Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview of the Company
MAUI LAND & Pineapple Company, Inc. is a Hawaii corporation and the successor to a business organized in 1909. We are a landholding company. Our principal subsidiary is Kapalua Land Company, Ltd., the operator and developer of Kapalua Resort, a master-planned community in West Maui. Our reportable operating segments are Resort and Community Development. In December 2009, all of our Agriculture segment operations were ceased and the segment is reported as discontinued operations.
Maui Land & Pineapple Co. Inc. lost $4.6 million, or 57 cents per share, in the second quarter of 2010, the company said Monday.
The losses are significantly lower than the $54.2 million, or $6.75 per share, the company lost in the year-earlier period.
Maui Land recorded $8.3 million in revenue for the quarter, compared to $8.7 million in the second quarter of 2009.
In the first half of the year, the company’s net loss was $7.3 million, or 90 cents per share — an improvement from a loss of $67.4 million, or $8.40 per share, for the same period a year ago.
Revenue totaled $19 million from January through June, compared to $19.5 million for the first six months of 2009.
The net loss for the first half of the year includes a $3.4 million credit recognizing the termination of post-retirement benefits earlier this year and a profit before taxes of about $2.5 million from the sale of real estate and part of the company’s former administrative offices in Kahului on Maui.
Proposed ‘Ewa development defies snap judgments
Sep 2, 2009
Last Friday’s daylong meeting of the State Land Use Commission, to rule on a petition by mega-developer D.R. Horton-Schuler to change the current zoning on 1,500 acres of prime ‘Ewa farmland from agriculture to mixed-use residential and commercial, was anything but boring.
Here’s Kioni Dudley, intervenor in the case, whom some have called the leader of the opposition: “In the beginning, over two years ago, this was just a gut feeling I had.” Now, it is more than a feeling, as Mr. Dudley–and everyone else with a sore gut over the proposed zone change–has picked up some unexpected allies, in the form of at least three State agencies and several local politicians.
Listen to Bryan Yee of the Attorney General’s office, speaking for the State Office of Planning: “We now know that if the petition [for the zoning change] goes through, H-I will be a parking lot from Waiawa to Makakilo. And the petitioner (Schuler) isn’t proposing any solutions.”
If there’s anything we like to cover besides net/nets here at Cheap Stocks, it’s real estate, more specifically, companies that own relatively large amounts of raw land, commercial property, or a combination of the two. My portfolio is chock full of these companies, from retailers such as Cabela’s, to restaurants (Cracker Barrell, Denny’s) to shipping companies (Alexander and Baldwin) to agriculture (JG Boswell and Limoneira), to name just a few.
Over the years, I’ve also sold out of some names as well. Maui Land and Pineapple (MLP) is a great example. I continue to follow the company, however, looking for a re-entry point, or making a determination of whether I want to take a new position.
MLP, which owns 24,500 acres primarily in Maui, Hawaii, including 10.6 miles of ocean frontage with 3300 of lineal feet along sandy beaches, has fallen on hard times during the recession. The company recently reported a $54 million loss for the second quarter, which included more than $37 million in writedowns, $21.3 million of which represented a decrease in value of the Company’s investment in the Kapalua Bay resort. Clearly, the downturns in real estate prices and resort visitors has been a double whammy for MLP. The stock now trades at $6.22, down 79% from its 52 week high of $29.69.
Maui Land & Pineapple reports 2nd-quarter loss
Associated Press, 08.03.09, 10:56 PM EDT
KAHULUI, Hawaii —
Maui Land & Pineapple Co. has reported a wider second-quarter loss due to hefty charges.
The company posted a loss of more than $54 million, or $6.75 per share, compared with net income of $272,000, or 3 cents per share, for the second quarter of 2008.
The latest-quarter loss included a charge of $21.3 million for the drop in value of the company’s investment in Kapalua Bay Holdings LLC, and charges of $14.2 million to write off development plans the company says are no longer feasible due to changes in market conditions.
The company said Monday that revenue slid 24 percent to $13.3 million from $17.6 million. Declines were seen across all business segments, as less tourist travel to Maui and the state of Hawaii and lower demand for real estate continued to impact operations and pineapple operations were scaled down.
May 21, 2007
Hawaii: a return to the land, for fuel
By Matt Villano
LAHAINA, Hawaii – Here on the West Side of Maui, where lush mountainsides and the warm waters of the Alalakeiki Channel juxtapose increasingly crowded roadways and a spate of new luxury hotels, the push for renewable energy has found an unlikely advocate: the chief executive of one of the most aggressive developers on the island.
The real estate maven, David Cole, has used his position as head of Maui Land and Pineapple, a land holding and operating company, to promote sustainable development. The effort harks back to Hawaii?s past, with plans to return some farmland to production ? this time for energy rather than food ? after so many years in which the state turned its back on its agricultural history in a headlong rush into tourism and real estate.
Perhaps the most notable effort is Hawaii BioEnergy, an international consortium that includes two other local landowners, Tarpon Investimentos, an investment company in Bermuda, and Brasil Bioenergia, an energy company in S?o Paulo.
The consortium, which also involves the co-founder of America Online, Stephen M. Case, and the venture capitalist Vinod Khosla, took form last July with the goal to make Hawaii, which has long had to pay high prices for imported fuel, largely energy-independent.
?As islanders, we?ve had to provide for our own survival for hundreds and hundreds of years,? said Mr. Cole, 55, who was raised on Oahu but spent most of his adult life on the mainland before coming to Maui in 2003.
?Now that the technology exists to turn some of our natural resources into energy, there?s no reason we should be getting energy from anywhere else,? he said.
While companies on the mainland are subsidized to produce ethanol from corn, Hawaiian companies and Hawaii BioEnergy are turning to other materials, particularly sugar cane, which are potentially far more efficient sources of ethanol per input of energy and raw material than corn.
Statistics from the Department of Energy, the Renewable Fuels Association in Washington and evidence from Brazil?s experience indicate that ethanol from sugar cane is considerably cheaper to produce than ethanol from corn, a savings that potentially could trickle down to consumers in the form of lower energy bills.
Even without these numbers, the business case for investing in alternative energy in Hawaii is compelling. The Hawaiian archipelago relies on imported oil for nearly 90 percent of its energy needs, making it one of the most expensive places in the nation to buy gasoline and pay for electricity and heat.
In May 2006, Hawaii passed a bill requiring that 20 percent of all highway fuel demand by 2020 must be provided by renewable fuels like ethanol, biodiesel or hydrogen. Another bill under consideration in the State Legislature would allow biofuel processing centers to be permitted in agriculture districts and would develop a baseline percentage of energy feedstock to be grown in the state.
Charmaine Tavares, mayor of Maui County, which includes the islands of Maui, Lanai, Molokai and Kahoolawe, said the goals were ?admirable,? but noted that more immediate changes were necessary as well.
?Every time we pay our energy bills, we?re all aware of the need for renewable energy,? Ms. Tavares said. ?The year 2020 just seems pretty far away.?
Mr. Cole, whose company is one of the largest landowners on Maui, agreed. Last summer, after an eye-opening trip to Brazil, he took matters into his own hands.
With the help of Mr. Case, whom he met during a stint at America Online in the 1990s, Mr. Cole signed up Hawaiian landowners like Kamehameha Schools, an independent school system and the largest landowner in the state, and the Grove Farm Company, a 22,000-acre sugar cane plantation in eastern Kauai that is owned by Mr. Case.
The pair also enlisted help from companies overseas, and recruited Mr. Khosla, a co-founder of Sun Microsystems in 1982 who has become one of the biggest backers of renewable energy in the world. Hawaii BioEnergy was born.
Since then, these founding partners and Maui Land and Pineapple have invested nearly $1 million in cash and put a number of full-time employees to work running the business. They expect other investors to help raise an additional $50 million to $80 million to get the operation off the ground.
?When you consider the tropical weather and all the sun Hawaii gets, it is a perfect place to prove that fuels made from biomass can be cost-competitive,? Mr. Khosla said of the project.
Still, the real heart of this consortium is land. The three landowners own about 10 percent of the arable soil in the state: 450,000 acres in all.
Though most of this soil is fallow today, Mr. Case wrote in a recent e-mail exchange that the partners plan to combine contiguous parcels, coordinate planting, harvesting and processing operations, and maximize economies of scale.
?These efforts are not without risk, but anything important has risks,? he wrote of the Hawaii BioEnergy plan. ?Hawaii?s first act was agriculture, and the second act was tourism. Now it is time for the third act, Hawaii 3.0.?
By some accounts, this new era is already under way. From a conference room at the understated Maui Land and Pineapple headquarters in Kahalui, Mr. Cole recently reviewed a new Hawaii BioEnergy feasibility study for producing ethanol from sugar cane on Maui, noting that the consortium could begin plant construction as soon as 2010.
Ultimately, he said, the plant would produce 27 million to 28 million gallons of ethanol a year, and would use the fuel to defray its own energy costs and to sell elsewhere in the state. He added that the group has explored other potential sources for ethanol, including soybeans, switch grass and a type of elephant grass called miscanthus.
Mr. Cole noted that the consortium also looked into producing ethanol from potential ?co-products? of the fuel-making process, including electricity from bagasse (the residue produced after crushing sugar cane), biodiesel from algae nourished by carbon dioxide off-take in the distillation process and animal feeds from the residual algae stream. All together, burning this additional ethanol could add another 25 to 30 megawatts of sustainable power capacity, Mr. Cole said.
?Part of our conception is that we get the most out of the project by making all waste streams into food streams for something else,? Mr. Cole explained. ?Before we invest in a particular technology, we want to be sure we?re investing in the technology that will give us the biggest and broadest return.?
To be sure, Hawaii BioEnergy is not the only partnership interested in renewable energy; elsewhere, the state?s two remaining sugar cane companies are exploring renewable energy efforts of their own.
On Kauai, for example, the cane producer Gay & Robinson recently received a state permit to build a $36 million ethanol plant in the town of Pakala as part of a joint venture with a local energy company. The other concern, the Maui-based Hawaiian Commercial and Sugar, is also investigating renewable fuels.
Because these companies currently combine to harvest 270,000 tons of sugar cane each year, they may be closer to actually producing renewable energy than Hawaii BioEnergy is. Alan Kennett, president and general manager of Gay & Robinson, suggested that his company could begin ethanol production as early as next year.
David Pimentel, professor of ecology and agricultural sciences at Cornell University in Ithaca, N.Y., said the fact that there would soon be various options for renewable energy in Hawaii was a step in the right direction.
?Any investment in renewable energy is a good investment,? he said. ?Beyond that, Hawaii should be practicing general conservation with smaller cars, less air-conditioning and decreased consumption over all.?
If anybody understands the need for conservation in Hawaii, Mr. Cole does. A stocky man with a graying goatee, he grew up in Kailua, a suburb of Honolulu, hiking through tropical forests and hanging out on beaches with friends. His first job on the island was delivering copies of The Honolulu Advertiser. He attended the University of Hawaii as an undergraduate.
Mr. Cole left Maui for law school on the mainland in the 1970s. Though he spent almost 30 years there before returning to head Maui Land and Pineapple in 2003, his love for the local environment still runs deep; he regularly rhapsodizes about the beauty of dawn, the sweet sounds of birds and the annual migration of humpback whales.
He also serves as chairman of the Hawaii Nature Conservancy.
Mr. Cole has extended these pro-environment ideals to many of his business decisions. This year, when construction crews dismantled the former Kapalua Bay Hotel, which is owned by a subsidiary of Maui Land and Pineapple, Mr. Cole required them to reuse 97 percent of the material in the company?s new offices.
Instead of recycling, he called the process ?upcycling,? and noted that his desk was a door in its former life.
Planning the next development ? an upscale neighborhood on the slopes of Mount Haleakala called Haliimaile (pronounced hah-lee-ee-my-lee) ? Mr. Cole has commissioned architects to design the enclave to minimize vehicle use, create a natural water filtration system, and incorporate solar and wind energy so residents generate more power than they consume.
Though the neighborhood is still in the permitting process and probably years away, Mr. Cole said he hoped this kind of forward thinking, together with the efforts of Hawaii BioEnergy, would eventually inspire outsiders to look to Hawaii for ideas about responsible and sustainable development.
?The whole world is looking for models,? he said. ?Years from now, when people think about renewable energy, I want them to look here and say, ?If it worked for Hawaii, it can work for us.? ?
Copyright 2007 The New York Times Company
Source: New York Times
Land and Pineapple Co. (MLP)? HUH? That’s what I said, too, when I stumbled across the company a few months ago. Who would want to own this thing? A pineapple company? I hate pineapples.
Then I dug some more. Not surprisingly, the company’s pineapple business is mediocre at best. The company also operates another subsidiary, Kapalua Land Company, which manages the company’s scenic Kapalua Resort community. As per consolidated results, the company is generally profitable (although erratic in its earnings) and boasts AOL founder Steve Case as a large shareholder. But that’s not why I’m writing this.
It turns out the company currently owns around 27,500 acres (or 1.2 billion sq ft.) on the Hawaiian island of Maui. That’s a lot of land. And here’s the best part: all of that land is recorded at cost between – you’ll never believe it – 1911 and 1930! Just to remind you: Hawaii wasn’t even close to being a state around that time.
So what does that mean? How much is the land worth today? Well, it doesn’t take a genius to realize that land values in Hawaii have gone up at least a little bit in the past century. Unfortunately, the vast majority (around 22,500 acres) of the land is either mountainous, preserved, or used for agriculture, so it’s not [necessarily] easily salable or, for that matter, developable (if this use of “developable” is not a word, credit me for coining it).
Nonetheless, I’d quite precisely estimate the value of the land somewhere between a little and a whole lot (how’s that for perfection?), but still far more than its cost. Investors can also take solace in the fact that the company still owns an additional 9 miles of beachfront (read: prime) real estate, several PGA toured golf courses, a happening resort community, and who knows what else.
A very good post on the company and some valuation metrics can be found here if you scroll down, so I’ll save you from the technical discussion. The author, Clyde Milton, does as good a job as any in describing the company, and I highly recommend the reading (and the whole blog, for that matter).