S3 Recycling Solutions recently acquired its first location outside of its home state of Tennessee, and plans to make more acquisitions in the next few years to complement the company’s organic growth.
The acquisition of iGlobal Asset Management, a California-based ITAD and medical asset disposition company, is part of the company’s five-year growth strategy, CEO Rod McDaniel told E-Scrap News.
“We’ve grown a lot organically, but now the plan is to grow through acquisition,” he said. “As we’ve grown our client base, logistics have been somewhat of a challenge.”
McDaniel added he’d like to see the company complete one acquisition per year over the next five years.
“We’re already revving up, looking for our next one,” he said. “For us, it’s cultural fit. It makes sense to look at companies that have been a bit stagnant and are looking to exit the market, to help us accommodate our growth.”
Strategic location near clients
Founded in 2007, S3 Recycling Solutions sorts, repurposes and remarkets electronic assets.
Although the Los Angeles area was not S3’s first choice, strategically it made the most sense, with one of S3’s biggest clients located there, he said.
“We have clients on the West Coast that we’ve been trucking to Nashville,” he said. “There’s an immediate cost savings of hundreds of thousands we hope to realize over the next 12 months.”
In the meantime, S3 is working on gaining certifications required for California. S3 already holds certifications in R2, ISO 9001, 14001 and 45001.
Looking ahead, “Dallas or Denver would be great – drive a radius around these areas to make it a one-day return trip for our drivers.”
While location is important for acquisitions, company culture is key to S3’s success – and perhaps more difficult to manage, especially from a considerable distance.
“As companies grow, it’s hard to expand the culture,” McDaniel said, adding that since the acquisition closed July 1, the California team has joined weekly team huddles virtually, and management has catered lunches weekly.
“We’re trying to bring our culture from Nashville there so they can see and feel it, and I think we’re already seeing that,” he said.
The purchase increases S3’s employee headcount by approximately 17% to around 65, increases annual revenue by 10% and brings its number of facilities to three.
Prior to the acquisition, in summer 2023 S3 purchased a warehouse building in Springfield, Tennessee, and added a chief operating officer to its leadership.
Rapid growth fueled by health care
In the first half of 2024, S3 processed about 30,000 devices per month, up from 20,000 per month in 2023. The company had around 1,460 pickups in 2023, compared to 1,062 the previous year.
The growth in S3’s corporate clients accounts for the rise, McDaniel said.
Nashville features more than 900 companies working in health care, including 17 publicly traded health care companies headquartered in middle Tennessee, according to the Nashville Health Care Council.
S3 started specializing in health care technology needs due to proximity to so many related firms, McDaniel said. “But everyone needs health care, so from a client-based perspective, even through COVID, our business never shut down,” he added.
Indeed, in 2020 S3 reported 603 pickups and 2.4 million pounds of materials processed, nearly double the number of pickups and 50% more volume of materials than in 2019. In 2021, pickups increased another 50% to 916, and volumes to 3.1 million pounds, according to the company’s annual sustainability report.
“A little over half of our clients are medical providers near Nashville, which is the health care capital of the U.S.,” he said. “A lot of health companies are based there, which is why it makes sense to grow in the health care space. It’s definitely a space we understand.”
