Covanta CEO talks Circon acquisition, future plans

Since his appointment as CEO of Morristown, New Jersey-based Covanta Holding Corp. following its acquisition by Swedish investment firm EQT Infrastructure in 2021, Azeez Mohammed has worked to shift the company’s operations toward a more circular future.

Described by Mohammed as a “transformative” time for Covanta, the company has undergone significant changes in the past year and a half, including a companywide reorganization into regional teams and the integration of several acquired businesses into Covanta’s portfolio.

To discuss some of these changes and his vision for the company’s future, Mohammed sat down with Waste Today Associate Editor Haley Rischar at this year’s WasteExpo conference in New Orleans. In the following Q&A, he shares his journey into the waste industry, Covanta’s growth strategy and the importance of sustainability.

Waste Today (WT): Since your appointment as CEO of Covanta, how have you acclimated to your role and found your footing in the waste industry?

Azeez Mohammed (AM): In the beginning, if you look at my career, it’s been very carbon-intensive—in fossil fuel, gas turbines and other [related industries]. But, along the way, I realized I needed to pivot into something more sustainable. Then, I went into solar, electric vehicle charging [and] green hydrogen, and then the Covanta opportunity came about. … The waste industry is something that I didn’t know about, but very quickly I realized this is actually the greenest thing I’ve ever done in my career, and it’s cleaner than solar … because of the landfill avoidance.

[The] waste industry [was] entirely new to me … but it was not a very difficult industry to understand. First and foremost, I have a solid team—we were able to get in some very good people—but the existing business … had decades’ worth of expertise, deep-rooted expertise. We seem to be in a place where we can hold the talent. So, they have been educating me; that’s No. 1. The second constituents that have been educating me are our customers.

The third thing [is] … coming in with a fresh set of eyes has helped me … to challenge and at least experiment on a few things.

I’m a big fan of fail fast, so you try something, and, if it fails, move on to the next thing rather than not trying at all. So, I think these are the three things that have helped me come up to speed—and I would not even claim I’m up to speed, either. I’m [on] the journey. It may take 10 years; it may take five years. I view any role I’ve taken as a continuous learning experience; you’re never finished learning.

WT: With your experience in the renewable energy space, how will you bring that into your current role, and how might that experience shape the new era of Covanta?

AM: There are three elements that I’m focused on, and that is what makes up the transformational story of Covanta. The first element is we were predominantly viewed as a northeast New Jersey-based company; very headquarters-centric. We said that that does not work; we need to be closer to the communities and the customers we serve.

As a result, what we did, which was a bold move for Covanta, is create four regional business units, which are headquartered in their respective regions. They have their own operating teams and have all the facilities and technologies at their disposal, and they’re fully empowered. So, that went live on January 1. And I’m happy to say we have the four presidents; they have their teams already in place; their headquarters have been identified; and they are already engaging with the customers.

So, being closer to the communities, to the customers, the stakeholders [and] the waste markets [is a benefit] because waste moves locally—it doesn’t travel across the country. So, this was the first element of the transformation.

The second one, I would say, is customer focus, and [identifying] which customers we want to grow with. We have predominantly been a municipal solid waste stream-focused company, dabbling a bit in industrial environmental service. We love our municipal customers, and we continue to invest in growing that, but we are making more investments and growing our environmental services offerings so that we can cater to industrial customers. And we do this through acquisitions and greenfield expansions, going multiple shifts in our facilities [and] doubling down on certain technologies like water treatment and cement kiln fuel.

The last [element] is being able to tell our carbon-negative story and being able to solve problems for our marquee Fortune 1000 customers and monetize it.

WT: There are currently a lot of misconceptions and environmental justice concerns regarding waste-to-energy, primarily surrounding incineration. How is Covanta working to battle some of those misconceptions and give residents living near these facilities peace of mind?

AM: First and foremost, what we do [at Covanta] is thermal treatment. Incineration has a negative connotation. We actually, in our facilities, are able to extract metal; we create renewable energy, and [in] the byproduct there are some emissions, as is the consequence with many industrial processes. We are a relatively small source of emissions in reality, but we are very visible with the stack, so sometimes we take some incoming fire from those who may not be familiar with the modern technology these facilities use. 

Now, there are some responsibilities on our part. We need to be able to go out there [and] recruit more people locally, be more in tune with local elected officials and give them value. In almost all places, we are welcome because we contribute to the local economy; we recruit locally; we create a supply chain around that community; but we never really told [that] story. That is something we need to do more [of], but we can’t rest on our past glory and stop short. We are always innovating. How can we do more in our communities? The regionalization [of the company] helps our team get closer to communities.  I’ll give you a few [more] examples. No. 1 is we believe in inspiring the next generation of STEM leaders by hosting thousands of students to tour facilities. … The second one is we have a program to hire incarcerated individuals to give them a second chance. The third is we put a premium on our employees volunteering in the communities around our facilities and track volunteer hours—it’s one of our enterprise's key performance indicators. No. 4 would be touch points with local communities. We’ve had so many food drives and other [events], which are things you have to do.

WT: Covanta had a busy year in 2022 with merger and acquisition activity. Can you tell me about some of those acquisitions and why those were key add-ons to your overall growth strategy?

AM: We had seven acquisitions last year, and so far, one this year so eight in total. The one we did this year is gigantic; it’s big. But all of them had a few things in common. The first [thing] they had was a geographical reach. So, in line with our first leg of the transformation, which is going regional, we needed to fill out those [regional] footprints. We were very light on the West Coast and the South.

So, if you look at our Miller [Environmental Transfer, Tulsa, Oklahoma], acquisition, if you look at our Biologic [Environmental Services & Waste Solutions, Hayward, California], acquisition, if you look at Circon [Holdings Inc., La Porte, Texas], which we announced [the closing of May 1]—if you look at all of those, it would be extending out into the Gulf, the Southwest and a little bit of the Southeast.

The second one links directly to the second leg of the transformation, which is growing the environmental services business and adding more technologies there. For example, we’ve dabbled in water, but with [the acquisition of [Taunton, Massachusetts-based] Globalcycle Inc., we are a leading [company in] water treatment. So, we will be taking more kinds of water and … treating [it]. With the acquisition of Circon, as well as [Niagara Falls, New York-based] Buffalo Fuel Corp., we are able to get into decarbonizing kilns, which is called sustainably engineered fuels. This means you take the waste and repurpose [it] to create fuel. So, you can displace other kinds of carbon-intensive fuels.

Europe’s already far ahead, and we could be a leader here. So, these are some examples of why we went forward with these companies. The third [reason] is we are always being very disciplined in saying it has to [be] carbon negative. We don’t want to just randomly acquire companies because it gives us EBITDA; it has to be a purposeful EBITDA. All the acquisitions we did had a carbon-negative story. … So, I think this is really what’s common there.

WT: Given the scale of the Circon acquisition, how do you plan to integrate the different services the company offers into your current portfolio?

AM: Part of the integration is making sure we’re harmonizing various things that are going on. But again, there are three areas, in my view, we cannot drop the ball [on]. But, if we got it right, the synergy display is going to be dramatic. The first one … [is] making sure every customer, on day one, understands what the new integration brings. The second one is making sure our employees don’t get confused in this new structure, new demands and new requirements; so, there’s clarity. The third area, which probably is of the most importance, would be cross-selling. Circon sales folks had a certain suite of offerings; we have a certain suite of offerings; when we put it together, now, suddenly, we have many more.

Just to throw out some ballpark numbers—they have about nine unique service offerings; we have nine unique service offerings. And each company, even as it stands, has cross-selling opportunities within their own respective companies. But now, … what we’ve seen is each sell, on an average, two to three services per customer, even though they have nine each. When you put it together, you now have a chance of taking the services we well from six to 18. So, cross-selling will be a big one.

Covanta is a waste-to-energy and industrial waste management services firm based in Morristown, New Jersey. For more information, visit www.covanta.com.