By: Frank Esposito
March 11, 2014
North America’s largest compounder soon will have a new man in charge.
Stephen Newlin, 61, will retire as president and CEO of Avon Lake, Ohio-based PolyOne Corp. on May 15. Those roles will be filled by Robert Patterson, 41, who currently serves as the firm’s executive vice president and chief operating officer.
PolyOne’s turnaround under Newlin has been impressive — analyst Kevin Hocevar called him “one of the great CEOs in the specialty chemicals space over the past decade.”
When Newlin was hired in early 2006, PolyOne was reeling from almost $300 million in losses in the five years since it was formed from the 2000 merger of compounders Geon Co. and M.A. Hanna Co.
Newlin “led PolyOne from a commodity company on the brink of disaster to what is now a specialty, innovative, industry leading compounder with its best years still to come,” said Hocevar, of Northcoast Research in Cleveland, in a March 12 email.
Industry consultant John Jones added that PolyOne “has made tremendous progress” under Newlin.
Jones, president of JRJ Inc. in Wyomissing, Pa., said that PolyOne “has aggressively grown through several large acquisitions without losing its focus on the specialty markets.”
In a March 12 conference call, Newlin said he “couldn’t be more proud of our specialty transformation and the employees who made it happen.” Speaking of Patterson, Newlin said “I’ve hired a lot of excellent leaders in three decades, and Bob [Patterson] is one of the best, if not the best hire I’ve ever made.”
Patterson added during the call that PolyOne’s “proven strategic direction will remain unchanged” under his leadership. He also said that acquisitions will continue to be “a very important part” of PolyOne’s growth.
“We’re always looking,” Patterson said. “We hope we can find other [acquisitions] to tuck into our specialty portfolio.”
When Newlin joined PolyOne, a manufacturing slowdown and internal challenges had driven PolyOne’s annual sales down from $3.1 billion to $2.2 billion. The firm also had shed almost 1,300 jobs by closing 20 plants.
Newlin took immediate action, selling businesses that were unprofitable or that did not fit the firm’s specialty profile. In one of those deals, PolyOne sold its minority stake in PVC resin maker Oxy Vinyls LP to partner Occidental Chemical Corp. for $261 million in 2007.
That move, combined with its 2011 sale of its stake in chlor-alkali maker SunBelt, reduced the firm’s exposure to commodity-type volatility.
The recession of 2008-09 caused Newlin to make some tough choices early in his PolyOne tenure. Between mid-2008 and the end of 2009, the firm closed an additional nine plants, eliminating more than 500 jobs. Salaries of the firm’s executives also were frozen in 2009.
At the same time, Newlin focused on paying down PolyOne’s large debt load and developing new products, before embarking on a string of specialty acquisitions. The firm made three major purchases under Newlin, starting with thermoplastic elastomer compounder GLS Corp. of McHenry, Ill., in late 2007.
In late 2011, PolyOne paid almost $500 million for ColorMatrix Inc. a maker of liquid colorants, additives and fluoropolymers in Berea, Ohio. Then in late 2012, the firm spent almost $400 million to buy Spartech Corp., a Clayton, Mo.-based maker of plastic sheet and compounds. That deal stood out, since it marked a move downstream into production of plastic products.
Other growth initiatives at PolyOne during Newlin’s time as CEO include:
• Buying a PVC compounding plant in Dongguan, China, in 2006.
• Opening a color concentrates plant in Kutno, Poland, in 2007.
• Buying Brazilian compounders and concentrate makers Uniplen and Polimaster in 2010-11.
• Opening a $3 million innovation center at its Avon Lake headquarters in 2011.
• Buying reinforced polymers and advanced composites maker Glasforms Inc. of Birmingham, Ala., for $34 million in 2012.
Financially, PolyOne’s fortunes also greatly improved under Newlin. For 2013, the firm posted sales of almost $3.8 billion and profit of more than $240 million.
The change also has been reflected in PolyOne’s per-share stock price. That price was near $9 when Newlin joined the firm, but sank to under $2 in the midst of the recession in 2009. Since that low point, the stock has made a remarkable recovery, closing at $36.75 on March 13.
Patterson joined PolyOne in 2008 as senior vice president and chief financial officer He also directly oversaw PolyOne’s growth initiatives in Asia, leading to record profitability in 2013. In 2012, he was promoted to his current role.
Prior to joining PolyOne, Patterson held leadership positions at aluminum firm Novelis Inc. of Atlanta and Charlotte, N.C.-based industrial manufacturer SPX Corp.
Newlin said now is “the perfect time” for him to retire, “with the company in the best position ever, with a capable leader ready to take the reins.”
He added that he had personal reasons for making the move.
“I’ve been working since I was 10 years old,” Newlin said. “I’ve got some personal goals I’m going to pursue. … I’ll spend some time speaking and in the classroom … and if I have any spare time I might take up the game of golf.”