The Company is a metal processing business with 13 locations across the United States and Mexico. The Company offers a wide array of metal finishing services, including anodizing and electroless nickel, paint and powder coating, and chromate, tin, zinc and precious metal plating and serves a variety of industries, including aerospace, automobile, outdoor/recreational, defense, medical and many others.
The Company made a major acquisition, which was financed by senior and subordinated debt, and underperformed financially soon after closing the deal. Simultaneously, the Company endured a significant downturn in three of their key markets. As a result, profitability declined dramatically, and the Company violated its financial covenants.
The Company initially decided to hire a financial advisor to assist in assessing the Company’s options, develop a plan to improve profitability and negotiate an amendment with its multi-bank senior lender group. FDP presented its plan to the Company’s Board and the Board decided to retain FDP’s engagement partner as Chief Restructuring Officer (CRO) to direct implementation of the FDP developed turnaround plan.
Working closely with management and the Board, FDP:
–Developed a comprehensive profit improvement plan that addressed all aspects of the business and served as CRO to implement the plan.
–The plan included:
•Implementing focused price increases that netted almost $1,000,000 annually;
•Filling key open positions that facilitated improved performance at struggling divisions;
•Adding a supply chain manager, which reduced cost by more than $500,000 within the first year;
•Developing an updated pricing model;
•Deferring an expensive and disruptive ERP implementation;
•Advising on a plant closure and relocation (completed); and
•Providing high degree of focus and sense of urgency regarding underperforming divisions.
–Established an open line of communications with a hostile lender group.
Consolidated from plants resulting in annual savings of approximately $1.5 million.
FDP, in its position as CRO, led the negotiations to amend the loan agreement, increasing liquidity and allowing for complete execution of 2-year plan.
The Company improved EBITDA by $4 million (60%) in the first year, with an expectation to improve an additional $2 million in year 2.