The 2009 CEO of Year built a wide moat business by carefully consolidating a fragmented, but profitable, industry.
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Jeremy Glaser: I’m Jeremy Glaser with Morningstar.com. This morning we announce our CEO of the Year for 2009 and here to share with us is Paul Larson. Paul thanks for joining me
Paul Larson: Thanks for having me again.
Jeremy Glaser: So who’s the winner?
Paul Larson: Mark Miller of Stericycle.
Jeremy Glaser: So what made this Mark Miller’s year?
Paul Larson: He built a company over two decades that has gone from a essentially a dozen customers up to over 400,000 customers and really he took a debt-riddled tiny company and created an industry juggernaut that we think has a wide economic mode.
Jeremy Glaser: So what does Stericycle do exactly?
Paul Larson: They are a medical waste services company. They go around the hospitals and dental offices and they gather the waste and dispose off the waste and also recycle when appropriate.
Jeremy Glaser: So what did Mark Miller was able to do kind of carve out. It's going to sound like a commodity business. I mean could I just buy a chalk and you’ll go out and start collecting medical waste?
Paul Larson: Well, you could but that would be very difficult to compete with Stericycle. As you might imagine, this is a heavily regulated industry and this is also an industry where route density matters and Stericycle has the densest routes in the industry table to utilize its assets better than anyone else and because of these factors, we think that the company has been able to create a wide mode for itself. This was a small company and through Mark Miller’s leadership, they were able to acquire over 170 other medical waste firms and integrate it into a company that really is a leader and has high returns on capital.
Jeremy Glaser: Will there be any significant moves that the company made in 2009 that set it apart for this reward right now?
Paul Larson: They’re actually weren’t any specific moves within 2009 but in 2009 the company really did show how resistant it is to the recession. The company basically didn’t skip a beat in 2009 and continued to grow while the rest of the economy contracted and I think that’s one of the attractive parts of this particular business is the fact that it’s not affected by the recession
Jeremy Glaser: So while the banks are trying to get rid of the toxic wastes on their books, Stericycle was actually making money by taking away other people’s toxic waste.
Paul Larson: It’s one way of putting it.
Jeremy Glaser: Alright, Paul thanks so much for talking to me today.
Paul Larson: Thanks for having me.
Jeremy Glaser: For Morningstar.com, I’m Jeremy Glaser.