St. Joe Q1 Earnings Call Highlights

Key Points

• Q1 results: Revenue rose 5% to $99.1 million and operating income increased 8%, but net income fell 21% largely because equity income from the Latitude Margaritaville Watersound joint venture dropped to $3.5M from $10.2M year-over-year due to lower home closings.
• Recurring revenue and margins improving: Hospitality and leasing made a record contribution (hospitality $44.7M, leasing $14.7M = 60% of revenue) while hospitality gross margin expanded to 24% from 18% and leasing margin rose to 61% from 55%.
• Growth pipeline and capital moves: St. Joe signed a PulteGroup agreement for up to 2,653 home sites and a long-range utility deal enabling thousands more, while deploying a measured capital plan including $20.7M of capex, $9.2M of dividends, $5M buybacks and $10.9M of project debt reduction focused on higher-rate variable debt.

St. Joe NYSE: JOE reported first-quarter 2026 results highlighted by higher revenue and operating income, while net income declined due largely to lower earnings from its unconsolidated joint venture at Latitude Margaritaville Watersound. President, CEO and Chairman Jorge Gonzalez and CFO Marek Bakun also discussed the company’s focus on recurring revenue growth, hospitality margin improvements, and a pipeline of development and infrastructure agreements in Northwest Florida.

Quarterly results: revenue and operating income rise, net income falls

Gonzalez said St. Joe posted a 5% increase in revenue and an 8% increase in operating income for the first quarter. Total revenue was $99.1 million, which he described as the company’s highest first-quarter revenue outside of a one-time timberland sale in 2014.

By segment, Gonzalez said the year-over-year revenue increase included a 13% rise in hospitality revenue and a 4% increase in real estate revenue. Leasing revenue declined 10%, which he attributed “primarily due to the sale of the Watercrest senior living property in September of 2025.”

Net income decreased 21% in the quarter. Gonzalez said the decline was “primarily because of a decrease in equity and income from unconsolidated joint ventures,” which fell to $3.5 million from $10.2 million in the first quarter of 2025. He attributed the change primarily to lower home closing volume in the Latitude Margaritaville Watersound unconsolidated joint venture, while noting Latitude is a “large-scale, long-term project” that can have quarterly and annual variability.

Recurring revenue mix and margin improvement in hospitality and leasing

Management emphasized its strategy of expanding recurring revenue. Gonzalez said the company generated a first-quarter record of $44.7 million in hospitality revenue and $14.7 million in leasing revenue, which together represented 60% of total revenue.

Gonzalez also pointed to improved profitability in those segments. In hospitality, the company has been focused on improving operations and increasing margins after opening five new hotels in 2023 and expanding its club membership program. He said hospitality gross margin improved “across all hospitality categories” to 24% in the first quarter of 2026, compared with 18% a year earlier.

In leasing, Gonzalez said gross margin increased to 61% from 55%. He described leasing as “not as operationally intensive as hospitality,” and said St. Joe’s approach to lifting profitability includes investing in higher-margin projects and divesting lower-margin assets. As examples, he cited WaterSound Town Center as a higher-margin investment and the 2025 sale of Watercrest as a divestiture.

Capital allocation and balance sheet actions

Gonzalez outlined a “measured and multifaceted” capital allocation approach during the quarter, including:

• $20.7 million in capital expenditures, “primarily for growth”
• $9.2 million in cash dividends
• $5 million in share repurchases
• $10.9 million in reduction of project debt

He said the company’s project debt reduction strategy is focused on “variable shorter term, higher interest rate debt,” such as hospitality-related borrowings, rather than “fixed longer term, lower interest rate debt,” such as apartment-related debt.

Development pipeline: Pulte agreement, utilities for future DSAPs, and other projects

During Q&A, management discussed the pace and structure of a newly announced agreement with PulteGroup. Gonzalez said the homebuilder’s pacing will ultimately be “set by market,” and that Pulte plans to offer multiple product types within the community. Bakun added that the company’s disclosure was “intentional” and reiterated that St. Joe has “built-in protections” related to the takedown schedule.

In his prepared remarks, Gonzalez said St. Joe executed a contract with PulteGroup for up to 2,653 home sites within its most recently approved Detailed Specific Area Plan (DSAP), noting it marks Pulte’s first entry into the Northwest Florida market. He also said the company executed a long-range utility, water, and sewer agreement that will service the Lake Powell and West Laird DSAPs, with infrastructure work planned to begin later this year and the potential for “thousands of future residential home sites.”

On timing for revenue realization, Gonzalez said Pigeon Creek closings are expected “probably [the] first part of 2027,” adding that St. Joe is working on engineering and permitting and coordinating with PulteGroup. For Southwood, he said the company does not pursue a homesite strategy and instead sells tracts with master infrastructure to homebuilders; he said St. Joe has several contracts in progress and continues discussions with builders.

Gonzalez also discussed several other projects and initiatives:

• Hospitality marketing: Asked about RevPAR improvement, Gonzalez said the majority of the uptick was “organic,” while noting the company has tracked increased bookings from the New York City market following a campaign launched in December and remains “cautiously optimistic.”
• VentureCrossings and data centers: Gonzalez said the company has held discussions with potential users about VentureCrossings Enterprise Centre, and would consider monetization through a ground lease (recurring revenue) and/or a sale depending on circumstances.
• Brokerage business: Gonzalez said the company has been pleased with the start of its real estate brokerage agency, which began at WaterColor Town Center and expanded to WaterSound Town Center. He said St. Joe plans three additional locations—two in Bay County and one in Walton County—and expects more meaningful evaluation after a full year of data.
• Pier Park City Center surf park: Gonzalez said the company has made “significant progress” and expects the surf park project to commence “relatively soon.” He also said St. Joe is in discussions with other potential users for the site and is being “very thoughtful” about tenant mix.
• Latitude Margaritaville expansion: Gonzalez said the company has been in discussions with its partner about the next phase and has made “really good progress,” adding that expansion would be “to the immediate west of the existing joint venture.”
• Intracoastal Waterway Marina: Gonzalez said work has started, but St. Joe still needs to obtain a couple more permits. He said the company does not see major regulatory challenges and expects to accelerate work once final permits are received.
• Origins West custom homesites near Art Park: Gonzalez said St. Joe is planning another custom residential homesite product in Origins West, but does not yet have specifics on lot count or timing and expects to share more information “in the subsequent weeks and months.”

Demand backdrop: migration, tourism, builders, and commercial interest

Gonzalez described continued positive demand signals in the region. In response to a question about migration and tourism, he said it “still feels really positive,” with migration broadening beyond historical feeder geographies. He said the company is also seeing hotel guests from a wider range of locations and noted the quarter’s hospitality revenue growth and improved occupancy and rates as supporting indicators.

On residential pace in Walton County, Gonzalez said the company agrees with the questioner’s observations about demand but emphasized balancing inventory to meet market needs without overextending capital. He cited Camp Creek as an example where many custom builders have participated, and said Origins currently has five or six builders with ongoing discussions with additional builders.

On commercial development, Gonzalez said activity depends on market demand, but added that St. Joe is receiving more inbound inquiries—particularly from national retailers—than in earlier years when the company was “the ones making phone calls.” If the trend continues, he said the company would make decisions to meet demand and “accelerate” commercial development.

St. Joe said it will hold its annual meeting of shareholders on May 12 at 9:00 a.m. Central Time at Camp Creek Inn.

About St. Joe NYSE: JOE

The St. Joe Company NYSE: JOE is a leading real estate development and asset management firm focused on Northwest Florida. Headquartered in Jacksonville, the company owns and manages approximately 171,000 acres of land across Bay, Gulf, Franklin and Walton counties. St. Joe's core businesses include residential community development, commercial real estate, and hospitality, with an emphasis on master-planned neighborhoods, office and retail campuses, resort hotels and mixed-use town centers.

Founded in 1936 as a paper manufacturing company, St.

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