AMREP CORP

Previous wording

Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 2024 condensed consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the 2024 Form 10-K. The preparation of the unaudited condensed consolidated financial statements included in this report on Form 10-Q required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those estimates and assumptions.

Current wording

Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 2024 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the 2024 Form 10-K. The preparation of the unaudited condensed consolidated financial statements included in this report on Form 10-Q required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those estimates and assumptions.

Previous wording

Information concerning the Company’s implementation and the impact of recent accounting standards or updates issued by the Financial Accounting Standards Board is included in the notes to the condensed consolidated financial statements contained in the 2024 Form 10-K and in the notes to the unaudited condensed consolidated financial statements included in this report on Form 10-Q. The Company did not adopt any accounting policy in the six months ended October 31, 2024 that had a material effect on its unaudited condensed consolidated financial statements.

Current wording

Information concerning the Company’s implementation and the impact of recent accounting standards or updates issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 2024 Form 10-K and in the notes to the unaudited condensed consolidated financial statements included in this report on Form 10-Q. The Company did not adopt any accounting policy in the nine months ended January 31, 2025 that had a material effect on its unaudited condensed consolidated financial statements.

Previous wording

For the three months ended October 31, 2024, the Company had net income of $4,042,000, or $0.75 per diluted share, compared to net income of $1,108,000, or $0.21 per diluted share, for the three months ended October 31, 2023. For the six months ended October 31, 2024, the Company had net income of $8,106,000, or $1.51 per diluted share, compared to net income of $2,454,000, or $0.46 per diluted share, for the six months ended October 31, 2023.

Current wording

For the three months ended January 31, 2025, the Company had net income of $717,000, or $0.13 per diluted share, compared to net income of $92,000, or $0.02 per diluted share, for the three months ended January 31, 2024. For the nine months ended January 31, 2025, the Company had net income of $8,823,000, or $1.64 per diluted share, compared to net income of $2,546,000, or $0.48 per diluted share, for the nine months ended January 31, 2024.

Previous wording

During the six months ended October 31, 2024 and October 31, 2023, the Company experienced delays in municipal entitlements, infrastructure availability, approvals and inspections and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 2024, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertainty and an increase in entitlement and infrastructure delays as compared to the prior year. This may result in reduced land sale revenues during 2025 and the fiscal year ending April 30, 2026 as compared to 2024.

Current wording

During the nine months ended January 31, 2025 and January 31, 2024, the Company experienced material delays in municipal entitlements, infrastructure availability, approvals and inspections and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. In addition, any tariffs on goods used as inputs in both the land development business segment and homebuilding business segment may result in further increases in the cost of housing and average sales prices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 2024 and 2025, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertainty and an increase in entitlement and infrastructure delays as compared to prior years. This may result in a reduction of revenues from the sale of developed residential land during 2025 and is expected to result in a reduction of revenues from the sale of developed residential land during the fiscal year ending April 30, 2026 as compared to 2024 and 2025.

Previous wording

The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for the three and six months ended October 31, 2024 compared to the prior periods were primarily due to the location and mix of land sold.

Current wording

The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for the three and nine months ended January 31, 2025 compared to the prior periods were primarily due to the location and mix of land sold.

Previous wording

As of October 31, 2024, the Company had 70 homes in production, including 15 homes under contract, which homes under contract represented $6,610,000 of expected home sale revenues when closed, subject to customer cancellations and change orders. As of October 31, 2023, the Company had 41 homes in production, including 16 homes under contract, which homes under contract represented $7,700,000 of expected home sale revenues when closed, subject to customer cancellations and change orders.

Current wording

As of January 31, 2025, the Company had 101 homes in production, including 16 homes under contract, which homes under contract represented $7,204,000 of expected home sale revenues when closed, subject to customer cancellations and change orders. As of January 31, 2024, the Company had 62 homes in production, including 19 homes under contract, which homes under contract represented $8,300,000 of expected home sale revenues when closed, subject to customer cancellations and change orders.

Previous wording

Miscellaneous other revenues for the three and six months ended October 31, 2024 primarily consist of extension fees for purchase contracts and residential rental revenues. Miscellaneous other revenues for the three and six months ended October 31, 2023 primarily consist of extension fees for purchase contracts, forfeited deposits and residential rental revenues.

Current wording

Miscellaneous other revenues for the three and nine months ended January 31, 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues. Miscellaneous other revenues for the three and nine months ended January 31, 2024 primarily consist of extension fees for purchase contracts, forfeited deposits and residential rental revenues.

Previous wording

Land sale gross margins were 60% and 52% for the three and six months ended October 31, 2024 compared to 27% and 32% for the three and six months ended October 31, 2023. The changes in gross margin were primarily due to changes in public improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold (including the sale of 567.1 acres and 585.2 acres for the three and six months ended October 31, 2024 as compared to 1.3 acres and 8.8 acres for the three and six months ended October 31, 2023 of undeveloped land with a low associated land sale cost of revenues) and the demand for lots by builders resulting in higher revenue per developed lot.

Current wording

improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold (including the sale of 5.7 acres and 590.8 acres for the three and nine months ended January 31, 2025 as compared to 43.0 acres and 51.8 acres for the three and nine months ended January 31, 2024 of undeveloped land with a low associated land sale cost of revenues) and the demand for lots by builders resulting in higher revenue per developed lot.

Previous wording

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in the three and six months ended October 31, 2024 or October 31, 2023. Due to volatility in market conditions and development costs, the Company may experience future impairment charges.

Current wording

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in the three and nine months ended January 31, 2025 or January 31, 2024. Due to volatility in market conditions and development costs, the Company may experience future impairment charges.

Previous wording

Interest Income, net. The Company had interest income, net of $576,000 and $857,000 for the three and six months ended October 31, 2024 and $163,000 and $211,000 for the three and six months ended October 31, 2023. There were no interest or loan costs capitalized in real estate inventory in the three and six months ended October 31, 2024 or October 31, 2023.

Current wording

Interest Income, net. The Company had interest income, net of $410,000 and $1,267,000 for the three and nine months ended January 31, 2025 and $262,000 and $473,000 for the three and nine months ended January 31, 2024. There were no interest or loan costs capitalized in real estate inventory in the three and nine months ended January 31, 2025 or January 31, 2024.

Previous wording

Income Taxes. The Company had a benefit for income taxes of $322,000 for the three months ended October 31, 2024 and a provision for income taxes of $887,000 for the six months ended October 31, 2024. The benefit (provision) for income taxes for the three and six months ended October 31, 2024 related to the amount of income before income taxes during each period and to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during the three months ended October 31, 2024. Refer to Note 11 to the consolidated financial statements contained in the 2024 Form 10-K for detail regarding accumulated other comprehensive income (loss). The Company had a provision for income taxes of $106,000 and $831,000 for the three and six months ended October 31, 2023 related to the amount of income before income taxes during each period.

Current wording

Income Taxes. The Company had a provision for income taxes of $125,000 and $1,012,000 for the three and nine months ended January 31, 2025. The provision for income taxes for the three and nine months ended January 31, 2025 related to the amount of income before income taxes during each period and, for the nine months ended January 31, 2025, to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during the nine months ended January 31, 2025. Refer to Note 11 to the consolidated financial statements contained in the 2024 Form 10-K for detail regarding accumulated other comprehensive income (loss). The Company had a provision for income taxes of $22,000 and $853,000 for the three and nine months ended January 31, 2024 related to the amount of income before income taxes during each period.

Previous wording

The net cash provided by operating activities for the six months ended October 31, 2024 was primarily due to cash generated from business operations and a reduction in real estate inventory and other assets and an increase in taxes payable (receivable), net offset in part by an increase in investment assets and a reduction in accounts payable and accrued expenses. The net cash provided by operating activities for the six months ended October 31, 2023 was primarily due to cash generated from business operations and a reduction real estate inventory and other assets offset in part by an increase in investment assets and a reduction in accounts payable and accrued expenses.

Current wording

The net cash provided by operating activities for the nine months ended January 31, 2025 was primarily due to cash generated from business operations and a reduction in real estate inventory and other assets offset in part by an increase in investment assets, net and a reduction in accounts payable and accrued expenses. The net cash provided by operating activities for the nine months ended January 31, 2024 was primarily due to cash generated from business operations and a reduction in investment and other assets offset in part by an increase in real estate inventory.

Previous wording

Notes payable decreased from $35,000 as of April 30, 2024 to $32,000 as of October 31, 2024 due to principal debt repayments. Refer to Note 6 to the unaudited condensed consolidated financial statements included in this report on Form 10-Q and Note 6 to the consolidated financial statements contained in the 2024 Form 10-K for detail regarding the Company’s notes payable.

Current wording

Notes payable decreased from $35,000 as of April 30, 2024 to $29,000 as of January 31, 2025 due to principal debt repayments. Refer to Note 6 to the unaudited condensed consolidated financial statements included in this report on Form 10-Q and Note 6 to the consolidated financial statements contained in the 2024 Form 10-K for detail regarding the Company’s notes payable.

Previous wording

During the six months ended October 31, 2024, the Company sold 585.2 acres of undeveloped property in Sandoval County, New Mexico categorized as land held for long-term investment.

Current wording

During the nine months ended January 31, 2025, the Company sold 585.2 acres of undeveloped property in Sandoval County, New Mexico categorized as land held for long-term investment.

Previous wording

As of October 31, 2024, fourteen homes were leased to residential tenants. As of April 30, 2024, ten homes were leased to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $24,000 and $48,000 for the three and six months ended October 31, 2024 and $29,000 and $48,000 for the three and six months ended October 31, 2023.

Current wording

As of January 31, 2025, fifteen homes were leased to residential tenants. As of April 30, 2024, ten homes were leased to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $33,000 and $64,000 for the three and nine months ended January 31, 2025 and $12,000 and $60,000 for the three and nine months ended January 31, 2024.