Checkpoint's CEO Hosts Appointment of Jeff Richard as new CFO Conference (Transcript)

May.13.13 | About: Checkpoint Systems (CKP)

Checkpoint Systems Inc. (NYSE:CKP)

Appointment of Jeff Richard as new CFO Conference Transcript

May 13, 2013 11:00 AM ET

Executives

George Babich - President and CEO

Ray Andrews - Chief Financial Officer

Jeff Richard - Chief Financial Officer

Annette Geraghty -- Investor Relations Specialist

Analysts

Chris McGinnis - Sidoti

Shelley Bergman - Morgan Stanley

Operator

Greetings. And welcome to this mornings Conference Call with Checkpoint’s Chief Executive Officer, George Babich. At this time, all participations are in a listen-only mode. A brief question-and-answer session will follow the formal presentations. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce Annette Geraghty, Investor Relations Specialist. Thank you. You may begin.

Annette Geraghty

Thank you, Christine. Good morning. And welcome to today’s call to discuss the Appointment of Jeff Richard as Checkpoint’s new Chief Financial Officer effective May 28th.

I remind you that during this call, certain forward-looking statements maybe made and these are subject to the forward-looking statements in the earnings release issued this past Friday, announcing Mr. Richard’s appointment. A replay of this call and written transcript will be made available on our website following the call.

Now, I will hand over to George Babich, President and Chief Executive Officer. George?

George Babich

Thank you, Annette, and good morning. Today I was hoping to make this a fairly informal free flowing conference call. I wanted to at least provide the opportunity for investors and analysts to ask any questions they may have regarding the transition from Ray Andrews as our CFO to Jeff Richard. So I don’t have prepared remarks that I need to cover at this point. So, I’d like to do is turn it back over to the operator, who can open it up to questions.

Question and Answer Session

Operator

Thank you. (Operator Instruction) Thank you. Our first question comes from the line of Chris McGinnis with Sidoti. Please proceed with your question.

Chris McGinnis - Sidoti

Hey. Good morning. Thanks for taking my question.

George Babich

Good morning.

Chris McGinnis - Sidoti

Maybe just talk about, I guess, the process and how long just in looking at the position and maybe just give a little -- provide a little more detail on that, on the background I guess?

George Babich

Sure. Chris, started the process about a year ago when I stepped in as the Interim CEO and at that time the process really was across the entire organization. Obviously, we weren’t performing at the level that we felt we need to be, which caused the change in the CEO and at that time, I had a responsibility, I believe to assess all of the senior talent in the organization and as I mentioned, in that first 90 day’s I traveled around the world and spoke to virtually all of our top 100 managers in the company.

What I concluded with respect to the CFO position is that we had in race someone who was a very, very good technical accountant as our formal Chief Accounting Officer and what I was thinking at that time, what we were looking, what we could -- what we needed was someone with more turnaround experience to help us through this process.

So, I, not knowing Ray other than sitting on the Board and having exposure to four, five times a year. Ray and I entered into a series of discussions and as a result of that process, he indicated that actually he was interesting retiring.

So I -- at that time, I being the new guy on the block, had a little bit of concern that I would be a new CEO and the possibility of not having an experienced CFO would be quite a daunting situation. So I talked to Ray about staying with it for another year to see as through what I thought he would take us together things back on track.

After significant conversations over the course of two or three months, we were obviously very involved in turning the business around. We -- Ray said to me that he would in fact see it through and that if we could kind of work together to make a one-year commitment he would appreciate it.

So, I would say the middle of the summer, I launched the search and with the search firm, as well as through all the various networks that I have and that our Board of Directors has and that actually talked to some of our shareholders about as well, so just for not specifically but in general terms we’re looking for upgrade talent within the organization.

So went through whole process, interviewed dozens of, I would say the search firm interviewed dozens, literally, probably, three dozen candidates, and I personally spoke to more than half a dozen, I would say eight or nine candidates.

So as I looked at it, what I was looking for was someone who had been a proven leader in the finance organization. Someone who had proven -- had a proven ability to upgrade talent in all areas of the finance organization, who set stretch targets for the team and not only finance team but for the peer group, entire leadership team and then someone who was comfortable holding other people accountable to delivering the results.

I was looking, obviously, for someone who had personal and professional cultural fit within the -- within Checkpoint that could both push and pull, as I said, the senior leadership team to new heights without creating adversarial relationships. So at times you can find the right person, but maybe the wrong approach. So it was important for me to balance all of that with a worldwide business that we have.

I thought it also important, Chris, to have someone that was proven at process improvement. We had over the years, as you know issues with forecasting and internally, our budgeting process wasn’t as strong as I like it to be.

I wanted to improve our management reporting and the management tools that we provide to our operators. I wanted to continue to build on the OpEx control process that had been put in place as well as the working capital, management processes that have been put in place, so someone that had experience with process improvements.

And importantly, I was looking for someone who was going to be a value creator, someone that had a track record of significant accomplishments in improving business performance and adding value -- shareholder value. To me, a strong CFO will have that skill set and it’s a focus on the mindset that some one has.

Obviously, you look for the usual things, intellectual curiosity. I wanted a forward thinker, someone that was pushing me and not uncomfortable in doing that, someone who has had experience with investors and boards. And I thought it was important also to have someone that would have had experiences in our sized company or a little bit larger but not too large because this is a -- while we’re a $700 million company, we are spread out pretty thinly and this is roll your sleeves up kind of environment.

And I didn’t want someone who was coming in, accustomed to a huge support staff. So I thought that was an important piece of it as well. So those -- and then finally obviously somebody through the whole process I guess that I could confirm had the highest standards of reputation of having extremely high integrity. So kind of the usual things, you should look for CFO and so it took us a while. Before we found Jeff, we went through a very comprehensive process of reference checks and talking with former CEOs, former peers, former subordinates and he passed with flying colors.

So we're very pleased with that. Jeff brings experience. He started his career with Tyco. And his last position with Tyco was the SVP of Finance, I believe, was his title. While he was with Tyco, lived internationally, operated internationally. He was responsible for, I believe, it was $2.5 billion division.

From Tyco, he left when there was a change in the senior management. He is well aware of what took place there and he went on from there to a company called Jacuzzi Brands. He was the CFO of Jacuzzi’s one operating division of $1.4 billion in revenues and a publicly held company. He was division, if you will, Chief Financial Officer and VP of Operations for the $1.2 billion division, so tremendous experience through that process. And as you know or you may know, Jacuzzi was eventually sold. From there, he’s spend a period of time at EDS as a Vice President of Financial Planning and Analysis and he really -- that's where Jeff strengths lie I think as -- in the financial planning, analysis, business operations side of things, more than the technical accounting.

He was recruited out of EDS to a company called Pavestone. Pavestone was $400 million business that ran into the 2008 housing bubble. And through that process, he was instrumental in restructuring that business to keep it afloat, as you might imagine quite a challenge during that period of time. And then actually work through a process to sell the company while I was there and then was recruited to Safety-Kleen, which is about a $1.5 billion business.

He was the EVP, Chief Financial Officer there where he had tremendous accomplishments in improving valuation of the company -- privately-held company that was -- done a dual path of an IPO versus sale and eventually were sold to their largest competitor. So, we were fortunate that Jeff was available and very excited to have him stepping into this role.

Chris McGinnis - Sidoti

Thank you. Thanks.

George Babich

Hopefully that covers.

Chris McGinnis - Sidoti

That was pretty good, yeah.

George Babich

No problem. And he would be traveling with me in the next couple of weeks visiting with investors as well as Chris, as well as -- first week, he is going to be here in Thorofare, we have our Board Meeting and Annual Shareholder Meeting. But following week, we will be in Europe and he will meet the other members of the leadership team and the financial organization weren’t located here in North America.

So at the end of these first two weeks, we will have a full indoctrination and have many of the key players and then on the road, the following week to meet some investors. So the first three weeks will be a pretty intense for him and then we have our strategic planning -- Annual Strategic Planning Conference at the end of July and he will be very involved in that process with us and the Board. So, first two or three months, it’s going to be a pretty steep learning curve, which is perfect time actually for him to be joining us.

Operator

(Operator Instructions) And next question comes from line of Shelley Bergman with Morgan Stanley. Please proceed with your question.

George Babich

Shelley?

Shelley Bergman - Morgan Stanley

Hi. Good morning. Thanks for taking the call. I think the last 10 minutes I think you probably answered everyone to my calls and every call and anybody who wanted a question on the phone. But question, I assume that -- Jeff is on the phone now?

George Babich

No, Jeff is not on the phone.

Shelley Bergman - Morgan Stanley

Okay. So Jeff is not on phone. I was going to ask him a couple of questions. So would you say now George, and this is obviously outside of this question just a little, but you’ve had a job for some time. You obviously have been searching out a CFO and that’s been important to you. Are there any other areas where you think you have to bring somebody else strong in as far as on the finance side, as far as on the structure side? Do you feel the team there now is the right team?

George Babich

Shelly, I believe, we have a very, very strong Chief Accounting Officer. We did bring in, upgrade the financial planning and analysis, Senior Director and who has made significant contributions as well over the past eight or nine months. Those are two key reports in finance. We have another strong person who runs our worldwide controllers operation, have been with the company for four or five years.

The only other position that I would comment on would be our tax position. Our VP of Tax left just about year end and we’re in the process of searching for an international VP of Tax. So if you know of anyone, let me know. But that’s been -- we’ve been able to buttress that through the use of the public accounting firm so that hasn’t been an issue.

But certainly I would like to get that position filled. And then I think that finance organization at the very senior level is in good shape. So one of the things that Jeff has been known to do when he joins and then this is a comment that was made by the last three CEOs that he worked for, each of which I spoke with, is that he immediately comes in and assesses talent and tries to get the right talent in places quickly as possible. So he’ll go through that process and if he sees any other opportunities, I am sure that he’ll act quickly.

Shelley Bergman - Morgan Stanley

That’s a good summary. So he is not so much a numbers guy. He is a strategic thinker who -- operating type CFO.

George Babich

Yeah. Exactly. I think that’s a good way to summarize, Shelley, someone who -- first and foremost who has the process orientation. He is a Six Sigma trained that sort of thing, help us with process, get the tools in place that the business leaders need to operate the business and that’s where he likes to focus helping them understand what they need to run their business and then helping them do that either with tools or analysis or getting involved, very involved. So very much an operationally oriented executive.

Shelley Bergman - Morgan Stanley

Maybe you want to discuss this and maybe not, did you have any comments on what he thought about the European operations right out of his first assessment?

George Babich

Nothing specific that I’d want to discuss at this point.

Shelley Bergman - Morgan Stanley

Okay. So he will be visiting like you said help he'll be making his -- he'll have his feet down on the ground assessing what’s going on in Europe in the next one to two months or so?

George Babich

Yeah. He’ll be here for a week and then immediately he and I are traveling together to Europe, meeting the other senior leaders of the company as well as the other direct reports in the finance organization from around the world. So after two weeks, he’ll have met the senior folks. Then we’ve got to get him back where he’s going to speak with some investors week three. And then we’ll get him back here for about six weeks to work on the strategic plan with me and from there we’re off to the recess.

Shelley Bergman - Morgan Stanley

Did he graduate to George Babich School of Business where you try to under-promise and over-achieve?

George Babich

I hope so.

Shelley Bergman - Morgan Stanley

Thank you.

George Babich

All right, Shelley. Thank you.

Operator

Mr. Babich, it appears we have no further questions at this time. Would you like to make some additional or closing comments?

George Babich

Just thanks for your interest Chris and Shelley and I look forward to introducing Jeff Richard to you and other investors over the coming months. Thank you very much and have a great day.

Operator

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

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