Price Increases and New Sales Earns Additional Capital

Industry: Healthcare

Aaron Industries

Clinton, South Carolina

Challenge

Manufacturer of OTC pharmaceuticals and nutritional supplements. $60 million annual revenues. $20 million debt. 


  • Increases in oil pricing created dramatic raw material cost increases.
  • Company unable to pass increases to customers, causing EBITDA deterioration.
  • EBITDA of $4 million was only half of projection.
  • Payables stretched to 90 days and company had no availability on their bank loan.

Solution

  • MorrisAnderson assisted CFO in preparing cash flow and financial forecasts.
  • Helped CFO create financial plan and forecast, coordinated bank relationships.
  • Initiated numerous price increases and reduced inventory by $1 million.
  • Business plan presented to bank and sub debt/equity stakeholders and negotiated increased debt support from lenders.

Results

  • Revenue increased $20 million due to price increases and new customers.
  • Margins restored to plan and EBITDA increased to $8 million.
  • Senior bank provided additional $2.5 million and sub debt provided additional $1.5 million term debt for business growth.
  • Company became an industry price leader.