Turnaround Plan Generates $25M of Savings

Challenge

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Turkey Slaughter and Meat Processing

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• MorrisAnderson engaged to do assessment at request of Bank Group.
• MorrisAnderson’s work immediately pivoted to Turnaround Plan Development as Company was losing $25M annually and would run out of cash within a few months.
• Sales of number one customer Walmart was growing rapidly but required significant additional capital investment.
• New CEO with CFO and VP Sales both retiring soon.
• Management had no plans to address pending cash crisis.

Solution

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• MorrisAnderson worked with management to develop Turnaround Plan to improve near-term profitability by $25M which provided enough time for additional Walmart sales volume to ramp up and add $20M of EBITDA which allowed for adequate debt service.
• Turnaround Plan included partial closure of a plant, SKU rationalization, vendor cost concessions, overhead and staff reductions and temporary cost reductions on purchased prices from turkey grower owners.
• Turnaround Plan also required a three quarter principal payment moratorium from the bank group and a sale leaseback of the Company’s most valuable processing plant.
• MorrisAnderson initiated a rigorous cash management process involving both finance and procurement personnel to manage cash weekly within the constraints of a borrowing base.
• Bank group consented to support the Turnaround Plan.

Results

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• Company EBITDA substantially improved and became positive approaching the $20M target.
• Sale leaseback was completed which reduced debt and provided extra liquidity.
• Cash was successfully managed within borrowing base.
• Company’s debt could now be restructured or refinanced.