Alexander & Baldwin Reports 2015 Results

Alexander & Baldwin Inc. President and CEO Chris Benjamin. Courtesy photo.

Alexander & Baldwin Inc. President and CEO Chris Benjamin today announced that “Aside from the challenges in our sugar operation, our company performed well in 2015.”

In summary for 2015, leasing net operating income grew 8.5%; sales at Waihonua, Maui Business Park and Kahala Avenue drove a $65.0 million development and sales operating profit; the materials and construction segment produced $41.0 million of earnings before interest, taxes, depreciation and amortization (up 7.9% from last year); and previously announced sugar losses and cessation charges negatively impacted reported earnings.

A&B reported a net income of $29.6 million for 2015 (or $0.545 per diluted share). The figure includes a previously reported loss for the agribusiness segment of $33.9 million ($0.69 per diluted share), principally caused by operating losses for Hawaiian Commercial & Sugar Company and costs related to the cessation of sugar operations planned for this year.

Earnings in 2014 were $61.4 million ($1.25 per diluted share), which included $5.7 million ($0.12 per diluted share) of agribusiness segment losses.

Excluding the agribusiness losses, which primarily reflect the impact of the cessation of sugar operations scheduled for 2016, and results from commercial property sales primarily in connection with property exchanges, adjusted net income rose from $32.8 million in 2014 to $64.7 million in 2015, reflecting the high-quality of earnings provided by the real estate and materials and construction segments.

Revenue for 2015 was $570.5 million, compared to revenue of $560.0 million in the prior year.

“Aside from the challenges in our sugar operation, our company performed well in 2015,”said Chris Benjamin, A&B president and chief executive officer. “Leading the way was our leasing segment, which posted an 8.5% increase in NOI [net operating income], resulting primarily from the strength of the Hawai‘i economy and our successful migration of assets from the Mainland to Hawai‘i. Not only are we now generating roughly 80% of our commercial portfolio’s NOI from Hawai‘i properties, but our Hawai‘i assets are performing well, validating our investment thesis. Additionally, we achieved solid sales across our development portfolio in 2015, including 18.4 acres at Maui Business Park, five Kahala Avenue properties, and 22 units at Kukui‘ula, plus binding pre-sales of all 450 high-rise and mid-rise units at The Collection condominium project. And, our materials and construction business finished strongly in 2015, producing $12 million of EBITDA [earnings before interest, taxes, depreciation and amortization] in the fourth quarter, for a total of $41 million for the full year.”

“Strong operating performance and cash flows from our real estate and materials and construction businesses helped us lower our debt levels by 17%, or $118 million, during 2015, strengthening our financial position as we head into 2016,” Benjamin continued. “Already this year, we have furthered our asset migration and expanded our grocery-anchored retail presence with the acquisition of the well-performing, 139,000-square-foot, Safeway- and CVS/Longs-anchored Mānoa Marketplace in January.

“We’re also focused on opportunities to generate organic growth within our expanded Hawai‘i portfolio and enhance the value of these assets,” Benjamin said. “This year, we expect to increase investments in existing assets to position them for sustained long-term growth, including the repositioning of the Kailua Macy’s leasehold improvements.

“In development, we look forward to continuing the monetization of some developments—such as The Collection—while adding new product to our pipeline with the start of pre-sales and construction of Kamalani, a 630-unit master-planned community in Kīhei, Maui,” Benjamin said. “Grace Pacific’s $227 million backlog is positive for its outlook, as is the expected start of new master-planned-community construction in West O‘ahu.

“Much of our focus in agribusiness in 2016 will be on a successful final harvest and helping smooth the transition for affected employees,” Benjamin said. “As we complete the harvest, our focus for the plantation will shift to implementing our diversified agriculture model, which we believe will put the agribusiness segment on a path toward stability.”

Leasing operating profit of $53.1 million was up 11.8% over last year, and NOI increased 8.5% to $83.9 million compared with 2014.

Real estate development and sales operating profit was $65.0 million in 2015, compared to $85.7 million in 2014, though results in 2014 included $56.2 million of commercial property sales, primarily from the sale of a single commercial property to fund a portion of the Kailua Portfolio acquisition.

The agribusiness operating loss for 2016 was $51.9 million, which included $22.6 million of pre-tax sugar cessation-related costs, compared to operating losses of $11.8 million in 2014.

Operating profit for the materials and construction segment in 2015 was $30.9 million, a 19.3% increase over prior year’s operating profit of $25.9 million, and EBITDA was $41.0 million, compared to $38.0 million in 2014.

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