MorrisAnderson Cost Reductions Enable Company to Stay with its Lender

Aerospace & DefensePerformance ImprovementTurnarounds & Restructuring

70M

Annual Sales

12M

in Debt

Sabreliner, St. Louis Missouri

Challenge

Repair station for small and medium-sized military aircraft. $70 million annual sales. $12 million bank debt.

  • Inability to manage fixed fee contracts and growth.
  • The Company had embarked on an ambitious growth strategy to triple its revenues within five years thinking “if they build it they will come”.
  • After three years the Company had missed revenue targets, customer deliveries, suffered massive losses, defaulted on its bank loan covenants and terminated its CEO.
  • The Company needed a plan that was capable of execution to re-establish its credibility with its employees, customers, and bank, and position the company for profitability.

Solution

  • MorrisAnderson brought in its own industry expert that had a prior history of owning and operating MRO facilities in the aerospace sector to analyze the Company’s bidding procedures and contracts and operational processes to determine the reasons for losses on contracts.
  • MorrisAnderson analyzed the Company’s operations to identify changes or reductions to the cost structure.
  • Performed financial analysis to assess the reasonableness of the Company’s projections and the impact on the Company’s cash flow and liquidity situation.
  • Created a comprehensive restructuring plan in six weeks that would restore the Company to profitability. The plan required significant changes at all levels to achieve a 10% further reduction of its cost structure. Assisted with implementation of Phase 1 of the plan.
  • Implemented a detailed cash flow forecasting model to provide visibility and manage cash flows more tightly.
  • Created management tools for monitoring progress on long term contracts to provide early warning signals of potential losses. Made recommendations for changed procedures for building up costs when bidding on new contracts to mitigate potential future losses.

Results

  • The Company was able to restore profitability and improve the accuracy of its forecasts by implementing the plan based on recommendations made by MorrisAnderson.
  • The Company was able to secure an extension of its loan based on greater confidence in the deliverability of the plan, better management, monitoring and disposition of excess assets.