Plastics Injection Molder. Sales declined from $262 million in 2007 to $182 million in 2009. $130 million debt.
- Gross margin declined from $31 million to $16 million over two years.
- EBITDA declined from $24.2 million to $4.2 million during the same period.
- Reduced demand for automotive and construction structural plastic injection molded parts, which was fueled by the recession,severely impacted margins and EBITDA.
- Most of the $30 million transfer work from key customers was single digit or negative margin work, which was inadequate to support the fixed operating expenses.
- Utilization fell to under 60% at the three smaller plants, and fell to 30% to 50% at the two primary plants.
- Company lost critical mass and economies of scale following the automotive volume declines.
- MorrisAnderson was engaged as the operations and financial advisor to validate the company’s business plan and projections, to implement cost savings initiatives, and to identify additional restructuring opportunities.
- MorrisAnderson determined that the business model was sound but was dependent on successful implementation of cost reduction initiatives and successful price increase negotiations with the OEM’s.
- MorrisAnderson confirmed that the cost reductions were realistic and being implemented.
- With MorrisAnderson’s support and counsel, management successfully negotiated price increases that provided adequate margins to profitably operate the business.
- With MorrisAnderson’s help, the company projected cash flow to be sufficient to fund operations.
- The company reduced annual costs by over $6 million.