AXR Stock Dips After Reporting Q2 Earnings, Revenues Surge Y/Y

Core Insights - AMREP Corporation's shares have declined 6.8% since the earnings report for the quarter ended October 31, 2024, underperforming the S&P 500 Index's 3.7% decline during the same period [1] - The company reported total revenues of $11.9 million for the quarter, a 34.5% year-over-year increase, driven by a 19.9% rise in land sale revenues and a 51.5% surge in home sale revenues [2] - Net income reached $4 million, or $0.75 per diluted share, compared to $1.1 million, or $0.21 per diluted share, in the same period last year [3] Revenue and Earnings Growth - Land sale revenues totaled $5.9 million, while home sale revenues reached $5.3 million, supported by higher sales volumes and pricing dynamics [2] - Operating income surged 199.1% year-over-year to $3.1 million, with the homebuilding segment benefiting from increased landscaping services [3][7] - The land development segment saw a revenue increase of 29.9% to $7.7 million, with a notable sale of 549 acres contributing $2.5 million [5] Business Metrics - Homebuilding revenues increased 43.4% to $4.2 million, with 12 homes sold compared to seven in the prior-year quarter, although the average selling price per home declined to $444,000 from $503,000 [5] - Land sale gross margins improved to 60% from 27% a year earlier, while home sale gross margins declined from 29% to 20% due to various cost factors [6] - General and administrative expenses increased 18% to $1.8 million, primarily due to expanded homebuilding operations [7] Cash Flow and Financial Position - As of October 31, 2024, AMREP reported $40.6 million in cash and equivalents, up from $30.2 million as of April 30, 2024 [8] - Operating cash flows were $10.5 million, significantly higher than $1.9 million in the prior-year period, driven by inventory reductions [8] - Capital expenditures were modest at $120,000, reflecting strategic restraint amid market uncertainties [8] Management Commentary - Management attributed strong revenue growth to increased land and home sales while focusing on cost management amid rising material and labor expenses [9] - Delays in municipal approvals and infrastructure availability were noted as ongoing challenges that could affect future project timelines [9] Market Outlook - Management highlighted potential for reduced land sale revenues in fiscal 2025 due to market headwinds and delays in entitlement processes [11] - Rising mortgage rates and inflation were cited as factors negatively impacting housing demand, prompting the company to manage its project pipeline strategically [11] Other Developments - Real estate inventory decreased by 3.9% to $63.4 million, primarily due to land and home sales [12] - AMREP's pension plan termination resulted in a $1.2 million reclassification of income tax benefits, enhancing net income for the quarter [13]