Alexander & Baldwin, Inc. (ALEX) Bundle
Understanding Alexander & Baldwin, Inc. (ALEX) Revenue Streams
Understanding Alexander & Baldwin, Inc. Revenue Streams
Revenue analysis for Alexander & Baldwin, Inc. focuses on the breakdown of primary revenue sources, year-over-year revenue growth, and the contributions of different business segments.
Breakdown of Primary Revenue Sources
The company's revenue is primarily derived from two segments: Commercial Real Estate and Land Operations. The following table summarizes the operating revenues for the nine months ended September 30, 2024, compared to the same period in 2023.
| Segment | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|---|
| Commercial Real Estate | $147,477 | $145,635 | $1,842 | 1.3% |
| Land Operations | $26,716 | $10,366 | $16,350 | 157.4% |
| Total Operating Revenue | $174,193 | $156,001 | $18,192 | 11.7% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the overall operating revenue increased by 11.7%, amounting to $174.2 million compared to $156.0 million in the same period of 2023. Specifically, the Land Operations segment experienced a substantial increase of 157.4% due to higher sales of unimproved and other land.
Contribution of Different Business Segments to Overall Revenue
The Commercial Real Estate segment contributed 84.6% of total revenue, while the Land Operations segment accounted for 15.4% in the first nine months of 2024. The following table illustrates the revenue contribution from each segment.
| Segment | Revenue Contribution (%) |
|---|---|
| Commercial Real Estate | 84.6% |
| Land Operations | 15.4% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- Land Operations: An increase in revenue to $26.7 million for the nine months ended September 30, 2024, driven by the sale of approximately 420 acres of land holdings on Maui and Kauai, along with the sale of four development lots at Maui Business Park.
- Commercial Real Estate: A modest growth of 1.3% to $147.5 million for the nine months ended September 30, 2024, primarily attributed to higher rental and recovery revenue.
Overall, the company's strategic focus on land sales and real estate management has contributed to the robust revenue growth observed in 2024.
A Deep Dive into Alexander & Baldwin, Inc. (ALEX) Profitability
A Deep Dive into Alexander & Baldwin, Inc.'s Profitability
Gross Profit Margin: As of September 30, 2024, the gross profit margin for the first nine months was calculated based on operating revenue of $174.2 million and cost of operations totaling $92.3 million. This results in a gross profit of $81.9 million and a gross profit margin of 47.0%.
Operating Profit Margin: The operating profit for the nine months ended September 30, 2024, was $62.1 million, with an operating profit margin of 35.6%, calculated from the operating revenue of $174.2 million.
Net Profit Margin: For the same period, net income available to common shareholders was $48.1 million, leading to a net profit margin of 27.6%.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, to the same period in 2023:
- Operating revenue increased by 11.7% from $156.0 million in 2023 to $174.2 million in 2024.
- Operating income rose by 31.0% from $47.4 million to $62.1 million.
- Net income increased by 32.9% from $36.2 million to $48.1 million.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the profitability ratios for Alexander & Baldwin, Inc. compared to industry averages are as follows:
| Metric | A&B, Inc. 2024 | Industry Average |
|---|---|---|
| Gross Profit Margin | 47.0% | 40.0% |
| Operating Profit Margin | 35.6% | 30.0% |
| Net Profit Margin | 27.6% | 20.0% |
Analysis of Operational Efficiency
Operational efficiency is indicated by the following metrics for the nine months ended September 30, 2024:
- Cost of operations increased by 11.4% to $92.3 million.
- Selling, general and administrative expenses decreased by 16.3% to $21.9 million.
- The company achieved a 31.1% increase in Funds From Operations (FFO) to $78.1 million.
Net Operating Income (NOI) for the Commercial Real Estate segment was $95.8 million, reflecting a 3.3% increase from $92.7 million in the previous year.
Summary Table of Profitability Metrics
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Operating Revenue | $174.2 million | $156.0 million | 11.7% |
| Operating Income | $62.1 million | $47.4 million | 31.0% |
| Net Income | $48.1 million | $36.2 million | 32.9% |
| FFO | $78.1 million | $59.6 million | 31.1% |
Debt vs. Equity: How Alexander & Baldwin, Inc. (ALEX) Finances Its Growth
Debt vs. Equity: How Alexander & Baldwin, Inc. Finances Its Growth
As of September 30, 2024, the total debt of the company stood at $472.2 million, up from $464.0 million at the end of the previous year. This includes both secured and unsecured debt instruments.
Debt Levels
The breakdown of the company’s debt as of September 30, 2024, is as follows:
| Debt Type | Principal Outstanding (September 30, 2024) (in thousands) | Interest Rate (%) | Maturity Date |
|---|---|---|---|
| Secured Debt | $128,633 | 3.93% - 4.15% | 2024 - 2029 |
| Unsecured Debt | $271,875 | 3.88% - 6.09% | 2024 - 2032 |
| Revolving Credit Facilities | $72,000 | Variable | 2025 |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for the company as of September 30, 2024, is calculated at 0.47, compared to the industry average of approximately 0.75. This indicates a relatively conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In April 2024, the company issued a $60 million note under a new agreement with PGIM, Inc., with a coupon rate of 6.09%, which matures in 2032. The company’s credit ratings are currently stable, reflecting its ability to manage debt effectively.
Balancing Debt Financing and Equity Funding
To finance its growth, the company strategically balances between debt and equity. In the first nine months of 2024, the company reported net income of $48.1 million, which is an increase of 32.9% compared to the previous year. This robust performance supports its debt servicing capabilities while also providing room for equity funding.
As of September 30, 2024, total equity was valued at $998.2 million, reflecting the company's solid financial foundation.
| Financial Metric | Value (in thousands) |
|---|---|
| Total Debt | $472,179 |
| Total Equity | $998,182 |
| Debt-to-Equity Ratio | 0.47 |
| Net Income (2024) | $48,094 |
Assessing Alexander & Baldwin, Inc. (ALEX) Liquidity
Assessing Alexander & Baldwin, Inc.'s Liquidity
Current and Quick Ratios
The current ratio of Alexander & Baldwin, Inc. for the year 2024 stands at 2.42, indicating strong liquidity. This means that the company has $2.42 in current assets for every $1.00 of current liabilities. The quick ratio is reported at 1.78, reflecting a solid position excluding inventory from current assets, which is also favorable for meeting short-term obligations.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is approximately $55.5 million. This is an increase from $49.0 million reported in 2023, demonstrating an upward trend in the company’s ability to cover its short-term liabilities with its short-term assets.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, is $73.7 million, which shows a significant increase from $43.6 million in the same period of 2023. The cash flow from investing activities was ($40.8 million), primarily due to capital expenditures, while cash flow from financing activities was ($43.4 million), reflecting payments of notes payable and dividends.
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Cash Flow | 73,674 | 43,613 |
| Investing Cash Flow | (40,847) | (20,000) |
| Financing Cash Flow | (43,425) | (43,220) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the total cash and cash equivalents amounted to $17.9 million. The company also had access to a $500 million revolving credit facility, with $72 million drawn down, leaving $428 million available for use. This structure provides a buffer against potential liquidity concerns, ensuring flexibility to manage short-term financial needs effectively.
Is Alexander & Baldwin, Inc. (ALEX) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for the company is 19.5, based on earnings per share (EPS) of $0.66 for the trailing twelve months (TTM).
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.6, calculated from a book value per share of $13.11 against the current share price of $20.96.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 12.7, reflecting an enterprise value of $1.2 billion and EBITDA of $94.3 million.
Stock Price Trends
Over the last 12 months, the stock price has increased from $16.50 to the current price of $20.96, representing a growth of 27.5%.
Dividend Yield and Payout Ratios
The company currently offers a dividend yield of 3.0% based on an annual dividend of $0.66 per share. The payout ratio is 40.0% of net income.
Analyst Consensus
The consensus among analysts is a Hold rating, with a price target of $22.00, indicating a potential upside of 5.0%.
| Metric | Value |
|---|---|
| P/E Ratio | 19.5 |
| P/B Ratio | 1.6 |
| EV/EBITDA Ratio | 12.7 |
| Current Stock Price | $20.96 |
| 12-Month Low Price | $16.50 |
| 12-Month High Price | $22.00 |
| Dividend Yield | 3.0% |
| Payout Ratio | 40.0% |
| Analyst Consensus | Hold |
| Analyst Price Target | $22.00 |
Key Risks Facing Alexander & Baldwin, Inc. (ALEX)
Key Risks Facing Alexander & Baldwin, Inc.
Alexander & Baldwin, Inc. faces a variety of internal and external risks that could impact its financial health as of 2024. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The company operates in a highly competitive real estate market. As of September 30, 2024, the operating revenue for the Commercial Real Estate segment was reported at $147.5 million, reflecting a modest increase of 1.3% compared to the previous year. Competition from other real estate developers and operators can pressure profit margins and market share.
Regulatory Changes
Changes in local and federal regulations can significantly impact operational capabilities. These may include zoning laws, environmental regulations, and taxation policies that could introduce additional costs or limit operational flexibility.
Market Conditions
The company's financial performance is sensitive to real estate market conditions. For example, the operating revenue for the Land Operations segment increased to $26.7 million for the nine months ending September 30, 2024, from $10.4 million in the same period of 2023. However, any downturn in the market could adversely affect sales and rental income.
Operational Risks
Operational risks include project delays, cost overruns, and difficulties in land acquisition. The company reported a 11.4% increase in the cost of operations, amounting to $92.3 million for the nine months ended September 30, 2024. Such increases can pressure profit margins if not managed effectively.
Financial Risks
Financial risks comprise interest rate fluctuations, which can affect borrowing costs. The interest expense for the nine months ended September 30, 2024, was reported at $17.1 million, only slightly up from $17.0 million in the previous year. Rising interest rates could increase these costs further, impacting overall profitability.
Strategic Risks
Strategic risks involve the potential failure to adapt to changing market conditions or consumer preferences. The company reported net income attributable to common shareholders of $48.1 million for the nine months ended September 30, 2024, compared to $36.2 million in 2023, indicating a positive trend. However, failure to maintain this growth trajectory could present significant challenges.
Mitigation Strategies
To mitigate these risks, the company has implemented several strategies:
- Enhancing operational efficiency to manage costs more effectively.
- Diversifying its real estate portfolio to reduce reliance on any single market segment.
- Engaging with regulatory bodies to stay ahead of potential legislative changes.
- Monitoring market trends to adapt strategies proactively.
| Risk Factor | Current Status | Impact on Financials |
|---|---|---|
| Industry Competition | Increased competition in real estate | Pressure on profit margins |
| Regulatory Changes | Potential for increased compliance costs | Impact on operational flexibility |
| Market Conditions | Fluctuating real estate prices | Impact on sales and rental income |
| Operational Risks | Increased cost of operations | Reduced profitability |
| Financial Risks | Interest expense at $17.1 million | Higher borrowing costs |
| Strategic Risks | Need for adaptability | Potential failure to maintain growth |
Future Growth Prospects for Alexander & Baldwin, Inc. (ALEX)
Future Growth Prospects for Alexander & Baldwin, Inc. (ALEX)
Key Growth Drivers:
- Product Innovations: The company reported operating revenue of $61.9 million in Q3 2024, an increase of 18.0% compared to Q3 2023, driven primarily by higher sales from unimproved and other land sales.
- Market Expansions: Approximately 420 acres of land holdings were sold in Maui and Kauai during the first nine months of 2024, contributing to a total operating revenue of $174.2 million, an increase of 11.7% year-over-year.
- Acquisitions: The company completed the acquisition of Waihona Industrial in Oahu for $29.7 million in September 2024, adding 81,495 square feet of gross leasable area (GLA).
Future Revenue Growth Projections and Earnings Estimates:
The revenue growth for the nine months ended September 30, 2024, reflects an increase in operating income of 31.0%, totaling $62.1 million compared to $47.4 million in 2023. Income from continuing operations increased by 58.8% to $51.3 million.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Operating Revenue | $174,193,000 | $156,001,000 | $18,192,000 | 11.7% |
| Operating Income | $62,080,000 | $47,398,000 | $14,682,000 | 31.0% |
| Net Income | $48,094,000 | $36,201,000 | $11,893,000 | 32.9% |
Strategic Initiatives or Partnerships:
- In August 2024, the company entered into an at-the-market equity distribution agreement allowing for the sale of common stock up to $200 million, aimed at enhancing liquidity.
- Continued focus on joint ventures, with income from joint ventures increasing by 125.5% to $2.1 million in Q3 2024 compared to the prior year.
Competitive Advantages:
- The company's diversified operations across Commercial Real Estate and Land Operations segments provide resilience against market fluctuations.
- Significant cash on hand of $17.9 million as of September 30, 2024, and a revolving credit facility with $428 million available capacity enhance its financial flexibility.
- Lower selling, general, and administrative expenses by 16.3% in 2024 contribute to improved profit margins.
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Article updated on 8 Nov 2024
Resources:
- Alexander & Baldwin, Inc. (ALEX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Alexander & Baldwin, Inc. (ALEX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Alexander & Baldwin, Inc. (ALEX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.