Stratus(US:STRS)2023-08-14 20:29Financial Performance - Revenues for Q2 2023 totaled $3.5 million, down from $11.1 million in Q2 2022, and $9.3 million for the first six months of 2023, compared to $14.2 million in the same period last year[104]. - Net loss for Q2 2023 was $5.3 million, or $0.64 per diluted share, compared to net income of $96.6 million, or $11.53 per diluted share, in Q2 2022[105]. - The company reported an operating loss of $5.352 million for the three months ended June 30, 2023, compared to an operating income of $495,000 for the same period in 2022[138]. - Real Estate Operations generated total revenues of $58,000 for the three months ended June 30, 2023, down from $7.927 million in the same period in 2022[140]. - The company experienced a net loss attributable to common stockholders of $5.301 million for the three months ended June 30, 2023, compared to net income of $96.621 million in the same period in 2022[138]. - Cash used in operating activities totaled $26.8 million for the first six months of 2023, a decrease from $43.6 million in the same period of 2022[155]. - Cash provided by financing activities was $50.1 million for the first six months of 2023, compared to $6.2 million for the same period in 2022[158]. Cash and Debt Management - The company had cash and cash equivalents of $44.1 million and availability under its revolving credit facility of $42.7 million as of June 30, 2023[100]. - Total debt increased to $139.4 million as of June 30, 2023, up from $123.9 million at December 31, 2022[164]. - The company repurchased 369,006 shares for a total of $9.5 million at an average price of $25.61 per share as of June 30, 2023[161]. - The company entered into a $26.1 million construction loan with Comerica Bank in February 2023, maturing on February 8, 2026, for the Holden Hills project[168]. - The company is restricted from repurchasing common stock exceeding $1.0 million or paying dividends without prior written consent from Comerica Bank[191]. - Future dividends or share repurchase decisions will depend on financial results, cash requirements, and compliance with debt covenants[191]. Project Developments - The Holden Hills partnership was established with a land contribution valued at $70 million and a cash contribution of $40 million from a partner, resulting in a cash distribution of $35.8 million to the company[106]. - The company plans to develop 475 unique residences in the Holden Hills project, with Phase I expected to consist of 337 luxury residence sites and 12 single-family platted home sites[113]. - The Tecoma Improvements, estimated to cost approximately $14.7 million, will provide necessary access and utilities for the Holden Hills development, with the company responsible for 60% of the costs[117]. - The Saint June project, a 182-unit luxury multi-family development, is expected to be completed in September 2023, with the first units ready for occupancy in July 2023[112]. - The company is developing Section N, a 570-acre mixed-use project, which is anticipated to significantly increase development density compared to prior plans[119]. - The Saint George project, a 316-unit luxury multi-family project, is expected to achieve substantial completion by mid-2024[120]. - The Annie B project, a proposed luxury high-rise rental project, aims to begin construction in late 2024 or 2025, subject to financing[121]. - The retail component of Magnolia Place includes up to four retail buildings totaling approximately 34,000 square feet, with 89% of the first phase tenants open for business as of June 30, 2023[127]. Operational Challenges - The company does not expect to generate sufficient recurring cash flow to cover general and administrative expenses but anticipates positive cash flows over time from its unique asset locations[99]. - Current market conditions include high inflation and tightening bank credit, which are adversely affecting cash flows and projected profitability of new projects[133]. - General and administrative expenses rose to $4.1 million in Q2 2023 from $3.4 million in Q2 2022, an increase of about 20.6%[147]. - Interest expense increased to $2.9 million in Q2 2023 from $1.5 million in Q2 2022, reflecting rising interest rates and increased average debt balances[148]. - The company acknowledges that actual results may differ materially from forward-looking statements due to various risks, including economic downturns and supply chain constraints[192]. - Key risks include increases in operating costs, market conditions, and the ability to collect anticipated rental payments[193]. - The company may face challenges in developing, constructing, and leasing properties on acceptable terms due to rising inflation and interest rates[193]. - Future performance is subject to changes in buyer preferences and competition from other real estate developers[193]. Future Projections - The company aims to reduce reliance on its revolving credit facility while managing capital expenditures and maximizing cash flow from stabilized assets[100]. - The company projects that it will meet the DSCR test over the next 12 months if an additional principal payment of approximately $1.2 million is made in August 2023[169]. - The company expects to successfully extend or refinance debt maturing in the next 12 months[180]. - The company anticipates making additional operating loans of up to $3 million over the next 12 months to support Stratus Block 150, L.P.[178]. - The weighted-average interest rate for the Jones Crossing loan increased to 7.19% for the three months ended June 30, 2023, compared to 2.91% in the same period of 2022[176].