SVL - Great quarter. 1Q EPS 16c V. 6c, Rev $45.7M v. $42.1M, guiding for 53c to 56c for the year.
Silverleaf Resorts, Inc. Reports First Quarter 2006 Results
Business Wire - May 02, 2006 08:39
DALLAS, May 02, 2006 (BUSINESS WIRE) -- Silverleaf Resorts, Inc. (AMEX:SVL) today announced its financial results for the first quarter ended March 31, 2006.
2006 First Quarter Financial Highlights:
-- Vacation Interval sales increased by 37.6% to $41.5 million
-- Net income increased by 146.4% to $6.2 million
-- Adoption of SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions," results in new income statement categories
-- Earnings guidance for 2006 increased to net income of $21 million to $22 million ($0.53 to $0.56 per diluted share)
"It is gratifying to see the momentum in 2005 carry into the first quarter of 2006, as we reported significantly better results this quarter compared to the same period last year," commented Sharon K. Brayfield, President. Ms. Brayfield further commented, "Our Vacation Interval sales growth during the first quarter is attributed primarily to increased efficiencies in sales to new and existing customers. Our focus will continue to be on sales to existing customers while providing new vacation experiences, such as the indoor water park we plan to build at The Villages Resort in East Texas and the recent acquisition of The Pinnacle Lodge in Winter Park, Colo. In addition, new sales initiatives, such as the Silverleaf Vacation Stores in the Dallas and Chicago markets as well as targeted acquisitions, will help us to continue to grow sales to new customers."
Adoption of SFAS No. 152:
As required, the Company adopted SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions" as of January 1, 2006. The adoption of SFAS No. 152 prospectively revises the classification of certain revenue and cost activity. However, the adoption of SFAS No. 152 did not have a material effect on our reported first quarter 2006 net income, nor did it result in a cumulative effect adjustment.
Since SFAS No. 152 did not permit the reclassification of our prior period consolidated financial statements, we have provided a Consolidated Statements of Operations Demonstrating the Impact of Adoption of SFAS No. 152 exhibit to provide users of our financial statements with a meaningful comparison of current year operating results to prior years by presenting a comparison of the Company's results as reported and as its results would have been reported had SFAS No. 152 not been adopted.
2006 First Quarter Results:
Vacation Interval sales increased 37.6% to $41.5 million during the first quarter of 2006 compared to $30.1 million during the first quarter of 2005. Vacation Interval sales to new customers increased 33.2% to $20.0 million on a 6.8% increase in new customer tours. Vacation Interval sales to existing customers increased 41.9% to $21.5 million on a 1.2% increase in existing customer tours.
Total revenue for the first quarter of 2006 increased to $45.7 million compared to $42.1 million in the year ago quarter. Total revenue in the first quarter of 2006 is decreased by estimated uncollectible revenue of $7.2 million in accordance with SFAS No. 152, representing estimated future gross cancellations of notes receivable prior to any recoveries of inventory. In addition, under SFAS No. 152, sampler sales are accounted for as incidental operations, which requires that any such incidental revenues be recorded as a reduction of incremental costs or expenses. Accordingly, $0.8 million of sampler sales, which would have been reported as revenue prior to adoption of SFAS No. 152, were accounted for as a reduction to sales and marketing expense in the quarter ended March 31, 2006. Had these two changes mandated by SFAS No. 152 not been made, revenues would have increased by 27.4% to $53.6 million.
Sales and marketing expense decreased to 46.4% of Vacation Interval sales for the first quarter of 2006 from 57.0% for the first quarter of 2005. Had sales and marketing expense not been reduced by sampler sales, as described above, sales and marketing expense would have been 48.2% of Vacation Interval sales.
Cost of Vacation Interval sales decreased to 10.1% of Vacation Interval sales in 2006 from 15.7% in 2005, due predominantly to the requirement under SFAS No. 152 that cost of sales be reduced by the estimated future recoveries of inventory, as described above. Without this change, cost of vacation interval sales would have been 14.4% of Vacation Interval sales for the quarter ended March 31, 2006.
As required by SFAS No. 152, in 2006 there is no longer a cost and operating expense for the provision for uncollectible notes as it is now replaced by the estimated uncollectible revenue offset to sales and corresponding decrease in cost of sales described above. Without this change, the first quarter 2006 provision for uncollectible notes expense would have been $5.4 million, or 13.0% of 2006 Vacation Interval sales, compared to $5.3 million for 2005, or 17.5% of Vacation Interval sales.
During the first quarter of 2006, Silverleaf recorded income tax expense at 38.5% of pre-tax income, compared to 20.0% of pre-tax income in the first quarter of 2005. The increase in the estimated effective income tax rate is due to the transition in 2005 from fully reserved net deferred tax assets at December 31, 2004 to net deferred tax liabilities at December 31, 2005. Income tax expense for 2006 is therefore recorded at full statutory rates.
Net income for the quarter ended March 31, 2006 increased to $6.2 million, or $0.16 per diluted share compared to net income of $2.5 million, or $0.06 per diluted share for the quarter ended March 31, 2005.
Outlook
Due primarily to increased sales efficiencies achieved in the first quarter of 2006, the Company is increasing its guidance for 2006 to net income of $21 million to $22 million ($0.53 to $0.56 per diluted share).
