Case Studies

Staffing Industry Case Studies:
National Staffing Company Turnaround: 138% Increase in Shareholder Value

Situation

  • $ 500m Remedy Temp went from a 5.5% EBITDA profit to a loss of 3.5 % of Sales
  • Greg Palmer became President and CEO
  • Recession hit
  • Pricing pressure increased
  • 2001 to 2003- Workers Compensation costs increased over $20m

Solution

  • Converted existing divisions into business units focusing on the Middle Market and Niche areas
  • Organically started RemX, a new specialty divisiontargeting faster growing areas with higher margins
  • Reduced corporate non revenue generating overhead
  • Increased pricing — Mark Up percent increased over 800 BP’s
  • Exited $100m of unprofitable business
  • Added $50m in cash to the balance sheet

Results

  • The company went from a pretax loss of -$18.5m in 2003 to an estimated pretax profit of +$14m in 2006
  • Changed the economic model to improve gross margin from 15.9% in 2003 to 22% in 2006
  • Reduced non-selling general and administrative costs by 25%
  • Organically grew niche specialty division to over $100M in revenue, 35% gross profit and estimated operating margins of 8 to 10 %
  • Added $20m in Direct Hire revenues
  • Reduced workers compensation costs by 30%, or $8m, in 3 years
  • Created an additional 138%, or $100m, in shareholder value during tenure