- Hospitality revenue increased substantially above the prior Company quarterly record achieved in the third quarter of 2023. Hospitality gross margin increased to 39.2% in the second quarter of 2024 as compared to 26.2% in the second quarter of 2023.
- Hospitality revenue increased by 38%, leasing revenue increased by 19%, while real estate revenue decreased by 51% as compared to the second quarter 2023. Overall revenue in the quarter was $111.6 million as compared to $128.1 million in 2023.
- For the first six-months of 2024, total revenue decreased by 1% to $199.4 million from 2023 and net income attributable to the Company decreased to $38.4 million, as compared to $45.1 million in 2023. The decrease in net income is primarily due to timing and product mix of sales in residential communities, fewer commercial and one-off land sales, partially offset by growth in hospitality and leasing revenue.
- Over 22,500 homesites are in various stages of planning or development.
- Third quarter dividend increasing 17% to $0.14 per share from $0.12 per share.
Jorge Gonzalez, the Company’s President and Chief Executive Officer, said, “We continued to focus our efforts on creating long-term shareholder value through investments in our business with an emphasis on recurring revenue streams while distributing excess cash by increasing the upcoming cash dividend by 17% to $0.14 per share. This is our fourth dividend increase since we initiated dividends in the fourth quarter of 2020, starting at $0.07 per share and now reaching $0.14 per share, a 100% increase in less than four years. Turning now to our operations, we have seen dramatic positive results in the quarter from hospitality operations due to the five new hotel openings in 2023 and growth in the Watersound Club membership program as evidenced by our 38% period-over-period growth in hospitality revenue during second quarter of 2024. In fact, we again achieved record hospitality revenue for a single quarter. Hospitality gross margin also increased substantially as the Company is beginning to achieve higher revenues and operating efficiency. Leasing revenue continues to increase as additional commercial projects are completed, bringing the Company portfolio to over 1.1 million rentable square feet.”
Mr. Gonzalez continued, “Despite the continued growth in hospitality and leasing revenues, overall revenue decreased as a result of an extraordinarily high number of homesites that were completed and sold in the second quarter of 2023, fueled by the completion and sale of a new phase of 133 homesites in the Watersound Origins community in June 2023. The Company sold 186 homesites in the second quarter of 2024, as compared to 300 homesites for the same period in 2023. As we often say, the ‘seeding and harvesting’ cycle of residential homesite development and sales is not linear and therefore not ideal for quarter-to-quarter comparisons. Total revenue in the second quarter of 2024 exceeded all quarters in 2023 except for the second quarter. Overall, there were 349 homesites and homes sold in the second quarter of 2024. This includes 186 homesites in ten different residential communities and 163 homes in the Latitude Margaritaville Watersound unconsolidated joint venture. All builders performed on their contractual obligations and no builder requested a delay in closings. The Company’s residential homesite pipeline has over 22,500 homesites in twenty different communities at various stages of planning or development.”
Mr. Gonzalez concluded, “This quarter demonstrates what we have been saying all along, which is that housing demand in our region is solid and our quarter-to-quarter homesite sales and margin results depend more on the timing of completion of development and product mix. The biggest driver of housing demand in our region is the net migration that is continuing from a wider range of geographies where individuals and families are looking for a high quality of life, safety, security, natural beauty, and great schools.”
Consolidated Second Quarter and First Half 2024 Results
Total consolidated revenue for the second quarter of 2024 decreased by 13% to $111.6 million as compared to $128.1 million for the second quarter of 2023. Hospitality revenue increased by 38% to $62.3 million and leasing revenue increased by 19% to $14.8 million. Real estate revenue decreased by 51% to $34.5 million due to a mix of sales from different communities, timing of homebuilder contractual closing obligations and reduced commercial transactions.
For the six months ended June 30, 2024, total consolidated revenue decreased by 1% to $199.4 million, as compared to $201.1 million for the first six months of 2023. Hospitality revenue increased by 46% to $101.6 million and leasing revenue increased by 20% to $29.1 million. Real estate revenue decreased by 36% to $68.7 million due to mix of sales from different residential communities and fewer commercial and one-off land sales, as compared to the same period in 2023.
Over the past several years, the Company has entered into joint ventures which are unconsolidated and accounted for using the equity method. For the three months ended June 30, 2024, these unconsolidated joint ventures had $94.1 million of revenue, as compared to $88.8 million for the same period in 2023. The Company’s economic interests in its unconsolidated joint ventures for the three months ended June 30, 2024, resulted in $5.4 million of equity in income from unconsolidated joint ventures, as compared to $6.0 million for the three months ended June 30, 2023. For the first six months of 2024, these unconsolidated joint ventures had $189.9 million of revenue, as compared to $170.6 million for the first six months of 2023. The Company’s economic interests in its unconsolidated joint ventures resulted in $12.8 million of equity in income from unconsolidated joint ventures, for the first six months of 2024, as compared to $9.7 million for the first six months of 2023. Although these business ventures are not included as revenue in the Company’s financial statements, they are part of the core business strategy, which generates substantial financial returns for the Company.
Net income attributable to the Company for the second quarter of 2024 decreased by 29% to $24.5 million, or $0.42 per share, as compared to net income of $34.7 million, or $0.60 per share, for the same period in 2023. Net income for the first six months of 2024 decreased by 15% to $38.4 million, or $0.66 per share, as compared to net income of $45.1 million, or $0.77 per share, for the same period in 2023.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, for the three months ended June 30, 2024, decreased by 18% to $49.2 million, as compared to $59.7 million for the same period in 2023. EBITDA for the six months ended June 30, 2024, was $84.2 million as compared to $84.1 million for the first six months of 2023. Depreciation is a non-cash, GAAP expense which is amortized over an asset’s prescribed life, while maintenance and repair expenses are period costs and expensed as incurred. See Financial Data below for additional information, including a reconciliation of EBITDA to net income attributable to the Company.
On July 24, 2024, the Board of Directors declared a cash dividend of $0.14 per share on the Company’s common stock, payable on September 6, 2024, to shareholders of record as of the close of business on August 9, 2024. The third quarter dividend represents a 17% increase from the second quarter 2024 dividend of $0.12 per share.
Real Estate
Total real estate revenue decreased by 51% to $34.5 million in the second quarter of 2024, as compared to $70.6 million in the second quarter of 2023. The quarter-to-quarter homesite sales and margin results depend more on the timing of completion of development and product mix. The second quarter of 2023 included activity which, as discussed in prior quarters, was delayed due to development delays as a result of the supply chain disruptions experienced in 2022 and early 2023.
The Company sold 186 homesites at an average base price of approximately $140,000 and gross margin of 52.3%, in the second quarter of 2024, as compared to 300 homesites at an average base price of approximately $153,000 and gross margin of 53.8% in the second quarter of 2023. The differences in the average sales price, number of homesite closings and gross margin period-over-period were due to the mix of sales in different communities.
As of June 30, 2024, the Company had 1,303 residential homesites under contract, which are expected to result in revenue of approximately $114.0 million, plus residuals, over the next several years, as compared to 1,825 residential homesites under contract for $158.5 million, plus residuals, as of June 30, 2023. The change in homesites under contract is due to increased homesite closing transactions during 2023 and the first half of 2024 and the amount of remaining homesites in current phases of residential communities. The Company’s residential homesite pipeline has over 22,500 homesites in various stages of development, engineering, permitting or concept planning.
The Latitude Margaritaville Watersound unconsolidated joint venture, planned for 3,500 residential homes, had 135 net sale contracts executed in the second quarter of 2024. Since the start of sales in 2021, there have been 1,878 home contracts. For the second quarter of 2024, there were 163 completed home sales bringing the community to 1,344 occupied homes. The 534 homes under contract as of June 30, 2024, with an average sales price of approximately $567,000, are expected to result in sales value of approximately $302.8 million at completion, as compared to 665 homes under contract as of June 30, 2023, with an average sales price of approximately $501,000.
Hospitality
Hospitality revenue increased by 38% to a Company quarterly record of $62.3 million in the second quarter of 2024, as compared to $45.1 million in the second quarter of 2023. Hospitality revenue continues to benefit from the growth of the Watersound Club membership program and the opening of five hotels throughout 2023. As of June 30, 2024, the Company had 3,571 club members, as compared to 2,853 club members as of June 30, 2023, an increase of 718 net new members. As of June 30, 2024, the Company owned (individually by the Company or through consolidated and unconsolidated joint ventures) twelve hotels with 1,298 operational hotel rooms, as compared to eleven hotels with 1,177 rooms as of June 30, 2023.
Leasing
Leasing revenue from commercial, office, retail, multi-family, senior living, self-storage and other properties increased by 19% to $14.8 million in the second quarter of 2024, as compared to the same period in 2023. As of June 30, 2024, the Company (individually by the Company or through consolidated and unconsolidated joint ventures) had 1,383 rentable multi-family and senior living units.
Leasable space as of June 30, 2024, consisted of approximately 1,100,000 square feet, of which approximately 1,058,000, or 96%, was leased, as compared to approximately 1,041,000 square feet as of June 30, 2023, of which approximately 1,016,000, or 98%, was leased. As of June 30, 2024, the Company had an additional 82,000 square feet of leasable space under construction. The Company is focused on commercial leasing space at the Watersound Town Center, Watersound West Bay Center and the FSU/TMH Medical Campus. These three centers, and others in the planning stage, have the potential to more than double the Company’s total current leasable commercial space and rental multi-family units. The Company, wholly or through joint ventures, also owns significant hospitality businesses that may otherwise be leased to others.
Corporate and Other Operating Expenses
The Company’s corporate and other operating expenses for the three months ended June 30, 2024, increased by $0.4 million to $5.9 million, as compared to $5.5 million for the same period in 2023. For the first six months of 2024, corporate and other operating expenses increased by $1.6 million to $12.9 million, as compared to $11.3 million for the first six months of 2023.
Investments, Liquidity and Debt
In the second quarter of 2024, the Company funded $32.4 million in capital expenditures. In addition, the Company paid $7.0 million in cash dividends and repaid a net of $4.7 million of debt. For the first six months of 2024, the Company funded $63.9 million of capital expenditures, paid $14.0 million in cash dividends and repaid a net of $6.9 million of debt. As of June 30, 2024, the Company had $86.7 million in cash, cash equivalents and other liquid investments, as compared to $88.6 million as of June 30, 2023. As of June 30, 2024, the Company had $294.9 million invested in development property, which, when complete, will be added to operating property or sold. As of June 30, 2024, the weighted average effective interest rate of outstanding debt was 5.3% with an average remaining life of 16.9 years. 67% of the Company’s outstanding debt had a fixed or swapped interest rate. The remaining 33% of debt has interest rates that vary with SOFR. Company debt as of June 30, 2024, is approximately 29% of the Company’s total assets.
Additional Information and Where to Find It
Additional information with respect to the Company’s results for the second quarter and first half of 2024 will be available in a Form 10-Q that will be filed with the Securities and Exchange Commission (“SEC”) and can be found at www.joe.com and at the SEC’s website www.sec.gov. We recommend studying the Company’s latest Form 10-K and Form 10-Q before making an investment decision.
FINANCIAL DATA SCHEDULES
Financial data schedules in this press release include consolidated results, summary balance sheets, corporate and other operating expenses and the reconciliation of earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP financial measure, for the second quarter and first half of 2024 and 2023, respectively.