Category: Arkansas

Cybersecurity firm Fishtech Group of Kansas City, Missouri, has hired former Walmart executive Kerry Kilker to lead its new Cyber Innovation Center at Grit Studios in Bentonville.

Kilker will serve Fishtech as executive vice president and chief information security officer.

Most recently, he was senior vice president and chief information security officer for Walmart Technology.

Fishtech is opening the Cyber Innovation Center to establish a permanent presence in the northwest Arkansas market that will give it an edge over other cybersecurity firms that do business but don’t have a presence there, CEO and Founder Gary Fish. It’ll have about six people on staff at first.

“What we want to do is provide that presence to attract cybersecurity talent to the area,” he said. “And what we want to do is work with the local business community and the local governments to find out what their needs are and then offer free training and career advice to folks in the area that are interested in cybersecurity and then potentially match them up with local organizations that have a need for that talent … Some of it’ll be for free, some of it’ll be for charge.”

Fish said the center will also offer several free seminars and workshops for cybersecurity professional each month and offer industry insight to universities that are educating the next generation of cybersecurity professionals.

The company hopes benefit from the pipeline of talent it would help build as well. “It’s no secret, if you do a search, that there’s a big talent shortage in cybersecurity … We’re all out there fighting over the same people. So what we have to do, as a company, is create that talent,” Fish said.

He also said, when the center outgrows the incubator space at Grit Studios, Fishtech will look for a more permanent location and possibly buy real estate to construct a center.

Fish added the his company would like to duplicate the NWA model in other “non-NFL” cities, or small cities.

Kilker also spoke about the center’s mission. He said, “The goal would be to continue to support northwest Arkansas and its business growth, growing and developing more and more technical talent in the area as well as training and education and awareness aware information security, or cybersecurity. I think there is a great need.”

Kilker explained that, while larger companies have information security programs, there are many other companies that need a third party to handle cybersecurity for them. Fishtech already works with Walmart, Arvest, Tyson and J.B. Hunt.

But Kilker said the center would help the company become the prominent cyber security provider in region and a recognizable brand for those small and medium businesses.

by Associated Press  on Thursday, Feb. 14, 2019 8:58 am   1 min read

by Arkansas Business Staff  on Wednesday, Feb. 13, 2019 9:32 am   1 min read

by Arkansas Business Staff  on Tuesday, Feb. 12, 2019 2:58 pm   2 min read

WASHINGTON — U.S. employers posted the most open jobs in December in the nearly two decades that records have been kept, evidence that the job market is strong despite several challenges facing the economy.

The Labor Department said Tuesday that job openings jumped 2.4 percent in December to 7.3 million. That is the most since records began in December 2000. It is also far greater than the number of unemployed, which stood at 6.3 million that month.

Businesses have shrugged off a variety of potential troubles for the economy in the past two months and kept on hiring. The 35-day partial government shutdown began Dec. 22, and growth in China, Europe and Japan has weakened, threatening U.S. exports. Still, employers added 304,000 jobs in January, the government said earlier this month, the most in nearly a year.

The jump in openings in December suggests hiring will likely remain robust. Openings are typically filled within 1 to 2 months. The surge in available jobs indicates that businesses expect demand to remain healthy and that they will need more employees to meet it.

Tuesday’s data also showed that employers boosted hiring in December, while the number of people who quit remained unchanged at a healthy level of about 3.5 million. Higher quits are typically sign of a dynamic job market, as most people quit to take a new job.

The number of unemployed typically runs far ahead of job openings, but that switched early last year.

That could mean potentially stronger wage gains are in store in the months ahead. With job postings so high at a time that the unemployment rate is at a very low 4 percent, businesses may be forced to pay more to attract the workers they need.

Paychecks are already increasing, though at a modest pace. Average hourly pay rose 3.2 percent in January from a year earlier, the government said earlier this month. That’s near December’s figure of 3.3 percent, which matched the best pay gain in almost a decade. Still, wage increases typically top 4 percent when the unemployment rate is this low.

Many industries with the biggest increases in job openings include mostly lower-paying jobs. Restaurants and hotels advertised more than 1 million jobs, 84,000 more than in November. Health care job postings rose 79,000 to 1.2 million.

Some higher-paying industries also did well. Professional and business services, which include jobs in fields such as architecture and engineering, rose 82,000 to 1.34 million.

Available jobs in manufacturing, meanwhile, fell 67,000 to 428,000. They also dropped in retail and financial services.

(All contents © copyright 2019 Associated Press. All rights reserved.) 

Fortified by a U.S. Supreme Court decision, supporters of an Arkansas bill to collect taxes from out-of-state, online sales are confident the time has come for the legislation to pass.

HB 1002, a bill “to require certain out-of-state sellers to collect and remit Arkansas sales tax and use tax,” is making its way through the state House of Representatives and stands a solid chance of passing, said the bill’s lead sponsor, Republican Rep. Dan Douglas, R-Bentonville.

“We shouldn’t have a terrible amount of trouble,” Douglas said.

Past efforts to force a special session to deal with the issue and past attempts at legislation have been unsuccessful. But last year, in South Dakota vs. Wayfair, the Supreme Court overturned a previous ruling and voted 5-4 for South Dakota, siding in favor of states collecting online sales taxes.

That decision and the outcry of business owners in their home districts should be enough to prompt Arkansas lawmakers to pass HB 1002, Douglas said.

“This bill will stand constitutional muster,” he said. “Everything should be fine there.”

The Wayfair decision overturned 1992’s Quill vs. North Dakota ruling, which was originally upheld by a lower court before Wayfair moved to the Supreme Court with the support of 40 states.

The 1992 Quill decision stated that the Quill Corporation, an office supply retailer doing business via mail and phone orders, could avoid paying local taxes. Out-of-state businesses have since used the decision as a legal defense for not collecting taxes in states where they had no physical location.

After passing an online sales tax law in 2016, South Dakota sued home goods site Wayfair, discount retailer Overstock.com, computer hardware and electronics retailer Newegg and industrial equipment supplier Systemax for non-compliance.

Douglas said HB 1002 was modeled after the South Dakota online sales tax bill and he cast it as an overdue way to ensure fairness for the physical business owners and retailers of Arkansas. He relayed retailers’ anecdotes of customers entering shops, photographing bar codes, labels and tags and then leaving to order the same items online.

“The thing we have to remember too is these local retailers, these brick and mortar retailers, not only do they collect and remit sales tax, but they hire local people and they create jobs and they pay property taxes and income taxes,” Douglas said. “They pay a lot of taxes to help support our local communities and schools. We’ve got to be as fair to them as we can.”

Douglas said it was difficult to determine exactly how much in annual, uncollected tax revenue online retailers represent. He cited a Department of Finance and Administration estimate of $35 million-$38 million, but said that doesn’t account for third-party or marketplace retailers who simply use online companies like Amazon as brokers.

“I think that sounds like it’s as good a guess,” Douglas said of the revenue estimate. “If it’s more than that we’ll be pleasantly surprised. If it’s less, well, then it is what it is. We’ve just got to make sure the field is leveled for our brick and mortar retailers and they’re not put at a disadvantage.”

“The numbers have been all over the board. It’s a lot,” Arkansas Municipal League General Counsel John Wilkerson said. “We’ve seen numbers from 10-odd-million to some 100-odd-million dollars.”

Online retail giant Amazon began to voluntarily collect and remit sales taxes in 2017. Walmart has collects and remits sales taxes on online purchases in states that have a sales tax.

In 2017, the Municipal League tried unsuccessfully to force Gov. Asa Hutchinson to call a special legislative session to deal with the online sales tax issue. A bill introduced in the state senate that year also failed to pass.

But Wilkerson agreed the Supreme Court’s Wayfair ruling has cleared the way for the Legislature to get on board with what he described as “common sense fairness.”

“We’re using the same page of the hymnal at this point,” Wilkerson said.

HB 1002 is in the House Revenue and Tax Committee, which met Tuesday, but the bill did not come up. Douglas forecast passage in possibly two weeks, depending on developments with the governor’s income tax cut plan and other legislation.

“What we’re waiting on is to try to see where we end up with the governor’s tax cut bill and then there’s another bill, a business operating loss bill, that’s coming out, and we’ll try to pair it with that,” Douglas said.

Legislators in the committee approved the governor’s income tax plan.

by Arkansas Business Staff  on Monday, Feb. 11, 2019 12:00 am   1 min read

The value of big deals in Arkansas leaped to $53.9 billion in 2018, a 267 percent increase over the $14.7 billion figure of 2017, bearing out last year’s predictions that corporate tax cuts would boost mergers and acquisitions.

The volume of big deals — those valued at $9 million or more — also surged, from 66 in 2017 to 94 in 2018.

“The M&A market was very good in 2018,” said Marshall McKissack, who heads the mergers and acquisitions practice at Stephens Inc. of Little Rock. The tax cut “boosted a lot of business owner and investor confidence, and I think we saw that in the market, all the way through the third quarter,” he said.

The biggest deals total was amplified by four deals of $6 billion or more. The top two of those were Walmart transactions: at No. 1, its purchase of a 77 percent stake in Flipkart, India’s largest online retailer, for $16 billion, and at No. 2, Walmart’s sale of Asda, its U.K. grocery subsidiary, in a deal valued at $10 billion.

Also looming large on the list was Acxiom’s sale of its Acxiom Marketing Solutions division, its biggest line of business, to the Interpublic Group of Cos. for $2.3 billion. But among the biggest Arkansas deals last year are two that don’t figure in the total because their value wasn’t released: the purchase by poultry producer George’s Inc. of Springdale of Ozark Mountain Poultry Inc. and the purchase by Baptist Health of Little Rock of Sparks Health System.

OMP, a Rogers company that produces antibiotic free and non-GMO chicken products and employs 1,800, ranked No. 35 on Arkansas Business’ private companies list, with revenue of $332 million. Its purchase by George’s, announced in September, likely totaled hundreds of millions of dollars.

In buying Sparks from publicly traded Community Health Systems Inc. of Franklin, Tennessee, Baptist Health acquired Sparks Regional Medical Center in Fort Smith and Sparks Medical Center in Van Buren, along with affiliated physicians’ clinics in western Arkansas and eastern Oklahoma. The financial details of the deal weren’t released but observers have estimated the value at about $100 million.

In addition to Flipkart, Walmart’s biggest buy ever, the company made other big purchases last year. It paid $225 million for Cornershop, an online marketplace for on-demand delivery from food purveyors and pharmacies in Mexico and Chile; $100 million for Eloquii, an online retailer of plus-sized women’s clothing; and undisclosed sums for Bare Necessities, an online retailer of women’s lingerie, and Art.com, an online seller of art and wall decor.

The Bentonville retailer’s acquisitions last year — coming after its purchases in 2016 and 2017 of Jet, Shoebuy, Moosejaw, Modcloth and Bonobos — show it remains committed to competing with Amazon for online dollars.

Tyson Foods of Springdale also went on a spending spree last year, paying $2.2 billion for Keystone Foods, a supplier of chicken nuggets to McDonald’s; $850 million for the poultry rendering and blending assets of American Proteins and its subsidiary, AMPRO Products; $382 million for Tecumseh Poultry; and an undisclosed sum for three commercial grain elevators.

But the poultry producer also made some big sales of business lines last year. It sold its Sara Lee Frozen Bakery and Van’s brands to Kohlberg, a private equity company, for $615 million and its Circle Foods LLC, a distributor of Mexican food products, for $48 million.

Referring to the 2017 corporate tax cuts, McKissack said, “I think what it really did was push companies and owners of businesses to really think about … what kind of returns they need to generate. Ultimately, it’s produced more bottom-line cash flow.”

And that, he said, caused companies to consider how they’d spend that cash. They’ve focused on several fronts, among them, internal capital projects and research and development programs; workforce wage increases and bonuses; and M&A, joint venture partnerships and minority investments, “really looking for opportunities for growth,” McKissack said.

Robert Cashion East is the former CEO of Advanced Cabling Systems of North Little Rock, recently purchased by ADT Inc. of Boca Raton, Florida, which plans to combine Advanced with its Red Hawk Fire & Security. Advanced Cabling employs 180 people and is one of the largest installers of cabling, fire alarms, CCTV and entry access systems in North America. East is a member of the Bank OZK board of directors.

East grew up in Little Rock and graduated with a bachelor’s degree in finance and administration from the University of Arkansas at Fayetteville in 1970. He was a sergeant in the Army combat engineers, 1970-1972.

What drew you to construction?
When I was 15 years old, I started working during the summers for a contractor in Little Rock and continued that through college. When I got out of the Army in 1972, I started full time for the same contactor working in the field and learning the business. I loved working outside and watching a building take shape. I worked for that company for 18 months, then quit and started my own business at age 26.

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What do you enjoy most about construction?
As contractor for a building project, you are required to become intimately involved in that particular business, in order to learn the most useful, efficient and cost-effective structure for the owner. I’ve learned about so many businesses, how they operate, what is successful and what is not, gaining insights that are invaluable in my business operations, and really interesting case studies.

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Why did you decide to buy Advanced Cabling?
In the 1990s, I owned, with a partner, a company in northwest Arkansas that sold electrical supplies. The buzz at that time was fiber optics, fiber cabling and delivery of bandwidth. I wanted to get into a business that would benefit from the coming age of computers, so I purchased controlling interest in Advanced in 1999, with three employees and a yearly revenue of $400,000, and the only line of business being low voltage cabling. My plan was to add several new lines of business, offer great training for our employees, and become a one-stop shop for all technology infrastructure needs.

I knew from my experience in construction that contractors, owners and subcontractors would embrace a company like this, and it would fulfill an obvious need.

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Why did you sell Advanced?
It was an exceptionally difficult decision. We were constantly approached by private equity companies to purchase our business, but Red Hawk and ADT sought out our company, made us a very clean offer and wanted to really expand their capability in the commercial security integration business. They offered great career opportunities for our employees, excellent benefits and a way for me to cleanly divest my interest.

While I would have loved to keep the business forever, I had seen so many businesses have difficult and even fatal transitions from owners, and since I had no family members who wanted to work in the business and take it over, I saw this sale as a chance to give the company a huge advantage in the market and have an orderly and successful transition of ownership.

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Best advice you ever received?
I’ve received so much career-saving advice, it’s hard to pick one thing. I’d say the most important thing to do is to listen!

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Best mistake that helped shape your career?
One of the biggest mistakes we made several times is taking construction work at a very low cost, just because we needed the work. We always lost more money than we thought, and we would’ve been better off dealing with the loss of revenue.

3E Software Inc. of Springdale is one of 10 companies, and the only one from Arkansas, chosen to participate in the inaugural ICBA ThinkTECH Accelerator, sponsored by Independent Community Bankers of America and hosted by the nonprofit Venture Center of Little Rock.

Each company will receive a $75,000 investment from the ICBA, along with mentoring and training from ICBA’s and the Venture Center’s network of mentors. Participants will also meet with representatives from thousands of community banks.

The accelerator kicked off last month and will end with the companies pitching their products or services at ICBA LIVE in Nashville, Tennessee, on March 18 and at the Venture Center on March 27.

3E Software will be pitching a product it has been selling for years: Teslar, a software-as-a-service product.

“We tell people all the time, they say, ‘In one sentence, what do you do?’ We say, ‘We create highly efficient banks,’” CEO Joe Ehrhardt told Arkansas Business. He founded the company 10 years ago but said it was just a typical software firm working for Walmart vendors for the first few years, before it started selling Teslar.

“Teslar is like a toolbox. We tell people there’s lots of tools. There’s a hammer, screwdriver. And no single tool is going to give you amazing efficiency,” he explained. “But if you do it across the whole industry, your entire bank — and Teslar has lots of modules — then you see a lot of efficiency gains.”

For example, Ehrhardt said, lenders can access Teslar and “see everything they need to do for the day. … Everything that a lender does, outside of meeting that customer day-to-day, is what Teslar is trying to do in one system. So it’s one platform to bring together what’s normally five platforms, 10 platforms, to one place.”

The product’s aim is to help people complete tasks in hours instead of days, he said.

3E Software’s smallest client right now is a bank that has just $75 million in assets. Its biggest clients are banks with almost $20 billion in assets, Ehrhardt said.

But that niche it serves, community and regional banks, accounts for most of the industry — all but the approximately 50 very large national banks, like Bank of America and Wells Fargo — Ehrhardt said.

He said the company began as a “bootstraps” setup, but decided to raise $1.4 million in capital about a year and a half ago. Before that, it had always been profitable. 3E Software returned to profitability this year.

“That’s our goal, to stay that way. But you never know. As you grow, maybe you’ve got to get more capital,” Ehrhardt said. “There’s always that fine line between bootstrapping and doing it yourself … or going out and finding external sources.”

3E Software chose to raise capital then because, Ehrhardt said, “the old thought is, if you can double [revenue] every year … that’s great. But if you start with a penny, it’s going to take you a lot of years to double. And technology’s changing so fast that by the time you get to that critical mass, you might be outdated.”

He declined to disclose the company’s financials, but said 3E Software’s goal this year is to increase revenue by 150 percent. Ehrhardt said the company is on track to do that.

The company has about 18 employees now and is working to hire a staff of 40 by the end of the year.

Ehrhardt, who has 20 years of experience in banking, said he’s looking for talent with banking experience because it’s easier to teach people the technology than it is to teach them the industry. But finding qualified software engineers and programmers in a tight labor market where wages are up and where they have to be lured from larger companies, like Walmart, has been a challenge, he said.

Ehrhardt hopes the new accelerator will help 3E Software overcome other challenges it faces. He said the company needs help understanding public relations, marketing, the mindsets of current and potential clients and perspectives from outside Arkansas so that it can grow as it wants to.

Unlike other startup founders, Ehrhardt is not looking for an exit. He’s not looking to sell the company once it’s big enough. “Our objective, in my opinion, is to build a world-class tech company here in northwest Arkansas that helps financial institutions across the country,” he said, and the accelerator is one way to do that.

(Correction: A previous version of this article stated that 3E had worked for retailers like Walmart. It previously worked for Walmart vendors. We have corrected the error.)