A Big Reach

A Big Reach

COMPANIES by Mark Gordon | Managing Editor

A small Sarasota company has had big sales - it recently surpassed $20 million in annual revenues - by doing lots of little things well. Its forte is quickly adapting to change.

Phil Nace is knocking down the theory that there aren't any Gulf Coast-based international conglomerates - one ink jet toner, jumbo jet component and energy drink at a time.

Those are just a few of the hundreds of products that Nace's company, Sarasota-based Esprix Technologies, manufactures, markets and sells in a bevy of industries, from printing and digital imaging to auto-manufacturing to pharmaceuticals. The company, essentially a chemistry firm, has one patent, with three others for new technologies filed in the last six months.

Esprix's clients include some of the Fortune 500's most prominent members, such as DuPont, Xerox, Kodak, 3M, Ford and Toyota. Esprix is global, too: In addition to its two-story headquarters in an industrial area near the Sarasota Bradenton International Airport, the company has offices in China, Germany, India and Japan. It has 18 employees in Sarasota, and another 10 in its four foreign offices.

"We're a little company," says Nace, "with a lot of reach."

In addition to selling a variety of chemistry-related products for a plethora of businesses, the company, which celebrated its 25th anniversary earlier this year, has also been steadily growing its revenues. It was a Deloitte and Touche Fast 50 company in 1999 and 2000, reaching $15 million in revenues in the latter year.

Esprix passed the $20 million mark in 2006, finishing the year with $21 million, an 11% growth from the $19 million it had in 2005.

The growth rate slowed in 2006 from the previous year, Nace says, because nearly $2 million in sales "vaporized" when a customer reneged on a series of ink-jet chemistry related purchases. Besides losing the sales, the ongoing dispute, which is currently being litigated in federal court, cost Esprix more in inventory backlogs and in higher financing costs. Nace declined to name the customer.

The company is projecting more growth in 2007, with at least $17 million in domestic sales. Nace predicts the international offices will grow as well, buoyed in part by Oxiport, a powdered energy drink component that Esprix technicians say will improve endurance by increasing the rate of oxygen through a user's body. Nace would like to market the product in the U.S. someday, too.

Overall, says Nace: "I feel confident we are in the right place at the right time."

Going solo

Although Nace doesn't specifically use the word conglomerate when describing the business he founded in 1982, the company can be traced to one of the world's biggest true conglomerates, Wichita, Kan.-based Koch Industries. It was there that Nace, a New York City native, began working in chemistry and other related technologies.

The good part about Koch, Nace says, was that even though it was big, it tried hard to maintain its entrepreneurial spirit. It also was willing to back ideas with money, utilizing its vast resources.

But Nace's department hit a ceiling, as it got lost in the Koch crowd. "We were so small," Nace says, "we were the pimple on the hide of the elephant."

So Nace ventured out on his own. The next 10 years were a growing and learning phase, as he merged with some other companies, including a publicly held British firm. That experience, having to respond to partners and shareholders, "drove me crazy," Nace says, so he ultimately settled on running the business on his own, from its Massachusetts headquarters.

A series of tax hikes and other business fees forced Nace out of New England, though, and he moved Esprix to the Sarasota-area in 1993.

The company grew steadily over the next decade, focusing on making chemicals to aid the production of diazo, a paper and film component used for making architectural blue prints and engineering design plans, among other products. It also began looking into using new chemicals to enter other industries, such as car manufacturing and drug research and production.

After the back-to-back Fast 50 awards, the company's revenues took a dive, directly related to what Nace calls the disappearance of the diazo industry, which at its peak was good for almost $10 million a year in Esprix sales. Nace says the company adjusted to the industry change quickly, and now makes chemicals that support a variety of the newer inkjet systems on the market. "If you're making an image at home or at your business," Nace says, "I want to be a part of that business."

The business plan adjustment worked: By 2004, revenues were back up to $15 million.

Costly challenges

Besides adapting to new markets, Nace has led a cultural shift at Esprix. In the beginning, the company was more of a middleman, marketing products from one customer to another. Now it creates its own products. Those range from the printing components to custom-made polymers used in airplane parts to compounds used to help drug manufacturers go from the laboratory to the marketplace.

The biggest challenge Nace faces is figuring out what products he wants his staff to focus on over others, a task that grows with the rapid changes in technology. And it's a costly challenge, as equipment is expensive: Some laboratory equipment costs as much as $300,000; an extruder used for creating long objects for printing work, for example, cost $85,000. Even small printer-testing devices can cost as much as $9,000.

To make back some of the expenses, Nace had previously rented out space not being used in the Esprix building. The quirky tenant list included a public relations firm and a federal and state drug task force. But as the company grew, Nace needed more of the space for testing and manufacturing; only one non-Esprix tenant remains in the building.

Nace also expects the company to grow its foreign operations, especially as India and China become more technology-savvy. "We have to follow the business," says Nace, "and a lot of that is outside the U.S."

REVIEW SUMMARY

Company. Esprix Technologies

Industry. Chemicals, manufacturing

Key. The company owns one patent with three more pending and has diversified into several industries during its 25-year existence. Nimbleness is critical.