Aftermarket Automotive Parts

The Situation

  • Private equity-owned aftermarket automotive company with four divisions specializing in ignition and electronic fuel injection systems, engine tuning devices, custom data acquisition, and display systems
  • Company embarked on aggressive growth strategy – revenues grew to $110MM and EBITDA $19MM; Company was highly leveraged with $125MM in secured debt held by an 11-member syndicate
  • Due to the financial crisis of 2008, revenue and EBITDA fell to $96MM and $3MM respectively, while secured debt was an unserviceable $120MM

Role(s)

Interim Senior Leadership

  • CRO/CEO
  • COO

The Work

  • Initially retained as CRO to determine viability of the business and explore options for a path forward; later installed as CEO and COO
  • Outlined plan to restructure debt and scheduled plan to rebuild earnings – the process required a reduction in working capital, consolidation of facilities, changing sales policies and procedures and a product development strategy
  • Rationalized product offerings and reduced SKUs by 30%, modified customer discount policy, curtailed extended payment terms practices and implemented an aggressive inventory control process
  • Restructured procurement process and ‘onshored’ over half of the sourced parts, simplifying the supply chain and further conserving working capital
  • Launched strategic product development plan which included new and industry award-winning technologies

The Results

  • Recovered $3MM in working capital in the first 6 months
  • Increased gross margin and gross profit as result of reduced SKUs and sales
  • Consolidated 2 manufacturing facilities, further increasing gross margin
  • Over 4-year period, reduced sales to $86MM, increased TTM EBITDA to $13MM, paid down secured debt by $14MM and sold the company for 6.5xEBITDA

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Overview

  • Automotive
  • Restructuring and Turnaround

Engagement Team