The Art of the Double Play

How a CFO runs the finances of two companies at once, why he won't agree to a prepayment penalty past the first two years of a capital-financing deal, and what he has against Starbucks.

Another example: there is a cable that you can put on the trucks that will give you a wealth of information about what the driver was doing during his run — whether he had to slam on his brakes, was accelerating too fast, or was speeding. It’s $200 per truck, which is not a lot of money. But the first thing I said [after receiving a request to buy the cables] was, what are you going to do with it? What’s the recourse going to be? Are you going to counsel the driver? Suspend him? How many shots does he get? Because I know what would happen. They’ll get the report, and talk to the driver, and not do anything until the driver has a wreck. While this cable is really nice technology with bells and whistles, it’s not something we would utilize fully for the cost, so we shot it down.

How about bigger-ticket items?

On the Estenson side, we only buy equipment when we have a new contract with a customer. We don’t go with just the normal cycle that the industry uses for replacing their older vehicles.

Where does risk come in? Don’t you have to take on some risk to maximize the performance of a company?

Every time Estenson signs a new contract, there’s an element of risk, as there is anytime you do a contract with a company you’re not familiar with. Did they give us all the information we needed to do the bid? Is anything hidden in there that we didn’t know about that’s going to bite us?

On the Truline side, Miller Beer wanted a solution where they could bring more beer into Las Vegas per load. The problem was the weight, because you can only carry so much weight over the roads. We looked at different options for lighter tractors and trailers and compared that cost to what we would get per load.

Navistar International had come out with a new tractor with a tiny sleeper space, just barely big enough for the driver to lie down in. We bought 10 of those. It was a huge risk for us, because we were one of the first to buy them. We did find one problem — the jake brake [a hydraulic brake particular to big diesel trucks] only has 300 horsepower, and you really need 400 to 500. So Navistar is working to increase their braking power. If we had had other issues, we might have paid for something we couldn’t utilize all that well.

But otherwise we don’t take a lot of risk. That’s one of the reasons Truline has done so well in the recession. We have good cash flow, we still have all our employee benefits, we’re still giving pay raises, we haven’t laid anybody off, and none of our trucks is sitting idle.

Do you do any bank borrowing?

We have lines of credit. In the three and a half years I’ve been here, Estenson has drawn on its line once, back in 2006 when Home Depot switched all of their accounts payable over to India. We renew the credit lines every year. The bank would like us to draw on them because [not doing so] ties up their capital, but we don’t need them.


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