Exhibit 99.1
UCP REPORTS SECOND QUARTER 2016 RESULTS
- Net Income Improved to $0.09 Per Share -
- Revenue from Homebuilding Increased 60.3% to $81.4 million -
- Homebuilding Gross Margin Expanded 110 basis points to 18.2% -
- Adjusted Homebuilding Gross Margin Expanded 170 basis points to 20.7% -
- Net New Home Orders Grew 11.2% to 229 -
San Jose, California, August 1, 2016. UCP, Inc. (NYSE: UCP) today announced its results of operations for the three months ended June 30, 2016.
Second Quarter 2016 Highlights Compared to Second Quarter 2015
| |
| • | Net income increased to $1.8 million |
| |
| • | Net income attributable to shareholders of UCP increased to $0.09 per share |
| |
| • | Total consolidated revenue grew 51.4% to $82.8 million |
| |
| • | Revenue from homebuilding operations increased 60.3% to $81.4 million |
| |
| • | Homes delivered grew 27.9% to 197 units |
| |
| • | Homebuilding gross margin percentage increased 110 basis points to 18.2% |
| |
| • | Adjusted homebuilding gross margin percentage increased 170 basis points to 20.7% |
| |
| • | Selling, general and administrative expense as a percentage of total revenue improved to 14.4%, compared to 19.8% |
| |
| • | Net new home orders grew 11.2% to 229 |
| |
| • | Backlog, on a dollar basis, increased 33.2% to $149.3 million |
Dustin Bogue, President and Chief Executive Officer of UCP, stated, “We continued to build momentum during the second quarter. We grew revenue, improved margins and prudently managed our balance sheet to maintain a strong cash position. We continue to experience broad-based success in the West, supporting our healthy backlog expansion. In the Southeast,
demand remains firm and we are rebounding from weather-related construction delays during the first half of 2016. In addition to strong operational results, our disciplined control of construction costs and overhead expenses continues to enhance our performance. The second quarter reflects the positive transformation being made throughout our organization. As we move forward, we remain focused on our four major initiatives to improve our return on equity: (1) monetizing our deep land position through organic revenue growth; (2) improving gross margins; (3) controlling overhead expenses; and (4) maintaining strong liquidity."
Second Quarter 2016 Operating Results
Net income grew to $1.8 million, compared to a net loss of $1.5 million in the prior year period. Net income attributable to shareholders of UCP was $0.7 million, or $0.09 per share, compared to a net loss attributable to shareholders of UCP of $0.7 million, or a $0.08 loss per share, in the prior year period. The Company’s weighted average basic and diluted shares outstanding attributable to shareholders of UCP were 8.0 million and 8.1 million, respectively, compared to 7.9 million basic and diluted shares in the prior year period.
Revenue from homebuilding operations grew 60.3% to $81.4 million, compared to $50.8 million for the prior year period. The improvement was driven by both a 27.9% increase in the number of homes delivered to 197, compared to 154 homes during the prior year period, as well as a 25.2% increase in the average selling price for home sales to approximately $413,000, compared to approximately $330,000 during the prior year period. The increase in average selling price was primarily a result of a greater mix of sales in the West along with core price gains.
Homebuilding gross margin percentage was 18.2%, compared to 17.1% in the prior year period. Adjusted homebuilding gross margin percentage was 20.7%, compared to 19.0% in the prior year period, due to a favorable shift in product mix of the homes sold along with ongoing cost savings initiatives. Consolidated gross margin percentage was 16.7%, compared to 17.0% in the prior year period, reflecting a $2.5 million impairment and abandonment charge related to the Company’s move to exit the Bakersfield, California market. The Company made a strategic decision to redeploy capital in markets with more attractive return metrics.
Sales and marketing expense was $4.7 million, compared to $4.4 million in the prior year period. As a percentage of total revenue, sales and marketing expense decreased to 5.6%, compared to 8.0% in the prior year period, due to significant cost controls as well as higher overall revenues.
General and administrative expense was $7.2 million, compared to $6.5 million in the prior year period. As a percentage of total revenue, general and administrative expense was 8.7%, down from 11.8% for the prior year period, primarily driven by higher revenues and a disciplined cost controls.
Net new home orders were 229, compared to 206 in the prior year period, an 11.2% increase. Net new home orders in the West grew 20.4% to 165, compared to the prior year period. Net new home orders in the Southeast declined 7.2% to $0, compared to the prior year period. The increase in the West is a direct result of strong market demand. The decline in the Southeast is the result of weather delays in late 2015 and the first half 2016, as well as a decision to slow absorption and increase gross margins in a number of communities that experienced high demand during the first half of 2015. Unit backlog at the end of the quarter was 339, compared to 274 at the end of prior year period, up 23.7%. The backlog on a dollar basis increased to $149.3 million, compared to $112.1 million at the end of prior year period, up 33.2%.
Total lots owned and controlled decreased to 5,547, from 5,878 at December 31, 2015 as the Company continues to prudently manage its inventory and strives to expand its return on equity and assets.
Stock Repurchase Program
In June 2016, the Company’s board of directors authorized a stock repurchase program, under which the Company may repurchase up to $5.0 million of its Class A common stock through June 1, 2018. During the second quarter of 2016, the Company repurchased 21,065 shares of Class A common stock for approximately $160,000 under this new stock repurchase program.
Webcast and Conference Call
The Company will host a conference call for investors and other interested parties on Monday, August 1, 2016, 12:00 p.m. Eastern Time, 9:00 a.m. Pacific Time. Interested parties can listen to the call live on the Internet and locate accompanying presentation slides through the Investor Relations section of the Company’s website at www.unioncommunityllc.com.
Listeners are advised to log on to the website at least 15 minutes prior to the call to download and / or install any necessary audio software. The conference call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the UCP Second Quarter 2016 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the conference call. A replay of the conference call will be available through September 1, 2016, by dialing 1-877-870-5176 for domestic participants or 1-858-384-5517 for international participants and entering the pass code 13641275. An archive of the webcast will be available on the Company’s website for a limited time.
About UCP, Inc.
UCP is a leading homebuilder and land developer with expertise in residential land acquisition, development and entitlement, as well as home design, construction and sales. UCP operates in the States of California, Washington, North Carolina, South Carolina and Tennessee. UCP designs and builds high-quality, sustainable single-family homes for a variety of lifestyles and budgets through its wholly-owned subsidiary, Benchmark Communities, LLC. The Benchmark Communities brand is recognized by homebuyers for its high-quality construction and craftsmanship, cutting-edge home design and customer-centric service and warranty programs.
Forward-Looking Statements
This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of the Company's business strategy. These statements often include words such as "may," “might,” "will," "should," “expects,” “plans,” "anticipates," “believes,” “estimates,” “predicts,” “potential,” “project,” “goal” "intend," or “continue,” or similar expressions. These statements are based on assumptions that the Company has made in light of its experience in the industry as we
ll as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Although the Company believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance they will prove to be correct. Therefore, you should be aware that many factors could affect the Company's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.
Any forward-looking statement made by the Company herein, or elsewhere, speaks only as of the date on which it was made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.
Homebuilding adjusted gross margin, land development adjusted gross margin and net debt to capital are non-GAAP financial measures. A reconciliation to the most comparable U.S. GAAP financial measures is presented in Appendix A hereto.
Contact:
Investor Relations:
Investorrelations@unioncommunityllc.com
408-207-9499 Ext. 476
Media:
Phil Denning/Jason Chudoba
Phil.denning@icrinc.com / Jason.chudoba@icrinc.com
UCP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except shares and per share data)
|
| | | | | | | |
| | June 30,
2016 | | December 31,
2015 |
| Assets | | | |
| Cash and cash equivalents | $ | 32,828 |
| | $ | 39,829 |
|
| Restricted cash | 900 |
| | 900 |
|
| Real estate inventories | 374,365 |
| | 360,989 |
|
| Fixed assets, net | 1,038 |
| | 1,314 |
|
| Intangible assets, net | 171 |
| | 236 |
|
| Goodwill | 4,223 |
| | 4,223 |
|
| Receivables | 817 |
| | 1,317 |
|
| Other assets | 6,137 |
| | 5,889 |
|
| Total assets | $ | 420,479 |
| | $ | 414,697 |
|
| | | | |
| Liabilities and equity | | | |
| Accounts payable | $ | 19,670 |
| | $ | 14,882 |
|
| Accrued liabilities | 20,116 |
| | 24,616 |
|
| Customer deposits | 3,166 |
| | 1,825 |
|
| Notes payable, net | 88,777 |
| | 82,486 |
|
| Senior notes, net | 73,908 |
| | 73,480 |
|
| Total liabilities | 205,637 |
| | 197,289 |
|
| | | | |
| Commitments and contingencies (Note 11) | | | |
| | | | |
| Equity | | | |
| Preferred stock, par value $0.01 per share, 50,000,000 authorized, no shares issued and outstanding as of June 30, 2016; no shares issued and outstanding as of December 31, 2015 | — |
| | — |
|
| Class A common stock, $0.01 par value; 500,000,000 authorized, 8,026,828 issued and 8,005,763 outstanding as of June 30, 2016; 8,014,434 issued and outstanding as of December 31, 2015 | 80 |
| | 80 |
|
| Class B common stock, $0.01 par value; 1,000,000 authorized, 100 issued and outstanding as of June 30, 2016; 100 issued and outstanding as of December 31, 2015 | — |
| | — |
|
| Additional paid-in capital | 96,698 |
| | 94,683 |
|
| Treasury stock at cost; 21,065 shares as of June 30, 2016; none as of December 31, 2015 | (160 | ) | | — |
|
| Accumulated deficit | (3,761 | ) | | (4,563 | ) |
| Total UCP, Inc. stockholders’ equity | 92,857 |
| | 90,200 |
|
| Noncontrolling interest | 121,985 |
| | 127,208 |
|
| Total equity | 214,842 |
| | 217,408 |
|
| Total liabilities and equity | $ | 420,479 |
| | $ | 414,697 |
|
UCP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME OR LOSS
(Unaudited)
(In thousands, except shares and per share data)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six months ended June 30, |
| | 2016 | | 2015 | | 2016 | | 2015 |
| REVENUE: | | | | | | | |
| Homebuilding | $ | 81,415 |
| | $ | 50,785 |
| | $ | 149,641 |
| | $ | 93,421 |
|
| Land development | 1,422 |
| | 1,920 |
| | 1,422 |
| | 2,040 |
|
| Other revenue | — |
| | 2,021 |
| | — |
| | 2,788 |
|
| Total revenue: | 82,837 |
| | 54,726 |
| | 151,063 |
| | 98,249 |
|
| | | | | | | | |
| COSTS AND EXPENSES: | | | | | | | |
| Cost of sales - homebuilding | 66,370 |
| | 42,120 |
| | 122,576 |
| | 77,738 |
|
| Cost of sales - land development | 225 |
| | 1,543 |
| | 686 |
| | 1,548 |
|
| Cost of sales - other revenue | — |
| | 1,742 |
| | — |
| | 2,405 |
|
| Impairment on real estate | 2,397 |
| | — |
| | 2,397 |
| | — |
|
| Total cost of sales | 68,992 |
| | 45,405 |
| | 125,659 |
| | 81,691 |
|
| Gross margin - homebuilding | 15,045 |
| | 8,665 |
| | 27,065 |
| | 15,683 |
|
| Gross margin - land development | 1,197 |
| | 377 |
| | 736 |
| | 492 |
|
| Gross margin - other revenue | — |
| | 279 |
| | 0 |
| | 383 |
|
| Gross margin - impairment on real estate | (2,397 | ) | | — |
| | (2,397 | ) | | — |
|
| Sales and marketing | 4,667 |
| | 4,357 |
| | 8,743 |
| | 8,553 |
|
| �� General and administrative | 7,234 |
| | 6,453 |
| | 14,509 |
| | 13,772 |
|
| Total costs and expenses | 80,893 |
| | 56,215 |
| | 148,911 |
| | 104,016 |
|
| Income (loss) from operations | 1,944 |
| | (1,489 | ) | | 2,152 |
| | (5,767 | ) |
| Other income, net | 22 |
| | 30 |
| | 49 |
| | 131 |
|
| Net income (loss) before income taxes | $ | 1,966 |
| | $ | (1,459 | ) | | 2,201 |
| | (5,636 | ) |
| Provision for income taxes | (141 | ) | | — |
| | (147 | ) | | — |
|
| Net income (loss) | $ | 1,825 |
| | $ | (1,459 | ) | | $ | 2,054 |
| | $ | (5,636 | ) |
| Net income (loss) attributable to noncontrolling interest | $ | 1,119 |
| | $ | (791 | ) | | $ | 1,252 |
| | $ | (3,128 | ) |
| Net income (loss) attributable to UCP, Inc. | 706 |
| | (668 | ) | | 802 |
| | (2,508 | ) |
| Other comprehensive income (loss), net of tax | — |
| | — |
| | — |
| | — |
|
| Comprehensive income (loss) | $ | 1,825 |
| | $ | (1,459 | ) | | $ | 2,054 |
| | $ | (5,636 | ) |
| Comprehensive income (loss) attributable to noncontrolling interest | $ | 1,119 |
| | $ | (791 | ) | | $ | 1,252 |
| | $ | (3,128 | ) |
| Comprehensive income (loss) attributable to UCP, Inc. | $ | 706 |
| | $ | (668 | ) | | $ | 802 |
| | $ | (2,508 | ) |
| | | | | | | | |
| Earnings (loss) per share of Class A common stock: | | | | | | | |
| Basic | $ | 0.09 |
| | $ | (0.08 | ) | | $ | 0.10 |
| | $ | (0.32 | ) |
| Diluted | $ | 0.09 |
| | $ | (0.08 | ) | | $ | 0.10 |
| | $ | (0.32 | ) |
| | | | | | | | |
| Weighted average shares of Class A common stock: | | | | | | | |
| Basic | 8,024,790 |
| | 7,932,037 |
| | 8,023,269 |
| | 7,927,708 |
|
| Diluted | 8,145,128 |
| | 7,932,037 |
| | 8,025,481 |
| | 7,927,708 |
|
UCP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
| | | | | | | |
| | Six months ended June 30, |
| | 2016 | | 2015 |
| Operating activities | | | |
| Net income (loss) | $ | 2,054 |
| | $ | (5,636 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | |
| Stock-based compensation | 415 |
| | 1,242 |
|
| Abandonment charges | 474 |
| | 2 |
|
| Impairment on real estate inventories | 2,397 |
| | — |
|
| Depreciation and amortization | 352 |
| | 304 |
|
| Fair value adjustment of contingent consideration | 8 |
| | 212 |
|
| Changes in operating assets and liabilities: | | | |
| Real estate inventories | (15,719 | ) | | (27,076 | ) |
| Receivables | 500 |
| | 111 |
|
| Other assets | (212 | ) | | (711 | ) |
| Accounts payable | 4,788 |
| | 10,791 |
|
| Accrued liabilities | (4,585 | ) | | (6,681 | ) |
| Customer deposits | 1,341 |
| | 1,170 |
|
| Income taxes payable | 78 |
| | — |
|
| Net cash used in operating activities | (8,109 | ) | | (26,272 | ) |
| Investing activities | | | |
| Purchases of fixed assets | (59 | ) | | (267 | ) |
| Net cash used in investing activities | (59 | ) | | (267 | ) |
| Financing activities | | | |
| Distribution to noncontrolling interest | (4,830 | ) | | (981 | ) |
| Proceeds from notes payable | 67,837 |
| | 59,168 |
|
| Repayment of notes payable | (61,505 | ) | | (35,162 | ) |
| Debt issuance costs | (129 | ) | | (450 | ) |
| Repurchase of common stock | (160 | ) | | — |
|
| Withholding taxes paid for vested RSUs | (46 | ) | | (22 | ) |
| Net cash provided by financing activities | 1,167 |
| | 22,553 |
|
| Net decrease in cash and cash equivalents | (7,001 | ) | | (3,986 | ) |
| Cash and cash equivalents – beginning of period | 39,829 |
| | 42,033 |
|
| Cash and cash equivalents – end of period | $ | 32,828 |
| | $ | 38,047 |
|
| | | | |
| Non-cash investing and financing activity | | | |
| Exercise of land purchase options acquired with acquisition of business | $ | 34 |
| | $ | 83 |
|
| | | | |
| Issuance of Class A common stock for vested restricted stock units | $ | 123 |
| | $ | 98 |
|
| | | | |
| Supplemental cash flow information | | | |
| Income taxes paid | $ | 69 |
| | $ | — |
|
Appendix A
Select Operating Data by Region
|
| | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2016 | | 2015 | | % Change | | 2016 | | 2015 | | % Change |
| Revenue from Homebuilding Operations (in thousands) | | | | | | | | | | | |
| West | 68,015 |
| | 35,746 |
| | 90.3 | % | | 124,774 |
| | 68,974 |
| | 80.9 | % |
| Southeast | 13,400 |
| | 15,039 |
| | (10.9 | )% | | 24,867 |
| | 24,447 |
| | 1.7 | % |
| Total | 81,415 |
| | 50,785 |
| | 60.3 | % | | 149,641 |
| | 93,421 |
| | 60.2 | % |
| | | | | | | | | | | | |
| Homes Delivered | | | | | | | | | | | |
| West | 143 |
| | 85 |
| | 68.2 | % | | 258 |
| | 163 |
| | 58.3 | % |
| Southeast | 54 |
| | 69 |
| | (21.7 | )% | | 106 |
| | 113 |
| | (6.2 | )% |
| Total | 197 |
| | 154 |
| | 27.9 | % | | 364 |
| | 276 |
| | 31.9 | % |
| | | | | | | | | | | | |
| Average Selling Price for Home Sales (in thousands) | | | | | | | | | | | |
| West | $ | 476 |
| | $ | 421 |
| | 13.1 | % | | $ | 484 |
| | $ | 423 |
| | 14.4 | % |
| Southeast | $ | 248 |
| | $ | 218 |
| | 13.8 | % | | $ | 235 |
| | $ | 216 |
| | 8.8 | % |
| Total | $ | 413 |
| | $ | 330 |
| | 25.2 | % | | $ | 411 |
| | $ | 338 |
| | 21.6 | % |
| | | | | | | | | | | | |
| Net New Home Orders | | | | | | | | | | | |
| West | 165 |
| | 137 |
| | 20.4 | % | | 341 |
| | 295 |
| | 15.6 | % |
| Southeast | 64 |
| | 69 |
| | (7.2 | )% | | 113 |
| | 165 |
| | (31.5 | )% |
| Total | 229 |
| | 206 |
| | 11.2 | % | | 454 |
| | 460 |
| | (1.3 | )% |
| | | | | | | | | | | | |
| Average Selling Communities | | | | | | | | | | | |
| West | 18 |
| | 17 |
| | 5.9 | % | | 18 |
| | 17 |
| | 5.9 | % |
| Southeast | 10 |
| | 12 |
| | (16.7 | )% | | 10 |
| | 10 |
| | — | % |
| Total | 28 |
| | 29 |
| | (3.4 | )% | | 28 |
| | 27 |
| | 3.7 | % |
| | | | | | | | | | | | |
| Backlog Units | | | | | | | | | | | |
| West | | | | | | | 268 |
| | 193 |
| | 38.9 | % |
| Southeast | | | | | | | 71 |
| | 81 |
| | (12.3 | )% |
| Total | | | | | | | 339 |
| | 274 |
| | 23.7 | % |
| | | | | | | | | | | | |
| Backlog Dollar Basis (in thousands) | | | | | | | | | | | |
| West | | | | | | | 130,287 |
| | 94,282 |
| | 38.2 | % |
| Southeast | | | | | | | 19,019 |
| | 17,777 |
| | 7.0 | % |
| Total | | | | | | | 149,306 |
| | 112,059 |
| | 33.2 | % |
| | | | | | | | | | | | |
| Owned Lots | | | | | | | | | | | |
| West | | | | | | | 3,955 |
| | 4,089 |
| | (3.3 | )% |
| Southeast | | | | | | | 964 |
| | 946 |
| | 1.9 | % |
| Total | | | | | | | 4,919 |
| | 5,035 |
| | (2.3 | )% |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Controlled Lots | | | | | | | | | | | |
| West | | | | | | | 404 |
| | 578 |
| | (30.1 | )% |
| Southeast | | | | | | | 224 |
| | 1,828 |
| | (87.7 | )% |
| Total | | | | | | | 628 |
| | 2,406 |
| | (73.9 | )% |
Appendix B
Reconciliation of GAAP and Non-GAAP Measures
Gross Margin and Adjusted Gross Margin
|
| | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| | 2016 | | % |
| | 2015 | | % |
|
| | ($ in thousands) |
| Consolidated Gross Margin & Adjusted Gross Margin | | | | | | | |
| Revenue | $ | 82,837 |
| | 100.0 | % | | $ | 54,726 |
| | 100.0 | % |
| Cost of Sales | 68,992 |
| | 83.3 | % | | 45,405 |
| | 83.0 | % |
| Gross Margin | 13,845 |
| | 16.7 | % | | 9,321 |
| | 17.0 | % |
| Add: interest in cost of sales | 1,936 |
| | 2.3 | % | | 1,049 |
| | 1.9 | % |
| Add: impairment and abandonment charges | 2,452 |
| | 3.0 | % | | — |
| | — | % |
Adjusted Gross Margin (1) | $ | 18,233 |
| | 22.0 | % | | $ | 10,370 |
| | 18.9 | % |
| Consolidated Gross margin percentage | 16.7 | % | | | | 17.0 | % | | |
Consolidated Adjusted gross margin percentage (1) | 22.0 | % | | | | 18.9 | % | | |
| | | | | | | | |
| Homebuilding Gross Margin & Adjusted Gross Margin | | | | | | | |
| Homebuilding revenue | $ | 81,415 |
| | 100.0 | % | | $ | 50,785 |
| | 100.0 | % |
| Cost of home sales | 66,636 |
| | 81.8 | % | | 42,120 |
| | 82.9 | % |
| Homebuilding gross margin | 14,779 |
| | 18.2 | % | | 8,665 |
| | 17.1 | % |
| Add: interest in cost of home sales | 1,790 |
| | 2.2 | % | | 1,000 |
| | 2.0 | % |
| Add: impairment and abandonment charges | 266 |
| | 0.3 | % | | — |
| | — | % |
Adjusted homebuilding gross margin(1) | $ | 16,835 |
| | 20.7 | % | | $ | 9,665 |
| | 19.0 | % |
| Homebuilding gross margin percentage | 18.2 | % | | | | 17.1 | % | | |
Adjusted homebuilding gross margin percentage (1) | 20.7 | % | | | | 19.0 | % | | |
| | | | | | | | |
| Land Development Gross Margin & Adjusted Gross Margin | | | | | | | |
| Land development revenue | $ | 1,422 |
| | 100.0 | % | | $ | 1,920 |
| | 100.0 | % |
| Cost of land development | 2,356 |
| | 165.7 | % | | 1,543 |
| | 80.4 | % |
| Land development gross margin | (934 | ) | | (65.7 | )% | | 377 |
| | 19.6 | % |
| Add: interest in cost of land development | 146 |
| | 10.3 | % | | 49 |
| | 2.6 | % |
| Add: Impairment and abandonment charges | 2,186 |
| | 153.7 | % | | — |
| | — | % |
Adjusted land development gross margin (1) | $ | 1,398 |
| | 98.3 | % | | $ | 426 |
| | 22.2 | % |
| Land development gross margin percentage | (65.7 | )% | | | | 19.6 | % | | |
Adjusted land development gross margin percentage (1) | 98.3 | % | | | | 22.2 | % | | |
| | | | | | | | |
| Other Revenue Gross and Adjusted Margin | | | | | | | |
| Revenue | $ | — |
| | — | % | | $ | 2,021 |
| | 100.0 | % |
| Cost of revenue | — |
| | — | % | | 1,742 |
| | 86.2 | % |
| Other revenue gross and adjusted margin | $ | — |
| | — | % | | $ | 279 |
| | 13.8 | % |
| Other revenue gross and adjusted margin percentage | — | % | | | | 13.8 | % | | |
|
| | | | | | | | | | | | | |
| | Six months ended June 30, |
| | 2016 | | % |
| | 2015 | | % |
|
| | ($ in thousands) |
| Consolidated Gross Margin & Adjusted Gross Margin | | | | | | | |
| Revenue | $ | 151,063 |
| | 100.0 | % | | $ | 98,249 |
| | 100.0 | % |
| Cost of Sales | 125,659 |
| | 83.2 | % | | 81,691 |
| | 83.1 | % |
| Gross Margin | 25,404 |
| | 16.8 | % | | 16,558 |
| | 16.9 | % |
| Add: interest in cost of sales | 3,475 |
| | 2.3 | % | | 1,973 |
| | 2.0 | % |
| Add: impairment and abandonment charges | 2,871 |
| | 1.9 | % | | 2 |
| | — | % |
Adjusted Gross Margin (1) | $ | 31,750 |
| | 21.0 | % | | $ | 18,533 |
| | 18.9 | % |
| Consolidated Gross margin percentage | 16.8 | % | | | | 16.9 | % | | |
Consolidated Adjusted gross margin percentage (1) | 21.0 | % | | | | 18.9 | % | | |
| | | | | | | | |
| Homebuilding Gross Margin & Adjusted Gross Margin | | | | | | | |
| Homebuilding revenue | $ | 149,641 |
| | 100.0 | % | | $ | 93,421 |
| | 100.0 | % |
| Cost of home sales | 122,842 |
| | 82.1 | % | | 77,738 |
| | 83.2 | % |
| Homebuilding gross margin | 26,799 |
| | 17.9 | % | | 15,683 |
| | 16.8 | % |
| Add: interest in cost of home sales | 3,329 |
| | 2.2 | % | | 1,924 |
| | 2.1 | % |
| Add: impairment and abandonment charges | 266,000 |
| | 0.2 | % | | — |
| | — | % |
Adjusted homebuilding gross margin(1) | $ | 30,394 |
| | 20.3 | % | | $ | 17,607 |
| | 18.8 | % |
| Homebuilding gross margin percentage | 17.9 | % | | | | 16.8 | % | | |
Adjusted homebuilding gross margin percentage (1) | 20.3 | % | | | | 18.8 | % | | |
| | | | | | | | |
| Land Development Gross Margin & Adjusted Gross Margin | | | | | | | |
| Land development revenue | $ | 1,422 |
| | 100.0 | % | | $ | 2,040 |
| | 100.0 | % |
| Cost of land development | 2,817 |
| | 198.1 | % | | 1,548 |
| | 75.9 | % |
| Land development gross margin | (1,395 | ) | | (98.1 | )% | | 492 |
| | 24.1 | % |
| Add: interest in cost of land development | 146 |
| | 10.3 | % | | 49 |
| | 2.4 | % |
| Add: Impairment and abandonment charges | 2,605 |
| | 183.2 | % | | 2 |
| | 0.1 | % |
Adjusted land development gross margin (1) | $ | 1,356 |
| | 95.4 | % | | $ | 543 |
| | 26.6 | % |
| Land development gross margin percentage | (98.1 | )% | | | | 24.1 | % | | |
Adjusted land development gross margin percentage (1) | 95.4 | % | | | | 26.6 | % | | |
| | | | | | | | |
| Other Revenue Gross and Adjusted Margin | | | | | | | |
| Revenue | $ | — |
| | — | % | | $ | 2,788 |
| | 100.0 | % |
| Cost of revenue | — |
| | — | % | | 2,405 |
| | 86.3 | % |
| Other revenue gross and adjusted margin | $ | — |
| | — | % | | $ | 383 |
| | 13.7 | % |
| Other revenue gross and adjusted margin percentage | — | % | | | | 13.7 | % | | |
* Percentages may not add due to rounding.
| |
| (1) | Adjusted gross margin, adjusted homebuilding gross margin and adjusted land development gross margin are non-GAAP financial measures. These metrics have been adjusted to add back capitalized interest, and impairment and abandonment charges. We use adjusted gross margin information as a supplemental measure when evaluating our operating performance. We believe this information is meaningful, because it isolates the impact that leverage and non-cash impairment and abandonment charges have on gross margin. However, because adjusted gross margin information excludes interest expense and impairment and abandonment charges, all of which have real economic effects and could materially impact our results, the utility of adjusted gross margin information as a measure of our operating performance is limited. In addition, other companies may not calculate adjusted gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. The table above provides a reconciliation of adjusted gross margin numbers to the most comparable U.S. GAAP financial measure. |
Debt-to-Capital Ratio and Net Debt-to-Capital Ratio
|
| | | | | | | |
| | As of June 30, 2016 | | As of December 31, 2015 |
| Debt | $ | 162,685 |
| | $ | 155,966 |
|
| Equity | 214,842 |
| | 217,408 |
|
| Total capital | $ | 377,527 |
| | $ | 373,374 |
|
| Ratio of debt-to-capital | 43.1 | % | | 41.8 | % |
| Debt | $ | 162,685 |
| | $ | 155,966 |
|
| | | | |
| Net cash and cash equivalents | $ | 33,728 |
| | $ | 40,729 |
|
| Less: restricted cash and minimum liquidity requirement | 15,900 |
| | 15,900 |
|
| Unrestricted cash and cash equivalents | $ | 17,828 |
| | $ | 24,829 |
|
| | | | |
| Net debt | $ | 144,857 |
| | $ | 131,137 |
|
| Equity | 214,842 |
| | 217,408 |
|
| Total adjusted capital | $ | 359,699 |
| | $ | 348,545 |
|
Ratio of net debt-to-capital (1) | 40.3 | % | | 37.6 | % |
| |
(1) | The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents, including restricted cash balance requirements) by the sum of net debt plus stockholders’ and member's equity. The most directly comparable U.S. 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 reconcile this non-GAAP financial measure to the ratio of debt-to-capital in the table above. The Company’s calculation of net debt-to-capital ratio might not be comparable with other issuers or issuers in other industries. |
