JOE Reports Third Quarter Losses

Site Staff,

JACKSONVILLE — The St. Joe Company (NYSE: JOE) today announced a net loss for the third quarter 2008 of $(19.2) million, or $(0.21) per share, compared to a Net Loss of $(6.8) million, or $(0.09) per share, for the third quarter of 2007.

   JOE's third quarter results included the following significant charges which totaled $13.0 million, or $0.09 per share after-tax:

  • Pre-tax restructuring charge of $1.3 million, or $0.01 per share after-tax, and a related $1.9 million pension charge, or $0.01 per share after-tax;
  • Pre-tax impairment of $1.3 million and pre-tax loss of $1.9 million related to abandoned property, or an aggregate of $0.02 per share after-tax, associated with certain of JOE's communities; and
  • $6.6 million pre-tax loss, or $0.05 per share after-tax, related to a fair value adjustment on retained interests of monetized installment notes.

 

For the third quarter of 2007, JOE recorded pre-tax impairment losses totaling $20.4 million, a $5.0 million termination fee paid to a third party management company and the pre-tax gain on the sale of two buildings reported in discontinued operations totaling $10.2 million, for an aggregate Net Loss per share of $0.17 after-tax.

Third Quarter Highlights

"During these extraordinary times that are impacting the entire real estate industry, we continue to make progress in the third quarter fortifying JOE," said Britt Greene, JOE's President and CEO. "With virtually no debt and a strong cash position, JOE's solid balance sheet better positions us to withstand the global financial crisis and the downturn in the Florida real estate market. We remain committed to continuing to manage costs during this prolonged downturn and will maintain our focus on managing our inventory and assets to preserve long-term shareholder value. At the same time, we are focusing on the opportunities presented by the opening of the airport and are positioning JOE for when the real estate markets begin to recover."

    Highlights during the third quarter include:

  • JOE entered into a new $100 million revolving credit facility with Branch Banking and Trust Company;
  • JOE ended the quarter with $106.3 million of cash after receiving $69.0 million in net cash proceeds from the monetization of $77.9 million of installment notes receivable; and
  • After the end of the third quarter, the U.S. District Court in Jacksonville issued a final order denying an attempt to halt construction of the new airport. Meanwhile, construction of the Panama City – Bay County International Airport continued to move forward on time and on budget.

 Third Quarter Operating Results

"The third quarter operating results reflect a challenging environment," said Greene. "The summer selling season in our resort markets was disappointing and the primary home market remains difficult. We continue to see long-term interest in Northwest Florida commercial markets, but they continue to be affected by the current economic conditions."

  • Resort and primary residential sales generated $8.7 million in revenue;
  • Commercial land sales generated $2.2 million;
  • Rural land sales generated $2.4 million in revenue from the sale of 346 acres; and
  • The forestry segment generated $5.9 million in revenue primarily from the sale of 327,000 tons of wood fiber.

 Commitment to a Solid Balance Sheet

At September 30, 2008, JOE had cash and pledged treasury securities of $135.7 million, compared to debt of $50.8 million, which includes $29.4 million of defeased debt.

In the third quarter, JOE entered into a new $100 million revolving credit facility with Branch Banking and Trust Company. JOE has not drawn on this facility, which matures in September 2011.

"Given the current state of the capital markets, we are pleased that we were able to close this three-year borrowing facility," said William S. McCalmont, JOE's Chief Financial Officer. "We have a solid balance sheet, virtually no debt, and no current plans to draw on this new facility."

In the third quarter, JOE implemented its previously announced staff reductions. As a result, the company expects to reduce its projected salary run rate for the fourth quarter 2008 by over 40 percent, compared with the same quarter in 2007.

New Panama City Airport at WestBay

"As construction continues on the new Panama City Airport, JOE is aggressively pursuing opportunities for its assets adjacent to the airport in the 75,000-acre WestBay Sector Plan," said Greene. "JOE is working with regional and national partners to attract economic development projects to WestBay concentrating on economic clusters expected to have significant growth potential. JOE is also working with business groups in Northwest Florida to attract additional air service to the new airport."

Almost half of the site infrastructure work, including the primary runway, has been completed. The Airport Authority projects a May 2010 opening. A new web site, www.newpcairport.com, has been created by the Airport Authority to provide updates on the new airport construction project.

Land Holdings and Entitlements

On September 30, 2008, JOE owned approximately 607,000 acres, concentrated primarily in Northwest Florida. Approximately 426,000 acres, or 70 percent, of JOE's total land holdings are within 15 miles of the coast of the Gulf of Mexico.

On September 30, 2008, JOE's land-use entitlements in hand or in process totaled approximately 45,600 residential units and approximately 14.4 million square feet of commercial space, as well as an additional 592 acres with land-use entitlements for commercial uses.

Year-to-Date Results

Net Loss for the first nine months of 2008 was $(8.0) million, or $(0.09) per share, compared to Net Income of $38.2 million, or $0.51 per share, for the first nine months of 2007. Included in results for the first nine months of 2008 were the following significant charges:

  • $30.6 million pre-tax, or $0.21 per share after-tax, related to a loss on the early extinguishment of debt;
  • Pre-tax restructuring charge of $4.3 million, or $0.03 per share after-tax, and a related $1.9 million pension charge, or $0.01 per share after-tax;
  • Pre-tax impairment charge of $4.6 million and pre-tax loss of $1.9 million related to abandoned property, or an aggregate of $0.04 per share after-tax; and
  • $8.5 million pre-tax loss on the monetization of installment notes, or $0.06 per share after-tax.
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