Poultry Supply Chain Management

Mid-Atlantic, U.S.
Investment Amount: $5,000,000
Investment Date: August, 2017
Investment Opportunity & CapX Solution

A leading supply chain partner in the poultry industry faced challenging headwinds at the end of 2016. Shrinking labor pools forced up payroll costs and margin pressure from major customers compelled management to seek automation for improved operational efficiencies and to restore their contribution profit margins.

The company moves 22 million chickens per week from contract growers to major food customers for processing. As part of their streamlining goal, the company sourced a European manufactured machine that has been employed regularly overseas but had not fully been exposed in the U.S.

CapX worked extensively to understand the mission-critical value of the equipment and its importance to the company as well as its customer base. CapX proposed a true lease structure whereby 100% of the equipment cost is financed and saves the company valuable liquidity as well as spreads the ownership cost of the asset over the majority of the company’s multi-year customer supply agreements. The CapX solution resulted in a senior banking relationship undisturbed by CapX’s true lease structure, greatly improved margins, EBTIDA and less risk associated with rising labor costs.

“CapX saw the vital positioning of the company in the poultry supply chain industry and the reliance their customers have on their services. The addition of these capital assets strengthen those relationships and provide the company enhanced profitability to reward shareholders as well as reinvest in the business.” Jeffry S. Pfeffer, Managing Partner, CapX Partners