“NFS followed a simple process. The communication was fast and realistic. Overall, I would give NFS an A+,” said Hoar. Keeping communication, straightforward and fast allowed Flow to fill its facilities with the necessary equipment and start production sooner.
SUMMARY
Early stage companies often face cash restraints that inhibit their ability to fuel growth. Entering the $15 billion U.S. water industry does not make things any easier.
- The addition of manufacturing facilities and equipment expenses to salaries, marketing, insurance and all other business expenses led Flow Water to seek other sources of financing.
- The completion of an equipment lease enabled Flow to begin self-manufacturing earlier than expected and increase operating margins to help the company grow and focus on other business units.
This is the story of how Flow Water worked with NFS Leasing to overcome these cash constraints, to increase production and enter new regional markets.
THE CLIENT
Flow Water was founded in late 2014 on the principle of being the world’s first socially responsible water company. As an early stage Canadian company looking to enter the U.S. bottled water industry, it positioned itself as a premium water company with a focus on providing customers the most naturally alkaline spring water in the most eco-friendly package possible.
The 100% recyclable, carton-based Tetra-Pak packaging allows Flow to reduce its carbon footprint and conserve the environment. It is currently the only premium water to use alternative packaging. The combination of naturally alkaline premium water and packaging integrity are the key factors between Flow and the competition.
THE CHALLENGE
Flow began its expansion in the United States and was looking to build multiple facilities. Even though Flow received incredible support from its shareholders, it still lacked the cash flow to support its aspirations for vertical integration and large-scale production to improve its margins. As a start-up company, it was difficult to obtain financing through traditional methods.
Struggling to see beyond Flow’s balance sheets, the banks asked Flow to take risks and accept terms it was not prepared to accept. The finance agreement with the bank proved to be too challenging to complete. Flow quickly realized that traditional bank financing was not the right option and the management team decided to look for other sources of financing.
THE SOLUTION
Flow turned his attention towards seeking an independent financier. In this research, NFS Leasing took the lead. After the first conversation between the two companies and their representatives, Flow realized that that it had found a genuine financial partner and not only a source of money.
Matthew Hoar, CFO of Flow Water said, “Working through the initial challenges with NFS was excellent. The level of responsiveness was fantastic, and they have an extremely high level of service. It was a great process.”
EXECUTION
Working through the agreement and getting it executed was quite easy. The completion of the transaction would allow Flow to start up its facilities with less downtime and increase its production and margin.
“NFS followed a simple process. The communication was fast and realistic. Overall, I would give NFS an A+,” said Hoar. Keeping communication simple and timely allowed Flow to fill its facilities with the necessary equipment and begin production sooner.
RESULTS
The arrangement with NFS enabled Flow to build two production facilities one in Canada and one in the United States in an efficient and effective manner. The first Canadian facility was operational with the required equipment one year ahead of schedule. The production capacity of Flow’s plant is excellent and exactly as it hoped. With the simple NFS process and a high level of service, Flow will look to generate revenues of between $75 million and $100 million over the next twelve months.
CLIENT UPDATE: Completing multiple transactions, NFS Leasing, Inc. has provided Flow Alkaline Spring Water with over $6,500,000 needed for Manufacturing Equipment to support its growth efforts.
