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Posted on: February 6, 2021

GALVESTON WHARVES CLOSES 2020 WITH POSITIVE CASH FLOW

The Galveston Wharves ended 2020 with a positive cash flow despite the pandemic and the related suspension of our cruise business. How, you may ask, did we stay in the black while losing a major revenue source for most of the year?

Put simply, we had fewer expenses and succeeded in generating additional revenues. In 2020 income from operations, grants and investments totaled $29 million, while expenses totaled just over $27 million, leaving us with a positive cash flow of $2 million.

This is important because the port is a city-owned, self-sustaining entity. We must generate all of the money we need to operate and maintain the port. We have no taxing authority and receive no city property taxes.

Note: The budget numbers discussed in this column don’t include annual depreciation and amortization of physical assets, such as port-owned buildings, docks and vehicles. In your personal finances this would be like calculating household income and expenses without including the depreciation on your vehicles and appreciation of your home.

BREAKING IT DOWN

Most of our income comes from operations. Here’s how our $27.4 million in operating income for 2020 breaks down:

• $11.4 million — Cargo

• $7.2 million — Cruise including cruise parking (before cruise operations were suspended in March)

• $6.1 million — Lay revenues (a new revenue record)

• $1.9 million — Real estate leases

 

• $800,000 — Miscellaneous including non-cruise parking

Non-operating revenue, including grants and interest from savings, totaled $1.7 million, up 42 percent compared to 2019.

2020 operating income was almost half of our $51 million in 2019, when we ended the year with net cash flow of $14 million, largely from a record-breaking cruise year. We’re reinvesting our net cash in port improvements and maintenance, as well as building up cash reserves.

Expenses in 2020 totaled $27 million, $11.3 million less than in 2019. Operating expenses excluding depreciation were 35 percent lower in 2020, largely because of lower cruise-related expenses. While cruise is a big revenue generator, we also pay millions of dollars a year in expenses for ship services and contract services including traffic control. We also reduced expenses by not filling vacant port staff positions.

LOOKING TO 2021

The Galveston Wharves board of directors has adopted a conservative 2021 budget based on past performance and realistic forecasts for the coming months.

We’re forecasting operating revenues of $37.5 million compared to $27 million in 2020. This projection is based on a phased resumption of our cruise business, with full operations in 2022.

We’ve forecast $3 million in operating revenues from lay dockage in 2021. While it doesn’t generate the jobs that cruise and cargo do, docking lay ships generates revenue at low expense from otherwise unused docks. As cruise sailings ramp up, we’ll have less dock space for lay ships.

In these dynamic times, we’ll amend the budget as needed, as we expect some changes to the assumptions used in preparing the 2021 budget.

Find more details about the 2021 budget in the Document Center on our website. www.portofgalveston.com.

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