Stratus Properties Inc. (NASDAQ: STRS), a diversified real
estate company with holdings, interests and operations in the
Austin, Texas area and other select markets in Texas, today
reported third-quarter 2023 results.
Highlights and Recent
Developments:
- Net loss attributable to common stockholders totaled
$2.8 million, or $0.35 per diluted share, in third-quarter 2023,
compared to net loss attributable to common stockholders of $2.4
million, or $0.29 per diluted share, in third-quarter 2022. Net
loss attributable to common stockholders totaled $13.9 million, or
$1.69 per diluted share, in the first nine months ended September
30, 2023, compared to net income attributable to common
stockholders of $96.5 million, or $11.50 per diluted share, in the
first nine months ended September 30, 2022.
- Stratus’ total stockholders’ equity was $192.0 million
at September 30, 2023, compared to $207.2 million at December 31,
2022 and $158.1 million at December 31, 2021. The increase in total
stockholders’ equity from December 31, 2021 to September 30, 2023
was primarily a result of the gain realized on Stratus’ sale of
Block 21 in 2022 and reflects a special dividend of approximately
$40 million in 2022 and share repurchases totaling approximately
$9.9 million in 2022 and through September 30, 2023.
- In November 2023, Stratus’ Board of Directors (Board) approved
a new share repurchase program, which authorizes repurchases of
up to $5.0 million of Stratus’ common stock. In October 2023,
Stratus completed the $10.0 million share repurchase program
that Stratus’ Board approved in 2022. In total, under the completed
share repurchase program Stratus acquired 389,378 shares of its
common stock for a total cost of $10.0 million at an average price
of $25.68 per share.
- Stratus had $35.2 million of cash and cash equivalents
at September 30, 2023 and no amounts drawn on its revolving credit
facility. Stratus’ cash position during the first nine months of
2023 was positively impacted by the receipt in first-quarter 2023
of $35.8 million in cash from the Holden Hills partnership and the
disbursement in June 2023 of the full $6.9 million of post-closing
escrow amounts related to the sale of Block 21.
- The first units at The Saint June, a 182-unit luxury
garden-style multi-family project in Barton Creek, were ready for
occupancy in July 2023, and construction was completed in November
2023. As of September 30, 2023, Stratus had signed leases for
approximately 25 percent of the units. Stratus also continues
construction on The Saint George, the last ten Amarra
Villas homes and Holden Hills.
- As of September 30, 2023, Stratus had signed leases for all the
retail space in the first phase of development at Magnolia
Place, and all tenants were open for business. Stratus’ three
stabilized mixed-use projects anchored or shadow-anchored by H-E-B
grocery stores, Kingwood Place, Jones Crossing, and
West Killeen Market, and its fourth stabilized mixed-use
project Lantana Place, continue to perform well.
- Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) totaled $(1.9) million in third-quarter
2023, compared to $(1.2) million in third-quarter 2022. For a
reconciliation of net loss from continuing operations to EBITDA,
see the supplemental schedule, “Reconciliation of Non-GAAP Measure
EBITDA,” below.
William H. Armstrong III, Chairman of the Board and Chief
Executive Officer of Stratus, stated, “We are proud to announce the
completion of construction at The Saint June, where we have already
signed leases for more than 25 percent of the units at rents above
our initial projections. We continue to advance the construction of
our residential projects, including The Saint George, Amarra Villas
and Holden Hills. While macroeconomic conditions in the real estate
industry remain difficult, we continue to focus on controlling
costs and advancing development plans to be positioned for a market
rebound. Longer term, we believe our excellent portfolio and
experienced team will produce additional value for Stratus’
shareholders. Following the recent completion of our $10.0 million
share repurchase program and based on our strong cash position and
confidence in our business, our Board authorized a new $5.0 million
share repurchase program.”
Summary Financial
Results
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In Thousands, Except Per Share
Amounts) (Unaudited)
Revenues
Real Estate Operations
$
—
$
6,887
$
2,551
$
14,837
Leasing Operations
3,669
3,090
10,450
9,370
Eliminations and other
—
—
—
(6
)
Total Consolidated Revenue
$
3,669
$
9,977
$
13,001
$
24,201
Operating (loss)
income
Real Estate Operations a
$
(1,505
)
$
(89
)
$
(6,215
)
$
1,014
Leasing Operations b
1,354
853
3,900
8,374
Corporate, eliminations and other c
(3,178
)
(3,594
)
(11,959
)
(10,202
)
Total consolidated operating loss
$
(3,329
)
$
(2,830
)
$
(14,274
)
$
(814
)
Net loss from continuing operations
$
(3,217
)
$
(2,574
)
$
(14,799
)
$
(230
)
Net income from discontinued operations
d
$
—
$
—
$
—
$
96,300
Net (loss) income
$
(3,217
)
$
(2,574
)
$
(14,799
)
$
96,070
Net loss attributable to noncontrolling
interests in subsidiaries e
$
373
$
214
$
853
$
463
Net (loss) income attributable to common
stockholders
$
(2,844
)
$
(2,360
)
$
(13,946
)
$
96,533
Basic net (loss) income per share:
Continuing operations
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
0.03
Discontinued operations
—
—
—
11.65
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
11.68
Diluted net (loss) income per share:
Continuing operations
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
0.03
Discontinued operations
—
—
—
11.47
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
11.50
EBITDA
$
(1,894
)
$
(1,247
)
$
(9,918
)
$
2,608
Capital expenditures and purchases and
development of real estate properties
$
26,314
$
17,517
$
70,875
$
57,183
Weighted-average shares of common stock
outstanding:
Basic
8,240
8,275
8,230
8,266
Diluted
8,240
8,275
8,230
8,397
a.
For the 2022 periods, reflects a $650
thousand impairment charge related to one of the Amarra Villas
homes that was sold in first-quarter 2023 for $2.5 million and a
$70 thousand impairment charge for the multi-family tract of land
at Kingwood Place that sold for $5.5 million in fourth-quarter
2022.
b.
The first nine months of 2022 includes a
$4.8 million pre-tax gain recognized on the reversal of accruals
for costs to lease and construct buildings under a master lease
arrangement that Stratus entered into in connection with its sale
of The Oaks at Lakeway in 2017.
c.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
d.
The first nine months of 2022 includes a
$119.7 million pre-tax gain on the May 2022 sale of Block 21.
e.
Represents noncontrolling interest
partners' share in the results of the consolidated projects in
which they participate.
Continuing Operations
The decrease in revenue from the Real Estate Operations
segment in third-quarter 2023, compared to third-quarter 2022,
reflects $6.9 million of undeveloped property sales in
third-quarter 2022, compared to no property sales in third-quarter
2023.
The increase in revenue from the Leasing Operations
segment in third-quarter 2023, compared to third-quarter 2022,
primarily reflects revenue from Magnolia Place and The Saint June,
both of which had no rental revenue in third-quarter 2022, as well
as increased revenue at Kingwood Place and West Killeen Market.
Debt and Liquidity
At September 30, 2023, consolidated debt totaled $156.1 million
and consolidated cash and cash equivalents totaled $35.2 million,
compared with consolidated debt of $122.8 million and consolidated
cash and cash equivalents of $37.7 million at December 31, 2022.
Debt increased primarily due to draws on project construction loans
for The Saint George, The Saint June and Amarra Villas.
As of September 30, 2023, Stratus had $40.5 million available
under its revolving credit facility and no amount was borrowed.
Letters of credit, totaling $13.3 million, had been issued under
the revolving credit facility as of September 30, 2023, $11.0
million of which secure Stratus’ obligation to build certain roads
and utilities facilities benefiting Holden Hills and Section N and
$2.3 million of which secure Stratus’ obligations, which are
subject to certain conditions, to construct and pay for certain
utility infrastructure in Lakeway, Texas, estimated to cost
approximately $2.3 million, which is expected to be utilized by the
planned multi-family project on Stratus’ remaining land in
Lakeway.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in
investing cash flows) totaled $70.9 million for the first nine
months of 2023, primarily related to the development of Barton
Creek properties (including The Saint June, Amarra Villas and
Holden Hills) and The Saint George, compared with $57.2 million for
the first nine months of 2022, primarily related to the development
of Barton Creek properties (including The Saint June and Amarra
Villas), The Saint George and Magnolia Place.
New Share Repurchase Program
Following the completion of Stratus’ $10.0 million share
repurchase program and with written consent from Comerica Bank,
Stratus’ Board approved a new share repurchase program, which
authorizes repurchases of up to $5.0 million of Stratus’ common
stock. The share repurchase program authorizes Stratus, in
management’s and the Capital Committee of the Board’s discretion,
to repurchase shares from time to time, subject to market
conditions and other factors. The timing, price and number of
shares that may be repurchased under the share repurchase program
will be based on market conditions, applicable securities laws and
other factors considered by management and the Capital Committee of
the Board. Share repurchases under the program may be made from
time to time through solicited or unsolicited transactions in the
open market, in privately negotiated transactions or by other means
in accordance with securities laws. The share repurchase program
does not obligate Stratus to repurchase any specific amount of
shares, does not have an expiration date, and may be suspended,
modified or discontinued at any time without prior notice.
CAUTIONARY STATEMENT
This press release contains forward-looking statements in which
Stratus discusses factors it believes may affect its future
performance. Forward-looking statements are all statements other
than statements of historical fact, such as plans, projections or
expectations related to the impact of inflation and interest rate
changes, supply chain constraints and tightening bank credit,
Stratus’ ability to meet its future debt service and other cash
obligations, future cash flows and liquidity, Stratus’ expectations
about the Austin and Texas real estate markets, the planning,
financing, development, construction, completion and stabilization
of Stratus’ development projects, plans to sell, recapitalize, or
refinance properties, future operational and financial performance,
municipal utility district (MUD) reimbursements for infrastructure
costs, regulatory matters, leasing activities, tax rates, future
capital expenditures and financing plans, possible joint ventures,
partnerships, or other strategic relationships, other plans and
objectives of management for future operations and development
projects, the impacts of any major public health crisis, and future
cash returns to shareholders, including the timing and amount of
repurchases under Stratus’ share repurchase program. The words
“anticipate,” “may,” “can,” “plan,” “believe,” “potential,”
“estimate,” “expect,” “project,” “target,” “intend,” “likely,”
“will,” “should,” “to be” and any similar expressions and/or
statements are intended to identify those assertions as
forward-looking statements.
Under Stratus’ Comerica Bank debt agreements, Stratus is not
permitted to repurchase its common stock in excess of $1.0 million
or pay dividends on its common stock without Comerica Bank’s prior
written consent, which we obtained in connection with the share
repurchase program. Any future declaration of dividends or decision
to repurchase Stratus’ common stock is at the discretion of
Stratus’ Board, subject to restrictions under Stratus’ Comerica
Bank debt agreements, and will depend on Stratus’ financial
results, cash requirements, projected compliance with covenants in
its debt agreements, outlook and other factors deemed relevant by
the Board. Stratus’ future debt agreements, future refinancings of
or amendments to existing debt agreements or other future
agreements may restrict Stratus’ ability to declare dividends or
repurchase shares.
Stratus cautions readers that forward-looking statements are not
guarantees of future performance, and its actual results may differ
materially from those anticipated, expected, projected or assumed
in the forward-looking statements. Important factors that can cause
Stratus’ actual results to differ materially from those anticipated
in the forward-looking statements include, but are not limited to,
Stratus’ ability to implement its business strategy successfully,
including its ability to develop, construct and sell or lease
properties on terms its Board considers acceptable, increases in
operating and construction costs, including real estate taxes and
the cost of building materials and labor, increases in inflation
and interest rates, supply chain constraints, tightening bank
credit, defaults by contractors and subcontractors, declines in the
market value of Stratus’ assets, market conditions or corporate
developments that could preclude, impair or delay any opportunities
with respect to plans to sell, recapitalize or refinance
properties, a decrease in the demand for real estate in select
markets in Texas where Stratus operates, particularly in Austin,
changes in economic, market, tax, business and geopolitical
conditions, including as a result of conflicts in Ukraine and
Israel, potential U.S. or local economic downturn or recession, the
availability and terms of financing for development projects and
other corporate purposes, the failure of any bank in which Stratus
deposits funds, any major public health crisis, Stratus’ ability to
collect anticipated rental payments and close projected asset
sales, loss of key personnel, Stratus’ ability to enter into and
maintain joint ventures, partnerships, or other strategic
relationships, including risks associated with such joint ventures,
Stratus’ ability to pay or refinance its debt, extend maturity
dates of its loans or comply with or obtain waivers of financial
and other covenants in debt agreements and to meet other cash
obligations, eligibility for and potential receipt and timing of
receipt of MUD reimbursements, industry risks, changes in buyer
preferences, potential additional impairment charges, competition
from other real estate developers, Stratus’ ability to obtain
various entitlements and permits, changes in laws, regulations or
the regulatory environment affecting the development of real
estate, opposition from special interest groups or local
governments with respect to development projects, weather- and
climate-related risks, environmental and litigation risks, the
failure to attract buyers or tenants for Stratus’ developments or
such buyers’ or tenants’ failure to satisfy their purchase
commitments or leasing obligations, cybersecurity incidents and
other factors described in more detail under the heading “Risk
Factors” in Stratus’ Annual Report on Form 10-K for the year ended
December 31, 2022, filed with the U.S. Securities and Exchange
Commission (SEC).
Investors are cautioned that many of the assumptions upon which
Stratus’ forward-looking statements are based are likely to change
after the date the forward-looking statements are made. Further,
Stratus may make changes to its business plans that could affect
its results. Stratus cautions investors that it undertakes no
obligation to update any forward-looking statements, which speak
only as of the date made, notwithstanding any changes in its
assumptions, business plans, actual experience or other
changes.
This press release also includes EBITDA, which is not recognized
under U.S. generally accepted accounting principles (GAAP).
Stratus’ management believes this measure can be helpful to
investors in evaluating its business because EBITDA is a financial
measure frequently used by securities analysts, lenders and others
to evaluate Stratus' recurring operating performance. EBITDA is
intended to be a performance measure that should not be regarded as
more meaningful than GAAP measures. Other companies may calculate
EBITDA differently. As required by SEC rules, a reconciliation of
Stratus' net loss from continuing operations to EBITDA is included
in the supplemental schedule of this press release.
A copy of this release is available on Stratus’
website, stratusproperties.com.
STRATUS PROPERTIES
INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME (Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenues:
Real estate operations
$
—
$
6,887
$
2,551
$
14,831
Leasing operations
3,669
3,090
10,450
9,370
Total revenues
3,669
9,977
13,001
24,201
Cost of sales:
Real estate operations
1,467
6,228
8,651
13,026
Leasing operations
1,381
1,350
3,786
3,204
Depreciation and amortization
967
907
2,865
2,664
Total cost of sales
3,815
8,485
15,302
18,894
General and administrative expenses
3,183
3,602
11,973
10,213
Impairment of real estate a
—
720
—
720
Gain on sale of assets b
—
—
—
(4,812
)
Total
6,998
12,807
27,275
25,015
Operating loss
(3,329
)
(2,830
)
(14,274
)
(814
)
Interest expense, net
—
—
—
(15
)
Other income, net
472
680
1,501
766
Loss before income taxes and equity in
unconsolidated affiliate's loss
(2,857
)
(2,150
)
(12,773
)
(63
)
Provision for income taxes
(356
)
(420
)
(2,016
)
(159
)
Equity in unconsolidated affiliate’s
loss
(4
)
(4
)
(10
)
(8
)
Net loss from continuing operations
(3,217
)
(2,574
)
(14,799
)
(230
)
Net income from discontinued operations
c
—
—
—
96,300
Net (loss) income and total comprehensive
(loss) income
(3,217
)
(2,574
)
(14,799
)
96,070
Total comprehensive loss attributable to
noncontrolling interests d
373
214
853
463
Net (loss) income and total comprehensive
(loss) income attributable to common stockholders
$
(2,844
)
$
(2,360
)
$
(13,946
)
$
96,533
Basic net (loss) income per share
attributable to common stockholders:
Continuing operations
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
0.03
Discontinued operations
—
—
—
11.65
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
11.68
Diluted net (loss) income per share
attributable to common stockholders:
Continuing operations
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
0.03
Discontinued operations
—
—
—
11.47
$
(0.35
)
$
(0.29
)
$
(1.69
)
$
11.50
Weighted-average shares of common stock
outstanding:
Basic
8,240
8,275
8,230
8,266
Diluted
8,240
8,275
8,230
8,397
Dividends declared per share of common
stock
$
—
$
4.67
$
—
$
4.67
a.
For the 2022 periods, reflects a $650
thousand impairment charge related to one of the Amarra Villas
homes that was sold in first-quarter 2023 for $2.5 million and a
$70 thousand impairment charge for the multi-family tract of land
at Kingwood Place that sold for $5.5 million in fourth-quarter
2022.
b.
For the first nine months of 2022, a
pre-tax gain of $4.8 million was recognized on the reversal of
accruals for costs to lease and construct buildings under a master
lease arrangement that Stratus entered into in connection with its
sale of The Oaks at Lakeway in 2017.
c.
The first nine months of 2022 includes a
$119.7 million pre-tax gain on the May 2022 sale of Block 21.
d.
Represents noncontrolling interest
partners' share in the results of the consolidated projects in
which they participate.
STRATUS PROPERTIES
INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
September 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
35,162
$
37,666
Restricted cash
1,228
8,043
Real estate held for sale
1,773
1,773
Real estate under development
245,965
239,278
Land available for development
47,320
39,855
Real estate held for investment, net
145,758
92,377
Lease right-of-use assets
11,449
10,631
Deferred tax assets
38
38
Other assets
13,328
15,479
Total assets
$
502,021
$
445,140
LIABILITIES AND EQUITY
Liabilities:
Accounts payable
$
17,136
$
15,244
Accrued liabilities, including taxes
7,172
7,049
Debt
156,068
122,765
Lease liabilities
15,970
14,848
Deferred gain
2,948
3,519
Other liabilities
6,784
9,642
Total liabilities
206,078
173,067
Commitments and contingencies
Equity:
Stockholders' equity:
Common stock
96
94
Capital in excess of par value of common
stock
197,293
195,773
Retained earnings
27,506
41,452
Common stock held in treasury
(32,924
)
(30,071
)
Total stockholders' equity
191,971
207,248
Noncontrolling interests in
subsidiaries
103,972
64,825
Total equity
295,943
272,073
Total liabilities and equity
$
502,021
$
445,140
STRATUS PROPERTIES
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In Thousands)
Nine Months Ended
September 30,
2023
2022
Cash flow from operating activities:
Net (loss) income
$
(14,799
)
$
96,070
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization
2,865
2,664
Cost of real estate sold
2,080
7,510
Impairment of real estate
—
720
Gain on sale of discontinued
operations
—
(119,695
)
Gain on sale of assets
—
(4,812
)
Debt issuance cost amortization and
stock-based compensation
2,110
1,898
Equity in unconsolidated affiliate’s
loss
10
8
Deferred income taxes
—
5,962
Purchases and development of real estate
properties
(34,697
)
(18,294
)
Decrease in other assets
2,223
4,858
Increase (decrease) in accounts payable,
accrued liabilities and other
908
(26,213
)
Net cash used in operating activities
(39,300
)
(49,324
)
Cash flow from investing activities:
Proceeds from sale of discontinued
operations
—
105,813
Capital expenditures
(36,178
)
(38,889
)
Payments on master lease obligations
(730
)
(742
)
Other, net
5
(8
)
Net cash (used in) provided by investing
activities
(36,903
)
66,174
Cash flow from financing activities:
Borrowings from credit facility
—
30,000
Payments on credit facility
—
(30,000
)
Borrowings from project loans
41,656
25,798
Payments on project and term loans
(8,472
)
(9,761
)
Payment of dividends
(678
)
(38,675
)
Stock-based awards net payments
(789
)
(452
)
Finance lease principal payments
(11
)
—
Noncontrolling interest contribution
40,000
15,032
Purchases of treasury stock
(2,064
)
(262
)
Financing costs
(2,758
)
(1,356
)
Net cash provided by (used in) financing
activities
66,884
(9,676
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(9,319
)
7,174
Cash, cash equivalents and restricted cash
at beginning of year
45,709
70,139
Cash, cash equivalents and restricted cash
at end of period
$
36,390
$
77,313
STRATUS PROPERTIES INC.
BUSINESS SEGMENTS
As a result of the sale of Block 21, Stratus has two operating
segments: Real Estate Operations and Leasing Operations. Block 21,
which encompassed Stratus’ Hotel and Entertainment segments, along
with some leasing operations, is presented as discontinued
operations.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed for sale, under development and available
for development), which consists of its properties in Austin, Texas
(including the Barton Creek Community, which includes Section N,
Holden Hills, Amarra multi-family and commercial land, Amarra
Villas, Amarra Drive lots and other vacant land; the Circle C
community; the Lantana community, which includes a portion of
Lantana Place planned for a multi-family phase known as The Saint
Julia; The Saint George; and the land for The Annie B); in Lakeway,
Texas, located in the greater Austin area (Lakeway); in College
Station, Texas (land for future phases of retail and multi-family
development and retail pad sites at Jones Crossing); and in
Magnolia, Texas (land for a future phase of retail development and
for future multi-family use and retail pad sites at Magnolia
Place), Kingwood, Texas (a retail pad site) and New Caney, Texas
(New Caney), each located in the greater Houston area.
The Leasing Operations segment is comprised of Stratus’ real
estate assets held for investment that are leased or available for
lease and includes The Saint June, West Killeen Market, Lantana
Place, Kingwood Place and the completed portions of Jones Crossing
and Magnolia Place and retail pad sites subject to ground leases at
Lantana Place, Kingwood Place and Jones Crossing.
Stratus uses operating income or loss to measure the performance
of each segment. General and administrative expenses, which
primarily consist of employee salaries, wages and other costs, are
managed on a consolidated basis and are not allocated to Stratus’
operating segments. The following segment information reflects
management determinations that may not be indicative of what the
actual financial performance of each segment would be if it were an
independent entity.
Summarized financial information by segment for the three months
ended September 30, 2023, based on Stratus’ internal financial
reporting system utilized by its chief operating decision maker,
follows (in thousands):
Real Estate Operations a
Leasing Operations
Corporate, Eliminations and Other
b
Total
Revenues:
Unaffiliated customers
$
—
$
3,669
$
—
$
3,669
Cost of sales, excluding depreciation and
amortization
(1,467
)
(1,381
)
—
(2,848
)
Depreciation and amortization
(38
)
(934
)
5
(967
)
General and administrative expenses
—
—
(3,183
)
(3,183
)
Operating (loss) income
$
(1,505
)
$
1,354
$
(3,178
)
$
(3,329
)
Capital expenditures and purchases and
development of real estate properties
$
13,613
$
12,701
$
—
$
26,314
Total assets at September 30, 2023 c
302,927
164,565
34,529
502,021
a.
Includes sales commissions and other
revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Corporate, eliminations and other includes
cash and cash equivalents and restricted cash of $34.3 million. The
remaining cash and cash equivalents and restricted cash is
reflected in the operating segments’ assets.
Summarized financial information by segment for the three months
ended September 30, 2022, based on Stratus’ internal financial
reporting system utilized by its chief operating decision maker,
follows (in thousands):
Real Estate Operations a
Leasing Operations
Corporate, Eliminations and Other
b
Total
Revenues:
Unaffiliated customers
$
6,887
$
3,090
$
—
$
9,977
Cost of sales, excluding depreciation and
amortization
(6,232
)
(1,350
)
4
(7,578
)
Depreciation and amortization
(24
)
(887
)
4
(907
)
General and administrative expenses
—
—
(3,602
)
(3,602
)
Impairment of real estate c
(720
)
—
—
(720
)
Operating (loss) income
$
(89
)
$
853
$
(3,594
)
$
(2,830
)
Capital expenditures and purchases and
development of real estate properties
$
6,203
$
11,314
$
—
$
17,517
Total assets at September 30, 2022 d
274,397
111,938
76,502
462,837
a.
Includes sales commissions and
other revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Includes a $650 thousand
impairment charge related to one of the Amarra Villas homes that
was sold in first-quarter 2023 for $2.5 million and a $70 thousand
impairment charge for the multi-family tract of land at Kingwood
Place that sold for $5.5 million in fourth-quarter 2022.
d.
Corporate, eliminations and other
includes cash and cash equivalents and restricted cash of $73.9
million, primarily received from the May 2022 sale of Block 21. The
remaining cash and cash equivalents and restricted cash is
reflected in the operating segments’ assets.
Summarized financial information by segment for the first nine
months ended September 30, 2023, based on Stratus’ internal
financial reporting system utilized by its chief operating decision
maker, follows (in thousands):
Real Estate Operations a
Leasing Operations
Corporate, Eliminations and Other
b
Total
Revenues:
Unaffiliated customers
$
2,551
$
10,450
$
—
$
13,001
Cost of sales, excluding depreciation and
amortization
(8,651
)
(3,786
)
—
(12,437
)
Depreciation and amortization
(115
)
(2,764
)
14
(2,865
)
General and administrative expenses
—
—
(11,973
)
(11,973
)
Operating (loss) income
$
(6,215
)
$
3,900
$
(11,959
)
$
(14,274
)
Capital expenditures and purchases and
development of real estate properties
$
34,697
$
36,178
$
—
$
70,875
a.
Includes sales commissions and
other revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
Summarized financial information by segment for the first nine
months ended September 30, 2022, based on Stratus’ internal
financial reporting system utilized by its chief operating decision
maker, follows (in thousands):
Real Estate Operations a
Leasing Operations
Corporate, Eliminations and Other
b
Total
Revenues:
Unaffiliated customers
$
14,831
$
9,370
$
—
$
24,201
Intersegment
6
—
(6
)
—
Cost of sales, excluding depreciation and
amortization
(13,030
)
(3,204
)
4
(16,230
)
Depreciation and amortization
(73
)
(2,604
)
13
(2,664
)
General and administrative expenses
—
—
(10,213
)
(10,213
)
Gain on sale of assets c
—
4,812
—
4,812
Impairment of real estate d
(720
)
—
—
(720
)
Operating income (loss)
$
1,014
$
8,374
$
(10,202
)
$
(814
)
Capital expenditures and purchases and
development of real estate properties
$
18,294
$
38,676
$
213
$
57,183
a.
Includes sales commissions and
other revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Represents a pre-tax gain
recognized on the reversal of accruals for costs to lease and
construct buildings under a master lease arrangement that Stratus
entered into in connection with its sale of The Oaks at Lakeway in
2017.
d.
Includes a $650 thousand
impairment charge related to one of the Amarra Villas homes that
was sold in first-quarter 2023 for $2.5 million and a $70 thousand
impairment charge for the multi-family tract of land at Kingwood
Place that sold for $5.5 million in fourth-quarter 2022.
RECONCILIATION OF NON-GAAP MEASURE
EBITDA
EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-GAAP (generally accepted accounting
principles in the U.S.) financial measure that is frequently used
by securities analysts, investors, lenders and others to evaluate
companies’ recurring operating performance, including, among other
things, profitability before the effect of financing and similar
decisions. Because securities analysts, investors, lenders and
others use EBITDA, management believes that Stratus’ presentation
of EBITDA affords them greater transparency in assessing its
financial performance. This information differs from net loss from
continuing operations determined in accordance with GAAP and should
not be considered in isolation or as a substitute for measures of
performance determined in accordance with GAAP. EBITDA may not be
comparable to similarly titled measures reported by other
companies, as different companies may calculate such measures
differently. Management strongly encourages investors to review
Stratus’ consolidated financial statements and publicly filed
reports in their entirety. A reconciliation of Stratus’ net loss
from continuing operations to EBITDA follows (in thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net loss from continuing operations
a
$
(3,217
)
$
(2,574
)
$
(14,799
)
$
(230
)
Depreciation and amortization
967
907
2,865
2,664
Interest expense, net
—
—
—
15
Provision for income taxes
356
420
2,016
159
EBITDA b
$
(1,894
)
$
(1,247
)
$
(9,918
)
$
2,608
a.
For both periods of 2022,
includes a $650 thousand impairment charge related to one of the
Amarra Villas homes that was sold in first-quarter 2023 for $2.5
million and a $70 thousand impairment charge for the multi-family
tract of land at Kingwood Place that sold for $5.5 million in
fourth-quarter 2022. The first nine months of 2022 includes a $4.8
million pre-tax gain recognized on the reversal of accruals for
costs to lease and construct buildings under a master lease
arrangement that Stratus entered into in connection with its sale
of The Oaks at Lakeway in 2017.
b.
EBITDA does not reflect net
income from discontinued operations, which was $96.3 million in the
first nine months of 2022, related to Block 21. The impact of
accounting for the Block 21 sale as discontinued operations reduced
EBITDA by $125.2 million in the first nine months of 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114392635/en/
Financial and Media Contact: William H. Armstrong III
(512) 478-5788
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