HONOLULU, Oct. 30, 2019 /PRNewswire/ -- Alexander & Baldwin, Inc. (NYSE: ALEX) ("A&B" or "Company"), a Hawai'i-based real estate investment trust focused on owning and operating high-quality commercial real estate in Hawai'i, today announced financial results for the third quarter of 2019.
"A&B's third quarter results reflect the excellent performance of our high-quality and growing commercial real estate ("CRE") portfolio, as total portfolio cash net operating income ("NOI") grew 24.4% compared to the same quarter last year," stated Chris Benjamin, A&B's president & chief executive officer. "Our ability earlier this year to redeploy proceeds quickly and efficiently from non-income-producing agricultural land sales into well-located commercial real estate properties and ground leases was a significant driver of our results this quarter. Additionally, we are progressing on our development and redevelopment efforts, which will generate incremental NOI growth as we continue to concentrate the Company's capital into vibrant commercial real estate properties."
"With strong fundamentals across our market and focused execution by our team, our portfolio is performing well. Overall occupancy was 95.0% at September 30, 2019, an increase of 310 basis points from last year. Same-store NOI ("SSNOI") increased by 2.2% compared to the same quarter last year, while leasing spreads for the quarter were a strong 6.0%. SSNOI growth moderated in the quarter, as expected, but we anticipate a stronger fourth quarter result and are maintaining the portfolio guidance metrics previously provided."
"Finally, we remain focused on our strategy to simplify our company. During the quarter, our team advanced sales efforts within our remaining for-sale projects. However, our Materials & Construction business remains challenged, and we are actively exploring the sale of Grace Pacific. In advance of the marketing and sales effort, we recorded a $49.7 million non-cash impairment related to goodwill during the third quarter in view of Grace's recent financial performance, which produced an operating loss of $57.9 million for the Materials & Construction segment. We are committed to achieving the best outcome for shareholders and will provide updates on the sale process as it advances."
Financial Results
Commercial Real Estate (CRE)
CRE Development and Redevelopment
Land Operations
Materials & Construction
Balance Sheet and Capital Markets Activity
Guidance
ABOUT ALEXANDER & BALDWIN
Alexander & Baldwin, Inc. is Hawai'i's premier commercial real estate company and the state's foremost owner of grocery-anchored retail centers. A&B is a fully integrated real estate investment trust and owns, operates and manages approximately 3.9 million square feet of primarily retail and industrial space in Hawai'i, and is a major landowner in the state. A&B's interests extend beyond commercial real estate into renewable energy and land stewardship. A&B is also a construction materials company and paving contractor in Hawai'i. Over its nearly 150-year history, A&B has evolved with the state's economy and played a lead role in the development of the agricultural, transportation, tourism, construction and real estate industries. Learn more about A&B at www.alexanderbaldwin.com.
Contact:
Brett A. Brown
(808) 525-8475
investorrelations@abhi.com
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES |
|||||||||||||||
SEGMENT DATA & OTHER FINANCIAL INFORMATION |
|||||||||||||||
(In millions, except per share amounts; unaudited) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Operating Revenue: |
|
|
|
|
|
|
|
||||||||
Commercial Real Estate |
$ |
42.7 |
|
|
$ |
35.9 |
|
|
$ |
118.6 |
|
|
$ |
104.9 |
|
Land Operations |
8.5 |
|
|
24.0 |
|
|
82.4 |
|
|
72.6 |
|
||||
Materials & Construction |
37.9 |
|
|
59.5 |
|
|
126.6 |
|
|
167.3 |
|
||||
Total operating revenue |
89.1 |
|
|
119.4 |
|
|
327.6 |
|
|
344.8 |
|
||||
Operating Profit (Loss): |
|
|
|
|
|
|
|
||||||||
Commercial Real Estate |
18.0 |
|
|
15.9 |
|
|
50.6 |
|
|
45.0 |
|
||||
Land Operations |
2.8 |
|
|
13.1 |
|
|
15.9 |
|
|
9.3 |
|
||||
Materials & Construction |
(57.9) |
|
|
3.4 |
|
|
(66.7) |
|
|
7.2 |
|
||||
Total operating profit (loss) |
(37.1) |
|
|
32.4 |
|
|
(0.2) |
|
|
61.5 |
|
||||
Gain (loss) on the sale of commercial real estate properties |
— |
|
|
— |
|
|
— |
|
|
49.8 |
|
||||
Interest expense |
(8.2) |
|
|
(9.1) |
|
|
(25.4) |
|
|
(26.4) |
|
||||
General corporate expenses |
(5.5) |
|
|
(6.5) |
|
|
(18.1) |
|
|
(20.5) |
|
||||
Income (Loss) from Continuing Operations Before Income Taxes |
(50.8) |
|
|
16.8 |
|
|
(43.7) |
|
|
64.4 |
|
||||
Income tax benefit (expense) |
— |
|
|
(1.0) |
|
|
1.1 |
|
|
1.8 |
|
||||
Income (Loss) from Continuing Operations |
(50.8) |
|
|
15.8 |
|
|
(42.6) |
|
|
66.2 |
|
||||
Income (loss) from discontinued operations, net of income taxes |
(0.1) |
|
|
(0.2) |
|
|
(0.8) |
|
|
(0.2) |
|
||||
Net Income (Loss) |
(50.9) |
|
|
15.6 |
|
|
(43.4) |
|
|
66.0 |
|
||||
Loss (income) attributable to noncontrolling interest |
1.1 |
|
|
(0.8) |
|
|
1.8 |
|
|
(1.4) |
|
||||
Net Income (Loss) Attributable to A&B Shareholders |
$ |
(49.8) |
|
|
$ |
14.8 |
|
|
$ |
(41.6) |
|
|
$ |
64.6 |
|
|
|
|
|
|
|
|
|
||||||||
Basic Earnings (Loss) Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||||
Continuing operations available to A&B shareholders |
$ |
(0.69) |
|
|
$ |
0.21 |
|
|
$ |
(0.57) |
|
|
$ |
0.92 |
|
Discontinued operations available to A&B shareholders |
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
||||
Net income (loss) available to A&B shareholders |
$ |
(0.69) |
|
|
$ |
0.21 |
|
|
$ |
(0.58) |
|
|
$ |
0.92 |
|
Diluted Earnings (Loss) Per Share of Common Stock: |
|
|
|
|
|
|
|
||||||||
Continuing operations available to A&B shareholders |
$ |
(0.69) |
|
|
$ |
0.20 |
|
|
$ |
(0.57) |
|
|
$ |
0.89 |
|
Discontinued operations available to A&B shareholders |
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
||||
Net income (loss) available to A&B shareholders |
$ |
(0.69) |
|
|
$ |
0.20 |
|
|
$ |
(0.58) |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-Average Number of Shares Outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
72.3 |
|
|
72.0 |
|
|
72.2 |
|
|
70.2 |
|
||||
Diluted |
72.3 |
|
|
72.4 |
|
|
72.2 |
|
|
72.4 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Amounts Available to A&B Shareholders: |
|
|
|
|
|
|
|
||||||||
Continuing operations available to A&B shareholders |
$ |
(49.7) |
|
|
$ |
15.0 |
|
|
$ |
(40.8) |
|
|
$ |
64.8 |
|
Discontinued operations available to A&B shareholders |
(0.1) |
|
|
(0.2) |
|
|
(0.8) |
|
|
(0.2) |
|
||||
Net income (loss) available to A&B shareholders |
$ |
(49.8) |
|
|
$ |
14.8 |
|
|
$ |
(41.6) |
|
|
$ |
64.6 |
|
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(In millions, unaudited) |
|||||||
|
|||||||
|
September 30, |
|
December 31, |
||||
ASSETS |
|
|
|
||||
Real estate investments |
|
|
|
||||
Real estate property |
$ |
1,531.4 |
|
|
$ |
1,293.7 |
|
Accumulated depreciation |
(124.3) |
|
|
(107.2) |
|
||
Real estate property, net |
1,407.1 |
|
|
1,186.5 |
|
||
Real estate developments |
93.8 |
|
|
155.2 |
|
||
Investments in real estate joint ventures and partnerships |
135.4 |
|
|
141.0 |
|
||
Real estate intangible assets, net |
78.7 |
|
|
59.8 |
|
||
Real estate investments, net |
1,715.0 |
|
|
1,542.5 |
|
||
Cash and cash equivalents |
7.2 |
|
|
11.4 |
|
||
Restricted cash |
0.2 |
|
|
223.5 |
|
||
Accounts receivable and retention, net |
67.8 |
|
|
61.2 |
|
||
Inventories |
23.9 |
|
|
26.5 |
|
||
Other property, net |
131.4 |
|
|
135.5 |
|
||
Operating lease right-of-use assets |
22.7 |
|
|
— |
|
||
Goodwill |
15.4 |
|
|
65.1 |
|
||
Other receivables |
28.7 |
|
|
56.8 |
|
||
Prepaid expenses and other assets |
109.4 |
|
|
102.7 |
|
||
Total assets |
$ |
2,121.7 |
|
|
$ |
2,225.2 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Liabilities: |
|
|
|
||||
Notes payable and other debt |
$ |
732.4 |
|
|
$ |
778.1 |
|
Accrued pension and post-retirement benefits |
31.4 |
|
|
29.4 |
|
||
Deferred revenue |
68.4 |
|
|
63.2 |
|
||
Accrued and other liabilities |
153.2 |
|
|
138.3 |
|
||
Redeemable Noncontrolling Interest |
7.9 |
|
|
7.9 |
|
||
Equity |
1,128.4 |
|
|
1,208.3 |
|
||
Total liabilities and equity |
$ |
2,121.7 |
|
|
$ |
2,225.2 |
|
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED CASH FLOWS |
|||||||
(In millions, unaudited) |
|||||||
|
|||||||
|
Nine Months Ended |
||||||
|
2019 |
|
2018 |
||||
Cash Flows from Operating Activities: |
|
|
|
||||
Net income (loss) |
$ |
(43.4) |
|
|
$ |
66.0 |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: |
|
|
|
||||
Depreciation and amortization |
36.6 |
|
|
31.6 |
|
||
Deferred income taxes |
— |
|
|
(2.4) |
|
||
Loss (gain) on asset transactions, net |
(2.6) |
|
|
(62.1) |
|
||
Goodwill impairment |
49.7 |
|
|
— |
|
||
Share-based compensation expense |
4.1 |
|
|
4.0 |
|
||
(Income) loss from affiliates, net of distributions of income |
(3.5) |
|
|
2.0 |
|
||
Changes in operating assets and liabilities: |
|
|
|
||||
Trade, contracts retention, and other contract receivables |
(6.9) |
|
|
(4.9) |
|
||
Inventories |
2.6 |
|
|
(0.3) |
|
||
Prepaid expenses, income tax receivable and other assets |
25.8 |
|
|
(4.1) |
|
||
Accrued pension and post-retirement benefits |
4.6 |
|
|
2.5 |
|
||
Accounts payable |
(10.3) |
|
|
(8.3) |
|
||
Accrued and other liabilities |
6.6 |
|
|
(7.3) |
|
||
Real estate development for sale proceeds |
48.5 |
|
|
41.0 |
|
||
Expenditures for real estate development for sale |
(7.8) |
|
|
(20.0) |
|
||
Net cash provided by (used in) operations |
104.0 |
|
|
37.7 |
|
||
|
|
|
|
||||
Cash Flows from Investing Activities: |
|
|
|
||||
Capital expenditures for acquisitions |
(218.4) |
|
|
(201.6) |
|
||
Capital expenditures for property, plant and equipment |
(31.8) |
|
|
(40.0) |
|
||
Proceeds from disposal of property, investments and other assets |
3.0 |
|
|
169.3 |
|
||
Payments for purchases of investments in affiliates and other investments |
(3.3) |
|
|
(21.3) |
|
||
Distributions of capital from investments in affiliates and other investments |
12.2 |
|
|
32.8 |
|
||
Net cash provided by (used in) investing activities |
(238.3) |
|
|
(60.8) |
|
||
|
|
|
|
||||
Cash Flows from Financing Activities: |
|
|
|
||||
Proceeds from issuance of long-term debt |
111.8 |
|
|
533.5 |
|
||
Payments of long-term debt and deferred financing costs |
(155.3) |
|
|
(433.6) |
|
||
Borrowings (payments) on line-of-credit agreement, net |
(5.1) |
|
|
(14.2) |
|
||
Distribution to noncontrolling interests |
(0.3) |
|
|
(0.2) |
|
||
Cash dividends paid |
(36.2) |
|
|
(156.6) |
|
||
Proceeds from issuance (repurchase) of common stock and other, net |
(1.0) |
|
|
(1.3) |
|
||
Payment of deferred acquisition holdback |
(7.1) |
|
|
— |
|
||
Net cash provided by (used in) financing activities |
(93.2) |
|
|
(72.4) |
|
||
|
|
|
|
||||
Cash, Cash Equivalents and Restricted Cash: |
|
|
|
||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
(227.5) |
|
|
(95.5) |
|
||
Balance, beginning of period |
234.9 |
|
|
103.2 |
|
||
Balance, end of period |
$ |
7.4 |
|
|
$ |
7.7 |
|
USE OF NON-GAAP FINANCIAL MEASURES
The Company uses non-GAAP measures when evaluating operating performance because management believes that they provide additional insight into the Company's and segments' core operating results, and/or the underlying business trends affecting performance on a consistent and comparable basis from period to period. These measures generally are provided to investors as an additional means of evaluating the performance of ongoing core operations.
Cash Net Operating Income ("Cash NOI") is a non-GAAP measure used internally in evaluating the unlevered performance of the Company's Commercial Real Estate portfolio. The Company believes Cash NOI provides useful information to investors regarding the Company's financial condition and results of operations because it reflects only those cash income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the Company's properties as this measure is not affected by non-cash revenue and expense recognition items, the impact of depreciation and amortization expenses or other gains or losses that relate to the Company's ownership of properties. The Company believes the exclusion of these items from operating profit (loss) is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company's Commercial Real Estate portfolio as well as trends in occupancy rates, rental rates, and operating costs. Cash NOI should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Cash NOI is calculated as total Commercial Real Estate operating revenues less direct property-related operating expenses. Cash NOI excludes straight-line lease adjustments, amortization of favorable/unfavorable leases, amortization of lease incentives, selling, general and administrative expenses, impairment of commercial real estate assets, lease termination income, other income and expense, net, and depreciation and amortization (including amortization of maintenance capital, tenant improvements and leasing commissions)
The Company reports Cash NOI on a same store basis, which includes the results of properties that were owned and operated for the entirety of the prior calendar year. The same-store pool excludes properties under development or redevelopment, properties held for sale and also excludes properties acquired or sold during the comparable reporting periods. While there is management judgment involved in classifications, new developments and redevelopments are moved into the same store pool upon one full calendar year of stabilized operation, which is typically upon attainment of market occupancy.
A reconciliation of CRE operating profit to CRE Cash NOI and Same-Store Cash NOI is as follows:
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
Change2 |
|
2019 |
|
2018 |
|
Change2 |
||||||||
Commercial Real Estate Operating Profit (Loss) |
$ |
18.0 |
|
|
$ |
15.9 |
|
|
|
|
$ |
50.6 |
|
|
$ |
45.0 |
|
|
|
Plus: Depreciation and amortization |
9.8 |
|
|
7.2 |
|
|
|
|
26.3 |
|
|
20.5 |
|
|
|
||||
Less: Straight-line lease adjustments |
(1.9) |
|
|
(2.0) |
|
|
|
|
(4.6) |
|
|
(2.7) |
|
|
|
||||
Less: Favorable/(unfavorable) lease amortization |
(0.1) |
|
|
(0.4) |
|
|
|
|
(1.1) |
|
|
(1.4) |
|
|
|
||||
Less: Termination income |
(0.1) |
|
|
— |
|
|
|
|
(0.1) |
|
|
(1.1) |
|
|
|
||||
Plus: Other (income)/expense, net |
(0.7) |
|
|
— |
|
|
|
|
(2.2) |
|
|
0.1 |
|
|
|
||||
Plus: Selling, general, administrative and other expenses |
2.3 |
|
|
1.4 |
|
|
|
|
7.8 |
|
|
4.7 |
|
|
|
||||
Less: Impact of adoption of ASU 2016-021 |
— |
|
|
(0.2) |
|
|
|
|
— |
|
|
(0.5) |
|
|
|
||||
Cash NOI as adjusted |
27.3 |
|
|
21.9 |
|
|
24.4% |
|
76.7 |
|
|
64.6 |
|
|
18.8% |
||||
Less: Cash NOI from acquisitions, dispositions and other adjustments |
(8.0) |
|
|
(3.0) |
|
|
|
|
(17.5) |
|
|
(8.4) |
|
|
|
||||
Same-Store Cash NOI as adjusted |
$ |
19.3 |
|
|
$ |
18.9 |
|
|
2.2% |
|
$ |
59.2 |
|
|
$ |
56.2 |
|
|
5.3% |
|
||||||||||||||||||||
1 Represents legal costs related to leasing activity that were previously capitalized when incurred and recognized as amortization expense over the term of the lease contract. Upon the Company's adoption of ASU 2016-02, Leases, on January 1, 2019, such legal costs are directly expensed as operating costs and are included in Cash NOI. For comparability purposes, Cash NOI for the 2018 periods presented have been adjusted to include legal fees in conformity with Cash NOI for the 2019 periods presented. |
||||||||||||||||||||
|
||||||||||||||||||||
2 Amounts in this table are rounded to the nearest tenth of a million, but percentages were calculated based on thousands. Accordingly, a recalculation of some percentages, if based on the reported data, may be slightly different. |
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA for the Materials & Construction ("M&C") segment are non-GAAP measures used by the Company in evaluating the Materials & Construction segment's operating performance on a consistent and comparable basis from period to period. The Company provides this information to investors as an additional means of evaluating the performance of the segment's ongoing core operations. EBITDA and Adjusted EBITDA should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
EBITDA is calculated for the Materials & Construction segment by adjusting segment operating profit (which excludes interest and tax expenses), by adding back depreciation and amortization. Adjusted EBITDA is calculated for the Materials & Construction segment by adjusting for income attributable to noncontrolling interests and asset impairments related to the M&C segment. The Company adjusts EBITDA for the asset impairments related to the Materials and Construction segment as the Company believes these items are infrequent in nature. By excluding these items from EBITDA the Company believes it provides meaningful supplemental information about its core operating performance and facilitates comparisons to historical operating results.
A reconciliation of Materials & Construction operating profit to Materials & Construction EBITDA and Adjusted EBITDA is as follows:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
(in millions, unaudited) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Operating Profit (Loss) |
$ |
(57.9) |
|
|
$ |
3.4 |
|
|
$ |
(66.7) |
|
|
$ |
7.2 |
|
Depreciation and amortization |
2.7 |
|
|
3.0 |
|
|
8.5 |
|
|
9.1 |
|
||||
EBITDA1 |
(55.2) |
|
|
6.4 |
|
|
(58.2) |
|
|
16.3 |
|
||||
Asset impairments related to the Materials & Construction segment |
49.7 |
|
|
— |
|
|
49.7 |
|
|
— |
|
||||
Income attributable to noncontrolling interest |
1.1 |
|
|
(0.8) |
|
|
1.8 |
|
|
(1.4) |
|
||||
M&C Adjusted EBITDA1 |
$ |
(4.4) |
|
|
$ |
5.6 |
|
|
$ |
(6.7) |
|
|
$ |
14.9 |
|
|
|||||||||||||||
1 See above for a discussion of management's use of non-GAAP financial measures and reconciliations from GAAP to non-GAAP measures. |
FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding possible or assumed future results of operations, business strategies, growth opportunities and competitive positions. Such forward-looking statements speak only as of the date the statements were made and are not guarantees of future performance. Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those expressed in or implied by the forward-looking statements. These factors include, but are not limited to, prevailing market conditions and other factors related to the Company's REIT status and the Company's business, as well as the evaluation of alternatives by the Company related to its materials and construction business and by the Company's joint venture related to the development of Kukui'ula, generally discussed in the Company's most recent Form 10-K, Form 10-Q and other filings with the SEC. The information in this release should be evaluated in light of these important risk factors. We do not undertake any obligation to update the Company's forward-looking statements.
View original content to download multimedia:http://www.prnewswire.com/news-releases/alexander--baldwin-inc-reports-third-quarter-2019-results-300948559.html
SOURCE Alexander & Baldwin, Inc.