Prologis Announces Q3 Financial Results, Shares Drop 3.6%
The company says that despite economic uncertainty, growth indicators remain strong, but it reduced guidance for 2022.
Logistics real estate giant Prologis announced its Q3 2022 earnings, stating, “Amid an uncertain economic backdrop, business growth indicators remain strong.”
Wall Street didn’t as shares ended at $102.06 on Wednesday, down almost 3.6% from Tuesday.
“Net earnings per diluted share was $1.36 for the quarter compared with $0.97 for the third quarter of 2021,” the company wrote. “Core funds from operations (Core FFO)* per diluted share was $1.73 for the quarter compared with $1.04 for the same period in 2021. The third quarter of 2022 included $0.57 of net promote income, while the same period in 2021 included $0.01.”
Quarterly revenue of $1.75 billion seems to be a company record, according to data from S&P Global Market Intelligence. Operating income of $839.3 million also seemed to the best the company has done. But net income of $1.02 billion is down sharply from the first quarter of 2022 ($1.15 billion) and last quarter of 2021 ($1.25 billion).
“We have significant liquidity, low leverage and investment capacity to support our operations and to allow for opportunistic investments,” the release quoted CFO Timothy Arndt. “Additionally, our embedded lease mark-to-market continued to expand to 62%, and we have substantially insulated our earnings and equity from foreign currency movements over the next several years.”
The biggest negative to investors, though, was most likely a change in guidance.
“While confident as ever about the resiliency of our business, we are exercising caution in the near term,” Arndt said. “Accordingly, we are taking a more conservative approach in how we choose to allocate our capital, and are therefore lowering our guidance for development starts, dispositions and contributions while we closely monitor the market.”
Previously, Prologis had provided FY 2022 net earnings guidance of $5.15 to $5.25 per share. That number is now a range of $4.25 to $4.30, a drop of 17.8%. Funds from operations (FFO), the REIT equivalent of earnings per share, went from the range of $5.14 to $5.18 down to $5.12 to $5.14, a drop of 0.6%. Also, strategic capital revenue guidance dropped 2.7% from $550 million to $560 million, lowering to $535 million to $545 million.
All this comes after Wells Fargo & Company cut its target for Prologis from $163 per share to $127.