M Line Holdings, Inc., (MLHC) is a real company about ready to break out. Read about this for yourself and you decide! 8 steps of its turnaround program have been completed and 4 more are about to happen. Take it from Bruce Barren, the CEO.
Our 12-Step Process: The M Line Story and How It’s Working!
When I first became involved at M Line Holdings, Inc. (symbol: MLHC), then a small publicly-held company, that was struggling to recover from the severe downturn in the aerospace industry and in the midst of a decapitating downward spiral for the business grave yard, here’s what I found: one key customer representing 60% of the then business – now only 20%; negative EBITDA of ($2.4 million) and now a positive EBITA of approximately $1 million; negative balance sheet equity and thus, “beyond” leveraged; an eroding customer base – now doubled; an ABL lender charging interest and fees at a 25% annual rate; plus payroll and rent, each behind – but now under control. However, the positive element was that it was a company in a good industry – aerospace but without the stamina or know-how to survive. So, what was so different that “we” as a management team undertook to put this company back on its feet!! How was the challenge met – Read on!
Step #1 and foremost, ”we” had to bring creditability back to the executive suite for the Company had a good management “core”, with a determined then senior 4-member team, but just could not solve the problem. So, Step#1 was to reinvigorate management and its employees so that a “new attitude” could emerge in M Line’s case by taking away the “image” that the graveyard was not on the horizon and that this company, despite all of its problems, can be successful. Step #2, stop hiding and get the “real” facts on the “table” so reality could gain a focus. Then, Step #3, cash flow could be focused, first concentrating in regaining customer endorsement and support. Step #4, here “we”, not “I”, got the Company’s primary customer to do a review with the objective to say that our manufacturing quality was acceptable and good based on their standards, not ours. Now, we could focus on more orders and new primary customers which in the first year “we” doubled.
So, with the first four steps accomplished, we then looked at our manufacturing facility as the Step #5 – a disorganized and uneconomical production flow line, utilization running at a 35% of capacity, and over-priced rent with a need to locate and move to a new facility which we did, saving alone $200,000 in annual rent and utilities and increasing gross margins by some 10-15%, enough during the turnaround process to cause a break-even. With Step #6 came brutal reality, we had to redo “our identity”, attract new capital in order to broaden our overhead break-even coverage. This “we” did by getting a NYC recognizable, investment banking firm to give us a $30 million commitment for an acquisition fund to acquire other companies in the same industry – aerospace.
Step #7 was then obvious, find “doable” acquisition candidates which was done by finding 2 key acquisitions which could not only complement our existing business but more than double our revenues, expand our key customer base but triple our EBITDA – important to show so that we could return to being profitable and gain the confidence of our shareholder base which then lead us to Step #8 – Communications! Why, because we had two critical problems – the price of our stock had fallen dramatically, yet the need to find a financing source to start the process of replacing our current “overpriced” lender. This was more than a challenging problem, but this was accomplished where just this past week an announcement was made that will solve the “soft-spot” in the repayment of M Line’s current ABL lender.
What’s left, now to the last Four Steps! Step #9 get the remainder of the current ABL line replaced which is now underway. Step #10, close on the first 2 acquisition candidates, which can be done in the next 60-days, with 3 more on the “table” having patented technologies and one which could bring MLHC to $50 million in annual revenue. Now here’s the critical Step #11 – completing the audits of the 10-K and the reviews of the 10-Q’s within the next 60-days. Then, lastly comes Step #12, translate the efforts from the past 18-months into true Shareholder Value! Stay tuned for this is in the works and a good foundation has been laid.
The EMCO/ Hanover Group (website: www.emcohanover.com) of which Mr. Bruce Barren is also the Chairman and MLHC’s current CEO, is considered America’s leading experts in capital in the corporate middle market, with some 200 corporate turnarounds in the past 44 years. However, without M Line’s management team, this story could not have been told.