SVLF posts a strong quarter and guides for EPS of $0.65 for 2007, fully taxed and diluted. At the current price of $4.60, that puts the forward PE at only 7.
Fourth Quarter Financial Highlights include:
-- Vacation Interval sales for the fourth quarter increased 23.9% to $46.0 million
-- Net Income increased by 12.2% to $4.0 million
Full Year Financial Highlights include:
-- Vacation Interval sales for the year increased by 28.0% to $187.5 million
-- Adjusted Net Income increased by 66.9% to $22.7 million
-- Adjusted Fully Diluted Earnings per Share increased 65.7% to $0.58
DALLAS--(BUSINESS WIRE)--Silverleaf Resorts, Inc. (Nasdaq:SVLF - News) today announced its financial results for the fourth quarter and year ended December 31, 2006.
Sharon K. Brayfield, President, commented, "We are pleased with our overall operating results for 2006, particularly the 28.0% increase in Vacation Interval sales and 66.9% increase in adjusted net income compared to 2005. Additionally, we made a number of key strategic decisions in 2006, most importantly completing our second term securitization and increasing the availability under our revolving credit facilities, which position Silverleaf for continued success. We feel confident that we are well positioned to meet our net income guidance for 2007 of approximately $25.5 million."
Adoption of SFAS No. 152
As previously announced, the Company was required to adopt SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions" as of January 1, 2006. As a result, new line items are included in the Company's Consolidated Statement of Operations and total revenue and total costs and expenses are reduced. However, adoption of SFAS No. 152 did not have a material impact on consolidated operating results or financial position. See the exhibit to this release entitled "Supplemental Consolidated Statements of Operations Demonstrating the Impact of Adoption of SFAS No. 152" for 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 Fourth Quarter Results
Vacation Interval sales increased 23.9% to $46.0 million during the fourth quarter of 2006 compared to $37.1 million during the same period of 2005.
Total revenue for the fourth quarter of 2006 increased to $52.1 million compared to $48.2 million for the fourth quarter of 2005. Total revenue for the fourth quarter of 2006 is reduced by estimated uncollectible revenue of $8.0 million in accordance with SFAS No. 152, representing estimated future gross cancellations of notes receivable prior to any recoveries of inventory. In addition, sampler sales are accounted for as incidental operations under SFAS No. 152, 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 fourth quarter of 2006. Had these two changes mandated by SFAS No. 152 not been made, revenues would have increased by 26.2% to $60.8 million.
Cost of Vacation Interval sales decreased to 8.7% of Vacation Interval sales for the fourth quarter of 2006 from 16.0% during the same period of 2005, due predominantly to the requirement under SFAS No. 152 that cost of sales be reduced by the estimated future recoveries of inventory.
Sales and marketing expense increased to 55.3% of Vacation Interval sales for the fourth quarter of 2006 from 53.0% for the same period of 2005. Had sales and marketing expense not been reduced by sampler sales, as described above, sales and marketing expense would have been 57.0% of Vacation Interval sales. The increase compared to the previous year's quarter reflects the investment in the additional sales channel that the Dallas and Chicago off-site sales centers will provide, as well as the investment in securing additional personnel and processes ahead of the Company's expected growth.
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 fourth quarter 2006 provision for uncollectible notes expense would have been $6.0 million, or 13.0% of fourth quarter 2006 Vacation Interval sales, compared to $5.6 million for 2005, or 15.0% of Vacation Interval sales.
During the fourth quarter of 2006, Silverleaf recorded income tax expense at 38.5% of pre-tax income, compared to 30.2% of pre-tax income in the same period of 2005. The increase in the effective 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 was therefore recorded at full statutory rates.
Net income for the quarter ended December 31, 2006 increased to $4.0 million, or $0.10 per diluted share compared to net income of $3.6 million, or $0.09 per diluted share for the quarter ended December 31, 2005.
2006 Full Year Results
Vacation Interval sales increased 28.0% to $187.5 million for 2006 compared to $146.4 million for 2005.
Total revenue for 2006 increased to $206.9 million compared to $201.9 million in 2005. Total revenue for the year of 2006 is reduced by estimated uncollectible revenue of $32.5 million in accordance with SFAS No. 152. In addition, sampler sales are accounted for as incidental operations under SFAS No. 152, which requires that any such incidental revenues be recorded as a reduction of incremental costs or expenses. Accordingly, $2.9 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 for the year ended December 31, 2006. Had these two changes mandated by SFAS No. 152 not been made, revenues would have increased by 20.0% to $242.3 million.
Total revenue for 2005 included a gain on sale of notes receivable of $6.5 million and a gain on sale of undeveloped land of $3.6 million.
Cost of Vacation Interval sales decreased to 10.1% of Vacation Interval sales in 2006 from 16.0% in 2005, due predominantly to the requirement under SFAS No. 152 that cost of sales be reduced by the estimated future recoveries of inventory.
Sales and marketing expense decreased to 50.1% of Vacation Interval sales for 2006 from 51.0% for 2005. Had sales and marketing expense not been reduced by sampler sales, as described above, sales and marketing expense would have been 51.7% of Vacation Interval sales. The increase compared to 2005 reflects the investment in the additional sales channel that the Dallas and Chicago off-site sales centers will provide, as well as the investment in securing additional personnel and processes ahead of the Company's expected growth.
