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VOLUME XXI

September 14, 2023

Everchem’s Closers Only Club

Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: read more

BASF SE’s (BASFY) CEO Martin Brudermüller on Q4 2021 Results – Earnings Call Transcript

Feb. 26, 2022 2:53 PM ETBASF SE (BASFY), BFFAF

BASF SE’s (OTCQX:BASFY) Q4 2021 Earnings Conference Call February 25, 2022 5:30 AM ET

Company Participants

Stefanie Wettberg – Investor Relations

Martin Brudermüller – Chairman of the Board of Executive Directors

Hans Engel – Chief Financial Officer

Martin Brudermüller

Good morning, ladies and gentlemen. It is hard to go back to business as usual the day after Russia attacked Ukraine. Yesterday marks the end of peace in Europe. It is a bitter day for all of us. A short time ago, no one would have thought it possible. We are dismayed by the attack and are very concerned about further developments. And we are all thinking at this moment of the people in Ukraine who have to fear for their lives and their future. Nevertheless, Hans Engel and I would like to welcome you to our Analyst Conference Call for the full year 2021.

2021 was a strong year for BASF. [Technical Difficulty] driven by the Chemicals and Materials segments. The Surface Technologies and Industrial Solutions segments also contributed considerably to the strong recovery. Looking at the underlying sales development, we increased sales prices by 25% and volumes by 11%. All segments achieved price and volume growth in 2021. Cash flows from operating activities improved by 34% and amounted to 7.2 billion Euros, as compared to 5.4 billion Euros in 2020. Free cash flow increased by 1.4 billion Euros to 3.7 billion Euros in 2021.

BASF’s automotive-related businesses continued to be negatively impacted by the semiconductor shortage. According to current data, global automotive production reached around 76 million units in 2021, and thus increased only slightly compared with the very low level of the previous year. For 2022, IHS Markit expects 84 million units. We assume that the semiconductor shortage will persist, at least in the first half of 2022. We therefore expect just 82 million units to be produced and are less optimistic than IHS for the full year. Throughout 2021, and particularly in the fourth quarter, higher raw materials prices and increased energy and logistics costs burdened the earnings development in all segments. Consequently, we will focus on further substantial price increases in the coming months to pass on the significantly higher costs and improve our margins in the downstream businesses. The established pricing procedures in these businesses lead to a delay in passing on costs.

Let’s now turn to the macroeconomic environment. According to the currently available data, global growth in the Chemical industry was 6.1% in 2021. The strongest growth in Chemical production was achieved in China, the world’s largest Chemical market, with a full-year expansion of 7.7%. Here, however, growth slowed at a high level during the course of the year. Electricity cuts had a negative effect on production, particularly in the third and fourth quarters. Growth in Asia excluding China reached 6.2% in 2021. Chemical production growth in the European Union was extraordinarily high at 6%. A contributing factor was the low basis in the previous year. In addition, the European Chemical industry benefited from the fact that availability of global production capacities for basic Chemicals was limited. In the United States, significant petrochemical capacities were temporarily unavailable. After the freeze in the first quarter, production on the US Gulf Coast was also negatively impacted in the summer by hurricanes Ida and Nicholas. In total, Chemical production in North America grew by only 1.7% in 2021.

On this slide you can see BASF’s volume growth by region compared with the prior year. With an increase in volumes of 10.6% in 2021, BASF Group’s growth was 4.5 percentage points above global Chemical production. Let’s now look at the volume development in the regions. With 14.4%, our volume growth was most pronounced in Asia excluding Greater China. In North America, sales volumes grew by 10.6% and in Europe by 10.1%. In Greater China, we increased volumes by 8.7% compared with an already very strong prior year. Volume development in the fourth quarter of 2021 was burdened in particular by lower demand for mobile emissions catalysts. This was a result of overall lower automotive production due to the semiconductor shortage. The electricity cuts for energy-intensive industries had only a minor impact on BASF’s operations in China.

We now look at our sales and earnings development by segment in 2021. Hans will comment later on the specific development in Q4. At BASF Group level, sales increased by 33% to 78.6 billion Euros due to considerably higher prices and volumes in all segments. Currency effects had a slightly negative effect and were mainly related to the US dollar. BASF Group’s EBIT before special items reached 7.8 billion Euros, an increase of 118% compared with 2020. All segments, with the exception of Nutrition & Care and Agricultural Solutions, increased EBIT before special items in 2021. The rise in earnings was driven in particular by the Chemicals and the Materials segments. For detailed explanations of the 2021 earnings development by segment, please refer to the BASF Report 2021 published this morning.

Let’s now look at our financial and non-financial targets. We achieved all our financial targets in 2021, and we have taken important steps to deliver on our mid-term CO2 emission target. As mentioned before, our sales volumes growth was well above global Chemical production. EBITDA before special items increased from 7.4 billion Euros to 11.3 billion Euros and thus by 53%. Our 2021 ROCE of 13.5% was considerably above the cost of capital rate of 9%.

For 2021, we will propose a dividend of 3.40 Euros per share to the Annual Shareholders’ Meeting, thus delivering on our progressive dividend policy. We want to reduce our absolute CO2 emissions by 25% by 2030 compared with the baseline 2018. In 2021, our CO2 emissions amounted to 20.2 million metric tons, a decrease from the 20.8 million metric tons emitted in 2020. This is remarkable given the strong growth in volumes. We also set a target of 22 billion Euros in sales with Accelerator products by 2025. These are products that make a substantial sustainability contribution in the value chain. In 2021, [Technical Difficulty] in 2020. We thus achieved our Accelerator sales target much earlier than planned. We will therefore adjust this portfolio steering target in the course of 2022.

Ladies and gentlemen, creating value for our shareholders is a top priority for us and this is why we aim to increase the dividend per share every year based on a strong free cash flow. At this year’s Annual Shareholders’ Meeting, the Board of Executive Directors and the Supervisory Board will propose to pay a dividend of 3.40 Euros per share, an increase of [Technical Difficulty]. In total, we would pay out 3.1 billion Euros based on the number of shares at the end of the year. This amount is more than covered by our free cash flow in 2021. With our dividend proposal, the BASF share offers an attractive dividend yield of 5.5% based on the share price at the end of 2021.

Since we have already received several inquiries, I would like to provide a short update about this year’s Annual Shareholders’ Meeting. The Board of Executive Directors and the Supervisory Board have decided to hold a virtual Annual Shareholders’ Meeting on April 29. The pandemic and the expected number of participants will not yet permit a physical meeting in 2022. The invitation with detailed information will be published in mid-March.

https://seekingalpha.com/article/4490951-basf-ses-basfy-ceo-martin-brudermuller-on-q4-2021-results-earnings-call-transcript?mailingid=26845879&messageid=2800&serial=26845879.2141&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=26845879.2141

February 25, 2022

Recticel Results

Recticel Annual Results 2021

Regulated information, Brussels, 25/02/2022 — 07:00 CET, 25.02.2022

  •  Net sales increase from EUR 616.9 million to EUR 1,032.8 million (+67.4%), of which +34.0% organic growth, +0.6% currency effect and a +32.8% contribution from FoamPartner
  • Adjusted EBITDA: from EUR 44.4 million to EUR 109.2 million (+145.9%)
  • Result of the period (share of the Group): from EUR 63.2 million to EUR 53.5 million (-15.3%), including EUR 4.9 million result from discontinued operations (2020: EUR 71.3 million)
  • Net financial debt: EUR 147.8 million (30 September 2021 : EUR 189.0 million)
  • Proposal to pay a gross dividend of EUR 0.29 per share


Olivier Chapelle (CEO): “We are happy with the very positive sales and profitability development in 2021, a year marked by deep changes in our Company. Changes which were planned and announced, such as the acquisition and integration of FoamPartner and the divestment of the Bedding activities. Changes which came as a consequence of the unsolicited takeover bid by Greiner AG, such as the divestment of our newly created Engineered Foams business segment. 

The Insulation and Engineered Foams businesses performed very well in a very volatile environment. The chemical raw materials supply remains tight, and prices are showing little signs of stabilisation. Transportation and labour costs are increasing at an unprecedented rate, while the steep energy cost inflation has a minor impact given the very low energy intensity of our business. Our commercial teams continue to adapt pricing where necessary. Moreover, lockdowns or mobility restrictions in countries such as Germany, the Netherlands and Austria, coupled with direct or indirect supply chain shortages (microchips) have added further challenges to the business environment. In that context, Recticel showed strong resilience and generated solid profitability and free cash flow.  

The integration of FoamPartner in Engineered Foams is continuing according to plan, and we confirm the targets to close the Bedding divestment to Aquinos Group and the Engineered Foams divestment to Carpenter Co. respectively before the end of 1Q2022 and around mid-2022.

I am grateful and proud of all Recticel teams and employees, who during this extremely busy year 2021, characterised by a challenging business environment, big M&A projects, and an unexpected takeover bid, have remained focussed, committed, positive, and extremely professional. They have enabled Recticel to generate this strong performance.


OUTLOOK

Given the important scope changes expected in Recticel during 1H2022, with the closing of the Bedding and Engineered Foams divestments, the variability linked to the timing of these closings and the subsequent alignment of our organization setup, the Group does not provide an outlook for the full year at this stage. However, the business continues to develop well in 2022 with top and bottom line growth, and as Recticel is now becoming a pure Insulation player, we are working on an accelerated growth plan in order to double the Insulation sales by 2025.  

https://www.recticel.com/recticel-annual-results-2021.html

February 25, 2022

Recticel Results

Recticel Annual Results 2021

Regulated information, Brussels, 25/02/2022 — 07:00 CET, 25.02.2022

  •  Net sales increase from EUR 616.9 million to EUR 1,032.8 million (+67.4%), of which +34.0% organic growth, +0.6% currency effect and a +32.8% contribution from FoamPartner
  • Adjusted EBITDA: from EUR 44.4 million to EUR 109.2 million (+145.9%)
  • Result of the period (share of the Group): from EUR 63.2 million to EUR 53.5 million (-15.3%), including EUR 4.9 million result from discontinued operations (2020: EUR 71.3 million)
  • Net financial debt: EUR 147.8 million (30 September 2021 : EUR 189.0 million)
  • Proposal to pay a gross dividend of EUR 0.29 per share


Olivier Chapelle (CEO): “We are happy with the very positive sales and profitability development in 2021, a year marked by deep changes in our Company. Changes which were planned and announced, such as the acquisition and integration of FoamPartner and the divestment of the Bedding activities. Changes which came as a consequence of the unsolicited takeover bid by Greiner AG, such as the divestment of our newly created Engineered Foams business segment. 

The Insulation and Engineered Foams businesses performed very well in a very volatile environment. The chemical raw materials supply remains tight, and prices are showing little signs of stabilisation. Transportation and labour costs are increasing at an unprecedented rate, while the steep energy cost inflation has a minor impact given the very low energy intensity of our business. Our commercial teams continue to adapt pricing where necessary. Moreover, lockdowns or mobility restrictions in countries such as Germany, the Netherlands and Austria, coupled with direct or indirect supply chain shortages (microchips) have added further challenges to the business environment. In that context, Recticel showed strong resilience and generated solid profitability and free cash flow.  

The integration of FoamPartner in Engineered Foams is continuing according to plan, and we confirm the targets to close the Bedding divestment to Aquinos Group and the Engineered Foams divestment to Carpenter Co. respectively before the end of 1Q2022 and around mid-2022.

I am grateful and proud of all Recticel teams and employees, who during this extremely busy year 2021, characterised by a challenging business environment, big M&A projects, and an unexpected takeover bid, have remained focussed, committed, positive, and extremely professional. They have enabled Recticel to generate this strong performance.


OUTLOOK

Given the important scope changes expected in Recticel during 1H2022, with the closing of the Bedding and Engineered Foams divestments, the variability linked to the timing of these closings and the subsequent alignment of our organization setup, the Group does not provide an outlook for the full year at this stage. However, the business continues to develop well in 2022 with top and bottom line growth, and as Recticel is now becoming a pure Insulation player, we are working on an accelerated growth plan in order to double the Insulation sales by 2025.  

https://www.recticel.com/recticel-annual-results-2021.html

February 24, 2022

Roofing Case Study

Brad Beldon leads his roofing company through ‘double whammy’ of labor shortage, broken supply chain

Richard Webner, ContributorFeb. 23, 2022Updated: Feb. 23, 2022 8:28 a.m. Comments

Jodi McCue and Brad Beldon pose Wednesday, Feb. 16, 2022 outside the Beldon corporate headquarters. The Beldon companies recently launched Ozbee Team Software, a construction software platform built on the Salesforce CRM services, with McCue as the Vice President of customer experience and Beldon as the CEO.
Jodi McCue and Brad Beldon pose Wednesday, Feb. 16, 2022 outside the Beldon corporate headquarters. The Beldon companies recently launched Ozbee Team Software, a construction software platform built on the Salesforce CRM services, with McCue as the Vice President of customer experience and Beldon as the CEO.William Luther, Staff

Brad Beldon, CEO of Beldon Roofing, describes the challenges facing the construction industry as a “perfect storm.”

For decades, the industry has struggled to find workers. The COVID-19 pandemic only made it harder. Now, with the global supply chain broken, companies can’t get the materials they need, or can get them only at inflated prices.

Beldon is not without ideas about the problems. He’s sent letters to President Joe Biden and members of Congress suggesting measures to alleviate the crisis, such as expanding the H-2B temporary worker program.

“You have the supply chain crisis hitting at the exact same time that labor became a crisis,” he said. “COVID took more labor out of the equation and then it shut down factories. When they shut down factories, they can’t get capacity back up. So there’s no inventory and if there’s no inventory it’s just-in-time, and just-in-time is, ‘Everybody needs it today.’”

The homepage for Ozbee Team Software, developed by Beldon Roofing to provide a one-stop shop for construction companies.
The homepage for Ozbee Team Software, developed by Beldon Roofing to provide a one-stop shop for construction companies.ozbee.com

And Beldon and another executive at his company, Jodie McCue, recently launched a software business, Ozbee Team Software, aiming to provide a one-stop shop for construction companies to do their scheduling, accounting, inspections and communicate with employees and customers, among other things.

The software was developed to help Beldon Roofing operate smoothly, but Beldon and McCue said they came to realize they had a product other companies might be interested in.

Ozbee, which operates on the Salesforce cloud platform, was launched earlier this month at the International Roofing Expo in New Orleans. Since then, Beldon and McCue have received more than 100 inquiries, he said. It is undergoing a security review from Salesforce before it can be released on the platform.

Beldon previously launched a tech startup called Roof Monitor, offering sensors that would help property owners protect their roofs from the effects of bad weather. The concept didn’t work because the technology was too pricey, he said.

“What we learned from that business was we built a product that would only work the way we wanted it, because we thought we were right,” he said. “We built Ozbee to work the other way — we give you the engine, and you tell us what you want to do with it. That was a very valuable lesson learned — a very expensive lesson learned.”

Beldon recently sat for an interview to discuss Ozbee, the supply chain breakdown, and why young Americans aren’t entering the construction industry. The following has been edited for brevity and clarity.

Q: Could you describe what you’re dealing with now with the supply chain?

A: It’s unprecedented. We have zero transparency. The inflation is just outpacing everything. I think there was an article that I read today — construction costs this year are up 23.6 percent or something like that, year over year, which is just mind boggling. I’ve been doing this for 35 years and to see it even climb 2 percent or 3 percent in a year is really odd.

I don’t know how it ends. There’s four main components to commercial roofing: You got your insulation, you got cover board, membrane and a method of attachment. The method of attachment, generally speaking, is one of two things: It’s a mechanical fastener or an adhesive. That adhesive comes in a steel container, so with the worldwide shortage of steel both aspects of attaching a roof you can’t find. Even though you can get the adhesive — maybe you can get the adhesive, but it’s made with MDI (or, methylene diphenyl diisocyanate), and MDI is the other shortage.

So you have a double whammy. That product that we used to see for $300 is now $1,400 and it was historically $300 since the day that product came out. A lot of the MDI is still stuck out in the Pacific, can’t get into here. There’s five truckers per every 100 truckloads of demand.

Q: What do you mean when you say zero transparency?

A: There’s zero transparency on deliverability, zero transparency on pricing. The customer is the one that’s suffering, right? They think we’re being elusive and yet we don’t have the answers. I wish we could! If we told him what we knew they’d be laughing like, “Yeah, right. That’s how you’re operating your business?” Like no, really, that is how we operate. We have no idea.

Q: How have you coped with that?

A: We had to make some difficult decisions. We laid off some employees, we reduced benefits.

Q: When did that happen? How many did you have to lay off?

A: The last quarter of 2021. Eleven. It’s hard. We’ve tried hiring them back, some of them, as business has picked up and some of the chokehold has a gotten a little bit better, but we still can’t fill every position. I mean, our backlog is the largest backlog we’ve had in the history of our company, and we can’t do the work.

Q: What other materials are you having trouble with?

A: Single plies are a large component in the roofing industry. They’re manufactured with resins, and most of the resins come from overseas. The MDI issues that you read about are from the freeze from February in South Texas. That was one of the largest MDI suppliers in the world, and I’m not sure that any of them are back up and running. We’re all trying to find that 1 percent of the MDI that’s left in the world and grab it.

We’ve seen labor increase over 20 percent in this market in a year. So we’ve seen materials go up, labor go up by over 20 percent. Inflation, at some point, is going to stop this, in my opinion. At some point, people are going to start saying “I can’t afford that anymore.”

Q: Tell me more about the labor issues.

A: The labor force is on the higher end — they’re closer to my age, in the late 50s. You don’t see the 20 year olds wanting to enter the construction industry. It’s not a “wow” industry, right?

It pays very well. I mean, we have roofers making six figures. Now, it’s dangerous. It’s hot, it’s dirty, it’s difficult, but it’s a really good income with no debt. These kids go to college for whatever job, where someone comes out and makes $40,000 a year with $200,000 in debt. How do they ever get get caught up?

Q: What could we do, as a society, to avoid these problems?

A: You want to write a book together?

On the labor side of things it’s an easy solution. They have a program, the H-2B (guest worker) program, that’s already on the books. It works, it’s effective. They contribute to Social Security and they don’t take anything out. That’s an easy fix to solve the labor problem in the United States because you can take the 66,000 workers that you allow to come in every year from around the world and make it 2 million, 3 million, 5 million, whatever that number is — the system’s already built. If you fix that problem then I think you might be able to fix the trucking problem. And then if you can get more people in the plant, then you can work three shifts instead of two, and produce more product.

Q: Why aren’t younger Americans going into the roofing industry?

A: I think it’s twofold. When I grew up, we had technical schools inside the high schools. You had the opportunity to go learn the trade. They don’t exist anymore, because what they want are these high-paying computer jobs, working for Facebook and Google.

And I think the construction industry is frowned upon as, it’s dirty. We’re a little bit above used car salesmen in the construction industry. But that doesn’t mean that we don’t run professionally operated businesses, and that we don’t care for our employees, and that we don’t offer them benefits that aren’t found at USAA and Valero — they just don’t know it! Because we don’t have the money that we can go out there and advertise, “Hey, we pay for your health care. We have a 401k.” Most of construction are family businesses — it’s just the nature of construction.

Q: What are your strategies for finding people?

A: We have a full-time HR director, he’s out there looking every single day. We do job fairs, we’re on all the ZipRecruiter, everything. We have a sign that’s been out front for 20 years about hiring. And then when they see the E-verify, or they see we drug test, you actually watch them walk up to the building, and they read the sign and turn around and leave — they don’t even walk in! You have to ask yourself why.

Q: Moving on to Ozbee, is there any product like that on the market right now?

A: Not that we’re aware of. (Before developing Ozbee) we were using five (customer relationship management platforms). And entering the data in manually, in multiple systems that couldn’t talk to each other. The Salesforce platform is so unique in that everything is right there on your screen and available to you instantaneously.

What we’ve learned, also, through COVID: Analytics drive construction more and more today, even than they did even two years ago. Just the amount of time it takes to nail a board or to paint a wall. I mean, there’s data out there will tell you, to the second, how long that should take — that data didn’t exist two years ago, or three years ago, and they’re perfecting it. We built Ozbee in a manner in which, if you create a field, we can measure off of that field. We don’t care what you want to measure. If you want to measure how many black jackets were worn that day, and how many yellow jackets were worn that day, I can tell you every day as long as the data is in there and I can give you trends. Everybody operates their business differently, so we want to give them the flexibility that they didn’t have to just buy a box and operate within that box — they can buy a box where they can tear down the walls, do whatever they want with the walls, and the box will work.

https://www.expressnews.com/sa-inc/article/Brad-Beldon-roofing-company-16939194.php

February 24, 2022

Roofing Case Study

Brad Beldon leads his roofing company through ‘double whammy’ of labor shortage, broken supply chain

Richard Webner, ContributorFeb. 23, 2022Updated: Feb. 23, 2022 8:28 a.m. Comments

Jodi McCue and Brad Beldon pose Wednesday, Feb. 16, 2022 outside the Beldon corporate headquarters. The Beldon companies recently launched Ozbee Team Software, a construction software platform built on the Salesforce CRM services, with McCue as the Vice President of customer experience and Beldon as the CEO.
Jodi McCue and Brad Beldon pose Wednesday, Feb. 16, 2022 outside the Beldon corporate headquarters. The Beldon companies recently launched Ozbee Team Software, a construction software platform built on the Salesforce CRM services, with McCue as the Vice President of customer experience and Beldon as the CEO.William Luther, Staff

Brad Beldon, CEO of Beldon Roofing, describes the challenges facing the construction industry as a “perfect storm.”

For decades, the industry has struggled to find workers. The COVID-19 pandemic only made it harder. Now, with the global supply chain broken, companies can’t get the materials they need, or can get them only at inflated prices.

Beldon is not without ideas about the problems. He’s sent letters to President Joe Biden and members of Congress suggesting measures to alleviate the crisis, such as expanding the H-2B temporary worker program.

“You have the supply chain crisis hitting at the exact same time that labor became a crisis,” he said. “COVID took more labor out of the equation and then it shut down factories. When they shut down factories, they can’t get capacity back up. So there’s no inventory and if there’s no inventory it’s just-in-time, and just-in-time is, ‘Everybody needs it today.’”

The homepage for Ozbee Team Software, developed by Beldon Roofing to provide a one-stop shop for construction companies.
The homepage for Ozbee Team Software, developed by Beldon Roofing to provide a one-stop shop for construction companies.ozbee.com

And Beldon and another executive at his company, Jodie McCue, recently launched a software business, Ozbee Team Software, aiming to provide a one-stop shop for construction companies to do their scheduling, accounting, inspections and communicate with employees and customers, among other things.

The software was developed to help Beldon Roofing operate smoothly, but Beldon and McCue said they came to realize they had a product other companies might be interested in.

Ozbee, which operates on the Salesforce cloud platform, was launched earlier this month at the International Roofing Expo in New Orleans. Since then, Beldon and McCue have received more than 100 inquiries, he said. It is undergoing a security review from Salesforce before it can be released on the platform.

Beldon previously launched a tech startup called Roof Monitor, offering sensors that would help property owners protect their roofs from the effects of bad weather. The concept didn’t work because the technology was too pricey, he said.

“What we learned from that business was we built a product that would only work the way we wanted it, because we thought we were right,” he said. “We built Ozbee to work the other way — we give you the engine, and you tell us what you want to do with it. That was a very valuable lesson learned — a very expensive lesson learned.”

Beldon recently sat for an interview to discuss Ozbee, the supply chain breakdown, and why young Americans aren’t entering the construction industry. The following has been edited for brevity and clarity.

Q: Could you describe what you’re dealing with now with the supply chain?

A: It’s unprecedented. We have zero transparency. The inflation is just outpacing everything. I think there was an article that I read today — construction costs this year are up 23.6 percent or something like that, year over year, which is just mind boggling. I’ve been doing this for 35 years and to see it even climb 2 percent or 3 percent in a year is really odd.

I don’t know how it ends. There’s four main components to commercial roofing: You got your insulation, you got cover board, membrane and a method of attachment. The method of attachment, generally speaking, is one of two things: It’s a mechanical fastener or an adhesive. That adhesive comes in a steel container, so with the worldwide shortage of steel both aspects of attaching a roof you can’t find. Even though you can get the adhesive — maybe you can get the adhesive, but it’s made with MDI (or, methylene diphenyl diisocyanate), and MDI is the other shortage.

So you have a double whammy. That product that we used to see for $300 is now $1,400 and it was historically $300 since the day that product came out. A lot of the MDI is still stuck out in the Pacific, can’t get into here. There’s five truckers per every 100 truckloads of demand.

Q: What do you mean when you say zero transparency?

A: There’s zero transparency on deliverability, zero transparency on pricing. The customer is the one that’s suffering, right? They think we’re being elusive and yet we don’t have the answers. I wish we could! If we told him what we knew they’d be laughing like, “Yeah, right. That’s how you’re operating your business?” Like no, really, that is how we operate. We have no idea.

Q: How have you coped with that?

A: We had to make some difficult decisions. We laid off some employees, we reduced benefits.

Q: When did that happen? How many did you have to lay off?

A: The last quarter of 2021. Eleven. It’s hard. We’ve tried hiring them back, some of them, as business has picked up and some of the chokehold has a gotten a little bit better, but we still can’t fill every position. I mean, our backlog is the largest backlog we’ve had in the history of our company, and we can’t do the work.

Q: What other materials are you having trouble with?

A: Single plies are a large component in the roofing industry. They’re manufactured with resins, and most of the resins come from overseas. The MDI issues that you read about are from the freeze from February in South Texas. That was one of the largest MDI suppliers in the world, and I’m not sure that any of them are back up and running. We’re all trying to find that 1 percent of the MDI that’s left in the world and grab it.

We’ve seen labor increase over 20 percent in this market in a year. So we’ve seen materials go up, labor go up by over 20 percent. Inflation, at some point, is going to stop this, in my opinion. At some point, people are going to start saying “I can’t afford that anymore.”

Q: Tell me more about the labor issues.

A: The labor force is on the higher end — they’re closer to my age, in the late 50s. You don’t see the 20 year olds wanting to enter the construction industry. It’s not a “wow” industry, right?

It pays very well. I mean, we have roofers making six figures. Now, it’s dangerous. It’s hot, it’s dirty, it’s difficult, but it’s a really good income with no debt. These kids go to college for whatever job, where someone comes out and makes $40,000 a year with $200,000 in debt. How do they ever get get caught up?

Q: What could we do, as a society, to avoid these problems?

A: You want to write a book together?

On the labor side of things it’s an easy solution. They have a program, the H-2B (guest worker) program, that’s already on the books. It works, it’s effective. They contribute to Social Security and they don’t take anything out. That’s an easy fix to solve the labor problem in the United States because you can take the 66,000 workers that you allow to come in every year from around the world and make it 2 million, 3 million, 5 million, whatever that number is — the system’s already built. If you fix that problem then I think you might be able to fix the trucking problem. And then if you can get more people in the plant, then you can work three shifts instead of two, and produce more product.

Q: Why aren’t younger Americans going into the roofing industry?

A: I think it’s twofold. When I grew up, we had technical schools inside the high schools. You had the opportunity to go learn the trade. They don’t exist anymore, because what they want are these high-paying computer jobs, working for Facebook and Google.

And I think the construction industry is frowned upon as, it’s dirty. We’re a little bit above used car salesmen in the construction industry. But that doesn’t mean that we don’t run professionally operated businesses, and that we don’t care for our employees, and that we don’t offer them benefits that aren’t found at USAA and Valero — they just don’t know it! Because we don’t have the money that we can go out there and advertise, “Hey, we pay for your health care. We have a 401k.” Most of construction are family businesses — it’s just the nature of construction.

Q: What are your strategies for finding people?

A: We have a full-time HR director, he’s out there looking every single day. We do job fairs, we’re on all the ZipRecruiter, everything. We have a sign that’s been out front for 20 years about hiring. And then when they see the E-verify, or they see we drug test, you actually watch them walk up to the building, and they read the sign and turn around and leave — they don’t even walk in! You have to ask yourself why.

Q: Moving on to Ozbee, is there any product like that on the market right now?

A: Not that we’re aware of. (Before developing Ozbee) we were using five (customer relationship management platforms). And entering the data in manually, in multiple systems that couldn’t talk to each other. The Salesforce platform is so unique in that everything is right there on your screen and available to you instantaneously.

What we’ve learned, also, through COVID: Analytics drive construction more and more today, even than they did even two years ago. Just the amount of time it takes to nail a board or to paint a wall. I mean, there’s data out there will tell you, to the second, how long that should take — that data didn’t exist two years ago, or three years ago, and they’re perfecting it. We built Ozbee in a manner in which, if you create a field, we can measure off of that field. We don’t care what you want to measure. If you want to measure how many black jackets were worn that day, and how many yellow jackets were worn that day, I can tell you every day as long as the data is in there and I can give you trends. Everybody operates their business differently, so we want to give them the flexibility that they didn’t have to just buy a box and operate within that box — they can buy a box where they can tear down the walls, do whatever they want with the walls, and the box will work.

https://www.expressnews.com/sa-inc/article/Brad-Beldon-roofing-company-16939194.php