St. Joe Incurs Loss in Q2, Segment Revenues Up

The St. Joe Company JOE reported second-quarter 2015 net loss of $0.2 million or zero cents per share, as against the Zacks Consensus Estimate of earnings of a penny.

Results compared unfavorably with the prior-year quarter performance wherein the company had reported net income of $14.6 million, or 16 cents per share backed by the RiverTown sale that accounted for $43.6 million in revenue and $26.0 million in net income. Notably, on Jun 30, 2015, St. Joe received remainder of the $19.6 million purchase money note associated with the transaction.

However, total revenue in second-quarter 2015 climbed to $37.8 million from $24.6 million, excluding the impact of $43.6 million related to the RiverTown Sale in the year-ago result.

Importantly, the company's second-quarter results reflected certain sum associated with the ongoing SEC investigation. Precisely, its second-quarter accrual of $7.4 million consists of a reserve of $3.5 million recognized for potential settlement costs and $3.9 million associated with legal expenses.

Quarter in Detail

In the second quarter of 2015, real estate sales climbed to $14.0 million from $5.3 million in the prior-year quarter, excluding the RiverTown sale in 2014. Though residential real estate revenues edged down to $4.0 million from $4.2 million, commercial real estate sales improved to $4.7 million from $1.0 million, backed by a 6.5-acre non-strategic land parcel sale. The company also accomplished a $5.3 million rural land deal.

St. Joe also reported a 17% increase in Resorts and leisure revenues to $19.3 million, mainly due to additional homes in its vacation rental business as well as an increase in membership revenues following the 2014 launch of St. Joe Club & Resorts.

Leasing operations recorded 29% growth to $2.2 million, reflecting higher lease revenues from the Pier Park North joint venture.

Also, with a more-than-double increase in tons delivered, timber sales increased to $2.3 million from $1.1 million recorded a year ago.

Moreover, St. Joe's investment income from its available-for-sale securities climbed to $2.8 million from $1.6 million in the year-ago comparable period.

Finally, the company exited second-quarter 2015 with cash, cash equivalents and investments of $713.5 million, as compared to $671.4 million in the prior-year end.

Our Viewpoint

Second-quarter loss at St. Joe is discouraging but the improvement in revenues at a number of its segments lessens our concern. In fact, in the long run, we believe the company's focus on enhancing its resort-based operations and leasing business would help it recover profitability.

St. Joe currently has a Zacks Rank #3 (Hold). Investors interested in the real estate industry may consider stocks like HFF, Inc. HF. CBRE Group, Inc. CBG and Jones Lang LaSalle Incorporated JLL. While HFF has a Zacks Rank #1 (Strong Buy), CBRE and JLL carry a Zacks Rank #2 (Buy).

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