VLS on Acquisitions and Finding Synergies

VLS Environmental Solutions launched in 2008 with a small railcar cleaning and repair business. Today, the Houston-based company offers diverse services and products across three divisions from 40 locations throughout North America.

Portfolio add-ons include similar service work geared to the marine sector and a suite of waste management options, from solidification of liquids to wastewater treatment and recycling, as well as fuels from the recovered materials. 

The waste division has seen substantial movement – eight of the fast-growing company’s 13 acquisitions are expanding this space.

VLS Environmental (recently bought by global infrastructure investment manager I Squared Capital) has in the past year alone launched a nonhazardous waste processing facility in Quartzsite, Arizona and entered the hazardous waste space with the purchase of Texas Molecular. The Texas deal, which includes two facilities, is the largest acquisition to date, and marks another leap in the way of forging new frontiers.

The plan is to continue to grow organically and through acquisitions, and to look for assets that could potentially provide synergies within each division, says Geoffrey Lehy, regional vice president of the company’s waste division. He believes VLS has a winning playbook.

“We acquire well, integrate well, and are opportunistic in organic investment where we feel it will drive growth. Our strategic approach is to make sure acquisitions fit in with our business model while allowing us to grow geographically,” he says.

“With each transaction, we ask, how can we help our current customers? Will this acquisition allow us to expand into other industries or regions and also touch other customer bases?”

A mainstay within the waste business is converting nonhazardous wastes to fuel for cement kilns and gasifiers as an alternative to petroleum. Since 2015, VLS has converted over 819,000 tons of waste into fuel and saved an estimated 738,000-plus tons of coal.

Customers on the front end are walked through determining if the material they want to dispose of meets the requirements to transform it into a feasible commodity.

“We develop a waste profile, blend or shred the material, and prepare the fuel to the kiln or gasifier specs. The alternative would be shipping waste direct to landfill,” Lehy says.

Creating and blending fuels to meet specs can be tricky. Even identifying viable feedstock takes practice and skill.

You have to be cognizant of the material coming in. You have to have a clear understanding of who the end users are and of their required fuel specs. And you have to be mindful of fluctuating, incoming streams.

“It’s waste. What comes in each day is not the same. So, we have to look for compatibility to be able to prepare a kiln-ready fuel. We may have to modify the blend to create a consistent product,” Lehy says.

While not all waste streams will be a match for VLS fuel programs, the team works with clients to determine a zero-landfill option, if available. 

The new facility in Quartzsite will primarily make fuel through blending and combusting mixed wastes. It will have capacity to process 10,000 tons a month of liquids, solids, and sludges. Some industries VLS is targeting are organic and inorganic chemical manufacturing, semiconductors, gas and oil, and automotive assembly plants. 

Building a plant in Arizona fit with the company’s strategy to capitalize on nonhazardous waste streams in the southwest portion of the U.S. –and to help its West Coast customers lower their emissions and costs by processing their materials closer to their operations. 

Before the Quartzsite facility’s September 2023 launch, Tennessee and Houston were the closest VLS sites to the West Coast.

“It’s a tough sell to say we can take your material and ship it to Houston. Now we can accommodate those clients while expanding our geographical footprint,” Lehy says.

Waste management company Ingenium picks up drums and containers from clients, consolidates them in its warehouse, then ships to VLS for processing.

“Often times, our customers have sustainability goals they are trying to meet. We partner with VLS to offer them waste-to-energy as an option –a more sustainable solution for treating their hazardous and nonhazardous waste,” says Heather Johnson, CEO of Ingenium.

Landfilling is typically a cheaper option, but increasingly waste generators opt for the greener alternative.

For VLS, running a successful operation is about growing, and it’s about diversity, whether moving into new geographical regions, taking on additional waste types, or expanding business lines. 

That’s been the formula for catapulting into new markets and for expanding into more industries, Lehy says.

Today, VLS services about a dozen highly regulated industries, with oil, gas, and chemical; aerospace; healthcare; pharmaceutical; and transportation.

The company has its eyes on new opportunities. If you want to know where some of the following activity will likely happen, from what Lehy says, you should look to the West Coast.