Equity LifeStyle Properties, Inc. (ELS) on Q1 2023 Results - Earnings Call Transcript
Operator: Marguerite Nader: Good morning, and thank you for joining us today. I am pleased to report the results for the first quarter of 2023. The quality of our cash flow and the strength of our balance sheet continues to allow us to report impressive results. Our core NOI exceeded our expectations in the quarter with 5.7% growth year-over-year. Our MH portfolio is 95% occupied. The MH business is unique in that once a high level of occupancy is achieved at a property, the occupancy is generally sustainable for a long time. The key to that stickiness is having an elevated level of homeowners in the portfolio. Our portfolio is 96% occupied by homeowners. Our new home sales over the last five years have contributed to building up this important benchmark. Our homeowners are focused on improving their home sites, and we have seen a great effort by those impacted by storms to repair their homes and remain in the community. Over the last thirty years, we have built our organization focused on high-quality team members, property, cash flow and capital allocation. The result of this shared focus is sustained value for our residents, customers and shareholders. Our properties are well located in areas where the demographic trends create tailwinds for ELS. Our properties have shown strong demand even when considering weather-related disruptions. ELS will be the beneficiary of Florida's outsized population growth and heavy demand for seasonal accommodations. We sold 176 new homes in the quarter at an average price of $104,000. While this is a decline from sales volume last year the volume remains at elevated numbers relative to our historical sales volume. We saw an increase in used home sales and are currently experiencing historically low levels of used home inventory. With respect to our RV business, our annual and seasonal segments, which represents the largest portion of our RV stream performed ahead of expectations in the quarter and we anticipate growth rates of 8.4% and 8.2% for the full year 2023. The full year guidance for our transient business is impacted by California storms and a reduced number of transient sites. Our customer surveys indicate that demand for RV camping remains strong with nine out of ten respondents from our database saying that they plan to camp the same or more than last year, driven by their desire to spend more time outdoors and because they recently invested in an RV and want to use it. 20% of our first-time transient guests from last year have booked a reservation in 2023 have increased their engagement as an annual, seasonal or member. This rate is consistent with the engagement we saw last year. In the quarter, our Thousand Trails membership properties performed very well. We sold approximately 4,500 camping passes and initiated 5,700 RV dealer activations. These passes and activations are the seeds for future growth in the Thousand Trails portfolio. When we last reported our results, we had not yet negotiated our insurance premium for the period beginning April 2023 and ending March 2024. We anticipated a tough renewal market. In the end, our overall insurance premiums increased 58%, which was higher than we anticipated by approximately $0.01 per share. The relationships that we have developed over the last thirty years with the carriers were helpful in allowing us to obtain the coverage for our MH, RV and Marina properties. Overall, the increase in expenses contributed to the 40 basis point adjustment to our anticipated core NOI growth, while still maintaining our initial normalized FFO per share guidance of $2.84. We had a great snowbird season in the South and our teams will now begin to focus on welcoming our residents, members and guests to our northern locations as we kick off the summer season. I'd like to thank all of our team members for their hard work in making this winter season so successful. I will now turn it over to Paul to walk through the numbers in detail. Paul Seavey: Thanks, Marguerite, and good morning, everyone. I will review our first quarter 2023 results and provide an overview of our second quarter and full year 2023 guidance. First quarter normalized FFO was approximately $800,000 higher than the midpoint of our guidance range or $0.74 per share. Core portfolio revenues and expenses were favorable to our guidance mainly as a result of higher than anticipated membership upgrade sales revenues and lower than expected real estate tax expenses. These line items contributed to core portfolio NOI growth of 5.7% for the first quarter. Core community base rental income increased 6.5% for the quarter compared to 2022, primarily as a result of noticed increases to in-place residents and market rent increases on resident turnover. We increased homeowners by thirty sites in the quarter. Our rental homes currently represent 3.9% of our MH occupancy. Our resorts and marina base rental income primarily generated by long-term revenue streams. On a full year basis, more than 80% of our resort base rent is from annual and seasonal stays and 99% of our marina rents are from annual customers. First quarter core resort and marina base rental income increased 5.5% compared to 2022. Rent growth from annuals in the first quarter was 8.4%, 8% from rate increases and 40 basis points from occupancy gains. First quarter rent from core RV seasonal increased 11.9%, compared to first quarter 2022. We continue to see strong demand for longer-term stays in our Sunbelt destination. Core rent from transient customers decreased 14.9% for the quarter, mainly from lower occupancy. Across the portfolio, we have fewer sites available for transient stays. We experienced operating disruptions in our California portfolio as a result of the strong rains and heavy snowfall. For the first quarter, the net contribution from our membership business was $18.3 million. Subscription revenues increased 4.7%, which includes a rate increase of 5.2%. The increase in upgrade sales revenue was generated by sales of higher priced products compared to last year. Our average upgrade sales price increased almost 15%, the percentage of sales attributed to our adventure products representing almost 30% of our first quarter 2022 sales. Core utility and other income increased 9.4%, mainly as a result of increases in utility income. Our recovery percentage was 46%, compared to 45.5% in first quarter of 2022. First quarter core operating expenses increased 7.4% compared to the same period in 2022. The comparison to prior year is affected by approximately $2 million of repairs and maintenance this year following storm events, including rain, resulting flooding and heavy snowfall in California. Adjusted for this activity, overall expense growth was in line with CPI for the quarter. First quarter expenses were favorable to our guidance on lower real estate taxes and utility expense. The real estate tax expense favorability is the result of lower tax bills in certain states where we pay taxes in arrears. The actual bills received during the first quarter were lower than the amount we had accrued at the end of 2022. Core property operating revenues increased 6.4% compared to the midpoint of our guidance of 6%. Our core property operating expenses increased 7. [Indiscernible] compared to the midpoint of our guidance of 7.8%, resulting in growth in core NOI before property management of 5.7% compared to the midpoint of our guidance of 4.7%, a $1.8 million favorable variance. Our non-core properties contributed $6 million in the quarter, in line with our expectations. Property management and corporate G&A were $31.1 million for the first quarter. Other income and expenses net, which includes our sales operations, joint venture income, as well as interest and other corporate income, $6 million for the quarter and interest and amortization expenses were $32.6 million. The press release and supplemental package provide an overview of 2023 second quarter and full year earnings guidance. As I provide some context for the information we've provided, keep in mind my remarks are intended to provide our current estimate of future results. All growth rates and revenue and expense projections represent midpoints in our guidance range and are qualified by the risk factors referenced in our press release and supplemental package. Our guidance for 2023 full year normalized FFO is $2.84 per share at the midpoint of our guidance range of $2.79 to $2.89. This is consistent with our previously provided guidance despite headwinds associated with our annual insurance renewal. The total impact of our April 1st renewal on 2023 is an increase to our budgeted expenses of approximately $2.6 million. I'll note that our budget included assumptions related to the split of insurance premiums between our core and non-core portfolios. The actual renewal resulted in a higher portion allocated to the core portfolio relative to our budget assumption. We project full year core property operating income growth of 5.1% at the midpoint of our range of 4.6% to 5.6%. Full year guidance assumes core base rent growth in the ranges of 6.3% to 7.3% for MH, 5.4% to 6.4% for RV and Marina. We assume occupancy in our stabilized MH portfolio will be flat to first quarter. Core property operating expenses are projected to increase 7.9% to 8.9%. The primary drivers of the increase in core expense growth compared to our prior guidance are the insurance renewal I mentioned and utility expense. Our guidance model includes the impact of the acquisition we announced and the impact of the fixed rate swaps we disclosed in our earnings release and supplemental package. The full year guidance model makes no assumptions regarding other capital events for the use of free cash flow we expect to generate in 2023. Our second quarter guidance assumes normalized FFO per share in the range of $0.62 to $0.68. Core property operating income growth is projected to be 2.2% at the midpoint of our guidance range for the second quarter, which represents approximately 23% of our expected near core NOI. In our core portfolio, property operating revenues are projected to increase 5.8% and expenses are projected to increase 10.3%, both at the midpoint of the guidance range. I'll now provide some comments on the financing market and our balance sheet. As noted in the earnings release and supplemental package, we executed a fixed rate swap on our $200 million unsecured term loan maturing in 2027. The swap fixes the all-in borrowing cost at 4.88% through maturity. Fixing this rate reduces our floating rate exposure to approximately 7.5% of our outstanding debt and further derisks our very strong balance sheet. Our debt maturity schedule shows that we have only 6% of our outstanding debt maturing over the next three years. This compares to an average of approximately 27%. I'll also remind you that approximately 20% of our outstanding secured debt is fully amortizing carries no refinancing risk. Current secured debt terms vary depending on many factors, including lender, borrower sponsor, asset type and quality. Current ten year loans are quoted between 4.75% and 5.25%, 60% to 75% loan-to-value and 1.4 to 1.6x debt service coverage. We continue to see solid interest from life companies and GSEs to lend for terms 10 years and longer. High quality, age-qualified MH assets continue to command at the financing terms. In terms of our liquidity position, we have $235 million available on our line of credit and our ATM program has $500 million of capacity. Our weighted average secured debt maturity is approximately 11 years. Our debt-to-adjusted EBITDA is around 5.2x and our interest coverage is 5.5x. We continue to place high importance on balance sheet flexibility and we believe we have multiple sources of capital available to us. Now we would like to open it up for questions. Operator: [Operator Instructions] Our first question comes from the line of Brad Heffern from RBC Capital Markets. Operator: Thank you. One moment for our next question. Our next question comes from the line of Joshua Dennerlein from Bank of America Securities. Operator: Thank you. One moment for our next question. Our next question comes from the line of James Feldman from Wells Fargo. Operator: Thank you. One moment for our next question. Our next question comes from the line of Samir Khanal from Evercore ISI. Operator: Thank you. One moment for our next question. Our next question comes from the line of Anthony Powell from Barclays. Operator: Thank you. One moment for our next question. Our next question comes from the line of Michael Goldsmith from UBS. Operator: Thank you. One moment for our next question. Our next question comes from the line of Eric Wolfe from Citi. Operator: Thank you. One moment for our next question. Our next question comes from the line of John Pawlowski from Green Street. Operator: Thank you. One moment for our next question. Our next question comes from the line of John Kim from BMO Capital Markets. Operator: Thank you. One moment for our next question. Our next question comes from the line of Keegan Carl from Wolfe Research. Operator: Thank you. Since we have no more questions on the line, at this time, I would like to turn it back over to Marguerite Nader for closing comments. Marguerite Nader: We appreciate you taking the time with us this morning and we look forward to updating you on our second quarter call. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Equity LifeStyle Properties, Inc. (ELS) Financial Overview and Market Performance
- Equity LifeStyle Properties, Inc. (NYSE:ELS) reported an earnings per share (EPS) of $0.57, missing the estimated $0.83.
- The company's quarterly funds from operations (FFO) per share was $0.83, aligning with the Zacks Consensus Estimate.
- ELS's revenue for the quarter was $327.2 million, below the estimated $392.9 million.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a leading entity in the real estate investment trust (REIT) sector, focusing on the residential industry. The company specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across North America, competing with other residential REITs to deliver stable returns to its investors.
On April 21, 2025, ELS disclosed an earnings per share (EPS) of $0.57, which was below the anticipated $0.83. This shortfall in EPS underscores the company's hurdles in aligning with market expectations. Despite this, ELS's quarterly funds from operations (FFO) per share stood at $0.83, meeting the Zacks Consensus Estimate and marking an improvement from the previous year's $0.78 per share.
The company's revenue for the quarter was reported at $327.2 million, not reaching the forecasted $392.9 million. This revenue miss is in line with the company's recent trend of not meeting revenue estimates, as highlighted by the 2.93% shortfall from the Zacks Consensus Estimate of $387.33 million for the quarter ending March 2025. Nevertheless, this figure still denotes a slight increase from the $386.57 million reported in the same quarter the previous year.
ELS's core property operating revenues saw a 2.9% increase, while operating expenses experienced a 1.5% rise. This led to a 3.8% growth in core income from property operations, excluding property management, compared to the first quarter of 2024. The Manufactured Home (MH) core base rental income witnessed a 5.5% increase, propelled by a 5.7% growth from rate increases, showcasing strong performance in this segment.
The company's financial metrics shed light on its market valuation and financial health. ELS has a price-to-earnings (P/E) ratio of approximately 32.31 and a price-to-sales ratio of about 8.15. Its enterprise value to sales ratio stands around 10.26, and the enterprise value to operating cash flow ratio is approximately 25.88. The earnings yield is about 3.10%, while the debt-to-equity ratio is approximately 1.84, indicating significant financial leverage. The current ratio of around 0.33 suggests potential liquidity challenges in meeting short-term obligations.
Equity LifeStyle Properties, Inc. (ELS) Financial Overview and Market Performance
- Equity LifeStyle Properties, Inc. (NYSE:ELS) reported an earnings per share (EPS) of $0.57, missing the estimated $0.83.
- The company's quarterly funds from operations (FFO) per share was $0.83, aligning with the Zacks Consensus Estimate.
- ELS's revenue for the quarter was $327.2 million, below the estimated $392.9 million.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a leading entity in the real estate investment trust (REIT) sector, focusing on the residential industry. The company specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across North America, competing with other residential REITs to deliver stable returns to its investors.
On April 21, 2025, ELS disclosed an earnings per share (EPS) of $0.57, which was below the anticipated $0.83. This shortfall in EPS underscores the company's hurdles in aligning with market expectations. Despite this, ELS's quarterly funds from operations (FFO) per share stood at $0.83, meeting the Zacks Consensus Estimate and marking an improvement from the previous year's $0.78 per share.
The company's revenue for the quarter was reported at $327.2 million, not reaching the forecasted $392.9 million. This revenue miss is in line with the company's recent trend of not meeting revenue estimates, as highlighted by the 2.93% shortfall from the Zacks Consensus Estimate of $387.33 million for the quarter ending March 2025. Nevertheless, this figure still denotes a slight increase from the $386.57 million reported in the same quarter the previous year.
ELS's core property operating revenues saw a 2.9% increase, while operating expenses experienced a 1.5% rise. This led to a 3.8% growth in core income from property operations, excluding property management, compared to the first quarter of 2024. The Manufactured Home (MH) core base rental income witnessed a 5.5% increase, propelled by a 5.7% growth from rate increases, showcasing strong performance in this segment.
The company's financial metrics shed light on its market valuation and financial health. ELS has a price-to-earnings (P/E) ratio of approximately 32.31 and a price-to-sales ratio of about 8.15. Its enterprise value to sales ratio stands around 10.26, and the enterprise value to operating cash flow ratio is approximately 25.88. The earnings yield is about 3.10%, while the debt-to-equity ratio is approximately 1.84, indicating significant financial leverage. The current ratio of around 0.33 suggests potential liquidity challenges in meeting short-term obligations.
Equity LifeStyle Properties, Inc. (ELS) Financial Overview
- Earnings Per Share (EPS) of $0.50, surpassing the estimated $0.48.
- Revenue of approximately $372.32 million, surpassing the estimated $369.3 million.
- Funds from Operations (FFO) for the quarter were $0.76 per share, aligning with the Zacks Consensus Estimate.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a real estate investment trust (REIT) based in Chicago. It specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across the United States. As a REIT, ELS is required to distribute at least 90% of its taxable income to shareholders, which it does through dividends. The company competes with other REITs in the residential and leisure sectors.
On January 27, 2025, ELS reported earnings per share (EPS) of $0.50, surpassing the estimated $0.48. The company generated revenue of approximately $372.32 million, surpassing the estimated $369.3 million. ELS's funds from operations (FFO) for the quarter were $0.76 per share, aligning with the Zacks Consensus Estimate. This marks an improvement from the previous year's FFO of $0.71 per share. Over the past four quarters, ELS has exceeded consensus FFO estimates twice, indicating a strong operational performance despite revenue challenges.
For the quarter ending December 2024, ELS generated revenues of $372.32 million, which fell short of the Zacks Consensus Estimate by 1.55%. This revenue figure, however, represents a slight increase from the $360.64 million reported in the same quarter the previous year. The company's ability to increase its annual dividend for 2025 by 7.9% to $2.06 per share reflects its commitment to returning value to shareholders.
ELS's financial metrics reveal a mixed picture. The company has a price-to-earnings (P/E) ratio of approximately 35.58, indicating high investor confidence. However, the current ratio of about 0.14 suggests potential liquidity challenges. The debt-to-equity ratio of approximately 2.44 shows a reliance on debt financing, which could impact future financial flexibility.
Equity LifeStyle Properties, Inc. (ELS) Financial Overview
- Earnings Per Share (EPS) of $0.50, surpassing the estimated $0.48.
- Revenue of approximately $372.32 million, surpassing the estimated $369.3 million.
- Funds from Operations (FFO) for the quarter were $0.76 per share, aligning with the Zacks Consensus Estimate.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a real estate investment trust (REIT) based in Chicago. It specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across the United States. As a REIT, ELS is required to distribute at least 90% of its taxable income to shareholders, which it does through dividends. The company competes with other REITs in the residential and leisure sectors.
On January 27, 2025, ELS reported earnings per share (EPS) of $0.50, surpassing the estimated $0.48. The company generated revenue of approximately $372.32 million, surpassing the estimated $369.3 million. ELS's funds from operations (FFO) for the quarter were $0.76 per share, aligning with the Zacks Consensus Estimate. This marks an improvement from the previous year's FFO of $0.71 per share. Over the past four quarters, ELS has exceeded consensus FFO estimates twice, indicating a strong operational performance despite revenue challenges.
For the quarter ending December 2024, ELS generated revenues of $372.32 million, which fell short of the Zacks Consensus Estimate by 1.55%. This revenue figure, however, represents a slight increase from the $360.64 million reported in the same quarter the previous year. The company's ability to increase its annual dividend for 2025 by 7.9% to $2.06 per share reflects its commitment to returning value to shareholders.
ELS's financial metrics reveal a mixed picture. The company has a price-to-earnings (P/E) ratio of approximately 35.58, indicating high investor confidence. However, the current ratio of about 0.14 suggests potential liquidity challenges. The debt-to-equity ratio of approximately 2.44 shows a reliance on debt financing, which could impact future financial flexibility.
Equity LifeStyle Properties, Inc. (NYSE:ELS) Quarterly Earnings Insight
- Projected earnings per share of $0.48 with revenue expectations of approximately $369.3 million.
- Price-to-Earnings (P/E) ratio stands at 34.51, indicating a high investor confidence level.
- Debt-to-equity ratio of 2.44 raises concerns about the company's reliance on borrowed funds.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a real estate investment trust (REIT) that specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across North America. ELS is a prominent player in the real estate sector, with a focus on providing affordable housing and vacation options. The company competes with other REITs like Sun Communities and UMH Properties.
ELS is set to release its quarterly earnings on Monday, January 27, 2025. Wall Street estimates the earnings per share to be $0.48, with projected revenue of approximately $369.3 million. The company's executive management team will host a conference call and audio webcast on January 28, 2025, to discuss these results. Interested parties can access the webcast on the company's website.
The company's financial metrics provide insight into its valuation. ELS has a price-to-earnings (P/E) ratio of 34.51, indicating that investors are willing to pay $34.51 for every dollar of earnings. The price-to-sales ratio is 8.56, suggesting the stock is valued at 8.56 times its sales. These ratios reflect investor confidence in ELS's earnings potential.
ELS's enterprise value to sales ratio is 10.87, showing the company's total valuation compared to its sales. The enterprise value to operating cash flow ratio is 26.15, offering insight into the company's valuation relative to its cash flow from operations. These figures highlight the company's financial health and operational efficiency.
The debt-to-equity ratio of 2.44 indicates ELS uses a significant amount of debt compared to its equity. This could be a concern for investors, as it suggests reliance on borrowed funds. Additionally, the current ratio of 0.14 suggests potential challenges in covering short-term liabilities with short-term assets, which may impact the company's liquidity.
Equity LifeStyle Properties, Inc. (NYSE:ELS) Quarterly Earnings Insight
- Projected earnings per share of $0.48 with revenue expectations of approximately $369.3 million.
- Price-to-Earnings (P/E) ratio stands at 34.51, indicating a high investor confidence level.
- Debt-to-equity ratio of 2.44 raises concerns about the company's reliance on borrowed funds.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a real estate investment trust (REIT) that specializes in owning and operating manufactured home communities, RV resorts, and campgrounds across North America. ELS is a prominent player in the real estate sector, with a focus on providing affordable housing and vacation options. The company competes with other REITs like Sun Communities and UMH Properties.
ELS is set to release its quarterly earnings on Monday, January 27, 2025. Wall Street estimates the earnings per share to be $0.48, with projected revenue of approximately $369.3 million. The company's executive management team will host a conference call and audio webcast on January 28, 2025, to discuss these results. Interested parties can access the webcast on the company's website.
The company's financial metrics provide insight into its valuation. ELS has a price-to-earnings (P/E) ratio of 34.51, indicating that investors are willing to pay $34.51 for every dollar of earnings. The price-to-sales ratio is 8.56, suggesting the stock is valued at 8.56 times its sales. These ratios reflect investor confidence in ELS's earnings potential.
ELS's enterprise value to sales ratio is 10.87, showing the company's total valuation compared to its sales. The enterprise value to operating cash flow ratio is 26.15, offering insight into the company's valuation relative to its cash flow from operations. These figures highlight the company's financial health and operational efficiency.
The debt-to-equity ratio of 2.44 indicates ELS uses a significant amount of debt compared to its equity. This could be a concern for investors, as it suggests reliance on borrowed funds. Additionally, the current ratio of 0.14 suggests potential challenges in covering short-term liabilities with short-term assets, which may impact the company's liquidity.
Equity LifeStyle Properties, Inc. (NYSE:ELS) Overview and Analyst Insights
- Equity LifeStyle Properties, Inc. (NYSE:ELS) has seen its consensus price target fluctuate, recently stabilizing at $72.
- The stock experienced a significant decline of 12.19% over the past four weeks, indicating it may be technically oversold.
- Analyst Anthony Powell from Barclays has a positive outlook with a price target of $75, ahead of ELS's third quarter 2024 earnings release.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a real estate investment trust (REIT) that specializes in owning and managing high-quality properties across the United States and British Columbia. As of early 2021, ELS boasts a substantial portfolio of 423 properties, encompassing 161,229 sites. The company operates in a competitive landscape, with other REITs vying for market share in the real estate sector.
The consensus price target for ELS has experienced some fluctuations over the past year. Last month, the average consensus price target was $72, which increased slightly to $73.8 last quarter. This modest rise suggests a positive outlook from analysts, possibly due to confidence in ELS's performance or favorable market conditions. However, the recent target has returned to $72, indicating a stabilization or reassessment of the company's prospects.
Despite the recent stabilization in price targets, ELS has faced a significant decline, losing 12.19% over the past four weeks. This decline has led to the stock being considered technically oversold, suggesting that the intense selling pressure may be easing. The situation is further buoyed by a strong consensus among Wall Street analysts to revise earnings estimates upward, indicating potential for a trend reversal in the near future.
Analyst Anthony Powell from Barclays has set a price target of $75 for ELS, reflecting optimism about the stock's recovery prospects. This target aligns with the upcoming release of ELS's third quarter 2024 earnings on October 21, 2024, after the market closes. Following the release, the company's executive management team will host a conference call and audio webcast on October 22, 2024, at 11:00 a.m., providing further insights into the company's performance and future outlook.
Investors should consider various factors that could influence analyst opinions and price targets for ELS. Market trends, company performance, economic conditions, and strategic initiatives all play a role in shaping analyst sentiment. Keeping an eye on these factors, along with upcoming earnings reports and company announcements, will help investors better understand potential changes in analyst sentiment and price targets for ELS.
