St. Joe's 2Q Earnings Down but Rummell Not Worried

Excluding conservation land gains, EBITDA was $33.4 million or 40 cents per diluted share compared with $38.4 million or 45 cents per share last year.

Conservation land sales produced EBITDA of $1.1 million versus $9.9 million previously. Arvida Realty Services, which produced EBITDA of $9.4 million in last year's second quarter, was sold April 17 of this year for $170 million cash to NRT Inc., a subsidiary of New York-based Cendant Corp.

"JOE continued to perform well during the second quarter," Peter S. Rummell, the Jacksonville, FL-based company's chairman/CEO, says in a prepared statement. "If you compare the second quarter of 2002 with the same quarter last year, excluding conservation land sales and the results of the discontinued operations of Arvida from both periods, EBITDA per share was 15% higher."

The second-quarter financials exclude the gain of $20.6 million or 25 cents per share from the Arvida sale because Arvida is treated as a discontinued operation in St. Joe's financial statements.

"This gain is subject to adjustment and a liability has been recorded, pending the resolution of an issue with an outside party over the use of the Arvida name," Rummell says.

Arvida "performed very well for us, and over the past few years we were able to significantly increase its value," the St. Joe chairman says. "As consolidation in the residential real estate services industry accelerated, JOE had the opportunity to sell ARS for a good price and capture significant value for shareholders."

Rummell says "strategically, the sale of ARS further tightens our focus on JOE's assets in northwest Florida where we have a unique competitive advantage and the potential for outstanding long-term returns."

St. Joe's second-quarter net income was $33 million or 40 cents per diluted share compared with $24.3 million or 29 cents per diluted share in second quarter 2001. St. Joe Commercial, the development arm of the Jacksonville, FL-based company, posted EBITDA $3.7 million, down from $6.6 million logged in the same 2001 period.

Atlanta-based Advantis Real Estate Services Co., St. Joe's commercial real estate sector, is rallying and helping the balance sheet, Kevin M. Twomey, St. Joe's president, chief operating officer and chief financial officer, says in the same statement.

"After recording losses for the full year of 2001 and the first quarter of 2002, Advantis delivered three successive months of positive EBITDA," Twomey says. "Advantis is bringing costs in line, building revenue, expanding its portfolio of real estate under management and recruiting top performing people."

Twomey says "the pipeline of business for Advantis is stronger than ever."

For 2003 and beyond, St. Joe's president is banking on the company's expanding portfolio of northwest Florida development, as well as land sales for commercial, retail, light industrial and apartment uses.

"These activities are expected to produce growing income in the second half of this year and for the future," Twomey says.

St. Joe's largest shareholder, the Alfred I. DuPont Testamentary Trust, sold seven million shares on the New York Stock Exchange of St. Joe common at $29 per share in the second quarter. St. Joe didn't receive any proceeds from the trust's transaction.

"We are delighted with the market's response to the offering," Rummell says in his statement. "The investors we spoke to understood JOE's Northwest Florida strategy and recognized its value creation potential."