CALATLANTIC GROUP INC ARLINGTON, Va., Nov. 8, 2017 /PRNewswire/ -- CalAtlantic Group, Inc. (NYSE: CAA) today announced results for the third quarter ended September 30, 2017.
"We are pleased to report third-quarter earnings which, after excluding delivery delays from the recent hurricanes and the impact of the Weyerhauser I-joint issue, reflect operating progress and a platform that is well-positioned for 2018," said Larry Nicholson, President and Chief Executive Officer of CalAtlantic Group, Inc. "As announced last week, we are merging our company with Lennar Corporation. We have great confidence that this merger will create a larger and even stronger company. Both management teams have already begun planning, with the initial focus on construction cost savings, systems conversions and financial services opportunities. As we begin integration planning, the cooperative spirit I see has been great."
2017 CalAtlantic Third Quarter Highlights and Comparisons to 2016 Third Quarter
-- Net new orders of 3,416, down 3%; Dollar value of net new orders up 6%
-- 574 average active selling communities, up 1%
-- 3,380 new home deliveries, down 8%
-- Average selling price of $448 thousand, down 1%
-- Home sale revenues of $1.5 billion, down 9%
-- Gross margin from home sales of 20.0%, compared to 22.5%
-- SG&A rate from home sales of 11.1%, compared to 10.3%
-- Operating margin from home sales of $134.3 million, or 8.9%, compared to
$203.6 million, or 12.2%
-- Net income of $93.4 million, or $0.75 per diluted share, vs. net income
of $132.3 million, or $0.97 per diluted share
-- $488.5 million of land purchases and development costs, compared to
$387.1 million
Impact of Hurricanes and Weyerhauser I-Joist Issue on Third Quarter Results
During the 2017 third quarter, our operations were negatively impacted by three non-recurring events: Hurricane Harvey, impacting our Texas operations; Hurricane Irma, primarily impacting our Florida operations; and the Weyerhauser I-joist issue, impacting our Colorado, Minnesota and Philadelphia operations. These events collectively reduced our 2017 third quarter orders by an estimated 265 units, reduced our 2017 third quarter deliveries by approximately 240 units, and reduced our home sale revenues by approximately $100 million ($1,515.2 million as reported compared to $1,615.2 million on a pro forma basis).
Orders. Net new orders for the 2017 third quarter were down 3% from the 2016 third quarter, to 3,416 homes, with the dollar value of these orders up 6%. The Company's monthly sales absorption rate was 2.0 per community for the 2017 third quarter, down 5% compared to the 2016 third quarter and down 19% from the 2017 second quarter. The Company's cancellation rate for the 2017 third quarter was 15%, down compared to 16% for the 2016 third quarter and up slightly from 14% for the 2017 second quarter. The Company's incentives on orders was 4.5% for the 2017 third quarter, down approximately 130 basis points compared to the 2016 third quarter, and up 10 basis points compared to the 2017 second quarter. Orders for the month ended October 31, 2017 were 1,094, up 13% over the prior year period.
Backlog. The dollar value of homes in backlog increased 12% to $3.7 billion, or 7,570 homes, compared to $3.3 billion, or 7,307 homes, for the 2016 third quarter, and increased 4% compared to $3.6 billion, or 7,534 homes, for the 2017 second quarter. The increase in year-over-year backlog value was driven by the 8% increase in the average home price in our backlog, to $490 thousand and a 4% increase in units in backlog. As of September 30, 2017, the average gross margin of the 7,570 total homes in backlog was 20.6%, down 20 basis points compared to the total homes in backlog as of June 30, 2017.
Revenue. Revenues from home sales for the 2017 third quarter decreased 9% to $1.5 billion, as compared to the 2016 third quarter, resulting from an 8% decrease in deliveries and a 1% decrease in the Company's average home price to $448 thousand. The decrease in average home price was primarily driven by a 13% decrease in the West region, attributable to a shift in product mix. Excluding the impact of the hurricanes and the Weyerhauser I-joist issue, revenues from home sales for the 2017 third quarter decreased 3% ($1.6 billion on a pro forma basis compared to $1.7 billion for the 2016 third quarter).
Gross Margin. The Company achieved gross margin from homes sales of 20.0% for the 2017 third quarter. The Company's 2017 gross margin was negatively impacted by a shift in product mix and an increase in direct construction costs per home.
SG&A Expenses. Selling, general and administrative expenses for the 2017 third quarter were $168.4 million, or 11.1%, as compared to $170.8 million, or 10.3%, for the 2016 third quarter. Isolating G&A from selling expenses, G&A expenses increased as a percentage of home sale revenues to 5.6% for the 2017 third quarter compared to 5.2% for the prior year period, primarily as a result of a decrease in home sale revenues, driven by the effects of the hurricanes and the Weyerhaeuser I-joist issue. Selling expenses increased as a percentage of home sale revenues to 5.5% for the 2017 third quarter compared to 5.1% for the prior year period as we continue to experience higher co-broker participation, driving an approximately 20 basis point increase compared to the prior year period. In addition, internal commissions for the 2017 third quarter were up approximately 10 basis points compared to the prior year period, driven by a timing related increase due to a large order/delivery imbalance, primarily in the West region where our orders exceeded our deliveries by 16%.
Land. During the 2017 third quarter, the Company spent $488.5 million on land purchases and development costs, compared to $387.1 million for the 2016 third quarter. The Company purchased $304.7 million of land, consisting of 4,043 homesites, of which 17% (based on homesites) is located in the North region, 40% in the Southeast region, 20% in the Southwest region, and 23% in the West region. As of September 30, 2017, the Company owned or controlled 67,961 homesites, of which 47,868 were owned and actively selling or under development, 15,676 were controlled or under option, and the remaining 4,417 homesites were held for future development or for sale.
Liquidity. The Company ended the quarter with $418.5 million of available liquidity, including $83.3 million of unrestricted homebuilding cash and $335.2 million available to borrow under its $750 million revolving credit facility. The Company's homebuilding debt to book capitalization as of September 30, 2017 and 2016 was 46.9% and 46.4%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 46.1%* and 44.9%*, respectively. In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending September 30, 2017 and 2016 was 4.2x* and 3.7x*, respectively.
Entry Into Merger Agreement with Lennar Corporation
On October 30, 2017, the Company announced that it entered into a definitive merger agreement with Lennar Corporation ("Lennar") pursuant to which each share of CalAtlantic stock will be exchanged for 0.885 shares of Lennar Class A common stock. CalAtlantic's stockholders will also have the option to elect to exchange all or a portion of their shares for cash in the amount of $48.26 per share, subject to a maximum cash amount of approximately $1.2 billion. This business combination will create the nation's largest homebuilder. The transaction, which is subject to the satisfaction or waiver of certain customary conditions, including the approval of the merger by the Company's stockholders and the stockholders of Lennar, is expected to close in the first calendar quarter of 2018.
Cancelation of Earnings Conference Call
As a result of the Company's entry into a definitive merger agreement with Lennar, the Company has cancelled the conference call and webcast to discuss its results for the 2017 third quarter that had previously been scheduled for Thursday, November 9th at 4:30 p.m. Eastern time.
About CalAtlantic Group, Inc.
CalAtlantic Group, Inc. (NYSE: CAA), one of the nation's largest and most respected homebuilders, offers well-crafted homes in thoughtfully designed communities that meet the desires of customers across the homebuilding spectrum, from entry level to luxury, in 43 Metropolitan Statistical Areas spanning 19 states. With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design earned over its 50 year history, CalAtlantic Group, Inc. utilizes its over five decades of land acquisition, development and homebuilding expertise to acquire and build desirable communities in locations that meet the high expectations of the company's homebuyers. We invite you to learn more about us by visiting www.calatlantichomes.com.
This news release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may qualify for the safe harbor provided for in Section 21E of the Securities Exchange Act of 1934, as amended. These statements include but are not limited to new home orders; deliveries; backlog; absorption rates; cancellation rates; average home price; revenue; profitability; cash flow; liquidity; gross margin; operating margin; product mix; land supply; our liquidity; the estimated impact on the Company from the hurricanes and Weyerhauser I-Joist issue; statements about the benefits of the proposed merger of the Company with Lennar, the expected timing for completing the proposed merger, the Company's and Lennar's objectives, plans and strategies and any other statements about future expectations, beliefs, goals, plans or prospects of the Company or Lennar, including after completion of the proposed merger. Any statements that are not statements of historical fact (including statements containing the words "expects," "intends," "anticipates," "estimates," "predicts," "believes," "should," "potential," "may," "forecast," objective," "plan," or "targets" and other similar expressions) are intended to identify forward-looking statements. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company's control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions, terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company's financial services operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; the risk that the proposed merger with Lennar may not be completed in a timely manner or at all; the risk that the Company or Lennar may be unable to obtain stockholder approval as required for consummation of the proposed merger; the risk that conditions to the closing of the proposed merger may not be satisfied or waived; the transaction may involve unexpected costs, liabilities or delays; the Company's business may suffer as a result of the uncertainty surrounding the transaction; the costs and outcome of any legal proceeding relating to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the ability of Lennar to recognize synergies and other benefits of the transaction; risks that the transaction disrupts current plans and operations of the Company; potential difficulties faced by the Company in employee recruitment and retention as a result of the transaction; the effect of the announcement or pendency of the transactions contemplated by the merger agreement on the Company's ability to maintain relationships with its customers, suppliers and others with whom it does business; risks related to diverting management's attention from the Company's ongoing business operations; other risks to consummation of the transaction; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent Quarterly Reports on Form 10-Q. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
No Offer of Solicitation.
This communication is for informational purposes only and shall not constitute an offer to purchase, nor a solicitation of an offer to sell, subscribe for or the solicitation of an offer to buy any securities or the solicitation of any vote or approval in connection with the proposed transaction or otherwise, nor shall there be any solicitation, offer, sale, issuance or transfer of securities in any jurisdiction in which such solicitation, offer, sale, issuance or transfer would be unlawful. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
Additional Information about the Proposed Transaction and Where to Find It.
In connection with the proposed merger, Lennar will file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 (the "Registration Statement"), in which a joint proxy statement of the Company and Lennar will be included that also constitutes a prospectus (the "Joint Proxy Statement/Prospectus"). Investors and stockholders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus regarding the proposed merger and the related transactions, when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about the Company, Lennar and the proposed merger. You will be able to obtain a free copy of the Joint Proxy Statement/Prospectus, as well as other filings containing information about the Company and Lennar at the SEC's website (www.sec.gov). You will also be able to obtain these documents, free of charge, from the Company at www.CalAtlantic.com under the link "Investors" and then under the heading "Financials" and the subheading "SEC Filings" and from Lennar at www.Lennar.com under the tab "Investors" and then under the heading "Financials."
Participants in the Solicitation.
The Company, Lennar, their respective directors, executive officers, other members of management and employees may be deemed to be participants in the solicitation of proxies from the Company's and Lennar's stockholders in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of the Company and their ownership of Company stock is set forth in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC on February 28, 2017 and its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on March 31, 2017. Information regarding Lennar's directors and executive officers is contained in Lennar's annual report on Form 10-K for the fiscal year ended November 30, 2016, which was filed with the SEC on January 20, 2017, and its proxy statement for its 2017 annual general meeting of stockholders, which was filed with the SEC on March 7, 2017. These documents can be obtained free of charge from the sources indicated above. Certain directors, executive officers, other members of management and employees of the Company and Lennar may have direct or indirect interest in the transaction due to securities holdings, vesting of equity awards and rights to severance payments. Additional information regarding the participants in the solicitation of the Company and Lennar stockholders will be included in the Joint Proxy Statement.
Contact:
Jeff McCall, EVP & CFO (240) 532-3888, jeff.mccall@calatl.com
*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(Note: Tables Follow)
KEY STATISTICS AND FINANCIAL DATA1
As of or For the Three Months Ended
-----------------------------------
September 30, September 30, Percentage June 30, Percentage
2017 2016 or % Change 2017 or % Change
---- ---- ----------- ---- -----------
Select Operating Data (Dollars in thousands)
---------------------
Deliveries 3,380 3,680 (8%) 3,653 (7%)
Average selling price $448 $452 (1%) $444 1%
Home sale revenues $1,515,167 $1,665,030 (9%) $1,620,614 (7%)
Gross margin % (including land
sales) 20.0% 22.4% (2.4%) 20.0% ?
Gross margin % from home sales 20.0% 22.5% (2.5%) 20.0% ?
Adjusted gross margin % from home
sales (excluding interest
amortized to cost of home
sales)* 23.2% 25.2% (2.0%) 23.2% ?
Incentive and stock-based
compensation expense $15,347 $18,594 (17%) $16,401 (6%)
Selling expenses $82,781 $84,723 (2%) $87,867 (6%)
G&A expenses (excluding incentive
and stock-based compensation
expenses) $70,301 $67,498 4% $69,729 1%
SG&A expenses $168,429 $170,815 (1%) $173,997 (3%)
SG&A % from home sales 11.1% 10.3% 0.8% 10.7% 0.4%
Operating margin from home sales $134,270 $203,587 (34%) $149,368 (10%)
Operating margin % from home
sales 8.9% 12.2% (3.3%) 9.2% (0.3%)
Net new orders 3,416 3,531 (3%) 4,078 (16%)
Net new orders (dollar value) $1,618,238 $1,520,358 6% $1,874,782 (14%)
Average active selling
communities 574 566 1% 557 3%
Monthly sales absorption rate per
community 1.98 2.08 (5%) 2.44 (19%)
Cancellation rate 15% 16% (1%) 14% 1%
Gross cancellations 617 679 (9%) 677 (9%)
Backlog (homes) 7,570 7,307 4% 7,534 0%
Backlog (dollar value) $3,708,701 $3,314,883 12% $3,561,471 4%
Land purchases (incl. seller
financing) $304,689 $227,596 34% $262,411 16%
Adjusted Homebuilding EBITDA* $205,852 $267,835 (23%) $220,500 (7%)
Adjusted Homebuilding EBITDA
Margin %* 13.6% 16.0% (2.4%) 13.6% 0.0%
Homebuilding interest incurred $52,972 $56,872 (7%) $52,168 2%
Homebuilding interest capitalized
to inventories owned $52,158 $55,761 (6%) $51,338 2%
Homebuilding interest capitalized
to investments in JVs $814 $1,111 (27%) $830 (2%)
Interest amortized to cost of
sales (incl. cost of land sales) $48,912 $44,751 9% $52,347 (7%)
As of
-----
September 30, December 31, Percentage
2017 2016 or % Change
---- ---- -----------
Select Balance Sheet
Data (Dollars in thousands, except per share amounts)
--------------------
Homebuilding cash
(including
restricted cash) $112,930 $219,407 (49%)
Inventories owned $6,946,766 $6,438,792 8%
Goodwill $985,185 $970,185 2%
Homesites owned and
controlled 67,961 65,424 4%
Homes under
construction 8,119 5,792 40%
Completed specs 1,059 1,255 (16%)
Homebuilding debt $3,822,138 $3,419,787 12%
Stockholders' equity $4,329,211 $4,207,586 3%
Stockholders' equity
per share $39.28 $36.77 7%
Total consolidated
debt to book
capitalization 47.9% 46.6% 1.3%
Adjusted net
homebuilding debt
to total adjusted
book
capitalization* 46.1% 43.2% 2.9%
(1)All statistical numbers exclude
unconsolidated joint ventures unless
noted otherwise.
*Please see "Reconciliation of Non-
GAAP Financial Measures" at the end
of this release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands, except per share amounts)
(Unaudited)
Homebuilding:
Home sale revenues $1,515,167 $1,665,030 $4,473,480 $4,402,896
Land sale revenues 676 5,928 1,176 32,107
Total revenues 1,515,843 1,670,958 4,474,656 4,435,003
--------- --------- --------- ---------
Cost of home sales (1,212,468) (1,290,628) (3,572,572) (3,440,549)
Cost of land sales (240) (5,638) (247) (31,217)
Total cost of
sales (1,212,708) (1,296,266) (3,572,819) (3,471,766)
---------- ---------- ---------- ----------
Gross margin 303,135 374,692 901,837 963,237
------- ------- ------- -------
Gross margin % 20.0% 22.4% 20.2% 21.7%
Selling, general and
administrative
expenses (168,429) (170,815) (498,702) (473,210)
Income (loss) from
unconsolidated joint
ventures 5,426 1,231 9,760 2,643
Other income (expense) (1,238) (4,169) (4,082) (11,992)
Homebuilding pretax income 138,894 200,939 408,813 480,678
------- ------- ------- -------
Financial Services:
Revenues 20,161 21,433 60,394 59,524
Expenses (12,883) (11,626) (36,919) (34,635)
Financial services pretax income 7,278 9,807 23,475 24,889
----- ----- ------ ------
Income before taxes 146,172 210,746 432,288 505,567
Provision for income taxes (52,820) (78,398) (157,322) (187,798)
------- ------- -------- --------
Net income 93,352 132,348 274,966 317,769
Less: Net income allocated to unvested restricted
stock (400) (294) (1,104) (635)
---- ---- ------ ----
Net income available to common stockholders $92,952 $132,054 $273,862 $317,134
======= ======== ======== ========
Income Per Common Share:
Basic $0.84 $1.12 $2.43 $2.66
Diluted $0.75 $0.97 $2.14 $2.34
Weighted Average Common Shares Outstanding:
Basic 110,205,460 118,338,891 112,778,362 119,188,145
Diluted 124,449,912 136,077,415 129,521,479 136,888,927
Cash Dividends Declared Per Common Share $0.04 $0.04 $0.12 $0.12
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2017 2016
---- ----
(Dollars in thousands)
ASSETS (Unaudited)
Homebuilding:
Cash and equivalents $83,310 $191,086
Restricted cash 29,620 28,321
Inventories:
Owned 6,946,766 6,438,792
Not owned 91,944 66,267
Investments in
unconsolidated joint
ventures 130,692 127,127
Deferred income taxes,
net 307,251 330,378
Goodwill 985,185 970,185
Other assets 235,135 204,489
Total
Homebuilding
Assets 8,809,903 8,356,645
--------- ---------
Financial Services:
Cash and equivalents 46,357 17,041
Restricted cash 21,205 21,710
Mortgage loans held for
sale, net 160,068 262,058
Mortgage loans held for
investment, net 25,510 24,924
Other assets 15,991 26,666
Total Financial
Services
Assets 269,131 352,399
------- -------
Total
Assets $9,079,034 $8,709,044
========== ==========
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable $177,752 $211,780
Accrued
liabilities 562,424 599,905
Revolving credit
facility 295,600 ?
Secured project debt
and other notes
payable 43,150 27,579
Senior notes payable 3,483,388 3,392,208
Total
Homebuilding
Liabilities 4,562,314 4,231,472
--------- ---------
Financial Services:
Accounts payable and
other liabilities 20,831 22,559
Mortgage credit
facility 152,786 247,427
Total Financial
Services
Liabilities 173,617 269,986
------- -------
Total
Liabilities 4,735,931 4,501,458
--------- ---------
Equity:
Stockholders' Equity:
Preferred stock ? ?
Common stock 1,102 1,144
Additional paid-in
capital 3,064,963 3,204,835
Accumulated
earnings 1,263,318 1,001,779
Accumulated other
comprehensive
income (loss), net
of tax (172) (172)
---- ----
Total Stockholders'
Equity 4,329,211 4,207,586
Noncontrolling Interest 13,892 ?
Total Equity 4,343,103 4,207,586
--------- ---------
Total
Liabilities
and
Equity $9,079,034 $8,709,044
========== ==========
INVENTORIES
September 30, December 31,
2017 2016
---- ----
(Dollars in thousands)
Inventories
Owned: (Unaudited)
Land and land
under
development $2,886,731 $3,627,740
Homes
completed
and under
construction 3,624,417 2,304,109
Model homes 435,618 506,943
Total
inventories
owned $6,946,766 $6,438,792
========== ==========
Inventories
Owned by
Segment:
North $984,186 $851,972
Southeast 2,034,307 1,896,552
Southwest 1,489,941 1,421,669
West 2,438,332 2,268,599
Total
inventories
owned $6,946,766 $6,438,792
========== ==========
REGIONAL OPERATING DATA
Three Months Ended September 30,
--------------------------------
2017 2016 % Change
---- ---- --------
Homes ASP Homes ASP Homes ASP
----- --- ----- --- ----- ---
(Dollars in thousands)
New homes delivered:
North 792 $357 848 $332 (7%) 8%
Southeast 1,025 417 1,052 380 (3%) 10%
Southwest 792 450 894 435 (11%) 3%
West 771 582 886 671 (13%) (13%)
Consolidated
total 3,380 $448 3,680 $452 (8%) (1%)
===== ==== ===== ==== === ===
Nine Months Ended September 30,
-------------------------------
2017 2016 % Change
---- ---- --------
Homes ASP Homes ASP Homes ASP
----- --- ----- --- ----- ---
(Dollars in thousands)
New homes delivered:
North 2,389 $355 2,120 $335 13% 6%
Southeast 2,981 405 2,748 387 8% 5%
Southwest 2,485 442 2,751 424 (10%) 4%
West 2,190 602 2,272 645 (4%) (7%)
Consolidated
total 10,045 $445 9,891 $445 2% ?
====== ==== ===== ==== === ===
Three Months Ended September 30,
--------------------------------
2017 2016 % Change
---- ---- --------
Homes ASP Homes ASP Homes ASP
----- --- ----- --- ----- ---
(Dollars in thousands)
Net new orders:
North 768 $358 823 $337 (7%) 6%
Southeast 1,015 405 1,071 375 (5%) 8%
Southwest 735 450 831 428 (12%) 5%
West 898 669 806 603 11% 11%
Consolidated
total 3,416 $473 3,531 $431 (3%) 10%
===== ==== ===== ==== === ===
Nine Months Ended September 30,
-------------------------------
2017 2016 % Change
---- ---- --------
Homes ASP Homes ASP Homes ASP
----- --- ----- --- ----- ---
(Dollars in thousands)
Net new orders:
North 2,747 $352 2,647 $333 4% 6%
Southeast 3,550 397 3,384 374 5% 6%
Southwest 2,662 446 2,907 429 (8%) 4%
West 2,839 649 2,649 632 7% 3%
Consolidated
total 11,798 $458 11,587 $437 2% 5%
====== ==== ====== ==== === ===
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Average number of selling communities
during the period:
North 150 134 12% 143 125 14%
Southeast 184 182 1% 183 180 2%
Southwest 158 165 (4%) 156 170 (8%)
West 82 85 (4%) 83 91 (9%)
Consolidated
total 574 566 1% 565 566 (0%)
=== === === === === ===
At September 30,
----------------
2017 2016 % Change
---- ---- --------
Homes Dollar Homes Dollar Homes Dollar
Value Value Value
----- ----- -----
(Dollars in thousands)
Backlog:
North 1,656 $603,952 1,530 $523,882 8% 15%
Southeast 2,362 1,018,389 2,257 934,797 5% 9%
Southwest 1,791 877,533 2,058 945,052 (13%) (7%)
West 1,761 1,208,827 1,462 911,152 20% 33%
Consolidated
total 7,570 $3,708,701 7,307 $3,314,883 4% 12%
===== ========== ===== ========== === ===
At September 30,
----------------
2017 2016 % Change
---- ---- --------
Homesites owned and controlled:
North 14,172 15,966 (11%)
Southeast 23,591 22,993 3%
Southwest 14,560 15,113 (4%)
West 15,638 13,892 13%
Total
(including
joint
ventures) 67,961 67,964 (0%)
====== ====== ===
Homesites owned 52,285 51,385 2%
Homesites
optioned or
subject to
contract 14,544 15,209 (4%)
Joint venture
homesites 1,132 1,370 (17%)
Total
(including
joint
ventures) 67,961 67,964 (0%)
====== ====== ===
Homesites owned:
Raw lots 11,309 10,013 13%
Homesites under
development 12,825 10,980 17%
Finished
homesites 12,908 15,071 (14%)
Under
construction
or completed
homes 10,826 10,055 8%
Held for future
development/
for sale 4,417 5,266 (16%)
Total 52,285 51,385 2%
====== ====== ===
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
The table set forth below reconciles the Company's gross margin percentage from home sales to adjusted gross margin percentage from home sales, excluding interest amortized to cost of home sales. We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group.
Three Months Ended
------------------
September 30, Gross September 30, Gross June 30, Gross
2017 Margin % 2016 Margin % 2017 Margin %
---- ------- ---- ------- ---- -------
(Dollars in thousands)
Home sale
revenues $1,515,167 $1,665,030 $1,620,614
Less: Cost of
home sales (1,212,468) (1,290,628) (1,297,249)
---------- ---------- ----------
Gross margin
from home
sales 302,699 20.0% 374,402 22.5% 323,365 20.0%
Add:
Capitalized
interest
included in
cost of home
sales 48,912 3.2% 44,636 2.7% 52,347 3.2%
------ ------ ------
Adjusted gross
margin from
home sales,
excluding
interest
amortized to
cost of home
sales $351,611 23.2% $419,038 25.2% $375,712 23.2%
======== ======== ========
The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios. In addition, the table set forth below calculates homebuilding debt to adjusted homebuilding EBITDA. We believe these ratios are useful to management and investors as a measure of the Company's ability to obtain financing. For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity. Adjusted net homebuilding debt excludes indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents.
September 30, June 30, December 31, September 30,
2017 2017 2016 2016
---- ---- ---- ----
(Dollars in thousands)
Total consolidated debt $3,974,924 $3,912,101 $3,667,214 $3,742,627
Less:
Financial
services
indebtedness (152,786) (149,828) (247,427) (161,898)
Homebuilding
cash,
including
restricted
cash (112,930) (200,200) (219,407) (213,829)
Adjusted net homebuilding debt 3,709,208 3,562,073 3,200,380 3,366,900
Stockholders' equity 4,329,211 4,235,706 4,207,586 4,134,435
--------- --------- --------- ---------
Total adjusted book
capitalization $8,038,419 $7,797,779 $7,407,966 $7,501,335
========== ========== ========== ==========
Total consolidated debt to book
capitalization 47.9% 48.0% 46.6% 47.5%
==== ==== ==== ====
Adjusted net homebuilding debt
to total adjusted book
capitalization 46.1% 45.7% 43.2% 44.9%
==== ==== ==== ====
Homebuilding debt $3,822,138 $3,762,273 $3,419,787 $3,580,729
LTM adjusted homebuilding
EBITDA $919,286 $981,269 $996,183 $979,694
-------- -------- -------- --------
Homebuilding debt to adjusted
homebuilding EBITDA 4.2x 3.8x 3.4x 3.7x
==== ==== ==== ====
The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA. Adjusted Homebuilding EBITDA means net income (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense, (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges, (e) (gain) loss on early extinguishment of debt, (f) homebuilding depreciation and amortization, including amortization of capitalized model costs, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures, (i) income (loss) from financial services subsidiaries, (j) extraordinary purchase accounting adjustments and (k) merger and other one-time transaction related costs. Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently. We believe Adjusted Homebuilding EBITDA information is useful to management and investors as it provides perspective on the underlying performance of the business. Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.
Three Months Ended LTM Ended September 30,
------------------ -----------------------
September 30, September 30, June 30, 2017 2016
2017 2016 2017
---- ---- ----
(Dollars in thousands)
Net income $93,352 $132,348 $98,994 $441,927 $395,298
Provision for
income taxes 52,820 78,398 57,254 237,910 236,446
Homebuilding
interest
amortized to
cost of sales 48,912 44,751 52,347 195,425 163,820
Homebuilding
depreciation
and
amortization 14,101 15,735 14,915 60,116 61,827
EBITDA 209,185 271,232 223,510 935,378 857,391
Add:
Amortization of
stock-based
compensation 5,066 3,704 4,922 20,860 18,220
Cash
distributions
of income from
unconsolidated
joint ventures 3,970 ? 193 7,465 2,688
Purchase
accounting
adjustments
included in
cost of home
sales ? ? ? ? 82,705
Merger and
other one-
time
transaction
related costs 335 3,937 937 4,957 58,635
Less:
Income from
unconsolidated
joint ventures 5,426 1,231 446 11,174 4,990
Income from
financial
services
subsidiaries 7,278 9,807 8,616 38,200 34,955
Adjusted Homebuilding EBITDA $205,852 $267,835 $220,500 $919,286 $979,694
======== ======== ======== ======== ========
Homebuilding revenues $1,515,843 $1,670,958 $1,621,114 $6,427,693 $6,109,314
========== ========== ========== ========== ==========
Adjusted Homebuilding EBITDA
Margin % 13.6% 16.0% 13.6% 14.3% 16.0%
==== ==== ==== ==== ====
View original content:http://www.prnewswire.com/news-releases/calatlantic-group-inc-reports-2017-third-quarter-results-300552219.html
SOURCE CalAtlantic Group, Inc.
