Four Corners Property Trust, Inc. (FCPT) Bundle
Understanding Four Corners Property Trust, Inc. (FCPT) Revenue Streams
Understanding Four Corners Property Trust, Inc.’s Revenue Streams
Four Corners Property Trust, Inc. generates its revenues primarily from two segments: real estate operations and restaurant operations. The detailed breakdown of these revenue sources is as follows:
Revenue Breakdown by Source
- Rental Revenue: For the nine months ended September 30, 2024, rental revenue totaled $176.4 million, representing an increase of $14.1 million or 8.7% compared to $162.3 million in the same period of 2023.
- Restaurant Revenue: Restaurant revenue for the nine months ended September 30, 2024, was $23.3 million, a slight increase from $23.2 million in 2023.
| Revenue Source | 9 Months Ended September 30, 2024 (in thousands) | 9 Months Ended September 30, 2023 (in thousands) | Percentage Change |
|---|---|---|---|
| Rental Revenue | $176,400 | $162,267 | 8.7% |
| Restaurant Revenue | $23,337 | $23,196 | 0.6% |
| Total Revenue | $199,737 | $185,463 | 7.7% |
Year-over-Year Revenue Growth Rate
The total revenue for the nine months ended September 30, 2024, was $199.7 million, marking an increase of $14.3 million or 7.7% compared to $185.5 million for the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contribution of different business segments to overall revenue is as follows:
- Real Estate Operations: Approximately 88.4% of total revenue.
- Restaurant Operations: Approximately 11.6% of total revenue.
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, rental revenue increased due to the acquisition of 48 leased properties compared to the previous year. This was partially offset by the disposal of one property. The restaurant segment saw a marginal increase attributed to higher net pricing, despite facing challenges from external construction projects affecting sales.
Additionally, variable lease revenue recognized during this period was $7.1 million, consistent with the previous year, reflecting stable rental income dynamics.
| Period | Total Revenue (in thousands) | Rental Revenue (in thousands) | Restaurant Revenue (in thousands) |
|---|---|---|---|
| Q3 2024 | $66,791 | $59,288 | $7,503 |
| Q3 2023 | $64,839 | $57,243 | $7,596 |
A Deep Dive into Four Corners Property Trust, Inc. (FCPT) Profitability
Profitability Metrics
In assessing the financial health of the company, it's crucial to analyze profitability metrics, including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Gross Profit: $37,735,000
- Operating Profit: $37,730,000
- Net Income: $25,612,000
For the nine months ended September 30, 2024, the figures were:
- Gross Profit: $113,349,000
- Operating Profit: $113,348,000
- Net Income: $74,388,000
Trends in Profitability Over Time
Year-over-year comparisons indicate the following trends:
- Net income increased from $24,192,000 in Q3 2023 to $25,612,000 in Q3 2024.
- Net income for the nine months increased from $71,003,000 in 2023 to $74,388,000 in 2024.
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios are as follows:
| Metric | FCPT (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 57.0% | 52.5% |
| Operating Profit Margin | 57.0% | 50.0% |
| Net Profit Margin | 39.3% | 35.0% |
Analysis of Operational Efficiency
Operational efficiency is reflected in the following metrics:
- General and Administrative Expenses: $18,064,000 for the nine months ended September 30, 2024, compared to $17,153,000 in 2023.
- Depreciation and Amortization: $40,418,000 for the nine months ended September 30, 2024, compared to $37,411,000 in 2023.
- Property Expenses: $8,531,000 for the nine months ended September 30, 2024, compared to $8,742,000 in 2023.
Overall, the company has maintained strong profitability metrics, with margins exceeding industry averages while showing positive trends over time.
Debt vs. Equity: How Four Corners Property Trust, Inc. (FCPT) Finances Its Growth
Debt vs. Equity: How Four Corners Property Trust, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total debt of Four Corners Property Trust, Inc. was approximately $1.132 billion, comprising $515 million in non-amortizing term loans and $625 million in senior unsecured fixed-rate notes. The company had $250 million available under its revolving credit facility.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio stood at approximately 1.02 as of September 30, 2024. This ratio is relatively aligned with the industry average for Real Estate Investment Trusts (REITs), which typically ranges from 0.8 to 1.5.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In March 2024, the company entered into an $85 million incremental term loan, utilizing the proceeds to repay $50 million of senior unsecured notes due in June 2024. The weighted average interest rate on the term loans was reported at 3.76%. The credit ratings for the company reflected a stable outlook, consistent with most REITs in its category.
How the Company Balances Between Debt Financing and Equity Funding
During the nine months ended September 30, 2024, the company issued 4,792,842 shares under its ATM programs, generating net proceeds of $125.3 million. The company maintains a balance between debt and equity financing by leveraging its equity to fund acquisitions and property improvements while managing debt levels to optimize capital costs. The total capital structure as of September 30, 2024, illustrates this balance:
| Debt Type | Amount ($ in millions) | Interest Rate (%) | Maturity Date |
|---|---|---|---|
| Term Loans | 515 | 6.29 | Various through 2027 |
| Senior Unsecured Fixed Rate Notes | 625 | 2.74 - 6.44 | 2026 - 2033 |
| Revolving Credit Facility | 250 | Variable | November 2025 |
The company strategically utilizes its revolving credit facility for short-term liquidity needs while relying on equity issuance for long-term growth initiatives.
Assessing Four Corners Property Trust, Inc. (FCPT) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, is calculated as:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $44,495,000 | $1,209,603,000 | 0.037 |
The quick ratio, which excludes inventory from current assets, is not applicable as there are no significant inventories reported.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is defined as current assets minus current liabilities:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $44,495,000 | $1,209,603,000 | ($1,165,108,000) |
This negative working capital indicates potential liquidity concerns as the company may face challenges meeting short-term obligations.
Cash Flow Statements Overview
The cash flow from operating, investing, and financing activities for the nine months ended September 30, 2024, is summarized below:
| Cash Flow Activity | Amount (in thousands) |
|---|---|
| Net Cash Provided by Operating Activities | $110,691 |
| Net Cash Used in Investing Activities | ($136,763) |
| Net Cash Provided by Financing Activities | $45,784 |
The net cash provided by operating activities shows a strong inflow, but the cash used in investing activities indicates significant expenditures on property investments.
Potential Liquidity Concerns or Strengths
At September 30, 2024, the company has:
- $44.5 million in cash and cash equivalents.
- $250 million available under a revolving credit facility.
- No outstanding borrowings under the revolving credit facility.
However, the negative working capital and reliance on cash flows from operations to meet short-term obligations may raise concerns about liquidity sustainability in the long term.
Is Four Corners Property Trust, Inc. (FCPT) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company can be assessed through various financial metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio is calculated as follows:
- Net Income (Last Twelve Months): $74,388,000
- Average Common Shares Outstanding: 94,877,995
- Earnings Per Share (EPS): $0.80
- Current Stock Price: $26.30
- P/E Ratio: $26.30 / $0.80 = 32.875
Price-to-Book (P/B) Ratio
The P/B ratio is another important metric for valuation:
- Total Assets: $2,564,344,000
- Total Liabilities: $1,132,236,000
- Shareholder's Equity: $2,564,344,000 - $1,132,236,000 = $1,432,108,000
- Book Value Per Share: $1,432,108,000 / 94,877,995 = $15.08
- P/B Ratio: $26.30 / $15.08 = 1.743
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio is calculated as follows:
- Market Capitalization: $26.30 94,877,995 = $2,498,109,000
- Total Debt: $1,132,236,000
- Cash and Cash Equivalents: $44,495,000
- Enterprise Value (EV): $2,498,109,000 + $1,132,236,000 - $44,495,000 = $3,585,850,000
- EBITDA (Last Twelve Months): $114,700,000
- EV/EBITDA Ratio: $3,585,850,000 / $114,700,000 = 31.25
Stock Price Trends
The stock price trends over the last 12 months are as follows:
| Month | Stock Price |
|---|---|
| September 2023 | $27.00 |
| December 2023 | $27.50 |
| March 2024 | $26.00 |
| June 2024 | $25.50 |
| September 2024 | $26.30 |
Dividend Yield and Payout Ratios
As of September 30, 2024:
- Annual Dividend Per Share: $1.0350
- Current Stock Price: $26.30
- Dividend Yield: $1.0350 / $26.30 = 3.93%
- Payout Ratio: ($1.0350 / $0.80) 100 = 129.375%
Analyst Consensus on Stock Valuation
According to the latest analyst ratings:
- Buy: 5 Analysts
- Hold: 3 Analysts
- Sell: 1 Analyst
The consensus indicates a generally positive outlook with the majority recommending a buy based on the financial health and growth potential of the company.
Key Risks Facing Four Corners Property Trust, Inc. (FCPT)
Key Risks Facing Four Corners Property Trust, Inc.
Four Corners Property Trust, Inc. faces a variety of internal and external risks that can impact its financial health. These risks include industry competition, regulatory changes, and fluctuations in market conditions.
Industry Competition
The competitive landscape for property trusts is intense, with numerous players vying for market share. As of September 30, 2024, the company reported total revenues of $199.7 million, up from $177.1 million in the same period the previous year. This growth reflects the company's ability to navigate competitive pressures; however, increased competition can impact rental rates and occupancy levels.
Regulatory Changes
Changes in regulations affecting real estate investment trusts (REITs) can pose significant risks. The company must comply with various federal and state tax regulations to maintain its REIT status. As of September 30, 2024, the income tax expense was $203,000, compared to $50,000 in the prior year, highlighting the potential impact of regulatory scrutiny on financial performance.
Market Conditions
Market conditions, including interest rate fluctuations, can significantly affect the company's performance. The weighted average interest rate on the term loans was 6.29% as of September 30, 2024. If interest rates rise, the cost of borrowing could increase, impacting profitability and cash flow.
Operational Risks
Operational risks include potential disruptions in property management and tenant relations. As of September 30, 2024, the company had total property expenses of $88.9 million for the nine months, with $21.9 million attributed to restaurant operations. These figures underscore the importance of effective operational management to mitigate risks associated with tenant turnover and property maintenance.
Financial Risks
The company is exposed to credit risk, particularly related to its cash held at financial institutions and the $250 million available capacity under its revolving credit facility. As of September 30, 2024, the company had no outstanding borrowings on the revolving credit facility. However, any future borrowings could expose the company to increased financial risk if not managed prudently.
Strategic Risks
Strategic risks may arise from acquisition strategies and capital allocation decisions. During the nine months ended September 30, 2024, the company invested $136.7 million in 42 properties across 19 states. Poor investment decisions or market misjudgments could adversely affect future profitability.
Mitigation Strategies
To address these risks, the company utilizes various strategies including diversification of its property portfolio and maintaining a strong balance sheet. As of September 30, 2024, total real estate investments net were valued at $2.3 billion, indicating a robust asset base that can help mitigate risks associated with any single property or tenant.
| Risk Type | Details | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition affecting rental rates and occupancy | Revenues of $199.7 million |
| Regulatory Changes | Compliance with REIT regulations | Income tax expense of $203,000 |
| Market Conditions | Interest rate fluctuations | Weighted average interest rate of 6.29% |
| Operational Risks | Property management and tenant relations | Total property expenses of $88.9 million |
| Financial Risks | Credit risk related to cash and borrowings | No outstanding borrowings on revolving credit facility |
| Strategic Risks | Acquisition strategies and capital allocation | Invested $136.7 million in properties |
Future Growth Prospects for Four Corners Property Trust, Inc. (FCPT)
Future Growth Prospects for Four Corners Property Trust, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its market position and revenue streams:
- Acquisitions: The company acquired 48 leased properties from October 1, 2023, to September 30, 2024, which contributed to a $14.1 million increase in rental revenue, or 8.7% year-over-year.
- Market Expansion: The company continues to explore opportunities for expansion in regions with growing demand for leased properties.
- Product Innovations: Enhancements in property management practices and tenant services are being implemented to increase tenant satisfaction and retention.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected based on the ongoing acquisitions and the stability of existing leases:
- Projected rental revenue for the next fiscal year is expected to reach $195 million.
- Earnings estimates suggest a net income of approximately $75 million for the year ending September 30, 2025.
Strategic Initiatives and Partnerships
The company has undertaken several strategic initiatives to bolster its growth:
- Debt Financing: The company issued $125.3 million in net proceeds from its ATM programs during the nine months ended September 30, 2024, enhancing its liquidity for future investments.
- Partnerships: Collaborations with local real estate firms are being explored to identify and acquire undervalued properties.
Competitive Advantages
The company possesses distinct competitive advantages that position it favorably in the market:
- High Occupancy Rates: The company achieved a 99.8% collection rate of contractual base rent for the three months ended September 30, 2024.
- Investment-Grade Tenancy: Approximately 57% of its tenants are rated as investment-grade, providing a stable revenue base.
- Long Lease Terms: The average remaining lease term is 7.3 years, contributing to predictable cash flows.
| Metrics | 2023 | 2024 | 2025 (Projected) |
|---|---|---|---|
| Total Revenues | $185.5 million | $199.7 million | $195 million |
| Net Income | $71 million | $74.4 million | $75 million |
| Rental Revenue | $162.3 million | $176.4 million | $180 million |
| Acquired Properties | – | 48 | – |
| ATM Proceeds | $128.2 million | $125.3 million | – |
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Article updated on 8 Nov 2024
Resources:
- Four Corners Property Trust, Inc. (FCPT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Four Corners Property Trust, Inc. (FCPT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Four Corners Property Trust, Inc. (FCPT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.