JOE Misses Estimates, Still in Red

The St. Joe Company ( JOE - Analyst Report ) , a publicly held real estate company, reported a net loss of $328.6 million or $3.56 per share in fourth quarter 2011 compared with a net loss of $2.7 million or 3 cents in the year-earlier quarter. The year-over-year decrease in earnings was primarily due to a pre-tax non-cash impairment charge of $374.8 million or $3.50 per share after-tax, excluding which the recurring earnings for the reported quarter were (6 cents) per share that missed the Zacks Consensus Estimate of (3 cents).

For the fourth quarter of 2011, total revenue stood at $19.8 million compared with $37.1 million in the year-ago quarter. Total revenue for the reported quarter was well ahead of the Zacks Consensus Estimate of $16 million.

By segment, St. Joe generated $9.6 million from its Residential segment during the quarter versus $9.5 million in the year-ago quarter. The Commercial segment generated $1.9 million in the reported quarter vis-à-vis $0.4 million in the year-earlier quarter, while Forestry segment recorded $7.7 million versus $7.8 million in the comparable period. Revenue from Rural Land Sales during the quarter was $0.6 million compared to $19.4 million in the prior-year quarter.

Subsequent to the quarter-end, the company adopted a new real estate investment strategy, which is focused on reducing future capital outlays and employing new risk-adjusted investment return criteria for evaluating the company’s properties and future investments in such properties. In accordance with this new strategy, St. Joe intends to significantly reduce and reprioritize future capital expenditures for infrastructure, amenities and master planned community development, and reposition certain assets to encourage increased absorption of such properties in their respective markets.

The new investment strategy is further expected to build upon the successful cost reduction initiatives that were previously implemented and enable the company to increase both its short and medium-term cash flows, reduce long-term risk and maintain strong cash position necessary to weather a tepid and volatile real estate environment.

St. Joe incurred total cash overheads of $7.2 million for the reported quarter compared with $13.5 million in the prior-year period. At quarter-end, the company had $162.4 million of cash and $23.3 million of pledged securities. By the end of fourth quarter 2011, total debt outstanding was $53.5 million, out of which $23.3 million was defeased debt.

We maintain our long-term ‘Neutral’ recommendation on St. Joe, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. One of its competitors, Rayonier Inc. ( RYN - Snapshot Report ) presently also has a ‘Neutral’ recommendation and a Zacks #3 Rank.