Executive Summary / Key Takeaways

• Maui Land & Pineapple Company, Inc. (MLP) is undergoing a strategic transformation under new leadership, shifting focus from historical land sales volatility to maximizing value from its extensive landholdings and commercial properties on Maui.
• Recent financial results for Q1 2025 show a significant increase in operating revenues, primarily driven by the Honokeana Homes wildfire relief project and strong growth in the Leasing segment, indicating a recovery in tourism and effective property management efforts.
• While Q1 2025 saw a substantial net loss due to a non-cash pension settlement expense, management anticipates improved operating income and revenue growth as non-recurring costs subside and land assets are transitioned into productive use.
• MLP's competitive advantages stem from its unique, large-scale land ownership in a supply-constrained market and integrated resort amenities, though it faces challenges from larger, more efficient competitors in commercial leasing and development.
• A new scalable agave agri-business venture represents a strategic initiative to reactivate dormant agricultural lands, offering potential long-term revenue upside through vertical integration and aligning with community sustainability goals.

A New Chapter for a Maui Legacy

For over a century, Maui Land & Pineapple Company, Inc. has been intrinsically linked to the landscape and community of Maui. Tracing its origins back to 1909, the company amassed over 22,000 acres on the island between 1911 and 1932, establishing a legacy rooted in land stewardship and agriculture. While historically known for its pineapple operations and later, land development, MLP is now charting a new course, driven by a renewed mission to strategically maximize the value of its diverse asset portfolio for both shareholders and the future of Maui.

A significant leadership transition in April 2023 brought in a team with deep experience in large-scale real estate management and community building. This new leadership has initiated a focused strategy centered on enhancing the productivity of MLP's extensive landholdings and approximately 247,000 square feet of commercial real estate. The strategic plan aims to meet the current and future needs of the community, particularly in the wake of the devastating 2023 Maui wildfires which highlighted the critical shortage of housing and jobs in West Maui.

MLP operates through three reportable segments: Land Development & Sales, Leasing, and Resort Amenities. The Land Development & Sales segment focuses on planning, entitlement, development, and sales of land assets, aiming to prepare land for productive use. The Leasing segment generates recurring revenue from commercial, industrial, and agricultural property leases, as well as water system management and conservation activities. The Resort Amenities segment manages the Kapalua Club, providing members access to resort facilities.

In the competitive landscape, MLP's leasing operations face substantial competition from other property owners across Maui and Hawaii. Larger, more diversified real estate companies like Alexander & Baldwin (ALEX) and Howard Hughes Corporation (HHC) also operate in Hawaii and other U.S. markets, bringing greater scale and potentially more efficient development processes. While specific, directly comparable market share figures for all niche competitors are not publicly detailed, MLP's unique position as a major landowner on Maui provides a distinct advantage in a supply-constrained market. Its integrated resort amenities and conservation land management also offer differentiation compared to purely commercial or residential developers. However, larger competitors like Vornado Realty Trust (VNO) and Simon Property Group (SPG) demonstrate significantly higher profitability margins and cash flow generation in commercial leasing, highlighting the scale disadvantage MLP faces in this area.

MLP's real estate operations do not appear to have specific technological differentiators in the way one might see in a tech company, the company's strategic approach to land management and resource utilization represents a form of operational differentiation. The active management of the Pu'u Kukui Watershed, providing a significant portion of West Maui's water, is a critical operational asset. Furthermore, the newly announced agave venture signals an innovative approach to leveraging agricultural land, aiming for vertical integration and added-value products, which could provide a competitive edge in the agri-business space. The company's focus is on strategic land use planning and development execution rather than proprietary building technologies or digital platforms.

Performance Reflecting Strategic Shifts

Recent financial results underscore the early impacts of the new strategic direction, albeit with the influence of significant one-time items. For the three months ended March 31, 2025, MLP reported total operating revenues of $5.80 million, a substantial increase from $2.48 million in the same period of 2024. This surge was primarily driven by the Land Development & Sales segment, which generated $2.30 million in revenue in Q1 2025 compared to zero in Q1 2024. This revenue was largely attributable to the Honokeana Homes project, a wildfire recovery initiative where MLP administers horizontal improvements on a cost-recovery basis for the State of Hawaii, meaning it does not generate direct profit from this specific work.

The Leasing segment also demonstrated strong performance, with operating revenues climbing 45.3% year-over-year to $3.22 million in Q1 2025 from $2.22 million in Q1 2024. This growth reflects the success of management's efforts to increase commercial property occupancy, which rose from 72% at the start of 2024 to 86% by March 31, 2025, and to convert below-market leases to current market rates. Operating income from the Leasing segment improved significantly, reaching $1.86 million in Q1 2025 compared to $1.22 million in Q1 2024. This segment currently serves as the primary source of operating income for the company.

The Resort Amenities segment saw a modest 7.5% increase in operating revenues to $287,000 in Q1 2025, but operating costs rose, leading to a wider operating loss of $325,000 compared to a $169,000 loss in the prior year period.

Despite the revenue growth, MLP reported a net loss of $8.64 million for the first quarter of 2025, significantly wider than the $1.38 million loss in Q1 2024. This increased loss was primarily due to a substantial $6.81 million non-cash settlement expense related to the termination of the company's defined benefit pension plan. General and administrative costs and share-based compensation also increased, with share-based compensation rising to $1.58 million in Q1 2025 from $959,000 in Q1 2024, partly due to option valuation expenses and the impact of prior grant cancellations.

From a liquidity standpoint, MLP's cash and cash equivalents increased to $7.88 million at March 31, 2025, from $6.84 million at December 31, 2024. The company also held investments totaling $1.57 million. MLP maintains a $15 million revolving line of credit facility, with $12 million available as of March 31, 2025. Cash provided by operating activities was $157,000 in Q1 2025, a positive shift from cash used in operations in the prior year. Management believes its current liquidity position, combined with operating cash flow and available credit, is sufficient to meet obligations for the next twelve months and the foreseeable longer term, with future development hard costs expected to be funded primarily by project presale deposits and construction financing.

Outlook and Strategic Initiatives

MLP's outlook is centered on executing its strategic plan to transition land into productive use and enhance recurring revenue streams. While the Honokeana Homes project provides near-term activity and revenue recognition on a cost-recovery basis, the company anticipates additional sales revenues from remnant and non-strategic parcels within the next 1-3 years. Larger unimproved land parcels designated for active planning and improvements are expected to require three or more years before revenue generation is realized.

Management anticipates cash flow from commercial properties to increase as occupancy stabilizes and initial tenant improvement costs are absorbed. They also expect a decrease in future share-based compensation expenses following recent grant cancellations and a shift away from using options. The significant non-cash pension settlement expense from Q1 2025 is expected to be largely offset by a corresponding gain in other comprehensive income in the second quarter, which should lead to improved reported operating income absent other factors.

A notable strategic initiative is the launch of a scalable agri-business venture focused on cultivating agave on reactivated dormant croplands. This project aims to create local jobs, promote sustainable land use, and capitalize on growing global demand for agave-based products. The company is exploring vertical integration opportunities, including on-island distillation, agri-tourism, and global distribution, which could provide significant long-term revenue upside. This venture leverages MLP's extensive agricultural land base and aligns with its mission of enhancing the quality of life on Maui.

Key risks for MLP include the cyclical nature of land development, potential impacts from natural disasters (exacerbated by the recent wildfires), macroeconomic conditions affecting tourism and real estate demand, the ability to obtain necessary land use entitlements, and competition from other property owners. The company is also working to resolve environmental compliance issues at its Upcountry Maui wastewater facility, which requires ongoing investment and regulatory coordination.

Conclusion

Maui Land & Pineapple is in a period of strategic transition, leveraging its unique asset base on Maui to build long-term value. The recent increase in operating revenues, particularly in the Leasing segment, signals positive momentum driven by focused management efforts and a recovering tourism market. While the Q1 2025 net loss was significantly impacted by a non-cash pension expense, the underlying operational trends, coupled with strategic initiatives like the agave venture and planned land development, offer a glimpse into the company's future potential.

The investment thesis for MLP hinges on the successful execution of its strategy to unlock value from its vast landholdings and enhance recurring income from its commercial properties. The company's competitive position is strengthened by its irreplaceable land assets in a high-demand market, but challenged by the scale and efficiency of larger competitors. Investors should monitor the progress of land development projects, the stabilization and performance of the leasing portfolio, the development of the new agri-business, and the resolution of legacy issues like the pension plan termination and environmental compliance as key indicators of MLP's ability to translate its strategic vision into sustainable financial performance.