Stratus Properties Inc. (NASDAQ: STRS), a diversified real
estate company with multi-family and single-family residential real
estate development, real estate leasing, hotel and entertainment
businesses in the Austin, Texas area and other select, fast-growing
markets in Texas, today reported year ended December 31, 2018
results.
Financial Highlights:
- Net loss attributable to common
stockholders totaled $4.0 million, $0.49 per share, for 2018,
compared with net income attributable to common stockholders of
$3.9 million, $0.47 per share, for 2017.
- Adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted EBITDA) totaled
$10.8 million for 2018, compared with $9.7 million for 2017. For a
reconciliation of net (loss) income attributable to common
stockholders to Adjusted EBITDA, see the supplemental schedule,
“Adjusted EBITDA,” on page V.
- Real estate operations revenues
increased by 51 percent to $16.8 million and operating income
increased by 150 percent to $1.3 million. During 2018, Stratus sold
17 developed properties for a total of $16.5 million, including 3
Amarra Drive Phase II lots, 9 Amarra Drive Phase III
lots, 4 Amarra Villas townhomes and 1 condominium at the
W Austin Hotel & Residences.
- Increased aggregate borrowing
capacity of revolving credit facility with Comerica Bank from
$52.5 million to $60.0 million and extended maturity date
from November 30, 2018 to June 29, 2020. As of December 31, 2018,
consolidated debt totaled $295.5 million and consolidated cash
totaled $19.0 million, with $7.6 million available under Stratus’
credit facility.
- Capital expenditures and
purchases and development of real estate increased to $105.6
million in 2018, compared with $48.5 million in 2017, primarily
reflecting investment in development projects.
Operational Highlights:
- Completed construction of the first
phase at Lantana Place, a mixed-use development in southwest
Austin, and the first phase of the retail component of Jones
Crossing, a mixed-use development in College Station.
- Substantially completed construction of
Santal Phase II, a 212-unit multi-family project located
directly adjacent to the previously completed Santal Phase
I, a 236-unit multi-family project, in Barton Creek. As of
December 31, 2018, 33 percent of Phase II’s total units were
leased and 95 percent of Phase I was leased.
- Obtained project financing and
commenced construction of The Saint Mary, a 240-unit luxury
garden-style apartment project in the Circle C community.
- Purchased a 54-acre tract of land,
obtained project financing and commenced construction of
Kingwood Place, an H-E-B, L.P. (HEB)-anchored, mixed-use
project in Kingwood, Texas.
- In partnership with HEB, purchased a
38-acre tract of land in New Caney, Texas, for the future
development of an HEB-anchored, mixed-use project.
- As of December 31, 2018, had
executed commercial leases for (1) 68 percent of West Killeen
Market, an HEB-anchored retail development project, (2) 71
percent of the retail space at Lantana Place as well as a
ground lease for an AC Hotel by Marriott, and (3) 87 percent of the
retail space at Jones Crossing.
William H. Armstrong III, Chairman, President and Chief
Executive Officer, stated, “We remained focused on execution of our
strategy throughout 2018 and made significant progress in advancing
our active development projects on schedule and within budget. We
completed construction of the initial phases of Lantana Place and
Jones Crossing and substantially completed construction of Santal
Phase II. We obtained construction financing and broke ground on
The Saint Mary and Kingwood Place projects. In addition, we
expanded our portfolio of development projects with the addition of
Kingwood Place and New Caney.”
Armstrong continued, “The city of Austin continues to
flourish. Despite the increased competition from new hotels in
downtown Austin, the W Austin Hotel and our entertainment venues
finished the year strong. As a diversified real estate company with
a strong reputation and solid relationships in our markets, we are
pleased to see high-profile tech companies expand into and drive
excellent growth opportunities in Austin and beyond. Looking ahead
to 2019, our full cycle active development program of acquiring,
developing and stabilizing, and then preparing properties for sale
or refinancing remains the focus of our strategy. We currently have
projects in each of these stages and we are well positioned to take
advantage of favorable market conditions in Texas generally, and in
Austin in particular, in order to create value for our
stockholders.”
Summary Financial
Results
Years Ended December 31, 2018 2017 (In Thousands,
Except Per Share Amounts)
Revenues
Real estate operations $ 16,831 $ 11,144 Leasing operations 11,319
8,856 Hotel 38,222 38,681 Entertainment 22,691 23,232 Corporate,
eliminations and other (1,463 ) (1,573 ) Total Consolidated Revenue
$ 87,600 $ 80,340
Operating income
(loss):
Real estate operations $ 1,305 a $ 522 Leasing operations 2,897
24,217 b Hotel 6,348 6,553 Entertainment 3,426 4,045 Corporate,
eliminations and other (11,803 ) (12,100 ) Total Consolidated
Operating Income $ 2,173 $ 23,237 Net (loss)
income attributable to common stockholdersc $ (3,982 ) d $ 3,879
Diluted net (loss) income per share $ (0.49 ) $ 0.47
Dividends declared per share of common stock $ — $ 1.00
Adjusted EBITDA $ 10,803 $ 9,741 Capital expenditures and
purchases and development of real estate properties $ 105,592 $
48,474 Diluted weighted average shares of common stock
outstanding 8,153 8,171
a. Includes $0.4 million of reductions to cost of sales
associated with collection of prior-years’ assessments of
properties in Barton Creek.
b. Includes gains of $25.4 million ($16.4 million to net income
attributable to common stockholders or $2.01 per share) associated
with the recognition of the majority of the gain on the sale of The
Oaks at Lakeway and the sale of a bank building and an adjacent
undeveloped 4.1 acre tract of land in Barton Creek, partly offset
by a charge of $2.5 million ($1.6 million to net income
attributable to common stockholders or $0.20 per share) for profit
participation associated with the sale of The Oaks at Lakeway.
c. Includes tax charges totaling $0.2 million ($0.03 per share)
for 2018 and $7.6 million ($0.93 per share) for 2017 associated
with U.S. tax reform.
d. Includes $1.15 million ($0.14 per share) from equity in
unconsolidated affiliates’ income reflecting Stratus’ interest in
Crestview Station. During 2018, Crestview Station sold its last
tract of land and its multi-family entitlements.
The 51 percent increase in revenue and 150 percent increase in
operating income from the Real Estate Operations segment in
2018, compared with 2017, primarily reflects higher revenues from
the sales of higher priced residential units, including Amarra
Villas townhomes and a W Austin Hotel & Residences condominium.
Stratus sold three Amarra Drive Phase II lots, nine Amarra Drive
Phase III lots, four Amarra Villas townhomes and one condominium at
the W Austin Hotel & Residences for $16.5 million during 2018.
Since December 31, 2018, Stratus closed on the sales of one
Amarra Villas townhome and two Amarra Drive Phase III lots for $2.9
million. Ten Amarra Drive Phase III lots and one Amarra Villas
townhome are currently under contract.
The 28 percent increase in revenue from the Leasing
Operations segment for 2018, compared with 2017, primarily
reflects the commencement of leases at Stratus’ recently completed
properties, Lantana Place, West Killeen Market, Santal Phase I and
Phase II, and Jones Crossing. The 88 percent decrease in operating
income for 2018, compared with 2017, primarily reflects the 2017
recognition of a portion ($24.3 million) of the deferred gain
associated with the sale of The Oaks at Lakeway. During 2017,
Stratus also had a $2.5 million profit participation charge
associated with the sale of the Oaks at Lakeway, partly offset by a
$1.1 million gain on the sale of a 3,085-square-foot bank building
and an adjacent 4.1 acre undeveloped tract of land in Barton
Creek.
Revenue and operating income from the Hotel segment
decreased slightly in 2018, compared with 2017, primarily as a
result of a lower number of reservations made by large groups.
Revenue per available room (RevPAR), which is calculated by
dividing total room revenue by the average number of total rooms
available during the year, was $245 in 2018, compared with $253 in
2017. According to a report published by the city of Austin’s hotel
and motel association, between 2010 (the year the W Austin Hotel
opened) and 2018, the central business district room count
increased from 6,226 rooms to 10,660 rooms, or by 71 percent. While
Stratus remains positive on the long-term outlook of the W Austin
Hotel based on continued population growth and increased tourism in
the Austin market, a continued increase in competition resulting
from the anticipated opening of additional hotel rooms in downtown
Austin during 2019 is expected to have an ongoing impact on
Stratus’ hotel revenues.
The decrease in revenue and operating income from the
Entertainment segment for 2018, compared with 2017,
primarily reflects lower event attendance. The ACL Live venue
hosted 240 events and sold approximately 285,900 tickets in 2018,
compared with 224 events and the sale of approximately 297,100
tickets in 2017. As of February 28, 2019, ACL Live had events
booked through December 2020. The ACL Live entertainment space is
promoted through the broadcast of Austin City Limits by KLRU, a
local public television station. In 2018, ACL Live extended its
agreement with KLRU and Austin City Limits for an additional ten
years. The 3TEN ACL Live venue hosted 216 events in 2018 with
estimated attendance of 38,100, compared with 228 events in 2017
with estimated attendance of 40,600. As of February 28, 2019,
3TEN ACL Live had events booked through December 2019.
Debt and Liquidity
At December 31, 2018, consolidated debt totaled $295.5
million and consolidated cash totaled $19.0 million, compared with
consolidated debt of $221.5 million and consolidated cash of $14.6
million at December 31, 2017.
Purchases and development of real estate properties (included in
operating cash flows) and capital expenditures (included in
investing cash flows) totaled $105.6 million for 2018, primarily
related to the purchase of the Kingwood Place land and development
of Santal Phase II, Lantana Place, Jones Crossing and The Saint
Mary projects. This compares with $48.5 million for 2017, primarily
for the development of Barton Creek properties, Lantana Place,
Santal Phase II, West Killeen Market and Jones Crossing.
Stockholder Return
The cumulative total stockholder return of 45 percent on
Stratus' common stock over the five years ending December 31, 2018,
was comparable to the returns of the S&P 500 Index (50 percent)
and the Dow Jones U.S. Real Estate Index (47 percent) and
significantly exceeded the returns of a group of peer real
estate-related companies, which had a 24 percent loss. The peer
group is comprised of Alexander & Baldwin, Inc.,
Consolidated-Tomoka Land Co., Forestar Group Inc., The Howard
Hughes Corporation, Maui Land & Pineapple Company, Inc., The
St. Joe Company and Tejon Ranch Co. This comparison assumes $100.00
invested at December 31, 2013, with all dividends reinvested. The
stock price performance is not necessarily indicative of future
performance.
----------------------------------------------
Conference Call
Information
Stratus will conduct an investor conference call to discuss its
year ended December 31, 2018, financial and operating results
today, March 18, 2019, at 11:00 a.m. ET. The public is invited
to listen to the conference call by dialing (877) 418-4843 for
domestic access and (412) 902-6766 for international access. A
replay of the conference call will be available at the conclusion
of the call for five days by dialing (877) 344-7529 for domestic
access and by dialing (412) 317-0088 for international
access. Please use replay ID: 10128653. The replay will be
available on Stratus’ website at stratusproperties.com until March
23, 2019.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND
REGULATION G DISCLOSURE.
This press release contains forward-looking statements in which
Stratus discusses factors it believes may affect its future
performance. Forward-looking statements are all statements other
than statements of historical fact, such as statements regarding
projections or expectations related to the planning, financing,
development, construction, completion and stabilization of Stratus’
development projects, plans to sell or refinance properties
(including, but not limited to, Amarra Drive lots, Amarra Villas
townhomes, West Killeen Market, the retail building at Barton Creek
Village, The Saint Mary, and Santal), operational and financial
performance, expectations regarding future cash flows, municipal
utility district reimbursements for infrastructure costs,
regulatory matters, leasing activities, estimated costs and
timeframes for development and stabilization of properties,
liquidity, tax rates, the impact of interest rate changes, capital
expenditures, financing plans, possible joint venture, partnership,
strategic relationships or other arrangements, Stratus’ projections
with respect to its obligations under the master lease agreements
entered into in connection with the sale of The Oaks at Lakeway,
other plans and objectives of management for future operations and
development projects, and future dividend payments and share
repurchases. The words “anticipates,” “may,” “can,” “plans,”
“believes,” “potential,” “estimates,” “expects,” “projects,”
“targets,” “intends,” “likely,” “will,” “should,” “to be” and any
similar expressions are intended to identify those assertions as
forward-looking statements.
Under Stratus’ loan agreement with Comerica Bank, Stratus is not
permitted to pay dividends on common stock without Comerica’s prior
written consent. The declaration of dividends is at the discretion
of Stratus’ Board of Directors (Board), subject to restrictions
under Stratus’ loan agreement with Comerica Bank, and will depend
on Stratus’ financial results, cash requirements, projected
compliance with covenants in its debt agreements, outlook and other
factors deemed relevant by the Board.
Stratus cautions readers that forward-looking statements are not
guarantees of future performance, and its actual results may differ
materially from those anticipated, expected, projected or assumed
in the forward-looking statements. Important factors that can cause
Stratus’ actual results to differ materially from those anticipated
in the forward-looking statements include, but are not limited to,
Stratus’ ability to refinance and service its debt, the
availability and terms of financing for development projects and
other corporate purposes, Stratus’ ability to enter into and
maintain joint venture, partnership, strategic relationships or
other arrangements, Stratus’ ability to effect its business
strategy successfully, including its ability to sell properties at
prices its Board considers acceptable, Stratus’ ability to obtain
various entitlements and permits, a decrease in the demand for real
estate in the Austin, Texas area and other select markets in Texas
where Stratus operates, changes in economic, market and business
conditions, reductions in discretionary spending by consumers and
businesses, competition from other real estate developers, hotel
operators and/or entertainment venue operators and promoters,
challenges associated with booking events and selling tickets and
event cancellations at Stratus’ entertainment venues, the
termination of sales contracts or letters of intent due to, among
other factors, the failure of one or more closing conditions or
market changes, Stratus’ ability to secure qualifying tenants for
the space subject to the master lease agreements entered into in
connection with the sale of The Oaks at Lakeway and to assign such
leases to the purchaser and remove the corresponding property from
the master leases, the failure to attract customers or tenants for
its developments or such customers’ or tenants’ failure to satisfy
their purchase commitments or leasing obligations, increases in
interest rates and the phase out of the London Interbank Offered
Rate, declines in the market value of Stratus’ assets, increases in
operating costs, including real estate taxes and the cost of
building materials and labor, changes in external perception of the
W Austin Hotel, changes in consumer preferences, industry risks,
changes in laws, regulations or the regulatory environment
affecting the development of real estate, opposition from special
interest groups or local governments with respect to development
projects, weather-related risks, loss of key personnel,
cybersecurity incidents and other factors described in more detail
under the heading “Risk Factors” in Stratus’ Annual Report on Form
10-K for the year ended December 31, 2018, filed with the U.S.
Securities and Exchange Commission.
This press release also includes Adjusted EBITDA, which is not
recognized under U.S. generally accepted accounting principles
(GAAP). Stratus believes this measure can be helpful to investors
in evaluating its business. Adjusted EBITDA is a financial measure
frequently used by securities analysts, lenders and others to
evaluate Stratus’ recurring operating performance. Adjusted EBITDA
is intended to be a performance measure that should not be regarded
as more meaningful than a GAAP measure. Other companies may
calculate Adjusted EBITDA differently. As required by SEC
Regulation G, a reconciliation of Stratus’ net loss attributable to
common stockholders to Adjusted EBITDA is included in the
supplemental schedules of this press release.
Investors are cautioned that many of the assumptions upon which
Stratus’ forward-looking statements are based are likely to change
after the forward-looking statements are made, some of which
Stratus may not be able to control. Further, Stratus may make
changes to its business plans that could affect its results.
Stratus cautions investors that it does not intend to update its
forward-looking statements more frequently than quarterly
notwithstanding any changes in its assumptions, business plans,
actual experience, or other changes, and Stratus undertakes no
obligation to update any forward-looking statements.
A copy of this release is available on Stratus’
website, stratusproperties.com.
STRATUS PROPERTIES INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
(In Thousands, Except Per Share
Amounts)
Years Ended December 31, 2018
2017 Revenues: Real estate operations $ 16,800 $ 11,001 Leasing
operations 10,389 7,981 Hotel 37,905 38,360 Entertainment 22,506
22,998 Total revenues 87,600 80,340 Cost of sales:
Real estate operations 15,277 10,378 Leasing operations 5,056 4,797
Hotel 28,160 28,478 Entertainment 17,089 17,121 Depreciation 8,571
7,853 Total cost of sales 74,153 68,627 General and
administrative expenses 11,274 11,401 Profit participation in sale
of The Oaks at Lakeway — 2,538 Gain on sale of assets —
(25,463 ) Total 85,427 57,103 Operating income 2,173
23,237 Interest expense, net (7,856 ) (6,742 ) Gain on interest
rate derivative instruments 187 293 Loss on early extinguishment of
debt — (532 ) Other income, net 55 1,581 (Loss)
income before income taxes and equity in unconsolidated affiliates’
income (loss) (5,441 ) 17,837 Equity in unconsolidated affiliates’
income (loss) 1,150 a (49 ) Benefit from (provision for) income
taxes 305 (13,904 ) Net (loss) income (3,986 ) 3,884 Net
loss (income) attributable to noncontrolling interests in
subsidiaries 4 (5 ) Net (loss) income attributable to common
stockholders $ (3,982 ) $ 3,879 Net (loss) income per
share attributable to common stockholders: Basic $ (0.49 ) $ 0.48
Diluted $ (0.49 ) $ 0.47 Weighted-average
shares of common stock outstanding: Basic 8,153 8,122
Diluted 8,153 8,171 Dividends declared per
share of common stock $ — $ 1.00
a. Represents Stratus’ interest in their unconsolidated
affiliate, Crestview Station, and reflects the sale of Crestview
Station’s last tract of land and its multi-family entitlements
during 2018.
STRATUS PROPERTIES INC. CONSOLIDATED BALANCE
SHEETS (Unaudited)
(In Thousands)
December 31, 2018 2017 ASSETS
Cash and cash equivalents $ 19,004 $ 14,611 Restricted cash 19,915
24,779 Real estate held for sale 16,396 22,612 Real estate under
development 136,678 118,484 Land available for development 24,054
14,804 Real estate held for investment, net 253,074 188,390
Deferred tax assets 11,834 11,461 Other assets 15,538 10,852
Total assets $ 496,493 $ 405,993
LIABILITIES AND EQUITY Liabilities: Accounts payable $ 20,602 $
22,809 Accrued liabilities, including taxes 11,914 13,429 Debt
295,531 221,470 Deferred gain 9,270 11,320 Other liabilities 12,525
9,575 Total liabilities 349,842 278,603
Commitments and contingencies Equity: Stratus
stockholders’ equity: Common stock 93 93 Capital in excess of par
value of common stock 186,256 185,395 Accumulated deficit (41,103 )
(37,121 ) Common stock held in treasury (21,260 ) (21,057 ) Total
stockholders’ equity 123,986 127,310 Noncontrolling interests in
subsidiaries 22,665 a 80 Total equity 146,651
127,390 Total liabilities and equity $ 496,493 $
405,993
a. Includes $18.0 million of capital contributions from the
Class B limited partners in the Kingwood Place and The Saint Mary
limited partnerships and $4.6 million received from HEB for its
contribution for the purchase of the land for the future New Caney
project.
STRATUS PROPERTIES INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In Thousands)
Years Ended December 31, 2018
2017 Cash flow from operating activities: Net (loss) income
$ (3,986 ) $ 3,884 Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities: Depreciation
8,571 7,853 Cost of real estate sold 10,283 5,774 Gain on sale of
assets — (25,463 ) U.S. tax reform charge 215 7,580 Gain on
interest rate derivative contracts (187 ) (293 ) Loss on early
extinguishment of debt — 532 Debt issuance cost amortization and
stock-based compensation 1,859 1,573 Equity in unconsolidated
affiliates’ (income) loss (1,150 ) 49 Return on investment in
unconsolidated affiliate 1,251 — Increase (decrease) in deposits
507 (1,322 ) Deferred income taxes, excluding U.S. tax reform
charge (588 ) (1,675 ) Purchases and development of real estate
properties (43,660 ) (14,395 ) Municipal utility districts
reimbursements — 13,799 (Increase) decrease in other assets (4,038
) 4,750 (Decrease) increase in accounts payable, accrued
liabilities and other (966 ) 10,126 Net cash (used in)
provided by operating activities (31,889 ) 12,772
Cash flow from investing activities: Capital expenditures (61,932 )
(34,079 ) Proceeds from sales of assets — 117,261 Payments on
master lease obligations (2,112 ) (2,196 ) Return of investment in
(investment in) unconsolidated affiliates 26 (37 ) Net cash
(used in) provided by investing activities (64,018 ) 80,949
Cash flow from financing activities: Borrowings from credit
facility 34,436 47,200 Payments on credit facility (9,981 ) (67,981
) Borrowings from project loans 56,999 15,793 Payments on project
and term loans (6,693 ) (64,761 ) Cash dividend paid (32 ) (8,133 )
Stock-based awards net payments (131 ) (235 ) Noncontrolling
interests’ contributions 22,589 — Financing costs (1,751 ) (1,703 )
Net cash provided by (used in) financing activities 95,436
(79,820 ) Net (decrease) increase in cash, cash equivalents and
restricted cash (471 ) 13,901 Cash, cash equivalents and restricted
cash at beginning of year 39,390 25,489 Cash, cash
equivalents and restricted cash at end of year $ 38,919 $
39,390
STRATUS PROPERTIES INC.BUSINESS
SEGMENTS
Stratus currently has four operating segments: Real Estate
Operations, Leasing Operations, Hotel and Entertainment.
The Real Estate Operations segment is comprised of Stratus’ real
estate assets (developed for sale, under development and available
for development), which includes its properties in Austin, Texas
(the Barton Creek community, including a portion of Santal Phase II
still under development; the Circle C community, including The
Saint Mary; the Lantana community, including a portion of Lantana
Place still under development; and one condominium unit at the W
Austin Hotel & Residences); in Lakeway, Texas, located in the
greater Austin area (Lakeway); in College Station, Texas (a portion
of Jones Crossing still under development); and in Magnolia, Texas
(Magnolia), Kingwood, Texas (Kingwood Place) and New Caney, Texas
(New Caney), located in the greater Houston area.
The Leasing Operations segment includes the office and retail
space at the W Austin Hotel & Residences, Barton Creek Village,
Santal Phase I, West Killeen Market in Killeen, Texas, and
completed portions of the Santal Phase II, Lantana Place and Jones
Crossing projects.
The Hotel segment includes the W Austin Hotel located at the W
Austin Hotel & Residences in downtown Austin, Texas.
The Entertainment segment includes ACL Live, a live music and
entertainment venue, and 3TEN ACL Live, both located at the W
Austin Hotel & Residences. In addition to hosting concerts and
private events, ACL Live is the home of Austin City Limits, the
longest running music series in American television history.
Stratus uses operating income or loss to measure the performance
of each segment. General and administrative expenses, which
primarily consist of employee salaries, wages and other costs, are
managed on a consolidated basis and are not allocated to Stratus’
operating segments. The following segment information reflects
management determinations that may not be indicative of what the
actual financial performance of each segment would be if it were an
independent entity.
Segment information presented below was prepared on the same
basis as Stratus’ consolidated financial statements (in
thousands).
Real EstateOperationsa
LeasingOperations
Hotel Entertainment
Eliminationsand Otherb
Total Year Ended December 31, 2018: Revenues: Unaffiliated
customers $ 16,800 $ 10,389 $ 37,905 $ 22,506 $ — $ 87,600
Intersegment 31 930 317 185 (1,463 ) — Cost of sales, excluding
depreciation 15,276 c 5,088 28,312 17,702 (796 ) 65,582
Depreciation 250 3,334 3,562 1,563 (138 ) 8,571 General and
administrative expenses — — — — 11,274 11,274 Operating
income (loss) $ 1,305 $ 2,897 $ 6,348 $ 3,426 $ (11,803 ) $ 2,173
Capital expenditures and purchases and development of real estate
properties $ 43,660 $ 60,759 $ 775 $ 398 $ — $ 105,592 Total assets
at December 31, 2018 177,617 175,889 100,248 35,899 6,840 496,493
STRATUS PROPERTIES INC. BUSINESS SEGMENTS
(continued)
Real EstateOperationsa
LeasingOperations
Hotel Entertainment
Eliminationsand Otherb
Total Year Ended December 31, 2017: Revenues: Unaffiliated
customers $ 11,001 $ 7,981 $ 38,360 $ 22,998 $ — $ 80,340
Intersegment 143 875 321 234 (1,573 ) — Cost of sales, excluding
depreciation 10,377 4,829 28,584 17,719 (735 ) 60,774 Depreciation
232 2,693 3,544 1,523 (139 ) 7,853 General and administrative
expenses — — — — 11,401 11,401 Profit participation — 2,538 — — —
2,538 Loss (gain) on sales of assets 13 (25,421 ) d — (55 ) —
(25,463 ) Operating income (loss) $ 522 $ 24,217 $
6,553 $ 4,045 $ (12,100 ) $ 23,237 Capital
expenditures and purchases and development of real estate
properties $ 14,395 $ 33,290 $ 506 $ 283 $ — $ 48,474 Total assets
at December 31, 2017 189,832 71,851 102,491 35,446 6,373 405,993
a. Includes sales commissions and other revenues together with
related expenses.
b. Includes consolidated general and administrative expenses and
eliminations of intersegment amounts.
c. Includes $0.4 million of reductions to cost of sales
associated with collection of prior-years’ assessments of
properties in Barton Creek.
d. Includes $24.3 million associated with recognition of the
majority of the gain on the sale of The Oaks at Lakeway.
RECONCILIATION OF NON-GAAP
MEASUREADJUSTED EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) is a non-GAAP (U.S. generally accepted accounting
principles) financial measure that is frequently used by securities
analysts, investors, lenders and others to evaluate companies’
recurring operating performance, including, among other things,
profitability before the effect of financing and similar decisions.
Because securities analysts, investors, lenders and others use
Adjusted EBITDA, management believes that Stratus’ presentation of
Adjusted EBITDA affords them greater transparency in assessing
Stratus’ financial performance. This information differs from net
(loss) income attributable to common stockholders determined in
accordance with GAAP and should not be considered in isolation or
as a substitute for measures of performance determined in
accordance with GAAP. Adjusted EBITDA may not be comparable to
similarly titled measures reported by other companies, as different
companies may calculate such measures differently. Management
strongly encourages investors to review Stratus’ consolidated
financial statements and publicly filed reports in their entirety.
A reconciliation of Stratus’ net (loss) income attributable to
common stockholders to Adjusted EBITDA follows (in thousands).
Years Ended December 31, 2018
2017
Net (loss) income attributable to common stockholders $
(3,982 ) $ 3,879 Depreciation 8,571 7,853 Interest expense, net
7,856 6,742 (Benefit from) provision for income taxes (305 ) 13,904
Profit participation in sale of The Oaks at Lakeway — 2,538 Gain on
sales of assets — (25,463 ) Equity in unconsolidated affiliates’
(income) loss (1,150 ) 49 Gain on interest rate derivative
instruments (187 ) (293 ) Loss on early extinguishment of debt —
532
Adjusted EBITDA $ 10,803 $ 9,741
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Financial and Media Contact:William H. Armstrong III(512)
478-5788
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