Solenis’ ‘commitment to people, resilient culture’ receives WSJ recognition

When Platinum Equity announced the $5.25 billion acquisition of Solenis, the firm was highly complementary of the water treatment chemistry company’s leadership.

“It is an exceptionally well-run organization with an outstanding management team and a service-oriented culture,” Platinum Equity Partner Jacob Kotzubei said when the definitive agreement was announced last summer. “We believe in the company’s mission and we are excited to invest in its continued growth and expansion.”

That leadership was acknowledged recently as a US Best Managed Company for the second year in a row by

The Wall Street Journal and Deloitte in their program recognizing outstanding U.S. private companies and the achievement of their management teams.

The release said: “The 2021 designees have demonstrated excellence in strategic planning and execution, a commitment to their people and fostering a dynamic, resilient culture, as well as strong financials, all while facing the uncertainty of the COVID-19 pandemic. Despite major challenges and immense pressure, they continued to lead with purpose and the vision to make significant contributions to their industries, communities, workforces and the economy.”

As part of Platinum’s Annual General Meeting program last fall, Solenis CEO John Panichella was asked to touch upon these themes.

In a wide-ranging conversation, Panichella explained Solenis’ mission, the Platinum-sponsored merger with pool-treatment company Sigura Water, its commitment to ESG and how Platinum will impact the company’s future.

PE: What does Solenis do?

Panichella: We provide specialty chemicals and technical services for water-intensive industries. Our solutions generally derive sustainable outcomes for customers around conserving and reusing water, using energy more efficiently, reducing waste in processes, and driving raw material efficiencies by consuming less and reusing more.

Panichella: Our chemistries make your everyday life better.  For customers of our pool solutions business, we make pool and spa water safe through our biocidal chemistries. (Biocidal is a product with an active substance that is intended to combat harmful organisms).
Our industrial solutions team focuses on industrial water-treatment products that enable manufacturing processes to be more efficient.
Our consumer solutions team enables papermakers to enhance the functional properties and visual characteristics of their products, and to optimize their pulp and papermaking processes. When you receive something in a box, more than likely our products made it stronger and more sustainable.

PE: Who are your major customers?

Panichella: Our major customers are refineries, chemical producers, power producers and paper manufacturers. Exxon, Dow Chemical, BASF or Marathon Oil would be examples of industrial water customers. In the tissue and towel industry, this would be customers like Kimberly-Clark or Procter & Gamble. And in the food packaging area, this would be customers like Graphic Packaging. In the corrugated (more durable cardboard) packaging area, this would be customers like International Paper, Packaging Corporation of America, and WestRock.

PE: What are the company’s top priorities following the transition to Platinum?

Panichella:  In the short term, we are focused on executing our strategy and business plan, which calls for us to grow the company and pay down our debt. This is a growth opportunity because the water treatment market as we define it is about a $36 billion market, growing at 4% to 5% annually. Our strategy will be to capture our fair share of that growth market.

PE: What are the factors driving that growth right now in the water treatment markets?

Panichella: Environmental regulations are a key factor. Actions by countries around the world generally mean water cleanliness is a more stringent requirement; it must meet higher standards before it can be discharged into the environment. And all those types of requirements drive the demand for our products. Water scarcity also is a trend that’s driving consumption of our products, because as the world gets warmer and water availability is reduced, people and manufacturers will need to reuse the water. Cleaning water so it can be reused really drives the need for our technologies.

Panichella: The Amazon effect is good for our corrugated packaging business. Think about it: You point and click every day. What shows up at your house? A box. Our products go into making that box, giving it strength and giving it light weight. Then there’s a big trend around plastics. Every day you see the news about plastics in the oceans. As a result, consumer brands have really recognized the impact that single-use plastics have on the environment. And so, consumer brands are driving the conversion from plastics to fiber-based solutions. These fiber-based solutions are perfect for us because we enable fiber to be used as a package. We give it dry strength; we give it wet strength, we give it barrier coatings. Those are just some examples of really positive trends that are driving the growth in this market.

PE: Why are Solenis and Sigura a good fit?

Panichella: We both participate in the water space, selling products that really make water work. One of the key things you try to do with water is keep it safe so people can be around it. Solenis sells a line of biocides to disinfect water used in packaging mills, in industrial cooling applications, so it is a key technology for us. If you look at the Sigura business, it’s all around disinfection in pools and spas. When you combine Solenis and Sigura, you create very close to a $900 million business that’s focused on disinfection in water systems.

PE: How did the Platinum team characterize their interest in Solenis?

Panichella: Well, Platinum’s interest in us began with their acquisition of Sigura. They studied the water space, thought it was attractive for a lot of the reasons that I’ve already shared with you. Then once they acquired Sigura, they knew how to build a bigger platform.

PE: Is there anything specific about Platinum’s approach that impressed you?

Panichella: Yeah, what I liked about the Platinum team was their thorough diligence; they went deep on a lot of areas. And while that was exhausting for my team, the reality is you like to work with somebody who’s going to go deep and make sure they really understand the business, the people, the markets. I also could see that they had operational expertise, and I think that fit nicely with our culture. And I thought the people were high-skill people.
PE: How does Solenis help its customers meet sustainability goals? How does Solenis products help the environment?

Panichella: About 80% of our sales revenue is directly attributed to products that help customers meet their sustainability goals. That’s really what the company is built upon.

Panichella: In the wastewater treatment area, as an example, our products are used in sludge disposal areas to reduce the amount of solids that go to landfill.  These products, help customers to efficiently remove water from those solids so that they can landfill them more effectively. In food packaging, our products provide barrier coatings that allow products such as paper cups, french fry boxes and ice cream containers to be compostable and recyclable. In the energy area, our deposit-control technologies help reduce their energy costs. We also help them gain efficiency by reusing water.

PE: How has Solenis invested in sustainability?

Panichella: First, it’s about our products and what we do for customers. I told you that 80% of our products drive sustainable outcomes for customers. That’s a pretty big investment on our part.

Panichella: Second, we invest in new products. We spend about 2% of our sales on R&D investments that are driving these sustainable outcomes.

Panichella: Then the third thing that we really focused on is our sustainability document and approach to explain to investors, employees, and customers, our commitment to ESG. We named a chief sustainability officer, created a sustainability report which is posted on our website and we’re dedicating a lot of resources to drive improvement across all aspects of ESG. So we’ve invested a lot of money; this is pretty core to our strategy at Solenis.