PR Newswire
HONOLULU, Feb. 27, 2019
HONOLULU, Feb. 27, 2019 /PRNewswire/ -- Alexander & Baldwin, Inc. (NYSE: ALEX) ("A&B" or "Company") today announced financial results for the fourth quarter and full year of 2018.
Chris Benjamin, A&B president & chief executive officer stated: "A&B's fourth quarter activities significantly advanced the Company's strategic transformation into a Hawai`i-focused commercial real estate ("CRE") company. The transformative sale of 41,000 acres of Maui agricultural land to a highly qualified farming group generated nearly $260 million of proceeds that will be reinvested in Hawai'i commercial properties. While we still are working through the reinvestment process, we are very pleased with the properties we have identified to date, and we have closed or are under contract for 77% of the total reinvestment amount. With these new properties, A&B's annual net operating income ("NOI") run rate from Hawai`i assets is expected to eclipse the $100 million mark - more than tripling NOI over the past six years. In addition to expanding our asset base, we continue to manage our existing portfolio effectively, finishing 2018 with 3.6% full-year same-store NOI growth and 8.4% full-year re-leasing spreads."
"Efforts to reduce our non-CRE investments and simplify our business model included continued monetization of legacy residential development projects and the commencement of a strategic review of Grace Pacific. In the case of our Kukui`ula project, we have chosen not to sell at this time, but did determine we are unlikely to stay in the project through its full buildout. This determination does not diminish our near-term focus on or commitment to the project as we position it for longer-term success and transition."
"With the meaningful progress made last year in our strategic transformation, we are optimistic about the continued expansion of our commercial real estate platform and further simplification of our business."
Corporate Highlights
Commercial Real Estate Highlights
CRE Acquisition and Disposition Highlights
Land Operations Highlights
Materials & Construction Highlights
Financial Highlights
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES | |||||||||||||||
SEGMENT DATA & OTHER FINANCIAL INFORMATION | |||||||||||||||
(In millions, except per share amounts; unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating Revenue: | |||||||||||||||
Commercial Real Estate | $ | 35.4 | $ | 35.5 | $ | 140.3 | $ | 136.9 | |||||||
Land Operations | 216.9 | 38.8 | 289.5 | 84.5 | |||||||||||
Materials & Construction | 47.3 | 48.4 | 214.6 | 204.1 | |||||||||||
Revenue | 299.6 | 122.7 | 644.4 | 425.5 | |||||||||||
Operating Profit (Loss): | |||||||||||||||
Commercial Real Estate | 13.5 | (6.9) | 58.5 | 34.4 | |||||||||||
Land Operations | (36.0) | 4.5 | (26.7) | 14.2 | |||||||||||
Materials & Construction | (80.4) | 3.0 | (73.2) | 22.0 | |||||||||||
Total operating profit (loss) | (102.9) | 0.6 | (41.4) | 70.6 | |||||||||||
Gain (loss) on the sale of commercial real estate properties | 1.6 | 6.3 | 51.4 | 9.3 | |||||||||||
Interest expense | (8.9) | (7.1) | (35.3) | (25.6) | |||||||||||
General corporate expenses | (7.1) | (8.7) | (27.6) | (29.2) | |||||||||||
REIT evaluation/conversion costs | — | (3.8) | — | (15.2) | |||||||||||
Income (Loss) from Continuing Operations Before Income Taxes | (117.3) | (12.7) | (52.9) | 9.9 | |||||||||||
Income tax benefit (expense) | (18.1) | 224.6 | (16.3) | 218.2 | |||||||||||
Income (Loss) from Continuing Operations | (135.4) | 211.9 | (69.2) | 228.1 | |||||||||||
Income (loss) from discontinued operations | (0.4) | — | (0.6) | 2.4 | |||||||||||
Net Income (Loss) | (135.8) | 211.9 | (69.8) | 230.5 | |||||||||||
Income attributable to noncontrolling interest | (0.8) | (0.3) | (2.2) | (2.2) | |||||||||||
Net Income (Loss) Attributable to A&B Shareholders | $ | (136.6) | $ | 211.6 | $ | (72.0) | $ | 228.3 | |||||||
Amounts Available to A&B Shareholders: | |||||||||||||||
Income (Loss) from Continuing Operations | (135.4) | 211.9 | (69.2) | 228.1 | |||||||||||
Income attributable to noncontrolling interest | (0.8) | (0.3) | (2.2) | (2.2) | |||||||||||
Income (loss) from continuing operations attributable to A&B shareholders | (136.2) | 211.6 | (71.4) | 225.9 | |||||||||||
Undistributed earnings allocated to redeemable noncontrolling interest | — | 0.6 | — | 1.8 | |||||||||||
Income (loss) from continuing operations available to A&B shareholders | (136.2) | 212.2 | (71.4) | 227.7 | |||||||||||
Income (loss) from discontinued operations | (0.4) | — | (0.6) | 2.4 | |||||||||||
Net income (loss) available to A&B shareholders | $ | (136.6) | $ | 212.2 | $ | (72.0) | $ | 230.1 | |||||||
Earnings (Loss) Per Share Available to A& B Shareholders: | |||||||||||||||
Basic Earnings (Loss) Per Share of Common Stock: | |||||||||||||||
Continuing operations available to A&B shareholders | $ | (1.89) | $ | 4.31 | $ | (1.01) | $ | 4.63 | |||||||
Discontinued operations available to A&B shareholders | (0.01) | — | (0.01) | 0.05 | |||||||||||
Basic Earnings (Loss) Per Share | $ | (1.90) | $ | 4.31 | $ | (1.02) | $ | 4.68 | |||||||
Diluted Earnings (Loss) Per Share of Common Stock: | |||||||||||||||
Continuing operations available to A&B shareholders | $ | (1.89) | $ | 3.42 | $ | (1.01) | $ | 4.30 | |||||||
Discontinued operations available to A&B shareholders | (0.01) | — | (0.01) | 0.04 | |||||||||||
Diluted Earnings (Loss) Per Share | $ | (1.90) | $ | 3.42 | $ | (1.02) | $ | 4.34 | |||||||
Weighted-Average Number of Shares Outstanding: | |||||||||||||||
Basic | 72.0 | 49.2 | 70.6 | 49.2 | |||||||||||
Diluted | 72.0 | 62.0 | 70.6 | 53.0 |
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In millions, unaudited) | |||||||
December 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current Assets | $ | 180.7 | $ | 274.8 | |||
Investments in Affiliates | 171.4 | 401.7 | |||||
Real Estate Developments | 124.1 | 151.0 | |||||
Property – Net | 1,322.0 | 1,147.5 | |||||
Intangible Assets – Net | 68.4 | 46.9 | |||||
Deferred Income Taxes | — | 16.5 | |||||
Goodwill | 65.1 | 102.3 | |||||
Restricted Cash | 223.5 | 34.3 | |||||
Other Assets | 70.0 | 56.2 | |||||
Total Assets | $ | 2,225.2 | $ | 2,231.2 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | $ | 129.4 | $ | 926.8 | |||
Long-term Liabilities: | |||||||
Long-term debt | 739.1 | 585.2 | |||||
Accrued retirement benefits | 28.3 | 22.7 | |||||
Deferred revenue | 63.1 | 2.5 | |||||
Other non-current liabilities | 49.1 | 34.9 | |||||
Redeemable Noncontrolling Interest | 7.9 | 8.0 | |||||
Equity | 1,208.3 | 651.1 | |||||
Total Liabilities and Equity | $ | 2,225.2 | $ | 2,231.2 |
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED CASH FLOWS | |||||||
(In millions, unaudited) | |||||||
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Cash Flows from Operating Activities: | |||||||
Net income (loss) | $ | (69.8) | $ | 230.5 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: | |||||||
Depreciation and amortization | 42.8 | 41.4 | |||||
Deferred income taxes | 16.6 | (199.0) | |||||
Gains on asset transactions, net | (54.0) | (35.1) | |||||
Impairment of assets and equity method investments | 268.0 | 22.4 | |||||
Share-based compensation expense | 4.7 | 4.4 | |||||
Income (loss) from affiliates, net of distributions of income | 12.9 | 5.5 | |||||
Changes in operating assets and liabilities: | |||||||
Trade, contracts retention, and other contract receivables | (4.2) | (2.4) | |||||
Inventories | 5.5 | 11.4 | |||||
Prepaid expenses, income tax receivable and other assets | (13.2) | (23.0) | |||||
Accrued pension and post-retirement benefits | 3.6 | (47.4) | |||||
Accounts payable | (9.0) | 3.3 | |||||
Accrued and other liabilities | 74.2 | (40.1) | |||||
Real estate inventory sales (real estate developments held for sale) | 58.4 | 47.6 | |||||
Expenditures for real estate inventory (real estate developments held for sale) | (26.6) | (20.8) | |||||
Net cash provided by (used in) operations | 309.9 | (1.3) | |||||
Cash Flows from Investing Activities: | |||||||
Capital expenditures for acquisitions | (241.7) | (10.1) | |||||
Capital expenditures for property, plant and equipment | (54.4) | (32.4) | |||||
Proceeds from disposal of property and other assets | 171.7 | 47.2 | |||||
Payments for purchases of investments in affiliates and other | (22.6) | (41.9) | |||||
Distributions of capital from investments in affiliates and other investments | 42.3 | 33.3 | |||||
Net cash provided by (used in) investing activities | (104.7) | (3.9) | |||||
Cash Flows from Financing Activities: | |||||||
Proceeds from issuance of long-term debt | 548.4 | 292.5 | |||||
Payments of long-term debt and deferred financing costs | (467.8) | (181.0) | |||||
Borrowings (payments) on line-of-credit agreement, net | 4.7 | 2.6 | |||||
Distribution to noncontrolling interests | (0.7) | (0.5) | |||||
Cash dividends paid | (156.6) | (10.3) | |||||
Proceeds from issuance (repurchase) of capital stock and other, net | (1.5) | (7.2) | |||||
Net cash provided by (used in) financing activities | (73.5) | 96.1 | |||||
Cash, Cash Equivalents and Restricted Cash | |||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 131.7 | 90.9 | |||||
Balance, beginning of period | 103.2 | 12.3 | |||||
Balance, end of period | $ | 234.9 | $ | 103.2 |
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. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP. The Company's methods of calculating non-GAAP measures may differ from methods employed by other companies and thus may not be comparable to such other companies.
Cash Net Operating Income ("Cash NOI") is a non-GAAP measure used by the Company in evaluating the CRE segment's operating performance as it is an indicator of the return on property investment, and provides a method of comparing performance of operations, on an unlevered basis, over time. 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 property revenues less direct property-related operating expenses. Cash NOI excludes straight-line lease adjustments, amortization of favorable/unfavorable leases, amortization of tenant incentives, selling, general and administrative expenses, impairments of commercial real estate, lease termination income, 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 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 December 31, | Year Ended December 31, | ||||||||||||||||||
(in millions, unaudited) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||
Commercial Real Estate Operating Profit (Loss) | $ | 13.5 | $ | (6.9) | $ | 58.5 | $ | 34.4 | |||||||||||
Plus: Depreciation and amortization | 7.5 | 6.3 | 28.0 | 26.0 | |||||||||||||||
Less: Straight-line lease adjustments | (1.3) | (0.3) | (4.0) | (1.6) | |||||||||||||||
Less: Favorable/(unfavorable) lease amortization | (0.5) | (0.7) | (1.9) | (2.9) | |||||||||||||||
Less: Termination income | — | (1.7) | (1.1) | (1.7) | |||||||||||||||
Plus: Other (income)/expense, net | 0.2 | (0.1) | 0.3 | 0.3 | |||||||||||||||
Plus: Impairment of assets | — | 22.4 | — | 22.4 | |||||||||||||||
Plus: Selling, general, administrative and other expenses | 2.2 | 2.0 | 6.9 | 7.9 | |||||||||||||||
Commercial Real Estate Cash NOI | 21.6 | 21.0 | 3.1% | 86.7 | 84.8 | 2.3% | |||||||||||||
Less Cash NOI from acquisitions, dispositions, and other adjustments | (3.3) | (3.2) | (12.5) | (13.2) | |||||||||||||||
Commercial Real Estate Same-Store Cash NOI | $ | 18.3 | $ | 17.8 | 2.8% | $ | 74.2 | $ | 71.6 | 3.6% |
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 | Year Ended | ||||||||||||||
(in millions, unaudited) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Operating Profit (Loss) | $ | (80.4) | $ | 3.0 | $ | (73.2) | $ | 22.0 | |||||||
Depreciation and amortization | 3.0 | 3.0 | 12.1 | 12.2 | |||||||||||
EBITDA | (77.4) | 6.0 | (61.1) | 34.2 | |||||||||||
Asset impairments related to M&C Segment | 77.8 | — | 77.8 | — | |||||||||||
Income attributable to noncontrolling interest | (0.8) | (0.3) | (2.2) | (2.2) | |||||||||||
Adjusted EBITDA | $ | (0.4) | $ | 5.7 | $ | 14.5 | $ | 32.0 |
1 | See above for a discussion of management's use of non-GAAP financial measures and reconciliations from GAAP to non-GAAP measures. |
2 | Backlog represents the amount of revenue that Grace Pacific and Maui Paving, LLC, a 50-percent-owned unconsolidated affiliate, expect to realize on contracts awarded and government contracts in which Grace Pacific has been confirmed to be the lowest bidder and formal communication of the award is perfunctory. |
Note: Percent changes are determined using amounts rounded to the thousands. | |
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 at 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 Securities and Exchange Commission. 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.
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 3.5 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:
Kenneth Kan
(808) 525-8475
[email protected]
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SOURCE Alexander & Baldwin, Inc.
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