St Joe Co (JOE) 2025 Q4 法說會逐字稿

Good day and thank you for standing by. Welcome to the St. Joe Company fourth quarter 2025 earnings conference. (Operator Instructions). Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Jorge Gonzalez, Chairman and CEO of the St. Joe Company. Please go ahead.

Thank you and good morning. I'm Jorge Gonzalez, President, CEO and Chairman of the St. Joe Company. It is my pleasure to welcome you to our quarterly earnings call. I'm joined today by Marek Bakun, our Chief Financial Officer. On Wednesday after the market closed, we issued our fourth quarter in full year 2025 earnings press release, which can be found in the investor section of our corporate website at joe.com.

If you want to send us questions for later in the call, you may do so by visiting the top right-hand corner of your screen where the words submit a question are visible. Clicking on that text will take you to the text entry box where you can type in your question and then click submit for later in the call.

Before we begin discussing our results and answering your questions, I would like to remind everyone that Wednesday's press release and the statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that can cause actual results to differ materially from our expectations and projections.

Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission. Additionally, during today's call, we will discuss non-GAAP measures which we believe can be useful in evaluating our performance.

A reconciliation of these measures can be found in our earnings release. This morning, we are continuing our commitment to quarterly earnings calls to provide our shareholders and the investor community with an opportunity to ask questions about our business and performance.

We have always been an open and transparent company that welcomes all feedback and opinions. Because of the types of assets that we own, we encourage shareholders to visit us in person so they may assess firsthand the progress of the region and of our assets.

Let's go ahead and get started. We assume everyone has already carefully reviewed our earnings release, which provides comprehensive details about our performance, so we are only going to mention a few key highlights of both the fourth quarter and full year before we move on to your questions.

For the fourth quarter, we continued the year-over-year growth of the previous three quarters with a 24% increase in revenue and a 58% increase in net income. Capital allocation in the fourth quarter was $18.5 million in capital expenditures, primarily for growth, $15.1 million for stock repurchase, $9.2 million for dividends, and $8 million for debt reduction.

That $15.1 million in stock repurchase was the highest of any quarter in 2025. For the full year, revenue increased by 27% to $513.2 million from $402.7 million. And net income increased by 56% to $115.6 million from $74.2 million.

Earnings per share increased to $2 from $1.27. Not including the one-time large timberland sale in 2014, we surpassed $500 million in revenue for the first time in 20 years and reached $2 per share for the first time in 23 years. However, we are now a different company than we were 20 years ago.

Back then, the company's financial performance was achieved primarily as a bulk seller of assets. With only 15% recurring revenue. Today, the company is a diversified real estate operating company with 56% recurring revenue.

The company now has a more sustainable and diverse business model with a demonstrated ability to grow multiple revenue streams, all while simultaneously increasing the value of the underlying land assets in what we call the virtuous circle of value creation where an investment in one segment creates value for the other segments.

In addition to the growth we had for the full year, we continue to refine our operations and improve profitability. Home site gross margins increased to 51% from 47%. Leasing gross margins increased to 57% from 54%. Hospitality gross margins had a slight decrease to 31% from 32%, which was primarily due to opening expenses associated with the new golf course, the third, and the renovation of the Shark's Tooth Clubhouse.

It is important to note that the hospitality gross margin of 32% in 2024 was a significant increase from 20% in 2023. For the full year we continued a measured and multifaceted capital allocation strategy with 47% for capital expenditures, primarily for growth, 33% for dividend payments and stock repurchases, and 20% for project debt reduction.

We accelerated stock repurchases with the repurchase of 798,622 shares as compared with a repurchase of 70,985 shares in 2024. The average price of shares we purchased in 2025 was $50.10. Which considering the share price as of the close of the market yesterday, it was a good value for our shareholders.

Since 2015, the company has used $653.6 million to repurchase 34.9 million shares of the company's stock, representing 37.8% of the original shares. Bringing the outstanding share balance below 58 million for the first time in nearly 30 years. Outside of the financial numbers, we continue to fill the pipeline for potential future growth.

We have local and state government approval for 10 detailed specific area plans or DSAPs, each with at least 1,000 acres of fully entitled mixed-use projects. We have only started to develop three of the 10 approved DSAPs, so we have a long runway for future growth.

An encouraging sign is that we continue to receive inquiries from new potential home builders from outside of this market who want to join our homebuilder program. So we plan on breaking ground on two more DSAPs in 2026 to accommodate our growing homebuilder demand.

At the end of the year, our residential home site pipeline had approximately 23,900 home sites in various stages of planning, engineering, permitting, or development. Which is an increase of 2,200 home sites as compared to the end of 2024.

At the end of the year, our commercial segment had 94,500 square feet under construction in the Watertown Town Center in West Bay Center, of which approximately 76% is pre-leased. We continue to receive inquiries from national and regional tenants who are noticing the growth of this market and are interested in leasing space from us.

In order to continue to meet this growing demand, in 2026, we plan on breaking ground on new commercial buildings in the Watersound Town Center and West Bay Center totaling approximately 54,000 square feet. We're also planning on breaking ground in a new apartment complex and executing several new commercial ground leases.

In our hospitality segment, we continue to increase our club membership program, and we continue to be focused on increasing occupancy and margins in our hotels while continuing to assess and plan for opportunities for new hotels, marinas, and club amenities.

Now Marek and I are going to answer your questions. As a reminder in the top right-hand corner of your screen, the words submit a question are visible. Clicking that text will take you to the text entry box where you can type your question and click submit. We're going to do this in the same, way that we've done the last several calls. Marek is going to read the questions and then we're going to answer them. Marek.

Thank you, Jorge. We have a few questions. The first one. Are there any new multi-family units on the horizon for 2026 or 2027? Any new hotel operations or acquisitions planned?

In my opening remarks, I've mentioned that we do have plans on breaking ground in a new apartment complex. The location of it is really focused on the potential of the FSU Health campus. So it's in that, vicinity. The, in terms of new hotels, we're constantly planning.

And getting prepared for the right timing of when we may move forward with new hotels. Similar with acquisitions, we're always looking at the market, and if the timing is good and there's an opportunity for us to gain value, we will execute those opportunities.

Next question. After the opening of Topgolf at the Pier Park, any new developments coming in the near future for the area?

So Pier Park East is an important project for us. We believe that is going to be the city center of the Pier Park area. We are being very thoughtful in planning that property and in choosing tenants. We've always wanted to have two major anchors for Pier Park East. We have one, as the questioner asked in Topgolf.

The second anchor, we're pleased to report that we finalized a ground lease with a really exciting family-oriented surf park concept. So that's going to be the second anchor for Pier Park East. We're currently in the process of planning the balance of that property, including potentially breaking ground on infrastructure in 2026.

Share prices have climbed nearly 40% since the last quarter. Does management still view buybacks as a prudent allocation of capital at this price.

Capital allocation, as, we've said many times, is multifaceted for us, and buying shares back is always a component of capital allocation. Also, as we've said many times, there's a facts and circumstances context to that depending on what's happening in the quarter at the macro and macro level, but the short answer to the question is yes.

Awesome year. Why pay down debt here when the stock seems unusually priced relative to the per acre implied value?

So interest is a real dollar expense. Minimizing interest and increasing earnings is always a positive, as Jorge just mentioned in 2025, 47% of our capital was allocated for dividends and repurchases. At the same time, we're able to pay down debt. Some of the debt that was paid down was related to the Watercrest sale, but we feel that, lowering interest is always a positive.

And I think if I can just add anybody that has owned or run a business before understands the importance of paying down project debt, because it is not a GAAP expense, it's a real cash expense.

Can you help break down the 47% year over year increase in real estate revenue in Q4? The higher average price on home site sales and the sale of the 136 North Splash Drive plus Watersound Villas make up some of the lower home site sales number. But what accounts for the rest of the Delta? Higher residuals.

So specifically to the residuals we do disclose in our 10-k the flow through of the residuals and just for the full year there was $13.6 million of new residuals that did go across all four quarters but yes there were residuals. But in addition to the average sales price, the villas of the town home sales, there are also normal land sales that that we have had and will continue to have, within the company.

So that's really details it out, just through normal, activity that we have. How are you thinking about replacing the high value home sites at Camp Creek as we start running out of lots? Are there plans for other similar high price point neighborhoods, more commercial land sales?

We always think about having a higher-end retail custom home site product. It's not just Camp Creek. We've also done that in Origins as an example, Pile Landing West, where we sold quite a few retail custom home sites at a very high value. We are in the process of planning and permitting a replacement product, and they're not exact replacements.

There is some overlap in terms of pricing and so forth. This one is going to be in Origins West, right next to a very exciting, art park that we think is going to be, very attractive, to residents. We don't have an exact time frame, for this new product, but we are pretty far along in the planning and permitting of this neighborhood.

Do you have any updates on the lake amenity or Pigeon Creek neighborhood?

So the lake amenity, is, I believe, referencing an amenity that we have been planning on Lake Powell for the Water Sound Club. We are pretty far along in planning that concept. We're spending a lot of time thinking about the right programming. And it's a project that we feel really good about, but we're still in the planning phase, programming phase.

Pigeon Creek is one of the DSAPs that we have talked about before. We have been in discussion with one builder that's going to be new to the market, for this project. We are pretty far along in those discussions, and we feel cautiously optimistic about executing those discussions into action relatively soon.

And with a relative question, what is the status and current timing around Pigeon Creek at the annual meeting and prior calls, it was mentioned that the lots could possibly be sold outright to a single developer. Is this still on the table and is there any update or timing?

So first, what we said at the annual meeting was that Pigeon Creek, even though it's sizable, over 3, 000 potential units, what we said is that we're in discussion with just one builder. We never indicated that, we had a particular preference for a business structure, on that project, so that still holds true.

We're in discussion with one, homebuilder who is new to the market for all of Pigeon Creek, which is over 3,000 units, and like I said in the previous, answer to the previous question, we're pretty far along in those discussions and we're cautiously optimistic that we'll be able to execute those discussions into action relatively soon.

Could you talk about the progress of some of the big projects along State Road 79 corridor, FSU Health Campus, potential commercial around it, and potential new residential builders along the corridor?

State Route 79, as I mentioned in our last annual meeting, is, an area of our landholdings that currently has a lot of energy, a lot of interest. In fact, we created a video in case the listeners want to take a look at it. You can go to our web page, about the State Road 79 corridor. Ward Creek is moving along, very nicely with our four home builders, constructing homes, with a pretty wide range of price and product types.

The FSU Health campus is very exciting. It is progressing very well. The first phase of that campus, as most listeners know, a medical office building 80,000 square feet, has been, finished for a couple years. It is essentially full with clinical practitioners. The second phase is a, teaching hospital, an academic health center that takes advantage of the synergy between research, teaching, and clinical delivery. It's going to be under the FSU health concept.

That hospital is progressing well. We believe it's going to be a pretty significant catalyst not only for the State Road 79 corridor but for the region, not just because the fact that it's a hospital and there's clinical delivery that will occur there, but because of the academic health center model, where research and teaching are also going to add a significant amount of value to that region, to that part of our holdings in the region.

Your LTV is under 25% when looking at your income producing assets. Your LTV is well below 25%, and your cost of debt is in the low single-digits. Why do you believe that paying down debt is a good use of capital? Why isn't the ideal debt level a lot higher than where you are today?

So, like I said before, anybody that has owned a business, has run a business, they understand the importance of managing debt because at the end of the day, cash is king, cash is what matters. Free cash flow is what matters, and when you have real expense associated with debt, it makes sense, for that to be part of the capital allocation strategy. We've been very thoughtful, very methodical. In how we pay down debt, and we feel pretty good about what we've done so far, and we intend to continue the same strategy.

Yes, and Jorge, if I may add, I want to say that not all debt that we have is equal. So if I look at the apartments debt, which is long-term HUD insured up to 42 years, at a very low fixed, rate, that's the type of debt that we're not paying down.

It's just amortizing of normal life. It's the debt that's shorter, life that we may choose to pay down and to save interest, but as far as the debt, as you mentioned, the new apartment community, it would be normal and consistent with our strategy to have debt on the new apartment community, especially if we could, continue to obtain long-term, HUD insured financing.

Absolutely and that and that's what we mean about us being thoughtful in how we pay down our project debt we're not doing that randomly and, across kind of a from a top-line perspective we're looking at each project we're looking at the specifics of the debt of each project and the ones that we believe, are going to, create a savings for the company.

We're going to pay down that debt and generally speaking, as Marek said, the debt we have, the HUD loans we have for our apartments are terrific. We have yet to find any program as good as the HUD loan program for apartments, so we do intend to continue, when we have apartments to follow that, loan program. And we're also not paying down the debt for the apartments. We're paying the debt down for projects that have higher interest rates and kind of present more challenges for us.

Thank you for all the hard work. Greatly appreciate this call and management continued execution in recent years. Over the past 10 years, there appears to be a high correlation between return on investment capital, earnings per share.

And the stock price. In 2023 and 2024, the company's recurring income grew significantly, but earnings per share return on invested capital declined as a result of lower lot income and land or asset sales. During this period, Joe's stock price underperformed. Over the past 12 months, earnings per share and return on invested capital have increased meaningfully.

Heavily driven by increase in income and asset sales and the stock price has gone up considerably assuming we all agree the company's NAV is meaningfully higher than the current stock price, does the company agree that future stock appreciation is highly dependent on the company's ability to continue growing EPS and increasing return on investment capital from its current levels.

And the company it and is the company aware of the importance of driving return on investment capital growth when it comes to long-term stock performance? Thank you again.

That's a very insightful, detailed and well thought through, question, and the best way we can answer that is with a simple yes.

Over the past year in areas surrounding St. Joe's land as well as areas immediately adjacent to our developments there have been numerous lot sales transactions at significant premiums to where we have been selling lots. Just last year, Dio Horton appeared to have paid.

146,000 per lot near Breakfast Point. Lots in Sweet Bay in Panama City were recently sold for over 130,000 per lot. Even at lowest entry level in Freeport, lots have been selling to close to 100,000 each. These lot prices appear to be significantly higher than what St. Joe has been transacting even at re even as recently as this year.

I.e., low to high 80s, 90s at breakfast point, or around 90,000 at breakfast point east. Furthermore, these transactions seem to be a typical market at typical market rates of 20% or more of the eventual home price. And we seem to be selling our lots at a discount to these rates in some cases low teens, if I'm willing, to be correctly, my, belief is that some of the lowest hanging fruit.

As it relates to, materially growing our cash flows is the coming in the coming years, especially more DSAPs come online is to bring MPC low prices to. Level that most appropriately reflects market value, i.e. 20% to 25% of finished home price. Furthermore, given our competitive positioning in the area, it's hard to understand why we would not be more of a price maker than a price taker. Is this something you can elaborate on? Thank you.

Again, another, long and thoughtful and detailed question, and I can assure the individual who, submitted the question this is something that we monitor very closely, literally every day we have a pretty good handle on what's happening in the market with direct competitors. Not all communities are direct competitors to our communities. I can also assure the questioner that, we don't sell lots at a discount.

One of the things that may not be obvious, to folks is, we believe we're the only developer that has a back end participation, when we sell home sites, to builders, we don't believe anybody else in the market has that. So when you just go on the property appraiser web page and just take a quick simple look at comps, you have to be careful, and I caution readers, not to assume, that's an apple to an apple.

With our transactions with home builders because again we're the only developer to our knowledge that has a back-end participation, where we get a part of the profit of the sales price of the home that the builder sells. Our back end participation is also not, uniformed. It's not one size fits all. They're all different based on the home builder, based on the price point, based on the community.

So again, I would caution, folks when they go on the property appraiser web page to take a look at comps that there's a couple layers deeper than that, particularly with us because of the back-end participation. I will also assure the questioner, that we don't sell lots at a discount.

What is the company's short and long-term goals for the percent of revenue that is recurring?

Are probably we have several different important parts of our business strategy and as most, everybody knows the arguably the most important one is to continue to grow recurring revenue so that is going to continue to be an important part of our business strategy and we want to continue to grow reoccurring revenue because that is a more sustainable and scalable, revenue stream than just pure transactions.

How is AI going to be implemented into the infrastructure of operations inside of St. Joe?

Like every operating company and business and really not just the country but the world, we continue to explore AI as a tool to improve our operations like everybody else is doing. It's an emerging technology. It's very dynamic. It changes literally day to day, and we continue to explore how we can use those tools to improve the efficiency of our operations.

What is the company's estimate of the average value per unused acre of land in the portfolio, and if answered per developable acre of land, then please disclose how many acres of land will not be able to be developed. Thank you.

That's a question that requires a lot of time to respond to because there are many different layers of what makes an acre developable, not developable. There's a lot of different layers of different types of development, different types of open space, green space, conservation. We don't have a one size fits all number.

We have, if you look at our previous disclosures, we do have a lot of different information in our tables and in our footnotes that, perhaps if somebody just read those and put them together, they can start making some assumptions, but there's not a one size fits all headline number to answer the question.

And Jorge, just, on the disclosure as you mentioned, we have also disclosed, including in last year's shareholder meeting presentation how many acres we have been using on an annual basis to generate the revenue that we have been generating so that data is also available for a number of years back that would be a good way to think about it.

Based on the current market demand and pricing, what you're planning to develop, do you think you can achieve 750,000+ lot prices on our future premium communities?

Like I said to an earlier question, our goal is always to have a high-end premium retail custom lot product. It's going to ebb and flow over time, in terms of location, in terms of what the actual price is, so yes, we're always working at trying to create the highest, premium, the highest value communities in the region.

I've noticed you guys typically transfer land to LLCs when a monetization event is on the horizon. In this light, you recently transferred land at topsail, the parcel across from powder room and the Pier Park City Center into such entities. You mentioned the surf park at City Center. Would you care to detail the other two locations and how, when you envision the monetization occurring?

We, when we create LLCs, or special purpose entities for, our projects or land holdings, it's not exclusively because we intend to, transact or sell that asset. There's a couple different reasons why we do that so I wouldn't just assume that just because we create an LLC, it means that we're anticipating selling an asset.

As I mentioned during the last earnings call, we are looking at all of our assets, because we consider particularly all of our operating assets as piggy banks. We, I have said that many times before. We have said that many times before. We're constantly looking at the piggy banks and making assessments about how those piggy banks fit into the broader strategy of the company, how creative they are to our other segments.

And what return they provide to us and what would be the price if we monetize them right now. So when we look at all those factors, we will, we get conclusions where some assets we believe they're in the best interest of the company to monetize and sell, others are not.

Any caller you can provide on how the nonstop flight from New York has been performing for Delta, do you think the flight is here to stay?

So to answer the last question first, time will tell. It's still early, so it's very difficult for Delta or anybody to say definitively. What the long-term plans are, but I can tell you, preliminarily, we believe, it's been performing well, we have started a campaign, to increase awareness in that market and so far we're pleased with the early results of that campaign in terms of how many folks in that market go to our web pages, to look at hospitality offerings.

Also that has translated and has started to translate into higher occupancies and reservations from that market. So early preliminary, results are, we're encouraged, we're cautiously optimistic, and we hope that not only is the flight here to stay, but our hope is that Delta will add flights, because the demand is so great.

One more, question. Great to see the brokerage business growing. Could you talk about the progress there and anything that surprised you with how it's been received in the market?

The biggest surprise is the reception from the agent community. We have been very surprised in a positive way about how many agents call us, expressing an interest in joining our brokerage. We had anticipated some of that would happen.

But not to the scale that we have and yes, we're pretty pleased with the start of the brokerage business. It's just, it's still in its infancy, so we're still, have a lot of way to go in terms of achieving our business goals with it, but so far we have been, very pleased with the reception of the agent community and the way that business is progressing.

Okay. Is there any new info on West Bay Parkway Walton segment? It is good to see that at least part of the road is underway.

We 100% agree. We also are very happy to see that that part of the road is underway. We continue to work very closely with the transportation planning organizations with the FDOT in moving forward with the next step in the process, which is in civil engineering and permitting of the road. There's been good progress made on that end, and, we are cautiously optimistic, about the road and the potential timing.

There are no more questions.

Okay, we'll wait just one more second in case there's a last-minute question. Okay, I think then that's the last question. Thank you again for joining us today. You're St. Joe Company and look forward to speaking with you again next quarter. And again, we welcome anybody and everybody to come to our market and look at the area and look at our assets. Thank you.

Thank you.

This concludes today's conference. Thank you for participating. You may now disconnect.