UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended OctoberJuly 31, 20212022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File Number: 1-4702
AMREP Corporation
(Exact Name of Registrant as Specified in its Charter)
Oklahoma |
| 59-0936128 |
State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |
|
| |
850 West Chester Pike, Suite 205, Havertown, PA | 19083 | |
Address of Principal Executive Offices | Zip Code |
(610) 487-0905 |
Registrant’s Telephone Number, Including Area Code |
|
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report |
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock $0.10 par value | | AXR | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ | Smaller reporting company ☒ |
Emerging growth company ☐ |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧☒
Number of Shares of Common Stock, par value $.10 per share, outstanding at December 3, 2021September 2, 2022 – 7,336,370.5,254,909.
AMREP CORPORATION AND SUBSIDIARIES
INDEX
| PAGE | ||
| | ||
| | | |
| | ||
| | | |
| Condensed Consolidated Balance Sheets | | 2 |
| | | |
| | 3 | |
| | | |
| | 4 | |
| | | |
| | 5 | |
| | | |
| | 6 | |
| | | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | | 7 |
| | | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 12 | |
| | | |
| 18 | ||
| | | |
| | ||
| | | |
| 19 | ||
| | | |
| 20 | ||
| | | |
| 21 |
PART I. FINANCIAL INFORMATION
Item 11.. Financial Statements
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSSHEETS
(Amounts in thousands, except share and per share amounts)
| | | | | | | | | | | | |
| | October 31, | | April 30, | | July 31, | | April 30, | ||||
| | 2021 | | 2021 | | 2022 | | 2022 | ||||
|
| (Unaudited) |
| |
| (Unaudited) |
| | ||||
ASSETS |
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | $ | 30,327 | | $ | 24,801 | | $ | 15,915 | | $ | 15,721 |
Real estate inventory | |
| 61,772 | |
| 55,589 | |
| 68,604 | |
| 67,249 |
Investment assets, net | |
| 9,775 | |
| 13,582 | ||||||
Investment assets | |
| 8,961 | |
| 9,017 | ||||||
Other assets | |
| 1,870 | |
| 645 | |
| 2,082 | |
| 1,882 |
Deferred income taxes, net | |
| 1,165 | |
| 2,749 | | | 928 | | | 958 |
Prepaid pension costs | |
| 311 | |
| 90 | ||||||
TOTAL ASSETS | | $ | 104,909 | | $ | 97,366 | | $ | 96,801 | | $ | 94,917 |
| | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
|
| |
|
| |
|
| |
|
|
Liabilities: | |
|
| |
|
| ||||||
LIABILITIES: | |
|
| |
|
| ||||||
Accounts payable and accrued expenses | | $ | 4,758 | | $ | 4,458 | | $ | 4,976 | | $ | 6,077 |
Notes payable, net | |
| 5,952 | |
| 3,448 | ||||||
Notes payable | |
| 2,080 | |
| 2,030 | ||||||
Taxes payable, net | |
| 29 | |
| 95 | |
| 4,428 | |
| 3,648 |
Accrued pension costs | |
| 35 | |
| 476 | ||||||
TOTAL LIABILITIES | |
| 10,774 | |
| 8,477 | |
| 11,484 | |
| 11,755 |
| | | | | | | | | | | | |
Shareholders’ Equity: | |
|
| |
|
| ||||||
Common stock, $.10 par value; shares authorized – 20,000,000; shares issued – 7,336,370 at October 31, 2021 and 7,323,370 at April 30, 2021 | |
| 731 | | | 730 | ||||||
SHAREHOLDERS' EQUITY: | |
|
| |
|
| ||||||
Common stock, $.10 par value; shares authorized – 20,000,000; shares issued – 5,254,909 at July 31, 2022 and 5,240,309 at April 30, 2022 | |
| 526 | | | 524 | ||||||
Capital contributed in excess of par value | |
| 45,221 | |
| 45,072 | |
| 32,558 | |
| 32,383 |
Retained earnings | |
| 52,673 | |
| 47,710 | |
| 56,740 | |
| 54,828 |
Accumulated other comprehensive loss, net | |
| (4,490) | |
| (4,623) | |
| (4,507) | |
| (4,573) |
TOTAL SHAREHOLDERS’ EQUITY | |
| 94,135 | |
| 88,889 | |
| 85,317 | |
| 83,162 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 104,909 | | $ | 97,366 | | $ | 96,801 | | $ | 94,917 |
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated financial statements.
2
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three and Six Months ended OctoberJuly 31, 20212022 and 20202021
(Amounts in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | |
| | Three Months ended | | Six Months ended | | Three Months ended | ||||||||||||
| | October 31, | | October 31, | | July 31, | ||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2022 |
| 2021 | ||||||
REVENUES: |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Land sale revenues | | $ | 8,466 | | $ | 8,526 | | $ | 15,656 | | $ | 12,013 | | $ | 5,172 | | $ | 7,190 |
Home sale revenues | | | 819 | | | 202 | | | 3,230 | | | 202 | | | 5,439 | | | 2,411 |
Building sales and other revenues | |
| 6,951 | |
| 528 | |
| 7,857 | |
| 1,247 | ||||||
Other revenues | |
| 621 | |
| 906 | ||||||||||||
Total revenues | |
| 16,236 | |
| 9,256 | |
| 26,743 | |
| 13,462 | |
| 11,232 | |
| 10,507 |
| | | | | | | | | | | | | | | | | | |
COSTS AND EXPENSES: | |
|
| |
| | |
|
| |
| | |
|
| |
| |
Land sale cost of revenues | |
| 6,154 | |
| 6,430 | |
| 11,765 | |
| 9,109 | |
| 3,832 | |
| 5,610 |
Home sale cost of revenues | | | 629 | | | 174 | | | 2,543 | | | 174 | | | 3,663 | | | 1,914 |
Building sales and other cost of revenues | |
| 3,837 | |
| 0 | |
| 3,837 | |
| — | ||||||
General and administrative expenses | |
| 1,257 | |
| 1,523 | |
| 2,443 | |
| 2,967 | |
| 1,171 | |
| 1,188 |
Total costs and expenses | |
| 11,877 | |
| 8,127 | |
| 20,588 | |
| 12,250 | |
| 8,666 | |
| 8,712 |
Operating income | | | 4,359 | | | 1,129 | | | 6,155 | | | 1,212 | | | 2,566 | | | 1,795 |
| | | | | | | | | | | | | | | | | | |
Interest income (expense), net | |
| 2 | |
| (12) | |
| 1 | |
| (6) | ||||||
Interest income, net | |
| 7 | |
| 1 | ||||||||||||
Other income | |
| 30 | |
| 0 | |
| 260 | |
| 650 | |
| — | |
| 230 |
Income before income taxes | | | 4,391 | | | 1,117 | | | 6,416 | | | 1,856 | | | 2,573 | | | 2,026 |
| | | | | | | | | | | | | | | | | | |
Provision for income taxes | | | 1,065 | | | 319 | | | 1,453 | | | 465 | | | 661 | | | 389 |
Net income | | $ | 3,326 | | $ | 798 | | $ | 4,963 | | $ | 1,391 | | $ | 1,912 | | $ | 1,637 |
| | | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.45 | | $ | 0.10 | | $ | 0.67 | | $ | 0.17 | | $ | 0.36 | | $ | 0.22 |
Diluted earnings per share | | $ | 0.45 | | $ | 0.10 | | $ | 0.67 | | $ | 0.17 | | $ | 0.36 | | $ | 0.22 |
Weighted average number of common shares outstanding – basic | |
| 7,361 | |
| 8,122 | |
| 7,354 | |
| 8,136 | |
| 5,274 | |
| 7,346 |
Weighted average number of common shares outstanding – diluted | |
| 7,383 | |
| 8,152 | |
| 7,378 | |
| 8,168 | |
| 5,296 | |
| 7,373 |
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated financial statements.
3
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three and Six Months ended OctoberJuly 31, 20212022 and 20202021
(Amounts in thousands)
| | | | | | | | | | | | | | | | | | |
| | Three Months ended | | Six Months ended | | Three Months ended | ||||||||||||
| | October 31, | | October 31, | | July 31, | ||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| 2022 |
| 2021 | ||||||
Net income | | $ | 3,326 | | $ | 798 | | $ | 4,963 | | $ | 1,391 | | $ | 1,912 | | $ | 1,637 |
Other comprehensive income, net of tax: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Decrease in pension liability | |
| 98 | |
| 132 | |
| 195 | |
| 264 | |
| 97 | |
| 97 |
Income tax effect | | | (31) | | | (42) | | | (62) | | | (84) | | | (31) | | | (31) |
Decrease in pension liability, net of tax | | | 67 | | | 90 | | | 133 | | | 180 | | | 66 | | | 66 |
Other comprehensive income | |
| 67 | |
| 90 | |
| 133 | |
| 180 | |
| 66 | |
| 66 |
Total comprehensive income | | $ | 3,393 | | $ | 888 | | $ | 5,096 | | $ | 1,571 | | $ | 1,978 | | $ | 1,703 |
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated financial statements.
4
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)(UNAUDITED)
Three and Six Months ended OctoberJuly 31, 20212022 and 20202021
(Amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Capital | | | | | Accumulated | | Treasury | | | | | | | | | | Capital | | | | | Accumulated | | | | |||||
| | | | | | | Contributed | | | | | Other | | Stock, | | | | | | | | | | Contributed | | | | | Other | | | | |||||
| | Common Stock | | in Excess of | | Retained | | Comprehensive | | at | | | | | Common Stock | | in Excess of | | Retained | | Comprehensive | | | | |||||||||||||
|
| Shares |
| Amount |
| Par Value |
| Earnings |
| Loss |
| Cost |
| Total |
| Shares |
| Amount |
| Par Value |
| Earnings |
| Loss |
| Total | |||||||||||
Balance, August 1, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 49,347 | | $ | (4,557) | | $ | 0 | | $ | 90,742 | |||||||||||||||||
Balance, May 1, 2022 |
| 5,240 | | $ | 524 | | $ | 32,383 | | $ | 54,828 | | $ | (4,573) | | $ | 83,162 | ||||||||||||||||||||
Issuance of restricted common stock | | 15 | | | 2 | | | 162 | | | — | | | — | | | 164 | ||||||||||||||||||||
Issuance of option to purchase common stock | | — | | | — | | | 13 | | | — | | | — | | | 13 | ||||||||||||||||||||
Net income | | — | | | 0 | | | 0 | | | 3,326 | | | 0 | | | 0 | | | 3,326 | | — | | | — | | | — | | | 1,912 | | | — | | | 1,912 |
Other comprehensive income |
| — | | | 0 | |
| 0 | |
| 0 | |
| 67 | |
| 0 | |
| 67 |
| — | | | — | |
| — | |
| — | |
| 66 | |
| 66 |
Balance, October 31, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 52,673 | | $ | (4,490) | | $ | 0 | | $ | 94,135 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |||||||||||||||||
Balance, August 1, 2020 | | 8,367 | | $ | 837 | | $ | 51,375 | | $ | 43,742 | | $ | (6,377) | | $ | (4,215) | | $ | 85,362 | |||||||||||||||||
Issuance of common stock settled from deferred common share units | | 12 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |||||||||||||||||
Repurchase of common stock | | (687) | | | (69) | | | (4,159) | | | 0 | | | 0 | | | 0 | | | (4,228) | |||||||||||||||||
Net income | | — | | | 0 | | | 0 | | | 798 | | | 0 | | | 0 | | | 798 | |||||||||||||||||
Other comprehensive income | | — | | | 0 | | | 0 | | | 0 | | | 90 | | | 0 | | | 90 | |||||||||||||||||
Balance, October 31, 2020 |
| 7,692 | | $ | 768 | | $ | 47,216 | | $ | 44,540 | | $ | (6,287) | | $ | (4,215) | | $ | 82,022 | |||||||||||||||||
Balance, July 31, 2022 |
| 5,255 | | $ | 526 | | $ | 32,558 | | $ | 56,740 | | $ | (4,507) | | $ | 85,317 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, May 1, 2021 |
| 7,323 | | $ | 730 | | $ | 45,072 | | $ | 47,710 | | $ | (4,623) | | $ | 0 | | $ | 88,889 | | 7,323 | | $ | 730 | | $ | 45,072 | | $ | 47,710 | | $ | (4,623) | | $ | 88,889 |
Issuance of restricted common stock | | 13 | | | 1 | |
| 149 | |
| 0 | |
| 0 | |
| 0 | |
| 150 | | 13 | | | 1 | | | 149 | | | — | | | — | | | 150 |
Net income | | — | | | 0 | | | 0 | | | 4,963 | | | 0 | | | 0 | | | 4,963 | | — | | | — | | | — | | | 1,637 | | | — | | | 1,637 |
Other comprehensive income |
| — | |
| 0 | |
| 0 | |
| 0 | |
| 133 | |
| 0 | |
| 133 | | — | | | — | | | — | | | — | | | 66 | | | 66 |
Balance, October 31, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 52,673 | | $ | (4,490) | | $ | 0 | | $ | 94,135 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |||||||||||||||||
Balance, May 1, 2020 | | 8,358 | | $ | 836 | | $ | 51,334 | | $ | 43,149 | | $ | (6,467) | | $ | (4,215) | | $ | 84,637 | |||||||||||||||||
Issuance of restricted common stock | | 9 | | | 1 | | | 41 | | | 0 | | | 0 | | | 0 | | | 42 | |||||||||||||||||
Issuance of common stock settled from deferred common share units | | 12 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |||||||||||||||||
Repurchase of common stock | | (687) | | | (69) | | | (4,159) | | | 0 | | | 0 | | | 0 | | | (4,228) | |||||||||||||||||
Net income | | — | | | 0 | | | 0 | | | 1,391 | | | 0 | | | 0 | | | 1,391 | |||||||||||||||||
Other comprehensive income | | — | | | 0 | | | 0 | | | 0 | | | 180 | | | 0 | | | 180 | |||||||||||||||||
Balance, October 31, 2020 |
| 7,692 | | $ | 768 | | $ | 47,216 | | $ | 44,540 | | $ | (6,287) | | $ | (4,215) | | $ | 82,022 | |||||||||||||||||
Balance, July 31, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 49,347 | | $ | (4,557) | | $ | 90,742 |
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated financial statements.
5
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SixThree Months ended OctoberJuly 31, 20212022 and 20202021
(Amounts in thousands)
| | | | | | | | | | | | |
| | Six Months ended October 31, | | Three Months ended July 31, | ||||||||
|
| 2021 |
| 2020 |
| 2022 |
| 2021 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
| |
|
| |
|
| |
|
Net income | | $ | 4,963 | | $ | 1,391 | | $ | 1,912 | | $ | 1,637 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
|
| |
|
| ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |
|
| |
|
| ||||||
Depreciation | |
| 204 | |
| 270 | |
| 8 | |
| 104 |
Amortization of debt issuance costs | |
| 34 | |
| 30 | |
| — | |
| 34 |
Non-cash credits and charges: | |
|
| |
|
| |
| | |
| |
Stock-based compensation | |
| 47 | |
| 42 | |
| 36 | |
| 16 |
Deferred income tax provision | |
| 1,522 | |
| 548 | |
| — | |
| 456 |
Net periodic pension cost | |
| (246) | |
| 208 | |
| (124) | |
| (123) |
Gain on debt forgiveness | | | (45) | | | — | | | — | | | (45) |
Changes in assets and liabilities: | |
|
| |
|
| |
|
| |
|
|
Real estate inventory and investment assets | |
| (2,580) | |
| (1,065) | |
| (1,299) | |
| (5,709) |
Other assets | |
| (1,203) | |
| (614) | |
| 56 | |
| (12) |
Accounts payable and accrued expenses | |
| 300 | |
| 1,575 | |
| (1,107) | |
| (758) |
Accrued pension costs | | | — | | | (1,847) | ||||||
Taxes payable | |
| (66) | |
| — | ||||||
Taxes payable (receivable), net | |
| 780 | |
| (66) | ||||||
Net cash provided by (used in) operating activities | |
| 2,930 | |
| 538 | |
| 262 | |
| (4,466) |
| | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| | |
| | |
| |
Proceeds from corporate-owned life insurance policy | |
| 92 | |
| — | ||||||
Capital expenditures | |
| (11) | |
| (3) | |
| (118) | |
| (1) |
Net cash provided by (used in) investing activities | |
| 81 | |
| (3) | ||||||
Net cash used in investing activities | |
| (118) | |
| (1) | ||||||
| | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
| | |
| | |
| |
Proceeds from debt financing | |
| 6,857 | |
| 5,415 | |
| 50 | |
| 6,857 |
Principal debt payments | |
| (4,292) | |
| (3,475) | |
| — | |
| (3,867) |
Payments for debt issuance costs | |
| (50) | |
| (57) | |
| — | |
| (50) |
Repurchase of common stock | | | — | | | (4,228) | ||||||
Net cash provided by (used in) financing activities | |
| 2,515 | |
| (2,345) | ||||||
Net cash provided by financing activities | |
| 50 | |
| 2,940 | ||||||
| | | | | | | | | | | | |
Increase (decrease) in cash and cash equivalents | |
| 5,526 | |
| (1,810) | |
| 194 | |
| (1,527) |
Cash and cash equivalents, beginning of period | |
| 24,801 | |
| 17,502 | |
| 15,721 | |
| 24,801 |
Cash and cash equivalents, end of period | | $ | 30,327 | | $ | 15,692 | | $ | 15,915 | | $ | 23,274 |
| | | | | | | | | | | | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |
|
| |
|
| |
|
| |
|
|
Income taxes refunded, net | | $ | 3 | | $ | — | | $ | — | | $ | (3) |
Interest paid, net of amount capitalized | | $ | — | | $ | 52 | ||||||
Right-of-use assets obtained in exchange for operating lease liabilities | | $ | 42 | | $ | — | ||||||
Interest paid | | $ | 16 | | $ | 40 |
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated financial statements.
6
AMREP CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Three and Six Months Ended OctoberJuly 31, 20212022 and 20202021
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been prepared by AMREP Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company, through its subsidiaries, is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales or activities outside the United States. AllUnless the context otherwise indicates, all references to the Company in this quarterly report on Form 10-Q include the RegistrantCompany and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, considered necessary to reflect a fair presentation of the results for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of what may occur in future periods. Unless the context otherwise indicates, all references to 20222023 and 20212022 are to the fiscal years ending April 30, 20222023 and 2021.2022.
The unaudited condensed consolidated financial statements herein should be read in conjunction with the Company’s annual report on Form 10-K for the year ended April 30, 2021,2022, which was filed with the SEC on July 27, 202121, 2022 (the “2021“2022 Form 10-K”). Certain 20212022 balances in these condensed consolidated financial statements have been reclassified to conform to the current year presentation with no effect on net income or shareholders’ equity.
Summary of Significant Accounting Policies
The significant accounting policies used in preparing these condensed consolidated financial statements are consistent with the accounting policies described in the 20212022 Form 10-K, except for those adopted as described below.10-K.
New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes –Simplifying the Accounting for Income Taxes, which removes certain exceptions for companies related to tax allocations and simplifies when companies recognize deferred tax liabilities in an interim period. ASU 2019-12 was effective for the Company’s fiscal year beginning May 1, 2021. The adoption of ASU 2019-12 by the Company did not have any effect on its consolidated financial statements.
There are no other new accounting standards or updates to be adopted that the Company currently believes might have a significant impact on its condensed consolidated financial statements.
(2) REAL ESTATE INVENTORY
Real estate inventory consists of (in thousands):
| | | | | | | | | | | | |
| | October 31, | | April 30, | | July 31, | | April 30, | ||||
|
| 2021 |
| 2021 |
| 2022 |
| 2022 | ||||
Land held for development or sale in New Mexico | | $ | 54,148 | | $ | 49,918 | | $ | 60,528 | | $ | 59,374 |
Land held for development or sale in Colorado | |
| 4,009 | |
| 3,975 | |
| 3,435 | |
| 3,434 |
Homebuilding finished inventory | | | 214 | | | 417 | | | 1,005 | | | 1,135 |
Homebuilding construction in process | | | 3,401 | | | 1,279 | | | 3,636 | | | 3,306 |
| | $ | 61,772 | | $ | 55,589 | | $ | 68,604 | | $ | 67,249 |
(3)INVESTMENT ASSETS
Investment assets consist of land held for long-term investment.
7
(3)INVESTMENT ASSETS, NET
Investment assets, net consist of (in thousands):
| | | | | | |
|
| October 31, |
| April 30, | ||
| | 2021 | | 2021 | ||
Land held for long-term investment | | $ | 9,775 | | $ | 9,775 |
Buildings | | | — | | | 10,003 |
Less accumulated depreciation | |
| — | |
| (6,196) |
Buildings, net | |
| — | |
| 3,807 |
| | $ | 9,775 | | $ | 13,582 |
As of April 30, 2021, buildings were comprised of a 143,000 square foot warehouse and office facility located in Palm Coast, Florida. In October 2021, the Company sold this 143,000 square foot warehouse and office facility. Depreciation associated with buildings was $98,000 and $140,000 for the three months ended October 31, 2021 and October 31, 2020 and $201,000 and $262,000 for the six months ended October 31, 2021 and October 31, 2020.
(4) OTHER ASSETS
Other assets consist of (in thousands):
| | | | | | | | | | | | |
|
| October 31, |
| April 30, |
| July 31, |
| April 30, | ||||
| | 2021 | | 2021 | | 2022 | | 2022 | ||||
Prepaid expenses | | $ | 324 | | $ | 324 | | $ | 501 | | $ | 366 |
Receivables | | | 58 | | | 37 | ||||||
Right-of-use assets associated with leases of office facilities | |
| 129 | |
| 84 | ||||||
Other assets | | | 80 | | | 172 | ||||||
Property and equipment | | | 1,476 | | | 222 | ||||||
Miscellaneous assets | | | 204 | | | 249 | ||||||
Property | | | 1,250 | | | 1,247 | ||||||
Equipment | | | 355 | | | 240 | ||||||
Less accumulated depreciation | | | (197) | | | (194) | | | (228) | | | (220) |
Property and equipment, net | | | 1,279 | | | 28 | | | 1,377 | | | 1,267 |
| | $ | 1,870 | | $ | 645 | | $ | 2,082 | | $ | 1,882 |
Prepaid expenses as of OctoberJuly 31, 20212022 primarily consistedconsist of stock compensation, insurance and real estate taxes. Prepaid expenses as of April 30, 2022 primarily consist of insurance, stock compensation, real estate taxes and utility deposits. Amortized lease cost for right-of-use assets associated with the leases of office facilities was $24,000$6,000 and $26,000$24,000 for the three months ended OctoberJuly 31, 20212022 and OctoberJuly 31, 2020 and $36,000 and $63,000 for the six months ended October 31, 2021 and October 31, 2020. In August 2021, the Company acquired a 7,000 square foot office building in Rio Rancho, New Mexico from which its real estate business now operates.2021. Depreciation expense associated with property and equipment was $2,000$8,000 and less than $1,000 for each of the three months ended OctoberJuly 31, 20212022 and OctoberJuly 31, 2020 and $3,000 and $8,000 for the six months ended October 31, 2021 and October 31, 2020.2021.
(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of (in thousands):
| | | | | | | | | | | | |
|
| October 31, |
| April 30, |
| July 31, |
| April 30, | ||||
| | 2021 | | 2021 | | 2022 | | 2022 | ||||
Real estate operations | | | | | | | | | | | | |
Accrued expenses | | $ | 866 | | $ | 658 | | $ | 845 | | $ | 1,238 |
Trade payables | |
| 2,117 | |
| 1,377 | |
| 1,561 | |
| 3,026 |
Real estate customer deposits | | | 1,378 | | | 1,769 | ||||||
Customer deposits | | | 2,175 | | | 1,357 | ||||||
| | | 4,361 | | | 3,804 | | | 4,581 | | | 5,621 |
Corporate operations | | | 397 | | | 654 | | | 395 | | | 456 |
| | $ | 4,758 | | $ | 4,458 | | $ | 4,976 | | $ | 6,077 |
8
(6) NOTES PAYABLE
Notes payable, net consist of (in thousands):
| | | | | | |
|
| October 31, |
| April 30, | ||
| | 2021 | | 2021 | ||
Real estate notes payable | | $ | 6,002 | | $ | 3,482 |
Unamortized debt issuance costs | |
| (50) | |
| (34) |
| | $ | 5,952 | | $ | 3,448 |
The following tables present information on the Company’s notes payable in effect during the sixthree months ended OctoberJuly 31, 20212022 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| Principal Amount |
| | |
| | |
| | |
| | | | |
| Principal Amount |
| | |
| | |
| | | ||
| | Available for | | Outstanding | | | | | | | | Available for | | Outstanding | | Principal | |||||||||||||
| | Borrowing | | Principal Amount | | Principal Repayments | | | | New Borrowings | | Principal Amount | | Repayments | |||||||||||||||
| | October 31, | | October 31, | | April 30, | | Three Months ended | | Six Months ended | | | | July 31, | | July 31, | | April 30, | | Three Months ended | |||||||||
Loan Identifier | | 2021 | | 2021 | | 2021 | | October 31, 2021 | | October 31, 2021 | | Lender | | 2022 | | 2022 | | 2022 | | July 31, 2022 | |||||||||
Revolving Line of Credit |
| $ | 3,750 |
| $ | 0 |
| $ | 0 | | $ | 0 | | $ | 0 | | BOKF |
| $ | 2,427 |
| $ | — |
| $ | — | | $ | — |
Lomas Encantadas U2B P3 | | | 632 | | | 0 | | | 410 | | | 0 | | | 1,770 | ||||||||||||||
Hawk Site U37 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | ||||||||||||||
Hawk Site U23 U40 | |
| 1,678 | |
| 0 | |
| 30 | |
| 30 | |
| 30 | ||||||||||||||
Lavender Fields – acquisition | |
| 0 | |
| 0 | |
| 1,749 | |
| 0 | |
| 1,703 | ||||||||||||||
Lavender Fields – development | |
| 2,194 | |
| 504 | |
| 1,293 | |
| 395 | |
| 789 | ||||||||||||||
La Mirada | |
| 1,877 | |
| 5,498 | |
| 0 | |
| 0 | |
| 0 | | BOKF | |
| 1,877 | |
| 2,030 | |
| 2,030 | |
| — |
Equipment Financing | | DC | | | — | | | 50 | | | — | | | — | |||||||||||||||
| |
| | | $ | 6,002 | | $ | 3,482 | |
| | |
| | | | |
| | | $ | 2,080 | | $ | 2,030 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
|
| |
| Mortgaged Property |
| |
| |
| |
| Mortgaged Property |
| Capitalized Interest | | | |||||
| | Interest Rate | | Book Value | | Capitalized Interest and Fees | | Interest Rate | | Book Value | | and Fees | | | |||||||
| | October 31, | | October 31, | | Three Months ended | | Six Months ended | | | | | | Three Months ended | | Scheduled Maturity | |||||
Loan Identifier | | 2021 | | 2021 | | October 31, 2021 | | October 31, 2021 | | July 31, 2022 | | July 31, 2022 | | July 31, 2022 | | as of July 31, 2022 | |||||
Revolving Line of Credit |
| 3.75 | % | $ | 1,693 | | $ | 0 | | $ | 0 |
| 5.36 | % | $ | 1,693 | | $ | — | | February 2024 |
Lomas Encantadas U2B P3 |
| 3.75 | % |
| 877 | |
| 0 | |
| 0 | ||||||||||
Hawk Site U23 U40 |
| 3.75 | % |
| 1,359 | |
| 0 | |
| 0 | ||||||||||
Lavender Fields – development |
| 3.75 | % |
| 5,261 | |
| 6 | |
| 17 | ||||||||||
La Mirada |
| 3.75 | % |
| 8,041 | |
| 40 | |
| 61 |
| 5.36 | % |
| 9,076 | |
| 16 | | June 2024 |
Equipment Financing |
| 2.35 | % |
| 50 | |
| — | | June 2028 |
As of OctoberJuly 31, 2021,2022, the Company and each of its subsidiaries werewas in compliance with the financial covenants contained in the loan documentation for the then outstanding notes payable. ReferExcept as described below, refer to NotesNote 6 and 19 to the consolidated financial statements contained in the 20212022 Form 10-K for additional detail about each of the above notes payable.
Equipment Financing. In June 2022, Rioscapes LLC (“Rioscapes”), a subsidiary of the Company, entered into a Loan Contract-Security Agreement with Deere & Company (“DC”). The note payable identified as “Hawk Site U37” was terminatedloan is secured by a security interest in October 2021.certain construction equipment. DC lent $50,000 to Rioscapes on a non-revolving line of credit basis to fund the acquisition of the construction equipment. AMREP Southwest Inc. (“ASW”), a subsidiary of AMREP Corporation, guaranteed Rioscapes’s obligations under the loan. The outstanding principal amount of the note payable identified as “Lavender Fields – acquisition” wasloan may be prepaid in fullat any time without penalty in June 2021 following the parties agreeing to reducepenalty. Interest on the outstanding principal amount of the loan is payable monthly at the annual rate equal to 2.35%. Rioscapes made certain representations and warranties in connection with this loan and is required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: Rioscapes’s failure to make principal, interest or other payments when due; the failure of Rioscapes to observe or perform its covenants under the loan documentation; the representations and warranties of Rioscapes being false; the insolvency or bankruptcy of Rioscapes or ASW; the merger by $45,000, which was recognized as Other incomeRioscapes or ASW into another entity; and the sale by Rioscapes or ASW of substantially all of their assets. Upon the occurrence and during the six months ended Octobercontinuance of an event of default, DC may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. Rioscapes incurred customary costs and expenses and paid certain fees to DC in connection with the loan.
As of July 31, 2021.2022, the Company had a letter of credit outstanding under its Revolving Line of Credit in the principal amount of $1,323,000 in favor of a municipality guarantying the completion of improvements in a subdivision being constructed by the Company. As of July 31, 2022, the Company had loan reserves outstanding under its note payable for La Mirada in the aggregate principal amount of $2,364,000 in favor of a municipality guarantying the completion of improvements in a subdivision being constructed by the Company. The amounts under the letter of credit and loan reserves are not reflected as outstanding principal in notes payable.
The following table summarizes the notes payable scheduled principal repayments subsequent to OctoberJuly 31, 20212022 (in thousands):
| | | | | | |
Fiscal Year |
| Scheduled Payments |
| Scheduled Payments | ||
2022 | | $ | 0 | |||
2023 | |
| 504 | | $ | 6 |
2024 | |
| 5,498 | |
| 8 |
2025 | |
| 2,038 | |||
Thereafter | |
| 28 | |||
Total | | $ | 6,002 | | $ | 2,080 |
9
(7) REVENUES
Land sale revenues. Substantially all of the land sale revenues were received from 3two customers for the three and six months ended OctoberJuly 31, 20212022 and 4three customers for the three and six months ended OctoberJuly 31, 2020.2021. There were 0no outstanding receivables from these customers as of OctoberJuly 31, 20212022 or OctoberJuly 31, 2020.2021.
Building sales and otherOther revenues. Building sales and otherOther revenues consist of (in thousands):
| | | | | | | | | | | | | | | | | | |
|
| Three Months ended October 31, |
| Six Months ended October 31, | | Three Months | ||||||||||||
| | 2021 | | 2020 | | 2021 | | 2020 | | ended July 31, | ||||||||
Sale of building | | $ | 6,750 | | $ | — | | $ | 6,750 | | $ | — | ||||||
|
| 2022 |
| 2021 | ||||||||||||||
Oil and gas royalties | | | 40 | | | 25 | | | 175 | | | 36 | | $ | 57 | | $ | 135 |
Public improvement district reimbursements | |
| 15 | |
| 69 | |
| 239 | |
| 244 | ||||||
Private infrastructure reimbursement covenants | |
| 31 | |
| 245 | |
| 83 | |
| 378 | ||||||
Infrastructure reimbursements | |
| 525 | | | 606 | ||||||||||||
Miscellaneous other revenues | |
| 115 | |
| 189 | |
| 610 | |
| 589 | |
| 39 | |
| 165 |
| | $ | 6,951 | | $ | 528 | | $ | 7,857 | | $ | 1,247 | | $ | 621 | | $ | 906 |
The Company owned a 143,000 square foot warehouse and office facility located in Palm Coast, Florida during the three and six months ended October 31, 2021, which was leased to a third party through August 2020 and a portion of which was leased to the same third party after August 2020. Sale of building during the three and six months ended October 31, 2021 consisted of the sale of this 143,000 square foot warehouse and office facility in October 2021.
Refer to Note 7 to the consolidated financial statements contained in the 20212022 Form 10-K for additional detail about each category of building sales and other revenues. Miscellaneous other revenues for the three and six months ended OctoberJuly 31, 2022 primarily consist of a non-refundable option payment and a forfeited deposit. Miscellaneous other revenues for the three months ended July 31, 2021 primarily consistedconsist of rent received from a tenant at a building in Palm Coast, Florida, and tenants at a shopping center in Albuquerque,New Mexico, payments for impact fee credits, a non-refundable option payment and proceeds from the sale of equipment. Miscellaneous other revenue for the three and six months ended October 31, 2020 primarily consisted of rent received from a tenant at a building in Palm Coast, Florida, payments for impact fee credits and a land condemnation.
Major customers:
(8) COST OF REVENUES
Building sales and other cost of revenues during the three and six months ended OctoberJuly 31, 2022. The revenues for each such customer during the three months ended July 31, 2022 were as follows: $2,360,000 and $2,341,000, with each of these revenues reported in the Company’s land development business segment. There were two customers with revenues in excess of 10% of the Company’s revenues during the three months ended July 31, 2021. The revenues for each such customer during the three months ended July 31, 2021 consistwere as follows: $4,200,000 and $1,700,000, with each of these revenues reported in the sale of a 143,000 square foot warehouse and office facility located in Palm Coast, Florida.Company’s land development business segment.
10
(9)(8) GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of (in thousands):
| | | | | | | | | | | | | | | | | | |
|
| Three Months ended October 31, |
| Six Months ended October 31, | | Three Months ended July 31, | ||||||||||||
| | 2021 | | 2020 | | 2021 | | 2020 |
| 2022 |
| 2021 | ||||||
Land development | | $ | 677 | | $ | 665 | | $ | 1,261 | | $ | 1,271 | | $ | 607 | | $ | 584 |
Homebuilding | |
| 212 | |
| 118 | |
| 399 | |
| 231 | |
| 257 | |
| 187 |
Corporate | |
| 368 | |
| 740 | |
| 783 | |
| 1,465 | |
| 307 | |
| 417 |
| | $ | 1,257 | | $ | 1,523 | | $ | 2,443 | | $ | 2,967 | | $ | 1,171 | | $ | 1,188 |
(10)(9) BENEFIT PLANS
Pension plan
Refer to Note 11 to the consolidated financial statements contained in the 20212022 Form 10-K for detail regarding the Company’s defined benefit pension plan. The Company recognizes the known changes in the funded status of the pension plan in the period in which the changes occur through other comprehensive income, net of the related deferred income tax effect. The Company recorded, net of tax, other comprehensive income of $67,000 and $90,000$66,000 during each of the three months ended OctoberJuly 31, 20212022 and OctoberJuly 31, 2020 and $133,000 and $180,000 during the six months ended October 31, 2021 and October 31, 2020 to account for the net effect of changes to the unfunded portion of pension liability. The Company funds the pension plan in compliance with IRS funding requirements. The Company did not make any contributions to the pension plan during the three and six months ended OctoberJuly 31, 2022 or July 31, 2021. The Company made voluntary contributions to the pension plan
10
Equity compensation plan
Refer to Note 11 to the consolidated financial statements contained in the 20212022 Form 10-K for detail regarding the AMREP Corporation 2016 Equity Compensation Plan (the “Equity Plan”). The summary of the restricted share award activity during the sixthree months ended OctoberJuly 31, 20212022 presented below represents the maximum number of shares that could become vested after these dates:
| | |
|
| |
| | Number of |
Restricted share awards | | Shares |
Non-vested as of April 30, |
|
|
Granted during the |
|
|
Vested during the |
|
|
Forfeited during the |
|
|
Non-vested as of |
|
|
The Company recognized non-cash compensation expense related to the vesting of restricted shares of common stock net of forfeitures of $31,000$22,000 and $25,000$16,000 during the three months ended OctoberJuly 31, 20212022 and OctoberJuly 31, 2020 and $47,000 and $54,000 during the six months ended October 31, 2021 and October 31, 2020.2021. As of OctoberJuly 31, 2021 and October 31, 2020,2022, there was $137,000 and $73,000$221,000 of unrecognized compensation expense related to restricted shares of common stock previously issued under the Equity Plan whichthat had not vested as of those dates, which is expected to be recognized over the remaining vesting term not to exceed three years.
In connection with the resignation of a director in September 2020, the Company (i) issued 12,411 shares of common stock in October 2020 pursuant to an equivalent number of deferred common share units previously issued to such director and (ii) paid $20,000 in September 2020 to such director in lieu of issuance of deferred common share units earned for calendar year 2020.
Director compensation non-cash expense, which is recognized for the expected annual grant of deferred common share units to non-employee members of the Company’s Board of Directors ratably over the director’s service in office during the calendar year, was $22,000 and $21,000$23,000 during each of the three months ended OctoberJuly 31, 20212022 and OctoberJuly 31, 2020 and $45,000 and $35,000 during the six months ended October 31, 2021 and October 31, 2020.2021. As of OctoberJuly 31, 2021,2022, there was $75,000$53,000 of accrued compensation expense
11
related to the deferred stock units expected to be issued in December 2021.2022. As of OctoberJuly 31, 2020,2021, there was $82,000$53,000 of accrued compensation expense related to the deferred stock units issued in December 2020.2021.
(11)(10) OTHER INCOME
There was no other income for the three months ended July 31, 2022. Other income for the three months ended OctoberJuly 31, 2021 consisted of $30,000 received for a life insurance policy for a retired executive of the Company. Other income for the six months ended October 31, 2021 consistedconsists of $185,000 received in connection with a bankruptcy of a warranty provider and $45,000 of debt forgiveness with respect to thea note payable identified as “Lavender Fields – acquisition” in Note 6 above and $30,000 received for a life insurance policy for a retired executive of the Company. Other income for the six months ended October 31, 2020 consisted of a settlement payment of $650,000 from a former business segment (refer to Note 3 to the consolidated financial statements contained in the 2021 Form 10-K for detail regarding the settlement agreement).payable.
(12)(11) STOCK REPURCHASESRISKS AND UNCERTAINTIES
In August 2020,During the three months ended July 31, 2022, the Company repurchased 11,847 shareshas experienced supply chain constraints, increases in the prices of common stockbuilding materials, shortages of skilled labor and delays in municipal approvals and inspections in both the land development business segment and homebuilding business segment, which have caused delays in construction and the realization of revenues and increases in cost of revenues. In addition, a significant increase in mortgage interest rates during the first half of 2022 has tempered demand for new homes. The rising cost of housing due to increases in average sales prices in recent years and the recent increases in mortgage interest rates, coupled with general inflation in the U.S. economy, have placed additional pressure on overall housing affordability and have caused many potential home buyers to pause and reconsider their housing choices. Given the affordability challenges described above and the resulting impact on demand, the Company has increased sales incentives on certain homes classified as homebuilding finished inventory or homebuilding construction in process. The Company believes these conditions will continue to impact the land development and homebuilding industries for at a priceleast the remainder of $4.48 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.2022.
In September 2020, the Board of Directors of the Company authorized the Company to purchase up to 1,000,000 shares of common stock of the Company from time to time pursuant to a share repurchase program, subject to the total expenditure for the purchase of shares under the share repurchase program not exceeding $5,000,000, exclusive of any fees, commissions and other expenses related to such repurchases. Under the share repurchase program, the Company was authorized to repurchase its common stock from time to time, in amounts, at prices, and at such times as the Company deemed appropriate, subject to market conditions, legal requirements and other considerations. The Company’s repurchases could be executed using open market purchases, unsolicited or solicited privately negotiated transactions or other transactions, and could be effected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The share repurchase program did not obligate the Company to repurchase any specific number of shares and could be suspended, modified or terminated at any time without prior notice. The share repurchase program did not contain a time limitation during which repurchases were permitted to occur. In October 2020, the Company repurchased 675,616 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction pursuant to the share repurchase program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.
In November 2020, the Company repurchased 143,482 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock. The share repurchase was not completed pursuant to the Company’s share repurchase program.
In November 2020, the Company’s share repurchase program was terminated.
1211
(13)(12) INFORMATION ABOUT THE COMPANY’S OPERATIONS IN DIFFERENT INDUSTRY SEGMENTS
The following tables set forth summarized data relative to the industry segments in which the Company operated for the periods indicated (in thousands):
| | | | | | | | | | | | |
|
| Land |
| | |
| | |
| | | |
| | Development | | Homebuilding | | Corporate | | Consolidated | ||||
Three months ended October 31, 2021 (a) |
| |
|
| |
|
| |
|
| |
|
Revenues | | $ | 8,745 | | $ | 689 | | $ | 6,802 | | $ | 16,236 |
Net income | |
| 1,612 | |
| 12 | |
| 1,702 | |
| 3,326 |
Provision for income taxes | |
| 263 | |
| 1 | |
| 801 | |
| 1,065 |
Interest income, net (b) | |
| 1 | |
| 0 | |
| 1 | |
| 2 |
Depreciation | |
| 0 | |
| 0 | |
| 100 | |
| 100 |
EBITDA (c) | | $ | 1,876 | | $ | 13 | | $ | 2,604 | | $ | 4,493 |
Capital expenditures | | $ | 0 | | $ | 10 | | $ | 0 | | $ | 10 |
| | | | | | | | | | | | |
Three months ended October 31, 2020 (a) | |
|
| |
|
| |
|
| |
|
|
Revenues | | $ | 8,989 | | $ | 202 | | $ | 65 | | $ | 9,256 |
Net income (loss) | |
| 1,693 | |
| (66) | |
| (829) | |
| 798 |
Provision (benefit) for income taxes | |
| 313 | |
| (24) | |
| 30 | |
| 319 |
Interest income (expense), net (b) | |
| (13) | |
| 0 | |
| 1 | |
| (12) |
Depreciation | |
| 8 | |
| 0 | |
| 124 | |
| 132 |
EBITDA (c) | | $ | 2,001 | | $ | (90) | | $ | (674) | | $ | 1,237 |
Capital expenditures | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 |
| | | | | | | | | | | | |
Six months ended October 31, 2021 (a) | | | | | | | | | | | | |
Revenues | | $ | 17,206 | | $ | 2,639 | | $ | 6,898 | | $ | 26,743 |
Net income | |
| 3,418 | |
| 190 | |
| 1,355 | |
| 4,963 |
Provision for income taxes | |
| 589 | |
| 37 | |
| 827 | |
| 1,453 |
Interest income, net (b) | |
| 0 | |
| 0 | |
| 1 | |
| 1 |
Depreciation | |
| 0 | |
| 0 | |
| 204 | |
| 204 |
EBITDA (c) | | $ | 4,007 | | $ | 227 | | $ | 2,387 | | $ | 6,621 |
Capital expenditures | | $ | 0 | | $ | 11 | | $ | 0 | | $ | 11 |
Total assets as of October 31, 2021 | | $ | 88,231 | | $ | 3,357 | | $ | 13,321 | | $ | 104,909 |
| | | | | | | | | | | | |
Six months ended October 31, 2020 (a) | | | | | | | | | | | | |
Revenues | | $ | 12,845 | | $ | 202 | | $ | 415 | | $ | 13,462 |
Net income (loss) | |
| 2,399 | |
| (152) | |
| (856) | |
| 1,391 |
Provision (benefit) for income taxes | |
| 327 | |
| (51) | |
| 189 | |
| 465 |
Interest income (expense), net (b) | |
| (11) | |
| 0 | |
| 5 | |
| (6) |
Depreciation | |
| 22 | |
| 0 | |
| 248 | |
| 270 |
EBITDA (c) | | $ | 2,737 | | $ | (203) | | $ | (414) | | $ | 2,120 |
Capital expenditures | | $ | 0 | | $ | 3 | | $ | 0 | | $ | 3 |
Total assets as of October 31, 2020 | | $ | 76,777 | | $ | 1,494 | | $ | 17,449 | | $ | 95,720 |
| | | | | | | | | | | | |
|
| Land |
| | |
| | |
| | | |
| | Development | | Homebuilding | | Corporate | | Consolidated | ||||
Three months ended July 31, 2022 (a) |
| |
|
| |
|
| |
|
| |
|
Revenues | | $ | 6,691 | | $ | 4,541 | | $ | — | | $ | 11,232 |
Net income (loss) | |
| 1,262 | |
| 1,003 | |
| (353) | |
| 1,912 |
Capital expenditures | | | 117 | | | — | | | — | | | 117 |
Total assets as of July 31, 2022 | | | 87,671 | | | 6,068 | | | 3,062 | | | 96,801 |
| | | | | | | | | | | | |
Three months ended July 31, 2021 (a) | |
|
| |
|
| |
|
| |
|
|
Revenues | | $ | 8,461 | | $ | 1,950 | | $ | 96 | | $ | 10,507 |
Net income (loss) | |
| 1,807 | |
| 178 | |
| (348) | |
| 1,637 |
Capital expenditures | | | — | | | 1 | | | — | | | 1 |
| | | | | | | | | | | | |
Total assets as of April 30, 2022 | | | 86,991 | | | 5,631 | | | 2,295 | | | 94,917 |
(a) | Revenue |
13
(14) (13) SUBSEQUENT EVENTS
In November 2021,
Refer to Note 6 to the Companyconsolidated financial statements contained in the 2022 Form 10-K for detail regarding the Loan Agreement (the “Loan Agreement”) entered into an employment agreement with Christopher V. Vitale. Mr. Vitalebetween BOKF, NA dba Bank of Albuquerque (“BOKF”) and ASW, in which BOKF agrees to lend up to $4,000,000 to ASW on a revolving line of credit basis for general corporate purposes. In August 2022, ASW and BOKF entered into the Third Modification Agreement to the Loan Agreement and ASW entered into the First Amended and Restated Revolving Line of Credit Promissory Note in favor of BOKF. These documents resulted in the following changes to the revolving line of credit financing facility: (a) the maximum amount available for borrowing increased by $1,750,000 to a new total maximum amount of $5,750,000, (b) the interest rate on borrowed amounts is equal to the Presidentone-month secured overnight financing rate as administered by the CME Group Benchmark Administration Limited plus a spread of 3.15%, adjusted monthly, and Chief Executive Officer(c) the scheduled maturity date of the Company. Pursuantloan is August 15, 2025. ASW incurred customary costs and expenses and paid certain fees to the employment agreement,BOKF in connection with this modification.
14
In November 2021, the Company granted Mr. Vitale an option to purchase 50,000 shares of common stock of the Company under the Equity Plan with an exercise price of $14.24 per share, which was the closing price on the New York Stock Exchange on the date of grant. The option will become exercisable for 100% of the option shares on November 1, 2026 if Mr. Vitale is employed by, or providing service to, the Company on such date. Subject to the definitions in the Equity Plan, in the event (a) Mr. Vitale has a termination of employment with the Company on account of death or disability, (b) the Company terminates Mr. Vitale’s employment with the Company for any reason other than cause or (c) of a change in control, then the option will become immediately exercisable for 100% of the option shares. The option has a term of ten years from the date of grant and terminates at the expiration of that period. The option automatically terminates upon: (i) the expiration of the three month period after Mr. Vitale ceases to be employed by the Company, if the termination of his employment by Mr. Vitale or the Company is for any reason other than as hereinafter set forth in clauses (ii), (iii) or (iv); (ii) the expiration of the one year period after Mr. Vitale ceases to be employed by the Company on account of Mr. Vitale’s disability; (iii) the expiration of the one year period after Mr. Vitale ceases to be employed by the Company, if Mr. Vitale dies while employed by the Company; or (iv) the date on which Mr. Vitale ceases to be employed by the Company, if the termination is for cause. If Mr. Vitale engages in conduct that constitutes cause after Mr. Vitale’s employment terminates, the option immediately terminates. Notwithstanding the foregoing, in no event may the option be exercised after the date that is immediately before the tenth anniversary of the date of grant. Except as described above, any portion of the option that is not exercisable at the time Mr. Vitale has a termination of employment with the Company immediately terminates.
Item 2. Management’s DiscussionDiscussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
AMREP Corporation (the “Company”), through its subsidiaries, is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales or activities outside the United States. AllUnless the context otherwise indicates, all references to the Company in this quarterly report on Form 10-Q include the RegistrantCompany and its subsidiaries. The following provides information that management believes is relevant to an assessment and understanding of the Company’s condensed consolidated results of operations and financial condition. The information contained in this Item 2 should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in this report on Form 10-Q and with the Company’s annual report on Form 10-K for the year ended April 30, 2021,2022, which was filed with the Securities and Exchange Commission on July 27, 202121, 2022 (the “2021“2022 Form 10-K”). Many of the amounts and percentages presented in this Item 2 have been rounded for convenience of presentation. Unless the context otherwise indicates, all references to 20222023 and 20212022 are to the fiscal years ending April 30, 20222023 and 2021.2022.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 20212022 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the 20212022 Form 10-K and in Note 1 to the condensed consolidated financial statements included in this report on Form 10-Q. The preparation of those condensed consolidated financial statements required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those estimates and assumptions.
1512
The Company’s critical accounting policies, assumptions and estimates are described in Item 7 of Part II of the 20212022 Form 10-K. There have been no changes in these critical accounting policies.
Information concerning the Company’s implementation and the impact of recent accounting standards or updates issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 20212022 Form 10-K and in the notes to the consolidated financial statements included in this report on Form 10-Q.10-K. The Company did not adopt any accounting policy in the sixthree months ended OctoberJuly 31, 20212022 that had a material effect on its condensed consolidated financial statements.
RESULTS OF OPERATIONS
For the three months ended OctoberJuly 31, 2021,2022, the Company had net income of $3,326,000,$1,912,000, or $0.45$0.36 per diluted share, compared to net income of $798,000,$1,637,000, or $0.10$0.22 per diluted share, for the three months ended OctoberJuly 31, 2020. For the six months ended October 31, 2021, the Company had net income of $4,963,000, or $0.67 per diluted share, compared to net income of $1,391,000, or $0.17 per diluted share, for the six months ended October 31, 2020.2021.
Revenues. The following presents information on revenues for the Company’s operations (dollars in thousands):
| | | | | | | | | | | | | | | | | | |||||||||
|
| Three Months ended October 31, |
| Six Months ended October 31, |
| | | | | | | | | | ||||||||||||
| | | | | | | | % Increase | | | | | | | | % Increase | |
| Three Months ended July 31, | | % Increase |
| ||||
|
| 2021 |
| 2020 |
| (Decrease) | | 2021 |
| 2020 |
| (Decrease) | |
| 2022 |
| 2021 |
| (Decrease) |
| ||||||
Land sale revenues | | $ | 8,466 | | $ | 8,526 |
| (1) | % | $ | 15,656 | | $ | 12,013 |
| 30 | % | | $ | 5,172 | | $ | 7,190 |
| (28) | % |
Home sale revenues | |
| 819 | |
| 202 |
| (a) | |
| 3,230 | |
| 202 |
| (a) | | |
| 5,439 | |
| 2,411 |
| 126 | % |
Building sales and other revenues | |
| 6,951 | |
| 528 |
| (a) | |
| 7,857 | |
| 1,247 |
| (a) | | |||||||||
Other revenues | |
| 621 | |
| 906 |
| (31) | % | |||||||||||||||||
Total | | $ | 16,236 | | $ | 9,256 |
| 76 | % | $ | 26,743 | | $ | 13,462 |
| 99 | % | | $ | 11,232 | | $ | 10,507 |
| 7 | % |
(a) Percentage not meaningful.During the three months ended July 31, 2022, the Company has experienced supply chain constraints, increases in the prices of building materials, shortages of skilled labor and delays in municipal approvals and inspections in both the land development business segment and homebuilding business segment, which have caused delays in construction and the realization of revenues and increases in cost of revenues per lot and per home. In addition, a significant increase in mortgage interest rates during the first half of 2022 has tempered demand for new homes. The rising cost of housing due to increases in average sales prices in recent years and the recent increases in mortgage interest rates, coupled with general inflation in the U.S. economy, have placed additional pressure on overall housing affordability and have caused many potential home buyers to pause and reconsider their housing choices. Given the affordability challenges described above and the resulting impact on demand, the Company has increased sales incentives on certain homes classified as homebuilding finished inventory or homebuilding construction in process. The Company believes these conditions will continue to impact the land development and homebuilding industries for at least the remainder of 2022.
● | Land sale revenues for the three months ended |
| | | | | | | | | | | | | | | | |
| | Three Months ended October 31, 2021 | | Three Months ended October 31, 2020 | ||||||||||||
|
| Acres Sold |
| Revenue |
| Revenue Per Acre1 |
| Acres Sold |
| Revenue |
| Revenue Per Acre1 | ||||
Developed | |
| |
| | |
| | |
| |
| | |
| |
Residential |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 17.4 | | $ | 8,376 | | $ | 481 |
Commercial |
| — | |
| — | |
| — |
| 0.4 | |
| 134 | |
| 335 |
Total Developed |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 17.8 | |
| 8,510 | |
| 478 |
Undeveloped |
| — | |
| — | |
| — |
| 2.0 | |
| 16 | |
| 8 |
Total |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 19.8 | | $ | 8,526 | | $ | 431 |
| | | | | | | | | | | | | | | | | ||||||||||||||||
|
| Six Months ended October 31, 2021 |
| Six Months ended October 31, 2020 | | | | | | | | | | | | | | | | | ||||||||||||
|
| Acres |
| | |
| Revenue |
| |
| | |
| Revenue | | Three Months ended July 31, 2022 | | Three Months ended July 31, 2021 | ||||||||||||||
| | Sold | | Revenue | | Per Acre1 | | Acres Sold | | Revenue | | Per Acre1 |
| Acres Sold |
| Revenue |
| Revenue Per Acre1 |
| Acres Sold |
| Revenue |
| Revenue Per Acre1 | ||||||||
Developed | |
|
| |
|
| |
| |
|
| |
|
| |
| |
| |
| | |
| | |
| |
| | |
| |
Residential | | 33.3 | | $ | 15,656 | | $ | 470 | | 25.1 | | $ | 11,863 | | $ | 473 |
| 9.9 | | $ | 5,152 | | $ | 520 |
| 17.4 | | $ | 7,190 | | $ | 413 |
Commercial | | — | |
| — | |
| — | | 0.4 | |
| 134 | |
| 335 |
| — | |
| — | |
| — |
| — | |
| — | |
| — |
Total Developed | | 33.3 | | $ | 15,656 | | $ | 470 | | 25.5 | |
| 11,997 | |
| 470 |
| 9.9 | | $ | 5,152 | | $ | 520 |
| 17.4 | |
| 7,190 | |
| 413 |
Undeveloped | | — | |
| — | |
| — | | 2 | |
| 16 | |
| 8 |
| 2.9 | |
| 20 | |
| 7 |
| — | |
| — | |
| — |
Total | | 33.3 | | $ | 15,656 | | $ | 470 | | 27.5 | | $ | 12,013 | | $ | 437 |
| 12.8 | | $ | 5,172 | | $ | 404 |
| 17.4 | | $ | 7,190 | | $ | 413 |
1Revenues Revenue per acre may not calculate precisely due to the rounding of revenues to the nearest thousand dollars.
1613
The change in the average selling price per acre of developed residential land for the three months ended OctoberJuly 31, 20212022 compared to the three months ended OctoberJuly 31, 2020 and for the six months ended October 31, 2021 compared to the six months ended October 31, 2020 was primarily due to the location and mix of lots sold.
● | Home sale revenues for the three |
| | | | | | |
| | Three Months ended July 31, | ||||
|
| 2022 |
| 2021 | ||
Homes sold | | | 11 | | | 8 |
Average selling price | | $ | 494,000 | | $ | 301,000 |
As of July 31, 2022, the Company had 32 homes in production, including 13 homes under contract, which homes under contract represented $7,535,000 of expected home sale revenues when closed, subject to customer cancellations and change orders.
● | Other revenues for the three months ended |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months ended October 31, | | Six Months ended October 31, | | | Three Months ended July 31, | ||||||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | |
| 2022 |
| 2021 | ||
|
| 2021 |
| 2020 | | (Decrease) |
| 2021 |
| 2020 | | (Decrease) | | ||||||||||
Sale of building | | $ | 6,750 | | $ | — | | (a) | | $ | 6,750 | | $ | — | | (a) | | ||||||
Oil and gas royalties | | | 40 | | | 25 | | 60 | % | | 175 | | | 36 | | (a) | | | $ | 57 | | $ | 135 |
Public improvement district reimbursements | |
| 15 | |
| 69 | | (a) | |
| 239 | |
| 244 | | (2) | % | ||||||
Private infrastructure reimbursement covenants | |
| 31 | |
| 245 | | (87) | % |
| 83 | |
| 378 | | (78) | % | ||||||
Infrastructure reimbursements | |
| 525 | |
| 606 | |||||||||||||||||
Miscellaneous other revenues | |
| 115 | |
| 189 | | (a) | |
| 610 | |
| 589 | | (a) | | |
| 39 | |
| 165 |
Total | | $ | 6,951 | | $ | 528 | | (a) | | $ | 7,857 | | $ | 1,247 | | (a) | | | $ | 621 | | $ | 906 |
(a) Percentage not meaningful.
The Company owned a 143,000 square foot warehouse and office facility located in Palm Coast, Florida during the three and six months ended October 31, 2021, which was leased to a third party through August 2020 and a portion of which was leased to the same third party after August 2020. Sale of building during the three and six months ended October 31, 2021 consisted of the sale of this 143,000 square foot warehouse and office facility in October 2021.
Miscellaneous other revenues for the three and six months ended October 31, 2021 primarily consisted of rent received from the tenant of the building in Palm Coast, Florida and tenants at a shopping center in Albuquerque, New Mexico, payments for impact fee credits, a non-refundable option payment and sale of equipment.
The Company owned a 61,000 square foot warehouse and office facility located in Palm Coast, Florida during 2021, which was leased to a third party through August 2020 and which was sold in April 2021. Miscellaneous other revenue for the three and six months ended October 31, 2020 primarily consisted of rent received from the tenant of the buildings in Palm Coast, Florida, payments for impact fee credits and a land condemnation.
Refer to Note 7 to the consolidated financial statements contained in the 20212022 Form 10-K for additional detail about the categories of building sales and other revenues.
17
Table Miscellaneous other revenues for the three months ended July 31, 2022 primarily consist of Contentsa non-refundable option payment and a forfeited deposit. Miscellaneous other revenues for the three months ended July 31, 2021 primarily consist of rent received from a tenant at a building in Palm Coast, Florida, a non-refundable option payment and proceeds from the sale of equipment.
Cost of Revenues. The following presents information on cost of revenues for the Company’s operations (dollars in thousands):
| | | | | | | | | | | | | | | | | | |||||||||
| | Three Months ended October 31, | | Six Months ended October 31, | | | | | | | | | | | ||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | | | Three Months ended July 31, | | % Increase | | ||||
|
| 2021 |
| 2020 |
| (Decrease) |
| 2021 |
| 2020 |
| (Decrease) | |
| 2022 |
| 2021 |
| (Decrease) |
| ||||||
Land sale cost of revenues | | $ | 6,154 | | $ | 6,430 |
| (10) | % | $ | 11,765 | | $ | 9,109 |
| 29 | % | | $ | 3,832 | | $ | 5,610 |
| (32) | % |
Home sale cost of revenues | |
| 629 | |
| 174 |
| (a) | |
| 2,543 | |
| 174 |
| (a) | | |
| 3,663 | |
| 1,914 |
| 91 | % |
Building sales and other cost of revenues | | | 3,837 | | | — | | (a) | | | 3,837 | | | — | | (a) | |
(a) Percentage not meaningful.
● | Land sale cost of revenues for the three months ended |
● | Home sale cost of revenues for the three |
14
General and Administrative Expenses. The following presents information on general and administrative expenses for the Company’s operations (dollars in thousands):
| | | | | | | | | | | | | | | | | | |||||||||
| | Three Months ended October 31, | | Six Months ended October 31, | | | | | | | | | | | ||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | | | Three Months ended July 31, | | % Increase | | ||||
| | 2021 | | 2020 | | (Decrease) |
| 2021 |
| 2020 | | (Decrease) | |
| 2022 |
| 2021 |
| (Decrease) |
| ||||||
Land development | | $ | 677 | | $ | 665 |
| 2 | % | $ | 1,261 | | $ | 1,271 |
| (1) | % | | $ | 607 | | $ | 584 |
| 4 | % |
Homebuilding | |
| 212 | |
| 118 |
| 80 | % |
| 399 | |
| 231 |
| 73 | % | |
| 257 | |
| 187 |
| 38 | % |
Corporate | |
| 368 | |
| 740 |
| (50) | % |
| 783 | |
| 1,465 |
| (47) | % | |
| 307 | |
| 417 |
| (26) | % |
Total | | $ | 1,257 | | $ | 1,523 |
| (17) | % | $ | 2,443 | | $ | 2,967 |
| (18) | % | | $ | 1,171 | | $ | 1,188 |
| (1) | % |
● | Land development general and administrative expenses for the three |
● | Homebuilding general and administrative expenses for the three |
● | Corporate general and administrative expenses for the three |
Interest income, (expense), net. Interest income, (expense), net increased to $2,000was $7,000 and $1,000 for the three and six months ended OctoberJuly 31, 2021 from $(12,000)2022 and $(6,000) for the three and six months ended OctoberJuly 31, 20202021. The change in interest income, net was primarily due to interest earned in connection with a reduction in bank fees.
18
Tablerefund of Contentsfederal income taxes.
Other income. Other income for the three months ended October 31, 2021 consisted of $30,000 received for a life insurance policy for a retired executive of the Company. Other income for the six months ended October 31, 2021 consisted of $185,000 received in connection with a bankruptcy of a warranty provider, $45,000 of debt forgiveness with respectRefer to Note 10 to the note payable identified as “Lavender Fields – acquisition” in Note 6 above and $30,000 received for a life insurance policy for a retired executive of the Company. There was no other income for the three months ended October 31, 2020. Other income for the six months ended October 31, 2020 consisted of a settlement payment of $650,000 from a former business segment (refer to Note 3 to thecondensed consolidated financial statements containedincluded in the 2021this report on Form 10-K10-Q for detail regarding the settlement agreement).other income.
Provision for income taxes. The Company had a provision for income taxes of $1,065,000$661,000 and $1,453,000$389,000 for the three and six months ended OctoberJuly 31, 2021 compared to a2022 and July 31, 2021. The provision for income taxes correlated to the amount of $319,000 and $465,000 for the three and six months ended October 31, 2020.income before income taxes during each period.
LIQUIDITY AND CAPITAL RESOURCES
AMREP Corporation is a holding company that conducts substantially all of its operations through subsidiaries. As a holding company, AMREP Corporation is dependent on its available cash and on cash from subsidiaries to pay expenses and fund operations. The Company’s liquidity is affected by many factors, including some that are based on normal operations and some that are related to the real estate industry and the economy generally.
The Company’s primary sources of funding for working capital requirements are cash flow from operations, bank financing for specific real estate projects, a revolving line of credit and existing cash balances. Land and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or pursuing other real estate projects willmay require financing, or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected. Except as described below, there have been no material changes to the Company’s liquidity and capital resources as reflected in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 20212022 Form 10-K.
15
Operating ActivitiesCash Flow
. The following presents information on the Company’s operating activitiescash flows for the Company (dollars in thousands):
| | | | | | | | | |
| | | | | | | | |
|
| | Three Months Ended July 31, | | % Increase | | ||||
|
| 2022 |
| 2021 |
| (Decrease) | | ||
Net cash provided by (used in) operating activities | | $ | 262 | | $ | (4,466) |
| (a) | |
Net cash used in investing activities | |
| (118) | |
| (1) |
| (a) | |
Net cash provided by financing activities | |
| 50 | |
| 2,940 |
| (98) | % |
Increase (decrease) in cash, cash equivalents and restricted cash | | $ | 194 | | $ | (1,527) |
| (a) | |
Operating Activities. Net cash provided by operating activities for the three months ended July 31, 2022 was higher than the three months ended July 31, 2021 by $4,728,000 primarily due to an increase in the Company’s net income and the amount of change during each period in real estate inventory and investment assets and in accounts payable and accrued expenses.
| | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
| ||
| | 2021 | | 2021 | | (Decrease) |
| ||
Real estate inventory | | $ | 61,772 | | $ | 55,589 |
| 11 | % |
Investment assets, net | |
| 9,775 | |
| 13,582 |
| (28) | % |
Other assets | |
| 1,870 | |
| 645 |
| 190 | % |
Deferred income taxes, net | |
| 1,165 | |
| 2,749 |
| (58) | % |
Accounts payable and accrued expenses | |
| 4,758 | |
| 4,458 |
| 7 | % |
Taxes payable, net | |
| 29 | |
| 95 |
| (69) | % |
Accrued pension costs | |
| 35 | |
| 476 |
| (93) | % |
| |
|
| |
|
|
|
| |
Investing Activities. Net cash used in investing activities for the three months ended July 31, 2022 was higher than the three months ended July 31, 2021 by $117,000 primarily due to the purchase of equipment.
Financing Activities. Net cash provided by financing activities for the three months ended July 31, 2022 was lower than the three months ended July 31, 2021 by $2,890,000 primarily due to a reduction in proceeds from debt financing partially offset by a reduction in principal debt repayments. Notes payable increased from $2,030,000 as of April 30, 2022 to $2,080,000 as of July 31, 2022 due to equipment purchases. Refer to Note 6 to the condensed consolidated financial statements included in this report on Form 10-Q and Note 6 to the consolidated financial statements contained in the 2022 Form 10-K for detail regarding each of the Company’s notes payable.
Asset and Liability Levels. The following presents information on certain asset and liability levels (dollars in thousands):
| | | | | | | | | |
|
| July 31, |
| April 30, |
| % Increase |
| ||
| | 2022 | | 2022 | | (Decrease) |
| ||
Real estate inventory | | $ | 68,604 | | $ | 67,249 |
| 2 | % |
Investment assets | |
| 8,961 | |
| 9,017 |
| (1) | % |
Other assets | |
| 2,082 | |
| 1,882 |
| 11 | % |
Deferred income taxes, net | |
| 928 | |
| 958 |
| (3) | % |
Prepaid pension costs | |
| 311 | |
| 90 |
| (a) | |
Accounts payable and accrued expenses | |
| 4,976 | |
| 6,077 |
| (18) | % |
Taxes payable, net | |
| 4,428 | |
| 3,648 |
| 21 | % |
(a) Percentage not meaningful.
1916
● | Real estate inventory increased from April 30, |
| | | | | | | | | | | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
|
| July 31, |
| April 30, |
| % Increase |
| ||||
| | 2021 | | 2021 | | (Decrease) |
| | 2022 | | 2022 | | (Decrease) |
| ||||
Land inventory in New Mexico | | $ | 54,148 | | $ | 49,918 |
| 8 | % | | $ | 60,528 | | $ | 59,374 |
| 2 | % |
Land inventory in Colorado | |
| 4,009 | |
| 3,975 |
| 1 | % | |
| 3,435 | |
| 3,434 |
| 0 | % |
Homebuilding finished inventory | |
| 214 | |
| 417 |
| (49) | % | |
| 1,005 | |
| 1,135 |
| (11) | % |
Homebuilding construction in process | |
| 3,401 | |
| 1,279 |
| 166 | % | |
| 3,636 | |
| 3,306 |
| 10 | % |
| | $ | 61,772 | | $ | 55,589 | | | | | $ | 68,604 | | $ | 67,249 | | | |
Land inventory in New Mexico increased from April 30, 20212022 to OctoberJuly 31, 20212022 by $4,230,000$1,154,000 primarily due to increased land development activity and the acquisition of land. Homebuilding finished inventory decreased from April 30, 20212022 to OctoberJuly 31, 20212022 by $203,000$130,000 primarily due to the sale of homes partially offset by the completion of construction of certain homes.homes not yet sold. Homebuilding construction in process increased from April 30, 20212022 to OctoberJuly 31, 20212022 by $2,122,000$330,000 due to increased homebuilding activity.
● | Investment assets |
| | | | | | | | | | | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
|
| July 31, |
| April 30, |
| % Increase |
| ||||
| | 2021 | | 2021 | | (Decrease) |
| | 2022 | | 2022 | | (Decrease) |
| ||||
Land held for long-term investment | | $ | 9,775 | | $ | 9,775 |
| 0 | % | | $ | 8,961 | | $ | 9,017 |
| (1) | % |
Building | |
| — | |
| 10,003 |
| (a) | | |||||||||
Less accumulated depreciation | |
| — | |
| (6,196) |
| (a) | | |||||||||
Building, net | |
| — | |
| 3,807 |
| (a) | | |||||||||
| | $ | 9,775 | | $ | 13,582 | | | |
(a) Percentage not meaningful.
As of April 30, 2021, the building was a 143,000 square foot warehouse and office facility located in Palm Coast, Florida. In October 2021, the Company sold this 143,000 square foot warehouse and office facility. Depreciation associated with the building was $98,000 and $140,000 for the three months ended October 31, 2021 and October 31, 2020 and $201,000 and $262,000 for the six months ended October 31, 2021 and October 31, 2020.
● | Other assets increased from April 30, |
● | Deferred income taxes, net decreased from April 30, |
● | Accounts payable and accrued expenses |
● | Taxes payable, net |
● | Accrued pension costs of the Company’s frozen defined benefit pension plan |
20
Financing ActivitiesRecent Accounting Pronouncements
Notes payable, net increased from $3,448,000 as of April 30, 2021 to $5,952,000 as of October 31, 2021 primarily due to additional borrowings to fund land acquisition and development activities partially offset by repayments made on outstanding borrowings.. Refer to Note 61 to the condensed consolidated financial statements included in this report on Form 10-Q and Notes 6 and 19Note 1 to the consolidated financial statements contained in the 20212022 Form 10-K for additional detail about notes payable.a discussion of recently issued accounting pronouncements.
Investing Activities
Capital expenditures were $10,000 and $11,000 for the three and six months ended October 31, 2021 and $3,000 for each17
Statement of Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in this report and other filings with the Securities and Exchange Commission, reports to the Company’s shareholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and contingencies that are difficult to predict. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.
The forward-looking statements contained in this report include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, homebuilding and capital expenditure needs, (2) the Company’s expected liquidity sources, including the amount of principal available for borrowing under the Company’s financing arrangements, (3) anticipated future development of the Company’s real estate holdings, (4) the timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (5) the availability of bank financing for projects, (6) the utilization of existing bank financing, (7)(4) the market conditions impacting the land development and homebuilding industries for at least the remainder of 2022, (5) the backlog of homes under contract and in production and the dollar amount of expected sales revenuerevenues when such homes are closed, (8) the effect of recent accounting pronouncements, (9)(6) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (10)(7) the future issuance of deferred stock units to directors of the Company and (11)(8) the future business conditions that may be experienced by the Company.
The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
21
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Vice President, Finance and Accounting, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. As a result of such evaluation, the Company’s Chief Executive Officer and Vice President, Finance and Accounting have concluded that such disclosure controls and procedures were effective as of OctoberJuly 31, 20212022 to provide reasonable assurance that the information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Vice President, Finance and Accounting, as appropriate, to allow timely decisions regarding disclosure. The Company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
No change in the Company’s system of internal control over “financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 6.6.Exhibits
| ||
Exhibit |
| Description |
10.1 | | |
10.2 | | |
31.1 | | Certification required by Rule 13a-14(a) under the Securities Exchange Act of 1934 |
31.2 | | Certification required by Rule 13a-14(a) under the Securities Exchange Act of 1934 |
32 | | |
101.INS | | Inline XBRL Instance Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase |
104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
2319
SIGNATURESIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: | AMREP CORPORATION | |
| (Registrant) | |
| | |
| By: | /s/ Adrienne M. Uleau |
| | Name: Adrienne M. Uleau |
| | Title: Vice President, Finance and Accounting |
| | (Principal Accounting Officer) |
2420
EXHIBIT INDEX
Exhibit |
| Description |
10.1 | | |
10.2 | | |
31.1 | | Certification required by Rule 13a-14(a) under the Securities Exchange Act of 1934 |
31.2 | | Certification required by Rule 13a-14(a) under the Securities Exchange Act of 1934 |
32 | | |
101.INS | | Inline XBRL Instance Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase |
104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
2521