Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Alexander & Baldwin (A&B) is a Hawai'i-focused REIT managing a large commercial real estate portfolio and simplifying its business by divesting non-core assets - A&B is a Hawai'i-based REIT owning 22 retail centers, 12 industrial assets, and four office properties, totaling **3.9 million square feet** of gross leasable area (GLA)[10](index=10&type=chunk) - The company's core business objectives are: growing the **Commercial Real Estate portfolio**, maintaining **balance sheet strength**, and completing its **strategic simplification** by divesting the Grace Disposal Group (Grace Pacific and Maui Quarries)[11](index=11&type=chunk) - The company operates two reportable segments: **Commercial Real Estate**, which focuses on owning, operating, and leasing real estate assets, and **Land Operations**, which includes legacy landholdings subject to monetization[19](index=19&type=chunk) - As of December 31, 2022, the **Grace Disposal Group** was classified as held for sale and **discontinued operations**, leading to the elimination of the former Materials and Construction (M&C) segment[20](index=20&type=chunk) - As of December 31, 2022, the company had **144 regular full-time employees** in its continuing operations, a **decrease from 168** in the prior year[24](index=24&type=chunk) - The company is advancing its **ESG initiatives**, including converting common area lighting to LED at 17 properties, installing a **1.3-megawatt photovoltaic system** at its largest retail asset, and adding electric vehicle (EV) charging stations[32](index=32&type=chunk)[33](index=33&type=chunk) [Item 1A. Risk Factors](index=9&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant risks including maintaining REIT status, Hawai'i's economic concentration, rising interest rates, tenant bankruptcies, and water shortages impacting land operations - Risks to REIT Status: The company may fail to maintain its **REIT qualification** due to complex tax provisions Additionally, potential legislative changes in Hawai'i could eliminate the REIT dividends paid deduction for state income tax purposes, leading to **double taxation**[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) - General Business Risks: The company's business is **concentrated in Hawai'i**, making it vulnerable to local economic downturns It faces challenges in disposing of **illiquid non-strategic assets** and may not successfully complete the sale of its **Grace Disposal Group**[61](index=61&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Financial Risks: **Rising interest rates** could increase interest expenses and **decrease the value** of the real estate portfolio The phase-out of LIBOR may also lead to less favorable financing terms[69](index=69&type=chunk)[70](index=70&type=chunk) - Commercial Real Estate Risks: The business is exposed to **tenant bankruptcies**, the shift from brick-and-mortar to **online retail**, and the risk of **co-tenancy provisions** that could allow other tenants to reduce rent or terminate leases if an anchor tenant vacates[88](index=88&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - Land Operations Risks: A **lack of sufficient water** for agricultural irrigation could trigger **financial obligations** related to the 2018 sale of Maui agricultural land to Mahi Pono[104](index=104&type=chunk) [Item 1B. Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported that it has no unresolved staff comments from the Securities and Exchange Commission - None[107](index=107&type=chunk) [Item 2. Description of Properties by Segment](index=24&type=section&id=Item%202.%20Description%20of%20Properties%20by%20Segment) The company's portfolio as of December 31, 2022, includes 3.9 million square feet of CRE properties with 95.0% occupancy and 4,168 acres in Land Operations Commercial Real Estate Improved Property Portfolio by GLA (SF) | Asset Class | GLA (Square Feet) | | :--- | :--- | | Retail | 2,503,700 | | Industrial | 1,255,200 | | Office | 145,700 | | **Total** | **3,904,600** | - The leased occupancy for the improved properties portfolio was **95.0%** as of December 31, 2022, an **increase from 94.3%** as of December 31, 2021[110](index=110&type=chunk) - The company's portfolio of commercial ground leases totaled **140.7 acres** with a current Annualized Base Rent (ABR) of **$18.8 million**[115](index=115&type=chunk)[116](index=116&type=chunk) - The Land Operations segment holds **4,168 acres** of real estate investments with a total carrying value of **$75.5 million**[118](index=118&type=chunk) - The primary active development-for-sale project within the Land Operations segment is **Maui Business Park II**, where the company sold **4.9 acres** in 2022[120](index=120&type=chunk) [Item 3. Legal Proceedings](index=27&type=section&id=Item%203.%20Legal%20Proceedings) This section incorporates by reference the information on legal proceedings and other contingencies detailed in Note 10 of the Notes to Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 10 – Commitments and Contingencies of Notes to Consolidated Financial Statements[122](index=122&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section incorporates by reference the information concerning mine safety violations required by the Dodd-Frank Act, which is included in Exhibit 95 of the annual report - Information concerning mine safety disclosures is included in Exhibit 95 to this Annual Report on Form 10-K[123](index=123&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Alexander & Baldwin's common stock (ALEX) is listed on the NYSE, with the company maintaining REIT status and an active $150 million stock repurchase program - The company's Board of Directors reauthorized a stock repurchase program of up to **$150 million**, effective from January 1, 2022, to December 31, 2023[128](index=128&type=chunk) Q4 2022 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share ($) | Approximate Value Remaining ($ thousands) | | :--- | :--- | :--- | :--- | | Oct 1-31, 2022 | 80,960 | $16.95 | $145,400 | | Nov 1-30, 2022 | — | $— | $145,400 | | Dec 1-31, 2022 | — | $— | $145,400 | | **Total** | **80,960** | **$16.95** | **$145,400** | [Item 6. Reserved](index=29&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - None [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, A&B reported a net loss of $50.6 million, primarily due to pension termination and discontinued operations impairment, despite strong CRE segment performance and adequate liquidity [Business Overview](index=31&type=section&id=Business%20Overview) This section outlines the company's CRE and Land Operations segments, its simplification strategy, the classification of Grace Disposal Group as discontinued operations, and the 2022 pension plan termination - The company's simplification strategy led to the classification of the **Grace Disposal Group** (Grace Pacific and Maui Quarries) as held for sale and **discontinued operations** as of December 31, 2022[140](index=140&type=chunk) - In 2022, the company sold approximately **18,900 acres** of land on Kauai and its interest in McBryde Resources, Inc. for **$76.0 million**, recognizing a net gain of **$54.0 million**[140](index=140&type=chunk) - The company completed the termination of its **Defined Benefit Pension Plans** in June 2022, making cash contributions of **$28.7 million** and recording a pre-tax settlement charge of **$76.9 million**[142](index=142&type=chunk) [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) For 2022, A&B reported a net loss of $50.6 million, a significant decline from 2021, primarily due to a $76.9 million pension charge and an $86.6 million loss from discontinued operations Consolidated Results of Operations (2022 vs. 2021) | Metric (in millions) | 2022 | 2021 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | $230.5 | $254.0 | $(23.5) | (9.3)% | | Operating Income | $115.7 | $85.4 | $30.3 | 35.5% | | Income from Continuing Operations | $37.1 | $75.4 | $(38.3) | (50.8)% | | Loss from Discontinued Operations | $(86.6) | $(39.6) | $(47.0) | (118.7)% | | Net Income (Loss) Attributable to A&B | $(50.6) | $35.4 | $(86.0) | NM | - A pension termination loss of **$76.9 million** was recorded in 2022 due to the settlement of the company's Defined Benefit Plans[147](index=147&type=chunk) - The loss from discontinued operations increased significantly to **$86.6 million** in 2022, primarily due to an **$89.8 million impairment charge** related to the Grace Disposal Group's classification as held for sale[148](index=148&type=chunk) [Analysis of Operating Revenue and Profit by Segment](index=36&type=section&id=Analysis%20of%20Operating%20Revenue%20and%20Profit%20by%20Segment) The CRE segment's operating revenue increased 7.5% to $187.2 million and profit grew 12.3% to $81.5 million, while Land Operations revenue declined to $43.3 million, resulting in a $1.4 million operating loss [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $33.3 million cash and $486.9 million available on its credit facility, despite a decrease in operating cash flow to $67.2 million in 2022 - As of December 31, 2022, the company had **$33.3 million** in cash and cash equivalents and **$486.9 million** of available capacity on its **$500 million** revolving credit facility[199](index=199&type=chunk) - Cash flows from continuing operations provided by operating activities **decreased by $50.9 million** to **$67.2 million** for the year ended December 31, 2022, largely driven by cash contributions related to the termination of the company's Defined Benefit Plans[196](index=196&type=chunk) - For 2023, the company anticipates capital expenditures between **$50.0 million and $60.0 million**, with the majority allocated to the Commercial Real Estate segment[204](index=204&type=chunk) - The company acknowledges that **high inflation** in 2022 increased construction and operating costs, though this impact is partially mitigated by lease structures that pass through operating expenses to tenants[209](index=209&type=chunk) [Critical Accounting Estimates](index=46&type=section&id=Critical%20Accounting%20Estimates) Impairment of long-lived assets is a critical accounting estimate, leading to a $5.0 million charge in Land Operations and an $89.8 million charge for the Grace Disposal Group in 2022 - **Impairment of long-lived assets** is a **critical accounting estimate** due to the high degree of subjectivity in assumptions about future cash flows and fair value[213](index=213&type=chunk) - In 2022, the company recorded impairment charges of **$5.0 million** for its Land Operations segment (continuing operations) and **$89.8 million** for the Grace Disposal Group (discontinued operations)[213](index=213&type=chunk)[214](index=214&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from borrowing, managed through fixed and variable-rate debt and interest rate swaps - The company's main market risk is **interest rate risk**, managed through a mix of fixed and variable-rate debt and interest rate swaps[217](index=217&type=chunk) Debt Composition as of December 31, 2022 | Debt Type | Principal Amount (in millions) | | :--- | :--- | | Fixed-rate debt (after swaps) | $460.4 | | Variable-rate debt | $12.0 | [Item 8. Financial Statements and Supplementary Data](index=49&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, with an unqualified auditor opinion, detailing assets, liabilities, and net loss [Report of Independent Registered Public Accounting Firm](index=50&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on A&B's financial statements, identifying the classification of Grace Pacific as a critical audit matter - The auditor, Deloitte & Touche LLP, provided an **unqualified opinion**, stating the financial statements are presented fairly in all material respects[224](index=224&type=chunk) - A **critical audit matter** was identified concerning the significant judgments made by management in classifying the Grace Pacific and Maui quarries as **'Held for Sale and Discontinued Operations'**[228](index=228&type=chunk)[230](index=230&type=chunk) [Consolidated Financial Statements](index=52&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $1.79 billion and shareholders' equity of $1.04 billion, with a 2022 net loss of $50.6 million Consolidated Balance Sheet Highlights (as of Dec 31, 2022) | Account (in millions) | Amount | | :--- | :--- | | Total Assets | $1,787.3 | | Assets held for sale | $126.8 | | Total Liabilities | $743.6 | | Liabilities associated with assets held for sale | $81.0 | | Total A&B Shareholders' Equity | $1,035.7 | Consolidated Statement of Operations Highlights (Year Ended Dec 31, 2022) | Account (in millions) | Amount | | :--- | :--- | | Total Operating Revenue | $230.5 | | Income from Continuing Operations | $37.1 | | Loss from Discontinued Operations | $(86.6) | | Net Loss Attributable to A&B Shareholders | $(50.6) | [Notes to Consolidated Financial Statements](index=58&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including the reclassification of Grace Disposal Group, the $472.2 million debt portfolio, Maui water rights contingencies, and the pension plan termination impact [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=96&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[437](index=437&type=chunk) [Item 9A. Controls and Procedures](index=96&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, affirmed by an unqualified audit report - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[438](index=438&type=chunk) - Management assessed the company's internal control over financial reporting as **effective** as of December 31, 2022, based on the COSO framework[441](index=441&type=chunk) - The independent registered public accounting firm, Deloitte & Touche LLP, issued an **unqualified audit report** on the company's internal control over financial reporting[441](index=441&type=chunk)[444](index=444&type=chunk) [Item 9B. Other Information](index=97&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - None[449](index=449&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=97&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[449](index=449&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=98&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on directors and executive officers as of February 15, 2023, incorporating details on corporate governance from the 2023 Proxy Statement - Information about directors, the Audit Committee, and the Code of Ethics is incorporated by reference from the company's 2023 Annual Meeting of Shareholders Proxy Statement[451](index=451&type=chunk)[459](index=459&type=chunk) - Provides a list and brief biographies of the company's executive officers as of February 15, 2023[452](index=452&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk) [Item 11. Executive Compensation](index=99&type=section&id=Item%2011.%20Executive%20Compensation) This section incorporates by reference information regarding executive and director compensation from the company's 2023 Proxy Statement - Information regarding executive compensation is incorporated by reference from the 'Executive Compensation' and 'Compensation of Directors' sections of the 2023 Proxy Statement[459](index=459&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates by reference information on security ownership by certain beneficial owners, directors, and executive officers from the company's 2023 Proxy Statement - Information regarding security ownership is incorporated by reference from the 'Shareholders' Security Ownership' section of the 2023 Proxy Statement[460](index=460&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This section incorporates by reference information regarding certain relationships, related party transactions, and director independence from the company's 2023 Proxy Statement - Information regarding related transactions and director independence is incorporated by reference from the 'Election of Directors' and 'Relationships and Transactions' sections of the 2023 Proxy Statement[460](index=460&type=chunk) [Item 14. Principal Accounting Fees and Services](index=99&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section incorporates by reference information concerning fees paid to the principal accountant and the services provided, as detailed in the company's 2023 Proxy Statement - Information concerning principal accountant fees and services is incorporated by reference from the 'Ratification of Appointment of Independent Registered Public Accounting Firm' section of the 2023 Proxy Statement[460](index=460&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=100&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed with the Form 10-K report, including financial statements from Item 8 and Schedule III - Lists the financial statements included in Item 8 of the report[461](index=461&type=chunk) - Includes Schedule III, which details the company's real estate holdings and accumulated depreciation as of December 31, 2022[464](index=464&type=chunk) - Provides a detailed list of all exhibits filed with the report, including material contracts, incentive plans, and required certifications[468](index=468&type=chunk) [Item 16. Form 10-K Summary](index=108&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a summary for this item - None[482](index=482&type=chunk)

Alexander & Baldwin, Inc. (NYSE:ALEX) Q3 2022 Earnings Conference Call November 3, 2022 5:00 PM ET Company Participants Steve Swett - Investor Relations Chris Benjamin - President and Chief Executive Officer Lance Parker - Chief Operating Officer Brett Brown - Chief Financial Officer Clayton Chun - Chief Accounting Officer Conference Call Participants Connor Mitchell - Piper Sandler Wendy Ma - Evercore Operator Good afternoon and welcome to the Third Quarter 2022 Alexander & Baldwin Earnings Conference Call ...

Alexander & Baldwin, Inc. (NYSE:ALEX) Q2 2022 Earnings Conference Call July 28, 2022 5:00 PM ET Company Participants Steve Swett - Investor Relations Chris Benjamin - President and Chief Executive Officer Lance Parker - Chief Operating Officer Brett Brown - Chief Financial Officer Clayton Chun - Chief Accounting Officer Conference Call Participants Alexander Goldfarb - Piper Sandler Sheila McGrath - Evercore ISI Operator Good day, and welcome to the Alexander & Baldwin Second Quarter 2022 Earnings Conferenc ...

Financial Data and Key Metrics Changes - For Q1 2022, the company recorded net income of $10.5 million or $0.14 per share, with FFO of $19.7 million or $0.27 per share, and core FFO of $20.8 million or $0.29 per share [19][20] - The company raised its 2022 guidance for core FFO per share to a range of $1.01 to $1.07, up from the previous range of $0.94 to $1.00, primarily due to improved outlook for CRE same-store NOI growth [24][25] Business Line Data and Key Metrics Changes - The Commercial Real Estate (CRE) segment saw revenues increase by nearly 15.5% to $46.1 million, and NOI increased by 17.8% to $29.8 million compared to the prior year [20][21] - Same-store NOI for CRE increased by 17% to $29.6 million, with the retail segment achieving over 26% improvement in same-store NOI [11][21] Market Data and Key Metrics Changes - Domestic visitor arrivals in Hawaii exceeded pre-pandemic levels, up about 8% compared to 2019, contributing to economic growth [12][13] - The unemployment rate in Hawaii improved to 4.1%, down from a peak of 22.4%, indicating a strong recovery in the local economy [13] Company Strategy and Development Direction - The company is focused on simplifying its operations and strengthening its balance sheet, with plans to actively pursue acquisitions in retail, industrial, and ground leases [10][14] - The company is also advancing its ESG initiatives, including a solar PV installation project at Pearl Highlands Center [26][56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery in Hawaii and its positive impact on leasing demand for high-quality commercial real estate assets [12][13] - The company anticipates that rising interest rates may create acquisition opportunities as highly leveraged buyers may be disproportionately affected [45][46] Other Important Information - The company reported non-core land sales totaling approximately $8 million in Q1 2022, indicating ongoing monetization efforts [12][18] - The Materials & Construction segment had its best quarter in 1.5 years, producing $4.1 million of adjusted EBITDA [13][22] Q&A Session Summary Question: Can you expand on the expanding acquisition pipeline? - The company remains focused on retail, industrial, and ground leases for acquisitions, despite a tight acquisition market [30] Question: Is the increase in guidance driven by first quarter outperformance or a stronger outlook for the year? - The increase in guidance is primarily driven by first quarter outperformance [32] Question: What impact will the pension plan have on second quarter earnings? - The anticipated pre-tax settlement charge related to the pension plan is expected to be between $81 million to $95 million [34] Question: Will macroeconomic factors impact redevelopment plans? - While there are some supply chain delays and inflationary pressures, the company remains optimistic about its redevelopment projects [37] Question: What is the status of rental collections and deferrals from the pandemic? - The company is performing well on collections, with rates exceeding 90% overall for CRE [40] Question: What is the outlook for international travelers and COVID restrictions? - The company noted a return to full capacity in terms of tourism, although some retailers may still be affected by changes in visitor demographics [42][43] Question: How might rising interest rates affect acquisition opportunities? - Rising interest rates may create opportunities for the company to pursue acquisitions as other buyers may be constrained [45][46] Question: What is the status of land sales and pricing? - The company is optimistic about ongoing interest in non-core land sales and has strong inquiries from buyers [48][49] Question: What is driving the improved performance at Grace? - The improved performance at Grace is attributed to operational momentum and a strong backlog of projects [52][54] Question: How is the solar project structured financially? - The solar project involves minimal initial investment from the company, with expected annual NOI of about $300,000 once operational [56]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and management's analysis for the quarter ended March 31, 2022 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2022 show a 21.2% revenue increase and a slight rise in net income, with decreased operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets and liabilities, primarily due to reduced cash and debt Condensed Consolidated Balance Sheets (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,854.6** | **$1,879.8** | | Real estate investments, net | $1,523.2 | $1,533.1 | | Cash and cash equivalents | $33.7 | $70.0 | | **Total Liabilities** | **$776.8** | **$806.3** | | Notes payable and other debt | $522.2 | $532.7 | | **Total Equity** | **$1,070.4** | **$1,066.6** | - Total assets decreased by **$25.2 million**, primarily driven by a **$36.3 million** decrease in cash and cash equivalents. Total liabilities decreased by **$29.5 million**, mainly due to a reduction in notes payable and other debt[8](index=8&type=chunk)[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Operating revenue increased 21.2% year-over-year, leading to higher operating income and net income, while diluted EPS remained flat Q1 2022 vs Q1 2021 Statement of Operations (in millions, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total operating revenue | $98.2 | $81.0 | | Operating Income | $18.4 | $13.9 | | Net Income Attributable to A&B Shareholders | $10.5 | $9.9 | | Diluted EPS | $0.14 | $0.14 | - Total operating revenue increased by **21.2%** year-over-year, driven by growth in the Commercial Real Estate and Materials & Construction segments. Despite higher revenue, Diluted EPS remained flat at **$0.14** per share[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly decreased, with financing activities primarily involving dividend payments and debt repayments Q1 2022 vs Q1 2021 Cash Flows (in millions) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7.3 | $20.6 | | Net cash provided by (used in) investing activities | $(3.9) | $10.4 | | Net cash used in financing activities | $(39.7) | $(56.2) | | **Net decrease in cash** | **$(36.3)** | **$(25.2)** | - Net cash from operations saw a significant decrease to **$7.3 million** from **$20.6 million** in the prior year. Financing activities primarily consisted of **$27.0 million** in cash dividend payments and **$10.5 million** in debt repayments[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides details on segment operations, debt structure, ongoing legal proceedings, and pension plan termination impacts - The company operates in three segments: Commercial Real Estate (CRE), Land Operations, and Materials & Construction (M&C). As of March 31, 2022, the CRE portfolio included **3.9 million square feet** of gross leasable area across **37 properties** in Hawai'i[27](index=27&type=chunk) - Total debt (carrying value) was **$522.2 million** as of March 31, 2022, a decrease from **$532.7 million** at year-end 2021. The company uses interest rate swaps to manage exposure on its variable-rate debt[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) - The company is involved in ongoing legal proceedings concerning water rights for its former agricultural lands in East Maui, with recent court rulings requiring further review and hearings[56](index=56&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - On February 23, 2021, the Board approved the termination of the company's Defined Benefit Pension Plans. A partial settlement charge of **$3.2 million** was recorded in Q1 2022, with expected additional cash contributions of **$34 million to $48 million** in 2022 to fully fund the plans[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 performance driven by CRE and M&C segments, ongoing simplification strategy, and pension plan termination [Business Overview](index=23&type=section&id=Business%20Overview) Outlines the company's three operating segments and its strategic focus on monetizing non-commercial real estate assets - The company operates three segments: Commercial Real Estate (CRE), Land Operations, and Materials & Construction (M&C)[106](index=106&type=chunk) - The CRE segment focuses on grocery-anchored neighborhood shopping centers and industrial spaces in Hawai'i[106](index=106&type=chunk) - The company is pursuing a simplification strategy, which includes monetizing non-commercial real estate assets, particularly the Materials & Construction business[108](index=108&type=chunk)[109](index=109&type=chunk) [Consolidated Results of Operations](index=25&type=section&id=Consolidated%20Results%20of%20Operations) Details the consolidated financial performance, highlighting revenue growth and the impact of pension settlement charges Consolidated Financial Results Summary (in millions) | Metric | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating revenue | $98.2 | $81.0 | $17.2 | 21.2% | | Operating income | $18.4 | $13.9 | $4.5 | 32.4% | | Net income attributable to A&B | $10.5 | $9.9 | $0.6 | 6.1% | | Core FFO | $20.8 | $15.4 | $5.4 | 35.1% | - The **21.2%** increase in operating revenue was driven by higher revenues from the CRE and M&C segments, partially offset by lower revenues from Land Operations[118](index=118&type=chunk) - Pension and post-retirement benefit expense increased to **$3.4 million** from **$0.6 million**, primarily due to a **$3.2 million** partial settlement charge related to the termination of the Defined Benefit Plans[119](index=119&type=chunk) [Analysis of Operating Revenue and Profit by Segment](index=27&type=section&id=Analysis%20of%20Operating%20Revenue%20and%20Profit%20by%20Segment) Analyzes revenue and profit contributions from Commercial Real Estate, Land Operations, and Materials & Construction segments Segment Operating Profit (Loss) (in millions) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Commercial Real Estate | $20.6 | $15.4 | | Land Operations | $(0.1) | $11.4 | | Materials & Construction | $3.2 | $(4.0) | - Commercial Real Estate operating profit increased **33.8%** due to higher rents as tenant relief modifications ended and improved collections. Same-Store NOI increased **17.0%** to **$29.6 million**[122](index=122&type=chunk) - Land Operations reported an operating loss of **$0.1 million**, a significant decrease from an **$11.4 million** profit in Q1 2021, reflecting the variable nature of land sales and a **$2.3 million** pension settlement charge[138](index=138&type=chunk)[139](index=139&type=chunk) - Materials & Construction swung to a **$3.2 million** profit from a **$4.0 million** loss, driven by quarry and asphalt sales. Backlog increased **59.4%** year-over-year to **$202.7 million**[142](index=142&type=chunk)[143](index=143&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's liquidity sources, available credit, significant cash requirements, and compliance with debt covenants - Principal sources of liquidity are cash from operations, cash on hand (**$33.7 million** at quarter-end), and borrowing capacity under credit facilities[156](index=156&type=chunk)[162](index=162&type=chunk) - As of March 31, 2022, the company had **$448.9 million** of available capacity on its primary revolving credit facility[162](index=162&type=chunk) - A significant near-term cash requirement is the expected contribution of **$34 million to $48 million** in 2022 to settle the termination of its Defined Benefit Pension Plans[158](index=158&type=chunk) - The company was in compliance with all financial covenants for its debt arrangements as of March 31, 2022[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Reports no material changes in market risk disclosures since the prior fiscal year-end - There have been no material changes in market risk disclosures since the year-end 2021 Form 10-K filing[179](index=179&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective[180](index=180&type=chunk) - There were no material changes to the company's internal control over financial reporting during the first fiscal quarter[181](index=181&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and equity security sales for the reporting period [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) Details ongoing legal challenges concerning water rights in East Maui, including recent court rulings and pending decisions - The company is involved in legal proceedings regarding water licenses in East Maui, which were previously used for agricultural operations[56](index=56&type=chunk)[57](index=57&type=chunk) - On March 2, 2022, the Supreme Court of Hawai'i vacated a prior ruling, holding that the Hawaii Environmental Policy Act applied to the water permits and remanded the case back to the Circuit Court[60](index=60&type=chunk)[61](index=61&type=chunk) - A separate lawsuit filed by the Sierra Club challenging the 2019 and 2020 revocable permits is also under appeal, and a decision on the 2021 and 2022 permits is pending following a contested case hearing[62](index=62&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Confirms no material changes to the risk factors previously disclosed in the company's latest annual report - No material changes to risk factors were reported for the period[184](index=184&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered equity sales and the reauthorization of a stock repurchase program with no shares bought back - No unregistered equity securities were sold during the period[185](index=185&type=chunk) - A **$150 million** stock repurchase program was reauthorized, effective through December 31, 2023. No shares were repurchased in 2022 or 2021 under the plan[185](index=185&type=chunk)

Alexander & Baldwin, Inc. (NYSE:ALEX) Q4 2021 Earnings Conference Call February 24, 2022 5:00 PM ET Company Participants Steve Swett – Investor Relations Chris Benjamin – President and Chief Executive Officer Lance Parker – Chief Operating Officer Brett Brown – Chief Financial Officer Clayton Chun – Chief Accounting Officer Conference Call Participants Alexander Goldfarb – Piper Sandler Sheila McGrath – Evercore Operator Good day, and welcome to the Fourth Quarter and Full Year 2021 Alexander & Baldwin Earn ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) A Hawai'i-focused commercial REIT operating in Commercial Real Estate, Land Operations, and Materials & Construction segments - A&B is a Hawai'i-focused commercial REIT, owning the largest grocery-anchored, neighborhood shopping center portfolio in the state[9](index=9&type=chunk) - The Company's strategy focuses on increasing recurring income from its CRE portfolio while monetizing non-core assets in Land Operations and M&C[12](index=12&type=chunk) - As of December 31, 2021, **79.8% of total consolidated assets** are in the CRE segment, 6.4% in Land Operations, and 9.5% in Materials & Construction[10](index=10&type=chunk) - The Company had **611 regular full-time employees** as of December 31, 2021, with approximately **48% covered by collective bargaining agreements**[24](index=24&type=chunk) Commercial Real Estate Portfolio (as of December 31, 2021) | Asset Type | Number of Properties | Gross Leasable Area (GLA) | Land Under Ground Leases | | :----------- | :------------------- | :------------------------ | :----------------------- | | Retail Centers | 22 | 3.9 million sq ft | 143.4 acres | | Industrial Assets | 11 | | | | Office Properties | 4 | | | [ITEM 1A. RISK FACTORS](index=9&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces risks related to its REIT status, general business operations, and specific segment challenges - Risks related to REIT status include complex tax provisions, potential legislative changes, and the need to sell assets or borrow funds to meet distribution requirements[37](index=37&type=chunk)[44](index=44&type=chunk)[53](index=53&type=chunk) - General business risks include adverse economic conditions in Hawai'i, the ongoing impact of the COVID-19 pandemic, illiquidity of non-strategic assets, difficulties in obtaining capital, and potential non-compliance with regulations[39](index=39&type=chunk)[66](index=66&type=chunk)[71](index=71&type=chunk)[79](index=79&type=chunk) - Commercial Real Estate segment risks involve declining rental income due to tenant bankruptcies, shifts to online shopping, inability to renew leases, and increased operating expenses[42](index=42&type=chunk)[91](index=91&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Land Operations risks include construction and development challenges, regulatory restrictions on development and agricultural land use, and water availability issues[107](index=107&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - Materials & Construction segment risks are tied to government funding for infrastructure, competitive market pressures, challenges in strategic monetization, community opposition to quarries, and volatility in fuel and raw material costs[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=23&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved SEC staff comments regarding the Company's filings [ITEM 2. DESCRIPTION OF PROPERTIES BY SEGMENT](index=24&type=section&id=ITEM%202.%20DESCRIPTION%20OF%20PROPERTIES%20BY%20SEGMENT) This section details the property portfolio across the Commercial Real Estate, Land Operations, and Materials & Construction segments - The improved properties portfolio maintained a **Leased Occupancy of 94.3%** as of December 31, 2021 and 2020[142](index=142&type=chunk) - The Land Operations segment has one active development-for-sale project: Maui Business Park (Phase II) in Kahului, Maui, with **116.7 planned saleable acres**[153](index=153&type=chunk)[154](index=154&type=chunk) - McBryde Resources, Inc. produced **25,723 MWH of hydroelectric power** in 2021, selling 19,069 MWH to KIUC[155](index=155&type=chunk) - Grace Pacific operates a quarry in Makakilo, Oahu (200 acres of 542 owned), delivering **910,000 tons of rock** in 2021, with permits through 2032[157](index=157&type=chunk) Commercial Real Estate GLA by Asset Class (as of December 31, 2021) | Asset Class | Current GLA (SF) | | :------------ | :--------------- | | Retail | 2,500,000 | | Industrial | 1,246,300 | | Office | 143,300 | | **Total** | **3,889,600** | Land Operations Landholdings by Type (as of December 31, 2021) | Land Type | Kauai (Acres) | Maui (Acres) | Oahu (Acres) | Total Acres | | :-------------------------------- | :------------ | :----------- | :----------- | :---------- | | Land used in other operations | — | 21 | 3 | 24 | | Urban Developable (full/partial infrastructure) | 2 | 116 | — | 118 | | Urban Developable (limited/no infrastructure) | 29 | 81 | — | 110 | | Urban Other | 1 | 17 | — | 18 | | Agriculture/Other | 6,152 | 4,296 | 75 | 10,523 | | Urban entitlement process | 260 | — | — | 260 | | Conservation & preservation | 12,487 | 355 | 509 | 13,351 | | **Total Land Operations Landholdings** | **18,931** | **4,886** | **587** | **24,404** | [ITEM 3. LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is incorporated by reference from Note 12 of the financial statements - Legal proceedings information is detailed in Note 12 of the financial statements[158](index=158&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine safety disclosures are provided in Exhibit 95 of this Annual Report - Mine safety disclosures are included in Exhibit 95 of the Form 10-K[159](index=159&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=29&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section covers stock market information, REIT distribution requirements, and the share repurchase program - A&B's common stock is traded on the NYSE under the ticker symbol **ALEX**[161](index=161&type=chunk) - As a REIT, A&B is generally required to distribute **at least 90% of its REIT taxable income** to shareholders[161](index=161&type=chunk) - The Board reauthorized a **$150 million common stock repurchase program** for January 1, 2022, through December 31, 2023, with no repurchases made in 2021 or 2020[166](index=166&type=chunk) Equity Compensation Plan Data (as of December 31, 2021) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Securities remaining available for future issuance (c) | | :--------------------------------------------- | :---------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :----------------------------------------------------- | | Equity compensation plans approved by security holders | 0 | $0.00 | 965,840 | [ITEM 6. RESERVED](index=30&type=section&id=ITEM%206.%20RESERVED) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides an in-depth review of financial condition, operating results, liquidity, and capital resources for 2021 and 2020 - Operating revenue increased by **24.2% ($74.0 million)** to $379.3 million in 2021, primarily due to higher revenues from Land Operations and Commercial Real Estate[184](index=184&type=chunk) - Net income attributable to A&B shareholders increased significantly from **$5.6 million in 2020 to $35.4 million in 2021**[184](index=184&type=chunk) - Impairment of assets in 2021 was **$26.1 million**, primarily related to the Materials & Construction segment due to revised forecasts on future earnings and cash flows[186](index=186&type=chunk) - The Company expects to make cash contributions of **$34 million to $48 million** in 2022 to fully fund its Defined Benefit Plans and recognize pre-tax non-cash pension settlement charges of **$80 million to $95 million**[177](index=177&type=chunk) - Cash flows from operating activities increased by **$62.4 million to $124.2 million** in 2021, driven by CRE operations and non-core asset monetization in Land Operations[234](index=234&type=chunk) Consolidated Results of Operations (2021 vs. 2020) | Metric (in millions) | 2021 | 2020 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Operating revenue | $379.3 | $305.3 | $74.0 | 24.2% | | Cost of operations | $(254.1)| $(233.5)| $(20.6) | (8.8)% | | Operating income (loss) | $50.2 | $29.7 | $20.5 | 69.0% | | Net income (loss) attributable to A&B | $35.4 | $5.6 | $29.8 | 5X | | Basic EPS - continuing operations | $0.50 | $0.09 | $0.41 | 5X | | FFO | $70.0 | $45.1 | $24.9 | 55.2% | | Core FFO | $69.4 | $55.2 | $14.2 | 25.7% | [Business Overview](index=35&type=section&id=Business%20Overview) This overview details the Company's operating segments, strategic focus on simplification, and significant recent events - The Company is pursuing the simplification of its business, including ongoing efforts to accelerate the monetization of its non-commercial real estate assets, such as the Materials & Construction businesses[175](index=175&type=chunk) - In 2021, the Company completed real estate sales of approximately **1,800 acres for $41.3 million** and nine Maui Business Park II lots for **$16.0 million**[175](index=175&type=chunk) - The Company's joint venture projects at Kukui`ula completed the sale of substantially all assets for **$183.5 million** in November 2021, resulting in **$113.4 million cash distributions** and **$5.5 million joint venture income**[175](index=175&type=chunk) - The Board approved the termination of Defined Benefit Plans, effective May 31, 2021, expecting **$34 million to $48 million in cash contributions** and **$80 million to $95 million in pre-tax non-cash pension settlement charges** in 2022[177](index=177&type=chunk) Total Revenue Reductions (Increases) Related to Adjustments, Assessments and Provisions (in millions) | Category | 2021 | 2020 | | :-------------------------------------------------------------------- | :---- | :---- | | Other relief modifications and other adjustments | $7.5 | $6.4 | | Tenant collectability assessments and allowance for doubtful accounts | $(2.9) | $19.0 | | **Total revenue reductions (increases)** | **$4.6**| **$25.4**| [Consolidated Results of Operations](index=38&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated results show a significant improvement in operating performance for 2021 compared to 2020 - Selling, general and administrative costs increased by **12.6% ($5.8 million)** to $51.9 million, mainly due to higher performance-based incentive compensation and new ERP system implementation costs[186](index=186&type=chunk) - Gain on disposal of assets, net, decreased from **$9.6 million** in 2020 (solar power facility sale) to **$3.0 million** in 2021 (residual land sale)[187](index=187&type=chunk) Consolidated Financial Performance (2021 vs. 2020) | Metric (in millions) | 2021 | 2020 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Operating revenue | $379.3 | $305.3 | $74.0 | 24.2% | | Cost of operations | $(254.1)| $(235.5)| $(18.6) | (7.9)% | | Selling, general and administrative | $(51.9) | $(46.1) | $(5.8) | (12.6)% | | Impairment of assets | $(26.1) | $(5.6) | $(20.5) | 4X | | Operating income (loss) | $50.2 | $29.7 | $20.5 | 69.0% | | Net income (loss) attributable to A&B | $35.4 | $5.6 | $29.8 | 5X | [Analysis of Operating Revenue and Profit by Segment](index=40&type=section&id=Analysis%20of%20Operating%20Revenue%20and%20Profit%20by%20Segment) This section provides a detailed breakdown of operating revenue and profit by segment [Commercial Real Estate](index=40&type=section&id=Commercial%20Real%20Estate) The Commercial Real Estate segment experienced a strong recovery in 2021, driven by improved rent collections and new developments - The increase in CRE revenue and profit was largely due to lower net bad debt and cash-basis charges, with revenue reductions from collectability assessments decreasing from **$25.4 million in 2020 to $4.6 million in 2021**[191](index=191&type=chunk) Commercial Real Estate Financial Results (2021 vs. 2020) | Metric (in millions) | 2021 | 2020 | Change ($) | Change (%) | | :------------------- | :----- | :----- | :--------- | :--------- | | Operating revenue | $173.2 | $150.0 | $23.2 | 15.5% | | Operating profit | $72.6 | $49.8 | $22.8 | 45.8% | | NOI | $110.7 | $94.3 | $16.4 | 17.4% | | Same-Store NOI | $107.8 | $91.9 | $15.9 | 17.3% | Leasing Activity (Year Ended December 31, 2021) | Asset Class | Leases Signed | GLA (SF) | ABR/SF | Rent Spread (Comparable Leases) | | :------------ | :------------ | :-------- | :-------- | :------------------------------ | | Retail | 185 | 310,263 | $38.93 | 5.2% | | Industrial | 68 | 304,191 | $14.99 | 4.1% | | Office | 18 | 36,141 | $36.62 | 3.0% | Improved Portfolio Occupancy Metrics (as of December 31) | Occupancy Type | 2021 | 2020 | Basis Point Change | | :--------------- | :---- | :---- | :----------------- | | Leased Occupancy | 94.3% | 94.3% | — | | Physical Occupancy | 93.8% | 93.5% | 30 | | Economic Occupancy | 92.2% | 92.9% | (70) | [Land Operations](index=42&type=section&id=Land%20Operations) The Land Operations segment saw a substantial increase in revenue and profit in 2021, driven by significant land monetization efforts - 2021 operating profit included **$20.4 million from joint ventures**, primarily from the Kukui`ula projects[209](index=209&type=chunk) - 2020 operating profit included an **$8.9 million gain** from the sale of the solar power facility in Port Allen and a **$6.7 million charge** for estimated reservoir remediation costs[210](index=210&type=chunk) Land Operations Financial Results (2021 vs. 2020) | Metric (in millions) | 2021 | 2020 | | :------------------- | :----- | :----- | | Development sales revenue | $16.0 | $7.9 | | Unimproved/other property sales revenue | $41.3 | $9.7 | | Other operating revenue | $22.6 | $21.1 | | **Total operating revenue** | **$79.9**| **$38.7**| | **Total operating profit (loss)** | **$55.4**| **$15.4**| [Materials & Construction](index=44&type=section&id=Materials%20%26%20Construction) The Materials & Construction segment reported an increased operating loss in 2021, driven by significant impairment charges - The 2021 operating loss was largely due to **$26.1 million in goodwill and other asset impairment charges** and a **$2.9 million impairment of an equity method investment** (Maui Paving)[212](index=212&type=chunk)[359](index=359&type=chunk) - Backlog increased to **$175.3 million** at December 31, 2021, from $126.7 million in 2020, driven by an increase in marketed bid opportunities[215](index=215&type=chunk) Materials & Construction Financial Results (2021 vs. 2020) | Metric (in millions) | 2021 | 2020 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Operating revenue | $126.2 | $116.6 | $9.6 | 8.2% | | Operating costs and expenses | $(118.9)| $(106.8)| $(12.1) | (11.3)% | | Impairment of assets | $(26.1) | $(5.6) | $(20.5) | 4X | | Impairment of equity method investments | $(2.9) | — | $(2.9) | —% | | Income (loss) related to joint ventures | $(2.9) | $1.3 | $(4.2) | NM | | **Operating profit (loss)** | **$(40.5)**| **$(10.5)**| **$(30.0)**| 3X | | Backlog at period end | $175.3 | $126.7 | $48.6 | 38.4% | [Use of Non-GAAP Financial Measures](index=45&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP measures like FFO, Core FFO, and NOI to provide additional insight into core operating results - FFO is a non-GAAP measure of operating performance for real estate companies, defined by Nareit, excluding depreciation, gains/losses from real estate sales, and impairment write-downs of real estate assets[216](index=216&type=chunk) - Core FFO is a non-GAAP measure relevant to the Company's core commercial real estate business, adjusting CRE operating profit for real estate depreciation/amortization, corporate expenses, and core business interest expense, while excluding non-recurring or infrequent items[217](index=217&type=chunk) - NOI is a non-GAAP measure used to evaluate the unlevered performance of the Commercial Real Estate portfolio, reflecting contract-based income and cash-based property-level expenses, excluding non-contractual revenue, non-cash expenses, and other non-property-related items[219](index=219&type=chunk)[221](index=221&type=chunk) Reconciliation of Net Income (Loss) to FFO and Core FFO (in millions) | Metric | 2021 | 2020 | | :-------------------------------------------------------- | :---- | :---- | | Net income (loss) available to A&B common shareholders | $35.1 | $5.5 | | Depreciation and amortization of commercial real estate properties | $37.7 | $40.1 | | Gain on the disposal of commercial real estate properties, net | $(2.8)| $(0.5)| | **FFO** | **$70.0**| **$45.1**| | Exclude items not related to core business: | | | | Land Operations Operating Profit | $(55.4)| $(15.4)| | Materials & Construction Operating (Profit) Loss | $40.5 | $10.5 | | Loss from discontinued operations | $1.1 | $0.8 | | Income (loss) attributable to noncontrolling interest | $0.4 | $(0.4)| | Income tax expense (benefit) | — | $(0.4)| | Non-core business interest expense | $12.8 | $15.0 | | **Core FFO** | **$69.4**| **$55.2**| [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) A&B's liquidity is primarily sourced from operating activities, cash reserves, and credit facilities - Cash provided by operating activities increased to **$124.2 million** in 2021, up from $63.1 million in 2020, due to improved CRE operations and non-core asset monetization[234](index=234&type=chunk) - As of December 31, 2021, the Company had **$70.0 million in cash** and cash equivalents and **$448.9 million available capacity** on its $500.0 million revolving credit facility (A&B Revolver), which was amended and extended to August 29, 2025[235](index=235&type=chunk) - In 2022, projected capital expenditures (excluding potential CRE acquisitions) are **$47.0 million - $60.0 million**, with $35.0 million - $43.0 million for CRE[240](index=240&type=chunk) - The Company uses §1031 and §1033 of the Code for tax-deferral treatment on qualifying real estate sales, with **$0.8 million and $3.1 million**, respectively, available for reinvestment as of December 31, 2021[242](index=242&type=chunk)[243](index=243&type=chunk) Capital Expenditures by Segment (in millions) | Category | 2021 | 2020 | Change (%) | | :-------------------------------------------- | :---- | :---- | :--------- | | CRE property acquisitions, development and redevelopment | $27.2 | $9.7 | 180.4% | | Building/area improvements (Maintenance) | $9.9 | $6.0 | 65.0% | | Tenant space improvements (Maintenance) | $2.5 | $3.1 | (19.4)% | | Quarrying and paving | $6.3 | $4.5 | 40.0% | | Agribusiness and other | $7.6 | $1.8 | 322.2% | | **Total capital expenditures** | **$53.5**| **$25.1**| **113.1%** | [Critical Accounting Estimates](index=50&type=section&id=Critical%20Accounting%20Estimates) This section highlights critical accounting estimates that require significant management judgment - Impairment of long-lived assets and finite-lived intangible assets is a critical accounting estimate, requiring significant judgment on future cash flows, economic conditions, and discount rates[248](index=248&type=chunk) - In 2021, the Company recorded **$24.3 million in aggregate long-lived asset and finite-lived intangible asset impairment charges** related to its Materials & Construction segment[248](index=248&type=chunk) [New Accounting Pronouncements](index=51&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 2 for a full description of the impact of recently issued accounting standards - The Company adopted ASC Topic 848, Reference Rate Reform, but does not expect its application to have a material effect on its financial position or results of operations[322](index=322&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=49&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) A&B is exposed to interest rate risk from its borrowing activities, which it manages through a mix of debt and interest rate swaps - The Company manages interest rate risk through a balanced mix of fixed-rate and variable-rate debt, and interest rate swaps[252](index=252&type=chunk) - As of December 31, 2021, the Company had **$532.9 million in fixed-rate debt** (after swaps) and effectively zero variable-rate debt due to an interest rate swap on $50.0 million until February 2023[252](index=252&type=chunk) - The Company is monitoring the transition away from LIBOR and its potential impact on financing costs and availability[77](index=77&type=chunk)[254](index=254&type=chunk) Debt Exposure to Interest Rate Risk (as of December 31, 2021, in millions) | Liability Type | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Fair Value | | :------------- | :---- | :---- | :---- | :---- | :---- | :--------- | :--------- | | Fixed-rate debt | $532.9| $502.8| $418.2| $261.2| $221.0| $152.1 | $554.3 | | Variable-rate debt | $— | $— | $50.0 | $50.0 | $— | $— | $— | [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=50&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the Company's audited consolidated financial statements and the independent auditor's report - The financial statements include Consolidated Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Cash Flows, and Equity for the years ended December 31, 2021, 2020, and 2019[256](index=256&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the Company's financial statements and internal control over financial reporting as of December 31, 2021[258](index=258&type=chunk)[259](index=259&type=chunk) - A critical audit matter identified was the assessment of held for sale and discontinued operations classification for the Materials & Construction businesses, due to significant judgments involved[262](index=262&type=chunk) [Consolidated Balance Sheets](index=53&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets provide a snapshot of A&B's financial position as of December 31, 2021, and 2020 - Investments in real estate joint ventures and partnerships decreased significantly from **$134.1 million in 2020 to $8.8 million in 2021**, reflecting the monetization of Kukui`ula assets[268](index=268&type=chunk) - Notes payable and other debt decreased by **$154.4 million**, from $687.1 million in 2020 to $532.7 million in 2021[268](index=268&type=chunk) Consolidated Balance Sheet Highlights (in millions) | Asset/Liability/Equity | December 31, 2021 | December 31, 2020 | | :--------------------- | :---------------- | :---------------- | | Real estate investments, net | $1,533.1 | $1,667.0 | | Cash and cash equivalents | $70.0 | $57.2 | | Investments in real estate joint ventures and partnerships | $8.8 | $134.1 | | Other property, net | $83.5 | $110.8 | | **Total assets** | **$1,879.8** | **$2,036.0** | | Notes payable and other debt | $532.7 | $687.1 | | Accrued pension and post-retirement benefits | $56.3 | $34.7 | | **Total liabilities** | **$806.3** | **$933.4** | | **Total A&B shareholders' equity** | **$1,066.6** | **$1,096.1** | [Consolidated Statements of Operations](index=54&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations show a strong rebound in profitability for A&B in 2021 - Income (loss) related to joint ventures increased from **$5.9 million in 2020 to $17.5 million in 2021**[271](index=271&type=chunk) - Impairment of assets increased from **$5.6 million in 2020 to $26.1 million in 2021**[271](index=271&type=chunk) Consolidated Statements of Operations Summary (in millions) | Metric | 2021 | 2020 | 2019 | | :---------------------------------------- | :------ | :------ | :------ | | Commercial Real Estate Operating Revenue | $173.2 | $150.0 | $160.6 | | Land Operations Operating Revenue | $79.9 | $38.7 | $112.2 | | Materials & Construction Operating Revenue| $126.2 | $116.6 | $162.4 | | **Total operating revenue** | **$379.3**| **$305.3**| **$435.2**| | Operating Income (Loss) | $50.2 | $29.7 | $(14.3) | | Income (Loss) from Continuing Operations | $36.9 | $6.0 | $(36.9) | | **Net Income (Loss) Attributable to A&B Shareholders** | **$35.4**| **$5.6** | **$(36.4)**| | Basic EPS - Continuing Operations | $0.50 | $0.09 | $(0.49) | | Diluted EPS - Continuing Operations | $0.50 | $0.09 | $(0.49) | [Consolidated Statements of Comprehensive Income (Loss)](index=55&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) These statements show a shift from a comprehensive loss in 2020 to a comprehensive income in 2021 - Actuarial losses from employee benefit plans significantly impacted other comprehensive income, with a loss of **$27.4 million in 2021**[273](index=273&type=chunk) Consolidated Statements of Comprehensive Income (Loss) Summary (in millions) | Metric | 2021 | 2020 | 2019 | | :---------------------------------------- | :---- | :---- | :----- | | Net Income (Loss) | $35.8 | $5.2 | $(38.4)| | Other Comprehensive Income (Loss), net of tax: | | | | | Unrealized interest rate hedging gain (loss) | $2.3 | $(6.9)| $(4.0) | | Actuarial gain (loss) | $(27.4)| $(7.7)| $5.3 | | **Other comprehensive income (loss), net of tax** | **$(20.7)**| **$(11.2)**| **$3.1**| | **Comprehensive Income (Loss)** | **$15.1**| **$(6.0)**| **$(35.3)**| [Consolidated Statements of Cash Flows](index=56&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements indicate a strong increase in cash from operating and investing activities in 2021 - Cash provided by investing activities in 2021 included **$149.5 million from distributions of capital** and other receipts from investments in affiliates, primarily Kukui`ula joint ventures[236](index=236&type=chunk)[276](index=276&type=chunk) - Cash used in financing activities in 2021 included **$159.2 million in net debt payments** and **$46.6 million in cash dividends paid**[241](index=241&type=chunk)[276](index=276&type=chunk) Consolidated Statements of Cash Flows Summary (in millions) | Cash Flow Activity | 2021 | 2020 | 2019 | | :-------------------------------------- | :------ | :------ | :------ | | Net cash provided by (used in) operations | $124.2 | $63.1 | $157.6 | | Net cash provided by (used in) investing activities | $96.5 | $12.0 | $(240.4)| | Net cash provided by (used in) financing activities | $(207.1)| $(33.1) | $(136.7)| | Net increase (decrease) in cash, cash equivalents and restricted cash | $13.6 | $42.0 | $(219.5)| | Balance, end of period | $71.0 | $57.4 | $15.4 | [Consolidated Statements of Equity and Redeemable Noncontrolling Interest](index=58&type=section&id=Consolidated%20Statements%20of%20Equity%20and%20Redeemable%20Noncontrolling%20Interest) These statements show a decrease in total A&B shareholders' equity from 2020 to 2021 - Net income attributable to A&B shareholders was **$35.4 million in 2021**, contributing positively to equity[280](index=280&type=chunk) - Cash dividends paid were **$49.2 million in 2021 ($0.67 per share)**, contributing to the increase in distributions in excess of accumulated earnings[280](index=280&type=chunk) Consolidated Statements of Equity and Redeemable Noncontrolling Interest Summary (in millions) | Metric | December 31, 2021 | December 31, 2020 | January 1, 2019 | | :---------------------------------------- | :---------------- | :---------------- | :-------------- | | Common stock - Stated Value | $1,810.5 | $1,805.5 | $1,793.4 | | Accumulated other comprehensive income (loss) | $(80.7) | $(60.0) | $(51.9) | | Distributions in excess of accumulated earnings | $(663.2) | $(649.4) | $(538.9) | | **Total A&B shareholders' equity** | **$1,066.6** | **$1,096.1** | **$1,208.3** | | Redeemable Noncontrolling Interest | $6.9 | $6.5 | $7.9 | [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial statement line items [1. Background and Basis of Presentation](index=59&type=section&id=1.%20Background%20and%20Basis%20of%20Presentation) This note describes A&B's business segments, basis of presentation, and principles of consolidation - A&B is a REIT operating in three segments: **Commercial Real Estate, Land Operations, and Materials & Construction**[282](index=282&type=chunk) - The Company consolidates entities where it has a controlling financial interest and uses the equity method for significant influence without control[283](index=283&type=chunk) - Segment reclassifications were made in Q1 2021, moving activity and results of Company-owned quarries from Land Operations to Materials & Construction, with historical periods restated[287](index=287&type=chunk)[475](index=475&type=chunk) [2. Significant Accounting Policies](index=60&type=section&id=2.%20Significant%20Accounting%20Policies) This note details A&B's significant accounting policies for areas like real estate, acquisitions, revenue recognition, and goodwill - Real estate property is recorded at cost, net of accumulated depreciation, with development and redevelopment costs capitalized[288](index=288&type=chunk)[290](index=290&type=chunk) - Acquisitions of real estate properties are generally accounted for as asset acquisitions, with purchase consideration allocated to tangible and identifiable intangible assets and liabilities based on fair value[291](index=291&type=chunk) - Revenue from Commercial Real Estate is recognized under lease accounting guidance, while Land Operations and Materials & Construction recognize revenue from contracts with customers, often using the percentage of completion method for construction contracts[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[312](index=312&type=chunk) - The Company adopted ASC 326 (Credit Losses) on January 1, 2020, and estimates allowances for credit losses at portfolio levels, factoring in historical losses, current conditions, and future forecasts[298](index=298&type=chunk) - Goodwill is reviewed for impairment annually or when circumstances change, using income and market approaches for fair value estimation[303](index=303&type=chunk)[352](index=352&type=chunk) [3. Real Estate Property, Net and Other Property, Net](index=67&type=section&id=3.%20Real%20Estate%20Property%2C%20Net%20and%20Other%20Property%2C%20Net) This note provides a breakdown of the Company's real estate and other property assets - Total interest costs incurred were **$26.6 million in 2021**, with $0.3 million capitalized for development activities[325](index=325&type=chunk) - Depreciation expense for real estate property was **$38.2 million in 2021**[326](index=326&type=chunk) Real Estate Property, Net (in millions) | Category | 2021 | 2020 | | :------------------------ | :-------- | :-------- | | Land | $784.9 | $769.6 | | Buildings | $709.4 | $696.0 | | Other property improvements | $93.9 | $84.1 | | Subtotal | $1,588.2 | $1,549.7 | | Accumulated depreciation | $(180.5) | $(154.4) | | **Real estate property, net** | **$1,407.7**| **$1,395.3**| Other Property, Net (in millions) | Category | 2021 | 2020 | | :-------------------------------- | :---- | :---- | | Land | $38.3 | $39.3 | | Buildings | $13.4 | $18.5 | | Asphalt plants, machinery and equipment | $46.6 | $104.4| | Water, power and sewer systems | $21.0 | $19.7 | | Other property improvements | $6.2 | $6.4 | | Subtotal | $125.5| $188.3| | Accumulated depreciation | $(42.0)| $(77.5)| | **Other property, net** | **$83.5**| **$110.8**| [4. Acquisitions and Intangible Assets, Net](index=68&type=section&id=4.%20Acquisitions%20and%20Intangible%20Assets%2C%20Net) This note details commercial real estate acquisitions and intangible assets - In 2021, A&B acquired two commercial real estate assets for **$10.8 million**, funded by proceeds from involuntary conversions under Code §1033[328](index=328&type=chunk) - Total intangible asset amortization expense was **$12.2 million in 2021**[335](index=335&type=chunk) Fair Value of Assets Acquired in 2021 (in millions) | Assets Acquired | Fair Value | | :---------------------- | :--------- | | Land | $8.8 | | Property and improvements | $2.0 | | **Total assets acquired** | **$10.8** | Real Estate Intangible Assets, Net (in millions) | Category | 2021 | 2020 | | :---------------------------------- | :---- | :---- | | In-place leases | $124.8| $125.0| | Favorable leases | $29.0 | $29.0 | | Accumulated amortization of in-place leases | $(81.9)| $(73.8)| | Accumulated amortization of favorable leases | $(20.3)| $(18.3)| | **Real estate intangible assets, net** | **$51.6**| **$61.9**| [5. Investments in Affiliates](index=69&type=section&id=5.%20Investments%20in%20Affiliates) This note details A&B's equity method investments, highlighted by the significant Kukui`ula joint venture asset sale - The Kukui`ula joint venture sold substantially all its assets for **$183.5 million** in November 2021, leading to **$113.4 million cash distributions** to A&B[337](index=337&type=chunk) - The Company's carrying value of investments in affiliates decreased from **$169.6 million in 2020 to $39.3 million in 2021**[338](index=338&type=chunk) Combined Assets and Liabilities of Equity Method Entities (in millions) | Category | 2021 | 2020 | | :---------------------- | :---- | :---- | | Current assets | $73.2 | $73.0 | | Non-current assets | $206.4| $688.0| | **Total assets** | **$279.6**| **$761.0**| | Current liabilities | $28.1 | $33.5 | | Non-current liabilities | $88.7 | $96.7 | | **Total liabilities** | **$116.8**| **$130.2**| Combined Operating Results of Equity Method Entities (in millions) | Metric | 2021 | 2020 | 2019 | | :------------------------------------ | :------ | :---- | :---- | | Revenues | $243.0 | $174.2| $191.9| | Operating costs and expenses | $214.2 | $147.1| $173.0| | Gross profit (loss) | $28.8 | $27.1 | $18.9 | | Income (loss) from Continuing Operations* | $(288.1)| $12.1 | $6.6 | | Net income (loss)* | $(288.3)| $11.6 | $6.6 | [6. Allowances and Other Reserves](index=70&type=section&id=6.%20Allowances%20and%20Other%20Reserves) This note details the Company's allowances for credit losses and doubtful accounts - The Company adopted ASC 326 (Financial Instruments - Credit Losses) on January 1, 2020, reclassifying certain allowances to an allowance for credit losses[342](index=342&type=chunk) - The allowance for credit losses for financing receivables at December 31, 2021, primarily relates to two Land Operations assets, with one having a full allowance due to an estimated zero outcome of expected cash flows[345](index=345&type=chunk) Allowance and Reserve Accounts Activity (in millions) | Category | Balance at beginning of year (2020) | Additions/(Reductions) (2020) | Balance at end of year (2020) | | :---------------------------------------- | :---------------------------------- | :---------------------------- | :---------------------------- | | Reserve for cash basis tenants | $0.9 | $10.6 | $12.7 | | Allowance for doubtful accounts | $0.6 | $3.6 | $2.6 | | Allowance for credit losses - financing receivables | $— | $(0.4) | $3.9 | | Allowance for credit losses - contract assets | $— | $(0.9) | $0.7 | Allowance and Reserve Accounts Activity (in millions) | Category | Balance at beginning of year (2021) | Additions/(Reductions) (2021) | Balance at end of year (2021) | | :---------------------------------------- | :---------------------------------- | :---------------------------- | :---------------------------- | | Reserve for cash basis tenants | $12.7 | $(1.3) | $11.1 | | Allowance for doubtful accounts | $2.6 | $(1.7) | $0.8 | | Allowance for credit losses - financing receivables | $3.9 | $(1.4) | $2.5 | | Allowance for credit losses - contract assets | $0.7 | $(0.2) | $0.5 | [7. Inventories](index=72&type=section&id=7.%20Inventories) This note provides a breakdown of A&B's inventories, primarily related to the Materials & Construction segment Inventories (in millions) | Category | 2021 | 2020 | | :-------------------------------- | :---- | :---- | | Asphalt | $4.7 | $4.2 | | Processed rock and sand | $8.1 | $7.9 | | Work in progress | $3.6 | $3.2 | | Retail merchandise | $2.1 | $2.1 | | Parts, materials and supplies inventories | $1.8 | $1.0 | | **Total** | **$20.3**| **$18.4**| [8. Goodwill](index=72&type=section&id=8.%20Goodwill) This note details the Company's goodwill balance and impairment testing - The Company's goodwill balance decreased from **$10.5 million in 2020 to $8.7 million in 2021**[349](index=349&type=chunk) - In 2021, a non-cash impairment charge of **$1.8 million** was recorded for the remaining M&C reporting unit's goodwill, based on a discounted cash flow analysis with a **13.0% discount rate**[353](index=353&type=chunk)[354](index=354&type=chunk) Changes in Carrying Amount of Goodwill by Segment (in millions) | Metric | Construction Materials & | Commercial Real Estate | Total | | :---------------------------------------- | :----------------------- | :--------------------- | :---- | | Balance, January 1, 2020 | $6.7 | $8.7 | $15.4 | | Gross amount of goodwill included in disposal | $(7.1) | — | $(7.1)| | Accumulated impairment losses included in disposal | $2.2 | — | $2.2 | | Balance, December 31, 2020 | $1.8 | $8.7 | $10.5 | | Impairment losses | $(1.8) | — | $(1.8)| | **Balance, December 31, 2021** | **$—** | **$8.7** | **$8.7**| [9. Fair Value Measurements](index=73&type=section&id=9.%20Fair%20Value%20Measurements) This note outlines A&B's fair value measurements, categorized into a three-level hierarchy - Fair value of notes payable and other debt was **$554.3 million** (carrying amount $532.7 million) at December 31, 2021, estimated using discounted cash flow analysis (Level 3)[356](index=356&type=chunk) - Interest rate swaps are measured at fair value (Level 2), based on estimated termination amounts using interest rate pricing models and observable inputs[356](index=356&type=chunk)[382](index=382&type=chunk) - Impairment charges of **$26.1 million** for goodwill/long-lived assets and **$2.9 million** for an equity method investment in 2021 were classified as Level 3 fair value measurements due to significant unobservable inputs[356](index=356&type=chunk)[357](index=357&type=chunk) - The investment in Maui Paving was deemed other-than-temporarily impaired in 2021, resulting in a **$2.9 million non-cash impairment charge**[359](index=359&type=chunk) [10. Notes Payable and Other Debt](index=74&type=section&id=10.%20Notes%20Payable%20and%20Other%20Debt) This note details A&B's debt structure, which was significantly reduced in 2021 - The Kailua Town Center mortgage notes were repaid in full in September 2021[363](index=363&type=chunk) - The A&B Revolver was amended in August 2021, increasing commitments to **$500.0 million** and extending the term to August 29, 2025, with **$448.9 million available capacity** as of December 31, 2021[370](index=370&type=chunk) Notes Payable and Other Debt (in millions) | Debt Type | December 31, 2021 | December 31, 2020 | | :------------------------ | :---------------- | :---------------- | | Secured Debt | $197.8 | $218.1 | | Unsecured Debt | $285.1 | $358.2 | | Revolving Credit Facilities | $50.0 | $111.0 | | **Total Debt (contractual)**| **$532.9** | **$687.3** | | Total debt (carrying value) | $532.7 | $687.1 | Scheduled Debt Principal Payments (in millions) | Year | Secured Debt | Unsecured Debt | Revolving Credit Facilities | Total Principal | | :------------------------ | :----------- | :------------- | :-------------------------- | :-------------- | | 2022 | $6.0 | $24.1 | $— | $30.1 | | 2023 | $6.0 | $28.6 | $— | $34.6 | | 2024 | $135.0 | $22.0 | $— | $157.0 | | 2025 | $1.9 | $38.3 | $50.0 | $90.2 | | 2026 | $1.9 | $67.0 | $— | $68.9 | | Thereafter | $47.0 | $105.1 | $— | $152.1 | | **Total Principal** | **$197.8** | **$285.1** | **$50.0** | **$532.9** | [11. Derivative Instruments](index=77&type=section&id=11.%20Derivative%20Instruments) This note describes A&B's use of interest rate swaps to manage exposure to variable-rate debt - A&B uses interest rate swaps to manage its exposure to interest rate risk on variable-rate debt[375](index=375&type=chunk) - The pre-tax effect of derivative instruments recognized in OCI was a gain of **$2.3 million in 2021**, with a reclassification adjustment to interest expense of **$1.6 million**[379](index=379&type=chunk) - A non-designated interest rate swap matured on September 1, 2021, and generated **$0.3 million in gains** related to changes in fair value in 2021[382](index=382&type=chunk) Cash Flow Hedges of Interest Rate Risk (in millions) | Effective Date | Maturity Date | Fixed Interest Rate | Notional Amount at Dec 31, 2021 | Asset (Liability) Fair Value at Dec 31, 2021 | | :------------- | :------------ | :------------------ | :------------------------------ | :------------------------------------------- | | 4/7/2016 | 8/1/2029 | 3.14% | $56.3 | $(1.7) | | 2/13/2020 | 2/27/2023 | 3.15% | $50.0 | $(0.5) | [12. Commitments and Contingencies](index=78&type=section&id=12.%20Commitments%20and%20Contingencies) This note outlines A&B's financial commitments, guarantees, and ongoing legal proceedings - As of December 31, 2021, standby letters of credit totaled **$1.1 million**, and bonds for construction and real estate activities totaled **$250.4 million**, with a maximum remaining exposure of **$61.2 million** for construction obligations[383](index=383&type=chunk) - The Company provides bond indemnities and guarantees of indebtedness for certain unconsolidated affiliates, with no outstanding borrowings on guaranteed lines of credit as of December 31, 2021[383](index=383&type=chunk) - A&B is involved in legal proceedings, including a lawsuit by the Sierra Club challenging the renewal of East Maui water revocable permits, with a court decision pending on the continuation of permits[385](index=385&type=chunk)[386](index=386&type=chunk)[387](index=387&type=chunk) [13. Revenue and Contract Balances](index=80&type=section&id=13.%20Revenue%20and%20Contract%20Balances) This note disaggregates A&B's revenue by segment and type, and provides information on contract balances - The Company has **$62.0 million in deferred revenue** related to performance obligations for the sale of agricultural land to Mahi Pono[392](index=392&type=chunk) - Total transaction price allocated to wholly unsatisfied or partially satisfied performance obligations was **$140.5 million in 2021**, with **65% to 75%** expected to be recognized in 2022[393](index=393&type=chunk) Revenues by Segment and Type (in millions) | Revenues | 2021 | 2020 | 2019 | | :-------------------------------------- | :---- | :---- | :---- | | Commercial Real Estate | $173.2| $150.0| $160.6| | Land Operations: | | | | | Development sales revenue | $16.0 | $7.9 | $57.2 | | Unimproved/other property sales revenue | $41.3 | $9.7 | $32.4 | | Other operating revenue | $22.6 | $21.1 | $22.6 | | **Total Land Operations** | **$79.9**| **$38.7**| **$112.2**| | Materials & Construction | $126.2| $116.6| $162.4| | **Total revenues** | **$379.3**| **$305.3**| **$435.2**| Receivables, Contract Assets, and Contract Liabilities (in millions) | Category | 2021 | 2020 | | :------------------------------------------------ | :---- | :---- | | Accounts receivable and retention, net | $28.9 | $43.5 | | Costs and estimated earnings in excess of billings on uncompleted contracts | $10.4 | $2.3 | | Billings in excess of costs and estimated earnings on uncompleted contracts | $6.8 | $8.5 | | Variable consideration | $62.0 | $62.0 | | Other deferred revenue | $6.5 | $4.9 | [14. Leases - The Company As Lessor](index=82&type=section&id=14.%20Leases%20-%20The%20Company%20As%20Lessor) This note details A&B's activities as a lessor, primarily within its Commercial Real Estate segment - A&B provided rent relief to tenants due to COVID-19, accounting for eligible concessions outside the lease modification framework[396](index=396&type=chunk) - Contractual future lease payments to be received on non-cancelable operating leases totaled **$947.5 million** as of December 31, 2021[403](index=403&type=chunk) Impact of Revenue Reductions (Increases) Related to Tenant Collectability (in millions) | Category | 2021 | 2020 | | :-------------------------------------------------------------------- | :---- | :---- | | Total revenue reductions (increases) - tenant collectability assessments and allowance for doubtful accounts | $(2.9) | $19.0 | | Other relief modifications and other adjustments | $7.5 | $6.4 | | **Total revenue reductions (increases)** | **$4.6**| **$25.4**| Property Under Operating Leases, Net (in millions) | Category | 2021 | 2020 | | :-------------------------------- | :-------- | :-------- | | Leased property - real estate | $1,563.2 | $1,525.3 | | Less: Accumulated depreciation | $(182.2) | $(152.2) | | **Property under operating leases, net** | **$1,381.0**| **$1,373.1**| Total Rental Income (in millions) | Category | 2021 | 2020 | | :---------------------- | :---- | :---- | | Lease payments | $123.6| $113.7| | Variable lease payments | $56.0 | $39.3 | | **Total rental income** | **$179.6**| **$153.0**| [15. Leases - The Company As Lessee](index=83&type=section&id=15.%20Leases%20-%20The%20Company%20As%20Lessee) This note outlines A&B's lease arrangements as a lessee for land, office space, and equipment - Weighted-average remaining lease term for operating leases was **12.1 years**, and for finance leases was **2.1 years**, as of December 31, 2021[408](index=408&type=chunk) Lease Cost - Operating and Finance Leases (in millions) | Category | 2021 | 2020 | | :-------------------------------------- | :---- | :---- | | Operating lease cost | $4.8 | $4.6 | | Finance lease cost: | | | | Amortization of right-of-use assets | $1.3 | $1.2 | | Interest on lease liabilities | $0.1 | $0.1 | | **Total lease cost** | **$6.2**| **$5.9**| | Short-term lease cost | $0.9 | $0.6 | | Variable lease cost | $0.8 | $0.6 | Future Lease Payments (in millions) | Year | Operating Leases | Finance Leases | | :------------------------ | :--------------- | :------------- | | 2022 | $4.8 | $1.0 | | 2023 | $3.7 | $0.8 | | 2024 | $3.0 | $0.2 | | 2025 | $1.5 | — | | 2026 | $1.4 | — | | Thereafter | $12.0 | — | | **Total lease payments** | **$26.4** | **$2.0** | | Less: Interest | $(7.0) | $(0.1) | | **Total lease liabilities** | **$19.4** | **$1.9** | [16. Share-Based Payment Awards](index=84&type=section&id=16.%20Share-Based%20Payment%20Awards) This note describes A&B's 2012 Incentive Compensation Plan and related stock unit activity - The 2012 Incentive Compensation Plan had **1.0 million shares remaining available for grants** as of December 31, 2021[411](index=411&type=chunk) - As of December 31, 2021, **$6.3 million of unrecognized compensation cost** related to non-vested RSUs is expected to be recognized over a weighted-average period of **1.7 years**[417](index=417&type=chunk) Non-Vested Restricted Stock Unit Activity (Year Ended December 31, 2021) | Metric | 2012 Plan Restricted Stock Units (thousands) | Weighted-Average Grant-date Fair Value | | :------------------------------------ | :------------------------------------------- | :------------------------------------- | | Outstanding, January 1, 2021 | 550.5 | $25.44 | | Granted | 376.6 | $16.63 | | Vested | (167.4) | $20.48 | | Canceled | (82.0) | $29.62 | | **Outstanding, December 31, 2021** | **677.7** | **$21.26** | Share-Based Expense (in millions) | Metric | 2021 | 2020 | 2019 | | :---------------------------------------- | :---- | :---- | :---- | | Time-based and market-based restricted stock units | $5.9 | $5.8 | $5.4 | | **Total share-based expense** | **$5.9**| **$5.8**| **$5.4**| [17. Employee Benefit Plans](index=86&type=section&id=17.%20Employee%20Benefit%20Plans) This note details A&B's employee benefit plans, including the termination of its Defined Benefit Plans - The Company is terminating its Defined Benefit Plans, effective May 31, 2021, expecting **$34 million to $48 million in cash contributions** and **$80 million to $95 million in pre-tax non-cash pension settlement charges** in 2022[177](index=177&type=chunk)[425](index=425&type=chunk) - The pension plan assets are managed with a liability-driven investment strategy, weighted towards **fixed income securities (98% in 2021)**[429](index=429&type=chunk)[430](index=430&type=chunk) - A&B contributed **$3.9 million to multiemployer defined benefit pension plans** in 2021 and **$0.6 million to its 401(k) plans** for matching contributions[447](index=447&type=chunk)[448](index=448&type=chunk) Funded Status of Defined Benefit Plans (in millions) | Metric | 2021 | 2020 | | :------------------------------------ | :-------- | :-------- | | Pension Benefits: | | | | Benefit obligation at end of year | $227.2 | $218.7 | | Fair value of plan assets at end of year | $186.6 | $200.6 | | **Funded Status (Recognized Liability)** | **$(40.6)** | **$(18.1)** | | Other Post-retirement Benefits: | | | | Benefit obligation at end of year | $12.6 | $13.5 | | **Funded Status (Recognized Liability)** | **$(12.6)** | **$(13.5)** | | Non-qualified Plan Benefits: | | | | Benefit obligation at end of year | $3.1 | $3.1 | | **Funded Status (Recognized Liability)** | **$(3.1)** | **$(3.1)** | Net Periodic Benefit Cost (in millions) | Component of Net Periodic Benefit Cost | Pension Benefits (2021) | Other Post-retirement Benefits (2021) | Non-qualified Plan Benefits (2021) | | :------------------------------------- | :---------------------- | :------------------------------------ | :--------------------------------- | | Service cost | $(1.2) | $(0.1) | — | | Interest cost | $(5.1) | $(0.3) | — | | Expected return on plan assets | $5.0 | — | — | | Amortization of net loss | $(2.5) | — | $(0.1) | | **Net periodic benefit cost** | **$(3.8)** | **$(0.4)** | **$(0.1)** | [18. Income Taxes](index=92&type=section&id=18.%20Income%20Taxes) This note details A&B's income tax expense and deferred tax assets and liabilities - As a REIT, A&B is generally allowed a deduction for dividends paid and is not subject to federal corporate income tax on distributed taxable income[451](index=451&type=chunk) - The valuation allowance increased by **$5.6 million in 2021 to $109.6 million**, reflecting the Company's assessment that U.S. and state deferred tax assets are not more likely than not to be realized[457](index=457&type=chunk) - As of December 31, 2021, the Company had gross federal net operating loss carryforwards of **$201.1 million** and state NOLs of **$204.8 million**[456](index=456&type=chunk) Income Tax Expense (Benefit) from Continuing Operations (in millions) | Category | 2021 | 2020 | 2019 | | :------- | :---- | :---- | :---- | | Current | $— | $(0.4)| $(2.0)| | Deferred | $— | $— | $— | | **Total**| **$—** | **$(0.4)**| **$(2.0)**| Deferred Tax Assets and Liabilities (in millions) | Category | 2021 | 2020 | | :---------------------------- | :-------- | :-------- | | Total deferred tax assets | $116.8 | $118.1 | | Valuation allowance | $(109.6) | $(104.0) | | **Total net deferred tax assets** | **$7.2** | **$14.1** | | Total deferred tax liabilities | $7.2 | $14.1 | | **Net deferred tax assets (liabilities)** | **$—** | **$—** | [19. Earnings Per Share ("EPS")](index=95&type=section&id=19.%20Earnings%20Per%20Share%20(%22EPS%22)) This note provides the calculation of basic and diluted Earnings Per Share (EPS) - Basic and diluted EPS are computed using the two-class method, adjusting for redeemable noncontrolling interests and participating securities[321](index=321&type=chunk) Income (Loss) from Continuing Operations Available to A&B Shareholders (in millions) | Metric | 2021 | 2020 | 2019 | | :-------------------------------------------------------- | :---- | :---- | :----- | | Income (loss) from continuing operations attributable to A&B shareholders | $36.5 | $6.4 | $(34.9)| | Distributions and allocations to participating securities | $(0.3)| $(0.1)| $(0.2) | | **Income (loss) from continuing operations available to A&B shareholders** | **$36.2**| **$6.3** | **$(35.1)**| | Income (loss) from discontinued operations available to A&B shareholders | $(1.1)| $(0.8)| $(1.5) | | **Net income (loss) available to A&B common shareholders** | **$35.1**| **$5.5** | **$(36.6)**| Weighted-Average Number of Shares Outstanding (in millions) | Metric | 2021 | 2020 | 2019 | | :---------------------------------------- | :---- | :---- | :---- | | Denominator for basic EPS | 72.5 | 72.3 | 72.2 | | Effect of dilutive securities | 0.1 | 0.1 | — | | **Denominator for diluted EPS** | **72.6**| **72.4**| **72.2**| [20. Accumulated Other Comprehensive Income (Loss)](index=96&type=section&id=20.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components of accumulated other comprehensive income (loss) - The net change in accumulated other comprehensive income (loss) for 2021 was a loss of **$(20.7) million**, primarily driven by actuarial losses in employee benefit plans[467](index=467&type=chunk) Components of Accumulated Other Comprehensive Loss (in millions) | Category | 2021 | 2020 | | :-------------------------------- | :-------- | :-------- | | Employee benefit plans: | | | | Pension plans | $(74.6) | $(48.9) | | Post-retirement plans | $(2.6) | $(3.6) | | Non-qualified benefit plans | $(0.7) | $(0.8) | | **Total employee benefit plans** | **$(77.9)** | **$(53.3)** | | Interest rate swap | $(2.8) | $(6.7) | | **Accumulated other comprehensive income (loss)** | **$(80.7)** | **$(60.0)** | [21. Related Party Transactions](index=97&type=section&id=21.%20Related%20Party%20Transactions) This note discloses A&B's related party transactions with affiliate entities - Revenues from construction contracts and material sales with affiliate entities were **$9.3 million in 2021**, and expenses were **$1.4 million**[469](index=469&type=chunk) - Receivables from these affiliates were **$1.1 million**, and amounts due to them were **$0.3 million** as of December 31, 2021[469](index=469&type=chunk) - The note receivable with a Land Operations joint venture, which had a carrying value of **$9.5 million in 2020**, was repaid in full in November 2021[470](index=470&type=chunk) [22. Segment Results](index=97&type=section&id=22.%20Segment%20Results) This note provides detailed financial information for A&B's three reportable segments - The Company's reportable segments are **Commercial Real Estate, Land Operations, and Materials & Construction**, with operating results reviewed by the chief operating decision maker[471](index=471&type=chunk) - In Q1 2021, the composition of reportable segments changed, reclassifying activity and results of Company-owned quarries on Maui from Land Operations to Materials & Construction, with historical periods restated[475](index=475&type=chunk) - Materials & Construction segment operating profit (loss) for 2021 includes impairment charges of **$29.0 million** related to long-lived assets, equity method investment, and goodwill[477](index=477&type=chunk) Operating Revenue by Segment (in millions) | Segment | 2021 | 2020 | 2019 | | :----------------------- | :---- | :---- | :---- | | Commercial Real Estate | $173.2| $150.0| $160.6| | Land Operations | $79.9 | $38.7 | $112.2| | Materials & Construction | $126.2| $116.6| $162.4| | **Total operating revenue**| **$379.3**| **$305.3**| **$435.2**| Operating Profit (Loss) by Segment (in millions) | Segment | 2021 | 2020 | 2019 | | :----------------------- | :------ | :------ | :------ | | Commercial Real Estate | $72.6 | $49.8 | $66.2 | | Land Operations | $55.4 | $15.4 | $18.9 | | Materials & Construction | $(40.5) | $(10.5) | $(67.3) | | **Total operating profit (loss)** | **$87.5**| **$54.7**| **$17.8**| [23. Long-lived Assets - Impairments](index=99&type=section&id=23.%20Long-lived%20Assets%20-%20Impairments) This note details the impairment charges recorded for long-lived assets in 2021 - In Q4 2021, A&B recorded **$24.3 million in impairment charges** for Materials & Construction segment assets[479](index=479&type=chunk) - The impairment was driven by downward revisions of management's forecasts on future projected earnings and cash flows due to strategic alternatives review[479](index=479&type=chunk) - Fair value measurements for these impairments were classified as Level 3, using a discount rate of **13.0%** and other unobservable inputs[479](index=479&type=chunk) Changes to Materials & Construction Long-lived Assets (in millions) | Metric | Materials & Construction | | :------------------------------------ | :----------------------- | | Balance, January 1, 2021 | $92.8 | | Additions to long-lived assets | $6.3 | | Depreciation | $(9.1) | | Long-lived asset impairment | $(24.3) | | **Balance, December 31, 2021** | **$65.7** | [24. Long-lived Assets - Held for sale or Disposals](index=100&type=section&id=24.%20Long-lived%20Assets%20-%20Held%20for%20sale%20or%20Disposals) This note details significant asset disposals in 2020 - In Q3 2020, A&B sold its solar power facility in Port Allen for **$17.1 million**, recognizing an **$8.9 million gain** on disposal[481](index=481&type=chunk) - In Q2 2020, the Company sold its 51% ownership interest in GPRM for **$5.0 million**, after recording a **$5.6 million write-down**[482](index=482&type=chunk) - Neither the solar power facility nor the GPRM disposal qualified for presentation as discontinued operations[481](index=481&type=chunk)[482](index=482&type=chunk) [25. Subsequent Events](index=100&type=section&id=25.%20Subsequent%20Events) This note discloses events occurring after the balance sheet date - On February 22, 2022, the Board declared a cash dividend of **$0.19 per share**, payable on April 5, 2022[483](index=483&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=101&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure matters [ITEM 9A. CONTROLS AND PROCEDURES](index=101&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the Company's disclosure controls and internal control over financial reporting were effective - The Company's disclosure controls and procedures were **effective** as of December 31, 2021[486](index=486&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fiscal fourth quarter[487](index=487&type=chunk) - Management assessed and concluded that the Company's internal control over financial reporting was **effective** as of December 31, 2021, based on COSO criteria[489](index=489&type=chunk) - Deloitte & Touche LLP issued an **unqualified audit report** on the Company's internal control over financial reporting[492](index=492&type=chunk) [ITEM 9B. OTHER INFORMATION](index=102&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This item states that there is no other information to report [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=103&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the Company PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=104&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section provides information on A&B's directors, executive officers, and corporate governance practices - Information on directors is incorporated by reference from A&B's 2022 Proxy Statement[498](index=498&type=chunk) - Key executive officers include **Christopher J. Benjamin (CEO and President)**, **Brett A. Brown (EVP and CFO)**, and **Lance K. Parker (EVP and COO)**[500](index=500&type=chunk)[501](index=501&type=chunk)[503](index=503&type=chunk) - Details on the Audit Committee and Code of Ethics are incorporated by reference from the 2022 Proxy Statement[504](index=504&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=105&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive and director compensation is incorporated by reference from the 2022 Proxy Statement - Executive compensation details are incorporated by reference from A&B's 2022 Proxy Statement[504](index=504&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=105&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership is incorporated by reference from the 2022 Proxy Statement and Item 5 - Security ownership information is incorporated by reference from A&B's 2022 Proxy Statement and Item 5 of Part II[505](index=505&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=105&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on related transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Information on related party transactions and director independence is incorporated by reference from A&B's 2022 Proxy Statement[505](index=505&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=105&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from the 2022 Proxy Statement - Principal accounting fees and services information is incorporated by reference from A&B's 2022 Proxy Statement[505](index=505&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=106&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits and financial statement schedules required for the Form 10-K - Financial statements are set forth in Item 8 of Part II[506](index=506&type=chunk) - Schedule III provides details on real estate and accumulated depreciation, with an aggregate tax basis of approximately **$690.8 million** for CRE and Land Operations assets as of December 31, 2021[509](index=509&type=chunk)[512](index=512&type=chunk) - A comprehensive list of exhibits, including organizational documents, material contracts, and compensation plans, is provided[517](index=517&type=chunk)[520](index=520&type=chunk)[526](index=526&type=chunk)[529](index=529&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=117&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item indicates that there is no Form 10-K summary provided [Signatures](index=118&type=section&id=Signatures) This section contains the required signatures certifying the Form 10-K submission - The report is signed by **Christopher J. Benjamin, President and Chief Executive Officer**, and other principal officers and directors[534](index=534&type=chunk)[535](index=535&type=chunk) - The report was signed on **February 25, 2022**[534](index=534&type=chunk)[535](index=535&type=chunk)

Alexander & Baldwin, Inc. (NYSE:ALEX) Q3 2021 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants Steve Swett – Investor Relations Chris Benjamin – President and Chief Executive Officer Lance Parker – Chief Operating Officer Brett Brown – Chief Financial Officer Conference Call Participants Daniel Santos – Piper Sandler Sheila McGrath – Evercore Marla Backer – Sidoti Operator Good day, and welcome to the Alexander & Baldwin Third Quarter 2021 Earnings Conference Call. [Operator Instruc ...