Five Point Holdings, LLC (NYSE:FPH) Q3 2023 Earnings Call Transcript

Ben Fader-Rattner: I see, okay. All right, thank you. Thank you on that. And then just one other question, and I know you haven’t given numbers on ‘24, and I’m not asking for them, but I guess if you could, as you think about now versus the point at which you’d proactively refinance the bonds. Are you comfortable with the cash balance here or do you think the cash balance is likely to be higher at the point at which you proactively decide to refinance your bond?

Kim Tobler: Ben, this is Kim. I would tell you that we’re monitoring that regularly. And again, given Dan’s leadership, we’ve been focused on increasing our cash balance strategically, and we’re going to keep working on that. The moment when we’re going to deal with the bonds is going to be based on the market, and we’re not going to wait for a certain amount of cash. We wanted to have enough as soon as possible so that we had options. So, again, we’re still optimistic about ‘24, and we haven’t given any guidance on that, but the challenge we’ve been given and that we’ve been trying to address is more regular positive cash and earnings each quarter, which is, you know, something we’re trying to maintain, but can’t promise every quarter. But so what I would say is we’re focused on increasing our cash, and then we’ll be watching and working with the market to figure out when we can go into it and deal with our senior notes, if that makes sense.

Ben Fader-Rattner: Yes, no, that does. And then just when you say you’re optimistic on ‘24, is it, am I correct in assuming that you believe that in ‘24, land sale proceeds will be in excess of G&A costs and interest expense and any other fixed obligations?

Dan Hedigan: If you were to ask me today, that’s what our plan is to do.

Ben Fader-Rattner: Okay, okay. Obviously it’s uncertain, but that’s very helpful. Thank you.

Dan Hedigan: Yes.

Operator: Our next question comes from a line of Kyle Chung, a Private Investor. Please proceed with your question.

Kyle Chung: Hi, thanks for taking my question, and congrats on a great quarter. I’m actually going to congrats on what you guys have accomplished for the past year or so. So I want to commend you on that first. My first question is if I did my math right, it looks like your fourth quarter free cash flow guidance is between $32 million and $82 million, which seems like a relatively wide guidance range. And that’s $50 million range, I’d like to understand why it’s so wide. I mean, is it wide because the acreage and the price that you expect to close for fourth quarter is uncertain? Or is it wide because the closing date might slip from fourth quarter into first quarter? And so is it more of a timing issue or is it because the amount and the price of the land for sale, that’s uncertain?

Kim Tobler: Thanks, Kyle, this is Kim. Yes, it is a timing issue. We don’t control everything as it relates to when we can get something closed. And as we’ve been saying, something may slip from the fourth quarter into the first quarter, because all of the municipal approvals didn’t get received in a timely fashion. So we are still expecting those sales. It’s not a question of how much is going to be received.

Kyle Chung: Right. So just to be 100% clear, if it turns out that your fourth quarter free cash flow ends up being $32 million, what investors should take from that is that $50 million got pushed to first quarter. Is that right? Is that the right way to think about it?