Els reports second quarter results
Chicago--(business wire)--equity lifestyle properties, inc. (nyse: els) (referred to herein as “we,” “us,” and “our”) today announced results for the quarter and six months ended june 30, 2016. all per share results are reported on a fully diluted basis unless otherwise noted. financial results for the quarter and six months ended june 30, 2016 for the quarter ended june 30, 2016, total revenues increased $8.6 million, or 4.3 percent, to $210.1 million compared to $201.5 million for the same period in 2015. net income available for common stockholders increased $3.7 million, or $0.04 per common share, to $35.5 million, or $0.42 per common share, compared to $31.8 million, or $0.38 per common share, for the same period in 2015. for the six months ended june 30, 2016, total revenues increased $20.3 million, or 5.0 percent, to $430.2 million compared to $409.9 million for the same period in 2015. net income available for common stockholders for the six months ended june 30, 2016 increased $27.1 million, or $0.31 per common share, to $86.1 million, or $1.01 per common share, compared to $59.0 million, or $0.70 per common share, for the same period in 2015. non-gaap financial measures and portfolio performance for the quarter ended june 30, 2016, funds from operations (“ffo”) available for common stock and op unit holders increased $4.4 million, or $0.05 per common share, to $68.9 million or $0.75 per common share, compared to $64.5 million, or $0.70 per common share, for the same period in 2015. normalized funds from operations (“normalized ffo”) available for common stock and op unit holders increased $4.8 million, or $0.05 per common share, to $69.3 million, or $0.75 per common share, compared to $64.5 million, or $0.70 per common share, for the same period in 2015. for the quarter ended june 30, 2016, property operating revenues, excluding deferrals, increased $8.9 million to $197.4 million compared to $188.5 million for the same period in 2015. for the six months ended june 30, 2016, property operating revenues, excluding deferrals, increased $19.1 million to $404.9 million compared to $385.8 million for the same period in 2015. for the quarter ended june 30, 2016, income from property operations, excluding deferrals and property management, increased $6.9 million to $113.4 million compared to $106.5 million for the same period in 2015. for the six months ended june 30, 2016, income from property operations, excluding deferrals and property management, increased $14.8 million to $240.7 million compared to $225.9 million for the same period in 2015. for the quarter ended june 30, 2016, core property operating revenues, excluding deferrals, increased approximately 4.2 percent and core income from property operations, excluding deferrals and property management, increased approximately 6.1 percent compared to the same period in 2015. for the six months ended june 30, 2016, core property operating revenues, excluding deferrals, increased approximately 4.3 percent and core income from property operations, excluding deferrals and property management, increased approximately 6.0 percent compared to the same period in 2015. investment activity on june 1, 2016, we completed the acquisition of forest lake estates, a 1,168-site property located in zephryhills, florida, consisting of 894 age qualified manufactured home sites and 274 rv sites. the purchase price of approximately $75.2 million was funded with proceeds from the at-the-market ("atm") program, discussed in more detail below, and the assumption of mortgage debt of approximately $22.6 million. on may 26, 2016, we completed the acquisition of portland fairview, a 407-site rv resort located in fairview, oregon. the purchase price of approximately $17.6 million was funded with available cash. balance sheet activity during the quarter we sold 683,548 shares of common stock as part of our atm equity offering program at a weighted average price per share of $73.15, resulting in cash proceeds of approximately $50.0 million before expenses of $0.7 million. during the quarter we paid off a maturing mortgage loan of approximately $3.3 million with a stated interest rate of 5.69 percent per annum, which was secured by a manufactured home community. in addition, we have executed rate lock agreements to obtain approximately $88.0 million in new mortgage loans from institutional lenders, subject to customary approvals and conditions. the loans will be secured by mortgages on four manufactured home communities and two rv resorts and, in total, are expected to bear a weighted average interest rate of approximately 4.01 percent per annum, and to have a weighted average maturity of approximately 23 years. we expect to use the proceeds from the secured financing to retire various loans that mature in late 2016 and early 2017. the financing is expected to close in the third and fourth quarters of 2016. about equity lifestyle properties we are a self-administered, self-managed real estate investment trust (“reit”) with headquarters in chicago. as of july 18, 2016, we own or have an interest in 390 quality properties in 32 states and british columbia consisting of 145,804 sites. for additional information, please contact our investor relations department at (800) 247-5279 or at investor_relations@equitylifestyle.com. conference call a live webcast of our conference call discussing these results will take place tomorrow, tuesday, july 19, 2016, at 10:00 a.m. central time. please visit the investor information section at www.equitylifestyle.com for the link. a replay of the webcast will be available for two weeks at this site. reporting calendar quarterly financial results and related earnings conference calls for the next three quarters are expected to occur as follows: forward-looking statements in addition to historical information, this press release includes certain “forward-looking statements” within the meaning of the private securities litigation reform act of 1995. when used, words such as "anticipate," "expect," "believe," "project," "intend," "may be" and "will be" and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of sites by customers and our success in acquiring new customers at our properties (including those that we may acquire); our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire; our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts; our assumptions about rental and home sales markets; our assumptions and guidance concerning 2016 estimated net income, ffo and normalized ffo; our ability to manage counterparty risk; in the age-qualified properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility; results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing; impact of government intervention to stabilize site-built single-family housing and not manufactured housing; effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions; the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto; unanticipated costs or unforeseen liabilities associated with recent acquisitions; ability to obtain financing or refinance existing debt on favorable terms or at all; the effect of interest rates; the dilutive effects of issuing additional securities; the effect of accounting for the entry of contracts with customers representing a right-to-use the properties under the codification topic "revenue recognition;" the outcome of pending or future lawsuits filed against us, including those disclosed in our filings with the securities and exchange commission, by tenant groups seeking to limit rent increases and/or seeking large damage awards for our alleged failure to properly maintain certain properties or other tenant related matters, such as the case currently pending in the california court of appeal, sixth appellate district, case no. h041913, involving our california hawaiian manufactured home property, including any further proceedings on appeal or in the trial court; and other risks indicated from time to time in our filings with the securities and exchange commission. these forward-looking statements are based on management's present expectations and beliefs about future events. as with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. we are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. investor information david bragg / ryan burke dbabin@rwbaird.com paul.adornato@bmo.com dbragg@greenstreetadvisors.com rburke@greenstreetadvisors.com dtoti@bbandtcm.com gmehta@cantor.com todd.stender@wellsfargo.com bank of america merrill lynchglobal research michael bilerman / nick joseph juan.sanabria@baml.com michael.bilerman@citi.com nicholas.joseph@citi.com ______________________ financial highlights (in millions, except stock and op units outstanding and per share data, unaudited) june 30,2016 march 31,2016 december 31,2015 september 30,2015 june 30,2015 stock outstanding (in thousands)and per share data 92,499 91,802 91,461 91,505 91,498 92,264 92,041 91,875 91,940 91,851 22.1 23.8 25.6 28.2 30.5 23.5 25.3 27.2 30.0 32.4 5.3 5.4 5.5 5.6 5.7 4.0 4.0 3.8 3.7 3.6 3.5 3.5 3.4 3.3 3.2 ______________________ as of december 31, 2015, september 30, 2015 and june 30, 2015, deferred financing costs of approximately $19.7 million, $20.3 million and $20.6 million, respectively, were reclassified from deferred financing costs, net to mortgages notes payable and term loan due to the adoption of asu 2015-03: simplifying the presentation of debt issuance costs. balance sheet (in thousands, except share and per share data) june 30,2016 december 31,2015 (1,339,298 ) (1,282,423 ) (236,623 ) (250,506 ) (1,197 ) (553 ) _______________ consolidated income statement (in thousands, unaudited) non-gaap financial measures second quarter 2016 - selected non-gaap financial measures (in millions, except per share data, unaudited) normalized ffo available for common stock and op unit holders (3) ___________________ reconciliation of net income to non-gaap financial measures (in thousands, except per share data, unaudited) _____________________________ consolidated income from property operations (1) (in millions, except home site and occupancy figures, unaudited) _________________________ 2016 core income from property operations (1) (in millions, except home site and occupancy figures, unaudited) % % )% % % % % % % % % % % % % % % % % % % % % % % ____________________________ acquisitions - income from property operations (1) (in millions, unaudited) quarterended six monthsended june 30, 2016 june 30, 2016 ______________________ 1. see page 20 for definition of acquisitions. income from rental home operations (in millions, except occupied rentals, unaudited) cost basis in rental homes: (3) __________________________ 1. for the quarters ended june 30, 2016 and 2015, approximately $9.0 million and $9.2 million, respectively, of the rental operations revenue are included in the community base rental income in the consolidated income from property operations table on page 8. for the six months ended june 30, 2016 and 2015, approximately $18.0 million and $18.6 million, respectively, of the rental operations revenue are included in the community base rental income in the consolidated income from property operations table on page 8. the remainder of the rental operations revenue is included in the rental home income in the consolidated income from property operations table on page 8. 2. occupied rentals as of the end of the period shown in our core portfolio. included in the quarters ended june 30, 2016 and 2015 are 143 and 65 homes rented through our echo joint venture, respectively. for the six months ended june 30, 2016 and 2015, the rental home investment associated with our echo joint venture totals approximately $5.4 million and $2.1 million, respectively. 3. includes both occupied and unoccupied rental homes. new home cost basis does not include the costs associated with our echo joint venture. at june 30, 2016 and 2015, our investment in the echo joint venture was approximately $15.4 million and $10.4 million, respectively. total sites and home sales (in thousands, except sites and home sale volumes, unaudited) __________________________ 1. sites primarily utilized by approximately 104,800 members. includes approximately 5,500 sites rented on an annual basis. 2. joint venture income is included in the equity in income from unconsolidated joint ventures in the consolidated income statement on page 4. 3. total new home sales volume includes home sales from our echo joint venture. new home sales gross revenues does not include the revenues associated with our echo joint venture. 2016 guidance - selected financial data (1) our guidance acknowledges the existence of volatile economic conditions, which may impact our current guidance assumptions. factors impacting 2016 guidance include, but are not limited to the following: (i) the mix of site usage within the portfolio; (ii) yield management on our short-term resort sites; (iii) scheduled or implemented rate increases on community and resort sites; (iv) scheduled or implemented rate increases in annual payments under right-to-use contracts; (v) occupancy changes; (vi) our ability to retain and attract customers renewing or entering right-to-use contracts; (vii) our ability to integrate and operate recent acquisitions in accordance with our estimates; (viii) completion of pending transactions in their entirety and on assumed schedule; and (ix) ongoing legal matters and related fees. (in millions, except per share data, unaudited) _____________________________________ 1. each line item represents the mid-point of a range of possible outcomes and reflects management’s estimate of the most likely outcome. actual normalized ffo available for common stock and op unit holders, normalized ffo per common share, ffo available for common stock and op unit holders, ffo per common share, net income available for common stockholders and net income per common share could vary materially from amounts presented above if any of our assumptions is incorrect. 2. see page 14 for 2016 core guidance assumptions. amount represents 2015 income from property operations, excluding deferrals and property management, from the 2016 core properties of $112.0 million multiplied by an estimated growth rate of 5.7% and $448.8 million multiplied by an estimated growth rate of 5.6% for the quarter ended june 30, 2016 and the year ended december 31, 2016, respectively. 3. see page 14 for the 2016 assumptions regarding the acquisition properties. 4. see page 18 for definitions of normalized ffo and ffo. 5. net income per fully diluted common share is calculated before income allocated to non-controlling interest-common op units. 2016 core guidance assumptions (1) (in millions, unaudited) third quarter quarter ended 2016 year ended 2016 september 30, growth growth 2015 factors (2) factors (2) 2016 assumptions regarding acquisition properties (1) (in millions, unaudited) quarter ended year ended september 30, 2016 (4) 2016 (4) 1. refer to page 19-20 for definition of core and acquisition properties. 2. management’s estimate of the growth of property operations in the 2016 core properties compared to actual 2015 performance. represents our estimate of the mid-point of a range of possible outcomes. calculations prepared using actual results without rounding. actual growth could vary materially from amounts presented above if any of our assumptions is incorrect. 3. see resort base rental income table included below within this table. 4. each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome for the acquisition properties. actual income from property operations for the acquisition properties could vary materially from amounts presented above if any of our assumptions is incorrect. right-to-use memberships - select data (in thousands, except member count, number of thousand trail camping pass, number of annuals and number of upgrades, unaudited) ________________________________ 1. guidance estimate. each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome. actual figures could vary materially from amounts presented above if any of our assumptions is incorrect. 2. members have entered into right-to-use contracts with us that entitle them to use certain properties on a continuous basis for up to 21 days. 3. ttcs allow access to any of five geographic areas in the united states. 4. members who rent a specific site for an entire year in connection with their right-to-use contract. 5. existing customers that have upgraded agreements are eligible for longer stays, can make earlier reservations, may receive discounts on rental units, and may have access to additional properties. upgrades require a non-refundable upfront payment. 6. the years ended december 31, 2012 and december 31, 2013, include $0.1 million and $2.1 million, respectively, of revenue recognized related to our right-to-use annual memberships activated through our dealer program. during the third quarter of 2013, we changed the accounting treatment of revenues and expenses associated with the rv dealer program to recognize as revenue only the cash received from members generated by the program. 7. revenues associated with contract upgrades, included in right-to-use contracts current period, gross, on our consolidated income statement on page 4. market capitalization (in millions, except share and op unit data, unaudited) total common annual dividend _________________ 1. excludes deferred financing costs of approximately $18.9 million. debt maturity schedule debt maturity schedule as of june 30, 2016 (in thousands, unaudited) ______________________ 1. reflects effective interest rate including amortization of note premiums and amortization of deferred loan cost for secured and total debt and stated interest rate for unsecured debt. non-gaap financial measures definitions and other terms this document contains certain non-gaap measures used by management that we believe are helpful in understanding our business, as further discussed in the paragraphs below. we believe investors should review funds from operations (“ffo”), normalized funds from operations (“normalized ffo”), funds available for distribution (“fad”) and adjusted earnings before interest, tax, depreciation and amortization (“adjusted ebitda”), along with gaap net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity reit’s operating performance. our definitions and calculations of these non-gaap financial and operating measures and other terms may differ from the definitions and methodologies used by other reits and, accordingly, may not be comparable. these non-gaap financial and operating measures do not represent cash generated from operating activities in accordance with gaap, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with gaap, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with gaap, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. funds from operations (ffo). we define ffo as net income, computed in accordance with gaap, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, and after adjustments for unconsolidated partnerships and joint ventures. adjustments for unconsolidated partnerships and joint ventures are calculated to reflect ffo on the same basis. we compute ffo in accordance with our interpretation of standards established by the national association of real estate investment trusts (“nareit”), which may not be comparable to ffo reported by other reits that do not define the term in accordance with the current nareit definition or that interpret the current nareit definition differently than we do. we receive up-front non-refundable payments from the entry of right-to-use contracts. in accordance with gaap, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. although the nareit definition of ffo does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of ffo. we believe ffo, as defined by the board of governors of nareit, is generally a measure of performance for an equity reit. while ffo is a relevant and widely used measure of operating performance for equity reits, it does not represent cash flow from operations or net income as defined by gaap, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance. normalized funds from operations (normalized ffo). we define normalized ffo as ffo excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b)gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. normalized ffo presented herein is not necessarily comparable to normalized ffo presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount. funds available for distribution (fad). we define fad as normalized ffo less non-revenue producing capital expenditures. we believe that ffo, normalized ffo and fad are helpful to investors as supplemental measures of the performance of an equity reit. we believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, ffo can facilitate comparisons of operating performance between periods and among other equity reits. we further believe that normalized ffo provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. for example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from normalized ffo allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. in some cases, we provide information about identified non-cash components of ffo and normalized ffo because it allows investors, analysts and our management to assess the impact of those items. income from property operations, excluding deferrals and property management. we define income from property operations, excluding deferrals and property management as rental income, utility income and right-to-use income less property operating and maintenance expenses, real estate tax, sales and marketing expenses, property management and the gaap deferral of right-to-use contract upfront payments and related commissions, net. we believe that this non-gaap financial measure is helpful to investors and analysts as a measure of the operating results of our manufactured home and rv communities. the following table reconciles income before equity in income of unconsolidated joint ventures to income from property operations (amounts in thousands): earnings before interest, tax, depreciation and amortization (ebitda) and adjusted ebitda. ebitda is defined as net income or loss before interest income and expense, income taxes, depreciation and amortization. we define adjusted ebitda as ebitda excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; d) gaap deferral of right-to-use contract upfront payments and related commissions, net; e) impairments, if any; and f) other miscellaneous non-comparable items. ebitda and adjusted ebitda provide us with an understanding of one aspect of earnings before the impact of investing and financing charges. we believe that ebitda and adjusted ebitda may be useful to an investor in evaluating our operating performance and liquidity because the measures are widely used to measure a company’s operating performance and they are used by rating agencies and other parties, including lenders, to evaluate our creditworthiness. the following table reconciles consolidated net income to ebitda and adjusted ebitda (amounts in thousands): core. the core properties include properties we owned and operated during all of 2015 and 2016. we believe core is a measure that is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations. acquisitions. the acquisition properties include three properties acquired during 2016 and three properties acquired during 2015. non-revenue producing improvements. represents capital expenditures that will not directly result in increased revenue or expense savings and are primarily comprised of common area improvements, furniture, and mechanical improvements. fixed charges. fixed charges consist of interest expense, amortization of note premiums and debt issuance costs.
