Hill Country Snack Foods Co.

HILL COUNTRY SNACK FOODS CO.

Written Analysis of the Case

Baya, Joan

Jailani, Alan

Tuting, Jenee Dee Trisha

Uy, Krizzia Camille

Viola, Omar Shariff

August 14, 2015

1. Summary of the Case

Hill Country Snack Foods

Hill Country Snack Foods is a company that manufactures, markets, and distributes a variety of snacks such as tortilla chips and frozen treats located in Austin, Texas, USA. HCSF offered more traditional snack foods which are patronized by customers thousands of times a day in convenience stores and supermarkets.  The company’s growth and success was driven by its efficient operations; quality products; strong position in a reign that was experiencing both population and economic growth and ability to expand in different markets.

HCSF Co.’s Corporate Culture

Hill Country Snack Foods was managed by Howard Keener, CEO, for the past 15 years. Keener’s leadership greatly influenced the corporate culture of HCSF Co. having the focus in the company’s shareholder value. Decisions and activities made by the different departments and the entity as a whole worked towards attaining maximum shareholder value. Keener and the members of the management team owns one-sixth of the 33.9 million shares outstanding of HCSF which explains their focus on maximizing the shareholder value. Strong commitment to efficiency and controlling costs is also a component of the corporate culture established by Keener. Operating and capital budgets were lean and aggressive, and Keener was actively involved in both the budget approval process and in ensuring the business was managed to the numbers in the budget. Another important culture made by Keener was the appetite of being a risk-averse entity as Keener is also a risk-averse kind of investor. The budget and activities performed by the company is closely inclined to this culture or attitude. Due to this corporate culture established by Keener, he set the tone at the top all the way down to the bottom of the organization. The company did not make high-risk bet and decisions with regard to its operations and avoided great leaps in its product markets. The management was contented with the steady growth rate of the company.  Growth was low-risk and incremental, driven by extensions of existing products and acquisition of smaller specialty companies. The culture of the company directly contributed to the increasing profits from operations.

Financial Performance

For the past years the company consistently produced strong financial results as shown in Exhibit 1. The company had experienced a decrease in earnings in 2007, and struggled to increase profitability in 2008, but growing sales and continued attention to costs drove large increases in net income since the recession ended in 2009. The return on assets and equity had similarly increased reaching 10% for ROA and exceeding 12% for ROE. HCSF Co. was able to pay continuous and growing dividends since the company’s cash flow was sufficient to fund both capital investments and dividend payments to shareholders. The dividend payout ratio had been just below 30% of net income for the past five years and the management plans to maintain this ratio. Though the company had a good cash position and conservative capital structure it had a negative impact on its financial performance measures.