Take 5 With Conner Industries' CFO Jason Smith

First American’s Amy Weader recently “Took Five” with Jason Smith, Chief Financial Officer of Conner Industries in Fort Worth, Texas, to discuss manufacturing innovations, leadership, and Conner's growth in the?industrial wood and packaging industry.?

Amy: Jason, tell me about yourself and what principles guide your leadership strategies.

Jason: I joined Conner as the Corporate Controller in 2017 and was promoted to Chief Financial Officer in 2019. I have over 20 years of financial leadership experience, with more than 15 of those years in manufacturing. My leadership strategy is based off a servant leadership strategy. My goal is to empower my people and make them accountable, but also provide support as management based on my career of almost 30 years. I've seen a lot of people that will dictatorially lead their team and tell them what to do without giving them the opportunity to actually own some of the decision-making process. So, from my perspective, I like to talk to the person about the situation or the problem, give them the opportunity for feedback and let them come back to rediscuss if it still hasn't been resolved.

Amy: Fantastic. That’s great advice. Let's move on for the second question. What makes your company unique?

Jason: What makes Conner unique is that we have 40 years of experience in this industry. We started with just selling dimensional lumber, then went to cutting lumber, then to making packaging for our end users. Over the last few years, we've made acquisitions that have allowed us to work in the multi-material space. This gives us offerings across a wide band in the industry where we support HVAC. We can support aerospace, oil and gas, and retail in many aspects with many product offerings. We have 14 plants across the United States that are located close to mills. We're able to get fiber and wood at a very economical price and provide that value and savings to our end customer in quantity. As I have stated, we have multiple product offerings, which makes us unique so we're not just a one-stop shop.

Amy: Wonderful. We’ll move on to the next question. Your website published an article projecting a 12-15% growth rate in 2022. How are you pacing to that goal?

Jason: Currently, we are pacing at about 13% in growth year over year, which is right in that sweet spot of the 12-15%. Sales are actually closer to over 20% based on the market price of lumber. The thing that's most encouraging is we're able to hold the profitability even with a fluctuating market. We do that through planned improvements, such as emphasis on efficiency which is focusing on our ability to manage our downtime and looking at the right type of customer for Conner. Instead of trying to be all things to all people, we try to find customers that want to be good, long-term partners with. We are interested in ones that can sustain in the growth initiatives that we have.

Amy: I like that. All right, we'll move on to question number 4. You recently celebrated your company's 40th anniversary, how has your culture changed and remained the same over the years?

Jason: I’d say the culture has remained the same because we like to put our customers as a priority. In our business, we want to take care of them through quality and through service. That's always been a high watermark for our company. What’s changed over that time is that we've added more value-added offerings to our end-customer.

I'd also say recently we’ve put more of an emphasis on our employees. We look at the people who are coming to work in a facility with wood and sawdust. This is definitely a harsher work environment, so we try to do things for them to make it a little more amicable for them to want to come to work every day. We've looked at pay rates as compared to the market, and we've taken up our hourly wages considerably since the pandemic started. We want to recognize that these people are key and instrumental to the success of our company. We've also implemented programs such as “the pain of the pump program” while gas prices have been high. Every one of our hourly employees have gotten a stipend to help them with rising gas prices so we can try to ease that burden for them.

We've offered other incentive programs as the company has become more and more profitable. The key is that we want to do things that are sustainable such as making changes to our facilities. We want to improve the conditions such as the quality of the break rooms, enhancing the lighting and keeping the facilities as cool as possible for the employees. They (the employees) make it happen on a day-to-day basis for us and we want to show them that we appreciate their time, their service, and helping make us a successful company.

Safety is also key. Our working environments could be dangerous if we don’t have the proper safety initiatives put into place. How do we try to protect our employees? What safety programs can we put in place? A lot of companies will give out safety incentives if you don't have any recordables. We flipped it. We give safety incentives based on the number of safety initiatives they come up with on a monthly basis. So, if our employees come with a safety finding or they identify an unsafe behavior, or a potential risk, we will award them with gift cards every single month at every single plant. Then, at the end of each quarter, we have three or four winners that get a larger reward for getting the best safety idea for each one of our regions. This gives everybody that participates an opportunity for a gift card, but then we take the best ideas on a quarterly basis and pay them more substantial amount. This promotes a culture of watching out for and keeping other people safe and we reward them by bringing up issues so we can address them immediately.

Amy: I like that you've flipped it. Instead of focusing on something negative like an accident occurring, you’re focusing on the positive and promoting a safe working environment. Final question, what does the future look like for your company?

Jason: In the future, Conner is looking at both organic and inorganic growth. We have potential opportunities out there in the marketplace and we will continue to look for good partners that keep the same set of core values that we do. We will also continue to expand in the spaces that we're already in.

We're also looking for expansion in verticals on complementary products as well. We do expect organic growth, understanding that there are going to be certain intrinsic challenges in the market with the economy that we're in right now. Our goal is to look at more expansion within the market. This means we measure this company's success based on board-footage sold and produced. Our goal is to reach back out recognizing the market challenges we had over the last two years. For us to have the biggest impact, and to get more board-footage to our end customers, we have to look for new and other customers we can partner with and expand our current footprint. We feel that the financial strength of the company is going to continue to be strong. But we also looked at margins that may compress a little bit as we work on that expansion in the market. This all will set Conner up to be in a very good position for future growth, when the market starts to come back in line over the next few quarters.

Amy: Great. Thank you so much. I appreciate your time this has been fun! ?

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