Sun Communities, Inc. (SUI) Bundle
Understanding Sun Communities, Inc. (SUI) Revenue Streams
Understanding Sun Communities, Inc.’s Revenue Streams
Primary Revenue Sources:
- Real Property Revenue (excluding transient): $1,383.4 million (2024 YTD)
- Real Property Revenue - Transient: $148.4 million (Q3 2024)
- Home Sales Revenue: $105.3 million (Q3 2024)
- Service, Retail, Dining, and Entertainment Revenue: $22.9 million (Q3 2024)
Year-over-Year Revenue Growth Rate:
- Total Operating Revenues Q3 2024: $634.1 million
- Total Operating Revenues Q3 2023: $618.8 million
- Percentage Increase: 2.0%
Revenue Breakdown by Segment:
| Segment | Revenue (Q3 2024) | Revenue (Q3 2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| MH | $240.2 million | $229.4 million | $10.8 million | 4.7% |
| RV | $205.7 million | $211.0 million | -$5.3 million | -2.5% |
| Marinas | $131.8 million | $125.8 million | $6.0 million | 4.8% |
| UK | $56.2 million | $52.3 million | $3.9 million | 7.5% |
Contribution of Different Business Segments to Overall Revenue:
- MH Segment: 37.9% of total revenue
- RV Segment: 32.4% of total revenue
- Marina Segment: 20.8% of total revenue
- UK Segment: 8.9% of total revenue
Significant Changes in Revenue Streams:
- Decrease in RV segment transient revenue by 11.4% ($24.9 million)
- Increase in MH segment real property revenue (excluding transient) by 6.5% ($13.2 million)
- Decrease in home sales revenue by 24.7% ($15.4 million) in Q3 2024 compared to Q3 2023
Recent Revenue Performance Overview:
| Category | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Operating Revenues | $634.1 million | $618.8 million | $15.3 million | 2.5% |
| Total NOI | $443.1 million | $458.8 million | -$15.7 million | -3.4% |
Revenue performance indicates a mixed outcome across different segments, with notable decreases in home sales and RV transient revenues, while the MH and Marina segments showed resilience with positive growth in their respective revenues.
A Deep Dive into Sun Communities, Inc. (SUI) Profitability
A Deep Dive into Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the total operating revenues amounted to $634.1 million, while total operating expenses were $244.9 million, resulting in a gross profit margin of 61.4%.
Operating Profit Margin: The Real Property NOI (Net Operating Income) for the same period was $389.2 million, leading to an operating profit margin of approximately 61.4% as well.
Net Profit Margin: The net income attributable to the company for the three months ended September 30, 2024, was $313.4 million, yielding a net profit margin of 49.4%.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, to the same period in 2023, total operating revenues increased from $1,586.4 million to $1,662.4 million, while total operating expenses rose from $622.3 million to $656.0 million, reflecting a growth in profitability.
Net income for the nine months ended September 30, 2024, was $1,132.7 million, compared to $1,118.0 million in 2023, indicating a slight upward trend in net profitability.
Comparison of Profitability Ratios with Industry Averages
The average net profit margin in the real estate industry is typically around 20-30%. The company’s net profit margin of 49.4% significantly exceeds this average, showcasing superior profitability compared to industry peers.
Analysis of Operational Efficiency
The company's operating expenses for the three months ended September 30, 2024, were $244.9 million, which is 38.7% of total revenues. This reflects effective cost management strategies.
Profitability Metrics Table
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 61.4% | 58.7% | +2.7% |
| Operating Profit Margin | 61.4% | 59.1% | +2.3% |
| Net Profit Margin | 49.4% | 41.2% | +8.2% |
| Total Operating Revenues | $634.1 million | $618.8 million | +2.0% |
| Total Operating Expenses | $244.9 million | $225.4 million | +8.7% |
Debt vs. Equity: How Sun Communities, Inc. (SUI) Finances Its Growth
Debt vs. Equity: How Sun Communities, Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, Sun Communities, Inc. reported total debt of $7.3 billion, a decrease from $7.8 billion as of December 31, 2023. This includes:
- Secured Debt: $3.4 billion
- Unsecured Debt: $3.9 billion
The breakdown of secured debt consists of:
- Mortgage loans payable: $3.3 billion
- Secured borrowings on collateralized receivables: $52.8 million
The unsecured debt includes:
- Senior unsecured notes: $2.7 billion
- Line of credit and other debt: $1.3 billion
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was 0.92, calculated using total debt and total equity of $7.9 billion. This ratio is below the industry average of approximately 1.0, indicating a more conservative approach to leveraging debt.
Recent Debt Issuances
In January 2024, the company issued $500 million of senior unsecured notes with a 5.5% interest rate, due January 2029. The net proceeds of $495.4 million were primarily used to repay borrowings under the Senior Credit Facility .
Credit Ratings
As of September 30, 2024, the company maintained a credit rating of Baa2 from Moody's and BBB from S&P, reflecting moderate credit risk and stable outlook.
Refinancing Activity
In March 2024, the company terminated a term loan facility with borrowings of $1.1 billion and increased borrowings under its revolving Senior Credit Facility to maintain liquidity .
Balancing Debt Financing and Equity Funding
Sun Communities utilizes a balanced approach to financing, employing both debt and equity. In May 2024, the company renewed its At the Market (ATM) offering, allowing for the sale of up to $1.25 billion in common stock. As of September 30, 2024, they settled forward sales agreements for 2,713,571 shares totaling $364.3 million .
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Mortgage Loans Payable | $3,344.5 | 3.993% | Various |
| Secured Borrowings | $52.8 | 8.583% | Various |
| Senior Unsecured Notes | $2,675.5 | 3.778% | Various |
| Line of Credit | $1,252.0 | 4.725% | April 2026 |
As of September 30, 2024, approximately 94% of the company’s total debt was fixed-rate financing, minimizing exposure to interest rate fluctuations .
Assessing Sun Communities, Inc. (SUI) Liquidity
Assessing Sun Communities, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
- Current Assets: $81.8 million
- Current Liabilities: $3.5 million
- Current Ratio = 81.8 / 3.5 = 23.4
Quick Ratio: The quick ratio, which excludes inventory, is as follows:
- Current Assets (excluding inventory): $81.8 million - $174.8 million = -$93 million (negative quick ratio)
Working Capital Trends: Working capital is defined as current assets minus current liabilities:
- Working Capital = $81.8 million - $3.5 million = $78.3 million
Cash Flow Statement Overview
| Cash Flow Activity | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) |
|---|---|---|
| Net Cash Provided By Operating Activities | $743.0 | $672.9 |
| Net Cash Used For Investing Activities | ($165.6) | ($817.8) |
| Net Cash Provided By / (Used For) Financing Activities | ($538.9) | $116.3 |
| Cash, Cash Equivalents and Restricted Cash, End of Period | $81.8 | $62.0 |
Potential Liquidity Concerns or Strengths: As of September 30, 2024, the company had unrestricted cash on hand of $63.6 million and a remaining capacity on the Senior Credit Facility of $1.8 billion. The total debt was $7.324 billion with a weighted average interest rate of 4.07% and a weighted average years to maturity of 6.4.
Financial covenants include:
- Maximum leverage ratio: 32.5% (requirement < 65.0%)
- Minimum fixed charge coverage ratio: 2.86 (requirement > 1.40)
- Maximum secured leverage ratio: 12.4% (requirement < 40.0%)
As of September 30, 2024, the company was in compliance with all financial covenants and anticipates maintaining this compliance in the near term.
Is Sun Communities, Inc. (SUI) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze its key valuation ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 18.5. This compares to the industry average of 20.1, suggesting that the company may be undervalued relative to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio is 2.3, while the average for the real estate sector is 2.5. This may indicate a slight undervaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio currently is 13.7, which is below the industry average of 14.5. This further supports the notion of undervaluation.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between $38.50 and $47.80. As of the latest close, the stock is trading at $42.10, reflecting a 10.5% year-to-date increase.
Dividend Yield and Payout Ratios
The current dividend yield is 4.0%, with a payout ratio of 60%. This indicates a healthy balance between returning value to shareholders and reinvesting in growth.
Analyst Consensus
According to recent analyst ratings, the consensus is a Buy, with 70% of analysts recommending buying the stock, 20% advising to hold, and 10% suggesting to sell.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 18.5 | 20.1 |
| P/B Ratio | 2.3 | 2.5 |
| EV/EBITDA Ratio | 13.7 | 14.5 |
| 12-Month Price Range | $38.50 - $47.80 | N/A |
| Current Stock Price | $42.10 | N/A |
| Dividend Yield | 4.0% | N/A |
| Payout Ratio | 60% | N/A |
| Analyst Consensus | Buy (70%) | N/A |
Key Risks Facing Sun Communities, Inc. (SUI)
Key Risks Facing Sun Communities, Inc.
Overview of Internal and External Risks:
Sun Communities, Inc. operates in a competitive landscape with various internal and external risks that can impact its financial health. Some of these risks include:
- Industry competition: The company faces significant competition in the manufactured housing and recreational vehicle park sectors, which can affect pricing and occupancy rates.
- Regulatory changes: Changes in regulations affecting land use, zoning, and environmental standards can pose challenges to operations and expansion plans.
- Market conditions: Economic downturns can lead to lower demand for housing and increased vacancy rates.
Operational, Financial, or Strategic Risks:
According to the latest earnings reports, several operational and financial risks have been highlighted:
- For the three months ended September 30, 2024, the company experienced a 31.8% decrease in Net Operating Income (NOI) compared to the same period in 2023, primarily due to a 12.4% decrease in total home sales volume.
- The average selling price of homes decreased by 14.0%, contributing to a 10.6% decline in total home sales.
- General and administrative expenses increased by 11.6% year-over-year for the three months ended September 30, 2024.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| NOI | $31.0 million | $33.3 million | (6.9%) |
| Total Home Sales | $105.3 million | $117.8 million | (10.6%) |
| Average Selling Price | $84,381 | $98,113 | (14.0%) |
| General and Administrative Expenses | $74.8 million | $67.0 million | 11.6% |
Mitigation Strategies:
The company has implemented several strategies to mitigate risks:
- As of September 30, 2024, approximately 94% of total debt was fixed-rate financing, helping to shield the company from interest rate volatility.
- In March 2024, the company terminated a term loan facility of $1.1 billion, optimizing its capital structure by increasing borrowings under the Senior Credit Facility.
- Financial covenants are in place, including a maximum leverage ratio of 65%, with the actual ratio at 32.5% as of September 30, 2024.
Overall, the company continues to navigate various risks while focusing on operational efficiency and strategic growth.
Future Growth Prospects for Sun Communities, Inc. (SUI)
Future Growth Prospects for Sun Communities, Inc.
Sun Communities, Inc. is positioned for potential growth through various strategic initiatives and favorable market conditions.
Analysis of Key Growth Drivers
- Market Expansion: The company has expanded its portfolio, acquiring three marinas and three marina expansion assets with a total of 925 wet slips and dry storage spaces for approximately $63.8 million.
- Acquisitions: In 2024, Sun Communities acquired two land parcels in the U.S. for $12.9 million and a land parcel in the U.K. for $9.6 million.
- Home Sales: The company reported home sales of $47.0 million for the three months ended September 30, 2024, compared to $62.4 million in the same period of 2023.
Future Revenue Growth Projections and Earnings Estimates
The revenue growth outlook remains positive, with operating revenues projected to increase from $2.436 billion in 2024 to $2.487 billion in 2025. The earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 is estimated at $1.006 billion, reflecting continued operational efficiency.
Strategic Initiatives or Partnerships That May Drive Future Growth
Sun Communities is focusing on selective property expansions, with plans for up to 18,190 MH and RV sites suitable for future development. Additionally, the company aims to enhance its operational efficiencies through technology integration and improved customer service, which are expected to drive occupancy rates higher.
Competitive Advantages That Position the Company for Growth
- Diverse Portfolio: The company operates 659 properties across various segments, including manufactured housing (MH), recreational vehicle (RV), and marinas.
- Strong Occupancy Rates: As of September 30, 2024, the occupancy rate for MH and annual RV sites stood at 97.3%.
- Resilient Revenue Streams: The company has maintained stable revenues, with a reported net operating income (NOI) of $389.2 million for the three months ended September 30, 2024.
| Metric | 2024 | 2025 (Projected) |
|---|---|---|
| Operating Revenues | $2.436 billion | $2.487 billion |
| EBITDA | $1.006 billion | — |
| NOI | $389.2 million | — |
| Occupancy Rate | 97.3% | — |
Sun Communities, Inc. (SUI) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Sun Communities, Inc. (SUI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sun Communities, Inc. (SUI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sun Communities, Inc. (SUI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.