Pacific Mercantile Bancorp : How A&F Distributing Corp. Achieved Peace-of-Mind for Their Employees and the Future of Their Business During a Challenging Year

Imagine going to school to learn English and stumbling on an opportunity to sell produce door-to-door, earning just a few dollars for a case. Over time, and with ample hard work, you find a way into the big leagues, and through dedication and good decision making, your produce is sold at Major League Baseball venues.

This is the story of PMB Client, A&F Distributing Corp. We recently sat down with owner Alberto Fausto and his son Luis, as they shared the inspiring story that started the business, the mind-set behind its growth through the years, and how the company looks to the future of their business.

A&F Distributing Corp. is a leading wholesale produce distributor operating in downtown Los Angeles. They are a family owned business that supplies businesses from the West to Mid-West regions of the United States with high-quality produce sourced from Mexico, Peru, Ecuador, and local farmers. Recognized as a produce leader in Hispanic markets in the area, the company has grown well over the last 20 years. It now also supplies produce for major food distributor Sysco, which means A&F produce is found in many restaurants, schools, even at LEGOLAND®and the Dodgers Stadium.

From Humble Beginnings to Fast-Growing Success

The company started over 20 years ago when Alberto and his brother began selling mangos and other pallets of produce door-to-door from their pick-up truck. They went from selling a set of 100 boxes of mangos to selling 3000 cases per truckload when Alberto and his brother quickly saw the potential in selling produce directly from farmers to consumers. The company began with just the two of them but now has grown to employ 35 to 40 people, far surpassing anything they imagined.

Where does this success come from? The company's growth has come directly from its dedication to being there for its customers. A&F Distributing Corp. works one-on-one with their clients, ensuring their customers always have the information and insights they need to meet the end users' needs. When Mother Nature causes difficulties for crops like limes or avocados, A&F can offer explanations and support to the customer, helping them to fill their need but also working to keep pricing in line with goals.

Alberto makes it clear. He says, 'That relationship of one-on-one, and always being there for the customer. I think that's what has made a difference for us.'

Alberto's son, Luis who recently joined the family business tells a story about how passionate the company is about meeting the client's needs. He discusses how a 16-store retailer in Colorado, frustrated with the store's poor produce called Alberto to find out if A&F could help them get back to the top of the produce game in the community. Luis said the very next day Alberto was on a flight to meet with the potential customer and won the business with his dedication to one-on-one service. Luis thinks his father's incredible commitment to meet their customers' needs is what helped Alberto grow the business.

The Impact of COVID-19

COVID-19 impacted many companies and organizations in numerous ways. The same applies to A&F Distributing Corp. The company is family-oriented and worked hard to avoid letting any of its employees go. They ensured those who were sick could stay home without fear of losing their paycheck. They put their employees' families first the entire time.

Even before the pandemic started, A&F was working towards moving some of their operations online by investing in computer systems. Pacific Mercantile Bank helped them with the process. Alberto says, 'When the pandemic started getting worse, we were okay because we were a little bit ahead of the game. We had computers ready for people to take home and actually be able to work from home, giving our employees peace of mind.' All of Pacific Mercantile Bank's help prior to the pandemic resulted in A&F successfully being able to help their employees during a time when they really needed it.

How Did the Pacific Mercantile Bank Team Help?

The company secured help through Pacific Mercantile Bank and access to a Paycheck Protection Program (PPP) loan to get them through this difficult time. Alberto says, 'Working with your team and knowing that the bank had our back, it gave us peace of mind.' Luis also noted, 'To us and to the employees, bringing that peace of mind that, they can go home to take care of family and not skip a beat on their paychecks. It's going to keep coming.'

The Bank also worked closely with A&F to help them get their business set up to thrive through the pandemic and plan for post-pandemic success. Their banker visited the company, shared breakfast with them, and demonstrated how the Bank's forecasting and modeling tool, Horizon Analytics®worked and what it could do for the business. Reflecting on that meeting, Alberto said it reminded him of the customer from Denver who needed his help and he was at the retailer's location the next day. Alberto said, 'Our banker gives us the same level of commitment we give our customers, it makes me feel good.'

'Without Horizon Analytics modeling, it's like walking through fog, not knowing where you're headed. But having that data and having the concrete numbers to show you where you can be, where you were, where you're projected to be, really just gives you peace of mind.'

Alberto Fausto, Owner of A&F Distributing Corp.

The Horizon Analytics tool available to the company opened their eyes to the opportunities available to them. It also provided them with insight into what they could do to improve cash flow and business value significantly. Alberto states, 'When our banker presented Horizon Analytics to us, it made me realize I may have ignored a bit of the importance of comparing one year with another. Things like reviewing our numbers, how important our accounts receivable and accounts payable results are, and the different things we can do were not things we did before.'

The team worked closely with their banker to learn how to manage different scenarios presented in the Horizon Analytics tool, including managing price changes and comparing things like the produce costs in different seasons. Horizon Analytics also enabled them to see forecasts and enterprise value, so they could make better decisions and adjustments. Alberto says, 'We have made a lot of positive changes thanks to that information.'

Luis added more about how Horizon Analytics empowered the company. He says, 'I think Horizon Analytics did a great job at showing what our company's value is. Our AR got a little bit away from us and started extending a little bit, and it really affected the value of our company and seeing how much it affected us, and that data giving us a solid number that we can focus on, really pushed us. It's been one of our goals this quarter and next quarter too, to bring that AR down, which we have a lot.'

He continued, 'It's been a good quarter. And we think the next one's going to be good too, but having that valuation number really just gave us a goal for the future. Without Horizon Analytics modeling, it's like walking through fog, not knowing where you're headed. But having that data and having the concrete numbers to show you where you can be, where you were, where you're projected to be, really just gives you peace of mind.'

About Horizon Analytics

When it comes to valuation, including enterprise value, companies like A&F Distributing Corp. need information but lack the time and resources to put together the necessary reports and gather data efficiently. That's where Horizon Analytics flips the switch. Using the modeling tools and data resources, profitable growth and cash flow is possible. That's because it becomes easy to create a business forecast to project where the company is going in numerous scenarios. The end result is just that - profit, growth, and revenue at new heights.

You can uncover hidden opportunities as well using Horizon Analytics. Our sophisticated modeling and analysis tools help you create a financial model and valuation that's on target and actionable. Sit down for a professional consultation with a specially trained banker to learn more about how you can see the profits you desire as well.

Learn more about getting started with a customized, no-cost financial analysis and model for sustainable growth. Learn More

To learn more about our Horizon Analytics methodology and hear from our Clients how they've found it to be a true difference-maker, click here