Vertis Communications said yesterday that it chose Michael T. DuBose as its new chairman and chief executive officer because of his experience in turning around companies in struggling industries.
Baltimore-based Vertis, which is owned by an investor group led by Thomas H. Lee Co. and Evercore Partners, is heavily in debt from a leveraged buyout last year. It also is trying to better compete in an advertising environment that is moving away from traditional methods such as newspapers and television.
"We have really struggled to find ... improvement in the profitability of the company over the last few years, and that has really brought us to the decision to bring Mike on board at this time," said Soren L. Oberg, managing director of Thomas H. Lee Partners and a Vertis director.
With net sales of about $1.5 billion last year, Vertis employs 6,000 nationwide and 100 locally. The company is one of the largest providers of advertising products and services, including newspaper inserts such as coupons, television guides and Sunday comics. It also provides other services such as consumer research and direct mail.
But it has had financial difficulties. Third-quarter revenue fell 4 percent to $352.2 million, compared with $367 million in the third quarter of last year. The company reported a net loss in the third quarter of $18.1 million, compared with a net loss of $24.6 million in the third quarter last year.
DuBose was most recently a senior adviser to Los Angeles investment firm Aurora Capital and chairman of Anthony International, which sells displays to market products.
From 1998 to last year, he served as chairman and chief executive officer of Aftermarket Technology, an Illinois remanufacturer of automotive drivetrain products. He was also CEO and chairman of Grimes Aerospace Co. and held executive positions at SAIC, General Instrument and General Electric Co.
Aftermarket Technology lost 39 cents a share when DuBose took over in 1998, and it earned $1.44 share when he left. The company had a net loss of $7.82 million in 1998 and it earned $31.01 million last year.
The changes came by improving delivery time, eliminating floor space and reducing labor costs as well as focusing on customer and employee feedback, according to Industry Week, a trade publication.
"He was really able to transform these businesses and find growth even though there may have been some challenging financial circumstances surrounding the company," Oberg said.
DuBose said he would take the next few months to come up with a strategy for the company, but indicated that it would be similar to what he has done at other companies.
"I fully understand the difficult industry issues we are facing at Vertis," he said. "I think that in this environment there is room for growth."
When questioned by analysts about cost reductions, DuBose left the door open.
"I think there are always opportunities for additional efficiencies, he said.
He added that efficiencies included not only cost reductions, but improvement in such things as quality and on-time delivery.
Vertis announced Monday that it had hired DuBose. He replaces Dean D. Durbin, who was CEO for 10 months and president since November 2004. As part of the management shake-up, Don Roland stepped down as chairman, but he will remain on as a member of the board of directors.
Company executives said they had been talking with DuBose for the past 18 months, but that he wasn't available to take on a large role with the company. Talks resumed during the past week.
"We obviously continue to be very supportive and optimistic about the business," Oberg said. "This is a reflection of our continued activity in trying to find value here in this company."