From Loss-Making To Private Capital Reward

A leading OEM of innovative power distribution, lighting, and control systems for the entertainment, industrial, and military markets was known for innovative solutions. Customers challenged to find a portable, safe, efficient, and effective solution for power distribution know they can find superior products designed to withstand the roughest of use, in the harshest environments.

Situation

The company’s book of business increased with a corresponding increase in costs, resulting in negative profitability with gross margins averaging just 40% – 45% of benchmark values.

Lean Resources was hired to provide interim guidance and implement the transformation plan. This included facilitating the shift of the current CEO/President to the Board of Directors, thereby streamlining the company’s leadership structure. A key part of the restructuring was the establishment of a governance framework, which involved setting up a new Board of Directors.

Manufacturing turnaround

$9M

Increased

Performance Boost.

+10%

Elevated

Elevating EBITA from a negative 5% to a positive 5%

✓

Adjusting

The revenue and expense structure.

Solution

Lean Resources quickly integrated with the team to build trust and confidence while effectively leading the staff to complete cost reductions and business transformation activities. Opportunities to improve throughput and reduce past-due orders were quickly addressed, thus maintaining critical customer service levels.

To build a robust leadership core, Lean Resources recruited a CEO and CDO, and established plant leadership to deliver on the Centers of Excellence Model. Supply chain management was significantly enhanced as part of the performance improvement initiative, which yielded notable financial gains. These improvements included an overall performance boost of $9.0M, elevating EBITA from a negative 5% to a positive 10%. Additionally, Lean Resources right-sized the company’s operational footprint, adjusting the revenue and expense structure. This led to a recalibration of the annual revenue expectations from $60-70M to a more sustainable $45M.

Key Outcomes

  • Accountability – Successfully integrate improvements through interim leadership if needed, active support and team building, while establishing accountability and collaboration throughout the entire organization.
  • Visibility and Cost Control – Establish tools and processes that enable staff to monitor, measure, report, and improve the operation using reliable, real-time data (sales, quoting, costing, reporting).
  • Performance – Create clarity, with specific objectives, across Sales, Pricing, Operations, and Administration to achieve positive EBITDA.

Centers of Excellence – “Purpose-Built” operating model which exploits the highest running products, value-add activities, footprint, and resources. The turnaround is a powerful narrative for potential private equity partners, showcasing Lean Resources’ capability to revitalize a business from being a loss-making entity to becoming a lucrative opportunity for private capital.