Five Point(FPH) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company reported a net loss of $53.2 million in Q1 2020, a reversal from $52.7 million net income in Q1 2019, driven by revenue decline and a $26.9 million impairment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $247,754 | $346,833 | | Inventories | $1,958,901 | $1,889,761 | | Investment in unconsolidated entities | $501,909 | $533,239 | | Total Assets | $2,937,423 | $3,004,700 | | Liabilities & Capital | | | | Notes payable, net | $616,430 | $616,046 | | Total liabilities | $1,089,929 | $1,095,900 | | Total capital | $1,822,494 | $1,883,800 | | Total Liabilities & Capital | $2,937,423 | $3,004,700 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | Total Revenues | $9,220 | $13,073 | | Gain on settlement of contingent consideration—related party | $0 | $64,870 | | Equity in (Loss) Earnings from Unconsolidated Entities | ($30,911) | $8,882 | | Net (Loss) Income | ($53,219) | $52,733 | | Net (Loss) Income Attributable to the Company | ($24,806) | $23,808 | | Diluted EPS (Class A) | ($0.37) | $0.35 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Category | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($89,426) | ($83,652) | | Net cash provided by investing activities | $1,017 | $267 | | Net cash used in financing activities | ($10,669) | ($38,682) | | Net Decrease in Cash | ($99,078) | ($122,067) | - The company recognized a $26.9 million other-than-temporary impairment charge on its investment in the Great Park Venture, attributing it to delays in projected distributions and land sales resulting from the impacts of the COVID-19 pandemic[45] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2020's financial decline to reduced land sales, a non-recurring 2019 gain, and a $26.9 million impairment, while affirming liquidity for the next 12 months - In response to the COVID-19 pandemic, the company implemented remote work, limited development activities, and began analyzing potential revenue delays of three, six, or nine months[130] - Equity in loss from unconsolidated entities was $30.9 million, a sharp decline from earnings of $8.9 million in the prior year, primarily due to a $26.9 million other-than-temporary impairment on the Great Park Venture investment caused by expected COVID-19 related delays[138] - The San Francisco segment's Q1 2019 results included a significant one-time gain of $64.9 million from the termination of the Retail Project at Candlestick, which was not repeated in Q1 2020[147][155] - As of March 31, 2020, the company had $247.8 million in cash and cash equivalents and $124.7 million available on its revolving credit facility, expecting to meet cash requirements for at least the next 12 months[175][176] Quantitative and Qualitative Disclosures About Market Risk The company's market risk from $616.4 million fixed-rate indebtedness is mitigated, as it does not use derivative financial instruments for risk management - As of March 31, 2020, the company had $616.4 million in outstanding consolidated net indebtedness, all bearing fixed interest rates, minimizing exposure to market interest rate fluctuations[200] - The company has not entered into any transactions using derivative financial instruments for hedging or speculative purposes[200] Controls and Procedures Management, including the CEO and CFO, deemed disclosure controls effective as of March 31, 2020, with no material changes to internal control over financial reporting - Management, including the Certifying Officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[202] - No material changes occurred in internal control over financial reporting during the first quarter of 2020[203] PART II. OTHER INFORMATION Legal Proceedings The company's legal proceedings, detailed in Note 12, include environmental challenges at Valencia and contamination lawsuits at The San Francisco Shipyard - For details on legal proceedings, the report refers to Note 12 of the financial statements[206] - Key legal matters include challenges to Valencia project approvals and multiple lawsuits related to alleged environmental contamination and fraudulent remediation testing at The San Francisco Shipyard[90][91][92] Risk Factors A new risk factor addresses COVID-19's business disruption, highlighting potential adverse effects like decreased demand and further asset impairments, exemplified by a $26.9 million impairment - A new risk factor was added to address the business disruption from the COVID-19 pandemic and government measures to control it[207][208] - Potential negative impacts from the pandemic include decreased consumer confidence, prolonged economic downturn, lower demand for homesites, and increased costs or decreased availability of contractors[209] - The company notes the risk of future asset impairments, similar to the $26.9 million impairment recognized on its Great Park Venture investment due to pandemic-related delays[209] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2020, the company repurchased 436,675 shares to satisfy employee tax withholding obligations upon restricted share vesting Issuer Purchases of Equity Securities (Q1 2020) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2020 | 436,675 | $8.09 | | February 2020 | 0 | N/A | | March 2020 | 0 | N/A | | Total | 436,675 | $8.09 | - The share repurchases were made to cover minimum statutory tax withholding obligations for employees related to the vesting of restricted shares under the company's equity compensation plan[210] Defaults Upon Senior Securities The company reported no defaults on its senior securities during the period - None[211] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[211] Other Information The company reported no other information for this item - None[211] Exhibits Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, along with Inline XBRL interactive data files - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[212] - The filing also includes various Inline XBRL documents for interactive data[212]