Q1 Earnings Comment Thread

tpltblogger28 Comments

https://ir.stockpr.com/tpltrust/sec-filings-email/content/0001811074-23-000023/exhibit991q12023earningsre.htm

https://ir.stockpr.com/tpltrust/sec-filings-email/content/0001811074-23-000025/tpl-20230331.htm

Revenue down -0.7% vs same quarter last year. Expenses up 80%. ($41.4MM vs $23.0MM)

$16.6MM in legal fees. ($2.16/share)

$6.7 million of common stock repurchases.

#ugly #poorstewards #agencyproblem #greed

Leave your observations in the comments.

PS: To my sellside analyst friends – If expenses aren’t your first question on the call, you need to find another job or admit that the one you have is a farce.

28 thoughts on “Q1 Earnings Comment Thread”

  1. The huge increase in expenses is a travesty and is probably related to huge dip in share repurchase activity from $29.5 million in 4Q2022 to only $6.7 million in 1Q2023. So you repurchase shares when at all-time highs (to fund treasury for executive comp) then sit on the sidelines as the price has plummeted since then? What great fiduciary stewardship.

    Liked by 2 people

  3. “I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”

    ― Warren Buffett

    TPL management appears to be testing this theory.

    Liked by 3 people

    • I have been mulling this over for a long time now.

      I can’t believe I have to question whether it is actually possibly to destroy this incredible business.

      Liked by 2 people

      • Remember the insane contracts that Glover et al were given. All they have to do is count the money coming in. Why 2 lawyers on staff, why an airplane, why so much more to pad their wallets and egos?

        Liked by 1 person

  5. Of particular concern is

    “Our total operating expenses of $41.4 million for the first quarter of 2023 increased $18.4 million compared to the same period of 2022. The increase in operating expenses is principally related to an increase in legal and professional fees during the first quarter of 2023 compared to the same period of 2022.”

    This doesn’t include legal expense for the trial which occurred in the 2nd quarter and which stockholders in attendance at the trial reported up to 25 legal eagle attendees representing TPL in person at the trial.

    As to the stock repurchase the 100 million authorization expired on 12/31/2022. The 250 million authorization started after that one expired. It appears that someone showed some restraint while the stock has been tanking.

    Interesting article linked on FINVIZ from Simply WallStreet with a Discounted Cash Flow calculation that values TPL stock as overvalued with a DCF Value of $1293.06.

    https://finance.yahoo.com/news/calculating-fair-value-texas-pacific-124941918.html

    Liked by 1 person

    • The trial prep work would have at least partially happened in Q1. You are right that there will be legal bills in Q2 as well.

      Like

  7. This is just sad.

    Management getting paid millions to actively destroy a company that requires no management.

    Motherf****** smartest guys in the room syndrome. They think they know better than a business model that has worked for 100 years – they need to wake up and realize their expiration date is (hopefully) nearing and their best move is to do NOTHING.

    Liked by 2 people

  8. How can anyone spend $14 million of shareholder money to sue shareholders? It’s a crime of not exercising their fiduciary duties for their own benefit. I hope that the judge reads these comments.

    Liked by 1 person

  9. Honestly, not surprising to see the legal fees rack up like this. I am so disgusted and angry at these crooks for their attempt to destroy a company that was otherwise close to perfect. These asshole management should be investigated if they have side deals or relationship with the lawyers they hired, if any dirt is were to be found, they should be sent straight to jail while compensating shareholders

    Liked by 1 person

  10. The Current board of directors are worthless and we need to start voting them out, this year and each year until we get a Board of Directors that will work for us stockholders!!!  The current board spend our money on lawsuits against some of the biggest stockholders, and personal expenses!!! They have to be held accountable!!!

    Sent from Yahoo Mail for iPad

    Liked by 2 people

    • I wish it were that easy! I just reviewed the Corporate Charter and By Laws. Guess what? If we don’t vote to re-elect a director and create a vacancy on the board, guess who gets to select the replacement? Drumroll Please,

      The Board of Directors! [Please correct me if I misinterpreted the legal jumbo, remember i am an engineer not a corporate lawyer].

      Like

  11. TPL stock $1399.99 in the afterhours, after hours volume 2.3K at 6:45pm EDT. down from $1433.15 at 89% Average 65 day volume.

    Liked by 1 person

      • If management and the few corrupt board members remain in control of the company, the stock will undoubtedly continue to crater. The question every shareholder must reconcile with is this: is it prudent to hold on and even add to your position at some lower price, or does the drama, stench of corruption, lousy stewardship, and self-dealing management outweigh the embedded benefits of TPL as an investment. Personally, I find it very difficult to justify, regardless of price, being in business with unethical people, which is why TPL as an investment is such a conundrum for me. I know several investors with large AUM that have sold out of TPL solely because of the well known issues with management. Right now they are looking really smart. If Murray/HK is struggling with this same open question, and who could blame them, god help us and look out below.

        Liked by 1 person

        • I share the same concerns. Though if I just consider the size of Horizon’s holdings I have to believe they will not lose this fight.

          The whole thing is disgusting.

          And here is what I don’t get. Management must be already wealthy wealthy people (and hey, good on them!).

          But as Charlie Munger has said: it’s a mistake to marry for money, it’s insane if you’re already rich.

          This situation is insane.

          Liked by 2 people

    • It might be time to move to PrairieSky Royalty.

      Very similar business model but HK actually praised them for having good management.

      Liked by 1 person

  12. I am working toward further gaining the trust of the shareholders to become a board member when this board is gone, We can look into any untoward activity that may have occurred on their watch. This crew doesn’t purchase shares, so the exorbitant legal bill doesn’t bother them much.

    Liked by 2 people

  13. As I am sure some of the board reads the blog, I am just asking a question. It is my understanding there were 4 Dallas Police Officers (thank you for your service to the city of Dallas) at the last annual meeting. Of course, we paid for it. Do we want to guess how many might be there this year? I still don’t understand why there were any in the first place.

    Liked by 2 people

  15. The crooks who run this company want shareholders to feel pain. They have succeeded. How much pain? Since 11/07/2022 and as of 05/03/2023, pick your benchmark:
    TPL -42.8%
    WTI -7.9%
    SPDR Energy sector -4.7%
    US REITs -3.0%
    S&P 500 +2.9%
    PBT (Permian Basin Royalty) +18.4%

    Management has also succeeded in perpetuating a principal agency risk premium which is now clear as daylight and is very expensive indeed. It is about breaking shareholders bones, teaching them a lesson not running a company. Management and the two board scumbags simply don’t care and will take this class action lawsuit all the way to the supreme court. Expect legal fees to be an ongoing part of our operating expenses for years to come if these motherfuckers stay on the board.

    Liked by 2 people

    • Motherfuckers is a great word. The $16mm spent on legal is probably a great point of pride for the top of the board. A great ego stroke. The rest of the board just wants a paycheck. Thirsty for those carpetbagger scraps.

      Liked by 1 person

    • ******Apologies for the performance numbers. They are monthly as of 4/30/2023******

      Total Returns from 11/07/2022 to 05/03/2023 are as follows:

      TPL -47.0%
      WTI -28.3%
      S&P 500 +8.3%
      PrairieSky Royalty -0.5%
      SPDR Energy sector ETF -13.3%
      PBT Royalty +7.7%
      US REITs Index 1.5%

      Liked by 1 person

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