The St. Joe pany(JOE) - 2022 Q2 - Quarterly Report

PART I Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Q2 and H1 2022, including balance sheets, income, and cash flows Condensed Consolidated Balance Sheets Total assets rose to $1.32 billion from $1.21 billion at year-end 2021, driven by real estate investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,319,825 | $1,208,151 | | Investment in real estate, net | $819,618 | $690,113 | | Cash and cash equivalents | $21,851 | $70,162 | | Total Liabilities | $672,385 | $582,051 | | Debt, net | $291,471 | $223,034 | | Total Equity | $647,440 | $626,100 | - A separate balance sheet for consolidated joint ventures shows total assets of $474.0 million and total liabilities of $406.9 million as of June 30, 2022. These assets are restricted to settling JV obligations and the liabilities do not have recourse to the general credit of the Company, with certain exceptions[11][12] Condensed Consolidated Statements of Income Q2 2022 revenue decreased to $68.3 million due to real estate, while H1 revenue increased to $133.1 million Q2 Financial Performance (in thousands, except per share) | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Total Revenue | $68,250 | $72,239 | | Real estate revenue | $28,027 | $41,063 | | Hospitality revenue | $29,556 | $22,627 | | Operating Income | $18,805 | $30,750 | | Net Income Attributable to Company | $17,039 | $24,224 | | Diluted EPS | $0.29 | $0.41 | Six-Month Financial Performance (in thousands, except per share) | Metric | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Total Revenue | $133,121 | $113,545 | | Real estate revenue | $64,801 | $62,116 | | Hospitality revenue | $45,877 | $35,694 | | Operating Income | $39,029 | $36,289 | | Net Income Attributable to Company | $30,451 | $27,420 | | Diluted EPS | $0.52 | $0.47 | Condensed Consolidated Statements of Comprehensive Income Q2 2022 total comprehensive income was $17.2 million, influenced by net income and favorable interest rate swaps Comprehensive Income Summary (in thousands) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $17,089 | $24,024 | $30,543 | $26,981 | | Total other comprehensive income (loss), net of tax | $399 | $(11) | $2,400 | $251 | | Total comprehensive income attributable to the Company | $17,203 | $24,213 | $31,924 | $27,671 | Condensed Consolidated Statements of Changes in Stockholders' Equity Equity increased to $647.4 million from $626.1 million, driven by net income and OCI, offset by dividends - For the six months ended June 30, 2022, the company paid dividends of $0.20 per share, totaling $11.8 million[24] - The company repurchased 4,760 common shares for $0.2 million during the first six months of 2022[24] Condensed Consolidated Statements of Cash Flows H1 2022 net cash from operations was $29.0 million, with $130.1 million used in investing, resulting in a $44.8 million cash decrease Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $29,005 | $47,196 | | Net cash used in investing activities | $(130,148) | $(137,696) | | Net cash provided by financing activities | $56,389 | $17,155 | | Net decrease in cash, cash equivalents and restricted cash | $(44,754) | $(73,345) | - Expenditures for operating property were a significant use of cash, totaling $106.3 million in H1 2022, up from $67.7 million in H1 2021[28] - The company had net debt borrowings of $69.9 million ($88.8 million borrowings less $18.9 million payments) in H1 2022, compared to net borrowings of $25.0 million in H1 2021[28] Notes to the Condensed Consolidated Financial Statements Notes detail accounting policies, JV consolidation, real estate investments, debt structure, and revenue recognition - The company operates primarily in three segments: residential, hospitality, and commercial, with all real estate assets located in Northwest Florida[33][34] - The company utilizes numerous joint ventures (JVs) for development, classified as either consolidated (if St. Joe is the primary beneficiary of a VIE or has majority control) or unconsolidated (accounted for via the equity method)[35][49] - As of June 30, 2022, the company had total debt of $297.2 million, an increase from $227.5 million at year-end 2021, primarily to finance construction and development projects[125][326] - On July 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.10 per share[210] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2022 financial performance, highlighting strong demand in Northwest Florida despite macroeconomic headwinds Business Overview and Market Conditions St. Joe focuses on Northwest Florida real estate development, facing supply chain issues but maintaining strong demand - The company's strategy is to use its existing land assets for residential, hospitality, and commercial ventures to increase recurring revenue and long-term shareholder value[213][214] - While demand remains strong in H1 2022, the company is experiencing impacts from macro-economic factors like inflation and supply chain disruptions, leading to project delays and increased operating costs[216][217] Reportable Segments Analysis Residential, Hospitality, and Commercial segments show growth, with 2,172 homesites, 476 hotel rooms, and 981,000 sq. ft. leased - As of June 30, 2022, the Residential segment had 2,172 homesites under contract, expected to generate approximately $167.8 million in revenue, an increase from 1,349 homesites a year prior[228] - The Hospitality segment's hotel portfolio includes 476 operational rooms and 767 rooms under development/construction, for a total of 1,298 rooms[238] - The Commercial segment's leasing portfolio includes approximately 981,000 sq. ft. of mixed-use, retail, and other space, which was 93% leased as of June 30, 2022, and 1,043 completed multi-family and senior living units, which were 93% occupied[246][250] Results of Operations Q2 2022 total revenue decreased to $68.2 million due to residential sales mix, while H1 revenue grew 17.3% to $133.1 million Consolidated Revenue by Source (in millions) | Revenue Source | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Real estate revenue | $28.0 | $41.0 | $64.8 | $62.1 | | Hospitality revenue | $29.6 | $22.6 | $45.9 | $35.7 | | Leasing revenue | $9.3 | $6.4 | $18.1 | $11.9 | | Timber revenue | $1.3 | $2.2 | $4.3 | $3.8 | | Total revenue | $68.2 | $72.2 | $133.1 | $113.5 | - Q2 2022 residential real estate revenue decreased 29.2% YoY to $23.0 million due to the mix of sales from different communities, with the average revenue per homesite dropping to $83,000 from $164,000 in Q2 2021[260] - Q2 2022 hospitality revenue grew 31.0% YoY to $29.6 million, driven by new hotels (Hilton Garden Inn and Homewood Suites) and increased membership at Watersound Club[266] - Q2 2022 leasing revenue increased 45.3% YoY to $9.3 million, primarily due to new leases at Watersound Origins Crossings apartments and Watercrest senior living community[268] Liquidity and Capital Resources As of June 30, 2022, the company held $135.6 million in cash, with total debt increasing to $297.2 million to fund capital expenditures - The company had cash, cash equivalents, and U.S. Treasury Bill investments of $135.6 million as of June 30, 2022[323] - Capital expenditures for the first six months of 2022 totaled $157.9 million, with $69.7 million for hospitality, $45.8 million for residential, and $42.3 million for commercial projects[325] - Total outstanding debt was $297.2 million as of June 30, 2022, up from $227.5 million at December 31, 2021[326] - The company has numerous guarantees on its own debt and the debt of its joint ventures, which could become full recourse in certain events[328][330][331] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk, with a 100 basis point increase raising annual interest expense by $1.7 million on variable-rate debt - A 100 basis point increase in interest rates would increase annual interest expense by $1.7 million on the company's variable-rate debt, which is based on LIBOR and SOFR[369] - The company is managing the transition away from LIBOR, which is set to be discontinued in June 2023. Existing debt agreements contain provisions for alternative base rates[370] Item 4. Controls and Procedures CEO and CFO concluded disclosure controls were effective as of June 30, 2022, with no material changes in internal controls - The CEO and CFO have concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[371] - No changes in internal controls over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[372] PART II Item 1. Legal Proceedings The company is subject to ordinary course litigation and environmental regulations, not expecting a material adverse effect - The company is subject to ordinary course litigation and environmental regulations but does not expect them to have a material adverse effect[374][376] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K were reported - No material changes to risk factors were reported for the quarter[377] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 4,760 shares in Q2 2022 under its ongoing program, with $99.8 million remaining for future repurchases Share Repurchases in Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining for Purchase (in Millions) | | :--- | :--- | :--- | :--- | | April 1-30, 2022 | — | $— | — | | May 1-31, 2022 | — | $— | — | | June 1-30, 2022 | 4,760 | $37.83 | $99.8 | | Total | 4,760 | $37.83 | $99.8 | - As of June 30, 2022, the company had $99.8 million remaining under its stock repurchase authorization[379] Item 5. Other Information No other information to report for this item - None[383] Item 6. Exhibits Exhibits include CEO and CFO certifications under Sarbanes-Oxley Act and XBRL data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files[385] SIGNATURES The report was signed on July 27, 2022, by the company's CEO and CFO - The report was signed on July 27, 2022, by the company's CEO and CFO[389]