Tier I Automotive Plastic Manufacturer

 

Background

  • CM&A partnered with a well-known private equity firm to purchase a severely distressed $250 million, multi-plant
    Tier I automotive plastics supplier

  • At the time of acquisition, the Company’s EBITDA was a staggering negative $11 million 

  • The suboptimal pre-acquisition performance was primarily driven by the negative impact of an employee strike at a major customer, substantial expense incurred for newly launched work, and the long-term effects of poor management under the Company’s previous parent

  • Furthermore, the Company was experiencing significant quality issues (6,000 PPM at the time of CM&A acquisition) coupled with the need to update antiquated machinery, equipment, and operating systems 

CM&A Role / Turnaround Process

  • CM&A Partner held CEO and Board positions

  • Rebuilt corporate staff with hand-picked individuals and implemented the Company's first Corporate Purchasing and Corporate Quality organization

  • Evaluated Plant Management and, as deemed necessary, recruited and onboarded new talent to align leadership with customer requirements

  • Increased annual total bookings by 80% (to $55 million) through revamping the Company’s selling efforts to mitigate customer-related issues

  • Internally raised $35 million of capital to: replace the aged legacy machinery & equipment, upgrade operating systems, and, where applicable, automate processes

  • Developed a quality system to focus the team’s efforts on improving quality standards and analysis of quality metrics

Outcome

  • As a result of Phase 1 of the turnaround process, the Company was transformed from an underperforming operation to one of the most profitable, best-in-class operations in the industry

  • Through consolidation of Corporate Purchasing effort, realized initial annual cost savings of $4 million - $5 million (and $3 million YoY annually after year 1)

  • Improved PPM performance from 6,000 to 15 and reduced customer complaints by 97%

  • Favorable $36 million annual EBITDA swing in 3-year period (from negative $11 million at time of acquisition to positive $25 million)

  • Reduced total debt by $28 million, while still investing $35 million in capital expenditures

  • At conclusion of the 3-year turnaround process, generated three purchase offers representing a strong multiple gain to shareholders