BRT Apartments Corp. :BRT-US: Earnings Analysis: Q3, 2017 By the Numbers : September 8, 2017

BRT Apartments Corp. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of BRT Apartments Corp. – Essex Property Trust, Inc., Camden Property Trust, Preferred Apartment Communities, Inc., Mack-Cali Realty Corporation, Independence Realty Trust, Inc., AvalonBay Communities, Inc., Mid-America Apartment Communities, Inc. and Apartment Investment and Management Company Class A (ESS-US, CPT-US, APTS-US, CLI-US, IRT-US, AVB-US, MAA-US and AIV-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 26.78 million, Net Earnings of USD -3.40 million.
  • Gross margins narrowed from 27.51% to 22.17% compared to the same period last year, operating (EBITDA) margins now 15.27% from 10.80%.
  • Year-on-year change in operating cash flow of -94.08% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from -14.51% to -12.96%.

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):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 26.78 24.81 25.5 24.76 23.2
Revenue Growth (%YOY) 15.46 -0.15 9.87 17.76 9.32
Earnings (mil) -3.4 -4.23 15.77 2.91 5.48
Earnings Growth (%YOY) -162.08 -139.68 875.32 -15.4 312.57
Net Margin (%) -12.7 -17.04 61.86 11.74 23.63
EPS -0.24 -0.3 1.13 0.21 0.39
Return on Equity (%) -1.51 -1.94 7.49 1.48 2.96
Return on Assets (%) -1.47 -1.97 7.32 1.4 2.84

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Market Share Versus Profits

Revenues History
Earnings History

BRT-US‘s change in revenue this period compared to the same period last year of 15.46% 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 BRT-US is holding onto its market share. Also, for comparison purposes, revenues changed by 7.93% and earnings by 19.56% 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 27.51% to 22.17%. 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 10.80% to 15.27%. For comparison purposes, gross margins were 20.68% and EBITDA margins were 16.85% 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?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

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

BRT-US‘s change in operating cash flow of -94.08% 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

Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from -14.51% to -12.96%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 31.40% to -14.11%.

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

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Company Profile

BRT Apartments Corp. is a real estate investment trust, which engages in the ownership, operation, and development of multi-family properties, the ownership, operation and development of commercial, mixed use and other real estate assets, and real estate lending. It operates through the following business segments: Multi-Family Real Estate and Other Real Estate. The Multi-Family Real Estate segment includes the ownership, operation, and development of the multi-family properties. The Other Real Estate segments involves in the ownership, development, operation and disposition of the real estate assets. The company was founded in June 1972 and is headquartered in Great Neck, NY.

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