Hudson Pacific Properties, Inc. :HPP-US: Earnings Analysis: 2016 By the Numbers : February 22, 2017

Hudson Pacific Properties, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Hudson Pacific Properties, Inc. – SL Green Realty Corp., Vornado Realty Trust, Kilroy Realty Corporation, Corporate Office Properties Trust, Brandywine Realty Trust and Franklin Street Properties Corp. (SLG-US, VNO-US, KRC-US, OFC-US, BDN-US and FSP-US) that have also reported for this period.

Highlights

  • Gross margins widened from 15.49% to 22.17% compared to the same period last year, operating (EBITDA) margins now 43.87% from 36.77%.
  • Earnings growth from operating margin improvements as well as one-time items.

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):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 639.64 488.52 247.34 199.35 166.16
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 27.85 -4.29 22.9 2.07 -4.27
Earnings Growth (YOY) 748.97 -118.74 1007.01 148.5 -83.4
Net Margin 4.35 -0.88 9.26 1.04 -2.57
EPS 0.25 -0.19 0.15 -0.27 -0.41
Return on Equity 0.73 -0.65 0.84 -1.07 -2.13
Return on Assets 0.43 -0.1 1.02 0.11 -0.31

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Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 15.49% to 22.17% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 36.77% to 43.87% compared to the same period last year. For comparison, gross margins were 15.49% and EBITDA margins were 36.77% in the last reporting 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

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -9.21% to 1.81% and (2) one-time items. The company’s pretax margins are now 6.84% compared to -3.29% for the same period last year.

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

Hudson Pacific Properties, Inc. owns, operates, and acquires office, media, and entertainment properties. It operates through the Office Properties, and Media and Entertainment Properties segments. The Office Properties segment manages 54 office properties located in California and Pacific Northwest. The Media and Entertainment segment includes the Sunset Gower and Sunset Bronson properties. The company was founded on November 9, 2009 and is headquartered in Los Angeles, CA.

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