External growth — especially the kind that takes a company into new markets — usually means adding headcount in finance, too. And that exercise has been front-and-center for CFO Mark Castaneda since he joined Primo Water in March 2008.
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“Three years ago we had people who got the business from startup, to a follow-on offering and a private round at $40 million,” he says. “So we needed more sophistication. Wanting to be a public company someday, we knew we needed to add horsepower to the team.”
Since then the finance staff has grown to 14 from five. And so far his team has been involved not only in taking Primo Water public — with a $100-million offering in November 2010 — but also in supporting acquisitions and, recently, helping develop a new business line.
With the overall Primo workforce having swelled to 115 from 65 employees over those three years, the bottled-water distributor — which provides three- and five-gallon containers via in-home dispensers — now is working to add systems that dispense single-serve carbonated beverages, as well.
Outsourcing for Finance Staffing
It’s been a busy three years indeed.
In his early days with the company, the 46-year-old Castaneda says, he sometimes found finance employees by tapping into his own Rolodex — including some former colleagues from his days at propane-grill gas “cylinder exchange” company Blue Rhino, like Primo based in North Carolina. At Blue Rhino, Castaneda worked as CFO with CEO and founder Billy Prim, who later moved on from Blue Rhino to start Primo Water in 2004. (Castaneda also had helped Prim take Blue Rhino public in 2005.)
But these days, Primo’s finance recruiting effort in Winston-Salem is getting a hand from finance staffing firm Accounting Principals. The skills Castaneda needs — varying from finance job to finance job, of course — usually have been developed on the job, rather than in schools. “We’re looking for people that can communicate well,” he says. “That sometimes can be difficult with accounting. It’s not just verbal; it’s interpersonal communications. For one thing, we’re communicating with our partners.”
Concentrating on such “soft skills” in finance is an increasing part of the recruiter’s job, says Kathy Gans, a Denver-based Accounting Principals senior vice president. “Usually, I see these skills through experience, not education,” she says, because many universities still haven’t learned how to train for these “real world” corporate needs. She says some of the best candidates she sees have distinguished themselves through volunteering for task forces at their prior companies, and getting involved with things like integration of new software systems.
Gans describes the job of outsourcing in that specialty recruitment field as “helping the leaders in the accounting and finance department to build their own teams” — in a wide range of forms, and “all the way up to controller and CFO.” CFO candidates, she says, increasingly need to have cross-disciplinary skills that give them broader company understanding. “To me,” says Gans, “the CFO is no different from a CEO or a COO; the CFO has to have the same skill set as any executive and leader” at the highest level.
As Primo’s Castaneda describes it, the relationship with Accounting Principals is based on an understanding of Primo’s specific and general staffing needs — along with awareness of his company’s “eight values,” a cultural list of qualities it prizes in its personnel. (The eight, in no particular order, according to Castaneda: flexibility, integrity, competitive edge, respect, a customer-first sense, innovation, passion, and fun.)
For Primo Water, the Accounting Principals relationship is part of a broader outsourcing strategy, in which Primo turns to others for such things as bottling, equipment manufacturing, and water-bottle distribution, for example. That’s one reason that employment is in the low hundreds rather than the thousands. Primo’s water is purified and bottled at more than 60 locations, and made available at retail locations nationwide.
And the recruiting relationship is about to get even busier, it seems. Castaneda says the company envisions adding two or three to the finance department this year, with a more-significant spurt possible next year.
Lately, Primo’s growth has partly reflected the environmental backlash against water in small plastic bottles — which benefits large-bottle “water exchange” systems like Primo, Castaneda says. Primo’s latest financial report showed fourth-quarter sales surging 61%, to $12.7 million. The net loss from continuing operations — in part recognizing higher expenses from its increased headcount — widened to $10.7 million from $3.2 million, but the company reported non-GAAP adjusted EBITDA of $206,000.
‘Keurig for Cold’
The recent $13.1-million acquisition of some assets of Omnifrio Beverage Co. is being positioned by Primo Water as potentially transformative because it allows Primo to offer “hydration stations” that can provide a range of carbonated beverages in single portions, as well as purified water. Castaneda says the company thinks of it as “Keurig for cold,” comparing the carbonated-beverage delivery — using an Omnifrido CO2 cannister in each water machine — with the wildly successful single-cup Keurig coffee service.
The prospects for rapid growth remind Castaneda of his days at Blue Rhino. “It was an environment where there was a lot of risk, and a lot of uncertainty. I loved that environment,” he says. “You were cutting a new path,” and growing all the time.
But it hadn’t always been that way in his career. After starting in public accounting, with Deloitte, he started in corporate finance by working with private energy companies, and there learned about different workplace models. At entrepreneurial companies “everybody I’d worked with was self-motivated,” while in other places he found that “If the work was light, they just worked slower.”
A lesson that he learned as a manager: “You’ve got to set people up for success.” It’s an approach he tries to take as the finance department expands at Primo Water, with Accounting Principals’ help.
There’s a sense in the finance department that the Omnifrido acquisition “opens a much bigger market,” the CFO says. And more and more, among the employees being hired, it puts the emphasis on one of the eight Primo Water values in particular: innovation.
That’s because, says Castaneda, “we’re trying to change the way people do things in their homes: the way they drink water.”