Alexander & Baldwin (ALEX) Q4 2024 Earnings Call February 27, 2025 05:00 PM ET Company Participants Michael Imanaka - Sr. Development ManagerLance Parker - President & CEOClayton Chun - Executive VP, Treasurer & CFOGaurav Mehta - Managing DirectorKit Millan - Senior Vice President of Asset ManagementRob Stevenson - Managing Director - Head of Real Estate ResearchAlexander Goldfarb - Managing DirectorMitch Germain - Managing Director - Real Estate Research Conference Call Participants Brendan McCarthy - Equi ...

Financial Performance - Net income available to A&B common shareholders for Q4 2024 was $12.4 million, or $0.17 per diluted share, compared to a loss of $3.5 million in Q4 2023[1][5] - Full-year 2024 net income available to common shareholders was $60.5 million, or $0.83 per diluted share, up from $29.7 million, or $0.41 per diluted share in 2023[1][5] - Net income attributable to A&B shareholders for the year ended December 31, 2024, was $60,537 million, a significant increase from $32,963 million in 2023, representing an 83.6% growth[21] - Basic earnings per share from continuing operations available to A&B shareholders increased to $0.88 for the year ended December 31, 2024, compared to $0.56 in 2023, reflecting a 57.1% increase[21] - Consolidated net income for 2024 was $60,537,000, an increase from $32,963,000 in 2023[45] Funds From Operations (FFO) - Funds From Operations (FFO) for Q4 2024 was $22.0 million, or $0.30 per diluted share, compared to $19.8 million, or $0.27 per diluted share in Q4 2023[6][8] - Adjusted FFO for the full year 2024 was $80.1 million, or $1.10 per diluted share, an increase from $63.6 million, or $0.87 per diluted share in 2023[6][8] - FFO for Q4 2024 was $21,952,000, compared to $19,824,000 in Q4 2023, representing a 10.7% increase[37] - Adjusted FFO for Q4 2024 was $14,178,000, an increase from $12,182,000 in Q4 2023, marking a 16.4% growth[37] - The forward-looking guidance for FFO per diluted share for 2025 is estimated between $1.13 and $1.20[38] Revenue and Operating Profit - Total segment operating revenue for the three months ended December 31, 2024, was $62,454 million, an increase of 18.2% compared to $52,867 million in the same period of 2023[21] - Operating profit for the Commercial Real Estate segment was $21,990 million, up 29.1% from $17,019 million year-over-year[21] - Consolidated EBITDA for 2024 reached $120,192,000, compared to $93,248,000 in 2023, reflecting a growth of approximately 29%[45] - Consolidated Adjusted EBITDA for 2024 was $122,589,000, up from $108,085,000 in 2023, indicating an increase of about 13.4%[45] Cash and Liquidity - Cash and cash equivalents rose to $33,436 million as of December 31, 2024, compared to $13,517 million in 2023, indicating a substantial improvement in liquidity[23] - The company reported net cash provided by operating activities of $97,991 million for the year ended December 31, 2024, compared to $67,092 million in 2023, a 46.1% increase[26] - The company experienced a net increase in cash, cash equivalents, and restricted cash of $19,919 million for the year ended December 31, 2024, compared to a decrease of $20,656 million in 2023[26] Assets and Liabilities - Total assets increased to $1,670,432 million in 2024 from $1,646,241 million in 2023, marking a growth of 1.5%[23] - Total liabilities rose to $666,889 million in 2024, up from $643,230 million in 2023, reflecting a 3.7% increase[23] - Total debt as of December 31, 2024, was $474,837,000, slightly up from $463,964,000 in 2023[41] - Net debt decreased to $441,748,000 in 2024 from $450,596,000 in 2023[41] Investments and Acquisitions - The company began construction of a 29,550 square foot warehouse and distribution center at Maui Business Park II, expected to be operational in late 2025[6][14] - The company closed on the acquisition of an 81,500 square foot food and distribution facility for $29.7 million in September 2024[6][13] - Capital expenditures for acquisitions were $29,826 million in 2024, significantly higher than $9,464 million in 2023, indicating aggressive investment strategies[26] Operational Metrics - Leased occupancy as of December 31, 2024, was 94.6%, with retail portfolio occupancy at 95.2% and industrial portfolio occupancy at 95.2%[6][12] - CRE Same-Store Net Operating Income (NOI) growth for Q4 2024 was 2.4%, and 2.9% for the full year, compared to 4.3% in 2023[6][10] - Same-Store NOI for Q4 2024 was $31,202,000, reflecting a 2.4% increase from $30,471,000 in Q4 2023[31] - Same-Store NOI excluding collections of amounts reserved in prior years for Q4 2024 was $30,969,000, up 2.9% from $30,092,000 in Q4 2023[31] Strategic Initiatives - The company executed a simplification strategy, selling legacy assets including Grace Pacific, LLC, enhancing its focus on commercial real estate in Hawai'i[33] - The company amended its revolving credit facility, extending the term to October 2028, with a borrowing capacity of $450.0 million[6][16] Risks and Forward-Looking Statements - Forward-looking statements indicate potential risks and uncertainties that could impact future performance, including market conditions and legacy asset evaluations[46] - The company does not undertake any obligation to update its forward-looking statements, which are subject to various risks[47]

Core Insights - Alexander & Baldwin, Inc. reported a net income of $12.4 million, or $0.17 per diluted share, for Q4 2024, and a full-year net income of $60.5 million, or $0.83 per diluted share [1][4][5] - The company achieved a Commercial Real Estate (CRE) operating profit of $22.0 million for Q4 2024 and $89.4 million for the full year [1][4][5] - The CEO expressed optimism for 2025, highlighting strong occupancy rates and leasing volumes, indicating potential for continued earnings growth [4] Q4 2024 Highlights - Net income available to A&B common shareholders was $12.4 million, compared to a loss of $3.5 million in Q4 2023 [5][6] - Funds From Operations (FFO) for Q4 2024 was $22.0 million, or $0.30 per diluted share, up from $19.8 million, or $0.27 per diluted share in Q4 2023 [6][34] - Same-Store Net Operating Income (NOI) growth was 2.4%, with a 2.9% increase when excluding collections of prior year reserves [6][28] Full-Year 2024 Highlights - Full-year net income available to A&B common shareholders was $60.5 million, compared to $29.7 million in 2023 [5][6] - Full-year FFO reached $100.0 million, or $1.37 per diluted share, compared to $79.4 million, or $1.09 per diluted share in 2023 [6][34] - Same-Store NOI growth for the full year was 2.9%, with a 3.3% increase when excluding collections of prior year reserves [6][28] Financial Performance - The company reported a total operating revenue of $62.5 million for Q4 2024, compared to $52.9 million in Q4 2023 [17] - Selling, general, and administrative expenses decreased by $4.2 million, or 12.4%, compared to 2023 [6][7] - The company closed on the acquisition of an 81,500-square-foot food and distribution facility for $29.7 million [13] Investment and Growth Activities - Construction began on a 29,550-square-foot warehouse and distribution center at Maui Business Park II, expected to be operational by late 2025 [6][13] - The company established a new $200 million at-the-market equity offering program [6] - The company amended its revolving credit facility, extending the term to October 2028, with a borrowing capacity of $450 million [6][13] 2025 Guidance - The company projects net income per diluted share for 2025 to be between $0.64 and $0.71, and FFO per diluted share to be between $1.13 and $1.20 [15][35] - CRE Same-Store NOI growth is expected to be between 2.4% and 3.2% for 2025 [15][35]

Company Overview - Alexander & Baldwin, Inc. (A&B) is the only publicly-traded real estate investment trust focusing exclusively on Hawai'i commercial real estate [2] - A&B is the largest owner of grocery-anchored neighborhood shopping centers in Hawai'i, managing approximately 4.0 million square feet of commercial space [2] - The company owns and operates 21 retail centers, 14 industrial assets, four office properties, and 142 acres of ground lease assets [2] - A&B has a 155-year history and has played a leadership role in various industries including agriculture, transportation, tourism, construction, residential, and commercial real estate [2] Dividend Announcement - The Board of Directors of A&B approved a first quarter 2025 dividend of $0.225 per share [1] - The dividend is scheduled to be payable on April 7, 2025, to shareholders of record as of the close of business on March 14, 2025 [1]

Core Viewpoint - Alexander & Baldwin, Inc. announced its 2024 dividend distributions for common shares, detailing the amounts and dates for shareholders [1][2]. Dividend Distribution Summary - The total dividend distribution for 2024 is $0.8925 per share, broken down as follows: - $0.2225 per share for the dividends payable on April 5, 2024 - $0.2225 per share for the dividends payable on July 8, 2024 - $0.2225 per share for the dividends payable on October 7, 2024 - $0.2250 per share for the dividends payable on January 8, 2025 [2]. Company Overview - Alexander & Baldwin, Inc. is the only publicly-traded real estate investment trust focused exclusively on Hawai'i commercial real estate and is the largest owner of grocery-anchored neighborhood shopping centers in the state [4]. - The company owns, operates, and manages approximately 4.0 million square feet of commercial space in Hawai'i, including 21 retail centers, 14 industrial assets, four office properties, and 142 acres of ground lease assets [4]. - Over its 155-year history, the company has played a leadership role in the development of various industries in Hawai'i, including agriculture, transportation, tourism, construction, residential, and commercial real estate [4].

Core Viewpoint - Alexander & Baldwin, Inc. (A&B) will report its fourth quarter and full-year 2024 results on February 27, 2025, and will host a conference call and webcast to discuss the performance [1][2]. Company Overview - A&B is the only publicly-traded real estate investment trust focused exclusively on Hawai'i commercial real estate and is the largest owner of grocery-anchored neighborhood shopping centers in the state [5]. - The company owns, operates, and manages approximately 4.0 million square feet of commercial space in Hawai'i, which includes 21 retail centers, 14 industrial assets, and four office properties, along with 142 acres of ground lease assets [5]. - Over its 155-year history, A&B has adapted to the state's economy and has played a significant role in the development of various industries, including agriculture, transportation, tourism, construction, residential, and commercial real estate [5]. Conference Call Details - The conference call and webcast will feature discussions on the operating and financial performance for the fourth quarter and full-year 2024, followed by a Q&A session with sell-side research analysts [2]. - Key participants in the call will include Lance Parker (CEO), Clayton Chun (CFO), and other senior management members [3]. - Access to the webcast will be available online, and earnings documents will be downloadable from A&B's investor website after the market closes on the reporting date [4].

Group 1: Postal Realty Trust (PSTL) - Postal Realty Trust is a real estate investment trust that owns and manages properties leased to the United States Postal Service [1] - The Zacks Consensus Estimate for its current year earnings has increased by 2.9% over the last 60 days [1] - The company has a dividend yield of 7.5%, which is higher than the industry average of 4.8% [1] Group 2: Telefonica (TEF) - Telefonica provides mobile and fixed communication services in Europe and Latin America [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 7.4% over the last 60 days [2] - The company has a dividend yield of 5.6%, significantly above the industry average of 0.8% [2] Group 3: Alexander & Baldwin Holdings (ALEX) - Alexander & Baldwin Holdings is a real estate investment trust that owns, operates, and manages retail, industrial, and office space primarily in Hawai`i and on the U.S. Mainland [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 2.3% over the last 60 days [3] - The company has a dividend yield of 5.2%, which is higher than the industry average of 4.8% [3]

Core Viewpoint - Alexander & Baldwin Holdings, Inc. (ALEX) has experienced a downtrend with a 7.9% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to analysts' positive earnings outlook [1]. Group 1: Technical Indicators - The stock's Relative Strength Index (RSI) is at 23.81, indicating it is oversold and may soon reverse its trend towards a more balanced supply and demand [4]. - RSI is a momentum oscillator that helps identify oversold conditions when the reading falls below 30, allowing investors to spot potential entry opportunities [2]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts to raise earnings estimates for ALEX, resulting in a 1.8% increase in the consensus EPS estimate over the last 30 days, which typically correlates with price appreciation [5]. - ALEX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further indicating a potential turnaround [5].

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Alexander & Baldwin Holdings, Inc. identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: Earnings Growth - Earnings growth is a critical factor for investors, with double-digit growth being particularly attractive as it signals strong future prospects [5]. - Alexander & Baldwin Holdings has a historical EPS growth rate of 15.3%, with projected EPS growth of 15.1% this year, significantly outperforming the industry average of 1.2% [6]. Group 2: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, allowing them to expand without relying on external funding [7]. - The year-over-year cash flow growth for Alexander & Baldwin Holdings is currently 0.5%, compared to an industry average of -4.7% [7]. - The company's annualized cash flow growth rate over the past 3-5 years stands at 35.7%, well above the industry average of 2.3% [8]. Group 3: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements, making them an important consideration for investors [9]. - There has been a 1.8% upward revision in the current-year earnings estimates for Alexander & Baldwin Holdings over the past month [9]. Group 4: Overall Assessment - Alexander & Baldwin Holdings has achieved a Growth Score of B and a Zacks Rank of 2, indicating its potential as a solid choice for growth investors [10][12].

Group 1 - The Board of Directors of Alexander & Baldwin, Inc. approved an increased fourth quarter 2024 dividend of $0.225 per share, up from $0.2225 per share in the previous quarter [1] - The dividend is scheduled to be payable on January 8, 2025, to shareholders of record as of December 20, 2024 [1] Group 2 - Alexander & Baldwin, Inc. is the only publicly-traded real estate investment trust focused exclusively on Hawai'i commercial real estate [2] - The company is the largest owner of grocery-anchored neighborhood shopping centers in Hawai'i, managing approximately 4.0 million square feet of commercial space [2] - A&B has a diverse portfolio that includes 21 retail centers, 14 industrial assets, four office properties, and 142 acres of ground lease assets [2] - Over its 154-year history, A&B has played a significant role in the development of various industries in Hawai'i, including agriculture, transportation, tourism, construction, residential, and commercial real estate [2]