2019 BBNC Annual Report - Page 32

The Industrial Services business line consists of the hold- ing company Bristol Bay Industrial, LLC and its companies Peak Oilfield Service Company LLC (Peak), Kakivik Asset Management, LLC (Kakivik), CCI Industrial Services, LLC (CIS), Alaska Directional, LLC, PetroCard, Inc. (PetroCard) and Bristol Alliance Fuels, LLC (BAF). The overall increase in revenues from FY2018 to FY2019 is primarily due to the effect of the increase in gallons sold and fuel price per gallon. The overall increase in earnings was a result of significant cost reductions in Peak as well as Kakivik and PetroCard exceeding expectations. Peak provides specialty services to the oil and gas industry in locations including Alaska’s Prudhoe Bay, Anchorage, Kenai, Valdez, and Palmer and to a small extent, North Dakota. Peak pro- vides a wide variety of services including crane services, rig moving, ice road construction, drilling support, gener- al civil work, construction, trucking, facility operations and maintenance support, tank cleaning, and power systems. Kakivik specializes in nondestructive testing and inspec- tion. CIS provides a diverse array of specialty services to the oil and gas industry. Alaska Directional, LLC provides project management, directional drilling, trenching, plow- ing, cellular towers, and communications infrastructure services. PetroCard, a reputable fuel distributor in the Pacific Northwest, is based in Kent, Washington and distributes fuel products through cardlock sites, mobile fueling and wholesale sales to commercial customers through facilities located primarily in Washington and Oregon. BAF is a fuel distributor in Dillingham, Alaska. BAF helps to fulfill BBNC’s strategic goals of developing economic opportunities in the Bristol Bay region, building the financial strength of BBNC, and increasing share- holder employment and development opportunities. The success of the Industrial Services business line can be attributed to the focus on quality safety programs that customers demand in this industry. The Industrial Services business line is the Corporation’s largest source of shareholder hire. Average shareholder hire for this business line was 147 individuals with wages in excess of $10.2 million paid to shareholders in FY2019. The Industrial Services business line is expected to con- tinue to play a key role in pursuit of the goals established within the Corporation’s strategic plan. CONSTRUCTION The following table displays results of Construction operational earnings, before interest and taxes for the fiscal year ended (in thousands): FISCAL YEAR 2019 2018 2017 403,666 473,397 440,208 397,363 450,564 415,116 6,303 22,833 25,092 REVENUES Construction $ COSTS AND EXPENSES Construction Earnings from Construction $ The following table displays results of Construction EBITDA for the fiscal year ended (in thousands): EBITDA The Construction business line is comprised of three sepa- rately managed company groups: Bristol Industries (jointly owned by Choggiung Limited [51%] and BBNC [49%]), CCI Alliance of Companies (excluding CCI Industrial Services, LLC), and SES Group of Companies (SES). In addition, Bris- tol Bay Shared Services, LLC, based in Anchorage, Alaska 30 BBNC FY2019 ANNUAL REPORT $ 2019 2018 2017 7,296 24,894 25,645 and Huntsville, Alabama, is the administrative shared ser- vice company supporting the Construction business line. Earnings decreased in the Construction business line by $16.5 million from FY2018. During FY2019, SES experi- enced several challenging contracts generating significant losses for this business line. Management expects those