Profit Improvement Allows Company to Stay with Bank
Superior Nut & Candy, Chicago Illinois
Consumer snack food manufacturer and distributor. Engaged as advisor to assess and implement profitability improvements and organizational restructuring. $30 million sales. $7 million debt. EBITDA declined by greater than 100% from $1.2 million to a loss of $(176K). 450 customers (top 50: 80% of sales). 6,600 (1,800 current) SKUs and over 200 employees.
- Significant margin erosion (exceeding 5%) caused by inaccurate costing data and failure to pass on substantial commodity price increases on a timely basis.
- Conflicted family owner/operator objectives and leadership problems impeded decision making and led to significant organizational issues and unnecessary overhead expenses.
- Productivity in numerous manufacturing areas declined below 50%.
- Bloated SG&A costs of approximately 30% of sales.
- Several years of margin erosion, declining profits, and inadequate cash management practices led to liquidity constraints.
- Corrected BOM cost errors, developed new pricing model and negotiated key customer price increases.
- Implemented operational efficiency measurement tool.
- Reorganized customer service, finance and warehouse departments and executed headcount reductions to reduce overhead.
- Improved management of staffing and overtime cost.
- Established cash flow forecasting process to improve liquidity and communicate with the bank.
- Initiated a weekly management meeting and regular informational meetings with the bank to facilitate information flow internally and externally.
- $1.2 million profit improvement program orchestrated by MorrisAnderson.
- Over 5% margin and profitability enhancements.
- Permanent overhead expense reductions exceeding $250K annually.
- Implemented improved plant controls and processes which increased operating efficiencies by over 30%.
- Negotiated fixed charge ratio, tangible net worth and EBITDA covenant amendment with bank.