Workgear Manufacturer

Division: Phoenix Management Services


Client

A $70 million revenue Workgear (knee pads, tool belts, etc.) Manufacturer based in Texas.

Problem

The client required a review and assessment of operations, distribution and product sourcing which included a validation of its financial forecasts and cash flow projections. Given the prevailing economic climate, rising unemployment and weakening sales levels, the Company’s senior lender was concerned about financial liquidity. The Company’s “big box” retail customers were themselves feeling the loss of consumer revenue. That coupled with the Company’s apparent excessive high debt load contributed further to the lender’s angst.

Solution

Phoenix was engaged by the Company and rapidly identified concentration risk amongst the Company’s supply sources and retail customers. In addition, Phoenix identified significant excess inventory which it recommended by liquidating rapidly to preserve the Company’s working capital liquidity. To assess the concentration risks Phoenix built “breakeven and 13-week cash flow models of the Company’s financial projections and prepared “what-if” analysis that illustrated Phoenix’s recommendations that the Company protect its financial performance by executing significant cost reductions. These cost reductions were documented and a program of inventory reduction was developed to further insure the Company’s profitability and working capital liquidity position were protected.

The collaborative plan developed by the Company and Phoenix allowed the Company’s lender to gain comfort in the plan and the overall Company prospects and continued to support the Company’s capital needs.