a corporation analyzes the pros and cons of hyperion strategic finance in the evolution of long-term...
DESCRIPTION
Ellen and Ryan guide attendees through a case study of how CHS, Inc. transformed from decentralized strategy discussions and individual spreadsheet-based financial models to a leading edge, long-range planning process. With Hyperion Strategic Finance (HSF) being a key component to the overall process change, Ellen and Ryan discuss both the opportunities and the challenges identified during the implementation, as well as the tools available for modeling, analysis, and reporting.TRANSCRIPT
A Corporation Analyzes the Pros and Cons of
Hyperion Strategic Finance in the Evolution of
Long-Term Planning
October 15, 2012 Ellen Scipta
CHS Inc. Finance & Business Planning
Ryan Meester
Edgewater Ranzal Strategic Planning Practice
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Introductions
Long-Term Planning Overview
CHS Study
High Level Demonstration
Q & A
Agenda
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Planning for Any Environment
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How Confident are You in Developing the
Corporate Strategy?
CFO
Treasury Corporate Finance M&A
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Complex spreadsheet
models
No consolidated or
consistent view
Lack of integrated models
make scenario analysis
cumbersome
Limited history or
documentation
Version control and
security
Duplicative efforts
Treasury
Board of Directors Senior Management
Banks Investors Acquisitions Divestitures
Long-Term Planning
Corporate Development
Traditional Long-Range Planning Challenges
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Corporate Development
Value Management
Long-Term Financial Planning
Treasury Strategies
Predictive Modeling & Simulation
Long-Term (3-5 Year)
Full Financial Statement
Projections
Key Performance Metrics
New Product Offerings
Acquisitions / Divestitures
Discounted Cash Flow
Economic Value Added
Liquidation Value
Capital Requirements
Reserve Ratios
Debt Issuances/Payments
What-if Analysis
Economic Shifts
Commodity Pricing
Product Pricing
Growth Initiatives
Cost Cutting
Capacity Planning
Hyperion Strategic Planning Overview
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CHS Inc.
The nation’s leading
cooperative, owned by farmers,
ranchers and co-ops across the
United States
A diversified energy, grains and
foods business committed to
providing the essential
resources that enrich lives
around the world
Business Divisions CHS Grains, Crop Nutrients
and Retail
CHS Energy
CHS Foods and Processing
CHS Business Solutions
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10,000 preferred stockholders (CHSCP on
NASDAQ Exchange)
Non-voting owners
62,000 individual producers (through
company-owned facilities)
Voting Equity 30%
CHS Ownership
1,100 locally owned cooperatives serving about
300,000 producers
Voting Equity 70%
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2012 Fortune #78
Fiscal 2011 Net Income $961.4 Million
Fiscal 2011 Net Revenues $36.9 Billion
Fiscal 2012 Q3 YTD Net Income $899.7 Million
Earnings History
$ in millions
CHS Recent Highlights
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Creating Value for Owners – Cash Returns
$ in millions
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New Leadership and Vision
New CEO & Key Leadership Retirements/Changes, Jan 2011
Updated Guiding Principles • Not a holding company • Not a speculative buyer and seller of businesses • Leveraging the diverse CHS enterprise to enhance
producers‟ profitability
Focused on Growth • Strategic expansion • Balanced business portfolio • Aspirations
CHS Finance Department Created, February 2011
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CHS Finance Team Challenge: Process & Content
Quarterly forecasts Reduce Annual
Budgeting Efforts through ongoing
Forecast and Strategy discussions
Drive Consistency
Annual and long range planning Vary drivers/growth
rates by line of business
Analyze and set top down‟s annual budget targets by line of business
Drive Consistency Assess patron
equity options and allocations
Identify base and incremental funding needs
Aspirations
Q4 Q1
Q2Q3Bank
Meeting
Divisional Operating & Capital Budgets
Forecast Submission
&Rollup
Aspiration Refresh
Forecast Submission
&Rollup
Forecast Submission
&Rollup
Forecast Submission
&Rollup
Reset Long Range Plan
Corporate Budgets and Allocations
Consolidation of Plans and Presentations
Board approval of
budget
Corporate Budget Refresh
Corporate Forecast
Submission
Corporate Forecast
Submission
CEO/CFO approval of
budget
Corporate Forecast
Submission
Corporate Forecast
Submission
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13
Aspirations
.
Optimize current portfolio and playbook over next 5 years
Scenario Analysis: Include/Exclude Aspirations Value acquisitions/divestitures d integrated within portfolio Model Range of Risk/Uncertainty
Analyze funding scenarios and capital needs by year Connect treasury / corporate development with corporate FP&A functions Funding routine to define cash balancing process
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CHS ASPIRATIONS
STRATEGIC IMPERATIVES
STRATEGIC OBJECTIVES
FINANCIAL MERITS &
CHS 5-YEAR
GROWTH PLAN
Aspirations: From Concept To Tactical Plans To
Strategic Financial Models
Enterprise
Strategy
Teams
Customer
Visits
Business
Unit
Teams
Senior
Leadership
Team Regional
Perspective
Customer
Perspective
Operational
Perspective
Enterprise
Perspective Senior
Leadership
Team Operational
Perspective
• Business Units Defined Actions
Required to Remain Relevant And
Grow Organically In Current Space
• Aggregated Customer, Operational,
Regional, and Enterprise Leader POVs
on Future Incremental Opportunities
• Outcome: Tactical Playbook for Next
5 Years By Business
• Producer –
Focused
• Global
Commodities
• Energy
• Food and Food
Ingredients
• Enhance/
Leverage
Enterprise
Value
The result of our work was a Strategic Growth Plan that carves the
path of CHS for the next 5 years
This is a key component of our planning process going forward as it
defines where our growth will come from
• Unbiased Validation of Plays aka
“The Aspirations”
• First Pass Financials: EBITDA,
CAPITAL, Time to Scale
• Objective Scoring: Prioritizing A
Playbook
• Score each Play Based on:
Relevance to the
Aspirations
Risk in Execution
Reward Potential
Property of Edgewater Ranzal
A Unique and All Encompassing Solution:
Hyperion Strategic Finance (HSF)
Independent of ERP system
Data Home, Data can be imported via Excel, Essbase / Planning, HFM, etc Can leverage the strengths of other Hyperion products (i.e. Essbase for
reporting)
Speed of Implementation
Fully Integrated Financial Statements Customized Drivers and Metrics for Individual Business Units
Ease of Use
Time spent on analysis and recommendations not development Ability to solve or allocate targets Scenarios in a cinch, base case simplified Reduces hours spent budgeting annually
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Spend the Time on Model Design
Business team awareness, partnership, and buy-in Capture the “right” details, build „placeholders‟ as needed Know the constraints of the tool and your IT systems up front Don’t underestimate the effort to gather / validate data
Keep it Simple and Strategic
Manage operational plans outside of HSF Focus on primary business drivers, manage # of inputs Use historic trend as available, play via scenarios Spend the time: Run the data to find the Optimal solutions
Train the Team on the Functionality of the Tool
Get your hands dirty on reporting, scenarios, updates, formula changes etc. Manage access effectively Document religiously Continuous improvement
HSF Implementation Lessons Learned
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Demo Screen Shots
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• Pre-built, fully integrated financial statement foundation
• Pre-built forecast methods and formula functions
• What-if Analysis toolkit
Pre-Built Accounting Integrity
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Powerful Scenario Capabilities
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Mix and Match Scenarios
Capital Projects included
Acquisition excluded
Easily Analyze Various Combinations
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World Class Treasury Analysis
• Calculates net cash surplus or deficit from multiple models and scenarios
• Funding Options tool to re-allocate surpluses and fund deficits
• Debt scheduler
• User-defined reports to monitor covenants, credit ratings, and earnings per share
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Acquisition / Divestiture Modeling
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Set Strategic Targets in HSF
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Seed Budgets With Strategic Targets
From Strategic Plan
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Tweak Budget with Targets In Mind
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Update Targets with Latest Forecast
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