Native regional corporations top $5 billion mark: most show double-digit growth.

• Author: Liles, Patricia
• Position: Alaska Native BUSINESS NEWS

Business is booming for Alaska's 13 Native regional corporations, thanks to increases in oil and metal prices, growth in the government and commercial contracting sector, and strong returns realized in investment portfolios.

Cumulatively, these corporations surpassed the $5 billion mark in total revenues reported in the fiscal year 2006, with a total of $5.156 billion in total revenues reported from 12 of the 13 corporations. Audited figures for Seattle-based The 13th Corp. for 2006 were not available at press time.

Even without the 13th's figures for 2006, the $1.1 billion increase reported from other corporations is almost a 30 percent increase in revenue from 2005, a phenomenal growth rate in just a year's time. All 12 corporations providing annual report information reported increased revenues in 2006, most with double-digit growth.

Net profits also increased substantially for Alaska's regional corporation, with $488.5 million reported for 2006, compared to slightly more than $250 million in 2005. A portion of those profits are distributed to shareholders in the form of dividends, ranging in size from $1.18 per share paid to Koniag shareholders to the $47.41 per share paid to shareholders of the Arctic Slope Regional Corp.

Several regional corporations experienced substantial revenue growth through work in the federal government-contracting arena through Section 8(a) of the U.S. Small Business Act, which gives special consideration to small and minority-owned businesses when bidding on federal contracts.

Lucrative, due to the sheer volume and geographical spread of business opportunities available, such governmental contracting work typically is a low margin venture. "Net profits after taxes, the 4 percent to 5 percent range is considered pretty good ... the government is always looking for the best value for taxpayers," said Barney Uhart, president and chief executive officer at Chugach Alaska Corp., which received the bulk of its $890 million in revenues in 2006 from contracting work. "If you have a lot more volume, you can make more money."

More than half of the $805 million in revenues in 2006 at NANA came from contracted government services. "It is low-margin work. You have to handle a lot of transactions to have much net income," said Helvi Sandvik, president of NANA Development Corp.

Most of the business expense in government contracts goes to the wages paid to employees who are delivering the services, she said. "Folks jump to the conclusion that we're not realizing huge returns," Sandvik said. "But with greater volume, we can make a greater contribution to the bottom line."

With increased scrutiny of the program, several of Alaska's regional corporations told shareholders in 2006 that they were working to protect the SBA program, while looking for other arenas in which to utilize these contracting skills.

Calista Corp., which received in 2006 more than half of its revenues from contracting work, "... expects to face increase competition in the contracting area and increased proposal costs as potential adverse changes ... make the challenges of obtaining contracts more difficult."

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AHTNA INC.

Headquartered in Glennallen, Ahtna Inc. reported a 15 percent increase in revenues in 2006, compared to the prior year. Total revenues grew from $95 million in 2005 to $110 million in 2006.

Profits also grew in 2006, increasing from $652,000 in 2005 to $1.06 million in 2006. "In 2006, we successfully executed a number of key initiatives to lay a foundation for continued growth," said Ken Johns, president and chief executive officer, in the corporation's annual report.

Ahtna added several new subsidiaries, including AhtnaSTS LLC, which represents support and training services, the primary focus of the new company. Another new subsidiary is Koht'aene Enterprises Co., a certified 8(a) company focused on construction, remodeling and building renovation.

"The possible reduction in future government-contracting opportunities for our subsidiaries is being addressed internally by an aggressive pursuit of non-government-contracting opportunities and strict management of existing government contracts," Johns said.

Exploration for gas on corporation land continued in 2006 and into 2007 by lessee Rutter & Wilbanks.

THE ALEUT CORP.

Representing Alaska Natives originating from the Aleutian Island chain in Southwest Alaska, the Aleut Corp. reported an increase in revenues in 2006. Total revenues grew to $119.5 million in...