The new home company reports first quarter 2014 results
Aliso viejo, calif.--(business wire)--the new home company inc. (nyse:nwhm) today announced results for the first quarter ended march 31, 2014. first quarter 2014 highlights compared to first quarter 2013 net income of $1.6 million, an increase from $0.2 million total revenues of $25.6 million, an increase of 41% new home deliveries of 43 (including 33 from fee building projects), compared to 57 homebuilding gross margin of 21.2%, compared to 20.1% fee building revenue was $20.5 million, an increase of 52% includes management fees from unconsolidated joint ventures ("jvs") of $1.7 million, an increase of 74% includes management fees from unconsolidated joint ventures ("jvs") of $1.7 million, an increase of 74% fee building gross margin increased $0.5 million to $1.1 million equity in net income from jvs of $0.8 million, an increase of $0.5 million new home deliveries from jvs increased 30% to 30 net new home orders from jvs increased 143% to 68 owned or controlled lots, including lots held in jvs and fee building projects, increased to 6,204 “we produced continued growth during the first quarter of 2014,” stated larry webb, chief executive officer. “during this period, we continued to grow our homebuilding platform, increasing our lot pipeline to over 6,200 well-located, premium lots in highly desirable california markets. as we move forward in 2014, we remain focused on expanding our attractive portfolio of communities to drive our growth, while continuing to generate attractive returns from our joint venture and fee building activities for the balance of 2014 and beyond.” first quarter 2014 operating results total revenues for the first quarter 2014 were $25.6 million, compared to $18.1 million in the prior year period. net income for the first quarter 2014 was $1.6 million, compared to $0.2 million, in the prior year period. the improvement in net income was primarily due to a $1.4 million tax benefit in first quarter 2014. in addition, we also experienced increases in equity in net income from jvs and fee building gross margin, offset partially by an increase in sg&a. diluted earnings per share for the first quarter 2014 was $0.11. excluding the $1.4 million tax benefit in the first quarter 2014, diluted earnings per share was $0.01. wholly owned projects home sales revenue for the first quarter 2014 was $5.1 million, compared to $4.7 million in the prior year period and new home deliveries were 10 for the first quarter 2014, compared to 12 in the prior year period. the average selling price of homes delivered was approximately $505,000, compared to $389,000 in the prior year period. this increase in revenue is primarily due to new home deliveries from communities with a higher average sales price. 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 delivery of homes from new communities. homebuilding gross margin percentage for the first quarter 2014 was 21.2%, compared to 20.1% in the prior year period. adjusted homebuilding gross margin percentage*, which excludes interest in cost of home sales, was 21.3%, compared to 21.7% in the prior year period, mainly attributable to a shift in product mix. sg&a expense for the first quarter 2014 was $2.7 million, compared to $1.4 million in the prior year period. as a percent of home sales revenue, sg&a was 53.0% for the first quarter 2014, compared to 29.1% in the prior year period. the increase in sg&a was a result of activity related to new communities, three of which are scheduled to open in the second quarter of 2014, and stock-based compensation related to being a public company. new home orders were 10 in the first quarter 2014, compared to 17 homes in the prior year period. as anticipated, active selling communities at the end of the first quarter 2014 were three, compared to three at the end of the prior year quarter. at the end of the first quarter 2014, the number of homes in backlog was 15, representing approximately $12.7 million of backlog dollar value, compared to 31 homes the prior year period, representing approximately $13.7 million of backlog dollar value. the average selling price of homes in backlog at the end of the first quarter 2014 was $849,000, compared to $443,000 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 a higher priced community. unconsolidated joint ventures (jvs) the company’s share of net income from jvs for the first quarter 2014 was $0.8 million, compared to $0.3 million in the prior year period. 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 $21.5 million and net income was $2.2 million for the first quarter 2014, compared to $30.8 million and $6.2 million in first quarter 2013, respectively. new home deliveries increased to 30 for the first quarter 2014, compared to 23 in the prior year period primarily due to an increase in community count. the average selling price of homes delivered in jvs was $717,000, compared to $1,338,000 in the prior year period due to the introduction of deliveries in a lower priced community in santa clarita, california. homebuilding gross margin percentage generated by the jvs for the first quarter 2014 was 26.4%, compared to 26.7% in the prior year period. adjusted homebuilding gross margin percentage* of the jvs, which excludes interest in cost of home sales, was 27.1%, compared to 29.1% in the prior year period. new home orders in jvs were 68 for the first quarter 2014, compared to 28 new homes in the prior year period, primarily due to an increase in community count. at the end of the first quarter 2014, the jvs had 100 homes in backlog, representing approximately $97.0 million of backlog dollar value, compared to 59 homes in the prior year period, representing approximately $82.5 million of backlog dollar value. fee building projects fee building revenue for the first quarter 2014 was $20.5 million, an increase of 52.3%, compared to $13.5 million in the prior year period. management fees from jvs were $1.7 million for the first quarter 2014, compared to $1.0 million in the prior year period. the increase in fee building revenue in the first quarter 2014, compared to the first quarter 2013 is due to six new fee building agreements and the increase in management fees from unconsolidated joint ventures. fee building gross margin for the first quarter 2014 was $1.1 million, compared to $0.5 million in the prior year period, mainly attributable to higher revenues. * see "reconciliation of non-gaap financial measures". initial public offering in february 2014, the company closed its initial public offering raising approximately $75.8 million in net proceeds after deducting underwriting discounts and commissions, other offering expenses and expenses related to the repurchase. upon completion of the ipo, the company had 16,448,750 common shares outstanding. 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 may 7, 2014 to review first 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 june 7, 2014 and can be accessed by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the pass code 13580722. 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, 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 $1.7 million and $1.0 million for the three months ended march 31, 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 income (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) 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. (1) the ratio of debt-to-capital is computed as the quotient obtained by dividing notes payable by the sum of total notes payable plus equity, exclusive of non-controlling interest. (2) the ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is notes payable less cash to the extent necessary to reduce the debt balance to zero) by total capital, exclusive of non-controlling interest. the most directly comparable gaap financial measure is the ratio of debt-to-capital. we believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. we believe that by deducting our cash from our notes payable, we provide a measure of our indebtedness that takes into account our cash liquidity. we believe this provides useful information as the ratio of debt-to-capital does not take into account our liquidity and we believe that the ratio net of cash provides supplemental information by which our financial position may be considered. investors may also find this to be helpful when comparing our leverage to the leverage of our competitors that present similar information. see the table above reconciling this non-gaap financial measure to the ratio of debt-to-capital. reconciliation of non-gaap financial measures (continued) (unaudited) the following table calculates the non-gaap measure of adjusted ebitda and reconciles those amounts to net income (loss), as reported and prepared in accordance with gaap. ebitda means net income (loss) before (a) interest expense, (b) income taxes, (c) depreciation and amortization and (d) expensing of previously capitalized interest included in costs of home sales. adjusted ebitda is defined as ebitda before non-recurring, non-cash charges, and stock-based compensation expense. other companies may calculate adjusted ebitda (or similarly titled measures) differently. we believe adjusted ebitda is useful in measuring the company’s ability to service debt and obtain financing. the following table reconciles net cash used in operating activities, as reported and prepared in accordance with gaap, to adjusted ebitda:
