2018 proved an exciting and challenging year for CIRI that ultimately resulted in solid financial performance.
While a struggling Alaska economy, low oil and commodity prices and stock market declines hindered the performance of several of CIRI’s business segments, the company’s government services segment boasted a record-breaking year and pre-tax net income for the real estate segment more than doubled. With the exception of CIRI’s marketable securities portfolio, which was hit by volatile December 2018 market conditions, the company realized positive cash flow in most of its other business segments.
At the end of 2018, the company achieved $1.02 billion in assets (compared to $1 billion in 2017) and had generated $28.5 million of net income during the year (compared to $50.7 million in 2017).
Shareholders’ equity also increased, totaling $674.3 million at year-end 2018 (compared to $668.6 at year-end 2017). CIRI’s dividend policy calculates dividends such that the total dividend payment to shareholders in any given year is equal to 3.5% of total shareholders’ equity, calculated as of Dec. 31 of the prior year. Based on this calculation, CIRI expects to pay dividends totaling $23.6 million ($37.60 per share) in 2019. Since its inception, the company has paid cumulative distributions totaling more than $1.1 billion to its shareholders—more than any other Alaska Native regional corporation.
“Alaska is now three years into a recession. According to the Alaska Department of Labor, the state has been losing jobs since October 2015. A precipitous drop in oil prices—from more than $100 per barrel to below $30 per barrel—caused job losses in areas of the state with high concentrations of oil and gas activity, and Alaska is in the process of moving away from relying on oil-related revenue to pay for state government,” said CIRI President and CEO Sophie Minich. “Even with the state’s recessionary environment, CIRI still posted solid financial results. Thanks to a portfolio of assets and investments that include diverse business sectors, CIRI ultimately overcame the challenges that impacted individual investments.”
2018 highlights included the government services and real estate segments reporting net income of $23.4 million and $44.5 million, respectively. Government services continued to grow its operations, leveraging current customer relationships built upon strong past performance. Real estate took advantage of favorable market conditions for refinancing and the sale of certain multifamily investments. Additionally, the oilfield services segment generated $5 million of net income from its work in the North Dakota Bakken field as a result of stabilized oil commodity prices that supported increased rig moves.
“I’m proud of all CIRI accomplished in 2018,” Minich said. “As we move into 2019, CIRI is focused on laying the groundwork for growth and is eager to continue its strong track record of delivering benefits to shareholders.”
A more detailed accounting of CIRI’s 2018 financial condition is available in the 2018 CIRI Annual Report, which was mailed to shareholders earlier this month.