ARVENIX

Operational Value Creation Calculator

Model EBITDA improvement, working capital release, operating leverage, payback, and illustrative enterprise value from operational improvements.

Net recurring EBITDA improvement$603,230Pro forma EBITDA $8,243,230
Working capital released$1,276,800Inventory cash release. Not included in EBITDA.
Year 1 ROI352.2%1.5 month payback
Illustrative EV impact$4,825,8408x net recurring EBITDA

Underwriting case

Scenario selection

Company baseline

Current state
Annual revenue$76,400,000
Current EBITDA margin10%

Gross profit model

Cost structure
Material COGS$16,808,000
Direct labor COGS$11,460,000
Other direct COGS$6,112,000
Total direct COGS$34,380,000
Gross profit$42,020,000
Gross margin55%
Annual marketing expense$15,280,000

Inventory optimization

Working capital
Annual material consumption$16,808,000
Current inventory turns2.10x
Target inventory turns2.50x
Target inventory$6,723,200
Working capital released$1,276,800

Operating cost pools

Current annual spend

Underwritten improvements

base case

Addressable operational gap

Existing sold revenue
Addressable jobs150
Underwritten recovery20%
Recovered jobs30
Recovered revenue$573,000
Contribution margin55%
Recovered EBITDA contribution$315,150

Arvenix investment

Year 1 and recurring

Valuation assumptions

Illustrative only

Annual value creation

base case
Material procurement$168,080
Shrink / obsolescence$30,000
Freight / transfers$37,500
Rework / repeat trips$60,000
Warehouse$37,500
Administrative labor$30,000
Recovered job contribution$315,150
Material procurement$168,080
Shrink / obsolescence$30,000
Freight / transfer$37,500
Rework$60,000
Warehouse$37,500
Administrative labor$30,000
Direct operating savings$363,080
Recovered jobs30
Recovered revenue$573,000
Recovered job contribution$315,150
Gross annual EBITDA improvement$678,230
Annual Arvenix cost($75,000)
Net recurring EBITDA improvement$603,230
Current EBITDA$7,640,000
Current EBITDA margin10%
Pro forma EBITDA$8,243,230
Pro forma EBITDA margin10.8%
Upfront implementation$75,000
Year 1 investment$150,000
Year 1 net benefit$528,230
Year 1 ROI352.2%
Recurring ROI804.3%
Benefit / cost9x
Payback1.5 months
Working capital released$1,276,800

Illustrative enterprise value

Net recurring EBITDA
6x EBITDA$3,619,380
8x EBITDA$4,825,840
10x EBITDA$6,032,300

Inventory impact

Cash conversion
Current average inventory$8,000,000
Current inventory turns2.10x
Target inventory turns2.50x
Target inventory$6,723,200
Working capital released$1,276,800