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Oct. 31, 2018-- The St. Joe Company (NYSE:JOE) (the “Company”) today announced Net Income for the third quarter of 2018 of $5.5 million, or $0.09 per share, compared with Net Income of $5.9 million, or $0.08 per share, for the third quarter of 2017. For the nine months ended September 30, 2018, the Company reported Net Income of $32.4 million, or $0.51 per share compared to Net Income of $21.0 million, or $0.29 per share for the same period last year.
Third quarter updates include:
As of September 30, 2018, the Company had under construction two commercial buildings totaling 18,200 gross square feet as well as the 240-unit apartment complex. In addition, the 124-room hotel located in Panama City Beach broke ground in October 2018.
As of September 30, 2018, the Company had 447 residential lots under development. The Company had approximately 650 residential lots under contract as of September 30, 2018, which are expected to result in revenue of approximately $65.2 million at closing of the lots, which are expected over the next several years. As of September 30, 2017, the Company had approximately 250 residential lots under contract which are expected to result in revenue of approximately $9.4 million ($8.1 million of which has been realized through September 30, 2018). The increase is due to increased builder contracts for residential lots. On August 28, 2018, the Company announced plans to create a new home development within the Watersound Origins community and entered into a definitive long-term contractual agreement with Kolter Homes, LLC that will consist of approximately 466 single-family detached homes to be constructed by Kolter. Lot construction in this new development is expected to begin in 2019 with homes being available for sale in 2020.
On October 10, 2018 Hurricane Michael impacted the Florida Panhandle, which resulted in widespread damage to the area. The majority of the Company’s properties incurred minimal or no damage; however, the Company is continuing to make a full assessment of the extent of the impact. The Company’s Bay Point Marina in Bay County and Port St. Joe Marina in Gulf County, as well as certain timber and commercial leasing assets were impacted. The marinas suffered significant loss requiring long-term restoration and remain closed. The Company maintains property and business interruption insurance, subject to certain deductibles, and is currently assessing claims under such policies; however the timing and amount of insurance proceeds are uncertain and may not be sufficient to cover all losses. See Footnote 19 – Subsequent Event on Form 10-Q for the period ended September 30, 2018.
Financial data schedules included in this press release provide greater detail on business performance, summarizing the consolidated results, summary balance sheets, debt schedule and other operating and corporate expenses for the third quarter of 2018 and 2017, respectively.
Jorge Gonzalez, the Company’s President and Chief Executive Officer, said: “With Hurricane Michael, the world knows much more about Northwest Florida. JOE was fortunate that most of our assets received minimal to no damage. Except for our marinas, we were back, fully open for business, after a couple of days. However, many were not as fortunate. We began to do our part by announcing that the St. Joe Community Foundation committed $1 million towards relief and recovery efforts in our area. Our employees are also doing their part by selflessly volunteering their time to help our friends and neighbors. Northwest Florida is truly a special place and not just for its natural beauty, but for the spirit and resiliency of its people. In their time of need, we have been overwhelmed by the neighbor-helping-neighbor attitude we have seen.”
Mr. Gonzalez added, “I have been asked about the impact of Hurricane Michael on JOE, to which I have responded quickly and consistently. Hurricane Michael has forced a reprioritization and acceleration of projects for homes, apartment rentals, hotels, offices, retail, and manufacturing spaces - especially in Bay County and Gulf County. Northwest Florida is our home and we have the people, capital, and first-hand knowledge of local areas to immediately start accelerating the implementation of our pipeline. Over the last couple of years, we have brought new partners to the market to help develop other types of physical assets and services needed for thriving communities. Additionally, these relationships will give us the horsepower to accelerate and add needed projects. Our partners tell us they are equally committed to fairly meeting demands for different types of spaces for displaced families and businesses.”
Mr. Gonzalez continued, “At our annual shareholder meeting, we presented JOE’s pipeline of projects. Before Hurricane Michael, our region was growing faster than what I’ve seen in many years. Walton County (where our headquarters is located) was already the 6th fastest growing county in the nation by percentage growth. Bay County was experiencing growth not only in tourism but also in manufacturing with announcements of companies locating to Bay County and creating quality, high multiplier jobs like GKN Aerospace (UK-based), Air Temp (Mexico-based), ACMT (Connecticut-based), and others. In late 2017, the U.S. Air Force announced that Tyndall Air Force Base was chosen as the preferred location for a new MQ-9 Reaper wing, with the potential to bring 1,600 new jobs and more than $250 million of military construction. After Hurricane Michael, I now believe that the Company must accelerate the implementation and add to the many projects in our pipeline to meet the market demand and needs of our region.”
The St. Joe Company Reports Third Quarter 2018 Results | The St. Joe Company
Third quarter updates include:
- Resorts and leisure revenue for the third quarter 2018 decreased as compared to the third quarter of 2017 by $5.6 million primarily due to the sale of the short-term vacation rental management business during December 2017. The decrease was partially offset by an increase in revenue in The Clubs by Joe, the Company’s private membership club, and an increase in revenue from both the WaterColor Inn and the WaterSound Inn. Excluding the impact from the prior year short term vacation rental management business, the resorts and leisure revenue increased by $1.4 million. The overall Gross Margin for resorts and leisure segment increased to 23.0% for the three months ended September 30, 2018 as compared to 20.3% for the three months ended September 30, 2017. Increase in Club membership as well as increase in lodging revenue at the WaterColor Inn and WaterSound Inn were primarily responsible for the increased margin.
- Leasing revenue increased by approximately $0.1 million in the third quarter of 2018 as compared to the third quarter of 2017. The increase represents the fifteenth consecutive quarter of increased revenue as compared to the same quarter in the previous year. As of September 30, 2018, the Company’s leasing portfolio consisted of approximately 808,000 square feet of rentable space, which was 89% leased.
- In the third quarter of 2018, the Company reassessed its valuation allowance against its state net operating loss carryforwards and recorded a net income tax benefit of $3.5 million for the three months ended September 30, 2018 as compared to income tax expense of $2.6 million during the same period in 2017.
As of September 30, 2018, the Company had under construction two commercial buildings totaling 18,200 gross square feet as well as the 240-unit apartment complex. In addition, the 124-room hotel located in Panama City Beach broke ground in October 2018.
As of September 30, 2018, the Company had 447 residential lots under development. The Company had approximately 650 residential lots under contract as of September 30, 2018, which are expected to result in revenue of approximately $65.2 million at closing of the lots, which are expected over the next several years. As of September 30, 2017, the Company had approximately 250 residential lots under contract which are expected to result in revenue of approximately $9.4 million ($8.1 million of which has been realized through September 30, 2018). The increase is due to increased builder contracts for residential lots. On August 28, 2018, the Company announced plans to create a new home development within the Watersound Origins community and entered into a definitive long-term contractual agreement with Kolter Homes, LLC that will consist of approximately 466 single-family detached homes to be constructed by Kolter. Lot construction in this new development is expected to begin in 2019 with homes being available for sale in 2020.
On October 10, 2018 Hurricane Michael impacted the Florida Panhandle, which resulted in widespread damage to the area. The majority of the Company’s properties incurred minimal or no damage; however, the Company is continuing to make a full assessment of the extent of the impact. The Company’s Bay Point Marina in Bay County and Port St. Joe Marina in Gulf County, as well as certain timber and commercial leasing assets were impacted. The marinas suffered significant loss requiring long-term restoration and remain closed. The Company maintains property and business interruption insurance, subject to certain deductibles, and is currently assessing claims under such policies; however the timing and amount of insurance proceeds are uncertain and may not be sufficient to cover all losses. See Footnote 19 – Subsequent Event on Form 10-Q for the period ended September 30, 2018.
Financial data schedules included in this press release provide greater detail on business performance, summarizing the consolidated results, summary balance sheets, debt schedule and other operating and corporate expenses for the third quarter of 2018 and 2017, respectively.
Jorge Gonzalez, the Company’s President and Chief Executive Officer, said: “With Hurricane Michael, the world knows much more about Northwest Florida. JOE was fortunate that most of our assets received minimal to no damage. Except for our marinas, we were back, fully open for business, after a couple of days. However, many were not as fortunate. We began to do our part by announcing that the St. Joe Community Foundation committed $1 million towards relief and recovery efforts in our area. Our employees are also doing their part by selflessly volunteering their time to help our friends and neighbors. Northwest Florida is truly a special place and not just for its natural beauty, but for the spirit and resiliency of its people. In their time of need, we have been overwhelmed by the neighbor-helping-neighbor attitude we have seen.”
Mr. Gonzalez added, “I have been asked about the impact of Hurricane Michael on JOE, to which I have responded quickly and consistently. Hurricane Michael has forced a reprioritization and acceleration of projects for homes, apartment rentals, hotels, offices, retail, and manufacturing spaces - especially in Bay County and Gulf County. Northwest Florida is our home and we have the people, capital, and first-hand knowledge of local areas to immediately start accelerating the implementation of our pipeline. Over the last couple of years, we have brought new partners to the market to help develop other types of physical assets and services needed for thriving communities. Additionally, these relationships will give us the horsepower to accelerate and add needed projects. Our partners tell us they are equally committed to fairly meeting demands for different types of spaces for displaced families and businesses.”
Mr. Gonzalez continued, “At our annual shareholder meeting, we presented JOE’s pipeline of projects. Before Hurricane Michael, our region was growing faster than what I’ve seen in many years. Walton County (where our headquarters is located) was already the 6th fastest growing county in the nation by percentage growth. Bay County was experiencing growth not only in tourism but also in manufacturing with announcements of companies locating to Bay County and creating quality, high multiplier jobs like GKN Aerospace (UK-based), Air Temp (Mexico-based), ACMT (Connecticut-based), and others. In late 2017, the U.S. Air Force announced that Tyndall Air Force Base was chosen as the preferred location for a new MQ-9 Reaper wing, with the potential to bring 1,600 new jobs and more than $250 million of military construction. After Hurricane Michael, I now believe that the Company must accelerate the implementation and add to the many projects in our pipeline to meet the market demand and needs of our region.”
The St. Joe Company Reports Third Quarter 2018 Results | The St. Joe Company