Uspci Growth Surges with Gagner at Helm/ Started in 1968 by Beard Oil Co., Using One or Two Trucks

Article excerpt

Journal Record Staff Reporter A small firm called U.S. Pollution Control Inc. had the use of only one or two trucks back in 1968, when it was started as a subsidiary of what was then Beard Oil Co. of Oklahoma City.

It grew slowly at first, then by leaps and bounds as a waste disposal firm meeting demands that stemmed from the growing influence of the U.S. Environmental Control Agency. Waste disposal sites were acquired in northwest Oklahoma and Utah, and a laboratory was established in Tulsa.

In 1983, USPCI was formed as a parent firm, which went public with 12 percent of its stock in 1984. The remaining 88 percent was controlled by Beard. Eventually, the Beard ownership was reduced to 30.4 percent.

However, the buyout officer by Union Pacific Corp. this week followed the largest growth period of USPCI by far during the last three years under Gerald J. Gagner, who became president in 1984.

After losses totaling $1.8 million in 1982 and 1983, USPCI reached a net income of $1.6 million reported in 1984. Last year, the company's consolidated earnings totaled $6.7 million from revenues of $56.9 million. The firm now has six divisions, three subsidiaries and owns three waste disposal facilities.

Even that success doesn't indicate the potential that Union Pacific and others obviously see in this 19-year-old Oklahoma City company, regardless of how the Union Pacific bid comes out.

A projection of $16.5 million in 1987 net income from revenues exceeding $75 million is stated in the 1987 budget of USPCi.

That would be a 146 percent increase in net income and a 32 percent increase in revenues. Beyond that, the net income would be up 904 percent from the $1.6 million in 1984.

"We currently have bids out on $60 million in contracts," said Gagner during a recent interview.

After Union Pacific's offer, the USPCI stock jumped from a 34 1/4 close on Tuesday to 49 on Thursday before slipping to 48 1/2 on Friday. Beard's stock also jumped - fromn 13 to 18 before slipping back tgo 16 1/2.

All this is the result of USPCI's climb from its two-year slump after Gagner joined the company. He changed its strategies for operating an efficient hazardous waste management firm, concentrating on profitable areas of the business.

Since then, the company has received high ratings from the Council of Economic Priorities. It was listed among Standard & Poor's top 100 small businesses in the country and was selected The Journal Record Stock of the Year in Oklahoma for 1984 and 1985.

Not only are USPCI's earnings growing at a rapid pace, its capital expenditures are increasing every year. Gagner said USPCI spent $17 million on capital improvements last year - an amount exceeding total expenditures made when the company was founded.

This year, USPCI intends to spend $26 million for capital improvements and is projecting expenditures for capital improvements will reach $50 million next year.

The most recent stock offering for 686,250 shares of common stock was completed on May 7, enabling the company to raise $12 million.

The net proceeds will be used this year to eliminate a net bank debt of about $3 million and the remainder will go toward the cost of building an incinerator in Utah, Gagner said.

To complete the incinerator project, Gagner said the company also will secure bank financing. USPCI purchased a lime plant in Utah that included two plant kilns which will be converted into incinerators used to treat contaminated soil - a market in the industry that is virtually untapped.

"There are millions of cubic yards of contaminated soil, but no facility to treat this," Gagner said.

Contaminated soil currently is hauled to landfills, a practice that is not well accepted by regulatory agencies, Gagner said.

The five incinerators planned for construction are expected to contribute $30 million a year to USPCI's consolidated sales. …