Coveris' Masse focuses on unified culture among brands

Much of the past three years has been spent on creating a common culture and business approach at Coveris Holdings Corp.

With a lot of that work now finished at the plastic packaging company, Coveris is looking to take a more external approach to focus more on customers and push for higher earnings.

Owned by Boca Raton, Fla.-based Sun Capital Partners Inc., Coveris was created in 2013 through the combination of a handful of packaging companies owned by the private equity firm.

A major part of Gary Masse's job as CEO has been bringing all of the different operations together and creating a unified vision for the company.

“I think we started within the four walls [of the company] because we had to integrate and we also had to get our plants performing well. I would say our plants are performing pretty well today,” he said.

“There was a need to really get our plants and get our businesses integrated and aligned. And that allowed us now to turn to the customer and say, ‘ok, we're ready to take you on and we're ready to give you service like no one else can.' But I think it would have been a fake promise before,” he said.

While internal improvements have allowed the company to increase EBITDA margins from “10 percent-ish” three years ago to 12.5 to 13 percent these days, the company has a goal of increasing that number to 16.5 percent, the CEO said. “I think we're on a journey to get there.

“First 3 percent we got all through productivity and integrating the companies. The next piece is going to come through continued productivity, but growth, and that's why we're spending so much time on customer excellence,” Masse said.

While the company has been focused on making internal changes, the CEO said much of his time this year will be spent on improving the company's sales and the way the Coveris interacts with customers.

“We've performed very well driving EBITDA through productivity. I think we've done an exceptional job. I think we've done a nice job bringing our companies together and forming Coveris and creating a culture. Where I'm going to focus my time over the next 18 months is growing the top line and driving customer excellence,” he said in a recent interview.

“What you will see differently a year from now is much greater penetration at our key accounts,” he said. “A very focused approach on how we grow and which customers we grow with.”

While increasing sales is expected to help boost profits at Coveris, the company still sees ways to impact the bottom line through internal moves that remain.

That includes taking a close look at resources needed to change machinery from the manufacture of one product to the next. Those changeovers can last as long as eight hours, but Masse said studying the process and improving productivity can drastically cut that time.

With multiple production changes each month, the productivity improvements can quickly add up on each machine.

Combining into Coveris also has allowed the single company to gain better prices on resin purchases. “In the past year, we've found another nugget,” Masse said.

Coveris believes the firm can drastically cut the number of resin formulations needed for the company's wide range of products, a move that will take out both “cost and complexity,” the CEO said.

“We feel we can combine these resin formulations,” he said. “There's a certain amount we can combine quickly and not have to get approvals [from customers] and there's others that have to get customer approval. This is a nice project we will have for a couple or three years.”

The CEO believes that cutting the number of resin formations by 50 percent over time will result in a $10 million savings for the company. He said the company uses “thousands” of resin formulations.

Coveris typically shares productivity savings with its customers, so they will have a motivation to consider changes.

All of the work, whether be it on company culture, process improvements, customer engagement or resin formulation, is all pointed in one direction: improving profitability. That's important as the owners of Coveris will ultimately look for an exit strategy for their private equity investment.

Coveris, in the past, has talked about an initial public stock offering. And that's still a possibility.

“We've been keeping our options open. Obviously, we work in a private equity setting. So there's going to be an exit at some time of the private equity firm. And we're keeping our options open to go down an IPO or through a sale process. But I think our main focus has been to continue to do the right things to run the business well. And whether we do an IPO or a sale, it will be a really good business with a tremendous value for both Sun Capital and the next person that picks it up,” the CEO said.

While there's no specific date, Masse said there could be potential action regarding ownership over the next two to three years.