The Turnaround Management Association selected Capital Restoration, LLC from a group of candidates that included major consulting firms as the recipient of its prestigious Turnaround of the Year Award for the turnaround of the Gloucester Company.
Founded 40 years ago, Gloucester was a closely held manufacturer of adhesives and sealants producing a variety of caulking products under the brand name Phenoseal sold in large and small home improvement stores. After the founders death his son became the CEO. The son soon began to expand the product line without careful attention to the realistic potential for sales of the new products. Neither was close attention paid to production or marketing costs. The results of this ill-considered expansion was continuing losses. The company had a negative net worth; sales were stagnant; gross margins had plummeted; vendors were refusing to ship needed goods; the company was in danger of missing payroll; and the company was in violation of its loan covenants with its lender.
Capital Restoration was engaged and I became the CRO to address the situation. After performing a rapid strategic and tactical review, we devised a strategy to save Gloucester. The strategy addressed short term cash flow issues, marketing strategy, product strategy and personnel.
Twelve months later the company had become a growing, profitable enterprise. Sales had increased, gross margins had increased from 35% to 47%; unit costs had decreased 22% and G & A had decreased by 45%. The combined effect on EBITA was dramatic.
Based on Capital Restoration’s work at Gloucester, the Turnaround Management Association gave Capital Restoration its Turnaround of the Year Award for companies with up to $50 million in sales. My role as CRO ended when Gloucester was sold, providing substantial liquidity for its shareholders.