In business, as in life, sometimes it just comes down to numbers. That's particularly true when profits, which by some standards may seem healthy, don't match up to the expectations of the owners.
Of course, numbers can mean different things to different parties, and can be used to tell different tales, depending on who is handling the narrative.
Hexpol A.B., particularly during recent months, has been a fascinating company when it comes to looking at the numbers. The Swedish firm derived 93 percent of its $1.64 billion in 2019 sales from custom compounding, with the remainder from its much smaller engineered products unit. And despite its European base, the world's top custom mixer gained nearly 60 percent of its revenues in the Americas.
To call Hexpol an acquisitive-minded company would be a genuine understatement. It has made a string of purchases, both big and small, going back years. Just last year, it pulled the trigger on a deal to bring in Preferred Compounding, which was the No. 2 mixer in North America with annual sales of $240 million.
Prior to that, it paid more than $190 million in 2018 for an 80-percent share of Italy's Mesgo Group, a mixer that had yearly revenues of roughly $115 million. Later that year, it paid $49 million for Kirkhill Rubber in the U.S., a firm that boasted $46 million in sales and capabilities in silicone and perfluoroelastomers.
When the Preferred deal was sealed last July, it was Ken Bloom, that firm's CEO, who saw that the numbers were not on his side, as the business only needed one top executive in North America. Having been involved with three private equity owners during his tenure at Preferred, Bloom knew that was a possibility and he was fine with leaving the organization and rubber industry behind.
A mere five months later, however, the numbers turned in his favor, as Tracy Garrison left as president of Hexpol Compounding Americas for another job. Hexpol A.B. CEO Mikael Fryklund contacted Bloom, setting off a quick chain of events that put Bloom in Garrison's job effective Jan. 1.
Now, less than two months into the New Year, it was Fryklund's turn to see the numbers turn against him. On Feb. 14, Hexpol released a statement saying that the company and Fryklund "decided to part ways," with the CEO on the job less than three years.
The reason was straightforward—it was all in the numbers.
Board Chairman Georg Brunstam said in his statement that several circumstances led to the move, but the pertinent part read: "The development of the group, mainly regarding sales growth and growth of results, which unfortunately have not met our expectations."
The departure followed just 15 days after the release of Hexpol's 2019 financial results. With Fryklund providing the commentary, it appeared all was well with the publicly held Swedish firm.
His statement closed: "Operating cash flow was strong and increased by 29 percent. Our financial position remains strong and we are well equipped for further expansion."
But remember, with numbers, the narrative is easily manipulated, and those who hold the purse strings always make the final call.