Hallwood Group Inc. (HWG) filed Quarterly Report for the period ended 2009-06-30.
The Hallwood Group Incorporated is a diversified holding company operating in two industry segments: real estate and textile products. The Company\'s real estate operations formerly included one hundred and sixteen buildings under management in six states. The Company\'s textile products subsidiary is an integrated textile company that develops and produces innovative woven fabrics through specialized finishing treating and coating processes. Hallwood Group Inc. has a market cap of $20.1 million; its shares were traded at around $13.192 with and P/S ratio of 13.2.
Highlight of Business Operations:
General. The Company principally operates in the textile products and energy business segments. The Companys cash position increased by $2,243,000 during the 2009 six month period to $8,259,000 as of June 30, 2009. The principal source of cash in the 2009 six month period was $9,063,000 provided by operations. The primary uses of cash were $882,000 for property, plant and equipment, principally at Brookwood, and $5,938,000 for repayment of bank borrowings.
Textiles. The Companys textile products segment generates funds from the dyeing, laminating and finishing of fabrics and their sale to customers in the military, consumer, industrial and medical markets. Brookwood maintains a $25,000,000 working capital revolving credit facility and a $3,000,000 equipment facility with Key Bank. The facilities have a maturity date of January 2010. At June 30, 2009, Brookwood had approximately $20,379,000 of unused borrowing capacity on its Working Capital Revolving Credit Facility and $3,000,000 on its equipment credit facility. Brookwood is currently in discussion with Key Bank to renew its existing agreements.
Brookwood paid cash dividends to the Company of $2,500,000 through June 30, 2009 and $9,300,000 for all of 2008. In addition, Brookwood made tax sharing payments to the Company of $2,627,000 through June 30, 2009 and $7,342,000 for all of 2008 under its tax sharing agreement with the Company. Future cash dividends and tax sharing payments are contingent upon Brookwoods continued compliance with the covenants contained in the Working Capital Revolving Credit Facility. Brookwoods total debt to total tangible net worth ratio of 0.71 at June 30, 2009 was reduced from 0.87 at December 31, 2008, principally due to its profitable operations during the 2009 six month period relative to the dividends paid, and was substantially below the maximum allowable ratio of 1.50. There were no significant additional capital requirements as of June 30, 2009.
Energy. During 2008, the Company invested $13,920,000 in Hallwood Energy, as part of a total investment of $75,401,000. No additional investment was made in Hallwood Energy during 2009.