Measurement Specialties Inc.
Situation
The company is a manufacturer and distributor of OEM industrial sensors (measuring pressure, force displacement, etc.) and sensor-based consumer products, with operations in the US, Europe and China.
The company had been in technical default of several of its loan covenants for 6-9 months, and cycled through two turnaround firms. The board engaged CRP to assess and implement an out-of-court restructuring plan. The senior lenders agreed to the new plan, executed a long-term forbearance agreement and provided additional liquidity to help fund the turnaround. Subsequently, CRP was hired as interim CEO with three support positions in finance and operations.CRP’S Approach
Two plants were sold and inventory was reduced to generate more than $30 million in cash to finance the restructuring and reduce debt. Manufacturing was transferred to the subsidiary in China to reduce direct labor costs and win new business. The company was reorganized around two core businesses, and consolidated from seven to three plants while taking $6 million in annual costs out of payroll, allowing the company to generate more production from two manufacturing facilities than it previously did from five.
Results
- As a result of operational improvements, revenue per labor dollar increased 50% and quarterly gross margins improved from a low of 28% to a high of 48%.
- Quarterly EBITDA improved from negative $4.5 million to positive $3 million in one year.
- Operational improvements enabled a complete balance sheet overhaul. Senior lenders exited with 100% recovery within the terms of the forbearance agreement.
- Within six months, the last of $35 million debt was retired. The share price recovered tenfold during the time period (from a low of $1.31 to more than $13) restoring $120 million in shareholder value.
- The company emerged poised for sustained growth.