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The New Home Company Reports 2019 Third Quarter Results

Company Release - 10/31/2019 6:00 AM ET

ALISO VIEJO, Calif.--(BUSINESS WIRE)-- The New Home Company Inc. (NYSE: NWHM) today announced results for the 2019 third quarter.

Third Quarter 2019 Financial Results

  • $39.7 million of cash flow from operations and $48.0 million of debt reduction during the quarter
  • Debt-to-capital ratio of 58.2% and a net debt-to-capital ratio of 54.9%*, a 280 basis point sequential improvement from the second quarter
  • Total revenues of $165.6 million, including $24.6 million of land sales revenue
  • Home sales revenue of $118.8 million vs. $119.9 million for the 2018 third quarter
  • SG&A ratio of 11.1%, a 170 basis point improvement as compared to the 2018 third quarter
  • Pretax loss of $4.8 million, including a $1.5 million loss on land sales and $3.6 million of inventory impairment charges, vs. pretax income of $3.4 million for the 2018 third quarter
  • Net loss of $4.6 million, or ($0.23) per diluted share, compared to net income of $2.5 million, or $0.12 per diluted share, for the 2018 third quarter
  • Adjusted net income of $0.2 million*, or $0.01 per diluted share*, excluding impairment charges and loss on land sales

“During the third quarter, we continued to make progress in our efforts to generate cash flow, deleverage our balance sheet and improve our SG&A efficiency,” said Larry Webb, Executive Chairman of The New Home Company. “Cash flow from operations during the quarter totaled $39.7 million and contributed to a $48.0 million repayment of debt, resulting in a net debt-to-capital ratio of 54.9%*, a 280 basis point improvement from the second quarter of 2019. Additionally, our SG&A ratio decreased 170 basis points from the prior year quarter thanks to lower selling and marketing expenses and a more streamlined cost structure.”

Mr. Webb continued, “We expect to make further improvements to our liquidity and debt leverage ratios in the fourth quarter, thanks in part to a $16.6 million land transaction that closed earlier this week. In addition, we anticipate our homebuilding gross margins will start to improve on a sequential basis. With our leverage ratios trending lower and our gross margins trending higher, we feel we are in a position to enter 2020 with momentum.”

Leonard Miller, President and Chief Executive Officer said “Home sales revenue for the 2019 third quarter of $118.8 million was essentially flat with the 2018 third quarter. However, for the 2019 year-to-date period, home sales revenue and home deliveries were up 13% and 20%, respectively, over the comparable 2018 period. The Company’s 2019 third quarter monthly sales absorption rate was 2.0, driven primarily by our more affordable communities which had a monthly sales absorption rate of 3.3 during the third quarter. We continue to see the benefits of transitioning to lower price points, and this more affordable product represents the majority of the lots in our pipeline for upcoming community openings.”

Third Quarter 2019 Operating Results

Total revenues for the 2019 third quarter were $165.6 million as compared to $159.1 million in the prior year period. During the quarter, the Company realized a $4.8 million pretax loss as compared to pretax income of $3.4 million in the prior year period. The 2019 third quarter included $3.6 million of inventory impairments, $1.9 million of which related to a future land sale, and a $1.5 million loss on land sales that closed during the third quarter. Net loss attributable to the Company for the 2019 third quarter was $4.6 million, or ($0.23) per diluted share, compared to net income of $2.5 million, or $0.12 per diluted share, in the prior year period. Adjusted net income for the 2019 third quarter, after excluding $3.6 million in pretax inventory impairment charges and a $1.5 million pretax loss on land sales, was $0.2 million*, or $0.01* per diluted share.

Wholly Owned Projects

Home sales revenue for the 2019 third quarter was fairly flat with the prior year at $118.8 million compared to $119.9 million in the year ago period. The slight decrease in home sales revenues was driven by 5% fewer deliveries, partially offset by a 4% increase in average selling price to $958,000 from $922,000 a year ago. The higher year-over-year average selling price was impacted by mix, particularly with the addition Arizona deliveries in 2019 where the average selling price exceeded $1 million for the third quarter.

Gross margin from home sales for the 2019 third quarter, which included $1.7 million in inventory impairment charges, was 9.5% as compared to 14.8% for the prior year period. The housing inventory impairment related to one community in Southern California that required more incentives than originally anticipated. Excluding home sales impairments, our home sales gross margin was 11.0%* for the 2019 third quarter as compared to 14.8% in the prior year period. The 380 basis point decline was primarily due to higher incentives and interest costs, and a product mix shift. Adjusted homebuilding gross margin, which excludes home sales impairment charges and interest in cost of home sales, was 16.2%* for the 2019 third quarter versus 18.4%* in the prior year period.

The Company's SG&A expense ratio as a percentage of home sales revenue for the 2019 third quarter was 11.1% as compared to 12.8% in the prior year period. The 170 basis point improvement in the SG&A rate was driven by reduced personnel expenses, more efficient marketing and advertising spend, and lower co-broker commissions as compared to prior year. These decreases were partially offset by a reduction in the amount of G&A expenses allocated to fee building cost of sales due to lower fee building activity and joint venture management fees.

Net new home orders for the 2019 third quarter decreased 6% due to a slower monthly sales absorption rate, slightly offset by an increase in average selling communities. The monthly sales absorption rate for the Company was 2.0 for the 2019 third quarter compared to 2.2 for the prior year period. On a combined basis, our California absorption rate was flat as compared to the prior year, while our Arizona division was down largely due to a lack of inventory at our nearly sold-out Belmont community in Gilbert. We ended the 2019 third quarter with 22 active communities, up from 20 at the end of the 2018 third quarter.

The dollar value of the Company's wholly owned backlog at the end of the 2019 third quarter was $185.8 million and totaled 207 homes compared to $310.8 million and 309 homes for the prior year period. The decrease in backlog units and dollar value was driven primarily by a lower beginning backlog coupled with a higher backlog conversion rate for the 2019 third quarter. Our backlog conversion rate was 60% for the 2019 third quarter as compared to 42% in the year ago period. The increase in the 2019 conversion rate resulted from the Company's move to more affordably priced product, which generally has quicker build cycles, as well as the Company's success in selling and delivering a higher number of spec homes. The decline in backlog dollar value was also impacted, to a lesser extent, by an 11% decrease in average selling price as the Company continues its transition to more affordable product.

Land Sales

During the 2019 third quarter, the Company sold two land parcels in Northern California. The land sales generated $24.6 million in revenue for the 2019 third quarter compared to no land sale revenue for the 2018 third quarter. In connection with these land sales, the Company recorded a $1.5 million loss. In addition, the Company sold a third parcel of land in Northern California in October of 2019 for which we recorded a $1.9 million impairment charge in the 2019 third quarter. Proceeds from this third land sale totaled $16.6 million.

Fee Building Projects

Fee building revenue for the 2019 third quarter was $22.3 million, compared to $39.2 million in the prior year period. The decrease in fee revenues was largely due to less construction activity in Irvine, California. Additionally, management fees from joint ventures and construction management fees from third parties, which are included in fee building revenue, decreased to $1.0 million for the 2019 third quarter as compared to $1.7 million for the 2018 third quarter. The lower fee building revenue and decrease in management fees, offset partially by a reduction in allocated G&A expenses, resulted in a fee building gross margin of $0.6 million for the 2019 third quarter versus $1.1 million in the prior year period.

Unconsolidated Joint Ventures (JVs)

The Company’s share of joint venture loss for the 2019 third quarter was $63,000 as compared to $34,000 in income for the prior year period. At the end of 2019 and 2018 third quarters, our joint ventures had four and seven actively selling communities, respectively.

Balance Sheet and Liquidity

As of September 30, 2019, the Company had real estate inventories totaling $506.3 million and owned or controlled 2,928 lots through its wholly owned operations (excluding fee building and joint venture lots), of which 1,449 lots, or 49% were controlled through option contracts. The Company generated $39.7 million in operating cash flows during the 2019 third quarter and ended the quarter with $40.9 million in cash and cash equivalents and $327.4 million in debt, of which $18.0 million was outstanding under its $130 million revolving credit facility. At September 30, 2019, the Company had a debt-to-capital ratio of 58.2% and a net debt-to-capital ratio of 54.9%*.

Guidance

The Company's current estimate for the 2019 fourth quarter is as follows:

  • Home sales revenue of $140 - $160 million
  • Fee building revenue of $20 - $30 million
  • Home sales gross margin of 12.0% - 12.3%

The Company's current estimate for full year guidance for 2019 is as follows:

  • Home sales revenue of $500 - $520 million
  • Fee building revenue of $85 - $95 million
  • Home sales gross margin of 11.5% - 11.7%

Conference Call Details

The Company will host a conference call and webcast for investors and other interested parties beginning at 12:00 p.m. Eastern Time on Thursday, October 31, 2019 to review third quarter results, discuss recent events and results, and discuss the Company's quarterly and certain full year guidance for 2019 and 2020. We will also conduct a question-and-answer period. The conference call will be available in the Investors section of the Company’s website at www.NWHM.com. To listen to the broadcast live, go to the site approximately 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. To participate in the telephone conference call, dial 1-877-407-0789 (domestic) or 1-201-689-8562 (international) at least five minutes prior to the start time. Replays of the conference call will be available through November 30, 2019 and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the pass code 13695063.

* Adjusted net income, adjusted EPS, net debt-to-capital ratio, home sales gross margin excluding impairment charges (homebuilding gross margin before impairments) and adjusted homebuilding gross margin (or homebuilding gross margin excluding impairments and interest in cost of home sales) are non-GAAP measures. A reconciliation of the appropriate GAAP measure to each of these measures is included in the accompanying financial data. See “Reconciliation of Non-GAAP Financial Measures.”

About The New Home Company

NWHM is a new generation homebuilder focused on the design, construction and sale of innovative and consumer-driven homes in major metropolitan areas within select growth markets in California and Arizona, including Southern California, the San Francisco Bay area, metro Sacramento and the greater Phoenix area. The Company is headquartered in Aliso Viejo, California. For more information about the Company and its new home developments, please visit the Company's website at www.NWHM.com.

Forward-Looking Statements

Various statements contained in this press release, including those that express a belief, anticipation, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning our revenues, community counts and openings, the timing and success of specific projects, our ability to execute our strategic growth objectives, gross margins, other projected results, income, earnings per share, joint ventures and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “should,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal,” “will,” “guidance,” “target,” “forecast,” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this press release speak only as of the date of this release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: economic changes either nationally or in the markets in which we operate, including declines in employment, volatility of mortgage interest rates and inflation; a downturn in the homebuilding industry; changes in sales conditions, including home prices, in the markets where we build homes; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; volatility and uncertainty in the credit markets and broader financial markets; our business and investment strategy including our plans to sell more affordably priced homes; availability of land to acquire and our ability to acquire such land on favorable terms or at all; our liquidity and availability, terms and deployment of capital; changes in margin; write-downs; shortages of or increased prices for labor, land or raw materials used in housing construction; adverse weather conditions and natural disasters (including wild fires and mudslides); our concentration in California; issues concerning our joint venture partnerships; the cost and availability of insurance and surety bonds; governmental regulation, including the impact of "slow growth" or similar initiatives; changes in, or the failure or inability to comply with, governmental laws and regulations; the timing of receipt of regulatory approvals and the opening of projects; delays in the land entitlement process, development, construction, or the opening of new home communities; litigation and warranty claims; the degree and nature of competition; the impact of recent accounting standards; availability of qualified personnel and our ability to retain our key personnel; and additional factors discussed under the sections captioned “Risk Factors” included in our annual report and other reports filed with the Securities and Exchange Commission. The Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(Dollars in thousands, except per share amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home sales

 

$

118,781

 

 

$

119,874

 

 

$

358,431

 

 

$

316,771

 

Land sales

 

 

24,573

 

 

 

 

 

 

24,573

 

 

 

 

Fee building, including management fees

 

 

22,262

 

 

 

39,240

 

 

 

64,209

 

 

 

121,129

 

 

 

 

165,616

 

 

 

159,114

 

 

 

447,213

 

 

 

437,900

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home sales

 

 

105,763

 

 

 

102,124

 

 

 

315,857

 

 

 

274,496

 

Home sales impairment

 

 

1,700

 

 

 

 

 

 

1,700

 

 

 

 

Land sales

 

 

26,078

 

 

 

 

 

 

26,078

 

 

 

 

Land sales impairment

 

 

1,900

 

 

 

 

 

 

1,900

 

 

 

 

Fee building

 

 

21,615

 

 

 

38,124

 

 

 

62,653

 

 

 

117,861

 

 

 

 

157,056

 

 

 

140,248

 

 

 

408,188

 

 

 

392,357

 

Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home sales

 

 

11,318

 

 

 

17,750

 

 

 

40,874

 

 

 

42,275

 

Land sales

 

 

(3,405

)

 

 

 

 

 

(3,405

)

 

 

 

Fee building

 

 

647

 

 

 

1,116

 

 

 

1,556

 

 

 

3,268

 

 

 

 

8,560

 

 

 

18,866

 

 

 

39,025

 

 

 

45,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

(7,828

)

 

 

(9,206

)

 

 

(26,190

)

 

 

(25,311

)

General and administrative expenses

 

 

(5,361

)

 

 

(6,184

)

 

 

(18,593

)

 

 

(18,182

)

Equity in net income (loss) of unconsolidated joint ventures

 

 

(63

)

 

 

34

 

 

 

306

 

 

 

249

 

Gain on early extinguishment of debt

 

 

 

 

 

 

 

 

969

 

 

 

 

Other income (expense), net

 

 

(86

)

 

 

(110

)

 

 

(381

)

 

 

(228

)

Pretax income (loss)

 

 

(4,778

)

 

 

3,400

 

 

 

(4,864

)

 

 

2,071

 

(Provision) benefit for income taxes

 

 

172

 

 

 

(944

)

 

 

(138

)

 

 

(151

)

Net income (loss)

 

 

(4,606

)

 

 

2,456

 

 

 

(5,002

)

 

 

1,920

 

Net (income) loss attributable to non-controlling interest

 

 

(18

)

 

 

3

 

 

 

(37

)

 

 

14

 

Net income (loss) attributable to The New Home Company Inc.

 

$

(4,624

)

 

$

2,459

 

 

$

(5,039

)

 

$

1,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to The New Home Company Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.23

)

 

$

0.12

 

 

$

(0.25

)

 

$

0.09

 

Diluted

 

$

(0.23

)

 

$

0.12

 

 

$

(0.25

)

 

$

0.09

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,096,969

 

 

 

20,693,473

 

 

 

20,051,751

 

 

 

20,859,402

 

Diluted

 

 

20,096,969

 

 

 

20,762,441

 

 

 

20,051,751

 

 

 

20,970,050

 

CONSOLIDATED BALANCE SHEETS

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(Dollars in thousands, except per share amounts)

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,892

 

 

$

42,273

 

Restricted cash

 

 

119

 

 

 

269

 

Contracts and accounts receivable

 

 

12,551

 

 

 

18,265

 

Due from affiliates

 

 

390

 

 

 

1,218

 

Real estate inventories

 

 

506,298

 

 

 

566,290

 

Investment in and advances to unconsolidated joint ventures

 

 

32,566

 

 

 

34,330

 

Other assets

 

 

31,071

 

 

 

33,452

 

Total assets

 

$

623,887

 

 

$

696,097

 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,559

 

 

$

39,391

 

Accrued expenses and other liabilities

 

 

37,748

 

 

 

29,028

 

Unsecured revolving credit facility

 

 

18,000

 

 

 

67,500

 

Senior notes, net

 

 

309,421

 

 

 

320,148

 

Total liabilities

 

 

388,728

 

 

 

456,067

 

Equity:

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding

 

 

 

 

 

 

Common stock, $0.01 par value, 500,000,000 shares authorized, 20,096,969 and 20,058,904, shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

 

 

201

 

 

 

201

 

Additional paid-in capital

 

 

193,263

 

 

 

193,132

 

Retained earnings

 

 

41,582

 

 

 

46,621

 

Total stockholders' equity

 

 

235,046

 

 

 

239,954

 

Non-controlling interest in subsidiary

 

 

113

 

 

 

76

 

Total equity

 

 

235,159

 

 

 

240,030

 

Total liabilities and equity

 

$

623,887

 

 

$

696,097

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

 

(Dollars in thousands)

 

Operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(5,002

)

 

$

1,920

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Deferred taxes

 

 

 

 

 

(1,481

)

Amortization of stock-based compensation

 

 

1,661

 

 

 

2,326

 

Distributions of earnings from unconsolidated joint ventures

 

 

319

 

 

 

715

 

Inventory impairments

 

 

3,600

 

 

 

 

Abandoned project costs

 

 

29

 

 

 

81

 

Equity in net income of unconsolidated joint ventures

 

 

(306

)

 

 

(249

)

Deferred profit from unconsolidated joint ventures

 

 

 

 

 

136

 

Depreciation and amortization

 

 

7,008

 

 

 

4,497

 

Gain on early extinguishment of debt

 

 

(969

)

 

 

 

Net changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Contracts and accounts receivable

 

 

5,714

 

 

 

2,367

 

Due from affiliates

 

 

790

 

 

 

(247

)

Real estate inventories

 

 

62,953

 

 

 

(138,632

)

Other assets

 

 

(2,390

)

 

 

(8,324

)

Accounts payable

 

 

(15,832

)

 

 

14,959

 

Accrued expenses and other liabilities

 

 

1,016

 

 

 

(14,036

)

Net cash provided by (used in) operating activities

 

 

58,591

 

 

 

(135,968

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(26

)

 

 

(215

)

Contributions and advances to unconsolidated joint ventures

 

 

(5,083

)

 

 

(12,670

)

Distributions of capital and repayment of advances from unconsolidated joint ventures

 

 

6,873

 

 

 

14,316

 

Interest collected on advances to unconsolidated joint ventures

 

 

 

 

 

178

 

Net cash provided by investing activities

 

 

1,764

 

 

 

1,609

 

Financing activities:

 

 

 

 

 

 

 

 

Borrowings from credit facility

 

 

40,000

 

 

 

115,000

 

Repayments of credit facility

 

 

(89,500

)

 

 

(53,000

)

Repurchases of senior notes

 

 

(10,856

)

 

 

 

Repurchases of common stock

 

 

(1,042

)

 

 

(5,764

)

Tax withholding paid on behalf of employees for stock awards

 

 

(488

)

 

 

(982

)

Net cash (used in) provided by financing activities

 

 

(61,886

)

 

 

55,254

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(1,531

)

 

 

(79,105

)

Cash, cash equivalents and restricted cash – beginning of period

 

 

42,542

 

 

 

123,970

 

Cash, cash equivalents and restricted cash – end of period

 

$

41,011

 

 

$

44,865

 

KEY FINANCIAL AND OPERATING DATA
(Dollars in thousands)
(Unaudited)

New Home Deliveries:

 

 

Three Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

% Change

 

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

Southern California

 

 

66

 

 

$

63,533

 

 

$

963

 

 

 

75

 

 

$

72,232

 

 

$

963

 

 

 

(12

)%

 

 

(12

)%

 

 

%

Northern California

 

 

45

 

 

 

40,146

 

 

 

892

 

 

 

55

 

 

 

47,642

 

 

 

866

 

 

 

(18

)%

 

 

(16

)%

 

 

3

%

Arizona

 

 

13

 

 

 

15,102

 

 

 

1,162

 

 

 

 

 

 

 

 

NA

 

 

NA

 

 

NA

 

 

NA

 

Total

 

 

124

 

 

$

118,781

 

 

$

958

 

 

 

130

 

 

$

119,874

 

 

$

922

 

 

 

(5

)%

 

 

(1

)%

 

 

4

%

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

% Change

 

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

Southern California

 

 

218

 

 

$

223,660

 

 

$

1,026

 

 

 

180

 

 

$

204,090

 

 

$

1,134

 

 

 

21

%

 

 

10

%

 

 

(10

)%

Northern California

 

 

126

 

 

 

96,181

 

 

 

763

 

 

 

131

 

 

 

112,681

 

 

 

860

 

 

 

(4

)%

 

 

(15

)%

 

 

(11

)%

Arizona

 

 

30

 

 

 

38,590

 

 

 

1,286

 

 

 

 

 

 

 

 

NA

 

 

NA

 

 

NA

 

 

NA

 

Total

 

 

374

 

 

$

358,431

 

 

$

958

 

 

 

311

 

 

$

316,771

 

 

$

1,019

 

 

 

20

%

 

 

13

%

 

 

(6

)%

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

% Change

 

 

2019

 

 

2018

 

 

% Change

 

Net New Home Orders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

68

 

 

 

75

 

 

 

(9

)%

 

 

216

 

 

 

248

 

 

 

(13

)%

Northern California

 

 

52

 

 

 

42

 

 

 

24

%

 

 

150

 

 

 

189

 

 

 

(21

)%

Arizona

 

 

4

 

 

 

15

 

 

 

(73

)%

 

 

24

 

 

 

30

 

 

 

(20

)%

 

 

 

124

 

 

 

132

 

 

 

(6

)%

 

 

390

 

 

 

467

 

 

 

(16

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling Communities at End of Period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

13

 

 

 

(15

)%

Northern California

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

5

 

 

 

80

%

Arizona

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

20

 

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Selling Communities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

11

 

 

 

12

 

 

 

(8

)%

 

 

12

 

 

 

11

 

 

 

9

%

Northern California

 

 

8

 

 

 

6

 

 

 

33

%

 

 

8

 

 

 

7

 

 

 

14

%

Arizona

 

 

2

 

 

 

2

 

 

 

%

 

 

2

 

 

 

1

 

 

 

100

%

 

 

 

21

 

 

 

20

 

 

 

5

%

 

 

22

 

 

 

19

 

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly Sales Absorption Rate per Community (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

2.1

 

 

 

2.0

 

 

 

5

%

 

 

2.0

 

 

 

2.5

 

 

 

(20

)%

Northern California

 

 

2.3

 

 

 

2.3

 

 

 

%

 

 

2.2

 

 

 

3.2

 

 

 

(31

)%

Arizona

 

 

0.7

 

 

 

2.5

 

 

 

(72

)%

 

 

1.3

 

 

 

2.3

 

 

 

(43

)%

Total

 

 

2.0

 

 

 

2.2

 

 

 

(9

)%

 

 

2.0

 

 

 

2.7

 

 

 

(26

)%

(1)

 

Monthly sales absorption represents the number of net new home orders divided by the number of average selling communities for the period.

Backlog:

 

As of September 30,

 

 

 

2019

 

 

2018

 

 

% Change

 

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

 

Homes

 

 

Dollar
Value

 

 

Average
Price

 

Southern California

 

 

88

 

 

$

91,538

 

 

$

1,040

 

 

 

139

 

 

$

155,054

 

 

$

1,115

 

 

 

(37

)%

 

 

(41

)%

 

 

(7

)%

Northern California

 

 

92

 

 

 

64,889

 

 

 

705

 

 

 

140

 

 

 

123,912

 

 

 

885

 

 

 

(34

)%

 

 

(48

)%

 

 

(20

)%

Arizona

 

 

27

 

 

 

29,351

 

 

 

1,087

 

 

 

30

 

 

 

31,856

 

 

 

1,062

 

 

 

(10

)%

 

 

(8

)%

 

 

2

%

Total

 

 

207

 

 

$

185,778

 

 

$

897

 

 

 

309

 

 

$

310,822

 

 

$

1,006

 

 

 

(33

)%

 

 

(40

)%

 

 

(11

)%

Lots Owned and Controlled:

 

As of September 30,

 

 

 

2019

 

 

2018

 

 

% Change

 

Lots Owned

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

537

 

 

 

545

 

 

 

(1

)%

Northern California

 

 

661

 

 

 

699

 

 

 

(5

)%

Arizona

 

 

281

 

 

 

299

 

 

 

(6

)%

Total

 

 

1,479

 

 

 

1,543

 

 

 

(4

)%

Lots Controlled (1)

 

 

 

 

 

 

 

 

 

 

 

 

Southern California

 

 

482

 

 

 

292

 

 

 

65

%

Northern California

 

 

490

 

 

 

579

 

 

 

(15

)%

Arizona

 

 

477

 

 

 

489

 

 

 

(2

)%

Total

 

 

1,449

 

 

 

1,360

 

 

 

7

%

Lots Owned and Controlled - Wholly Owned

 

 

2,928

 

 

 

2,903

 

 

 

1

%

Fee Building Lots (2)

 

 

1,173

 

 

 

959

 

 

 

22

%

 

(1)

 

Includes lots that we control under purchase and sale agreements or option agreements subject to customary conditions and have not yet closed. There can be no assurance that such acquisitions will occur.

(2)

 

Lots owned by third party property owners for which we perform general contracting or construction management services.

Other Financial Data:

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest incurred

 

$

6,978

 

 

$

7,270

 

 

$

22,345

 

 

$

20,598

 

Adjusted EBITDA(1)

 

$

9,511

 

 

$

10,206

 

 

$

27,536

 

 

$

20,333

 

Adjusted EBITDA margin percentage (1)

 

 

5.7

%

 

 

6.4

%

 

 

6.2

%

 

 

4.6

%

 

 

LTM(2) Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

Interest incurred

 

$

30,124

 

 

$

27,359

 

Adjusted EBITDA(1)

 

$

47,101

 

 

$

48,970

 

Adjusted EBITDA margin percentage (1)

 

 

7.0

%

 

 

6.4

%

Ratio of Adjusted EBITDA to total interest incurred(1)

 

1.6x

 

 

1.8x

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Ratio of debt-to-capital

 

 

58.2

%

 

 

61.8

%

Ratio of net debt-to-capital(1)

 

 

54.9

%

 

 

59.0

%

Ratio of debt to LTM(2) Adjusted EBITDA(1)

 

7.0x

 

 

9.7x

 

Ratio of net debt to LTM(2) Adjusted EBITDA(1)

 

6.1x

 

 

8.6x

 

Ratio of cash and inventory to debt

 

1.7x

 

 

1.6x

 

 

(1)

 

Adjusted EBITDA, Adjusted EBITDA margin percentage, ratio of Adjusted EBITDA to total interest incurred, ratio of net debt-to-capital, ratio of debt to LTM Adjusted EBITDA and ratio of net debt to LTM Adjusted EBITDA are non-GAAP measures. Please see "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of each of these measures to the appropriate GAAP measure.

(2)

 

"LTM" indicates amounts for the trailing 12 months.

KEY FINANCIAL AND OPERATING DATA - UNCONSOLIDATED JOINT VENTURES

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

%
Change

 

 

2019

 

 

2018

 

 

%
Change

 

Financial Data - Unconsolidated Joint Ventures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home sales revenue

 

$

22,155

 

 

$

24,903

 

 

 

(11

)%

 

$

110,849

 

 

$

86,081

 

 

 

29

%

Land sales revenue

 

 

13,654

 

 

 

30,564

 

 

 

(55

)%

 

 

26,325

 

 

 

35,278

 

 

 

(25

)%

Total revenues

 

$

35,809

 

 

$

55,467

 

 

 

(35

)%

 

$

137,174

 

 

$

121,359

 

 

 

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(262

)

 

$

(169

)

 

 

(55

)%

 

$

2,041

 

 

$

349

 

 

 

485

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Data - Unconsolidated Joint Ventures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New home orders

 

 

23

 

 

 

41

 

 

 

(44

)%

 

 

87

 

 

 

119

 

 

 

(27

)%

New homes delivered

 

 

26

 

 

 

24

 

 

 

8

%

 

 

116

 

 

 

92

 

 

 

26

%

Average selling price of homes delivered

 

$