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Imperial Sugar Company (IPSU) |
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CEOCFO Current
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This is a printer friendly page! With a good cash position and adequate
liquidity The Imperial Sugar Company is now able to focus 100% of our attention on
operations and our approach to the marketplace
BIO: Robert A. Peiser has operated in a number of roles to successfully finance, restore profitability to, or otherwise create value in an extensive number of companies in a variety of industries. Currently, he is president and chief executive officer of Imperial Sugar Company, a $1 billion, Houston-based refiner and marketer of sugar products to retail and industrial customers. To date, he has created a strong balance sheet from a very distressed situation, has rationalized capacity and has begun the process of creating value added margins in a commodity product line through customer partnerships and creative brand strategies. Prior to this role, he was chairman of the Board and chief executive officer of Vitality Beverages, Inc., a $500 million privately-owned Tampa-based company which sells juice and other beverage products to the foodservice market and private label juice products to retail establishments. He led a significant operational turnaround and a series of acquisitions and divestitures that gave the company a significant presence in its core markets and eliminated non-core activities. Previously, he was chairman of the Board of CV Services Int’l, a Boston-based, privately-owned computer services company where he was responsible for improving the strategic vision of the Company, creating greater management accountability and increasing equity value. Prior to this assignment, he was president and chief executive officer of Western Pacific Airlines where he redirected the Company’s distribution and pricing strategy, improved its information technology function and moved its operational hub from Colorado Springs to Denver. He also served as vice chairman and chief executive officer of Dallas-based FoxMeyer Drug Company, a position he took coincident with that Company’s Chapter 11 filing, and successfully engineered its sale to McKesson Corporation. Prior to FoxMeyer, he was executive vice president
and chief financial officer of St. Louis-based Trans World Airlines, Inc., where he was
widely credited with being the architect of that Company’s successful 1995 financial
restructuring. He had ten years of prior experience with TWA during two five-year
periods beginning in 1972 and 1982, respectively, and served as its senior vice president
and chief financial officer during its takeover battle with Carl Icahn. Mr. Peiser has also been engaged in a number of other
turnaround assignments through his affiliation with BBK. Ltd., a turnaround consulting
firm based in Southfield, Michigan and in various executive positions, including president
and chief executive officer of Florida-based Orange-co, Inc., a juice processor and
marketer which was named Turnaround Company of the Year in 1992 by The Tampa Tribune. He also was sr. vice
president and cfo for Borman’s, Inc., a supermarket chain with stores in the Detroit
and Salt Lake City areas; senior vice president and chief financial officer for ALC
Communication Corporation, a Michigan-based long distance telephone company; treasurer of
Hertz Corporation and staff vice president of RCA Corporation. Mr. Peiser received a Bachelor’s Degree in
economics from the University of Pennsylvania and a MBA from Harvard University. He
is currently a member of the Board of Directors of Ascent Assurance, Inc., Kitty Hawk,
Inc. and Pinnacle Airlines, and previously served as an outside director of Phar-Mor,
Inc., following its emergence from Chapter 11, and Microware Systems, Inc. He is a
past member of the Board of the Tampa Bay Partnership and Chairman of its International
Leadership Advisory Council, a past Trustee of the Leukemia Society and a past member of
the Boards of the Denver Metro and Colorado Springs Chambers of Commerce. Imperial Sugar® Company is the producer of Imperial Pure Cane Sugar® products. The Imperial Sugar® label is sold primarily in the southwestern region of the United States. Imperial Sugar® has been supplying Texans with sugar, great recipes and excellent service for over 150 years. Holly Sugar® Company, a subsidiary of Imperial Sugar
Company, is the producer of Holly Sugar products. Spreckels Sugar® Company, a division of
Holly Sugar Company, is the producer of Spreckels Sugar products. The Holly® labels and
the Spreckels Sugar® labels are primarily marketed in the western half of the United
States. Both labels are manufactured and packaged in beet sugar factories located in
California. With quality and service a number one priority, Holly has been supplying sugar
products to its consumers for over 90 years and Spreckels has been supplying sugar
products to consumers and customers for over 100 years. Savannah Foods & Industries, Inc., a subsidiary
of Imperial Sugar Company, is the producer of Dixie Crystals® Sugar. The Dixie Crystals
pure cane label is marketed primarily in the eastern half of the United States. Dixie
Crystals has always strived to bring you a variety of quality sugar and sweetener
products, convenient packages, great recipes and excellent service. For over 80 years
Dixie Crystals has maintained a time-honor tradition of trust and loyalty. The new, combined resources of Imperial’s
Specialty Products Group provide customers the many advantages of product selection,
product development, multiple shipping and manufacturing locations, customer service and
sales. Savannah Molasses & Specialties: Started in 1996, Wholesome Sweeteners was created to
source and supply the highest quality, natural and organic products from around the world.
These products, and their sources, are constantly reviewed to make sure that they meet the
product specifications required by our broad international customer base and can be
supplied to them on a consistent basis. CEOCFOinterviews: Mr.
Peiser, where was Imperial Sugar Company when you became its CEO and what attracted you? Mr. Peiser: “I have a history of coming into companies that are in need of someone to change the culture, the business philosophy (and make an impact on it), and improve its balance sheet as well as its operations. I also spent a number of years in the Florida citrus business; sugar is a very parallel product line with the same types of distribution channels, the same types of customers, the same go-to-market strategies and the same type of commodity products. That was an interesting fit as well.” CEOCFOinterviews: What changes did you make and will you tell us about your progress? Mr. Peiser: “The biggest progress is on our balance sheet. When I joined the company about a year ago, the company had just come out of chapter 11 in August of 2001. However, we were still over-leveraged and had some unhappy banks. We have, in the subsequent eight months between the time I joined the company in April 2002 and December 2002, sold off a number of assets and refinanced our bank debt. We now have one of the strongest balance sheets in the industry and certainly the strongest I have ever worked with. On the operations side we have brought in a lot of new management. They are very capable and entrepreneurial individuals, and people that are focused on creating a valuable company for our stockholders and employees. We have set about changing the mindset of the company from being a producer of commodity sugar products to one where we add varying degrees of value added components to our service; from the way we deliver our product to our packaging designs. We can sell on the basis of service and design rather than just price. We have rationalized some of the capacity by closing some plants and moving production to areas that are more efficient. We still have a lot to do. The company was far from perfect when I came and it has just been one year. So there is still a lot of work to do before all the things we want to accomplish are accomplished.” CEOCFOinterviews: Will you tell us about your recent move to NASDAQ? Mr. Peiser: “It is kind of a mark of legitimacy to be able to come off the bulletin board and be traded on the national market system. There are obviously a lot of companies that are on the major markets, but there are many companies that are not. I think our employees are excited about that and that is good because it creates an exciting environment here.” CEOCFOinterviews: Will you tell us about the sugar industry and where Imperial fits in? Mr. Peiser: “The sugar industry is an old unchanged industry in many ways. When you go into a supermarket, you will see four or five-lb. bags of sugar that are probably no different than the sugar your grandmother used to buy in the same type of packages. There has not been a lot of innovation in this category and there has not been a mindset of a consumer packaged goods company, which you will see at a Proctor & Gamble or General Mills. It is very competitive and it has been subject of a lot of consolidation. The majority of the market is handled by three competitors. We are close to each other as far as market share and we are probably the number three player in the total market. However on the consumer side, there are four very strong regional brands and we have two of them. One is Dixie Crystals® which we sell in the southeast and Imperial® which we sell in the southwest. We also sell a brand called Pioneer® in the Midwest. We have a dominant position among brands in our core markets. About 65% of our business is sold to industrial customers, which are companies that use our sugar in their products, whether they are cereal makers or candy or donut manufacturers. The best way to create value is to find ways of delivering our product in more efficient ways. We have recently established a customer logistics team, which is the only one in the industry as far as I am aware, that is charged with the task of partnering with our customers and understanding ways of making delivery of our product more efficient to them. On the consumer side, we need to develop more consumer-friendly packages. Those four-lb. bags will always be there, but there are plenty of examples of commodity products that are packaged in a way that is convenient for the customer. The best example is that people used to buy a head of lettuce and now they can buy lettuce already shredded in bags. The heads of lettuce are still sold and the four-lb. bags of sugar are still sold, but there are ways of creating value in the marketplace that can reward us.” CEOCFOinterviews: Is all sugar the same? Mr. Peiser: “Sugar is fundamentally sugar; it is harder to differentiate sugar than it is to differentiate other products. For example the other industry I just came out of, which was orange juice. There is a greater range of quality and taste with orange juice than there is with sugar. The tag on the value added equation is more towards packaging than toward the product. Having said that, there is granulated sugar, brown sugar and powdered sugar. Powdered sugar or brown sugar carry a higher profit margin for us.” CEOCFOinterviews: How does the diet consciousness of people today affect the industry? Mr. Peiser: “Consumption of sugar has risen about a point-and-a-half a year, up until the last year or two, and has declined recently. Clearly, the health consciousness of the American public has been an issue. I think sugar has an unfortunate rap in that process. There has been a lot of focus on soft drinks and how they are unhealthy for children and yet there is no sugar in soft drinks; it is high-fructose corn syrup. There is really only 15 calories in a teaspoon of sugar, so by itself it is not particularly high caloric. I always get a kick out of seeing someone put a package of Sweet and Low in their coffee or drink a can of soda. The can of soda has about 130 calories and the sugar has about 15. The average American thinks that one teaspoon has over 100 calories and there are some people that think it is over 500 calories a teaspoon. That is an industry issue and one that is difficult to fight. My view is that it will be difficult to change that perception whether it is right or wrong. We are looking at ways of gaining market share in a slightly down marketplace. I am not banking on the sugar demand going up.” CEOCFOinterviews: How do you get the message out to the wholesale customer that you have something better and you can deliver it better? Mr. Peiser: “We have a direct sales force that is pretty strongly tied into our operational people. We have teams of people that go visit our big industrial and retail customers. Those are good relationships and I find that when they are introduced to some of the concepts that we promote, they are surprised and pleased that a sugar company is taking that approach. The customer logistics program is relatively new and it is going to take a little time to roll that out.” CEOCFOinterviews: Do companies tend to have long-term arrangements for the purchase of sugar? Mr. Peiser: “The customers generally contract for a year. Retail customers on private label, which we supply as well as our brands, tend to contract on a shorter period of time. There are no long-term contracts. A one-year contract is fairly normal on the industrial side of the business. On the brand side, we do not necessarily have a contract with our retail supermarket accounts but the consumers are very insistent that we have that brand in the supermarket. So it is more of a consumer pull product.” CEOCFOinterviews: What is the financial condition of the company today? Mr. Peiser: “There is debt on the balance sheet of about fifty million dollars, and for a billion-dollar company that is hardly anything. We have a good cash position and adequate liquidity under our bank agreements and for the first time in a long time, we have banks that want to be our banks. I am very comfortable with our capital structure and our liquidity position. My entire management team and I are very focused on the operation at this point. It is a luxury that I have not had in long time and that is to be able to not even think about our capital structure and to be able to focus 100% of our attention on the operations and our approach to the marketplace.” CEOCFOinterviews: What do you see as your immediate challenges and how are you ready? Mr. Peiser: “Our immediate challenge is on the sales and marketing side. There are always costs that can be taken out of the system but given everything that we have done over the past year, I think what is left on the cost side is marginal. Our challenges are to create more of a demand for our retail products and move our product mix a little bit away from industrial towards retail, and from retail move it a little bit away from private label towards our brands.” CEOCFOinterviews: What should potential investors know that may not be readily apparent on the surface? Mr. Peiser: “We have not taken a very proactive investor relations stance yet and we probably will not until we have more tangible evidence of what is going on here. We have one of the most sophisticated management groups in the industry. We have a sophisticated information technology system that is helping our internal efficiencies and is helping our customers. We have a dedicated work force. I think we are going to transform the industry. We are the only public company in the industry, which puts us at a little disadvantage because we are under a microscope that other companies are not and we have a timeframe that is probably a little more accelerated than others, but it gives us the advantage of forcing us to think more aggressively. I do not know of a management in this industry that is as aggressively trying to change very nature of the way we approach this industry. That is not very obvious to anyone outside the company. I think that is what is ultimately what is going to drive the success here, changing the way we approach the marketplace and I do not see anyone else doing that.”
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