Consolidated Tomoka Land Earnings 2019-09-30

CTO 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
TRC	432	529	94	35	0	5	11	493	0%	43.1	1%
NTP	340	318	90	0	0	0	0	340			0%
RFL	304	143	17	5	0	-3	-1	291	0%	-259.0	-2%
CTO	302	578	380	84	59	29	57	522	71%	9.2	5%
PICO	228	177	2	17	0	1	1	219	0%	281.3	0%
ARL	214	818	507	82	0	168	223	433	0%	1.9	21%
MMAC	200	326	111	0	0	66	68	295		4.3	20%
GRIF	192	264	167	26	25	5	18	328	93%	18.5	2%
MLP	190	48	17	10	0	1	1	189	0%	250.5	2%
LEJU	166	417	175	0	0	0	0	18			0%

10-Q 1 cto-20190930x10q.htm 10-Q cto_Current_Folio_10Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 01-11350

CONSOLIDATED-TOMOKA LAND CO.

(Exact name of registrant as specified in its charter)


Florida		59-0483700
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1140 N. Williamson Blvd., Suite 140
Daytona Beach, Florida		32114
(Address of principal executive offices)		(Zip Code)

(386) 274-2202

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
COMMON STOCK, $1.00 PAR VALUE	CTO	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒
			
Non-accelerated Filer	☐	Smaller Reporting Company	☐
			
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of Common Stock Outstanding

October 11, 2019

$1.00 par value 4,929,079

Table of Contents

INDEX


		Page
		No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets – September 30, 2019 (Unaudited) and December 31, 2018		3

Consolidated Statements of Operations – Three and nine months ended September 30, 2019 and 2018 (Unaudited)		4

Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2019 and 2018 (Unaudited)		5

Consolidated Statements of Shareholders’ Equity – Nine months ended September 30, 2019 and 2018 (Unaudited)		6

Consolidated Statements of Cash Flows – Nine months ended September 30, 2019 and 2018 (Unaudited)		7

Notes to Consolidated Financial Statements (Unaudited)		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		41

Item 3. Quantitative and Qualitative Disclosures About Market Risks		58

Item 4. Controls and Procedures		59

PART II—OTHER INFORMATION		59

Item 1. Legal Proceedings		59

Item 1A. Risk Factors		59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		60

Item 3. Defaults Upon Senior Securities		60

Item 4. Mine Safety Disclosures		60

Item 5. Other Information		60

Item 6. Exhibits		61

SIGNATURES		62

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED-TOMOKA LAND CO.

CONSOLIDATED BALANCE SHEETS


	(Unaudited) September 30, 2019		December 31, 2018
ASSETS
Property, Plant, and Equipment:
Income Properties, Land, Buildings, and Improvements	$	472,444,875	$	392,520,783
Other Furnishings and Equipment		730,878		728,817
Construction in Progress		412,543		19,384
Total Property, Plant, and Equipment		473,588,296		393,268,984
Less, Accumulated Depreciation and Amortization		(32,696,922)		(24,518,215)
Property, Plant, and Equipment—Net		440,891,374		368,750,769
Land and Development Costs		23,520,982		25,764,633
Intangible Lease Assets—Net		49,195,221		43,555,445
Assets Held for Sale—See Note 21		4,502,635		75,866,510
Investment in Joint Venture		6,850,594		6,788,034
Impact Fee and Mitigation Credits		447,596		462,040
Commercial Loan Investments		32,419,693		—
Cash and Cash Equivalents		5,411,727		2,310,489
Restricted Cash		6,213,295		19,721,475
Refundable Income Taxes		—		225,024
Other Assets—See Note 10		14,008,249		12,885,453
Total Assets	$	583,461,366	$	556,329,872
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	2,624,096	$	1,036,547
Accrued and Other Liabilities—See Note 15		5,627,474		5,197,884
Deferred Revenue—See Note 16		7,457,665		7,201,604
Intangible Lease Liabilities—Net		26,059,614		27,390,350
Liabilities Held for Sale—See Note 21		1,729,049		1,347,296
Income Taxes Payable		112,896		—
Deferred Income Taxes—Net		58,761,619		54,769,907
Long-Term Debt		282,087,031		247,624,811
Total Liabilities		384,459,444		344,568,399
Commitments and Contingencies—See Note 19
Shareholders’ Equity:
Shareholders' Equity:
Common Stock – 25,000,000 shares authorized; $1 par value, 6,075,462 shares issued and 4,927,728 shares outstanding at September 30, 2019; 6,052,209 shares issued and 5,436,952 shares outstanding at December 31, 2018		6,015,867		5,995,257
Treasury Stock – 1,147,734 shares at September 30, 2019 and 615,257 shares at December 31, 2018		(63,441,664)		(32,345,002)
Additional Paid-In Capital		26,062,021		24,326,778
Retained Earnings		230,284,293		213,297,897
Accumulated Other Comprehensive Income		81,405		486,543
Total Shareholders’ Equity		199,001,922		211,761,473
Total Liabilities and Shareholders’ Equity	$	583,461,366	$	556,329,872

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

CONSOLIDATED-TOMOKA LAND CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Revenues
Income Properties	$	10,260,831	$	9,360,155	$	31,360,544	$	28,347,181
Interest Income from Commercial Loan Investments		855,559		41,262		908,324		615,728
Real Estate Operations		631,741		8,012,509		11,677,413		24,498,527
Total Revenues		11,748,131		17,413,926		43,946,281		53,461,436
Direct Cost of Revenues
Income Properties		(1,476,288)		(1,773,840)		(5,043,496)		(5,677,758)
Real Estate Operations		(342,148)		(5,577,491)		(6,448,016)		(7,993,767)
Total Direct Cost of Revenues		(1,818,436)		(7,351,331)		(11,491,512)		(13,671,525)
General and Administrative Expenses		(2,260,728)		(1,928,008)		(6,881,524)		(7,180,737)
Depreciation and Amortization		(4,286,836)		(3,756,507)		(11,707,710)		(11,308,876)
Total Operating Expenses		(8,366,000)		(13,035,846)		(30,080,746)		(32,161,138)
Gain on Disposition of Assets		2,187,332		—		20,869,196		22,035,666
Total Operating Income		5,569,463		4,378,080		34,734,731		43,335,964
Investment Income		33,048		14,179		86,363		38,383
Interest Expense		(3,253,908)		(2,345,156)		(9,219,195)		(7,443,922)
Income from Continuing Operations Before Income Tax Expense		2,348,603		2,047,103		25,601,899		35,930,425
Income Tax Expense from Continuing Operations		(595,144)		(561,223)		(6,459,234)		(9,016,556)
Net Income from Continuing Operations		1,753,459		1,485,880		19,142,665		26,913,869
Loss from Discontinued Operations (Net of Income Tax)—See Note 21		(267,437)		(1,189,708)		(591,746)		(1,542,490)
Net Income	$	1,486,022	$	296,172	$	18,550,919	$	25,371,379

Per Share Information—See Note 11:
Basic
Net Income from Continuing Operations Attributable to Consolidated-Tomoka Land Co.	$	0.36	$	0.27	$	3.79	$	4.88
Net Income from Discontinued Operations Attributable to Consolidated-Tomoka Land Co. (Net of Income Tax)		(0.05)		(0.22)		(0.12)		(0.28)
Basic Net Income per Share	$	0.31	$	0.05	$	3.67	$	4.60
Diluted
Net Income from Continuing Operations Attributable to Consolidated-Tomoka Land Co.	$	0.36	$	0.27	$	3.79	$	4.85
Net Income from Discontinued Operations Attributable to Consolidated-Tomoka Land Co. (Net of Income Tax)		(0.05)		(0.22)		(0.12)		(0.28)
Diluted Net Income per Share	$	0.31	$	0.05	$	3.67	$	4.57

Dividends Declared and Paid	$	0.11	$	0.07	$	0.31	$	0.19

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

CONSOLIDATED-TOMOKA LAND CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018

Net Income	$	1,486,022	$	296,172	$	18,550,919	$	25,371,379
Other Comprehensive Income (Loss)
Cash Flow Hedging Derivative - Interest Rate Swap (Net of Income Tax of $(21,153) and $7,576 for the three months ended September 30, 2019 and 2018, respectively, and Net of Income Tax of $(137,543) and $85,169 for the nine months ended September 30, 2019 and 2018, respectively)		(62,307)		22,316		(405,138)		331,126
Total Other Comprehensive Income (Loss), Net of Income Tax		(62,307)		22,316		(405,138)		331,126
Total Comprehensive Income	$	1,423,715	$	318,488	$	18,145,781	$	25,702,505

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

CONSOLIDATED-TOMOKA LAND CO.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

For the three months ended September 30, 2019:


									Accumulated
					Additional				Other
	Common		Treasury		Paid-In		Retained		Comprehensive		Shareholders’
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity
Balance July 1, 2019	$	6,014,536	$	(63,441,664)	$	25,450,060	$	229,333,766	$	143,712	$	197,500,410
Net Income		—		—		—		1,486,022		—		1,486,022
Stock Issuance		1,331		—		77,944		—		—		79,275
Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options		—		—		534,017		—		—		534,017
Cash Dividends ($0.11 per share)		—		—		—		(535,495)		—		(535,495)
Other Comprehensive Loss, Net of Income Tax		—		—		—		—		(62,307)		(62,307)
Balance September 30, 2019	$	6,015,867	$	(63,441,664)	$	26,062,021	$	230,284,293	$	81,405	$	199,001,922

For the nine months ended September 30, 2019:


									Accumulated
					Additional				Other
	Common		Treasury		Paid-In		Retained		Comprehensive		Shareholders’
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity
Balance January 1, 2019	$	5,995,257	$	(32,345,002)	$	24,326,778	$	213,297,897	$	486,543	$	211,761,473
Net Income		—		—		—		18,550,919		—		18,550,919
Stock Repurchase		—		(31,096,662)		—		—		—		(31,096,662)
Vested Restricted Stock		12,957		—		(316,272)		—		—		(303,315)
Stock Issuance		7,653		—		434,867		—		—		442,520
Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options		—		—		1,616,648		—		—		1,616,648
Cash Dividends ($0.31 per share)		—		—		—		(1,564,523)		—		(1,564,523)
Other Comprehensive Loss, Net of Income Tax		—		—		—		—		(405,138)		(405,138)
Balance September 30, 2019	$	6,015,867	$	(63,441,664)	$	26,062,021	$	230,284,293	$	81,405	$	199,001,922

For the three months ended September 30, 2018:


									Accumulated
					Additional				Other
	Common		Treasury		Paid-In		Retained		Comprehensive		Shareholders’
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity
Balance July 1, 2018	$	5,984,747	$	(24,700,205)	$	23,228,788	$	202,024,986	$	681,426	$	207,219,742
Net Income		—		—		—		296,172		—		296,172
Stock Repurchase		—		(1,784,560)		—		—		—		(1,784,560)
Exercise of Stock Options		8,520		—		189,849		—		—		198,369
Stock Issuance		949		—		57,424		—		—		58,373
Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options		—		—		386,109		—		—		386,109
Cash Dividends ($0.07 per share)		—		—		—		(384,507)		—		(384,507)
Other Comprehensive Income, Net of Income Tax		—		—		—		—		22,316		22,316
Balance September 30, 2018	$	5,994,216	$	(26,484,765)	$	23,862,170	$	201,936,651	$	703,742	$	206,012,014

For the nine months ended September 30, 2018:


									Accumulated
					Additional				Other
	Common		Treasury		Paid-In		Retained		Comprehensive		Shareholders’
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity
Balance January 1, 2018	$	5,963,850	$	(22,507,760)	$	22,735,228	$	177,614,274	$	372,616	$	184,178,208
Net Income		—		—		—		25,371,379		—		25,371,379
Stock Repurchase		—		(3,977,005)		—		—		—		(3,977,005)
Exercise of Stock Options		8,520		—		189,849		—		—		198,369
Vested Restricted Stock		19,065		—		(517,439)		—		—		(498,374)
Stock Issuance		2,781		—		171,098		—		—		173,879
Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options		—		—		1,283,434		—		—		1,283,434
Cash Dividends ($0.19 per share)		—		—		—		(1,049,002)		—		(1,049,002)
Other Comprehensive Income, Net of Income Tax		—		—		—		—		331,126		331,126
Balance September 30, 2018	$	5,994,216	$	(26,484,765)	$	23,862,170	$	201,936,651	$	703,742	$	206,012,014

See Accompanying Notes to Consolidated Financial Statements

Table of Contents

CONSOLIDATED-TOMOKA LAND CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	September 30,		September 30,
	2019		2018
Cash Flow from Operating Activities:
Net Income	$	18,550,919	$	25,371,379
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		11,707,710		11,612,557
Amortization of Intangible Liabilities to Income Property Revenue		(1,810,459)		(1,779,031)
Loan Cost Amortization		323,672		389,656
Amortization of Discount on Convertible Debt		1,009,847		947,419
Gain on Disposition of Property, Plant, and Equipment and Intangible Assets		(2,187,332)		(22,035,666)
Loss (Gain) on Disposition of Assets Held for Sale		(18,681,864)		1,119,362
Accretion of Commercial Loan Origination Fees		(67,432)		(34,768)
Non-Cash Imputed Interest on Commercial Loan Investment		(94,761)		—
Deferred Income Taxes		3,586,574		8,345,475
Non-Cash Compensation		2,059,167		1,283,434
Decrease (Increase) in Assets:
Refundable Income Taxes		225,024		491,821
Golf Assets Held for Sale		(40,159)		—
Land and Development Costs		2,243,651		3,090,301
Impact Fees and Mitigation Credits		14,444		586,343
Other Assets		(2,865,683)		(2,139,265)
Increase (Decrease) in Liabilities:
Accounts Payable		1,587,549		(1,035,771)
Accrued and Other Liabilities		429,590		(4,194,651)
Deferred Revenue		256,061		600,929
Golf Liabilities Held for Sale		381,753		—
Income Taxes Payable		112,896		—
Net Cash Provided By Operating Activities		16,741,167		22,619,524
Cash Flow from Investing Activities:
Acquisition of Property, Plant, and Equipment and Intangible Lease Assets and Liabilities		(75,313,805)		(29,399,109)
Acquisition of Commercial Loan Investments		(32,257,500)		—
Acquisition of Land		—		(3,794,058)
Cash Contribution for Interest in Joint Venture		(62,560)		(2,087,521)
Proceeds from Disposition of Property, Plant, and Equipment, Net, and Assets Held for Sale		80,321,554		26,377,525
Principal Payments Received on Commercial Loan Investments		—		11,960,467
Net Cash Provided By (Used In) Investing Activities		(27,312,311)		3,057,304
Cash Flow from Financing Activities:
Proceeds from Long-Term Debt		122,500,000		36,300,000
Payments on Long-Term Debt		(88,901,414)		(55,830,473)
Cash Paid for Loan Fees		(469,885)		(263,473)
Cash Proceeds from Exercise of Stock Options and Stock Issuance		—		372,248
Cash Used to Purchase Common Stock		(31,096,662)		(3,977,005)
Cash Paid for Vesting of Restricted Stock		(303,314)		(498,374)
Dividends Paid

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	5	$302

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8-K	2019-12-09	M&A, Regulation FD, Exhibits
8-K	2019-11-26	Enter Agreement, M&A, Off-BS Arrangement, Exhibits
8-K	2019-10-23	Regulation FD, Exhibits
8-K	2019-10-18
8-K	2019-10-16
8-K	2019-10-16
8-K	2019-10-15
8-K	2019-07-17	Earnings, Exhibits
8-K	2019-07-17	Regulation FD, Exhibits
8-K	2019-06-03	Regulation FD, Exhibits
8-K	2019-05-24	Enter Agreement, Exhibits
8-K	2019-04-24	Shareholder Vote
8-K	2019-04-24	Regulation FD, Exhibits
8-K	2019-04-16	Earnings, Exhibits
8-K	2019-04-16	Regulation FD, Exhibits
8-K	2019-02-05	Earnings, Exhibits
8-K	2019-02-05	Regulation FD, Exhibits
8-K	2018-10-17	Officers, Exhibits
8-K	2018-10-17	Regulation FD, Exhibits
8-K	2018-10-17	Earnings, Exhibits
8-K	2018-07-18	Earnings, Exhibits
8-K	2018-07-18	Regulation FD, Exhibits
8-K	2018-06-04	Regulation FD, Exhibits
8-K	2018-04-25	Shareholder Vote
8-K	2018-04-25	Regulation FD, Exhibits
8-K	2018-04-17	Earnings, Exhibits
8-K	2018-04-17	Regulation FD, Exhibits
8-K	2018-04-09	Regulation FD, Exhibits
8-K	2018-02-21	Officers
8-K	2018-02-07	Earnings, Exhibits
8-K	2018-02-07	Regulation FD, Exhibits

EX-31.1	cto-20190930ex311bf983d.htm
EX-31.2	cto-20190930ex312cf729a.htm
EX-32.1	cto-20190930ex3218d1dae.htm
EX-32.2	cto-20190930ex322d6b02b.htm