Orleans Homebuilders, Inc. (ASE:OHB) is a residential homebuilder with operations in Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Greensboro and Raleigh, North Carolina; Richmond and Tidewater, Virginia; Orlando, Palm Coast and Palm Bay, Florida; Chicago, Illinois; and Phoenix, Arizona.
| • | The backlog at June 30, 2006 decreased 40% to $334,676,000 (715 homes) compared with $553,237,000 (1,406 homes) at June 30, 2005. |
| • | The Company controls approximately 16,900 building lots at June 30, 2006 compared to approximately 17,100 building lots at June 30, 2005. |
| • | The Company repurchased 40,400 shares of its common stock during the fourth quarter of fiscal year 2006 at an aggregate purchase price of $681,000. |
| • | The Company experienced a cancellation rate of approximately 40% for the quarter ended June 30, 2006 compared with a cancellation rate of approximately 14% in fiscal year 2005. |
Outlook for Fiscal Year 2007
Challenging market conditions in the housing industry have continued to place downward pressure on the Company’s new order activity through the fourth quarter of fiscal 2006. The major factors contributing to these challenging market conditions include increasing levels of existing and new home inventory and increases in cancellation rates. In Florida, the Company experienced a 58% cancellation rate for the year as a result of significant investor activity. These factors will continue to have a negative impact on new orders and new order pricing in the near-term, thereby reducing future revenue growth and gross margins. The Company is responding to these challenging market conditions by continually adapting its business strategies with respect to land acquisitions, sales incentives, speculative inventory and cost containment.
Orleans Homebuilders will hold its quarterly conference call to discuss fiscal year results on Thursday, August 17, 2006, at 12:00 p.m. Eastern Time. This call is being web cast by CCBN and can be accessed at Orleans Homebuilders’ web site at www.orleanshomes.com by clicking on the heading “Investor Relations”. The webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN’s individual investor center at www.earnings.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected event management site, StreetEvents (www.streetevents.com).
A replay of the conference call will be available later that day on the Company’s website at www.orleanshomes.com. A copy of this press release, including the Company’s results of operations for the three and twelve months ended June 30, 2006 to be discussed during the conference call, is available at the Company’s website, www.orleanshomes.com, under the heading “Investor Relations”.
About Orleans Homebuilders, Inc.
Orleans Homebuilders, Inc. develops, builds and markets high-quality single-family homes, townhouses and condominiums. The Company serves a broad customer base including luxury, move-up, empty nester, active adult, and first-time homebuyers. The Company currently operates in the following fourteen distinct markets: Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Orlando, Palm Coast and Palm Bay, Florida; Chicago, Illinois; and Phoenix, Arizona. The Company’s Charlotte, North Carolina operations also include adjacent counties in South Carolina. To learn more about Orleans Homebuilders, please visit www.orleanshomes.com.
(1) Reconciliation of EBITDA to net income
| | Three Months
Ended 6/30/06 | | Three Months
Ended 6/30/05 | | Twelve Months
Ended 6/30/06 | | Twelve Months
Ended 6/30/05 | |
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EBITDA | | $ | 50,310,000 | | $ | 54,173,000 | | $ | 119,925,000 | | $ | 105,951,000 | |
Income tax expense | | | 16,389,000 | | | 18,164,000 | | | 40,375,000 | | | 35,399,000 | |
Interest | | | 6,512,000 | | | 6,825,000 | | | 15,160,000 | | | 13,312,000 | |
Depreciation and Amortization | | | 371,000 | | | 605,000 | | | 1,349,000 | | | 1,656,000 | |
Net income | | $ | 27,038,000 | | $ | 28,579,000 | | $ | 63,041,000 | | $ | 55,584,000 | |
(1) | Pursuant to the requirements of Regulation G, we have provided a reconciliation of EBITDA, a non-GAAP financial measure, to the most directly comparable GAAP financial measure. EBITDA represents net earnings before interest expense, previously capitalized interest amortized to residential properties cost of sales, income taxes, depreciation, amortization, and extraordinary items. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excluded amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet, or statement of cash flows of the issuer; or includes amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States of America. The Company believes EBITDA provides a meaningful measure of operating performance. |
Certain information included herein and in other Company statements, reports and SEC filings is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning anticipated earnings per share, revenues, sales, operating results, financial resources, pace of sales, industry outlook, growth and expansion. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company statements, reports and SEC filings. For example, there can be no assurance that the current sales pace can continue in the absence of an improvement in the current general economic environment. These risks and uncertainties include local, regional and national economic conditions, the effects of governmental regulation, the competitive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of capital, the availability and cost of labor and materials, our dependence on certain key employees and weather conditions. Additional information concerning factors the Company believes could cause its actual results to differ materially from expected results is contained in Item 7 of the Company’s Annual Report of Form 10-K for the fiscal year ended June 30, 2005 filed with the SEC.
Orleans Homebuilders, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
| | Three Months Ended
June 30, | | Twelve Months Ended
June 30, | |
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| | 2006 | | 2005 | | 2006 | | 2005 | |
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Earned revenues | | | | | | | | | | | | | |
Residential properties | | $ | 388,765 | | $ | 396,294 | | $ | 975,483 | | $ | 911,004 | |
Land sales and other income | | | 4,221 | | | 2,784 | | | 11,710 | | | 8,226 | |
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| | | 392,986 | | | 399,078 | | | 987,193 | | | 919,230 | |
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Costs and expenses | | | | | | | | | | | | | |
Residential properties | | | 307,272 | | | 314,938 | | | 761,270 | | | 727,006 | |
Land sales and other expense | | | 2,564 | | | 1,807 | | | 8,345 | | | 5,438 | |
Selling, general and administrative | | | 39,723 | | | 35,552 | | | 114,162 | | | 95,701 | |
Interest, net | | | — | | | 38 | | | — | | | 102 | |
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| | | 349,559 | | | 352,335 | | | 883,777 | | | 828,247 | |
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Income from operations before income taxes | | | 43,427 | | | 46,743 | | | 103,416 | | | 90,983 | |
Income tax expense | | | 16,389 | | | 18,164 | | | 40,375 | | | 35,399 | |
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Net income available for common shareholders | | $ | 27,038 | | $ | 28,579 | | $ | 63,041 | | $ | 55,584 | |
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Earnings per share: | | | | | | | | | | | | | |
Basic | | $ | 1.47 | | $ | 1.54 | | $ | 3.41 | | $ | 3.09 | |
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Diluted | | $ | 1.44 | | $ | 1.51 | | $ | 3.35 | | $ | 2.96 | |
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Weighted average number of shares: | | | | | | | | | | | | | |
Basic | | | 18,391 | | | 18,519 | | | 18,483 | | | 17,978 | |
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Diluted | | | 18,733 | | | 18,894 | | | 18,824 | | | 18,809 | |
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Orleans Homebuilders, Inc
Summary of Deliveries, New Orders and Backlog by Region
(Dollars in thousands)
(Unaudited)
| | Three Months Ended
June 30, | | Twelve Months Ended
June 30, | |
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| | 2006 | | 2005 | | 2006 | | 2005 | |
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DELIVERIES | | | | | | | | | | | | | |
Northern region (NJ, PA) (1) | | | | | | | | | | | | | |
Homes | | | 286 | | | 371 | | | 796 | | | 852 | |
Dollars | | $ | 153,424 | | $ | 170,443 | | $ | 392,727 | | $ | 384,645 | |
Average Sales Price | | $ | 536 | | $ | 459 | | $ | 493 | | $ | 451 | |
Southern region (NC, SC, VA) (2) | | | | | | | | | | | | | |
Homes | | | 335 | | | 375 | | | 862 | | | 827 | |
Dollars | | $ | 161,653 | | $ | 142,424 | | $ | 371,981 | | $ | 304,132 | |
Average Sales Price | | $ | 483 | | $ | 380 | | $ | 432 | | $ | 368 | |
Florida region (FL) | | | | | | | | | | | | | |
Homes | | | 118 | | | 146 | | | 366 | | | 456 | |
Dollars | | $ | 31,859 | | $ | 29,217 | | $ | 91,945 | | $ | 82,269 | |
Average Sales Price | | $ | 270 | | $ | 200 | | $ | 251 | | $ | 180 | |
Midwestern region (IL) (3) | | | | | | | | | | | | | |
Homes | | | 96 | | | 139 | | | 279 | | | 372 | |
Dollars | | $ | 41,829 | | $ | 54,210 | | $ | 118,830 | | $ | 139,958 | |
Average Sales Price | | $ | 436 | | $ | 390 | | $ | 426 | | $ | 376 | |
Total | | | | | | | | | | | | | |
Homes | | | 835 | | | 1,031 | | | 2,303 | | | 2,507 | |
Dollars | | $ | 388,765 | | $ | 396,294 | | $ | 975,483 | | $ | 911,004 | |
Average Sales Price | | $ | 466 | | $ | 384 | | $ | 424 | | $ | 363 | |
NEW ORDERS | | | | | | | | | | | | | |
Northern region (NJ, PA, NY) (1) | | | | | | | | | | | | | |
Homes | | | 106 | | | 201 | | | 455 | | | 727 | |
Dollars | | $ | 51,220 | | $ | 95,370 | | $ | 242,729 | | $ | 352,347 | |
Average Sales Price | | $ | 483 | | $ | 474 | | $ | 533 | | $ | 485 | |
Southern region (NC, SC, VA) (2) | | | | | | | | | | | | | |
Homes | | | 152 | | | 271 | | | 791 | | | 788 | |
Dollars | | $ | 78,340 | | $ | 107,796 | | $ | 367,334 | | $ | 306,280 | |
Average Sales Price | | $ | 515 | | $ | 398 | | $ | 464 | | $ | 389 | |
Florida region (FL) | | | | | | | | | | | | | |
Homes | | | (48 | ) | | 176 | | | 145 | | | 496 | |
Dollars | | $ | (14,038 | ) | $ | 44,824 | | $ | 48,914 | | $ | 115,623 | |
Average Sales Price | | $ | 292 | | $ | 255 | | $ | 337 | | $ | 233 | |
Midwestern region (IL) (3) | | | | | | | | | | | | | |
Homes | | | 42 | | | 76 | | | 221 | | | 245 | |
Dollars | | $ | 19,871 | | $ | 36,100 | | $ | 97,945 | | $ | 100,503 | |
Average Sales Price | | $ | 473 | | $ | 475 | | $ | 443 | | $ | 410 | |
Total | | | | | | | | | | | | | |
Homes | | | 252 | | | 724 | | | 1,612 | | | 2,256 | |
Dollars | | $ | 135,393 | | $ | 284,090 | | $ | 756,922 | | $ | 874,753 | |
Average Sales Price | | $ | 537 | | $ | 392 | | $ | 470 | | $ | 388 | |
(1) | Information on residential revenue earned and new orders includes the acquired operations of Realen Homes’ Southeastern Pennsylvania region from July 28, 2004, the acquisition date, through June 30, 2006. |
(2) | Information on residential revenue earned and new orders includes the acquired activity from Peachtree Residential Properties for the period beginning December 23, 2004, the date the company acquired the assets, through June 30, 2006. |
(3) | Information on residential revenue earned and new orders includes the acquired operations of Realen Homes’ Midwestern region from July 28, 2004, the acquisition date, through June 30, 2006. |
| | At June 30,
2006 | | At June 30,
2005 | |
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BACKLOG | | | | | | | |
Northern region (NJ, PA, NY) | | | | | | | |
Homes | | | 194 | | | 535 | |
Dollars | | $ | 100,523 | | $ | 250,521 | |
Average Sales Price | | $ | 518 | | $ | 468 | |
Southern region (NC, SC, VA) | | | | | | | |
Homes | | | 302 | | | 373 | |
Dollars | | $ | 153,644 | | $ | 158,291 | |
Average Sales Price | | $ | 509 | | $ | 424 | |
Florida region (FL) | | | | | | | |
Homes | | | 138 | | | 359 | |
Dollars | | $ | 43,171 | | $ | 86,202 | |
Average Sales Price | | $ | 313 | | $ | 240 | |
Midwestern region (IL) | | | | | | | |
Homes | | | 81 | | | 139 | |
Dollars | | $ | 37,338 | | $ | 58,223 | |
Average Sales Price | | $ | 461 | | $ | 419 | |
Total | | | | | | | |
Homes | | | 715 | | | 1,406 | |
Dollars | | $ | 334,676 | | $ | 553,237 | |
Average Sales Price | | $ | 468 | | $ | 393 | |
Orleans Homebuilders, Inc
Selected Balance Sheet Data
(in thousands)
(Unaudited)
| | June 30,
2006 | | June 30,
2005 | |
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Cash and cash equivalents | | $ | 15,964 | | $ | 62,576 | |
Restricted cash - due from title company | | | 25,304 | | | 28,785 | |
Residential properties | | | 272,068 | | | 190,855 | |
Land and improvements | | | 544,574 | | | 398,290 | |
Inventory not owned | | | 117,073 | | | 88,252 | |
Land deposits and costs of future developments | | | 26,862 | | | 27,408 | |
Total assets | | | 1,060,285 | | | 861,540 | |
Obligations related to inventory not owned | | | 103,636 | | | 79,585 | |
Mortgage obligations secured by real estate | | | 422,608 | | | 399,030 | |
Subordinated notes | | | 105,000 | | | — | |
Other notes payable | | | 5,885 | | | 9,400 | |
Shareholders’ equity | | | 291,942 | | | 231,956 | |
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