Food Packaging Products Manufacturer

Food Packaging Products Manufacturer

Roles
Chief Restructuring Officer, Financial Advisor
  • Returned company to compliance, providing liquidity
  • Reduced Inventory levels with MRP implementation
  • Achieved positive EBITDA
The company was a private equity owned manufacturer of food packing products created from merger of two equally sized companies. Due to an unsuccessful merger and failed lean manufacturing implementations, CR3 Partners was engaged to assess operational issues, inventory control, and poor liquidity. CR3 implemented an MRP system to get inventory under control, replaced personnel, improved product deliveries, and reestablished liquidity that supported a longer-term agreement with the lender.

The Situation

  • Private equity owned manufacturer of food packaging products created from a merger of two equally sized companies
  • Merger was proving to be unsuccessful as management teams were unwilling to make the changes necessary to drive operational improvement
  • Failed lean manufacturing implementation led to poor customer delivery, resulting in customer sales declines, excessive inventory levels, and declining liquidity

The Work

  • Initially engaged to assess business, determine viability of projections, and project near-term cash flows
  • Eventually, Board replaced existing CEO and named a CR3 Partners professional as Interim CEO/CRO with a mandate to stabilize business
  • Identified operations improvement using a KPI-driven approach to improve throughput and reduce inventory
  • Implemented a material requirements planning (MRP) system to get inventory under control
  • Managed attrition and replacement of personnel, who after dealing with previous on-site consultants had demonstrated significant resistance to making operational changes
  • As operations and on-time delivery improved, focus was shifted to meeting commitments to core profitable customers, which resulted in an increasing sales backlog and improved EBITDA

The Results

  • Company returned to compliance under its asset-based revolver, which provided liquidity for efficient operating levels and supported a longer-term agreement with lender
  • Inventory levels were reduced by 40%
  • EBITDA margins went from negative to 6% in 18 months

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