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Financial Training Sessions

It’s been a busy two plus weeks for me and for the Business Literacy Institute. The crazy started when I finally closed the sale of Setpoint Systems after about 25 years working with and agonizing over that business. So much good came out of my time there and really my finance training approach was honed with the implementation of an open book approach.

Setpoint Systems was sold to JR Automation of Holland, Michigan on Tuesday April 18th. That ended a 6-month process of due diligence, challenges with our sister company Setpoint, Inc (long story), and crazy bank issues. Glad it’s over, I learned a lot and would not want to do that again.

After that it was off to Boston with my wife and son to run the worst weather Boston Marathon in 30 years. At the start it was below 40 degrees, 20 to 40 mph winds and about 2 inches of rain during the race. I ran about 12 miles and then survived the next 14. I don’t like running in the rain and the wind was not a good addition. But I finished so check that box. It was a good weekend and the weather was cool but every other day we were there it was dry and nice running weather. My son ran the Boston 5k on Saturday in 50-degree weather and partly cloudy skies, oh well.

Then upon my return it was a day and a half of training for Granite Construction in Salt Lake City. It was nice to be able to train without having to travel but I was pretty tired. The class went well, I like the Granite groups. They are smart and have engineering backgrounds for the most part. Project revenue recognition is always the big topic with them. Figuring out those over and under billings is always a point of interest with them. It’s actually a real challenge to get those numbers right. I’ve always been impressed with how Granite does a pretty good job at that. Their project managers have a pretty good understanding of these concepts.

After Granite it was a busy weekend with my church service. Then Sunday afternoon it was off to 30 Rock in New York for two days of training with NBCUniversal. The training takes place in the Talent Lab on 22nd floor of 30 Rock, with excellent facilities. These groups are great too. For the New York training the NBCUniversal Executive Vice President of Finance, Planning, and Analysis spoke each day to two different groups. It’s always great when company finance executives take part in these classes. This executive was able to present NBCUniversal’s strong performance over the last 7 years. Their business has been really strong and is a strong contributor to the stock appreciation of Comcast. The NBCUniversal parks have been particularly strong over this period.

After my visit to New York it was on to Hollywood for a day with another group in the NBCUniversal Invest program. This class takes place in the Comcast/NBCUniversal tower right outside the studio and park. The Talent Lab there is on the 22nd floor overlooking the park, studios, and the Bob Hope golf course. Maybe a nicer venue that the 30 Rock Lab.

This last day was the 5th training day in a week and a half, coming right off the marathon. I was tired and a bit apprehensive going in but this group was so animated and exciting I was able to work off their energy and have a great day. Probably the best of the 5 training days. There was no guest speaker for this group, so my host was afraid I might not have enough material to cover the entire day but with the questions and discussions I was pushing to get it all covered. A great close out day.

Cash Flow Statement TrainingAs always, I go the OCF metric that NBCUniversal uses to measure their success. Most of what they talk about is OCF or operating cash flow. The problem is that their OCF is actually EBITDA (earnings before interest, taxes, depreciation, and amortization). OCF is actually a number taken from the cash flow statement and is not EBITDA, which is very confusing. I guess the story is that in the cable industry since most revenue is collect immediately EBITDA and OCF are very close together one another so that is why Comcast and others in that industry report that way. The problem is that does not apply to NBCUniversal which collects on much of its revenue long after it is recognized. Think advertising and film revenue, with them EBITDA and OCF are not as closely correlated. In fact, as an example actual NBCUniversal’s 2017 EBITDA was about $8.2 billion while it’s actual OCF was about $7.1 billion. Close but still over a billion different. This issue is always a point of confusion for these managers and leaders in class. It’s actually pretty easy to explain and reconcile but it is an issue.

The SEC (security and exchange commission) that regulates public companies required Comcast to stop calling their EBITDA OCF when presenting to investors. They now call it adjusted EBITDA when reporting publicly.

There’s my exciting week and a half. I survived selling a business, the freezing wet Boston marathon, training Granite Construction, training NBCUniversal in New York and Hollywood. I truly look forward to a calmer May. I can always hope!

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