WHY MANAGING IT MATTERS

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Southwire’s ability to make a positive impact for our key stakeholders depends on our financial success. Strong financial performance enables Southwire to pay our employees, suppliers, creditors and shareholders—plus significant federal, state and local taxes, which strengthen our communities. Further, stable financial performance makes it easier to attract motivated employees who want to grow with the company.

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We understand strong financial performance is a prerequisite to obtaining and maintaining lines of credit from our suppliers and lenders, and Southwire models our financial management approach on public companies’ best practices. We develop a business plan each year and track performance against that plan. Toward the end of the first quarter, we conduct a gap analysis, develop a forecast and determine how to get back to plan, if needed. Southwire obtains third-party financial audits and links payment of incentive compensation (see Financial Incentives, below) to the auditor’s clean opinion statement.

Governance & Transparency

Southwire’s finance group—responsible for tracking the financial performance of our business groups (Construction Systems & Solutions Group, Power Systems & Solutions Group and International Group)—reports to our chief financial officer. The finance group adheres to strict deadlines and the goal is to close our books in a timely manner for monthly reporting. Our executive leadership team and senior leaders of our business groups review our financial reports monthly in an all-day meeting. This process includes review of variances to Plan, action steps to get back on Plan when needed and a full year forecast discussion. We share our quarterly reports with Southwire’s board of directors.

Southwire communicates our financial performance with other stakeholders in a variety of ways.

  • Shareholders. Each quarter, we send shareholders a letter with financial performance highlights; we provide detailed financial results on an annual basis.
  • Employees. Our chief executive officer provides a summary of our financial performance at quarterly town hall meetings, which are live-broadcast and recorded for Southwire employees. In most quarters, we also update bonus-eligible employees how we are doing compared to Plan.
  • Creditors. Southwire holds a quarterly earnings call with our lender base. Prior to the call, we prepare and send a package of materials to this group. We also complete forms, validate compliance metrics and communicate to formal lenders through monthly, quarterly and/or annual reporting.
  • Strategic Suppliers. Our financial health also affects our suppliers, so we provide them with assurances that Southwire is profitable. For example, our current ratio—Southwire’s current assets over current liabilities—is greater than one, demonstrating our ability to pay both short- and long-term obligations.

Financial Incentives

Some measures of our financial performance affect our entire workforce, which receives a financial reward based on achievement of specified financial results. Additionally, most of Southwire’s incentive programs, affecting one-third of our salaried workforce, revolve around our financial performance—both from an income statement and a balance sheet perspective.

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Benchmarking

As part of our internal reporting, Southwire tracks our financial performance relative to our public competitors in North America and globally. We review this comparison at a senior leadership level and include this evaluation in our board reporting.

External Evaluation

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As a privately held company, Southwire maintains the confidentiality of our financial performance for competitive reasons.

The ultimate litmus test of financial performance is a set of audited financial statements with a clean opinion, so Southwire engages a large, international third-party auditor to review our annual financials. The banks that loan Southwire money also conduct limited audits.

A consortium of banks, insurance companies and pension funds invest in Southwire through debt instruments. To provide a level of confidence for these investors, we share our financial performance and strategy with rating agencies Moody’s and Standard & Poor’s (S&P), which provide rating analysis for Southwire. Two recent reports from S&P are available under Related Resources. These reports are reprinted with permission of Standard & Poor’s Financial Services LLC, a wholly owned subsidiary of S&P Global Inc, copyright 2017, all rights reserved.