Sealaska, Southeast’s regional Native corporation, continues its financial recovery. But its operational side is still losing money and even its investments are in the red.
Sealaska just released its 2015 annual report, which illustrates its financial ups and downs.
Those affect more than 22,000 shareholders, who receive dividends twice a year. It also impacts businesses and communities where shareholders spend their money. That’s mostly in Southeast and Southcentral Alaska, but also the Pacific Northwest.
“We’re not where we want to be, but we are excited and happy that we are showing steady progress,” said Anthony Mallott, president and CEO of Sealaska, which is headquartered in Juneau.
He points to figures showing net income of about $12 million out of total revenues of nearly 10 times that amount. It’s a little less than the previous year, but far, far better than the disastrous year before that.
“Our operations are making money. They’re just not covering the full cost structure of Sealaska,” Mallott said.
Including those costs leaves an overall loss of around $12 million. That amount is also less than the previous year and a far cry from devastating losses the year before that. In 2013, Sealaska’s construction company badly underestimated two federal projects, losing more than $25 million. Problems with other businesses more than doubled that loss.
Like many regional Native corporations, Sealaska’s finances are like a three-legged stool.
One leg is a mix of business earnings and operational costs. Another is investments, which usually boost the overall total, but not last year.
“The investment market was flat-to-down in 2015. And it fell from over $7 million to about a $600,000 loss,” he said.
Then there’s what’s been the corporation’s largest revenue source for years. It’s a shared pool of all regional Native corporations’ resource earnings called 7(i).
That added about $25 million in 2015. Half covered losses and the rest went toward profits – and shareholder dividends.
Sealaska has a variety of businesses but reports their earnings in groups, not as individual enterprises.
Its service group, including contracts with government agencies, brought in close to $4 million — about a 10 percent increase from the previous year.
“There was improvement across the board. Sealaska Environmental Services improved their income. Managed Business Solutions and their data-analytics team improved their income,” Mallott said.
The natural resources group earned about $700,000 in 2015. That’s not much, but it was better than the previous year, when losses were twice that amount.
He says Sealaska’s logging subsidiary, once its largest source of income, should see revenues rise.
It almost shut down a few years ago as the timber supply ran out. But a Congressional lands-claim deal provided more than 70,000 additional acres of the Tongass National Forest.
Mallott says the corporation will still mostly clear-cut trees for overseas sales, but it’s a different operation.
“It’s much smaller. And we’re at the point where we have to save infrastructure, which means to be financially feasible, landowners have to work together and find those efficiencies,” he said.
Other landholders include the Forest Service and the state.
Sealaska’s longterm goal is to expand into seafood, natural foods and other industries closer to home. Corporate projections show that bringing full profitability by the end of the decade.
“We still want our businesses to cover that entire cost structure. Because the reality of having 7(i) and investment income, just income and cash flow on top of what the businesses create, can be very powerful for us,” he said.
The vetting process for acquiring new businesses has been long. But Mallott says announcements will be made soon.
Those will face intensive scrutiny from critics, who say Sealaska has been mismanaged for years.