PICO Holdings (PICO) Reports Q1 EPS of $0.33

PICO Holdings (NASDAQ: PICO) reported Q1 EPS of $0.33, versus ($0.12) reported last year. Revenue for the quarter came in at $12.12 million, versus $344 thousand reported last year.

“Our net income of $6.7 million for the first quarter 2019 was driven largely by two sale transactions. We sold 1,064 acres of land and 18 acre-feet of water rights in Dodge Flat, Fernley, Nevada for gross proceeds of $8.9 million and a gross margin of approximately $7.2 million. In addition, our subsidiary, Fish Springs Ranch, LLC sold 86 acre-feet of water rights to residential developers at $35,000 per acre-foot in the North Valleys region of Reno, Nevada. We believe these transactions demonstrate the robust growth that is occurring in northern Nevada and that our remaining inventory of water rights in northern Nevada which can serve the North Valleys and the Dayton corridor / Lyon County area are well positioned to provide for continued growth in the region.

“Our net income for the quarter also included certain severance accruals - chiefly for John Perri, our former Chief Financial Officer. On behalf of the Board and the Company, I wish to thank John for the service he has given to the Company over many years and for being a dedicated employee and highly professional finance executive. He has ensured a smooth transition as we closed our La Jolla, California office and transitioned the treasury, finance and administrative functions to our head office in Carson City, Nevada. We wish John every success in the future. Max Webb, our Executive Chairman, has been appointed as our Chief Financial Officer with immediate effect.

“As a result of the completion of the transition of functions to Carson City, Nevada and the related reduction in headcount and payroll, we anticipate from this date forward that our annual net operating cash costs, that is, overhead, project related costs and operating income before any asset monetizations or extraordinary items, to be approximately $5.5 million. We will continue to review all operations for the purpose of identifying possible further reductions in our overhead costs.

“With respect to our capital allocation, we believe that repurchasing shares of our common stock is still attractive at current stock price levels. During the first quarter we repurchased approximately 420,000 shares on the open market for approximately $4.3 million ($10.32 per share) and as of March 31, 2019 we had 20,305,710 shares outstanding.

“As we previously disclosed, we entered into an agreement to buy certain groundwater rights in Lyon County, Nevada. In the second quarter of 2019, we closed on the acquisition of 267 acre-feet in Lyon County for approximately $4 million and have entered into options to acquire an additional 403 acre-feet in Lyon County over the next couple of years. We believe the supply and demand dynamics of water rights in this area is a compelling investment opportunity and the acquired water rights complement our existing inventory in the area.”

For earnings history and earnings-related data on PICO Holdings (PICO) click here.

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