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 September 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 October 26, 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 - September 30, 2020 and December 31, 2019	3
Condensed Consolidated Statements of Income - Three and Nine Months Ended September 30, 2020 and 2019	5
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2020 and 2019	6
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three and Nine Months Ended September 30, 2020 and 2019	7
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 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	45
Item 3. Quantitative and Qualitative Disclosures About Market Risk	74
Item 4. Controls and Procedures	75
PART II
Item 1. Legal Proceedings	75
Item 1A. Risk Factors	75
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 3. Defaults Upon Senior Securities	77
Item 4. Mine Safety Disclosures	77
Item 5. Other Information	77
Item 6. Exhibits	77
SIGNATURES	78

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	September 30,		December 31,
	2020		2019
ASSETS
Investment in real estate, net	$	530,673	$	430,776
Investment in unconsolidated joint ventures		34,848		5,084
Cash and cash equivalents		102,351		185,716
Investments - debt securities		50,035		53
Investments - equity securities		2,677		9,746
Other assets		58,471		52,069
Property and equipment, net of accumulated depreciation of $65,565 and $63,223 at September 30, 2020 and December 31, 2019, respectively		18,750		19,018
Investments held by special purpose entities		206,108		206,771
Total assets	$	1,003,913	$	909,233
LIABILITIES AND EQUITY
Liabilities:
Debt, net	$	143,375	$	92,529
Other liabilities		70,774		57,200
Deferred tax liabilities, net		60,122		52,808
Senior Notes held by special purpose entity		177,222		177,026
Total liabilities		451,493		379,563

Commitments and contingencies (Note 18)

Equity:
Common stock, no par value; 180,000,000 shares authorized; 59,414,583 issued at September 30, 2020 and December 31, 2019; and 58,882,549 and 59,414,583 outstanding at September 30, 2020 and December 31, 2019, respectively		305,676		305,631
Retained earnings		239,552		214,225
Accumulated other comprehensive loss		(1,513)		(335)
Treasury stock at cost, 532,034 shares held at September 30, 2020		(8,803)		—
Total stockholders’ equity		534,912		519,521
Non-controlling interest		17,508		10,149
Total equity		552,420		529,670
Total liabilities and equity	$	1,003,913	$	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 September 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 September 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”) and the 30A Greenway Hotel, LLC (“The Lodge 30A 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.


	September 30,		December 31,
	2020		2019
ASSETS
Investment in real estate	$	161,362	$	96,001
Cash and cash equivalents		5,007		3,483
Other assets		12,612		12,766
Investments held by special purpose entities		206,108		206,771
Total assets	$	385,089	$	319,021
LIABILITIES
Debt, net	$	127,501	$	81,071
Other liabilities		12,201		3,471
Senior Notes held by special purpose entity		177,222		177,026
Total liabilities	$	316,924	$	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				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue:
Real estate revenue	$	18,476	$	13,490	$	41,838	$	33,634
Hospitality revenue		17,005		14,003		35,180		36,994
Leasing revenue		4,963		4,037		14,169		11,218
Timber revenue		1,597		1,326		5,508		2,580
Total revenue		42,041		32,856		96,695		84,426
Expenses:
Cost of real estate revenue		9,368		6,036		18,412		14,715
Cost of hospitality revenue		10,973		10,191		26,534		26,384
Cost of leasing revenue		2,047		1,351		3,972		3,411
Cost of timber revenue		212		175		603		509
Other operating and corporate expenses		5,113		5,054		16,975		16,116
Depreciation, depletion and amortization		3,303		2,629		9,394		7,162
Total expenses		31,016		25,436		75,890		68,297
Operating income		11,025		7,420		20,805		16,129
Other income (expense):
Investment income, net		2,405		2,371		2,851		10,952
Interest expense		(3,379)		(3,109)		(10,113)		(9,075)
Other income, net		267		2,147		20,276		7,126
Total other (expense) income, net		(707)		1,409		13,014		9,003
Income before equity in loss from unconsolidated affiliates and income taxes		10,318		8,829		33,819		25,132
Equity in loss from unconsolidated affiliates		(95)		—		(301)		—
Income tax expense		(2,441)		(3,003)		(7,852)		(7,098)
Net income		7,782		5,826		25,666		18,034
Net (income) loss attributable to non-controlling interest		(31)		(109)		(249)		53
Net income attributable to the Company	$	7,751	$	5,717	$	25,417	$	18,087

NET INCOME PER SHARE
Basic and Diluted
Weighted average shares outstanding		58,882,549		60,043,427		59,052,613		60,187,313
Net income per share attributable to the Company	$	0.13	$	0.10	$	0.43	$	0.30

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				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income:	$	7,782	$	5,826	$	25,666	$	18,034
Other comprehensive income (loss):
Net unrealized gain on available-for-sale investments		21		34		127		824
Net unrealized gain on restricted investments		2		—		7		18
Interest rate swap		1		(509)		(865)		(509)
Interest rate swap - unconsolidated affiliate		(2)		—		(843)		—
Reclassification of net realized gain included in earnings		—		(80)		(4)		(78)
Total before income taxes		22		(555)		(1,578)		255
Income tax (expense) benefit		(5)		135		400		(71)
Total other comprehensive income (loss), net of tax		17		(420)		(1,178)		184
Total comprehensive income, net of tax		7,799		5,406		24,488		18,218
Total comprehensive (income) loss attributable to non-controlling interest		(31)		(109)		(249)		53
Total comprehensive income attributable to the Company	$	7,768	$	5,297	$	24,239	$	18,271

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) Income		Stock		Interest		Total
Balance at June 30, 2020	58,882,549	$	305,676	$	231,801	$	(1,530)	$	(8,803)	$	15,506	$	542,650
Capital contribution from non-controlling interest	—		—		—		—		—		2,357		2,357
Capital distribution to non-controlling interest	—		—		—		—		—		(386)		(386)
Other comprehensive income, net of tax	—		—		—		17		—		—		17
Net income	—		—		7,751		—		—		31		7,782
Balance at September 30, 2020	58,882,549	$	305,676	$	239,552	$	(1,513)	$	(8,803)	$	17,508	$	552,420


							Accumulated
	Common Stock						Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		Loss		Stock		Interest		Total
Balance at June 30, 2019	60,200,534	$	330,209	$	199,820	$	(70)	$	(7,073)	$	19,254	$	542,140
Allocation of ownership interest in Windmark JV	—		(3,787)		—		—		—		(7,832)		(11,619)
Capital contribution from non-controlling interest	—		—		—		—		—		(1,683)		(1,683)
Stock based compensation expense	5,708		27		—		—		—		—		27
Repurchase of common shares	(670,029)		—		—		—		(11,721)		—		(11,721)
Other comprehensive loss, net of tax	—		—		—		(420)		—		—		(420)
Net income	—		—		5,717		—		—		109		5,826
Balance at September 30, 2019	59,536,213	$	326,449	$	205,537	$	(490)	$	(18,794)	$	9,848	$	522,550

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 December 31, 2019	59,414,583	$	305,631	$	214,225	$	(335)	$	—	$	10,149	$	529,670
Capital contribution from non-controlling interest	—		—		—		—		—		7,496		7,496
Capital distribution to non-controlling interest	—		—		—		—		—		(386)		(386)
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	—		—		—		(1,178)		—		—		(1,178)
Net income	—		—		25,417		—		—		249		25,666
Balance at September 30, 2020	58,882,549	$	305,676	$	239,552	$	(1,513)	$	(8,803)	$	17,508	$	552,420


							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		—
Allocation of ownership interest in Windmark JV	—		(3,787)		—		—		—		(7,832)		(11,619)
Capital contribution from non-controlling interest	—		—		—		—		—		1,784		1,784
Capital distribution to non-controlling interest	—		—		—