct and on their radar, but those things are not nearly as recycled as much as steel, copper and aluminum.

“Anything with metal can be recycled.”

Adams’ company has proven the world of recycling can be quite profitable. Orange-based SA Recycling reported two-year revenue growth of 206% to $3.8 billion, ranking it No. 1 on last week’s Business Journal’s list of Fastest-Growing Private Companies, for those companies topping $100 million in annual revenue.

The growth “was all by acquisitions,” Adams said. “My goal is to buy one company a month.”

In the last 10 years, SA Recycling has spent more than $1 billion on acquisitions.
Last year alone, the company added 50 scrap yards to its portfolio. SA, which has 3,000 employees, now has 126 scrap yards in 15 states including Arizona, Georgia and Alabama. It processes more than 5 million tons of scrap a year.

“Today we’re the largest scrap company in North America,” said Adams. “There’s no question about it.”

Australian JV

Adams’ father, George Adams Sr., began the company in 1973 in Anaheim, calling it Orange County Steel.

While a teenager, Adams Jr. began working there helping to shred vehicles. After Adams Jr. graduated from college, he returned to the company and eventually became CEO in the mid-1980s when he was around 27 years old.

The company in 2007 became a 50-50 joint venture between his family and Sims Ltd., a publicly traded Australian metals recycling company with a $1.9 billion market cap (OTC: SMUPF).

SA slowly grew over the years, financing its expansion through profits and bank loans.
“What happens is when you build one company, you make enough money, then you buy a second company,” Adams said. “It might be five years before you can buy another company. Now you’ve got two companies making you money, you buy your third company. Now you’ve got three companies making you money. It takes less time each time to buy the next company.

“When you get 10 companies making you money, the 11th company will take less time to buy. The momentum goes much faster.”

SA wanted to enter Tennessee, so last year it acquired Nashville’s Southern Recycling LLC. Then it made its biggest deal ever when late last year it paid $323 million to acquire PSC Metals, which was a Nashville-based unit of Icahn Enterprises LP (Nasdaq: IEP).

PSC in 2021 reported $684 million in revenue, with net income of $186 million, according to Icahn’s annual report.

“My family jokes that I haven’t met a scrapyard that I don’t like, which is probably true,” he quipped during an April 1 speech at a Las Vegas convention (see story, this page).

Shredder Forte

The company now has 25 shredders nationwide that can tear apart products as diverse as cars, appliances and chain link fences.

“Our forte is operating shredders,” Adams said. “We have more shredders than anyone in the country. We’re really good at that.”

It also tears down buildings and ships. He showed a photo to the Business Journal of a 15,000-ton ship about to be broken down in Brownsville, Texas.

The firm also has three port loading operations in Long Beach, Los Angeles and Savannah, Ga. The company operates a Long Beach iron ore facility that sells to the international marketplace.

SA benefits when commodities go higher. Aluminum and copper have reached record prices in recent years while steel was near its record high.

The company also deals with a variety of potentially sticky issues, such as environmental regulations.

“Things are definitely more difficult” than in prior years, he said.

“It depends on what state you’re in. A Democrat state like California is brutal. They don’t want business in general; it’s not just a question of a scrap business.

“California has the most anti-business laws of anywhere. I’m in 15 states and nobody compares to California.”

When COVID-19 struck in 2020, his industry was declared essential because otherwise things would pile up on the streets.

“During the pandemic, the government gave people so much money that people were buying stuff like crazy. It’s why you couldn’t get anything, and they’d scrap like crazy. I’m embarrassed to say we did well because so many people did bad, like restaurants and hotels.”

Family Business

Adams Jr., who is father to six children, plans to keep it a family business; his siblings have also worked at the company.

One son is chief operating officer, while another son runs the company’s southeast division, and a third runs a scrapyard as well as has his own business.

“These kids are way smarter than me. They can do things with computers that I cannot do.”

He plans to continue working, which can reach up to 80 hours a week.

“I like to work. I like my business, so I don’t really look at it as work.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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