Kiddar Capital CEO Todd Hitt on Varney & Co:
"We're American Business"
January 12, 2018
Kiddar Capital CEO Todd Hitt explains on Varney & Co. why the recent tax cuts are causing American businesses to raise wages and make new investments.
Varney: I want to get back to businesses giving bonuses following the tax cuts. These are on the screen right now, some of the big name companies that have announced these bonuses and/or higher wages just in the last twenty-four hours. Joining us is Todd Hitt, he’s the CEO of Kiddar Capital. You’re giving bonuses too, aren’t you?
Hitt: We are.
Varney: How much?
Hitt: Anywhere from five to fifteen percent of current salary.
Varney: That’s a lot!
Hitt: It is. We really had the Holy Grail of tax reform just happen, and the bottom line is if you want to expand your companies, you have to actually give some ownership back to the people that work for you.
Varney: Do your people know that they’re getting these bonuses?
Hitt: They do.
Varney: What was the response when you told them?
Varney: They didn’t say, “send it back, I don’t need it”?
Hitt: You know Stuart, again, [reinforcing] what I said thirty days ago, I told you more of this was going to happen when I was on your show. You’re going to see tons of it. You’re going to see it not just in the big companies that are Wall Street-based companies, but privately held companies, and ownership is going to be able to give back some of the ownership to their employees. Everything sort of bumps up, and that allows ownership, from a governance standpoint, to actually sit atop and make new investments. So it’s opportunity economics, and then it’s expansion economics. That’s the way it works.
Varney: Nancy Pelosi says that these bonuses, yours included, are pathetic — oh, what was the expression? Pathetic crumbs. Insignificant. Your response?
Hitt: Maybe I should send a financial statement, a P&L showing that it’s not that insignificant. It’s going to have a major impact on private business, which is a major part of our GDP.
Varney: Are you giving back, or passing through I should say, all of the extra money that’s coming to you because you got a tax cut?
Hitt: Seventy percent straight to employees in terms of governance and more aggressive and accelerated investing. About twenty-five percent in expansion economics. Five percent to current ownership. [More than that] is unnecessary. We’re sitting on reserves, and we want to expand. We’re American business. We innovate and we push out forward.
Varney: As opposed to offering higher wages, better benefits, and bonuses, what about reinvesting the capital that’s coming back to you — reinvesting that in the business? Is that really going to take of?
Hitt: It is. Let me give you a great example. One of our businesses, which is a core construction business of ours, we are actually investing in a new lab that’s going to test new tech. All because of the tax plan. All because we have additional capital now to do this.
And just think about the accelerating and expansion part of that, that you’re going to be able to look at new technologies. New window types. New ways to run construction sites. Exoskeletons — so now all of a sudden your labor force is not physically impacted as poorly. Construction off-site in areas where the climate is more hospitable, so now you’re doing panelized construction. We’re actually going to take some of the capital that we have and invest in these things, which is going to radically change the way construction is done in all areas — housing and commercial construction in this country.
Varney: For the dollars that you put into investment in your businesses — is that immediately deductible, immediately expensed one hundred percent?
Hitt: When it comes to equipment, it is now in construction. Construction was one of the most overtaxed industries in the United States, as you know. We paid the highest tax right. So now, all of a sudden — look what Caterpillar did today. Look at Caterpillar’s stock over the last couple weeks, what’s happened there. Twenty-five percent of their revenues comes from American construction. So construction’s the tip of the spear, U.S. housing and construction are the tip of the spear. All sorts of things flow from that in terms of our GDP. I think I said we’d get to four percent growth?
Hitt: Let’s fix this labor shortage we have right now — we’d like to continue to talk about that with you over time.
Varney: You’re on tape that we’re going to get to four percent growth.
Hitt: I am. I believe we will. Fix a few more things, leadership out of Washington, DC.
Varney: Okay. Anything else?
Varney: You did well — two and a half minutes, you packed a whole lot in this.
Hitt: Always do.
Varney: It’s very good. Todd Hitt, thanks for joining us today.
Hitt: Great to be here Stuart.
This video was first featured on Fox Business on January 12, 2018.