What is it like growing up in the pipe industry?

00;00;00;00 - 00;00;29;26 Unknown Welcome to Coming Down the Pipe RC Global's podcast about pipeline assets, investments, pipeline construction and the market in general. RS is the midstream partner for providing streamlined sourcing solutions. And I'm Josh and this is Tyler Williams. Tyler Tyler's grown up in the pipeline business. He's the founder of CPI, Pipe and Steel, RC Global and several other pipeline related companies. 00;00;29;26 - 00;01;02;20 Unknown And today we're here to talk about growing up in pipelines. And Tyler, what we want to get from you today is tell us grassroots how this whole thing started, how basically where you've been and how we've gotten to where we are today. Give us a little bit of background about yourself and your family and and your company. Yeah, sure. 00;01;02;23 - 00;01;53;17 Unknown So thank you, Josh Yeah. So my parents, my my father started in the oil field to be in business back in 1981. And of course he made us work at the pipe yard every Saturday and holidays, every summer. And so I grew up kind of in a pipe yard since I was nine years old, driving forklifts. And we were in the oilfield tubing and my granddad actually helped my dad and worked for him and we had threshers and hydrostatic water testers and upset ears and you name it and, and did the oilfield tubing business all the way through high school and graduated high school, went to college for four weeks and it just wasn't for 00;01;53;17 - 00;02;24;07 Unknown me. I truly enjoyed learning from my dad, my granddad every day and the pipe business and so came home and started working with them and we had contracts with Shell and Exxon and buying all their offshore three jack tubing. And back in 1984 we joint venture to a line pipe deal with a friend of ours and it just completely changed everything. 00;02;24;07 - 00;02;55;17 Unknown It was a total business. We weren't really tied to oil field and and so we, we switched over to a long pipe. And at that time we started CPR. I started removing pack bonds and and ever since 1994, to this day, we've removed 2500 miles of old transmission lines, predominantly from 12 inch all the way to 36 inch pipe and about an eight state area. 00;02;56;13 - 00;03;27;02 Unknown And when you remove that pipe, you bring it in and you clean the coating off and and rebuild it, fabricate it and sell it back in construction, casing, road bore application, dredging pylon, you name it. And that chasing a pipe all over the United States for all the big name ups, midstream companies over the years, I saw that instead of just digging pipe, we needed to, you know, see what other pipe was out there. 00;03;27;15 - 00;04;15;10 Unknown And really probably in about 2010, I really started roaming the country and all their surplus, whether it's new surplus or take take up surplus. And and that's when I kind of saw the void. Our CPI is fed CPI in the construction market, but really for a line pipe, whether it's take up new surplus, you you not really new surplus I would see in those bids and we would all bid you, you basically have a scrap number which is 10% of New and then you have a construction number devaluation to the midstream company which is about 20% of new. 00;04;15;25 - 00;05;08;10 Unknown And then you have new costs. So there was a 80% yield there that I just I see when you have new surplus pie that's leftover from a brand new project, why can't I take one MLP or one midstream company's pipe and sell that to another midstream company, which is what peer to peer is and a market? And so in 2014 I started across, which stands for Asset Redeployment Solutions, and it was basically designed to be a peer to peer marketing company where we can I consignment sell it for the owner and or purchase the pipe depending on whatever their accounting thresholds are, you know, if they want it gone or if they've got a little 00;05;08;10 - 00;05;45;03 Unknown more time to sit on it and hold out for a little more value action which will bring them back more of about a 60 or 70% of new cost. And it creates a win win for the customer. It's an inventory that's readily accessible and they get at a discount and then the seller actually recuperates about 40% more back so that the whole goal was to create a win win. 00;05;45;03 - 00;06;14;05 Unknown Sure. Let's let's talk about that for a second. When you when you say it's a win win, can you talk a little bit more about how RC helps the contractors and the purchaser of the surplus accelerate their construction timelines? What does it look like from being able to purchase something that's on the ground versus having to go to a manufacturer and say, Hey, I need 100 miles of pipe? 00;06;14;11 - 00;06;58;20 Unknown What what do you think on average at that time savings is? Yeah, sure. Well, I think the best way to answer that is I think that really, you know, 20, 30 years ago, companies for designed a project and submitted their applications and ordered their pipe. And where I saw the future going was for for more regulatory issues. As you know they design and pipeline and they're going to need to file their permits and and naturally where things are today and where they have gone is they need to really wait for those permits and then order their product or their materials. 00;06;58;20 - 00;07;28;17 Unknown And and now once they order the materials, the materials may take a year, six months, year lead time. So it just pushes everything home. So having that new prime surplus available and being able to, you know, purchase that and speed to market, get it built as is it in moving forward, that's going to be one of the most important things there is. 00;07;28;27 - 00;08;19;24 Unknown Sure. Can you talk a little bit about the the cost savings that the purchasers are are realizing versus new pipe? And how does that kind of fluctuate with the steel market? We've seen crazy volatility over the last two years, but how does the surplus pricing kind of fall in line behind behind the steel market? Yeah. So I think the surplus, the prime surplus market is, you know, it's you can see it, you can feel it, you can touch it, you can take possession of it, you can get it recoded, you can you can get it to you right away or get an installed much, much quicker at the anywhere from, you know, even if it's 00;08;19;24 - 00;09;02;00 Unknown 15% cheaper, it could be 15 to 30% cheaper. But but you can actually move on your project, get that project behind you and move on where with commodity prices and where things are going to really address. When I created RCI, I envisioned about five or six years ago that availability was going to be a major driver behind it because I believe that these companies old school companies back in, you know, 30, 40 years ago, where a lot of them were owned by mom and pops and they held a lot of inventory. 00;09;02;00 - 00;09;35;28 Unknown And the new business curriculum or whatever you call it, AQ or now they don't want to carry any inventory if you want it and you need it, they need to build it. And so availability is going to be the major driver in the future. We've seen it over the last couple of years and you're going to see it even more so in the future because new private equity or money and or management does not want inventory. 00;09;36;23 - 00;10;13;14 Unknown Fair point. And I think one of the things to to look at, if you are just kind of adding on to what you're saying is the reason they don't want inventory is because the longer their inventory sits, unfortunately, the more book value they accumulate. But the less the actual commodities worth. That's when you start looking at fusion, bond, epoxy coatings and other coatings that degrade with with you've exposure or you have something sitting in a warehouse where it may be out of warranty, but there's no preventative maintenance programs on. 00;10;13;14 - 00;10;42;17 Unknown So valves aren't being greased, valves aren't being turned rotating equipment like pumps are not being rotated. So that's kind of where RC comes in to because they do offer a storage solution for for some of their clients. Can you elaborate a little bit more on some of the things that you've done for clients in the past when they have inventory that they just need a place to park it until their project is ready to come online? 00;10;42;23 - 00;11;20;06 Unknown Yeah, sure. So we have two storage locations, one in Victoria, Texas, one in Yukon, Oklahoma. Look into always thought about adding one, maybe predominantly, maybe in Ohio, northeast. But, you know, basically our clients can store their materials at our location and it can basically, if you think about it, it could go on our marketing platform, our online sales platform, and and if somebody is in need of those materials, they may place a bet on it or want to buy it. 00;11;20;06 - 00;11;55;10 Unknown And at that time, the owner of that material gets to evaluate that offer, figure out whether they want to sell it or they need. They actually need to keep it. And so it's it's it kind of creates a win win. And, you know, so because so much of that material for years just sat in warehouses and so that material needs if somebody needs it, you know, they have my house is worth $200,000. 00;11;55;10 - 00;12;17;11 Unknown If somebody drives by and they want to pay me 400, well, they can have my house and I'll move. And I've got Yeah, yeah. Well, that's the way that's how my dad always taught me is everything's for sale sign. And that's kind of, you know, it's just a it's a new, it's a new it's a new air and, you know, the buy and hold. 00;12;17;11 - 00;12;46;27 Unknown And you mentioned, you know, and the coatings and things getting old and degrading. It's it's just and then you match that would lead time So it's it's it's everything's coming it's going to be a whole new path forward I guess. Sure. So with all of those things said, where does RC go from here and what is what is RC looking for in a client? 00;12;46;27 - 00;13;28;23 Unknown Both a buyer, but but mainly a seller. Yeah. So I mean, that's is all I ever wanted to create is the midstream partner. And we were, we were very fortunate to work with all the midstream companies. So we, we, we, we hear their strengths, we hear their pain points and it's how can we help and what can we create to to give them all what I would say less write downs, availability opportunity to, you know, maybe do things more efficiently downtime if they need valve. 00;13;29;00 - 00;13;58;02 Unknown All right here is in our warehouse make an offer you know it's it's just to be the midstream partner and and and and get in and and understand who they are and what their needs are and then and then be their partner. Sure. And what's the what's the ideal transaction size or what's what are the transactions and inventory that air is looking to purchase. 00;13;58;15 - 00;14;23;17 Unknown Yeah, it's really on area side. It you know, we we only have so many people and so much time and you know, it's, it's more specific. What I've always said is you can take any inventory list and you know you can have $200 million of the inventory and and 80% of that value is 20% of the actual items. 00;14;24;02 - 00;15;02;06 Unknown So we really need to focus on the larger items. The smaller items are, you know, a lot of times liquidated through auction networks or whatnot. But those 80% of those 88, 80% of the value is 20% of that inventory list as far as itemized out is what is where that customer needs that needs that help to, you know, market availability and and and try to maximize their return to minimize the write down. 00;15;02;06 - 00;15;34;18 Unknown But really moving forward. You know I'm in the in in any project there are actual purchase the available funding that we can secure is not going to sound limited but it's it's it's very good and we will look at anything. Okay great. Well Tyler, I think we're about out of time or our red lights going off, so. Sure. 00;15;35;02 - 00;15;57;16 Unknown Thank you. Very well. You and I just talked to I mean, we we we can we can talk all day, but thank you for coming down to Houston from OKC and joining us. I know that podcast attendee is not in your title, but thank you. Thank you for coming down and thank you guys for for watching our second episode of Coming Down the Pipe. 00;15;58;06 - 00;16;15;23 Unknown Be sure to subscribe and we'll see you next month. Absolutely. Thank you.