Case Study

Chief Financial Officer

Transportation

A transportation company (solid municipal waste hauler) with $100 million in revenue was losing nearly $1.6 million in EBITDA monthly, prompting its private equity owner to seek a turnaround.

The PE owner had purchased the assets of the company through an Article 9 foreclosure, but the company continued to be unprofitable.
The company had aged equipment that experienced deferred maintenance for many years, resulting in high operating expenses and out-of-service issues.

Reviewed the financial statements and identified assets not entered as part of the acquisition accounting, increasing equity by $6.8 million.
Implemented 13-week cash flow forecasting.
Negotiated payment plans with critical vendors for past due balances.
Increased terms on trade payables by 30 to 60 days.
Negotiated a full-service lease contract for 60 vehicles to provide new equipment and reduce maintenance costs associated with old, high-mileage equipment.
Analyzed fuel procurement processes and found that nearly 70% of fuel purchases were priced at retail cost rather than on a discounted cost-plus basis.
- Established a plan to reduce fuel costs by negotiating with fuel suppliers and truck stop chains.
Reviewed the workers compensation program and found that over 500 drivers were misclassified as “garbage/refuse collectors” rather than “drivers”.
Restructured accounting classifications to create location P&Ls.
- Management reviewed controllable P&L performance with local decision-makers.
The information was used to reduce expenses and more fully understand revenue sources.

Conserved $4.5 million of cash by negotiating extended payment terms with vendors.
Reduced maintenance costs by $1.4 million through converting to a full-service lease model.
Reduced fuel expense by $1.2 million through redesigning fuel purchasing processes.
Reduced workers compensation expense by $700k over two years through properly classifying drivers.