The St. Joe Company Reports Second Quarter 2020 Results | The St. Joe Company The St. Joe Company (NYSE: JOE) (the “Company”) today announced total revenue increased by approximately 2% to $36.1 million for the second quarter of 2020 as compared to $35.5 million for the second quarter of 2019. The increase in real estate revenue, leasing revenue and timber revenue was partially offset by a decline in hospitality revenue related to COVID-19 restrictions. Net income increased approximately 85% to $19.2 million, or $0.33 per share, compared with net income of $10.4 million, or $0.17 per share, for the same period in 2019. Per share net income increased by approximately 90%. For the six months ended June 30, 2020, the Company’s net income increased by approximately 43% to $17.7 million or $0.30 per share compared to net income of $12.4 million or $0.21 per share for the same six-month period last year. Per share net income increased by approximately 46%. During the second quarter, the Company moved forward on the Latitude Margaritaville Watersound community with the transfer of land to the unconsolidated joint venture and commencement of development of the initial 248 homesites in the community with the design center and models planned to be open in April 2021. The second quarter of 2020 included approximately $11.6 million in after-tax gain related to the transfer of land to the unconsolidated Latitude Margaritaville Watersound joint venture. The Company also completed the initial phases of three new residential communities, approximately 50,000 square feet of commercial spaces and the Busy Bee convenience store joint venture. In addition, with the Company’s joint venture partner, the 124-room TownePlace Suites hotel was successfully opened. Jorge Gonzalez, the Company’s President and Chief Executive Officer, said, “As we navigate the uncertainty caused by the pandemic, we are seeing positive momentum in all operating segments through the second quarter. In June, we sold 89 residential homesites to five builders as well as to retail customers, including the initial sales in all three new residential communities in Bay County. This momentum is also occurring in our commercial and hospitality segments. In the second quarter, we executed 8 new commercial leases bringing the year to date total to 14. We sold 67 new The Clubs by JOE memberships in the second quarter, bringing the full-year total to 77. Our 240-unit joint venture apartment community of Pier Park Crossings, which was completed in January, is 100% leased. Our hotels, which were closed in April, gradually reopened in May. Upon reopening, the occupancy and daily rates increased quickly above summer season levels. The drive-to aspect of our hospitality market is one of the reasons for the strong recovery.” Mr. Gonzalez continued, “Projects that have been under construction are now becoming operational. The TownePlace Suites hotel near Pier Park opened in May with its initial occupancy exceeding our expectations. We are also seeing more buyers in our residential communities, more guests in our hotels and new club members from larger urban markets and different parts of the United States, which we have not seen before. Families across the nation are beginning to notice what we have always known, which is that Northwest Florida provides a great quality of life and is a great place to live, work or play.” Mr. Gonzalez concluded, “Despite the disruption caused by the pandemic, our operating revenue and income for the second quarter and for the first six months of 2020 exceeded our revenue and operating income for the same periods in 2019, while our operating and corporate expenses have remained steady. We currently have 869 residential homesites under contract with eight different builders. We have an additional 637 new apartment units, 604 additional new hotel rooms and other operational assets such as The Clubs by JOE amenity complex at Watersound Camp Creek, all under construction. As we continue to manage fixed corporate expenses, we expect these additional assets to be reflected in our bottom-line performance.” The following information compares the second quarter 2020 to the second quarter 2019. Real Estate Revenue Real estate revenue increased approximately 14% to $17.6 million in the second quarter of 2020 as compared to $15.5 million in the second quarter of 2019. We sold 122 homesites in the second quarter of 2020 totaling $11.7 million in revenue as compared to 151 homesites in the second quarter of 2019 totaling $12.6 million in revenue. The average revenue per homesite, excluding homesite residuals, was approximately $86,000 in the second quarter of 2020 as compared to approximately $73,000 in the second quarter of 2019. Gross margin remained steady at approximately 50%. In addition to the homesite sales, the Company had eight commercial, rural and unimproved residential land sales totaling $3.6 million as compared to four such commercial and rural land sales totaling $1.3 million in the second quarter of 2019. As of June 30, 2020, the Company had 869 residential homesites under contract, which are expected to result in revenue of approximately $96,000 per homesite for a total of $83.2 million over the next several years. Hospitality Revenue Hospitality revenue declined by approximately 26% to $11.6 million in the second quarter of 2020 as compared to $15.6 million in the second quarter of 2019 due to COVID-19 related restrictions initiated in March. Hotels and hospitality related businesses gradually reopened in May with business activity increasing rapidly through the end of the quarter and into July. The table below details hospitality revenue for the second quarter of 2020 and 2019 by month. Hospitality revenue was down over 70% for April 2020 as compared to April 2019. As operations reopened, June 2020 revenue exceeded June 2019 revenue by approximately 19%. The Company has under construction a 255-room Embassy Suites hotel, with its joint venture partner, in the Pier Park area of Panama City Beach, Florida, a 143-room Hilton Garden Inn hotel located near the Northwest Florida Beaches International Airport, a 75-room boutique inn and new The Clubs by JOE amenities at Watersound Camp Creek, as well as a 131-room Homewood Suites hotel near the new Panama City Beach Sports Complex. The Company intends to operate these new hotels. In addition, the Bay Point Marina and Port St. Joe Marina are in reconstruction and new marinas are in the planning process. Leasing Revenue Leasing revenue from commercial, retail, apartment and other properties increased by approximately 32% for the second quarter of 2020 as compared to the same period in 2019. This increase was due to increasing apartment leasing revenue as well as higher lease rates. COVID-19 related restrictions had minimal impact. In the second quarter of 2020, the Company abated approximately $0.1 million and deferred approximately $0.3 million of lease payments. As of June 30, 2020, the Company’s rentable space consisted of approximately 898,000 square feet of which approximately 758,000 was leased, as compared to approximately 823,000 square feet as of June 30, 2019 of which approximately 758,000 was leased. In the first quarter of 2020, the Company sold the SouthWood Town Center consisting of 34,230 rentable square feet that decreased the gross square feet under lease which was offset by newly completed rentable space. The 240 completed apartment units in Pier Park Crossings were 100% leased. The Company, through consolidated and unconsolidated joint ventures, has under construction three apartment communities totaling 637 additional units and 107 assisted living / memory care units. There are also two commercial leasing projects under construction totaling approximately 23,000 square feet of rentable space. In addition, the Company entered into new leases for approximately 55,000 square feet of commercial space yet to be constructed. Timber Revenue Timber revenue increased by approximately 186% to $2.0 million for the second quarter of 2020 as compared to $0.7 million for the second quarter of 2019. Revenue increased in the second quarter of 2020 as the industry continued to recover from the effects of Hurricane Michael. Gross margins increased to 90.0% for the second quarter of 2020 as compared to 71.4% for the second quarter of 2019. Other Operating and Corporate Expenses Other operating and corporate expenses decreased by 2% to $5.0 million for the second quarter of 2020 compared to $5.1 million for the same period in 2019. The Company continues to manage operating costs to maintain an efficient structure. Liquidity The Company maintained cash, cash equivalents and investments of $158.5 million as of June 30, 2020 compared to $158.9 million at the beginning of the quarter. Of the $158.5 million, $49.9 million was invested in U.S. Treasury Bills and $87.0 million was invested in U.S. Treasury Money Market Funds. During the second quarter of 2020, the Company incurred a total of $42.4 million for capital expenditures and used $2.0 million to repurchase 120,921 shares of its common stock. As of June 30, 2020, the Company had approximately 58.9 million shares of its common stock outstanding. Financial data schedules included in this press release include a business performance summary, consolidated results, summary balance sheets, debt and other operating and corporate expenses for the second quarter 2020 and 2019, respectively.