Case Studies

International Designer

Client Overview: $350 million brand name international designer, manufacturer and marketer of retail and contract furnishings with facilities located both domestically and internationally.

Opportunities/Challenges:

EBITDA had decreased from a run rate of $40M to annualized $17M
Overhead had increased three-fold
Layered, non-responsive corporate office had been established
Inventory levels and costs were out of control
Off-shore sourcing in constant state of disruption
Poor quality in company's own facilities

Solutions:

Focus efforts on overhead and operating costs
Eliminate "corporate office" structure
Establish four distinct market-focused SBUs
Utilize China sourcing and logistics
Move more product to Mexico
Refocus SKU management and responsibilities
Reduce SKUs by over 40% in the "traditional" market channel
Establish detailed focus on cost
No "Silver Bullets;" enforce cost and quality discipline

Results:

2004: $17M
2005: $27.5M
2006: $33.5M
2007: Low 50's

Drove manufacturing cost efficiencies from operating margin in low 20s to mid-40s
Improved "big box" channel profitability by 30% - from an average of 14% to 18.3%
Each SBU became its own profit center
Re-gained leadership position "channel-by-channel" in product offering and design through disciplined product design and replacement process and procedures
Improved employee turnover at the same time by reducing employee costs with consumer-driven health insurance

Plastic Food Service Disposables Manufacturer

Client Overview: Leading North American manufacturer of high quality, rigid plastic food service disposables serving the supermarket/deli, hotel/motel, and foodservice distribution markets focused on the $3.8 billion rigid plastics sector of the food service disposables' market.

Opportunities/Challenges:

Highly dysfunctional operation created by the major relocation and merger of two operations
Ineffective key processes (i.e., scheduling, inventory management and operational reporting)
Extremely poor inventory accuracy and control
FY 04/05 EBITDA ($20M) on $30M Revenue
Prepare to stand-alone

Solutions:

Make immediate personnel changes that address key deficiencies and excesses
Instill sense of urgency and accountability; create a culture of execution and results
Identify and implement numerous operational enhancements to improve inventory accuracy, warehouse management, production planning and labor absorption
Ensure operational data accuracy for reporting and management

Results:

Formed a top-graded, enthusiastic leadership team
Improved inventory accuracy to +/- 90% levels
Realized initial cost savings of approx. $2M/yr; with additional $1M in annual savings starting in 2Q06
Established more flexibility for stakeholders regarding strategic options
FY 05/06 - Breakeven at EBITDA level; exit at over $200K monthly EBITDA
$3.5M EBITDA on $45M Revenue in FY 06/07

Contract Mail Service Provider

Client Overview: One of the nation's largest independent providers of ground-based contract mail services for the United States Postal Service (USPS).

Opportunities/Challenges:

EBITDA and other key financial measures had decreased by over 30% in two years, the company was in technical default with lenders, and there was no access to additional capital
Experienced heavy growth through acquisition. Three commercial "off the shelf" (COS) systems were implemented, but never aligned to Company's business processes. This lack of integration caused insurmountable training, change management, key quality and delivery issues
Cultural and union issues were contributing to the downward spiral and poor morale

Solutions:

Implement immediate turnaround actions in multiple areas
Assume leadership and control through assumption of the interim management positions of CEO and COO. Subsequently hired the Permanent CEO.
Conduct a "Rapid Process Analysis" by interviewing process owners and stakeholders, and analyzing business metrics, systems and processes
Develop an action plan to turnaround the company (done in two weeks, presented to the officers and lenders who approved for an active implementation)

Results:

Critical improvements in EBITDA were evident very quickly. This improvement generated lender confidence and continued funding of Company
Address of cultural and union issues combined with a thorough communications plan resulted in the decertification of the union at two terminals and immediate improvement in organization morale
Restructured the debt of the organization creating optimum working capital conditions
Realized annualized, tangible ROI of over $3M from operational process improvements and changes. In addition, cost avoidance from maintaining DOT compliance is in excess of $9M
Created a metrics scorecard for future management of the company

Commercial Printing Company

Client Overview: Commercial printing company with revenues in excess of $1.5M in revenues. The company's services and products include commercial print, envelopes, labels, packaging and business documents through a network of production, fulfillment and distribution facilities throughout North America.

Opportunities/Challenges:

Stock price had gone from $21 to $2 in 9 months
Credit rating had been downgraded to BBB-
Shareholder lawsuits had been initiated
EBITDA had diminished from $170M to $110M

Solutions:

Provided accessible leadership to investment community, customers and employees, and direction to the organization
Initiated and implemented $55.8M in cost reduction; EBITDA plan of $205M in 2006.
Restructured the organization, eliminating two layers of management
Rebuilt relationship and reached control agreement with dissident shareholder

Results:

2+ to 5+ on announcement that the BOD was seeking alternatives
5+ to 7+ on announcement of CEO search
7+ to 10+ on announcement in changes and restructuring
10+ to 26+ on execution of plan by current management

Increased market capitalization from $375M to $750M, increasing share price from $10 to $14.50 per share