Business Context and Reporting Period
Company: J.W. Mays, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: January 31, 2001 (Unaudited)
Business Overview: The Company operates as a real estate enterprise following the discontinuance of its retail department store segment in 1989. It owns and manages commercial properties, including significant holdings in Jamaica and Brooklyn, New York, and Fishkill, New York.
Key Financial Metrics
| Metric | Three Months Ended Jan 31, 2001 | Six Months Ended Jan 31, 2001 | Balance Sheet (Jan 31, 2001) |
|---|---|---|---|
| Total Revenues | $2,811,565 | $5,548,457 | - |
| Net Income | $133,827 | $447,302 | - |
| Earnings Per Share (Basic) | $0.07 | $0.22 | - |
| Operating Cash Flow | - | $904,517 | - |
| Cash and Equivalents | - | - | $1,097,186 |
| Total Assets | - | - | $43,095,328 |
| Total Liabilities | - | - | $10,849,166 |
| Long-Term Debt | - | - | $6,495,443 |
| Shareholders' Equity | - | - | $32,246,162 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased to $2,811,565 for the three months ended Jan 31, 2001, from $2,727,171 in the prior year period. This increase is primarily attributed to the leasing of 11,200 square feet to a tenant at the Jamaica, New York property, which commenced on September 1, 2000.
- Net Income Decline: Net income decreased to $133,827 (three months) and $447,302 (six months) compared to $197,357 and $491,857 in the respective prior year periods. The decline is driven by increased operating expenses and administrative costs, despite higher revenues.
- Expense Increases: Real estate operating expenses rose due to higher real estate taxes, utilities, and maintenance. Administrative and general expenses increased due to higher payroll and medical costs.
- Bad Debt Recovery: The six-month period included a bad debt recovery of $47,532 related to a prior write-off from Jamesway Corporation (see Contingencies).
- Debt Reduction: Interest expense decreased compared to the prior year due to scheduled debt repayments.
Outlook, Risks, and Management Commentary
- Future Leasing: The Company completed a lease with the State of New York for 42,250 square feet in Jamaica, NY, with occupancy anticipated to commence around August 1, 2001. This is expected to increase cash flow by $398,415 due to scheduled rental increases from existing tenants for the fiscal year ending July 31, 2001.
- Capital Improvements: The Company is undertaking renovations for the new State of New York tenant and an existing tenant in Jamaica, NY. Total anticipated renovation costs are approximately $4,500,000, with roughly $1,558,903 expected to be reimbursed by tenants. A separate renovation in Fishkill, NY, is expected to cost approximately $237,000 and complete by March 2001.
- Financing: On December 13, 2000, the Company secured a $3,500,000 construction loan to fund capital improvements for the State of New York lease. As of January 31, 2001, $580,000 had been drawn against this facility.
- Debt Maturity: A mortgage on the Brooklyn, New York property is due on May 1, 2001. Management has determined it will pay off this mortgage on that date.
- Contingencies: The Company has resolved its claims against Jamesway Corporation (Chapter 11 bankruptcy), realizing a final recovery of $47,532 in the current period. Management believes other pending lawsuits will not have a material adverse effect.
- Treasury Stock: The Company purchased 25,000 shares of its common stock for $213,750 during the six-month period.
Investor Verification Checklist
- Debt Refinancing: Verify the Company's ability to pay off the Brooklyn property mortgage due May 1, 2001, given current cash levels of ~$1.1 million.
- Lease Commencement: Monitor the August 1, 2001, occupancy date for the 42,250 sq. ft. State of New York lease to ensure projected revenue increases materialize.
- Capital Expenditure Reimbursement: Confirm that tenants reimburse the anticipated $1.56 million in renovation costs as planned.
- Concentration Risk: Note that one tenant accounted for 15.83% of rental income in the quarter; assess the stability of this tenant.
- Construction Loan Terms: Review the terms of the $3.5 million construction loan, specifically the conversion to a permanent loan and interest rate resets.