What ratios do you track?
The only ratio I really look at is a quick ratio, a current ratio. I always try to keep it above one, always try to make sure that we are in a position where we can pay our bills. Like I said, I’m more receivable-based because I know that’s the quick cash, and I want to make sure that we’re not over-leveraged.
Has the slow economy made it difficult to maintain good levels of working capital?
It’s always a challenge to manage cash flow based on the seasonality of our business. All the money goes out the door and onto the shelves. Then it slowly comes back in and you pay off your credit lines. The timing of that cycle is an everyday challenge, especially with what’s going on with the economy. Everyone just throws up red flags, and you’re a little bit more cautious.
How has the caution affected your growth strategy?
We look at our dealer network carefully. We don’t sell direct [to schools or clubs]. We sell mainly to what we call lacrosse specialty stores. From day one we’ve been in this for the long term. We can grow a lot faster, but we actually hindered our growth a little bit. We wanted to partner with dealers with a good history and good territories, and that pay their bills. I know everyone says that, but we really tried to look at it on a pretty consistent basis and [examine the dealer network] through a process.
Would you consider branching out, selling products to big-box stores like Sports Authority or Dick’s Sporting Goods?
Big-box stores are getting into [lacrosse]. That’s changing the industry a bit. Lacrosse is getting to a point where it’s becoming national and becoming bigger. Whether we’re going to do it , that’s to be determined. It is sort of a different monster — it changes your whole outlook on who you are. You’ve got to figure it out and make sure it’s the right move for your brand.
As CFO of a smaller company you are involved in the importing side of the supply chain. What is your role?
I have to make sure that we have the product funding. I also am involved in negotiating terms with the factories, reviewing what we pay in duties, what our freight will cost, what’s the most economical way of bring products [into the United States]. How you import products is actually a science. If you know the [importing] categories and how to work with the categories you’ll save your company money. Also, you have to assess what countries you want to work with. That changes all the time. For example, if you’re importing from Mexico it might be free, whereas imports from China may have an 18% duty.
Has there been a shift away from Chinese manufacturing?
[The changing duty structure] forces businesses to look for new fabrication sources. That’s happened in the garment industry. A lot of garment [manufacturing] went to South America, Central America, and Mexico; it used to always be in China.
Does Maverik still uses Chinese factories?
For the most part. I would say [we manufacture] probably 85 percent of our products in China.
Despite being a private company, Maverik reports its financial results in U.S. generally accepted accounting principles. Why?
It’s not required by our banks, it’s what our accountant suggested that we use. I am not an accountant, and after asking him some questions it, [U.S. GAAP] looked like the best choice, especially if we need it in the future or the banks start asking for it.