Leading Through Instability | Budgeting, Tech, & Human Capital

Program Recap: June 15, 2023

On Thursday, June 15th the CFO Forum Atlanta and Emory's Goizueta Business School hosted an enlightening breakfast. We were joined by Karla Ahlert, CFO of RaceTrac, David Rumph, EVP and Chief Strategy and Corporate Finance Officer of Global Payments, and Michael Schmit, CFO and Corporate Secretary of RPC Inc. and Marine Products Corp. Inc. The session was moderated by Grant Thornton's Johnny Lee, Principal & National Practice Leader, Forensic Technology. Key takeaways and topics can be found below:

Managing Liquidity, Capital, and Risk:

Karla: We are teaching employees that their analysis needs to change as it’s a whole new world of hurdles with these higher interest rates. They are so accustomed to rates being low. Our biggest pain is constant education & reeducation of our board, risk, and audit committee, too. Luckily, RaceTrac hedged 85% of its debt years ago when things were good, and fortunately, business is good.

David: We must be out on our front foot, mitigate risk, and be prepared ahead of time.

Mike: In RPC’s industry, investment in new equipment, such as pressure pumping fleets, can take over a year to receive due to current supply chain issues, so we must invest cautiously. For example, we may have to make a $60M order for a new pressure pumping fleet, but the market dynamics could change in a year, and we may not need it once the supply chain catches up. Neither company has debt, and both are holding cash, in hopes of continuing to invest in new equipment or possibly buying other companies, or alternatively returning capital to shareholders.

On the Marine Products side, boating was very popular during and shortly after COVID which helped drive sales, but we must be strategic with our cash given economic uncertainty.

Cost Management & Cost Cutting:

Karla: We are not cutting costs; we are investing in things that will drive growth and value. We see results of upgraded talent and technology – but for RaceTrac has been an investment. We scrutinize new hires and salary ranges, increases are non-stop, but we must be competitive. We are constantly meeting with leadership to discuss comp and how we keep the right talent and attract others.

Mike: We are currently investing in IT & Tech (Solar Panels, Large Warehouses, etc.). We’ve experienced natural attrition, without having to hire back yet.

David: Our industry is tied to consumer spending. We enacted a small workforce reduction at the beginning of the year based on economic uncertainty. We’ve been able to augment that reduction with some continued labor arbitrage opportunities as we balance between higher and lower cost locations. . We recently completed the acquisition of a competitor which provides tailwinds from additional scale.

Managing Talent, Succession Planning:

Mike: On the corporate & finance side we have low turnover. It’s a tenured team and people-focused. Corporate is lean.

Karla: We aren’t focused on succession planning now, but HR is certainly driving those discussions and disciplining everyone about the risk of talent leaving.

David: We are constantly evaluating employees. Global Payments is run lean, so empowering leaders to have a voice is important. We implemented a mentorship program last year and we’ve seen that program roughly double this year – having junior/senior connections is key.

Measuring Employee Satisfaction:

Mike: We don’t measure it well enough, but we have extremely low turnover. I believe we have sent employee surveys in the past, but employee satisfaction is diffciult to measure.

Although, I believe with the current economic uncertainty, as people get concerned about the future they may be more reluctant to leave their current company.

Karla: Our president established small group “Listening Tours” made up of directors and executive directions with 6-8 people. This created an open and honest forum for feedback. We also conduct exit interviews and truly focus on themes of those exit interviews.

David: Since COVID we haven’t conducted a single, global feedback survey – feedback has been more functionally or geographically driven. Global Payments is a results-oriented organization, and we hold our employees to high standards but try to make them feel valued.

Building & Maintaining Culture and CFOs Role:

Karla: I was intimidated by the CFO role originally and making multi-million-dollar decisions. The reality is I don’t make many decisions. However, in terms of building a culture, and leadership team, I have great influence and provide non-bias feedback. RaceTrac’s former CFO was very risk-oriented. In the culture of a company that’s trying to grow, we must also focus on the real world and business side.

David: CFOs historically had the “Dr. No” role and told business leaders not to spend money. Our job should be to figure out where to spend to get the most value. The finance team must collectively partner with the business. Growing requires investments.

Do you have a different approach and each company? @Mike Schmit

Mike: It’s very different. On the RPC side, field finance employees don’t have much insight on a daily basis what is going on at corporate, but we have quarterly update calls with company-wide updates and where we review the company and team’s vision and priorities. We’ve also created a knowledge-sharing process to keep our employees informed.

On the Marine Products side, it’s very centralized with five plants in the same location, so communication is much easier. I believe it always comes back to open communication and starting a back-and-forth dialogue.

Primary Technology Investments:

David: We are very acquisitive. Unified systems and reporting are important. We must leverage technology to automate and consolidate efficiently which forces discipline up front. Constantly investing and setting clear expectations will naturally mitigate risk.

Acquisition & Integration:

David: We focus on lessons learned. We have an M&A playbook and tweak it each time. It takes conviction to make these decisions. We determine up front which pieces of a specific acquisition we want to fully integrate versus which pieces we may want to maintain some autonomy. Support from our CEO & ELT is key, and the alignment is very clear.

Karla: RaceTrac is focused on our retail locations and the labor challenges and rising costs. The underlying theme around our technology investments are those that help us automate things inside the stores so that we can optimize labor and maximize revenue. The focus is ongetting the right people the right information to take actiion at the right time.

At the corporate level, we are focusing on data and how to monetize it. IT has served up data on a platter, and we need to use it. Currently interviewing data scientists with PhDs for the role.

Mike: Our biggest current investment is in the field right now. (i.e., services to billing and process issues in the field) with a solid investment in inventory and customer management.

Q&A:

Where does AI play a role over the 3-5 years in terms of staffing and analysis?

Karla: RaceTrac is experimenting with AI right now. Must get the data science team in-house first.

David: Global Payments is working with machine-learning companies in place such as fraud detection but also in areas such as automating repeatable tasks.

Mike: The oil & gas industry is different and highly customized, so we are further away from repeatable processes and I’m not aware of AI playing a big role for us in the near term.

Johnny: Use caution when relying on AI. It’s a dangerous time to be dabbling with AI. We don’t want to fall victim to “Hallucinations” and privacy is an ongoing issue.

How do you ensure comp rates are relevant to the marketplace given inflation?

Mike: We review data available on various websites, work with our HR group and external recruiting firms in different locations. I’m constantly surprised by how high some salaries have been increasing in some finance and accounting roles, but we must pay market to attract and retain top talent. We also are currently balancing total comp and flexibility from an individual perspective.

Karla: We engaged Mercer a few years ago to study comp bands, role profiles, and expectations. They stressed the importance of being within range and strengths vs newness. I’m currently advocating for long-term incentive plans for directors and above – it’s crucial.

David: With 25,000 employees in dozens of markets around the world, it certainly take a lot of effort. We’re not perfect at it. Must be selective and engage the highest contributors. During acquisitions, fighting different comp rates at different companies is a challenge but the more you can commit to and afford to standardize quickly the better.

Effective ways to look at cost of turnover/replacement costs?

Karla: We see a negative impact on those that remain. When someone leaves, it falls on the rest of the team. Stressing the system with strain on people that remain can be damaging to the culture.

ABOUT THE SPEAKERS:

Karla Ahlert is the Chief Financial Officer of RaceTrac Inc., a privately held company headquartered in Atlanta. RPI owns and operates over 800 retail fuel and convenience stores across 16 states under the RaceTrac and RaceWay brands. The RT family of companies also includes Energy Dispatch, the transportation company that hauls fuel to its stores, and Metroplex Energy, the wholesale fuel supplier that secures bulk fuel to supply RaceTrac and RaceWay stores and other third-party companies.

Karla leads the company’s Finance, Accounting, and Tax functions. She is passionate about building and developing high performing teams, which have been critical supporting the company’s rapid expansion. As a member of RaceTrac’s Senior Leadership Team, Karla provides input and direction to other senior leaders on company-wide initiatives and market opportunities.

She’s an active member of the Merchant Advisory Group and the Association of Finance Professionals and serves on the Fifth Third Bank Advisory Board.

David is EVP, chief strategy, and corporate finance officer of Global Payments and has served in that position since 2022. He is responsible for the development and execution of Global Payments’ worldwide strategy, including strategic planning & analysis, sourcing, evaluation, execution and integration of mergers, acquisitions, and joint ventures.

Most recently, David served as EVP of corporate finance and treasury for Global Payments and was responsible for enterprise financial planning & analysis, global treasury functions and financial ownership for the corporate functions.

David joined TSYS in 2011 and held numerous leadership roles across treasury, financial planning & analysis and mergers & acquisitions supporting the company's revenue diversification strategy which led to roughly a tripling of revenues and profits over that time. David was instrumental in the planning, diligence, and integration of TSYS’ 2019 merger with Global Payments. Prior to joining TSYS, he spent roughly a decade at The Home Depot and Turner (Time Warner) in a variety of finance and accounting roles.

Mike is Vice President, Chief Financial Officer and Corporate Secretary of both RPC, Inc. (NYSE: RES), an oil field services company, and Marine Products Corporation (NYSE: MPX), a manufacturer of fiberglass motorized boats under the Chaparral and Robalo brand names since May 2022.

Previously, he served as Chief Accounting Officer at Schweitzer-Mauduit International, Inc. (NYSE: MATV), a global performance materials engineering and manufacturing company, since 2019. In addition, he served as the Chief Accounting Officer and Controller of Chart Industries, Inc. (NYSE: GTLS), a global manufacturer of highly engineered equipment servicing the clean energy and industrial gas markets, in 2019 and 2018 and as Corporate Controller in 2017.

Earlier in his career, Mr. Schmit worked for other public and private companies, including Georgia-Pacific, LLC, and Arby’s Restaurant Group in various financial and risk management roles. He started his career in public accounting working for Ernst & Young, both in the U.S. and Australia. Mr. Schmit holds a B.S. in Business Administration from the University of Nebraska with a major in accounting and emphasis in International Business. Mr. Schmit also holds the following professional certifications: CPA, CGMA, CIA and CA (Australia).

Johnny Lee is a Principal in the Forensic Advisory practice and the National Practice Leader of the Forensic Technology practice. A forensic investigator, management consultant, and former attorney, he specializes in data analytics, digital forensics, and electronic discovery in support of investigations, data breach response, and litigation. He also provides advisory services to and expert testimony for organizations working to address complex Blockchain, Cryptocurrency, Cybersecurity, and Data Privacy issues.

Johnny’s broad range of experience includes over twenty-five years of software development, systems integration and analysis, and nearly twenty years within the legal industry. He has delivered solutions (in both public and private sectors) to Law Firms, General Counsel, Boards of Directors, Audit Committees, and Chief Financial / Information / Operations executives, on the effective identification and mitigation of business, compliance, and litigation risk within the enterprise. His particular expertise involves advising attorneys, executive management, and Boards on the proper management of vast and complex stores of information to address operational, financial, legal, and regulatory risks facing organizations today—from policies and procedures to training and systems implementations.

At Grant Thornton, Johnny has led project teams across a variety of industries, including financial services, healthcare, retail, insurance, advanced technology, communications, private equity / venture capital, hospitality, manufacturing, construction, transportation, and legal.