Tiptree, Inc. :TIPT-US: Earnings Analysis: Q3, 2017 By the Numbers : December 12, 2017

Tiptree, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Tiptree, Inc. – Ashford Hospitality Trust, Inc., Universal Health Realty Income Trust, Welltower, Inc., Ventas, Inc., HCP, Inc., Sabra Health Care REIT, Inc., Healthcare Trust of America, Inc. Class A and Duke Realty Corporation (AHT-US, UHT-US, HCN-US, VTR-US, HCP-US, SBRA-US, HTA-US and DRE-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 194.55 million, Net Earnings of USD -3.11 million.
  • Gross margins narrowed from 50.25% to 43.04% compared to the same period last year, operating (EBITDA) margins now 1.21% from 12.28%.
  • Year-on-year change in operating cash flow of 167.10% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

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):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 194.55 181.88 166.82 255.89 146.51
Revenue Growth (%YOY) 32.79 22.78 19.33 240.38 8.21
Earnings (mil) -3.11 -4.44 1.08 7.65 5.85
Earnings Growth (%YOY) -153.28 -173.1 -80.37 3287.92 228.38
Net Margin (%) -1.6 -2.44 0.65 2.99 3.99
EPS -0.11 -0.15 0.03 0.21 0.19
Return on Equity (%) -0.8 -1.13 0.28 1.98 1.53
Return on Assets (%) -0.5 -0.71 0.16 1.05 0.84

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Market Share Versus Profits

Revenues History
Earnings History

TIPT-US’s change in revenue this period compared to the same period last year of 32.79% 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 TIPT-US is holding onto its market share. Also, for comparison purposes, revenues changed by 6.96% and earnings by 29.91% 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 decline in earnings was influenced by a weakening in gross margins from 50.25% to 43.04%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 12.28% to 1.21% in this time frame. For comparison, gross margins were 43.18% and EBITDA margins were 0.55% 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

TIPT-US’s change in operating cash flow of 167.10% 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 decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 7.88% to -2.79% and (2) one-time items that contributed to a decrease in pretax margins from 7.88% to -2.79%

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

Tiptree, Inc. operates as a holding company. It operates through the following segments: Specialty Insurance, Asset Management, Senior Living, and Specialty Finance. The Specialty Insurance segment is conducted through Fortegra Financial Corporation (Fortegra), an insurance holding company. The Asset Management segment is primarily conducted through Telos Asset Management LLC’s (Telos) management. The Senior Living segment is conducted through Care Investment Trust LLC (Care), a wholly-owned subsidiary of the company. The Specialty Finance segment is conducted through Siena Capital Finance LLC. The company was founded on March 19, 2007 is headquartered in New York, NY.

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