Fabrice Taylor, CFA, publishes the President's Club investment letter. His letter and The Globe and Mail have a distribution agreement.
CEO-of-the-year awards are typically given to people who run the hottest and flashiest companies, usually accompanied by a high-flying stock. They're often, not coincidentally, contrarian indicators for investors because their companies' shares tend not to do well after they accept their honours.
If these prizes were handed out to leaders who quietly go about running their businesses by focusing on generating cash, paying attention to detail and allocating capital in an intelligent way, Greg Yull would have to be at the top of the nominees' list.
Mr. Yull runs Intertape Polymer Group, now based in Montreal and Sarasota, Fla., a company readers of this column know as it was recommended in this space three years ago, delivering an almost 1,000-per-cent return to anyone who took the advice.
Credit for this extraordinary turnaround story lies almost entirely with the CEO.
Intertape was founded by Mr. Yull's father, Melbourne Yull, in 1981 to make mundane products such as duct tape, liners and lumber wrap. In the 1990s, it was a success story, and emboldened by this success, with the encouragement of banks, the company began acquiring other factories with borrowed money. It became a stock-market darling with the stock touching $45 a share.
But the strategy left the balance sheet very exposed to a multitude of risks, any one of which alone could have caused major problems: commodity prices, interest rates, competition and others.
By the time Mr. Yull took the reins from his father in 2010, the company was not just facing one of these risks but all of them, which were compounded by the Great Recession. At one point, the company spurned a takeover offer only to watch the stock sink to about a quarter of that bid.
Eventually the stock sank below $1 as investors looked at the debt and wrote off the company's chances of survival.
When I had my first conversation with Mr. Yull in 2011, I was struck by how calm he was in the face of crushing adversity. Because Intertape doesn't have a powerful brand name, it's a price taker in items like tape, meaning it has to price its product at a significant discount to competitors such as 3M, which wasn't budging on pricing at all.
Meanwhile, commodity prices were rising rapidly, and because Intertape's costs include lots of raw materials, its profit margins were compressing at an alarming rate. That would be bad enough in good times but the company had a lot of debt it needed to service from its operating profits.
At the same time, Mr. Yull was striving to shutter inefficient plants and find money to innovate and research new products to stay competitive. The stress of it all had to be intense, especially because Mr. Yull's family has the bulk of their wealth in the company.
The CEO managed to keep his creditors calm, restructure the business, come up with new products to boost the company margins and survive long enough to be able to raise prices after 3M did, when conditions permitted.
The most telling thing Mr. Yull said to me back then as he outlined his turnaround plan was "I don't care if my revenues drop as long as my profits go up."
Many CEOs would have tried to increase revenue with price cuts and aggressive expansion into areas they have no business competing in (a good example: BlackBerry's attempts a couple of years ago to fix its problems by trying to take on Apple in the consumer market).
Today, Intertape has paid off a lot of its debt and refinanced the rest, initiated a dividend that was recently increased by 50 per cent, bought back stock and made investors a bundle. And while revenues are scarcely higher than they were, the next step, including a new state-of-the-art plant in South Carolina, should see the top line grow somewhat at better profitability.
The easiest money has been made on this stock but I still own it and like it because I believe it has upside, both capital appreciation and a growing dividend, which is paid in U.S. dollars and therefore offers Canadian investors something of a hedge.
And while Mr. Yull will probably never win a CEO of the year award, he has my vote and that of many other investors who appreciate that the best leaders often toil away far from the spotlight.