Fellow
Employees,
Happy
New Year! As we look ahead into 2015, I want to take the opportunity to review
some of our exciting accomplishments from 2014 as well as key priorities for
the next several months.
As
you all know, we closed a chapter in Furmanite’s storied history book with the
retirement of Charlie Cox at the end of 2014. Charlie served on the Board of
Directors since 1995 and as Chief Executive Officer (“CEO”) of Furmanite from
2010 through 2014 where he led significant change throughout the organization.
I have had the privilege of serving as Chief Operating Officer (“COO”)
beginning in 2005 and President since 2008, serving in both of these roles
throughout Charlie’s tenure.
Following
Charlie’s retirement announcement, the Board of Directors appointed me to lead
the company as CEO and serve with them as a Director. It is a privilege to
serve on such an energized and engaged Board, whose members are focused on
long-term value creation for our shareholders. We are very fortunate to have a
Board that is, and has always been, fully supportive of every one of us, our
long-term growth strategy and all of the initiatives we have undertaken to help
make Furmanite a “Billion Dollar Company” by 2018. That future is made possible
through our employees. Today, Furmanite has the best technicians, engineers,
subject matter experts and support staff in our industry. I am both honored and
humbled to serve our shareholders, our customers and you, our great employees of
this company, in this new capacity.
As
the COO of Furmanite over the previous ten years, I have had the opportunity to
play a key role in our transformation from a company that operated as a
collection of independent operating units to one company that is focused on
working together as one single global team. While I am not the “new kid on the
block” who was brought in to change direction, I am pleased to say, while we
will always strive for continuous improvement, our transformation phase is
complete and we are now collectively focused on 2015 as a year of execution
that is intent on driving shareholder value.
Our
changes over the previous several years were paramount to our success. We would
not be in the position we are today without our previous focus on building a
strong operational foundation. Because of our efforts, we are poised to gain
market share and maximize our performance in 2015 and beyond. Let me briefly
recap our accomplishments and what they mean in terms of our future success:
•
We
instilled a single company-wide culture that defines who we are and how we
interact with our customers; this culture is focused on Safety, Ethics and the
pursuit of perfect product and service delivery.
•
We
took a company with almost one hundred years of working in an “every man for
himself” mindset and unified it into a company that is focused on succeeding as
a single cohesive global team, where everyone understands that, while local
market dominance is critical to our combined goal, everyone must work together
to win collectively in order to achieve our overall goals.
•
We
began standardization of our key business processes to work collectively around
the world; capitalizing on best practices, optimizing our performance and
allowing us to maximize our outcomes. This includes:
◦
Global
Business Development and Marketing - Uniting all of our previously independent
sales strategies under a single umbrella, for the first time in our history;
focusing on building long term, broad-based customer relationships and
promoting the full-range of our capabilities in every corner of the world
across a wide range of industries to virtually any sector that has a valve,
pressure vessel or piping system. A key component to the optimization of our
sales strategy included revising our sales incentive program for 2015 to a
single global plan that shifts the motivation back into the direct control of
the sales force by rewarding them based on their individual revenue generation
efforts, while still aligning their collective target goals with total company
expectations. This shift in the sales incentive program from the 2014 program
design is essential for revenue growth as well talent retainage and
recruitment; which in turn creates increased opportunities and earning
potential for our field service personnel.
◦
Global
Workforce - Aligning the utilization of our workforce on six continents around
the world to the needs of our local staffing requirements; allowing us to
maximize service technician deployment and control variable costs by improving
our occupancy.
◦
Global
Administration - Bringing standardization to all global back-office functions
as well as contract rate administration and oversight; ensuring that our global
customers benefit from consistent invoicing standards and that we properly
receive all funds rightly due to the company.
◦
Global
Equipment Group - Maximizing the utilization of our extensive global equipment
fleet through better planning and coordination of our local service delivery
needs; standardizing maintenance processes to provide the maximum safety
performance and equipment up-time for our customers. This initiative also aids
in maximizing the effectiveness of our capital spending dollars by viewing equipment
allocation on a global basis rather than a local basis.
Another
important benefit of these initiatives is that it frees up a significant amount
of time that our local operations management personnel previously devoted to
managing these processes locally, enabling them to spend substantially more
time with our customers as well as focusing on other value-added tasks.
•
As
our customers’ project scopes grow increasingly complex in an environment where
minimizing downtime is a chief concern, and their desire has grown to partner
with a single provider who offers multiple capabilities, we added a new leader
to our Project Management Group in the fourth quarter of 2014 who joined
Furmanite from a leading global general contracting company. While the need for
project management may seem commonplace, our new approach is unique in that we
utilize true professionally trained project managers to deliver the total scope
of our offerings. Other providers offer only a single specialist foreman for
each service and in turn rely on the customer to manage the sum of their
deliverables. Our approach positions Furmanite to maximize work scope safety,
quality and customer confidence, as well as optimize bottom-line performance,
by leveraging the total suite of our capabilities in a uniform fashion to meet
and exceed customer expectations.
•
While
Specialty Mechanical Service offerings, for largely non-discretionary customer
spend, continue to be the largest portion of our work today, over recent years
we have increased our capabilities through acquisition and organic growth to
meet the increasing needs of today’s customers. These new capabilities position
us to partner with customers earlier and longer in the project and maintenance
activities of their assets’ life cycles for all of our long-standing service
capabilities. These new capabilities include:
◦
Non-Destructive
Testing (“NDT”) - The ability to provide non-discretionary inspection services
for construction builds, plant maintenance and full-time mechanical integrity
oversight of plant and process assets. In total, this is a multi-billion dollar
global industry that will continue strong growth due to aging infrastructures,
new expansions, increased regulatory compliance and safety standards, and one
that interconnects with all of our traditional offerings.
◦
Engineering
and Project Solutions - Front-End Engineering and Design (“FEED”), Process
Engineering, Automation, Mechanical and Piping Design, Construction Management
oversight, Professional In-Plant Staffing services and a host of integrated
engineering capabilities that separate Furmanite from our competitors’
capabilities and align our total solution offerings with changing market
demands and the customers’ needs. This capability came to Furmanite through an
acquisition of a business with over 39 years of experience providing
engineering services comprised of approximately 300 in-house engineers and 600
in-plant (embedded in our customers’ sites) professionals and engineers. We
added a new leader for this group in the fourth quarter of 2014 who joined us
from a leading global engineering and field service contractor and brings a
shared passion for Furmanite’s vision, and the role this group will play in our
future success.
Over
time we will look back on the era between 2010 and 2014 as the cornerstone to
our future success; a period of building a strong foundation that has
positioned us as the company we are today. As we laid this cornerstone to our
planned launch, we invested in our future vision with the understanding that it
could result in a short-term unfavorable impact on our earnings in order to
achieve the best long-term results for our Company and shareholders. While
these investments have seen us nearly double our top-line performance from
roughly $275 million in 2009 to over $500 million in 2014, the full benefits
that will be derived from these initiatives are lagging behind the incremental
costs we’ve incurred to build this foundation. We fully expect our associated
revenue growth, combined with control of our expenses, will put these costs
back in alignment with our revenues in the near term. Going forward we intend
to limit our overhead spend to 25 percent of the incremental gross margin
dollars that are generated, contributing 75 percent of those accretive margin
dollars to our operating income.
In
2015, we will harvest the fruits of the efforts described above, as we are now
a much different Furmanite that has focused on building the right team by
listening to our customers’ current and future needs and in turn have built a
business that sets us apart from our competitors. Today, Furmanite is the only
global player in our space offering a comprehensive asset life cycle solution;
integrating our design, inspection and specialty mechanical services from
concept, through construction, commissioning, operation and decommissioning,
while never compromising safety or integrity.
As
the new CEO of this great company, I can state clearly that our transformation
is complete and I intend to lead with a sense of urgency, a passion, and a
commitment to deliver the results that are now possible as a result of the hard
work and dedication of the entire global team over the previous years. In 2015,
we will execute the strategies that have been developed while staying ever
cognizant of changes in the climates of the industries we serve in order for us
to react quickly to seize opportunities and maximize results based on customer
trends.
I
look forward to continuing to work together with all of the outstanding people
around the world that make us who we are so that we can achieve our objectives
for 2015 and beyond. Thank you for your dedication to Furmanite and continued
focus on working safely as we pursue continued growth and value creation.
Sincerely,
Joe
