FLYING HIGH ; Cirrus Design of Duluth, now the No. 2 small-plane manufacturer in America behind Cessna, has more than doubled production over the past two years. The 850-employee firm could go public in 2004 or 2005.
Neal St. Anthony; Staff Writer
1,923 words
12 January 2004
Star-Tribune
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<<Money was like oxygen and we were running out of breath by 2001," said CEO Alan Klapmeier, who founded the company 18 years ago with brother Dale in a Wisconsin barn. “I don’t know that [U.S. Bank] ever formally raised our line of credit, but we just kept writing checks like it had. The day before Crescent came in we made every decision based on preserving cash. Now we decide based on what’s good for the long-term interest of the company.”
Cirrus paid off more than $50 million in debt and invested more than $20 million of the Crescent proceeds into production technology and key people that enabled it to more than double production from 183 airplanes built and delivered in 2001 to 470 last year. Able to meet demand for the first time since it commenced production of the SR-20 and SR-22 in 1999, Cirrus also started to generate cash from operations in recent months.
Cirrus boosted production by 140 percent while only increasing employment by 70 percent, to 850 workers in Duluth and Grand Forks, N.D., last year, through investments in better machine tooling, parts-delivering floor couriers and other ideas suggested largely by the men and women on the plant floor, said Chief Operating Officer David Coleal. >>
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. the future regarding funding and capital…
<<The investment by Crescent, also majority owner of Minneapolis- based Caribou Coffee, has boosted the hopes among shareholders that Cirrus can raise its next batch of capital from the equity market through an initial public offering of stock that also would provide liquidity in a company that has strong growth prospects.
Crescent typically looks for a cash return on investment within four to six years. And Cirrus also may be bait for a larger player in the general aviation industry, including manufacturers of commercial aircraft, looking to diversify or expand its product line.
“We would anticipate retaining significant ownership, even if we did an inititial public offering of stock,” Underwood said. “If a strategic, long-term buyer came in, we’d go with their wishes.”
Crescent beefed up management, including Brent Wouters, a new chief financial officer who’s also an aeronautical engineer. And in 2002 it hired John Bingham, a former U.S. regional sales manager for Rolls Royce and Bentley luxury autos, as its sales and marketing chief.
At one point, before the 2000 stock market meltdown, Cirrus had orders for 400 airplanes, but it could only produce a few each week. That number has slipped to a backlog closer to 100 as production has increased markedly.
“The backlog was running out last year,” Bingham said. “We developed a production machine. We just lacked the sales and marketing tools to deliver the other parts of the program.”
Bingham - who noted that a new Rolls Royce is in the same price range as a Cirrus - nearly doubled the sales staff nationally from seven to 12, added representatives in Australia and Europe, and started advertising in some of the same publications as Rolex watches and high-end cars - as well as aviation publications. >>