The new home company reports 2015 fourth quarter and full year results
Aliso viejo, calif.--(business wire)--the new home company inc. (nyse: nwhm) today announced results for the fourth quarter and year ended december 31, 2015. fourth quarter 2015 highlights compared to fourth quarter 2014 net income of $12.2 million, or $0.69 per diluted share vs. $5.3 million, or $0.32 per diluted share total revenues of $194.6 million, up 167% from $73.0 million homebuilding gross margin of 15.1%, up 190 bps from 13.2% average selling price up 15% to $1.9 million from $1.7 million sg&a as a percentage of home sale revenues of 7.6% vs. 16.2%, an 860 basis point improvement backlog dollar value of $166.6 million, up 92% wholly owned community count of 10, up 150% full year 2015 highlights compared to full year 2014 net income of $21.7 million, or $1.28 per diluted share vs. $4.8 million, or $0.30 per diluted share pretax income of $33.9 million vs. $5.0 million, up 578% total revenue of $430.1 million vs. $149.7 million, up 187% income from joint ventures of $13.8 million vs. $8.4 million, a 63% increase larry webb, the company’s chief executive officer, commented, “i am very pleased with our performance in the 2015 fourth quarter as our wholly owned, fee building and joint venture businesses each contributed nicely to the bottom line. i am particularly excited about our wholly owned business, which increased revenues in the quarter by 345% year over year, thanks to a 285% increase in deliveries and a 15% increase in average selling prices. this sharp increase in revenues allowed us to better leverage our sg&a costs and generate higher profits.” mr. webb added, “we continue to invest in the business, and the equity capital we raised during the fourth quarter will go a long way towards supporting future growth. we have many exciting new communities opening in 2016, and we’ve identified additional land opportunities that fit nicely into our existing footprint. in short, we believe we are in a great position to build on the momentum we generated in 2015 and scale our business profitably.” fourth quarter 2015 operating results total revenues for the 2015 fourth quarter were up 167% to $194.6 million, compared to $73.0 million in the prior year period. net income attributable to the company was $12.2 million, or $0.69 per diluted share, compared to $5.3 million, or $0.32 per diluted share, in the year earlier period. the improvement in net income was primarily due to an increase in total revenues, a 190 basis point improvement in gross margin from home sales and an 860 basis point improvement in sg&a expenses as a percentage of home sale revenues. wholly owned projects home sales revenue for the 2015 fourth quarter was $146.9 million, compared to $33.2 million in the prior year period. the growth in home sales revenue was driven by a 285% increase in deliveries and a 15% increase in the average selling price of homes delivered to $1.9 million compared to $1.7 million in the prior year period. the increase in average selling price was primarily due to a product mix shift to higher-priced coastal southern california communities, including the initial deliveries from the company's new fiano community located in newport coast (newport beach, ca). homebuilding gross margin percentage improved 190 basis points to 15.1%, compared to 13.2% in the prior year period. adjusted homebuilding gross margin percentage, which excludes interest in cost of home sales, was 16.2%*, compared to 14.5%* in the prior year period. the year-over-year increase in gross margin percentage was due primarily to a larger proportion of deliveries generated from our higher-priced newport coast, irvine and lafayette communities and, to a lesser extent, the initial deliveries from our two new communities in the cannery masterplan in davis, ca. sequentially, the company's homebuilding gross margin percentage improved 130 basis points from the 2015 third quarter primarily due to the initial deliveries from our fiano community, and our sage and heirloom communities in davis, ca. selling, general and administrative ("sg&a") expenses were $11.2 million, compared to $5.4 million in the prior year period. the increase in sg&a expenses resulted from higher selling and marketing expenses due to a 342% increase in home sales revenue and increased g&a to support our growth. as a percentage of home sales revenue, sg&a was 7.6% versus 16.2% in the prior year period, an 860 basis point decline. the improvement in the year-over-year sg&a rate was driven by stronger operating leverage from higher home sales revenue. new home orders were up 153% to 48 homes, compared to 19 homes in the prior year period. the company's monthly sales absorption pace was 1.6 sales per average selling community, flat with the prior year period. the company more than doubled its active selling communities to 10 communities at the end of the 2015 fourth quarter, compared to four as of the end of the prior year quarter. the dollar value of the company's wholly owned backlog at the end of the 2015 fourth quarter was up 92% year-over-year to $166.6 million and totaled 67 homes in backlog compared to 41 homes in the prior year period. fee building projects fee building revenue for the 2015 fourth quarter increased 20% to $47.7 million due to an increase in fee building construction activity. fee building gross margin was $4.1 million, compared to $2.6 million in the prior year period. the increase in fee building gross margin was primarily attributable to an increase in fee building activities and better g&a leverage. unconsolidated joint ventures (jvs) the company’s share of joint venture income for the 2015 fourth quarter was $4.6 million, compared to $7.4 million in the prior year period. the decrease in the company's share of joint venture income was driven largely by a decrease in land sales revenue and land sales gross margins. the following sets forth supplemental information about the company’s jvs. such information is not included in the company’s financial data for gaap purposes. total revenue of the jvs was $155.1 million and net income was $25.9 million, compared to $183.2 million and $33.6 million in the prior year period, respectively. home sales revenue of the jvs was $135.2 million, compared to $136.3 million in the prior year period. homebuilding gross margin percentage generated by the jvs increased slightly to 23.5%, compared to 23.1% in the prior year period. as of december 31, 2015, the jvs had eight actively selling communities, consistent with eight at the end of the prior year period. new home orders from jvs for the 2015 fourth quarter decreased 46% to 31 as compared to the prior year period of 57 homes. the decline in jv orders was the result of a lower monthly sales absorption rate, which was largely the result of having fewer available homes to sell within the actively selling jv communities. the dollar value of homes in backlog from unconsolidated jvs at the end of the 2015 fourth quarter was up 3% to $117.9 million from 109 homes, compared to $115.0 million from 75 homes in the prior year period. in addition, the dollar value backlog of jv lots at the end of the 2015 fourth quarter was approximately $33.5 million versus $89.1 million in the year earlier period. full year 2015 operating results total revenues for the year ended december 31, 2015 were up 187% to $430.1 million, compared to $149.7 million in the prior year. net income attributable to the company for the full year 2015 was $21.7 million, or $1.28 per diluted share, compared to $4.8 million, or $0.30 per diluted share, in the year earlier period. the improvement in net income was primarily due to an increase in total revenues, a $5.3 million increase in joint venture income and a 1,740 basis point improvement in sg&a expenses as a percentage of home sale revenues. the reduction in our sg&a rate to 10.4% from 27.8% was driven by stronger operating leverage resulting from a 400% increase in home sales revenue to $280.2 million. the increase in home sales revenue was due to a 179% increase in new home deliveries and a 79% increase in our average selling price to $1.9 million. balance sheet and liquidity during december 2015, the company completed a follow-on equity offering of 4,025,000 shares of common stock for $47.3 million in net proceeds to the company after underwriting and other expenses. in addition, the company exercised the accordion under its senior unsecured revolving credit facility during the quarter, increasing the total commitment under the facility from $175 million to $200 million. as of december 31, 2015, the company had $45.9 million of cash and cash equivalents, $127.1 million in available loan commitments and $83.1 million of total debt outstanding. the company ended the 2015 fourth quarter with a net debt-to-capital ratio of 14.3%*. guidance the company is providing initial guidance for the full year 2016 as follows: wholly owned revenues of $450 - $500 million fee building revenues of $100 - $120 million income from unconsolidated joint ventures of $10 - $12 million wholly owned active year-end community count of 14, an increase of 40% conference call details the company will host a conference call and webcast for investors and other interested parties beginning at 1:00 p.m. eastern time on friday, february 26, 2016 to review fourth quarter results, discuss recent events and 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 march 26, 2016 and can be accessed by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the pass code 13628719. 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 coastal 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. * adjusted homebuilding gross margin percentage and net debt-to-capital ratio 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." forward-looking statements various statements contained in this press release, including those that express a belief, 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 the timing and success of specific projects and our future production, our ability to execute our strategic growth objectives, revenues, income, earnings per share and capital spending. our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal,” “will,” “guidance,” 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; continued volatility and uncertainty in the credit markets and broader financial markets; our future operating results and financial condition; our business operations; changes in our business and investment strategy; availability of land to acquire and our ability to acquire such land on favorable terms or at all; availability, terms and deployment of capital; continued or increased disruption in the availability of mortgage financing or the number of foreclosures in the market; shortages of or increased prices for labor, land or raw materials used in housing construction; delays in land development, home construction or home sales resulting from adverse weather conditions or other events outside our control; the cost and availability of insurance and surety bonds; 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; the cyclical and competitive nature of our business, litigation and warranty claims; our leverage and debt service obligations; 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 assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. the company nonetheless 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. key operations and financial data (dollars in thousands) (unaudited) fee building revenue(1) lots owned and controlled(2) ratio of net debt-to-capital** ** see "reconciliation of non-gaap financial measures." key operations and financial data - unconsolidated joint ventures (dollars in thousands) (unaudited) ** see "reconciliation of non-gaap financial measures." consolidated balance sheets consolidated statements of operations (unaudited) three months ended december 31, year ended december 31, consolidated statements of cash flows (unaudited) reconciliation of non-gaap financial measures(unaudited) in this earnings release, we utilize certain non-gaap financial measures as defined by the securities and exchange commission. we present these measures because we believe they, and similar measures, are useful to management and investors in evaluating the company’s operating performance and financing structure. we also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. because these measures are not calculated in accordance with generally accepted accounting principles (“gaap”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with gaap. the following tables reconcile homebuilding and land gross margin percentage, as reported and prepared in accordance with gaap, to the non-gaap measure adjusted homebuilding and land gross margin percentage. we believe this information is meaningful, as it isolates the impact leverage has on homebuilding and land gross margin and provides investors better comparisons with our competitors, who adjust gross margins in a similar fashion. reconciliation of non-gaap financial measures (continued)(unaudited) the following table reconciles the company’s ratio of debt-to-capital to the non-gaap ratio of net debt-to-capital. we believe that the ratio of net debt-to-capital is a relevant financial measure for management and investors to understand the leverage employed in our operations and as an indicator of the company’s ability to obtain financing. ratio of debt-to-capital(1) ratio of net debt-to-capital(2)
