To the point of those who posted earlier, when I shared this with DW, she struggled with the language. Still, it was entertaining and constructive to put together. I plagiarized a lot of InTheSeam's original post, so this is only about half original content:
TW Family Enterprises Quarterly Operating Update
April 5, 2020
The first quarter of 2020 brought significant challenges to TW Family Enterprises due to the onset of the worldwide Covid-19 pandemic. Working arrangements and schedules have been disrupted. Education and training efforts have required redesign on the fly. At the time of these writing, the new working and living arrangements have been in place for three weeks, and the team is adjusting to a new normal.
Cash holdings as of March 31, 2020, kept in a combination of FDIC insured savings accounts and highly liquid money market account, totaled $78,824. Current liabilities totaled $1,449. Net funds will be kept on hand in the event of unexpected, extreme revenue losses.
Revenue streams remain strong despite the global market environment. Revenue sources are over-dependent on the T-side of the enterprise, but W-side revenue continues its recent growth trend, and free cash-flow of $1,470 monthly from real estate holdings provides an increasingly balanced revenue model. The solid financial position and work industries of our tenants provides confidence that real estate revenues will continue uninterrupted. In the event of a partial loss of revenue, capital investments and growth opportunities would be evaluated and placed on temporary hold in an incremental fashion.
The past three weeks have brought significant disruption of the day-to-day operations of TW Family Enterprises. The W-side of the team has brought significant innovation and expertise to bear to lead the team through the initial challenges. Longer term training approaches for junior associates remain a work in process, but the team is adjusting to the new norms. An upside of the situation is that with reduced corporate travel, there is significantly more time for building culture and close internal relationships and cleaning up longstanding loose ends around the facilities.
Operating expenses were controlled in March to their lowest level in three years. Certain one-time medical expenses from February came due, and refunds of certain pre-purchased entertainment expenses were received during the month, offsetting the medical expenses. Charitable giving of $1,500 during the month was processed to important local agencies.
Prior to the 25 to 30% downturn in the stock market, 27% of T-side long term investments were converted to cash. This new cash plus $48,000 of W-side cash held for the past 12 months, provides TW Family Enterprises with $372,531 for future long-term investment. This amount is increasing monthly by approximately $5,000 from ongoing operating revenue.
At this time, we see an opportunity for aggressive capital investment in a diversified mix of growth and income producing assets deemed to be selling at a discount in comparison to years of previously determined market value. TW Family Enterprises has therefore shifted away from prepayment on property notes to address this rare opportunity. We are currently maximizing contributions to tax advantaged purchases of diversified shares, while ensuring compliance is maintained to continue receiving match funds from our key customers. Anticipating further broad market declines, front-loaded purchasing has been curtailed. Steady investment of current long-term cash holdings over the balance of the year is anticipated. Current equity holdings will be maintained.
As this market environment may produce rare opportunities to purchase shares of quality, individual companies that are deemed to be discounted considerably further than the broad market, TW Family Enterprises may assume the high risk of purchasing shares using no more than 10% of 2020 total capital deployment at predetermined purchase intervals. Evaluation of returns on these purchases will be tracked against broad market returns to direct future strategy. Consistent with this strategy, the annual capital contribution to the PP joint venture will be increase to $5,000 instead of the $1,000 contractual minimum.
