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Spaulding Smails

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Posts posted by Spaulding Smails

  1. 16 minutes ago, G650 said:

    Well then you get into multiple banks and that's no fun. One email and any money I have can be in any account I have.

    Edit: My private side team does all the money moving, including weekly payroll, in and out of operating, etc..

    Two takeaways from this:

    -So glad we're with a mid-sized bank now (Broadway) instead of a behemoth (BBVA) like we were a few years ago.  BBVA was a revolving door of inexperienced "bankers" who didn't know their head from their ass.  Constantly re-telling our story, no proactivity.  Broadway has been a dream to work with.  They're proactive, they know me, and I truly feel like they have our best interest in mind.  They're all about the long-term relationship.  They've been rock stars over the last week through this SBA process.

    -So glad we outsource payroll.  I've been able to keep my office focused on operations.  I sent one note to our PEO rep Wednesday.  They're already handling hundreds of other businesses like mine that need the payroll info.  No problem.  We'll have the info to you by EOD Thursday.  Bam.  Perfectly formatted.  All the information I needed.  Would have been a pain to compile that internally.  

    • Like 1
  2. I've always had trouble sitting still, and we've had a full plate with kids' activities, etc for the last several years, so coming to a complete stop has been difficult.  Work has been bananas trying to figure this all out, so I'm spent at the end of the day.  We've been eating good, but I've been drinking too much.

    To keep busy, I've knocked out a ton of projects around the house.  Still a bunch more on the horizon.  My son has been obsessed with "Forged In Fire", so we started making a machete.  That's been great spending time with him and letting him take the reigns there.  Every night, we go outside and shoot hoops or hang while the kids ride bikes.  Been playing a ton of darts and 9-ball with my wife.  And lots of card games.  The only thing that I really watched on TV is sports, so I really miss that.  My running has been back up.  Averaging 30 miles/week over the last two weeks which is double what I was doing.

    We're at the ranch right now.  It's been incredibly cathartic.  I've been working as much as I would be at home, but it's nice to be able to go for a long walk around the place looking for sheds when I need a break.

    • Like 1
  3. 13 hours ago, Brew said:

    Depending on financial strength and overall revenue, it could also just suck rather than be a true need. Need is too arbitrary in this scenario. I can say factually I’m looking at being down $1.5M over 4 weeks. We were also on record pace to easily eclipse $30M, so without that revenue it’s going to suck. I also have a stupid amount of receivables and WIP out that will have some loss built in. However, I don’t know that we “need” it to survive. My partner group is taking a pay cut worst case and we may have to lay off a few people. I have other clients that have a true need for funds to stay open that probably aren’t going to get it. That’s not even touching on the point that our grandkids are probably going to be paying it off as we’ve already spent our kids money.

    This is very similar to our forecast and the pending implications.  As I said previously, we're in a good industry (construction / facility maintenance) with a good balance sheet and a strong backlog.  We had our largest month ever in February, and we were well on our way to $10M in revenue this year (30% YOY increase).  Even with Abbott re-opening construction yesterday, we're going to see a drop in production and revenue over the next few months.  Not to mention, I'm now forecasting a much lower than originally planned Q3 and Q4.  So, even if we're not feeling the pain to the magnitude and immediateness of other industries, this is going to leave a mark.  We don't "need" the SBA loan to survive, but we're damn sure going to try to take advantage of it.  If nothing else, it extends our runway several months to adjust our business model and keep a big chunk of our employees on the payroll that we would have otherwise had to consider laying off.  

    • Like 2
  4. 1 minute ago, Wally Pryor said:

    Same here.  Open season for me if my outsourcers can be included in payroll costs but thinking it's just my W-2'd staff. 

    Am curious about the PTO payout included in the formula.   The sheer definition of it allows you to double dip as that paid PTO is already in the W-2 comp.  

    That part was confusing to me as well.  You have to think it's going to be what's showing up on your payroll reports.  Wages, benefits, retirement, PTO.  Things that can be validated and confirmed.  If it is open to 1099s, it leaves it way to wide open for manipulating the subs and potential fraud.  I think there's going to be plenty of attempts at fraud as is, but isolating it to W2 reports at least makes it more standardized.

  5. 1 minute ago, Wally Pryor said:

    Yeah, thus my question.  Unfortunately, I see the 2nd being true.  For employers, just W2 comp being under the payroll cost umbrella. 

    I hope I'm wrong.  Not an unusual occurrence. 

     

    It's my interpretation that, as an employer, the calculation for payroll is based on W2 wages only.  I'm going to clarify that on my call with my banker tomorrow.  

  6. For two people, Gin Rummy is fun.  My 12 yo son and I have been playing that a bunch.  Hearts and Spades are great for four players.  You can play a modified version of Spades with two players as well.

    I'm glad you brought this up.  We used to play the shit out of VC in high school.  It was some card game that a Vietnamese friend of mine taught us.  Anyone else play that?  I need to go back and re-visit the rules and teach it to my kids.  That game was a blast.

  7. 2020 started out like an enormous turd in a punch bowl before the rona even entered the picture.  I told people that "January 2020 was the hardest year I've ever had in business".  From a business perspective, in January, we had:

    -Two vehicular accidents (one minor that was our fault, the other one totalled our vehicle but was the other driver's fault)

    -One lawsuit filed against us (bullshit three year old warranty claim that we'll win, but still going to be a pain in the ass)

    -Two recordable injuries (one of them major where an employee almost cut his finger off)

    -Had to issue a $60,000 credit (it was a deposit from December and the client decided not to move forward, so no money lost, but started off 2020 $60K in the hole from an accrual standpoint)

    Surprisingly, we killed it in February.  Biggest month ever from a revenue standpoint.  We had planned on hiring seven more employees in March.  

    2020 can eat a bag of dicks.

    • Like 1
  8. Below is the SBA summary that my banker sent over.

    Paycheck Protection Plan (part of the H.R. 748)
    ** The Bill has passed the Senate and is set to be voted on in the House on Friday (3/27). The President will need to
    sign, then the Bank will need to receive implementation guidance from the SBA before the program is available to our
    customers. **
    Key Program Details (subject to change prior to final Government approval):
    Eligibility –
    Small businesses, non-profits, self-employed, and independent contractors.
    (Churches and/or religious affiliated businesses MAY qualify – details to come)
    Must meet SBA Size Standards (based on NAICS Code of subject business).
    Loan Amount –
    Lesser of $10MM OR any outstanding balance on SBA Disaster Relief loans obtained between January 31, 2020 through
    date debt is eligible to be refinanced (information included within your Disaster Relief loan documents) PLUS:
    Existing Business:
    2.5x the average monthly payroll cost incurred and paid over the year prior
    New Business (less than 1 year):
    2.5x the average of 2 months payroll from January 1 st to February 29 th , 2020
    Seasonal Business:
    2.5x the average of monthly payroll from February 15 th or March 1 st , 2019 through June 30, 2019.
    *Payroll costs include salary, wages, and payment of cash tips, employee group health care benefits, including
    insurance premiums; retirement contributions; and covered leave. Salaries/Wages over $100,000 per employee
    will not be included.
    Loan Requirements -
    No Personal Guaranty
    No Collateral Requirements
    $0 Guaranty Fee
    Business must certify loan is necessary to continue to operate, retain their employees, and/or make mortgage and utility
    payments and that you have not applied or received another 7(a) loan for similar purposes.
    Loan Forgiveness –
    Calculated based on payroll costs, mortgage interest, rent, utilities for the 8 week period paid after loan origination.
    Payroll costs over $100,000 per employee will not be considered in the forgiveness application.
    *Amount will be reduced if the # of employees used to determine loan amount is decreased or salary expense is
    reduced*
    Business must certify funds were utilized to keep business operational and retain/pay employees.

    • Like 4
  9. 2 hours ago, VABuckeye said:

    Yesterday there was a portal open to apply for SBA disaster loan assistance online.  Clicking on the link today takes one to a page where the application can be downloaded to be printed, filled out and mailed in.  Yeah, that's going to be an efficient process.  Furk.

    My banker just sent me a summary.  I've never really considered an SBA loan, but this one may be pretty enticing.  I'll be curious to see what type of conditions accompany it.  But, on the surface, it seems to be a pretty solid deal that would help a ton. 

  10. 16 minutes ago, Brew said:

    I’ll get through a lot of the rest of this when I get some time tonight, but the first bill does NOT guarantee 80 hours. It is an FMLA extension and based on instructions from my two labor law attorneys if you are shut down as nonessential this bill does not cover you. It only covers business entities open where people can’t come to work for one of the 6 established reasons. You have to dig into the wording that was used in the bill and the FMLA law it lays on top of. That doesn’t mean they will not come back later and pull that group in with a future interpretation, but that is our understanding as of today. It is also not addressed in any specific DOL posting at the moment.
     

    I would be curious how they are coming to their interpretation.

    That's good insight.  I haven't read through the bill, but our HR consultant indicated that we WOULD be on the hook for up to 80 hours if a shelter in place prohibited our people from working (assuming they can't work remotely).  If it's limited to those six reasons (essentially direct effect of COVID-19), then we're in a much better spot as a company, but our employees are now up a creek.  I understood the FMLA piece that extends beyond that timeframe the same as you.  

    Let me know if you have any more insight or can cite the specifics of that provision that I can share with our consultant.  

    FYI, it sounds like the DOL updated the effective date for that first bill to April 1 to coincide with the start of the quarter as opposed to the previously communicated April 2 enactment date.  

    • Like 1
  11. Below is the summary of the second stimulus package that I just received from our HR consultant.  If true about advance refunding, this could be a huge shot in the arm for many businesses from a cash flow perspective.  Lots to be verified and digested here, but it's a start.

    • Late last night Senate lawmakers struck a deal for a $2 trillion stimulus package aimed at helping the people, states and businesses devastated by the coronavirus pandemic. The Coronavirus Aid, Relief and Economic Security Act — or CARES Act —  covers an array of programs, including direct payments to Americans, an aggressive expansion of unemployment insurance, billions in aid to large and small businesses, and a new wave of significant funding for the health care industry. The Senate is expected to vote on this later today! Here are the highlights as it stands :
      • Financial assistance to Americans (direct checks based on income level)
      • An extended unemployment insurance program for laid-off workers that will allow for four months of "full pay," and raise the maximum benefit by $600 per week. The provisions for UI will be back dated to January 27th.
      • $150B for the Health Care System.
      • $150B to state and local governments.
      • The CARES Act provides for advance refunding of paid sick and family leave credits so that employers can get the money they need to provide paid leave in the near-term.
      • $350B for small businesses impacted by the pandemic in the form of loans…and some of these loans could be forgiven (portions pertaining to payroll costs)! Businesses could receive a maximum of two and a half months’ worth of payroll costs, up to a maximum of $10 million, but forgiveness would be proportional based on how many employees the employer retained compared to its pre-COVID-19 levels. Employers can receive credits and loan forgiveness for pay provided to workers who were laid off on March 1 or later if they rehire and pay them.
    • Like 3
  12. 1 hour ago, Gale Snoats said:

    I'm a commercial litigation attorney in Austin with strong focus on construction.  The order issued by COA is poorly drafted and is creating a ton of confusion in the industry.  COA's intent is to shut down pretty much all residential and commercial construction but the order, as drafted, has holes that allow for exceptions to swallow the rule.  COA issued a 'clarification memo' earlier today but it isn't helping.  I've been on the phone with clients all morning who are scrambling trying to figure out what to do. 

    Get em Sea Bass!

    AIA sent out a memo from their attorneys basically outlining the same thing.  There are numerous conflicts with Travis County orders, direct contradiction of previous information, and the memo provided by Development Services last night essentially "fails to provide clarity".  

    • Like 1
  13. The boy and I are rolling out Saturday morning as well.  Need to fill protein feeders.  We'll see if we can call in a gobbler.  May sit in the blind a few evenings to see if an axis doe or pig walks out.  I'm so damn ready to get out there and turn off for at least a few days.

    • Like 2
  14. 3 minutes ago, RollLeft said:

    Given your industry it sounds to me like you run approximately 70k of payroll a week.  Your in a good position compared to most.  The question is cut people or tap into your lines of credit until  the government money comes in.  How's your WIP?  If strong i wouldn't hesitate if you insist on keeping staff.  It's a tough choice i don't envy it.  That said the guys who find it difficult to use their credit lines are the guys who never have to use them.  That's a good thing, until shit like this happens or you want to scale.

    WIP is solid.  We're over-billed on a number of jobs and gross margins are tracking ahead of budget on 8 of our 10 largest projects.  I have two stinkers that are getting drug out and eroding profitability, but otherwise we're fine.

    BTW, you nailed the weekly payroll number.  Damn near to the penny.  Well done.

    • Like 1
  15. 32 minutes ago, Mach 1 said:

    How did those calls go? I'm a real estate developer that was just about to sign a $7MM construction loan with a hard completion date.  The force majeure provision was limited with no pandemic language.

    Now this lender has temporarily closed up shop and isn't funding any draws.   Nice, right?  I understand construction crews needing to push forward, but how long does this go on if the lenders don't fund.  Hopefully this ends soon and we don't have to find out.

    The calls I participated on were primarily preparatory in nature.  To your point, our three largest construction projects all have limited force majeure provisions with no pandemic-specific language just as you described.  We're going to see if our February 20 draws fund by March 31 and use that as a barometer for work continuation.  We're not over-extended too terribly much if we limit it to that timeline.  Our GCs have indicated that the jobs are on track to fund.  

    Despite all that, we are absolutely tightening up our receivables.  We have reduced our DSO by 15% in the last week.  On the service side, we've started collecting payment at time of services rendered, even for long-standing customers who have terms, but we're waiving credit card processing fees.  This has really expedited payment, and the decrease in exposure through AR has outweighed the credit card fees we will incur.   I'm trying to build up as much runway as possible to float as many employees as possible as long as possible if work really does get shut down.  

    • Like 2
  16. 39 minutes ago, Sbbruin said:

    We have several tenant improvement projects currently underway.  Where we normally have subs from different trades working simultaneously in space, we are staggering and limiting the work to a single trade at a time.

    We also have a MASSIVE ground up development that has basically stopped.  And it is going to be brutally expensive.

    On the ground up project, has it broken ground yet?  It's obvious that developers are going to undoubtedly suspend new projects, but I'm curious how many will push on with active projects vs. shuttering half-way through construction.  I guess that's a cost-benefit analysis comparing future investment to complete, tenant viability, debt service and degradation of an unfinished structure among other factors.

  17. 35 minutes ago, G650 said:

     

    There's several reasons actually. First and foremost, when your road caves in or watermain breaks, we are the ones that have to fix it, and we aren't like Roto rooter just hanging out waiting for a call. We can't just idle and then go, it's a lot of moving parts.

     

    Secondly, we can keep generating economic activity fairly safely because we are all spread out in the open air working, and we are self contained, ie. not customer facing. We don't mix with the public so there's no wider transmission risk.

     

    ETA: Even in Italy the road contractors are still working.

    100% this.  I think the decision to keep construction active by some states and municipalities is multi-faceted.  There's probably less risk of a four-man roofing crew being exposed while putting down a TPO roof at the strip center in Florence than when they go to HEB or Walgreens or the gas station on the way home.  I would hope that most politicians driving these orders understand that.

    Second, it's extremely difficult to differentiate some businesses (mine included) that provide both essential and non-essential work.  We provide construction and facility maintenance services.  On the facility maintenance side, we service essential services like medical, restaurant, manufacturing and child care facilities.  While we're prepared to shut down 2/3 of our business, our attorneys have advised us to continue working until we receive specific directives that shut down our construction sites.  We're practicing social distancing on the job and have equipped all of our employees with additional PPE and sanitizers in accordance with CDC guidelines.  

    Lastly, I think there would be tremendous financial and legal repercussions if construction did shut down.  We've had a number of preparatory calls with our legal team to discuss Force Majeure clauses in our contracts.  But, how do owners, lenders, tenants and all other parties react / respond when a location is set to open May 1 but gets delayed due to the impact of shelter in place orders?  Or, if you're a homeowner on a lease-back of a house you're selling while you wait for your new home to finish construction, and that gets delayed, are you out on the streets for a few months?  

    I know these financial and legal issues pale in comparison to loss of life and the overall impact on the global economy, but at some point, they're going to have to be considered and discussed.

    • Like 4
  18. I'm thinking the same thing @Noogman.  Assuming we don't have a bullshit shelter in place by the end of next week, I'm going to head to the ranch for a few days.  Spring turkey season is upon us.  Wouldn't mind busting a gobbler and maybe a hog or two.  Given the circumstances, I may whack an axis doe if one walks out.  

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