FPH - Earnings call transcript Q4 2017 | Five Point Holdings, LLC

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

Operator

Greetings and welcome to the Five Point Holdings Fourth Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Before I turn the conference over, I would like to read the following forward-looking statements. Thank you and good afternoon. Today's conference call may include forward-looking statements including statements regarding Five Points' business, financial condition, results of operations, cash flows, strategies, and prospects.

results. Five and on give are as actual only this date any represent to call conference not future statements Points' the estimates of assurance Forward-looking intended to that Because have are forward subject and risks to relate looking to inherently not occurred, these statements yet statements uncertainties. matters Five forward-looking materially factors activities from cause and and could statements. or activities results results future actual Many in the results affect anticipated may Points' to differ filings, on SEC those These the SEC. release, filed those and the factors Factors included with described press Risk Points' include in today's most in Five recent Form the including section of Quarterly Report XX-Q Please note any update that to Five assumes obligation statements. no forward-looking Point conference to turn I now to would Mr. over like the Bob Wetenhall, EVP Capital of Markets. Please ahead, go sir.

Robert Wetenhall

quarter here Erik Chief call. and XXXX year-end the of the that well which as Good it on question one and who you so can We'd afternoon. will I'm our people and update Mike provide Legal McWilliams; follow-up your Thank XXXX to and as going we this Emile to Haddad; Kofi for ask performance, detail CFO, after with recent accommodate of Co-COO's, many brief you outlook I'm CEO, Higgins; our Emile additional recap an Chief Erik will possible. as to Officer, like questions Greg to liquidity. Q&A a regarding Alvarado; our portion XXXX Officer, Bonner fourth conference during provide Policy financial limit call and for off Jochim. afternoon our Lynn hand joining a as

Emile Haddad

us that placements May, notes we a capital million raised to ago. a million position later $XXX IPO stronger for everyone. it and Five meet fully now put Bob a elaborate I our on then in want in transactions transformational when Five land much We in of where a even to another private completed this more we we funded company but welcome Erik year our just year have These able senior and financial Thanks, and when fees. Point are emphasize is terms November. issued $XXX being XXXX in was development of than will Point. strong was

We lot activities success at last Newhall. Park and development of Great the including a start year continued also the of in operational had development

selling efforts residential entrance Our is into commercial KX is lots Five Limited Point three XX% by with which constraints in acquisition which were with of We the note land momentum. start, complemented a gotten combination Park, solid remains home on housing think season has market. a from foot will the good square our $X finished tailwinds on a job interest in markets of limited and high in year has a the in development the of million the beginning specialist one [ph]. Angeles growth that In tight San We the home also sustained our spring that supply a of year appreciation continued consistent of gives housing and Great Orange demand confidence will Francisco, land for create the increase value price support and resulting Gateway, construction commercial to activity portfolio. a County the we [ph] XXXX owners. the the residential us since a be operate. off in Los rewarding created vibrant a markets and

has bodes Parasol that at already Cadence We a Park, our sales newest the home month with for bliss earlier Park and opened sites venture pace well of our to that X are delivered Great Park, more than builders. XX% X,XXX sold neighborhood this

Los approved opening Newhall, currently towards of development end home upto activities. growth X.X land have of our Village development In forward XXXX. with and we is start We sites and square limited the are development should robust our of in sometimes XXXX. moving also expect the Francisco sales land and the for County. availability with approximately to activities job which Mission home of delivery residential million in benefit additional to The feet to expect X,XXX Angeles have in from commercial Mission San continued sites Village Switching we

and design for community. users retail portion residential, and refined be Our commercial program with [ph] of on the the continues a focus development to canvastic

before financial secure we feet square Finally, X performance. remains expect over approval we and the it conclude our million of efforts additional With process to turn XXXX. that, underway to office to discuss I'd space sometime to our for the of end -- like an Erik

Erik Higgins

joining the earnings everybody again of this was to issued afternoon. earlier summary our A Thanks, financial and results Emile release us this afternoon. in thanks included

First investment continued in quarter the financial performance communities. our reflects

result Newhall our results owned our the liability in entities recorded lower remind included in while credit. runs estimate which Five line Point receivable Francisco reduction are and May, the reminder, capital our for that accounted fresh change the want $X tax material quarter on in accounting. senior statements our are to Park investors in for passage wholly This unconsolidated IPO venture are corporate the through issuance Gateway consolidated San corporate I and and under Point agreement our a in of As billion of reflect of of November to agreement Great expansion the December. in also communities notes venture our Five revolving statement method Fourth the tax receivable the XXXX of as is equity of taxes financial of and are raised operations. a for nearly

for sale fees agricultural Newhall Ranch and management non-core results operating parcels, of from $XX.X any sell land consolidated at included San lands Our Candlestick Point the shipyard the collection the revenue did quarter. our not by Francisco the Company The golf two and revenues of operations. largely residential during or and quarter the million of generated

expense recognition Great the quarter. provided This by management managers. for the during Our Park primarily entities incentive our Park XX% and services The $XX.X land for in Park was not sell ventures did quarter. Park Commercial investment in to by ventures venture of Great the and accrual consists the Great our Gateway fee unconsolidated interest interest decreased compensation Great venture XX.X% which related in venture of fourth million any

Our Gateway investment unchanged. was venture Commercial in

of divisional quarter. million terms was In the costs SG&A for $XX operating corporate and

As using I was tax December. in recalculated a lower we mentioned of the receivable passed which liability tax due corporate tax earlier, legislation agreement to rate the recent reform

Going decrease forward, our will state XX%. blended tax rate XX% federal and from to

$XXX.X This from statement a the in TRA of million. million down $XXX our decreased liability to As by million runs change estimate through operations. result, $XXX

fourth with the For totaled net the the decline The the loss by $XXX.X million primarily of driven attributable to TRA. interests quarter, million. impact the net in million was income $XX.X non-controlling liability associated the $XX.X the

net capital want million As a XXXX was income At discussing result, availability by borrowing of and total Company cash our of $XX.X attributable had we balance million. liquidity conclude XX, our $XXX.X $XXX.X December $XXX liquidity position. million. of million and to of I the comprised to

our million the fourth of increase senior balance large During of of notes reflects million. issuance from in increased $XXX.X quarter, November cash $XXX million the $XXX to The XXXX.

access markets. to million million development capital $XXX our credit. with Our expect in currently within unsecured available undrawn sufficient $X remains our have credit to We except communities accordance the to horizontal the liquidity development fund of line plans without need of letters of for

without Our development have move straining efforts liquidity. last year raising enabled to us forward capital program with this

cap $X.X and billion at is fourth at quarter over year. our the total the approximately capital was of I'll the end the total ratio the operator. to With turn Finally, debt of that, it XX% end to

Operator

question. with from [Operator your ISI. Stephen first of comes Kim question Instructions] Please Evercore Our from proceed line the

Stephen Kim

respect and of portion. how first I be guess how up on I deliveries San thinking that should could we my shifting one affect developments give the wondering of next Francisco, we the there over was few to you been if been understand bit us a little might there have going cadence priority relates you've course the [indiscernible] years? of just the to the catch clean-up with

Emile Haddad

Just this to we And bases and Point sometimes years as not delay. of know, is issue of remind there up the Shipyard redevelopment the of in site, XX the to at for is you been applicable have clean-up comes Candlestick. only some Hunter's Navy the to business where everybody,

we've and because to like The to in a So issues cleanup putting of moving of that. in contemplation maintained is we're no shift around lot have always phases because flexibility Candlestick we Candlestick of as something we of plans that our now us parcels navy wait Candlestick [ph]. will allow move infrastructure in disruption complete for business of to it's the to deliver forward any the without and obligation

Stephen Kim

going course have shifted revenue the of that revenues add is net those to more of in recognized or going be -- is the to So change next I expect Candlestick to that to change to recognize of the years, required; just several is any outlays numbers? there there it the much numbers you not the to you also cash the terms but focus as should over pretty be -- any net amount that might also of and

Emile Haddad

There but point will will it you net positive view. they to be when cash look of the a from at be

We Candlestick result, infrastructure and that have optimized; revenue less from sure have when infrastructure, we will and group the decrease. making spent increase, of is are a expect a not with we lot on as to outlay Kofi the his probably time the putting I and think

optimized to a but more all you right have be tell you we're I give that before. now the in can't can we I than -- number going of it's of actually middle So because that more

Robert Wetenhall

please? question Thank you. next Operator,

Operator

question line Capital of question. from the RBC Markets. comes Michael next proceed from Our Please your with Eisen

Michael Eisen

development position your [ph]. development? progress continue under a help talk how to Just and would quick question; little win to capital strong and liquidity you you about very rates you standpoint; good a the fit cover Can to bit be your wanted on funds to what able to where cause a is add make to that guys that from additional you current that

Emile Haddad

to the for to assets. raise something go of we our to for we activities land now we strategic go like we will move that any expect development ahead we've the need as Right and opportunities capital forward the that but cover really or we more liquidity have for -- all stated, to something and for vertical plan. have changes, grow us reasons, developments, whether need evaluate land have, we -- our the through be our capital that Unless things we as that, that's want we capital liquidity raise all

Michael Eisen

development strategic for the lot been in around communities years? these Have the just commentary original change about then vertical entitlement next size any additional there to any position guys the three the been and ability on you're for up comments those more plan? communities of thinking on your are some couple of potential and what is additions the you there in and entitlement. in Have to And any get following looking

Emile Haddad

entitlements our match going X looking different fees we one through for terms think benefits One to in as we you and now sure process ask with questions. that's I market always the When San is, Francisco editors, said, we're that have. entitlement, right talk opportunities I that are of city. -- the the about make in of

We have right square we expect office year before the we'll sometimes now. the end of feet entitlements add of X what million to that

The of the market more optimizing land. and And you producing lot we on vertical more last In one are vertical. make side going and to that terms our every configuration, [indiscernible]. day that's the talking of going should that base to answer real-time income catering visit we in that are we value we're sizes in the be to us expect I that widest the -- is think and the yes, was sure something about on buyers

Operator

Fargo. comes question the next from Wells of line Our Steven [ph] from

Paul Przybylski

generate? have year First next maybe that is I the update or the lots any there on sell could is of Newhall; revenue expect you question that on to number

Emile Haddad

give in numbers to No, a exact yet. we're not position

into I for are think our feet next X Village I year. million until year that now the of year as that will is to with exactly land really end we exactly X.X and commercial. that's for first a number won't in of right how And the later be able months sites be I development approved season unless get we have up contacts deliveries delivering but here. home and good said, square And know X,XXX next you tell not -- we sites can't but many feel rainy we home we expected will we

Paul Przybylski

do San Orlando Okay. any have on in Francisco? the then, for the conveyance expectations And you and latest delay

Emile Haddad

take go and through and to everybody. shifted land the that mean more I -- we near in we land to we potential really what to navy is to we focus did all this therefore and the in that of it's business are delay as off the Candlestick are and future delay when said, of will I ready the none our as our Candlestick parcels issues we're shifted these subject let with and we signed plan, No, why -- potential going the

Paul Przybylski

new Finally, I it? to should we book-keeping quarterly capitalized will how just that expensed be the to interest With regards be able directly have your of the question. of debt, on a or you capitalize breakout that think all of will versus

Emile Haddad

we'll be all Yes, interest expense. capitalizing the

Operator

Our question Please line the with from Zelman Ratner proceed next comes & Alan question. Associates. of from your

Alan Ratner

on First 'XX? what a have do forecast one development Point on you final Newhall spend; for development spend a and you Hunter's just on and number at for 'XX

Emile Haddad

we are type the… already to of forward, planning No, in I these the don't breakdowns financials I of we list give and think don't going that

Erik Higgins

they San around think And I there to insurance Newhall, think inventory about year are $XX at million, right different Francisco -- at of additions well, that's for $XX a there? I inventory. about and are million the

Alan Ratner

there as development about should right? no but since that there that Right, think sales spend, were we

Erik Higgins

So that of so over million. a large in little a the on had $XX sales we Francisco, San sale was cost

that So were referenced numbers to the inventory, cost the inventory I would the changes have to sales. the of in additions you

Alan Ratner

of just would of venture? but I the the the timing that's ones; [ph] imagine it's on not joint there book-keeping May And JV, all because at two more -- just Candlestick affect is then search a that does that change kind

Emile Haddad

the sure us the feel configuration. we're going want major we discussions affect the an that secret not through to in we in that but some best have the help and like work that's have understand the and we who is that well is It to world that the future a are timing look retail we could on what on Search in and for something some [ph] a make actually them with and rethinking and might partner of some we reading doing impact gone real-time that has to redesign shifts May It's of timing. retail to

Alan Ratner

lap a tax on the more we've little recently, moderation And either not first you over this from far at although that final curious your the just you about and as maybe sizes are thinking based strategic; rates moving question, that? all product Great at have think concern the you seen changing phase and phase reform some Park -- next given affordability more or impact bit or we've Newhall; seen at just more type seen any as

Emile Haddad

Well, and homes the looking an at -- our home we're in of of I the always think sites configuration size with our affordability. eye on

a lifestyle size with real give have the would a like you that our be it notwithstanding is, around we at because reached concern a on that haven't to do doesn't the that combined fact price we look product point see the are within. done -- see people it's higher homes don't of we that diversified in at what you we on answer, density Great we look to we've so and will if are you But living of the what markets, not homes real the the Park, escalation. offering starting We standalone yet that very some see

to and answer the we do believe is almost question that your or yes, weekly. not, So

Operator

next question your Our Please [ph] of the from Michael from proceed line comes with JPMorgan. question.

Unidentified Analyst

roughly 'XX; all model of roughly XXXX of with before was from year flow average in and the we I take generating out to $XXX then back, in in size coming negative in and flow just particularly of guess box obviously, operations of had cash XXXX. negative cash -- cash and million trajectory our breakeven being 'XX an a different pieces the Shipyard; consolidated overall wanted Newhall ago Park, moving Great flows the I step a

there type Given if months cash case you that the that was developments approach actually some last obviously that the of for Emile and interesting a the -- of it to still the be X you get mentioned you're was Shipyard? timeline, that; I to the over update broad an in would do shift hoping flow the still relative let's think in or say? in roughly is Or that positive in XXXX that's a perhaps type changes net there looking or year in those timing, flows flows to negative about before cash at breakeven of XXXX? is cash and negative sadly 'XX, next year any original strong just kind to if had expectations moderation in 'XX any of in think of -- this change

Emile Haddad

you're money start earlier spending later development be positive. comes the biggest meant a projected 'XX going in flow land Well, we the it's get and that if -- land money on what Newhall by move spending and than Probably trying where a point started we the at on from when and news a that Sure. because deliveries and flow timing will part now to in up saw year; to you cash benchmark activities of IPO. the actually We up. 'XX development 'XX the were obviously the of it's the moved started but we on moved we of we 'XX Newhall we of Newhall and good through lot to impact the through cash

will by the As cash positive. the happens by where also turn way than we quarter rather our XXXX of year to it now relates right XXXX, beginning end XXXX in rather we a quarter a of flow of the to actually is, first at what that look than up plans that now it position year XXXX. first Right us the show moved until late of be we that about 'XX, earlier post

Unidentified Analyst

near the to as earlier saying what cash like then, better be point is to that around Shipyard -- medium would Shipyard flows the the in well? also your you're slightly And also term

Emile Haddad

the more you're to we efficiency said, of have we than as this of expect before. right works kind we expect that coming and going now happen it's see I out but in to all Yes, size that

Operator

question. Our line next Bank. Sood Please question proceed from comes from Nisha your Deutsche with the of

Tim Daley

So in gotten these buying [indiscernible] power following I guess a boost reforms. have first; so tax

acquisitions discussions a easing a you can, understand up? the how pre So land noticed Delaware change builders? in to or in reform, gearing you willingness maybe they in help you're management spend underwriting of If and competition your over just post-tax bit with have last with have of standards, months, dealing noticed couple the their more us

Emile Haddad

I in very of who The that that I home directly breed at in seeing anything from seen communities the round you very mean unique think next to price and -- we least in seeing when builders see lot that and Well, our our in Angeles Orange tell that are smart and taxes in buyers markets I home of and is lot have very a we we lack County. easing underwriting but supply sites home the to at is builders enthusiasm what we or and in I think because performed which haven't way don't there underwriting appreciation you sell I creation about related marketplace. of sales. a our questions San I today Los of And of think think active the Francisco, our I well are anything like have can and of extreme that see we're repeat of a is builders because that site still job the are an least high and demand a markets builders

Tim Daley

with there has tax hear. other ownership then, any sticking have changed And any to those distribution good reform; the kind to as been of you. lines rate? things just TRA changes tax promoted just corporate along other of than it's the in Thank the well, the structure, and the Understood, so

Emile Haddad

No.

Operator

to now call the like have closing session. I over and remarks. turn the for we question-and-answer of management reached Ladies back end to the would gentlemen,

Robert Wetenhall

joining you look it us, to speaking a thank and next Everybody, you we with forward quarter. afternoon. Have for appreciate great

Operator

today's conference. This concludes

may lines at time. this You disconnect your

Five Point (FPH) 29 Mar 182017 Q4 Earnings call transcript