- Stella Environmental Holdings, a Houston-based portfolio company of Hidden Harbor Capital Partners, recently acquired Dallas-based Jack Herod Trucking for undisclosed terms, according to a company press release. Herod, the company's owner, will stay on to assist with "business development."
- CEO Heath Eddleblute told Waste Dive that Jack Herod — a "sizable player in the Dallas metro area" — was larger than Stella in the Dallas-Fort Worth market. The deal is viewed as a way to not only expand in northern Texas, but also grow business in states such as Oklahoma and New Mexico.
- Furthermore, the deal is considered beneficial because about 50% of Jack Herod's business is outside the transfer station sector, giving Stella more opportunities to diversify. The company also moves material such as scrap steel and brewery byproducts that are used as livestock feed.
This deal is the latest of many in recent years that show heightened interest from private equity companies in acquiring more waste industry assets and growing them through ongoing acquisitions. Stella has been in business since 1992 and was bought by Hidden Harbor Capital Partners in 2017 after a series of ownership changes. The company went on to acquire Georgia-based Rackleff Enterprises later that year and hired Eddleblute away from Republic Services in 2018.
Stella now operates 46 transfer stations across Alabama, Georgia, Nebraska, Oklahoma and Texas. Other offerings include landfill tipping, transportation service and equipment maintenance. Waste Management, Republic Services, Waste Connections, Advanced Disposal and WCA Waste are among its top customers.
Many of those companies have been citing higher transfer costs as minor headwinds in recent quarters, often leading to price increases for collection and disposal. Asked what was behind this trend, Eddleblute pointed to rising expenses for insurance, fuel, maintenance and labor as factors in his own pricing.
While Eddleblute said his company works to get creative with customers for cost savings, some issues go well beyond the waste sector. Labor is especially challenging across all trucking industries, but Stella believes its routes may be more appealing to potential drivers.
"We all face the driver shortage in our markets. We believe we offer a value to an over-the-road driver that ends up getting to stay at home and work locally," said Eddleblute.
Unlike larger transfer competitors MBI and KRD Trucking, Stella's fleet largely consists of independent contractors, said Eddleblute. According to the most recent Federal Motor Safety Carrier Administration filing, Jack Herod Trucking has 42 drivers — which will help change that equation.
Route lengths are generally manageable around Texas, given the proliferation of landfills — even though some of Stella's routes within southern Georgia are currently 70-80 miles one way. While this is still shorter than the distances waste often travels in some U.S. regions, Eddleblute noted "the landfills are getting further and further out" in his area, and that long-haul may become a growing part of the business.