Select Interior Concepts, Inc (NASDAQ:SIC) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 09:00 am ET


Select Interior Concepts, Inc (NASDAQ:SIC) Q2 2020 Earnings Conference Call - Final Transcript


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Bill Varner

waste in redundancy as I see today low-hanging fruit to harvest and create a solid foundation for long-term value creation. We still have multiple IT systems, desperate compensation and benefit plans, a lack of coordination between RDS and the ASG, duplication in the back office and our supply chain as well as opportunities in other areas.

There also appears to be an under optimization of current facilities at both RDS and ASG. There are compelling integration opportunities at both the enterprise and the segment level. I expect to be well down the road to integration optimization within the next six months. Operational inefficiencies, the absence of a complete corporate shared service infrastructure, and lack of cohesion across the company, all impediments to capitalizing on a favorable secular trends in the residential construction market and on emerging opportunities created by the shift from brick-and-mortar showrooms to hybrid Brick and Click sales strategies.

In addition, further enhancement of the current capital structure is another opportunity for the company to realize its full potential. What I've seen at SIC is not unlike what I saw in my prior position as Chief Executive Officer of United Subcontractors or USI. When I joined USI, the company was a collection of businesses [Indecipherable], which have been acquired in a roll-up strategy. The businesses have not been fully integrated nor have they taken advantage of back-office and supply chain synergies or even the soft synergies or sharing ideas and leveraging sales forces in common territories. Corporate headquarters was viewed as a payroll and reporting center. Brand identity was weak. The company was capital constrained.

Given the situation I pulled together 30 plus branches or former companies with multiple locations together as one culturally and economically and then include the company organically as well as through acquisitions to expand its geographic reach and product portfolio using technology to support and enhance earnings. Because of this experience, I have a proven playbook that I have already begun to implement at SIC to improve operations and to align performance and compensation with shareholder value creation.

I'd like to describe my playbook as a three-legged stool. The first leg is focusing on organic revenue growth and core earnings. We must have a strong foundation in place to support future growth. With a more efficient business, we will be in a much better position to take advantage of inorganic growth opportunities. What does that entail? It starts with the corporate infrastructure. Corporates should be built as a service organization with a mandate to make operations better the unified back office functions so the operating entities can narrow the aperture and focus on market and competitive trends while driving organic sales. We need to round out the corporate functions that are critical to our success.

A corporate level human capital executive is imperative for service organization like SIC. We expect to announce the appointment of a highly experienced and talented Chief Human Resource Officer very shortly. Our corporate level IT executive is essential