Alexander & Baldwin(ALEX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited interim financial statements and management's discussion and analysis for the period ended June 30, 2025 Financial Statements This section presents Alexander & Baldwin, Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, income, cash flows, and equity Condensed Consolidated Balance Sheets The company's total assets decreased to $1.64 billion as of June 30, 2025, from $1.67 billion at year-end 2024, primarily due to a reduction in cash and cash equivalents and deferred revenue Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $1,642,373 | $1,670,432 | | Total liabilities | $629,341 | $666,889 | | Total shareholders' equity | $1,013,032 | $1,003,543 | Condensed Consolidated Statements of Operations The company reported a significant increase in net income for both the second quarter and first six months of 2025 compared to the prior year Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | $51,702 | $51,047 | $105,440 | $112,249 | | Operating Income | $28,138 | $16,234 | $52,119 | $40,017 | | Net Income | $25,128 | $9,108 | $46,561 | $29,090 | | Diluted EPS | $0.35 | $0.13 | $0.64 | $0.40 | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for Q2 2025 was $23.1 million, a significant increase from $10.3 million in Q2 2024, primarily due to higher net income partially offset by an other comprehensive loss Comprehensive Income (Loss) Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $25,128 | $9,108 | $46,561 | $29,090 | | Other comprehensive income (loss), net of tax | $(2,002) | $1,229 | $(5,630) | $1,958 | | Comprehensive Income (Loss) | $23,126 | $10,337 | $40,931 | $31,048 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operations was $42.5 million, while investing activities used $5.6 million and financing activities used $60.4 million, resulting in a net decrease in cash to $10.1 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,492 | $38,365 | | Net cash provided by (used in) investing activities | $(5,628) | $6,907 | | Net cash provided by (used in) financing activities | $(60,439) | $(29,266) | | Net increase (decrease) in cash | $(23,575) | $16,006 | | Cash, cash equivalents, and restricted cash, end of period | $10,097 | $29,759 | Condensed Consolidated Statements of Equity Total equity increased from $1.004 billion at the start of 2025 to $1.013 billion at June 30, 2025, driven by net income partially offset by dividends and other comprehensive loss Changes in Total Equity - Six Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance, January 1, 2025 | $1,003,543 | | Net income | $46,561 | | Other comprehensive loss | $(5,630) | | Dividend on common stock | $(32,949) | | Share-based compensation & other | $1,507 | | Balance, June 30, 2025 | $1,013,032 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, a new sales-type lease gain, a significant termination agreement with Mahi Pono, and a declared quarterly dividend - The company is a REIT focused on Hawai'i commercial real estate, owning a portfolio of retail centers, industrial assets, and office properties[26] - In June 2025, the company entered into a termination agreement with Mahi Pono, resulting in derecognizing $62.0 million in deferred revenue and establishing a $55.3 million refund liability[71][75][161] - During H1 2025, the company entered into a sales-type ground lease for a 4.7-acre parcel in Maui Business Park, recognizing a $4.1 million selling profit[77][110] - On July 22, 2025, the Board of Directors declared a quarterly cash dividend of $0.225 per share[91] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, business segments, liquidity, and capital resources, highlighting strong Q2 and H1 2025 results driven by gains in Land Operations and steady Commercial Real Estate performance Business Overview The company operates through two primary segments: Commercial Real Estate (CRE), focused on properties in Hawai'i, and Land Operations, managing legacy landholdings and joint venture investments - The company's business is structured into two reportable segments: Commercial Real Estate (CRE) and Land Operations[97] - The CRE segment focuses on property management, leasing, investment, and development of retail, industrial, and urban ground lease properties in Hawai'i[97] - The Land Operations segment is focused on the simplification and monetization of legacy landholdings, joint ventures, and related liabilities[97] Consolidated Results of Operations Consolidated net income increased significantly in Q2 and H1 2025 compared to 2024, driven by a substantial gain on asset disposals and settlements Q2 2025 vs Q2 2024 Financial Results (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating revenue | $51,702 | $51,047 | $655 | 1.3% | | Operating income | $28,138 | $16,234 | $11,904 | 73.3% | | Net income | $25,128 | $9,108 | $16,020 | 175.9% | H1 2025 vs H1 2024 Financial Results (in thousands) | Metric | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating revenue | $105,440 | $112,249 | $(6,809) | (6.1)% | | Operating income | $52,119 | $40,017 | $12,102 | 30.2% | | Net income | $46,561 | $29,090 | $17,471 | 60.1% | - The primary driver for the increase in Q2 2025 operating income was an $11.6 million gain on disposal of assets and settlements, related to a favorable contract modification from a prior year land sale[102] Commercial Real Estate Segment The Commercial Real Estate segment showed steady growth in H1 2025, with operating revenue increasing 3.7% to $101.8 million and operating profit up 2.3% to $45.6 million, alongside improved occupancy CRE Segment Performance - Q2 2025 vs Q2 2024 (in thousands) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Operating revenue | $50,731 | $49,208 | 3.1% | | Operating profit | $22,205 | $22,611 | (1.8)% | | Same-Store NOI | $32,732 | $31,088 | 5.3% | CRE Occupancy as of June 30 | Occupancy Type | 2025 | 2024 | Basis Point Change | | :--- | :--- | :--- | :--- | | Leased Occupancy | 95.8% | 93.9% | 190 | | Physical Occupancy | 95.4% | 93.4% | 200 | | Economic Occupancy | 94.8% | 92.8% | 200 | - Leasing activity in Q2 2025 included 52 new and renewal leases covering 183,800 sq. ft., with a 6.8% positive rent spread on comparable leases[119][121] Land Operations Segment The Land Operations segment's profitability surged in 2025 due to one-time events, with Q2 operating profit at $13.9 million, contrasting with minimal profit in Q2 2024 - The timing and mix of real estate sales in the Land Operations segment can cause significant fluctuations in operating results, making direct year-over-year comparisons less indicative of future performance[130][131][132] Land Operations Operating Profit (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | $13,906 | $168 | | H1 | $18,756 | $8,099 | - The significant increase in Q2 2025 operating profit was primarily driven by a gain from a contract modification and favorable resolution of obligations from a prior land sale, as well as $2.6 million in equity earnings from joint ventures[134] Use of Non-GAAP Financial Measures The company uses non-GAAP measures like Funds from Operations (FFO), Adjusted FFO (AFFO), and Net Operating Income (NOI) to evaluate performance, which are reconciled to GAAP net income FFO and Adjusted FFO Reconciliation Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income available to common shareholders | $25,128 | $9,104 | $46,561 | $29,078 | | FFO | $35,155 | $20,619 | $61,501 | $49,824 | | Adjusted FFO | $20,478 | $16,942 | $42,764 | $42,472 | NOI Reconciliation Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | CRE Operating Profit | $22,205 | $22,611 | $45,631 | $44,592 | | NOI | $33,620 | $31,632 | $66,848 | $63,396 | | Same-Store NOI | $32,732 | $31,088 | $65,121 | $62,178 | Liquidity and Capital Resources The company believes its liquidity, sourced from operating cash flow, cash on hand, and its credit facility, is sufficient for short and long-term needs, despite a new $45.3 million liability from the Mahi Pono termination agreement - Principal sources of liquidity are cash from operations, available cash ($8.6 million), and borrowing capacity under its credit facility ($299.0 million available as of June 30, 2025)[156][166] - A new material contractual obligation arose in June 2025 from a termination agreement with Mahi Pono, requiring the company to pay $55.3 million over four years, with $45.3 million remaining payable as of June 30, 2025[161] - The company has a $100 million stock repurchase program authorized through 2025, with $99.9 million remaining available as of June 30, 2025[172] Other Matters This section confirms no material changes to critical accounting estimates since the 2024 Form 10-K and references notes for new accounting pronouncements - There were no material changes to the company's significant accounting estimates during the quarter[176] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk disclosures since its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes in the quantitative and qualitative disclosures about market risk since December 31, 2024[178] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the second quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[179] - No material changes occurred in the company's internal control over financial reporting during the second fiscal quarter[180] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures Legal Proceedings This section incorporates by reference the detailed discussion of legal proceedings found in Note 7 of the condensed consolidated financial statements - Information regarding legal proceedings is detailed in Note 7 of the Notes to Condensed Consolidated Financial Statements[182] Risk Factors The company reports that there have been no material changes to the risk factors disclosed in its most recent Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's most recent annual report on Form 10-K[183] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased a small number of shares under its authorized stock repurchase program during the quarter, with $99.9 million remaining available as of June 30, 2025 Issuer Purchases of Equity Securities - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Value Remaining for Purchase (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | 5,830 | $15.78 | $99,908 | | May 2025 | — | — | $99,908 | | June 2025 | — | — | $99,908 | - As of June 30, 2025, $99.9 million remains available under the company's $100.0 million stock repurchase program[185] Other Information The company confirms that none of its directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement during the second quarter of 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[187] Exhibit Index This section lists exhibits filed with the Form 10-Q, including a material contract, officer certifications, and Inline XBRL data files - Key exhibits filed include the Termination Agreement with Mahi Pono Holdings, CEO/CFO certifications, and Inline XBRL financial data[189]