Five point holdings, llc reports second 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 second quarter 2022 results. dan hedigan, chief executive officer, said, “our second quarter has been a pivotal quarter for fivepoint, as we have focused our attention on positioning and building for our future. we are positioned with near-term residential land closings that will be profitable and will fortify our already strong balance sheet, we have right-sized our operating platform with our ‘do more with less’ overhead strategy, and we are executing a carefully crafted commercial property strategy that will begin to produce results as well. while there is some uncertainty in the new home market, the long-term outlook remains quite favorable, given disciplined mortgage underwriting standards that have been in place, the favorable demographics that support the need for new housing, as well as the general overall shortage of housing supply.” consolidated results liquidity and capital resources as of june 30, 2022, total liquidity of $252.5 million was comprised of cash and cash equivalents totaling $127.8 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. total capital was $1.9 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 june 30, 2022 revenues. revenues of $5.4 million for the three months ended june 30, 2022 were primarily generated from management services. equity in earnings from unconsolidated entities. equity in earnings from unconsolidated entities was $0.6 million for the three months ended june 30, 2022. the great park venture had no land sales during the three months ended june 30, 2022 but did close the sale of 13 homes under its fee build program at great park neighborhoods, generating $23.3 million in revenues. net income for the great park venture was $1.5 million. our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $0.2 million. additionally, we recognized $0.1 million in earnings from our 75% interest in the gateway commercial venture and $0.3 million in earnings from our 10% interest in the valencia landbank venture, which was primarily a result of land sales to third-party homebuilders by the valencia landbank venture. selling, general, and administrative. selling, general, and administrative expenses were $12.7 million for the three months ended june 30, 2022. net loss. consolidated net loss for the quarter was $11.0 million. net loss attributable to noncontrolling interests totaled $5.9 million, resulting in net loss attributable to the company of $5.1 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 tuesday, august 2, 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 (800) 458-4121 (domestic) or (856) 344-9290 (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 6902049. the telephonic replay will be available until 11:59 p.m. eastern time on august 16, 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 june 30, six months ended june 30, 2022 2021 2022 2021 revenues: land sales $ 14 $ 65 $ 571 $ 87 land sales—related party 1,711 37 1,712 56 management services—related party 2,703 7,647 6,250 20,086 operating properties 965 555 1,746 1,255 total revenues 5,393 8,304 10,279 21,484 costs and expenses: land sales — — — — management services 2,200 5,848 4,884 16,625 operating properties 2,378 1,418 4,217 3,003 selling, general, and administrative 12,651 19,218 29,442 38,756 restructuring — — 19,437 — total costs and expenses 17,229 26,484 57,980 58,384 other income: interest income 117 26 138 53 miscellaneous 112 1,113 224 2,317 total other income 229 1,139 362 2,370 equity in earnings (loss) from unconsolidated entities 643 12,119 (389 ) 8,563 loss before income tax provision (10,964 ) (4,922 ) (47,728 ) (25,967 ) income tax provision (8 ) (5 ) (13 ) (5 ) net loss (10,972 ) (4,927 ) (47,741 ) (25,972 ) less net loss attributable to noncontrolling interests (5,861 ) (2,638 ) (25,500 ) (13,904 ) net loss attributable to the company $ (5,111 ) $ (2,289 ) $ (22,241 ) $ (12,068 ) net loss attributable to the company per class a share basic $ (0.07 ) $ (0.03 ) $ (0.32 ) $ (0.18 ) diluted $ (0.07 ) $ (0.03 ) $ (0.33 ) $ (0.18 ) weighted average class a shares outstanding basic 68,495,523 67,410,440 68,332,460 67,349,986 diluted 69,635,563 67,410,440 69,472,500 67,349,986 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) june 30, 2022 december 31, 2021 assets inventories $ 2,187,647 $ 2,096,824 investment in unconsolidated entities 372,685 374,553 properties and equipment, net 30,881 31,466 intangible asset, net—related party 51,405 51,405 cash and cash equivalents 127,820 265,462 restricted cash and certificates of deposit 1,330 1,330 related party assets 98,656 101,818 other assets 19,185 20,052 total $ 2,889,609 $ 2,942,910 liabilities and capital liabilities: notes payable, net $ 619,884 $ 619,116 accounts payable and other liabilities 100,757 115,374 related party liabilities 102,588 95,918 deferred income tax liability, net 12,998 12,998 payable pursuant to tax receivable agreement 173,068 174,126 total liabilities 1,009,295 1,017,532 redeemable noncontrolling interest 25,000 25,000 capital: class a common shares; no par value; issued and outstanding: june 30, 2022—69,068,354 shares; december 31, 2021—70,107,552 shares class b common shares; no par value; issued and outstanding: june 30, 2022—79,233,544 shares; december 31, 2021—79,233,544 shares contributed capital 586,267 587,587 retained earnings 26,548 48,789 accumulated other comprehensive loss (1,925 ) (1,952 ) total members’ capital 610,890 634,424 noncontrolling interests 1,244,424 1,265,954 total capital 1,855,314 1,900,378 total $ 2,889,609 $ 2,942,910 five point holdings, llc supplemental data (in thousands) (unaudited) liquidity june 30, 2022 cash and cash equivalents $ 127,820 borrowing capacity (1) 124,651 total liquidity $ 252,471 (1) as of june 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 june 30, 2022 debt (1) $ 625,000 total capital 1,855,314 total capitalization $ 2,480,314 debt to total capitalization 25.2 % debt (1) $ 625,000 less: cash and cash equivalents 127,820 net debt 497,180 total capital 1,855,314 total net capitalization $ 2,352,494 net debt to total capitalization (2) 21.1 % (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 six months ended june 30, 2022 (in thousands): three months ended june 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 $ 14 $ — $ 262 $ — $ 276 $ — $ 276 $ (262 ) $ 14 land sales—related party 1,711 — 1,744 — 3,455 — 3,455 (1,744 ) 1,711 home sales — — 23,314 — 23,314 — 23,314 (23,314 ) — management services—related party(2) — — 2,602 101 2,703 — 2,703 — 2,703 operating properties 843 122 — 2,121 3,086 — 3,086 (2,121 ) 965 total revenues 2,568 122 27,922 2,222 32,834 — 32,834 (27,441 ) 5,393 costs and expenses: land sales — — 13 — 13 — 13 (13 ) — home sales — — 17,882 — 17,882 — 17,882 (17,882 ) — management services(2) — — 2,200 — 2,200 — 2,200 — 2,200 operating properties 2,378 — — 629 3,007 — 3,007 (629 ) 2,378 selling, general, and administrative 3,582 936 4,425 1,046 9,989 8,133 18,122 (5,471 ) 12,651 management fees—related party — — 1,848 — 1,848 — 1,848 (1,848 ) — total costs and expenses 5,960 936 26,368 1,675 34,939 8,133 43,072 (25,843 ) 17,229 other income (expense): interest income — — 89 — 89 117 206 (89 ) 117 interest expense — — — (313 ) (313 ) — (313 ) 313 — miscellaneous 112 — — — 112 — 112 — 112 total other income (expense) 112 — 89 (313 ) (112 ) 117 5 224 229 equity in earnings from unconsolidated entities 336 — 235 — 571 — 571 72 643 segment (loss) profit/loss before income tax provision (2,944 ) (814 ) 1,878 234 (1,646 ) (8,016 ) (9,662 ) (1,302 ) (10,964 ) income tax provision — — — — — (8 ) (8 ) — (8 ) segment (loss) profit/net loss $ (2,944 ) $ (814 ) $ 1,878 $ 234 $ (1,646 ) $ (8,024 ) $ (9,670 ) $ (1,302 ) $ (10,972 ) (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. six months ended june 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 $ 571 $ — $ 592 $ — $ 1,163 $ — $ 1,163 $ (592 ) $ 571 land sales—related party 1,712 — 3,233 — 4,945 — 4,945 (3,233 ) 1,712 home sales — — 40,475 — 40,475 — 40,475 (40,475 ) — management services—related party(2) — — 6,046 204 6,250 — 6,250 — 6,250 operating properties 1,444 302 — 4,059 5,805 — 5,805 (4,059 ) 1,746 total revenues 3,727 302 50,346 4,263 58,638 — 58,638 (48,359 ) 10,279 costs and expenses: land sales — — 13 — 13 — 13 (13 ) — home sales — — 30,784 — 30,784 — 30,784 (30,784 ) — management services(2) — — 4,884 — 4,884 — 4,884 — 4,884 operating properties 4,217 — — 1,069 5,286 — 5,286 (1,069 ) 4,217 selling, general, and administrative 8,026 1,785 11,986 2,125 23,922 19,631 43,553 (14,111 ) 29,442 restructuring — — — — — 19,437 19,437 — 19,437 management fees—related party — — 3,351 — 3,351 — 3,351 (3,351 ) — total costs and expenses 12,243 1,785 51,018 3,194 68,240 39,068 107,308 (49,328 ) 57,980 other income (expense): interest income — — 244 — 244 138 382 (244 ) 138 interest expense — — — (620 ) (620 ) — (620 ) 620 — miscellaneous 224 — — — 224 — 224 — 224 total other income (expense) 224 — 244 (620 ) (152 ) 138 (14 ) 376 362 equity in earnings (loss) from unconsolidated entities 521 — 235 — 756 — 756 (1,145 ) (389 ) segment (loss) profit/loss before income tax provision (7,771 ) (1,483 ) (193 ) 449 (8,998 ) (38,930 ) (47,928 ) 200 (47,728 ) income tax provision — — — — — (13 ) (13 ) — (13 ) segment (loss) profit/net loss $ (7,771 ) $ (1,483 ) $ (193 ) $ 449 $ (8,998 ) $ (38,943 ) $ (47,941 ) $ 200 $ (47,741 ) (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 earnings (loss) from our investment in the great park venture that is reflected in the condensed consolidated statement of operations for the three and six months ended june 30, 2022 (in thousands): three months ended june 30, 2022 six months ended june 30, 2022 segment profit (loss) from operations $ 1,878 $ (193 ) less net income of management company attributed to the great park segment 402 1,162 net income (loss) of the great park venture 1,476 (1,355 ) the company’s share of net income (loss) of the great park venture 554 (508 ) basis difference amortization (347 ) (586 ) equity in earnings (loss) from the great park venture $ 207 $ (1,094 ) the table below reconciles the commercial segment results to the equity in earnings from our investment in the gateway commercial venture that is reflected in the condensed consolidated statement of operations for the three and six months ended june 30, 2022 (in thousands): three months ended june 30, 2022 six months ended june 30, 2022 segment profit from operations $ 234 $ 449 less net income of management company attributed to the commercial segment 101 204 net income of the gateway commercial venture 133 245 equity in earnings from the gateway commercial venture $ 100 $ 184
