Every company, regardless of size or technical acumen, has an opportunity to increase the sophistication with which it makes use of its own data. By starting with existing management reports, companies can start down the path of moving from simple reporting to the generation of actionable, data-driven insights.

1. Moving from
“What” to
“Why”
January 2020

2. Abraxas Group LLC 2Abraxas Group LLC 2

3. Overview
• Successful companies understand that data-driven insights are the one
universal value creation opportunity.
• By investing constantly in data reporting and analysis, high-performing
companies develop crucial insight into themselves and their markets and
then seek to constantly push out the frontier of that insight.
Abraxas Group LLC 3Abraxas Group LLC 3

4. The Importance of Context
Abraxas Group LLC 4Abraxas Group LLC 4
Absolute measures of performance at most companies are meaningless. Context is necessary to
better understand whether performance was superior to, in line with, or below expectations.
Period Q1
Bud/Act Act
Revenue $ 25,500
Cost of Goods Sold 15,989
Gross Profit 9,512
Operating Expenses 7,650
Operating Profit 1,862
Non-Operating Expenses 2,540
Net Income (679)
EBITDA Add-backs
Interest 1,560
Taxes -
Depreciation 920
Amortization 200
Other -
EBITDA 2,002
Profit Measures
Gross Margin 37.3%
Operating Margin 7.3%
Net Margin -2.7%
EBITDA Margin 7.8%
What Happened With Context
Period Q1 Q1 Variance
Bud/Act Act Bud $ %
Revenue $ 25,500 $ 27,000 $ (1,500) -5.6%
Cost of Goods Sold 15,989 17,685 (1,697) -9.6%
Gross Profit 9,512 9,315 197 2.1%
Operating Expenses 7,650 7,830 (180) -2.3%
Operating Profit 1,862 1,485 376 25.4%
Non-Operating Expenses 2,540 2,760 (220) -8.0%
Net Income (679) (1,275) 596 -46.8%
EBITDA Add-backs
Interest 1,560 1,560 - 0.0%
Taxes - - - N/A
Depreciation 920 920 - 0.0%
Amortization 200 200 - 0.0%
Other - - - N/A
EBITDA 2,002 1,405 596 42.5%
Profit Measures
Gross Margin 37.3% 34.5% 2.8% 8.1%
Operating Margin 7.3% 5.5% 1.8% 32.7%
Net Margin -2.7% -4.7% 2.1% -43.7%
EBITDA Margin 7.8% 5.2% 2.6% 50.8%

5. The Power of “Why”
Abraxas Group LLC 5Abraxas Group LLC 5
Comparative analysis alone is not sufficient. High performing companies look to provide
additional context that will further aide in understanding the drivers of performance.
Additional Context
Period Q1 Q1 Variance Classification Notes
Bud/Act Act Bud $ %
Revenue $ 25,500 $ 27,000 $ (1,500) -5.6% Timing Major customer delayed $2.5MM purchase to
Q2
Cost of Goods Sold 15,989 17,685 (1,697) -9.6% Operations Achieved better pricing with new supplier
Gross Profit 9,512 9,315 197 2.1%
Operating Expenses 7,650 7,830 (180) -2.3% Timing Temporary staffing lower due to delayed
customer order
Operating Profit 1,862 1,485 376 25.4%
Non-Operating Expenses 2,540 2,760 (220) -8.0% Operations Fee expense lower than anticipated
Net Income (679) (1,275) 596 -46.8%
EBITDA Add-backs
Interest 1,560 1,560 - 0.0%
Taxes - - - N/A
Depreciation 920 920 - 0.0%
Amortization 200 200 - 0.0%
Other - - - N/A
EBITDA 2,002 1,405 596 42.5%
Profit Measures
Gross Margin 37.3% 34.5% 2.8% 8.1%
Operating Margin 7.3% 5.5% 1.8% 32.7%
Net Margin -2.7% -4.7% 2.1% -43.7%
EBITDA Margin 7.8% 5.2% 2.6% 50.8%

6. Revenue
Adjusted for timing, revenue seems
to be tracking to budget.
Gross Margin Operating Expenses
Improvement due to better pricing
with a new supplier is higher than
forecast. Why was this opportunity
missed or under-represented in the
budget? Has the market changed?
Out-performance was temporary
and directly tied to the delayed
customer order.
Insights
Abraxas Group LLC 6Abraxas Group LLC 6
The more robust report format has yielded superior insight of both the
company’s own performance as well as offering tantalizing hints about the
broader market. Additional follow-up in these areas would likely yield further
insight.

7. David Johnson
David Johnson (@TurnaroundDavid) is Founder and
Managing Partner of Abraxas Group, a boutique advisory
firm focused on providing transformational leadership to
middle market companies in transition.
Over the course of his career, David has served as financial
advisor and interim executive to dozens of middle market
companies.
David is also a recognized thought leader on the topics of
business transformation, change management, interim
leadership, performance improvement, restructuring,
turnaround and value creation. He can be contacted at:
david@abraxasgp.com.
Abraxas Group LLC 7Abraxas Group LLC 7