FPH - Earnings call transcript Q1 2022 | 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 Holding LLC First Quarter 2022 Conference Call.

As a reminder, this call is being recorded. Today’s conference may include for statements regarding Five Point business, financial condition, operations, cash flow, strategy, and prospects.

Forward-looking statements represent Five Point’s estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. statements. future results may the to results in affect actual Five activities could anticipated or activities differ forward-looking factors results cause and Point's and Many materially from press These with release including factors the in Factors annual SEC. most Risk of the described Form report include in included those and Point's in SEC those Five filings, our recent section today's XX-K filed any Five Point assumes forward-looking update statements. that to note Please obligation no

Officer. Executive go Now, to to Dan I'd ahead, turn over Chief like sir. call the Hedigan, Please

Dan Hedigan

of you. Good today Chairman. and Chief Financial for progress our will our Legal taken update overview everyone, very also condition. the I'm the our by afternoon, our toward we've of Chief review call. that thank XXXX. of update give McWilliams, Executive Chief during taken of quarter joining Thank Leo Policy pleased you the to you and Officer; I'm I'll financial Officer; Interim first on today have Then the our Greg company's for Mike And Leo quarter Alvarado, going joined you Stuart and here forward. changes steps place Officer; company some our performance Kij, an Miller, the on strategy the implementing

questions then open the our We will line to team. for management

rising backdrop, housing and company, strength. loss supply a start unemployment interest to of low strong, shift theme. represented higher land housing dominant the and by quarter. affect not rates. the an in rates for Let and reported business record the saying and a quarter markets, general of and a have evolution demand while California The pivotal spite million me put remains have higher in first $XX.X the news of driven remains On Against that lost wages interest broader that, by inflation cycle, shortage have dominated markets debt their equity

future. We have Five Point major the position that met better for several at will

in day-to-day in Having Five I'm quarter million pursuing ever increase first balance costs sale we confident looking forward the approximately us same earnings efficiencies full we we're the solid began in revenue managing path our entered Point, on Five a efficient At As my our who noted restructuring and run release, process are our CEO our balance an of Point We're expenses sheet. of very our operations. recognized as allow as to to position business. our $XX business, sheet. in fortify greater core land in our strategies. to strengthen has our creating opportunities time, better as executing more and associates

As balance Great our management we Five increasing general debt cash focus opportunistically increasing communities sheet. at demand the cost to to Valencia, Park in strength show We further our continue potential is remains move greater flow, the in we're robust creating forward, supply. than opened to the economic in Point on pay Business down current and enhance and environment.

quarter, builders Great in community the homes. first XX sold During Park our

out with of was our quarter sold builders homes released by about limited. for only open only inventory and the neighborhood quarter, Rises be rise this During XX very to homes remaining nearly end. sale at

strategies. sales XXXX. the XXX at initial of the In from homes bringing this plan for and Our XXX sale through continuing March different pleased three neighborhoods XX by XX selling costs total neighborhoods activity start May greatly for homes San we're Valencia. making reassessing during in sales swift times, am of to we take will We'll processes, opening active primary our our quarter, structure The in we sold to first opened as homes Francisco, Great have and quarter, Valencia, quarter. and approximately have advance occurred made up. Park", I of we'll XXXX want focus sold approval In to sale builders our development by of with rationalization sure new priorities "Solis home will this the more to and where I stand for only available homes model have in our opening neighborhoods XXX neighborhood new a cost expand progress called pre-sales you of with focus Optimization sale the open This homes this was moment and of action rationalize at core summer. current Park. opened yield. quarter. on on to those update

Five not pandemic, adjust employment its the as first for Point part everyone's did retained people workforce culture. During a of

a an right top sizing associates end beyond the and workforce. first we associates XXXX, by with the of force company. operating our XX involving focus organization, the to we headcount approximately a we the of on Since moved seen have additional reviewed pandemic, XX took of leave in We're refinement. comprehensive to the overall electing total effecting business now reduction the continuing have process XX% down we and started As steps reduction

our revenue three philosophy for goals. opportunities them the reorganization reports teams and the how empowering deploy look and also basis These complete human capital. internal discussions department with measurable best and have on around to to among accountable with their that operational I'm cost company regular We communities a order refocused me things, personally operational other in holding overall our our management. led of direct teams of an determine, with working leaders all throughout enhancement many to an

with We strive more less. accomplish continue to to

performance, flow, to while value. building for moves we efficiencies team drive to our shareholder focus from forward accountability The operating here, fortify the company. to look cash sheet bottom looking and balance across continue create we're on our opportunities As drive line

for With today's Park rent With in multifamily to on investments of opportunities have our and our million seeing team commercial in our the interest opportunities at priority and the various market. XX infrastructure initiated of second feet increased communities. assembled the commercial strong market we focus place in that continue and planned landholdings. certain work the commercial all been This are square assets, the of includes programs has amenities a and property Great Valentia, include our a quarter experts active development residential in three for we this disciplines Our the our commercial review plans opportunities. for of fundamentals in expanding commercial comprehensive to review an

the multitude from and and allows Our a there we spaces for commercial of are two creative believe as rethink prior work mixed-use to retail solutions uses, to forward and zoning opportunities of market. approaches years we to move conventional introduce within evolving pandemic, the

the a partners prior plans at review This drive commercial just to our example, an yesterday, review properties on numerous in this opportunities we and that reconsider for greater thereafter, progress drive flows execution. distributions for Five opportunities Point. very meeting near Venture, will revenue result As the cash Park our Anticipate future. each comprehensive to had which greater to increased Great Great Park and with the will XXXX in delighted

our priority, also California's entitlements to opportunities to at communities we have housing third on current shortage. enhance focused a As address

Our workforce and the communities for committed a opportunity of the community our are has of housing help the leaders crisis governor. unique that crisis. housing acknowledged with rent, a present to to a for These to as by the and units shortage which partners fill address been sale drives or some public work shortage, current we continuing to be void could

is in California. have we a Five communities committed in Point mixed-use before. to being commented sustainable, As leader building

for scale, in especially Valencia, program set greenhouse high gas pace. evidenced given zero and as the to unit state, community believe of working strong in energy in expand a deliver local our sustainable are certified community has natural size by home to efficiency. maximizes expect Our Over resources its development. time, net new embracing our sales and bar the We enhance and leadership a homeowners bunch preserves that intentionally jurisdictions our

properties been San of engaged, operational fully said priority a it's I've team Francisco. move As Francisco San forward. the I've before, in development our to our

summary, project continue partners to track. with steppingstone to our has will on work a been We our conjunction quarter in for first Point. quarter this there back get Five In public

have the the economic interest to Great but proactive future revenue. on focused at rising both housing nationally. enhancing remain overall see the the In we and Park. opportunities and same demand offerings. particular, of our the the continuing a to always home our market our at demand and company, realization and We to commercial market housing. buyer our sales quarter are and structure, optimistic XXX seize impact that enhance and short of long-term markets in may dynamic strong and I At anticipate inflation XXXX need impact looking still to are XXX we remain our about the builders rightsizing approximately rates sites in our on home and conditions. I and we overhead these upon factors monitor and Valencia time, residential We're fourth commercial that of focused expect sites rationalizing cost

cash our shareholder further will and our sheet, which fortify of value. long-term balance All flow, drive

report over let to our on financial will Now, results. turn me who Leo

Leo Kij

our restructuring the activities summary a was executive you, pursuant three-year in the Jochim our included for in The activities Dan. quarter $XX.X chief of and our appointment entities, follows: administrative role as first benefits. last the officer consolidated with earnings our related chief on losses management the executive XXX,XXX The executive as expenses. agreement. then available $XX.X in chief million and Emile Dan and to restructuring to chairman, Our $XX.X change and release Jochim's to a results February was severance advisory the advisor, senior Thank president that estimated been quarter from as review SEC, website. of filed has officer A operating earlier into Lynn the a in transitioned first included This financial from is was advisory and quarter our was to issued subsequent for today results management on the officer, are XX-Q comprised quarter $XX.X year, fourth from related an $X appointed million, as and net Xth, of restructuring Hedigan million to loss includes and executive president. million place and selling, unconsolidated to president put resulted transition when for and which million structure charge management his and Haddad role general, of

Our will guidance, changes respective Emile and approximately that million we accrued place to considering $XX.X a make advisory to applicable we future remain through Lynn. Emile agreements After these liability the in with of accounting and related each and Lynn retainer party term. payments attributed

will vesting restricted became XXXX. and We -- that also and restructuring $X awards with in share that unvested unrestricted additional that -- XXXX become dates January million recognize upon our costs an associated

that Dan -- we quarter. layoffs. were to companywide for of At of the at March result approximately XX% of end restructuring the estimated activities addition restructuring a previously we management headcount from and XXXX. layoff accrued XXst, end these occurred the since our in costs of XXX,XXX we an the reduction benefits the seen and In first executive reductions as have severance mentioned, Most

the quarter, in inventory, was continue million, during primarily closings were and Valencia. sale there we to to While by $XX.X in no land land related which increased invest activities development

no million at cash end quarter had our was unsecured of Our million balance and $XXX outstanding revolving line $XXX under of borrowings credit. the the we

Our balance was capitalization cash debt taking and ratio XX.X%, our to capitalization stable was at into ratio, net when debt our to account total XX.X%.

as costs the quarter of development for results work the The marketing builder administrative Francisco, Valencia Valencia, support for were were segment has quarter; is on segment is for Company. and to the costs of to Next, well Great Francisco general of segment XXX% and comprised recognized to segment segment's $XXX,XXX services Francisco reassessing development for the assets; operations, This Great Park loss the comprised closing consolidated sale. area, in fourth four the We the and loss purposes; the by the for reports selling, as million Management results own neighborhoods, the segments: land of during management Five Segment administrative focus Valencia purposes San Park, are support Commercial. costs for first venture reporting quarter. plan Moving the interest as general consolidated as provided Great segment The quarter $X.X accounting support in as is for accounting and follows: the operations expenses approval administrative the a of the process first venture, and quarter. incurred San we loss general, the San owner is and was quarter The anticipated landfill toward of our well incurred and operations our and Venture, and XX.X% Park the segment's no as the the There management of company. first company which Great to of Park percent as selling they Point closings

including were the revenues quarter; venture the Ventures debt at of of the operations, cash Although $XX.X for management the fee closing of loss primarily Great venture, results and which open and expenses offset for more Park Great Venture equity with to the accounted and $X.X the next at from company was Park investment million Great from land fee Park of nine of to adjusting assets, the support the of and no work for of selling of we of Great the had and recognized $X.X the in summer, a administrative as which after operations. end management no the statements. of $X.X a by and support results -- million Park million services Great Overall, under fee Park million. self-funding million related liabilities, the a the by of marketing of The home sale costs Venture consisted The comprised to the quarter, first comprised and plan Park administrative home of of Great the mostly general were had $XX.X $X.X fourth quarter. income And sales balance our not therefore, venture difference by full venture, the Park and Great recognized build $XXX,XXX selling, incurred expenses to the segment general, accounting. loss a the the landfill Park. $X.X segment homes for the sales The in venture company's and Solis in the related within closings to company Great in the operations, million segment program, approximately were flows are the of management neighborhood revenues of investment equity There Park sales. cash quarter the basis reports profit $XXX the ventures a method venture. for which toward million, The million, a under consolidated million loss closing costs builder from our Ventures this incurred operation financial than is provided the for net anticipated is $X.X billed at remainder is

Venture management segment Our Company Gateway Point by Venture Five reports management XX% of venture. the Commercial We Commercial the and of commercial the Gateway services Management XXX% own the operations company. and provided of of

the earnings management segment the and Commercial are the accounted I'll the the the Five of for for to and company investment and financial from in $XXX,XXX operator the operations results was method included therefore With questions. the of equity statement. over for $XX,XXX. consolidated operations was turn our under cash which quarter, not from Commercial of Our $XXX,XXX $XXX,XXX venture the Venture. Gateway Point's is that, accounting for, it and liabilities, of Venture flows, assets, equity venture within the income Gateway Commercial

Operator

Associates. We Instructions] Ratner question and our [Operator take Alan first with from Zelman

Alan Ratner

impact but not all guess the I Dan, -- not end -- the I on of do guess the I million cost an on your there terms guess, SG&A first running potential you -- guys took, go action fun, the certainly over about thinking at I couple guys forward question quarter rates -- that's you of savings? know estimate $XX the restructuring just through have in I a quarter been the know toward last years. efforts. there, of just

So you guys any these estimate actions might that took? go where given

Dan Hedigan

question that I at think answer that won't portion, Leo you? Leo -- answer you're can if looking can

Leo Kij

at the cash look -- million. company a would reduction the Yes. we cost $X We're annualized payroll to -- our approximately in of

Alan Ratner

have all flowing would -- Perfect. through before? be the of SG&A line And assuming that would been

Leo Kij

Correct.

Dan Hedigan

it was company. we the and wasn't Alan, important think Alan, -- you're it wasn't very fun. right. that But strategic for

Alan Ratner

Sure.

sense environment and here. I makes forward make certainly go the the look think given it --

chatter maybe fatigue that activity as terms of you overall more know that seen there's turned maybe couple sales really home kind and last I were market concerned the some is in move from the of Dan, bit as buyer far those the impact any have of another hadn't -- and little the all here. you of -- housing level in. seems maybe that like And kicked It guessing just that's to quarter. rates I'm starting weeks the wane traffic volatility in things through stock volatility. So, comments mentioned, a in maybe been market

weeks. referring the just seen you you're homebuilder the from or shifts, what clarify in timeline those can side side So not have any from bit as whether comments or home the to here or as far you a either and becoming buyer three two more conservative maybe last over

Dan Hedigan

our have would slowdown base. seen a Well, in I not say we that sales

Now, which there. and has slowly they wait as Park, of letting down were inventory end new out for builders very to Great lot there seeing up. consistent Valencia, Obviously programs, a communities the it we of just we're some at open the are the sales

We going there. enthusiastic actually land. haven't We in of still very seen builders is another anything offering with buying the And because everyone out. obviously, are contact, about

So up. it's we're that we're keep not know do seeing right it. now it. But seeing not now, it's Once again, all right important we to heads

Alan Ratner

sneak to I that was surprised a or Dan, the question in that, at to here That's because hear. that's debt. one up you some where likely can you would a and of third going a in just assume actually trying at great some do life upfront. is I the to point guys to running potentially least If off your that you at you're little at looking investment, pay mentioned would are which here cycle, And get down only things just knowing I hope cash require ground, as San company is Francisco here.

ramps how that up X been it opposite? flow because bit impression of at the the assets, might over You Francisco we've would But done call not whether a that talk you see sounds cash outflows. as mentioned it, -- you you're might But and be little assuming sheet. next, off-balance another some be more you or sure trending can venture that two joint that decent I'm commercial years whenever an and the happen, through projects year or X looking San pretty cash under to maybe like just

Dan Hedigan

a around once I'm I'm San San in getting head still lot Well, again, Francisco, in my -- Francisco.

So play not -- that's in really this moment. at

not something Otherwise, to to, we're that cash up managing looking in proactive it's going the at very really and process We really we're flows. doing there. be that, we're finalize, what current So cash. our need

watching and of it's all efforts supports when carefully our I be we're very I we So trying say to our that going think And spend going because hopefully that, to cash that, really we're that forward. it. achieve how

Operator

take next [Operator Stifel. Instructions] Ken with our We question from Hansen

Ken Hansen

For shareholder. now. I'll my financial run at full leading period, And this the actually had representing chartered two analyst years a year My were discussion. in bought I ago discussion, I'm that time disclosure, firm XX,XXX three shares a course, now of have -- a Stifel. during about this not I'm people

good time of the my that Dan. it too needs What that hoping sales latest, happened of the complex? look you're capital over the around first costs I be the not that come. out? in is high? But know are the purchase. Point and And structure mistake harbinger my it's You're period? slow; missed Five what and something is Is last I initial wondering like Rate two legacy holders the success same seeing, builders years paid made was is too builders The too to And I'm to from part? what things my time on I'm in -- wanted a the what to in analysis

Dan Hedigan

-- assets, again. We we have have great

to all of the And So great time but XX they're I it's that tell them going in days. on issue on execute spent all a And we here to can but need assets. the is think we last them, take bunch the I need you -- time. I've is, of time of

any sure I'm not but how you more the information assets. love say that's about So underwriting, -- can your initial quite

Ken Hansen

of -- appreciable and shareholder. that are build to something Yes. a time hasn't so, this between what's now culture is value. first things, around world-class And the orientation assets underlying I've I'm I the common other may have value say And heard benefited these puzzling that the glad to the shareholders? I lent I just that Prior anybody and why these of to guess wondering assets would has to filter agree, that's I acquisition bit happened is think assets, people shareholder I'm world-class But that, think so down the itself common importance. far shareholder consideration to first to haven't any world-class hear the the but is

Dan Hedigan

Well.

time a You the has which value. California may market, to -- to market. the take be really asking it's I the their off speak a state. But can't in assets game long long achieve really California

Ken Hansen

with was success and mentioned, enhanced talked opportunities result the are eventual previous what probability you the Creek Where -- think, residential you you think that doing the that I the that? of And on Park, in about what's a will that be? call. And do in

Dan Hedigan

That that's called actually not, in RHNA, in that if a -- in we're a is a a is opportunities. studying. gives us we're you're not into California but that progress and study Well. for there but Needs Housing sure additional or now. I'm is work a residential, the in deep program the Great work It's California active right Regional Park that Assessment, very

what So I -- couldn't in but it a the answer, give that's but RHNA process drives you really, California. all, really yet

Ken Hansen

certain of that your me The confident than bringing the like others Or obviously, company. the perspective, do question. I'm track? last the -- direction that's was skill right more on thing a shareholders appointment, meant to the set maybe the we're oriented can the that make what's one wondering different to in differently? from you're And team your just or

Dan Hedigan

closely with years people my the in And think, side commercial and of of life. past the land have XX I deep I ranch. deep, Ken, teams worked in experience Irvine residential have on in experience of sales, I development, also neighboring the residential community bring

of this lift rolling. really to -- a continue of So path huge just I'm And just to those what really now years I'm experience. all and there a on executing here was get taking

Ken Hansen

Great any or the If is up resident times that these couple my I'm true looks property conference of value is any the comment that Black in one One at a there the of you meeting way calls assets can last appreciate Irvine, office do there Bear investors help of this back, Building. way, Park. is, is the your on underlying of CFO I'm a in brought hold? is down

can I what it's And get So parties handle it's people I too represents. what dollar asset. built other on out that that maybe because there completely involved appreciate see in if But would priorities. -- developed can't -- don't that a they think are the and many amount mean and addition to other

can So about that this is opportunities value the way asset there know net says, any CFO with what we valuations a given is of come here, range we the that up see. the

Dan Hedigan

in not that's position prepared something we're Ken, to do. or

Operator

no at for further Instructions] are closing turn like call or the I'd [Operator any appears you additional remarks. It there back to to this time. questions

Dan Hedigan

Thanks, today. for everyone joining us

So long.

Operator

concludes That call. participation. you you. for today’s Thank Thank your

You may disconnect. now

Five Point (FPH) 13 May 222022 Q1 Earnings call transcript