Financial Projection and Analysis

Profitability AnalysisSuccessful management teams utilize a financial roadmap to help guide them through the ebbs and flows of running their business.

Based upon management’s strategic and operational plan, Sutker develops comprehensive monthly financial projections to determine anticipated profits, as well as working capital and cash needs.

Monthly, Sutker will then rollforward and reforecast the financial projections based upon the latest Company information in order to determine the current trajectory of the business.

How We've Helped

Case Study: A Bank Prospect: A Burgeoning Business with no Financial Plan

$120 Million Cell Phone Wholesaler and Distributor

Solution

A high-net-worth individual started a turnkey cell phone wholesale and distribution company with three interconnecting companies. He self-funded the rapidly growing company with $10 million as the Company reached $40 million in annual revenue.

Confident about the upward trajectory of his business, the owner reached out to a Chicago-based bank to provide a working capital loan to fund the growth. However, to this point, the accounting was done “out of a shoebox” and there was no financial information supporting his working capital line request.

With a complicated turnkey business model that has thin margins, the Bank needed to gain comfort with the business and what the true capital need was.

The lender referred us to their prospect. We assessed the business and developed a financing memorandum that thoroughly explained the model and provided financial projections that mapped out the initial working capital need.

With a satisfactory comfort level, the Bank approved a less than maximum working capital line with the understanding of a six-month revisit to determine if additional capital was needed.

Sutker, then, developed processes and procedures to provide timely and accurate financial information to the owner and lender which led to formally becoming the Company’s Outside CFO and key member of the management team.

Now, a year-and-a-half since the start of our engagement, the Company’s current run rate is $120 million with a projected $2 million in net income with additional working capital support from its Lender.

Case Study: A Revolving Door Leads to an Interim, then a Permanent Solution to Company’s Financial Management

$100 Million General Contractor

Overview

A $100 Million multi-entity Construction Company found themselves yet again in need of a Controller. Their current Controller, in the role for only four months, quit. This was their fourth head change in the seat in just two years. The financial statements were in disarray, complicated by a general ledger system upgrade that was in progress.

Solution

Referred in by a friendly competitor of the Company, Sutker Moran took over the CFO/Controller role providing full-coverage CFO/Controller services at significantly less cost than a W2 employee. Sutker simultaneously reconciled every balance sheet account while developing and implementing a formal monthly close process. Sutker then focused on the Company’s convoluted WIP projection process. Sutker Moran, first, gained a thorough understanding of the existing process. Then, teamed with the Senior Management Team to reimagine a new formal process tailor-made for the Company’s operations. Armed with meaningful information, Sutker Advisors, as the Company’s CFO/Controller, challenges project managers with cost issues and helps identify operational under-performance.

Case Study: A Skittish Bank Finds Comfort in the Company’s Plan

$25 million Commercial Printing Company

Overview

Given the variability in revenue of a project-based operation, a $25 million Commercial Printing company continued to fall short of profit expectations causing its lender unease over the prospects of the organization. The lender requested the Company hire a financial consultant to help develop a turnaround plan.

Solution

With reluctance from ownership, Sutker Moran was hired and instantly plugged itself into the Company’s cash situation to create a 13-week cash flow projection to help gain comfort with the adequacy of the company’s near-term liquidity.  Simultaneously, Sutker began working on a Zero-Based Budget exercise to find the optimal structure of the company.  The resulting plan including downsizing to a two-shift operation, selling excess equipment to pay down term debt, and shifting focus away from identified underperforming segments while investing more resources those segments that were determined to generate incremental profits.  When presenting the financial plan to their bank, it was satisfying to listen to our once-reluctant client explain the zero-base process to our lender.  Based upon the plan, the lender loosened its lending limits. Fast forward a year later and the Company is generating consistent profits, and the upcoming bank renewal will be far less restrictive.

Case Study: Analyzing the Facts and Making a Decision

$18 million Global Marketing Service Organization

Solution

A middle-market marketing organization began to service an overseas client and wanted to build an organizational presence there. Sutker, as the Company’s CFO, gathered and analyzed the start-up and ongoing costs required to support this endeavor. Based upon an expected gross margin percentage, Sutker provided management with the revenue requirements in order to break even, expected payback period,  as well as projected profitability at various revenue levels, all of which management used to make its decision.

Case Study: Building Financial Acumen Leads to Competitive Advantage

$80 million distributor to the Construction Industry

Solution

A middle-market construction-related company seeking to increase its competitive advantage eliminated its controller position and hired Sutker Moran at significantly less cost to prepare and analyze monthly financial statements, attend monthly management meetings, and provide guidance when financial issues arise from time to time.

Sutker Moran develops, in conjunction with other senior management, the company’s annual operating plan, provides monthly analysis on customer and product line profitability, as well as variances to budget. In addition, Sutker reviews administrative expenses, recently being instrumental in reducing the company’s corporate insurance by 40%.

Case Study: Too Many Products Cause Sizeable Loss

$12 million framed picture manufacturer

Overview

A third-generation, family-owned $12 million framed picture manufacturer was losing money. For many years, these losses were buried within the overvaluation of obsolete inventory. Burdened with a large overhead structure, the company sold “all things to all people.” The excessive product lines and sizeable customer base created inefficiencies within the plant and confusion within the marketplace.

Solution

We analyzed each category within each product line, and each product within each category, and recommended a 40% reduction in SKUs. Selective price increases were implemented for the remaining products. In addition, we scrutinized each non-direct labor position, resulting in over $400,000 of savings from job eliminations. Finally, by narrowing the product base and instituting an inventory reduction program, the space required to support the operations was reduced, allowing for one of the three operating facilities to be sold.

Case Study: Competition Erodes Enviable Market Position

$75 million plumbing parts manufacturer

Overview

A third-generation, family-owned $75 million plumbing parts manufacturer had long enjoyed a commanding market share and steady profitability. When new competition forced the company to reduce margins, management was slow to react.

Solution

Through extensive interviews of all levels of management, we helped to assemble a less complacent, more cohesive hands-on management team. We then guided the new team to take action – consolidating departments, eliminating shifts, and discontinuing unprofitable product lines.

Case Study: Costing Analysis Key to Reinstating Profitability

$12 million plastic injection molder

Overview

A $12 million injection molding company was minimally profitable mainly due to the inability to pass through significant material price increases.

Solution

Through a zero-base exercise, eight unnecessary positions were identified and eliminated for a net annual savings of $450,000. We also conducted a lengthy activity-based cost analysis and discovered opportunities for $750,000 in annual price increases. A minimum order requirement was established for non-major customers, eliminating unprofitable short production runs. In addition, activity-based set-up charges were instituted to encourage major customers to order in larger lots.

Case Study: Does this Business Really Work?

$20 million web-based furniture maker

Solution

One of the two owners of a Company that was in the very mature age of its business cycle but cash flowing began to invest in a start-up business in a potentially burgeoning market. After several years of consistent losses and several million dollars invested, both owners questioned the viability of the business model. Sutker Moran helped construct a working senior management team and “locked arms” with them to make significant restructuring moves. These moves included eliminating a low profit, resource-draining royalty relationship, non-productive sales representatives, as well as identifying and converting excess inventory into cash. Even though Sutker played a small role in Company’s future success, we are proud to say we helped the management team build the foundation to allow it to have doubled in size and consistently generate millions of dollars in annual profits.

Case Study: Finding a Lender Who Fits Better

$12 million Engineering Services Firm

Overview

An engineering-based, construction-related firm had a really bad year due to poor non-core investments and excess overhead as anticipated revenue did not materialize. On its own, the Company shed the investments and right-sized its operations to match its anticipated revenue. However, their lender, already adverse to construction-related companies, no longer wanted to bank them. Furthermore, their Controller resigned during this period.

Solution

Sutker took on the interim Controller tasks. Sutker also developed a comprehensive refinancing package that included a detailed financial analysis showing the Company’s path from an unprofitable year to its projected profitable year, as well as presented their upcoming working capital needs. Confident about the credibility of the Company’s plan, Sutker reached out to several lenders who were not averse to the construction industry as well as whose customer base and culture matched that of the Company.  Sutker negotiated the lending agreement with the new lender on behalf of the Company.

Case Study: If Distressed, Start from Scratch

Overview

Due to a dramatic industry slowdown,  a recently acquired $4 million training firm was incurring substantial losses, having difficulty repaying its acquisition term debt, and heading towards insolvency. The lender was requesting financial information that the lead accounting person at the company did not have the wherewithal to produce.

Solution

Sutker Moran was hired to assess the situation by developing financial projections as well as construct a turnaround plan. In a period of one week, Sutker Moran facilitated a zero-base budgeting exercise with management which started from scratch and brought back segments of the business that were profitable as well as identified opportunities for profit improvement. Unthinkable when we were first engaged, the actions taken because of the exercise allowed the company to continue to operate as well as provide comfort to the lender to maintain support while management seeks to revitalize the revenue base and ownership seeks equity investors.

Case Study: Inheriting a disorganized accounting department

$25 million Wholesale Eyewear company

Overview

The Chief Financial Officer of a $25 million Wholesale Eyewear company resigned right before the end of the year. The accounting staff and the president had limited knowledge of the innerworkings of this disorganized area of their business.

Solution

Sutker Moran was hired as the interim CFO and immediately began to finalize year-end financials where they found insufficient, inaccurate, as well as confusing financial information. Sutker painstakingly refined the closing process and continued to facilitate the annual CPA review. In previous years, this was a huge pain point for everyone involved. The CPA firm was thrilled with the new clarity of the financial information allowing them to work quicker and not push up against tax filing deadlines like they had in the past.  Management was also thrilled because the CPA’s fees were significantly less than in prior years. Sutker then created robust financial projections to track the Company’s monthly financial performance, which has led to in-depth conversations with ownership on how to improve their results.  Given the acquired knowledge of the business and proven quality, Sutker Moran was named to the permanent CFO position, which was not something ownership even considered when first engaged as the interim CFO.

Case Study: Keep the Plumbers Plumbing and the Accountants Accounting

$15 million Plumbing and HVAC subcontractor in the Construction Industry

Overview

A Father/Daughter Duo started and successfully grew their plumbing and HVAC business.  While the cash was flowing in, the business was becoming more complex, the ability to understand performance was difficult and keeping track of the numbers was a burden.

Solution

Sutker Moran was hired and immediately created an accurate WIP schedule to provide meaningful job profitability results as well as created KPI and Operational Metrics to report revenues and gross profit by project team and customer. These analyses helped the team improve project management and identify poorly performing projects.

We then focused on creating a formal monthly closing process which provided a fully accurate picture of the company’s financial performance and, as a by-product, reduced their CPA’s year-end review cost since all the books and records were pristine.

With the processes in place, Sutker Moran has transitioned into the CFO/Controller role. With a high level of comfort that their financial department is being managed well, “the plumbers are now focused on the plumbing.”

Case Study: Lack of Information Made it Difficult to Run Business

$60 million Commodity Product Broker

Overview

A growing, profitable commodity-item broker never knew how its year would come out as it always had last-minute, year-end surprises on its financial statements. Furthermore, the paper trail of transactions, essential to a brokerage business, was in disarray.

Solution

Sutker reorganized administrative processes, allowing for a clear delineation of duties that resulted in the efficient and accurate processing of transactions. We also developed comprehensive monthly projections, complete with accruals that allowed ownership and management to understand and anticipate its financial circumstances; Standardized the closing process, improving the timeliness and accuracy of the financial statements; Developed a monthly gross margin analysis by customer, product line, and customer order to help understand profitability;  Finally, Sutker provided a monthly detailed analysis of results, including the Company’s performance versus projections.

Case Study: Management Saw Roadblock Ahead and Changed Course

$18 million Global Marketing Service Organization

Solution

After a very successful year, a project-based international marketing firm invested in its infrastructure — started a regional office, hired a senior sales executive, etc. After developing the monthly financial projections at the beginning of the new year, Sutker, as the Outsourced CFO, reforecasted the projections monthly incorporating updated potential projects and changes in the expense structure. Starting in July, Sutker/Management saw softening in the backlog for the 4th quarter and into the following year. This softness increased when Sutker reforecasted in August. Seeing the financial impact to the reduced business, both in profits and liquidity, Management took proactive steps to reduce its expense structure in anticipation of the lower 4th quarter revenue.

Case Study: Mapping Out the Solution allows for a Triumphant Return

$10 Million Restaurant Group

Overview

COVID-19 and the resulting capacity restrictions brought a successful restaurant group to its knees. Ownership as well as the group’s lender questioned its viability.

Solution

Working with ownership/management, Sutker Moran developed financial projections for each restaurant, modeled to easily evaluate various scenarios given the uncertainty of the situation. Sutker, then, analyzed various components of the operation which was used by management to identify cost reductions. After incorporating these reduced costs into the projections, Sutker modeled the payment deferrals it needed from its lender and landlords in order to survive. Armed with a plan, Sutker was able to negotiate and agree upon a deferred payment plan from its lender as well as its landlords. These deferrals allowed the restaurant group to survive until obtaining government relief and the eventual lifting of capacity restrictions.

Case Study: One Giant Black Hole

$18 million Global Marketing Service Organization

Overview

A marketing services firm had a vast organization of talented individuals who priced potential opportunities based upon their own experiences, causing disparity amongst the quotes. Furthermore, these estimates were never compared to the actual cost incurred, resulting in uncertainty regarding job profitability and the validity of the estimates, themselves.

Solution

Through extensive interviews and analysis, Sutker developed a consensual, standard pricing template that was used for all estimates. With the estimates’ standardized, Sutker, working with the Company’s IT Department, developed a labor tracking system that mirrored the estimating template, allowing for relevant actual vs. estimate analysis. Proving its value, Sutker became the Company’s outsourced CFO.

Case Study: Rapid Growth Led to Instability

Overview

A private-equity backed rapidly expanding single-family home rental business needed to establish processes and procedures to fuel its growth. Employees worked remotely in various cities throughout the Midwest and were overworked. Receivables were not being adequately tracked resulting in financial statement misstatements and a lack of confidence in the accuracy of the information provided to the Board of Directors. The financial information provided to the CEO was meaningless.

Solution

The CEO was referred to Sutker Moran by an existing Sutker Moran client who he knew.

Once hired, Sutker Moran successfully converted the Company from cash-basis accounting to the accrual-basis and tackled the receivables issue. Sutker Moran secured collection of over $200 thousand in unreported receivables from the parent Company which were previously undetected. Weekly and monthly controls were established to ensure consistent tracking and collection of receivables.

While the Company was exponentially growing, Sutker Moran established consistent, timely procedures for monthly close and created a financial projection that guided management in hiring and purchasing decisions. New KPIs were established to arm the CEO with the information he needed when presenting to the Board of Directors providing all stakeholders the confidence in the financial information they were seeking. Once the company reached critical mass, the private equity firm brought in a W2 CFO. Sutker Moran helped transition to this individual.

Case Study: Start-up’s CFO Suddenly left

Overview

With the departure of their CFO without any notice, this tech start-up, capitalized with over $35 million dollars, needed to act swiftly to shore up its financial management as well as provide comfort to its outside investors.

Solution

With absolutely zero transition time, Sutker Moran stepped in right away into the CFO role. Since all Sutker Moran employees are trained to efficiently and effectively onboard financial management positions, Sutker Moran did not “miss a beat” by closing and reporting financial statements within the allowed timeframe in the first month of the engagement.

Once established, Sutker Moran brought the financials to GAAP standard and assisted with year-end forecasting including never-performed balance sheet and cash flow projections. As now their permanent outsourced CFO, Sutker Moran assists with audits, tax studies, and financial reporting, as well as manages the accounting department.

Case Study: The Numbers Do Not Add Up

$65 Million Food & Beverage Distributor

Overview

A large middle-market Global Food & Beverage Distributor was reporting profits. However, it had no liquidity being tapped out on its line of credit facility and late on vendor payments. The accounts receivable and inventory balance grew significantly. Unhappy with their outsourced CFO, they terminated the firm.

Solution

Sutker Moran took over the outsourced CFO and Controller roles, diving into the financials and identifying gross mistakes and misrepresentations. As a result of providing the owners with a true, realistic financial picture that reflected significant operating losses, Sutker Moran collaborated with ownership and implemented a major restructuring based on their customer profitability analysis and their strategic zero-base analysis of expenses. With a return to strong, credible profitability, Sutker Moran succeeded in helping the Company obtain more conventional financing that provided sufficient working capital to fund the Company’s growth strategies. As the Company’s permanent outsourced CFO/Controller and management team member, Sutker Moran provides timely and accurate financial statements and analysis, manages cash, develops annual financial projections and interim financial forecasting, as well as recently assisted in the implementation of a new enterprise system.