Beyond the Bottom Line at Texas Pipe and Supply

Chief financial officer Carl Lenz recaps Texas Pipe and Supply’s growth mode, from new product lines to acquisitions—defining its success in the oil and gas industry

As the chief financial officer for Texas Pipe and Supply, Carl Lenz has played an integral role in not only overseeing the financial health of the company, but its continued growth into new markets, environments, and product lines. Here, Lenz discusses his responsibilities at the company, a recent acquisition, and the effects of the current oil and gas environment.

How did you pick finance as a career path?

Carl Lenz: Growing up, I had an interest in, and liked, math and numbers. I took an accounting class in high school my junior year. I liked it and took another class in my senior year. I investigated the profession a little bit, and the research showed that over the next ten years the accounting industry would be growing significantly with many opportunities.

Do you ever feel like you’ve gotten to the point that you’ve exhausted your experiences in the industry? Or do you feel like you’re always learning something new or growing in some way personally?

Lenz: Accounting can be repetitive. Some people find it monotonous. But I’ve been very fortunate in that for the last fifteen years I’ve been involved more as a financial advisor and consultant to the owners,  kind of a steward to the company. I’ve moved away from a big part of the record-keeping and the books of the company, and more to helping the company grow and achieve the owners’ vision of where they want the company to be.

How did your previous positions prepare you for this role?

Lenz: At each of the companies I came from, I had different mentors, different environments and cultures I worked in, and I wanted to bring the positives that I liked about each of those experiences to Texas Pipe. There was already a very deep, rich culture here, so I just tried to tweak it.

You helped orchestrate the merger with Dodson Global. How did that come about?

Lenz: We were looking to grow the company and for opportunities to either expand our product-line offerings, expand into new regions and territories that we weren’t in, or find a business that complemented our existing business. We targeted products that we didn’t currently sell that complemented pipe, such as carbon fitting and flanges.

How would you describe your role in the acquisition?

Lenz: I was the lead person in valuing the company and coming up with the purchase price that we were going to submit in our initial bid. I also led the due diligence and coordinated the legal work with the various attorneys involved. I sat down with the owners, and we discussed the return on the investment, the risk of the investment, the amount of the investment, and the growth opportunity of our two companies combined.

What were some of your biggest challenges?

Lenz: I understood the magnitude of the work involved, but I probably didn’t understand how much of a sacrifice would be involved in the process. Probably the most challenging task was at one point I was managing and coordinating with four different law firms, while still trying to lead the due diligence.

When reviewing the financials of a company like Dodson Global, what are you looking for?

Lenz: You look for the strength of the company and how well it is managed. You also look for trends, where there may be potential liabilities or hidden liabilities, or where other financial issues might arise.

For instance?

Lenz: One of the matters that came up in looking at Dodson related to their fittings and flanges that fit on the end of a pipe. They connect pipes together, and the potential for an explosion or a failure of one of those products could be significant and expensive. We realized we needed to make sure we had sufficient insurance to cover our exposure in case of a catastrophic event.

You mentioned earlier that your company is exploring multiple growth avenues. What are some examples of such avenues?

Lenz: We added a new product line, instrumentation stainless tubing. It is a real niche product. Also, we expanded into the international markets by hiring salespeople residing overseas.

_B1B5277_bw300x450
Carl Lenz, CFO at Texas Pipe and Supply

Has dealing with international law, such as compliance, been an issue?

Lenz: I’ve had to hire a law firm in Singapore to help us. It is necessary to have somebody that knows and understands the compliance requirements in each country. It’s expensive, it’s time consuming, and it’s expertise that we don’t have in-house, so you have to engage experts. It has definitely been a challenge to find someone in those countries who can help us comply with the local law, both in Singapore as well as in the United Kingdom.

Six months ago, the United States had 1,800 active drilling rigs. Today it’s less than 1,000. How has your company been affected?

Lenz: Approximately 60 percent of our pipe is sold to customers in the oil and gas industry. That particular industry of our markets is feeling softer demand for our product, and therefore is producing lower sales.

What are you doing to offset the decline in demand?

Lenz: We started reducing our inventory purchases when the oil price started falling. The next step is to reduce our capital expenditures and eliminate unnecessary expenses. Our company has a very strong balance sheet, so we’ll weather this storm.

In addition to your leadership in the company, you also make a point to give back to the community.

Lenz: My wife and I feel that it is important to give back. One of the causes we support is called Impact Back to School Night. We take financially underprivileged kids to get all their school supplies. We basically equip them before school starts, and then we take them out to dinner, usually for pizza or something. We have been doing this for almost twenty years, and it is so rewarding. My wife and I also sponsor kids who can’t afford to go to summer camps, and we purchase nonperishable food and diapers and help our church distribute those items to needy families.

Your company also is very philanthropic.

Lenz: The owners really have a big desire to give back to the community. They started a foundation that donates to many of the medical research facilities here in Houston. The owners also acquired property and gave it to the city of Bellaire, which will become Evelyn’s Park. They are very supportive of the local police and fire departments in many ways.

What are your sights set on right now?

Lenz: I look forward to continued growth both professionally and personally. Professionally, there are always new things to learn, new challenges, and opportunities to develop others. Personally, my wife and I have raised three wonderful children, and we look forward to traveling to new places on our bucket list, and pursuing our interests, such as tennis, hiking and biking, snow skiing, and just about anything outdoors.