The St. Joe Company Q1 2026 Earnings Call - Recurring Revenue Strategy Pays Off Amidst Land Monetization Expansion

Conference Call Operator: Day, thank you for standing by. Welcome to The St. Joe Company 1st quarter 2026 earnings conference call. At this time, all participants on a listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time during the conference. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker host for today, Mr. Jorge Gonzalez, President, CEO, and Chairman of The St. Joe Company. Please go ahead, sir.

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Thank you. Good afternoon. I’m Jorge Gonzalez, President, CEO, and Chairman of The St. Joe Company. It is my pleasure to welcome you to our quarterly earnings call. I’m joined today by Marek Bakun, our Chief Financial Officer. On Wednesday, after the market closed, we issued our first quarter of 2026 earnings press release, which can be found in the investor relations section of our corporate website at joe.com. This afternoon, we are continuing our commitment to quarterly earnings calls to provide our shareholders and the investor community with an opportunity to ask questions about our business and performance. We have always been an open and transparent company that welcomed all feedback and opinions. Because of the types of assets that we own, we always encourage shareholders to visit us in person so they may assess firsthand the progress of the region and of our assets.

If you want to send us questions for later in the call, you may do so by visiting the top right-hand corner of your screen where the words submit a question are visible. Clicking on that text will take you to the text entry box, where you can type in your question and then click submit for later in the call. Before we begin discussing our results and answering your questions, I would like to remind everyone that Wednesday’s press release and the statements made during this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in the earnings release and in our filings with the Securities and Exchange Commission.

Additionally, during today’s call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. A reconciliation of these measures can be found in our earnings release. Let’s go ahead and get started. We assume everyone has already carefully reviewed our earnings release, which provides comprehensive details about our performance. We are only gonna mention a few key highlights of the first quarter before we move on to your questions. For the first quarter, we had a 5% increase in revenue and an 8% increase in operating income. The first quarter revenue of $99.1 million was the company’s highest first quarter revenue outside of the one-time timberland sale in 2014. The increase in total revenue included a 13% increase in hospitality revenue and a 4% increase in real estate revenue when compared to the same period last year.

Leasing revenue decreased by 10%, which was primarily due to the sale of the Watercrest senior living property in September of 2025. Net income decreased by 21%, primarily because of a decrease in equity and income from unconsolidated joint ventures. Equity and income was $3.5 million for the quarter when compared to $10.2 million in the first quarter of 2025. The decrease was primarily attributed to a lower home closing volume in the Latitude Margaritaville Watersound unconsolidated joint venture. Latitude is a large-scale, long-term project that will have ebbs and flows in quarterly and even year volume and provides benefits to us beyond its financial performance with consumers for our commercial and the hospitality segments.

We continue to successfully execute our strategy of growing recurring revenue, as evidenced by the first quarter record of $44.7 million in hospitality revenue and $14.7 million in leasing revenue, which together accounted for 60% of the total revenue in the quarter. As a result of the successful execution of the strategy to grow recurring revenue, the company has a sustainable business model that is poised for future growth with a demonstrated ability to grow multiple revenue streams, all while simultaneously increasing the value of the underlying land assets. In addition to the growth in recurring revenue, we are also improving profitability, as evidenced by the increase in gross margins in hospitality and leasing revenue.

As we have previously mentioned, since opening 5 new hotels in 2023 and expanding our club membership program, we have been focused on improving our hospitality operations and increasing margins. The gross margin improved across all hospitality categories to a total of 24% for the first quarter of 2026 as compared to 18% for the first quarter of 2025. Similarly, we have been focused on improving gross margins and leasing revenue with 61% for the first quarter of 2026 when compared to 55% for the first quarter of 2025. Leasing revenue is not as operationally intensive as hospitality revenue, so the strategy to increase profitability and gross margins is to invest in projects with higher margins and divest from projects with lower margins. We are systematically evaluating our leasing portfolio to execute this strategy.

An example of investment in higher margin projects is the WaterSound Town Center, and an example of divesting is the 2025 sale of the lower margin Watercrest senior living property. In the first quarter, we continued to implement a measured and multifaceted capital allocation strategy. With $20.7 million in capital expenditures primarily for growth, $9.2 million in cash dividends, $5 million in share repurchases, and $10.9 million in reduction of project debt. Project debt is a real cash expense, and not all project debt is the same. The focus of our project debt reduction strategy is on the variable shorter term, higher interest rate debt, like for our hospitality assets, as opposed to our fixed longer term, lower interest rate debt, like for our apartment assets. Outside of the financial numbers, we continue to fill the pipeline for potential future growth.

In the first quarter, we were pleased to announce the execution of a contract with PulteGroup for up to 2,653 home sites in our most recently approved Detailed Specific Area Plan or DSAP. PulteGroup is the third-largest home builder in the country, this is their first entry into the Northwest Florida market. In the first quarter, we were also pleased to execute a long-range utility, water, and sewer agreement with the utility provider that will service the Lake Powell and West Laird DSAPs with the potential for thousands of future residential home sites. Work on this infrastructure is planned to commence later this year. Speaking of the future, most developers and national home builders will admit that two of the most challenging aspects of their future growth are acquiring and entitling land.

In addition to the demonstrated ability to execute our business strategy, it is important to remember that we already own over 165,000 acres of land with many entitlements in the growing part of Florida. Our competitive advantage is clear. Marek and I are going to answer your questions. As a reminder, in the top right-hand corner of the screen, the words Submit a Question are visible. Clicking that text will take you to the text entry box where you can type your question and click Submit. Marek.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Thank you, Jorge Gonzalez. We have a few questions. Can you elaborate on the pace of takedown at Pigeon Creek DSAP? 1,300 home sites is great, but obviously, whether it’s over 3, 5, or 10 years makes a big difference. Also, are there protections in the takedown schedule as it relates to the value of the land?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Thank you for the question. First of all, as I mentioned in my opening remarks, we’re really happy, really pleased with the execution of the agreement with PulteGroup. PulteGroup is the third-largest national home builder in the country. They obviously made the decision to enter this market, and it’s the first time they are in the Northwest Florida market because they see the growth potential of the market. We’re very pleased with the addition of PulteGroup to our builder group, and builder relationships. The best way to answer the question is ultimately, pace is set by market. PulteGroup is planning on having various product types in this community.

Each product type will be a little bit different in terms of pricing, the consumer that will be interested in that product. In terms of the agreement itself, we learn every time we do an agreement, particularly of this scale or similar scale, going back to many years ago. We learn, we understand how things end up happening in the field in real life, and we adjust. Certainly, all those lessons that we’ve learned over the years are lessons that we’ve incorporated in this agreement and will continue to incorporate in subsequent agreements. Yep.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Jorge, just adding, our disclosure was intentional. We use the term significant variable of revenue and because we do have built-in protections as the question requests.

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: One last thing. When you look at agreements that we executed 5, 6, 7 years ago, those agreements had a time and place and a context. Certainly, the way that we look at new agreements is based on lessons learned and based on what’s happening in the market at the moment.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Next question. There was a nice uptick in the RevPAR at the hotels this quarter. Was any of that attributable to the New York City marketing campaign?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Thank you for the question. The majority of the uptick was organic. So far we’ve been pleased with the early part of season in our hospitality segment. We have been tracking very carefully the increase in bookings from the New York City market that may be based on the campaign that we launched in December. We are cautiously optimistic. We’re pleased. It’s still very early in the campaign. We’re in the process of assessing the campaign as we’ve been measuring every day in making decisions about future phases of the campaign. Again, the growth that the question asks about in terms of RevPAR, we believe is primarily organic.

Based on the measurement we’ve been doing, on the New York City market, we have seen an increase from that market in booking so far this year.

Marek Bakun, Chief Financial Officer, The St. Joe Company: With strong national demand for data centers driven by AI, have you considered or pursued marketing positions of VentureCrossings Enterprise Centre for data center development? If so, how does that fit into your recurring revenue and land monetization strategy?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We have had discussions with those type of users specifically about VentureCrossings. In terms of the business structure and specific to the question of how we would monetize it, like we do in all of those discussions, we would have conversations about a ground lease potentially, which would be a recurring revenue, and or potentially a sale depending on facts and circumstances, and time frame and various different factors. Yes, we’ve had discussions with those type of users specific to that location.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Can you provide additional color on the brokerage revenue, either by county, average transaction value, or number of transactions?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We’ve been so far very pleased with the commencement of the real estate brokerage agency. We started in 1 location, the WaterSound Town Center. We quickly opened in a second location, the WaterSound Town Center. We have plans right now to open 3 additional locations. Those 3 additional locations will be 2 in Bay County and 1 in Walton County. We’ve been pleased with the reception from the agent community. We have received a lot of interest from agents in joining the agency. We still don’t have a full year worth of data. The agency literally opened its doors right before summer of last year.

After we finish this year, we’re gonna have one full year of data, and that’s the kind of data that we’ll look at and make some decisions on moving forward.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Pier Park City Center is a beautiful location. When do you expect lease payments to start on the surf park? Has there been any progress towards monetizing the space beyond the surf park?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: The answer to both questions is yes. We’ve made significant progress with the surf park. In terms of when that project is gonna commence, it’s gonna be relatively soon. We do have plans and have been in discussion with other potential users in that location. We’re being very thoughtful about the users that go into that location because it’s a special location. It’s a special piece of property in the middle of Panama City Beach, where there’s a lot of energy, a lot of activity. We’re being very thoughtful about the type of users that should go to Pier Park City Center. Yes, we have made progress on both counts of the question.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Southwood was part of the residential under contract dollar numbers last quarter. Did something change in the contract with Southwood that led you to remove it this quarter? The answer is no, there have been no changes to the contract. With adding Pigeon Creek, contract, which is a long-term contract, in the quarter, it made more sense to show it excluding the dollars related to those two specific contracts. There were no changes to the actual contract itself. Over the past several years, not only has migration seemingly accelerated, but also local migration seems to really be picking up, with more folks leaving the area south of Highway 98 to go north of it.

The area on both sides of 331 below the bridge are one of the hottest in the region, and I’m curious if, given that we have over 20,000 entitlement homes in Walton County, including over 3,000 listed in the pipeline, if we are looking to accelerate our offerings from current pace. Given local demand and price points being paid for lots, it does not seem unrealistic for St. Joe to be selling at 250-300 home sites per year in Walton County at prices of at least $250,000 per lot, should we open things up to more than just the current small group of builders. It seems really evident that there is not only demand, but also willingness for folks to pay premiums to current pricing if we open things up a bit.

Is this something we’re able to do in the next few years?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Thank you for the question. It’s a great question, and we agree, by the way, with the majority of the observations made in the question. A two different answers to that question. Number 1, pace is ultimately determined by market. One of the things that we always try to be very careful with, we try to have product and inventory available to meet market demand. We also don’t wanna get too far ahead of market demand where we have inventory sitting in the ground for too many years, where we could be using that capital for other purposes like buying shares back, for example.

It’s a delicate balance of making sure that we have inventory to meet the demand but not overextend ourselves in a way where we risk capital being in the ground for too many years where we could be using that capital for share repurchase. We have opened it up quite a bit. An example is Camp Creek. Just about every custom home builder has participated in Camp Creek, and they’re building homes and have built homes in Camp Creek. In Origins, I wouldn’t say we have a small group of builders. We have 5 or 6 builders right now, and we’re always talking to 3 or 4 new ones. We’re currently doing that right now. We do agree with the sentiment of the question.

We do agree with the great things that are happening in Walton County and the demand. We feel very bullish about how the company’s positioned to meet that demand at the highest prices and highest margins possible.

Marek Bakun, Chief Financial Officer, The St. Joe Company: The regional growth story remains very strong, yet St. Joe current commercial development activities seem modest compared to the broader market pace. As the dominant landowner, how are you thinking about this? Should we expect St. Joe to take a larger percentage of the area’s development activity at some point? How are you thinking about the pros and cons of becoming a more active commercial developer?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Commercial development. Great question. Commercial development, similar to residential, there’s a market component to that. In terms of how proactive we’re gonna be, obviously it’s gonna be dependent on market demand. I will say this, and I’ve mentioned it before, we have mentioned it before in earnings releases, and in earnings calls, we are getting a lot more calls from prospective commercial tenants, particularly national tenants, than we ever have. Many years ago when we started this journey and started really almost from scratch, in terms of building our commercial leasing portfolio, we weren’t getting a lot of those phone calls. We were the ones making phone calls.

But now, we are getting a lot more phone calls, particularly from national retailers, which is very encouraging. If that trend continues, we’re certainly gonna make decisions to meet that demand and accelerate our commercial development.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Yeah. Just adding to that, again, I think the market demand and our goal is always to have a high lease percentage as well out there. Building for market demand is important. Latitude available lots are declining. When would you expect to add more lots to that partnership, and do you expect it would be contiguous to the existing project?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We’ve been in discussion with our partner about the next phase. We’ve made some really good progress in those discussions. Yes, it would be to the immediate west of the existing joint venture.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Do you see a point at which the Watersound Club membership will be full until more facilities are built? Example, golf course, tennis, gym amenities, et cetera. If so, what is the approximate number?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Well, we’ve made some significant investments in facilities for the club to expand capacity in the last few years. Obviously Camp Creek, which is a very sizable facility that accommodates a lot of different activities for our club members. That was a very significant expansion of capacity for our club membership program. The other one, of course, is the opening of a brand-new golf course, the third, which opened last year. We have been expanding facilities. We constantly are having discussions about where are we gonna do the next new facilities, what’s gonna be the programming that’s gonna be involved in those facilities, constantly monitoring capacity usage, and also trying to create more experiences for our members.

At this moment, we feel our existing facilities have a good balance of usage. We don’t think we’re at capacity, but we’re constantly planning and looking at where the new facilities are gonna be.

Marek Bakun, Chief Financial Officer, The St. Joe Company: There was a $5 million change within the other expense line item in the Latitude joint venture this quarter. Could you give us more color on what drove this, and if it will continue into the future quarters? Looking at the disclosures, the costs are very consistent. There are no operating cost changes. The income was pure driven by volume, the number of closings that were delivered in a quarter compared to the first quarter of 2025. There were no real changes in cost. The actual margins on a per unit were actually above the margins a year ago quarter. Any updates or information on the custom home sites near the future Art Park? Anticipate a number of lots.

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We have been planning another custom residential home site product in Origins West to the west of the Art Park that’s in a planning process right now. We don’t have the specifics yet in terms of the number of home sites, the timeframe, but it is a real project that we’re planning. We’ve done some preliminary development work in that phase. Look for us to share more information about that project in the subsequent weeks and months.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Is there any color you can give us on recent migration, population, or even tourism growth and trends in the Bay Walton area? If you don’t have any quantitative figures, even anecdotal examples would be greatly appreciated.

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Yeah. I think Beyond the tables and charts and data, which certainly show that the migration and the tourism in our region is growing, maybe a good way I can answer that is how does it feel to us since we’re in the market every day. It still feels really positive. It feels like the migration is continuing, not only in terms of numbers, but also in terms of the broadening of the geography where the migration is coming from. The migration is not just coming from historical locations. They’re coming from places that haven’t been historical in terms of where people have moved from to our area in the past.

Similar with our hospitality segment in terms of tourists and guests in our hotels, we continue to feel that we’re seeing more and more guests in our hotels from a broader range of locations, and we’re seeing a good uptick in our occupancy and rates as one of the earlier questions noted. Obviously, our first quarter results for hospitality show a pretty good uptick in revenue, which is really a by-product of what we feel the migration is continuing, and we feel the awareness about our region from a broader range of locations in the country is continuing.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Any notable updates on the Intracoastal Waterway Marina?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We started work on that marina. We still have 2 more permits that we have to obtain. We’re in the process of obtaining those permits. Once we do, we’re gonna accelerate the work that has been done on that marina. We still feel really good, really positive about the market demand for that marina. We don’t see any major regulatory challenges in terms of obtaining those permits. It’s just a process. As soon as we get the final permits, we’re gonna move forward and finalize the marina.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Based on lot sales and lots under development, it seems like there has been an increase in activity demand growth at Windmark. Can you give us some color on what’s going on there? What future plans and opportunities could occur there and in the area?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: We feel the residential component of Windmark has been one of our success stories. We’ve been very pleased with the results of Windmark ever since we made the decision to partner with that one builder. The pace has been pretty good. We see the traffic and the demand continuing in the pipeline continuing to be very positive. We’re meeting the demand that the builder is experiencing in their home sales. In terms of future, we’re always assessing what other areas can we look at in that market. Again, we feel very positive about Windmark. We think it’s a success story in terms of the residential component and constantly assessing future opportunities.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Clubs seem to be doing very well. Given the timelines for development and also perhaps a little bit of growing pains related to the size and success of what it has become, do you think it makes sense to accelerate the Lake Powell amenity or anything north of 98? The truth of development is that it can take a long time. The marina has been at various stages of progress for over half a decade. I’d imagine now the club amenities are at least 3 years out at best. My concern is that because of this, future growth or even quality of club may be limited until more opens up. Can you share your thoughts on this and elaborate perhaps on the timelines?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Great question, part of the answer is what I mentioned earlier. In terms of the capacity of our club, the experiences our members are having in adding future capacity, that’s something that we look at and evaluate constantly. Right now we feel we’re in a really good place. You don’t wanna be on either extreme where there’s more demand than capacity or way more capacity than demand. We feel we’re in a good place right now. We’re balanced in terms of the demand and capacity that’s available. We do have several new amenities that we have been planning. We have mentioned before one of them is in Lake Powell. We’re actively in the planning and design process for that amenity.

In terms of when we would start construction, we don’t have an exact timeframe yet. We’re also looking at other locations for future club amenities. But again, we don’t wanna be too far ahead where we have too much capacity for the usage. But at the same time, we don’t wanna be behind either. Right now we feel we’re in a sweet spot, where we feel we are pretty balanced.

Marek Bakun, Chief Financial Officer, The St. Joe Company: What is the expected timeline for starting to realize revenue from home sites at Pigeon Creek and also Southwood?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Pigeon Creek, in terms of closings, it’s probably gonna be early part of 2028, excuse me, 2027. We are actively working on the engineering and permitting of the first phase of Pigeon Creek, working very closely with PulteGroup. In terms of closings, transactions, realizing revenue, probably first part of 2027. In terms of Southwood, in Southwood, we don’t have a home site development strategy. In Southwood, we sell tracts with master infrastructure to home builders. We’ve got several contracts that we’re working on, and we’re always in discussion with home builders in that market who wanna purchase those tracts.

Marek Bakun, Chief Financial Officer, The St. Joe Company: How can we interpret the increase in the advanced deposits figure as a year-over-year increase in bookings demand when it comes to hotels?

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Like I said before, so far, we feel pretty good about the start that we’ve had to the season. Our revenue numbers for the first quarter show that. Even looking beyond the first quarter and looking at what we have in terms of bookings and just how does it feel, how does the demand feel, we feel pretty good. We are cautiously optimistic that our hospitality segment is gonna have a good year and a good season this year.

Marek Bakun, Chief Financial Officer, The St. Joe Company: Okay. There are no more questions.

Jorge Gonzalez, President, CEO, and Chairman, The St. Joe Company: Let’s give it a 2 more minutes in case there’s any last-minute questions. These have all been great questions. We always greatly appreciate the quality of the questions, the depth of knowledge that the individuals asking the questions have about our business, about our region. Those type of questions only make us better, so we really greatly appreciate the quality of the questions. Okay. We don’t see any more questions. Again, thank you for joining us today. We appreciate your interest in us, in our company, and we look forward to speaking with you again next quarter. As a quick reminder, we are holding our annual meeting of shareholders on May 12 at 9:00 A.M. Central Time at Camp Creek Inn. We hope to see many of you then. Thank you.