True Citrus – $5MM ABL & Manufacturing Growth
Business trends impact many businesses but food manufacturing is especially susceptible. True Citrus needed the flexibility to respond to market shifts in a competitive and fast-paced market, and asset-based lending provided it.
Asset-Based Financing Helps Sponsor-Backed Food Manufacturer Grow Healthy
True Citrus Co. began with the creation of a proprietary process that crystallizes lemon juice and oils to deliver fresh taste in a convenient, shelf-stable format. As a new food manufacturer, the company entered the competitive fray with the advantages of an innovative product that dovetails beautifully with new market trends, but also the disadvantages of getting into a business in which years of patience and careful allocation of capital are required to reach the critical mass for stable profitability.
Winning Over Consumers with Delicious, Health-Promoting Products
Over time, the company has added strategically to its product line, now producing over 75 retail and foodservice products including four unsweetened citrus flavors (True Lemon, True Lime, True Orange and True Grapefruit), naturally sweetened, low-calorie drink mixes (True Lemon Lemonades and True Lime Limeades), zero calorie True Lemon Energy drinks, True Lemon Ice Tea drinks, and salt-free Citrus Seasoning Blends.
True Citrus products target consumers’ growing demands for delicious, good-for-you food products with less sugar (Public Enemy #1) and clean labels (shorter, simpler ingredient lists, which equals transparency). True Citrus products are made from real fruit, contain no artificial sweeteners or preservatives, use only natural flavors, and are gluten-free, salt-free and non-GMO. The company markets its key message as “Drink More Water Deliciously” with “Simple Ingredients.”
But Big Food Is Watching, Too
Consumers’ healthier eating habits and changing tastes have not gone unnoticed by the major food manufacturers either, who have been switching up their portfolios, modifying their processes, acquiring new lines through innovation and acquisition, and opening their sizeable wallets to fund these initiatives.
This means that a mid-market manufacturer, like True Citrus, even with innovative products and on-target branding, is running the gauntlet for market share and shelf space with much larger consumer product companies. They need funds to stabilize operations and grow, but traditional lenders may not be as responsive as needed.
Sales Triple with the Backing of Gibraltar’s Food-Industry Expertise
True Citrus has been a customer of Gibraltar Business Capital since 2013 and has tripled sales with the support of this long-standing relationship. The company currently has a $5 million asset-based-lending line of credit, backed primarily by accounts receivable and inventory.
Working with Gibraltar has enabled True Citrus to:
- Make timely strategic marketing investments to grow the top line, and
- Manage seasonal working capital fluctuations
Gibraltar’s experience in the food products space has made a significant difference to this mid-market company, as well as to others such as Dari Farms Ice Cream. Understanding the impact of common retailer/supplier promotional arrangements is critical, for example, in helping smaller suppliers maximize the liquidity of their AR to optimize access to capital.
“We couldn’t have experienced this level of growth without Gibraltar’s understanding of the world we operate in,” said True Citrus CEO Robert Cuddihy, “and their ongoing willingness to problem-solve our challenges and opportunities.”
Financial Sponsors See Benefits
True Citrus is the second client of Alerion Partners, one of its two financial sponsors along with Juggernaut Capital Partners, to close a deal with Gibraltar. Financial sponsors appreciate Gibraltar for flexibility, speed to close, lack of minimum equity requirements, best-in-class service, and borrowing base creativity.
Sayles Braga, Principal at Alerion Partners, explained that —when the inevitable surprises surface — instead of reacting by becoming more restrictive in its lending, Gibraltar looks for a mutually beneficial solution. “Gibraltar’s people have been phenomenal partners to us.”