ALEX - Earnings call transcript Q1 2022 | Alexander & Baldwin, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Alexander & Baldwin First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Steve Swett, Investor Relations. ahead. go Please

Steve Swett

Parker; Operating is Executive Financial Officer Officer, our and & Chief aloha, portion and present today our to and call our Thank first will welcome quarter Clayton our for and Alexander Chief Chief of President A&B’s Baldwin’s call me the call. Chris Brown; Q&A Chun, XXXX Chief Lance discuss Officer, Benjamin; Accounting also Brett earnings be you, available are to Officer, earnings. for With the

Before that regarding and opportunities we novel statements forward-looking and materially the statements differ These in presentation cause number of Reform statements that the contemplated a those not relevant Such risks the operations, are forward-looking but plans from speak statements. involve assumed Litigation pandemic statements challenges statements the with responses future the to, positions, or of related economic the the within performance. and could of changing please COVID-XX forward-looking actual only facts Act and commence, results note of that were future that include, forward-looking by as this the are of to guarantees Private competitive date well made and are and Securities to and not as results are possible rapidly limited growth coronavirus call not statements XXXX company’s meaning strategies, historical disruptions. of business as uncertainties

by risks. important will Chris. company’s will statements. market other cause factors certain Brett presentation results to then and and to your those other www.alexanderbaldwin.com. as the risks and evaluation we over not related other will update events in referring this conditions Construction presentation obligation to of are a not then condition, be for up expressed its by statements. a and will real Lance then well strategic presentation company’s download associated With estate impacts or matters. company’s it that, in the business, company’s discuss use to Forward-looking some The Materials the will business, of during from today’s from status factors statements do are is slides these Investors our to to should prevailing with Form its that & of XX-K, the with COVID-XX to These company’s and factors this businesses, to, operations, the light and differ are subject forward-looking evaluated related of of the the the timing financial XX-Q and but the factors as most implied REIT actual include, limited on and a materially be could recent filings company in SEC. and alternatives call results non-GAAP liquidity discussed the Form our information of measures reconciliations. financial We Included website turn Slides undertake the it remarks, me Chris today. our will to on any statement operations, Management open questions. at call the regarding measures financial available let with non-GAAP the today’s return for for appendix presentation of and section turn in forward-looking at for over Chris presentation up update He an closing update. open and in

Chris Benjamin

and listeners. good to our Steve, Thanks, afternoon

Baldwin, & last another results our XXXX was quarter year. first very quarter excellent as on we of from built strong The for Alexander

X.X largest continue EBITDA years. producing industrial of projects years, best and commercial to segment be its and its adjusted robust, well-located occupancy strong across retail, real our estate quarter, building and our four in portfolio our & significant properties. had higher expectations Construction and the of Land sales For in lease backlog Materials ground leasing over exceeded activity with positive performance NOI, quarter

CRE performance, per guidance dividend the strong these the another surpassing I roughly share, has X%, and $X.XX level. by our our a we of hard their work members to results. $X.XX to Board quarterly exceptional contributions want to As and raised dividend team all A&B for pre-pandemic increased our result thank

and quarter, balance Before a the A&B diving in There’s I’d at our into like many following significant steady on large development we’ve to resulting Hawaii to details Hawaii, strategic of for were years, step our of including growth migration Granted, of turning portfolio, been the Hawaii. delevering important some provide simplification of XXXX progress the of team sales and real the best of CRE But our land back shift the the meaningful events making context. the of been our lands, and point. the in ag amounts the back XXXX of an portfolio sale commercial significant estate sheet. late

pipeline. With The the ready sale patiently we’ve market and Kukui’ula strengthened non-core put are to balance work. acquisition other assets, tight, and it our of our dramatically to but and we’re sheet building actively is

knowledge. positioned our our our our strategy. know do of, capable which still final some market simplification. we relationships sell, us progress is constraining or Hawaii to not Grace from important We making achieve the it’s with element assets they’re towards We’re profitability benefit business of but uniquely big and will to non-core of growth position to core have kind

early in marketing success CRE success XX%. share meantime, of by results NOI, portfolio continuing which obvious from or the quarter. We revenue NOI our recovery the a Grace Retail improvement were process strong summer. more segment. possible grew saw demonstrated than positioning efforts estate in segment, saw year. the per We the in last than was same-store our as we up the more first late and same-store impede that strength real particular Total are CRE NOI by achieved us more doesn’t And XX% for that XX%. up both XX%. distract a In as than diluted FFO commercial core was The

XX also We the basis same-store up at strong occupancy, portfolio year quarter produced from industrial points nearly leased growth X%. ago. NOI the Our of ended XX.X%

industrial portfolio at the assets total retail and in had strong Our over XX% We leased. and activity leased feet square XXX,XXX with leasing X.X%. over is are again quarter rent our XX% leased spreads

visitor economic three see across to the exceeded growth of robust each to levels We for arrivals the XXXX pre-pandemic compared months X% state. levels. Domestic about continue XXXX, first up of have

since have and visitor been year, trending the international rebound, Additionally, of continue arrivals incremental upward start to should the benefits. providing economic

to community While dependent our and on not portfolio Hawaii in activity, economy. heavily resurgence is a based tourism broad Hawaii’s providing the is tourist benefit

leasing Hawaii’s March of We raise Economic XX Business sales With Tourism strong high assets, driving growth at XXXX, XXXX first quickly from other to of our X%. State X.X% totaling Park had real the tailwinds improvement strong demand land unemployment and of are of X.X our acres nearly than Overall, for quarter over expected, but Business quality remaining II the X.X% demand is rebounding for and rate non-core $X Hawaii non-core not Department including from XX.X% percentage XXX the estate to from Maui more these general, broad supporting commercial in holdings. in state lands. acres Development real ago. only to non-core approximately the an two economy estate leading including years the million, economic land points peak down And forecast

and & quarter, Pacific million EBITDA Construction balance Materials activity. in produced at Grace this $X.X of of construction other segment the the As attributable importantly, $X.X and materials our million adjusted to

that over expect growth pleased While we’re were with business EBITDA momentum in Grace’s year. of balance is gaining and continued the earnings the modest, the

I a earnings marketing right. if seem likely half decision positioning before process we next are As make noted, for call. conditions second that We’ll our

to growth. Turning

asset a robust we announced have not XXXX, focused acquisitions neighborhood classes, remain industrial. We evaluating. pipeline our unlike in existing any we’ve on retail While we’re opportunities of primarily

to highlights land Now I’ll the recent Officer, activity. Lance? Chief turn to our our Lance call Operating review real sales commercial over estate and Parker,

Lance Parker

largest reflecting their also leases the to invest approximately were customer a lease at XXX,XXX and long-term spreads the Beginning and The collections. significant restaurant was center, enhancing Center, of the during Bakery on will for local We renewal maintained aloha, Sam’s Liliha achieved and improved XXXX, pleased activity quarter lease at first Club. of everyone. of and recent XX.X% and stability XX the CRE them with our leases. the new Chris, Same-store our in This see in year. this continued and foot the most XX% Highlands quarter well. providing our square favorites tenant to opening tenant has of at asset. occupancy of you, later Little performance which and up NOI perform XXX,XXX operations, retail was Joe’s feet the for Pearl Steakhouse We store, Thank renewal executed experience X.X% portfolio exceptionally first leases year-over-year, X.X% strategic refresh square the largest extend

property, foot target square Same-store including regard to XX.X%, across first to Oahu, quarter XX.X%, Industrial occupancy Harbor square the SAMs, Kailua, of GLA. Park, a XXX% two XX Aikahi XX,XXX in we approximately leased XX,XXX Shopping feet Industrial quarter lease located GLA, completed at In totaling feet leases addition and at related to occupancy the Overall, XX,XXX Park totaling square of was up team the more at sustaining are of on million Hawaii earmarking end occupancy from Center earlier. points approximately Komohana leases and our XX Maui, pace. leased XX months With an basis active we points as and from markets XXXX. or up was million $XX XX annual our is basis to of Island Kauai, growth, $XX properties

and this of we’ll provide advantages this us refresh market across redevelopment solid the table pipeline our and competition shopping of from deep the and redevelopment enable will options. vibrant summary on Upon see uncover we long-standing dining, a market. appropriately Center, additional build-out Shopping year, our continue Park robust knowledge schedule and strategic with target at On work to to later mix to activity, in supplement. believe have Aikahi stabilization reaching active with relationships efforts community-focused a tenant final opportunities value, remove despite service project underway We customers and the

commenced visitor lastly, elements. repositioning energy has solar and to with project the rooftop center expand efforts operating sustainable our design of phase such while Our properties, Manoa Center. other megawatt building overall properties. goal owning experience commitment This and Pearl look ESG design Highlands X.X to into the sustainable installation commenced renewable the and aligns this has at neighborhood at incorporating on And work well-located improve Marketplace and we project to

at as land total Maui non-core remain turn on remaining totaling as many approximately sales. Park to for proceeds. interested progress acres monetization discussions now units We this Brett? Business $X XXX II, for to details. We other non-core expect buyers of active well call landholdings Brett Turning I’ll the in five We over to our quarter. land holdings financial year. acres and with strong million approximately X.X a of first successful sold of had make

Brett Brown

with Thanks, Lance. our everyone. afternoon, Good results. Starting financial

of $XX.X share. FFO net or $XX.X For quarter, recorded or FFO per of million income or $X.XX core million first per $X.XX million $X.XX share. we $XX.X the of per share. And

details supplemental additional comparisons earnings For including our and of quarter see the information package. on to please our first results, XXXX, release

including for or in CRE a the XX.X% $X.XX This share overall XXXX revenues prior of year compared quarter improved increased of last our Real period XXXX. quarter million again, $XX.X resulted per or quarter each segment the of or current from ago the As rents. quarter, $X.X collections, year. of $X.X NOI benefited tenants, increased turn to XXXX million which Estate nearly million, reserve these the over or approximately from for I’ll increase million share compared to prior $X.X the to note, same $X XX.X% rent recovery metrics million to by in and and year to first $XX.X first now reflects both the of Commercial million quarter. the period $X.XX by per in reversals first

million the First quarter same-store NOI to $XX.X $X.X quarter million. year or over prior increased XX%

the $X.X million quarter Our we’ve adjusted first revenue lighter episodic adjusted as limited transactions, for mentioned revenue the the of EBITDA quarter. land XXXX. the EBITDA second business With operations expected past, produced activity for and be be with of million in of could may in $XX.X quarter, and generated negative

compares year respectively the Construction to of a million first of of with a in loss million the XXXX. $X start EBITDA operating million million, and & negative $X.X solid adjusted this and profit quarter $X.X Our $X.X had to segment Materials

strong As million. added Chris of had segment Grace the Construction Pacific other adjusted to $X.X segment EBITDA best M&C noted, years, quarter million, & results while in its $X.X the with Materials business X.X contributing

million For with $XX.X XXXX, were first of million budget. G&A and the in the in quarter quarter XXXX to first expenses line compared $XX.X our

end, credit million sheet outstanding on balance $XX monetization quarter net debt and X would March million, EBITDA of XX, our low M&C to was debt impairment $XXX At X.X XXXX, adjusted total adjusted At times, capacity our to remaining in liquidity debt range. be trailing Turning the of million, to liquidity net the and consolidated non-core EBITDA facility. consolidated total $XXX we impacts, and million was excluding of and mid metrics. XX one-time had including our cash $XXX approximately times to months

to remainder our a X.X% declared dividend to stood of With Our at quarterly $X.XX and first dividend, the a performance quarter quarter strong first dividend total quarter a increase second our market XX.X% consecutive XXXX XXXX results debt share, respect reflecting XXXX. capitalization Board from increase, quarter or and expected end. recently for the at of $X.XX second the CRE per

business dividend quarter to XXXX, on close payable second is XXXX. as the June shareholders X, The of record of July of on XX,

Finally, to turning guidance.

expect for $X now range share to from has We a range pre-tax of in X%. want FFO not per core on related same-store remarks. same-store quarter I’ve prior same-store as not expect also our within The to for to million pension share range core for been as to X% prior a range prior of to revised CRE NOI between CRE to also to second to settlement of is the FFO, within for year to our range $XX everyone, of plan. $XX increase of the X% X%. $X.XX a defeasance growth CRE of million. primarily X% upward per part $XX million is we turn in to remind mentioned $XX to calls, I share. the call range million prior pension the Chris it’s of of new from expected the to part from X% an growth. his X% contributions to NOI per guidance guidance I’ll $X.XX $X.XX NOI due the outlook to improvement reserve Cash charge while that, our incur reversals defeasance our of range XXXX our raising it’s closing growth, X% excluding With over prior our We’re to

Chris Benjamin

across segments Thanks, all results first for Brett. I’m pleased the our with quarter.

enable outstanding with strong NOI where Our to CRE should to last portfolio activity. year strategic on Renewed CRE supported growth, balance robust market sheet building excellent advantages our Hawaii, increasing with occupancy in portfolio opportunities momentum leasing a value. our to of drivers uncover a flexible strong have and continues focus and enable us strong expand growth will and long-term us from performance, growth by and

month. On initiatives, will new we and the our advancing ESG are actively progress. and front, accelerate environmental environmental help councils multiple employee-led social off groups employee last and we us social These ESG kicked

proud megawatt PV of on our at now of Pearl Center. for – a questions. we’ll call open Highlands With the construction particularly the solar of commencement your installation X.X We’re that,

Operator

Please question-and-answer question session. Mitchell Our first We will now the Connor [Operator begin Piper is with Sandler. Instructions] from ahead. go

Connor Mitchell

pipeline, a another it’s focus on guess, first, acquisition expanding type? mentioned leases, question. was or thank the Hi, on more property you for just taking industrials please ground I my can what guys expand about just you of

Chris Benjamin

want Lance, do to… you

Lance Parker

Sure.

marketplace. our we the – of in food Connor, be of the more I it with would acquisition few retail, our groups, relatively acquisition here I major to we efforts. in say terms getting pleased on remains So that focused I’m the with view in looks ground broadly say that we’re what industrial, our would remain terms marketed of But deals. number tight market, so just very leases three

appropriate And later our to confident in ability the so year. feel we in find deals

Connor Mitchell

also of you year? this, remainder the the quarter And mostly – is guidance. in Okay. inclusive a related outperformance outlook stronger is but guys or just by that I That’s to mentioned for guidance, a the increase of question had first the driven helpful. know then second it

Brett Brown

Connor, Brett. by of Most as very in year. early in driven that it’s was we’re outperformance first quarter the the the

comment to hard later quarter yes. on driven be the would quarters, it by first but So more outperformance, the mostly

Connor Mitchell

plan regarding might and Okay. you quarter, can you the second Thank said earnings? that affect? pension I said you then you. just repeat what again think how much And

Brett Brown

in to That’s anticipated through the is second It correct. flow quarter.

to $XX the $XX I cash as settlement there overall $XX second and then $XX pre-tax million million. that a contribution so of million will mentioned, of And happen approximately charge million quarter dollar is amount,

Connor Mitchell

you That’s for Thank Okay. much. me. all That’s very very helpful.

Brett Brown

All Thanks, right. Connor.

Operator

question ahead. next go The from Please with Sidoti. Backer Marla is

Marla Backer

be recent out has of So seeing we’re the around current redevelopment. result interest as of what rate terms a on plans the given lot the a some impacted pushed But commentary of quarters you your been in opportunities macroeconomic do environment, in factors? might inflationary of think or environment,

Lance Parker

Hey, say maybe issues. to extent specific Marla. chain lesser a macroeconomic so of generally, and in Lance. This supply is inflation impact, terms to I would

side, certainly in chain sourcing seeing some we supply materials. We’re delays impacts have had on

so not some little go terms desire later lines. underwriting our It they’re we’ve in RCDs economic, time of have and our programmed with impact And to but a of our may that to to projects. going material into redevelopment our be forward move able being a on or

On increases certain certainly in materials. side, seeing the pricing we’re

only XX having to was short now days, We’re pricing where for which it is contractors firm holding previous periods. in relative

conversations feel just that. that and we’re Aikahi, And Pearl finishing to complete and with build-to-suits on we then in with in. prospectively good from But to feel would more and some tenants I Manoa about opportunities again, say, so with our Highlands, similarly decisions, progressing factoring Marketplace And specific that expect our and of optimistic them. opportunities our we’re for those in up about being growth so internal deliberate

Marla Backer

on kind that you in then the rental during collections. Okay, Where any deferrals housekeeping terms thanks. pandemic? offer question are one And of you question, a of

Lance Parker

collections around to the question Was those? relating the

Marla Backer

Yes.

Lance Parker

quite overall. doing our actually yes, – side things, overall collections respect collection to overall okay. well With we’re of So the on

CRE, the of in levels within and We’re deferred pre-pandemic that basically XX% excess are at overall for of amounts.

a able cash to been we’ve pandemic. And recover benefit been the as have tenants to able from result, collections. our So from

Marla Backer

Okay, thank you.

Lance Parker

Marla. you, Thank

Operator

The is Sheila next ahead. go ISI. from McGrath with Evercore question Please

Sheila McGrath

do up. Yes, mentioned international good afternoon. picking that the Chris, you mentioned travelers you –

you your for give travelers, and bigger if at traveling us there any are view this to Hawaii Just if could picture people restrictions wondering, COVID the mainland on point?

Chris Benjamin

are hotels it’s crowded. crowded, are the restaurants Yes, here. The crowded streets the are crowded,

to and I mix, it terms pre-pandemic think it’s tourists. different still on It’s impacts some impacts think that that – we’re visitor. a dependent have to of strength closely are those full some levels. because a retailers most mix relative Asian different does the essentially of I of on capacity destinations And in negative probably back most

and So as from retail unemployment the rate, portfolio, but X%, in of to just of Waikiki, some down standpoint mentioned, was is our Waikiki pre-pandemic. to which the the where is it above slightly I

of that And portfolio so are then we dependent heavily centers on our retail arrivals. the that when are islands both drive and not think two you that the neighbor that, resort things and on grocery-anchored about also international have

influence We’re rely terms say visitor the not in Hawaii portfolio. essentially our everybody lot a to because landlords tenants back we some back to on than is that more economic That’s the strength in full as said, normal, do. drivers to of Asian and that I

Sheila McGrath

just buyer acquisition then if I’m – helpful. your the I Alexander improves the know of but Okay, And & help kind That’s kind with pool in curious, rates, that spin rate for on maybe on out interest hit this would great. Baldwin. new, might – it’s of backup the still thoughts

thoughts Just on that? your

Chris Benjamin

and covered – we and you’ve of the long have interest advantage and and historically us Having take to slowing times a think be balance We generally enough to company Clearly, to rates able may said wish of economy perform a and side. ability with the where do that challenges the to strong that in nice dislocations that want the able economic as sheet, for market difficult interest don’t we rates rising economy to – don’t know for could opportunities acquisition buyers on perform the Yes. there been rise. we changes lot down. be not an

of would specifics say, may could But to have Lance generally, wants tend this So disruption kind more add. to us. I benefit he

Lance Parker

be with seeing asset interest we’re deals. we’re play for they’re and add but able I time, very and debt highly sheet the and disproportionately more rates through good Yes, with that expectation levered monetization, we debt-type be this impacted would in to right to we have balance buyers last were our that, year our feeling rising that certainly, would pursue out the non-core just to going opportunity the pay solid about our that down real

Sheila McGrath

at you additional us great. the then chance Maui in on a bucket non-core maybe could and Park you haven’t the give And price. other land sales. just but activity sale then, of perspective, if And Lance, pricing comment out land this to the land yet, I had year? figure Okay, the it anticipate Business the

Lance Parker

the our our has. I about as Sheila, Maui non-core generally, company good would say, core other activity, Park both specific as land to land lands we’re – feeling Business well that

So have about continued Maui the Park, we’ve But that forward, last build-to-suit. good And feeling And separately interest we’re through industrial as get getting interest. and with on QX. strong I tenants to break importantly, the starting inquiries from also get Business then from actual looking you. would has buyers that side pricing out to we the been year, probably past, we we’ve say for We interest from strong in inquiries to discussed continue buyers. had

the monetization challenging then our various timing, in the of another opportunities non-core have we in rest land to of of avenue guidance and for stages a about feeling transactions that’s that it’s continued on we do provide always for for portfolio, pursue. segment. continue number So but to sort the that And optimistic and us

Sheila McGrath

does Okay, there. it and might to great. the XXXX comment see EBITDA event. you improved how be was a if help could performance given of pickup what there, you sale process that along move a was on one-time? wondered is And much Grace, And that the a driving recovery just then think nice I

Chris Benjamin

Yes.

So this is Chris.

later we that a issue. and one One, things one-timers expected, we posted project do we within expect timing Grace any just off million we itself, to that start didn’t that’s think got of I have three address, $X.X me Let than where did that, we have a there. driving EBITDA, but

we that $X So think upward go go trend up some ground be we the the forward we’ll as that we as can one project. balance But number of year. hopeful actually for that we million on we’re forward making from that

So was by a we And business. million we’re entry, balance The Materials have of a itself. another JV was gain, related that one-time optimistic I on $X.X driven a – essentially I of Construction largely investment an Grace to should in guess, the one-time & accounting-related say. recognition

is probably that the does how not a So would performance third question, your But and Grace recur. to focus, sale. and biggest that position us for

know momentum fact really biggest We’re years. with we’re to in the very these we’ve pleased for black, requests spending the the seem have money. on the that We does more build backlog, the from we government we’re related, in and maintenance back contracts we Grace the infrastructure paving it’s sure seeing have. and on government good four And work don’t a be more but of for some a whether backlog had lot

remarks, really looking a see the respect as we’ll of continued The I broader on thinking trajectory market, buyer rates, interest disposition, early like. said earnings we with come the it my that to see and our hopeful prepared is the third impact probably of the quarter, both pickup. as we’re depends So in timing a pool as what well situation

the that suffice months. operating to to XX better business want us next of disposition this So it timing, the I say over but position performance positive six to the in should specific don’t for momentum commit to a

Sheila McGrath

one like, to the questions. Okay, the the how capital rest solar, great. on portfolio? ask I’m what’s assuming But And your a I’m I’m it last to a potential you One Is the return to on investment that on of the end? out there roll – works, it? more just is interested

Chris Benjamin

the the is, one team of form of start add where local as we invite they of solar the Sheila. of available sort banks some to a that a I’ll financing. did tax from So What structured and specifics, and take use with the deal broadly effectively credits putting the rest then we

turn start then the to investment first once for relatively nominal estimated actual a about our we that $XXX,XXX is on. to And we year. NOI get So be year we’ve it

hopeful the that to the to tenants pass tenants. year to some able pass we’re lease in electricity running get some and have reduced savings place right cases, the to up charges specific to system effectively the structure our so in later then some of in our And – and we of by And system and and then be we’ll the purchase on end. [indiscernible] rates

Sheila McGrath

you. thank Okay,

Operator

session. would This to to for conference closing remarks. question-and-answer concludes I turn our like Steve the back any over Swett

Steve Swett

Thank you us And thank joining you, operator. today. all for

any a investorrelations@adhi.com. Aloha, If XXX-XXXX day. call (XXX) follow-up at us and e-mail feel free please to you have or at great have questions,

Operator

The conference has Thank today’s now concluded. you attending for presentation.

You may now disconnect.

Alexander & Baldwin (ALEX) 8 May 222022 Q1 Earnings call transcript