Five point holdings, llc reports third quarter 2022 results
Irvine, calif.--(business wire)--five point holdings, llc (“five point” or the “company”) (nyse:fph), an owner and developer of large mixed-use planned communities in california, today reported its third quarter 2022 results. dan hedigan, chief executive officer, said, “while the third quarter was a difficult one for our primary residential land sale business, our team performed well, limiting our cash spend and minimizing our loss for the quarter. we are maintaining our focus on managing costs and overhead with our ‘do more with less’ strategy. although home builder demand for land has been impacted by the federal reserve raising interest rates at the most aggressive pace since the early 1980s, there remains a significant shortage of housing in california, and five point has some of the best entitled parcels in the state. while home builders are rebalancing their pricing and sales velocity assumptions as they look at their future land needs, we are continuing to work with the home builder community to sell land at market prices, balancing current market conditions with the scarcity of entitled land inventory in our markets. we are also continuing to move forward with our unique commercial land offerings at the great park and valencia.” consolidated results liquidity and capital resources as of september 30, 2022, total liquidity of $211.0 million was comprised of cash and cash equivalents totaling $86.4 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. total capital was $1.8 billion, reflecting $2.9 billion in assets and $1.0 billion in liabilities and redeemable noncontrolling interests. results of operations for the three months ended september 30, 2022 revenues. revenues of $15.4 million for the three months ended september 30, 2022 were primarily generated from management services. equity in loss from unconsolidated entities. equity in loss from unconsolidated entities was $4.3 million for the three months ended september 30, 2022. net loss for the great park venture was $18.3 million. our share of the net loss from our 37.5% percentage interest, adjusted for basis differences, was $4.5 million. additionally, we recognized $0.1 million in loss from our 75% interest in the gateway commercial venture and $0.4 million in earnings from our 10% interest in the valencia landbank venture. selling, general, and administrative. selling, general, and administrative expenses were $12.0 million for the three months ended september 30, 2022. net loss. consolidated net loss for the quarter was $9.5 million. net loss attributable to noncontrolling interests totaled $5.1 million, resulting in net loss attributable to the company of $4.4 million. net loss attributable to noncontrolling interests represents the portion of loss allocated to related party partners and members that hold units of the operating company and the san francisco venture. holders of units of the operating company and the san francisco venture can redeem their interests for either, at our election, our class a common shares on a one-for-one basis or cash. in connection with any redemption or exchange, our ownership of our operating subsidiaries will increase thereby reducing the amount of income allocated to noncontrolling interests in subsequent periods. conference call information in conjunction with this release, five point will host a conference call on thursday, october 27, 2022 at 5:00 p.m. eastern time. dan hedigan, chief executive officer, and leo kij, interim chief financial officer, will host the call. interested investors and other parties can listen to a live internet audio webcast of the conference call that will be available on the five point website at ir.fivepoint.com. the conference call can also be accessed by dialing (888) 204-4368 (domestic) or (856) 344-9221 (international). a telephonic replay will be available starting approximately two hours after the end of the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. the passcode for the live call and the replay is 3213669. the telephonic replay will be available until 11:59 p.m. eastern time on november 10, 2022. about five point five point, headquartered in irvine, california, designs and develops large mixed-use planned communities in orange county, los angeles county, and san francisco county that combine residential, commercial, retail, educational, and recreational elements with public amenities, including civic areas for parks and open space. five point’s communities include the great park neighborhoods® in irvine, valencia® in los angeles county, and candlestick® and the san francisco shipyard® in the city of san francisco. these communities are designed to include approximately 40,000 residential homes and approximately 23 million square feet of commercial space. forward-looking statements this press release contains forward-looking statements that are subject to risks and uncertainties. these statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. when used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. this press release may contain forward-looking statements regarding: our expectations of our future revenues, costs and financial performance; future demographics and market conditions in the areas where our communities are located; the outcome of pending litigation and its effect on our operations; the timing of our development activities; and the timing of future real estate purchases or sales. we caution you that any forward-looking statements included in this press release are based on our current views and information currently available to us. forward-looking statements are subject to risks, trends, uncertainties and factors that are beyond our control. some of these risks and uncertainties are described in more detail in our filings with the sec, including our annual report on form 10-k, under the heading “risk factors.” should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. we caution you therefore against relying on any of these forward-looking statements. while forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. they are based on estimates and assumptions only as of the date hereof. we undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. five point holdings, llc condensed consolidated statements of operations (in thousands, except share and per share amounts) (unaudited) three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 revenues: land sales $ 72 $ 10,000 $ 643 $ 10,087 land sales—related party 2,817 17 4,529 73 management services—related party 12,108 10,156 18,358 30,242 operating properties 419 522 2,165 1,777 total revenues 15,416 20,695 25,695 42,179 costs and expenses: land sales — — — — management services 7,488 8,075 12,372 24,700 operating properties 1,580 2,095 5,797 5,098 selling, general, and administrative 12,030 20,757 41,472 59,513 restructuring — — 19,437 — total costs and expenses 21,098 30,927 79,078 89,311 other income: interest income 307 21 445 74 miscellaneous 112 1,516 336 3,833 total other income 419 1,537 781 3,907 equity in (loss) earnings from unconsolidated entities (4,265 ) 485 (4,654 ) 9,048 loss before income tax provision (9,528 ) (8,210 ) (57,256 ) (34,177 ) income tax provision (3 ) — (16 ) (5 ) net loss (9,531 ) (8,210 ) (57,272 ) (34,182 ) less net loss attributable to noncontrolling interests (5,092 ) (4,362 ) (30,592 ) (18,266 ) net loss attributable to the company $ (4,439 ) $ (3,848 ) $ (26,680 ) $ (15,916 ) net loss attributable to the company per class a share basic $ (0.06 ) $ (0.06 ) $ (0.39 ) $ (0.23 ) diluted $ (0.07 ) $ (0.06 ) $ (0.39 ) $ (0.23 ) weighted average class a shares outstanding basic 68,514,843 67,429,394 68,393,923 67,376,746 diluted 68,879,642 67,429,394 68,758,722 67,376,746 net loss attributable to the company per class b share basic and diluted $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) weighted average class b shares outstanding basic and diluted 79,233,544 79,233,544 79,233,544 79,233,544 five point holdings, llc condensed consolidated balance sheets (in thousands, except shares) (unaudited) september 30, 2022 december 31, 2021 assets inventories $ 2,229,525 $ 2,096,824 investment in unconsolidated entities 367,486 374,553 properties and equipment, net 30,558 31,466 intangible asset, net—related party 45,969 51,405 cash and cash equivalents 86,379 265,462 restricted cash and certificates of deposit 1,330 1,330 related party assets 104,887 101,818 other assets 18,959 20,052 total $ 2,885,093 $ 2,942,910 liabilities and capital liabilities: notes payable, net $ 620,267 $ 619,116 accounts payable and other liabilities 107,364 115,374 related party liabilities 99,913 95,918 deferred income tax liability, net 12,998 12,998 payable pursuant to tax receivable agreement 173,068 174,126 total liabilities 1,013,610 1,017,532 redeemable noncontrolling interest 25,000 25,000 capital: class a common shares; no par value; issued and outstanding: september 30, 2022—69,068,354 shares; december 31, 2021—70,107,552 shares class b common shares; no par value; issued and outstanding: september 30, 2022—79,233,544 shares; december 31, 2021—79,233,544 shares contributed capital 586,954 587,587 retained earnings 22,109 48,789 accumulated other comprehensive loss (1,917 ) (1,952 ) total members’ capital 607,146 634,424 noncontrolling interests 1,239,337 1,265,954 total capital 1,846,483 1,900,378 total $ 2,885,093 $ 2,942,910 five point holdings, llc supplemental data (in thousands) (unaudited) liquidity september 30, 2022 cash and cash equivalents $ 86,379 borrowing capacity (1) 124,651 total liquidity $ 211,030 (1) as of september 30, 2022, no amounts were drawn on the company’s $125.0 million revolving credit facility; however, letters of credit of approximately $0.3 million were issued and outstanding under the revolving credit facility, thus reducing the available capacity by the outstanding letters of credit amount. debt to total capitalization and net debt to total capitalization september 30, 2022 debt (1) $ 625,000 total capital 1,846,483 total capitalization $ 2,471,483 debt to total capitalization 25.3 % debt (1) $ 625,000 less: cash and cash equivalents 86,379 net debt 538,621 total capital 1,846,483 total net capitalization $ 2,385,104 net debt to total capitalization (2) 22.6 % (1) for purposes of this calculation, debt is the amount due on the company’s notes payable before offsetting for capitalized deferred financing costs. (2) net debt to total capitalization is a non-gaap financial measure defined as net debt (debt less cash and cash equivalents) divided by total net capitalization (net debt plus total capital). the company believes the ratio of net debt to total capitalization is a relevant and a useful financial measure to investors in understanding the leverage employed in the company’s operations. however, because net debt to total capitalization is not calculated in accordance with gaap, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by gaap. rather, this non-gaap financial measure should be used to supplement the company's gaap results. segment results the following table reconciles the results of operations of our segments to our consolidated results for the three and nine months ended september 30, 2022 (in thousands): three months ended september 30, 2022 valencia san francisco great park commercial total reportable segments corporate and unallocated total under management removal of unconsolidated entities(1) total consolidated revenues: land sales $ 72 $ — $ 28,678 $ — $ 28,750 $ — $ 28,750 $ (28,678 ) $ 72 land sales—related party 2,817 — 6,517 — 9,334 — 9,334 (6,517 ) 2,817 management services—related party(2) — — 12,000 108 12,108 — 12,108 — 12,108 operating properties 193 226 — 2,189 2,608 — 2,608 (2,189 ) 419 total revenues 3,082 226 47,195 2,297 52,800 — 52,800 (37,384 ) 15,416 costs and expenses: land sales — — 15,105 — 15,105 — 15,105 (15,105 ) — management services(2) — — 7,488 — 7,488 — 7,488 — 7,488 operating properties 1,580 — — 754 2,334 — 2,334 (754 ) 1,580 selling, general, and administrative 2,519 898 3,655 1,076 8,148 8,613 16,761 (4,731 ) 12,030 management fees—related party — — 35,294 — 35,294 — 35,294 (35,294 ) — total costs and expenses 4,099 898 61,542 1,830 68,369 8,613 76,982 (55,884 ) 21,098 other income (expense): interest income — — 460 — 460 307 767 (460 ) 307 interest expense — — — (386 ) (386 ) — (386 ) 386 — loss on extinguishment of debt — — — (89 ) (89 ) — (89 ) 89 — miscellaneous 112 — — — 112 — 112 — 112 total other income (expense) 112 — 460 (475 ) 97 307 404 15 419 equity in earnings (loss) from unconsolidated entities 362 — 96 — 458 — 458 (4,723 ) (4,265 ) segment loss/loss before income tax provision (543 ) (672 ) (13,791 ) (8 ) (15,014 ) (8,306 ) (23,320 ) 13,792 (9,528 ) income tax provision — — — — — (3 ) (3 ) — (3 ) segment loss/net loss $ (543 ) $ (672 ) $ (13,791 ) $ (8 ) $ (15,014 ) $ (8,309 ) $ (23,323 ) $ 13,792 $ (9,531 ) (1) represents the removal of the great park venture and gateway commercial venture operating results, which are included in the great park segment and commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investment in each venture using the equity method of accounting. (2) for the great park and commercial segments, represents the revenues and expenses attributable to the management company for providing services to the great park venture and the gateway commercial venture, as applicable. nine months ended september 30, 2022 valencia san francisco great park commercial total reportable segments corporate and unallocated total under management removal of unconsolidated entities(1) total consolidated revenues: land sales $ 643 $ — $ 29,270 $ — $ 29,913 $ — $ 29,913 $ (29,270 ) $ 643 land sales—related party 4,529 — 9,750 — 14,279 — 14,279 (9,750 ) 4,529 home sales — — 40,475 — 40,475 — 40,475 (40,475 ) — management services—related party(2) — — 18,046 312 18,358 — 18,358 — 18,358 operating properties 1,637 528 — 6,248 8,413 — 8,413 (6,248 ) 2,165 total revenues 6,809 528 97,541 6,560 111,438 — 111,438 (85,743 ) 25,695 costs and expenses: land sales — — 15,118 — 15,118 — 15,118 (15,118 ) — home sales — — 30,784 — 30,784 — 30,784 (30,784 ) — management services(2) — — 12,372 — 12,372 — 12,372 — 12,372 operating properties 5,797 — — 1,823 7,620 — 7,620 (1,823 ) 5,797 selling, general, and administrative 10,545 2,683 15,641 3,201 32,070 28,244 60,314 (18,842 ) 41,472 restructuring — — — — — 19,437 19,437 — 19,437 management fees—related party — — 38,645 — 38,645 — 38,645 (38,645 ) — total costs and expenses 16,342 2,683 112,560 5,024 136,609 47,681 184,290 (105,212 ) 79,078 other income (expense): interest income — — 704 — 704 445 1,149 (704 ) 445 interest expense — — — (1,006 ) (1,006 ) — (1,006 ) 1,006 — loss on extinguishment of debt — — — (89 ) (89 ) — (89 ) 89 — miscellaneous 336 — — — 336 — 336 — 336 total other income (expense) 336 — 704 (1,095 ) (55 ) 445 390 391 781 equity in earnings (loss) from unconsolidated entities 883 — 331 — 1,214 — 1,214 (5,868 ) (4,654 ) segment (loss) profit/loss before income tax provision (8,314 ) (2,155 ) (13,984 ) 441 (24,012 ) (47,236 ) (71,248 ) 13,992 (57,256 ) income tax provision — — — — — (16 ) (16 ) — (16 ) segment (loss) profit/net loss $ (8,314 ) $ (2,155 ) $ (13,984 ) $ 441 $ (24,012 ) $ (47,252 ) $ (71,264 ) $ 13,992 $ (57,272 ) (1) represents the removal of the great park venture and gateway commercial venture operating results, which are included in the great park segment and commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investments in each venture using the equity method of accounting. (2) for the great park and commercial segments, represents the revenues and expenses attributable to the management company for providing services to the great park venture and the gateway commercial venture, as applicable. the table below reconciles the great park segment results to the equity in loss from our investment in the great park venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended september 30, 2022 (in thousands): three months ended september 30, 2022 nine months ended september 30, 2022 segment loss from operations $ (13,791 ) $ (13,984 ) less net income of management company attributed to the great park segment 4,512 5,674 net loss of the great park venture (18,303 ) (19,658 ) the company’s share of net loss of the great park venture (6,864 ) (7,372 ) basis difference accretion 2,324 1,738 equity in loss from the great park venture $ (4,540 ) $ (5,634 ) the table below reconciles the commercial segment results to the equity in (loss) earnings from our investment in the gateway commercial venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended september 30, 2022 (in thousands): three months ended september 30, 2022 nine months ended september 30, 2022 segment (loss) profit from operations $ (8 ) $ 441 less net income of management company attributed to the commercial segment 108 312 net (loss) income of the gateway commercial venture (116 ) 129 equity in (loss) earnings from the gateway commercial venture $ (87 ) $ 97
