Maui Land & Pineapple Company, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 23, 2023. The filing reports annual results, not a standalone fourth-quarter period.
Business context
The company owns approximately 22,200 acres on Maui and operates through real estate, leasing, and resort amenities. Real estate sales and development are concentrated in the Kapalua Resort and Upcountry Maui. Leasing includes commercial, agricultural, and industrial property, trademark licensing, water systems, and conservation activities.
Financial performance
| Metric | 2022 | 2021 |
|---|---|---|
| Operating revenue | $20.96 million | $12.44 million |
| Operating income | $9.61 million | $1.64 million |
| Net income (loss) | $1.79 million | $(3.42) million |
| Net income (loss) per share | $0.09 | $(0.18) |
| Operating cash flow | $6.26 million | $1.39 million |
| Cash and cash equivalents at year-end | $8.50 million | $5.60 million |
| Total assets | $42.41 million | $37.92 million |
| Total liabilities | $8.63 million | $14.33 million |
Operating margin was approximately 45.8% in 2022, compared with 13.2% in 2021. The improvement primarily reflected higher real estate sales revenue. Net income also reflects substantial pension expense: $7.89 million in 2022, including $7.49 million of settlement expense from pension annuity purchases. There was no income tax expense in either year.
- Real estate: Revenue was $11.60 million, up from $3.40 million. The company sold approximately 50 acres to Maui County for a regional park, receiving $1.9 million net, and sold a 646-acre agricultural parcel for $9.6 million gross and $9.2 million net proceeds.
- Leasing: Revenue was $8.51 million, up from $8.10 million. Higher visitor traffic lifted percentage rents; property maintenance costs also increased.
- Resort amenities: Revenue was $0.85 million, versus $0.94 million in 2021, and the segment recorded a $0.70 million operating loss. Lower club membership and higher contracted golf fees contributed.
- Investments: Year-end investments were approximately $3.0 million in corporate bonds, which the company intended to hold to maturity.
Liquidity, debt, and capital resources
Current assets were $15.22 million and current liabilities were $2.31 million at year-end. The company had no outstanding borrowings under its $15.0 million revolving credit facility and reported $15.0 million of available capacity. The facility matures December 31, 2025, is secured by commercial leased space, and includes a $2.0 million minimum liquidity covenant, a $45.0 million maximum total-liabilities covenant, and restrictions on new debt and cash dividends. The company reported covenant compliance at December 31, 2022.
Operating cash flow rose to $6.26 million. The company made $5.7 million of voluntary pension-plan contributions in 2022 and invested approximately $3.0 million in bonds. Management stated that cash, operating cash flow, and available credit should support working capital and obligations for at least the next 12 months and the foreseeable longer term. No cash dividends are anticipated.
Material changes, outlook, and risks
- Revenue increased 68% year over year, driven mainly by real estate sales; operating income improved substantially and the company returned to net profitability.
- The company annuitized scheduled payments for 167 pension participants in 2022, paying approximately $14.5 million from plan assets. The reported pension funded-status liability declined to $2.75 million from $8.08 million, while settlement charges weighed heavily on earnings.
- A $40.0 million agreement to sell the Kapalua Central Resort property remained conditional on approval of a five-year extension of its Special Management Area permit by April 10, 2023. If not approved by then, the agreement would terminate; if approved, closing was expected within 30 days. The filing gives no later outcome.
- Management provided no quantified earnings or revenue guidance. It plans to invest in operating infrastructure and continue development planning and entitlement work. Projects depend on financing, approvals, market conditions, and development timing.
- Key risks include cyclical Maui real estate and tourism markets, interest rates and financing availability, lengthy or uncertain land-use approvals, development cost and schedule overruns, environmental requirements, natural disasters and climate exposure, and possible need for additional capital.
- A Hawaii Department of Health order concerning alleged wastewater effluent violations includes a $230,000 penalty and a requirement to develop a new treatment plant. Corrective work was completed and monitoring showed concentrations within allowable ranges; an administrative hearing was scheduled for June 2023. Approximately $23,000 was accrued, and the company could not estimate any remaining probable liability.
- Under a separate 1999 settlement, the company shares specified costs for filtration systems if DBCP levels exceed thresholds. It reported no current plans for additional affected-area wells and recorded no reserve for future costs.
- The audited financial statements received an unqualified opinion. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not required to attest to internal-control effectiveness.
Important facts for investors to verify
- Whether the Kapalua Central Resort permit extension was approved and whether the $40.0 million sale closed or terminated.
- The ongoing condition, funding requirements, and actuarial sensitivity of the pension plans after the annuity transactions and market losses.
- The status and potential financial exposure of the wastewater matter, including the scheduled hearing and any treatment-plant requirements or penalties.
- Whether real estate sales can be sustained, given that 2022 results depended significantly on asset disposals and development activity is subject to lengthy approvals.
- Future liquidity and covenant headroom, including reliance on credit availability or timely property sales to fund projects.