Part I. Financial Information Financial Statements The company reported a net loss of $34.2 million for the nine months ended September 30, 2021, with total assets slightly decreasing to $2.94 billion and increased cash usage in operations, influenced by complex VIE and unconsolidated entity structures Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $191,134 | $298,144 | | Inventories | $2,167,291 | $1,990,859 | | Investment in unconsolidated entities | $374,441 | $442,850 | | Total Assets | $2,936,275 | $2,961,985 | | Notes payable, net | $618,732 | $617,581 | | Total Liabilities | $1,063,429 | $1,051,887 | | Total Capital | $1,847,846 | $1,885,098 | Condensed Consolidated Statements of Operations (in thousands) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $20,695 | $8,377 | $42,179 | $41,904 | | Equity in earnings from unconsolidated entities | $485 | $52,423 | $9,048 | $45,417 | | Net (Loss) Income | ($8,210) | $36,422 | N/A | ($34,182) | ($2,559) | N/A | | Net (Loss) Income Attributable to the Company | ($3,848) | $16,964 | ($15,916) | ($1,210) | | Diluted EPS (Class A) | ($0.06) | $0.25 | ($0.23) | ($0.02) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($162,301) | ($115,713) | | Net cash provided by investing activities | $78,313 | $57,129 | | Net cash used in financing activities | ($23,022) | ($18,080) | | Net Decrease in Cash | ($107,010) | ($76,664) | - The company conducts all operations through the Operating Company, a consolidated Variable Interest Entity (VIE), with substantially all assets and liabilities belonging to this VIE, and also consolidates other VIEs including the San Francisco Venture, FP LP, and FPL73 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports strong new home sales and sufficient liquidity, despite a consolidated net loss influenced by varied segment performance and equity method investments, notably increased land sales in Great Park and reduced commercial revenue post-asset sales Overview and Operational Highlights The company operates through four segments, two accounted for by equity method, and underwent a significant leadership transition while reporting strong home sales in Great Park Neighborhoods and Valencia - Effective September 30, 2021, Emile Haddad transitioned to Chairman Emeritus and senior advisor, with Stuart Miller named Executive Chairman and Lynn Jochim becoming President and COO135136 - Strong home sales were reported, with 135 homes sold at Great Park Neighborhoods in Q3 2021 (591 YTD) and 199 homes sold at Valencia since its May 2021 launch138 - In Q3 2021, the Great Park Venture sold 113 homesites and eight homes for an aggregate gross price of $78.0 million137 Consolidated Results of Operations Q3 2021 revenues increased to $20.7 million due to land sales and management fees, but a sharp decline in equity earnings from unconsolidated entities resulted in a net loss of $8.2 million for the quarter and $34.2 million YTD Comparison of Results of Operations (in thousands) | Metric | Q3 2021 | Q3 2020 | Change | YTD 2021 | YTD 2020 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $20,695 | $8,377 | +147.0% | $42,179 | $41,904 | +0.7% | | Total Costs & Expenses | $30,927 | $24,540 | +26.0% | $89,311 | $91,450 | -2.3% | | Equity in Earnings | $485 | $52,423 | -99.1% | $9,048 | $45,417 | -79.9% | | Net (Loss) Income | ($8,210) | $36,422 | N/A | ($34,182) | ($2,559) | N/A | - The decrease in equity in earnings for Q3 2021 was primarily due to a large gain from the sale of two buildings by the Gateway Commercial Venture in the prior-year period148 - For the nine months ended Sep 30, 2020, equity in earnings included a $26.9 million other-than-temporary impairment on the company's investment in the Great Park Venture, offset by gains on asset sales from the Gateway Commercial Venture155 Segment Results Segment performance varied, with Great Park profitable from land sales, Valencia incurring a loss due to marketing, San Francisco delayed by land retesting, and Commercial profit significantly down due to the absence of prior-year asset sales - Valencia: YTD revenues of $11.5 million included $10.0 million from a contingent payment on a 2011 commercial property sale, while SG&A expenses increased 59.6% YTD due to marketing for the new development area171173175 - San Francisco: Development progress is hampered by delays in land transfer from the U.S. Navy due to re-evaluation of environmental remediation work, and the company is also a defendant in related litigation179180 - Great Park: YTD land sales revenue surged to $407.3 million (887 homesites) from $23.1 million (35 homesites) in the prior year, and the venture made distributions of $204.3 million to percentage interest holders, of which the company received $76.6 million186196 - Commercial: YTD revenues decreased 70.3% to $6.7 million, as the prior-year period included rental income from three buildings sold in 2020 for gross proceeds of $463.0 million209213 Liquidity and Capital Resources As of September 30, 2021, the company held $191.1 million in cash and an undrawn $125.0 million credit facility, with cash used in operations totaling $162.3 million and investing activities providing $78.3 million, primarily from a Great Park Venture distribution Liquidity Position as of Sep 30, 2021 (in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $191.1 | | Revolving credit facility capacity | $125.0 | | Drawn on credit facility | $0 | | Letters of credit outstanding | $0.3 | | Available Liquidity | $315.8 | - Cash used in operating activities increased by $46.6 million YTD, driven by continued investment in horizontal development and SG&A costs226 - Cash from investing activities was primarily driven by a $76.6 million distribution (return of investment) from the Great Park Venture229 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is its $618.7 million in fixed-rate consolidated net indebtedness, which is not subject to interest rate fluctuations, and it does not use derivative financial instruments - As of September 30, 2021, the company had $618.7 million in outstanding consolidated net indebtedness, which bears interest at fixed rates239 - The company has not entered into any transactions using derivative financial instruments239 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting identified during the quarter - Management concluded that disclosure controls and procedures were effective as of September 30, 2021240 - No changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal controls were identified during the quarter241 Part II. Other Information Legal Proceedings The company is a defendant in multiple lawsuits, including a class action related to The San Francisco Shipyard, alleging fraudulent environmental misrepresentation by a U.S. Navy contractor, for which the company asserts meritorious defenses - The company is a defendant in a putative class action lawsuit filed in May 2018 concerning The San Francisco Shipyard, alleging fraudulent misrepresentation of test results and remediation by Tetra Tech, a contractor hired by the U.S. Navy99 - Additional lawsuits have been filed by homeowners at The San Francisco Shipyard, alleging that environmental contamination issues were not properly disclosed, to which the company believes it has meritorious defenses100101 Risk Factors No material changes to the company's risk factors have occurred since those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - The company states there have been no material changes in its risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020245 Other Disclosures (Items 2, 3, 4, 5, 6) This section confirms no unregistered equity sales, no defaults on senior securities, no other material information under Item 5, and provides a list of exhibits, with mine safety disclosures being inapplicable - The company reported no activity for Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, or Other Information246
Five Point(FPH) - 2021 Q3 - Quarterly Report