Capital Source - A World of Tile

Division: Phoenix Management Services


Client

A seventeen-store retail hardwood floor and wall tile chain with annual revenue of approximately $25 million. The Company operates retail locations in Colorado, Texas, Arizona and New Mexico. The Corporate offices and central distribution center are located in Denver, Colorado. The Company’s business focused upon both the consumer retail customer and the wholesale commercial and homebuilder markets.

Problem

A World of Tile’s (AWOT) EBITDA declined from $3.2 million when the CapitalSource (“CS”) loan was first completed to $1.6 million in the first twelve months. CS recently completed a credit facility amendment to provide additional liquidity supported by a collateralized guarantee and an infusion of additional working capital by the equity sponsors. In conjunction with the aforementioned amendment and the Company’s declining performance, CS engaged Phoenix Management Services to complete a business assessment of AWOT’s operations.

Solution

Phoenix analyzed all aspects of AWOT’s business model including its market place position, factors affecting sales performance, opportunities for margin improvement, payroll planning and scheduling methodologies, G&A outsourcing opportunities, strengths and weaknesses of key management personnel, quality of real estate, and evaluation of the Company’s cash flow and financial forecasting. The analysis achieved the two primary objectives of the engagement. It provided CS a complete understanding of company and its areas in need of improvement, and provided the Company added value by developing solutions to several of the operating challenges currently being faced by the Company.