In business, price and quality aren't everything.
A company also has to deliver the goods on time.
When Stephen Newlin became CEO atPolyOne (
) in late February 2006, the company's on-time delivery rate was
81%. The corporate culture had a attitude of that's good
Although 81% was in line with the industry average, Newlin
challenged the company to aim for 95%.
In his 2011 letter to shareholders, Newlin reported that
on-time delivery was now at 94%. He added that it was achieved
via operational planning and efficiencies, not by stockpiling
PolyOne's stock is up about 90% during Newlin's reign vs. 36%
for the Nasdaq and 14% for the S&P 500.
The stock is in IBD's 85-85 index.
The company provides specialized polymer materials for the
plastics industry. The Chemicals-Plastics industry group was No.
7 of 197 industry groups as of Monday's IBD. PolyOne has an EPS
Rating of 89, the best in the group.
Based in Ohio, PolyOne has business in the Americas, Europe
Europe has posed some problems. In the second quarter, volumes
fell 6.4% because of weak demand on the Continent. Meanwhile,
unfavorable currency exchange rates dented sales 2.2%.
Overall, company sales grew 3%, the smallest gain since late
The Europe effect might've been worse if not for actions taken
in Q1. The company began hedging to lessen the impact of currency
In December 2011, the company acquired ColorMatrix, a
manufacturer of performance-enhancing additives for plastic
products and colorants.
ColorMatrix has higher margins than PolyOne's other segments.
In Q2, after-tax margin was 4.2%, the highest in at least 17
quarters. Pretax margin was 5.1% last year, the highest in at
least nine years.
Return on equity, a gauge of financial efficiency, was
In February, PolyOne announced it was increasing its quarterly
dividend from 4 cents a share to 5 cents a share. The annualized
dividend yield is 1.2%.