Bob DeCecco faced a daunting situation in early 2010 when he met with some New York hedge fund executives. DeCecco was there to ask for a $25 million investment in what was then a floundering Clearwater-based consumer products firm the fund had backed. It was an audacious request considering the firm, then called OmniReliant Holdings, had just ripped through more than $50 million of the fund's cash in three years with nary a profit.
A semi-retired financial services and technology executive in Sarasota, DeCecco essentially made a last-ditch effort to save OmniReliant. DeCecco, 43, had only run the company for two months, but he was confident he knew both what was wrong and how he could make it right.
The pitch worked. Sort of.
DeCecco got $5 million from the fund, and launched a turnaround endeavor with the cash infusion.
Now, less than two years later, that effort is on the cusp of some remarkable success. In fact, DeCecco says the firm, now called Infusion Brands, will likely make money in the fourth quarter — its first-ever profitable period.
Moreover, under DeCecco's leadership, Infusion went on a hiring spree. It now has 54 employees, including 36 who work out of the firm's 34,000-square-foot facility in a Clearwater business park. It's a big leap from two years ago, when OmniReliant had six employees.
“It wasn't just restarting a business,” says DeCecco. “We also had to solve a lot of the sins of the past.”
Those alleged sins, DeCecco says, include sour relationships with partners and vendors due to improper expectations; lawsuits that stemmed from bad decisions by the prior regime; and a failed conglomerate-style business model that relied on acquisitions without a coherent strategy.
At its core, the revamped company still sells consumer products, much like OmniReliant did. But little else is the same. Says DeCecco: “This is a turnaround in every sense of the word.”
Infusion's flagship product remains the Dual Saw, which uses patented technology that propels two blades to rotate in opposite directions at the same time. The Dual Saw rose to prominence a few years ago when well known Tampa-based TV products salesman Billy Mays pitched it on an infomercial. Mays died in 2009.
Dual Saw represents the bulk of Infusion Brand's sales. The company had $16.73 million in 2010 revenues, up 75% from $9.55 million in 2009, according to Securities and Exchange Commission filings.
Past Dual Saw, Infusion Brands is a business with multiple tentacles. One arm is its TV studio, one of the biggest on the Gulf Coast, where it rents out space for companies, including Publix and Tropical Smoothie, to shoot commercials. The TV studio is also where Infusion produces infomercials and live shopping events for its own products, like the Dual Saw, and other products it represents for a fee, but doesn't own.
Another key arm Infusion Brands has is a partnership with a manufacturing firm to design, test, assemble and sell a range of consumer goods, from fashion and beauty products to home cleaning supplies.
The tentacles present three business models, Infusion Chief Operating Officer Allen Clary says.
There's the direct-response model, which eliminates third-party sales options to sell straight to the consumer. Then there's the standard retail business model, which sells products through big-box stores, like Home Depot. And there's the live TV shopping model.
The three-tiered approach could either be an asset or stretch the company thin — a daily challenge that confronts Infusion Brand executives. “It's rare to have a company with a presence in all three of those areas,” Clary says.
Indeed, taken all together, DeCecco says Infusion Brands is a cross between a consumer products firm like Proctor & Gamble that builds brands, and a direct-to-consumer company like Amazon, that sells stuff.
“It's a great marriage,” DeCecco says, “if you can bring both together.”
Build a Business
That was the crux of the pitch DeCecco made to the hedge fund officials in New York in spring 2010.
DeCecco told the fund's executives he could save the company, but it would require a total do-over. The makeover would go from new board members and top executives down to when the firm's fiscal year begins and ends.
A patently optimistic fellow who was once the chief financial officer for self-help guru and motivational speaker Tony Robbins, DeCecco also outlined a bold — and potentially profitable — turnaround plan for the firm.
For starters, once Infusion can post six straight profitable quarters, DeCecco says he will take the company public again, this time with an IPO on the New York Stock Exchange. Infusion Brands is currently traded on the Pink Sheets exchange, where the stock is worth one or two pennies a share.
DeCecco owns about 5% of the 179 million total Infusion Brands shares, according to SEC filings. The hedge fund owns a bulk of the other shares.
The company plans to issue incentive options after its next capital raise, DeCecco says, and at that point he will likely hold a 10% ownership stake in the firm.
DeCecco considers the current low share price and tiny market capitalization, $2.68 million, a starting point, not a negative. “I'm in the business of building a company,” he says, “not a stock.”
On the building a company part, Infusion recently grew on an international scale. It opened a sales and marketing office in Taiwan earlier this summer that now has 10 employees. And in a deal that closed in May, Infusion bought Home Shopping Express, a Spain-based consumer products firm that has since been renamed Infusion Brands Europe.
The former Home Shopping Express held a loss of $1.5 million in accounts payable and accrued liabilities on its most recent balance sheet, an SEC filing on the deal shows. But Infusion bought the business because it holds the intellectual property for Dual Saw in most of Europe, not for its cash flow.
Targeted deals like the one for Home Shopping Express show why the DeCecco-led turnaround makes the old days of OmniReliant seem like a world away.
DeCecco says OmniReliant spent millions of dollars a month for years and was down to its last $700,000 when he got there in January 2010 — initially to consult on an acquisition.
OmniReliant was founded in 2005 by a group of entrepreneurs. The co-founders include Kevin Harrington, a Tampa-based infomercial entrepreneur who is now part of the investors on the ABC TV show Shark Tank. Harrington was previously CEO of HSN Direct International.
But under different leadership in 2007, OmniReliant started to spend gobs of money, DeCecco says, in what he calls a misguided attempt to build a holding company of disparate entities. The companies OmniReliant bought did cool and innovative stuff, he says, but had no business being lumped together.
“It was such a disaster,” says DeCecco. “It was not fixable the way it was. It needed a new strategy.”
With the strategy execution under way, DeCecco plans to ask the hedge fund for another investment later this summer. He seeks at least $5 million.
The money, says DeCecco, will go for three things: general operating capital to cultivate sustainability; funds to support a new Dual Saw marketing campaign for early 2012; and capital to boost the balance sheet, to make bank financing more viable.
The last point is key, says DeCecco, because the company has been using purchase order and accounts receivable financing for capital, which can be more expensive than traditional bank financing. It's a common financing tool for startups with an experienced management team, but little record of profitability in the new entity.
“This financing has allowed us to grow our sales without depending on internal capital,” says DeCecco. “It has been priceless in a tough economy.”
DeCecco learned his toughness in business at an early age. A native of Lawrence, Mass., a small town north of Boston, DeCecco was actually headed to plumber's training school when he was a teenager. But he eventually gave up that track to focus on a career in accounting.
Now a CPA, DeCecco's first job in the field was with PricewaterhouseCoopers in Boston, where he worked with technology and financial services firms. After he moved to San Diego, for the stint as CFO for Tony Robbins, DeCecco relocated to the Gulf Coast.
He ultimately started several successful businesses in Sarasota and Tampa. One was a software firm he and his partners sold to Adobe Systems for more than $20 million. Another was a mortgage firm he sold just before the residential real estate boom cooled in summer 2006.
DeCecco hopes his diverse career will be an asset at Infusion Brands. “We are not a live shopping company, and we don't want to be,” says DeCecco. “We are interested in being a global sales company.”