Financial Executives International | February 2024

Upcoming events - March 19

Financing Alternatives and Overview of Private Credit -

 A Look at Market Conditions

WHEN: Tuesday, March 19, Lunch

WHERE: University Club, U of L campus

SPEAKERS: David Quackenbush and Drew Kleinrichert, Prudential Private Capital, Chicago

FEI Louisville's March meeting is one that CFOs won't want to miss. David Quackenbush and Drew Kleinrichert will examine the pros and cons of non-bank lending arrangements, including leveraged loans, mezzanine debt, and structured equity. They'll talk about current market conditions and how rising interest rates impact both lender and investor appetite for different forms of financing. And finally, they'll explore current conditions in the M&A market and how rising interest rates impact traditional demand from private equity funds.

One hour of CPE credit is available. To pre-qualify, click "yes" on the CPE button during registration.

Join us for this informative dive into critically important finance issues. FEI members and sponsors attend at no cost. The non-member guest price is $50.

April 11 FEI event - SAVE THE DATE

For our April meeting, a panel of executives from Advanced Business Solutions and Houchens Insurance Group examines how compliance, cybersecurity, and insurance work together, discussing the evolving landscape and the implications for businesses. You'll gain insights into risk mitigation strategies through the adoption of best practices, emerging trends in the cyber insurance market, and the increasing significance of compliance requirements.

Mark your calendar for April 11 over lunch for this important discussion, and watch your email and LinkedIn for your invitation to register to attend.

To submit specific questions for the panel to address, click the button below.

Jim Schildt, president, FEI Louisville

After going through another year-end close, I experienced deadline stress and thought other financial professionals might be experiencing the same. Handling stress in the work environment can be challenging, but there are several strategies you can implement to better manage and cope with stress. Here are nine tips:

1. Identify the source of stress: Start by identifying what specifically is causing you stress at work. Is it the workload, deadlines, difficult colleagues, or something else? Understanding the root cause can help you find targeted solutions.

2. Prioritize and organize: Create a to-do list or use a task management system to prioritize your work. Break down big tasks into smaller, more manageable ones. This will give you a sense of control and help you focus on one task at a time.

3. Practice time management: Efficiently manage your time by setting realistic deadlines and avoiding procrastination. Break your day into chunks and allocate specific time for different tasks. Avoid multitasking, as it can increase stress levels and reduce productivity.

4. Communicate and seek support: Openly communicate with your colleagues, supervisors, or HR department about your workload, concerns, or challenges. Seek support when needed and collaborate with others to share the workload or find solutions together.

(Click below to see the rest of Jim's stress tips.)

Jim can be reached at jims@feilouisville.org.

Manufacturing and Meta -

Impacts on Louisville

Commentary from URIC DUFRENE

Indiana University Southeast

Sanders Chair in Business

What should we make of the recent announcement that the parent of Facebook - Meta Platforms, Inc. - is investing $800 million in a River Ridge data center?

It's positive, as I told Business First when a reporter asked me for reaction. It’s not so much the facility but the name connected to the facility. It signals that yes, this region can land a company such as Meta.

In terms of jobs, projects such as these won't be replacing manufacturing anytime soon. Manufacturing remains one of Louisville's most important sectors.

Fueled by employers such as Ford and General Electric, Louisville manufacturing payrolls peaked at around 96,000 back in 1999. Since the trough at the Great Recession, they've been on the upswing. The latest numbers are close to 90,000.

Last year, in fact, one of the strongest sectors for Louisville Metro was manufacturing. Sector payrolls grew by 4.3% over the year, second to mining, logging and construction at 8.1%. 

Nationwide, manufacturing hit a soft patch last year, adding only 14,000 jobs with year over year declines in industrial production.   But signs are emerging that the national manufacturing chill may be warming up, providing further evidence of a recession miss. Evidence comes from positive reports for job growth, new orders, and customer inventories.

The last ISM manufacturing report came in much higher than expected.  

The last national jobs report, which blew all consensus estimates out of the water, showed that manufacturing added 23,000 jobs, exceeding the total number of manufacturing jobs added over 2023. In the last three months alone, national manufacturing added 56,000 jobs.   

The ISM new orders statistic, a survey measure of new orders, had the highest increase since 2020, and is now above 50, signifying growth in new orders.

And the customer inventories index plummeted to the lowest level since October 2022, suggesting that inventories may be thinning out, a sign of future production in the pipeline. An inventory measure like the inventory to sales ratio has remained flat for the past 7 months, suggesting that inventories have not grown relative to the level of sales.    While that measure has increased from the pandemic low of 1.1, when inventories were quite scarce, a measure of 1.3 is a historically low number.   

The current labor market will continue to support consumer spending, and when you compare this to the current state of inventories, national manufacturing may continue to see a steady increase in payrolls, unlike 2023.  

We should also expect the same for Indiana and Kentucky manufacturing. Indiana manufacturing saw a decline of 4,000 manufacturing jobs over 2023, and Kentucky was just about flat, adding 2,000 jobs. A good part of Indiana losses likely occurred due to the slowdown in RV manufacturing.    Jobs peaked in the Elkhart-Goshen region in 2022 and over a period of a year, declined by 10,000.  

Manufacturing often leads growth or contraction in the overall economy. Last year’s expected recession never materialized but manufacturing stalled.  As we begin 2024, manufacturing is now showing signs of growth, adding to the soft-landing argument.  Along with the recent blowout payrolls report, 2024 may be shaping up as another year of steady growth.  

Uric can be reached at udufrene@ius.edu.

February recap

Thanks to all who came out to celebrate FEI "Groundhog Week" at Ten20 Craft Brewery, and congratulations to the trivia winners! And to our president Jim Schildt, who correctly picked the winning Super Bowl team Kansas City and came closest to guessing the total points scored by both teams. Member Rick French was second closest.

Over pizza and brews, FEI participants were reminded that (in the movie) weatherman Phil Conners awakened to Sonny & Cher's "I've Got You Babe" every morning at 6 a.m. And, in actual history, the Germans first used a small animal to predict the weather, the Punxsutawney Elks Lodge hunted groundhog for food, and a newspaper editor started the traditional February celebration.

Let's do it again....and again.

By WILLIAM STOUT

FEI Louisville Director

Wondering about the direction of audit fees? 

Look no further than the Financial Executives Research Foundation. FERF recently released findings from on its latest annual survey of audit fees for public companies. While the data is from 2022, the trends should interest CFOs, controllers and other finance executives. 

I downloaded the full report from FEI National's website as a pdf. You can, too -- downloading the report as an FEI member almost pays for your annual membership!

The first section of the report discusses the value of an external audit. (And of course that’s from an FEI perspective, not AICPA.). The next section analyzes data on audit fees. The report then provides insights on the “key drivers of the changes in audit fees and related effort.” 

Additionally, it discusses the current environment of financial reporting and auditing, covers the impact of ESG reporting (environmental, social, and governance) and ends with observations about the audit marketplace in the future.

Importantly, the report was prepared in partnership with the Center for Audit Quality, including anonymous surveys and interviews with FEI members and CPA audit engagement partners. Half of the respondents were from the “Big Four” accounting firms, meaning that input was also gathered from firms like FORVIS, giving a more complete view of the environment.

Although the focus is on public companies, the report likely has relevance to private companies, too. (Reporting on public companies is easier as information is readily available from SEC reports.)

Here are some select findings: 

Click "Read More" below to read findings from the report.

Bill can be reached at william.stout@louisville.edu.

Derek Bell is part of the Business First

"People on the Move"

New FEI member Derek Bell is a Certified Public Accountant and the Chief Accounting Officer at RPG within Republic Bank.

Says Business First: "He leads the prep and review of monthly accounting data and evaluates the financial performance of third-party entities, ensuring alignment with benchmarks and budgets, and provides concise contract reviews and summaries for RPG.

"Derek is an Adjunct Professor in Accounting and Finance at U of L, showcasing his commitment to advancing financial acumen both in and out of the corporate realm."

Chris Taft, Advantum Health

Chris Taft is CFO of Advantum Health, an industry-leading practice revenue management authority based in Louisville. He is a 2023 Best-in-Finance honoree.

Before joining Advantum Health in 2016 as a Director of Business Development, Taft worked in wealth management for Merrill Lynch and UBS, and founded a mobile app startup. At Advantum, Taft held positions of Senior Business Analyst, Vice-President of Finance & Acquisitions, and Senior Vice-President of Finance prior to becoming CFO in 2022.

He earned a Bachelor of Science in Business Administration from the University of Louisville, and an MBA from Indiana Wesleyan University.

Kevin Trotta, Eminence Speaker LLC

New FEI Louisville member Kevin Trotta is the chief financial officer and treasurer for Eminence Speaker, LLC, a company with Kentucky roots that was purchased in 2023 by B&C Speakers, a prominent loudspeaker manufacturer based in Florence, Italy.

Kevin has served as CFO and Treasurer for nearly 30 years. He holds an MBA in business administration and a BA in accounting from Sullivan University.

Got news or job updates? Let the Louisville finance community know about it. Contact Chapter Administrator Terry McWilliams using the information below or directly at terrym@mozaicir.com.

FEI Louisville | www.feilouisville.org | 502.410.2113 | admin@feilouisville.org