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Seaport Entertainment Group Inc.(SEG) - 2025 Q1 - Earnings Call Transcript
2025-05-13 13:30
Financial Data and Key Metrics Changes - Total consolidated revenues for Q1 2025 were $16.1 million, representing a 12% year-over-year decrease compared to pro forma Q1 2024 [18] - First quarter net loss attributed to common stockholders was $31.9 million, an improvement of $12.2 million or 28% versus the comparable period in 2024 [24] - Non-GAAP adjusted net loss attributable to common stockholders for Q1 2025 was $22.8 million, representing an improvement of $11.9 million or more than 34% versus the comparable period in 2024 [24] - General and administrative expenses during the quarter were just under $10 million, resulting in a year-over-year reduction of 41% [22] Business Line Data and Key Metrics Changes - Hospitality segment consolidated revenue decreased 28% compared to pro forma Q1 2024, with same-store hospitality revenues down 12% year-over-year [19] - Overall hospitality revenues declined 16%, driven by a 33% reduction at the Tin Building [6] - Entertainment revenue increased 18% versus Q1 2024, benefiting from increased Seaport Winter activation revenue and higher Aviators ticket sales [20] - Landlord segment operating EBITDA increased 13% versus Q1 2024, primarily due to better expense management [21] Market Data and Key Metrics Changes - The Las Vegas Aviators reached the midpoint of the 2025 season in first place atop the AAA Minor League standings, indicating strong performance [11] - The company hosted various events, including the Las Vegas College Baseball Classic and the West Coast Conference Baseball Tournament, contributing to ticket sales and attendance [11] Company Strategy and Development Direction - The company aims to achieve breakeven in 2026, profitability in 2027, and stabilization of the current asset base by 2028 [4] - Key initiatives include optimizing the Tin Building operations, monetizing non-cash flowing assets, and enhancing the Las Vegas Ballpark utilization [4] - The company is focused on transforming the Seaport into a year-round vibrant neighborhood, enhancing its entertainment and hospitality offerings [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges of cash burn and emphasized the importance of strategic initiatives to improve financial performance [4] - The company is optimistic about the future, citing positive press and customer interest surrounding new openings and events [8][10] - Management expressed confidence in the ongoing marketing process for 250 Water Street, with over 130 potential buyers or partners showing interest [14] Other Important Information - Capital expenditures in Q1 2025 totaled $16.5 million, primarily related to the completion of the Gatano NYC build-out and initial work for Meow Wolf [25] - Long-term debt outstanding as of March 31 was $102.4 million, unchanged from year-end 2024, with a negative net debt position benefiting from healthy cash balances [25] Q&A Session Summary Question: What are the expectations for the new event space at Pier 17? - Management highlighted the event space's capacity of approximately 800 people and its strategic location, which will enhance year-round usage and attract more events [10] Question: How is the company addressing the cash burn issue? - The company is implementing strategies to achieve breakeven by 2026 and is focused on optimizing operations and enhancing revenue streams [4] Question: Can you provide an update on the performance of the Las Vegas Aviators? - The Aviators are currently in first place in the AAA Minor League standings, showcasing strong performance and effective ticket sales strategies [11]
Seaport Entertainment Group Inc.(SEG) - 2025 Q1 - Quarterly Report
2025-05-12 20:38
[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to known and unknown risks and uncertainties - The report contains forward-looking statements regarding future operations, economic performance, capital requirements, technology impact, and development opportunities. These statements are subject to known and unknown risks and uncertainties[6](index=6&type=chunk)[7](index=7&type=chunk) - Key risks include those related to the separation from Howard Hughes Holdings Inc. (HHH), macroeconomic conditions (volatility in capital markets, inflation, interest rates, recession), changes in consumer spending, real estate industry risks, ability to obtain capital, supply chain disruptions, concentration of properties in New York City and Las Vegas, extreme weather, cybersecurity, and ability to attract and retain key personnel[7](index=7&type=chunk)[9](index=9&type=chunk) [Part I Financial Information](index=8&type=section&id=Part%20I%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated and combined financial statements of Seaport Entertainment Group Inc., including the balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, investments, debt, and other financial disclosures [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Total assets | $718,414 | $743,556 | | Total liabilities | $177,355 | $172,174 | | Total equity | $541,059 | $571,382 | - Total assets decreased by **$25.1 million**, primarily driven by a reduction in cash and cash equivalents. Total equity decreased by **$30.3 million**[12](index=12&type=chunk) [Consolidated and Combined Statements of Operations](index=9&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific reporting periods Consolidated and Combined Statements of Operations Highlights (Three months ended March 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Total revenues | $16,069 | $14,511 | | Total expenses | $48,771 | $45,840 | | Operating loss | $(32,702) | $(31,321) | | Net loss | $(31,538) | $(44,078) | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | | Basic EPS | $(2.51) | $(7.98) | | Diluted EPS | $(2.51) | $(7.98) | - Total revenues increased by **$1.56 million (11%)** year-over-year. Net loss decreased by **$12.54 million (28%)** year-over-year, and net loss attributable to common stockholders decreased by **$12.19 million (28%)**. Basic and diluted EPS improved from **$(7.98)** to **$(2.51)**[14](index=14&type=chunk)[174](index=174&type=chunk) [Consolidated and Combined Statements of Cash Flows](index=10&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities Consolidated and Combined Statements of Cash Flows Highlights (Three months ended March 31, in thousands) | Activity | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Cash used in operating activities | $(20,478) | $(18,796) | | Cash used in investing activities | $(14,497) | $(28,578) | | Cash (used in) provided by financing activities | $(870) | $47,659 | | Net change in cash, cash equivalents and restricted cash | $(35,845) | $285 | | Cash, cash equivalents and restricted cash at end of period | $132,000 | $44,130 | - Cash used in operating activities increased by **$1.7 million**. Cash used in investing activities decreased by **$14.1 million**, primarily due to the consolidation of the Tin Building by Jean-Georges. Cash provided by financing activities decreased by **$48.5 million**, shifting to cash used, mainly due to the elimination of net transfers from HHH post-separation[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) [Consolidated and Combined Statements of Shareholders' Equity](index=11&type=section&id=Consolidated%20and%20Combined%20Statements%20of%20Shareholders'%20Equity) This section presents changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Consolidated and Combined Statements of Shareholders' Equity Highlights (in thousands) | Metric | December 31, 2024 | March 31, 2025 | | :-------------------------------- | :---------------- | :------------- | | Common stock (shares) | 12,708 | 12,699 | | Common stock (amount) | $127 | $127 | | Additional paid in capital | $613,015 | $614,580 | | Accumulated deficit | $(51,660) | $(83,548) | | Total stockholders' equity | $561,482 | $531,159 | | Noncontrolling interest in subsidiary | $9,900 | $9,900 | | Total equity | $571,382 | $541,059 | - Total stockholders' equity decreased by **$30.3 million**, primarily due to a net loss of **$31.89 million**, partially offset by **$2.09 million** in stock compensation[18](index=18&type=chunk) [Notes to Consolidated and Combined Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20and%20Combined%20Financial%20Statements) These notes provide comprehensive details on the company's accounting policies, the impact of its separation from HHH, specific financial instruments, and operational segments, offering context for the presented financial statements [Note 1. Summary of Significant Accounting Policies](index=12&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's formation as a spin-off from HHH, its three operating segments (Hospitality, Entertainment, Landlord Operations), and the basis of presentation for its financial statements, which transitioned from carve-out combined statements to standalone consolidated statements post-separation - Seaport Entertainment Group Inc. (SEG) was incorporated in 2024 and spun off from Howard Hughes Holdings Inc. (HHH) on July 31, 2024, becoming an independent, publicly traded company[20](index=20&type=chunk) - The company operates through three segments: Hospitality, Entertainment, and Landlord Operations, primarily focused on entertainment and real estate assets in New York City and Las Vegas[21](index=21&type=chunk)[40](index=40&type=chunk) - Financial statements for periods until July 31, 2024, are combined carve-out statements from HHH, while periods from August 1, 2024, onwards are standalone consolidated statements[24](index=24&type=chunk) [Note 2. Investments in Unconsolidated Ventures](index=24&type=section&id=Note%202.%20Investments%20in%20Unconsolidated%20Ventures) This note details the company's equity method investments, including The Lawn Club and Jean-Georges Restaurants. It highlights the significant change in the Tin Building by Jean-Georges, which was consolidated into the company's financial statements as of January 1, 2025, due to SEG becoming its primary beneficiary Investments in Unconsolidated Ventures (in thousands, except percentages) | Investment | Ownership Interest (March 31, 2025) | Carrying Value (March 31, 2025) | Share of Earnings (Losses) (Three months ended March 31, 2025) | | :------------------------ | :---------------------------------- | :------------------------------ | :----------------------------------------------------------- | | The Lawn Club | 50% | $4,658 | $(157) | | Tin Building by Jean-Georges | 0% (Consolidated Jan 1, 2025) | $0 | $0 | | Jean-Georges Restaurants | 25% | $14,803 | $327 | | **Total** | | **$19,461** | **$170** | - As of January 1, 2025, the Tin Building by Jean-Georges was consolidated into the company's financial statements, as SEG became its primary beneficiary, leading to a preliminary allocation of **$7.75 million** in net assets assumed[76](index=76&type=chunk)[79](index=79&type=chunk) - The company holds a **25%** interest in Jean-Georges Restaurants, acquired in March 2022 for **$45.0 million**, and has a warrant to acquire an additional **20%** interest[82](index=82&type=chunk)[83](index=83&type=chunk) [Note 3. Other Assets and Liabilities](index=30&type=section&id=Note%203.%20Other%20Assets%20and%20Liabilities) This note provides a breakdown of the significant components comprising 'Other assets, net' and 'Accounts payable and other liabilities' on the consolidated balance sheets Other Assets, Net (in thousands) | Component | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Intangibles | $16,590 | $17,379 | | Security and other deposits | $11,015 | $11,116 | | Food and beverage and merchandise inventory | $2,909 | $1,875 | | Prepaid expenses | $3,351 | $4,862 | | Other assets, net | $34,060 | $35,801 | Accounts Payable and Other Liabilities (in thousands) | Component | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Deferred income | $13,894 | $3,946 | | Accounts payable and accrued expenses | $9,149 | $10,998 | | Accrued payroll and other employee liabilities | $2,178 | $5,961 | | Accrued interest | $1,188 | $84 | | Total accounts payable and other liabilities | $28,442 | $23,111 | [Note 4. Mortgages Payable, Net](index=31&type=section&id=Note%204.%20Mortgages%20Payable,%20Net) This note summarizes the company's mortgage obligations, distinguishing between fixed-rate and variable-rate debt, and provides details on interest rates, maturity dates, and collateral Mortgages Payable, Net (in thousands) | Type of Debt | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Fixed-rate debt | $41,087 | $41,087 | | Variable-rate debt | $61,300 | $61,300 | | Unamortized deferred financing costs | $(782) | $(794) | | **Mortgages payable, net** | **$101,605** | **$101,593** | Secured Mortgages Payable Details (March 31, 2025, in thousands) | Type of Debt | Principal | Interest Rate | Maturity Date | | :-------------------------- | :-------- | :------------ | :------------ | | Fixed rate | $41,087 | 4.92% | December 15, 2038 | | Variable rate | $61,300 | 11.33% | July 1, 2029 | - The variable-rate debt on 250 Water Street was amended on January 1, 2025, increasing the margin from **5.0%** to **7.0%**, but a total return swap with the lender results in no change in cash flows to the company, maintaining an assumed rate of SOFR + **4.5%**[92](index=92&type=chunk)[93](index=93&type=chunk) [Note 5. Fair Value](index=33&type=section&id=Note%205.%20Fair%20Value) This note presents the fair value measurement hierarchy for the company's financial instruments, categorizing inputs into Level 1, 2, or 3 based on observability, and explains the valuation methods used for debt Fair Value Measurement Hierarchy (March 31, 2025, in thousands) | Instrument | Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | | :-------------------------- | :------------------- | :-------------- | :------------------- | | Cash and Restricted cash | Level 1 | $132,000 | $132,000 | | Accounts receivable, net | Level 3 | $11,336 | $11,336 | | Fixed-rate debt | Level 2 | $41,087 | $40,131 | | Variable-rate debt | Level 2 | $61,300 | $61,300 | - The fair value of fixed-rate debt is estimated using a discounted future cash payment model, while variable-rate debt approximates fair value due to its adjustable interest rate[97](index=97&type=chunk)[98](index=98&type=chunk) [Note 6. Commitments and Contingencies](index=33&type=section&id=Note%206.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal proceedings and its operating lease commitments, stating that no material adverse effects are expected from current litigation - Management believes that liabilities from normal course of business legal actions are not expected to have a material effect on the company's financial statements or liquidity[99](index=99&type=chunk) Contractual Rental Expense (in thousands) | Period | Contractual Rental Expense | | :-------------------------- | :------------------------- | | Three months ended March 31, 2025 | $1,600 | | Three months ended March 31, 2024 | $2,100 | [Note 7. Income Taxes](index=35&type=section&id=Note%207.%20Income%20Taxes) This note explains the company's income tax provision for interim periods, noting that no income tax benefit was recognized due to operating losses - The company recognized **zero** income tax benefit for the three months ended March 31, 2025, and 2024, due to operating losses and an assessment of available evidence[102](index=102&type=chunk) [Note 8. Revenues](index=35&type=section&id=Note%208.%20Revenues) This note disaggregates the company's revenues by source, detailing amounts from contracts with customers and lease-related revenues, and provides information on contract liabilities and remaining performance obligations Revenues Disaggregated by Source (Three months ended March 31, in thousands) | Revenue Source | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Hospitality revenue | $7,735 | $4,077 | | Entertainment revenue | $4,209 | $3,564 | | Other revenue | $336 | $333 | | **Total revenues from contracts with customers** | **$12,280** | **$7,974** | | Rental revenue | $3,789 | $6,537 | | **Total revenues** | **$16,069** | **$14,511** | Contract Liabilities (in thousands) | Period | Contract Liabilities | | :-------------------------- | :------------------- | | Balance at December 31, 2024 | $3,940 | | Consideration received during the period | $12,946 | | Consideration earned during the period | $(2,992) | | Balance at March 31, 2025 | $13,894 | - The aggregate amount of transaction price allocated to remaining unsatisfied performance obligations as of March 31, 2025, is **$22.85 million**, expected to be recognized over less than 1 year (**$15.60 million**), 1-2 years (**$2.41 million**), and 3+ years (**$4.84 million**)[106](index=106&type=chunk) [Note 9. Leases](index=37&type=section&id=Note%209.%20Leases) This note details the company's lessee and lessor arrangements, including operating lease right-of-use assets, lease obligations, and future minimum lease payments for both roles Leased Assets and Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets, net | $38,078 | $38,682 | | Operating lease obligations | $47,308 | $47,470 | Future Minimum Lease Payments (Lessee) as of March 31, 2025 (in thousands) | Period | Operating Leases | | :-------------------------- | :--------------- | | Remainder of 2025 | $3,296 | | 2026 | $3,427 | | 2027 | $2,760 | | 2028 | $2,819 | | 2029 | $2,880 | | Thereafter | $222,847 | | **Total lease payments** | **$238,029** | | Less: imputed interest | $(190,721) | | **Present value of lease liabilities** | **$47,308** | Total Future Minimum Rents (Lessor) as of March 31, 2025 (in thousands) | Period | Total Minimum Rent | | :-------------------------- | :----------------- | | Remainder of 2025 | $8,454 | | 2026 | $8,799 | | 2027 | $8,910 | | 2028 | $9,000 | | 2029 | $9,131 | | Thereafter | $55,400 | | **Total** | **$99,694** | [Note 10. Equity](index=39&type=section&id=Note%2010.%20Equity) This note details the calculation of earnings per share (EPS) and provides information on the noncontrolling interest in a subsidiary, including preferred distributions Net Loss Per Share Attributable to Common Stockholders (Three months ended March 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----- | :----- | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | | Weighted average shares outstanding - basic and diluted | 12,694 | 5,522 | | Net loss per share attributable to common stockholders - basic and diluted | $(2.51) | $(7.98) | - On July 31, 2024, a subsidiary issued **10,000 shares** of **14.000% Series A preferred stock** with an aggregate liquidation preference of **$10.0 million**, recorded as Noncontrolling interest in subsidiary[117](index=117&type=chunk) - Preferred distributions to noncontrolling interest in subsidiary amounted to **$(350) thousand** for the three months ended March 31, 2025[14](index=14&type=chunk)[117](index=117&type=chunk) [Note 11. Segments](index=40&type=section&id=Note%2011.%20Segments) This note presents financial information by the company's three reportable operating segments: Hospitality, Entertainment, and Landlord Operations, using Adjusted EBITDA as the key performance metric - The company's three reportable operating segments are Hospitality, Entertainment, and Landlord Operations, with performance evaluated using Adjusted EBITDA[118](index=118&type=chunk)[124](index=124&type=chunk) Segment Adjusted EBITDA (Three months ended March 31, in thousands) | Segment | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Hospitality | $(12,523) | $(13,947) | | Entertainment | $(2,868) | $(2,815) | | Landlord Operations | $721 | $(142) | | **Total Segment Adjusted EBITDA** | **$(14,659)** | **$(16,904)** | Total Segment Assets (in thousands) | Segment | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Hospitality | $56,136 | $54,020 | | Entertainment | $130,258 | $125,207 | | Landlord Operations | $410,543 | $397,584 | | **Total segment assets** | **$596,937** | **$576,811** | [Note 12. Related-Party Transactions](index=43&type=section&id=Note%2012.%20Related-Party%20Transactions) This note details transactions with related parties, including the former parent HHH, Creative Culinary Management Company (CCMC), and equity method investees, covering expense allocations, management fees, and rental revenues - Prior to the Separation, HHH provided centralized support functions and employee benefits, with **$3.6 million** in allocated expenses to the company for the three months ended March 31, 2024[128](index=128&type=chunk)[129](index=129&type=chunk) - Related-party management fees due to CCMC (a subsidiary of Jean-Georges Restaurants) amounted to **$1.1 million** for the three months ended March 31, 2025, an increase from **$0.5 million** in the prior-year period, partly due to the consolidation of Tin Building by Jean-Georges[135](index=135&type=chunk)[137](index=137&type=chunk) - The company recorded **$0.3 million** in rental revenue from related parties (primarily The Lawn Club) for the three months ended March 31, 2025, a significant decrease from **$2.9 million** in the prior-year period due to the consolidation of Tin Building by Jean-Georges[140](index=140&type=chunk)[142](index=142&type=chunk) [Note 13. Subsequent Events](index=47&type=section&id=Note%2013.%20Subsequent%20Events) This note states that the company has evaluated subsequent events through the financial statement issuance date and found no events requiring recognition or disclosure - No subsequent events requiring recognition or disclosure have occurred through the date of issuance of these financial statements[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key factors affecting the business, significant items impacting comparability, and detailed segment performance, along with liquidity and critical accounting estimates [Overview](index=48&type=section&id=Overview) This section introduces the company's business model, operating segments, strategic focus, and the transition in its financial reporting post-spin-off - The company was formed to own, operate, and develop assets at the intersection of entertainment and real estate, with a portfolio including live concerts, dining, sports, and retail[148](index=148&type=chunk) - Operating segments are Hospitality, Entertainment, and Landlord Operations, with a focus on dedicated management, partnership expansion, strategic acquisitions, and development projects[148](index=148&type=chunk) - The company's financial statements transitioned from carve-out combined statements (pre-July 31, 2024) to standalone consolidated statements (post-August 1, 2024) following its spin-off from HHH[155](index=155&type=chunk)[157](index=157&type=chunk) [Key Factors Affecting Our Business](index=52&type=section&id=Key%20Factors%20Affecting%20Our%20Business) This section discusses the primary internal and external factors influencing the company's operations, financial performance, and strategic decisions - As a standalone public company, SEG expects ongoing costs for support functions to differ from, and potentially exceed, historical allocated amounts from HHH, including incremental labor and corporate governance costs[161](index=161&type=chunk) - The consolidation of Tin Building by Jean-Georges as of January 1, 2025, significantly impacts Hospitality segment results, with the company now recognizing **100%** of its operating income or losses[162](index=162&type=chunk)[163](index=163&type=chunk) - Operations are highly seasonal, with higher revenues from May to October due to outdoor concerts and baseball games, and lower revenues in fall and winter. Weather conditions can significantly impact results[164](index=164&type=chunk)[165](index=165&type=chunk) - As of March 31, 2025, real estate assets at the Seaport were **83%** leased or programmed, with a new lease signed with Meow Wolf for **74,000 square feet** in Pier 17[167](index=167&type=chunk)[168](index=168&type=chunk) - Inflationary pressures and other macroeconomic trends, such as slower economic growth or tariffs, could adversely affect the company, its tenants, and consumers, impacting profitability and costs[169](index=169&type=chunk)[170](index=170&type=chunk) [Significant Items Impacting Comparability](index=56&type=section&id=Significant%20Items%20Impacting%20Comparability) This section highlights specific events and accounting changes that affect the period-over-period comparability of the company's financial results - The company incurred **$9.2 million** in pre-tax separation costs for the three months ended March 31, 2024, with no such costs in 2025[171](index=171&type=chunk) - Shared service costs allocated from HHH amounted to **$3.6 million** for the three months ended March 31, 2024[172](index=172&type=chunk) - The consolidation of Tin Building by Jean-Georges as of January 1, 2025, significantly impacts period-over-period comparability, as it was previously accounted for under the equity method[173](index=173&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) This section analyzes the company's overall financial performance, detailing changes in revenues, expenses, and net loss Key Operating Results (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :----- | :----- | :--------- | :--------- | | Total revenues | $16,069 | $14,511 | $1,558 | 11% | | Total expenses | $48,771 | $45,840 | $2,931 | 6% | | Operating loss | $(32,702) | $(31,321) | $(1,381) | (4)% | | Net loss attributable to common stockholders | $(31,888) | $(44,078) | $12,190 | 28% | | General and administrative expenses | $9,782 | $16,554 | $(6,772) | (41)% | | Interest income (expense) | $994 | $(2,546) | $3,540 | 139% | | Equity in earnings (losses) from unconsolidated ventures | $170 | $(10,211) | $10,381 | 102% | - The decrease in net loss attributable to common stockholders was primarily driven by a **$6.8 million** decrease in general and administrative expenses (due to lower separation costs) and a **$3.5 million** increase in interest income[174](index=174&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The decrease in equity in losses from unconsolidated ventures and changes in hospitality/rental revenues and costs are primarily due to the consolidation of the Tin Building by Jean-Georges as of January 1, 2025[175](index=175&type=chunk) [Segment Operating Results](index=59&type=section&id=Segment%20Operating%20Results) This section provides a detailed analysis of the financial performance for each of the company's operating segments: Hospitality, Entertainment, and Landlord Operations, highlighting key revenue and cost drivers and their impact on Adjusted EBITDA [Hospitality Segment](index=59&type=section&id=Hospitality%20Segment) This section details the financial performance of the Hospitality segment, including revenue, costs, and Adjusted EBITDA Hospitality Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :------- | :------- | :--------- | :--------- | | Hospitality revenue | $7,735 | $4,077 | $3,658 | 90% | | Hospitality costs | $(20,428) | $(7,815) | $(12,613) | (161)% | | Equity in earnings (losses) from unconsolidated ventures | $170 | $(10,211) | $10,381 | 102% | | **Adjusted EBITDA** | **$(12,523)** | **$(13,947)** | **$1,424** | **10%** | - Hospitality Adjusted EBITDA increased by **$1.4 million**, primarily due to a **$4.5 million** increase in revenue and a **$9.6 million** decrease in losses from unconsolidated ventures, both driven by the consolidation of Tin Building by Jean-Georges as of January 1, 2025[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) [Entertainment Segment](index=61&type=section&id=Entertainment%20Segment) This section details the financial performance of the Entertainment segment, including revenue, costs, and Adjusted EBITDA Entertainment Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Entertainment revenue | $4,209 | $3,564 | $645 | 18% | | Entertainment costs | $(7,077) | $(6,381) | $(696) | (11)% | | **Adjusted EBITDA** | **$(2,868)** | **$(2,815)** | **$(53)** | **(2)%** | - Entertainment revenue increased by **$0.6 million**, driven by a **$0.4 million** increase in Aviators ticket revenue and a **$0.2 million** increase in concert series sponsorship revenue[186](index=186&type=chunk) - Entertainment costs increased by **$0.7 million**, primarily due to a **$0.5 million** increase in breakdown and removal costs for the Winterland Skating concept and higher costs at Las Vegas Ballpark[187](index=187&type=chunk) [Landlord Operations Segment](index=62&type=section&id=Landlord%20Operations%20Segment) This section details the financial performance of the Landlord Operations segment, including rental revenue, operating costs, and Adjusted EBITDA Landlord Operations Segment Adjusted EBITDA (Three months ended March 31, in thousands, except percentages) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Rental revenue | $8,464 | $8,084 | $380 | 5% | | Operating costs | $(8,079) | $(8,563) | $484 | 6% | | **Adjusted EBITDA** | **$721** | **$(142)** | **$863** | **608%** | - Landlord Operations Adjusted EBITDA increased by **$0.9 million**, driven by a **$0.4 million** increase in rental revenue from rent escalations and variable-rent leases, and a **$0.5 million** decrease in operating costs due to lower payroll and marketing expenses[190](index=190&type=chunk)[191](index=191&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations and development projects Cash and Restricted Cash (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $129,921 | $165,667 | | Restricted cash | $2,079 | $2,178 | | **Total** | **$132,000** | **$167,845** | - The company's capital structure and liquidity sources changed significantly post-separation from HHH, which no longer finances its operations and development projects[196](index=196&type=chunk) - Management believes existing cash balances, restricted cash, and access to capital markets provide adequate liquidity for current and long-term obligations, capital expenditures, and development projects[197](index=197&type=chunk) Summary of Cash Flows (Three months ended March 31, in thousands) | Activity | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Cash used in operating activities | $(20,478) | $(18,796) | | Cash used in investing activities | $(14,497) | $(28,578) | | Cash (used in) provided by financing activities | $(870) | $47,659 | [Critical Accounting Estimates](index=66&type=section&id=Critical%20Accounting%20Estimates) This section discusses the critical accounting estimates that require significant management judgment and can materially impact the company's financial results, including impairments, variable interest entities, investments in unconsolidated ventures, and capitalization of development costs [Impairments](index=66&type=section&id=Impairments) This section explains the company's policy and judgments involved in assessing long-lived assets for impairment - The company reviews long-lived assets for impairment when indicators suggest the carrying amount may not be recoverable, recognizing a loss if the carrying amount exceeds fair value[208](index=208&type=chunk) - Cash flow estimates for recoverability and fair value are highly subjective, relying on assumptions about future economic conditions, occupancy, rental rates, and development costs, which could differ materially from actual results[209](index=209&type=chunk) [Variable Interest Entities](index=68&type=section&id=Variable%20Interest%20Entities) This section discusses the significant judgments involved in identifying and consolidating variable interest entities - The determination of whether an entity is a VIE and if the company is the primary beneficiary involves significant judgment regarding control over economic performance and the obligation to absorb losses or right to receive benefits[212](index=212&type=chunk) - The Tin Building by Jean-Georges, previously a VIE, was consolidated as of January 1, 2025, after the company became its primary beneficiary by directing operating activities and employing management personnel[213](index=213&type=chunk) [Investments in Unconsolidated Ventures](index=68&type=section&id=Investments%20in%20Unconsolidated%20Ventures) This section details the accounting treatment and judgments for investments where the company exerts significant influence but does not consolidate - Equity method investments are accounted for when the company can exert significant influence, with the investment adjusted for its allocable share of earnings or losses[214](index=214&type=chunk) - For certain equity method investments, the company's economic interest and recognition of income or loss may differ from its stated ownership due to specific provisions in joint venture agreements regarding cash flow distributions, profit/loss allocations, and preferred returns[217](index=217&type=chunk)[219](index=219&type=chunk) [Capitalization of Development Costs](index=70&type=section&id=Capitalization%20of%20Development%20Costs) This section outlines the company's policy and judgments regarding the capitalization of costs associated with development projects - Development costs, including planning, design, materials, labor, real estate taxes, interest, and certain employee costs, are capitalized as part of the property being developed until the project is completed or put on hold[220](index=220&type=chunk) - The capitalization of development costs requires judgment and can directly impact operating expenses and subsequent depreciation, with **$2.3 million** capitalized for the three months ended March 31, 2025[221](index=221&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily focusing on interest rate risk associated with its variable-rate and fixed-rate mortgage payables - The company is subject to interest rate risk from its variable-rate mortgage payable; a **1%** increase in short-term interest rates would have increased interest expense by approximately **$0.2 million** for the three months ended March 31, 2025[222](index=222&type=chunk)[223](index=223&type=chunk) - As of March 31, 2025, the company had **$41.1 million** in fixed-rate indebtedness with a weighted average interest rate of **4.92%** per annum[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and confirms that there have been no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[226](index=226&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[227](index=227&type=chunk) [Part II Other Information](index=71&type=section&id=Part%20II%20Other%20Information) This section provides additional disclosures not covered in Part I, including legal proceedings, risk factors, equity sales, and other miscellaneous information [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is involved in routine legal proceedings but does not anticipate any material adverse effects on its business, results of operations, or financial condition - Management believes there are no pending lawsuits or claims that, individually or in aggregate, could have a material adverse effect on the company's business, results of operations, or financial condition as of March 31, 2025[229](index=229&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the company's Annual Report on Form 10-K for a comprehensive discussion of risk factors and confirms that no material changes to these risks have occurred during the quarter - There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the completion of a rights offering in October 2024, which generated significant net proceeds, and confirms the continued intended use of these proceeds for general corporate purposes - The company completed a rights offering on October 17, 2024, generating approximately **$166.8 million** in net proceeds[231](index=231&type=chunk)[232](index=232&type=chunk) - The proceeds from the rights offering are intended for general operating, working capital, and other corporate purposes, with no material change in their use[233](index=233&type=chunk) [Item 3. Defaults Upon Senior Securities](index=73&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - None[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that the disclosure requirements for mine safety are not applicable to the company - Not applicable[235](index=235&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) This section discloses that no directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the fiscal quarter - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2025[236](index=236&type=chunk) [Item 6. Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed as part of the Form 10-Q, including various agreements, certifications, and XBRL documents - Key exhibits include the Separation Agreement with HHH, Amended and Restated Certificate of Incorporation and Bylaws, Investor Rights Agreement, Services Agreement, and certifications from the CEO and CFO[237](index=237&type=chunk)[238](index=238&type=chunk) [Signatures](index=76&type=section&id=Signatures) This section confirms the official signing of the report by the company's authorized financial officers - The report is duly signed on behalf of Seaport Entertainment Group Inc. by Matthew M. Partridge, Executive Vice President, Chief Financial Officer and Treasurer, and Lenah J. Elaiwat, Senior Vice President and Chief Accounting Officer[241](index=241&type=chunk)[243](index=243&type=chunk)
Seaport Entertainment Group Inc.(SEG) - 2024 Q4 - Earnings Call Transcript
2025-03-11 20:18
Financial Data and Key Metrics Changes - Total consolidated revenues during the fourth quarter were $22.8 million, largely flat year-over-year [36] - Consolidated hospitality revenue increased 6.5% during the quarter, while overall hospitality revenue grew 12.8% [22][37] - Fourth quarter net loss attributable to common stockholders was $41.6 million, representing an increased loss of $5.6 million or 16% versus the comparable period in 2023 [44] - Non-GAAP adjusted net loss attributable to common stockholders for the fourth quarter was $19.2 million, representing an improvement of $8.8 million or more than 31% versus the comparable period in 2023 [45] Business Line Data and Key Metrics Changes - Same-store hospitality revenues were down 3.5%, primarily due to underperformance at the Tin Building [22][37] - Rental revenues were up nearly 15% during the quarter, primarily due to the benefit of the Alexander Wang lease [39] - The hospitality segment's operating income was down year-over-year due to higher operating expenses and payroll [38] Market Data and Key Metrics Changes - The Seaport's Tin Building launched in late 2022 but has not been profitable, requiring immediate focus for improvement [9] - The Rooftop at Pier 17 concert series brings approximately 200,000 visitors to the Seaport each year, while the new partnership with Meow Wolf is expected to drive over 1 million visitors annually [15][16] Company Strategy and Development Direction - The company aims to create a premier real-estate centric hospitality and entertainment company, focusing on the Seaport Neighborhood in New York City [7] - A significant priority is to optimize the utilization of existing vacancies within Pier 17 and the Cobblestones [12] - The company is exploring options for the development site at 250 Water Street, including potential partnerships or outright sales [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about executing identified areas for improvement and finding unique growth opportunities [53] - The company anticipates headwinds for hospitality revenue growth in the first quarter of 2025 due to strategic reductions in operating hours [38] - Management is committed to providing more robust portfolio detail and operational metrics to help the investment community measure progress [51] Other Important Information - The company completed a rights offering in October, generating net proceeds of approximately $167 million, which was more than two times oversubscribed [47] - The company has engaged a leading investment sales team to explore different options for the 250 Water Street site [26] Q&A Session Summary Question: What is the expected impact of the A's move to Las Vegas on the Aviators? - Management believes it will be a long-term benefit, enhancing community support and providing fans with the opportunity to see future stars [28] Question: How will the company utilize cash on the balance sheet? - A portion will be used to absorb operating losses, while significant amounts will be allocated for landlord work, tenant improvement allowances, and leasing commissions [48][49]
Seaport Entertainment Group Inc.(SEG) - 2024 Q4 - Earnings Call Transcript
2025-03-11 14:21
Financial Data and Key Metrics Changes - Total consolidated revenues during the fourth quarter were $22.8 million, largely flat year-over-year [36] - Consolidated hospitality revenue increased 6.5% during the quarter, with overall hospitality revenue growth of 12.8% [22][37] - Fourth quarter net loss attributable to common stockholders was $41.6 million, representing an increased loss of $5.6 million or 16% versus the comparable period in 2023 [44] - Non-GAAP adjusted net loss attributable to common stockholders for the fourth quarter was $19.2 million, representing an improvement of $8.8 million or more than 31% versus the comparable period in 2023 [45] Business Line Data and Key Metrics Changes - Same-store hospitality revenues were down 3.5%, primarily due to underperformance at the Tin Building [22][37] - Rental revenues were up nearly 15% during the quarter, primarily due to the benefit of the Alexander Wang lease [39] - The hospitality segment's operating income was down year-over-year due to higher operating expenses and payroll [38] Market Data and Key Metrics Changes - The Seaport's Tin Building launched in late 2022 but has not been profitable, indicating challenges in the market [9] - The Rooftop at Pier 17 concert series brings approximately 200,000 visitors to the Seaport each year, while the new partnership with Meow Wolf is expected to drive over 1 million visitors annually [15][16] Company Strategy and Development Direction - The company aims to optimize the Seaport Neighborhood in New York City by focusing on entertainment and hospitality [12][49] - A significant focus is on consolidating operations at the Tin Building to improve efficiency and reduce cash burn [10][11] - The company is exploring options for the 250 Water Street development site, considering partnerships or outright sale to maximize long-term value [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about executing identified areas for improvement and finding unique growth opportunities [53] - The company anticipates headwinds for hospitality revenue growth in the first quarter of 2025 due to strategic reductions in operating hours [38] - Management is committed to providing more robust portfolio detail and operational metrics to help the investment community measure progress [51] Other Important Information - The company completed a rights offering in October, generating net proceeds of approximately $167 million, which is seen as a strong endorsement of its strategy [47] - The company has engaged a leading investment sales team to explore different options for the 250 Water Street site [26] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the call concluded without a formal Q&A session [55]
Seaport Entertainment Group Inc.(SEG) - 2024 Q4 - Annual Results
2025-03-11 11:30
Financial Performance - Net loss for Q4 2024 was $41.6 million, or $3.63 per share, compared to a net loss of $36.0 million, or $6.52 per share in Q4 2023, representing a 15.6% increase in loss [5] - Total revenues for Q4 2024 were $22.8 million, a slight decrease of 0.3% from $22.9 million in Q4 2023 [7] - For the full year 2024, total revenues were $111.1 million, down 3.9% from $115.7 million in 2023 [8] - The company reported a net loss of $153.2 million for the full year 2024, significantly improved from a net loss of $838.1 million in 2023, marking an 81.7% reduction in loss [8] - Non-GAAP adjusted net loss for Q4 2024 was $19.2 million, a 31.3% improvement from $28.0 million in Q4 2023 [7] - Basic earnings per share attributable to common shareholders for Q4 2024 was $(3.63), an improvement from $(6.52) in Q4 2023 [26] Revenue and Assets - Total revenues for Q4 2024 were $22.844 million, a slight decrease of 0.26% compared to $22.903 million in Q4 2023 [26] - Total assets increased to $743.556 million in 2024, up from $616.813 million in 2023, reflecting a growth of 20.5% [24] - Total liabilities decreased to $172.174 million in 2024, down from $231.920 million in 2023, a reduction of 25.7% [24] - Stockholders' equity rose to $571.382 million in 2024, compared to $384.893 million in 2023, indicating a growth of 48.5% [24] - Hospitality revenue for the twelve months ended December 31, 2024, was $29.528 million, down 10.3% from $32.951 million in 2023 [26] Expenses and Impairments - Depreciation and amortization expenses increased to $34.785 million for the twelve months ended December 31, 2024, compared to $48.432 million in 2023 [26] - The company reported a provision for impairment of $10 million in Q4 2024, compared to $672.492 million for the full year 2023 [26] Strategic Initiatives - The company generated net proceeds of approximately $166.8 million from a rights offering, issuing 7 million shares at $25.00 per share [12] - The company signed a long-term lease for 74,497 square feet with Meow Wolf to open in 2027, enhancing its entertainment offerings [9] - The company extended its programming agreement with Live Nation for five years, effective January 1, 2025, for The Rooftop at Pier 17 [5] - The company is exploring monetization strategies for its 250 Water Street development site, considering options for outright sale or strategic partnerships [2]
Seaport Entertainment Group Inc.(SEG) - 2024 Q4 - Annual Report
2025-03-10 20:50
Debt and Financial Flexibility - The Refinanced 250 Water Street Term Loan was established to reduce outstanding indebtedness and provide greater financial flexibility[139]. - The company faces restrictions under its debt agreements that may limit operational capabilities and increase refinancing costs[141]. - The company has entered into interest rate hedging contracts to mitigate exposure to interest rate volatility, which carries additional risks[149]. - The company is subject to interest rate risk, particularly with its variable-rate mortgage, which could impact future refinancing efforts[356]. Revenue and Financial Performance - Total revenues for 2024 were $111,136,000, a decrease of 3.5% from $115,678,000 in 2023[372]. - Net loss for 2024 was $152,625,000, compared to a net loss of $838,065,000 in 2023, indicating a significant improvement[372]. - Operating income loss for 2024 was $(101,740,000), an improvement from $(756,406,000) in 2023[372]. - Cash used in operating activities was $(52,700,000) in 2024, slightly higher than $(50,780,000) in 2023[375]. - Total expenses rose to $219,605,000 in 2024, up from $199,625,000 in 2023, primarily due to increased general and administrative costs[372]. - The company reported a basic loss per share of $(16.82) for 2024, compared to $(151.77) for 2023[372]. Assets and Liabilities - Total assets increased to $743.6 million as of December 31, 2024, compared to $616.8 million in 2023, reflecting a growth of approximately 20.5%[369]. - Mortgages payable decreased to $101.6 million in 2024 from $155.6 million in 2023, a reduction of approximately 34.7%[369]. - Total liabilities decreased from $142.5 million to $125.6 million[468]. Compliance and Regulatory Risks - The company is subject to environmental compliance costs, including a requirement for a Remedial Action Work Plan at the 250 Water Street site[158]. - Tax changes and challenges from tax authorities could adversely impact financial results and operational conditions[161]. - The company may face increased compliance costs due to new energy efficiency regulations, particularly in New York City[156]. - Compliance with the Americans with Disabilities Act (ADA) may impose significant costs, potentially affecting the company's financial condition and results of operations[164]. Corporate Structure and Governance - As of December 31, 2024, Pershing Square owns approximately 39.5% of the company's outstanding common stock, which could impact stock price if shares are sold[171]. - The Investor Rights Agreement with Pershing Square allows it to nominate individuals to the board as long as it owns at least 10% of the outstanding shares[206]. - The company is classified as an emerging growth company, which may result in different reporting requirements compared to other public companies[195]. Separation and Transition Costs - The separation from HHH may result in increased costs for corporate functions previously performed by HHH, impacting cash flows and profitability[181]. - The transition of information technology systems from HHH is expected to be complex and costly, with risks of data loss during the process[185]. - Following the Spin-Off, the company is dependent on HHH for critical transition services, which may lead to increased costs or difficulties in finding replacements after the agreement expires[186]. Investments and Impairments - The Company recognized an impairment of $5.0 million related to the Ssäm Bar investment in the year ended December 31, 2023[456]. - The Company recorded a $709.5 million impairment charge in 2023 related to Seaport properties and investments in the Hospitality segment due to decreased future cash flow estimates[472]. - An impairment charge of $10.0 million was recorded in 2024 related to the warrant agreement with Jean-Georges for acquiring an additional 20% interest[473]. Development and Growth - The potential development at 250 Water Street has received approvals for 547,000 zoning square feet of mixed-use space, but further challenges may arise[150]. - Total developments increased to $146.461 million in 2024 from $102.874 million in 2023, representing a 42.3% growth[412]. - Development costs rose significantly to $94.743 million in 2024, up from $51.156 million in 2023, indicating an increase of 85%[412]. Cash Flow and Financing Activities - Cash and cash equivalents significantly increased to $165.7 million in 2024 from $1.8 million in 2023, representing a growth of over 9,000%[369]. - Cash provided by financing activities increased to $279,581,000 in 2024 from $136,214,000 in 2023[375]. - The Company completed a Rights Offering on October 17, 2024, issuing 7.0 million shares at a subscription price of $25.00 per share, generating total gross proceeds of $175.0 million[386].
Seaport Entertainment Group Is In The Buy Zone Following Market Turbulence (Upgrade)
Seeking Alpha· 2025-03-06 21:43
Group 1 - Seaport Entertainment Group (SEG) is a spinoff from Howard Hughes Holdings (HHH) and consists of a collection of non-core assets [1] - The analysis of SEG was conducted shortly after its public market debut in August [1]
Seaport Entertainment Group Inc.(SEG) - 2024 Q3 - Quarterly Report
2024-11-07 21:28
Financial Performance - Net loss attributable to common stockholders decreased by $703.7 million, or 96%, to $32.5 million for the three months ended September 30, 2024, compared to $736.2 million in the prior-year period[205]. - Total revenue for the three months ended September 30, 2024, was $39.7 million, a decrease of $789, or 2%, from $40.5 million in the same period of 2023[202]. - General and administrative costs increased by $11.1 million, or 154%, to $18.3 million for the three months ended September 30, 2024, compared to $7.2 million in the prior-year period[208]. - Total expenses for the three months ended September 30, 2024, were $64.5 million, an increase of $7.6 million, or 13%, from $56.9 million in the same period of 2023[202]. - Hospitality revenue decreased by $1.9 million, or 17%, to $8.8 million for the three months ended September 30, 2024, compared to $10.7 million in the prior-year period[202]. - Sponsorships, events, and entertainment revenue increased by $221, or 1%, to $24.7 million for the three months ended September 30, 2024, compared to $24.5 million in the prior-year period[202]. - Total revenue for the nine months ended September 30, 2024, decreased by $4.5 million, or 5%, to $88.3 million compared to $92.8 million in the prior-year period[214]. - Sponsorships, events, and entertainment revenue declined by $3.1 million, or 6%, while hospitality revenue decreased by $3.9 million, or 15%[214]. Operational Highlights - The Company completed its spin-off from HHH on July 31, 2024, with HHH contributing $23.4 million in capital to support operations[184][185]. - The Company operates in three segments: Landlord Operations, Hospitality, and Sponsorships, Events, and Entertainment, focusing on strategic acquisitions and partnerships for growth[178]. - The Company aims to leverage the growing consumer appetite for unique restaurant experiences to expand its culinary footprint[182]. - Seasonality significantly impacts operations, with increased revenue during warmer months and potential revenue losses due to weather-related disruptions[192][193]. - The weighted average remaining term of leases for retail, office, and other properties is approximately seven years, excluding renewal options[194]. - The Company recognizes all economic interest in the Tin Building by Jean-Georges joint venture, impacting overall results of operations[190]. - The Aviators, a Triple-A Minor League Baseball team, play at the Las Vegas Ballpark, which has a capacity of 10,000, contributing to the Company's entertainment segment[183]. - The Company is exploring opportunities for year-round entertainment at the Rooftop at Pier 17, which hosts a popular Summer Concert Series[183]. Cash Flow and Financing - As of September 30, 2024, the company's cash and cash equivalents were $23.7 million, compared to $1.8 million as of December 31, 2023[251]. - Cash used in operating activities increased by $19.8 million to $48.0 million for the nine months ended September 30, 2024, compared to $28.2 million in the prior-year period[258]. - Cash used in investing activities rose by $3.6 million to $82.2 million for the nine months ended September 30, 2024, compared to $78.6 million in the prior-year period[260]. - Cash provided by financing activities increased by $22.8 million to $114.1 million for the nine months ended September 30, 2024, compared to $91.3 million in the prior-year period[261]. - The company commenced a $175 million Rights Offering in September 2024, issuing 7.0 million shares at a subscription price of $25.00 per share, resulting in total gross proceeds of $175.0 million[256]. - The company expects the additional liquidity from the Rights Offering to be sufficient to fund operations until cash generation from operating activities begins[259]. - The variable rate mortgage related to 250 Water Street was refinanced on July 31, 2024, with HHH paying down $53.7 million of the outstanding principal balance[252]. - The company’s ability to fund operations and development projects will depend on future cash flow management and access to debt or equity financing on acceptable terms[253]. Cost Management - General and administrative costs increased by $33.8 million, or 171%, to $53.5 million, primarily due to a $23.8 million rise in separation costs[217]. - Depreciation and amortization expense decreased by $18.9 million, or 47%, to $21.1 million, attributed to prior impairment recognized on buildings and equipment[218]. - Interest expense, net rose by $7.1 million, or 381%, to $8.9 million, mainly due to a decrease in amounts capitalized to development assets[219]. - Hospitality costs decreased by $0.1 million, or 1%, to $8.4 million for the three months ended September 30, 2024, compared to $8.5 million in the prior-year period[233]. Legal and Compliance - As of September 30, 2024, the company believes there were no pending lawsuits or claims that could have a material adverse effect on its business or financial condition[284]. - There were no changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected the internal control[283].
Seaport Entertainment Group Inc.(SEG) - 2024 Q3 - Quarterly Results
2024-11-07 21:20
Financial Performance - Seaport Entertainment Group reported a net loss of $32.5 million, or $5.89 per share, for Q3 2024, a significant improvement from a net loss of $736.2 million, or $133.31 per share, in Q3 2023[3]. - Total revenues for Q3 2024 were $39.7 million, slightly down from $40.5 million in the same quarter last year, representing a decrease of 1.9%[3]. - Year-to-date revenues for the nine months ended September 30, 2024, totaled $88.3 million, down 4.8% from $92.8 million in the same period of 2023[8]. - The net loss for the nine months ended September 30, 2024, was $111.3 million, a reduction of 86.1% compared to a net loss of $802.1 million in the prior year[8]. - Operating loss for the three months ended September 30, 2024, was $(20,000,000), significantly improved from a loss of $(688,895,000) in the same quarter of 2023[19]. - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $(32,511,000), compared to $(736,154,000) in 2023[19]. - Basic earnings per share for the three months ended September 30, 2024, was $(5.89), an improvement from $(133.31) in the same period of 2023[19]. Revenue Breakdown - Sponsorships, events, and entertainment revenue increased slightly to $24,703,000 from $24,482,000, while hospitality revenue decreased to $8,817,000 from $10,677,000[19]. - Total revenues for the three months ended September 30, 2024, were $39,697,000, a decrease of 1.95% from $40,486,000 in the same period of 2023[19]. Expenses and Costs - Total expenses rose to $64,495,000 for the three months ended September 30, 2024, compared to $56,912,000 in 2023, marking an increase of 13.5%[19]. - General and administrative expenses surged to $18,319,000 in Q3 2024, up from $7,220,000 in Q3 2023, reflecting a 153% increase[19]. - Depreciation and amortization expenses decreased to $7,694,000 in Q3 2024 from $13,636,000 in Q3 2023, a reduction of 43.5%[19]. - Interest expense for the three months ended September 30, 2024, was $(3,133,000), compared to $(592,000) in the same period of 2023, indicating an increase in interest costs[19]. Cash and Debt Position - As of September 30, 2024, the company had $27.8 million in cash and cash equivalents, with an additional $5.0 million available under its revolving credit facility[9]. - The company has $103.4 million in consolidated debt with a weighted-average interest rate of 8.0%, and 41% of this debt is fixed at a weighted-average interest rate of 4.9%[9]. Strategic Initiatives - The company completed a rights offering on October 17, 2024, issuing 7,000,000 shares at $25.00 per share, generating net proceeds of approximately $166.7 million[4]. - Seaport Entertainment Group extended its programming agreement with Live Nation for The Rooftop at Pier 17 for five years, effective January 1, 2025[5]. - The company plans to launch year-round concert and event programming at The Rooftop at Pier 17 starting in fall/winter 2025[5]. - The company is focusing on long-term value creation through strategic partnerships and enhancing operational efficiencies to strengthen cash flow[6].