The new home company reports second quarter 2014 results
Aliso viejo, calif.--(business wire)--the new home company inc. (nyse:nwhm) today announced results for the second quarter ended june 30, 2014. second quarter 2014 highlights compared to second quarter 2013 total revenues of $22.5 million, an increase of 18% new home deliveries of 87 (including 74 from fee building projects), compared to 84 deliveries (including 62 from fee building projects) homebuilding gross margin of 17.6%, an increase of 60 basis points average sales price of homes delivered increased to $739,000 or 90% average sales price of homes in backlog increased to $1,583,000 or 211% fee building revenue was $12.9 million, an improvement of 22% fee building revenue was $12.9 million, an improvement of 22% includes management fees from unconsolidated joint ventures ("jvs") of $1.6 million, an increase of 7% net loss of $1.0 million, compared to net income of $0.6 million equity in net income from jvs of $0.2 million, compared to $0.4 million new home deliveries from jvs improved 76% to 44 homes net new home orders from jvs grew 133% to 84 homes backlog of homes from jvs increased 101% to 141 homes with an average sales price of $1,009,000 owned or controlled lots, including lots held in jvs and fee building projects, increased to 6,120 “the continued expansion of our homebuilding platform in the second quarter further positions us to execute our strategic growth objectives in 2014 and coming years,” stated larry webb, chief executive officer. “as a result of an increase in actively selling communities during the quarter, we increased backlog dollar value by 122% for owned projects and 32% for unconsolidated joint venture projects. we remained disciplined with our land acquisition strategy and continue to focus on well-located, premium lots in our target california markets. in june, we closed our unsecured revolving credit facility with u.s. bank, which strengthens our balance sheet and provides us with additional capital to continue expanding our homebuilding activities. we're very comfortable with our company’s strategy and foundation for growth and are well positioned to generate attractive returns for shareholders.” second quarter 2014 operating results total revenues for the second quarter 2014 were $22.5 million, compared to $19.1 million in the prior year period. the net loss for the second quarter 2014 was $1.0 million, or $0.06 per diluted share, compared to net income of $0.6 million, or $0.07 per diluted share, in the prior year period. the change in net income was primarily due to a decrease in equity in net income from jvs, a decline in fee building activity and related gross margin and an increase in sg&a. wholly owned projects home sales revenue for the second quarter 2014 was $9.6 million, compared to $8.6 million in the prior year period and new home deliveries were 13 for the second quarter 2014, compared to 22 in the prior year period. the average selling price of homes delivered was approximately $739,000 compared to $389,000 in the prior year period. the increase in average selling prices was primarily due to a change in product mix to communities with higher average sales prices. the company expects that the average selling price will continue to vary from quarter to quarter due to the mix of product offered and the introduction of new communities. homebuilding gross margin percentage for the second quarter 2014 was 17.6%, compared to 17.0% in the prior year period. adjusted homebuilding gross margin percentage*, which excludes interest in cost of home sales, was 18.1%, compared to 18.4% in the prior year period, mainly attributable to a reduction in interest in cost of home sales related to a community nearing close-out. sg&a expense for the second quarter 2014 was $3.4 million, compared to $1.6 million in the prior year period. as a percent of home sales revenue, sg&a was 35.6% for the second quarter 2014, compared to 19.3% in the prior year period. the increase in sg&a was a result of increased activity related to the company's communities, three of which opened for sale in the second quarter, and an increase in stock-based compensation and professional fees and costs associated with being a publicly traded company. new home orders were 23 in the second quarter 2014, compared to 27 homes in the prior year period. the company had four actively selling communities at the end of the second quarter and three at the end of the prior year period. at the end of the second quarter 2014, the number of homes in backlog was 25, representing approximately $39.6 million of backlog dollar value, compared to 35 homes the prior year period, representing approximately $17.8 million of backlog dollar value. the average selling price of homes in backlog at the end of the second quarter 2014 was $1,583,000 compared to $509,000 at the end of the prior year period. the increase in average selling price of homes in backlog was primarily the result of a change in product mix, driven by the introduction of sales in higher priced communities. unconsolidated joint ventures (jvs) the company’s share of net income from jvs for the second quarter 2014 was $0.2 million, compared to $0.4 million in the prior year period. the recognition of such income is significantly impacted by both the homes delivered as well as the point in time within the jv lifecycle when the homes are delivered. 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. home sales revenue of the jvs was $30.9 million and net income was $3.0 million for the second quarter 2014, compared to $34.9 million and $6.2 million in the prior year period, respectively. new home deliveries increased to 44 for the second quarter 2014, compared to 25 in the prior year period primarily due to an increase in average selling communities. the average selling price of homes delivered in jvs was $703,000 compared to $1,394,000 in the prior year period due to a higher mix of new homes delivered from lower priced communities. homebuilding gross margin percentage generated by the jvs for the second quarter 2014 was 21.3%, compared to 26.2% in the prior year period. adjusted homebuilding gross margin percentage* of the jvs, which excludes interest in cost of home sales, was 22.7%, compared to 28.6% in the prior year period. new home orders in jvs were 84 for the second quarter 2014, compared to 36 new homes in the prior year period, primarily due to an increase in average selling communities. at the end of the second quarter 2014, the jvs had 141 homes in backlog, representing approximately $142.2 million of backlog dollar value, compared to 70 homes in the prior year period, representing approximately $107.5 million of backlog dollar value. fee building projects fee building revenue for the second quarter 2014 was $12.9 million, compared to $10.6 million in the prior year period. management fees from jvs were $1.6 million for the second quarter 2014, compared to $1.5 million in the prior year period. the increase in fee building revenue was due to four new fee building agreements and the increase in management fees from unconsolidated joint ventures. fee building gross margin for the second quarter 2014 was ($0.1) million, compared to $0.7 million in the prior year period. the results for the three months ended june 30, 2014 were negatively impacted by a delay in the timing of home starts in certain communities related to fee building projects and a delay in the timing of home closings related to certain communities owned by our unconsolidated joint ventures. liquidity and capital resources in june 2014, the company closed a $125.0 million senior unsecured credit facility with us bank, which replaced the prior $30.0 million secured revolving credit facility. as of june 30, 2014, the company had $52.3 million of cash and cash equivalents and $95.3 million in available loan commitments. * see "reconciliation of non-gaap financial measures". conference call details the company will host a conference call and webcast for investors and other interested parties beginning at 10:00 a.m. eastern time on friday, august 8, 2014 to review second 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 start time. replays of the conference call will be available through september 8, 2014 and can be accessed by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the pass code 13586514. 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, including coastal southern california, the san francisco bay area and metro sacramento. 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, 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 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,” 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 or home construction 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 degree and nature of our competition; 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 filed with the securities and exchange commission ("sec"). key operations and financial data(dollars in thousands)(unaudited) (1) fee building revenue includes management fees from unconsolidated joint ventures of $1.6 million and $1.5 million for the three months ended june 30, 2014 and 2013, respectively, and $3.3 million and $2.5 million for the six months ended june 30, 2014 and 2013, respectively. (2) includes lots owned and controlled through joint ventures and fee building agreements. * 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) 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 gross margin percentage, as reported and prepared in accordance with gaap, to the non-gaap measure adjusted homebuilding gross margin percentage. we believe this information is meaningful, as it isolates the impact leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. reconciliation of non-gaap financial measures (continued)(unaudited) reconciliation of non-gaap financial measures (continued)(unaudited) the following table reconciles the company’s ratio of debt-to-capital to the 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.
