DAYTONA BEACH, Fla.--(BUSINESS WIRE)--Consolidated-Tomoka Land Co. (NYSE MKT: CTO) (the “Company”) today announced its operating results and earnings for the quarter and six months ended June 30, 2017.
OPERATING RESULTS
Operating results for the quarter ended June 30, 2017 (as compared to the same period in 2016):
- Net income was $0.67 per basic share, an increase of $0.39 per share, or 139.3%;
- Operating income was approximately $8.0 million, an increase of approximately $3.3 million, or approximately 69.9%; and
- Revenues from our Operating Segments were as follows:
| Increase (Decrease) | |||||||||||||||
| Operating Segment |
Revenue for |
vs Same Period in |
vs Same |
||||||||||||
| Income Properties |
$ |
7,565 |
$ |
1,532 |
25.4 | % | |||||||||
| Interest Income from Commercial Loan Investments | 553 | (82 | ) | -12.9 | % | ||||||||||
| Real Estate Operations | 13,257 | 8,483 | 177.6 | % | |||||||||||
| Golf Operations | 1,384 | (29 | ) | -2.0 | % | ||||||||||
| Agriculture & Other Income | 79 | 60 | 315.8 | % | |||||||||||
| Total Revenues |
$ |
22,838 |
$ |
9,964 |
77.4 | % | |||||||||
Operating results for the six months ended June 30, 2017 (as compared to the same period in 2016):
- Net income was $2.95 per basic share, an increase of $2.43 per share, or 467.3%;
- Operating income was approximately $30.9 million, an increase of approximately $19.8 million, or approximately 177.6%; and
- Revenues from our Operating Segments were as follows:
| Increase (Decrease) | |||||||||||||||
| Operating Segment |
Revenue for |
vs Same Period in |
vs Same |
||||||||||||
| Income Properties |
$ |
14,638 |
$ |
2,176 |
17.5 | % | |||||||||
| Interest Income from Commercial Loan Investments | 1,090 | (426 | ) | -28.1 | % | ||||||||||
| Real Estate Operations | 42,732 | 28,397 | 198.1 | % | |||||||||||
| Golf Operations | 2,858 | (19 | ) | -0.7 | % | ||||||||||
| Agriculture & Other Income | 233 | 195 | 513.2 | % | |||||||||||
| Total Revenues |
$ |
61,551 |
$ |
30,323 |
97.1 | % | |||||||||
Repurchase Program
Repurchased 47,855 shares of the Company’s stock during the second quarter of 2017 for approximately $2.6 million at an average purchase price of $54.03 per share. During the first six months of 2017, the Company repurchased 104,098 shares of its shares for approximately $5.5 million, an average purchase price $52.96.
Income Property Portfolio Update
In the second quarter of 2017, the Company acquired three income properties for an aggregate purchase price of approximately $21.0 million at a weighted average cap rate of 6.83%. During the six months ended June 30, 2017, the Company has acquired five income properties for an aggregate purchase price of approximately $40.0 million at a weighted average cap rate of 6.65%.
Land Update
Land Sales
In the second quarter of 2017, the Company sold approximately 81.4 acres of land in four separate transactions with four different buyers generating aggregate sales proceeds of approximately $10.9 million, representing an average of approximately $133,000 per acre and resulting in aggregate gains at closing of approximately $6.9 million, or approximately $0.76 per share, after tax.
Beachfront Venture
On July 12, 2017, the LandShark Bar & Grill and Cocina 214 Restaurant & Bar held a joint groundbreaking ceremony for the construction of two restaurant properties the Company will develop on its six acre beachfront parcel. The Company and the restaurant owner/operators expect the development of the restaurants to be completed in time for commencement of operations during the first quarter of 2018.
Financial Results
Revenue
Total revenue for the quarter ended June 30, 2017 increased to approximately $22.8 million, compared to approximately $12.9 million during the same period in 2016, an increase of nearly $10.0 million, or approximately 77%. This increase was primarily the result of the following elements of the Real Estate Operations segment and the Income Property Operations segment, respectively:
| Increase (Decrease) | ||||||||
| Real Estate Operations Segment |
Revenue for |
vs Same Period in |
||||||
| Land Sales Revenue |
$ |
10,858 |
$ |
10,858 |
||||
| Revenue from Reimbursement of Infrastructure Costs | 955 | 955 | ||||||
| Impact Fees/Mitigation Credit Sales | 1,222 | 1,055 | ||||||
| Percentage of Completion Revenue (Tomoka Town Center) | - | (3,843 | ) | |||||
| Subsurface Revenue | 222 | (542 | ) | |||||
| Total Related to Real Estate Operations |
$ |
13,257 |
$ |
8,483 |
||||
| Increase (Decrease) | ||||||||
| Income Property Operations Segment |
Revenue for the |
vs Same Period |
||||||
| Q4 2016 & YTD 2017 Acquisitions |
$ |
1,335 |
$ |
1,335 |
||||
| Revenue from the Grove at Winter Park |
133 |
107 | ||||||
| Revenue from Remaining Portfolio | 5,547 | 96 | ||||||
| Accretion of Above Market/Below Market Intangibles | 550 | (6 | ) | |||||
| Total Related to Income Property Operations |
$ |
7,565 |
$ |
1,532 |
||||
Total revenue for the six months ended June 30, 2017 increased to approximately $61.6 million, compared to approximately $31.2 million during the same period in 2016, an increase of approximately $30.3 million, or approximately 97%. This increase was primarily the result of the following elements of the Real Estate Operations segment and the Income Property Operations segment, respectively:
| Increase (Decrease) | ||||||||
| Real Estate Operations Segment |
Revenue for |
vs Same Period in |
||||||
| Land Sales Revenue | $ | 39,564 | $ | 37,929 | ||||
| Revenue from Reimbursement of Infrastructure Costs | 1,276 | 1,276 | ||||||
| Impact Fees/Mitigation Credit Sales | 1,439 | 1,167 | ||||||
| Percentage of Completion Revenue (Tomoka Town Center) | - | (11,357 | ) | |||||
| Subsurface Revenue | 453 | (619 | ) | |||||
| Total Related to Real Estate Operations | $ | 42,732 | $ | 28,396 | ||||
| Increase (Decrease) | ||||||||
| Income Property Operations Segment |
Revenue for |
vs Same Period in |
||||||
| Q4 2016 & YTD 2017 Acquisitions | $ | 2,330 | $ | 2,330 | ||||
| Revenue from the Grove at Winter Park | 137 | 83 | ||||||
| Accretion of Above Market/Below Market Intangibles | 1,081 | (82 | ) | |||||
| Revenue from Remaining Portfolio | 11,090 | (155 | ) | |||||
| Total Related to Income Property Operations | $ | 14,638 | $ | 2,176 | ||||
Net Income
Net income and basic net income per share for the quarter ended June 30, 2017, compared to the same period in 2016, was as follows:
| Increase (Decrease) | |||||||||||||||
|
For the |
vs Same Period in |
vs Same |
|||||||||||||
| Net Income ($000’s) |
$ |
3,679 |
$ |
2,108 |
134.3 | % | |||||||||
| Basic Net Income Per Share |
$ |
0.67 |
$ |
0.39 |
139.3 | % | |||||||||
The above results for the second quarter of 2017, as compared to the same period in 2016, reflected the following operating elements:
- The approximately $10.0 million increase in revenues as described above;
- An increase in direct cost of revenues of approximately $5.0 million primarily related to the increase in the direct cost of revenues for the real estate operations of approximately $4.7 million, which primarily reflects the increase of approximately $3.7 million in cost basis related to the increased land sales during the quarter;
- The sale of mitigation credits to Minto Communities, LLC during the second quarter of 2017 for approximately $1.1 million resulting in a gain of approximately $932,000, or $0.10 per share, after tax;
- An increase in general and administrative expenses of approximately $828,000 primarily related to the legal and other costs related to our contested director election at our 2017 annual shareholder meeting;
- An increase in depreciation and amortization of approximately $1.4 million resulting from the growth in our income property portfolio; and
- Income of approximately $1.4 million recognized in the second quarter of 2016 in connection with the Company’s disposition of four single-tenant income properties offset by the recognition of approximately $2.0 million in impairment charges in the second quarter of 2016.
Net income and basic net income per share for the six months ended June 30, 2017, compared to the same period in 2016, was as follows:
| Increase (Decrease) | ||||||||||
|
For the Six Months |
vs Same Period |
vs Same |
||||||||
| Net Income ($000’s) | $ |
16,425 (1) |
$ | 13,430 | 448.4 | % | ||||
| Basic Net Income Per Share | $ | 2.95 | $ | 2.43 | 467.3 | % | ||||
(1) Includes $0.24 in non-cash earnings for the elimination of the accrued liability associated with the straight-line accounting for the land lease which was terminated as part of the acquisition of the LPGA International golf course land. This earnings impact was not included in the Company’s original 2017 guidance for earnings per share.
The above results for the six months ended June 30, 2017, as compared to the same period in 2016, reflected the following operating elements:
- The approximately $30.3 million increase in revenues as described above;
- An increase in direct cost of revenues of approximately $12.2 million primarily related to the increase in the direct cost of revenues for the real estate operations of approximately $11.6 million, which primarily reflects an increase of approximately $9.5 million in cost basis related to the increased land sales during the quarter;
- The sale of mitigation credits to Minto Communities, LLC during the second quarter of 2017 for approximately $1.1 million resulting in a gain of approximately $932,000, or $0.10 per share, after tax;
- A decrease in general and administrative expenses of approximately $749,000 primarily related to a reduction in stock compensation costs of approximately $1.7 million offset by an increase of approximately $1.1 million in the legal and other costs related to our contested director election at our 2017 annual shareholder meeting in excess of the legal costs we incurred in 2016 related to certain other shareholder matters;
- An increase in depreciation and amortization of approximately $2.1 million resulting from the growth in our income property portfolio;
- Income of approximately $2.2 million related to the transaction to acquire the land underlying our golf operations; and
- Income of approximately $1.4 million recognized in 2016 in connection with the Company’s disposition of four single-tenant income properties offset by the recognition of approximately $2.2 million in impairment charges during the six months ended June 30, 2016.
Review and Update of 2017 Guidance
Based on the current results achieved through June 30, 2017, including but not limited to, the land sale transactions completed, a transaction for the sale of mitigation credits completed in the second quarter of 2017 and other events, the Company is increasing its guidance for earnings per share for the year ended December 31, 2017 to a range of $2.95 per share to $3.10 per share from the previously provided guidance of $2.25 per share to $2.45 per share.
The following summary provides a review of the Company’s original and/or updated guidance for the year ending December 31, 2017 compared to the operating results and leverage as of and for the six months ended June 30, 2017 and the income property investment activity and land transactions as of July 14, 2017:
|
FY 2017 |
FY 2017 |
2017 Actual | ||||||||
| Reported Earnings Per Share (Basic) | $2.25-$2.45 | $2.95-$3.10(1) | $2.95(1) | |||||||
| Acquisition of Income-Producing Assets | $50mm - $70mm | No Change | $40.0 | |||||||
| Target Investment Yields (Initial Yield – Unlevered) | 6% - 8% | No Change | 6.65% | |||||||
| Land Transactions (Sales Value) | $30mm - $50mm | No Change | $39.6mm | |||||||
| Leverage Target (as % of Total Enterprise Value) | <40% | No Change | 33.0% | |||||||
(1) Includes $0.24 in non-cash earnings for the elimination of the accrued liability associated with the straight-line accounting for the land lease which was terminated as part of the acquisition of the LPGA International golf course land. This earnings impact was not included in the Company’s original 2017 guidance for earnings per share.
Quarterly Dividend
The Company’s Board of Directors declared a quarterly dividend of $0.05 per share payable on August 30, 2017 to shareholders of record on August 10, 2017. This represents a 25% increase from the previous quarterly dividend of $0.04 per share.
Second Quarter 2017 Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter ended June 30, 2017 tomorrow, Thursday, July 20, 2017, at 9:00 a.m. eastern time. Shareholders and interested parties may access the Earnings Call via teleconference or webcast:
| Teleconference: USA (Toll Free) | 1-888-317-6003 | |
| International: | 1-412-317-6061 | |
| Canada (Toll Free): | 1-866-284-3684 |
Please dial in at least five minutes prior to the scheduled start time and use the code 5594242 when prompted.
A webcast of the call can be accessed at: http://services.choruscall.com/links/cto170720.html. To access the webcast, log on to the web address noted above or go to http://www.ctlc.com and log in at the investor relations section. Please log in to the webcast at least ten minutes prior to the scheduled time of the Earnings Call.
A replay of the Earnings Call will be archived and available online through the Investor Relations section of http://www.ctlc.com.
About Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based publicly traded real estate company, which owns a portfolio of income investments in diversified markets in the United States including more than 1.9 million square feet of income properties, as well as approximately 8,100 acres of land in the Daytona Beach area. Visit our website at www.ctlc.com.
We encourage you to review our most recent investor presentation for the quarter ended June 30, 2017, available on our website at www.ctlc.com.
SAFE HARBOR
Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements. Words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Although forward-looking statements are made based upon management’s expectations and beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include the completion of 1031 exchange transactions, the modification of terms of certain land sales agreements, uncertainties associated with obtaining required governmental permits and satisfying other closing conditions, as well as the uncertainties and risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.
|
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED BALANCE SHEETS |
||||||||
| (Unaudited) | ||||||||
|
June 30, |
December 31, 2016 |
|||||||
| ASSETS | ||||||||
| Property, Plant, and Equipment: | ||||||||
| Income Properties, Land, Buildings, and Improvements | $ | 316,424,434 | $ | 274,334,139 | ||||
| Golf Buildings, Improvements, and Equipment | 6,102,694 | 3,528,194 | ||||||
| Other Furnishings and Equipment | 1,083,939 | 1,032,911 | ||||||
| Construction in Progress | 4,441,858 | 5,267,676 | ||||||
| Total Property, Plant, and Equipment | 328,052,925 | 284,162,920 | ||||||
| Less, Accumulated Depreciation and Amortization | (20,252,879 | ) | (16,552,077 | ) | ||||
| Property, Plant, and Equipment—Net | 307,800,046 | 267,610,843 | ||||||
| Land and Development Costs | 40,213,760 | 51,955,278 | ||||||
| Intangible Lease Assets—Net | 37,146,580 | 34,725,822 | ||||||
| Impact Fee and Mitigation Credits | 1,515,906 | 2,322,906 | ||||||
| Commercial Loan Investments | 23,960,467 | 23,960,467 | ||||||
| Cash and Cash Equivalents | 7,153,369 | 7,779,562 | ||||||
| Restricted Cash | 4,727,381 | 9,855,469 | ||||||
| Refundable Income Taxes | 1,199,559 | 943,991 | ||||||
| Other Assets | 8,324,420 | 9,469,088 | ||||||
| Total Assets | $ | 432,041,488 | $ | 408,623,426 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts Payable | $ | 1,359,060 | $ | 1,518,105 | ||||
| Accrued and Other Liabilities | 7,735,648 | 8,667,897 | ||||||
| Deferred Revenue | 1,719,866 | 1,991,666 | ||||||
| Intangible Lease Liabilities - Net | 30,703,143 | 30,518,051 | ||||||
| Accrued Stock-Based Compensation | 45,046 | 42,092 | ||||||
| Deferred Income Taxes—Net | 62,416,899 | 51,364,572 | ||||||
| Long-Term Debt | 168,709,921 | 166,245,201 | ||||||
| Total Liabilities | 272,689,583 | 260,347,584 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Common Stock – 25,000,000 shares authorized; $1 par value, 6,038,358 shares issued and 5,622,934 shares outstanding at June 30, 2017; 6,021,564 shares issued and 5,710,238 shares outstanding at December 31, 2016 | 5,931,468 | 5,914,560 | ||||||
|
Treasury Stock – 415,424 shares at June 30, 2017; 311,326 shares at December 31, 2016 |
(20,811,266 | ) | (15,298,306 | ) | ||||
| Additional Paid-In Capital | 21,114,253 | 20,511,388 | ||||||
| Retained Earnings | 152,871,541 | 136,892,311 | ||||||
| Accumulated Other Comprehensive Income | 245,909 | 255,889 | ||||||
| Total Shareholders’ Equity | 159,351,905 | 148,275,842 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 432,041,488 | $ | 408,623,426 | ||||
|
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | ||||||||||||||||
| Income Properties | $ | 7,565,007 | $ | 6,033,082 | $ | 14,638,247 | $ | 12,462,323 | ||||||||
| Interest Income from Commercial Loan Investments | 553,159 | 635,050 | 1,089,648 | 1,516,295 | ||||||||||||
| Real Estate Operations | 13,257,355 | 4,774,620 | 42,731,815 | 14,335,518 | ||||||||||||
| Golf Operations | 1,383,513 | 1,412,196 | 2,858,457 | 2,876,555 | ||||||||||||
| Agriculture and Other Income | 78,749 | 18,990 | 232,900 | 37,682 | ||||||||||||
| Total Revenues | 22,837,783 | 12,873,938 | 61,551,067 | 31,228,373 | ||||||||||||
| Direct Cost of Revenues | ||||||||||||||||
| Income Properties | (1,629,515 | ) | (1,204,040 | ) | (3,041,228 | ) | (2,380,747 | ) | ||||||||
| Real Estate Operations | (5,792,529 | ) | (1,124,641 | ) | (14,949,378 | ) | (3,381,682 | ) | ||||||||
| Golf Operations | (1,401,919 | ) | (1,447,176 | ) | (2,900,597 | ) | (2,851,764 | ) | ||||||||
| Agriculture and Other Income | (30,536 | ) | (52,654 | ) | (70,973 | ) | (100,705 | ) | ||||||||
| Total Direct Cost of Revenues | (8,854,499 | ) | (3,828,511 | ) | (20,962,176 | ) | (8,714,898 | ) | ||||||||
| General and Administrative Expenses | (2,727,187 | ) | (1,899,126 | ) | (5,947,334 | ) | (6,696,583 | ) | ||||||||
| Impairment Charges | — | (1,970,822 | ) | — | (2,180,730 | ) | ||||||||||
| Depreciation and Amortization | (3,215,690 | ) | (1,805,559 | ) | (5,978,265 | ) | (3,872,926 | ) | ||||||||
| Gain on Disposition of Assets | — | 1,362,948 | — | 1,362,948 | ||||||||||||
| Land Lease Termination | — | — | 2,226,526 | — | ||||||||||||
| Total Operating Expenses | (14,797,376 | ) | (8,141,070 | ) | (30,661,249 | ) | (20,102,189 | ) | ||||||||
| Operating Income | 8,040,407 | 4,732,868 | 30,889,818 | 11,126,184 | ||||||||||||
| Investment Income (Loss) | 8,524 | 2,691 | 17,707 | (563,693 | ) | |||||||||||
| Interest Expense | (2,144,176 | ) | (2,154,437 | ) | (4,206,067 | ) | (4,246,203 | ) | ||||||||
| Income Before Income Tax Expense | 5,904,755 | 2,581,122 | 26,701,458 | 6,316,288 | ||||||||||||
| Income Tax Expense | (2,225,847 | ) | (1,000,480 | ) | (10,276,158 | ) | (3,343,081 | ) | ||||||||
| Net Income | 3,678,908 | 1,580,642 | 16,425,300 | 2,973,207 | ||||||||||||
|
Less: Net Loss (Income) Attributable to Noncontrolling Interest in Consolidated VIE |
— | (10,199 | ) | — | 21,954 | |||||||||||
|
Net Income Attributable to Consolidated-Tomoka Land Co. |
$ | 3,678,908 | $ | 1,570,443 | $ | 16,425,300 | $ | 2,995,161 | ||||||||
| Per Share Information: | ||||||||||||||||
| Basic | ||||||||||||||||
| Net Income Attributable to Consolidated-Tomoka Land Co. | $ | 0.67 | $ | 0.28 | $ | 2.95 | $ | 0.52 | ||||||||
| Diluted | ||||||||||||||||
| Net Income Attributable to Consolidated-Tomoka Land Co. | $ | 0.67 | $ | 0.28 | $ | 2.94 | $ | 0.52 | ||||||||
| Dividends Declared and Paid | $ | 0.04 | $ | 0.04 | $ | 0.08 | $ | 0.04 | ||||||||
