Advanced Integration Technology, a Plano, Texas-based industrial automation and tooling company that serves the commercial aerospace and defense industries, is facing liquidity pressure amid an upcoming maturity of its revolver, according to sources. AIT has limited access to its revolver, cash on the balance sheet is dwindling, and its financial performance has suffered due to the Covid-19 pandemic, particularly in the commercial aerospace segment, they added.
The company has a $60 million revolver due April 2021 that is subject to a springing net first lien leverage ratio of 5x if over $18 million is drawn, according to documents reviewed by Reorg. As of Sept. 30, the company reported a debt-to-EBITDA ratio of 8.92x and $1.5 million outstanding on the revolver, meaning incremental revolver availability would be limited to about $16.5 million. Cash on the balance sheet at the end of the third quarter was roughly $270,000, down from $6.2 million as of Dec. 31.
The company also has a $319 million L+475 bps senior secured term loan due April 2023, which was bid today at 84, according to a trading desk.
An illustrative capital structure is shown below:
The company’s commercial aerospace operations came under pressure recently due to weak consumer demand in the travel sector amid the pandemic. Commercial aircraft manufacturers made up roughly half of the company’s revenue at the beginning of 2020, sources said, but that percentage has plummeted amid the pandemic.
Revenue fell 27.8% year over year to $41.1 million in the three months ended Sept. 30, according to the document.
Adjusted EBITDA declined 55.6% year over year to $8 million in the third quarter. The company had forecast adjusted EBITDA of $16 million. As a percentage of adjusted revenue, adjusted EBITDA margin decreased by 1,100 bps year over year to 21% in the third quarter; AIT had projected a margin of 30%.
Adjusted revenue was $176 million on an LTM basis to the end of September, compared with $298 million generated during the same period the year before. On an LTM basis, adjusted EBITDA was $52 million as at the end of September this year, compared with $109 million the same period the year prior.
The company’s financial results for the third quarter are shown below:
Net cash provided by operating activities declined 79.4% year over year to $1.3 million in the third quarter. Capital spending fell 44.3% year over year to $103,488.
Founded in 1992, AIT is jointly owned by private equity sponsor, Onex, and management, according to its website
. The company serves the world’s largest aerospace OEMs and tier 1 suppliers, including Boeing, Airbus, Lockheed Martin and Northrop Grumman. The company has facilities in the United States, France, Germany, Spain and Sweden.
AIT declined to comment. Onex did not respond to a request for comment.