PICO Holdings, Inc.
PICO Holdings, Inc. (NASDAQ:PICO) reported
results for the third quarter ended September 30, 2018.
Our reported shareholders’ equity was $184.5 million ($8.60 per
share) at September 30, 2018, compared to $207.2 million
($8.95 per share) at December 31, 2017.
Third Quarter Results of
Operations
Our third quarter results of operations were as
follows (in thousands):
|
|
|
Three Months Ended September
30, |
|
2018 |
|
2017 |
Total revenue |
$ |
(694 |
) |
|
$ |
205 |
|
Total cost and expenses |
3,975 |
|
|
3,022 |
|
Loss from continuing operations before income taxes |
(4,669 |
) |
|
(2,817 |
) |
Provision for federal and state income taxes |
— |
|
|
(292 |
) |
Loss from continuing operations |
(4,669 |
) |
|
(3,109 |
) |
Net loss from discontinued operations, net of
tax |
— |
|
|
(3,175 |
) |
Net income |
(4,669 |
) |
|
(6,284 |
) |
Net loss attributable to noncontrolling
interests |
— |
|
|
1,645 |
|
Net loss attributable to PICO Holdings, Inc. |
$ |
(4,669 |
) |
|
$ |
(4,639 |
) |
|
|
|
|
Net loss per share |
$ |
(0.21 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
Nine Months Results of
Operations
Our nine months results of operations were as
follows (in thousands):
|
|
|
Nine Months Ended September
30, |
|
2018 |
|
2017 |
Total revenue |
$ |
10,262 |
|
|
$ |
35,032 |
|
Total cost and expenses |
13,462 |
|
|
22,628 |
|
Income (loss) from continuing operations before income taxes |
(3,200 |
) |
|
12,404 |
|
Provision for federal and state income taxes |
(72 |
) |
|
(3,419 |
) |
Income (loss) from continuing operations |
(3,272 |
) |
|
8,985 |
|
Net income (loss) from discontinued operations, net
of tax |
43 |
|
|
(6,256 |
) |
Net income (loss) |
(3,229 |
) |
|
2,729 |
|
Net income attributable to noncontrolling
interests |
— |
|
|
(1,150 |
) |
Net income (loss) attributable to PICO Holdings, Inc. |
$ |
(3,229 |
) |
|
$ |
1,579 |
|
|
|
|
|
Net income (loss) per share |
$ |
(0.15 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
PICO’s Chief Executive Officer, Dorothy Timian -
Palmer, commented:
“We continued to monetize assets in the third
quarter with small transactions in Nevada, Arizona and
Colorado. We expect to record the sale of approximately 70
acre - feet of our water credits held by our subsidiary, Fish
Springs Ranch, LLC (“FSR”) in the North Valleys region of Reno,
Nevada for approximately $2.5 million in the fourth quarter of 2018
or the first quarter of 2019 when Truckee Meadows Water Authority,
the utility serving the Reno metropolitan region, issues the “will
- serve permits” to the developer who is purchasing our water
credits. FSR received 50% of the $2.5 million at the beginning of
the governmental approval process, and will receive the remaining
amount at issuance of the building permit. Subsequent to
September 30, 2018 we sold an additional 3.61 acre - feet of FSR
credits for Industrial/Commercial developments, with pricing
remaining at $35,000 per acre - foot. The Truckee Meadows
Water Authority (“TMWA”) has advised us that residential and
industrial/commercial development plans requiring an additional
48.62 acre - feet of FSR credits have been submitted to TMWA for
final map, and the review process is underway. We believe we will
continue to see more FSR credits sold for development in 2019 as
more developments move through the local governmental review,
approval, and permitting processes.
“Due to historic and ongoing drought conditions
in the Colorado River Basin, and the probability of Colorado River
reservoirs - particularly Lake Powell and Lake Mead - decline to
critical elevations, our Arizona Long Term Storage Credits continue
to be highly strategic and valuable.
“Included in our third quarter results was a total non - cash
charge of approximately $2.3 million to write - off the entire
carrying value of one of our remaining legacy investments, Spigit,
Inc.
“We also continue to return capital to our
shareholders. During the nine months ended September 30, 2018
we repurchased 1,715,678 of our common shares via open market
purchases at a total cost of $19.9 million - for an average price
of approximately $11.57 per share.
“The transition of the finance and treasury
functions from our La Jolla, California office to our headquarters
in Carson City, Nevada is proceeding and we expect to close the La
Jolla office before the end of the year. We expect the total
transition costs to be approximately $1.6 million. We also
expect, once the transition is complete and together with the
management restructuring announced earlier this year, to reduce our
operating costs by approximately $650,000 per annum. We
continue to seek ways to reduce our operating costs for 2019 and
beyond.”
Net Operating Loss
Carryforwards
At December 31, 2017, we had approximately
$185.5 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 our Annual Report on Form
10-K for the year ended December 31, 2017 that we filed with
the Securities and Exchange Commission.
About PICO Holdings, Inc.
As of September 30, 2018, 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.
Currently, we believe the highest potential
return to shareholders is from a return of capital to shareholders.
As we monetize assets, rather than reinvest the proceeds, we intend
to return the capital derived therefrom, less any working capital
requirements, back to shareholders through a stock repurchase
program or by other means such as special dividends taking into
effect liquidity requirements, debt covenants and any other
contractual and legal restrictions that may exist at the time.
OTHER INFORMATION
At September 30, 2018, we had a market
capitalization of $269.3 million, and 21,460,653 shares
outstanding.
Our 2019 Annual Meeting of Stockholders will be
held in Omaha, Nebraska on Friday, May 4th at the Durham
Museum. We have found in the past, due to our meeting
schedule, that many of our attendees leave for Omaha for the
Berkshire Hathaway annual stockholders meeting immediately
following our Annual Stockholders Meeting. Our 2019 Annual
Meeting of Stockholders will begin at 9:00 am CDT and we will
provide a continental breakfast beginning at 8:00 am CDT.
We remind all of our stockholders that you can
submit a question regarding our operations, to
info@picoholdings.com, and, if appropriate, we will post on our
website responses to these questions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Statements in this press release that are not
historical, including statements regarding our business objectives,
our ability to monetize our water resources, and the timing
thereof, the timing of our transition to Carson City and the costs
related thereto, the savings expected from our transition to Carson
City and management restructuring, our ability to preserve and
utilize NOLs to offset taxable income and reduce our federal income
liability, and our ability to monetize assets and return capital to
shareholders through stock repurchases or through other means, 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 (775) 885-5000 x200 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.
This news release was distributed by
GlobeNewswire, www.globenewswire.com.
CONTACT:
Max WebbExecutive Chairman(775) 885-5000 x 200
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