PICO Holdings, Inc. Announces Results for the First Quarter of 2019

CARSON CITY, Nev.–(BUSINESS WIRE)–PICO Holdings, Inc. (NASDAQ:PICO) reported results for the first quarter
ended March 31, 2019. Our reported shareholders’ equity was $179.0
million ($8.81 per share) at March 31, 2019, compared to $176.6 million
($8.52 per share) at December 31, 2018.

First Quarter Results of Operations

Our first quarter results of operations were as follows (in thousands):

      Three Months Ended March 31,
2019   2018
Total revenue





Total cost and expenses   5,436   3,207  
Gain (loss) from operations before income taxes 6,684



Provision for federal and state income taxes  


Net income (loss) attributable to PICO Holdings, Inc. 6,684



Net income (loss) per share







PICO’s Chief Executive Officer, Dorothy Timian-Palmer, commented:

“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

“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.”

Net Operating Loss Carryforwards

At December 31, 2018, we had approximately $170.1 million of (pre-tax)
federal net operating loss carryforwards, or NOLs, that could be
utilized in certain circumstances to offset PICO’s taxable income and
reduce its federal income tax liability. Additional information with
respect to these NOLs is contained in our Annual Report on Form 10-K for
the year ended December 31, 2018 that we filed with the Securities and
Exchange Commission.

About PICO Holdings, Inc.

As of March 31, 2019, our primary holding was Vidler Water Company,
Inc., a water resource and water storage business with assets and
operations primarily in the Southwestern U.S.

Currently, we believe the highest potential return to shareholders is
from a return of capital. As we monetize assets, rather than reinvest
the proceeds, we intend to return capital to shareholders through a
stock repurchase program or by other means such as special dividends.
Nonetheless, we may, from time to time, reinvest a portion of proceeds
from asset monetizations in further development of existing assets if we
believe the returns on such reinvestment outweigh the benefits of a
return of capital.


At March 31, 2019, we had a market capitalization of $201.0 million, and
20,305,710 shares outstanding.

We remind all of our stockholders that you can submit a question
regarding our operations, to info@picoholdings.com,
and, if appropriate, we will post on our website responses to these


Statements in this press release that are not historical, including
statements regarding our business objectives, our ability to monetize
our water resources, the future demand for our water resources, the
savings expected from our transition to Carson City and reduction in
headcount, our ability to preserve and utilize NOLs to offset taxable
income and reduce our federal income liability, and our ability to
monetize assets and return capital to shareholders through stock
repurchases or through other means, are forward-looking statements based
on current expectations and assumptions that are subject to risks and

In addition, a number of other factors may cause results to differ
materially from our expectations, such as: any slow down or downturn in
the housing recovery or in the real estate markets in which Vidler
operates; fluctuations in the prices of water and water rights;
physical, governmental and legal restrictions on water and water rights;
a downturn in some sectors of the stock market; general economic
conditions; prolonged weakness in the overall U.S. and global economies;
the performance of the businesses in which Vidler operates; the
continued service and availability of key management personnel; and
potential capital requirements and financing alternatives.

For further information regarding risks and uncertainties associated
with our business, please refer to the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Risk
Factors” sections of our SEC filings, including our Annual Report on
Form 10-K and our Quarterly Reports on Form 10-Q, copies of which may be
obtained by contacting us at (775) 885-5000 x200 or at http://investors.picoholdings.com.

We undertake no obligation to (and we expressly disclaim any obligation
to) update our forward-looking statements, whether as a result of new
information, subsequent events, or otherwise, in order to reflect any
event or circumstance which may arise after the date of this press
release, except as may otherwise be required by law. Readers are urged
not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release.


Dorothy Timian-Palmer
President and Chief Executive Officer

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