TreeCon Resources, Inc. (TCOR) research, news, and more from GeoInvesting

Company description

Wed, 06 Feb 2019 13:22:54 GMT

TreeCon Resources, Inc., is a holding company that, through its subsidiaries, operates a portfolio of businesses based primarily in the east Texas forest region.

Logging and heavy equipment dealership operations are conducted through the Company's wholly owned subsidiary Texas Timberjack, with sales, leasing, financing and service locations in Lufkin, Jasper and Cleveland, Texas.

Lumber and treating operations are conducted through it's wholly owned subsidiaries, Southern Forest Products in Newton County, Texas and International Forest Products in Houston, Texas.

Texas Frac Fluids operates an oilfield services facility in northeast Texas producing water-based fluids for the oil and gas industry.

The Company also owns and manages a real estate portfolio consisting primarily of timberlands in Texas and Louisiana.

Research

Mon, 06 Mar 2023 16:08:44 GMT

In 2019 we issued a brief Reasons For Tracking (RFT) piece on Treecon Resources Inc (OTC:TCOR), a holding company that distributes, leases and provides financing for industrial and logging equipment, and engaged in sawmill operations and real estate investments. which can be seen here.

The company used to publish its financial results on its website, but went completely dark starting in Q3 2021.

We came across this tweet recently and will look to reach out to management ourselves to verify and possibly see at what price they are willing to buy shares from current shareholders.

–

Research

Thu, 04 Feb 2021 20:59:12 GMT

Treecon Resources Inc (OTC:TCOR) ($0.55; $10.2M market cap) a holding company that distributes, leases and provides financing for industrial and logging equipment, and engaged in sawmill operations and real estate investments, reported its Q4 2020 results:

Sales of $24.1 million vs $18.0 million in the prior year
EPS of $0.01 vs a loss of $0.06

For the full year 2020:

Sales of $76.7 million vs $87.2 million in the prior year
EPS of $0.09 vs $0.02 in the prior year

The company only issues its reports on its website. There is no commentary in the report. We need to understand what makes up the “other income/expense” line item in its filings. In 2019 we issued a brief Reasons For Tracking (RFT) piece which can be seen here.

Reasons For Tracking

Wed, 06 Feb 2019 13:47:03 GMT

TCOR deregistered their stock from the American Stock Exchange in 2002. The last 10K they filed was for the year ended September 30, 2003, which showed the following description:

“TreeCon Resources, Inc., is a holding company that, through our subsidiaries, currently operates in two industry segments: the equipment, parts and service segment, which distributes, leases and provides financing for industrial and logging equipment and the timber and wood products segment, which includes sawmill operations and the treatment and sale of lumber products.”

As a fun fact, TCOR actually used to own and operate a food business, Overhill Farms. I recognized this name perusing through the company’s 10-K, since I used to be a fan of their prepackaged ice cream cake sold in grocery stores. TCOR spun off this asset in 2002..

TCOR's website describes the company as a holding company that operates a portfolio of businesses based primarily in the east Texas forest region:

Logging and heavy equipment dealership operations are conducted through the Company's wholly owned subsidiary Texas Timberjack, with sales, leasing, financing and service locations in Lufkin, Jasper and Cleveland, Texas.
Lumber and treating operations are conducted through its wholly owned subsidiaries, Southern Forest Products in Newton County, Texas and International Forest Products in Houston, Texas.
Texas Frac Fluids operates an oilfield services facility in northeast Texas producing water-based fluids for the oil and gas industry.
The Company also owns and manages a real estate portfolio consisting primarily of timberlands in Texas and Louisiana.

It looks like TCOR added an oil services business since its filed it last 10K with the SEC. I was able to find a reference to the oil business while searching $GOOG, where I actually came across a PDF highlighting audited financial statements for 2013. While I was excited to come across this filing, I was more excited to find that even though the company does not file with the SEC or at OTCmarkets.com, it does provide quarterly and annual financial summaries at its website, dating back to 2012. Unfortunately, the website has essentially zero information on the company’s industries, customers and services. However, the primary reasons for tracking TCOR come from positive trends presented in the financial filings on the site.

Annual sales between 1999 and 2003 (the last 10K filed) were around $40 million, accompanied by losses. While we don’t know how sales fared between 2003 and 2011 ( I am still searching), the website picks up at 2012, showing that sales have increased nicely from $47 million in 2012 to $91 million in 2018.
The company has also maintained profitability every year since 2012, even after adjusting for other income/expense items.
The company has eliminated $10.7 million in accumulated deficit since 2012
Related party debt owed to Harold Estes, President of TTI which TCOR acquired in 1994 has come down from $10 million to $2 million. There is not enough disclosure to determine how the company paid down this debt, but we are assuming that debt and/or equity could have been the mains sources of funds since
- Debt has increased from around $10 million to around $20 million.
- Shares outstanding have increased from 18 million to 27 million
- We found that in 2005 the company almost closed a convertible preferred deal to settle the debt, which would have resulted in an immediate conversion of the preferred into 20 million common shares. However, it looks like the deal never closed.

Our estimate of the Current Ratio looks to be strong at around 7:1

Here is a snapshot of some financial data since 2012:

	2018	2017	2016	2015	2014	2013	2012
Sales	$91.4	$70.8	$78.7	$86.7	$78.4	$56.3	$47.7
EPS	$0.07	$0.02	$0.02	$0.09	$0.12	$0.06	$0.03
Net Inc	$1.7	$0.68	$0.66	$2.2	$2.7	$1.4	$0.65
Other Inc	($0.85)	($1.0)	$0.67	$0.82	($0.47)	($0.19)	$0.42
BV	$1.11	$1.09	$1.03	$1.11	$1.12	$0.89	$0.78
S/O	27.1	26.3	24.5	22.6	22.6	22.6	18.6

If I were to guess, growth in sales may have been from the oil business TCOR acquired in 2013, given that sales prior to 2012 were about $40 million. You can see that 2016 and 2017 sales experienced a decline and then rose again in 2018, closely mirroring the decline and then subsequent recovery in the global oil and gas industry.

TCOR Is by no means an exciting company. Additionally, it’s operating in commodity and cyclical businesses. But the financial trends are heading in the right direction, to the point where I really want to talk to management to better understand the business, learn what has enabled TCOR to steadily grow revenue and get color on whether or not profitability can be maintained. At $0.59, the stock is trading at a 49% discount to book, a P/E of 9.3, a P/S of 0.18 and EV/S ranging between 0.17 and 0.46. While we believe that TCOR will probably never command high valuation multiples due to the industries it's involved in, we also believe that if improving trends continue, the stock could see a bump in valuation multiples, maybe getting closer to book. We will do our best to contact management.

Caveats

No access to full financials or other important information typically included in SEC filings
Management will likely not return our calls
Low valuation multiple industries

Research

Wed, 06 Feb 2019 13:20:15 GMT

TCOR Deregistered their stock from the American Stock Exchange in 2002. The last 10K they filed was for the year ended September 30, 2003 which showed the following description:

“TreeCon Resources, Inc., is a holding company that, through our subsidiaries, currently operates in two industry segments: the equipment, parts and service segment, which distributes, leases and provides financing for industrial and logging equipment and the timber and wood products segment, which includes sawmill operations and the treatment and sale of lumber products.”

As a fun fact, TCOR actually used to own and operate a food business, Overhill Farms. I recognized this name perusing through the company’s 10K since I used to be a fan of their prepackaged ice cream cake sold in grocery stores. TCOR Spun off this asset in 2002.

TCOR Website describes the company as a holding company that operates a portfolio of businesses based primarily in the east Texas forest region:

Logging and heavy equipment dealership operations are conducted through the Company's wholly owned subsidiary Texas Timberjack, with sales, leasing, financing and service locations in Lufkin, Jasper and Cleveland, Texas.
Lumber and treating operations are conducted through its wholly owned subsidiaries, Southern Forest Products in Newton County, Texas and International Forest Products in Houston, Texas.
Texas Frac Fluids operates an oilfield services facility in northeast Texas producing water-based fluids for the oil and gas industry.
The Company also owns and manages a real estate portfolio consisting primarily of timberlands in Texas and Louisiana.

It looks like TCOR added an oil services business since it filed it last 10K with the SEC. I was able to find a reference to the oil business while searching $GOOG, where I actually came across a PDF highlighting audited financial statements for 2013. While I was excited to come across this filing, I was more excited to find that even though the company does not file with the SEC or at OTCmarkets.com, it does provide quarterly and annual financial summaries at its website, dating back to 2012. Unfortunately, the website has essentially zero information on the company’s industries, customers and services. However, the primary reasons for tracking TCOR come from positive trends presented in the financial filings on the site.

Annual sales between 1999 and 2003 (the last 10K filed) were around $40 million, accompanied by losses. While we don’t know how sales faired between 2003 and 2011 ( I am still searching), the website picks up at 2012, showing that sales have increased nicely from $47 million in 2012 to $91 million in 2018.
The company has also maintained profitability in every year since 2012, even after adjusting for other income/expense items.
The company has eliminated $10.7 million in accumulated deficit since 2012
Related Party debt owed to Harold Estes, President of TTI which TCOR acquired in 1994 has come down from $10 million to $2 million. There is not enough disclosure to determine how the company paid down this debt, but we are assuming that debt and/or equity could have been the mains sources of funds since
- Debt has increased from around $10 million to around $20 million.
- Shares outstanding have increased from 18 million to 27 million
- We found that in 2005 the company almost closed a convertible preferred deal to settle the debt, which would have resulted in an immediate conversion of the preferred into 20 million common shares. However, it looks like the deal never closed.

Our estimate of the Current Ratio looks to be strong at around 7:1

Here is a snapshot of some financial data since 2012:

	2018	2017	2016	2015	2014	2013	2012
Sales	$91.4	$70.8	$78.7	$86.7	$78.4	$56.3	$47.7
EPS	$0.07	$0.02	$0.02	$0.09	$0.12	$0.06	$0.03
Net Inc	$1.7	$0.68	$0.66	$2.2	$2.7	$1.4	$0.65
Other Inc	($0.85)	($1.0)	$0.67	$0.82	($0.47)	($0.19)	$0.42
BV	$1.11	$1.09	$1.03	$1.11	$1.12	$0.89	$0.78
S/O	27.1	26.3	24.5	22.6	22.6	22.6	18.6

If I were to guess, the growth in sales may have been from the oil business TCOR acquired in 2013, given that sales prior to 2012 were about $40 million. You can see that 2016 and 2017 sales experienced a decline and then rose again in 2018, closely mirroring the decline and then subsequent recovery in the global oil and gas industry.

TCOR Is by no means an exciting company. Additionally, it’s operating in commodity and cyclical businesses. But the financial trends are heading in the right direction, to the point where I really want to talk to management to better understand the business, learn what has enabled TCOR to steadily grow revenue and get color on whether or not profitability can be maintained. At $0.59, the stock is trading at 49% discount to book, a P/E of 9.3, a P/S of 0.18 and EV/S ranging between 0.17 and 0.46. While we believe that TCOR will probably never command high valuation multiples due to the industries its involved in, we also believe if the improving trends continue, the stock could see a bump in valuation multiples, maybe getting closer to book. We will do our best to contact management.

Caveats

No access to full financials or other important information typically included in SEC filings
Management will likely not return our calls
Low valuation multiple industries