EPR Properties (EPR)

EPR Properties: A Comprehensive Overview

Company Profile:

History and Background:

EPR Properties (NYSE: EPR) is a real estate investment trust (REIT) specializing in experiential properties. Founded in 1995, EPR focuses on owning and operating properties in the entertainment, recreation, and education industries. Initially focusing on movie theaters, EPR diversified its portfolio over the years to include amusement parks, ski resorts, indoor waterparks, and educational facilities. As of September 30, 2023, EPR's portfolio consisted of 344 properties across 44 states, including 51 owned theaters, 54 Topgolf locations, 48 ski resorts, and 153 other entertainment properties.

Core Business Areas:

• Theatres: EPR owns and operates 51 movie theaters across the United States, generating rental income from major theatre chains like AMC and Cinemark.
• Topgolf: With 54 locations nationwide, EPR's Topgolf portfolio represents its largest investment. These venues offer entertainment and dining experiences through interactive golf games.
• Ski Resorts: EPR owns and operates a diverse range of 48 ski resorts and waterparks across the country, generating rental income from established operators like Vail Resorts and Snowshoe Mountain.
• Other Entertainment: The remaining portion of EPR's portfolio includes educational facilities leased to private schools and other entertainment properties such as arcades and trampoline parks.

Leadership and Corporate Structure:

• CEO: Gregory Silverman
• President and COO: Alan Klehr
• EVP & CFO: Chad Meyer
• EVP and General Counsel: Scott P. Davis
• EVP, Chief Investment Officer: Eric R. Renz
• EVP, Operations: Joseph P. Parente

The Board of Directors includes experienced individuals from diverse backgrounds, overseeing the company's strategic direction and performance.

Top Products and Market Share:

Top Products and Offerings:

• Movie Theatres: EPR is the third-largest owner of movie theatres in the U.S., providing critical infrastructure for the entertainment industry.
• Topgolf: As the largest Topgolf franchisee, EPR plays a vital role in expanding this popular golf and entertainment concept.
• Ski Resorts: EPR's portfolio boasts a diverse collection of renowned ski resorts catering to various levels of skiers and snowboarders.
• Educational Facilities: EPR's commitment to education is reflected in its investment in private school campuses across the country.
• Other Entertainment: Offering diverse entertainment experiences, EPR's portfolio includes trampoline parks, arcades, and waterparks.

Market Share:

• Movie Theatres: EPR owns approximately 3.5% of the U.S. movie theatre market.
• Topgolf: As the largest Topgolf franchisee, EPR boasts a market share exceeding 30%.
• Ski Resorts: EPR holds a significant share of the U.S. ski resort market, with ownership or interest in 48 resorts.
• Educational Facilities: EPR focuses on strategically chosen markets for its private school investments.
• Other Entertainment: EPR maintains a diversified presence within the broader entertainment property segment.

Product Performance and Market Reception:

EPR's diverse portfolio demonstrates strong performance, with Topgolf and ski resorts exceeding pre-pandemic levels and theatres showing recovery. The company's focus on resilient entertainment experiences continues to resonate with consumers.

Total Addressable Market:

The total addressable market for EPR includes:

• Movie Theatre Industry: Valued at roughly $11 billion in the U.S.
• Golf Entertainment Industry: Estimated at $1.4 billion in the U.S.
• Ski Resort Industry: Approximately $3 billion in the U.S.
• Private Education Market: Projected to reach $285 billion globally by 2026.
• Broader Entertainment Industry: A vast market exceeding $2 trillion globally.

The combined size of these industries highlights the vast potential within EPR's target markets.

Financial Performance:

Recent Financial Highlights:

• Revenue: Increased to $1.23 billion in 2022.
• Net Income: Increased to $322.3 million in 2022.
• Profit Margins: Gross margin reached 72.8% in 2022.
• Earnings per Share (EPS): Diluted EPS stood at $2.13 in 2022.

Year-over-Year Growth:

• Revenue increased by 13.7% from 2021 to 2022.
• Net income saw a substantial jump of 135.2% over the same period.
• EPS growth mirrored net income, showing a significant increase of 134.5%.

Cash Flow and Balance Sheet Health:

• Cash flow from operations reached $547.4 million in 2022.
• Total debt-to-equity ratio stands at around 0.5, reflecting a healthy financial structure.

EPR's financial statements demonstrate solid performance, with consistent revenue growth and improving profit margins. The company's strong cash flow and balanced sheet provide a foundation for future expansion.

Dividends and Shareholder Returns:

Dividend History:

EPR has a strong track record of dividend payouts, increasing dividends for 11 consecutive years. The most recent annual dividend stands at $4.16 per share, translating to a yield of approximately 6.5%.

Shareholder Returns:

Over the past year, EPR's stock price has delivered total returns exceeding 15%, outperforming the S&P 500. Over five years, total returns have surpassed 80%, demonstrating strong value creation for shareholders.

Growth Trajectory:

Historical Growth:

EPR's revenue has nearly doubled over the past five years, indicating consistent growth. Net income has similarly witnessed significant expansion during this period.

Future Growth Projections:

Analysts project continued revenue growth for EPR, with estimates ranging from 5 to 10% annually over the next three to five years. This projection aligns with the positive outlook within the entertainment industry and EPR's strategic initiatives.

Recent Growth Drivers:

• Continued expansion of Topgolf locations
• Recovery and growth within the movie theatre industry
• Investments in ski resort upgrades and expansions
• Strategic acquisitions in growth areas

Market Dynamics:

Industry Overview:

The experience industry is witnessing a revival post-pandemic, with consumers prioritizing leisure activities. Technological advancements are transforming the industry, creating opportunities for immersive and interactive experiences.

Positioning and Adaptability:

EPR's focus on experiential properties positions the company at the forefront of this dynamic industry. Its diversified portfolio and innovative approach enable adaptation to changing consumer preferences and technological advancements.

Competitors:

• Cineworld (CNK)
• AMC Entertainment (AMC)
• Cinemark Holdings (CNK)
• VICI Properties (VICI)
• Crown Castle International (CCI)

Market Share Comparison:

• EPR: 4.8%
• VICI: 21.8%
• Crown Castle: 16.2%
• Others: 57.2%