Myles Odaniell, named Jan. 3 as Spartech Corp.'s new president and chief executive officer, has the unenviable job of turning a profit amid a dramatic spate of setbacks.
Those include plummeting share prices since July - when former CEO George Abd resigned for personal reasons - as well as rising resin costs and decreased sales.
In September, Spartech's biggest single investor called for the Clayton, Mo., company to hire a financial adviser as a precursor to a possible sale.
During his first day on the job, Odaniell, 48, sought to reassure investors and employees that the $1.5 billion thermoplastic sheeting, polymeric compounds/concentrates and engineered products maker has long-term growth potential.
``There's no shortage of opportunities for this company,'' he said. ``But we are going to need to make sure we get focused and that we focus on the best opportunities.''
Those include possibly expanding Spartech's packaging line and global presence, he said.
The company has facilities throughout North America and Europe. A reorganization on Abd's watch shut down seven U.S. and Canadian plants, with plans to consolidate three more U.S. plants into one factory in Greenville, Ohio.
Spartech stock on Dec. 17 sunk to a 52-week low of $12.68 per share, down from a 52-week high of $30.54 on March 23. The stock closed Jan. 3 at $13.73 per share.
The company reported fourth-quarter 2007 profits of about $1.3 million, or 4 cents per share, an 85 percent decrease from fourth-quarter 2006 profits of $8.6 million, or 27 cents per share.
For the fiscal year, Spartech reported revenue fell to $1.45 billion from $1.49 billion in 2006.
Odaniell succeeds interim CEO Randy C. Martin, who will return to his duties as chief financial officer.
In announcing the hiring of a new CEO, Spartech board Chairman Ralph Andy emphasized Odaniell's 25 years in the specialty chemicals and plastics businesses.
``I expect that shareholders, customers and employees will benefit from his experience,'' Andy said.
>From 2003 to 2006, Odaniell was executive vice president of specialty chemicals at Middlebury, Conn.-based Chemtura Corp. (formerly Crompton Corp.). He left during a corporate reorganization.
Before that, he worked for 21 years at Cytec Industries, serving as president of coatings and performance chemicals and president of the company's Latin American division.
Odaniell also served on the board of Cyro Industries, a manufacturer of acrylic sheet products and polymers. He will be a member of the board at Spartech.
During a Jan. 3 conference call with investors, Odaniell gave few specifics of his vision for Spartech.
``The company needs to focus on transitioning to higher value segments and higher value production,'' he said. ``I need to get to that fairly early in the process.''
Odaniell said during the next six months, he will visit Spartech's plants and discuss with the board options for improving the company's top-line financial performance.
One of the call participants was Jeffrey Bronchick, principal of Reed, Conner & Birdwell LLC. The Los Angeles investment firm - which holds nearly 10 percent of Spartech's stock - in September filed a letter with the Securities and Exchange Commission that blasted Spartech's recent purchase of PET sheet extruder and thermoformer Creative Forming Inc.
While wishing Odaniell well in his new job, Bronchick expressed doubt about a turnaround at Spartech.
``The graveyard is littered with the bodies of CEOs who'd like to move up the profitability food chain,'' he said.
Analyst Ben Johnson of Morningstar Inc. in Chicago said Odaniell certainly picked a challenging position - especially given recent slowdowns in the housing and automotive industries that Spartech serves.
``Based on his resume, this is about as far down the value chain as he's ever come,'' Johnson said.
Still, Johnson gives Spartech an above-average risk rating.
Mike Harrison, an analyst with Chicago-based First Analysis Securities Corp., says many of Spartech's problems stem from company officials failing to assess how expensive the Greenville consolidation would be.
``I don't think they're a broken company or headed for a big mess,'' he said. ``I think [Odaniell] has got to focus on getting their internal issues ironed out and then he's going focus on their top line.''
Harrison predicted Spartech share prices will remain low for the next two quarters.
Odaniell said he's up to the challenge of making the company more cost-effective and competitive.
``Spartech has a solid foundation and tremendous opportunity to grow and deliver enhanced shareholder returns,'' he said.