Maui Land & Pineapple Company, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited consolidated results; financial figures below are in millions of dollars unless stated otherwise. The company owns approximately 22,000 acres on Maui and operates real estate, leasing, and resort amenities businesses.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $2.551 | $2.437 | $18.787 | $9.446 |
| Operating income (loss) | $(0.008) | $0.005 | $10.131 | $1.449 |
| Net income (loss) | $(0.124) | $(0.139) | $9.783 | $0.806 |
| Net income (loss) per share | $(0.01) | $(0.01) | $0.50 | $0.04 |
| Operating cash flow | Not provided for quarter | Not provided for quarter | $6.064 | $0.583 |
- Nine-month revenue rose 99%, primarily reflecting $11.6 million of real estate revenue versus $2.7 million a year earlier. Leasing revenue also increased to $6.6 million from $5.9 million.
- Nine-month operating income included $10.7 million of real estate segment income. No real estate sales were recorded in Q3. Q3 leasing revenue increased to $2.33 million from $2.18 million, while the resort amenities segment recorded a $0.11 million operating loss.
- Cash and restricted cash totaled $11.315 million at September 30, 2022, including $11.074 million unrestricted cash. Total current assets were $16.118 million and current liabilities were $2.578 million.
- The company had no borrowings under its $15 million revolving credit facility, which matures December 31, 2025, and reported covenant compliance. Total liabilities were $8.364 million; stockholders’ equity was $34.666 million.
- Cash increased by $5.719 million during the nine months. Operating activities provided $6.064 million; investing activities used $0.034 million and financing activities used $0.311 million. The company received $9.2 million net proceeds from an agricultural land sale and $2.0 million for land sold to Maui County.
Material changes and unusual items
- The company closed the sale of a 646-acre Upcountry Maui parcel in May for $9.6 million gross and $9.2 million net proceeds, and sold approximately 50 West Maui acres to Maui County for $2.0 million in June.
- A $5.7 million defined-benefit pension contribution was made in August; management said no further 2022 contributions were required. The reported pension liability fell to $0.064 million from $5.932 million at year-end 2021; total accrued retirement benefits declined to $2.157 million from $8.079 million.
- The company’s reincorporation from Hawaii to Delaware was completed July 18, 2022; each outstanding share converted one-for-one and the NYSE listing continued under MLP.
- The 2021 comparison includes a $0.214 million loss from discontinued operations related to the previously sold Kapalua water and wastewater utility assets.
Outlook, risks and contingencies
- Management stated that cash on hand, operating cash flow, and available credit should provide sufficient flexibility for working capital and capital expenditures through the next 12 months and foreseeable future. The company may borrow to support infrastructure, planning, and entitlement work; no quantified earnings guidance was provided.
- The proposed $40 million sale of the 46-acre Kapalua Central Resort project depends on approval by April 10, 2023, of a five-year extension to its Special Management Area permit. Without approval, the agreement terminates; if approved, closing is expected within 30 days.
- A Hawaii Department of Health order concerning alleged wastewater effluent violations includes a $230,000 administrative penalty and a new-treatment-plant requirement. The order is deferred while corrective work and discussions continue; testing was reported within allowable ranges. Approximately $23,000 was accrued, and the company could not estimate any additional probable liability.
- Management cited potential effects from COVID-19, tourism and real estate demand, higher interest rates and recession concerns, entitlement and project execution, environmental obligations, pension funding, and access to capital. It said there were no material changes to the risk factors in its 2021 Form 10-K.
- The company reported effective disclosure controls and no significant changes in internal control over financial reporting during the nine-month period.
Investor verification priorities
- Verify the status of the $40 million Kapalua Central Resort transaction and the required permit extension.
- Assess how much of nine-month earnings and operating cash flow depends on land sales, and whether recurring leasing operations can sustain results.
- Review the pension plan’s funded status and future contribution needs following the $5.7 million contribution.
- Monitor the wastewater matter, potential remediation or penalty exposure, and progress with the Hawaii Department of Health.
- Confirm liquidity and credit-facility covenant headroom if development spending or weaker real estate and tourism conditions increase cash needs.