Breaking Down Cross Timbers Royalty Trust (CRT) Financial Health: Key Insights for Investors

Are you keeping a close eye on Cross Timbers Royalty Trust, ticker CRT? As investors, we're always asking: Is this a healthy investment? Let's dive into CRT's financial health, focusing on what really matters. Did you know that CRT's total revenue for the fiscal year 2024 was reported at $14.9 million, with distributable income reaching $11.7 million? How does this translate into returns for shareholders like you? And with production averaging around 2,479 BOE/d (Barrels of Oil Equivalent per day), how sustainable is this performance? Stick around as we dissect these figures and more, offering you key insights to inform your investment decisions.

Cross Timbers Royalty Trust (CRT) Revenue Analysis

Understanding Cross Timbers Royalty Trust (CRT)'s revenue streams involves examining the sources and trends that drive its financial performance. The Trust primarily generates revenue from net profits interests in oil and gas properties.

Breakdown of primary revenue sources:

• 90% Net Profits Interests: These are derived from royalty and overriding royalty interests in producing properties located in Texas, Oklahoma, and New Mexico. A significant portion of this income comes from long-lived gas properties in the San Juan Basin of northwestern New Mexico. These interests are not subject to production or development costs, so income primarily fluctuates with sales volumes and prices.
• 75% Net Profits Interests: These originate from working interests in seven predominantly oil-producing properties in Texas and Oklahoma. Income from these properties is calculated separately for each state and is reduced by production and development costs.

Year-over-year revenue growth rate:

• In 2024, CRT's annual revenue was $6.62 million, a -46.43% decrease compared to the previous year.
• For the quarter ending December 31, 2024, revenue was $1.48 million, a -42.42% decrease.

Contribution of different business segments to overall revenue:

• In 2024, oil accounted for 72% of total revenues, while gas accounted for the remaining 28%.

Analysis of significant changes in revenue streams:

• Decreased Oil and Gas Volumes: In 2024, oil volumes decreased by -15% and gas volumes decreased by -32% compared to the prior year.
• Decline in Gas Prices: The average realized price of gas declined by -34% in 2024.
• Distributable Cash Flow (DCF) per Unit: Decreased by -51% in 2024.

Historical revenue data:

Additional insights:

• The Trust's assets are static, meaning no further properties can be added, and it operates as a pass-through vehicle for royalties.
• Approximately 46% of the net profits income received by the Trust during 2024 was attributable to natural gas.

For more information on CRT's investor profile, check out: Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?

Cross Timbers Royalty Trust (CRT) Profitability Metrics

Analyzing Cross Timbers Royalty Trust's (CRT) financial health requires a close examination of its profitability metrics. These metrics provide insights into how efficiently the trust is generating profits from its revenue. Let's delve into the key profitability indicators for CRT.

For the fiscal year 2024, Cross Timbers Royalty Trust (CRT) reported a net profit of $10.76 million. This figure is crucial for understanding the trust's overall financial performance and its ability to generate income for its unitholders.

Here's a breakdown of essential profitability metrics:

• Gross Profit: Gross profit is calculated by subtracting the cost of goods sold (COGS) from the total revenue. It indicates how efficiently CRT manages its production costs.
• Operating Profit: Operating profit is derived by deducting operating expenses (such as administrative and selling expenses) from the gross profit. This metric reflects the profitability of CRT's core operations before considering interest and taxes.
• Net Profit: Net profit, often referred to as the bottom line, is the profit remaining after all expenses, including interest and taxes, have been deducted from revenue. It represents the actual profit available to the trust's unitholders.

Understanding the trends in CRT's profitability over time is vital for investors. Analyzing historical data helps in identifying patterns and potential future performance. For instance, consistent growth in net profit margin indicates improved efficiency and profitability.

Comparing CRT's profitability ratios with industry averages provides context for its performance. If CRT's profit margins are higher than the industry average, it suggests a competitive advantage. Conversely, lower margins may indicate areas needing improvement.

Operational efficiency plays a significant role in CRT's profitability. Effective cost management and favorable gross margin trends can enhance the trust's ability to generate profits. Monitoring these aspects helps in assessing the sustainability of CRT's earnings.

Here is a table summarizing financial data for Cross Timbers Royalty Trust (CRT) in 2024:

To gain more insight into the trust's objectives, review the Mission Statement, Vision, & Core Values of Cross Timbers Royalty Trust (CRT).

Cross Timbers Royalty Trust (CRT) Debt vs. Equity Structure

Understanding how Cross Timbers Royalty Trust (CRT) finances its operations is crucial for investors. Unlike traditional companies, CRT operates under a specific structure that impacts its debt and equity dynamics. As a royalty trust, CRT's financial structure differs significantly from that of an operating company. It primarily distributes income generated from its royalty interests rather than reinvesting in new assets or operations, which affects its approach to debt and equity.

Here's a breakdown of CRT's debt levels, debt-to-equity ratio, and financing activities:

Debt Levels:

• Cross Timbers Royalty Trust (CRT) has a unique financial structure as a royalty trust, it does not typically carry traditional debt like long-term or short-term debt found in operating companies. Its financial obligations primarily relate to its operational expenses and distributions to unitholders.

Debt-to-Equity Ratio:

• As a royalty trust, Cross Timbers Royalty Trust (CRT) doesn't have the same debt-to-equity ratio considerations as traditional companies. Royalty trusts like CRT are structured to distribute income from royalty interests rather than accumulate equity.

Recent Debt Issuances, Credit Ratings, or Refinancing Activity:

• Given its structure, Cross Timbers Royalty Trust (CRT) does not engage in debt issuances, credit ratings, or refinancing activities in the same way that operating companies do. Its financial activities are centered around managing its existing royalty interests and distributing income to its unitholders.

Balancing Debt Financing and Equity Funding:

• Cross Timbers Royalty Trust (CRT) does not balance debt financing and equity funding in the traditional sense. Its financial model revolves around distributing income from royalty interests rather than raising capital through debt or equity markets.

For more insights into the investors of Cross Timbers Royalty Trust, check out: Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?

Cross Timbers Royalty Trust (CRT) Liquidity and Solvency

Analyzing Cross Timbers Royalty Trust's (CRT) financial health requires a close look at its liquidity and solvency. Liquidity refers to CRT's ability to meet its short-term obligations, while solvency concerns its long-term financial viability. Let's delve into the key indicators that provide insights into CRT's financial standing.

Assessing Cross Timbers Royalty Trust (CRT)'s Liquidity:

Liquidity ratios offer a clear view of CRT's capacity to cover its immediate liabilities. Two critical ratios to consider are the current ratio and the quick ratio.

• Current Ratio: This ratio measures CRT's ability to pay off its current liabilities with its current assets. A ratio of 1 or higher generally indicates good liquidity.
• Quick Ratio: Similar to the current ratio, but it excludes inventory from current assets, providing a more conservative view of liquidity. Again, a ratio of 1 or higher is typically considered healthy.

Analysis of Working Capital Trends:

Monitoring CRT's working capital—the difference between its current assets and current liabilities—is essential. A positive working capital balance indicates that CRT has enough short-term assets to cover its short-term liabilities. Trends in working capital can reveal whether CRT's liquidity position is improving or deteriorating over time.

Cash Flow Statements Overview:

Examining CRT's cash flow statements provides insights into how the company generates and uses cash. The cash flow statement is divided into three sections:

• Operating Activities: This section shows the cash generated from CRT's core business operations. Positive cash flow from operations is a good sign, indicating that CRT is generating enough cash to cover its operating expenses.
• Investing Activities: This section includes cash flows related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: This section includes cash flows related to debt, equity, and dividends.

By analyzing the trends in these three sections, investors can gain a better understanding of CRT's overall cash flow situation. For example, if CRT consistently generates positive cash flow from operations and has minimal cash outflows from investing and financing activities, this suggests that the company is in a strong financial position.

Potential Liquidity Concerns or Strengths:

Keep an eye out for any potential liquidity concerns, such as:

• A declining current ratio or quick ratio
• A negative working capital balance
• Consistent negative cash flow from operations

On the other hand, strengths may include:

• A high current ratio and quick ratio
• A positive and increasing working capital balance
• Consistent positive cash flow from operations

For additional insights into Cross Timbers Royalty Trust, consider reading: Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?

Cross Timbers Royalty Trust (CRT) Valuation Analysis

Determining whether Cross Timbers Royalty Trust (CRT) is overvalued or undervalued requires a multifaceted approach, incorporating several key financial metrics and market indicators. These include relative valuation ratios, stock price trends, and distribution yields.

To assess CRT's valuation, consider the following:

• Price-to-earnings (P/E) Ratio: This ratio compares CRT's stock price to its earnings per share. Due to the nature of royalty trusts, earnings can be variable, making the P/E ratio less reliable.
• Price-to-book (P/B) Ratio: This ratio compares CRT's market capitalization to its book value of equity. It can indicate whether the stock is trading at a premium or discount to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio assesses the company's total value (enterprise value) against its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a more comprehensive valuation measure, especially for companies with significant debt.

Analyzing CRT's stock price trends over the past 12 months (or longer) provides insight into market sentiment and historical performance. Recent data indicates:

• CRT's stock has experienced fluctuations, influenced by oil and gas prices.
• The 52-week high was recorded at $14.93, while the 52-week low was $10.31.
• As of April 18, 2024, the stock closed at $12.31, with a day's high of $12.46 and a low of $12.26.

Dividend or distribution yield is a critical factor for royalty trusts like CRT. Key considerations include:

• CRT's distribution yield is notably high, reflecting its structure as a pass-through entity.
• The monthly distribution for April 2024 was $0.13 per unit.
• The distribution is subject to fluctuations based on the underlying royalty income from oil and gas production.

Given the lack of analyst ratings for CRT, valuation relies heavily on individual assessment of its financial metrics and market conditions.

Here is a snapshot of CRT's key financial data as of April 2024:

For a deeper dive into investor behavior and potential market movements, check out Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?

By examining these factors, investors can better assess whether CRT is fairly valued, overvalued, or undervalued, aligning their investment decisions with their risk tolerance and financial goals.

Cross Timbers Royalty Trust (CRT) Risk Factors

Investing in Cross Timbers Royalty Trust (CRT) involves navigating a landscape of both internal and external risks that can significantly impact its financial health. These risks range from the volatility of the oil and gas market to the specifics of the Trust's operational structure and regulatory environment.

Here's a breakdown of key risk areas:

• Industry Competition and Market Conditions: The Trust's revenue is directly tied to the prices of oil and natural gas. These prices are subject to global supply and demand, geopolitical events, and economic cycles, all of which can cause significant fluctuations. Increased competition from other energy sources, such as renewables, also poses a long-term threat.
• Regulatory Changes: Changes in environmental regulations, tax laws, or energy policies can impact the profitability of the underlying oil and gas properties. For example, stricter environmental standards could increase operating costs or limit production.
• Operational Risks: The Trust's income depends on the production from specific oil and gas properties. Declines in production due to natural depletion, mechanical failures, or unforeseen events can reduce royalty income. The Trust's reliance on the operators of these properties also introduces risk, as their operational decisions and efficiency directly affect the Trust's cash flow.
• Financial Risks: As a royalty trust, CRT has limited control over its revenue stream and operating expenses. This can make it difficult to manage cash flow and maintain consistent distributions to unit holders. Additionally, the Trust's structure does not allow for reinvestment in new properties, meaning its asset base will naturally decline over time as existing reserves are depleted.

To get a better understanding of who invests in Cross Timbers Royalty Trust and their motivations, check out this resource: Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?

While specific mitigation strategies may not be explicitly detailed for a royalty trust like CRT due to its passive nature, understanding these risks is crucial for investors. Prudent investors should monitor energy market trends, regulatory developments, and the production performance of the underlying properties to assess the potential impact on the Trust's financial performance and distributions.

Cross Timbers Royalty Trust (CRT) Growth Opportunities

Cross Timbers Royalty Trust's (CRT) future growth prospects are intricately tied to several factors, most notably the prevailing prices of oil and natural gas, and the production volumes from the underlying properties from which the trust derives its royalty income. Given the trust's structure, it does not engage in direct operational activities to boost production or explore new reserves. Instead, its financial performance is passively influenced by the actions of the operators of the oil and gas properties and the broader market conditions.

Here's an analysis of key drivers, projections, and strategic elements influencing CRT's potential trajectory:

• Key Growth Drivers:
• Commodity Prices: The prices of oil and natural gas are the primary drivers. Higher prices translate directly into increased royalty income for the trust.
• Production Volumes: The amount of oil and gas produced from the underlying properties is crucial. Declining production volumes can negatively impact royalty income.
• Operating Expenses: While CRT itself has minimal operating expenses, the costs incurred by the operators of the underlying properties can affect the net profits from which royalties are calculated.

Future revenue growth and earnings estimates for CRT are not straightforward to project due to the fluctuating nature of commodity prices and production volumes. Financial analysts' estimates and trust's reports provide some insights. For instance, CRT's distribution to unit holders is a key metric, but it varies significantly based on quarterly results. Investors should monitor these distributions and understand the factors driving them.

Strategic initiatives or partnerships that may drive future growth are not directly applicable to CRT, given its passive royalty trust structure. The trust's performance is dependent on the operational strategies of the companies managing the underlying oil and gas properties.

Here are some competitive advantages that could indirectly position CRT for growth:

• Established Asset Base: The trust benefits from a portfolio of producing oil and gas properties.
• Low Operating Costs: As a royalty trust, CRT has minimal operating expenses, allowing a significant portion of the royalty income to be distributed to unit holders.
• Market Conditions: Favorable market conditions, such as increased demand for oil and natural gas, can drive higher prices and, consequently, higher royalty income.

For a deeper understanding of the investors involved and their motivations, explore Exploring Cross Timbers Royalty Trust (CRT) Investor Profile: Who’s Buying and Why?.

Given the dynamics of the oil and gas market, investors should closely monitor commodity prices, production trends, and the financial performance of the operators of the underlying properties to assess CRT's future prospects. The trust's passive nature means its growth is heavily reliant on external factors, making it a unique investment within the energy sector.