Fleet Management News & Business Info | Commercial Carrier Journal
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commercial carrier journal | august 2017 35 A day in the books CFOs share financial strategies O n June 29, chief financial officers from trucking and logistics companies met in Chicago to discuss topics that ranged from mergers and acquisitions to taxes, financial reporting and business intel- ligence. The CFO conference was organized by McLeod Software. One speaker, Dwight Lloyd, shared his vision to create profit- and-loss statements for every truck and driver at his company. "Our ultimate goal is to put together a P&L for a truck based on the driver," said Lloyd, controller for PS Logistics, a Bir- mingham, Ala.-based company that operates more than 2,000 trucks. "If you want to manage your day-to-day business, you want to know what is going on by truck." Lloyd noted some roadblocks in this effort, one being dif- ferent cost-per-mile calculations. The company uses two types of mileage records from its McLeod system: "empty" miles for truck movements to its shippers, and "loaded" miles from shippers to consignees. Analyzing tractor and driver fuel costs per mile is not as simple as divid- ing total gallons purchased by total dispatch miles for empty and loaded, he said. PS Logistics also considers miles driven "outside the McLeod system," Lloyd said, such as when the company sends drivers home on weekends. PS Logistics uses odometer or IFTA miles for calculating cost per mile for main- tenance and insurance. With the different mileage definitions and a somewhat subjective method for allocating administra- tive costs, Lloyd said the P&Ls are a work in progress. The P&L challenge is even more complex when a company has different driver pay structures. "There are a whole stream of factors," he said. "The challenge is to come up with true num- bers that make a truck profitable or not." A sellers' market In addition to discussing accounting practices, speakers at the conference shared strategies for and experiences with acquiring transportation companies. The market continues to be strong for sellers of asset and nonasset transportation companies, but the scale has tipped toward "high-quality operators" in logistics, said Hugh Rabb, managing director of BB&T Capital Markets. Most transactions for logistics companies are driven by stra- tegic buyers who want to add new products and services, Rabb said. It's not unusual to see the sticker price of higher-quality logistics businesses at seven to eight times their EBITDA earn- ings, he said. On the asset-based side, many buyers pay close attention to carriers' maintenance and capital expenditures, and it's com- mon to see carriers selling for four to six times their EBITDA. "When we are looking at asset deals, we focus on the culture, the people and the drivers, but it's really all about the drivers," said Brian Barze, CFO of PS Logistics. "Everyone knows how tough it is to find quality drivers." Barze and other speakers agreed that they would not buy a carrier that has not already implemented electronic logs due to the investment risk. MAKING THE LATEST TECHNOLOGY DEVELOPMENTS WORK FOR YOUR FLEET BY AARON HUFF technology FINANCIAL DIALOGUE: Fleet CFO topics ranged from mergers and acquisitions to taxes, report- ing and BI. COMPREHENSIVE P&L: Experts discussed creating profit-and-loss statements for every truck and driver. GOOD TIME TO SELL: The market continues to be strong for sellers of asset and nonasset companies. AARON HUFF is Senior Editor of Commercial Carrier Journal. E-mail ahuff@ccjmagazine.com or call 385-225-9472. INTERESTED IN TRUCKING TECHNOLOGY? Scan the barcode or go to www.goo.gl/Ph9JK to subscribe to the CCJ Technology Weekly e-mail newsletter. Trucking and logistics finance experts met in Chicago at the inaugural CFO conference organized by McLeod Software.