The St. Joe CEO Discusses Q3 2010 Results - Earnings Call Transcript
The St. Joe Company (
)
Q3 2010 Earnings Call
November 02, 2010 10:30 a.m. ET
Executives
David Childers - Treasurer
Britt Greene - President & CEO
Bill McCalmont - EVP & CFO
Analysts
Buck Horne - Raymond James
Sheila McGrath - KBW
Jim Wilson - JPM Securities
Michael Gaiden - Morningstar
Presentation
Operator
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The St. Joe Company Q3 2008 Earnings Call Transcript
Good day and welcome to the St. Joe Company Third Quarter Earnings Release Conference Call. This call is being recorded. Currently all participants are in a listen-only mode. You will be given a chance later to ask questions.
At this time, I would like to turn the call over to the Company's Treasurer, David Childers. Please go ahead, sir.
David Childers
Good morning. Welcome to the St. Joe Company conference call to discuss 2010 third quarter results. I'm David Childers, Vice President and Treasurer and on the call this morning are Britt Greene, our President and CEO; and Bill McCalmont, our Executive Vice President and CFO.
Before we start, let me remind you that matters discussed on this conference call which are not historical facts are forward-looking statements that are based on our current expectation. Actual results may differ materially. Forward-looking statements are subject to certain risks and uncertainties that are described in today's earnings release, and in our SEC filings. These filings are on our website at www.joe.com.
Reconciliation of non-GAAP measures mentioned in today's call can also be found in today's earnings release. With that, I'll turn the call over to you, Britt?
Britt Greene
Thanks David. Before I get into the specific results, I'd like to take a few moments to touch on our history and our business. It's important to begin by explaining how we got to where we are today. Further majority of the last 80 years, there have been three major owner of the real estate in Northwest Florida. The Federal Government, the State of Florida and the St. Joe Company. Because of this other structure, when St. Joe became a seller real estate in the late 1990s, it was the first real opportunity for the Northwest Florida region to grow economically in the last 80 years. And since the region had not developed like the rest of Florida, St. Joe undertook every aspect real estate development and sales including obtaining land-use entitlements, master planning, developing, building and selling.
In a little over 10 years, we developed successful and profitable residential and commercial projects, includes infrastructure, attracted regional and national businesses to the area and in doing so, contributed to regional growth and prosperity. Today, we operate under a chains corporate structure and with an extremely flexible balance sheet that support a more efficient and less capital-intensive business model. We have a reduced risk profile and the ability to be very opportunistic and adaptable in regard to the future.
Because of the financial flexibility as well as the land in assets on our balance sheet and throughout the region, the ground work is in place to benefit our company and the shareholders for decades to come. We have the opportunity to extract this proportionate percentage of every new dollar to the area because we are a majority landowner that can provide for the region's growing commercial and residential needs.
Additionally, most competitors of ours must acquire land at market price and title it and build amenities to compete against us. These development processes can take a long time for our competitors. Competitor advantage for St. Joe, that we have several communities who develop products ready for sale that prospective buyers can see. What's most important to know about our business is that our land holdings cannot be duplicated. We enjoyed vast acres of low basis land suitable for development in Northwest Florida.
Like all businesses, we have been impacted by the global economic downturn and the impact has been especially pronounced in Florida. However, despite these challenging times, we are confident that St. Joe is well-positioned to succeed and to create long-term value for our shareholders. With that I'm pleased to turn over the call to Bill to discuss our results, Bill?
Bill McCalmont
Thanks Britt. Before I review the quarterly result, I want to comment on our accounting for long life assets. In particular, I want to revise some clarity regarding the detailed process we go through each quarter to ensure that our properties are valid appropriately and in accordance with Generally Accepted Accounting Principals or GAAP.
As part of our quarterly review of all our long lined assets we perform an impairment analysis of our real estate holdings according to GAAP. This then tells the review of current market data compared to homes and home size lifted for sale and review of our economic models for our development projects.
This review according to GAAP evaluates the future undiscounted cash revenue streams of a project, combined with the estimated future expenses and expenditures necessary to maintain and complete a project and compares these net cash flows to the carrying value of the project.
These economic models are updated at lest annually. In the event these net cash flows exceed the carrying value of the project there is not impairment, to the extent the net cash flow falls short of the carrying value of the project impairment is reported to reduce the projects asserted value.
We also review any events or changes in circumstances that would indicate that an asset might be impaired. This could include a change in the plans development of a project, the sale of a project or even the abandonment of a project.
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