The pandemic has created a new set of challenges for manufacturing companies that, even under normal circumstances, can experience hurdles due to the capital-intensive nature of the industry. This is especially true for situations in which income or cash-based performance metrics are temporarily not meeting traditional banking measures.
At Gibraltar, we work with manufacturers across a diverse set of manufacturing industries who have faced unique challenges such as economic and market slowdowns, regulatory hurdles and fluctuating revenue periods.
We have also helped companies scale their operations from local to national, expand their offerings and ramp up production or gear up quickly for major projects. In each case, asset-based loans provided the liquidity and financial flexibility necessary to meet today’s immediate needs, while supporting future goals.
Recent Manufacturing Transactions Reflect Diverse ABL Use Cases
The ability to leverage GBC’s borrowing base creativity to create more liquidity and flexibility in financing terms has allowed manufacturers across a diverse range of industries to achieve their financing goals — including in partnership with financial sponsors that specialize in those industries. Here are just a few examples.
Seasonal Businesses Gain Stability
Asset-based lending can be particularly critical to seasonal businesses navigating fluctuating revenue periods. For Easy Gardener, which manufactures, and sells a broad range of consumer lawn and garden products, ABL provided the structural flexibility to meet the needs of this very seasonal business.
It is typical for an asset-based advance formula to include accounts receivable and inventory. In this situation, Gibraltar was able to offer higher advances against inventory for seasonal needs, plus make accommodative advances against non-conventional inventory types. These special exceptions and inclusions resulted in a financing solution that could generate incremental liquidity and flexibility to support business needs.
Legacy Companies Execute Transformation
Asset-based lending provides a flexible approach to navigating change. That flexibility was key for Clearon Corp., a leading manufacturer of chlorinated dry bleach used in an array of applications including water treatment, disinfection, and sanitization.
“The team at Gibraltar has demonstrated their sincere interest and willingness to partner with Clearon through a truly transformational period in the company’s 60-year legacy,” said J. Bryan Kitchen, Clearon President & CEO.
In a similar situation, Ideal Steel needed flexibility and improved liquidity as the business looked to transform into a more streamlined operation and position itself for future growth opportunities. While the asset-based nature of the financing created new opportunities to achieve company goals, it was GBC’s specific approach that made the difference. GBC was able to eliminate restrictive covenants and provide more flexibility to the company shareholders.
The key to leveraging an asset-based lender to help your manufacturing business during periods of transitions is about finding a lending partner that understands your niche. This helps the lender better analyze your specific needs as it relates to industry trends — while also having a keen understanding of the process and potential expenses you will face during the transitional phase.