DAYTONA BEACH, Fla., Oct. 17, 2018 (GLOBE NEWSWIRE) -- Consolidated-Tomoka Land Co. (NYSE American: CTO) (the “Company”) today announced its operating results and earnings for the quarter and nine months ended September 30, 2018.
QUARTER HIGHLIGHTS
Land Holdings
Completed Land Sales: Two land parcels totaling approximately 24 acres with aggregate proceeds of approximately $7.0 million, or approximately $289,000 per acre.
Land Pipeline: Sixteen (16) potential land transactions totaling approximately 3,500 acres of the Company’s remaining land, or approximately 64%, with potential proceeds of approximately $154.1 million, or approximately $44,000 per acre.
Share Repurchase Program
Since June 30, 2018 and through October 16, 2018, the Company has repurchased 50,732 shares of its common stock for approximately $3.1 million, at an average purchase price of $60.94 per share with approximately $7.2 million remaining in the recently increased buyback program.
Golf Impairment
The Company wrote-down the value of its golf operation net assets to $3.1 million, reflecting an impairment charge of approximately $1.1 million, which negatively impacted earnings for the quarter and year-to-date by $0.15 per share, after tax.
Book Value Per Share
Our book value per share totaled $37.20 as of September 30, 2018, an increase of $4.22 per share, or 13%, compared to year-end 2017.
Strategic Initiatives
During the quarter ended September 30, 2018 and subsequently, the Company has commenced efforts to pursue the monetization of certain of its multi-tenant income properties, its portfolio of subsurface interests and its interest in the golf operations, which in aggregate could potentially generate proceeds in excess of $125 million. The Company will seek to deploy the proceeds from any of the aforementioned dispositions to acquire single-tenant net lease assets utilizing the 1031 like-kind exchange structure where possible.
OPERATING RESULTS
Operating results for the 3rd Quarter ended September 30, 2018 (as compared to the same period in 2017):
- Net income per share (basic) and operating income were as follows:
| Increase (Decrease) | ||||||||
| For the Quarter | vs Same Period in 2017 | vs Same Period in 2017 (%) | ||||||
| Net Income Per Share (basic) | $ | 0.05 (1) | $ | (0.13 | ) | -72 | % | |
| Operating Income ($ millions) | $ | 2.8 | $ | (1.0 | ) | -26 | % | |
| (1) Excluding the impairment charge on the golf operation assets the Company’s net income per share (basic) would have totaled approximately $0.20 per share. | ||||||||
- Revenues from our Operating Segments were as follows:
| Increase (Decrease) | ||||||||
| Operating Segment | Revenue for the Quarter ($000’s) | vs Same Period in 2017 ($000’s) | vs Same Period in 2017 (%) | |||||
| Income Properties | $ | 9,360 | $ | 1,432 | 18 | % | ||
| Interest Income from Commercial Loan Investments | 41 | -597 | -94 | % | ||||
| Real Estate Operations | 8,013 | 5,087 | 174 | % | ||||
| Golf Operations | 1,015 | 218 | 27 | % | ||||
| Agriculture and Other Income | - | -91 | -100 | % | ||||
| Total Revenues | $ | 18,429 | $ | 6,049 | 49 | % | ||
Operating results for the nine months ended September 30, 2018 (as compared to the same period in 2017):
- Net income per share (basic) and operating income were as follows:
| Increase (Decrease) | ||||||||
| For the Nine Months | vs Same Period in 2017 | vs Same Period in 2017 (%) | ||||||
| Net Income Per Share (basic) | $ | 4.60 (1) | $ | 1.47 | 47 | % | ||
| Operating Income ($ millions) | $ | 41.3 | $ | 6.6 | 19 | % | ||
| (1) Excluding the impairment charge on the golf operation assets the Company’s net income per share (basic) would have totaled approximately $4.75 per share. | ||||||||
- Revenues from our Operating Segments were as follows:
| Increase (Decrease) | ||||||||
| Operating Segment | Revenue for the Nine Months ($000’s) | vs Same Period in 2017 ($000’s) | vs Same Period in 2017 (%) | |||||
| Income Properties | $ | 28,347 | $ | 5,781 | 26 | % | ||
| Interest Income from Commercial Loan Investments | 616 | (1,111 | ) | -64 | % | |||
| Real Estate Operations | 24,476 | (21,182 | ) | -46 | % | |||
| Golf Operations | 3,652 | (4 | ) | 0 | % | |||
| Agriculture and Other Income | 22 | (302 | ) | -93 | % | |||
| Total Revenues | $ | 57,113 | $ | (16,818 | ) | -23 | % | |
Income Property Operations Update
Subsequent to September 30, 2018, the Company acquired a single-tenant net lease office property for a purchase price of approximately $44.0 million and eight single-tenant ground leases for a purchase price of approximately $32.3 million (the “October Acquisitions”). Including the October Acquisitions, for an aggregate purchase price of approximately $76.3 million, the Company’s portfolio of single-tenant income properties is thirty-eight (38) as of October 17, 2018.
The Company’s income property portfolio consisted of the following as of October 17, 2018:
| Property Type | # of Properties | Square Feet | Average Years Remaining on Lease | ||
| Single-Tenant | 38 | 1,815,034 | 9.7 | ||
| Multi-Tenant | 7 | 531,915 | 4.4 | ||
| Total / Wtd. Avg. | 45 | 2,346,949 | 8.5 | ||
Land Update
During the quarter, the Company completed two land transactions totaling approximately 24 acres with aggregate proceeds of approximately $7.0 million, or approximately $289,000 per acre, resulting in an aggregate gain of approximately $1.8 million, or $0.24 per share, net of tax.
Land Pipeline Update
As of October 17, 2018, the Company’s pipeline of potential land sales transactions includes the following sixteen (16) potential transactions with fourteen (14) different buyers, representing approximately 3,500 acres or approximately 64% of our remaining land holdings:
| Transaction (Buyer) | Acres | Amount ($000’s) | Price Per Acre ($ Rounded 000’s) | Estimated Timing | |||
| 1 | Commercial/Retail – O’Connor - East of I-95 (1) | 203 | $ | 45,252 | $ | 223,000 | ‘19 |
| 2 | Residential (AR) – Minto Communities – West of I-95 | 1,614 | $ | 26,500 | $ | 16,000 | Q4 ’18 |
| 3 | Residential (SF) – ICI Homes – West of I-95 | 1,016 | $ | 21,000 | $ | 21,000 | ‘19 |
| 4 | Mixed-Use Retail – North American – East of I-95 (2) | 35 | $ | 14,362 | $ | 409,000 | Q4 ‘18 |
| 5 | Commercial/Residential – Unicorp Dev. – East of I-95 | 101 | $ | 9,500 | $ | 94,000 | ’19 - ‘20 |
| 6 | Commercial/Medical Office – East of I-95 | 32 | $ | 8,089 | $ | 253,000 | ’19 - ‘20 |
| 7 | Residential (MF) – East of I-95 (3) | 45 | $ | 5,200 | $ | 116,000 | Q4 ’18 & ‘20 |
| 8 | Residential (MF) – East of I-95 | 20 | $ | 4,250 | $ | 213,000 | Q4 ’18 |
| 9 | Residential (MF) – East of I-95 | 20 | $ | 4,000 | $ | 200,000 | ’19 - ‘20 |
| 10 | Commercial/Residential – Unicorp Dev. – East of I-95 | 14 | $ | 3,800 | $ | 271,000 | ’19 - ‘20 |
| 11 | Commercial/Distribution – VanTrust - East of I-95 | 26 | $ | 3,215 | $ | 124,000 | ’18 – ‘19 |
| 12 | Residential (SF) – West of I-95 (4) | 200 | $ | 3,175 | $ | 16,000 | Q4 ’18 & ‘20 |
| 13 | Commercial/Retail – East of I-95 | 9 | $ | 2,900 | $ | 322,000 | Q4 ’18 – ‘19 |
| 14 | Residential (SF) – ICI Homes – West of I-95 | 146 | $ | 1,400 | $ | 10,000 | ’19 |
| 15 | Commercial/Medical Office – East of I-95 | 4 | $ | 935 | $ | 234,000 | Q4 ’18 |
| 16 | Residential (SF) –East of I-95 | 18 | $ | 570 | $ | 32,000 | ’19 - ‘20 |
| Totals (Average) | 3,503 | $ | 154,148 | $ | 44,000 | ||
| (1) Land sales transaction which requires the Company to incur the cost to provide the requisite mitigation credits necessary for obtaining the applicable regulatory permits for the buyer, with such costs representing either our basis in credits that we own or potentially up to 5% - 10% of the contract amount noted. | |||||||
| (2) Pursuant to the contract, amount includes the reimbursement of infrastructure costs incurred by the Company for Tomoka Town Center plus interest accrued as of December 31, 2017. | |||||||
| (3) The acres and amount include the buyer’s option to acquire 19 acres for approximately $2.0 million, in addition to the base contract of 26 acres for approximately $3.2 million. | |||||||
| (4) The acres and amount include the buyer’s option to acquire 71 acres for approximately $925,000, in addition to the base contract of 129 acres for approximately $2.25 million. | |||||||
As noted above, these agreements contemplate closing dates ranging from the fourth quarter of 2018 through fiscal year 2020, and although some of the transactions may close in 2018, some of the buyers are not contractually obligated to close until after 2018. Each of the transactions are in varying stages of due diligence by the various buyers including, in some instances, making submissions to the planning and development departments of the City of Daytona Beach, and other permitting activities with other applicable governmental authorities including wetlands permits from the St. John’s River Water Management District and the U.S. Army Corps of Engineers and conducting traffic analyses and potential road impact requirements with the Florida Department of Transportation and negotiating other matters with Volusia County. In addition to other customary closing conditions, the majority of these transactions are conditioned upon the receipt of approvals or permits from those various governmental authorities, as well as other matters that are beyond our control. If such approvals are not obtained or costs to meet governmental requirements or obligations are too high, the prospective buyers may have the ability to terminate their respective agreements prior to closing. As a result, there can be no assurances regarding the likelihood or timing of any one of these potential land transactions being completed or the final terms thereof, including the sales price.
Excluding the approximately 3,500 acres under contract, the Company’s remaining land holdings consist of approximately 2,000 acres of undeveloped land.
Golf Operations – Impairment Charge
During the three months ended September 30, 2018, an impairment charge of approximately $1.1 million, or $0.15 per share, after tax, was recognized to write-down the net assets of the Company’s golf operations to their estimated fair value of approximately $3.1 million. The impairment charge was taken during the third quarter of 2018 as certain facts and circumstances changed or became evident necessitating the adjustment in the fair value of the assets. Included in the triggering events for recognition of the impairment charge is that the Company has begun to actively seek a buyer for the golf operations and related assets.
Debt Summary
The following table provides a summary of the Company’s long-term debt as of September 30, 2018:
| Component of Long-Term Debt (1) | Principal | Interest Rate | Maturity Date | ||
| Revolving Credit Facility (2) | $50.75 million | 30-day LIBOR 1.50% – 2.20 | + % | September 2021 | |
| Mortgage Note Payable (3) | $24.72 million | 3.17 | % | April 2021 | |
| Mortgage Note Payable | $30.00 million | 4.33 | % | October 2034 | |
| Convertible Senior Notes | $75.00 million | 4.50 | % | March 2020 | |
| Total Debt/Weighted-Average Rate | $180.47 million | 4.05 | % | ||
| (1) At face value | |||||
| (2) In connection with the October Acquisitions the outstanding balance on the Revolving Credit Facility, as of October 17, 2018, was $120.7 million and as a result our Total Debt as of that date was approximately $250.5 million and our weighted average interest rate was 3.97%. The Company intends to utilize proceeds from certain 1031 transactions, completed before or anticipated to be completed after the October Acquisitions to reduce the current outstanding balance on the Revolving Credit Facility. | |||||
| (3) Utilized interest rate swap to achieve fixed interest rate of 3.17% | |||||
2018 Guidance
The following summary provides a review of the Company’s results for the nine months ended September 30, 2018 relative to the guidance for the full year ending December 31, 2018:
| Guidance YTD 2018 | Actual Q3 2018 YTD | ||
| Reported Earnings Per Share (Basic)(1) | $7.25 - $8.25 | $4.11 | |
| Acquisition of Income-Producing Assets (2) | $80mm - $120mm | $26.5mm | |
| Target Investment Yields (Initial Yield – Unlevered) (2) | 5.75% - 7.25% | 4.50% | |
| Disposition of Income-Producing Assets (Sales Value) | $6mm - $18mm | $11.4mm | |
| Target Disposition Yields | 7.50% - 8.50% | 7.40% | |
| Land Transactions (Sales Value) (3) | $55mm - $70mm | $37.9mm | |
| Leverage Target (as % of Total Enterprise Value) (2) | <40% | 34% | |
| (1) Excludes earnings impact of anticipated and actual income property dispositions. Actual results as of September 30, 2018 included earnings from income property dispositions of approximately $0.49 per share, net of tax, which have been excluded from the actual results noted in the above table. | |||
| (2) Including the October Acquisitions, the Company has acquired approximately $102.8 million of income-producing assets at a weighted-average initial investment yield of approximately 6.35%, and our leverage as a percentage of Total Enterprise Value (as of October 10, 2018) equaled approximately 42%. | |||
| (3) Includes the $15.3 million of proceeds for the sale of the 70% interest in the mitigation bank joint venture. | |||
3rd Quarter Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter and nine months ended September 30, 2018 tomorrow, Thursday, October 18, 2018, 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 fifteen minutes prior to the scheduled start time and use the code 4424173 when prompted.
A webcast of the call can be accessed at: http://services.choruscall.com/links/cto181018.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.
About Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based publicly traded real estate company, which owns, as of October 17, 2018, a portfolio of income investments in diversified markets in the United States including more than 2.3 million square feet of income properties, as well as approximately 5,500 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 and nine months ended September 30, 2018, 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, 2017 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, 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) | ||||||||
| September 30, 2018 | December 31, 2017 | |||||||
| ASSETS | ||||||||
| Property, Plant, and Equipment: | ||||||||
| Income Properties, Land, Buildings, and Improvements | $ | 396,483,185 | $ | 358,130,350 | ||||
| Golf Buildings, Improvements, and Equipment | 3,746,877 | 6,617,396 | ||||||
| Other Furnishings and Equipment | 726,380 | 715,042 | ||||||
| Construction in Progress | 761,696 | 6,005,397 | ||||||
| Total Property, Plant, and Equipment | 401,718,138 | 371,468,185 | ||||||
| Less, Accumulated Depreciation and Amortization | (26,467,425 | ) | (23,779,780 | ) | ||||
| Property, Plant, and Equipment—Net | 375,250,713 | 347,688,405 | ||||||
| Land and Development Costs | 27,243,368 | 39,477,697 | ||||||
| Intangible Lease Assets—Net | 37,112,279 | 38,758,059 | ||||||
| Investment in Joint Venture | 6,738,537 | — | ||||||
| Impact Fee and Mitigation Credits | 538,926 | 1,125,269 | ||||||
| Commercial Loan Investments | — | 11,925,699 | ||||||
| Cash and Cash Equivalents | 5,320,493 | 6,559,409 | ||||||
| Restricted Cash | 8,477,796 | 6,508,131 | ||||||
| Refundable Income Taxes | 624,759 | 1,116,580 | ||||||
| Other Assets | 14,852,899 | 12,971,129 | ||||||
| Total Assets | $ | 476,159,770 | $ | 466,130,378 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts Payable | $ | 844,745 | $ | 1,880,516 | ||||
| Accrued and Other Liabilities | 6,265,875 | 10,160,526 | ||||||
| Deferred Revenue | 6,954,111 | 2,030,459 | ||||||
| Intangible Lease Liabilities—Net | 28,415,319 | 29,770,441 | ||||||
| Deferred Income Taxes—Net | 50,308,213 | 42,293,864 | ||||||
| Long-Term Debt | 177,359,493 | 195,816,364 | ||||||
| Total Liabilities | 270,147,756 | 281,952,170 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Common Stock – 25,000,000 shares authorized; $1 par value, 6,051,168 shares issued and 5,538,310 shares outstanding at September 30, 2018; 6,030,990 shares issued and 5,584,335 shares outstanding at December 31, 2017 | 5,994,216 | 5,963,850 | ||||||
| Treasury Stock – 512,858 shares at September 30, 2018; 446,655 shares at December 31, 2017 | (26,484,765 | ) | (22,507,760 | ) | ||||
| Additional Paid-In Capital | 23,862,170 | 22,735,228 | ||||||
| Retained Earnings | 201,936,651 | 177,614,274 | ||||||
| Accumulated Other Comprehensive Income | 703,742 | 372,616 | ||||||
| Total Shareholders’ Equity | 206,012,014 | 184,178,208 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 476,159,770 | $ | 466,130,378 | ||||
| CONSOLIDATED-TOMOKA LAND CO. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Revenues | ||||||||||||
| Income Properties | $ | 9,360,155 | $ | 7,928,258 | $ | 28,347,181 | $ | 22,566,505 | ||||
| Interest Income from Commercial Loan Investments | 41,262 | 637,801 | 615,728 | 1,727,449 | ||||||||
| Real Estate Operations | 8,012,509 | 2,926,406 | 24,476,153 | 45,658,221 | ||||||||
| Golf Operations | 1,014,771 | 797,420 | 3,652,045 | 3,655,877 | ||||||||
| Agriculture and Other Income | — | 90,717 | 22,374 | 323,617 | ||||||||
| Total Revenues | 18,428,697 | 12,380,602 | 57,113,481 | 73,931,669 | ||||||||
| Direct Cost of Revenues | ||||||||||||
| Income Properties | (1,773,840 | ) | (1,715,516 | ) | (5,677,758 | ) | (4,756,744 | ) | ||||
| Real Estate Operations | (5,572,319 | ) | (459,169 | ) | (7,978,251 | ) | (15,408,547 | ) | ||||
| Golf Operations | (1,388,282 | ) | (1,272,647 | ) | (4,295,160 | ) | (4,173,244 | ) | ||||
| Agriculture and Other Income | (5,172 | ) | (18,874 | ) | (15,516 | ) | (89,847 | ) | ||||
| Total Direct Cost of Revenues | (8,739,613 | ) | (3,466,206 | ) | (17,966,685 | ) | (24,428,382 | ) | ||||
| General and Administrative Expenses | (1,928,008 | ) | (1,995,512 | ) | (7,180,737 | ) | (7,942,846 | ) | ||||
| Depreciation and Amortization | (3,857,240 | ) | (3,161,169 | ) | (11,612,557 | ) | (9,139,434 | ) | ||||
| Impairment Charges | (1,119,362 | ) | — | (1,119,362 | ) | — | ||||||
| Total Operating Expenses | (15,644,223 | ) | (8,622,887 | ) | (37,879,341 | ) | (41,510,662 | ) | ||||
| Gain (Loss) on Disposition of Assets | — | (266 | ) | 22,035,666 | (266 | ) | ||||||
| Land Lease Income | — | — | — | 2,226,526 | ||||||||
| Other Gains (Losses) and Income | — | (266 | ) | 22,035,666 | 2,226,260 | |||||||
| Operating Income | 2,784,474 | 3,757,449 | 41,269,806 | 34,647,267 | ||||||||
| Investment Income | 14,179 | 9,724 | 38,383 | 27,431 | ||||||||
| Interest Expense | (2,345,156 | ) | (2,073,299 | ) | (7,443,922 | ) | (6,279,366 | ) | ||||
| Income Before Income Tax Expense | 453,497 | 1,693,874 | 33,864,267 | 28,395,332 | ||||||||
| Income Tax Expense | (157,325 | ) | (726,974 | ) | (8,492,888 | ) | (11,003,132 | ) | ||||
| Net Income | $ | 296,172 | $ | 966,900 | $ | 25,371,379 | $ | 17,392,200 | ||||
| Weighted Average Common Shares Outstanding: | ||||||||||||
| Basic | 5,491,181 | 5,513,327 | 5,516,989 | 5,548,644 | ||||||||
| Diluted | 5,493,367 | 5,522,593 | 5,548,425 | 5,565,274 | ||||||||
| Per Share Information: | ||||||||||||
| Basic Net Income Per Share | $ | 0.05 | $ | 0.18 | $ | 4.60 | $ | 3.13 | ||||
| Diluted Net Income Per Share | $ | 0.05 | $ | 0.18 | $ | 4.57 | $ | 3.13 | ||||
| Dividends Declared and Paid | $ | 0.07 | $ | 0.05 | $ | 0.19 | $ | 0.13 | ||||
| Contact: | Mark E. Patten, Sr. Vice President and CFO | |
| mpatten@ctlc.com | ||
| Phone: | (386) 944-5643 | |
| Facsimile: | (386) 274-1223 |