Two Execs Reshaping Holding Company
By Robbie Neiswanger
Published July 2, 2017
It didn’t take long for Jay Puchir and Charles Rateliff to realize they had a similar vision for Rogers-based Ecoark Holdings Inc.
Puchir, the new chief executive officer, began laying out his plans and needed a chief financial officer. Rateliff, who was retired after a 25-year career at Wal-Mart Stores Inc., was a member of Ecoark’s board of directors but began considering a return to full-time work.
“Charles said, ‘I think I might like to do this if we were going to go toward the Berkshire [Hathaway] model,'” Puchir said, referring to Warren Buffett’s holding company. “I picked up my 90-day plan and showed it to him, and it said ‘Berkshire model’ right on there. That was when the light bulb went off.”
They decided to team up and over the past three months have been reshaping the company, which was founded by Randy May in 2011. May stepped down as chief executive officer earlier this year, and Puchir, who joined the company as director of finance in December 2016, moved into the role. May remains board chairman.
Ecoark’s mission, according to Puchir, is to allocate capital for acquisitions and fund its existing businesses that have the greatest opportunity to produce long-term value for shareholders. He described the overall strategy as a “modified Berkshire model,” adopting a decentralized approach to managing companies and being open to an array of targets.
One key step has been the development of a merger and acquisition team within Ecoark to identify and evaluate potential businesses to bring into the fold.
“What we don’t want to do is exclude any potential possibilities of what might be a good return for shareholders,” Rateliff said. “So we want to be active.”
Currently, Ecoark has a portfolio of businesses that provide technology and services designed to make companies more sustainable without compromising profitability.
Zest Labs, based in San Jose, Calif., has generated the most enthusiasm and is Ecoark’s core subsidiary. The company’s technology tracks perishable foods with real-time analytics and is able to route those items through the supply chain to maintain as much freshness as possible. The technology is designed to help eliminate food waste and has plenty of market potential, according to Rateliff.
Ecoark recently purchased 440Labs, the software development arm for Zest, and sold a company called Eco3D for about $4.8 million. The firm’s other subsidiaries are Pioneer Products, Sable Polymer Solutions and Magnolia Solar.
“We’re not going to be standing over their shoulder,” Puchir said. “But we’re also going to be here to provide them guidance and capital and check in on their budget once a month.”
Over the past four months, Ecoark has raised $18 million with two institutional investors, and Puchir said the company has “well over” $10 million in cash on its books. He also added that the company also has about $60 million of equity it could put toward any potential acquisitions.
Ecoark completed its initial public offering last year, and shares of company stock are trading on the over-the-counter market. Ecoark has completed its application for uplisting to the Nasdaq and is awaiting approval from the U.S. Securities and Exchange Commission.
“It would open up a whole new realm of investors that can invest in the fund,” Puchir said.
The company continues to fill out its team. Last week, Ecoark hired Stephen Dacus as the company’s general counsel and his addition will help Ecoark “efficiently manage the deal structuring and vetting process for multiple acquisition targets simultaneously,” according to Puchir.
His addition comes after the company added former Wal-Mart chief human resource officer Susan Chambers and former Dillard’s controller Steven Nelson to its eight-member board in April.
The additions have been noticed. Clete Brewer, managing partner of Bentonville’s New Road Capital Partners, said he paid attention when Rateliff came out of retirement to become CFO.
“The more capital available in a market to both acquire and invest in growth companies is better for everyone,” Brewer said. “A rising tide lifts all boats. So we welcome that here and love to see more of it. I think it’s all positive for the area, the ecosystem.”
While most of the company’s current subsidiaries aren’t based in Northwest Arkansas, Puchir and Rateliff acknowledged the possibilities in a region that has produced Fortune 500 companies like Wal-Mart, Tyson Foods and J.B. Hunt. They believe there’s potential to help foster more successful businesses as well, which is why they’ve teamed up to lead Ecoark.
“I left a very strong career and career path,” said Puchir, who was previously in a CFO development program with HCA Holdings. “Charles came out of retirement after a long, storied career as well. The opportunity to work together, the opportunity to work with the company and the opportunity in Northwest Arkansas is just too great to pass up.”
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