Episode Transcript
[00:00:03] Speaker A: Welcome to Ayna Insights, where prominent leaders and influencers shaping the industrial and industrial technology sector discuss topics that are critical for executives, boards and investors. INA Insights is brought to you by Ayna AI, a firm focused on working with industrial companies to make them unrivaled segment of ONE leaders. To learn more about INA AI, please visit our website at www.ina.AI.
[00:00:40] Speaker B: Welcome everybody to another episode of Titanium economy podcast by INA. Well, we have Scott Barber from ADS Today. He's the president and CEO of a $3 billion revenue company.
In 2017, there were a $2 billion market cap. Now they've grown tremendously to a $12 billion company.
The other part, which I'm really excited about, ADS, is the sustainability part. You have essentially you recycle about 500 million pounds of plastic every year.
Scott, you spent 27 years at Emerson before you joined and you started leading ads.
We are very excited to have you on our podcast with us. Thank you for making the time.
[00:01:23] Speaker C: Well, thank you and welcome. Welcome here to Columbus in our new headquarters.
[00:01:28] Speaker B: Fabulous.
Well, Scott, before I dive in, I think there's one of the things we are really excited about at INA, which is the i250 or the Industrials250 campaign that we're running. We're spotlighting the largest 250 industrial companies in a sector that's very important.
And we know industrials contribute about 25% of the market cap, over 20 million jobs and essentially 60% of exports. It's a fairly important sector which doesn't get its day in the sun.
Now ADIUS is on the list of the top 250.
For you personally, Scott, what does it mean to be front and center of the American and the industrial story?
[00:02:13] Speaker C: Well, it's very special. I've spent my whole career in industrial businesses. 27 years at Emerson, pretty industrial, pretty product oriented.
The last eight and a half here at ads, very industrial. And it's really special. And I think there's something kind of two really cool things about ADS and our industrial background that I think this kind of, kind of syncs up with. You know, one is we manage water.
You know, it's an enormously important natural resource for everyone.
And we take that very, very, very seriously. You know, our part in managing stormwater, the antiseptic things that we do with our, with our products. And I think that's pretty cool to be, you know, in the middle of an important end in the management of a precious resource like water.
The other is, and I didn't come up with this one of my Board members did. But at ads, it's really the great American story. A couple of young engineers come up with a product, they bring in salespeople, they find a market for it, they gain capital, they build plants, they develop new products, risk are taken, acquisitions made.
And over a long period of time, you come up to be a company like ADS today, where we can really be scaled and have great impact in our segments and markets. And the fact that our market cap went up nicely along the way is also good. But I think that's a nice way. And our employees across North America take a huge amount of pride in that.
[00:03:56] Speaker B: And it's a fabulous story, especially over the last few years. And then post Covid now, Scott, most folks walk past ADS products without even knowing that they're.
So Scott, just describe a bit more. What does ADS do and then what makes water management a more exciting business than it looks like?
[00:04:17] Speaker C: Okay. Oh, I'm. This is right up my alley.
Well, we have two parts to the ADS business.
The legacy business, the foundation of the business. Stormwater.
You have to capture the water with a drain. You have to convey that stormwater with a pipe. Often you have to store it on site.
This is a miniaturization of storage on site, like underneath the parking lot. And then you have to clean it up, you know, roughly clean it up with hydrodynamic separation or biofiltration or kind of rough separators before it goes back into the watershed, a lake, a river or stream. And this is fairly well defined and fairly well regulated around the country.
The second part of the business is on site septic. That's the infiltrator business. If you're not on a municipal system, you have your septic on site and that needs to be collected in a tank. It needs to then be put out into a leach field and then it infiltrates into the surrounding ground.
About 30% of homes, year in and year out of new homes built or are on on site septic. So it's a pretty good sized market.
And we're clearly the leader in both of those stormwater and the on site septic with that common thematic of water and treatment of water and all that. So we're really all around and once you kind of know who we are, you start to see our pipe or our storm chambers around on non residential commercial construction sites, schools, institutions, parks, road and highways, agriculture, all kinds of different places.
And we sell across North America.
[00:06:07] Speaker B: That's fairly omnipresent right now. Well, I think the other part of the story, which is since you've become CEO. The market cap has grown from 2 billion to 12 billion. That's a 6x growth.
What were the two or three defining moments that basically put this company on this trajectory?
[00:06:25] Speaker C: Yeah, I would say there were really three.
One is we need to be fairly paid for the product and the services that we provide.
We're a product and manufacturing company, but Bolta, all around us is an enormous transportation fleet.
550 trucks, 1200 trailers. We're running over a thousand loads a day right now. So that's a pretty good sized transportation company. We need to be fairly paid at market rates for that transportation as well as all the technical services we provide people. Designs for these kinds of. We process something like 170 designs a day for these types of systems that we provide to professional engineering firms. A day?
A day.
So there's a lot that goes on around just making the pipe and these other things. So we had to get the pricing right.
Number two is to look at how we were organized around the manufacturing.
Traditional stuff is our headcount. Right. Do we have the right number of factors, earning in the right places? Have we been investing at the right rate back into that equipment? So there's been a lot across all of that and I would call that broadly the conversion and logistics cost. And we've spent capital at a fairly high rate to do that. We had to catch up on a lot of things. And then third is the inorganic or the acquisitions.
The big one being infiltrator in 2019, which we knew well because they were a manufacturing partner of ours. They made these products for us. We were, we, we knew. Like I said, we knew them well. We were strategically engaged. So when the P firm that owned them was ready to sell, you know, we were right there and we got a. We got a really good and timely deal on that. Since then, we've acquired nds, the drain company. Just recently we acquired a couple small pipe. One small pipe company. We acquired a Renko. So we're not a serial acquirer, but I think we're an efficient acquirer. We know what we want and we work long to develop the relationships about it. So get the price right, work on our cost, make good inorganic capital decisions.
[00:08:54] Speaker B: That's the holy trifecta.
[00:08:56] Speaker C: Yeah. Something that I learned at Emerson. And they kind of beat into you. Grow sales, grow your profits faster than your sales, grow your cash flow faster than your profits. And when you do that, or you're using working capital efficiently and stuff like that, you generate cash. You control your own destiny.
And that's really what we started with at the very beginning. That drove the price conversion logistics and materials cost controls and being good at that, that led to the cash generation. That led to our ability to go and make those investments.
[00:09:34] Speaker B: I think you laid it out the best, right? Grow profits faster and grow cash even faster, which is essentially the, the bedrock of industrial companies.
Very strong cash flow generators and utilizing cash.
[00:09:50] Speaker C: Right. Then allocate that cash appropriately.
And as the CEO, because as you know, I moved from being a group executive to a CEO, that's a big jump. And the biggest thing you have to learn through that jump is the capital allocation part because you're running a P and L, you know, you know how to do working capital and all that stuff. But when you make that move from running maybe several businesses to then also having to allocate the capital among return to shareholders, organic and inorganic, I mean that, you know, I thought I knew that pretty well, but I really, you know, had to learn kind of a next gear in that.
[00:10:33] Speaker B: Yeah. Shifting gears to the growth for a bit. I think the material conversion strategy, which I think ADS is frontline in leading the whole moving customers from concrete and clay to plastic right now, that has been the core growth driver.
Now for you, where you are right now, how much of that Runway is still there and what does it take to sort of convert skeptical customers?
[00:11:04] Speaker C: Two things.
One, to answer your question, we think of the overall market. It's somewhere between 35 and 40% is converted.
It varies a lot by region. It can vary by diameter and application. So there is a long way to go.
And you might say the first 30% we got was the low hanging fruit. I don't know, we've been at it a long time, but we follow a pretty solid prescription.
We get an approval so often you have to go to a county engineer, a department of transportation, any of these kind of regulators, and you get an equivalency that your plastic pipe will, with the right installation meet all the criteria that the reinforced concrete pipe does. Then then. So you get an approval. That's a hunting license. Then you go drive acceptance among the civil engineering community that, you know, it's this, you know, technically they're the same. You do that with really good street knowledge and knowledge of how the, the local, the local rainfall and soil conditions and installation practices and all that.
So you get approval. Then you get acceptance from these guys. Then you go out and drive sales with the contractors and with them this value proposition is installation time is better, fewer trucks, easier to handle. There's just a lot of advantages to working with our product than the concrete pipe. And then finally you work with your distribution to win the job.
And we go through that approval, acceptance, win rate, all that is very much how we act in the field.
And we believe very deeply in having a consistent value proposition not just around the pipe, but also around these allied products which are driven in much the same manner.
[00:13:04] Speaker B: Got it? Now, you touched on this very briefly.
Your quiet infiltrator and nds both billion dollar plus acquisitions.
Now, can you share a bit more about what was your conviction behind this and how does it sort of fill fit into the whole water management solution at scale and what's missing?
[00:13:29] Speaker C: So there's a lot to unpack in that question.
And we have in talking about the stormwater side, this capture, convey, store and treat, this is the store product and infiltrator made this force. The manufacturing process for this is very similar in size of press and shot and material as their traditional chambers for septic. They're different, but they're similar processes.
So we knew these guys well.
And honestly the big fear was if this company, we knew it would be acquired, it was owned by pe.
If someone unfriendly to ADS acquired it, big problem for us. So we were very sensitive.
That was our conviction right there is I had a great product, make a lot of money on it, and I don't need an enemy owning that thing. It would have been very difficult for me to recreate what Infiltrator has in terms of manufacturing and engineering, know how they are great product and manufacturing engineers with very sharp commercial acumen.
I mean, these guys, I've been in a lot of great factories. I run a lot of great factories at Copeland and Emerson. These guys are really, really good. So that was my conviction around it. And then I also knew that in those first couple of years, that pipe business, as I was saying earlier, is fundamentally different from a profit structure. More plants, the logistics are more difficult.
You know, you're selling against more competitors. These allied products are more concentrated, high volume manufacturing, better logistics, often same distribution, same projects, but a different profit profile. So I knew that we wanted to grow these allied products faster than the pipe business.
This fit into that and gave me more capabilities to do it as well as the NDS business.
Because think about that. We talk about capture.
We had a very bespoke capture product that had very nice participation in a certain part of the market.
And we always competed for standard products against nds.
And we had tried before I got here, we had tried and they'd killed us.
We didn't have the breadth. We didn't really know how to go at it. We tried to sell it like a project. It's not a project.
It's an awareness, availability, distribution thing.
So I worked on three years to get this thing carved out of a German company. Strategically, I knew it fit with us. I was very convicted of how it fit. Standard product, bespoke product, expand my market participation dramatically.
And literally three years working on getting this carved out.
Then the pipe piece, that's really about new products. We gotta continue to develop new pipe products. If small pipe guys become available, we might go buy them.
This, what we call water quality, which is this clean up the water before it goes back to the watershed. We tried to get bigger through acquisition and we didn't win.
And the board said, you know, look, if we don't get this acquisition, then we gotta do it ourselves. And our engineering and technology center was coming online kind of it. They were kind of at the same time and, and we made the decision to really, I would call it over. Some might have said overinvest. I call it investing for the future in the right laboratories, both chemistry labs and testing labs to make those water, those water quality products home run. We've developed a super, super set of products there in a very short period of time. So now I'm number two in that market. I'm number one in all these others, but I'm number two with a, with a star beside us. Going up very fast. And there's some regulatory changes and I think, I think a bit of, yeah, there's some regulatory changes that are going to happen there. And that's always the time to win in these product designs. When efficiency standards or removal rates or anything like that are changing, you know that that's the time you can really gain market share.
[00:17:43] Speaker B: Got it. And I think if I think about infiltrator nds you throw in Orenco and River Valley, you've got all of these under the ADS umbrella.
The question is, what does the integration look like? What are the real challenges there? What's the ADS playbook? And what do leaders typically get wrong in the industrial space when they're acquiring and consolidating?
[00:18:05] Speaker C: Yeah, well, for us, we have a very prescribed playbook and process and playbook. And it's really built around kind of understanding, developing the right plan, good cadence and governance. I mean, and while you think, you know, and here's where I think we get things wrong sometimes. While you think, you know a lot about A business because you've studied it for two years and you've been through all the due diligence and all that kind of stuff. I would. I always have found that once you own the business and you kind of have to live with those folks, those managers, and you gotta kind of see their cadence and what really makes their business tick, and that takes a couple of months, then you can really begin to take aggressive action. I think oftentimes where they make mistakes is you think you know everything beforehand, and you often. You try to take a business.
I mean, you probably a billion dollars for a business, right?
You gotta assume these people know what they're doing, but then you buy them and then you, like, try to change everything that they've been doing for the last 20 years in a month or a quarter.
That's usually where things go wrong.
[00:19:19] Speaker B: Got it.
[00:19:20] Speaker C: And we've tried very hard not to do that. We measure twice. I don't go slow. One of my board members said, you're going too slow. I said, yeah, maybe, But I haven't missed a plan yet. You know, one of these integration plans, and we personally spend a lot of time on it. You know, the senior managers do, and it's not always easy.
Sometimes people get in conflict every now and then.
But you. I think we. We try to work to that process and governance kind of religiously to make the decisions, and we get there.
[00:19:55] Speaker B: Got it. I think the core of it is not preempting what can be done till the time you actually learn what the business is. Which is. Which is a fabulous story.
The other thing which excites me a lot about ads is the whole 500 million pounds of plastic that you recycle right now. Just wanted to understand how did sustainability become a core part of the story, and when did it become an advantage than just a marketing message?
[00:20:27] Speaker C: Well, it's just not a marketing message. It is a real economic driver and procurement strategy. And we're vertically integrated in this. So it's an operational strategy as well.
And, you know, there's a delta that Delta moves between virgin resins and recycled.
Now it can get small, it can get big.
It's widening right now given the current Iranian conflict and now oil prices are moving and stuff. So now's a great time to be vertically integrated.
We hid it for a long time until before I came here. We didn't want to tell anyone.
And I think many, many years ago, there was some perception that there was a quality difference between a pipe made with virgin material and one made with recycled Material, I can tell you that is not the difference. We, we, we can make pipe to the same specification and blends with recycled and virgin or maybe a combination of the two.
And so when I got here, it might have been the first board meeting. It wasn't the first, it was the second. One of our board members, she said to me, she goes, you know, there's this whole water thing you got, and you're doing all this recycling. It seems like there might, there ought to be a little something more to your story than that. And literally, that board member, she's no longer a board member, but that kind of sparked something in me saying, you know, we probably need to think about how we position the company.
We were born publicly as a building products company, and that's okay. It's not a bad zip code. There's a lot of worse zip codes you can be born into. But we saw these water guys like Xylem and Equova at the time and some of these others that had bigger multiples.
We also watched the conversion people like Trex and Azak and James Hardy and them.
And so we developed, I would say, a communications or positioning strategy that said, look, we've got conversion, we've got this water story that. That's a heck of a lot better than building products that are bigger spaces. So we began to rebuild our story around that. That's where a lot of this.
About that time, we started to redo our image with the. With the branding and the water thematic.
And the way I thought about it was it's a bigger place for us to play. It's a better thematic. I've got this great recycling activity that we've never told anyone about, which reinforces water and sustainability.
So that's where we kind of, I would say, kind of took it out of the shadows of the company and began to really talk about it. And honestly, that's usually one of the first or second things people ask me about the company is about the recycling.
And I think our employees take a lot of pride in it. We're making a really nice investment in that in recycling right now in Georgia, like $38 million. And we are going to.
I mean, our timing couldn't be more perfect, to tell you the truth. It's lucky, the timing. But even when that gap was not big, we talked about it with the board. I said, look, we don't make investments around this recycling based on a gap right now, because this thing is going to cycle. We make it that because over the long term, when we've looked at the past, it's been an enormous return on invested assets.
So we, we kept going and it's going to be, it's coming online just right in time.
I wish, I wish I could say I timed it that way.
[00:24:15] Speaker B: Yeah, we'll wait for the news. Yeah. But I think, Scott, the other piece, which I think you briefly talked about, which is also where we are sitting right now, which is your new engineering and technology center here. Right. You invested 65 million to get this up and going.
What does this unlock for ads, which you didn't have before?
[00:24:34] Speaker C: Yeah, thank you for that question. We did not have a scaled engineering activity or presence. I had a couple here and a couple there and a couple. I mean, we were spread all over the map. You know, in terms of the engineers and capabilities. We had really no laboratories.
You know, we might have a, you know, like a very small metal building that had something in it, but there was no way to really do consistent engineering work. And I, and I call it engineering, engineering and technology, not research, because we are engineering new products through this thing.
So I needed to bring it all together to get any type of good activity. And our activities are material science, design and testing of the product, tooling, then the equipment to make the product, the line, the machinery. You got to get those four lined up. And when you get them lined up right, things go well. And it was taking us way too long to get through that cycle.
So put them all in one place. You know, as you build your team and you're hiring build it here versus all these other places.
About half of those people that were in all these other places moved. We made offers to all of them, but about half of them moved. That's okay.
And then begin to, you know, programmatically drive new products.
That's what we're doing over there.
And we're really pleased with how it's going to be going along. And again, $65 million was a lot. Honestly, it's easier to convince your board, you know, I didn't have anything. It's an investment for the future.
They were really, really highly supportive of that.
And already the new products we're getting and when we take people through it, they see all that, what we do.
So you, you know, you can kind of look at this and say nothing, like there's much to it. But once you see the material science, which includes the blending of the recycled materials, the design, the tooling, the machinery, you're like, wow, it's not that simple. It's not that simple.
[00:26:45] Speaker B: Well, you've got me all excited. At some point we should do a tour of this facility.
[00:26:49] Speaker C: Oh, it's fantastic. It is fantastic.
[00:26:52] Speaker B: But from R and D to the other portion that we spoke about is your portfolio has been evolving to go into higher margin products. Right now that was a lot of change, right? So can you just talk about what was the change and what had to stick? Like how do you sell, how do you allocate capital, how do you measure performance? Can you just walk us through change the company had to go through?
[00:27:18] Speaker C: Well, I described the different profit profiles and we wanted to build in some, some what I would call, I guess organic profit growth. You know with. As we mix to these kind of products and we thought there was more market share, we, we were under. Participated in these kind of products versus the pipe. So we, it kind of was a natural to kind of take on, on, on, on that thing.
And then we began to organize ourselves.
You know, our people, the meetings. We have the cadences. We have our capital as well.
Although the pipe is more capital intensive than the Allied products.
We began to organize around that if you make sense. And we through that we identified some places that really needed capital in our Allied Products fittings. We make a lot of plastic fittings out of HDP that fit these kind of products together.
And great product line, fantastic product line. We're by far the biggest. Got it. Got the breadth, all that kind of stuff but was a little tired.
So we put some great product managers in there. He's done a wonderful job.
We put a fantastic lady who's doing all the production planning from that. She came from the retail industry but the skills of production planning and inventory planning.
Women's garments ain't a whole lot different than fittings. We found out and she's killed it. And we, we got like 98% fill rate. A great turn.
We've invested the first tranche of three of. Of updating our equipment. The equipment was, was quite old and used and very manual. And now based on some of the infiltrator automation principles we built a killer fat fab fittings fabrication down there. I just say that's a good example of when we kind of split and began to look at these things kind of individually. The Allied products, the pipe, you know, we began to see things and opportunities for investment that we really weren't seeing before. Same with the transportation where we, we got really transportation people to start managing that. And at Gates saw opportunities for equipment and trailer investments around there that were pretty good. I mean it's kind of simple stuff.
But we have made a lot of nice progress around that. So as we've tried to remix the company to these different things and organized around that, it's driven a lot of different decision making, lots of different decision making for us and excuse me, and allocation of that capital.
[00:30:10] Speaker B: I think one thing you touched on is the logistics part and the fleet part of it staying on that you basically manage one of the largest company owned fleets. You've got 63 plants, close to 35 distribution centers.
[00:30:25] Speaker C: That's a lot.
[00:30:26] Speaker B: That's quite a bit. Right. So the question for you is how do you manage to optimize all of this at scale and then you put the acquisitions together, how do they integrate into this entire picture?
[00:30:37] Speaker C: Good question.
So we essentially run here just with an ADS legacy. I'm not even including infiltrator. We really run kind of three pretty good sized operations.
A scaled recycling of material, which we're very, you know, one of the two biggest in the country. You know, just as an operation that we're doing in three different plants.
We run those pipe plants, you know, that are spread all across North America. And then a fleet of trucks that delivers to job sites and manages some interplant stuff around that.
So we really separated those out, got it and began to develop, you know, kind of managers, general managers and reports, cadence of meetings and stuff like that around those, those three different things.
And that gave us line of sight to the problems because I knew it wasn't very efficient.
It was kind of, it worked, we kind of got it done.
But it was really, really difficult to anticipate problems.
When we had it all smashed together, it was very difficult to anticipate problems. It was tribal beyond anything I'd ever seen before.
I mean, I've been around, I worked a lot of different places and had seen my fair share of troubles, but it was tribal beyond anything. And so we really had no way to grow.
I mean every time the company wanted to grow, we just threw people at it. And that doesn't work after a while.
And so we had to do a pretty big transformation of. Let's look at these three things. Recycling, pipe manufacturing, the logistics separately from an operations standpoint. Get the right metrics in place and all that, see where the problems are. Now we can anticipate our problems.
Think about what I just described, where we're going to make a pretty big transition from using virgin resins to recycled resins.
And we're going to do that in like two months.
And I would have never been able to do that before because I've got teams and I got visibility, I know what to go do.
And we could not see that before. The way we were organized, it was spread all over the place.
And that scale, scale's tough. I'm sure you guys see this all the time. Scale is tough. It requires a lot of cultural change, organizational change, new processes and tools.
[00:33:17] Speaker B: Now that's true. I'm assuming the fact that you've put everything into three very distinct verticals also goes back to the philosophy of I'm going to scale by not adding too many people because these are more efficient, let's just say verticals. And then I'm assuming a acquisitions fit into one of these. Server purpose. It's kind of a jigsaw you can easily find.
[00:33:42] Speaker C: I mean, a pipe acquisition fits pretty easily. You know, Infiltrator was a different business model, so it kind of runs on its own. We really leverage some of the back end stuff like particularly materials and material science type things.
And then with NDS over time, you know, we'll figure out where the right, the right points are that would have the highest leverage, if you know what I mean.
[00:34:05] Speaker B: Absolutely.
I think taking a step back, probably taking it back into memory books a bit. You spent 27 years at Emerson across functions, geographies, P&LS.
What did the breadth of these experiences teach you and what do industrial leaders get wrong today as they kind of develop themselves and go through the paces?
So taking a step back on your own learnings, 27 years, multiple different areas, what sticks with you and what would be your guidance to the new leaders coming up?
[00:34:44] Speaker C: Well, I certainly had a breadth of experience with different types of products and problems and geographies and all that kind of stuff.
And I think it prepared me pretty well to come here.
Like I said, there was that jump that has to be made.
And I thought I was really well prepared for any kind of complexity that someone was going to throw at me.
Because through all those different jobs, you really learned how to figure out quickly what was hurting you from a complexity standpoint and find out a way to kind of break it down and attack it. I had some really nice principles laid down. This kind of grow sales, grow profits, grow cash, allocate capital. Well, I mean, that was from the Emerson playbook, very much so. I think what I got out of those 27 years was a lot of really good skills and I know what to go do.
I feel very comfortable dealing with different cultures and different kind of people because I had to do that my whole career. There I probably need to be a bit better getting things done through people versus trying to do it myself.
But all those different things prepared me for, I think being a CEO and having kind of that broader set of challenges come at you because you don't, you don't see it. There are different sets of challenges, quite honestly.
And this has been a great, this ads business is a great business. I mean, it has a lot has. And I saw this from the outside in. I said, man, these guys are highly relevant in their market.
Good set of products, know how to sell, know how to go to the market. Well, anyone you talk to on the outside and you ask them about ads, so, man, those guys know how to sell. That's good.
Because a lot of companies don't know how to sell.
And then I thought there was. I could see that from a financial standpoint it ought to be more profitable given their market share and relevance.
So we kind of started with that idea and began to work it in it. And it worked out pretty good.
[00:37:08] Speaker B: Oh, that's a fundamentally good capability to have is to be able to sell.
[00:37:13] Speaker C: If you can sell, that helps a lot.
[00:37:17] Speaker B: The other thing you've led ads through now, a pandemic, supply disruptions, multiple integrations and acquisitions. Some choppy demand environment recently, and you've been very successful at it. In your view, what do successful industrial companies do better and the ones that don't, where do they miss the mark?
[00:37:41] Speaker C: Usually you stray from what you're good at, you lose focus, you try to go into adjacency. That's two or three standard deviations.
And that's sometimes a result of not understanding what you're really good at and what's driving, driving the business.
And the fellow who used to be, who was the president since retired, an infiltrator.
He knew exactly what made money down to the machine. And he made sure those machines were always well maintained.
Pumping it out, shot size, the right one, and that material cost.
He really understood those levers.
And whenever we looked at new products, one of his criteria was, can that be the same as this?
Can it make money? Like, I know how we make money.
And then I recall sometimes you make an acquisition and you say, man, does that acquisition help me sell one incremental of my core product?
And if it doesn't, you probably are straying a little too far.
For most managers, maybe there's some that can get past that, but for most managers, so I think that happens a lot actually.
[00:39:12] Speaker B: So I think the core was, try
[00:39:14] Speaker C: not to say anything untoward, but I
[00:39:17] Speaker B: think the core message was for focus, focus.
You know, too many distractions you try doing.
[00:39:24] Speaker C: Too many try to do things that you're not good at.
[00:39:27] Speaker B: That's a fair point.
[00:39:28] Speaker C: You know, we, they, they. I get asked all the time, well, why don't you buy an installation company, you know, that wants to install your pipes and forward integrate into that. And I like, no, no, no, I'm not. We're not a service company. We got a trucking company. That's our service.
[00:39:46] Speaker B: It's a very different business to manage.
[00:39:47] Speaker C: Yeah, that is a hugely different business to manage.
[00:39:50] Speaker B: We're getting permits and people and then
[00:39:52] Speaker C: our friends across town at Vertiv have a great service business and a great product business. But man, they are different and they manage them differently.
They are very managed very differently and the levers are completely different. So my point being is that's where I think people strive.
[00:40:08] Speaker B: No, got it.
One final question. I think we spoke about it at the start. We said about the whole industrial 250 thesis. Industrials is an important sector and nobody talks about it.
Contribution to market cap, the jobs, the export. Right.
I think as a CEO of one of those companies, what does it mean for you and for America if more capital and talent flowed into the sector than historically it has? Right. And then if I think about the ADS story, what does it like, what does it show? What's possible given the story that ADS has been able to demonstrate with the investments they've made?
[00:40:47] Speaker C: I think it's a talent thing, not necessarily a capital thing.
[00:40:51] Speaker B: Okay.
[00:40:52] Speaker C: Just in our case where, you know, there's a lot of capital in America, our issue is not availability of capital in America. Some other countries maybe.
I don't think that's our problem. I think it's more about bringing talent into our industries and in getting young people to want to be in engineering type fields or work in manufacturing companies and kind of get all the challenges there. I mean we run a very dynamic business. I mean any of the functions, I would say you could take any of the functions that we do and I could make a case they're pretty darn challenging and just as much fun as other things that you might be attacking in our area.
You can always move to Hollywood and get something that's more glamorous or something. But if you want to really work, work hard, have a good career, be challenged in your field, we have stuff. So I think it's getting people to understand that and talent, I mean, you know, my, my, my daughters want to work in, you know, financial Fields and public relations and stuff like that. I try to get them, you know, come here. You will learn a lot working in a company here and it's kind of what you want to do also. I always wanted to work in this kind of thing, so I naturally gravitated towards it.
And we do a lot to try to tell our story like today and to attract people into our company, the headquarters here.
And it's not an accident. They're on either side of the interstate and they look alike. I mean, they created an image for the company. It's not the only reason we did it, but it's one reason we did it. Did it is, is. And we have a very long serving senior, senior guy here. He said, you know, since we built those buildings, people ask me, you know, about where I work. They know where I work all these years, but now they ask me, can I bring, can you take my resume? And I'm looking, I'm thinking about maybe changing careers and stuff like that. So it does make a difference, I think.
[00:43:16] Speaker B: On the note of talent and seeing what you built here is fabulous. This is one of the more collaborative spaces I've seen in a while and I'm.
[00:43:27] Speaker C: Yeah, we love the space.
We've enjoyed the space. And since we moved in here, I've been very pleased at how I see the space being used.
And it's been fun. It was not easy getting in here, but it was fun.
[00:43:45] Speaker B: Well, Scott, on that note, I'm really glad we could find time, you could find time to sort of be with us. It was a very enriching conversation and wish you all the best ahead and in attracting all the talent because I think you are addressing one of the core needs of water management in the world today. Well, thank you, Scott.
[00:44:05] Speaker C: Thank you. It's been a pleasure. And thank you for joining us here in our headquarters today.
[00:44:09] Speaker B: Thank you.
[00:44:15] Speaker A: Thanks for listening to INA Insights. Please visit INA AI for more podcasts, publications and events on developments shaping the industrial and industrial technology sector.
