Five Point (FPH) Q4 2018 earnings summary

Executive summary

• 2018 focused on advancing large-scale mixed-use communities in Los Angeles, San Francisco and Orange Counties, planned for more than 40,000 homes and 23 million sq. ft. of commercial space.

• Development advanced at Mission Village; Great Park land sales continued, while San Francisco Shipyard land transfers remained delayed by Navy retesting.

Financial highlights

• Revenue was $49.0 million, down 64.9% YoY, primarily reflecting the absence of the 2017 San Francisco related-party land sale; higher Great Park management revenue partly offset the decline.

• Net loss attributable to shareholders was $34.7 million versus net income of $73.2 million in 2017; basic and diluted Class A EPS were both $(0.53) versus $1.33 basic in 2017.

• 2018 other income included a $6.7 million gain on the golf course sale; 2017 other income included a $105.6 million TRA payable reduction, primarily from the Tax Act rate cut.

• Operating cash flow was $(343.3) million, including higher Newhall development spending and $38.6 million of senior-note interest payments; 2018 had no significant land-sale proceeds.

Outlook and guidance

• Available cash and management-fee collections were expected to meet cash needs for at least the next 12 months; horizontal development was expected to be funded for several years.

• Newhall homesite deliveries were expected to begin in late 2019; land sales at Candlestick and the Shipyard were not expected to provide significant liquidity within 12 months.

• The 2019 housing outlook was viewed as healthy, supported by limited supply, sustained job growth and improved affordability from lower mortgage rates.

• City approval of the revised Candlestick design was anticipated before year-end 2019; the proposed first phase includes 1,600 homes, 750,000 sq. ft. of office space and 300,000 sq. ft. of lifestyle amenities.