Todd Shipyards Corp. (TOD) filed Quarterly Report for the period ended 2009-09-27.
Todd Shipyards Corporation operates a shipyard through their wholly ownedsubsidiary Todd Pacific Shipyards Corporation. Todd Pacific is engaged in the repair/overhaul conversion and construction of commercial and military ships and vessels. Todd Shipyards Corp. has a market cap of $95.8 million; its shares were traded at around $16.6 with a P/E ratio of 12.6 and P/S ratio of 0.9. The dividend yield of Todd Shipyards Corp. stocks is 1.2%.
Highlight of Business Operations:
Revenue for the first six months of fiscal year 2010 was $84.2 million, which reflects a $37.4 million, or 80% increase from the same period last fiscal year. The year to year increase results largely from higher ship repair and new construction volumes. Cost-type and firm fixed price work revenues increased 196% and 50%, respectively, between the second quarters of fiscal years 2010 and 2009, while work under time-and-material contracts decreased by 61%. We previously reported that we received a notice from DCAA questioning the reasonableness of a payment to one of our subcontractors for work performed on the aircraft carrier USS John C. Stennis, which was a cost-type contract in fiscal year 2005. We established a $3.1 million reserve for this item in the first quarter of fiscal year 2009 and filed an REA with the Navy contracting officer to allow the $3.1 million in incurred costs. In the event of an unfavorable decision on our REA, we will file an appeal to the Armed Services Board of Contract Appeals or directly to federal court.
Investment & Other Income - Investment and other income (including gain on the sale of available-for-sale securities) was $0.3 million for the second quarter of fiscal year 2010 and $0.8 million for the first six months ended September 27, 2009. During the same periods in fiscal year 2009 investment and other income was $1.2 million and $2.2 million, respectively. Investment and other income in fiscal year 2010 was impacted negatively by the completion of contracts to lease certain facilities and provide related services to Kiewit-General in connection with their construction of the Hood Canal Floating Bridge.
Working capital at September 27, 2009 was $33.0 million, an increase of $4.9 million, or 17%, from the working capital reported at the end of fiscal year 2009. The overall increase is due to an increase in accounts receivable of $3.6 million, and an increase in cost in excess of billings of $8.4 million, which are partially offset by an increase in accounts payable of $5.8 million. All of these changes are primarily due to increased volumes and timing of work.
In July 2009, we renegotiated certain terms of our $10.0 million revolving credit facility. In July 2009, we also added a new $15.0 million credit facility to support the issuance of letters of credit to meet our performance security obligations on the WSF 64-Auto Ferry new construction project and other commercial new construction projects when performance security is required. As of September 27, 2009, we have a letter of credit outstanding of $0.5 million and we had borrowings of $2.6 million. These reduced our available revolving credit facility to $6.9 million and $15.0 million available on our performance letter of credit facility. The revolving credit facility, which is renewable on a bi-annual basis, provides us with flexibility in funding our operating cash flow needs. We have certain financial debt covenants that we must meet in order to maintain these credit lines. As of September 27, 2009, we believe we were compliant with all bank covenants.
We previously reported that we received notice from the DCAA questioning the reasonableness of a payment to one of our subcontractors on the 2005 dPIA of the aircraft carrier USS John C. Stennis. During the first quarter of fiscal year 2009 the DCAA issued its final report disapproving $3.1 million of costs related to payments made to the subcontractor and costs incurred by us to perform work which we contracted to the subcontractor. The Navy contracting officer then issued the decision to disallow the costs and withhold the above stated amount from payments due on our current contracts with the Navy. In response, we filed an REA with the Navy contracting officer to allow the $3.1 million in incurred costs. In the event of an unfavorable decision on our REA, we will file an appeal to the Armed Services Board of Contract Appeals or directly to federal court. We established a reserve for this item in the amount of $3.1 million and booked the resulting transaction as a reduction in revenue in the first quarter of fiscal year 2009. The Navy collected the entire amount in the second quarter of fiscal year 2009 through the non-payment of other outstanding project receivables. In the third quarter of 2009, the Navy agreed to return the $3.1 million while the REA and additional information we have provided is under consideration. There are no assurances that the Navy will agree with our REA. Our current financial statements continue to reflect a reserve in billings in excess of sales for the $3.1 million at issue.
At September 27, 2009 our firm shipyard backlog consisted of approximately $58.1 million of repair and overhaul work. Our backlog at March 29, 2009 was approximately $84.0 million. The decrease in the backlog of work at the end of the first six months of fiscal year 2010 is primarily attributed to progress on projects under contract. The backlog does not include the award of the second 64-car ferry contract and the US Coast Guard Healy modification, for $114.1 million and $12.5 million respectively, both of which were awarded subsequent to the end of the second quarter.
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