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� x , Jerik Brumm From: Kelly Hemp <khemp@cornerstoneccinc.com> Sent: Thursday, August 22, 2013 9:42 AM To: Jerik Brumm;Tony Woolhouse Subject: RE: Unit Pricing Jerik, Good Morning. Before we hit 2013, I was involved in discussions with Dan&Tim about this coming year—2013. Those discussions took a while, about 5-6 months. When I was in a meeting early on with Dan &Tim, about when we epoxied your floor,one of the things we discussed was the payment terms,which is what took up the bulk of the time. Tim and Dan both asked about pricing, and I let them know we were seeing a minimum price increase of 6-10% back in January. We are not able to control all of the external factors that effect our costs. The truth, is that the increase is more. We have been honoring the old quotes, when the increase should have been implemented in January. A big part of this is the amount of work you guys have awarded. To my knowledge, we still have Tony bid every project, and you award based on your internal decisions. Part of the agreement with Dan was also a %% Discount based on paying prior to 30 days on invoices. This created a discount for you and a proper cash flow for us. Tony has been keeping your prices, only your account,to an absolute minimum increase. If we operate below margin, we are no longer in business. The Volume you provide helps us to find and keep good guys on pay roll, but finding qualified guys is getting harder every day! We have had to increase or payroll in the company just to keep guys, and this was a factor we had not truly planned for. Also, with the current chaos in the market,we are being scheduled all over the place, meaning we just really have not been able to concentrate on a project,get it wiped out, and move to the next. This creates a ton of lost time and fuel costs. So,we have had other costs go up in non-anticipated ways. Yes, I did discuss an increase (6-10%) back prior to January or so with Dan &Tim. You have been running under that 6% on almost everything so far. We have held on to this pricing as long as possible. We are now looking into the coming winter as well. When it is all said and done, I don't see the winter costs falling below 10%, but we are not done fleshing this out yet. I don't know what it would take to reduce costs to drop prices back. We can try to figure out how to keep them as low as possible, and this involves both of us. There are some coordinated efforts between us that can help to keep costs down, but so far l don't think these have been very well received. Most of my attempts there have been with Steve. The two main areas here for us, involve what your customers actually receive from you about concrete decisions and awareness, and the other part is on the scheduling side. You just should not be getting a call on a hairline crack or a rock pop.We really try to service this stuff with a trip and a customer discussion, but it is contrary to getting volume done, and the customers should know better, as your customer. Scheduling: If we could have a house for 1 to 2 days to ourselves,we could effectively get the floor, garage, stoop, and sidewalk knocked out and then move on. Separate trips alone for these items have caused us to fall behind, and be less effective for you. I know there are Scheduling things to weigh out, but this would at lease let us hit the margins we should be hitting as a business. These costs have not been added to your pricing to date. I would really like to talk and see if we can give a couple different things a try, and see if we can both be in a better spot. Tony can speak more directly to actual price structure, and why he has held numbers so long,and what that has been based on more specifically with your Team. 1