Background

• $80 million multi-plant, global automotive stamping company that was experiencing internal operating problems and was under siege due to the internal management group partnering with an external Company partner in an aggressive internal / external mutinous hostile takeover action

• The unusual internal / external mutiny was particularly troublesome in that the Company’s automotive OEM purchase orders had been transferred to the joint venture associated with the business 

• This action threatened the current lender’s A/R collateral and the viability of the Company

• The Company’s CEO had just terminated the internal mutinous executives and needed a trusted outside resource to assist in restoring profitability

• At the time of CM&A’s engagement, the Company’s EBITDA had just turned negative with senior debt of approximately $20 million leading to the senior lender becoming extremely nervous and declaring a default in the existing loan agreement

CM&A Role / Turnaround Process

• CM&A’s two-pronged assignment was to: (1) neutralize the threat and terminate the mutinous joint venture; and (2) stabilize the operations and restore the Company to profitability

• CM&A Partner led all interaction with the joint venture partner and immediately suspended shipments to the automotive OEMs to create a time-crisis for the joint venture and the customers

• In support of profitability restoration, CM&A established a detailed Earned Hours review process for all facilities in order to assess efficiency, throughput, and Direct / Indirect staffing levels

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

• Replaced the existing CFO and financial staff with strong, hands-on operational leadership

• Established and participated in weekly executive / plant leadership monitoring meetings to review metrics and mid-course correct all operations

Outcome

• In support of the initiated shipment suspension to flush out the joint venture partner, commenced negotiations with the automotive OEMs to re-issue the purchase orders back to the Company

  • Incidentally, the OEMs were unaware of the fraudulent joint venture partner activities

• Within 90 days of CM&A engagement:

  • Successfully terminated the joint venture with full cooperation of automotive OEMs

  • Commenced legal action against the dishonest joint venture principal

  • Reduced headcount by 100 FTEs (600 total Company FTEs at time of CM&A engagement) driven by the Earned Hours analysis

  • Reached an acceptable settlement to resolve this component of the CM&A engagement

• Reduced debt substantially, which allowed the Company to execute a capital reinvestment program

• Realized annual EBITDA improvement of approximately $8 million

• Upon the conclusion of Phase 1 of the turnaround process, a CM&A Partner remained actively involved as an outside Board advisor and continued to assist ownership for a 4-year period.  This Board advisory role included / yielded: 

  • Leading weekly meetings with Company leadership

  • Managerial oversight on the Company’s revenue growth plan, which achieved a revenue increase by over 50% to $120 million annually

  • Improved annual EBITDA to approximately $9.5 million