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The St. Joe Company Q2 2010 Earnings Call Transcript

The St. Joe Company Q2 2010 Earnings Call Transcript

The St. Joe Company (JOE)

Q2 2010 Earnings Call

August 05, 2010 10:30 am ET


David Childers - IR

Bill McCalmont - EVP and CFO

Britt Greene - President and CEO


Sheila McGrath - KBW

Buck Horne - Raymond James


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Good day and welcome to the St. Joe Company second quarter earnings 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, Mr. David Childers. Please go ahead.



Thank you. Good morning. Welcome to the St. Joe Company conference call to discuss 2010 second quarter results. I'm David Childers, Vice President of Finance and Treasurer and on the call this morning are Britt Greene, our President and CEO; and our Executive Vice President and CFO, Bill McCalmont.

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

Reconciliation of non-GAAP measures mentioned in today's call can also be found in today's earnings release. Bill?



Thanks David. For the second quarter of 2010, we had a net loss of $8.6 million or $0.9 per share, including a pre-tax restructuring charge of $1.2 million or $0.01 per share after-tax. This compares to a net loss of $44.8 million or $0.49 per share in the second quarter of 2009, which included pre-tax and non-cash charges of $64.7 million or $0.43 per share after-tax.

In our residential business during the second quarter, we accepted contracts on 20 home sites throughout our communities at an average price in excess of $135,000. We closed on 11 home sites at an average price of $109,000 in the Resort communities of WaterColor and WaterSound West Beach in Walton County. And we closed five home sites at an average price of $57,000 in the primary community of Hawks Landing in Bay County.

Britt will discuss VentureCrossings momentarily but in our commercial business broadly, we are currently in the final stages of negotiations on several build-to-suit agreements and ground leases. We closed on limited rural land sales this quarter as we remained focused on selling smaller tracks rather than larger than larger contiguous acreage. We generate $400,000 from the sale of 42 acres at an average price of $9,500 per acre. We also generate $400,000 from easement transaction during the quarter and recognized another $400,000 from previously deferred sales.

Forestry revenues during the second quarter were $7.8 million, an increase of $600,000 from the second quarter of 2009, mostly due to the increased sales price per ton of sawtimber.

Regarding our Resort operations, we were off to a great start prior to the oil spill but now we anticipate that results for the second half of the year will be lower than in 2009, based on reduced advance bookings and continuing cancellations due to the Deepwater Horizon incident. These cancellations lead to the overall lower occupancy as well as lower [Gulf] food and beverage and marine operation revenues.

Turning to our three-year agreement with Southwest, which commenced on May 23, we have agreed to reimburse Southwest to bank her losses on service for their new airport. During the second quarter there was no required reimbursement payment to Southwest Airlines. Our quarterly valuation to standby guarantee liability did not change and we continue to carry liability of $800,000.

We have also limited our exposure to rising jet fuel prices and effectively hedge a portion of this variable expense by way of entering into a premium neutral color during the second quarter.

Let me now turn to our cost controls. In the first half of this year we reduced capital expenditures to $6 million for $9.4 million in the same period of 2009, a reduction of 36%. Our capital expenditure in the second half of this year will be mostly associated with the development of two buildings within VentureCrossings, which Britt will discuss.

During Q2 we were successful on continuing to trim expenses and reduce cash overheads. These costs were reduced by $2.5 million from $14.4 million in Q2 2009, a reduction of 17%. We expect expenses associated with corporate relocation to be approximately $5 million pre-tax and cash termination benefits of $2.2 million pre-tax. Most of these expenses will be incurred by the end of the third quarter of 2011.

Regarding the balance sheet; at June 30, we had cash of $139 million accentuating no debt and our $125 million revolving credit facility remained undrawn. Subsequent to the end of the quarter our nearly $68 million cash receivable was received. Our solid balance sheet and increasingly efficient operating structure provides substantial flexibility allowing us to execute our business strategies as we move ahead.

We want to take this opportunity now to provide you with an update regarding our response to the Deepwater Horizon oil spill incident. As with the case during the last earnings call, I will limit my comments to what we as a company know about the incident and the steps we are taking to respond.

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