In order to meet these strategic goals, the Corporation
must generate sufficient earnings. To that end, BBNC’s
assets have been allocated to a variety of businesses that
operate throughout Alaska and across the United States.
As noted above, the Corporation’s assets are primarily
allocated in two key areas: to a passive portfolio of
investments (the Portfolio) and to the operating subsidiary
companies. There is also a small allocation to corporate
assets which includes the Corporation’s headquarters
building in Anchorage, Alaska.
The Portfolio is comprised of a variety of assets including
marketable securities and liquid and non-liquid alternative
investments. Management classifies the operating subsid-
iaries into four distinct business lines which are:
• Construction
• Government Services
• Industrial Services
• Tourism
The Corporation also has earnings from natural resource
activities that are primarily comprised of certain revenue
sharing payments received from other Alaska Native cor-
porations as required under ANCSA.
The following pages are management’s outlook for
FY2020 and view of the Corporation’s FY2019 results in
total, for the Portfolio and of the business lines.
FY2020 OUTLOOK
Management expects FY2020 to bring both challenges
and opportunities across the broad landscape of BBNC’s
business activities. Management expects overall earnings
before income taxes to be consistent or better in FY2020,
due to consistent profit in most business lines and benefits
from planned acquisitions.
The Industrial Services business line can positively or
negatively be affected by oil prices. Uncertainty in the
Alaska oil and gas industry driven by the precipitous drop
in oil prices during FY2016 negatively affected earnings of
BBNC companies in this business line in FY2018. However,
in FY2019, risks were mitigated by the strong positioning of
subsidiaries within the industry, and significant reductions
in operating costs in turn generating significant profits.
Management expects these exceptional results to continue
into FY2020. BBNC companies are some of the safest and
most efficient contractors working in Alaska and BBNC’s
customers and our customer base includes some of the
strongest oil and gas companies operating in the state.
The Construction business line is expected to generate
earnings exceeding those in FY2019. During FY2019, the
SES group experienced several challenging contracts gen-
erating significant losses for this business line. Management
expects those losses to reverse in FY2020, returning the
Construction business line to significant profitability.
The federal government is the primary customer for the
Government Services business line. Earnings in FY2020
are expected to remain consistent from levels seen in
recent years. In prior years, BBNC made certain changes
26
BBNC FY2019 ANNUAL REPORT
to the strategic alignment and management team within
the business line in order to respond to the needs of the
Corporation’s customers.
Following a directive of the BBNC Board of Directors to
increase investments in the Bristol Bay region, BBNC has ini-
tiated several strategies to increase both investments in the
region and economic opportunities for shareholders. One
such strategic initiative authorized by the board is called
the In-region Government Contracting (IGC) Program. The
goals of the IGC Program are as follows:
• Increase federal contract awards
and successful performance rates;
• Leverage BBNC subsidiaries capacity,
experience and knowledge;
• Create returns for BBNC, tribes and village
corporations, and
• Develop and provide extensive training to village
corporations and tribes and their managers to
increase their knowledge of federal government
contracting programs, regulations and
corporate governance to ensure full compliance
for government contracting requirements.