AMREP CORP. SEC 10-K Report

AMREP Corporation, primarily engaged in land development and homebuilding operations in New Mexico, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the current market environment.

Financial Highlights

• Total Revenues: $49.7 million, reflecting a decrease of 3% compared to the previous year, primarily due to a decrease in land sale revenues and other revenues.
• Operating Income: $12.1 million, an increase from $7.6 million in the prior year, driven by a reduction in total costs and expenses.
• Net Income: $12.7 million, up from $6.7 million in the previous year, indicating improved profitability.
• Earnings per share - diluted: $2.37, compared to $1.25 in the prior year, reflecting the increase in net income.

Business Highlights

• Land Development Operations: AMREP Corporation owns approximately 16,600 acres in Sandoval County, New Mexico, focusing on selling both developed and undeveloped real property to various builders and developers, with significant activities in Rio Rancho, New Mexico.
• Homebuilding Operations: The company operates a homebuilding segment in New Mexico, offering a variety of home floor plans and elevations. It focuses on single-family detached and attached homes, utilizing both built-to-order and speculative home sales strategies.
• Sales Units: In 2025, the company sold 50 homes compared to 36 homes in 2024. The number of new construction single-family residential starts in Rio Rancho was 973 in 2025, slightly down from 1,007 in 2024.
• Geographical Performance: The company conducts a substantial portion of its business in Rio Rancho, New Mexico, which is the third largest city in the state. The company has no foreign sales or activities outside the United States.
• Future Outlook: The company anticipates a reduction in revenues from the sale of developed residential land during the fiscal year ending April 30, 2026, due to market headwinds and uncertainty, as well as an increase in entitlement and infrastructure delays.
• Operational Challenges: The company experienced delays in municipal entitlements, infrastructure availability, and utility response times, impacting both land development and homebuilding segments. Rising costs of housing and mortgage interest rates have also affected demand.
• Infrastructure Reimbursement Mechanisms: The company utilizes public improvement districts and private infrastructure reimbursement covenants to recover certain development costs, which have contributed to changes in land sale cost of revenues.
• Human Capital Resources: As of April 30, 2025, the company employed 49 individuals, focusing on attracting and retaining talent through competitive pay and benefits. The company emphasizes ethical behavior and performance enhancement through technology and training.

Strategic Initiatives

• Liquidity and Capital Resources: The company has focused on managing its liquidity and capital resources by maintaining a revolving line of credit with BOKF, NA dba Bank of Albuquerque, which allows for up to $5,750,000 in borrowings for general corporate purposes. Additionally, the company has engaged in equipment financing with Deere & Company to support its construction equipment needs.
• Project Reductions: The company has strategically reduced the number and scope of its active land development projects due to market headwinds and uncertainty, which is expected to impact future revenues.
• Capital Management: The company has managed its capital by maintaining a balance of cash, cash equivalents, and U.S. Government Securities, which increased by 32% from the previous year. The company has also utilized its cash flows from operations to support its working capital requirements and has reduced its notes payable from $35,000 to $26,000 through principal repayments. Shareholders' equity increased due to net income and stock compensation expenses, with no dividends declared or stock repurchases reported.
• Future Outlook: The company anticipates that its primary demand for funds will continue to be for the development and acquisition of land, construction of home and commercial projects, and general administrative expenses. The company plans to explore public or private offerings of securities, asset disposals, or new debt facilities to meet its capital needs. The company also expects to face continued uncertainty in economic conditions, which may affect its ability to sell properties and generate cash flow from operations.

Challenges and Risks

• Market and Operational Challenges: The company faces challenges related to the acquisition of new properties to sustain growth, as well as competition from other land developers and homebuilders. The development of properties requires financing, which may not always be available, posing a risk to future growth.
• Regulatory and Compliance Risks: The company experienced delays in municipal entitlements, infrastructure availability, and utility response times, impacting construction timelines and increasing costs. Rising housing costs, interest rates, and general inflation have affected housing affordability, potentially reducing demand. The company has responded by offering sales incentives, reducing lot sizes, and leasing completed homes.
• Economic Conditions: Future economic conditions remain uncertain, with potential impacts from changes in mortgage rates, inflation, and labor shortages. The company’s financial performance is sensitive to changes in market conditions, including the availability of financing for land development and homebuilding projects.
• Revenue Impact: The company has noted a reduction in revenues from land sales due to market headwinds and entitlement delays, which may continue to affect future revenues.
• Market Risk Exposure: Although the company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company, the management discussion highlights exposure to risks related to interest rate fluctuations and inflation, which could impact financing costs and operating margins.

SEC Filing: AMREP CORP. [ AXR ] - 10-K - Jul. 25, 2025