At a Glance: Performance Machine
§ Location: La Palma, CA.
§ Line of business: Manufacturer of premium wheels and brakes for performance motorcycle aftermarket
§ Challenge: Financing costly state-of-the-art equipment needed to remain innovative while preserving financial stability
§ Merrill Lynch solutions: WCMA® account, Reducing RevolverSM Loan
Performance Machine, Inc. (PM) is a household name to serious bikers, who covet PM's premium wheels and brakes. Keeping up with new cycle designs has been a wild ride. "In this business, you have to be innovative every day," owner Nancy Sands says. "But you have to balance innovation with financial stability." Merrill Lynch has helped them stay ahead of the pack.
La Palma-based PM was born in 1970 when Perry and Nancy Sands were looking for better brakes. Perry Sands had an industrial arts background, which he parlayed into a multimillion-dollar business employing 170 skilled designers, engineers and metalworkers in two plants. They produce parts for the handsomest custom bikes anywhere. Nancy Sands uses words like fun and magical to describe a business that is not only manufacturing, but also testing prototypes, showing custom cycles worldwide, and even racing them.
Maintaining the cutting edge
To maintain quality and meet growing demand, PM needs cutting-edge technology, like a state-of-the-art Computer Numerically Controlled machine shop, which combines milling and lathing. On a machine the size of a large living room, unfinished metal goes in one end and a complete wheel comes out the other. PM is proud of their custom forged aluminum wheels, whose swirling patterns are sculpted into the metal. Designs and materials constantly change as cycle makers roll out new models each year, so it takes creative energy, manufacturing muscle and continual retooling to provide the best parts money can buy. Maximum efficiency is vital to PM's business health.
That's why the Sands family was glad to team with Merrill Lynch Financial Advisor Steve Carlsen (Long Beach, Calif.) in 1996. He introduced them to Merrill Lynch Business Financial Services, with its expertise in cash management and financing for businesses. Perry and Nancy first opened a working capital line of credit for PM, financed through the Working Capital Management Account® (WCMA® account). A year later, they obtained a WCMA Reducing RevolverSM Loan as they prepared to occupy additional manufacturing space. The Reducing Revolver combined the benefits of a term loan with a flexible reducing credit facility, enabling them to hold down interest expense on the loan as excess cash balances in their WCMA account automatically paid down the loan. Since then they have increased their line of credit to take advantage of good deals on equipment, and they use the Business Center for efficient online banking services. "It's wonderful," Nancy exults, "I go online every other day. The interface is pretty user-friendly."
Keeping costs in check
In 2004, PM was faced with a problem that is acute in California: the cost of workers' compensation, which is reportedly higher here than in any other state in the country. "One new service that we just recently completed for PM was securing a Letter of Credit to help qualify them for a big discount in their workers’ comp insurance," said Carlsen.
At PM, motorcycles are a way of life. Today, Perry and Nancy's children, Roland and Summer, are part of the company, helping them create some of the hottest bikes on the road. In this fast-paced business, PM stands out for its forward-looking, clean designs and excellent quality. "Our bikes have their own look," Nancy says. "Whenever bikers see one, they say, 'That's a PM bike, I can tell.' It's important to be innovative and to know your customers." She adds, "Merrill Lynch helped us to maximize our financial resources in order to take our ideas further and make Performance Machine the industry leader."
The clients' testimony is their own experience and may not be representative of the experience of others. It is not indicative of future performance or success.
The Working Capital Management Account® is a product of Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer, not a bank, and the WCMA account is not a bank account. Banking services are provided by licensed banks or by third parties through licensed banks. The WCMA Line of Credit and the WCMA Reducing RevolverSM Loan, which are linked to the Working Capital Management Account, are offered along with other financing through Merrill Lynch Business Financial Services Inc., 222 North LaSalle Street, 17th Floor, Chicago, IL 60601– California Loans made pursuant to a Department of Corporations California Finance Lenders License. Programs, options and property types are not available in all states and are subject to change. Certain conditions, restrictions and costs may apply. Not all features are available with all programs. All loans are subject to credit review and approval.