Price Increases and New Sales Earns Additional Capital

Challenge

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

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• 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

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• 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

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• 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.