Maui Land & Pineapple Company, Inc. — Q1 2021 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless otherwise stated. Dollar amounts below are in thousands, except per-share data. The company owns approximately 23,000 acres on Maui and operates in real estate, leasing, and resort amenities.
Financial performance
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Operating revenue | $2,059 | $2,035 |
| Operating loss | $(658) | $(994) |
| Loss from continuing operations | $(794) | $(1,157) |
| Discontinued operations | $(140) | $83 |
| Net loss | $(934) | $(1,074) |
| Net loss per share, basic and diluted | $(0.05) | $(0.06) |
| Cash used in operating activities | $(513) | Cash provided: $1,453 |
Revenue was nearly flat, while operating loss narrowed; the operating loss equaled approximately 32% of revenue, versus 49% a year earlier. Leasing revenue was $1,801 (up from $1,736), resort amenities and other revenue was $258 (up from $230), and real estate revenue was zero (versus $69). Lower resort amenities costs and increased conservation grant income contributed to results. Leasing operating income was $961, essentially unchanged; resort amenities operating loss narrowed to $154 from $340.
Q1 2021 cash declined by $411 to $458. Investing activities used $74, and financing activities provided $176, including $600 of revolving-credit proceeds and $424 of debt and common-stock issuance costs and other. The company contributed $553 to its defined-benefit pension plan during the quarter.
Financial position and liquidity
- At March 31, 2021, total assets were $37,898, stockholders’ equity was $19,841, and total liabilities were approximately $18,057. Cash was $458, compared with $869 at year-end 2020.
- Long-term debt was $800, all classified as current, under a $15.0 million revolving facility; $14.2 million remained available. The facility bears interest at LIBOR plus 3.50% (3.62% at quarter-end) and matures December 31, 2021. It is secured by the 800-acre Kapalua Mauka project and commercial space.
- The credit facility requires, among other terms, minimum defined liquidity of $2.0 million and maximum total liabilities of $45.0 million. The company reported compliance at quarter-end.
- Accrued retirement benefits totaled $10,397, down from $11,091 at December 31, 2020. The company reports a full valuation allowance against deferred tax assets.
Material changes, outlook, and risks
- COVID-19 continued to pressure tourism and tenant activity. Average daily visitor census on Maui was 29,060 in Q1 2021, down 58% from 69,281 in Q1 2020. Management said the duration and scale of the economic impact remain uncertain and could significantly affect results, cash flows, and financial position.
- Percentage rent fell to $117 from $266. The company recorded an additional $60 allowance for doubtful accounts, bringing the allowance to $280. Grant income for conservation programs rose to $317 from $99.
- The sale of Kapalua Water Company and Kapalua Waste Treatment Company regulated assets closed May 1, 2021, for net proceeds of $4.2 million. A separate agreement to sell the 46-acre Kapalua Central Resort project for $43.9 million remained subject to customary conditions and due diligence ending July 15, 2021; closing was expected 30 days thereafter.
- Potential liquidity needs may require additional borrowing or asset sales, and management noted that repayment could depend on selling real estate at acceptable prices within compressed timeframes. The credit facility’s near-term maturity and reliance on real estate sales are key financing considerations.
- A Hawaii Department of Health order concerning alleged wastewater effluent violations includes a $230 penalty and requirements relating to a new treatment plant. The company reported completing corrective-action work and said test results were in compliance with applicable standards; the agency was reviewing results. The company could not estimate any probable liability and recorded no provision.
- The filing provides no specific financial guidance. Management described priorities including operating infrastructure investment, development planning and entitlements, and addressing COVID-19 effects.
Investor verification points
- Confirm the status and final proceeds of the Kapalua Central Resort project sale and any related use of proceeds to reduce debt.
- Review the credit facility’s December 2021 maturity, covenant definitions, refinancing or extension plans, and liquidity availability.
- Track visitor levels, tenant rent collection and reserves, and the effects of COVID-19 on leasing and resort-related activity.
- Monitor the wastewater matter for agency findings, required work, penalties, and any resulting liability.
- Assess pension funding obligations and the company’s ability to fund operations through recurring cash flow, asset sales, or borrowing.