ST JOE Co Q3 FY2026 earnings call

• Financial Performance: Total quarterly revenue decreased by 3%, net income fell by 5%, but operating income rose significantly by 16%. For the first nine months of 2026, total revenue increased by 8%, net income by 7%, and operating income by 26% compared to the same period in 2025.
• Hospitality Growth: The hospitality segment hit a quarterly record with $66 million in revenue. Hotel and club revenues grew by 7% and 14% respectively, with notable guest origin expansion into New York, South Carolina, Illinois, and Michigan.
• Real Estate Development: Latitude Margaritaville-Watersound has 2,426 existing homes out of a planned 3,700. A second phase adding ~3,500 homes was announced, bringing the total planned community size to ~7,200 homes. Sales through the first nine months increased by 24%.
• New Community Planning: Plans were announced for a new Pulte Group community in Pigeon Creek (approx. 3,000 homes), expected to break ground in early 2027. This will drive demand for the emerging Watersound West Bay Center commercial town center (min. 500,000 sq ft).
• Capital Allocation: The company executed a multifaceted strategy in Q3: 40% on stock repurchases ($27.2M), 34% on capital expenditures ($22.8M), 13% on dividends ($9.1M), and 13% on debt repayment ($8.8M). YTD share repurchases increased 161% to $64.9M.
• Hurricane Impact: Properties suffered minor damage including tree debris on golf courses, boardwalk reconstruction needs at the beach club, and minor roof damage at Camp Creek. Operations resumed within 24-48 hours, and main coastal dunes remained intact.

The Hospitality segment achieved a record third-quarter revenue of $66 million, representing a 9% increase from the prior year's $61 million. This growth was driven by a 7% rise in hotel revenue and a 14% increase in club revenue. While specific absolute financial figures for other segments are not detailed in the transcript, the company noted that organic growth contributed to overall performance despite a 3% decrease in total quarterly revenue. The residential sales segment experienced fluctuations due to the timing of closings rather than demand issues, with first-nine-month sales increasing by 24%.

• Commercial Leasing CapEx: Management anticipates accelerating capital expenditure spending over the next one to two years to meet growing tenant demand, particularly national tenants, in both the Watersound Town Center and the new West Bay Center.
• Dividend Increase: The Board declared a cash dividend of 18 cents per share for Q3 2026, marking a 13% increase from Q3 2025 and a 157% increase since the program's inception in 2020.
• Share Buybacks: The company continues an aggressive buyback strategy, having repurchased $64.9 million in shares YTD 2026 vs $24.9 million in the same period last year, reducing outstanding shares to nearly 30-year lows.

• Regulatory Delays: The ICW Marina project is currently stalled pending one final federal permit. Although mass grading has occurred, full construction cannot proceed until this specific regulatory hurdle is cleared.
• Operational Vulnerability: Despite resilience strategies, the company faces risks from severe weather events, evidenced by hurricane-related damages to infrastructure (boardwalks, roofs) and golf course assets.
• Sales Timing Volatility: Residential revenue recognition is subject to spotty timing based on closing schedules, which can cause quarter-to-quarter volatility in reported sales numbers unrelated to underlying demand.

Q: How did the recent hurricane impact the company's properties, specifically regarding infrastructure and operational continuity? / A: CEO Jorge Gonzalez stated that impacts were relatively minor compared to the storm's west side. Key issues included downed trees on golf courses, minor roof damage at Camp Creek, and boardwalk damage at the Beach Club requiring reconstruction. Crucially, hotels reopened within 24-48 hours, and main coastal dunes were not materially impacted, avoiding the need for major rebuilding efforts.

Q: What is the status and timeline for the ICW Marina development, given the lack of recent groundbreaking activity? / A: Gonzalez clarified that while mass grading was completed earlier, the project is ready to move forward "full steam ahead" once a final federal permit is issued. Most other federal, state, and local permits are secured. The delay is solely due to awaiting this last regulatory approval, which management expects in the near term to trigger rapid construction activity.

Q: Why has the home delivery backlog at Latitude Margaritaville-Watersound increased from 149 to 222 units, and does this indicate a slowdown in construction pace? / A: CFO Marek Bakun explained that the increase is due to natural ebbs and flows in the joint venture structure, where there is a time lag between selling a home and completing its construction. With sales up 24% year-to-date, more homes are under contract. The backlog growth reflects strong sales volume and the inherent delay between sale and delivery, rather than a deliberate decision to slow construction.

Q: Can you explain the significant jump in contractual obligations from $30 million to $120.6 million, and how it relates to future capital expenditure plans? / A: Gonzalez attributed the rise primarily to two factors: securing contracts for accelerated commercial leasing expansions to meet tenant demand, and initiating offsite utility corridors. These utilities are necessary to support future residential communities across multiple DSAPs (Development Service Area Plans) that have not yet begun development, ensuring infrastructure readiness for thousands of future homesites.