Writing instrument manufacturer (No.2 pencils). One of the oldest public companies in the US with roots back to 1795. $100 million in annual sales. $6.5 million EBITDA. $45 million bank debt.
- Historical educational market in decline as big box Retailers moving into educational segment and education budget cuts.
- Plants operating at 50% of capacity.
- Inventory and AR levels excessive.
- Stock market cap at $4.5 million.
- Covenant defaults occurred and senior lenders blocked sub-debt payments.
- MorrisAnderson engaged to do assessment and develop Turnaround Plan.
- Implemented inventory and SKU reduction plan to improve liquidity and profitability.
- Implemented over $1 million of layoffs and cost reductions.
- Implemented purchasing controls and vendor management program.
- Restarted stalled plant relocation from Ohio to Mexico.
- Prepared to refinance company with planned sale 1 year later.
- EBITDA improved by $3 million to $9.5 million run rate.
- Company was refinanced as a bridge to eventual sale.
- Company was sold with Shareholders receiving $18 million; over $13.5 million more than a likely overhauled market capitalization when MorrisAnderson arrived.