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Jul 28, 2017 12:50 PM ET

CalAtlantic Group, Inc. Reports 2017 Second Quarter Results

Disclosure NewswireTM

iCrowdNewswire - Jul 28, 2017

ARLINGTON, Va. — CalAtlantic Group, Inc. (NYSE: CAA) today announced results for the second quarter ended June 30, 2017.

 

“The second quarter was a productive one for the Company,” said Larry Nicholson, President and Chief Executive Officer of CalAtlantic Group, Inc.  “In addition to our solid operating results, I am pleased with the significant progress we made with our growth initiative, expanding into the robust Seattle and Salt Lake City markets.  Our entry into these strong “top 20″ markets offer us great growth and earnings opportunities going forward in sustainable, long-term markets.”

2017 CalAtlantic Second Quarter Highlights and Comparisons to 2016 Second Quarter

  • Net new orders of 4,078, up 4%; Dollar value of net new orders up 7%
  • 557 average active selling communities, down 2%
  • 3,653 new home deliveries, up 5%
  • Average selling price of $444 thousand, down 1%
  • Home sale revenues of $1.6 billion, up 4%
  • Gross margin from home sales of 20.0%, compared to 21.9%
  • SG&A rate from home sales of 10.7%, compared to 10.6%
  • Operating margin from home sales of $149.4 million, or 9.2%, compared to $175.2 million, or 11.2%
  • Net income of $99.0 million, or $0.75 per diluted share, vs. net income of $112.8 million, or $0.83 per diluted share
  • $406.1 million of land purchases and development costs, compared to $394.8 million

Orders.  Net new orders for the 2017 second quarter were up 4% from the 2016 second quarter, to 4,078 homes, with the dollar value of these orders up 7%.  The Company’s monthly sales absorption rate was 2.4 per community for the 2017 second quarter, up 6% compared to the 2016 second quarter and down 4% from the 2017 first quarter.  The Company’s cancellation rate for the 2017 second quarter was 14%, down compared to 15% for the 2016 second quarter and up slightly from 13% for the 2017 first quarter.

Backlog.  The dollar value of homes in backlog increased 4% to $3.6 billion, or 7,534 homes, compared to $3.4 billion, or 7,456, homes, for the 2016 second quarter, and increased 9% compared to $3.3 billion, or 7,109 homes, for the 2017 first quarter.  The increase in year-over-year backlog value was driven by the 3% increase in the average home price in our backlog, to $473 thousand and a 1% increase in units in backlog.  As of June 30, 2017, the average gross margin of the 7,534 total homes in backlog was 20.8%, up 40 basis points compared to the total homes in backlog as of March 31, 2017.     

Revenue.  Revenues from home sales for the 2017 second quarter increased 4% to $1.6 billion, as compared to the 2016 second quarter, resulting from a 5% increase in deliveries, partially offset by a 1% decrease in the Company’s average home price to $444 thousand.  The decrease in average home price was primarily driven by a 5% decrease in the West region, attributable to a shift in product mix.   

Gross Margin.  The Company achieved gross margin from homes sales of 20.0% for the 2017 second 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 second quarter were $174.0 million, or 10.7%, as compared to $165.7 million, or 10.6%, for the 2016 second quarter.  This 10 basis point increase was primarily the result of an increase in co-broker commissions.   

Land.  During the 2017 second quarter, the Company spent $406.1 million on land purchases and development costs, compared to $394.8 million for the 2016 second quarter. The Company purchased $262.4 million of land, consisting of 3,576 homesites, of which 33% (based on homesites) is located in the North region, 24% in the Southeast region, 11% in the Southwest region, and 32% in the West region.  As of June 30, 2017, the Company owned or controlled 67,622 homesites, of which 46,788 were owned and actively selling or under development, 16,502 were controlled or under option, and the remaining 4,332 homesites were held for future development or for sale. 

Liquidity.  The Company ended the quarter with $823.1 million of available liquidity, including $167.8 million of unrestricted homebuilding cash and $655.3 million available to borrow under its $750 million revolving credit facility. The Company’s homebuilding debt to book capitalization as of June 30, 2017 and 2016 was 47.0% and 47.9%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 45.7%* and 45.9%*, respectively.  In addition, the Company’s homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending June 30, 2017 and 2016 was 3.8x* and 4.4x*, respectively.

Share Repurchases.  During the 2017 second quarter, the Company repurchased 4.4 million shares at an average price of $33.90 for a total spend of approximately $150.0 million.  As of the end of the quarter, the Company had $217.4 million remaining under its 2016 share repurchase authorization.

Debt Refinancing Activities.  On April 4, 2017 the Company issued $125 million of 5.875% senior notes due November 2024 and $100 million of 5.25% senior notes due June 2026.  On their May 15, 2017 maturity date, the Company repaid in full its $230 million 8.4% senior notes.  On June 9, 2017 the Company issued $350 million of 5.0% senior notes due June 2027.  On June 8, 2017 the Company issued a “Notice to Repurchase at Holder’s Option” and a “Notice of Redemption” to the holders of its 1.25% convertible senior notes due 2032.  The Company intends to repurchase the entire $253 millionprincipal balance of the 1.25% convertible notes on August 7, 2017, unless such notes are earlier repurchased or converted.  If the $253 million of convertible notes are repurchased as planned, the fully diluted share count of the Company will be reduced by approximately 6.3 million shares.

Earnings Conference Call

A conference call to discuss the Company’s 2017 second quarter results will be held at 10:00 a.m. Eastern time July 28, 2017.  The call will be broadcast live over the internet and can be accessed through the Company’s website at http://investors.calatlantichomes.com.  The call will also be accessible via telephone by dialing (888) 283-6901 (domestic) or (719) 325-2412 (international); Passcode2625889 The audio transmission with the slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 2625889.  

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 and the referenced earnings conference call contain forward-looking statements.  These statements include but are not limited to new home orders; deliveries; backlog; absorption rates; cancellation rates; average home pricerevenue; profitability; cash flow; liquidity; gross margin; operating margin; product mix; land supply; our liquidity; our ability to execute our business; our positioning, growth and earnings opportunities arising from our entry into the Seattle and Utah markets; the amount and timing of share repurchases; and the planned repurchase of the Company’s convertible notes due 2032 and the resulting approximately 6.3 million share reduction in the Company’s fully diluted share count.  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; 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.

Contact:  
Jeff McCall, EVP & CFO (240) 532-3888, [email protected]

*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

   

June 30,

 

June 30,

 

Percentage

 

March 31,

 

Percentage

   

2017

 

2016

 

or % Change

 

2017

 

or % Change

Select Operating Data

(Dollars in thousands)

               

Deliveries

 

3,653

  

3,484

 

5%

  

3,012

 

21%

Average selling price

$

444

 

$

447

 

(1%)

 

$

444

 

   ―   

Home sale revenues

$

1,620,614

 

$

1,558,701

 

4%

 

$

1,337,699

 

21%

Gross margin % (including land sales)

 

20.0%

  

21.6%

 

(1.6%)

  

20.5%

 

(0.5%)

Gross margin % from home sales

 

20.0%

  

21.9%

 

(1.9%)

  

20.5%

 

(0.5%)

Adjusted gross margin % from home sales (excluding purchase accounting adjustments included in cost of home sales)*

 

20.0%

  

22.2%

 

(2.2%)

  

20.5%

 

(0.5%)

Adjusted gross margin % from home sales (excluding purchase accounting adjustments and interest amortized to cost of home sales)*

 

23.2%

  

24.8%

 

(1.6%)

  

23.5%

 

(0.3%)

Incentive and stock-based compensation expense

$

16,401

 

$

17,275

 

(5%)

 

$

14,925

 

10%

Selling expenses

$

87,867

 

$

81,396

 

8%

 

$

73,592

 

19%

G&A expenses (excluding incentive and stock-based compensation expenses)

            
  

$

69,729

 

$

67,023

 

4%

 

$

67,759

 

3%

SG&A expenses

$

173,997

 

$

165,694

 

5%

 

$

156,276

 

11%

SG&A % from home sales

 

10.7%

  

10.6%

 

0.1%

  

11.7%

 

(1.0%)

Operating margin from home sales

$

149,368

 

$

175,214

 

(15%)

 

$

118,568

 

26%

Operating margin % from home sales

 

9.2%

  

11.2%

 

(2.0%)

  

8.9%

 

0.3%

Adjusted operating margin from home sales*

$

149,368

 

$

181,072

 

(18%)

 

$

118,568

 

26%

Adjusted operating margin % from home sales*

 

9.2%

  

11.6%

 

(2.4%)

  

8.9%

 

0.3%

Net new orders

 

4,078

  

3,921

 

4%

  

4,304

 

(5%)

Net new orders (dollar value)

$

1,874,782

 

$

1,749,217

 

7%

 

$

1,915,601

 

(2%)

Average active selling communities

 

557

  

567

 

(2%)

  

562

 

(1%)

Monthly sales absorption rate per community

 

2.44

  

2.31

 

6%

  

2.55

 

(4%)

Cancellation rate

 

14%

  

15%

 

(1%)

  

13%

 

1%

Gross cancellations

 

677

  

711

 

(5%)

  

650

 

4%

Backlog (homes)

 

7,534

  

7,456

 

1%

  

7,109

 

6%

Backlog (dollar value)

$

3,561,471

 

$

3,428,713

 

4%

 

$

3,259,168

 

9%

               

Land purchases (incl. seller financing)

$

262,411

 

$

237,925

 

10%

 

$

165,269

 

59%

Adjusted Homebuilding EBITDA*

$

220,500

 

$

243,048

 

(9%)

 

$

178,864

 

23%

Adjusted Homebuilding EBITDA Margin %*

 

13.6%

  

15.4%

 

(1.8%)

  

13.4%

 

0.2%

Homebuilding interest incurred

$

52,168

 

$

55,610

 

(6%)

 

$

51,705

 

1%

Homebuilding interest capitalized to inventories owned

$

51,338

 

$

54,564

 

(6%)

 

$

50,875

 

1%

Homebuilding interest capitalized to investments in JVs

$

830

 

$

1,046

 

(21%)

 

$

830

 

   ―   

Interest amortized to cost of sales (incl. cost of land sales)

$

52,347

 

$

41,830

 

25%

 

$

39,428

 

33%

               

 

 

   

As of 

 
   

June 30,

 

December 31,

 

Percentage

 
   

2017

 

2016

 

or % Change

 

Select Balance Sheet Data

(Dollars in thousands, except per share amounts)

 
           

Homebuilding cash (including restricted cash)

$

200,200

 

$

219,407

 

(9%)

 

Inventories owned

$

6,654,990

 

$

6,438,792

 

3%

 

Goodwill

$

985,185

 

$

970,185

 

2%

 

Homesites owned and controlled

 

67,622

  

65,424

 

3%

 

Homes under construction

 

7,775

  

5,792

 

34%

 

Completed specs

 

986

  

1,255

 

(21%)

 

Homebuilding debt

$

3,762,273

 

$

3,419,787

 

10%

 

Stockholders’ equity

$

4,235,706

 

$

4,207,586

 

1%

 

Stockholders’ equity per share

$

38.44

 

$

36.77

 

5%

 

Total consolidated debt to book capitalization

 

48.0%

  

46.6%

 

1.4%

 

Adjusted net homebuilding debt to total adjusted book capitalization*

 

45.7%

  

43.2%

 

2.5%

 
           

 

1All 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 June 30,

 

Six Months Ended June 30,

    

2017

 

2016

 

2017

 

2016

    

(Dollars in thousands, except per share amounts)

    

(Unaudited)

Homebuilding:

           
 

Home sale revenues

$

1,620,614

 

$

1,558,701

 

$

2,958,313

 

$

2,737,866

 

Land sale revenues

 

500

  

19,661

  

500

  

26,179

  

Total revenues

 

1,621,114

  

1,578,362

  

2,958,813

  

2,764,045

 

Cost of home sales

 

(1,297,249)

  

(1,217,793)

  

(2,360,104)

  

(2,149,921)

 

Cost of land sales

 

(7)

  

(19,212)

  

(7)

  

(25,579)

  

Total cost of sales

 

(1,297,256)

  

(1,237,005)

  

(2,360,111)

  

(2,175,500)

   

Gross margin

 

323,858

  

341,357

  

598,702

  

588,545

   

Gross margin %

 

20.0%

  

21.6%

  

20.2%

  

21.3%

 

Selling, general and administrative expenses

 

(173,997)

  

(165,694)

  

(330,273)

  

(302,395)

 

Income (loss) from unconsolidated joint ventures

 

446

  

223

  

4,334

  

1,412

 

Other income (expense)

 

(2,675)

  

(4,415)

  

(2,844)

  

(7,823)

   

Homebuilding pretax income 

 

147,632

  

171,471

  

269,919

  

279,739

Financial Services:

           
 

Revenues

 

20,277

  

20,539

  

40,233

  

38,091

 

Expenses

 

(11,661)

  

(12,393)

  

(24,036)

  

(23,009)

   

Financial services pretax income

 

8,616

  

8,146

  

16,197

  

15,082

Income before taxes

 

156,248

  

179,617

  

286,116

  

294,821

Provision for income taxes

 

(57,254)

  

(66,857)

  

(104,502)

  

(109,400)

Net income 

 

98,994

  

112,760

  

181,614

  

185,421

  Less: Net income allocated to unvested restricted stock

 

(408)

  

(251)

  

(705)

  

(350)

Net income available to common stockholders

$

98,586

 

$

112,509

 

$

180,909

 

$

185,071

            
            

Income Per Common Share:

           
 

Basic

 

$

0.87

 

$

0.95

 

$

1.59

 

$

1.55

 

Diluted

$

0.75

 

$

0.83

 

$

1.38

 

$

1.36

               

Weighted Average Common Shares Outstanding:

           
 

Basic

  

113,689,435

  

118,419,937

  

114,086,136

  

119,617,438

 

Diluted

 

131,636,412

  

136,088,146

  

132,079,976

  

137,277,899

               

Cash Dividends Declared Per Common Share

$

0.04

 

$

0.04

 

$

0.08

 

$

0.08

               

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 
      

June 30,

 

December 31,

      

2017

 

2016

      

(Dollars in thousands)

ASSETS

(Unaudited)

   

Homebuilding:

     
 

Cash and equivalents

$

167,833

 

$

191,086

 

Restricted cash

  

32,367

  

28,321

 

Inventories:

       
  

Owned

   

6,654,990

  

6,438,792

  

Not owned

  

86,618

  

66,267

 

Investments in unconsolidated joint ventures

 

125,768

  

127,127

 

Deferred income taxes, net

 

312,471

  

330,378

 

Goodwill

   

985,185

  

970,185

 

Other assets

   

233,785

  

204,489

   

Total Homebuilding Assets

 

8,599,017

  

8,356,645

Financial Services:

     
 

Cash and equivalents

 

47,861

  

17,041

 

Restricted cash

  

21,375

  

21,710

 

Mortgage loans held for sale, net

 

155,180

  

262,058

 

Mortgage loans held for investment, net

 

25,613

  

24,924

 

Other assets

   

17,750

  

26,666

   

Total Financial Services Assets

 

267,779

  

352,399

    

Total Assets

$

8,866,796

 

$

8,709,044

           

LIABILITIES AND EQUITY

     

Homebuilding:

     
 

Accounts payable

 

$

146,383

 

$

211,780

 

Accrued liabilities

  

542,568

  

599,905

 

Secured project debt and other notes payable

 

27,041

  

27,579

 

Senior notes payable

 

3,735,232

  

3,392,208

   

Total Homebuilding Liabilities

 

4,451,224

  

4,231,472

Financial Services:

     
 

Accounts payable and other liabilities

 

19,374

  

22,559

 

Mortgage credit facility

 

149,828

  

247,427

   

Total Financial Services Liabilities

 

169,202

  

269,986

    

Total Liabilities

 

4,620,426

  

4,501,458

Equity:

     
 

Stockholders’ Equity:

     
  

Preferred stock

 

   ―   

  

   ―   

  

Common stock

 

1,102

  

1,144

  

Additional paid-in capital

 

3,060,402

  

3,204,835

  

Accumulated earnings

 

1,174,374

  

1,001,779

  

Accumulated other comprehensive income (loss), net of tax

 

(172)

  

(172)

  

   Total Stockholders’ Equity

 

4,235,706

  

4,207,586

 

Noncontrolling Interest

 

10,664

  

   ―   

   

Total Equity

 

4,246,370

  

4,207,586

    

Total Liabilities and Equity

$

8,866,796

 

$

8,709,044

           

 

INVENTORIES

  

June 30,

 

December 31,

  

2017

 

2016

  

(Dollars in thousands)

Inventories Owned:

 

(Unaudited)

  
     

     Land and land under development

 

$     3,156,378

 

$     3,627,740

     Homes completed and under construction

 

3,041,557

 

2,304,109

     Model homes

 

457,055

 

506,943

        Total inventories owned

 

$     6,654,990

 

$     6,438,792

     

Inventories Owned by Segment:

    
     

     North

 

$        930,156

 

$        851,972

     Southeast

 

1,998,997

 

1,896,552

     Southwest

 

1,438,224

 

1,421,669

     West

 

2,287,613

 

2,268,599

        Total inventories owned

 

$     6,654,990

 

$     6,438,792

     

 

REGIONAL OPERATING DATA

 
     

Three Months Ended June 30,

 
     

2017

 

2016

 

% Change

 
     

Homes

 

ASP

 

Homes

 

ASP

 

Homes

 

ASP

 
     

(Dollars in thousands)

 

New homes delivered:

                   
 

North

  

914

 

$

362

  

711

 

$

339

  

29%

  

7%

 
 

Southeast

  

1,075

  

399

  

983

  

392

  

9%

  

2%

 
 

Southwest

  

907

  

448

  

1,003

  

432

  

(10%)

  

4%

 
 

West

  

757

  

600

  

787

  

634

  

(4%)

  

(5%)

 
   

Consolidated total

  

3,653

 

$

444

  

3,484

 

$

447

  

5%

  

(1%)

 
                       
     

Six Months Ended June 30,

 
     

2017

 

2016

 

% Change

 
     

Homes

 

ASP

 

Homes

 

ASP

 

Homes

 

ASP

 
     

(Dollars in thousands)

 

New homes delivered:

                   
 

North

  

1,597

 

$

354

  

1,272

 

$

336

  

26%

  

5%

 
 

Southeast

  

1,956

  

399

  

1,696

  

391

  

15%

  

2%

 
 

Southwest

  

1,693

  

439

  

1,857

  

418

  

(9%)

  

5%

 
 

West

  

1,419

  

613

  

1,386

  

629

  

2%

  

(3%)

 
   

Consolidated total

  

6,665

 

$

444

  

6,211

 

$

441

  

7%

  

1%

 
                       
     

Three Months Ended June 30,

 
     

2017

 

2016

 

% Change

 
     

Homes

 

ASP

 

Homes

 

ASP

 

Homes

 

ASP

 
     

(Dollars in thousands)

 

Net new orders:

                   
 

North

  

923

 

$

355

  

933

 

$

331

  

(1%)

  

7%

 
 

Southeast

  

1,252

  

402

  

1,112

  

377

  

13%

  

7%

 
 

Southwest

  

940

  

445

  

945

  

431

  

(1%)

  

3%

 
 

West

  

963

  

649

  

931

  

659

  

3%

  

(2%)

 
   

Consolidated total

  

4,078

 

$

460

  

3,921

 

$

446

  

4%

  

3%

 
                       
     

Six Months Ended June 30,

 
     

2017

 

2016

 

% Change

 
     

Homes

 

ASP

 

Homes

 

ASP

 

Homes

 

ASP

 
     

(Dollars in thousands)

 

Net new orders:

                   
 

North

  

1,979

 

$

349

  

1,824

 

$

331

  

8%

  

5%

 
 

Southeast

  

2,535

  

394

  

2,313

  

374

  

10%

  

5%

 
 

Southwest

  

1,927

  

445

  

2,076

  

429

  

(7%)

  

4%

 
 

West

  

1,941

  

640

  

1,843

  

645

  

5%

  

(1%)

 
   

Consolidated total

  

8,382

 

$

452

  

8,056

 

$

440

  

4%

  

3%

 
                       
     

Three Months Ended June 30,

 

Six Months Ended June 30,

     

2017

 

2016

 

% Change

 

2017

 

2016

 

% Change

Average number of selling
communities during the period:

            
 

North

 

138

 

126

 

10%

 

139

 

121

 

15%

 

Southeast

 

181

 

179

 

1%

 

184

 

180

 

2%

 

Southwest

 

156

 

169

 

(8%)

 

155

 

172

 

(10%)

 

West

 

82

 

93

 

(12%)

 

82

 

94

 

(13%)

   

Consolidated total

 

557

 

567

 

(2%)

 

560

 

567

 

(1%)

                

 

     

At June 30,

 
     

2017

 

2016

 

% Change

 
     

Homes

 

Dollar
Value

 

Homes

 

Dollar
Value

 

Homes

 

Dollar
Value

 
     

(Dollars in thousands)

 

Backlog:

                   
 

North

  

1,680

 

$

603,968

  

1,555

 

$

524,001

  

8%

  

15%

 
 

Southeast

  

2,372

  

1,018,178

  

2,238

  

923,385

  

6%

  

10%

 
 

Southwest

  

1,848

  

896,335

  

2,121

  

970,020

  

(13%)

  

(8%)

 
 

West

  

1,634

  

1,042,990

  

1,542

  

1,011,307

  

6%

  

3%

 
   

Consolidated total

  

7,534

 

$

3,561,471

  

7,456

 

$

3,428,713

  

1%

  

4%

 
                       

 

     

At June 30,

 
     

2017

 

2016

 

% Change

 

Homesites owned and controlled:

       
 

North

 

14,759

 

15,636

 

(6%)

 
 

Southeast

 

23,402

 

23,033

 

2%

 
 

Southwest

 

13,982

 

15,006

 

(7%)

 
 

West

  

15,479

 

14,066

 

10%

 
  

Total (including joint ventures)

 

67,622

 

67,741

 

(0%)

 
           
 

Homesites owned

 

51,120

 

50,947

 

0%

 
 

Homesites optioned or subject to contract 

 

15,042

 

15,412

 

(2%)

 
 

Joint venture homesites

 

1,460

 

1,382

 

6%

 
  

Total (including joint ventures)

 

67,622

 

67,741

 

(0%)

 
           
           

Homesites owned:

       
 

Raw lots

 

9,860

 

8,325

 

18%

 
 

Homesites under development

 

13,694

 

12,344

 

11%

 
 

Finished homesites

 

12,761

 

14,296

 

(11%)

 
 

Under construction or completed homes

 

10,473

 

10,015

 

5%

 
 

Held for future development/for sale

 

4,332

 

5,967

 

(27%)

 
  

Total

 

51,120

 

50,947

 

0%

 
           

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 extraordinary purchase accounting adjustments related to the merger and interest amortized to cost of home sales.  The table set forth below also calculates adjusted operating margin percentage from home sales, excluding extraordinary purchase accounting adjustments related to the merger.  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

 
 

June 30, 
2017

 

Gross
Margin %

 

June 30,
2016

 

Gross
Margin %

 

March 31, 
2017

 

Gross
Margin %

 
 

(Dollars in thousands)

 
                

Home sale revenues

$

1,620,614

   

$

1,558,701

   

$

1,337,699

   

Less: Cost of home sales

 

(1,297,249)

    

(1,217,793)

    

(1,062,855)

   

Gross margin from home sales

 

323,365

 

20.0%

  

340,908

 

21.9%

  

274,844

 

20.5%

 

Add: Purchase accounting adjustments included in cost of home sales

 

   ―  

 

n/a

  

5,858

 

0.3%

  

   ―  

 

n/a

 

Adjusted gross margin from home sales, excluding purchase accounting adjustments included in cost of home sales

 

323,365

 

20.0%

  

346,766

 

22.2%

  

274,844

 

20.5%

 

Add: Capitalized interest included in cost of home sales

 

52,347

 

3.2%

  

40,528

 

2.6%

  

39,428

 

3.0%

 

Adjusted gross margin from home sales, excluding purchase accounting adjustments and interest amortized to cost of home sales

$

375,712

 

23.2%

 

$

387,294

 

24.8%

 

$

314,272

 

23.5%

 
                
                

Adjusted gross margin from home sales, excluding purchase accounting adjustments included in cost of home sales

$

323,365

 

20.0%

 

$

346,766

 

22.2%

 

$

274,844

 

20.5%

 

Less: Selling, general and administrative expenses

 

(173,997)

 

(10.7%)

  

(165,694)

 

(10.6%)

  

(156,276)

 

(11.7%)

 

Adjusted operating margin from home sales, excluding purchase accounting adjustments

$

149,368

 

9.2%

 

$

181,072

 

11.6%

 

$

118,568

 

8.9%

 
                

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. 

 

   

June 30,
2017

 

March 31,
2017

 

December 31,
2016

 

June 30,
2016

   

(Dollars in thousands)

              

Total consolidated debt

$

3,912,101

 

$

3,572,368

 

$

3,667,214

 

$

3,890,212

Less:

            
 

Financial services indebtedness

 

(149,828)

  

(154,467)

  

(247,427)

  

(174,514)

 

Homebuilding cash, including restricted cash

 

(200,200)

  

(174,187)

  

(219,407)

  

(286,840)

Adjusted net homebuilding debt

 

3,562,073

  

3,243,714

  

3,200,380

  

3,428,858

Stockholders’ equity

 

4,235,706

  

4,287,373

  

4,207,586

  

4,039,955

Total adjusted book capitalization

$

7,797,779

 

$

7,531,087

 

$

7,407,966

 

$

7,468,813

              

Total consolidated debt to book capitalization

 

48.0%

  

45.5%

  

46.6%

  

49.1%

              

Adjusted net homebuilding debt to total adjusted book capitalization

 

45.7%

  

43.1%

  

43.2%

  

45.9%

              
              

Homebuilding debt

$

3,762,273

 

$

3,417,901

 

$

3,419,787

 

$

3,715,698

LTM adjusted homebuilding EBITDA

$

981,269

 

$

1,003,817

 

$

996,183

 

$

842,628

              

Homebuilding debt to adjusted homebuilding EBITDA

 

3.8x

  

3.4x

  

3.4x

  

4.4x

              

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 June 30,

   

June 30,
2017

 

June 30,
2016

 

March 31,
2017

 

2017

 

2016

   

(Dollars in thousands)

                 

Net income 

$

98,994

 

$

112,760

 

$

82,620

 

$

480,923

 

$

310,127

 

Provision for income taxes

 

57,254

  

66,857

  

47,248

  

263,488

  

189,165

 

Homebuilding interest amortized to cost of sales

 

52,347

  

41,830

  

39,428

  

191,264

  

152,392

 

Homebuilding depreciation and amortization

 

14,915

  

15,381

  

12,676

  

61,750

  

53,460

                 

EBITDA

 

223,510

  

236,828

  

181,972

  

997,425

  

705,144

Add:

              
 

Amortization of stock-based compensation

 

4,922

  

3,726

  

4,294

  

19,498

  

18,052

 

Cash distributions of income from unconsolidated joint ventures

 

193

  

         ―  

  

3,081

  

3,495

  

2,688

 

Purchase accounting adjustments included in cost of home sales

 

         ―  

  

5,858

  

         ―  

  

         ―  

  

82,705

 

Merger and other one-time transaction related costs

 

937

  

5,005

  

986

  

8,559

  

65,914

Less:

               
 

Income from unconsolidated joint ventures

 

446

  

223

  

3,888

  

6,979

  

3,880

 

Income from financial services subsidiaries

 

8,616

  

8,146

  

7,581

  

40,729

  

27,995

Adjusted Homebuilding EBITDA

$

220,500

 

$

243,048

 

$

178,864

 

$

981,269

 

$

842,628

                 

Homebuilding revenues

$

1,621,114

 

$

1,578,362

 

$

1,337,699

 

$

6,582,808

 

$

5,090,546

                 

Adjusted Homebuilding EBITDA Margin %

 

13.6%

  

15.4%

  

13.4%

  

14.9%

  

16.6%

                 

 

SOURCE CalAtlantic Group, Inc.

Related Links

http://www.calatlantichomes.com

Contact Information:

CalAtlantic Group, Inc.

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