welcome to a scrap life a podcast solely focused on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day here is your host Brett eart K&L Tyler Texas I know there’s a story because anytime I’ve ever went to Texas I’ve always ran to great people I think Texas is probably the state that more resembles Idaho than any state I’ve really ever traveled to um you got the down south Hospitality but you’ve also got you know people that uh love the outdoors we love you know be able to do stuff Our Own Way independent of somebody telling us how to do it so I’m privileged to be able to sit down and talk to uh K&L recycling today out of Tyler Texas thanks for taking the time than for having so Jennifer said you guys have a good story and one thing I know about Jennifer bats is she’s never led me astray um she’s much like my wife is and the fact that they’re very strong willed women and they when they know something they know something right so K&L based out Tyler how

many uh locations does K&L recycling have at the moment we have nine brick and mor locations eight of them are here in East Texas we spread all the way out from um minola Texas which is north of Tyler so north of Dallas down to basically bont Texas so we cover a big region here in East Texas then we also have a facility in greatman Kansas that’s awesome so I when you and I originally talked I mean you guys have a great story in the fact that there at one time you guys were um a publicly company correct and there’s not a lot of people that can say we went private to public to private and so I always kind of found that that part of it fascinating for sure so it without let’s kind of start back before that gonna give me where did how did KL start and and what was it before and kind of give me some history I always love a good history lesson well it started in 1968 or n when they first really came out with the Big Mac came out with their mobile auto Crusher yep

we my parents had been married a long time and weren’t able to have children so they both lived in Dallas sold everything and they were approached by um Robert Flanigan about possibly going on the road with a mobile car crusher so they said we don’t have any kids sure sell everything go on the road crushing car six months later found out they’re pregnant with me so at that time they even used airplanes all kinds of methods because before that there wasn’t really an easy way for people to get their cars to Market so you would have big huge acres and Acres of cars in won yards so they would find a big pocket move there crush the cars in the area find the next big pocket move there so I lived in 13 States before I was three years old so I was basically born as a Carney on a Car Crushing crew and um we to Su Springs Texas and live next door to a wrecking yard that we had and then by 77 kind of decided to go in a different direction my dad did got away for metal recycling so he

did various things through then sold horses all kinds of stuff but um he got back into it in 1987 when we opened a salvage yard here in Tyler I was a junior in high school at the time did my time working at the salvage yard work desk all the different things that you do there then I left and went to college when I did they closed that and they decided to go back into Mobile Car Crushing so they um left and went to Kansas and crushed cars in Kansas and Missouri then when um I came home from college I came back to the office here and then about 1993 and four we started opening brick and mortar locations again we got up to 21 Brick and Mortar locations and then we had our car crushers we were brokering a lot of scrap moving a lot of scrap at the time and so we bought into a public shell out of Utah so took our company public then after we took it public about 1997 what was the public ticker at that was it called barck f ex okay and then um after we took

it public I think it was about 95 when it actually went public and then 97 and8 is when all the consolidation was happening with Metals management and all that and so we were bought by Recycling Industries and that was a privately held company out of Colorado they bought us we went in with them their situation didn’t work out so 11 months later we bought part of it back and so then we were just gonna stay real small and not do much just kind of coast along yeah and you know my dad was a true entrepreneur so that doesn’t work very well so he started growing again and then we got up to scrapyards at that time in 2008 yet and I like your dad already that’s right so he we grew it that big and then 2008 came and obviously that was horrible and so then we just started downsizing and getting lean and mean and that’s how we ended up where we are now so he’s retired Mark and I are still here and we have those nine facilities we have three Car Crushing cruise and we have two demo crws so from

18 back to 9 and then now you guys are so did you get the bug from your dad you guys are ready to go you guys are ready to start expanding again or what’s the at nine no we can’t just sit still you know because we have our next my son and son-in-law are already involved and so we got to do something we’re kind of researching right now to see what that next step might be but no we can’t just say still we get bored if we sit still I know that feeling I have that feeling I feel like that’s in this industry you know you see you see a lot of multi-generations but what you see is people that they start with one and then either they grow that one like facility right they either expand the heck out of it and they you know acreage and they keep adding pieces and partials and or they add more facilities I think the entrepreneurial spirit is a alive and well in our industry and people have a hard time just saying yeah we’re good with just this facility you know and

it sounds like uh that’s how your dad was so there’s just too many opportunities so it’s just kind of deciding which direction you want to go you can either you know get into where you’re refining something down to a different package or you know get more yards do more car pressures expand your territory all kinds of things so I I my question for you is is um because I have a a little place in my heart because my dad so we used to have a MATC car crusher but it was a stationary MATC car crusher and my my grandfather and my dad um years ago they put um undercarriage on it so it could be a mobile car crusher right and I think that was kind of how my dad cut his teeth in the industry and my mom my dad has some of the best stories about my mom you know in ankle deep mud out pulling cuz and that that those days it was the lever style right so you had the two levers um that rocked it as you as you and and so that’s kind of how my my first

taste of car crushing was is I never spent much time on the loader but I spent a lot of time like on pallets trying to not freeze my feet to Freed off or mud like trying to go get my boots stand on those pallets like pulling those levers while my dad crushed once I was old enough to run the handles and my mom was in the office so right I do I know that feeling all too well yeah I think I think she’s got stories of her mom sitting on that car crusher and because it had the cab and she had a little York terrier dog and that Yorkshire terer dog would be sitting in her um lap and she’d be running the crusher and theyd tell stories about they started going too slow she’d start honking the horn at him hurry up bring some more car that’s what is like one of the best things about like I and this is why I say that that you say Yuri story isn’t that unique or it’s not that interesting or whatever but everybody in our industry has a unique or interesting story so when

I mean there has to be a heck of a process to go from a privately held company where you control everything to a publicly traded company where you maybe you have control but not nearly the amount of control you once did I would I’m curious what those two Dynamics are and what that the difference you know is with those we didn’t really lose control because you know they were basically investors it wasn’t people that had a lot of opinions they were just betting on us basically so we didn’t really lose control but the thing that we did learn through that process is you know financials and keeping books and Records on a publicly traded company are a lot different than a privately traded company and so we had to constantly have in a commodity Market you know when you’re publicly traded they want to see the curve constantly going like this and if it’s not you have to have an explanation and a story so you know we’re constantly keeping a diary basically one of my jobs was to write a diary every day about well it rain 10 inches or we didn’t have

any electricity or whatever because you had to have a dialogue if you weren’t able to continue to grow and show a bigger profit so we learned a lot about ways bankers and big investors and things look at it and so when we went back private and then especially after we bought portions of it back we continu to run our company the same way that we ran it then and that’s unique probably in our industry yeah was it a tough move for to go public was that a was it was it a challenge to I mean to to do that and what was the motivation behind going public at that time well the motivation was my dad was ready to sell my mother was sick at the time she had cancer and so he was ready to sell and that was going to be the best way to get the must bang for his buck is to sell as private as a publicly held company and so um and then oddly enough we sold to a private company but that was the motivation behind it and you know it’s really expensive first of all because

you have to have a lot of advisors and things like that to help you do that to either find the shell or to do your IPO so um it is expensive I will say it was before Enron I don’t know how much more difficult it would be now than it was then yeah and so it’s not something that we’re looking to do again but it was a really fun ride and we learned a lot doing it yeah I when we partnered with for for those of you guys don’t know we partnered with Schnitzer Steel and and 19 bought yourself back and I think that’s incredible yeah and and when we partner with them they were a privately held company um they weren’t a publicly traded company at that time so here we are this little company over in Idaho you know 15 employees and we’re partners with you know a pretty good siiz company at that time um and here that they go public I think in 2000 or 2001 and now here’s our company attached to this you know publicly traded company that’s growing and they have their own steel mills they I

mean they’re just and they’re they’re adding and they’re growing and they’re adding more businesses and Acquisitions and I remember the inner dynamics of how we did accounting and how they did accounting and how we weren’t as concerned about depreciation and they were very concerned about depreciation and we were like hey if we can depreciate this right now and that saves US money from taxes and we can use that money to grow our business like that’s a that’s beneficial for us right and in their case they’re like but you’re not showing you’re making a profit you know so that doesn’t help us as a as a partnership and we were definitely more long-term focused you know a year two five 10 out versus you know three four six months out and it was a very I think that probably created the most it was I say it this way it it it grew us the the most on the knowledge and the accounting side we learned a lot we became very much more professional company than we were if we wouldn’t have partnered with them but it also created the most heartache between the

two companies because it was trying to save taxes to trying to show the biggest profit so you’re going to be paying the most taxes yeah yeah they want to pay taxes that means they’re making money and then they can acquire more you know you know more people interested in their and not that we mve the needle a lot compared to you know their operation as a whole but it was definitely two schools of of of accounting thought that didn’t the small business versus the publicly traded company they look at things very very differently and so you’ve got to see both both sides of that both ends of the spectrum yeah it was really it was a neat opportunity but you’re right I mean it’s totally different mind thoughts and the way that you do things and as a privately held company you’ll be going hey I want to do this over here because this is going to make a lot of money but it doesn’t jive with what they want to do yeah so is your is your dad is your dad has he passed away is he still involved alive just retire okay

no he’s still around I love it I love it so does he consult does he consult on a daily basis does he get does he does he put his two cents in or does he uh not really as much anymore but one time he was a consultant an an unpaid consultant yeah no tell how many times we did it probably right most of the time but you know it’s just it times change and especially in our business things have changed and you can’t do things the way that you could have at one time for sure your oper what is your role Mark in the in in in the well well I haven’t been speaking a lot because everything she just talked about was before me yeah um well not really uh she actually came to me in seventh grade anyway so we started dating in high school and then uh um kind of went our separate ways for what 20 years about and so I married I married her in oh we got back together and I married her in 2006 so that’s that was my introduction to the scrap World um a good

year that was a that was a good year because you were like yeah you got a good two you got you know all of o six you got 07 you got half a 08 so you this is like take baby yeah it’s like man jackpot yeah and then 08 October of 08 and you’re like huh this sucks but no it’s been um it’s been a fun ride I mean I’ve done everything from opening the one of the Yards up from the ground I mean literally the first day we moved the tin or the can Balor in there um to uh I mean going out with a Car Crushing crew you know loading trucks um just about everything you can you can think of I mean kind of done a little bit of all of it um he’s operations I’m I’m more of an operations guy I mean I don’t consider myself um I don’t consider myself a strong business person I’m a relationship guy but as far as the business and the cogs and the wheels turning about depreciation and and all that yeah that one right is she’s brilliant um I mean she

she really is the the brains behind K&L so I guess I would be the brawn and she’s the brains because you know I’ll go out and bail cans or heal process onars but I can’t make the decision she makes um so she’s really the reason that we’re we’re even still in business really um because OHA was rough on all of us um that were in this business and so um but it’s been it’s been a good ride and you know I think one of the main reasons that we’re she she goes to a it’s a faith-based a christian-based uh business group that meets what do youall meet monthly um and one of the things that stuck out to her in one of their meetings was you know if you’re not if you’re not growing you’re dying and she kind of took that to heart um and I agree with her I mean you know if we’re just sitting here and coasting with what we have right now what are we doing what are we really doing I mean we’re just we’re just basically have jobs and so that’s kind of where

we started looking at um advancing K&L and and growing K&L um because we we really do want to uh provide a life for not only our employees but you know now with the third generation involved you know you want them to have something to continue to grow and invest in and and you know who knows maybe their children will one day be involved maybe not you know but but we wanted to be able to to leave something here and not just something stagnant but something that’s still moving forward absolutely and just for the record I sit next to our CFO it was my one of my best friends just for that reason because I feel like operationally I’m a lot more sound than I am on the financial side I mean I could navigate my way through it but I sit next to the accountant for a reason right because it takes all kinds and you need both sides you need someone to keep you on your toes you need someone if you say hey I want to do this or buy that or does this work and they can say yes

or they can say you know pound sand I think it I think you need that you need that um give and take so and if you want I mean I watch my mom and dad do it my whole life right so I mean my mom was the CFO and my dad was relationships and and operations and so I think I got a little bit of both in me from them but I still know that I still knew enough to go find a good accountant and we have a really good leadership team there’s seven on our leadership team and so we have a good team so we kind of do everything we use a EOS system okay and it really helps I know that y’all meet y’all have your operations meeting once a week and we do that very similar thing and so we’re trying to build the infrastructure for the growth so we’ve kind of done and we’ve got that in place and now it’s trying to decide which way to go forward so when you think about like the future of K&L like what do you guys see what do you I

mean what what do you what when you look out there was it operationally or whatever I mean and whatever you’re willing to you know put on the put out on the internet I mean what do you what do you see that’s that’s out there for you guys I mean growth wise more facilities more like you know deeper on the processing side or it’s it’s kind of been um probably over the last year or so we’ve been we we’ve gone down a couple of avenues that we’ve done a lot of research and and stuff on but um and and I feel like I feel like that you know a lot of it is all about God’s timing and what he has planned for us and I feel like that some of these Avenues we’ve researched I think I think we’re going to get there we just don’t know if the time’s right um but in the in the short term one thing we’re really concentrating on you know knl’s always been uh real big on pedler traffic um but we are we are growing our commercial accounts um I think our goal last year was

to purchase how many new rolloff boxes like 10 you know 10 boxes let’s start there cuz we prob have had about 80 or 90 running around just in this area around Tyler and so we bought 10 well we ended up buying how many like 30 30 um and now we’re probably by 15 or 20 more so um no small investment like I people you know when you they say oh 10 or 20 or 30 and I don’t know what you guys are paying for boxes out there but if they’re 30 or 40 yard boxes I mean you’re you’re up anywhere from 10 to 15 a box just you know I mean I I know like what we pay for a good box and it’s not that’s not a small investment you know it’s not but you know you said in one of your interviews I heard you say y’all took your business from 75% Peddler and 25% commercial and you flipped it you totally did and that’s probably about what we are right now is the 75 25 or maybe even 8020 historically but you know retail retail retail 8080 retail and 20 okay

yeah now our facility in great B Kansas they have over a 100 rolloff boxes out just that one facility and they’re probably a lot more that 7525 okay so we’re just trying that’s not anything we bought a lot of existing yards in the nine that we have some of them are Green Field probably half and half green field and half existing yards so the rolloff containers that we had in this area were some we just inherited when we bought a yard and they had a rolloff business so it’s never been anything that we’ve concentrated on down here and just over the past year concentrating on it you know it’s proved the ROI on one of those $10,000 containers is not bad yeah so yeah so um putting that back out there I think our goal is to have 400 is our first goal so that’s what we’re concentrating on right now I and I and the the advantage of the Box you know I tell people this all the time they’ve asked me the question like you know you and I think we’ had this originally how would use fighters to start from

Square One how would I start I’d buy a truck in boxes and then I’d buy the facility right because I think that your ability to control your transportation just bring so much value to your business and that’s like the material not just people think about Transportation they think about material on the outbound side but I think about it like inbound and outbound because you got to anymore we’re becoming such a service-based business I mean people want to know like when can you come get it when can you be here to crush the cars when can you you know drop me a rollof box or a bin or a trailer or whatever the case may be and it’s became I feel like even my dad’s era and my dad started recognize it and that it was changing it was less about you know the scale traffic especially if you’re in a more rural type area um where you don’t have a Houston type population where there’s just people everywhere right that are generating you know scrap flow so if the more rural you are the the the farther you got to go which your

ability to drop boxes and service those boxes and whatever else that’s how you’re going to get scrap flow when the price when scale price is shitty and when scale is shitty people don’t want to spend the diesel or the gas to bring it in there they just let it sit in the field they don’t really care but but if you want to but but but they still need to get rid of it a lot of times they’re willing to load it or have you come load it or whatever the case may be but your ability to service that business and your ability to service those manufacturing accounts who are generating scrap regardless of the price that’s how you keep your flow sound when the price you know comes off a cliff or you know nickel and dimes you all the way down you know it keeps that that material flowing even when the pricing isn’t great that’s what we’re hoping for so I took that to heart when you said that and so that’s what we’re gunning towards yeah I feel I feel it’s smart on your guys’s part I mean not because I

said it but I just feel like you guys were on to it you guys understood it and I just feel like just your ability to control the flow that’s why big companies buy small companies is they want the flow that’s why steel mills buy shredders that’s because they want to control their inflow right and how do you control the inflow as a small guy I think it’s bins and boxes and customer service so if you got the customer service and you can afford some of the the input stuff you know Trucking and boxes I think it’s I think it’s a good it’s a good move but it’s like anything you know you can’t just go buy a 100 boxes right you know because now you got to have you know XYZ M more trucks and there’s just there’s a lot to it it it’s a it’s a slow build to get to that point usually unless you just say by somebody out well and we’re having to analyze okay how many boxes can one truck service in our footprint and you know at what point are we gonna have to have because right now

we’re running two rolloff trucks for what point are you gonna have to have that third one and you know they’re not cheap yeah and and also finding Personnel to drive them’s not cheap so just you don’t want to get it too early but you don’t want to get it too late so that’s kind of what we’re having fun analyzing right now well and you know another thing that we that we kind of complemented the the rolloff service from the from the metal recycling to scrap standpoint was we also we also um are putting our name out there and and we’ve put a lot of boxes out there just servicing contractors with the the CND disposal so we’ve got 30 yard Billboards all over town with these General Contractors that we know and we get we we run into people all the time and goes hey I saw one of your boxes you know and I’m like that’s awesome God looks out for the ignorant and we qualify because we got these big um trash dumsers where you know they don’t have the braces down the side so we said oh we’ll just put our

logo on the side of them and our phone number blah blah blah and like he said they become walking Billboards and so the funniest one is we had one that was sitting right outside of where everybody left the country club right outside was the dumpster sitting right in front of them and so people that have known us forever like oh is that what you do like no that’s not what we do but we will for a price that’s right but but but I mean it just fit because it’s like we had the equipment and you know there’s there’s typically a lot of construction going on in this area so I mean just kind of fit with our operation you know we’ve got the truck we’ve got the boxes or we bought the boxes specifically for the for the CND disposal but um so we keep those pretty much full all the time or we have friend that is a contractor and so how that started is we’re sitting in our operations meeting one day and he brought that up so we called her and said hey how much do you pay for that and

she told us and she said do you want do you want that gig and we’re like yeah we want that gig we want that gig yeah we want that got what five or six projects going on at a time so we have a box at each one so I think it’s important for people understand too and I think we’re going to get into some tricky markets in 2024 and I don’t know and I can only speak for my own scrap flow you know um at our Yards in Idaho and Oregon but you know we probably were I would say 25 to 30% volume down from 21 22 to 23 and I and we were talking in our in our meeting um our managers meeting here last week and they said what do you anticipate for 24 and I feel like I said I feel like it’s going to be a lot like 23 I think it’s a it’s going to be a challenging year on the scrap flow standpoint so like a lot of the lwh hanging fruit got picked in 21 and 22 maybe early 23 and I don’t see maybe pricing you

know just taking off um and I think it’s going to be a choppy year and this is just my guess but I feel like anything you can do in your business that gives you opportunity to weather you know you know a volume red uction or whatever the case may be is smart and I feel like you guys talking about the CN D I’m glad you brought that up just because it’s you guys being aware hey I’ve got these boxes I’ve got the ability to turn them maybe I’m not going to make a Jag of money like if it was full of 304 stainless or prepared iron but that’s the things that actually help you weather the storm a little bit that you know and hopefully 24 is Rosy I I hope I’m wrong I hope I’m all the way wrong and I think and and it goes off like a rocket but if it doesn’t you you start putting things in place to be able to help you continue your growth of adding more rolloffs because you can service them you got a home for them you know their Billboards all the you know

the marketing side of it has a lot of value too right and I think you guys are smart for that well and I I think the way we kind of looked at it initially and you’ll have to correct me if I’m wrong but I think we were kind of looking at it as okay if if we can put if we can put these CND D disposal boxes out will that generate the revenue to cover the cost we would love to get that to a zero cost you know we’d love to have enough of the trash disposal to offset the cost of getting the material to the yards and the rops so that’s what we would love it’s gotten pretty it’s it it helps tremendously cut down on the cost because we figure thing on a tonage basis so we’re figuring out how much a ton it cost us to get metal to the yard and so we’re able to offset that with some of that income to help so my last my last question for you is you got the third generation working in the the business right now right is it is it

as good as you as you expected it is it does it create its own set of challenges are you happy what’s Give me the give me the La let me know curious it’s really fun because our um son that is getting involved he is a lot like my dad and so we’ll be sitting in a meeting and he’ll say something and it’s like he sounds just like my dad sometimes you’re going oh my gosh and um he has just a really different view on things but he’s been around this business all of his life he was talking about the other day that he was hauling my dad pulling a goose neck trailer to Kansas and Hauling stuff back and he goes I don’t even know if I was supposed to be doing that at 16 years old and yeah he’s he’s like completely out of compliance at 16 you know they’re they’re gross weight ratings probably you know he’s in a douly and a goose neck so I mean they were probably gross weight ratings probably 40,000 yeah you know just little things like that and you know and he um buried a

truck one one time and had a big toe Bill and he got to pay that back by bail and cans you know for free till he paid back his toe bill so he’s been around it the most so it’s really fun to hear their thought process on things and so it hasn’t proved to be they they’ve been around me enough that they know how I operate and what will and won’t go and even better not be late to work and you don’t miss and you know so it it’s not a problem it’s been fun that’s yeah it’s not a challenge with him specifically because Dylan he’s 25 he’s 25 he he he’s dyslexic so that was a challenge in a formal School setting but when it comes to like this business and Common Sense he’s like brilliant yes you know I think that has to do with that dyslexia that he’s a you know he’s that sometimes those guys are just smart and he’s just he’s brilliant when it comes to that kind of stuff so um his mind works differently than ours does so he sees things that we don’t see even with

all the experience in the age and what we call wisdom he sees things we don’t we’re like huh I’m not going to admit that villain just showed me that but so it’s it’s pretty cool but they say you know the majority of all billionaires are dyslexic because they don’t have the bridge between their brain that where we’ look at something and say oh we can’t do that they don’t do that they look at something and figure out how to do it yeah they break it down they go back to like what they call like first world PR first first level principles right so they like they break it all the way down and say okay like level one and they start to rebuild the problem to towards the solution versus us up here trying to connect the two saying it’s not possible they go all the way to the bottom and build towards the solution side that’s right and it’s really good because he’s very obviously very operational and our son-in-law is has an MBA and he’s very Financial so they compliment each other Bal that’s a good balance well I think

that sets up well for you guys I mean honestly I mean I I’m looking forward to my to to coming out to Tyler and I’m Gonna Make It Happen um we have our adopted one right in the middle that is 15 years younger than us that we claim him as ours too and he compliments because he’s kind of a little bit on both sides so I’m anxious for you to come meet everybody I I’m in well thank you guys for taking the time I appreciate it and and you’ll see me in person and send me the link on that table I’m curious thanks you guys have a great day yeah