Stratus(STRS) - 2024 Q1 - Quarterly Report

Financial Performance - Revenues for Q1 2024 totaled $26.5 million, a significant increase from$5.8 million in Q1 2023, driven by sales of approximately 47 acres of undeveloped land for $14.5 million and two homes for$7.6 million[84]. - Net income attributable to common stockholders in Q1 2024 was $4.6 million, or$0.56 per diluted share, compared to a net loss of $5.8 million, or$0.73 per diluted share, in Q1 2023[85]. - In Q1 2024, the company reported operating income of $3.685 million, a significant improvement from a loss of$5.593 million in Q1 2023[111]. - Total revenues for Real Estate Operations in Q1 2024 reached $22.123 million, compared to$2.493 million in Q1 2023, driven by developed and undeveloped property sales[113]. - Rental revenue in Q1 2024 was $4.384 million, up from$3.309 million in Q1 2023, primarily due to new leases and revenue from The Saint June[116]. - Operating cash flow increased to $6.5 million in Q1 2024 from a cash outflow of$18.4 million in Q1 2023, primarily due to property sales[125]. Development Projects - The company has a development portfolio of approximately 1,600 acres of commercial and residential projects under development or undeveloped land held for future use[70]. - The Saint June multi-family project achieved approximately 90% lease-up as of May 10, 2024, with the first units available for occupancy in July 2023[89]. - The Saint George project is expected to achieve substantial completion by Q3 2024, with 316 luxury units under development[95]. - The company plans to continue developing properties using project-level debt and third-party equity capital through joint ventures, aiming for attractive long-term returns[74]. - The ETJ Law, effective September 1, 2023, may streamline the development permitting process for the Holden Hills and Section N projects, potentially increasing development density[94]. Cash and Debt Management - As of March 31, 2024, consolidated cash totaled $20.7 million, with$39.6 million available under the revolving credit facility, net of $13.3 million in letters of credit[78]. - The company anticipates seeking additional capital through project-level debt and third-party equity capital arrangements for its development projects[104]. - Total debt as of March 31, 2024, was$170.1 million, down from $177.4 million at December 31, 2023[134]. - The company had$20.7 million in cash and cash equivalents as of March 31, 2024, with no borrowings under the revolving credit facility[133]. - Total debt maturities amount to $170.1 million as of March 31, 2024, with significant amounts due in 2024 ($67.1 million) and 2026 ($62.9 million)[144]. - The company plans to extend or refinance debt maturing in the next 12 months and will not incur material costs for new projects until adequate financing is secured[150]. Interest and Expenses - Interest expense in Q1 2024 totaled$4.0 million, an increase from $2.4 million in Q1 2023, reflecting higher interest rates and increased average debt balances[120]. - The weighted-average interest rate for the Jones Crossing loan increased to 7.70$0.1 million in Q1 2024, down from $1.2 million in Q1 2023[121]. - Cash used in investing activities decreased to$8.4 million in Q1 2024 from $10.2 million in Q1 2023, with capital expenditures of$8.1 million primarily for The Saint George[126]. - Cash used in financing activities totaled $9.1 million in Q1 2024, compared to cash provided of$42.7 million in Q1 2023[127]. Future Outlook and Challenges - The company expects to generate approximately $7.2 million of pre-tax net cash proceeds from the sale of West Killeen Market, contracted for$12.8 million, expected to close in Q2 2024[80]. - Market conditions have been challenging due to inflation, higher borrowing costs, and supply chain constraints, impacting project profitability and timelines[105]. - The company does not expect to generate sufficient recurring cash flow to cover general and administrative expenses each period due to its development-focused business model[151]. - Future financial performance will depend on the ability to sell or lease properties profitably and extend or refinance debt as it becomes due[152]. Shareholder and Compliance Matters - A new share repurchase program was approved in November 2023, authorizing repurchases of up to $5.0 million of common stock[132]. - The company was in compliance with all financial covenants as of March 31, 2024[140]. - The company is subject to restrictions under its Comerica Bank debt agreements, limiting stock repurchases and dividend payments without prior consent[164].