Case Studies

Challenge
In December 2014, the City of Boston engaged us to conduct a financial and operational assessment of the Boston Public Library (BPL). The evaluation included all services (Library Services, Community Services, Museum Services, and Event Planning and Coordination) for the Boston Public Library whose holdings ($23M) are second only to the Library of Congress ($35M). The assessment identified and quantified areas of strength and weakness and proposed specific action plans for high priority improvement areas. This highly publicized audit served as a valuable roadmap for the Mayor of Boston during a tumultuous time in the library’s history as it was released simultaneous with the announcement of a significant loss of high value artwork at the library (over $600K).

Role

Consulting Assignment

  • Financial
  • Operational

The Work
We used a time-boxed approach to focus most heavily on the areas of greatest impact and benchmarked our findings against peer data research. This allowed us to provide detailed action plans in the top 10 key improvement areas: Union Cooperation, Prioritization and Accountability, Employee Performance Management, Fundraising, Inventory Management, Implementation Mindset, Website Design and Implementation, Technology Leverage, and Hiring.

Results

  • $1.5M in additional annual funding gap identified
  • $1.1M total cost avoidance opportunity related to improved inventory management and possible sale off non-core special collections
  • Identified necessity to close the gap from current 19% of assets searchable to something closer to the peer average of 92%
  • An estimated $0.5M – $1.5M in annual revenue opportunity identified from newly commercialized space by consolidating staff and making more efficient use of highly valuable real estate
  • Increased percentage of interactions where patrons resolve requests with a single staff interaction
  • Identified the need to speed implementation of key improvements through increased cooperation of unions and decreased negotiation where not required by contracts
  • Identified the need to improve organizational effectiveness through technology upgrades
Challenge
Our client was a well known Japanese fusion style restaurant chain. A weakened economy exposed the chain as more of a collection of restaurants rather than an integrated corporate restaurant chain. Company profits started to erode with the economic downturn. Comparable restaurant sales declined by 8 and 6 percent in FY 2009 and FY 2010, respectively. Net losses totaled $14M – $5.1M in FY2009 and $8.9M in FY 2010. Adjusted EBITDA declined 22% from $35.3M in FY 2009 to $27.7M in FY 2010. The company reached its lowest stock price of $3.08 with a market capitalization of $51M. The chain’s image was declining and the value proposition was damaged by higher prices and lower quality product offerings. Management had lost focus and a new CEO was hired.

Role

Interim Management

  • CFO

The Work
We were initially engaged to validate the principles of a “renewal program” launched by the recently hired CEO to improve the guest experience and financial results. We were then named as interim CFO where we helped implement the renewal program. We participated in a review of strategic alternatives for the Board of Directors including a sale process. After conducting a robust process, the sale process was terminated in May 2011 and we commenced a search for a permanent CFO which was completed in August 2011.

Results

  • Six consecutive fiscal quarters with comparable store sales increases
  • Net income in FY 2011 was $1.3M versus a loss of $8.9M in FY 2010
  • Adjusted EBITDA increased by 22% (from $27.7M in FY 2010 to $33.8M in FY 2011)
  • Stock price improved to $10.50 per share in July 2011, with a market capitalization of $175M, an increase of $124M from the beginning of engagement
  • On the balance sheet, senior secured debt ($35.2M as of November 2009) was completely paid off solely through operating cash flow and the company was able to place a $30M senior secured line of credit under favorable terms
  • Permanent CFO recruited and placed
Challenge
This 50 year old energy distribution company experienced a significant downturn during the recession as prices became extremely volatile. Combined with an acquisition which over-levered the company, profitability dropped from adequate to crisis levels. These factors exposed significant deficiencies in financial structure, hedging strategy, and operations. At the time we were introduced, the company’s bank had just severed the relationship, the company’s sole-source provider was threatening to shut off supply, and the family had exhausted their ability to infuse further cash. Initially, we successfully brought them through the liquidity crisis. Then we helped them fix operations and they returned to profitability. Today, we provide monthly financial reviews and special projects support (acquisition due diligence, capital improvement analysis, etc).

Roles

Interim Sr. Leadership

  • Interim CFO

Consultant

  • Cash management
  • Finance controls
  • Pricing/segmentation
  • Distribution efficiency
  • Contract management
  • Hedging
  • Refinance

Executive Coach

  • President
  • Controller

The Work
Within eight weeks, provided a comprehensive plan to return the organization to profitability through improved operations and a restructured balance sheet. Over the next several years, we supported execution of the plan in both advisory and interim management roles with the following results: secured favorable bridge then permanent financing, improved gross margin by $2.9M on 19% less volume, diversified business, and improved EBITDA from negative ($2.1M) to positive $3.9M.

Results

  • Achieved $6.0M of EBITDA improvements on 19% less volume
  • Provided financial reporting/dashboards for improved management visibility and faster decision-making
  • Managed cash to improve vendor relationships and terms
  • Purchasing improvements due to negotiated exclusivity and better commodities hedging
  • Customer contract restructuring and management
  • Customer segmentation and pricing improvements (reduced SKUs in core, diversified offerings outside core)
  • Organizational restructuring eliminated over-staffing
  • Secured favorable financing to restructure balance sheet within the first year:
    1. $9.5M in alternative bridge financing within 4 months
    2. $13.5M in permanent, replacement senior financing
    3. $11.0M in additional junior financing
Challenge
Our client is one of the leading hospitality and leisure companies with more than $4B revenue, 750 properties in 80 countries and 110,000 employees at is owned and managed properties. The Company owns, operates and franchises 7 brands of hotels and resorts and is one of the premier developers and operators of high quality vacation interval ownership resorts. The Chairman, CEO and COO were looking for guidance and assistance in transforming a premier acquisition company into a premier operating company. Their objectives were to increase EBITDA, improve organic growth and develop a common business culture. Focus included balancing global standardization with local innovation, skills, tools and decision- making in this high customer touch service environment. The goal was to increase customer loyalty and retention, revenue generation and cost efficiencies.

Roles

Interim Management

  • CEO

Bankruptcy Advisory

  • FA in a 363 sale

The Work
The client’s objectives were to increase EBITDA, improve organic growth and develop a common business culture. Focus included balancing global standardization with local innovation, skills, tools and decision-making in this high customer touch service environment. The goal was to increase customer loyalty and retention, revenue generation and cost efficiencies. Due to risk of introducing a large organizational change, a 2- month design process was utilized to ensure implementation success.

Results

  • During implementation, the existing management system was enhanced using financial and process dashboards to identify opportunities and drive improved business performance
  • Operating processes were defined, documented and communicated in order to aid employees in improving and delivering consistent service to consumers
  • Managers were trained in analytical problem solving, change management, and project implementation so that initial and ongoing process improvement became a way of doing business
Challenge
Our client was a roll up of eight companies that produced high end, retail store fixtures for large retailers. With headquarters in St. Louis, the company had factories in Louisville, KY, Minneapolis, Seattle, Miami and Toronto. The Company had achieved revenues of $140 million in 2000 but suffered declining revenues from the economic downturn in the retail market following September 11th, 2001. The market downturn led to retail store chains curtailing their new store openings. Retail bankruptcies and other restructurings also caused lower orders for new retail store fixtures. The Company had a highly leveraged balance sheet common to companies formed through roll ups in the late 1990’s. EBITDA had dropped to nearly zero with a balance sheet containing over $100 million in debt. The Company’s sponsor equity group successfully negotiated an out-of-court restructuring significantly cutting debt in exchange for limited equity.

Role

Interim Sr. Leadership

  • CRO/COO
  • Plant GM

The Work
We were retained as CRO/COO to improve operating performance and increase EBITDA. After an assessment of the entire enterprise, we began a multi-pronged effort to improve productivity, rationalize floor space in production and warehouse facilities, standardize the IT systems, create common business processes and improve the executive team’s performance. We also filled other interim roles as plant general manager.

Results

  • Closed one plant, auctioning off tools and equipment. Reorganized the largest facility and hired new management. Restructured another plant around a customer-focused, team structure, improving customer service and shortening lead times
  • Negotiated the termination of two leases, saving the company over $6 million in future lease payments at a cost less than 5%
  • Lean manufacturing methods were deployed on the floor improving productivity cutting scrap and reducing manufacturing lead time
  • Organized “common process” teams in estimating, engineering and manufacturing, creating standard ways of doing business
  • A common IT system was selected and implemented which streamlined the generation of corporate financials
  • The company newsletter was revitalized to improve communication, boost morale and increase employee involvement
  • About $12 million of annual fixed costs were eliminated and 40% of space were eliminated, a case of less is more