St. Joe's (JOE) Q1 Income Records Y/Y Growth, Expenses Fall

The St. Joe Company (NYSE:JOE) reported first-quarter 2019 net income of $2 million or 3 cents per share, higher than the net income of $0.7 million, or 1 cent per share recorded in the prior-year period. Though the company’s revenues declined, lower expenses supported bottom-line growth.

Total revenues for the quarter came in at $16 million, down 19.6% from $19.9 million recorded a year ago. Results reflect decline in revenues in real estate and timber segments. The company’s total expenses for the quarter declined 10.8% from the prior-year quarter’s reported figure to $18.2 million.

Behind the Headline Numbers

In the first quarter, real-estate revenues came in at $4.6 million, slumping 40.3% from the prior year’s $7.7 million. This fall was mainly related to the timing of home-site development completion and closings mostly in the Watersound Origins, SouthWood and Breakfast Point communities, partly offset by higher commercial real estate sales.

The company noted that as of Mar 31, 2019, it had 773 residential home sites under contract. The company expects 199 of these to close in 2019, generating revenues of nearly $11.6 million. This compares with 141 residential home sites, which the company had under contract as of Mar 31, 2018. This upside reflects higher number of builder contracts for residential home sites.

Timber revenues of $0.5 million declined from $1.7 million reported in the year-ago quarter. Fall in timber revenues was mainly due to the impact of Hurricane Michael.

Leasing revenues came in at $3.5 million, up 2.9% from the prior-year quarter’s $3.4 million. As of Mar 31, 2019, the company’s rentable space totaled nearly 811,000 square feet, which was 93% leased. This compares to roughly 813,000-square-foot as of Mar 31, 2018, which was 89% leased.

As of March 31, 2019, the company had three commercial buildings under construction, totaling 73,785 square feet of rentable space, a 240-unit apartment community and a 124-room hotel. Moreover, 1,332 square feet of rentable space was repurposed in the WaterColor Town Center into a new company-operated store. Also, 1,534 square feet of rentable space was repurposed at WaterSound Gatehouse for a new company-operated store, scheduled to open later this year.

Hospitality revenues came in at $7.4 million, up 4.2% from the year-ago period. The upside can mainly be attributed to higher revenues from resorts, lodging and other management services. This was partly muted by softer marina revenues as the company’s marinas remained closed due to the damage caused by Hurricane Michael. The company opened the new WaterColor Store in the WaterColor Town Center in January 2019.

As of Mar 31, 2019, the company’s investment income totaled $6 million, up 66.7% from the $3.6 million recorded in 2018.

Liquidity

St. Joe exited first-quarter 2019 with cash, cash equivalents and investments of $238.8 million as of Mar 31, 2019, lower than $240.3 million as of Dec 31, 2018.

Conclusion

St. Joe’s strategies to expand its portfolio of income-producing properties and focus on recurring operating-income opportunities will likely create long-term value for shareholders. Continued efforts to enhance its leasing portfolio have enabled the company to record encouraging growth. Nonetheless, inconsistent revenue performance in a number of segments and regional business concentration remain concerns.

St. Joe currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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