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Thursday, Mar 28, 2024

Mystery Surrounds CEO Exit From Real Industry

The reasons behind the unexpected resignation of the chief executive at Real Industry Inc. remain murky, according to analysts who follow the company. Craig Bouchard stepped down late last month as the top executive of the Sherman Oaks investment firm and has been replaced by Kyle Ross, the chief financial officer. Bouchard also served as chairman, a position that board member William Hall was elected to fill. Hall said that Bouchard and the board agreed the time was right for a leadership transition now that the integration of Real Alloy, an independent aluminum recycler in Cleveland acquired last year, has been completed. “Craig has been instrumental in leading Real Industry’s growth and development as a Nasdaq-listed public company, and we thank him for his leadership and dedication,” Hall said in a prepared statement. Real Industries had been known as Signature Group Holdings Inc. until purchasing Real Alloy, which processes scrap aluminum for use in the automotive, aerospace, beverage packaging and construction industries. Analyst Daniel Moore, director of research at CJS Securities Inc., in White Plains, N.Y., said in a research note on Aug. 23 that during a conference call to discuss the management changes, the reasons for Bouchard’s departure were “left purposefully unanswered.” He added that it was clear there may have been some strategic disagreement between Bouchard and the Real board. “However, it is clear that the company is in strong condition as the remaining management team and the operating strategy remains intact,” Moore wrote in the note. Investors did not take the news well, as the share price dropped 10 percent the day of the announcement to $7.33 from $8.16 a share. The board will not search for a permanent chief executive and will instead look for a replacement for Ross as chief financial officer. Ross played a leading role in the due diligence and financing of the Real Alloy acquisition and in its integration into Real Industry’s operations. Bouchard’s exit followed by two weeks the release of the company’s quarterly financial report. The company reported on Aug. 9 a net loss of $1.5 million (-7 cents a share) for the quarter ending June 30, compared with a net loss of $10.9 million (-42 cents) in the same period a year earlier. Revenue decreased 13 percent to $321 million. In his research note, Moore said that while Real Industry is in a tough operating environment, its largest customers – rolling mills and automakers – were reasonably healthy. Underappreciated tailwinds, including increased volumes at Real Alloy as the customers use more recycled aluminum, could make for a strong 2017, he concluded. “Meanwhile, auto-related capacity at rolling mills is just starting to come online, which we believe could prove to be another catalyst for growth next year,” Moore wrote.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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