For new FGH VALUE INVESTORS, an old piece about J.L. Holloway "The Man"!
businessweek.com
"SPECIAL REPORT
Friede Goldman Intl.: A Gusher in a Drought
J.L. Holloway has always dreamed big. 'Even when I was living on a dirt road in rural Mississippi, I always thought I could do better,' says Holloway, the son of an oil-field roughneck. That outlook proved handy as oil prices slid over the past year. Holloway, chairman and CEO of Friede Goldman International Inc., a Jackson (Miss.)-based builder and refurbisher of oil-drilling platforms, hardly batted an eye.
Thanks to a hefty order backlog, key acquisitions, and drum-tight operations, Holloway managed to churn out the sort of growth more often found in Silicon Valley than the oil patch. Revenues shot upward at a 186.5% annual pace between 1995 and 1998, to $382.9 million last year, while earnings grew at a 123.3% annual rate, to $35.3 million. Even more impressive, the company squeezed a 31.2% average annual return from its capital. All that catapulted the unlikely Friede Goldman FGI into the No. 1 spot in BUSINESS WEEK's Hot Growth rankings.
Indeed, even with much of the oil sector in the doldrums, Holloway, 54, has so far managed to rocket ahead. He has nimbly steered into new markets and added divisions to design, build, and outfit drilling platforms. Friede Goldman also does a booming business in overhauling rigs so that companies can tap oil in ever-deeper waters. And in an industry that's notorious for cost overruns and delays, Holloway leans on his construction yards to finish work on time and on budget. 'Finding shipyards that will meet deadlines is quite difficult,' says James C. Day, chairman and chief executive of Noble Drilling Corp., which hired Holloway's company to refurbish a half-dozen rigs. 'Friede Goldman does an outstanding job.'
Holloway got his start in 1971, dropping out of the University of Mississippi to earn a living in the construction-equipment business after his parents died. He wound up with his own company and in the early 1980s, sold it to buy a troubled shipbuilder. He put that company back on its feet and established a reputation for upgrading and repairing worn-out drilling rigs. But Holloway wanted more. So in 1997, he bought a New Orleans design firm, Friede & Goldman Ltd., and kept its name to launch a public offering later that year. He still owns 42.5% of it.
DOLLAR SALE. Holloway expanded rapidly by snapping up choice assets at hefty discounts. When bureaucrats in Newfoundland wanted to sell two unprofitable, government-owned shipyards in 1997, he offered just $1. Government ministers demanded that Holloway pick up $48 million in debt, but he refused. In the end, he landed the facilities by simply pledging to keep the shipyards' 600 workers employed for at least three years. By doing so, he established a beachhead nearer the oil-rich North Sea.
At the same time, Holloway laid big bets that the upturn in oil prices would lead to a boom in drilling--and orders for new rigs. Last year, Holloway opened a state-of-the-art, $60 million assembly facility in Pascagoula, Miss. The new facility 'is one of the top shipyards in the U.S., and Friede Goldman's quality is as good as anyone's,' says Jan Rask, president of Marine Drilling Co.
Because of the two-year lag between booking and completion in big projects, some investors fear Friede Goldman's backlog will start running dry in coming months. The company's shares soared more than fivefold, to a split-adjusted 48, after the 1997 IPO. But in February, shares fell below 10 when oil prices hit a historic low. With prices recovering and the shares now back at 16, others are more optimistic. 'There's a downturn baked into the cake to some extent, but if prices stay where they are or go up, they should recover their backlog pretty quickly,' says Robert W. D'Alelio, co-manager of the $1.8 billion Neuberger Berman Genesis Fund, which owns nearly a half-million shares.
Holloway, a gregarious negotiator, has been known to treat oil execs to hunting and fishing trips and closes many deals himself. He scoffs at predictions of slower growth. 'We've been consistently able to produce profits, and we're going to stay with it,' Holloway says. Big talk? Sure. But so far, he's managed to find ways to keep the profits gushing.
By David Rocks in Jackson, Miss."
Since the bio was printed last Spring, a lot has happened, some good, some bad. On the good side was the acquisition of Halter Marine Group. The merger brought new problems along with new challenges.
Mr. Holloway "The Problem Solver" is solving the problems and growing Stockholders' Equity, just like he said he would. One Yahoo poster succinctly described him this way: "THIS MAN DONT HAVE A TATOO ON HIS ARM HE HAS HIS BRANDED!!THIS MAN IS TOUGH!"
It would appear Mr. Holloway "The Man" has once again PROVEN his vast ability and toughness to weather any storm.
Welcome aboard to all the NEW Value Investors. Settlement of the Ocean Rig dispute marks the beginning of a new era of growth for Friede Goldman Halter, Inc.
Good luck!
SargeK |
