Dealing with Unexpected Bad News


Company

Industry

LTI Boyd, Inc.

Industrials

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Dealing with Unexpected Bad News


Company: LTI Boyd, Inc.

Position: Industrials

Location: Modesto, California

Date of Investment: April 2006

Exit Date: July 2012


Company Description
LTI Boyd is the leading global manufacturer and supplier of high performance, custom engineered components for large, multinational OEMs. LTI Boyd offers specialized solutions for gasket, sealing, insulation, and impact protection applications in the heavy truck, recreational vehicle, enterprise electronics, off-highway, aerospace, and consumer electronics markets.

Background
On the evening of Friday, September 4, 2009, four days after Sentinel made a follow-on investment in LTI Boyd, a fire destroyed its Newnan, Georgia facility, resulting in a total loss of the building and equipment. Fortunately, no one was in the building at the time and no one was injured.

The Challenge
The fire completely destroyed LTI Boyd’s office building, computers, and production equipment, rendering the company unable to produce a major portion of its product line. As a result, LTI Boyd’s customers—predominately large, multinational OEMs—risked having to shut down their own production lines because of supply interruption. Further compounding the crisis was that LTI Boyd was in the midst of integrating a recent tuck-in acquisition, and establishing relationships with many new customers who had been buying from LTI Boyd for only a short time. Under these circumstances, retaining customers—especially new customers—posed a significant challenge.

Accomplishments
Stabilized the Business: By the next afternoon, the Sentinel deal team had identified a consultant that specialized in managing property casualty events. Together, we immediately initiated discussions with LTI Boyd’s insurance carrier, who advanced $1 million of property and casualty insurance within seven days of the fire. LTI Boyd would ultimately go on to receive more than $13 million in property and casualty and business interruption insurance to completely replace its destroyed facility and to fund its business operations.

Outsourced Manufacturing: Within a week of the fire, we had replaced LTI Boyd’s computer servers and began to reach out to customers as well as potential suppliers who could assist with outsourced manufacturing. Over the course of the next three weeks, LTI Boyd outsourced hundreds of components used to supply its more than 200 customers, established logistics supply arrangements, and began re-shipping products to its multinational customer base. LTI Boyd never caused a shutdown of an OEM customer’s production line.

Completely Rebuilt Facility: Within three months of the fire, LTI Boyd had signed a lease for a new facility in nearby Fairburn, Georgia. Three months later, LTI Boyd was producing in its new Fairburn facility, and within nine months of the fire, all production was back in-house. During this tumultuous time, LTI Boyd retained more than 95% of its customers. LTI Boyd’s Fairburn facility is best-in-class, and the company is the go-to provider for many of the world’s leading OEMs.

Outcome
After successfully managing the business following the fire, LTI went on to complete a transformational acquisition that more than doubled its size. Having achieved significant growth over the six-year investment period, Sentinel sold LTI Boyd in July 2012 to another private equity firm in a highly successful transaction.