ICO Inc. of Houston is working hard to establish its new identity as a maker of proprietary powder concentrates for the rotomolding market.
``Rotomolding was really our strength, so that's where we needed to be,'' ICO Chief Executive Officer Tim Gollin said in a March 25 interview in Houston.
``We're focusing on a market that others had passed by,'' Gollin added. ``But we understand the needs of rotomolders, and now our focus is tied with theirs.''
ICO wrapped up a tumultuous 2002, during which it sold its oilfield business to Varco International Inc. for $137 million in a move designed to pay off debt and refocus the company. The sale allowed publicly held ICO to pay off $105 million in senior bank notes. The firm still owes $10 million on senior notes and has another $22 million in long-term debt, but is in a much better position than it was a year ago, Gollin said.
Sales in ICO's first quarter, ended Dec. 31, were $45.2 million, up about 6 percent vs. the first quarter of fiscal 2002. ICO posted 2002 profit of almost $28 million, a sizable improvement over the loss of more than $13 million it recorded the previous year.
After selling the oilfields unit and closing or selling some smaller operations, ICO now operates 21 locations in the United States, Europe and Asia. ICO employs about 900, including 40 at its Houston headquarters. In addition to producing rotomolding compounds, ICO does a good deal of business in size reduction and grinding.
ICO also has tripled its research and development budget and doubled that staff in the past 18 months. The firm operates R&D labs in Rushden, England; La Porte, Texas; and Auckland, New Zealand.
The increased focus on R&D will result in an average of nine new grades of rotomolding compounds being commercialized each month between February 2003 and April 2004, according to marketing and planning manager Richard Neff. Included in those offerings are new grades for toys and kayaks. The toy grades were commercialized in March, while the kayak grades are being commercialized in April.
ICO also is focused on producing small lots more economically. The firm currently can turn out lots of 5,000 pounds or less, but wants to be able to handle lots of 1,000 pounds or less by the end of the year.
The firm also has been active on other fronts, such as:
* Opening of a location in Brazil late last year.
* Forging a product development deal with additives maker Ciba Specialty Chemicals Inc. in mid-2002. ICO already has commercialized ultraviolet-light-resistant and antimicrobial concentrates that were developed via the Ciba alliance.
* Installing seven or eight new extrusion lines at various locations during its current fiscal year.
* Making its product slate available worldwide, instead of having some products only available on a regional basis.
A stable 2003 would be welcome at ICO, where a proxy fight led by Gollin and other investors in early 2001 led to the mid-2002 ouster of the Pacholder family, which had controlled the firm for nearly 20 years. Travis Street Partners - a Houston investment group that includes Gollin - had accused the Pacholders of poor management.
At one point, Travis Street Partners had planned to buy ICO for $3.10 per share. Those plans were shelved as ICO's per-share stock price dropped from $2.40 in August 2001 to $1.20 by the end of that year. ICO stock has bounced around between $1.10 and $1.80 since then.
Travis Street remains one of ICO's largest shareholders, with a stake of about 10 percent.