Stratus(STRS) - 2023 Q1 - Quarterly Report

Financial Performance - Revenues for Q1 2023 totaled $5.8 million, a 87.1% increase from $3.1 million in Q1 2022, primarily due to the sale of one Amarra Villas home[101] - Net loss attributable to common stockholders for Q1 2023 was $5.8 million, or $0.71 per diluted share, compared to net income of $2.3 million, or $0.27 per diluted share, in Q1 2022[102] - The company reported an operating loss of $5.6 million for the three months ended March 31, 2023, compared to an operating income of $1.5 million for the same period in 2022[130] - Rental revenue increased to $3.3 million in Q1 2023 from $3.1 million in Q1 2022, primarily due to revenue from Magnolia Place, which had no rental revenue in Q1 2022[135] - Interest expense increased to $2.4 million in Q1 2023 from $1.1 million in Q1 2022, reflecting rising interest rates and increased average debt balances[139] - Consolidated general and administrative expenses rose to $4.7 million in Q1 2023 from $3.2 million in Q1 2022, mainly due to higher compensation costs and new consulting fees[138] Project Developments - The Holden Hills project consists of 495 acres, with Phase I expected to develop 337 luxury residence sites and is projected to start building homes in late 2024 or 2025[109][111] - The Tecoma Improvements for Holden Hills are estimated to cost approximately $14.7 million, with the company responsible for 60% of the costs[112] - The Saint June project, a 182-unit luxury multi-family development, is expected to be completed in Q3 2023, with first units ready for occupancy in June 2023[108] - The Saint George project, a 316-unit luxury multi-family development, is expected to achieve substantial completion by mid-2024[116] - The Annie B project, a proposed luxury high-rise rental project, aims to begin construction in late 2023 or 2024, subject to financing[117] - The Saint Julia project is a 306-unit multi-family development in Austin, with construction expected to begin in 2024, subject to financing and market conditions[118] - In October 2022, the company contracted to sell approximately 11 acres for $4.3 million, planned for 275 multi-family units in Magnolia Place, expected to close by mid-2024[119] Cash Flow and Financing - Cash used in operating activities totaled $18.4 million in Q1 2023, slightly up from $18.1 million in Q1 2022[145] - Cash used in investing activities was $10.2 million in Q1 2023, down from $14.9 million in Q1 2022[146] - Cash provided by financing activities increased significantly to $42.7 million in Q1 2023 from $13.5 million in Q1 2022[147] - Total debt as of March 31, 2023, was $129.4 million, up from $123.9 million at the end of 2022[153] - The company received a $40.0 million contribution from a noncontrolling interest owner related to the Holden Hills partnership in Q1 2023[148] - As of March 31, 2023, the company had $50.9 million in cash and cash equivalents, with no borrowings under the revolving credit facility[152] - The company anticipates seeking additional debt to finance the development of Phase II of Holden Hills and is pursuing other development projects[125] Debt and Interest Rates - The weighted-average interest rate for the Jones Crossing loan increased to 6.73% in Q1 2023 from 2.42% in Q1 2022[163] - The maturity date of the revolving credit facility was extended to March 27, 2025, with modified interest terms[154] - As of March 31, 2023, the interest rate for the revolving credit facility was 8.67 percent[167] Risks and Future Outlook - The main source of revenue and cash flow is expected to come from sales of properties to third parties or distributions from joint ventures, which are difficult to predict[168] - The company does not expect to generate sufficient recurring cash flow to cover general and administrative expenses each period[168] - Future operating and financial performance will depend on the ability to sell or lease properties profitably and extend or refinance debt as it becomes due[169] - The company is not permitted to repurchase common stock in excess of $1.0 million or pay dividends without prior written consent from Comerica Bank[178] - Forward-looking statements are subject to various risks, including economic downturns, supply chain constraints, and changes in market conditions[179] - The company cautions that actual results may differ materially from those anticipated in forward-looking statements due to numerous factors[181] - There have been no changes in critical accounting estimates from those discussed in the 2022 Form 10-K[171]