Kimberly Kashevarof | April 2020 Chair of the Board Report
2019 was a very good year for SNA resulting in a 2020 distribution of $12.89 per share from our Shareholder Trust.
Your board and management have worked hard these past few years to shore up the company and concentrate on our profitable businesses. The decision was made to get rid of those companies that were costing us money. In 2019 we sold the last construction company after it finished its final project in California. Our team is now working on
maximizing profits from our current businesses and looking at some promising long-term opportunities.
Let me share some information on our current businesses. This year we were able to enter into a gravel sales
agreement for our land in Jakalof Bay. This was land that was traded to us from the State of Alaska, and land that SNA owns the gravel on. The contractor extracted 25,000 cubic yards of gravel for projects on the Kenai Peninsula and also resurfaced several miles of the Jakalof Bay road. The contractor expects to continue operations this year. For our West Side lands, the bear viewing was a bit slow due to the higher temperatures but we were able to add a new multi-year lease from a communications company. The hunting went well, and we were able to coordinate with one of our hunting guides to provide moose meat to the Tribe, which they
enjoyed very much.
Finally, the Dimond Center Hotel outperformed our expectations all year long, the earthquake didn’t do much damage, so we were able to have a good January when some of the other hotels had to close. Our manager for several years also left in the spring but by September we enlisted a very good manager from a competitor. We have improved our amenities by providing blacklights to housekeeping to improve room cleanliness, upgraded breakfast serving equipment, and added a better dining selection for evening service. We also have switched our back office software to create more efficiency and allow us to have check in by kiosk, once the install is complete. All of these, and many smaller changes, have not only increased
profitability, but have also moved us up on TripAdvisor.com ratings from 17th place to currently 8th place out of all hotels in Anchorage. Once the pandemic is over, the hotel will be well positioned to continue to compete in the Anchorage market.
Chair of the Board
Kimberly Kashevarof | April 2019 Chair of the Board Report
2018 turned into a year of transition for SNAI. After nearly 15 years in the government construction arena, the board decided to sell those subsidiaries and leave that business. Operating under the “Red Mountain” name, the three “8(a)” eligible companies were sold and the remaining non 8(a) company finished up its final major project. Contracting saw some good years and some bad years. However, in the end, the board decided that trying to expand into the business while government contracting was coming under more scrutiny and contracts were being delayed was not the best business decision for SNAI . Also contributing to the decision was the direct costs and management challenges of overseeing operations and employees in 5 states. In addition to ending our government contracting, SNAI also transitioned our management, hiring one of our own shareholders as CEO to provide history, continuity, and experience to our management team.
These decisions paid off in 2018. A loss was predicted for 2018, however, due to the changes mentioned above SNAI produced a profit under our new CEO. The construction companies were able to limit losses while awaiting their sale and able to reduce costs. The last project in California came in under budget and produced more profit than expected. This, combined with the changes made at the hotel, boosted revenues and customer satisfaction, as well as gave SNAI a $367,305 Net Income before the contribution to the Shareholder Trust and taxes.
The final transition was the creation of the Shareholder Trust. SNAI now has a way to pass dividends and other future benefits to our shareholders tax free. In addition, the funds put into the Shareholder Trust are taxed at just 10% for the trust verses 28% (SNAI’s usual corporate rate). To help explain this a bit more, see the attached table showing the tax impacts.
The table shows that by contributing $150,000 to the Trust, SNAI and the Trust saved $27,280 in combined taxes. This allowed the Trust to pay a bigger distribution than SNAI could have given alone. And the distribution is now tax free to the shareholders. Now that makes a good transition year!
Chair of the Board