Maui Land & Pineapple Company, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; comparisons are with FY2019. This is an annual filing, not a standalone fourth-quarter report. The company owns about 22,800 acres on Maui and operates in real estate, leasing, and resort amenities. Leasing generated 79% of FY2020 operating revenue.
Financial performance
| Metric | FY2020 | FY2019 |
|---|---|---|
| Operating revenue | $7.540 million | $10.045 million |
| Operating loss | $2.552 million | $0.796 million |
| Loss from continuing operations | $2.267 million | $7.009 million |
| Loss from discontinued operations | $0.337 million | $3.357 million |
| Net loss | $2.604 million | $10.366 million |
| Net loss per share | $0.14 | $0.54 |
| Cash from operating activities | $2.200 million | $1.772 million |
| Cash at year-end | $0.869 million | $0.683 million |
| Total assets | $38.470 million | $39.119 million |
| Stockholders’ equity | $20.067 million | $22.692 million |
Revenue fell about 25%, while the operating loss widened. The smaller net loss versus 2019 largely reflects the prior-year $4.999 million tax expense and $3.614 million impairment in discontinued operations; FY2020 included a $0.894 million other-income item. Operating cash flow improved, though the company remained loss-making. The filing does not provide a conventional gross-margin measure.
FY2020 segment revenue and operating results: Real Estate revenue was $0.772 million and segment operating loss $0.903 million; Leasing revenue was $5.948 million and segment operating income $0.606 million; Resort Amenities revenue was $0.820 million and segment operating loss $0.865 million. Segment operating results include allocated expenses and are not directly comparable to segment revenues less the separately presented segment costs.
Liquidity, debt, and financial position
At year-end, the company had $0.869 million cash and $14.8 million of available capacity on its $15.0 million revolving credit facility. Balance-sheet debt was $0.2 million, classified current; the facility matures December 31, 2021, bears interest at LIBOR plus 3.50%, and is secured by the Kapalua Mauka project and commercial property. The company reported covenant compliance at December 31, 2020. Covenants include at least $2.0 million in defined liquidity, a $45.0 million maximum on total liabilities, and limits on new debt. The filing does not state the covenant-defined liquidity amount separately from cash and available credit.
Operating cash flow was $2.2 million; investing activities used $0.517 million and financing activities used $1.497 million. A $0.6 million minimum pension contribution was made in January 2021. Accrued retirement benefits totaled $11.091 million, including an $11.068 million underfunded defined-benefit plan status. No cash dividends are anticipated, and the credit agreement restricts dividends without lender approval.
Material changes, outlook, and risks
- COVID-19: Maui County visitor arrivals fell 73% to 611,799 in 2020. Lower tenant sales reduced percentage rent; the company granted $0.4 million in rent abatements and increased its doubtful-account allowance to $0.220 million. Resort amenity access restrictions also reduced member dues. Management said the pandemic’s duration and financial impact remained uncertain; no company-specific earnings guidance was provided.
- Real estate transactions: The company agreed to sell the 46-acre Kapalua Central Resort project for $43.9 million. COVID-related travel restrictions extended due diligence through July 15, 2021; closing remained contingent on customary conditions. A separate sale of water and wastewater utility assets for approximately $4.3 million remained subject to closing conditions, including Hawaii Public Utilities Commission approval.
- Other unusual items: A $2.0 million one-time trademark royalty received in March 2020 is recognized over an estimated 15-year useful life. The company also received $0.9 million in returned cash collateral upon dissolution of a joint venture. It wrote off the previously recognized $5.0 million AMT-credit tax benefit against the valuation allowance pending clarification of federal refund offsets.
- Contingencies: Hawaii’s Department of Health issued an order concerning alleged wastewater effluent violations, including a $230,000 proposed administrative penalty and a requirement to develop a new treatment plant. Corrective work was underway, discussions continued, and the company could not estimate any probable liability; no provision was recorded.
- Execution and asset-value risks: The company had $8.9 million of deferred development costs, whose recovery depends on long-term project plans and assumptions. Entitlement delays, development costs, property-market weakness, tourism levels, tenant payment capacity, and access to financing could affect results and liquidity. Pension obligations are also sensitive to discount rates and asset returns.
The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor was not required to attest to internal-control effectiveness.
Investor facts to verify
- Whether the $43.9 million Kapalua Central Resort sale and approximately $4.3 million utility-asset sale closed, and the resulting net proceeds and use of proceeds.
- Facility renewal or refinancing after its December 31, 2021 maturity, covenant headroom, and the calculation of defined liquidity.
- Progress and ultimate cost or liability from the wastewater order and corrective action plan.
- Tenant rent collections, lease occupancy and percentage rents, and the pace of Maui tourism recovery.
- Support for the recoverability of deferred development costs and the company’s ability to fund development plans and pension obligations.