One of the largest aluminum extrusion companies in the nation had hit full capacity. Three of their presses were running 24/7, with a fourth running five full days a week. Due to these capacity constraints, the company was forced to subcontract as much as 2 million pounds of materials during the previous year – a situation it desperately wanted to correct.
Increasing the production volume would require investing in a larger press. The investment wasn’t small; the total bill for the Ube 10” press the company needed would reach $2.35 million.
A significant portion of the investment entailed “soft” costs, including dismantling and removal of old equipment and the installation of the new press. Despite a fantastic relationship with their bank, they were unable to finance these intangible expenses, and the much-needed expansion was suddenly in jeopardy.
Our team quickly proposed a Fixed Fair Market Value (FMV) lease that covered the entire investment required, including the necessary soft costs. Installation period financing would also accommodate the down payment and subsequent progress payments required by the vendor. As a result, the deal was able to go through without a hitch. The solution was structured as a 36-month capital lease with a competitive, fixed rate and no fees.
The new press is expected to open up 20 million pounds of production capacity per year, which should boost revenues by $60,000 per month and net income by $40,000 per month. The company is also now able to capitalize on growth opportunities – including the flexibility to expand into new markets, such as flatbed truck floors. Indeed, the press has opened a door to an important new chapter in this growing company’s story.