Bill Kelley's promotion to CFO of TreeHouse Foods in 2020 was part of a shift in corporate strategy that would require a rethinking of the processes and systems the finance and accounting teams used.
The private-label food and beverage company, little-known despite being in the Fortune 500 with $4.5 billion in annual revenue, had increased its margins and built a strong bottom line. It wanted Kelley and a revamped executive team to focus on a 1 to 2% top-line growth goal.
“We became analytical about it — maniacal about it — to figure out where we can grow,” Kelley said last week in a CFO Thought Leader podcast. “I wanted to make sure finance and IT was structured in a way that could support that strategy.”
Meeting that goal meant embedding in each of the company’s two business divisions — beverages and meal preparation — a senior finance analyst who reported directly to the division presidents but maintained a dotted-line connection to finance.
“We changed the financial reporting relationships so these business unit finance partners [were no longer] hardwired in finance,” he said. “So, the CFO of the beverage division reports to the president of that division, [but we] knitted that to the finance organization. We own training and development, promotions and merit opportunities.”
Hardwiring the position into the business unit, Kelley said, was key to enabling better integration between finance and the businesses they support.
“They are the copilot, the chief of staff, to the business unit presidents,” he said. “They help them make decisions on how to allocate capital, how to make decisions around profitability, how to grow the organization and how to manage the costs — so, very senior roles.”
Another transformational move he made was to systems. He implemented a SAP Central Finance tool to integrate reporting and added a business planning control system called SAP BPC on top of that.
In addition, he deployed artificial intelligence and robotic process automation throughout the finance and accounting functions to free up staff time for the analytical work the growth targets required.
“We have about 30 or so bots automating manual transactions,” he said. “The idea of getting to the right data [to track top-line growth] has to start with allocating our time, spending more time on insights and analysis and not just data collection or transactional processes.”
The use of AI is key given the complexity of the company’s product mix, he said. As a private-label producer, the company’s products are customized to client specifications, so it can’t rely on mass production.
“We have many more skews” than other producers, he said. “So, our ability to automate and streamline and get the data set correct at that level of detail is really key to our profitability.”
Up through the academies
Kelley said he came to the transformation assignment well-prepared thanks to his experience working at what he calls the academies of the finance profession — big multinationals like Pepsi, Cargill and Kraft that have a reputation for growing finance and accounting careers through their extensive training and job experience opportunities.
“These are places that put finance and accounting first, and expose you to strong financial training disciplines,” he said.
In his nine years at PepsiAmericas, for example, he changed roles every 18 to 24 months, which exposed him to a number of control and auditing responsibilities. In one key role, he and a financial reporting partner led the effort to design and implement the company’s response to stepped-up regulatory requirements under the 2002 Sarbanes-Oxley law.
“We put in controls and systems processes for SOX,” he said. “Like everyone else, we put in too many.”
He also had regular exposure to new roles in his 12 years at Cargill, the giant food producer, particularly in audit, and at Kraft, where he rose to global head of internal audit.
EPS, cash flow targets
In addition to the systems he implemented to meet growth targets, he’s helping TreeHouse meet two other performance goals: reaching at least $300 million annually in free cash flow and growing earnings per share (EPS) 10% a year.
To help him track progress, his financial planning and analysis (FP&A) team is tracking three metrics in particular: revenue growth, service levels, and working capital.
“Those are the three areas that are key to our business,” he said. “Our investment thesis that we talk to investors about is our unique ability to generate an outsized amount of cash flow, and that cash comes from revenue, which comes from good service to our customers and from our ability to manage our balance sheet appropriately.”
He’s not quick to recommend course changes.
“I consider myself a student of the business,” he said. “You need to be a great listener. I’m hesitant to weigh in too quickly and take a side without [thinking long and hard about it]. The CFO has to aim, aim, aim and then shoot.”