CFO Studio Magazine with Craig Steeneck, CFO, Pinnacle Foods

with better systems and talent. In 2007, the focus changed to investing in the business so as to build a world-class food company. His prior experience was extremely useful. Early in his career, he worked 13 years at Reckitt & Colman (now Reckitt Benckiser), becoming CFO of its North American operations. There he was involved in acquisitions of such brands as Woolite and Lysol to grow the company’s portfolio (and it was there that he met his wife, Sandra). He held his first public company CFO position at International Home Foods (Chef Boyardee, Gulden’s Mustard, Bumble Bee) and later joined Pinnacle Foods as executive vice president of finance, overseeing supply chain and IT. Pinnacle had bought Aurora Foods a year prior, and was experiencing problems with customer service. Also, the logistics network was costing significantly more than industry benchmarks indicated necessary. “We had to put much better tools and processes in place, which we ultimately did,” he says. These tools and processes were critical in 2009 as the company embarked on the integration of the Birds Eye Foods acquisition, and in 2013 integrating the Wish-Bone business. “We fully integrated Birds Eye within six months and exceeded the acquisition plan on all key metrics. We had similar success with Wish-Bone.” Today, two years after proving the company’s value with its successful IPO, Steeneck is still excited by the position he holds and the issues that come up. “I think the best part of my job is being a trusted advisor to the management team and having to be on my game day in and day out,” he says. “We are fighting for market share, we’re fighting for share of shelf, we’re fighting for quality employees, and we’re fighting for investor dollars. So there’s not much room for error. But we’re faster, we’re nimbler, we’re less bureaucratic. By making decisions faster in this world, we’re able to outmaneuver our competition.” Looking Forward When Pinnacle received the $163 million break-up fee, the company used most of that money to pay down debt. It also needed to ensure retention, so the company sweetened its bonus plan for the year and granted stock to all salaried employees who did not receive equity as part of their compensation. “One important lesson from the Hillshire event was how important it is for employees to be owners and have a direct stake in the company’s future,” says Steeneck. The acquisitions that defined Pinnacle Foods’ growth over the course of the company’s first decade are harder to come by now. But it’s possible to improve margins by reinvigorating, for example, the male-focused TV dinner Hungry-Man with new flavors and combinations that can raise the price point: Fried Chicken and Waffles, anyone? Steeneck’s finance teamplays an active role in this sort of product innovation. Senior-level finance staffmembers are integrated into the business units in sales, marketing, and supply chain, with dual reporting responsibilities. Beyond costing out and evaluating new products, says Steeneck, “They’re involved in the development of the marketing and sales plans, and linking those plans to the supply chain.” Finance teammembers are thus in a position to influence the brand teams tomake better decisions, whether it’s forecasting sales or determining a future path. “You don’t want your finance team just looking in the rearviewmirror. You want themworking as cross-functional business partners to support better decision- making,” he says. And Steeneck’s choice of people to support the commercial side of the business and help in the decision-making process gives him a maestro’s role in Reinvigorating Iconic Brands . C 3rd QUARTER 2015 WWW.CFOSTUDIO.COM 11 T he No. 1 area for which the CFO is responsible at Pinnacle Foods is cash flow management, according to Craig Steeneck, who should know. He’s chief financial officer of the $2.7 billion company and figures out the allocation of capital, monitoring its uses from quarter to quarter. “First and foremost, we have targets around how we’re going to manage our working capital, capital spending, interest, and taxes. All of that falls within my domain.” Steeneck says high cash-flow generation is not unusual in the food industry. Pinnacle had the cash in 2014 to pay down over $200 million in debt; pay over $100 million in dividends to shareholders; invest in capital spending, including expenses to integrate acquisitions; buy back a million shares from The Blackstone Group, which was reducing its stake; make an acquisition of Garden Protein International for approximately $160 million; and pay interest expense of about $100 million. In summary, he says, “We’re ensuring that we’re hitting all the strategic buckets: first and foremost acquisitions, debt pay-down, paying dividends to shareholders, buying back some shares.” Steeneck pauses, then adds, “I think we did a very good job in 2014.” Job No. 1: Cash Flow Management To learn more about how Pinnacle Foods invests in its various brands, click on www.cfostudio.com/reinvigorating-brands