The downturn took its toll on the St. Joe Company during the fourth quarter of 2007, with the company posting net income of $1 million, or a penny a share, compared with a profit of $22.3 million, or 30 cents per share, in the fourth quarter of 2006. The decline was primarily due to a 35.4% decrease in revenue.
For all of 2007, the company had net income of $39.2 million, or 53 cents per share, compared with $51 million for 2006. The decline was due to write-downs of $23.2 million, including $13.6 million on homes and home sites in the company's residential segment and $7.4 million associated with a goodwill write-off at its discontinued Sunshine State Cypress sawmill. The company took charges of $8.9 million related to its restructuring, $4.3 million related to a liquidating trust minority position and $2.2 million related to other discontinued operations. It also booked a pre-tax gain of $47.8 million related to the sale of the company's office building portfolio.
"This past year was clearly difficult," said chairman and CEO Peter S. Rummell. "We believe we have taken appropriate steps, through our previously announced restructuring plan, to position JOE to weather continuing difficult market conditions and ultimately for future growth when market conditions improve. As we prepare for the traditional spring selling season, Northwest Florida resort and residential real estate markets remain very weak, commercial markets are somewhat stronger, and rural land demand remains steady.
The company also announced that Rummell will be stepping aside as CEO in May, when Britt Greene, now president and COO, will become president and CEO. Rummell will continue as chairman.
At yearend, the company owned approximately 700,000 acres, mostly in Northwest Florida, including approximately 310,000 acres within 10 miles of the coast of the Gulf of Mexico. It also owns approximately 14,000 acres in southwest Georgia. Also at yearend, the company's land-use entitlements in hand or in process totaled approximately 46,000 residential units and approximately 14.5 million square feet of commercial space, as well as an additional 633 acres with land-use entitlements for commercial uses.
During the fourth quarter St. Joe announced it would sell approximately 100,000 acres of non-strategic rural lands. By December 31, 2007, JOE had closed on the sale of 18,274 acres for a total of $28.2 million and currently has contracts on multiple parcels totaling approximately 28,000 acres for an aggregate price of approximately $52 million. It is negotiating with "several parties" on an additional 90,000 acres, the company said.
"Despite poor market conditions, we have seen some demand for high quality product priced to the market," said Greene. "To that end, Joe closed on 134 home sites and 31 homes in the fourth quarter. To harvest our embedded investment in existing inventory, we are focusing our efforts to be in position for the traditional buying season that starts in the spring."
Earlier this month, Beazer Homes confirmed its plans to grow its position in Northwest Florida through a strategic relationship with St. Joe. "JOE and Beazer have entered into a long-term relationship under which Joe entitles and sells home sites in a number of the region's markets to Beazer," said Greene. "We are working on several projects now and together plan to identify new opportunities as market conditions in the region improve."
St. Joe stock (NYSE:JOE) closed down 2.66% at $36.65 in Tuesday trading.