THE CLIENT
International consumer products manufacturer and distributor of nutritional and personal care products operating in forty countries.
THE SITUATION
Formerly at $700 million revenues, the private equity–owned company was operating at significantly lower sales levels. Avant Advisory Group provided a CFO replacement during a period of tight cash, significant cost reductions, combined with large scale strategic, management and staff changes. A material accounting error occurred that resulted in a breach of debt covenants necessitating restatement of previously issued audited financial statements.
THE SOLUTION
Avant was engaged to provide an interim CFO within days of a major refinancing to upgrade the position for increased credibility and confidence among creditors, employees and other stakeholders. Material accounting errors were identified which required restatement of previously audited financial statements. We investigated, analyzed, and communicated the errors, their cause, and impact to the appropriate parties, which included management, private equity owner, lenders and board members. We coordinated a confirming forensic investigation and the re-audit and reissued financial statements.
Simultaneously, we worked with operations to maximize cash and improve working capital. Several cost reduction initiatives were implemented in the areas of manufacturing, freight and logistics, and inventory rationalization.
THE RESULTS
Our efforts restored credibility in financial reporting among management, investors, lenders, and the board of directors. In addition, Avant helped improve cash flows by working with operating management to implement cost reduction initiatives in manufacturing, outsourcing, transportation, and export tax recovery that drove $500,000 of procurement savings in the following areas:
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Duty drawback: 90% refund of import duties paid on imported components and ingredients
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Uniforms: 67% reduction in annual costs
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Small package delivery: 12% improvement in overall costs
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Pallets: 40% decrease in pallet costs
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Truck freight: 11% reduction in less-than-truckload freight costs