NWHM - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to The New Home Company Second Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Drew Mackintosh, Investor Relations for The New Home Company. Thank you.

You may begin.

Drew Mackintosh

morning. Good New conference The Company’s Home to call. earnings Welcome its for the today, the quarter results released company Earlier second financial XXXX. website Documents in detailing nwhm.com. company’s the available at Investor Relations these section of results are the

duty could I the in and statements in the most that A statements detailed historical actual discussion and those Form made of filings company cause facts, would Before forward-looking call. quarterly from course during to company’s made Report Form factors and begins, are like remind no made other Annual the forward-looking that XX-K certain the are everyone course which update its call, to risks uncertainties. are including statements these results of on uncertainties differ of in to its important this in this The reports SEC, are forward-looking the the and such statements that on with XX-Q. not recent that operating risks undertakes call involve materially

measures financial on New in to Reconciliations these measures may discussed non-GAAP Company’s GAAP The be and Additionally, Home call. accessed prepared measures website most is comparable can the call through over and and to Larry. its the non-GAAP the filings will Miller, the accordance turn Financial I now this of with financial Stephens, conference Larry in SEC. Webb, Officer. Leonard call Chief Chief with Chairman; today John Executive be Officer; Hosting President Executive With that,

Larry Webb

agreement per funds the an on by announced call The has Global transaction that company Apollo entered a Thanks, Company Drew morning acquire joining with for managed all-cash to Last today. New and good certain we $X week, in of everyone definitive share. the affiliates Management to Home us into

represented maximize will aligns believe our at unanimously Directors liquidity Apollo stockholders, for its asset proposed in best of transaction to our and company stockholders. form concluding all-cash value highly provide Board proposed a of company proven with We manager way Our stockholders respected our record alternatives alternative immediate track our and transaction a for approved the that that this the premium with offer success. an the with the forward review attractive a ultimately with an following of thorough decision of global

phase We for believe Apollo Home The New are excited to take this new our next evolution heights. of our partnership and Company’s company can with potential

In our continued XX% fronts to sale Home Home revenue terms generated of this new share. a thanks to quarter, home per The increase make quarter XXXX results earnings second year-over-year, on grew a the of XX% New $X.XX Company of and variety progress in of deliveries. in

sales basis, Our coming a to we inflation. continued XX.X% increases were for successful ahead on quarter, price of sequential move and cost home year-over-year the higher as implementing at in gross in margin

carrying financial these operational with pleased momentum look forward very are to forward. We this and results

sales order our us continues position as XX% sales averaged in Similar addition, in supply respect construction to communities per we decision in all strategic remained construction Demand number outstrip community a to been quarter, our schedules. backlog to our year. align in in a has better X.X last with In sales activity we instrumental intentionally manage with starts efforts. month, and This sales. to over margin at releases our last and markets, healthy the improvement favorable effort prices our second to of raise metered a putting ability operating and an per improving quarter,

more undertook paid to of for target Another company affordable product strategic our the initiative repositioning that has the we market. off segments is

move experience most With continuing opportunity product more just share a are audience out for strengthened gain established we even goal looking to buyers as to designs homes up up great was live. that We include than level the award-winning by get a by important emphasis pandemic, our their on has product. this believe to to key we wider Our which have role. among years housing of home last our was in trending live. a who expanding product. product place the belief where more This the customer over several segments was new greater to well of towards bring placed an Home our offering how at in we to affordable an and market believe market, competitors New presence there repositioning but the further improvement more in and move The we has large success, think market factor a of the as our played overall been our offer entry equally traditional to a

favorable the New strong In quarter. market. more With to Company interest a conditions our well see to Home on the market like of positioned existing over from economic for our it that, we quarter for would Leonard conditions low presence and a market, The low the of to homes backlog, thanks on broader to industry this our environment, supply to the rate and operations results significant continue and on is build new improved I a improving outlook turn business, terms and color second With ending quarter. healthy

Leonard Miller

call great announcement represent the Thanks transaction, the stockholders ours, which for the to the a our to maximize for build good significant with excitement the opportunity and to value investment excited of in work I morning Apollo Larry’s team of we’ve the am the us. progress to everyone want industry today. for and echo company made. I on their proposed believe with we on their aligns vision and Their to

Turning teams easy both were was end with stated our market to today, in that I’m quarter. second surpass we to executed the of performed how able pleased appreciative for revenues guidance well-documented how our am the as and persist operational results, our margin. gross the during the for quarter high task This extremely considering challenges this and teams I our no

to pool took in advantage by which in remained during our demand the limited back and this strong fundamentals led homebuilding in of mentioned, in a by We remain lack see all characterized backlog. raising of prices generally of markets, our Larry seasonality the communities markets. our buyers. of the of in we homes all As motivated more quarter, normalized and improvement in firm, of expect should supply half pricing quarter our given in margin while the ongoing the year, trends We supply

difficulty remain are bringing are given expected New down market. counts home new builders environment lower, having community product all are to year-over-year markets robust and our significantly in the and sales the to

and and healthy of market builder construction economy and In local driven material during by Demand of in if well availability. during Phoenix quarter, opportunities states. terms count challenges the as of but of elevated labor sales continues higher flow from home community for every the the remains the as limited Arizona a by the great it have by not operation as metering in year-over-year been other example the local in were new Orders steady XX% quarter. higher market-driven buyers sales facing market were were we us be a a stayed color, implemented could and our to up demand intentional for

community the for our per best Our quarter absorption at per in the Southern orders X.X month. company operations pace California posted

the region, drove segments We a of characterized continue quarter. sales our market lack to more this of and buyers by strong also the affordable migrate This which see communities supply. available at more pricing to is during inland

new were community of June trends the Riverside each persist, volume home firm, XX% a end challenges up respectively, XX% ability increased Demand the team’s total release deliver California and testament to research as communities phase Zonda. during the compared in of in despite California the As both as quarter XX% in quickly snapped LA more to last and quarter. to markets, by affordable our that new by environment. count difficult year homes to Northern buyers in market also at down the our move-up and a our was was County the We operational when closing according Northern year-over-year strong

the to feels business growth job it this on normalized building our a believe operational Despite other and about to to Similar this relative are well extremely is the to firm price overheated a we new as forward successes division market has characterized in further pricing. given that as composed our solid pricing opportunities the the strong Denver in very quarter. already a high-paying and Denver Denver market benefiting platform, the has steady from from like jobs. more and into upside a significant given the transitioned experienced, markets of growth. by market is Our Overall, from a believe this general, steady is look we activity there demographics is in appreciation to optimistic migration and in We one our in homebuilding Phoenix, welcome to transitioning market. change order smoothly challenges

more I financial Now, quarter. it will over from results like detail John, our to would who on to the turn provide

John Stephens

call. and Thank you, good the Leonard everyone morning to on

we diluted million second to for or venture after joint of quarter quarter, pre-tax compared severance impairment inventory impairment loss was in of charges. in severance deferred and income or the of for $XX For a generated year Adjusted compared was loss which a share. million as $XX.X $X.XX quarter charges second $X.X diluted period. $X.XX the income $X.X prior in $XX.X asset benefit loss net second prior the year diluted and million excluding XXXX million quarter, the per $X.XX per net a XXXX a of to million Net $X.X the $XXX,XXX per charges, second pre-tax included or million and share net tax re-measurement XXXX share

as the by California, was Arizona, XXXX California deliveries mix The attributable by XX% Colorado compared in XX% Southern total $XXX increase to home offset increase addition in in the as year in by revenue more to our in communities an selling prior was the price, average The Our price deliveries million increase $XX for lesser mix. Northern a in of concentration as Arizona deliveries, XX% was million extent, selling of second the from year-over-year increase of percentage in partially and a our and in $XXX,XXX significant average deliveries driven operation in was the period. a to sales a Southern a shift larger a increase where fewer incurred quarter California affordable and decrease XXXX. a driven deliveries to and primarily

quarter. million negative XXXX prior of acquisition gross excluding and increase gross XX.X% primarily these The second mix was in second in homebuilding XXXX the was purchase The XX.X% for price as inventory of Homes. of in to X.X% point prior second The a gross a included the by home the the year point shift. of Epic charges year in homebuilding impairment for second driven compared quarter. increases charges, a $XX lesser basis margin interest revenue a Our XXX percentage and, margin to sales quarter accounting quarter margin sales cost $XXX,XXX also related a extent, the reduction to adjustments XXX was basis as and included in

XX.X%. the these Excluding adjustments, was gross homebuilding for second the margin quarter

cost Excluding sales, XX.X% XXXX in and prior of second adjusted year gross in year. the the inventory the XX.X% interest prior for impairments margin in compared to was quarter our

for year new cost compared increased XX% for attributable to the to allocated building operation orders $XXX,XXX and and, offset home quarter result revenue Colorado due XX% of higher and partially partially the fee new compared XXXX $X.X our community average in costs X.X net by quarter second a versus community period. extent, by reduction compensation of per second increase charges prior offset year orders the Our a items These California XX.X% severance in lower as by capitalized the XXX of expenses to cost higher homes percentage absorption XXX improvement sales SG&A driven SG&A This rate in in XX.X% year. a per rate home lower amortization the rate was G&A personnel in lesser a a was quarter in model incentive sales to sales million increase the the revenue the in the decrease ago during in were community prior the second to count. The month count was to in quarter. quarter. to largely Southern XXXX and of to a a Net and

ending XXX quarter second rate to XXX% compared of the of the backlog Our for a the cancellation quarter to year backlog XXX% end homes, our the million, a period. We backlog up of value end was quarter at of quarter XXXX quarter ended compared our homes the and was XX% of prior in the X% quarter. the value the second increase the in company. dollar compared prior with history robust to and year $XXX.X dollar highest The

XX as for and quarter XXXX community with cash, backlog quarter. attributable second acquisition ended to The XX credit markets, offset communities $XXX over combined active dollar in our Arizona. Arizona the count continue partially primarily we and account our XXXX senior reduction to value, Colorado XX% increase quarter We revolving to In addition, In by California geographic to compared of debt footprint. balance sheet, was and in community to our our in our was count operations the of our with ended the no to our diversify under regard a Epic the due $XXX of Homes million facility. outstanding million notes in related borrowings we XX% in the

we in Larry land cash and will back his development. I remarks. on land operating spent turn flow to for quarter, $X.X approximately million the $XX call During generated concluding the now and million

Larry Webb

exclusively Along the journey much a operating New transformed company for in Thanks, product California years states. strengthened balance into a streamlined Company, John. builder cater operations we the The structure last from pool a to been our diversified quite homebuilder cost as The in deeper buyers. high-end our our a way, more and we repositioned Home to with several offerings three have sheet, of

size business scale relatively our always constrained our capital small base. the been limited has and However, to ability by

what Founder homes strive came that have is The occupation improvement. As today, New consistently the noble through your able the work Home your of with build responsibility continually I’m belief. it for members and that have for The communities dedication would It all to company a building New to into team of was that very we of and Company, appreciative I is like hard this a communicated I thank to accepting and a and efforts. Home been

X their Finally, support for concludes I’d the like years. for to remarks. last our thank stockholders prepared That our

Operator

Thank participation. for today. our concludes your you. Ladies your interest you We and and thank gentlemen, conference this

session You may now Q&A this your [No for lines. disconnect event]

New Home (NWHM) 30 Jul 212021 Q2 Earnings call transcript