The St. Joe Company's Q3 2025: Contradictions Emerge on Share Repurchase and Cash Allocation, Population Growth and Market Trends, and Housing Market Dynamics

Date of Call: October 30, 2025

Financials Results

• Revenue: Overall revenue up 63% YoY; residential real estate revenue $36.8M (up 94% YoY); average homesite price $150,000 vs $86,000 prior year; leasing revenue $16.7M (up 7% YoY); hospitality revenue $60.6M (up 9% YoY).
• Gross Margin: 53%, compared to 39% in the prior year (up 14 percentage points)

Guidance:

• Continue a measured, multifaceted capital allocation strategy: capex, buybacks, dividends, project debt reduction.
• Share repurchases remain a priority; pace will be balanced against liquidity and timing constraints.
• Will continue to expand hospitality and commercial leasing selectively (focus on WaterSound Town Center, West Bay, FSU health campus).
• Will evaluate monetizing operating properties and timberlands when market value meets expectations.
• No explicit numerical short-term revenue or margin targets provided.

Business Commentary:

* Revenue and Earnings Growth: - The St. Joe Company reported 63% growth in revenue and 130% growth in net income for Q3 2025 compared to Q3 2024. - This growth was driven by a 94% increase in residential real estate revenue and a 9% increase in hospitality revenue, with leasing revenue increasing by 7% to an all-time quarterly record.

• Residential Real Estate Performance:
• Residential real estate revenue grew by 94% to $36.8 million, with a 70% increase in the average homesite base price from $86,000 to $150,000.

• This was attributed to strong demand, increased pricing, and a greater focus on higher-end communities.

• Capital Allocation Strategy:

• The company allocated $28 million for project debt reduction and $8.7 million for share repurchase in Q3 2025.

• This strategy reflects a commitment to reducing debt and returning value to shareholders through share buybacks, which is a priority despite generating significant cash.

• Timberland and Asset Monetization:

• The sale of the Watercrest senior living property resulted in a gross profit of $19.4 million, reflecting a strategic approach to monetize assets.
• The company is continually evaluating the monetization of nonstrategic timberlands and operating properties to reinvest in strategic capital allocation.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 63% revenue growth and 130% net income growth YoY; record quarterly leasing ($16.7M) and Q3 hospitality ($60.6M); residential revenue up 94% to $36.8M; YTD share repurchases ~$24.9M and a 14% dividend increase to $0.16.

Q&A:

• Question from Unidentified Analyst (Submitted Question): At the current buyback rate, why are you building cash rather than increasing the pace of buybacks?
  Response: Buybacks are a priority but will be balanced with liquidity, capex and debt reduction; repurchases have accelerated (~$25M through 9M 2025) and timing of large cash events (Watercrest sale) affected quarter-to-quarter activity.

• Question from Unidentified Analyst (Submitted Question): Why not sell more land/assets that support NAV to materially reduce share count?
  Response: Management will evaluate monetization of operating properties and timberlands but will only sell when they can capture full value—won't sell at a discount.

• Question from Unidentified Analyst (Submitted Question): Where do you see cash levels 12–18 months from now and what regulatory hurdles restrict buybacks?
  Response: Cash targets depend on facts and circumstances; repurchases limited by blackout/open-window rules and capital allocation priorities (capex, dividends, debt paydown).

• Question from Unidentified Analyst (Submitted Question): Any progress on talks with a large-scale builder for the Pigeon Creek DSAP?
  Response: Discussions are ongoing and management is encouraged, but there is nothing definitive to report.

• Question from Unidentified Analyst (Submitted Question): Any plans for the beachfront lots (Wavecrest) east of the Twin Beachfront homes?
  Response: The property is being thoughtfully evaluated for highest-and-best use and potential synergy with inland holdings; no final decision yet.

• Question from Unidentified Analyst (Submitted Question): Have you identified interest to monetize additional hospitality or leasing assets?
  Response: Yes—management continually evaluates monetization opportunities across operating properties and leasing, with dialogue ongoing.

• Question from Unidentified Analyst (Submitted Question): Given implied 'piggy banks,' would you increase the pace of repurchases?
  Response: Management will continue to evaluate and may accelerate repurchases, but will remain measured and balance against other capital needs.

• Question from Unidentified Analyst (Submitted Question): For Watersound Origins Crossings, are the unleased townhomes being put up for sale?
  Response: Yes—intent is to transition remaining townhomes to for-sale and sell them individually, which has proven successful so far.

• Question from Unidentified Analyst (Submitted Question): What is driving the uptick in lot sales at WindMark Beach and can the community scale further?
  Response: Strategy shifted to a builder/spec-home program, which increased volume; WindMark is performing well and could approach ~1,000 units as development continues.

• Question from Unidentified Analyst (Submitted Question): The average homesite price jumped to $150k from $86k—how much is mix vs like-for-like price strength and are margins sustainable into 2026?
  Response: The increase is largely mix- and timing-driven across diverse communities; historically residential margins have been around ~50% and management believes that level is sustainable over time.

• Question from Unidentified Analyst (Submitted Question): Can you estimate cumulative capital spending over the next 3–5 years?
  Response: No numeric multi-year capex guidance given; reiterates measured capital allocation and balancing capex with repurchases and other uses.

• Question from Unidentified Analyst (Submitted Question): What is the estimate of land inventory value and recurring revenue at end of Q3 2025?
  Response: Land valuation work (timberlands) is in process; recurring revenue (9M): hospitality $169M vs $157M prior-year, leasing $49.4M vs $44.7M.

• Question from Unidentified Analyst (Submitted Question): Who will be the builder for LLP 3 / Watersound Origins West?
  Response: Origins West will follow the same multi-builder semi-custom strategy as Origins—multiple builders, not a single builder.

• Question from Unidentified Analyst (Submitted Question): Are you discounting home site pricing versus a year ago?
  Response: No—management states they have not been discounting home site pricing and negotiate builder terms to protect pricing and margins.

• Question from Unidentified Analyst (Submitted Question): How close is the area to shedding secondary/tertiary status for national builders and institutions; what else is needed?
  Response: Trend is moving toward greater national attention; the FSU Health academic medical center and new direct flights are key catalysts and management is seeing more inbound interest from businesses.

• Question from Unidentified Analyst (Submitted Question): When will you present mid/long-term financial framework and KPIs (revenues, cash flow per share, etc.)?
  Response: Management is open to providing more frameworks and has added disclosure schedules; as recurring revenue cadence stabilizes they expect to provide more consistent metrics over time.

Contradiction Point 1

Share Repurchase and Cash Allocation

It involves the company's strategy regarding share repurchase and cash allocation, which are critical aspects of the company's financial management and investor relations.

What are the projected cash levels for the next 12–18 months? What regulatory hurdles exist for buying back shares? - Marek Bakun(CFO)

2025Q3: We are not going to sell assets at a discount. We will ensure we get the value that our shareholders deserve when we monetize our assets. - Jorge Gonzalez(CEO)

Does the Board believe Florida Senate Bill 1622 will negatively impact St. Joe's real estate holdings, especially in Walton County? - unknown(unknown)

2025Q2: We're not going to change the policy, our company's policy is defined by the Board of Directors and by our management team, and that is, we will be opportunistic with our cash, we will be opportunistic with our investments. We will be opportunistic with our asset sales. And we will be opportunistic with our return of capital, that's our current policy. - Jorge Gonzalez(CEO)

Contradiction Point 2

Population Growth and Market Trends

It involves the company's outlook on population growth and market trends, which are crucial for business strategy and investment decisions.

Is there any indication the area is no longer a secondary or tertiary market for national builders and institutional real estate firms? - Marek Bakun(CFO)

2025Q3: Our area is growing with more exposure to larger consumer bases. More direct flights and an academic health center are significant. We're trending towards being less secondary or tertiary. - Jorge Gonzalez(CEO)

What has been the population growth in the area over the past year? Is it possible for the local housing market to outperform the national trend? - unknown(unknown)

2025Q2: Bay and Walton County are among the fastest-growing by rate. We expect to see a continuation of the trend in growth rate. - Jorge Gonzalez(CEO)

Contradiction Point 3

Housing Market Dynamics

It involves the company's analysis of the housing market dynamics, which are essential for business planning and investor expectations.

Have lot sales at WindMark Beach increased significantly? - Marek Bakun(CFO)

2025Q3: We switched to a builder program, which has increased sales significantly. There are plans to expand the community if trends continue. - Jorge Gonzalez(CEO)

What is the main bottleneck to selling more than 1,000 homesites annually? - unknown(unknown)

2025Q2: There's not a bottleneck but rather relief in mortgage interest rates would help accelerate sales. - Jorge Gonzalez(CEO)