SEC Filing | The St. Joe Company

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 1-10466

The St. Joe Company

(Exact name of registrant as specified in its charter)


Florida	59-0432511
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

130 Richard Jackson Boulevard, Suite 200
Panama City Beach, Florida	32407
(Address of principal executive offices)	(Zip Code)

(850) 231-6400

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, no par value	JOE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☑ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑

As of July 27, 2020, there were 58,882,549 shares of common stock, no par value, outstanding.

Table of Contents

THE ST. JOE COMPANY

INDEX


	Page No.
PART I
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets - June 30, 2020 and December 31, 2019	3
Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2020 and 2019	5
Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2020 and 2019	6
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three and Six Months Ended June 30, 2020 and 2019	7
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019	9
Notes to the Condensed Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3. Quantitative and Qualitative Disclosures About Market Risk	72
Item 4. Controls and Procedures	73
PART II
Item 1. Legal Proceedings	74
Item 1A. Risk Factors	74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3. Defaults Upon Senior Securities	76
Item 4. Mine Safety Disclosures	76
Item 5. Other Information	76
Item 6. Exhibits	76
SIGNATURES	77

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	June 30,		December 31,
	2020		2019
ASSETS
Investment in real estate, net	$	497,658	$	430,776
Investment in unconsolidated joint ventures		29,293		5,084
Cash and cash equivalents		106,039		185,716
Investments - debt securities		49,996		53
Investments - equity securities		2,415		9,746
Other assets		54,977		52,069
Property and equipment, net of accumulated depreciation of $64,523 and $63,223 at June 30, 2020 and December 31, 2019, respectively		19,500		19,018
Investments held by special purpose entities		206,438		206,771
Total assets	$	966,316	$	909,233
LIABILITIES AND EQUITY
Liabilities:
Debt, net	$	120,522	$	92,529
Other liabilities		68,128		57,200
Deferred tax liabilities, net		57,860		52,808
Senior Notes held by special purpose entity		177,156		177,026
Total liabilities		423,666		379,563

Commitments and contingencies (Note 18)

Equity:
Common stock, no par value; 180,000,000 shares authorized; 59,414,583 issued at June 30, 2020 and December 31, 2019; and 58,882,549 and 59,414,583 outstanding at June 30, 2020 and December 31, 2019, respectively		305,676		305,631
Retained earnings		231,801		214,225
Accumulated other comprehensive loss		(1,530)		(335)
Treasury stock at cost, 532,034 shares held at June 30, 2020		(8,803)		—
Total stockholders’ equity		527,144		519,521
Non-controlling interest		15,506		10,149
Total equity		542,650		529,670
Total liabilities and equity	$	966,316	$	909,233

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

The following presents the portion of the condensed consolidated balances attributable to the Company’s consolidated variable interest entities, which, as of June 30, 2020 and December 31, 2019, include the Pier Park North joint venture (“Pier Park North JV”), Pier Park Crossings LLC (“Pier Park Crossings JV”), Origins Crossings, LLC (“Watersound Origins Crossings JV”), SJWCSL, LLC (“Watercrest JV”), Reliant Title and Closing Services, LLC (“Reliant Title JV”), Pier Park Crossings Phase II LLC (“Pier Park Crossings Phase II JV”), Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC as discussed in Note 2. Summary of Significant Accounting Policies. Basis of Presentation and Principles of Consolidation. As of June 30, 2020, the condensed consolidated balances attributable to the Company’s consolidated variable interest entities also include the Pier Park Resort Hotel, LLC (“Pier Park Resort Hotel JV”). The following assets may only be used to settle obligations of the consolidated variable interest entities and the following liabilities are only obligations of the variable interest entities and do not have recourse to the general credit of the Company, except for covenants and guarantees discussed in Note 10. Debt, Net.


	June 30,		December 31,
	2020		2019
ASSETS
Investment in real estate	$	129,536	$	96,001
Cash and cash equivalents		3,786		3,483
Other assets		13,175		12,766
Investments held by special purpose entities		206,438		206,771
Total assets	$	352,935	$	319,021
LIABILITIES
Debt, net	$	106,479	$	81,071
Other liabilities		14,548		3,471
Senior Notes held by special purpose entity		177,156		177,026
Total liabilities	$	298,183	$	261,568

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenue:
Real estate revenue	$	17,555	$	15,553	$	23,362	$	20,144
Hospitality revenue		11,565		15,560		18,176		22,991
Leasing revenue		4,907		3,674		9,206		7,181
Timber revenue		2,055		759		3,911		1,254
Total revenue		36,082		35,546		54,655		51,570
Expenses:
Cost of real estate revenue		7,245		6,846		9,044		8,679
Cost of hospitality revenue		8,240		9,002		15,560		16,193
Cost of leasing revenue		1,314		1,121		1,925		2,060
Cost of timber revenue		212		193		391		334
Other operating and corporate expenses		4,946		5,094		11,862		11,062
Depreciation, depletion and amortization		3,018		2,422		6,092		4,533
Total expenses		24,975		24,678		44,874		42,861
Operating income		11,107		10,868		9,781		8,709
Other income (expense):
Investment income, net		2,055		2,535		446		8,580
Interest expense		(3,390)		(3,024)		(6,734)		(5,966)
Other income, net		15,477		3,283		20,009		4,979
Total other income, net		14,142		2,794		13,721		7,593
Income before equity in loss from unconsolidated affiliates and income taxes		25,249		13,662		23,502		16,302
Equity in loss from unconsolidated affiliates		(123)		—		(206)		—
Income tax expense		(5,907)		(3,434)		(5,412)		(4,095)
Net income		19,219		10,228		17,884		12,207
Net (income) loss attributable to non-controlling interest		(20)		145		(218)		163
Net income attributable to the Company	$	19,199	$	10,373	$	17,666	$	12,370

NET INCOME PER SHARE
Basic and Diluted
Weighted average shares outstanding		58,901,540		60,200,534		59,138,579		60,260,488
Net income per share attributable to the Company	$	0.33	$	0.17	$	0.30	$	0.21

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income:	$	19,219	$	10,228	$	17,884	$	12,207
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments		106		(9)		106		790
Net unrealized gain on restricted investments		15		7		5		18
Interest rate swap		(137)		—		(866)		—
Interest rate swap - unconsolidated affiliate		(841)		—		(841)		—
Reclassification of net realized (gain) loss included in earnings		—		—		(4)		2
Total before income taxes		(857)		(2)		(1,600)		810
Income tax benefit (expense)		217		—		405		(206)
Total other comprehensive (loss) income, net of tax		(640)		(2)		(1,195)		604
Total comprehensive income, net of tax		18,579		10,226		16,689		12,811
Total comprehensive (income) loss attributable to non-controlling interest		(20)		145		(218)		163
Total comprehensive income attributable to the Company	$	18,559	$	10,371	$	16,471	$	12,974

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)


							Accumulated
	Common Stock						Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		Loss		Stock		Interest		Total
Balance at March 31, 2020	59,003,470	$	305,658	$	212,602	$	(890)	$	(6,807)	$	10,347	$	520,910
Capital contribution from non-controlling interest	—		—		—		—		—		5,139		5,139
Stock based compensation expense	—		18		—		—		—		—		18
Repurchase of common shares	(120,921)		—		—		—		(1,996)		—		(1,996)
Other comprehensive loss, net of tax	—		—		—		(640)		—		—		(640)
Net income	—		—		19,199		—		—		20		19,219
Balance at June 30, 2020	58,882,549	$	305,676	$	231,801	$	(1,530)	$	(8,803)	$	15,506	$	542,650


							Accumulated
	Common Stock						Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		Loss		Stock		Interest		Total
Balance at March 31, 2019	60,200,534	$	331,408	$	189,447	$	(68)	$	(7,073)	$	16,606	$	530,320
Allocation of ownership interest in Watercrest JV	—		(1,209)		—		—		—		1,209		—
Capital contribution from non-controlling interest	—		—		—		—		—		1,784		1,784
Capital distribution to non-controlling interest	—		—		—		—		—		(200)		(200)
Stock based compensation expense	—		10		—		—		—		—		10
Other comprehensive loss, net of tax	—		—		—		(2)		—		—		(2)
Net income	—		—		10,373		—		—		(145)		10,228
Balance at June 30, 2019	60,200,534	$	330,209	$	199,820	$	(70)	$	(7,073)	$	19,254	$	542,140

See accompanying notes to the condensed consolidated financial statements.

Table of Contents


							Accumulated
	Common Stock						Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		Loss		Stock		Interest		Total
Balance at December 31, 2019	59,414,583	$	305,631	$	214,225	$	(335)	$	—	$	10,149	$	529,670
Capital contribution from non-controlling interest	—		—		—		—		—		5,139		5,139
Stock based compensation expense	—		45		—		—		—		—		45
Repurchase of common shares	(532,034)		—		—		—		(8,803)		—		(8,803)
Adoption of ASU 2016-13 Financial Instruments - Credit Losses, net of tax	—		—		(90)		—		—		—		(90)
Other comprehensive loss, net of tax	—		—		—		(1,195)		—		—		(1,195)
Net income	—		—		17,666		—		—		218		17,884
Balance at June 30, 2020	58,882,549	$	305,676	$	231,801	$	(1,530)	$	(8,803)	$	15,506	$	542,650


							Accumulated
	Common Stock						Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		(Loss) Income		Stock		Interest		Total
Balance at December 31, 2018	60,672,034	$	331,395	$	187,450	$	(674)	$	—	$	14,940	$	533,111
Allocation of ownership interest in Watercrest JV	—		(1,209)		—		—		—		1,209		—
Capital contribution from non-controlling interest	—		—		—		—		—		3,468		3,468
Capital distribution to non-controlling interest	—		—		—		—		—		(200)		(200)
Stock based compensation expense	—		23		—		—		—		—		23
Repurchase of common shares	(471,500)		—		—		—		(7,073)		—		(7,073)
Other comprehensive income, net of tax	—		—		—		604		—		—		604
Net income	—		—		12,370		—		—		(163)		12,207
Balance at June 30, 2019	60,200,534	$	330,209	$	199,820	$	(70)	$	(7,073)	$	19,254	$	542,140

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)