PICO Holdings, Inc. (NASDAQ:PICO) reported results for the third
quarter ended September 30, 2017. PICO reported
shareholders’ equity of $324 million ($14.00 per share) at
September 30, 2017, compared to $328 million ($14.22 per
share) at December 31, 2016.
Third Quarter Segment Results of
Operations
For the third quarter of 2017, PICO reported a
net loss of $4.6 million ($0.20 per share), compared to a net loss
of $2.9 million ($0.13 per share) in the third quarter of
2016. Our third quarter segment results of operations were as
follows (in thousands):
|
|
|
Three Months Ended September 30, |
|
2017 |
|
2016 |
Revenue by
operating segment: |
|
|
|
Water
resource and water storage operations |
$ |
347 |
|
|
$ |
577 |
|
Corporate |
(142 |
) |
|
588 |
|
Total revenue |
$ |
205 |
|
|
$ |
1,165 |
|
|
|
|
|
Income (loss)
before taxes by operating segment: |
|
|
|
Water
resource and water storage operations |
$ |
(965 |
) |
|
$ |
(1,006 |
) |
Corporate |
(1,852 |
) |
|
(4,093 |
) |
Loss from continuing
operations before income taxes |
(2,817 |
) |
|
(5,099 |
) |
Benefit
(provision) for federal and state income taxes |
(292 |
) |
|
530 |
|
Loss from continuing
operations |
(3,109 |
) |
|
(4,569 |
) |
Income
(loss) from discontinued operations, net of tax |
(5,269 |
) |
|
2,710 |
|
Gain on
sale of discontinued operations, net of tax |
2,094 |
|
|
2 |
|
Net income (loss) from
discontinued operations, net of tax |
(3,175 |
) |
|
2,712 |
|
Net loss |
(6,284 |
) |
|
(1,857 |
) |
Net
(income) loss attributable to noncontrolling interests |
1,645 |
|
|
(1,043 |
) |
Net loss attributable
to PICO Holdings, Inc. |
$ |
(4,639 |
) |
|
$ |
(2,900 |
) |
|
|
|
|
|
|
|
|
First Nine Months Segment Results of
Operations
For the first nine months of 2017, we reported
net income of $1.6 million ($0.07 per share), compared to a net
loss of $13.1 million ($0.57 per share) in the first nine months of
2016. Our nine months segment results of operations were as
follows (in thousands):
|
|
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
Revenue by
operating segment: |
|
|
|
Water
resource and water storage operations |
$ |
25,766 |
|
|
$ |
890 |
|
Corporate |
9,266 |
|
|
1,910 |
|
Total revenue |
$ |
35,032 |
|
|
$ |
2,800 |
|
|
|
|
|
Income (loss)
before taxes by operating segment: |
|
|
|
Water
resource and water storage operations |
$ |
8,664 |
|
|
$ |
(4,186 |
) |
Corporate |
3,740 |
|
|
(10,287 |
) |
Income (loss) from
continuing operations before income taxes |
12,404 |
|
|
(14,473 |
) |
Benefit
(provision) for federal and state income taxes |
(3,419 |
) |
|
712 |
|
Income (loss) from
continuing operations |
8,985 |
|
|
(13,761 |
) |
Income
from discontinued operations, net of tax |
3,053 |
|
|
4,195 |
|
Loss on
sale or impairment loss on classification of assets as
held-for-sale, net of tax |
(9,309 |
) |
|
(1,858 |
) |
Net income (loss) from
discontinued operations, net of tax |
(6,256 |
) |
|
2,337 |
|
Net income (loss) |
2,729 |
|
|
(11,424 |
) |
Net
income attributable to noncontrolling interests |
(1,150 |
) |
|
(1,676 |
) |
Net income (loss)
attributable to PICO Holdings, Inc. |
$ |
1,579 |
|
|
$ |
(13,100 |
) |
|
|
|
|
|
|
|
|
PICO’s Chief Executive Officer, Max Webb,
commented:
“The main activity in the third quarter was the
closing of the merger between our 57% owned subsidiary, UCP, Inc.
and Century Communities, Inc. At closing we received $55.3 million
in cash and approximately 2.4 million shares of Century common
stock. As of September 30, 2017 our major assets consisted
primarily of our wholly - owned subsidiary Vidler Water Company,
Inc., cash and marketable securities, and our shares of Century
common stock. Subsequent to the end of the third quarter, on
October 3, 2017 we sold our entire position in Century for net
proceeds of $59.2 million.
“Based on the substantial amount of cash we had
accumulated as result of closing the UCP merger and other asset
monetizations in 2017 and the fact we had established that the
Company did not have or expect to have current or accumulated
earnings and profits for tax purposes in 2017, on October 26, 2017
our Board of Directors declared a special cash dividend of $5 per
share on our outstanding common stock. The dividend will be payable
on or around November 20, 2017, and pursuant to FINRA Rule 11140,
the ex-dividend date will be November 21, 2017 - one business day
after the anticipated distribution of the special dividend. The
special dividend is expected to be treated as a tax - free return
of capital to our shareholders. We are very pleased to be able to
return such a significant amount of capital to our shareholders in
accordance with our stated business plan in a highly tax -
efficient manner.”
The foregoing discussion of the tax
treatment of the special dividend is general in nature, is not
intended for any particular shareholder and is not intended as tax
advice. Each shareholder is strongly encouraged to
consult its financial and tax advisors regarding the appropriate
treatment of the special dividend and the corresponding tax
consequences that may be relevant to such shareholder’s particular
circumstances, because the tax treatment is complex and uncertain
at this time, and the actual current or accumulated earnings and
profits of the Company for 2017 could vary from the Company’s
present estimate and such variance could result in different
consequences to a particular shareholder.
Net Operating Loss
Carryforwards
At September 30, 2017, PICO had
approximately $187.1 million of (pre-tax) federal net operating
loss carryforwards, or NOLs, that could be utilized in certain
circumstances to offset PICO’s taxable income and reduce its
federal income tax liability. Additional information with
respect to these NOLs is contained in PICO’s Annual Report on Form
10-K for the year ended December 31, 2016 that PICO has filed
with the Securities and Exchange Commission.
Net Book Value
The following table is provided as a supplement
to the condensed consolidated financial statements contained in our
Quarterly Report on Form 10-Q, to illustrate the relative size of
our assets and activities (in millions):
Segment |
|
Net Book Value |
|
|
September 30, 2017 |
Water resource and
water storage operations |
|
$ |
173.9 |
|
Corporate |
|
157.9 |
|
Shareholders’ equity |
|
$ |
331.8 |
|
About PICO Holdings, Inc.
PICO Holdings is a diversified holding
company. The Company recently announced that the Company's
Board of Directors had engaged JMP Securities LLC as
PICO’s exclusive financial advisor and Cooley LLP as
PICO’s legal counsel to explore strategic alternatives to further
enhance shareholder value. The intention of the engagements is to
evaluate potential alternatives such as the sale of the Company, a
merger, a business combination, or a sale, license or disposition
of assets of the Company.
As of September 30, 2017, our major
investment was Vidler Water Company, Inc., a water resource and
water storage business with assets and operations primarily in the
Southwestern U.S.
OTHER INFORMATION
At September 30, 2017, PICO Holdings, Inc.
had a market capitalization of $386.6 million, and 23,146,823
shares outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Statements in this press release that are not
historical, including statements regarding our business objectives,
the timing of the payment and tax treatment of the special cash
dividend, our earnings and profits for tax purposes in 2017, our
ability to preserve and utilize NOLs to offset taxable income and
reduce our federal income liability, and our ability to consummate
a strategic transaction to further enhance shareholder value, are
forward-looking statements based on current expectations and
assumptions that are subject to risks and uncertainties.
In addition, a number of other factors may cause
results to differ materially from our expectations, such as: any
slow down or downturn in the housing recovery or in the real estate
markets in which Vidler operates; fluctuations in the prices of
water and water rights; physical, governmental and legal
restrictions on water and water rights; a downturn in some sectors
of the stock market; general economic conditions; prolonged
weakness in the overall U.S. and global economies; the performance
of the businesses; the continued service and availability of key
management personnel; and potential capital requirements and
financing alternatives.
For further information regarding risks and
uncertainties associated with our business, please refer to the
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Risk Factors” sections of our SEC
filings, including our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q, copies of which may be obtained by contacting
us at (858) 456-6022 or at
http://investors.picoholdings.com.
We undertake no obligation to (and we expressly
disclaim any obligation to) update our forward-looking statements,
whether as a result of new information, subsequent events, or
otherwise, in order to reflect any event or circumstance which may
arise after the date of this press release, except as may otherwise
be required by law. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release.
CONTACT:
Max WebbChief Executive Officer(858) 652-4114
PICO (NASDAQ:PICO)
Historical Stock Chart
From Mar 2024 to Apr 2024
PICO (NASDAQ:PICO)
Historical Stock Chart
From Apr 2023 to Apr 2024