Blackstone Mortgage Trust, Inc. :BXMT-US: Earnings Analysis: Q3, 2016 By the Numbers : November 7, 2016

Blackstone Mortgage Trust, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Blackstone Mortgage Trust, Inc. – RAIT Financial Trust (RAS-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 127.95 million, Net Earnings of USD 64.79 million.
  • Gross margins narrowed from 90.02% to 89.29% compared to the same period last year, operating (EBITDA) margins now 50.43% from 49.03%.
  • Year-on-year change in operating cash flow of -34.59% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from 49.04% to 52.04%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 138.36 128.38 123 130.37 127.95
Revenue Growth (%YOY) 174.6 120.36 93.98 61.99 -7.53
Earnings (mil) 66.89 65.27 57.05 63.08 64.79
Earnings Growth (%YOY) 203.71 203.7 61.18 115.41 -3.13
Net Margin (%) 48.34 50.84 46.38 48.39 50.64
EPS 0.72 0.7 0.61 0.67 0.69
Return on Equity (%) 10.71 10.43 9.11 10.07 10.34
Return on Assets (%) 2.63 2.72 2.41 2.65 2.88

Access our Ratings and Scores for Blackstone Mortgage Trust, Inc.

Market Share Versus Profits

Revenues History
Earnings History

BXMT-US‘s change in revenue this period compared to the same period last year of -7.53% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BXMT-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.86% and earnings by 2.72% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline was driven by the drop in gross margins from 90.02% to 89.29%. This drop in earnings would have been worse were in not for operational cost control activities, which helped the operating margins (EBITDA margins) improve from 49.03% to 50.43%. For comparison purposes, gross margins were 87.84% and EBITDA margins were 53.16% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

BXMT-US‘s change in operating cash flow of -34.59% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from 49.03% to 50.43% and pretax margins widened from 49.04% to 52.04%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Blackstone Mortgage Trust, Inc.

Company Profile

Blackstone Mortgage Trust, Inc. is a real estate investment trust, which focuses primarily on loans and securities backed by commercial real estate assets. It operates through two segments: Loan Origination and CT Legacy Portfolio. The company was founded by Samuel Zell, John R. Klopp and Craig M. Hatkoff in July 1997 and is headquartered in New York, NY.

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