Situation
- Private $68M automotive supplier launching a door trim facility with a new technology – 50% of sales
- Had no capital availability – Total debt of $30M
- Loosing $800K per month
- Lacked management structure and weekly/monthly metrics
ADVISORY SERVICES CASE STUDIES
Value Realization Program
- Sold off real estate in sale lease back
- Reduced operating scrap by 70%
- Zachary hired as President
- Implemented weekly financial reviews
- Restructured from 30 direct reports to 8 VP’S & Managers
- Benchmarked competition and evaluated industry trends
- Implemented lean manufacturing techniques
- Formalized continuous improvement programs
- Launched annual strategic and financial reviews
Results
- Operations broke even within 6 months
- Inventory turns increased from 45 to 20 days
- Operating margin increased from (2)% to 10%
- Successfully repositioned company from interior to exterior supplier – sales grew 65% to $120 million
- Essentially debt free after 4 years
- ROIC averaged 22% per year
6
month turnaround
22
annual ROIC
65
growth
Situation
- Private $100 million family owned and operated company, CEO/ Father died and 3 sons took over, no succession plan
- Capital availability used to fund acquisition, operating losses and stock repurchase – Total debt of $25 million
- Lost $5 million over prior 5 years
- Operating in 5 Business Segments
- Lacked strategic plan and definition of success
Value Realization Program
- Exit custom autoclave equipment immediately
- Redeploy 40 engineers into Fluid group
- Communicate plan with bank, renegotiate LOC
- Measurements and metrics developed
- Implemented strategic planning committee (6x / year)
- Develop 3 sons, remove CFO and replace with one son
- Divest JV and portion of Equipment group
- Create turnaround plan for Hose, divest if needed
- Reinvest in R&D, become technology leader
- Implement market pricing, eliminate cost plus pricing
- Distribute excess capital to shareholders
Results
- Operations methodically divested non core segments, 3 business focus
- During tenure as Director, generated $47 million in cash flow
- Operating margin increased in year 1 from new strategic plan and continuously grew for next 5 years
- Successfully repositioned company from diversified business to focused on high end valves
- Company was essentially debt free after 6 years, sold to Parker Hannifin in 2012
47
dollars in cash flow
5
years of continuous growth
18
increase in equity value
Situation
- Private company operating in automotive parts sector
- Financial hardship resulting from unprecedented downturn in industry during November, 2008
- Bank forbearance was eminent
- Lacked liquidity to fund losses resulting from 80% decline in sales in one month and lasting 4 months
- Industry took 12 months to stabilize
Value Realization Program
- Dramatically shrunk employees costs, moved management and key team members to production
- Accrued payments to landlord rather than rent reduction
- Stopped principal payments to bank, maintained interest payments
- Fired #1 and #4 customer to generate cash through sale of inventory
- Stretched payments to vendors from 45 days to 75 days
- Renegotiated loan agreements
- Aggressively fund sales and marketing effort
- Invest in upgraded fixed assets for efficiency
Results
- Bank agreed to refinance loans in 2010 & finance new equipment purchases in 2011
- 2010 returned to positive EBITDA with 3 new customers
- Received approval for new business from General Motors and Chrysler
- 2011 record earnings year, total growth sales grew 20% over 2008 results
- Booked sales for 2012 30% over 2011
3
new customers
0
in new capital infusion
56
growth
Situation
- Private company operating with 3rd generation: wholesale gasoline distributor and retail operator
- Lacked Governance Discipline
- Financial hardship resulting from increased competition, poor acquisition, economic downturn and infighting
- 2009, EBITDA loss of $700 thousand
- Bank forbearance was eminent
- Lacked weekly and monthly metrics
Value Realization Program
- Dramatically shrink company owned stores (sale or termination), expand transportation segment and expand commissioned dealer network
- Sold off real estate to generate cash for lease termination
- Launched advisory board & daily pricing meeting
- Measurements and metrics developed
- Formalized Governance with outside directors
- Continue disciplined growth in current operations through organic growth in gallons and profits
- Reviewing opportunistic acquisitions
Results
- Bank agreed to one year standstill
- 2010 returned to positive EBITDA, 2011 generated coverage ratio of total debt / EBITDA of 2.5x
- Evaluating acquiring troubled competition
- Commissioned dealer network transformed from an operating loss to most profitable segment
- Decision making focused on impact to performance rather than personal desires
Situation
- Nationwide subdivision, a leading US E&S insurance carrier
- Stagnant business with shrinking revenue. Faced decision on whether to grow, or to fold
- They wanted to grow business in “Garage” market segment.
Value Realization Program
- Provided advisory and consulting to senior management and leaders on establishing vision and scope, and formulating strategy
- Modeled market size; surveyed and interviewed channel partners; assessed internal organizational readiness; and drove primary and secondary customer research
- Conducted gap analysis and plotted roadmap to grow revenue multiple folds
Results
- Identified incremental revenue of $50 to $200 million from new business model and capabilities
- Drove discussions with president’s cabinet members on innovation culture and Fast Follower concept
- Shifted the client senior leadership’s thinking of their strategic priorities based on customer and competitive insights
Situation
- Capital maintenance costs of track spiraling out of control following merger of Burlington Northern and Santa Fe railroads
- $3 Billion per year spend by 60 teams (rail gangs)
- Limited measurement of repair gang performance
- No established standards and best practices
Value Realization Program
- Studied 25 gangs performance over 3 months, isolated key performance drivers and best practices
- Measurements and metrics developed
- Maintenance of way management became “owners”
- Implemented on-line performance measurement and tracking system
- Trained all 60 gangs in best practices over 6 months
- Re-organized maintenance of way group to support implementation
Results
- 8% savings (~$250 Million) first full year of implementation, 15% (~$500 Million) after second year
- Number of maintenance gangs reduced from 60 to 48 after 2 years
- Cultural Shift in Morale and Purpose
