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PJ Dick Final Client Presentation
- 1. PJ Dick Company Consulting Field Project 1
- 5. Operates in commercial, institutional, and government related projects.
- 6. Privately held company who reaches market through PJ Dick-Trumbull-Lindy Paving conglomerate.
- 7. Large presence in Western PA, headquartered in Pittsburgh. Growing market share in Ohio, DC Metro, Eastern PA, and West Virginia.
- 8. Notable Projects: Consol Energy Center, Three PNC Plaza, UPMC Children's Hospital, David Lawrence Convention Center, North Shore T-Line (tunnel).PJ Dick’s current regional territory Consol Energy Center
- 9. Go or No Go?? 5 In building a self performing activity group, does Drywall belong? Rewards Risks Yes With mode of entry dependent on PJ Dick’s risk taking capability
- 10. Topics of Discussion Project Overview Approaching the Problem Financial Analysis Scenario Analysis Summary & Recommendation 6
- 12. 8 Financial Analysis Incorporating a framework SWOT Analysis Economic Factors Market Analysis Industry/ Competition Analysis Vendor Relationships Matrix Strategic Factors Should PJ Dick self-perform the dry wall activity? Merger/Acq./JV/Self-Perform Value addition to customers No Synergies with existing business Synergy with current resources
- 13. 9 Defining the Project Scope Financial Analysis Vendor Relationship Mode of Entry Economies of Scale Industry/Comp. Analysis Market Analysis Synergies SWOT Analysis IMPACT FEASIBILITY
- 14. 10 What numbers say about the market
- 15. 11 What experts say about the market Although 2010 does not look promising, the industry is expected to rebound starting 2011 and continuing in 2012 Economic conditions will dictate responses from subcontractors and competitors Expert Quote, “Earning a 5% margin today is as good as earning a 15% margin 5 years ago.”
- 16. 12 A window of opportunity!! PJ Dick has weathered the storm and has performed better than the rest of the market The industry experts believe that the market should recover soon Therefore, we believe that there is a clear window of opportunity for PJ Dick to enter the drywall market in the present situation Industry
- 17. 13 Low Low Low Scenario Modeling Medium Medium Medium High High High Degree of Participation Modes of Entry Self - Perform How should PJ Dick enter into the Drywall industry? Joint Venture Acquisitions 13
- 18. 14 Financial Analysis: The Assumptions Ramp up % in acquisition is higher than JV because of the single entity factor and better management prospects. Ramp up % in JV and Acquisition increases as a result of increased synergies due to expertise, benefits of scale received from the partner company
- 20. Scenario Analysis: The Framework
- 21. 18 Quantitative Scenario Model 50% Risks, 50% Rewards Risks Risks Rewards Rewards The model is built. Let’s interpret this graphically!!
- 22. 19 Scenario Model Detail
- 23. 20 Looking for Scenarios with Low Risk / High Reward Scenario Decision Matrix y High JVH JVM AQM AQH AQL I II JVL Reward SPH SPM III IV SPL Low x Low High Risk
- 24. 21 Scenarios From Quadrant 1..... Scenario Summary of Results
- 25. 22 Summary & Recommendation Risk Takers choice Risk Averse Risk Seek Risk Averse choice
- 26. 23 Synergies/Target Companies PJ Dicks Requirement XYZ Co. Line of Business Dry Wall Dry Wall Revenue ~ $ 20MM $ 23 MM Net Worth/Credit Rating $3.8 MM/Good Positive/Good 2.5% (2008) 8% (2007) 12%( 2006) 8-15% Profit Margin Low Risk/ Optimal Reward/ Good Management Strategy Alingment Low Risk/ High Reward/ Superior Management
- 28. 25 Questions & Comments?
Notes de l'éditeur
- This is a nice opportunity to thank the PJ Dick folks who gave you all the information.
- I’d take out the Yes – No blocks from the middle, and go directly from the question to the types of analysis.
- Why not express the numbers in millions, so that they’re easier to read?
- Change “PJ Dick effect” to “Effect on PJ Dick”It should be PJ Dick has “weathered”
- This may be a good point to note that the 8% and 12% profit margin estimates may be somewhat optimistic – as suggested by the target company analysis later.
- EMPHASIZE assumptions. It’s the comparison across scenarios that needs to be focused on, i.e., Acq> JV > Self-perform
- The “under the hoods” look at how you arrived at the recommendations is a little lengthy. Be prepared to cut it short and focus on the decisions themselves.
- Remember to highlight the real facts. Our recommendations are based on several realties of PJ Dicks situation, which is also reflected in our model and rankings. Why Joint Venture Medium to AQ low, not high or medium. While true the rewards are the greatest in AQ med and high, we feel it makes very little sense to take on such a risky practice to attain a couple more margin points on a practice that only reflects about 10% of PJ Dicks revenue stream, perhaps 15% in near future is expanded. Given the fact that subs contribute to an overwhelmingly large portion of revenue to PJ Dick it just doesn’t make much sense to try and take on a course of action that increases margin on a small revenue stream, that can potentially harm or even decrease margins on a large revenue stream. That not good for PJ Dicks’s bottom line. That’s why we think, and our model reflects that even the risky choice reflect a low degree of participation and (disruption).
- Patrinos Corp profit margins are a far cry from the 8-15% that the client is expecting. This is worth reflecting on. What margin numbers did you get from the other Drywallers that you ran the D&B numbers on? Clearly, an important step for PJ Dick is to stress-test that assumption of Drywall margins.