High End Aerospace and Commercial CNC Shop in OC

The Company has a 40-year history in the precision machining marketplace. It is a third-tier supplier in the aerospace industry with the ability to make complex physical parts, hold inventory, and have long-term agreements with its clients to produce parts for scheduled deliveries.

As a small business enterprise and a leader in its marketplace, it strives to provide dedicated customer service, best-value solutions and exceptional quality using the newest machining and manufacturing technologies. The Company believes its success comes from its ability to build long-lasting relationships with their customers, suppliers, and employees. They leverage the unique skills of each employee by encouraging a team-building environment to tackle any challenge that comes its way. Through consistent interaction with its customers, suppliers and employees, the Company envisions its customers’ products and develops plans to execute them with the utmost efficiency and reliability.

The Company operates out of a 12,000sq-ft enclosed facility and 6,000 sq-ft back areas for staging, sawing and stocking close to Irvine, CA.

Besides the owner, the business is staffed with an Operations Manager, a Manufacturing Manager, and Office Manager, and several machinist and technicians.

The Company has a stellar reputation with its customers and works very hard to maintain it. It serves customers across the USA and excels in manufacturing a large variety of parts with dynamic delivery schedules with consistent precision and quality.  The Company’s core competencies of accuracy and online delivery has contributed to its long-term success in the aircraft and aerospace market.

Even though the Company does not have a large customer base, its customers are very loyal and consistent due to its focus on persistent quality, solid relationships, and a people-oriented service.

The Company has solid prospects for growth by adding some new customers in the medical, industrial, and automotive parts aftermarket. Since the pandemic and other world events, there seems to be a trend of onshoring and manufacturing within the USA, which is contributing to a robust forecast for a very strong 2022, which is expected to be more than 20% year over year.

Company & Market Highlights

• The Business was purchased by the current owners in 2015 and, with the exception of the covid impact, has had consistent growth and profitability year after year since.
• Managed by an experienced team with well-defined roles and job responsibilities.
• Produces detailed financial results on a weekly basis, including a cash forecast of all of the Company’s inflows and outflows on a rolling 13-week (1 business quarter) basis.
• Leverages technology to control the manufacturing process variance control to become more operationally efficient.
• Created expansive operating procedures that standardize more exceptions, so they are not effectively exceptions. Rework the 80/20 rule at the employee level with best hardware and software tools to enable the right information to be available to made decisions, rather than excessive time researching anomalies that waste time and possibly create poor quality parts.
• Reduced physical paper to electronic document flow and has speeded up information flow that allowed multiple people and departments to access the data in parallel. Enabled more collaboration of common information to find and fix anomalies and details faster and with less labor effort.
• Operationally focused to solve root problems that lead to exceptions. Exceptions are a root of inefficiency. Interdepartmental communication needs to be efficient and optimized to reduce miscommunication or incomplete information. Extensive employee training and frequent process reviews are performed as processes evolve and improve. The Company culture has this ever-evolving approach of viewing operations.

Capabilities

The buyer will inherit:

• A long-term supplier to key customers with the majority of sales revenue on Long Term Agreements (LTA).
• A long-term business reputation for quality and on time delivery in an industry governed by performance metrics. Over its decades in business, Company I has established a “standing reputation” for integrity, superior customer service, and genuine concern for its customers.
• Potential for continued growth with existing customers with options to expand customer base. The Company enjoys a strong 30-year base with key customers. Expansion will likely lead to rapid growth given that the new owner can focus on growth while relying on the stable established base, as opposed to having to focus on both stability and growth simultaneously.
• New technology in manufacturing, inspection and office operations: All areas of the business have been infused and refreshed with newest technologies; from multi axis CNC’s running with low attendance factor, to fast optical inspection equipment and start to end contract process flow-controlled ERP and other integrated advance specialty software system modules.
• Strong internal operational systems and processes: Although not outwardly visible, is a significant strength of the Company business model and success factors. Cross training and departmental process integration ensure end to end efficient process flow.
• No long-term financial, union, or legal complications. There are presently no legal or union problems.
• A cash-flow-positive operation. Company is well-managed, and profitable.  Potential buyers are welcome to audit its books and bank account deposits.  The Business has enjoyed consistent growth over the past few years (with the exception of the Covid impact).
• Strong relationships with suppliers, vendors, and professionals.  The same long term business nature exists with key suppliers and industry professionals and align with the Company name and team.

According to IBISWorld, the Machine Shop Services industry has declined after a volatile period over the five years to 2021. Revenue is expected to rise at an annualized rate of 0.8% to an estimated $40.8 billion during the five-year period. Although nearly all of this industry's downstream markets expanded in the years prior to 2020 and were operating with improved market conditions, falling metals prices and the COVID-19 (coronavirus) pandemic adversely affected industry revenue in 2020. Further, the pandemic caused the price of steel to decrease 9.6% in 2020, spurring industry revenue to drop 4.1% in 2020 alone, tempering prior gains. Meanwhile, downstream industries have conducted layoffs to cut costs, reducing demand for this industry. However, the industrial production index and price of steel in particular are expected to rally in 2021 as the economy reopened and social distancing protocols loosened. Renewed investment and military spending, however, are also expected to support a solid recovery, with revenue anticipated to rise 5.1% in 2021.

Over the five years to 2026, operators will devote further resources to satisfy projected growing demand from manufacturers in markets such as automobile manufacturing, commercial aircraft manufacturing and metal forging. Demand from medical device manufacturers is also expected to increase due to a progressively aging US population with a growing need for medical care. This trend will heighten the need for micromachined products.

Additionally, the effects of the coronavirus pandemic are expected to die down early during the period, rebooting the economy and increasing demand from important downstream industries for industry services. As a result, revenue is forecast to grow at an annualized rate of 1.2% to $43.3 billion over the five years to 2026.

Working Capital target Included in price: 2MM

Projected 2022 revenue: 6MM

Projected Cash Flow/SDE in 2022: 990K