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Maui Land and Pineapple Company Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 4, 2009 12:13PM
Maui Land and Pineapple Company Inc (MLP) filed Quarterly Report for the period ended 2009-09-30. MAUI LAND & PINEAPPLE CO Inc. is committed to the integration of agriculture natural resource management and eco-effective design principles to create and manage holistic communities. MLP's vision of holistic communities is based on the traditional Hawaiian model of ahupua?a a system of self-reliance based on the artful use of land and water resources to sustain island life indefinitely. MLP is a Hawai?i corporation and successor to a business organized in 1909. Its principal operating subsidiaries are Maui Pineapple Company Ltd. a producer and marketer of Maui-grown pineapple and Kapalua Land Company Ltd. operator of Kapalua Resort a master-planned resort community in West Maui. Maui Land And Pineapple Company Inc has a market cap of $53.1 million; its shares were traded at around $6.52 with and P/S ratio of 0.6. Maui Land And Pineapple Company Inc had an annual average earning growth of 23.6% over the past 5 years.
Highlight of Business Operations:
For the third quarter of 2009, we incurred a net loss of $25.5 million and for the nine months ended September 30, 2009, we had negative cash flows from operations of $19.6 million. In September 2009, we sold approximately 125 acres that comprised a portion of our Kapalua Mauka project for $10.0 million and in August 2009 we sold a residential property for $1.7 million. Proceeds from these sales were used to pay down our revolving lines of credit and to support ongoing operating activities. In September 2009, Bay Holdings recorded a $208.8 million charge representing an impairment of the value of the Kapalua Bay Residence condominium project. We recorded a loss of $22.8 million from this investment in the third quarter of 2009 and stopped recording our share of Bay Holdings losses in September 2009 after our investment balance and other amounts advanced to Bay Holdings were reduced to zero, and the estimated remaining obligations to the joint venture were accrued.
In early October 2009, we entered into amended agreements for our two lines of credit. Our $45 million revolving line of credit was increased to $50 million, the maturity of this credit was extended from March 2010 to March 2011, and the minimum liquidity requirement was reduced from $10 million to $8 million. The maturity and liquidity requirement for our $25 million revolving line of credit was similarly amended. See Note 12 to the condensed consolidated financial statements.
We reported a net loss of $25.5 million ($3.17 per share) for the third quarter of 2009 compared to a net loss of $8.7 million ($1.09 per share) for the third quarter of 2008. The net loss for the third quarter of 2009 includes $22.8 million equity in losses from our investment in Bay Holdings, compared to income of $5.1 million attributable to this investment for the third quarter of 2008. Consolidated revenues for the third quarter of 2009 were $26.7 million compared to $19.1 million for the third quarter of 2008. Our Agriculture and Resort segments produced lower revenues in the third quarter of 2009 compared to the third quarter of 2008. Revenues from our Community Development segment for the third quarter of 2009 include the sale of two properties that resulted in revenues of $11.7 million.
Interest expense was $2.7 million for the third quarter of 2009 compared to $1.4 million for the third quarter of 2008. There was no interest capitalized in the third quarter of 2009 because construction projects have been delayed due to the current economic climate and our cash flow constraints; interest of $41,000 was capitalized to construction projects in the third quarter of 2008. Included in interest expense are credits of $322,000 and $205,000 for the third quarters of 2009 and 2008, respectively, representing the change in fair value of certain interest rate swap agreements. Also included in interest expense for the third quarter of 2009 and 2008 is a net charge (credit) of $260,000 and $(941,000), respectively, representing the change in the estimated fair value of the derivative liability that was bifurcated from the $40 million convertible notes, plus accretion on the carrying value of the notes. In the third quarter of 2009 our average borrowings were approximately $2.7 million lower than the third quarter of 2008. Our effective interest rate on borrowings was 6.4% in the third quarter of 2009 compared to 5.2% in the third quarter of 2008.
Revenues for the Agriculture segment decreased by 32%, or $2.3 million, from $7.2 million for the third quarter of 2008 to $4.9 million for the third quarter of 2009, primarily due to a reduction in fresh fruit and pineapple juice sales volume and lower average prices for both products. The Agriculture segment reported an operating loss of $4.1 million for the third quarter of 2009 compared to an operating loss of $9.5 million for the third quarter of 2008. The operating loss for the third quarter of 2008 includes employee severance charges of approximately $1.7 million as a result of a reduction in the work force related to the restructuring of these operations. The reduction in loss in the third quarter of 2009 reflects cost cutting measures that we have continued to implement in the Agriculture operations.
The Community Development segment reported an operating loss of $16.9 million for the third quarter of 2009 compared to an operating profit of $2.5 million for the third quarter of 2008. Revenues from this operating segment were $13.8 million for the third quarter of 2009 compared to $2.2 million for the third quarter of 2008. The operating loss for the third quarter of 2009 reflect the losses from our investment in Bay Holdings; increased revenues reflect the sale of two real estate properties in the third quarter of 2009. In September 2009, Bay Holdings recorded an impairment in the value of its real estate inventory totaling $208.8 million primarily reflecting a change in forecasted sales revenues on the unsold whole and fractional units, which substantially reduced the value of the units currently held in inventory.
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