A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term...

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

Property of Edgewater Ranzal

Introductions

Long-Term Planning Overview

CHS Study

High Level Demonstration

Q & A

Agenda


Planning for Any Environment


How Confident are You in Developing the

Corporate Strategy?

CFO

Treasury Corporate Finance M&A


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


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


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


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%


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


Creating Value for Owners – Cash Returns

$ in millions


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


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


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


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


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


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


Demo Screen Shots


• Pre-built, fully integrated financial statement foundation

• Pre-built forecast methods and formula functions

• What-if Analysis toolkit

Pre-Built Accounting Integrity


Powerful Scenario Capabilities


Mix and Match Scenarios

Capital Projects included

Acquisition excluded

Easily Analyze Various Combinations


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


Acquisition / Divestiture Modeling


Set Strategic Targets in HSF


Seed Budgets With Strategic Targets

From Strategic Plan


Tweak Budget with Targets In Mind


Update Targets with Latest Forecast


A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term...

Economy & Finance

Transcript of A Corporation Analyzes the Pros and Cons of Hyperion Strategic Finance in the Evolution of Long-Term...