Listen to the full episode here!
PODCAST OPENER
Welcome to the Inside Insight podcast presented by CR Solutions. At Consolidated Risk Solutions, we are taking our expert knowledge of the insurance world and using it to innovate the industry using technology, groundbreaking thinking and a personal touch. Join us as we talk to masterminds both inside and outside of CR Solutions about how the world of insurance is changing, and how we can be sure to grow along with it. If you have to manage insurance in your work, then you can benefit from the interviews, conversations and insights we’ll be exploring to elevate your business’s success.
INTRO (00:42 – 04:18)
Trevor Casey: Beau, this podcast is reaching so many people that we are getting CFO’s in here.
Beau Lunceford: We are kind of amazing I think.
Trevor Casey: Not only are we having CFO’s, we’ve had CEO’s, we’ve had presidents and we’ve had owners, I feel the reach of this podcast is starting to impress me a little bit. And some of these people are a little terrifying to talk to because they are so smart.
Beau Lunceford: I don’t know if other people have noticed this. But we have kind of pulled back on a lot of the questions that we asked during these conversations, because they answer our questions before we ask them.
Trevor Casey: And that just shows the level of knowledge and love that these people have for what they do. And this episode is super special, because we have Steven Goldstein, who’s the Chief Financial Officer at Cauldwell Wingate. I’m sure you’ve heard of Cauldwell Wingate, they’re a huge name, especially in the New York area.
Beau Lunceford: Not only is the name well known, but Steve just presents as this guy who as soon as he got on the call with us. And I wonder if you’re going to be able to hear it or not, he just dominates the space with like, I am knowledgeable, and I am powerful, and I am awesome. But also still very approachable. Like, we still talk to him and it was just a fun conversation. And I really hope that people get to hear that.
Trevor Casey: And what’s really great, I think with Steven is that he’s worked in so many different roles over his career. So he truly understands what it takes to run a successful company that you can’t sit up in the C-Suite and just live your life, you really have to implement from the top down. And that’s how you have a successful company. And I think Steve is really embodies that and shows that, us management needs to speak with operations need to speak with the finance team, all of us hand in hand, make a successful project. It’s not just the guy who’s bidding the project or the project team who’s running it or the insurance person, it’s everybody hand in hand.
Beau Lunceford: And Steve does a really good job of kind of walking us through the importance of that in this conversation. But before we dive into it, Trevor, tell us a little bit about Steve and his history. Give us a little bio for him.
Trevor Casey: Absolutely. So currently, Steve sits as the Chief Financial Officer at Cauldwell Wingate. Steve also plays a pivotal role in driving the company’s financial vision. In this capacity he oversees the overall financial management of the organization. With over 30 years of experience in the public accounting space, including a decade at one of the largest construction accounting firms in the US, Steven has a wealth of expertise. His background includes leading audit engagements for general contractors, specialty contractors, construction associations, and even some labor unions. Over the last four years, Steven has been instrumental in advising various specialty trade contractors, which will contribute to the realization of Cauldwell Wingate financial objectives and strategic goals. Goldstein also received his Bachelor of Science degree in Accounting from the University of Maryland, and he’s a certified public accountant in New York, and Connecticut.
Beau Lunceford: Now, this conversation is, I will say, less of a conversation because Steve really just jumps in and kind of like Trevor mentioned, he is answering questions before we can even think to ask them. But it’s so insightful. It’s so wonderful. So I really hope that you guys enjoy this. So let’s not waste any more time. Let’s jump into this conversation with Steve Goldstein.
Trevor Casey: And let’s talk money.
Interview (04:20 – 28:10)
Trevor Casey: All right, we are back with another episode of the Inside Insight podcast and we are honored today to be with Steven Goldstein of Cauldwell Wingate, I’m sure you’ve heard of that name before. They’re huge in the New York area, and are really shaping the skyline of New York and the tri state area. So, Steven, we really appreciate that you’re here and thank you so much for the time and your expertise that you’re bringing.
Steven Goldstein: Trevor, great to be here. Beau, awesome to be here. Thank you for having me.
Beau Lunceford: Steven, just to kind of get us started, tell the people that are listening a little bit about who you are, where you’re coming from, a little bit about your background, and so that as we learn all this stuff that you’re getting ready to share with us. We’ve got some context for what makes you so incredible in your field and your history?
Steven Goldstein: Well, I appreciate that, I’ll try to give you the Cliff Notes version. So I spent many years in public accounting, working with contractors and subcontractors and union associations and non-union associations and labor organizations. And I merged my firm in 2010 to a midsize firm that specializes in construction, where I really hone my skills in what to look for contractors. And it was really interesting, the managing partner of that firm provided me with some great insight. He says, “If you want to learn the construction industry, you need to be where the contractors are.” And so I made it a point to try to go to all of the events and associations and get to know contractors and discuss what their issues and challenges were as well as thought leaders in the industry. And because of that it actually gave me an opportunity to go into private where I was approached by a specialty contractor. And he offered me a position to become his CFO. And I thought hard about it. But I was able, I decided, it was the right time in my career to do something different. And then something happened about a week after I gave notice that it was something called COVID. So my timing was just unbelievable. But I spent a couple of years at the specialty contractor, really learning how operations and financial and accounting need to support one another. In particular, financial and accounting supporting operations. Jump forward, I’ve left the area after about a little over a year and a half and had an opportunity to join another specialty contractor that is very well known in the industry doing some huge projects in the New York metropolitan area. And I spent another year and a half there. Because I had an opportunity to come to Cauldwell Wingate as their CFO. And I really feel not only many years in public accounting, which gave me an insight as to what the credit community is looking for, whether it’s a bank or assurity, or when you’re doing pre-qual, what are they looking for from your financial statements. And then working in specialty contractors for the next four years gave me a really great opportunity to learn how to support operations and really learned how to provide and support them with data so that they can run their projects efficiently and effectively and identify when those projects could perhaps go off the rails. So it’s been a really incredible ride for me. But the last I’ll say 15 years of my career has been absolutely phenomenal from a standpoint that you can teach an old dog like me new tricks.
Trevor Casey: That’s incredibly unique. And I see the value that you have brought to the table from where you started, and then where you’ve worked up to where you’re at now. And one of the things that I’ve seen, just talking with people in the construction space is how top down it can be bad. Like, you can have guys on a job site, they’re like, “Hey, I’m taking this drill home at the end of the job,” because they’re going to just write it off anyways. And so you see that mentality down on the job site, what’s the mentality on the higher end, what’s $50? In the grand scheme of things, what’s $50,000 or greater. So it’s really interesting to see how those things work together. And I think it’s incredible what you said there where you’re really kind of working to merge people in the operations and financial aspects of things and say, “Hey, we need to work together and say, let’s grow this company together, not working in our own separate areas.”
Steven Goldstein: Trevor, that was one of my biggest takeaways when I moved from public accounting into private accounting, and then to the private space. What it enabled me to realize is that the financial and accounting team needs to support the operation folks, but we need to give them data so that they can understand how jobs are progressing. And if a job is going to go off the rails, why is it going off the rails and how can we prevent it? What can we do before the job gets too far down the road? One of my things that I preach is that cash is king. So you just mentioned I will also say that cash is king and revenue is queen, but in the cash space, I don’t care how big you are. Margins is so tight these days, that if somebody’s taking a drill where they’re walking away with something that’s very costly. That’s how margins fade, that’s how risk is not mitigated. So, I have seen where companies are between the video protections, and there are really good companies out there that have cameras on say 24/7. So you can see if there’s somebody who’s stealing or to mitigate prevent accidents from happening, because claims are so prevalent today and we’re in a litigious society. So with insurance costs so high right now, I don’t want to tell you, but we’re in a hard market right now. And the fact that if a claim occurs, we got to protect. It’s so important to protect not only the GC, but the subcontractors from theft, from injury, because those claims are really what could put contractors had a business.
Trevor Casey: Absolutely, I mean, we’ve heard horror stories of a job starting and week one, they have a claim that is their full deductible. And they’re just losing money. And in a SIP situation, you can come back and you could capture that money and pick it up elsewhere, safety and things like that. But it is so wild how one small slip one small thing can really throw a multimillion dollar project completely off the rails and the owners completely underwater by the end of it.
Steven Goldstein: Correct. And I have seen that, and I have seen where certain claims like that, because of the potential cost has essentially put contractors out of business. So it’s essential to have a good EMR, it’s essential to protect the owner, the contractor and the specialty contractors from theft, and injury, toolbox talks, OSHA training, getting all these. Having a culture that promotes this is so vitally important to the success of the company, and every company that I’ve been to has made this one of their top priorities, that is absolutely critical to the success of a company being able to have a safety program, which is top notch.
Trevor Casey: And I think everything that you just said there completely goes back to that original point you said is that the finance people need to speak with the operations and the management people. If you’re saying all these things, and we can save money here, we can do all these things. But it doesn’t matter if you don’t have a good safety program in place. And even if you do, it doesn’t do any good. If those people are not actually sitting down and saying, “All right, let’s do these toolbox talks, let’s have a conversation when you have done something wrong, or what have you.” If you’re okay with stepping away from that for a moment, I’m just kind of interested as a CFO, when you’re looking at a job, what is your thought with how are we going to make money on that? Or when you’re going to approach that with the insurance, the claims? Like you said, we’re in a society where everybody wants to sue everybody, there is a lot of theft out there. What is your, and I’m not speaking of just called will win game, I’m just speaking as a whole, like, what are the kind of the things that you say, “All right, I want to look at this before I go and bid a job. I’m just curious, is that something that you’re comfortable talking about?”
Steven Goldstein: Well, sure. I mean, every job you have an estimation department that’s going to estimate a project the project is awarded. Therefore, you have an opportunity to do buyouts, improve on general conditions. And really, look at the project to see where you could go wrong. For example, some of the specialty contractors that I worked for had a certain margin that they were looking to obtain. But because of material escalation subsequent to COVID or labor cost, overtime costs, to meet certain milestones, that’s where a project can go off the rails. So I’m looking at the project in three phases. “What do we have? What’s our projection? What’s our projected contract value with approve change orders, along with what’s our cost of completion?” That gives us what our gross profit is. Then I’m looking at the project with operation folks to see how the project is progressing from the actual terms. We’re looking at the cost. We’re comparing actual cost and then cost to go? Will that equal what our cost of completion is going to be? If it’s going to exceed because a certain change orders, will we be able to recoup that? If not, then we’re going to see a fade, if that’s the situation. And then we have to identify why are our costs exceeding our budgets? Where did they go wrong? And the fact of the matter is, if we can identify a project that’s below 50%, complete, we might be able to correct that as we do work in place. But if a job is further along, we’re going to be strapped, we’re not going to make the margin on there. So if we’re losing margin, and now our gross profit on these projects exceeds what our general administrative expenses are, then that’s not good. We’re losing money on the deal. So that’s essentially what I’m looking at project by project to see how we’re doing on these projects, where could we be having some fade? And then try to correct that in real time and work with the ops fault? But like I said, initially, we’ve got to give them data which is correct and that’s essentially what I’ve been trying to work on. Since I’ve got it at the private making sure that the data that we have internally is correct.
Trevor Casey: Absolutely. All that made me think of one thing that is interesting and maybe to you, or I really just wanted curious of your thoughts is, how important is insurance when it comes to bidding a job? Like, is that something that you’re like, are we really, really, really need to calculate this? Because we can make a lot of money or we can lose a lot of money? Or is that something as a CFO you’re like, are that somebody else’s problem to worry about? I’m just curious and how that plays into it.
Steven Goldstein: So right now, what I’ve been having to deal with quite a bit is looking at the insurance program, is it a CSIP? Do you have enough enrollment in the CSIP? Is it an SDI program? Are you at risk for potential subcontractor default? The bonding capacity is so vitally important. With margins shrinking and contractors not performing like they did, you’re looking at a capacity issue, and there’s minimum thresholds that need to be kept to maintain the bonding. So you’re looking at a plethora of factors regarding insurance that I think are playing a huge part on whether projects and or construction companies will show positive margins or margins that are going to put them into a potential red situation at the end of the year. So I think you’re 100% right. Are you self-performing? Do you have to keep certain escrow accounts balances? Again, cash is king. Where are you getting the cash for that? Do you have the proper line of credit? Do you tap into that line of credit? When can you clean up those provisions? There’s usually a yearly cleanup provision that you’re going to have to do. All these play into a lot of planning and analysis, and hopefully the systems that are being used can give that data on a timely basis. Because if it’s not timely, then you run the risk of really certain projects going off the rails. Again, that’s what I am trying to work closely with. Get the data accurate, close in a timely fashion, so you can sit with data that is current and work with the operation folks, to be on the same page as to how the projects are performing. I hope I answered your question yet, Trevor. There’s a lot of insurance impact to projects these days, a huge amount.
Trevor Casey: Would you like to talk a little bit about Cauldwell Wingate as a whole?
Steven Goldstein: Sure. Again, I’m here four and a half weeks, but this company is 110 years old, and they have a pretty good reputation. And it’s really remarkable what this company has accomplished over the last 110 years. But one of the things that we’re doing is we’re pivoting, because right now the real estate market is so tight because of 421A. Those were the tax abatements that were allotted to contractors to build residential property. So we’ve had to move away from that because the developers are not developing these properties because the tax abatements have essentially gone away. I believe that will come back at some point in time. But until there’s a new 421A, companies have had to pivot towards new types of building we’re looking specifically at certain public works where we have a lot in the pipeline right now. But with the bipartisan infrastructure law that came about, you’re going to see a lot of infrastructure and civil highway and bridges and roads, but you’re also going to see jails and you’re going to see schools and the dorms and universities investing a lot of capital into building. And I think that’s one of the areas. We do some large projects, large commercial projects, but we also do interiors and there’s a lot of repurposing going on right now with taking commercial property and repurposing them into residential. But also, as I said, the public works is going to be an interesting area to focus in on building. And that’s one of the areas that we are pivoting and have opportunity at. So we have a lot in the pipeline. The challenges right now, especially for the entire construction industry, is getting those awards in place. I know that we’ve been burning through a lot of our backlog, other contractors, specialty contractors, where I recently was, we were burning through some significant projects, and that backlog is going to be a couple of years backlog, but it’s a tough environment right now. You’re seeing, especially with what we do, the challenge with awards right now, it’s just slowed down. So 2024 is going to be a tough year. I think for many contractors and those that can survive, it will be very beneficial, I think 2025 and beyond.
Trevor Casey: I think something that you said there is super interesting also that I don’t think I’ve ever really thought about is how politics not only can affect your business, obviously politics can affect everything, but it affects the type of business that you do. It’s not something that I would think that a contractor of any kind would say, “Hey, we’re moving from commercial to residential because of politics, or we’re moving from residential to the public sector.” And I think that is really interesting to think about and to hear that that can really just shift the focus completely of the direction that a company or a contractor, I should say, is going. And it’s a very interesting thought.
Steven Goldstein: Well, initially when we spoke, I said my managing partner when I was in public accounting taught me, if you want to know what’s going on in the construction industry, you need to be with the construction leaders, both thought leaders and the contractors themselves. And I always pride myself on that. But I will tell you that I know that our CEO of Cauldwell Wingate, Rob Palumbo, is extremely active in the landscape of knowing what’s going on in the industry. We’re involved with associations like Cagney and the Building Congress and the BTEA, the Building Trades Employers association, among others. And that enables us to help set the landscape for what is going to happen down the road so we can plan accordingly. Very important to be thinking that somebody needs to champion that in every construction business, because I’ve been doing this for many, many years, and the construction industry is extremely volatile. It goes up, down, up, down, up, down. I mean, you could look at 2008 and what happened there, and then you could look where we were at such a great point in history right before COVID. I mean, the building was just so prevalent, and then with COVID and the slowdown there, it just came back down. And now we see the effects of COVID right now that the awards have essentially slowed down, but we’re hoping that 2025 will be a return to loss of building based upon. Again, the BIL, as we call it, and the opportunity for an influx of capital from bipartisan infrastructure law that was passed.
Trevor Casey: Wow. Everything that you said is just like, I’m sitting here writing things down, like where I need to go back in time to pull quotes that we can use for marketing, because everything that you say is just incredible.
Beau Lunceford: It’s a goldmine.
Trevor Casey: It really is.
Steven Goldstein: Again, this is a pleasure. I love talking about it. I can’t screw a light bulb in, but I certainly love the construction industry. And my wife will attest, I don’t go buy a construction site without analyzing who the contractor is, who the architect is, and looking at how they’re doing. So love construction. And when you think about it, building in New York City, it’s incredible. The skyline has changed and it continues to change with JPMorgan Chase going up right now at 270 park. It’s incredible what we’ve seen over the last few years and we’ll continue to see. And so I just love the industry.
Trevor Casey: Absolutely. And we do the same thing. I don’t know Beau as much, but everyone in our office always jokes when we’re going down to the beach or go to New York and you see all the cranes and you think in your head and you calculate how much insurance cost is sitting up in the air right now and we all come back like, “Hey, I saw $750 million in premium in cranes.” And you’re like, I saw $850. It’s funny when you really do love what you do.
Steven Goldstein: Trevor, you bring up a great point. If you come to New York right now, you will not see many cranes. There aren’t many cranes up right now. And that tells you everything you need to know.
Beau Lunceford: Yes, that’s a big indicator.
Steven Goldstein: There aren’t many cranes. You do not see them.
Trevor Casey: Financial law flip. One thing that we always laugh about in New York is that the contractor, they renovate the building and they get to the top and then they all just walk back down to the building to start the new renovation again and work their way back up. It’s just a constant.
Steven Goldstein: I so wish that was that easy but you’re right about that.
Trevor Casey: Was there anything else that you want to highlight or mention or just talk about?
Steven Goldstein: I just want to thank you both for the opportunity to talk construction. I love doing this. I hope I can come back at another time and give you an update of some really good improvements in the marketplace as it relates to new construction, etc. But we can update and see what’s going on in the marketplace at that time.
Beau Lunceford: Absolutely. There’s no way this is going to be our last conversation. There’s going to be way too much that we’re going to need to come back and touch base with you on, especially coming into this next year. I’m excited. I’m pretty pumped. It’s going to be great.
Steven Goldstein: Appreciate it.
Trevor Casey: Thank you so much.
Beau Lunceford: Steve, if people want to get in touch with you, if they want to find out a little bit more about how they can partner with Cauldwell Wingate, like what are some ways that direct people to reach out to you?
Steven Goldstein: By all means, check out our website, cauldwellwingate.com, and my email address is sgoldstein@cwingate.com. There you go.
Beau Lunceford: Perfect.
Trevor Casey: Beautiful. We’ll drop that for anybody who is interesting. We’ll also put that in the show notes, and then we’ll also link his bio that is on Cauldwell Wingate’s website as well, just so you guys can learn a little bit more about Steve. And Steve, again, thank you so much for the time. We appreciate. It’s a Friday afternoon. Nobody really likes to have calls on Friday afternoon. So thank you. Enjoy your weekend, and we will see you on the next episode.
Steven Goldstein: Great, guys. Thanks.
OUTRO (28:13 – 30:18)
Beau Lunceford: I like Steve so much. He’s such a nice guy.
Trevor Casey: So nice, so approachable, friendly and knowledgeable. I mean, if I had a 10th of the understanding of finance that he does, and honestly, if I have a 10th of the understanding of insurance that he has, I would be in a much different place in my life.
Beau Lunceford: You might not be doing a podcast. Is that what you’re saying?
Trevor Casey: Maybe not. I might be running a company that hosts the podcast. I don’t know what I’d be doing.
Beau Lunceford: You’d be the CFO of this podcast is what it would be. Because there’s this just rolling in cash, and the financial situation here is just so out of control. You’d be controlling all of them.
Trevor Casey: Wild.
Beau Lunceford: Well, Steve, we enjoyed having you so much. This conversation was so much fun. I really hope that we actually get to connect again in the future to talk about some. There were things that we cut out of this that were past that we would love to come back and talk more about. But if you guys want to reach out to Steve or connect with what’s going on over at Cauldwell Wingate, please check out the links that are in the show notes of this episode. Follow that stuff. Check out the website, reach out to Steve. Again, very approachable, very contactable guy. If you have any questions or want to connect anymore about the kind of things that he’s done.
Trevor Casey: Absolutely. And like you said, we plan to have Steve back for another episode in the future, delving into some additional topics that, like Beau said, that we cut out of this because we want to really focus on them a little bit more in depth. So with that being said, if anyone has any questions that you would like to hear from Steve on that next episode, please shoot him our way. We’ll happily ask them to him. And to get a little bit better understanding from a chief financial officer’s standpoint, he’s very, very knowledgeable at asking or answering questions in a broad spectrum. He doesn’t have to necessarily answer them that regards to Cauldwell, so love talking to him.
Beau Lunceford: Well, this was a great conversation. Trevor, I love the time that we get to spend together. I love the time that we get to spend talking to these genius people. But I think that’s all we’ve got for today. So until next time, stay covered. Bye-bye.
PODCAST CLOSER
Thanks for tuning in to Inside Insight presented by CR Solutions. If you like anything that you heard today, subscribe, follow and rate the show so that other industry pioneers like yourself can find it. Maybe even share it with someone you think might benefit from this episode. Do you have a question that you want answered or a concept that you need explain, you can email us at info@c-r-solutions.com with the subject line “Podcast Question”, and maybe your question, we’ll make it onto one of our episodes. You can also submit a question via our website at c-r-solutions.com/podcast. There are no dumb questions, only opportunities to learn something new. Now that’s a wrap on this episode. Join us next time on Inside Insight presented by CR Solutions. Stay covered.
