CASE STUDY

Manufacturer of Specialty Foods

CASE STUDY

Manufacturer of Specialty Foods

Novo Advisors executed a strategic plan with speed, cutting costs and increasing top line growth

Situation

A manufacturer of specialty foods sold primarily to national restaurant chains intended to grow its business, and in 2018, embarked on a capacity expansion project. During the installation process, the company lost significant volume from a few key customers, causing its sales to drop by 50 percent. There were also significant delays and cost overruns in the installation of its new plant.

By the summer of 2020, the company was losing $0.5 million of EBITDA per month. The owners no longer had resources to contribute to the company and the lenders were fatigued.

The Novo Approach

Novo Advisors was retained as the company’s CRO in August of 2020. Recognizing that the situation required immediate and decisive action, we acted quickly to stabilize the business. Within 90 days, Novo was successful in reducing the monthly EBITDA burn to neutral.

Results

The company was struggling to man its production lines on two shifts as a result of high turnover and no-shows. Novo moved quickly to migrate production to four 12-hour shifts, resulting in annual savings of $2 million.
The Company had historically shipped its volume from its own plant but partnered with a 3PL for outbound shipping as it grew. When its volume shrank, it struggled to bring outbound shipping back in-house. Novo Advisors deployed a team to get shipping pulled back in-house within 60 days, saving $1 million annually.
The company also had outsourced its plant cleaning and sanitation. The Novo team worked to self-perform the cleaning, saving $0.6 million annually.
Novo improved the margins of the business by $1 million annually through price increases and SKU reductions.
Finally, approximately $1.5 million of G&A headcount was reduced.

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