I’m on my way back home from Tucson Arizona after a keynote session with Sundt Construction based in Tempe Arizona. This billion-dollar construction company had an annual leadership meeting and I was asked to do a finance keynote. I was lucky enough to be in Tempe during a cold spell, it didn’t even make to 100 degrees. I still died on my morning run, it was still too hot for me.
The keynote session went great. Sundt is owned privately by an ESOP or Employee Stock Ownership Program. The company has been in business for over 100 years and was an early adopter of the ESOP ownership model. With an ESOP the company is literally owned by the employees through a tax protected retirement program. What makes that cool for my session is that the 140 or so top leaders in the business at the conference were really into learning more about the numbers.
The construction industry is a low margin high capital expenditure business. It is also very competitive. To survive in that environment a business like Sundt has to be very efficient and control their costs. One topic of interest in the session was cash flow. On big constriction jobs it’s easy to get upside down on cash if the project is delayed and terms in the contract are unfavorable to Sundt. In fact, their business is a lot like my business Setpoint. Profit is important but at the end of the day if you don’t have cash everyone has to go home. We did an exercise showing how a company can be profitable but have no cash to illustrate this point. We had some lively discussions on how to work with customers and execute on projects so Sundt can be profitable and have cash flow. It’s not easy to do but Sundt has obviously figured it out.
We did have a chance to talk some college football on this trip. My team BYU is playing Arizona based in Tucson on September 3 at the University of Phoenix stadium in Phoenix. So I was in a room full of Arizona fans which led to some lively discussions. I actually have tickets to that game but my niece decided to schedule her wedding on the same day as the game so I think I’m going to miss that one. Go Cougars!
I enjoy these short trips. Tucson is just an hour and a half flight. The Sundt folks were great, I look forward to doing more financial literacy work with this group.