Wednesday, April 16, 2014

Conrad Industries 2013 Annual Report Highlights $CNRD

  • In 2013, we achieved revenues of $303.3 million, net income of $28.6 million, EBITDA of $48.9 million and earnings per diluted share of $4.80. Vessel construction and repair and conversion hours and revenue were the highest in the Company’s history as was vessel construction gross profit. Net income and earnings per diluted share also exceeded all other years. Our new construction segment accounted for 74.1% of our total revenue and our repair and conversion segment accounted for 25.9% of our total revenue.
  • For 2013, 35.2% of total revenue was Gulf of Mexico oil and gas industry (“energy”) related, 64.6% was other commercial and .2% was government. This compares to 16.2% energy, 76.1% other commercial and 7.7% government in 2012.
  • Our backlog was $152.9 million at December 31, 2013 as compared to $120.7 million at December 31, 2012. At December 31, 2013, 67.0% of our vessel construction backlog was from other commercial contracts and 33.0% was from energy contracts. This compares to backlog at December 31, 2012 of 84.3% other commercial and 15.7% from energy contracts. Subsequent to year end, as of March 28, 2014, we had signed contracts totaling $67.3 million, which includes the sales of two stock barges that were in progress at December 31, 2013.
  • During the past five years, we have made, in the aggregate, approximately $39.6 million of capital expenditures to add capacity and improve the efficiency of our shipyards. This includes $12.4 million in 2013, which was primarily capital additions at our five locations to increase capacity and operational efficiencies, and to replace leased equipment with Company owned equipment. The additions for 2013 also include plant improvements and machinery and equipment for our new Conrad Deepwater South facility in the amount of $1.9 million. We acquired our 50-acre Conrad Deepwater South facility in 2012 for $5.6 million, have developed the site for new construction activities and expect to deliver our first vessel in the first quarter of 2014. Our Board of Directors has approved a $9.3 million capital expenditure program for 2014.
  • A significant portion of our recent backlog, approximately 34.9% at December 31, 2013 and 68.3% at December 31, 2012, has been related to the construction of tank barges for use by customers transporting petroleum products resulting from the use of horizontal drilling in conjunction with hydraulic fracturing, which has expanded the ability of producers to recover natural gas and oil from low-permeability geologic plays, particularly shale plays.
  • During the past five years, we have made, in the aggregate, approximately $39.6 million of capital expenditures to add capacity and improve the efficiency of our shipyards.
  • Selling, general and administrative expenses (“SG&A”) increased $694,000, or 10.8%, to $7.1 million (2.3% of revenue) for 2013, as compared to $6.4 million (2.7% of revenue) for 2012.
  • Daniel T. Conrad has been a director of Conrad Industries since January 2014. Mr. D. Conrad was appointed to the Board of Directors to fill the vacancy created by the resignation of J. Parker Conrad and to serve as a Class III director with a term expiring at the 2016 annual meeting of stockholders. Mr. Conrad joined the company in 1997 and has held numerous positions including Facility Manager, Sales Manager, Business Relations Manager and currently is Senior Vice President of our Conrad Shipyard, Conrad Aluminum and Conrad Orange subsidiaries. From 1989 to 1996, Mr. Conrad served in various positions with Venture Transport, Inc., a specialized carrier in oilfield and energy equipment. Mr. Conrad is the son of John P. Conrad, Jr.
  • [3rd generation Conrad moving up in the company.]
At $40, the market capitalization is now $238 million. Let's say that $38 million of the cash on balance sheet is "excess" (which would leave a current ratio of 1.7x). That gives an enterprise value of $200 million.

The 2013 EBITDA was $49 million. The past five years' average EBITDA was $32 million. The past five years' average capex was $7.9 million, so the average (EBITDA-capex) was $24 million.

That means the EV/EBITDA(ttm) is 4x and the EV/EBITDA(5y) is 6.25x. The "free cash flow" multiple is 8x.

The results are fantastic, but priced in to a large degree - the stock is up more than 50% over the past year. It is not crazy cheap the way it used to be.  

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