Stratus(STRS) - 2025 Q1 - Quarterly Results

Financial Performance Overview Stratus Properties reported a net loss in Q1 2025 due to decreased revenue, while progressing on key development projects and strategic financial initiatives First-Quarter 2025 Highlights Stratus Properties reported a net loss of $2.9 million in Q1 2025, reversing prior-year net income, driven by a significant revenue decrease Key Financial Metrics (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $5.0 million | $26.5 million | | Net (Loss) Income to Common Stockholders | $(2.9) million | $4.6 million | | Diluted (Loss) Income Per Share | $(0.36) | $0.56 | | EBITDA | $(2.3) million | $5.2 million | - The revenue decline was primarily due to the absence of major land and home sales in Q1 2025, partially offset by increased revenue from the Leasing Operations segment, notably from The Saint June property[4] - As of March 31, 2025, the company held $12.0 million in cash and had $34.5 million available under its revolving credit facility[4] - Stratus contracted to sell West Killeen Market for $13.3 million, expected to close in Q2 2025 and generate approximately $7.7 million of pre-tax net cash proceeds[4] - The company refinanced project loans at Lantana Place and Jones Crossing, raising approximately $4.2 million in additional cash proceeds, and extended its revolving credit facility maturity to 2027 at a lower interest rate[4] CEO Commentary and Strategic Progress The CEO highlighted strategic progress, nearing completion of key projects, developing Holden Hills, and maintaining a pipeline of multi-family projects - Construction on The Saint George multi-family project and the last two Amarra Villas homes is expected to be completed in Q2 2025[5] - The company is focusing on the development of Holden Hills Phase 1 (495-acre residential) and planning for Holden Hills Phase 2 (570-acre mixed-use development)[5] - A pipeline of multi-family development projects, including The Annie B, Lakeway, and College Station, are ready for development subject to market conditions and financing[5] Detailed Financial Analysis This section provides a detailed analysis of the company's operational results, debt and liquidity, and share repurchase program Results of Operations Quarterly performance varied significantly, with Real Estate Operations revenue declining sharply and Leasing Operations revenue growing due to segment-specific activities - The decrease in Real Estate Operations revenue is attributed to the sales of 47 acres of undeveloped land at Magnolia Place for $14.5 million and two Amarra Villas homes for $7.6 million in Q1 2024, with no such sales in Q1 2025[8][9] - The increase in Leasing Operations revenue primarily reflects higher income from The Saint June, which was in the process of leasing up in Q1 2024[9] Debt and Liquidity The company's liquidity shifted, with cash decreasing and consolidated debt rising, yet maintaining capital access and continuing development spending Balance Sheet Items (in millions) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12.0 million | $20.2 million | | Consolidated debt | $207.8 million | $194.9 million | - As of March 31, 2025, Stratus had $34.5 million available under its revolving credit facility[11] - Capital expenditures and real estate development costs totaled $11.7 million in Q1 2025, down from $17.1 million in Q1 2024, primarily related to Holden Hills Phase 1 and The Saint George[12] Share Repurchase Program Stratus continued its share repurchase program, buying back over 20,000 shares in Q1 2025, with $3.0 million remaining available under the authorization - In Q1 2025, Stratus repurchased 20,694 shares of its common stock for $0.4 million at an average price of $19.78 per share[13] - Through May 9, 2025, total repurchases under the current program amounted to 83,380 shares for $2.0 million, with $3.0 million remaining available[13] Business Segments This section outlines Stratus's two primary business segments, Real Estate Operations and Leasing Operations, and their respective financial performances Overview of Business Segments Stratus operates through Real Estate Operations, focusing on property development and sales, and Leasing Operations, managing income-producing leased properties - The Real Estate Operations segment includes properties under development for sale, such as Holden Hills, Amarra Villas, and The Saint George[32][33] - The Leasing Operations segment comprises income-producing properties held for investment, including The Saint June, West Killeen Market, and the retail portions of Lantana Place and Jones Crossing[32][34] Segment Financial Performance In Q1 2025, Real Estate Operations reported a loss due to lack of sales, while Leasing Operations saw profit growth from stronger leasing revenue Segment Performance (Q1 2025) (in thousands) | Segment Performance (Q1 2025) | Real Estate Operations | Leasing Operations | | :--- | :--- | :--- | | Revenue | $25 thousand | $5,018 thousand | | Segment (Loss) Profit | $(1,502) thousand | $1,958 thousand | Segment Performance (Q1 2024) (in thousands) | Segment Performance (Q1 2024) | Real Estate Operations | Leasing Operations | | :--- | :--- | :--- | | Revenue | $22,123 thousand | $4,384 thousand | | Segment Profit | $6,801 thousand | $1,349 thousand | Total Assets by Segment (in millions) | Total Assets by Segment | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Real Estate Operations | $371.4 million | $329.1 million | | Leasing Operations | $152.0 million | $160.8 million | Consolidated Financial Statements This section presents the company's consolidated statements of comprehensive (loss) income, balance sheets, and cash flows for the reporting period Consolidated Statements of Comprehensive (Loss) Income For Q1 2025, Stratus reported a significant revenue decline, resulting in an operating loss and net loss per diluted share, reversing prior-year income Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Income Statement (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $5,043 | $26,507 | | Operating (Loss) Income | $(3,595) | $3,685 | | Net (Loss) Income | $(3,757) | $3,697 | | Diluted (Loss) Income Per Share | $(0.36) | $0.56 | Consolidated Balance Sheets As of March 31, 2025, total assets slightly increased, primarily in real estate, while liabilities and debt rose, decreasing stockholders' equity Consolidated Balance Sheets (in thousands) | Balance Sheet (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,006 | $20,178 | | Total Assets | $534,581 | $532,606 | | Debt | $207,838 | $194,853 | | Total Liabilities | $241,998 | $235,039 | | Total Stockholders' Equity | $191,459 | $194,705 | Consolidated Statements of Cash Flows In Q1 2025, the company experienced a net cash outflow from operating activities, with financing activities partially offsetting cash used in investing Consolidated Statements of Cash Flows (in thousands) | Cash Flows (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(13,495) | $6,547 | | Net cash used in investing activities | $(4,693) | $(8,392) | | Net cash provided by (used in) financing activities | $9,991 | $(9,059) | | Net decrease in cash | $(8,197) | $(10,904) | Non-GAAP Financial Measures This section provides a reconciliation of the company's non-GAAP financial measure, EBITDA Reconciliation of EBITDA The company's EBITDA, a non-GAAP measure, was negative $2.3 million in Q1 2025, a significant decline from the positive $5.2 million in Q1 2024 EBITDA Reconciliation (in thousands) | EBITDA Reconciliation (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) income | $(3,757) | $3,697 | | Depreciation and amortization | $1,394 | $1,401 | | Provision for income taxes | $30 | $102 | | EBITDA | $(2,333) | $5,200 |