Stratus Posts Q2 Earnings on Home Sales, Boosts Buyback Plan

Core Insights - Stratus Properties Inc. (STRS) shares increased by 10.2% following the earnings report for Q2 2025, contrasting with a 1.2% rise in the S&P 500 index during the same period [1] - Despite the initial positive reaction, the stock has decreased by 3.6% over the past month, underperforming the S&P 500's 2.5% growth [1] Financial Performance - The company reported a net income per share of 3 cents for Q2 2025, a turnaround from a net loss of 21 cents per share in the same quarter last year [2] - Revenues increased to $11.6 million, marking a 36.7% rise from $8.5 million in Q2 2024, primarily due to the sale of two Amarra Villas homes compared to one in the prior year [2] - Net income attributable to common stockholders was $0.3 million, reversing a net loss of $1.7 million from the previous year [2] Key Business Metrics - EBITDA improved significantly, with a loss of only $0.2 million compared to a loss of $1.3 million a year earlier [3] - Leasing operations generated an operating profit of $6.3 million, up from $1.8 million last year, aided by a $5 million pre-tax gain from the sale of the West Killeen Market retail project [3] - Real estate operations faced a loss of $3.5 million, partly due to a $1 million write-off of receivables related to previously sold properties [3] Capital Expenditures and Cash Position - Capital expenditures and development spending totaled $9.8 million, mainly for the Holden Hills Phase 1 and The Saint George multi-family project [4] - As of June 2025, the company had $59.4 million in cash and cash equivalents, a significant increase from $20.2 million at the end of 2024, with no borrowings on its revolving credit facility [4] Management Commentary - Chairman and CEO William H. Armstrong III noted that the company achieved "significant milestones" in H1 2025, including the completion of The Saint George and the last two Amarra Villas homes [5] - The CEO highlighted a $47.8 million cash distribution from the Holden Hills Phase 2 joint venture and the sale of West Killeen Market, which enhanced liquidity [5] - The strengthened cash position allows for flexibility in share repurchases, debt reduction, or reinvestment in development [5] Factors Influencing Results - Revenue growth was primarily transaction-driven, particularly from higher-value Amarra Villas home sales and the disposal of West Killeen Market [6] - Lower aggregate sales in the first half compared to last year's significant land and home transactions negatively impacted year-to-date results [6] - Increased real estate operating expenses and a receivables write-off affected margins, although leasing operations helped mitigate some of these challenges [6] Other Developments - Stratus entered a joint venture for the development of Holden Hills Phase 2, a 570-acre mixed-use project, which returned $47.8 million in cash to the company [7] - The board approved an expansion of the share repurchase program from $5 million to $25 million, with $22 million remaining available as of August 8, 2025 [7]