Compressor Engineering Corporation (CECO), headquartered in Houston, Texas, will receive the “Turnaround of the Year” Award for 2016 in the “Large Business” category from the Turnaround Management Association (TMA) Chicago/Midwest chapter.
TMA’s “Turnaround of the Year Award” recognizes the individuals and organizations who establish effective operations, implement solid management, improve cash flow, and increase production, in addition to other operational factors leading to recovery of a business under stress.
CECO was founded in 1964 as a family-owned business. It has grown into two complementary divisions, Product Manufacturing and Pipeline Services. CECO’s Pipeline Services division had been experiencing rapid growth since 2010, mainly from pipeline construction projects in the Marcellus and Utica fields of Ohio and Pennsylvania. In 2014, financial losses were discovered, hidden in data in the complicated processes of construction accounting. Due to these losses, CECO was on the verge of imminent bankruptcy.
Immediate action was taken, those responsible for the losses were relieved of their duties, and a turnaround team was established with the help of AEG Partners out of Chicago. The team was quickly expanded to include the legal services of Hoover Slovacek, LLP (Houston) to aide in negotiations with creditors. Winstead LC was retained to aide in negotiations with senior debt holders. The financial advisory firm, Statesman Business Advisors, LLC (Houston) was retained to provide investment banking services.
Accounting for the losses was the job of accountants from Wrinkle, Gardner & Company of Friendswood TX. Sirius Solutions of Houston was employed to do forensics on the financials mishandling of the OH/PA region where the meltdown took place.
“It took a lot of work to convince senior debt holders that we had an ongoing business model. The plan concentrated on returning to our core legacy business model. We presented plans that ultimately saved the company,” said Richard Hotze, President and COO at CECO. Once the bank gave us a forbearance agreement, we went to work executing the plan.”
The company was recapitalized and what resulted was the two best years of financial results in the company’s history. Today, CECO is poised to have its most profitable fiscal year ever with projected revenues in excess of $100 million and record breaking earnings.
TMA will present the award to CECO November 21st in Chicago. The recognition criterion was based on the remarkable success of CECO recovering from a period of dire financial hardship, and returning it to operational and financial excellence over such a short period of time.