A privately held contract manufacturing firm experiencing rapid growth averaging 56 percent per annum for the previous three years, was experiencing substantial operational and financial stress. This stress was evidenced by declining on-time customer deliveries, declining operating income, excess inventories and insufficient working capital financing agreements to sustain growth.
A E78 partner, first acting as an Advisor and Board Member and later as Interim President and COO, led existing management through the formulation of an improvement plan. His focus included restructuring working capital facilities with a major commercial bank; improving key customer relationships through collaborative, needs-satisfaction account management; increasing manufacturing throughput and efficiency; and more effective working capital management.
During the next twelve months of operations the company experienced:
- More than 27 percent sales increase
- A 25 percent increase in throughput capacity, with minimal capital investment
- On-time delivery to customers improved to 95 percent
- Cash from operations increased by 280 percent
- Accounts receivable collection period reduced by 40 percent
- A 30 percent reduction of inventory
- All vendors returned to payment within terms
- A 50 percent reduction in total debt
- EBITDA 5.5 times that of the prior year