Maui Land & Pineapple Company, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Unaudited results; amounts below are in millions unless stated otherwise. The company owns approximately 23,000 acres on Maui and operates in real estate, leasing, and resort amenities.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Operating revenue | $2.248 | $2.059, up 9% |
| Operating loss | $(0.502) | $(0.658) |
| Net loss | $(0.618); $(0.03) per share | $(0.934); $(0.05) per share |
| Comprehensive loss | $(0.462) | $(0.713) |
| Cash provided by operating activities | $2.817 | Cash used of $0.513 |
| Cash and restricted cash | $8.131 total, including $2.300 restricted | $5.596 at year-end 2021 |
| Total assets / liabilities | $40.225 / $16.599 | $37.919 / $14.329 at year-end 2021 |
| Debt | No borrowings outstanding | $15.0 revolving credit facility available |
Leasing revenue rose to $2.031 million from $1.801 million, and leasing segment income increased to $1.290 million from $0.961 million. Real estate had no sales in either period. Resort amenities and other revenue declined to $0.217 million from $0.258 million, while its operating loss widened to $0.293 million from $0.154 million. No material capital spending was reported in the quarter.
Material changes and management commentary
- Management attributed higher leasing income to increased Maui visitor traffic as travel restrictions and social-distancing rules eased. Percentage rent was $0.394 million, versus $0.117 million a year earlier; no doubtful-account provision was recorded in Q1 2022, compared with $0.060 million of additional reserves in Q1 2021.
- Resort amenities results worsened primarily because of lower club membership levels and higher golf-course fees.
- Operating cash flow improved to $2.817 million from cash use of $0.513 million. The filing does not provide a clear breakdown in the presented cash-flow summary explaining the drivers of this change.
- Current liabilities increased to $4.806 million from $2.397 million, including deferred revenue of $2.796 million versus $0.217 million. Cash includes $2.300 million of escrow deposits from prospective property buyers, classified as restricted cash.
- Accrued retirement benefits totaled $8.004 million. The company said no 2022 pension contribution was required; it contributed $0.553 million in Q1 2021.
Outlook, risks, and contingencies
- The filing provides no specific earnings or revenue guidance. Management said it may borrow under the credit facility if economic conditions are negatively affected by COVID-19. Development and infrastructure initiatives may require borrowing or real-estate sales.
- Two property sales were pending after quarter-end: the 46-acre Kapalua Central Resort project for $40.0 million, with a $0.300 million non-refundable escrow deposit and diligence/closing extensions; and a 646-acre Upcountry Maui parcel for $9.7 million, with a $2.0 million escrow deposit that becomes non-refundable after diligence. The filing does not establish that either sale had closed.
- The $15.0 million credit facility matures December 31, 2025. Its covenants include minimum defined liquidity of $2.0 million, maximum total liabilities of $45.0 million, and limits on new debt. Management believed the company was compliant at March 31, 2022.
- A Hawaii Department of Health order concerning alleged wastewater-effluent violations at the Upcountry facility includes a $0.230 million administrative penalty and requirements related to a new treatment plant. The order was deferred while corrective-action discussions continued; approximately $0.023 million was accrued, and the company could not estimate any additional probable liability. Testing was reported consistently within allowable ranges.
- Management highlighted uncertainty from COVID-19, tourism and real-estate demand, development entitlements and costs, access to capital, debt covenants/refinancing, pension funding, environmental obligations, and natural disasters. No material risk-factor changes were reported for the quarter.
- Disclosure controls were considered effective, with no significant changes in internal control over financial reporting.
Important facts for investors to verify
- Whether the two pending land-sale agreements closed, and the final proceeds, timing, and any conditions or amendments.
- How much of reported operating cash flow reflects recurring operations versus working-capital or escrow-related movements.
- Whether restricted escrow cash is available for general liquidity; confirm covenant-defined liquidity and ongoing compliance.
- The potential total cost and timing of resolving the wastewater order, beyond the amount accrued.
- Leasing trends and visitor-dependent percentage rents, alongside resort-club membership and golf-course fee costs.
- Funding needs for development and infrastructure projects, and the company’s ability to finance them without relying on timely asset sales.