The St. Joe pany(JOE) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's analysis for the quarter Item 1. Financial Statements Unaudited Q1 2022 financial statements show significant revenue and net income growth, driven by real estate investments Condensed Consolidated Balance Sheets | Balance Sheet Highlights | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,256,345 | $1,208,151 | | Investment in real estate, net | $741,455 | $690,113 | | Cash and cash equivalents | $33,115 | $70,162 | | Total Liabilities | $619,313 | $582,051 | | Debt, net | $256,763 | $223,034 | | Total Equity | $637,032 | $626,100 | - Total assets increased by approximately $48.2 million from December 31, 2021, to March 31, 2022, primarily driven by a $51.3 million increase in Investment in real estate, net[11] - Total liabilities increased by $37.3 million, mainly due to a $33.7 million increase in net debt[11] Condensed Consolidated Statements of Income | Income Statement Highlights | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $64,871 | $41,305 | | Real estate revenue | $36,774 | $21,053 | | Hospitality revenue | $16,321 | $13,067 | | Leasing revenue | $8,822 | $5,594 | | Operating Income | $20,224 | $5,539 | | Net Income Attributable to the Company | $13,412 | $3,196 | | Diluted EPS | $0.23 | $0.05 | - Total revenue for Q1 2022 increased by 57.1% year-over-year, driven by strong growth across all segments, particularly in real estate revenue which grew by 74.7%[16] - Net income attributable to the Company saw a substantial increase of 319.6% year-over-year, rising from $3.2 million in Q1 2021 to $13.4 million in Q1 2022[16] Condensed Consolidated Statements of Comprehensive Income | Comprehensive Income | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net Income | $13,453 | $2,957 | | Total other comprehensive income, net of tax | $2,001 | $262 | | Total comprehensive income attributable to the Company | $14,721 | $3,458 | Condensed Consolidated Statements of Changes in Stockholders' Equity - Total equity increased from $626.1 million at December 31, 2021, to $637.0 million at March 31, 2022. The increase was primarily driven by net income of $13.5 million and other comprehensive income of $2.0 million, partially offset by dividends of $5.9 million[21] - The company paid dividends of $0.10 per share, totaling $5.9 million, during the three months ended March 31, 2022[21] Condensed Consolidated Statements of Cash Flows | Cash Flow Highlights | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,813 | $9,828 | | Net cash used in investing activities | ($81,339) | ($71,093) | | Net cash provided by financing activities | $28,928 | $7,048 | | Net decrease in cash, cash equivalents and restricted cash | ($32,598) | ($54,217) | - Cash from operations more than doubled year-over-year, increasing to $19.8 million from $9.8 million, mainly due to higher net income and changes in operating assets and liabilities[23] - Investing activities used $81.3 million, primarily for expenditures for operating property ($51.6 million) and net purchases of debt securities ($29.5 million)[23] - Financing activities provided $28.9 million, largely from $35.2 million in new debt borrowings, which offset dividend payments of $5.9 million[23] Notes to the Condensed Consolidated Financial Statements - The company operates primarily in real estate development, asset management, and operations in Northwest Florida, with business conducted across three reportable segments: residential, hospitality, and commercial[28][29] - The company utilizes numerous joint ventures (JVs) for development projects. Some are consolidated as Variable Interest Entities (VIEs) where St. Joe is the primary beneficiary, while others are unconsolidated and accounted for using the equity method. As of March 31, 2022, the total investment in unconsolidated JVs was $52.6 million[46][59] - Total debt, net of issuance costs, increased to $256.8 million as of March 31, 2022, from $223.0 million at year-end 2021, primarily to finance construction and development projects across its segments[120] - On April 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.10 per share[202] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports strong Q1 2022 financial performance, with significant revenue and net income growth driven by robust demand across all real estate segments Business Overview and Market Conditions - The company is a real estate development, asset management, and operating company focused entirely on Northwest Florida, with 90% of its land holdings within fifteen miles of the Gulf of Mexico[204] - Despite macroeconomic headwinds such as inflation and rising interest rates, demand across all business segments remains strong, attributed to the continued growth and quality of life in Northwest Florida[208] Q1 2022 Financial Highlights (YoY) | Q1 2022 Financial Highlights (YoY) | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $64.9M | $41.3M | +57.1% | | Net Income (attributable to Company) | $13.4M | $3.2M | +319.6% | | Net Cash from Operating Activities | $19.8M | $9.8M | +101.6% | Reportable Segments Overview - Residential: As of March 31, 2022, the company had 2,294 residential homesites under contract, expected to generate approximately $175.6 million in revenue. This is a significant increase from 1,268 homesites under contract for $114.0 million a year prior[222] - Hospitality: The company's hotel portfolio totals 1,177 rooms (524 operational/managed, 653 under development). The Watersound Club membership grew to 2,271 members as of March 31, 2022, up from 1,722 a year ago[229][255] - Commercial: The leasing portfolio includes 877 completed multi-family units (97% leased) and 107 senior living units (54% occupied). The commercial property portfolio consists of approximately 981,000 square feet of leasable space, which was 90% leased[236][241] Results of Operations Revenue by Segment | Revenue by Segment (in millions) | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Real estate revenue | $36.8 | $21.0 | +75.2% | | Hospitality revenue | $16.3 | $13.1 | +24.4% | | Leasing revenue | $8.8 | $5.6 | +57.1% | | Timber revenue | $3.0 | $1.6 | +87.5% | - Residential real estate revenue grew 59.5% to $32.7 million, driven by a higher average revenue per homesite sold ($150,000 in Q1 2022 vs $73,000 in Q1 2021) due to a favorable mix of sales from different communities[252] - Hospitality gross margin decreased from 12.2% to 8.6% YoY, impacted by pre-opening expenses for the new Homewood Suites hotel and increased labor and product costs[255] - Leasing revenue increased 57.1% due to new leases at recently completed apartment and senior living communities. Gross margin improved to 58.0% from 51.8% as start-up expenses from the prior period subsided[256] Liquidity and Capital Resources - As of March 31, 2022, the company had $151.3 million in cash, cash equivalents, and U.S. Treasury Bills[287] - Total capital expenditures for Q1 2022 were $79.0 million, with significant investments across residential ($25.9 million), commercial ($25.8 million), and hospitality ($27.2 million) segments[289] - Total outstanding debt increased to $262.1 million from $227.5 million at year-end 2021 to fund ongoing development[290] Summary of Cash Flows | Summary of Cash Flows (in millions) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19.8 | $9.8 | | Net cash used in investing activities | ($81.3) | ($71.1) | | Net cash provided by financing activities | $28.9 | $7.1 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate fluctuations, impacting investment values and variable-rate debt expenses - A hypothetical 100 basis point increase in interest rates would increase annual interest expense on variable-rate loans by $1.4 million[335] - The company is managing the transition from LIBOR to alternative rates like SOFR, as many of its debt agreements are tied to LIBOR. Existing agreements have provisions for an alternative base rate[336] Item 4. Controls and Procedures The CEO and CFO confirmed effective disclosure controls and procedures, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[337] - No material changes were made to the internal controls over financial reporting during the quarter ended March 31, 2022[338] PART II - OTHER INFORMATION This section provides information on legal proceedings, risk factors, and other required disclosures Item 1. Legal Proceedings The company is subject to various litigation and claims in the ordinary course of business, none expected to have a material adverse effect - The company is subject to a variety of litigation and claims in the ordinary course of business, none of which are expected to have a material adverse effect[340] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the filing of the 2021 Annual Report on Form 10-K - No material changes to the company's Risk Factors have occurred since the filing of the 2021 Annual Report on Form 10-K[343] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information None Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including required certifications and Inline XBRL documents Signatures The report is duly signed and authorized by the President and CEO, and EVP and CFO, on April 27, 2022