Stratus Properties Inc. (NASDAQ: STRS), a diversified real
estate company with holdings, interests and operations in the
Austin, Texas area and other select markets in Texas, today
reported second-quarter 2023 results.
Highlights and Recent
Developments:
- Net loss attributable to common stockholders totaled
$5.3 million, or $0.64 per diluted share, in second-quarter 2023,
compared to net income attributable to common stockholders of $96.6
million, or $11.53 per diluted share, in second-quarter 2022. Net
loss attributable to common stockholders totaled $11.1 million, or
$1.35 per diluted share, in the six months ended June 30, 2023,
compared to net income attributable to common stockholders of $98.9
million, or $11.82 per diluted share, in the six months ended June
30, 2022.
- Stratus’ total stockholders’ equity was $194.8 million
at June 30, 2023, compared to $207.2 million at December 31, 2022
and $158.1 million at December 31, 2021. The increase in total
stockholders’ equity from December 31, 2021 to June 30, 2023 was
primarily a result of the gain realized on Stratus’ sale of Block
21 in 2022 and reflects a special dividend of approximately $40
million in 2022 and share repurchases totaling approximately $9.5
million in 2022 and through June 30, 2023.
- In 2022, Stratus’ Board of Directors (Board) approved a
share repurchase program, which authorizes repurchases of up to
$10.0 million of Stratus’ common stock. Through August 9, 2023,
Stratus has acquired 381,889 shares of its common stock for a total
cost of $9.8 million at an average price of $25.65 per share.
- Stratus had $44.1 million of cash and cash equivalents
at June 30, 2023 and no amounts drawn on its revolving credit
facility. Stratus’ cash position during the first six months of
2023 was positively impacted by the receipt in first-quarter 2023
of $35.8 million in cash from the Holden Hills partnership and the
disbursement in June 2023 of the full $6.9 million of post-closing
escrow amounts related to the sale of Block 21.
- The first units at The Saint June, a 182-unit luxury
garden-style multi-family project in Barton Creek, were ready for
occupancy in July 2023, and the project is expected to be completed
in September 2023. Stratus also continues construction on The
Saint George, the last ten Amarra Villas homes and
Holden Hills.
- As of June 30, 2023, Stratus had signed leases for all the
retail space in the first phase of development at Magnolia
Place, and tenants representing 89 percent of the space were
open for business. Stratus’ three stabilized mixed-use projects
anchored or shadow-anchored by H-E-B grocery stores, Kingwood
Place, Jones Crossing, and West Killeen Market,
and its fourth stabilized mixed-use project Lantana Place,
continue to perform well.
- Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) totaled $(3.8) million in second-quarter
2023, compared to $1.5 million in second-quarter 2022. EBITDA does
not reflect net income from discontinued operations, which was
$95.9 million in second-quarter 2022, related to Block 21. For a
reconciliation of net (loss) income from continuing operations to
EBITDA, see the supplemental schedule, “Reconciliation of Non-GAAP
Measure EBITDA,” below.
William H. Armstrong III, Chairman of the Board and Chief
Executive Officer of Stratus, stated, “We are pleased to announce
the opening of The Saint June with the first tenants having moved
in during July and expected completion of the project in September.
We continue to advance the construction of our residential projects
The Saint George and Holden Hills, and our retail properties are
performing well. In the current real estate market environment, we
remain focused on completing our projects under construction,
controlling costs, advancing development plans for our future
projects and working to manage and expand our credit and joint
venture partner relationships. Supported by our experienced team
and strong liquidity position, Stratus is well-positioned to
continue its track record of capturing value for our shareholders
when market conditions improve.”
Summary Financial
Results
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(In Thousands, Except Per Share
Amounts) (Unaudited)
Revenues
Real Estate Operations
$
58
$
7,927
$
2,551
$
7,950
Leasing Operations
3,472
3,200
6,781
6,280
Eliminations and other
—
(2
)
—
(6
)
Total Consolidated Revenue
$
3,530
$
11,125
$
9,332
$
14,224
Operating (loss)
income
Real Estate Operations
$
(2,689
)
$
2,471
$
(4,710
)
$
1,103
Leasing Operations a
1,404
1,465
2,546
7,521
Corporate, eliminations and other b
(4,067
)
(3,441
)
(8,781
)
(6,608
)
Total consolidated operating (loss)
income
$
(5,352
)
$
495
$
(10,945
)
$
2,016
Net (loss) income from continuing
operations
$
(5,309
)
$
532
$
(11,582
)
$
2,344
Net income from discontinued operations
c
$
—
$
95,925
$
—
$
96,300
Net (loss) income
$
(5,309
)
$
96,457
$
(11,582
)
$
98,644
Net loss attributable to noncontrolling
interests in subsidiaries d
$
8
$
164
$
480
$
249
Net (loss) income attributable to common
stockholders
$
(5,301
)
$
96,621
$
(11,102
)
$
98,893
Basic net (loss) income per share:
Continuing operations
$
(0.64
)
$
0.09
$
(1.35
)
$
0.31
Discontinued operations
—
11.59
—
11.66
$
(0.64
)
$
11.68
$
(1.35
)
$
11.97
Diluted net (loss) income per share:
Continuing operations
$
(0.64
)
$
0.09
$
(1.35
)
$
0.31
Discontinued operations
—
11.44
—
11.51
$
(0.64
)
$
11.53
$
(1.35
)
$
11.82
EBITDA
$
(3,841
)
$
1,457
$
(8,024
)
$
3,855
Capital expenditures and purchases and
development of real estate properties
$
25,528
$
20,078
$
44,561
$
39,666
Weighted-average shares of common stock
outstanding:
Basic
8,227
8,273
8,225
8,262
Diluted
8,227
8,383
8,225
8,369
a.
The first six months of 2022 includes a
$4.8 million pre-tax gain recognized on the reversal of accruals
for costs to lease and construct buildings under a master lease
arrangement that Stratus entered into in connection with its sale
of The Oaks at Lakeway in 2017.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment amounts.
The increases in the 2023 periods from the 2022 periods are
primarily the result of higher compensation costs for salary
increases and estimated cash incentive awards for 2023, as well as
charges for restricted stock units (RSUs) granted in second-quarter
2022 in connection with the Profit Participation Incentive Plan
(PPIP) payouts for Lantana Place and The Santal. Fees related to a
new consulting arrangement in 2023 to help raise third-party equity
capital and office rent, which was eliminated in consolidation
prior to the sale of Block 21, also contributed to the increases in
the 2023 periods.
c.
The 2022 periods include a $119.7 million
pre-tax gain on the May 2022 sale of Block 21.
d. Represents noncontrolling interest partners' share in the
results of the consolidated projects in which they participate.
Continuing Operations
The decrease in revenue from the Real Estate Operations
segment in second-quarter 2023, compared to second-quarter 2022,
reflects the sale of one Amarra Villas home and $5.4 million of
undeveloped property sales in second-quarter 2022, compared to no
property sales in second-quarter 2023.
The increase in revenue from the Leasing Operations
segment in second-quarter 2023, compared to second-quarter 2022,
primarily reflects revenue from Magnolia Place, which had no rental
revenue in second-quarter 2022, and increased revenue at Kingwood
Place.
Debt and Liquidity
At June 30, 2023, consolidated debt totaled $137.4 million and
consolidated cash and cash equivalents totaled $44.1 million,
compared with consolidated debt of $122.8 million and consolidated
cash and cash equivalents of $37.7 million at December 31,
2022.
As of June 30, 2023, Stratus had $42.7 million available under
its revolving credit facility and no amount was borrowed. Letters
of credit, totaling $11.0 million, had been issued under the
revolving credit facility as of June 30, 2023, and secure Stratus’
obligation to build certain roads and utilities facilities
benefiting Holden Hills and Section N. In May 2023, Stratus entered
into a modification of the revolving credit facility to increase
the maximum amount of letters of credit that may be issued under
the revolving credit facility from $11.5 million to $13.3 million.
In July 2023, Stratus entered into a $2.3 million letter of credit
to secure its obligations, which are subject to certain conditions,
to construct and pay for certain utility infrastructure in Lakeway,
Texas, estimated to cost approximately $2.3 million, which is
expected to be utilized by the planned multi-family project on
Stratus’ remaining land in Lakeway. The amount available under the
revolving credit facility, net of letters of credit issued, was
$40.4 million as of August 9, 2023.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in
investing cash flows) totaled $44.6 million for the first six
months of 2023, primarily related to the development of Barton
Creek properties (including The Saint June, Amarra Villas and
Holden Hills) and The Saint George, compared with $39.7 million for
the first six months of 2022, primarily related to the development
of Barton Creek properties (including The Saint June and Amarra
Villas) and Magnolia Place.
CAUTIONARY STATEMENT
This press release contains forward-looking statements in which
Stratus discusses factors it believes may affect its future
performance. Forward-looking statements are all statements other
than statements of historical fact, such as plans, projections or
expectations related to the impact of inflation and interest rate
changes, supply chain constraints and tightening bank credit,
Stratus’ ability to meet its future debt service and other cash
obligations, future cash flows and liquidity, Stratus’ expectations
about the Austin and Texas real estate markets, the planning,
financing, development, construction, completion and stabilization
of Stratus’ development projects, plans to sell, recapitalize, or
refinance properties, future operational and financial performance,
municipal utility district (MUD) reimbursements for infrastructure
costs, regulatory matters, leasing activities, tax rates, future
capital expenditures and financing plans, possible joint ventures,
partnerships, or other strategic relationships, other plans and
objectives of management for future operations and development
projects, the impacts of any major public health crisis, and future
cash returns to shareholders, including the timing and amount of
repurchases under Stratus’ share repurchase program. The words
“anticipate,” “may,” “can,” “plan,” “believe,” “potential,”
“estimate,” “expect,” “project,” "target," “intend,” “likely,”
“will,” “should,” “to be” and any similar expressions and/or
statements are intended to identify those assertions as
forward-looking statements.
Under Stratus’ Comerica Bank debt agreements, Stratus is not
permitted to repurchase its common stock in excess of $1.0 million
or pay dividends on its common stock without Comerica Bank’s prior
written consent, which was obtained in connection with the special
cash dividend and share repurchase program. Any future declaration
of dividends or decision to repurchase Stratus’ common stock is at
the discretion of Stratus’ Board, subject to restrictions under
Stratus’ Comerica Bank debt agreements, and will depend on Stratus’
financial results, cash requirements, projected compliance with
covenants in its debt agreements, outlook and other factors deemed
relevant by the Board. Stratus’ future debt agreements, future
refinancings of or amendments to existing debt agreements or other
future agreements may restrict Stratus’ ability to declare
dividends or repurchase shares.
Stratus cautions readers that forward-looking statements are not
guarantees of future performance, and its actual results may differ
materially from those anticipated, expected, projected or assumed
in the forward-looking statements. Important factors that can cause
Stratus’ actual results to differ materially from those anticipated
in the forward-looking statements include, but are not limited to,
Stratus’ ability to implement its business strategy successfully,
including its ability to develop, construct and sell or lease
properties on terms its Board considers acceptable, increases in
operating and construction costs, including real estate taxes and
the cost of building materials and labor, increases in inflation
and interest rates, supply chain constraints, tightening bank
credit, defaults by contractors and subcontractors, declines in the
market value of Stratus’ assets, market conditions or corporate
developments that could preclude, impair or delay any opportunities
with respect to plans to sell, recapitalize or refinance
properties, a decrease in the demand for real estate in select
markets in Texas where Stratus operates, particularly in Austin,
changes in economic, market, tax and business conditions, including
as a result of the war in Ukraine, potential U.S. or local economic
downturn or recession, the availability and terms of financing for
development projects and other corporate purposes, the failure of
any bank in which Stratus deposits funds, any major public health
crisis, Stratus’ ability to collect anticipated rental payments and
close projected asset sales, loss of key personnel, Stratus’
ability to enter into and maintain joint ventures, partnerships, or
other strategic relationships, including risks associated with such
joint ventures, Stratus’ ability to pay or refinance its debt,
extend maturity dates of its loans or comply with or obtain waivers
of financial and other covenants in debt agreements and to meet
other cash obligations, eligibility for and potential receipt and
timing of receipt of MUD reimbursements, industry risks, changes in
buyer preferences, potential additional impairment charges,
competition from other real estate developers, Stratus’ ability to
obtain various entitlements and permits, changes in laws,
regulations or the regulatory environment affecting the development
of real estate, opposition from special interest groups or local
governments with respect to development projects, weather- and
climate-related risks, environmental and litigation risks, the
failure to attract buyers or tenants for Stratus’ developments or
such buyers’ or tenants’ failure to satisfy their purchase
commitments or leasing obligations, cybersecurity incidents and
other factors described in more detail under the heading “Risk
Factors” in Stratus’ Annual Report on Form 10-K for the year ended
December 31, 2022, filed with the U.S. Securities and Exchange
Commission (SEC).
Investors are cautioned that many of the assumptions upon which
Stratus’ forward-looking statements are based are likely to change
after the date the forward-looking statements are made. Further,
Stratus may make changes to its business plans that could affect
its results. Stratus cautions investors that it undertakes no
obligation to update any forward-looking statements, which speak
only as of the date made, notwithstanding any changes in its
assumptions, business plans, actual experience, or other
changes.
This press release also includes EBITDA, which is not recognized
under U.S. generally accepted accounting principles (GAAP).
Stratus’ management believes this measure can be helpful to
investors in evaluating its business because EBITDA is a financial
measure frequently used by securities analysts, lenders and others
to evaluate Stratus' recurring operating performance. EBITDA is
intended to be a performance measure that should not be regarded as
more meaningful than GAAP measures. Other companies may calculate
EBITDA differently. As required by SEC rules, a reconciliation of
Stratus' net (loss) income from continuing operations to EBITDA is
included in the supplemental schedule of this press release.
A copy of this release is available on Stratus’
website, stratusproperties.com.
STRATUS PROPERTIES
INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME (Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues:
Real estate operations
$
58
$
7,925
$
2,551
$
7,944
Leasing operations
3,472
3,200
6,781
6,280
Total revenues
3,530
11,125
9,332
14,224
Cost of sales:
Real estate operations
2,697
5,432
7,184
6,798
Leasing operations
1,144
870
2,405
1,854
Depreciation and amortization
970
884
1,898
1,757
Total cost of sales
4,811
7,186
11,487
10,409
General and administrative expenses a
4,071
3,444
8,790
6,611
Gain on sale of assets b
—
—
—
(4,812
)
Total
8,882
10,630
20,277
12,208
Operating (loss) income
(5,352
)
495
(10,945
)
2,016
Interest expense, net
—
—
—
(15
)
Other income, net
544
80
1,029
86
(Loss) income before income taxes and
equity in unconsolidated affiliate’s loss
(4,808
)
575
(9,916
)
2,087
(Provision for) benefit from income
taxes
(498
)
(41
)
(1,660
)
261
Equity in unconsolidated affiliate’s
loss
(3
)
(2
)
(6
)
(4
)
Net (loss) income from continuing
operations
(5,309
)
532
(11,582
)
2,344
Net income from discontinued operations
c
—
95,925
—
96,300
Net (loss) income and total comprehensive
(loss) income
(5,309
)
96,457
(11,582
)
98,644
Total comprehensive loss attributable to
noncontrolling interests d
8
164
480
249
Net (loss) income and total comprehensive
(loss) income attributable to common stockholders
$
(5,301
)
$
96,621
$
(11,102
)
$
98,893
Basic net (loss) income per share
attributable to common stockholders:
Continuing operations
$
(0.64
)
$
0.09
$
(1.35
)
$
0.31
Discontinued operations
—
11.59
—
11.66
$
(0.64
)
$
11.68
$
(1.35
)
$
11.97
Diluted net (loss) income per share
attributable to common stockholders:
Continuing operations
$
(0.64
)
$
0.09
$
(1.35
)
$
0.31
Discontinued operations
—
11.44
—
11.51
$
(0.64
)
$
11.53
$
(1.35
)
$
11.82
Weighted-average shares of common stock
outstanding:
Basic
8,227
8,273
8,225
8,262
Diluted
8,227
8,383
8,225
8,369
a.
The increases in the 2023 periods from the
2022 periods are primarily the result of higher compensation costs
for salary increases and estimated cash incentive awards for 2023,
as well as charges for RSUs granted in second-quarter 2022 in
connection with the PPIP payouts for Lantana Place and The Santal.
Fees related to a new consulting arrangement in 2023 to help raise
third-party equity capital and office rent, which was eliminated in
consolidation prior to the sale of Block 21, also contributed to
the increases in the 2023 periods.
b.
For the first six months of 2022, a
pre-tax gain of $4.8 million was recognized on the reversal of
accruals for costs to lease and construct buildings under a master
lease arrangement that Stratus entered into in connection with its
sale of The Oaks at Lakeway in 2017.
c.
The 2022 periods include a $119.7 million
pre-tax gain on the May 2022 sale of Block 21.
d.
Represents noncontrolling interest
partners' share in the results of the consolidated projects in
which they participate.
STRATUS PROPERTIES
INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
June 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
44,145
$
37,666
Restricted cash
995
8,043
Real estate held for sale
1,773
1,773
Real estate under development
271,597
239,278
Land available for development
47,113
39,855
Real estate held for investment, net
94,478
92,377
Lease right-of-use assets
11,711
10,631
Deferred tax assets
38
38
Other assets
13,905
15,479
Total assets
$
485,755
$
445,140
LIABILITIES AND EQUITY
Liabilities:
Accounts payable
$
18,107
$
15,244
Accrued liabilities, including taxes
5,393
7,049
Debt
137,432
122,765
Lease liabilities
16,297
14,848
Deferred gain
3,066
3,519
Other liabilities
6,299
9,642
Total liabilities
186,594
173,067
Commitments and contingencies
Equity:
Stockholders' equity:
Common stock
96
94
Capital in excess of par value of common
stock
196,819
195,773
Retained earnings
30,350
41,452
Common stock held in treasury
(32,449
)
(30,071
)
Total stockholders' equity
194,816
207,248
Noncontrolling interests in
subsidiaries
104,345
64,825
Total equity
299,161
272,073
Total liabilities and equity
$
485,755
$
445,140
STRATUS PROPERTIES
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In Thousands)
Six Months Ended
June 30,
2023
2022
Cash flow from operating activities:
Net (loss) income
$
(11,582
)
$
98,644
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization
1,898
1,757
Cost of real estate sold
2,087
3,599
Gain on sale of discontinued
operations
—
(119,695
)
Gain on sale of assets
—
(4,812
)
Debt issuance cost amortization and
stock-based compensation
1,443
1,107
Equity in unconsolidated affiliate’s
loss
6
4
Deferred income taxes
—
5,832
Purchases and development of real estate
properties
(21,084
)
(12,091
)
Decrease in other assets
601
3,112
Decrease in accounts payable, accrued
liabilities and other
(123
)
(21,098
)
Net cash used in operating activities
(26,754
)
(43,641
)
Cash flow from investing activities:
Proceeds from sale of discontinued
operations
—
105,813
Capital expenditures
(23,477
)
(27,575
)
Payments on master lease obligations
(484
)
(418
)
Other, net
9
—
Net cash (used in) provided by investing
activities
(23,952
)
77,820
Cash flow from financing activities:
Borrowings from credit facility
—
30,000
Payments on credit facility
—
(30,000
)
Borrowings from project loans
22,828
12,455
Payments on project and term loans
(8,328
)
(5,582
)
Payment of dividends
(616
)
—
Stock-based awards net payments
(789
)
(452
)
Finance lease principal payments
(7
)
—
Noncontrolling interest contribution
40,000
—
Purchases of treasury stock
(1,589
)
—
Financing costs
(1,362
)
(205
)
Net cash provided by financing
activities
50,137
6,216
Net (decrease) increase in cash, cash
equivalents and restricted cash
(569
)
40,395
Cash, cash equivalents and restricted cash
at beginning of year
45,709
70,139
Cash, cash equivalents and restricted cash
at end of period
$
45,140
$
110,534
STRATUS PROPERTIES INC.
BUSINESS SEGMENTS
As a result of the sale of Block 21, Stratus has two operating
segments: Real Estate Operations and Leasing Operations. Block 21,
which encompassed Stratus’ Hotel and Entertainment segments, along
with some leasing operations, is presented as discontinued
operations.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed for sale, under development and available
for development), which consists of its properties in Austin, Texas
(including the Barton Creek Community, which includes Section N,
Holden Hills, Amarra multi-family and commercial land, Amarra
Villas, The Saint June, Amarra Drive lots and other vacant land;
the Circle C community; the Lantana community, which includes a
portion of Lantana Place planned for a multi-family phase now known
as The Saint Julia; The Saint George; and the land for The Annie
B); in Lakeway, Texas, located in the greater Austin area
(Lakeway); in College Station, Texas (land for future phases of
retail and multi-family development and retail pad sites at Jones
Crossing); and in Magnolia, Texas (land for a future phase of
retail development and for future multi-family use and retail pad
sites at Magnolia Place), Kingwood, Texas (a retail pad site) and
New Caney, Texas (New Caney), each located in the greater Houston
area.
The Leasing Operations segment is comprised of Stratus’ real
estate assets held for investment that are leased or available for
lease and includes retail space at West Killeen Market, Lantana
Place, Kingwood Place and the completed portions of Jones Crossing
and Magnolia Place and retail pad sites subject to ground leases at
Lantana Place, Kingwood Place and Jones Crossing.
Stratus uses operating income or loss to measure the performance
of each segment. General and administrative expenses, which
primarily consist of employee salaries, wages and other costs, are
managed on a consolidated basis and are not allocated to Stratus’
operating segments. The following segment information reflects
management determinations that may not be indicative of what the
actual financial performance of each segment would be if it were an
independent entity.
Summarized financial information by segment for the three months
ended June 30, 2023, based on Stratus’ internal financial reporting
system utilized by its chief operating decision maker, follows (in
thousands):
Real Estate
Operations a
Leasing Operations
Corporate, Eliminations
and Other b
Total
Revenues:
Unaffiliated customers
$
58
$
3,472
$
—
$
3,530
Cost of sales, excluding depreciation
(2,697
)
(1,144
)
—
(3,841
)
Depreciation and amortization
(50
)
(924
)
4
(970
)
General and administrative expenses
—
—
(4,071
)
(4,071
)
Operating (loss) income
$
(2,689
)
$
1,404
$
(4,067
)
$
(5,352
)
Capital expenditures and purchases and
development of real estate properties
$
12,057
$
13,471
$
—
$
25,528
Total assets at June 30, 2023 c
328,033
111,252
46,470
485,755
a.
Includes sales commissions and other
revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Corporate, eliminations and other includes
cash and cash equivalents and restricted cash of $43.2 million. The
remaining cash and cash equivalents and restricted cash is
reflected in the operating segments’ assets.
Summarized financial information by segment for the three months
ended June 30, 2022, based on Stratus’ internal financial reporting
system utilized by its chief operating decision maker, follows (in
thousands):
Real Estate
Operations a
Leasing Operations
Corporate, Eliminations
and Other b
Total
Revenues:
Unaffiliated customers
$
7,925
$
3,200
$
—
$
11,125
Intersegment
2
—
(2
)
—
Cost of sales, excluding depreciation
(5,432
)
(870
)
—
(6,302
)
Depreciation and amortization
(24
)
(865
)
5
(884
)
General and administrative expenses
—
—
(3,444
)
(3,444
)
Operating income (loss)
$
2,471
$
1,465
$
(3,441
)
$
495
Capital expenditures and purchases and
development of real estate properties
$
7,227
$
12,820
$
31
$
20,078
Total assets at June 30, 2022 c
265,929
106,020
112,711
484,660
a.
Includes sales commissions and other
revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Corporate, eliminations and other includes
cash and cash equivalents and restricted cash of $102.3 million,
primarily received from the May 2022 sale of Block 21. The
remaining cash and cash equivalents and restricted cash is
reflected in the operating segments’ assets.
Summarized financial information by segment for the six months
ended June 30, 2023, based on Stratus’ internal financial reporting
system utilized by its chief operating decision maker, follows (in
thousands):
Real Estate
Operations a
Leasing Operations
Corporate, Eliminations
and Other b
Total
Revenues:
Unaffiliated customers
$
2,551
$
6,781
$
—
$
9,332
Cost of sales, excluding depreciation
(7,184
)
(2,405
)
—
(9,589
)
Depreciation and amortization
(77
)
(1,830
)
9
(1,898
)
General and administrative expenses
—
—
(8,790
)
(8,790
)
Operating (loss) income
$
(4,710
)
$
2,546
$
(8,781
)
$
(10,945
)
Capital expenditures and purchases and
development of real estate properties
$
21,084
$
23,477
$
—
$
44,561
a.
Includes sales commissions and
other revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
Summarized financial information by segment for the six months
ended June 30, 2022, based on Stratus’ internal financial reporting
system utilized by its chief operating decision maker, follows (in
thousands):
Real Estate
Operations a
Leasing Operations
Corporate, Eliminations
and Other b
Total
Revenues:
Unaffiliated customers
$
7,944
$
6,280
$
—
$
14,224
Intersegment
6
—
(6
)
—
Cost of sales, excluding depreciation
(6,798
)
(1,854
)
—
(8,652
)
Depreciation and amortization
(49
)
(1,717
)
9
(1,757
)
General and administrative expenses
—
—
(6,611
)
(6,611
)
Gain on sale of assets c
—
4,812
—
4,812
Operating income (loss)
$
1,103
$
7,521
$
(6,608
)
$
2,016
Capital expenditures and purchases and
development of real estate properties
$
12,091
$
27,362
$
213
$
39,666
a.
Includes sales commissions and other
revenues together with related expenses.
b.
Includes consolidated general and
administrative expenses and eliminations of intersegment
amounts.
c.
Represents a pre-tax gain recognized on
the reversal of accruals for costs to lease and construct buildings
under a master lease arrangement that Stratus entered into in
connection with its sale of The Oaks at Lakeway in 2017.
RECONCILIATION OF NON-GAAP MEASURE
EBITDA
EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-GAAP (generally accepted accounting
principles in the U.S.) financial measure that is frequently used
by securities analysts, investors, lenders and others to evaluate
companies’ recurring operating performance, including, among other
things, profitability before the effect of financing and similar
decisions. Because securities analysts, investors, lenders and
others use EBITDA, management believes that Stratus’ presentation
of EBITDA affords them greater transparency in assessing its
financial performance. This information differs from net (loss)
income from continuing operations determined in accordance with
GAAP and should not be considered in isolation or as a substitute
for measures of performance determined in accordance with GAAP.
EBITDA may not be comparable to similarly titled measures reported
by other companies, as different companies may calculate such
measures differently. Management strongly encourages investors to
review Stratus’ consolidated financial statements and publicly
filed reports in their entirety. A reconciliation of Stratus’ net
(loss) income from continuing operations to EBITDA follows (in
thousands):
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net (loss) income from continuing
operations a
$
(5,309
)
$
532
$
(11,582
)
$
2,344
Depreciation and amortization
970
884
1,898
1,757
Interest expense, net
—
—
—
15
Provision for income taxes
498
41
1,660
(261
)
EBITDA b
$
(3,841
)
$
1,457
$
(8,024
)
$
3,855
a.
The first six months of 2022 includes a
$4.8 million pre-tax gain recognized on the reversal of accruals
for costs to lease and construct buildings under a master lease
arrangement that Stratus entered into in connection with its sale
of The Oaks at Lakeway in 2017.
b.
EBITDA does not reflect net income from
discontinued operations, which was $95.9 million in second-quarter
2022 and $96.3 million in the first six months of 2022, related to
Block 21. The impact of accounting for the Block 21 sale as
discontinued operations reduced EBITDA by $122.8 million in
second-quarter 2022 and $125.2 million in the first six months of
2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814564713/en/
Financial and Media Contact: William H. Armstrong III
(512) 478-5788
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