Interim CFO to Food Industry Manufacturer

Background

This $40MM multi-product food company, based in New England and controlled by a private equty fund headquartered in Maryland, was suffering year over year declining sales in a frozen meat category that was the leading unit sales contributer for the company.  Distribution of key products became more constrained and cash flow limited as a consequence.  This, in turn, resulted in the organization facing increasing creditor pressure from key suppliers and its lender for repayment of over $10mm in trade debt and commerical loans.    

Need

Work with the the production manager and director of sales and marketing to develop a plan to restore confidence to the creditor body and distributors, while stabilizing the operation and a return to profitability.

Process (Diagnostic)

Created an annual budget process that looked at the contribution margin of each of the client's product lines.  This allowed management to evaluate different sales programs and consider other channels of distribution beyond its traditional grocery store sales point.  This initial functionality also permitted evaluation of impact to corporate overhead and ultimately cash flow generation under various product sales alternatives.  For example, impact of buy one, get one ("BOGO") on volume sales and margins. 

Revised the sales commission program to rewarded sales of products with higher gross margin rather than simply unit sales.

In production & material planning created weekly direct and indirect labor work schedules as well as "buy" plans to proactively monitor production yeilds, inventory levels and turnover and allow for immediate corrective action when variances occured from the operating plan.

Developed a comprehensive restructuring plan that permitted the trade creditors to accept payment in full of open accounts over an extended period of time, or immediate payment under discounted terms.  This was accomplished outside of a court proceeding.  The company's lender agreed to a restructuring of its line of credit upon completion of the trade debt re-composition.

Oversaw the subsequent sale process of interested buyers for the business and created a sales waterfall analysis under different puchase structures including how offers impact the supplier and bank recomposition plan.  The latter having a bearing on sale proceeds available to shareholders. 

Result

Over the course of the engagement a loss of $2mm was turned into positive EBITDA of $1.08MM.  The restructure plan resulted in the company returning to solvency.  The combination of these two milestones faciliated the ultimate sale of the business allowing for the fund established by the equity firm to be in a position to return the original investor's investments to them.