St. Joe (NYSE:JOE) Q3 2026 Earnings Call

0:00 Thank you for joining us. President, CEO, and Chairman of the St. Joe Company. Please go ahead.

0:34 Thank you and good morning. I'm Jorge Gonzalez, President, CEO, and Chairman of the St. Joe Company. It is my pleasure to welcome you to our quarterly earnings call. I'm joined today by Marek Bakun, our Chief Financial Officer, and Rhea Goff, our Chief Administrative Officer. On Wednesday, after the market closed, we issued our third quarter of 2026 earnings press release, which can be found in the investor relations section of our corporate website at joe.com. This morning, we are continuing our commitment to quarterly earnings calls to provide our shareholders and the investor community with an opportunity to ask questions about our business and performance. We have always been an open and transparent company that welcomes all feedback and opinions. Because of the types of assets that we own, we encourage shareholders to visit us in person so they may assess firsthand the progress of our region and of our assets. If you would like to send us questions for later in the call, you may do so by visiting the top right-hand corner of your screen where the words submitted question are visible. Clicking on that text will take you to the text entry box where you can type in your question and then click submit.

1:37 Before we begin discussing our results and answering your questions, I would like to remind everyone that Wednesday's press release and the statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that can cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission. Additionally, during today's call, we will discuss non-GAAP measures, measures which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in our earnings release. Let's go ahead and get started. We assume everyone has already carefully reviewed our earnings release in 10Q, which provide comprehensive details about our performance, so we are only going to mention a few key highlights of the third quarter before we move on to your questions.

2:34 Although the sale of watercress boosted the prior year results, we had a solid third quarter with organic growth. Quarterly total revenue decreased by 3%, net income decreased by 5%, and operating income increased by 16%. On October 28th, the Board of Directors declared a cash dividend of 18 cents per share, which is a 13% increase from the third quarter dividend and a 157% increase from when the current dividend program was initiated in 2020. For the first nine months of 2026, total revenue increased by 8%, net income increased by 7%, and operating income increased by 26% when compared to the first nine months of 2025. except for the large one-time Timberland sale in 2014, the full year 2025 had the best performance in 20 years. So it is encouraging that through the first nine months of 2026, the company's performing ahead of 2025.

3:33 In the third quarter, we wrapped up another strong peak season in our hospitality segment. Total hospitality revenue increased by 9%, to a company third quarter record of 66 million when compared to 61 million in the third quarter of 2025. Our hotel revenue increased by 7% and our club revenue increased by 14%. We also continue to expand the geography from where our hotel guests travel with the highest growth coming from the states of New York, South Carolina, Illinois, and Michigan. Through the end of September, we had guests stay in our hotel from all 50 states. Latitude Margaritaville-Watersound has 2,426 existing homes of the planned 3,700 homes.

4:21 And in the third quarter, we announced plans to move forward with a second phase that will add approximately 3,500 planned homes, which will bring the community to approximately 7,200 planned homes. Sales were strong for the first nine months with an increase of 24%. The growth of Latitude, together with the previously announced new planned community for Pulte Group in the Pigeon Creek DSAP, will create continued demand for the Watersound West Bay Center, the company's emerging commercial lifestyle town center, which is planned for a minimum of 500,000 square feet with 33,182 square feet existing and 69,134 square feet under construction, including a new Publix grocery store.

5:12 The emerging Watersound West Bay Center will make the Latitude and Pigeon Creek communities more appealing to potential buyers by offering convenient shopping, service and entertainment opportunities, which is another example of our virtuous circle of value creation. The community in Pigeon Creek is expected to break ground in the first part of 2027 and its plan for approximately 3,000 homes. In the third quarter, we continue to implement a measured and multifaceted capital allocation strategy. We repurchased 27.2 million of the company's common stock, funded 22.8 million in capital expenditures primarily for future growth, paid 9.1 million in cash dividends and repaid 8.8 million of debt.

5:59 The allocation broke down as 40% for stock repurchases, 34% for capital expenditures for growth, 13% for cash dividends, and 13% for debt reduction. More than half, or 53% of the capital allocation in the third quarter was to shareholders through stock repurchases and cash dividends. For the first nine months of 2026, the company repurchased 64.9 million of common stock when compared to $24.9 million for the same period in 2025, an increase of 161%. As of September 30, the company had 56,578,851 outstanding shares, which is the lowest number of outstanding shares in nearly 30 years. Now Marek and I are going to answer your questions. As a reminder, in the top right hand corner of the screen, the words submit a question are visible. Clicking that text will take you to the text entry box where you can type your questions and click submit. Ray, do you mind reading the questions?

7:08 Could you talk about the impact of the hurricane on the company's properties along the Gulf and the further inland assets?

7:18 We appreciate the question. We issued a press release shortly after The storm or the hurricane came through. We were fortunate the impact to our properties was not as severe as it was on the west side of the storm. We did have an impact to our golf courses with trees down. We had an impact to the boardwalk in our beach club, which has been under reconstruction. and we had some minor roof damage in the Pearl in Waterstown, excuse me, in Camp Creek. Relatively speaking, they are minor damage. We were open for business in our hotels within 24 to 48 hours.

8:07 Will the coastal dunes along the company's properties be rebuilt or just naturally reestablished over time?

8:15 The main coastal dunes that we have on our properties are the dunes in the Watertown Beach Club. Those dunes were not materially impacted. So there's really not gonna be a need to rebuild those dunes. The rebuilding is primarily the boardwalk that provides access from the beach club to the beach. And like I mentioned a few minutes ago, that boardwalk is currently under reconstruction.

8:46 Appreciate the measured and multifaceted capital allocation, including the increased pace of buyback.

8:54 Thank you.

8:56 Is there any updated timeline on the ICW Marina? It appears little change from when it was a part of the 2025 annual meeting soared. And in September, it looks like an updated application was approved for a bigger project, but still surprising to see no ground has broken.

9:15 We have commented on the ICW marina a couple of times. First of all, we're really excited about the potential of this marina. We did break ground. We did do some mass grading a while back. The project from our end is a project that we're ready to move forward with, full steam ahead. As I mentioned before, we have obtained most of the permits that are needed from the federal, state, and local authorities. but we're still waiting for one final permit from the federal authorities before we can go full steam ahead. We believe that permit is going to be issued hopefully in the near term and as soon as we get that final permit the development and construction activity on the marina is going to move forward pretty quickly.

10:06 Strong growth in the backlog and sales contract pace at Latitude Margaritaville-Waterstown. Could you talk about the pace of completion at Latitude? Was it an active decision to lower the pace of completion there, or is it just sort of the natural ebb and flow of building homes?

10:26 Yep. Natural ebbs and flows is the right answer. Just as a reminder, the joint venture transacts homes, so it takes time from the time you sell a home to the time you complete the construction of the home. So just a reminder, coming into 2026, the backlog number of homes under contract was 149. Now, as of September 30th, it's 222. So it's the time lag between selling a home and building the home to the deliveries that caused the timing of the closings.

11:00 And one of the reasons for the increase in the backlog is sales have increased, as I mentioned earlier. Sales so far for this year are up 24%. Correct.

11:11 Do you see growth capital spend accelerating from the 80 to 100 million range of past two years to support leasing divisions potentially doubling of square feet?

11:24 We do see capital expenditure for growth growing over the next year or two. As we continue to see demand from tenants, particularly national tenants for our commercial leasing space, We certainly want to fulfill that demand and we are seeing that both in the Watersound Town Center and also in the emerging West Bay Center. So yes, we believe we're going to be increasing the pace and accelerating the pace over the next couple of years.

11:59 Explain the decline in residential sales. Is it more of a timing issue?

12:04 It is. Residential sales, unlike the revenue that comes in from leasing and hospitality, comes in in spurts based on the closings that are scheduled at that particular time in that particular quarter. In the second quarter, we had an uptick in closings. This quarter it was down, but it was not for any specific reason other than the timing of when closings are scheduled.

12:32 What is per acre amount realized on $50 million land sales to latitude this quarter?

12:40 It is about on average of one unit per acre realized on the latitude transaction.

12:57 That's the last question we have so far. So as we always do, let's give it a little bit of time in case there's any additional questions that any of the participants want to ask. There are no other questions.

13:33 It seems there is a large jump in the filing notation. As of September 30, 2026, we had a total of $120.6 million, primarily in construction and development related contractual obligations. Capital expenditures and contractual obligations exclude amounts related to unconsolidated JVs. B note four, joint ventures for additional information. Can you elaborate on the nature of these? As say one year ago, this number was closer to 30 million.

14:09 Good question, thank you. The answer to this question is in part related to the answer I gave to two questions ago about the potential acceleration of Capital Expenditures to meet growing demand in our commercial leasing segment. So we have seen that demand grow. So we are planning to fill that demand and the way that we execute that planning of course is by getting under contract more work to develop and expand the leasing portfolio. I also mentioned, we also mentioned starting early this year a focus on offsite utility corridors that are necessary to feed future residential homesites, future new communities in the thousands of units that are going to capture probably two or three separate DSAPs that we haven't even started developing yet.

15:11 So part of the increase that you have seen in that notation relate to the utility corridors that we're going to start working on pretty soon.

15:24 Could you provide color on the year-over-year growth for the Discover Water Sound weekend?

15:31 Well attended. We added a lot of new events, a lot of new potential buyers and club members that's an event that our team does a great job with and it has grown every year. It's a way to really frame the Watersound lifestyle to prospective new residents in our communities, to prospective new club members and it is something that we plan on continuing to do because so far it has been very well received. Watersound Real Estate has also participated in that event which provides good exposure and creates really good relationships and potential leads for the agents in the agency.

16:14 What ongoing maintenance and capital expenditures does Joe see long-term to maintain appropriate coastal resilience, which includes living shorelines with enough beach buffer to protect property? Is there ongoing beach renourishment projects contemplated?

16:31 It's a great question, and I think the starting point to answer that question is This part of Florida is different than other parts of Florida. We do have more elevation along the coast than other parts of Florida. Natural dune systems have been kept, particularly on our properties like the Watersound Beach Club and even on residential communities that we previously developed like Watersound Beach Club, excuse me, like the Watersound Beach residential community. So the approach that this region has taken and the planning approach that the company has taken, we have been executing what the question really asked for quite some time.

17:16 We leave natural buffers. We leave the natural coastal systems, whether they're dunes or natural vegetation. That is something that we have been known for. There is no better armoring system than nature. and our company has been executing that strategy for quite some time.

17:36 And if I may just add to this, so the first question is of maintenance. So we have generally new properties. Most of the expenditures that we have and expect to continue is for growth. We will continue to maintain our existing assets in good form, but that is a very small fraction of our capital expenditures to the quality and of the assets that we have. So most of the expenditures is for growth.

18:04 How has the response been in regards to the increase of club initiation fees? It seems there are constantly new people scoring much more than normal.

18:15 So far the response has been positive. We have been very gradual and incremental and measured in how we have raised initiation fees. We always want to make sure that we are providing value to our club members, both existing and prospective. So ever since we made that announcement, it's been well received and we have seen an increase in interest, an increase in traffic, an increase in new members. That is the last question we have so far, so let's give it a couple more minutes to see if we have any more questions that come in.

19:34 We don't see any more questions. Again, as always, we appreciate everybody joining the call and asking the always great questions. We appreciate your interest in our company and look forward to speaking with you again next quarter. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.