Hudson Pacific Properties, Inc. :HPP-US: Earnings Analysis: Q3, 2016 By the Numbers : November 7, 2016

Hudson Pacific Properties, Inc. reports financial results for the quarter ended September 30, 2016.

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

Highlights

  • Summary numbers: Revenues of USD 164.58 million, Net Earnings of USD 2.01 million.
  • Gross margins widened from 9.17% to 22.30% compared to the same period last year, operating (EBITDA) margins now 43.82% from 45.29%.
  • 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):

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 147.65 148.49 149.01 147.76 164.58
Revenue Growth (%YOY) 121.31 120.22 137.19 4.49 11.47
Earnings (mil) -0.71 -3.94 2.41 1 2.01
Earnings Growth (%YOY) -106.54 -535.36 -89.24 104.53 382.54
Net Margin (%) -0.48 -2.65 1.62 0.68 1.22
EPS -0.04 -0.07 0.03 0.01 0.02
Return on Equity (%) -0.4 -0.68 0.24 0.09 0.2
Return on Assets (%) -0.05 -0.25 0.16 0.06 0.13

Access our Ratings and Scores for Hudson Pacific Properties, Inc.

Market Share Versus Profits

Revenues History
Earnings History

HPP-US‘s change in revenue this period compared to the same period last year of 11.47% 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 HPP-US is holding onto its market share. Also, for comparison purposes, revenues changed by 11.39% and earnings by 101.00% 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 earnings growth has been influenced by the year-on-year improvement in gross margins from 9.17% to 22.30%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

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 -6.83% to 2.86% and (2) one-time items. The company’s pretax margins are now 3.17% compared to -1.24% 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

Access our Ratings and Scores for Hudson Pacific Properties, Inc.

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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