Samples of Success
Air & Ground Medical Transport Company
This $12 million privately held company incurred significant losses the prior year when it relocated its operations to five new bases in west Texas. The Controller had not closed the general ledger and prepared financial statements in 18 months. Due to the losses, its lender requested they bring in a CPA / CFO and provide GAAP audited financial statements going forward. Steve closed the general ledger for the prior 18 months, reconciled and adjusted all the balance sheet accounts, and prepared the financial statements. In converting the company to an accrual basis from a cash basis, a one-time favorable adjustment netted the prior year losses to zero. This adjustment provided valuable comfort to the lender. Also, the company had a $1 million profit for the first six months of the following year.
Steve hired a new Controller, an HR Manager, and an IT Managed Service Provider (MSP). He researched and engaged a national accounting firm with air medical transport experience to perform the audit and tax services. The company wanted to become an in-network provider for Blue Cross Blue Shield of Texas. Steve sourced a medical contracts consultant in Austin, who negotiated physician group agreements with BCBS of Texas to assist the company.
Southwest School Book Depository
This $3.5 million privately held company warehoused textbooks and ancillary materials on consignment for 36 publishing companies, performed the order fulfillment, and reported the sales and inventory to the publishers.
Upon starting, Steve’s immediate task was to resolve a failed ERP system customization. With prior year shipments of $33 million, the ERP failure contributed to a physical inventory discrepancy of $5 million, and accordingly, the company’s auditors did not consider the company a going concern. Steve worked closely with an outside programmer to resolve the system issues. After reconciling the inventory shortage, Steve negotiated settlements of the inventory discrepancies with the textbook publishers at the cost of only $120,000.
Steve played a crucial role in returning the company to profitability, tripling the shipment volume to $100 million, and negotiating a depository asset purchase in New Mexico. Total revenue grew to $8 million, and as a result of his efforts, Steve was allowed to acquire a 4.5% equity interest.
Spirit Aviation Services
Spirit Airlines acquired a $40 million aircraft Maintenance, Repair, and Overhaul station (FAA Part 145 MRO) in Fort Worth. Steve directed the financial management of the facility and reported to the corporate headquarters in Fort Lauderdale. He created job cost reports and developed maintenance budgets for 31 aircraft. These exposed the high cost of buying foreign aircraft not maintained to US aviation standards. These job cost reports and budgets helped guide Spirit Airlines into replacing its costly planes with new Airbus models, which was critical to competing with JetBlue, which had a successful IPO and was flying new Airbus planes.
Critical Information Network
This private equity-sponsored SaaS company provided online interactive training programs. Upon starting, Steve identified significant issues with the budget. He reconstructed the budget and reduced the break-even cash flow by six months. Private equity had acquired the company in bankruptcy, and Steve increased the training assets' valuation by 14 times to $25 million through a FASB 141R fair value assessment. He developed extensive revenue models for the subscription renewals and the corresponding annual recurring revenue, and he completed the current and prior year audits of the financial statements.
Business Jet Solutions (now Flexjet)
Steve reported to the President and the two joint venture partners, American Airlines and Bombardier, for this fractional ownership program with corporate aircraft. As the company grew from $65 million to $320 million, Steve restructured and developed an Accounting / Finance staff of 37. He created the financial and operational reporting, capital budgets, forecasts, cash projections, and a five-year strategic plan. Also, Steve designed an Executive Summary encompassing the price, volume, and efficiency of critical business drivers. This document was an essential tool used by the executive team to manage the business.
The company had two binding agreements for jet engine maintenance and pilot training. Steve assisted in evaluating the engine maintenance contracts with the third-party insurer. With $1 million overhaul costs per engine, the insurer’s low hourly rates created a $600,000 deficit per engine; thus, we negotiated the engines' transfer to the OEM’s maintenance program. This transfer guaranteed the performance of the future maintenance and the future market value of the aircraft. He mediated between the Chief Pilot and the training provider for the pilot training agreement and renegotiated several new vital provisions.
Levantina y Asociados de Minerales (Spain) acquired a $36 million privately-held distributor of natural stone in Dallas. Steve improved the cash flow and increased inventory turnover by reducing inventory levels by $6.2 million (38%) by controlling purchases and discounting obsolete inventory.
Health Information Associates
This $10 million HCA Healthcare medical transcription company provided services to 62 hospitals. Due to ongoing losses, Steve designed a three-part plan to return the company to profitability.
Steve supervised the IT Department, which developed an in-house system with ten modules. Every employee and all 62 hospitals utilized this integrated solution, which improved production by over 30%.
He developed a new compensation plan affecting 130 production workers, which reduced labor costs by 24% while achieving an attrition rate of less than 5%.
Steve outsourced the human resources, benefits, and payroll functions to Administaff (now Insperity) and implemented a first-class medical plan that reduced annual costs by $200,000. With home-based employees in 29 different states, Administaff provided outstanding HR support for the office managers in Chicago, Dallas, New Orleans, and Tampa. Administaff’s total benefits cost was 16.3%, as compared to 21.5% charged by HCA.
This three-part plan generated profitable results immediately upon implementation.
HCA sold this company to Edix as part of a venture capital strategy to build a large nationwide medical transcription service. There was one very gratifying outcome from the sale. Edix had repeatedly touted their $10 million technology investment. When they could not resolve specific technical and operational issues, they utilized our ten-module system, which we developed for under $250,000.