This contractor serves the industrial and automotive markets for large production line installations including upgrades of existing systems. The company was involved in several projects in which they failed to recognize significant losses due to an archaic estimating and job costing system. The resulting cash flow constraints had put the company in crisis. We developed weekly cash flow projections to assist in the short-term management of the company's scarce resources and implemented an integrated estimating, project management, and job costing system.
After a thorough analysis of all open contracts identified further losses on other projects we developed and implemented an action plan to downsize the company to a level that management and the capital structure could accommodate.
We disposed of the excess assets of the company maximizing their value. During this process we prepared and successfully negotiated settlements of construction claims on several of the projects ranging in value from $150 thousand to $250 thousand.
National Casework Manufacturer
This family owned company manufactures industrial wood cabinets and distributes them on a national basis. After the founder retired the company doubled its debt load to $5 million in order to purchase a technologically advanced, automated manufacturing system with plans for future growth.
In advance of the installation of the system the company increased its bidding activity and booked orders in excess of $8 million for the coming year. Unfortunately the new system was not fully operational according to schedule and the company was unable to produce its backlog efficiently and in a timely manner which led to a significant loss. The company continued to ineffectually utilize the new system, leading to delays in delivery and continued losses and declining revenues.
The company found itself unable to meet its debt payments and disarray among the family owners led to the hiring of ARP Services, LLC to operate the company until a purchaser could be identified. During this period scheduling systems were designed and implemented that allowed the company to begin meeting delivery schedules though revenues had dropped to $5 million annually.
Subsequent to the successful sale of the company ARP Services, LLC role as interim President was continued along with the implementation of the action plan. Overhead and operating efficiencies were obtained through our design of an information system that integrated to the automated manufacturing system. This further improved the company's ability to meet its delivery commitments and also yielded a higher quality product.
The company was returned to profitability after three months and more than doubled its sales after three years to $11 million. With the company's further growth constrained by the facility we were able to obtain a $5 million Michigan Strategic Fund Bond at 4% interest to purchase and rehabilitate a new facility and purchase additional equipment. This was supported by a working capital line of credit of $2 million. We were further able to obtain a MEGA Grant of $1 million and state and local property tax abatements to support the company's growth.
The company continues to grow profitably at thirty percent annually with current revenues in excess of $20 million.