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    Landscaping business adds custom fuel price protection plan

    A large landscaping business gains fuel price predictability and peace of mind


    Pricelock provides guidance and expertise to customize fuel price protection plans for companies with unique needs.

    The CFO had struggled historically with the impact of fuel prices on the company budget. After years of trying to manage volatile fuel prices, he decided that the company needed to proactively manage its fuel costs in order to protect its earnings, limit its operating risk exposure and remain competitive.

    Initially, he sought assistance from banks with which the company did business. While these banks were ready to fulfill his trading needs, he realized he needed more. He wanted to work with a firm who had the expertise to help him determine monthly volumes, address his seasonal needs, acquire attractive execution pricing and assist with hedge accounting. A trusted industry source suggested that he speak with Pricelock.

    The CFO quickly discovered that Pricelock's solution was precisely what he needed. Pricelock experts were able to understand his needs and worked closely with his team and fuel card provider to evaluate his fuel usage. He was glad to talk to someone who understood his business and was able to help him define the company's requirements, guide him on the risks and rewards of various hedging strategies and make recommendations that would best meet the company's goals and budget objectives. He also found that Pricelock was unique in its ability to provide the upfront documentation to establish FAS 133 accounting treatment and provide ongoing performance monitoring of the plan.

    Pricelock worked closely with the company to design and implement a protection plan that was easy to understand, execute and manage with the following four step approach.
    Define Requirements
    Pricelock kicked off the process by analyzing the company's historical fuel transaction data-including monthly fuel consumption volumes and dollars spent by geographic location-to understand its consumption patterns and price risk exposure, and looked for any seasonal trends to thoroughly assess the company's fuel price protection needs during all parts of the year. Pricelock then engaged in a series of discussions with the company to understand its goals, budget objectives and risk policy. Because FAS 133 was crucial to the company, Pricelock began evaluating appropriate protection strategies that would qualify for FAS 133 accounting treatment.

    Recommend
    Pricelock walked the company through the pros and cons of each strategy, including how each would perform under various market scenarios. Pricelock then made a recommendation based on the company's objectives and incorporated the structure that best took advantage of the pricing environment at the time. Pricelock also ensured that the recommended strategy was based on monthly volumes to account for the company's seasonality trends.

    Execute
    Unlike traditional fuel price protection providers, Pricelock obtained and negotiated market quotes from multiple parties to get the best pricing available. Pricelock also completed a 60 page FAS 133 report outlining the effectiveness of the recommended hedging structure which was approved by the company's auditor, one of the Big Four auditing firms. Pricelock then worked with the company's fleet, finance and legal teams to execute the trade.

    Ongoing Performance Monitoring and Reporting
    Pricelock currently provides the company with ongoing monitoring of the hedge to ensure it complies with FAS 133 accounting requirements and issues quarterly reports for its auditor. Pricelock also delivers frequent market pricing updates and continues to evaluate the effectiveness of the company's fuel price protection plan.
    Overall, the company's protection program successfully shielded the company from fuel price increases and resulted in significant fuel savings of $0.47/gallon. The Pricelock program has allowed the CFO to rest easy knowing that he no longer has to worry about rising fuel prices. He noted that Pricelock made fuel price protection very simple and took care of all the complexity behind commodities and FAS 133 accounting requirements. With the company's protection plan soon to expire, Pricelock is busy helping the company define and execute its next protection plan.
    Large landscaping business
    Landscaping Services
    The company is a large landscaping services business with annual fuel usage of nearly 5 million gallons. They have steadily grown and have over 100 locations throughout the United States.
    Overall, the company's protection program successfully shielded them from fuel price increases and resulted in significant fuel savings of $0.47/gallon.



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