The Coal Creek Company - 2019 Annual Report

The Coal Creek Company (CCRK) annual report for 2019 is now out. Coal Creek shares have declined and are currently trading at the same level they were in the summer of 2006. Book value per share was $134 and marketable securities per share were $76 as of year-end 2019.

This is a company that land aficionado Oddballians like, but which happens to have a lot of exposure to the pandemic crisis. Of its $6.8 million of 2019 revenue, almost all of it is vulnerable: rental income, recreational fees, general store income, and gas and oil royalties. It will be important for them to have cut their $5 million of operating expense rapidly as sales fell.

They likely lost money on their $7.2 million securities portfolio as well, which underlines the point we made a year ago about how these small company equity portfolios compound the macroeconomic risks and are a poor safety cushion.

We will have our full commentary on the 2019 results in the upcoming June 2020 Issue of the Oddball Stocks Newsletter. (Previously, we published an excerpt from Issue 25 (June 2019) about The Coal Creek Company.)

1 comment:

  1. Article about Coal Creek manager

    When Brent Galloway was growing up in eastern Tennessee, he often rode his dirt bike on local mountain trails. This wasn't illicit behavior, per se, but it wasn't exactly sanctioned by The Coal Creek Company, the mining outfit that owned the land.

    Fast-forward several decades: Galloway is general manager and chief forester at Coal Creek. He came onboard in 2009, after Coal Creek bought out his forestry consulting company. Galloway now oversees the Coal Creek OHV (off-highway vehicle) Area and Windrock Park, a recreation and camping facility on those same Oliver Springs mountains where he biked as a kid.

    "It does make me proud to say I have been riding here for 24 years," Galloway says.

    In 2000 Coal Creek started selling permits for its trails, not only as a way to generate revenue, but also to regulate usage, to reduce the danger of forest fires and to pay for trail maintenance, mapping and other land management. A campground was added in 2007; new cabins went up this year. Coal Creek still has three coal mines and is involved in timber sales and timber consulting to other companies.

    At 72,000 acres, with 315 miles of trails, the OHV and Windrock Park together make up one of the country's largest off-road parks; similar facilities in the area are less than one-quarter the size. "I refer to what they do as trail riding in a closet," Galloway quips. "We are very fortunate to have the acreage that we have." The trails are open to all types of off-highway transportation like four-wheel-drive vehicles, trucks, ATVs and mountain bikes.
    Ryan Roma, Race Day Events
    "This is a big-kids' playground, surrounded by sheer beauty." --Ryan Roma, Race Day Events

    Galloway takes care to ensure that trails are designed to shield visitors from harvested areas--"Users who travel 500 miles to come here do not want to drive through areas where timber has been cut," he says--and is diligent about removing invasive kudzu and undertaking sustainable forestry projects.

    Galloway won't disclose revenue from the park or the camping area, both of which are subsidiaries of Coal Creek, but says the ventures are "valuable" to the firm's bottom line. Daily and multiday permits start at $17, and there is an $88 annual option available.

    The addition of non-motorized activities--including outdoor concerts and ziplining--is in the works. First up is a two-day foot race planned for April 2013. "This is a big-kids' playground, surrounded by sheer beauty," says Ryan Roma, development director for Knoxville, Tenn.-based Race Day Events, which is producing the race. "We want to help open it so more people can use it."

    Coal Creek's board sees recreation as a growing business segment that has allowed the company to survive the volatility in the mining industry. "Coal Creek was a coal-mining company for 100 years. Then the laws changed.

    Oil and gas are natural resources; prices go up and down," Galloway explains. "Out of all the things we do, recreation is the one thing we can control."