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 March 31, 2022


☐	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 April 25, 2022, there were 58,912,504 shares of common stock, no par value, outstanding.

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THE ST. JOE COMPANY

INDEX


	Page No.
PART I
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets - March 31, 2022 and December 31, 2021	3
Condensed Consolidated Statements of Income - Three Months Ended March 31, 2022 and 2021	5
Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2022 and 2021	6
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three Months Ended March 31, 2022 and 2021	7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2022 and 2021	8
Notes to the Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3. Quantitative and Qualitative Disclosures About Market Risk	68
Item 4. Controls and Procedures	68
PART II
Item 1. Legal Proceedings	68
Item 1A. Risk Factors	69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3. Defaults Upon Senior Securities	69
Item 4. Mine Safety Disclosures	69
Item 5. Other Information	69
Item 6. Exhibits	69
SIGNATURES	70

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	March 31,		December 31,
	2022		2021
ASSETS
Investment in real estate, net	$	741,455	$	690,113
Investment in unconsolidated joint ventures		52,622		52,027
Cash and cash equivalents		33,115		70,162
Investments - debt securities		118,173		88,956
Other assets		69,875		70,235
Property and equipment, net of accumulated depreciation of $66,009 and $64,251 as of March 31, 2022 and December 31, 2021, respectively		35,974		31,145
Investments held by special purpose entities		205,131		205,513
Total assets	$	1,256,345	$	1,208,151
LIABILITIES AND EQUITY
Liabilities:
Debt, net	$	256,763	$	223,034
Other liabilities		67,799		67,985
Deferred revenue		37,368		36,207
Deferred tax liabilities, net		79,746		77,259
Senior Notes held by special purpose entity		177,637		177,566
Total liabilities		619,313		582,051

Commitments and contingencies (Note 19)

Equity:
Common stock, no par value; 180,000,000 shares authorized; 58,908,143 and 58,882,549 issued and outstanding at March 31, 2022 and December 31, 2021, respectively		296,915		296,873
Retained earnings		318,448		310,925
Accumulated other comprehensive income (loss)		920		(389)
Total stockholders’ equity		616,283		607,409
Non-controlling interest		20,749		18,691
Total equity		637,032		626,100
Total liabilities and equity	$	1,256,345	$	1,208,151

See accompanying notes to the condensed consolidated financial statements.

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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 joint ventures, which, as of March 31, 2022 and December 31, 2021, 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”), Watersound Closings & Escrow, LLC (“Watersound Closings JV”), Pier Park Crossings Phase II LLC (“Pier Park Crossings Phase II JV”), Pier Park Resort Hotel, LLC (“Pier Park Resort Hotel JV”), the 30A Greenway Hotel, LLC (“The Lodge 30A JV”), Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC. As of March 31, 2022, condensed consolidated balances attributable to the Company’s consolidated joint ventures also includes Mexico Beach Crossings, LLC (“Mexico Beach Crossings JV”). See Note 2. Summary of Significant Accounting Policies. Basis of Presentation and Principles of Consolidation and Note 4. Joint Ventures for additional information. The following assets may only be used to settle obligations of the consolidated joint ventures and the following liabilities are only obligations of the joint ventures and do not have recourse to the general credit of the Company, except for covenants and guarantees discussed in Note 10. Debt, Net.


	March 31,		December 31,
	2022		2021
ASSETS
Investment in real estate	$	222,582	$	206,565
Cash and cash equivalents		5,458		10,564
Other assets		21,366		17,392
Investments held by special purpose entities		205,131		205,513
Total assets	$	454,537	$	440,034
LIABILITIES
Debt, net	$	190,878	$	173,531
Other liabilities		12,941		17,602
Deferred revenue		312		234
Senior Notes held by special purpose entity		177,637		177,566
Total liabilities	$	381,768	$	368,933

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

(Unaudited)


	Three Months Ended
	March 31,
	2022		2021
Revenue:
Real estate revenue	$	36,774	$	21,053
Hospitality revenue		16,321		13,067
Leasing revenue		8,822		5,594
Timber revenue		2,954		1,591
Total revenue		64,871		41,305
Expenses:
Cost of real estate revenue		15,295		10,544
Cost of hospitality revenue		14,868		11,495
Cost of leasing revenue		3,652		2,664
Cost of timber revenue		150		141
Corporate and other operating expenses		5,656		7,069
Depreciation, depletion and amortization		5,026		3,853
Total expenses		44,647		35,766
Operating income		20,224		5,539
Other income (expense):
Investment income, net		2,300		1,195
Interest expense		(4,153)		(3,671)
Gain on contributions to unconsolidated joint ventures		482		120
Other (expense) income, net		(369)		1,294
Total other expense, net		(1,740)		(1,062)
Income before equity in loss from unconsolidated joint ventures and income taxes		18,484		4,477
Equity in loss from unconsolidated joint ventures		(495)		(468)
Income tax expense		(4,536)		(1,052)
Net income		13,453		2,957
Net (income) loss attributable to non-controlling interest		(41)		239
Net income attributable to the Company	$	13,412	$	3,196

NET INCOME PER SHARE ATTRIBUTABLE TO THE COMPANY
Basic	$	0.23	$	0.05
Diluted	$	0.23	$	0.05

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		58,882,549		58,882,549
Diluted		58,886,931		58,882,549

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2022		2021
Net income:	$	13,453	$	2,957
Other comprehensive (loss) income:
Net unrealized loss on available-for-sale investments		(322)		(2)
Interest rate swaps		2,308		157
Interest rate swap - unconsolidated joint venture		313		211
Reclassification of net realized loss (gain) included in earnings		147		(15)
Total before income taxes		2,446		351
Income tax expense		(445)		(89)
Total other comprehensive income, net of tax		2,001		262
Total comprehensive income, net of tax		15,454		3,219
Total comprehensive (income) loss attributable to non-controlling interest		(733)		239
Total comprehensive income attributable to the Company	$	14,721	$	3,458

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)



	Common Stock						Accumulated Other
	Outstanding				Retained		Comprehensive		Non-controlling
	Shares		Amount		Earnings		(Loss) Income		Interest		Total
Balance at December 31, 2021	58,882,549	$	296,873	$	310,925	$	(389)	$	18,691	$	626,100
Capital contributions from non-controlling interest	—		—		—		—		2,035		2,035
Capital distributions to non-controlling interest	—		—		—		—		(710)		(710)
Issuance of restricted stock	25,594		—		—		—		—		—
Stock based compensation expense	—		42		—		—		—		42
Dividends ($0.10 per share)	—		—		(5,889)		—		—		(5,889)
Other comprehensive income, net of tax	—		—		—		1,309		692		2,001
Net income	—		—		13,412		—		41		13,453
Balance at March 31, 2022	58,908,143	$	296,915	$	318,448	$	920	$	20,749	$	637,032



	Common Stock						Accumulated Other
	Outstanding				Retained		Comprehensive		Non-controlling
	Shares		Amount		Earnings		(Loss) Income		Interest		Total
Balance at December 31, 2020	58,882,549	$	296,873	$	255,216	$	(1,472)	$	17,553	$	568,170
Capital contributions from non-controlling interest	—		—		—		—		1,745		1,745
Capital distributions to non-controlling interest	—		—		—		—		(319)		(319)
Dividends ($0.08 per share)	—		—		(4,711)		—		—		(4,711)
Other comprehensive income, net of tax	—		—		—		262		—		262
Net income	—		—		3,196		—		(239)		2,957
Balance at March 31, 2021	58,882,549	$	296,873	$	253,701	$	(1,210)	$	18,740	$	568,104

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	13,453	$	2,957
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		5,026		3,853
Stock based compensation		42		—
Gain on sale of investments		—		(17)
Unrealized (gain) loss on investments, net		(25)		1,049
Equity in loss from unconsolidated joint ventures, net of distributions		528		468
Deferred income tax expense		2,042		268
Cost of real estate sold		14,064		9,839
Expenditures for and acquisition of real estate to be sold		(25,937)		(12,038)
Accretion income and other		(259)		(188)
Gain on disposal of property and equipment		(10)		—
Gain on contributions to unconsolidated joint ventures		(482)		(120)
Gain on insurance for damage to property and equipment, net		(723)		(866)
Changes in operating assets and liabilities:
Other assets		8,427		816
Deferred revenue		1,133		2,009
Other liabilities		2,534		1,798
Net cash provided by operating activities		19,813		9,828
Cash flows from investing activities:
Expenditures for operating property		(51,633)		(24,319)
Expenditures for property and equipment		(1,440)		(803)
Proceeds from the disposition of assets		10		—
Proceeds from insurance claims		723		866
Purchases of investments - debt securities		(74,476)		(84,971)
Maturities of investments - debt securities		45,000		39,000
Sales of investments - debt securities		—		36
Sales of investments - equity securities		—		9
Sales of restricted investments		—		1,173
Capital contributions to unconsolidated joint ventures		(142)		(2,500)
Capital distributions from unconsolidated joint ventures		206		—
Maturities of assets held by special purpose entities		413		416
Net cash used in investing activities		(81,339)		(71,093)
Cash flows from financing activities:
Capital contributions from non-controlling interest		2,035		1,745
Capital distributions to non-controlling interest		(710)		(319)
Dividends paid		(5,889)		(4,711)
Borrowings on debt		35,168		11,343
Principal payments for debt		(536)		(449)
Principal payments for finance leases		(35)		(21)
Debt issuance costs		(1,105)		(540)
Net cash provided by financing activities		28,928		7,048
Net decrease in cash, cash equivalents and restricted cash		(32,598)		(54,217)
Cash, cash equivalents and restricted cash at beginning of the period		74,400		110,119
Cash, cash equivalents and restricted cash at end of the period	$	41,802	$	55,902

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows.



	March 31,		March 31,
	2022		2021
Cash and cash equivalents	$	33,115	$	52,313
Restricted cash included in other assets		8,687		3,589
Total cash, cash equivalents and restricted cash shown in the accompanying condensed consolidated statements of cash flows	$	41,802	$	55,902

Restricted cash includes amounts reserved as a requirement of financing and development for certain of the Company’s projects.


	Three Months Ended
	March 31,
		2022	2021
Cash paid during the period for:
Interest, net of amounts capitalized	$	5,692	$	5,207
Income taxes	$	—	$	—

Non-cash investing and financing activities:
Non-cash contributions to unconsolidated joint ventures	$	(831)	$	(574)
Decrease in Community Development District debt	$	(15)	$	(2)
Transfers of operating property to property and equipment	$	4,960	$	7,092
Increase (decrease) in expenditures for operating properties and property and equipment financed through accounts payable	$	1,070	$	(551)
Unrealized gain on cash flow hedges	$	2,621	$	368

See notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, unless otherwise stated)

(Unaudited)

1. Nature of Operations

The St. Joe Company together with its consolidated subsidiaries (“St. Joe” or the “Company”) is a Florida real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. Approximately 86% of the Company’s real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of the Company’s real estate land holdings are located within fifteen miles of the Gulf of Mexico.

The Company conducts primarily all of its business in the following three reportable segments: 1) residential, 2) hospitality and 3) commercial. See Note 18. Segment Information.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The unaudited interim condensed consolidated financial statements include the accounts of the Company and all of its majority-owned and controlled subsidiaries, voting interest entities where the Company has a majority voting interest or control and variable interest entities where the Company deems itself the primary beneficiary. Investments in joint ventures (“JV”) and limited partnerships in which the Company is not the primary beneficiary, or a voting interest entity where the Company does not have a majority voting interest or control, are accounted for by the equity method. All significant intercompany transactions and balances have been eliminated in consolidation. The December 31, 2021 condensed consolidated balance sheet amounts have been derived from the Company’s December 31, 2021 audited consolidated financial statements. Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the Company’s previously reported total assets and liabilities, stockholders’ equity or net income. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.

A variable interest entity (“VIE”) is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. A VIE is required to be consolidated by its primary beneficiary, which is the entity that possesses the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary of the VIE, including real estate JVs determined to be VIEs. The Company continues to evaluate whether it is the primary beneficiary as needed when assessing reconsideration events. See Note 4. Joint Ventures.

The unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company adheres to the same accounting policies in preparation of its unaudited interim condensed consolidated financial statements as the Company’s December 31, 2021 annual financial statements, except for any recently adopted accounting pronouncements. As required under GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates.

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Concentration of Risks and Uncertainties

All of the Company’s real estate investments are concentrated in Northwest Florida. Uncertain economic conditions could have an adverse impact on the Company’s operations and asset values.

The economic conditions in the United States have been negatively impacted by the continued threat of the COVID-19 pandemic. While demand across each of the Company’s segments remain strong, the Company’s hospitality operations have already been, and may in the future be, disrupted by the impacts of the COVID-19 pandemic and the federal, state and local government actions to address it. Despite the Company’s positive financial results during the COVID-19 pandemic, the magnitude and duration of the COVID-19 pandemic impact remains unknown and the Company could experience material declines within each of its reportable segments in the future compared to historical norms.

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, other receivables, investments held by special purpose entity or entities (“SPE”) and investments in retained interests. The Company deposits and invests cash with local, regional and national financial institutions, and as of March 31, 2022, these balances exceeded the amount of F.D.I.C. insurance provided on such deposits. In addition, as of March 31, 2022 the Company had $8.9 million invested in U.S. Treasury Money Market Funds, $118.2 million invested in U.S. Treasury Bills classified as investments – debt securities, and $0.5 million invested in two issuers of preferred stock that are non-investment grade.

Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the Company by the basic weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares. The treasury stock method is used to determine the effect on diluted earnings. For the three months ended March 31, 2022, the Company had 25,594 unvested shares of restricted stock. As of March 31, 2021, there were no outstanding common stock equivalents. For the three months ended March 31, 2021, the Company did not have any potential dilutive instruments, therefore, basic and diluted weighted average shares outstanding were equal. See Note 15. Stockholders’ Equity for additional information related to the issuance of common stock for employee compensation.

The computation of basic and diluted earnings per share shares are as follows:


	Three Months Ended March 31,
	2022		2021

	(Dollars in thousands except per share amounts)
Income
Net income attributable to the Company	$	13,412	$	3,196

Shares
Weighted-average shares outstanding - basic		58,882,549		58,882,549
Incremental shares from restricted stock		4,382		—
Weighted-average shares outstanding - diluted		58,886,931		58,882,549

Net income per share attributable to the Company
Basic income per share	$	0.23	$	0.05
Diluted income per share	$	0.23	$	0.05

Recently Adopted Accounting Pronouncements

There were no recently adopted accounting pronouncements which would have a material effect on the Company’s financial condition, results of operations and cash flows.

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Recently Issued Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting that provides temporary optional guidance to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The new guidance provides expedients and exceptions for applying GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate that is expected to be discontinued due to reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) which clarifies the original guidance that certain optional expedients and exceptions in contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. This new guidance was effective upon issuance and may be applied prospectively through December 31, 2022, as reference rate activities occur. There is no current impact to the Company from this guidance and the Company will consider the impact on its financial condition, results of operations and cash flows if there are modifications to existing agreements.

3. Investment in Real Estate

Real estate, excluding unconsolidated JVs, by property type and segment includes the following:


	March 31,		December 31,
	2022		2021
Development property:
Residential	$	125,784	$	122,404
Hospitality		146,298		137,089
Commercial		104,553		85,931
Other		3,261		3,232
Total development property		379,896