Stratus(STRS) - 2024 Q2 - Quarterly Report

Revenue and Sales Performance - Revenues for Q2 2024 totaled $8.5 million, a significant increase from$3.5 million in Q2 2023, and $35.0 million for the first six months of 2024 compared to$9.3 million in the same period last year[77]. - The increase in revenues is primarily due to the sale of approximately 47 acres of undeveloped land at Magnolia Place for $14.5 million and three Amarra Villas homes for a total of$11.3 million in the first half of 2024[77]. - Total revenues for Real Estate Operations were $3.629 million for the three months ended June 30, 2024, compared to$58,000 in the same period of 2023[101]. - Revenues from developed property sales increased significantly, with three Amarra Villas homes sold in the first six months of 2024, compared to one in the same period of 2023, and an average sales price increase of approximately 50%, from $2.5 million to$3.7 million per home[104]. - Rental revenue for the second quarter of 2024 was $4.861 million, up from$3.472 million in the second quarter of 2023, reflecting increased revenue from new leases[107]. Financial Performance - Net loss attributable to common stockholders for Q2 2024 was $1.7 million, or$0.21 per diluted share, compared to a net loss of $5.3 million, or$0.66 per diluted share, in Q2 2023[78]. - The company reported a net loss attributable to common stockholders of $1.725 million for the three months ended June 30, 2024, compared to a loss of$5.301 million in the same period of 2023[99]. - Operating income from leasing operations increased to $1.745 million in the second quarter of 2024, compared to$1.404 million in the same quarter of 2023[107]. - General and administrative expenses decreased to $3.8 million in the second quarter of 2024, down from$4.1 million in the same quarter of 2023, primarily due to lower compensation costs[110]. - Interest expense for the first six months of 2024 totaled $7.9 million, compared to$5.3 million in the same period of 2023, reflecting higher interest rates and increased average debt balances[111]. Development Projects and Future Plans - The Saint June multi-family project achieved approximately 98% occupancy as of August 9, 2024, following its completion in Q4 2023[81]. - The company anticipates starting to build homes and/or sell home sites in the Holden Hills project by late 2025, pending timely permit processing[82]. - The company secured the right to develop a multi-family project on approximately 35 acres in Lakeway, Texas, with a construction goal contingent on infrastructure completion and market conditions[86]. - The Annie B project, a proposed luxury high-rise with 316 residential units, is under evaluation for profitability as either a rental or sale product[87]. - The Saint George project, a 316-unit luxury multi-family project, is expected to achieve substantial completion in Q4 2024[85]. Cash and Debt Management - As of June 30, 2024, consolidated cash totaled $13.5 million, with$39.6 million available under the revolving credit facility[71]. - The company had $13.5 million in cash and cash equivalents as of June 30, 2024, with no borrowings under the revolving credit facility[119]. - Cash used in operating activities was$1.7 million for the first six months of 2024, significantly lower than $26.8 million in the same period of 2023[114]. - Total debt as of June 30, 2024, was$180.0 million, an increase from $177.4 million at the end of 2023[120]. - The total debt maturities as of June 30, 2024, amounted to approximately$179.967 million, with significant amounts due in 2026 and beyond[131]. Share Repurchase and Equity - A new $5.0 million share repurchase program was approved by the Board in November 2023, following the completion of a$10.0 million share repurchase program in October 2023[66]. - The company has a $5.0 million share repurchase program approved on November 14, 2023, with no shares repurchased as of June 30, 2024[151]. - The company is restricted from repurchasing common stock in excess of$1.0 million without prior written consent from Comerica Bank[146]. Market Conditions and Economic Outlook - The company is optimistic about improving real estate market conditions over the next 12 months, with expectations of declining interest rates[73]. - Market conditions have been impacted by inflation and higher borrowing costs, with the Federal Reserve raising rates by 525 basis points from March 2022 to July 2023[95]. - Forward-looking statements caution that actual results may differ materially due to various factors including market conditions and economic downturns[147]. Regulatory and Accounting Updates - The Financial Accounting Standards Board (FASB) issued ASU No. 2023-05, effective January 1, 2025, requiring joint ventures to measure contributions at fair value upon formation[140]. - ASU No. 2023-07 enhances segment reporting disclosures, effective for fiscal years beginning after December 15, 2023, allowing for more than one measure of segment profit or loss[141]. - ASU No. 2023-09 mandates public business entities to disclose a tabular rate reconciliation of income taxes paid, effective for annual periods beginning after December 15, 2024[142]. - The company does not expect the recent accounting pronouncements to have a material effect on its consolidated financial statements[140][142]. Compliance and Risk Management - As of June 30, 2024, the company was in compliance with all financial covenants related to its debt agreements[126]. - The company’s disclosure controls and procedures were evaluated as effective as of June 30, 2024[149]. - No material changes to risk factors were disclosed in the latest report[151].