PICO Holdings, Inc. (NASDAQ:PICO) reported results for the first
quarter ended March 31, 2020. Our reported shareholders’ equity was
$173.3 million ($8.94 per share) at March 31, 2020, compared to
$178.3 million ($9.01 per share) at December 31, 2019.
First Quarter Results of Operations
Our first quarter results of operations were as follows (in
thousands):
Three Months Ended March
31,
2020
2019
Total revenue
$
229
$
12,120
Total cost and expenses
2,040
5,436
Gain (loss) from operations before income
taxes
(1,811
)
6,684
Provision for federal and state income
taxes
—
—
Net income (loss) attributable to PICO
Holdings, Inc.
(1,811
)
6,684
Net income from discontinued operations,
net of tax
—
—
Net income (loss) attributable to PICO
Holdings, Inc.
$
(1,811
)
$
6,684
Net income (loss) per share
$
(0.09
)
$
0.33
PICO’s Chief Executive Officer, Dorothy Timian - Palmer,
commented:
“Our reported net loss of $1.8 million for the first quarter
ended March 31, 2020, is due to the absence of any significant
water resource asset sale transactions in the period. Our revenue
and net income can vary significantly from period to period, as
demonstrated by our reported results for the corresponding quarter
in 2019, where we generated $12.1 million revenue, primarily from
the sales of real estate and groundwater rights in northern Nevada,
and net income of $6.7 million.
“However, we closed the sale of 470 acre feet of groundwater
rights in Dodge Flat, Nevada, for sale proceeds of $3.1 million on
May 1, 2020 and this transaction will be recorded and reported in
our second quarter, 2020 results of operations.
“Given the current economic environment in the U.S. due to the
COVID-19 pandemic, we are actively monitoring our liquidity and
working capital requirements. Currently our liquidity is adequate
and we currently have cash and cash equivalents of approximately
$14.2 million. However, to ensure we maintain adequate liquidity in
these uncertain times, we elected to defer the exercise of an
option to acquire 201 acre - feet of groundwater rights in Lyon
County, Nevada, in the second quarter of 2020 for $3.2 million
until the second quarter 2021. The deferral cost together with a
regularly scheduled option payment for a further 201 acre - feet of
groundwater rights in Lyon County, Nevada, due also to be exercised
in the second quarter of 2021, totaled $285,000 which was paid and
recorded in our first quarter, 2020 results of operations.
“With our cash resources totaling $18.2 million at the beginning
of 2020, and the Board’s belief that at current and recent market
prices, our stock is undervalued from our estimate of its intrinsic
value, we continued to repurchase our common stock through open
market purchases throughout the first quarter of 2020 and year to
date. In 2020, we have repurchased to date a total of 479,234
shares for approximately $4.3 million. We will continue to monitor
our liquidity and forecast cash generation very carefully;
depending on the price of our shares, our cash position, and our
cash flow outlook, we will continue to evaluate our capital
allocation with respect to our share repurchase plan.”
Net Operating Loss Carryforwards
At December 31, 2019, we had approximately $156.5 million of
(pre-tax) federal net operating loss carryforwards, or NOLs, that
could be utilized in certain circumstances to offset PICO’s taxable
income and reduce its federal income tax liability. Additional
information with respect to these NOLs is contained in our Annual
Report on Form 10-K for the year ended December 31, 2019 that we
filed with the Securities and Exchange Commission.
About PICO Holdings, Inc.
As of March 31, 2020, our primary holding was Vidler Water
Company, Inc. (“Vidler”), a water resource and water storage
business, with assets and operations primarily in the Southwestern
U.S.
Currently, we believe the highest potential return to
shareholders is from a return of capital. As we monetize assets,
rather than reinvest the proceeds, we intend to return capital to
shareholders through a stock repurchase program or by other means
such as special dividends. Nonetheless, we may, from time to time,
reinvest a portion of proceeds from asset monetizations in further
development of existing assets, if we believe the returns on such
reinvestment outweigh the benefits of a return of capital.
OTHER INFORMATION
At March 31, 2020, we had a market capitalization of $150.8
million, and 19,385,030 shares outstanding.
We remind all of our stockholders that questions regarding our
operations may be submitted to info@picoholdings.com, and, if appropriate, we
will post on our website responses to these questions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains statements that may constitute
forward-looking statements, which are based on information
currently available, usually identified by words such as
"anticipates," "believes," "estimates," "plans,'' "projects,"
"expects," "hopes," "intends," "strategy," ''focus," "outlook,"
"will," "could," "should," "may," "continue," or similar
expressions, which speak only as of the date the statement was
made. Such statements are forward-looking statements and are within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and such statements are subject to the safe harbor created
by those sections and the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical or
current fact, are statements that could be deemed forward-looking
statements, including without limitation statements regarding our
business objectives, our ability to monetize our water resources,
the future demand for our water resources, our ability to reduce
net operating cash use, our ability to preserve and utilize NOLs to
offset taxable income and reduce our federal income liability, and
our ability to monetize assets and return capital to shareholders
through stock repurchases or through other means. The
forward-looking statements are based on current expectations and
assumptions and are subject to risks and uncertainties.
A number of other factors may cause actual results to differ
materially from our expectations, such as: any slow down or
downturn in the housing or in the real estate markets in which
Vidler operates; fluctuations in the prices of water and water
rights; physical, governmental and legal restrictions on water and
water rights; a downturn in some sectors of the stock market;
general economic conditions; the impacts of the COVID-19 global
pandemic; prolonged weakness in the overall U.S. and global
economies; the performance of the businesses in which Vidler
operates; the continued service and availability of key management
personnel; and potential capital requirements and financing
alternatives.
For further information regarding risks and uncertainties
associated with our business, please refer to the “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors” sections of our SEC filings,
including our Annual Report on Form 10-K and our Quarterly Reports
on Form 10-Q, copies of which may be obtained by contacting us at
(775) 885-5000 x200 or at http://investors.picoholdings.com.
We undertake no obligation to (and we expressly disclaim any
obligation to) update our forward-looking statements, whether as a
result of new information, subsequent events, or otherwise, in
order to reflect any event or circumstance which may arise after
the date of this press release, except as may otherwise be required
by law. Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507006135/en/
Dorothy Timian-Palmer President and Chief Executive Officer
(775) 885-5000
PICO (NASDAQ:PICO)
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