Exhibit 99.1
Shea Homes Reports Fourth Quarter and Full Year 2012 Results
Walnut, Calif., February 15, 2013
Shea Homes, one of America’s largest private homebuilders, today reported results for the fourth quarter and year ended December 31, 2012.
Three Months Ended 12/31/12 Highlights and Comparisons to Three Months Ended 12/31/11
| • | Net income (loss) attributable to Shea Homes was $33.2 million for the 2012 fourth quarter compared to $(7.1) million in the prior year |
| • | Home sales orders were 407 compared to 321, a 27% increase |
| • | Active selling communities averaged 63 and 71 in the fourth quarter of 2012 and 2011, respectively |
| • | Home sales per community for the quarter were 6.5 homes, or 2.2 per month, in 2012 compared to 4.5 homes, or 1.5 per month, in 2011, a 44% increase |
| • | Cancellation rate was 20% compared to 21% |
| • | Backlog units at December 31, 2012 were 911 compared to 461 at December 31, 2011, a 98% increase |
| • | Backlog sales value was $413.2 million at December 31, 2012 compared to $184.7 million at December 31, 2011, a 124% increase |
| • | The average selling price in backlog was $454,000 at December 31, 2012 compared to $401,000 at December 31, 2011, a 13% increase |
| • | Total revenues were $295.7 million compared to $241.5 million, a 22% increase |
| • | House revenues were $284.8 million* compared to $235.3 million*, a 21% increase |
| • | Homes closed were 700 compared to 542, a 29% increase |
| • | Average selling price of homes closed was $407,000 compared to $434,000, a 6% decrease |
| • | House gross margin was 20.9%* compared to 18.8%* |
| • | SG&A expense was $23.9 million (8.1% of revenues) compared to $26.5 million (11.0% of revenues) |
| • | Adjusted EBITDA was $75.3 million* versus $40.4 million* last year |
| • | Cash, restricted cash and investments at December 31, 2012 were $304.9 million compared to $314.5 million at December 31, 2011 |
Year Ended 12/31/12 Highlights and Comparisons to Year Ended 12/31/11
| • | Net income (loss) attributable to Shea Homes was $29.0 million compared to ($114.4) million |
| • | Home sales orders were 2,023 compared to 1,365, a 48% increase |
| • | Active selling communities averaged 65 and 76 in 2012 and 2011, respectively |
| • | Home sales per community for the year were 31.1 homes, or 2.6 per month, in 2012 compared to 18.0 homes, or 1.5 per month, in 2011, a 73% increase |
| • | Cancellation rate was 15% compared to 21% |
| • | Total revenues were $680.1 million compared to $587.8 million, a 16% increase |
| • | House revenues were $645.0 million* compared to $570.3 million*, a 13% increase |
| • | Homes closed were 1,573 compared to 1,348, a 17% increase |
| • | Average selling price of homes closed was $410,000 compared to $423,000, a 3% decrease |
| • | House gross margin was 20.2%* compared to 18.1%* |
| • | SG&A expense was $89.5 million (13.2% of revenues) compared to $82.6 million (14.1% of revenues) |
| • | Adjusted EBITDA was $131.2 million* versus $77.1 million* |
| * | See “Reconciliation of Non-GAAP Financial Measures” beginning on page 10. |
Page 1
Bert Selva, President and CEO, stated: “Our strong fourth quarter operating results reflect the improved housing market conditions we began experiencing earlier in 2012. Our improved sales pace for the year, lower cancellation rate and higher gross margins all contributed to the year over year increase in fourth quarter and full year earnings from our homebuilding operations. In addition, during the fourth quarter, we saw new home sales orders continue to meaningfully exceed the prior year levels and we were able to continue to raise home prices across most of our markets. As a result of these positive trends, we will begin 2013 with a healthy backlog of presold homes, which is up 98% year over year, and includes strong gross margins.
As we look ahead, we believe we are operating in some of the best housing markets in the country which continue to exhibit signs of improvement. In addition, we believe many of the important drivers that have historically contributed to a healthy housing market appear positive as we begin the new year, including low mortgage interest rates, lower resale and new home inventory levels than in recent years, favorable own versus rent dynamics and attractive affordability ratios. As a result of the improved housing environment, in 2013 we are targeting to exceed the 2012 total land acquisition and development spend of $240.0 million, and open approximately 28 communities compared to 15 in 2012.”
New home sales orders increased 27% year over year for the 2012 fourth quarter. Orders were up in all of our segments except the South West, despite an 11% decline in our average community count during the fourth quarter of 2012 compared to the year earlier period. The decrease in orders in the South West segment, specifically in the Arizona market, was primarily due to a lower community count and a reduced number of houses available for sale resulting from project close outs. The overall demand environment in Arizona appears healthy and we anticipate orders to pick up in the Arizona market as new communities are brought on line. The improved order trends for both the 2012 fourth quarter and full year resulted in a 98% year over year increase in the number of homes in our backlog at December 31, 2012.
For the 2012 fourth quarter, net income (loss) attributable to Shea Homes was $33.2 million compared to $(7.1) million for 2011, due primarily to a $37.6 million improvement in gross margin (driven by higher revenues and gross margin percentages), a $3.8 million reduction in general and administrative expenses, a $1.1 million decrease in interest expense, a $4.4 million decrease in equity in losses from joint ventures and a $6.4 million decrease in income attributable to non-controlling interests. These improvements were offset, in part, by a $1.2 million increase in selling expense due to an increase in homes closed and a $4.8 million charge related to our completed operations policies that were reinsured in 2009.
For the 2012 fourth quarter, total revenues were $295.7 million compared to $241.5 million for 2011, a 22% increase, and house revenues for the 2012 fourth quarter were $284.8 million* compared to $235.3 million* for 2011, a 21% increase. This increase was mostly due to a 29% increase in new house deliveries to 700, partially offset by a 6% decrease in average selling price to $407,000. Deliveries were up year over year in all of our segments except Southern California, which decline was due to a 33% lower number of active selling communities for the year versus 2011. The decrease in average selling price of homes closed was primarily attributable to a shift towards lower-priced homes, particularly in our Northern California and San Diego segments, partially offset by price increases in most of our markets.
Total gross margin for the 2012 fourth quarter was 22.1% compared to 11.5% for 2011, a 1,060 basis point (bp) increase, and house gross margin for the 2012 fourth quarter was 20.9%* compared to 18.8%* for 2011, a 210 bp increase. There were no inventory impairments in 2012 compared to $20.3 million of impairments in 2011. Increases in house gross margin were primarily attributable to price increases in most of our markets.
Page 2
SG&A expense for the 2012 fourth quarter was $23.9 million (8.1% of revenues) compared to $26.5 million (11.0% of revenues) for 2011. The decrease was primarily attributable to the Company leveraging its G&A base over a higher level of revenues and lower legal expenses associated with our completed contract method tax court case. The majority of these legal expenses were incurred prior to, and shortly after, the July 2012 trial. We await a decision from the Tax Court on this matter.
Interest incurred for the 2012 fourth quarter was $16.8 million compared to $16.1 million in 2011, while interest expense for the 2012 fourth quarter was $3.1 million versus $4.2 million for 2011. The 26% decrease in interest expense for the 2012 fourth quarter resulted from a higher level of qualified inventory.
Other income (expense) for the 2012 fourth quarter was $(5.6) million compared to $2.9 million in 2011. In 2012, other expense included a $4.8 million charge related to actuarial adjustments to our loss reserves on completed operations policies that were reinsured in 2009 (the “PIC Transaction”). In 2011, we recognized a $2.9 million gain due to the actuarial adjustments.
Net operating cash flows for the 2012 fourth quarter were $80.6 million compared to $68.3 million for 2011. The increase in cash flows provided by operating activities for the 2012 fourth quarter included increased cash receipts from deliveries of homes and sales of land, partially offset by increased land acquisitions, land development and construction costs. Total land acquisitions and development costs for the 2012 fourth quarter were $62.2 million compared to $42.9 million in the 2011 fourth quarter. For the year ended 2012, net operating cash flows were $(6.2) million compared to $38.9 million for 2011, the decrease primarily due to increased land acquisitions, land development and construction costs, partially offset by increased cash receipts from deliveries of homes and sales of land. Total land acquisitions and development costs for the year ended 2012 were $240.0 million compared to $138.0 million in 2011.
For the year ended 2012, net income (loss) attributable to Shea Homes was $29.0 million compared to ($114.4) million for 2011. The improvement was primarily due to the 16% increase in full year revenues, the 210 bp higher house gross margin percentage, and the $88.4 million loss on debt extinguishment recorded in May 2011. In addition, in 2012, we recognized an $8.8 million gain on sale of investments and a $7.0 million decrease in income attributable to non-controlling interests, offset by a $12.0 million charge in 2012 related to actuarial adjustments to our loss reserves on completed operations policies that were reinsured in 2009 compared to a $3.1 million gain in 2011, a $3.1 million increase in interest expense, a $6.9 million increase in SG&A expense and a $3.7 million increase in income tax expense.
At December 31, 2012, total equity was $319.2 million compared to $328.0 million at December 31, 2011. The decrease in equity was primarily the result of the Shea Colorado LLC transaction previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. As a result of this transaction, which resulted in us receiving a distribution of homebuilding assets, total equity decreased $39.8 million, of which $11.6 million was attributable to SHLP and $28.2 million to non-controlling interests. Full year net income of $29.2 million partially offset the impact of this transaction.
About Shea Homes
Shea Homes is one of the largest private homebuilders in the nation. Since its founding in 1968, Shea Homes has delivered more than 88,000 homes. Shea Homes builds homes with quality craftsmanship and designs that best fit varied lifestyles and budgets. Over the past several years, Shea Homes has been recognized as a leader in customer satisfaction with a reputation for design, quality and service. For more about Shea Homes and its communities, visit www.sheahomes.com.
The preceding summary of the financial results of Shea Homes Limited Partnership and its subsidiaries does not purport to be complete and is qualified in its entirety by reference to the consolidated financial statements of Shea Homes Limited Partnership and its subsidiaries, available on our website at: http://www.sheahomes.com/investor.
Page 3
This news release contains forward-looking statements and information relating to Shea Homes Limited Partnership and its subsidiaries, such as improving housing market conditions, the strength of our housing markets, the number of new community openings, the strength of our gross margins in our backlog and the expected improvement in orders for the South West region in 2013, that are based on the beliefs of, as well as assumptions made by, and information currently available to, our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “anticipate,” “appear” and “project” and similar expressions, as they relate to Shea Homes Limited Partnership and its subsidiaries are intended to identify forward-looking statements. These statements reflect our management’s current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of Shea Homes Limited Partnership’s and its subsidiaries’ 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: changes in employment levels; changes in the availability of financing for homebuyers; changes in interest rates; changes in consumer confidence; changes in levels of new and existing homes for sale; changes in demographic trends; changes in housing demands; changes in home prices; elimination or reduction of the tax benefits associated with owning a home; litigation risks associated with home warranty and construction defect and other claims; and various other factors, both referenced and not referenced above, and included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described as anticipated, believed, estimated, expected, intended, planned or projected. Except as required by law, Shea Homes Limited Partnership and its subsidiaries neither intend nor assume any obligation to revise or update these forward-looking statements, which speak only as of their dates. Shea Homes Limited Partnership and its subsidiaries nonetheless reserve 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: Andrew Parnes, CFO @ 909-594-9500 or andy.parnes@sheahomes.com
Page 4
KEY OPERATIONAL AND FINANCIAL DATA
(dollars in thousands)
| At or For the Three Months Ended December 31, | At or For the Year Ended December 31, | |||||||||||||||||||||||
| 2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||
| Operating Data: |
||||||||||||||||||||||||
| Revenues |
$ | 295,655 | $ | 241,477 | 22 | % | $ | 680,147 | $ | 587,770 | 16 | % | ||||||||||||
| Gross margin % |
22.1 | % | 11.5 | % | 1,060 bp’s | 20.8 | % | 12.3 | % | 850 bp’s | ||||||||||||||
| Homebuilding revenues (a) * |
$ | 295,408 | $ | 240,944 | 23 | % | $ | 679,162 | $ | 586,385 | 16 | % | ||||||||||||
| Homebuilding gross margin % (a) * |
22.1 | % | 11.3 | % | 1,080 bp’s | 20.7 | % | 12.1 | % | 860 bp’s | ||||||||||||||
| House revenues * |
$ | 284,766 | $ | 235,292 | 21 | % | $ | 645,000 | $ | 570,267 | 13 | % | ||||||||||||
| House gross margin |
$ | 59,579 | $ | 44,297 | 34 | % | $ | 130,093 | $ | 102,952 | 26 | % | ||||||||||||
| House gross margin % * |
20.9 | % | 18.8 | % | 210 bp’s | 20.2 | % | 18.1 | % | 210 bp’s | ||||||||||||||
| Adjusted house gross margin % excluding interest in cost of sales * |
29.5 | % | 26.9 | % | 260 bp’s | 28.7 | % | 26.1 | % | 260 bp’s | ||||||||||||||
| Inventory impairments |
$ | — | $ | 20,298 | -100 | % | $ | — | $ | 30,600 | -100 | % | ||||||||||||
| SG&A expense |
$ | 23,863 | $ | 26,472 | -10 | % | $ | 89,535 | $ | 82,625 | 8 | % | ||||||||||||
| SG&A % of total revenue |
8.1 | % | 11.0 | % | (290) bp’s | 13.2 | % | 14.1 | % | (90) bp’s | ||||||||||||||
| Net income (loss) attributable to Shea Homes |
$ | 33,220 | $ | (7,089 | ) | — | $ | 29,038 | $ | (114,385 | ) | — | ||||||||||||
| Adjusted EBITDA (b) * |
$ | 75,286 | $ | 40,445 | 86 | % | $ | 131,201 | $ | 77,130 | 70 | % | ||||||||||||
| Interest incurred |
$ | 16,769 | $ | 16,055 | 4 | % | $ | 66,857 | $ | 69,961 | -4 | % | ||||||||||||
| Interest capitalized to inventory |
$ | 13,440 | $ | 11,676 | 15 | % | $ | 46,146 | $ | 51,840 | -11 | % | ||||||||||||
| Interest capitalized to investments in joint ventures |
$ | 245 | $ | 210 | 17 | % | $ | 849 | $ | 1,315 | -35 | % | ||||||||||||
| Interest expense |
$ | 3,084 | $ | 4,170 | -26 | % | $ | 19,862 | $ | 16,806 | 18 | % | ||||||||||||
| Interest in cost of sales (c) |
$ | 24,418 | $ | 18,930 | 29 | % | $ | 54,733 | $ | 45,944 | 19 | % | ||||||||||||
| Other Data (d): |
||||||||||||||||||||||||
| Home sales orders (units) |
407 | 321 | 27 | % | 2,023 | 1,365 | 48 | % | ||||||||||||||||
| Homes closed (units) |
700 | 542 | 29 | % | 1,573 | 1,348 | 17 | % | ||||||||||||||||
| Average selling price |
$ | 407 | $ | 434 | -6 | % | $ | 410 | $ | 423 | -3 | % | ||||||||||||
| Average active selling communities |
63 | 71 | -11 | % | 65 | 76 | -14 | % | ||||||||||||||||
| Home sales orders per community |
6.5 | 4.5 | 44 | % | 31.1 | 18.0 | 73 | % | ||||||||||||||||
| Cancellation rate |
20 | % | 21 | % | 15 | % | 21 | % | ||||||||||||||||
| Backlog at end of period (units) |
911 | 461 | 98 | % | ||||||||||||||||||||
| Backlog at end of period (estimated sales value) |
$ | 413,196 | $ | 184,730 | 124 | % | ||||||||||||||||||
| Lots owned or controlled (units) |
17,910 | 17,762 | 1 | % | ||||||||||||||||||||
| Homes under construction (units) (e) |
826 | 456 | 81 | % | ||||||||||||||||||||
| (a) | Homebuilding revenue and gross margin include house, land and other homebuilding activities. |
| (b) | See page 11 for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss). |
| (c) | As previously capitalized to house and land. |
| (d) | Represents consolidated activity only; excludes unconsolidated joint ventures. |
| (e) | Homes under construction includes completed homes. |
| * | See “Reconciliation of Non-GAAP Financial Measures” beginning on page 10. |
Page 5
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 279,756 | $ | 268,366 | ||||
| Restricted cash |
13,031 | 13,718 | ||||||
| Investments |
12,078 | 32,428 | ||||||
| Accounts and other receivables, net |
141,289 | 120,689 | ||||||
| Receivables from related parties, net |
34,028 | 60,223 | ||||||
| Inventory |
837,653 | 783,810 | ||||||
| Investments in joint ventures |
28,653 | 17,870 | ||||||
| Other assets, net |
27,049 | 31,012 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,373,537 | $ | 1,328,116 | ||||
|
|
|
|
|
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| Liabilities and equity |
||||||||
| Liabilities: |
||||||||
| Notes payable |
$ | 758,209 | $ | 752,056 | ||||
| Other liabilities |
296,081 | 248,057 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,054,290 | 1,000,113 | ||||||
| Total equity |
319,247 | 328,003 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 1,373,537 | $ | 1,328,116 | ||||
|
|
|
|
|
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
| Three Months
Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenues |
$ | 295,655 | $ | 241,477 | $ | 680,147 | $ | 587,770 | ||||||||
| Cost of sales |
(230,196 | ) | (213,631 | ) | (538,434 | ) | (515,578 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross margin |
65,459 | 27,846 | 141,713 | 72,192 | ||||||||||||
| Selling, general and administrative expenses |
(23,863 | ) | (26,472 | ) | (89,535 | ) | (82,625 | ) | ||||||||
| Loss on debt extinguishment |
— | — | — | (88,384 | ) | |||||||||||
| Interest expense |
(3,084 | ) | (4,170 | ) | (19,862 | ) | (16,806 | ) | ||||||||
| Other income (expense), net |
(5,597 | ) | 2,947 | (2,516 | ) | 5,312 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
32,915 | 151 | 29,800 | (110,311 | ) | |||||||||||
| Income tax benefit (expense) |
287 | (799 | ) | (616 | ) | 3,069 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
33,202 | (648 | ) | 29,184 | (107,242 | ) | ||||||||||
| Less: Net loss (income) attributable to non-controlling interests |
18 | (6,441 | ) | (146 | ) | (7,143 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to Shea Homes |
$ | 33,220 | $ | (7,089 | ) | $ | 29,038 | $ | (114,385 | ) | ||||||
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|
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|
|
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|
|
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Page 6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Operating activities |
||||||||||||||||
| Net income (loss) |
$ | 33,202 | $ | (648 | ) | $ | 29,184 | $ | (107,242 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||||||||||
| Loss on debt extinguishment |
— | — | — | 88,384 | ||||||||||||
| Depreciation and amortization expense |
3,383 | 4,083 | 8,638 | 11,296 | ||||||||||||
| Inventory impairment |
— | 20,298 | — | 30,600 | ||||||||||||
| Gain on sale of available-for-sale investments |
(4 | ) | (26 | ) | (8,806 | ) | (565 | ) | ||||||||
| Other operating activities, net |
(289 | ) | (1,703 | ) | 173 | (822 | ) | |||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Inventory |
46,127 | 67,674 | (68,733 | ) | 31,521 | |||||||||||
| Payables and other liabilities |
7,412 | (34,914 | ) | 50,336 | (6,110 | ) | ||||||||||
| Other operating assets |
(9,213 | ) | 13,530 | (16,983 | ) | (8,184 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) operating activities |
80,618 | 68,294 | (6,191 | ) | 38,878 | |||||||||||
| Investing activities |
||||||||||||||||
| Purchase of available-for-sale investments |
— | (20,205 | ) | — | (20,205 | ) | ||||||||||
| Proceeds from sale of investments |
2,593 | 544 | 26,547 | 1,724 | ||||||||||||
| Net proceeds from promissory notes from related parties |
56 | (176 | ) | 1,987 | 107,680 | |||||||||||
| Other investing activities, net |
(10,615 | ) | 14,010 | (12,110 | ) | 15,778 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) investing activities |
(7,966 | ) | (5,827 | ) | 16,424 | 104,977 | ||||||||||
| Financing activities |
||||||||||||||||
| Net decrease in debt |
(888 | ) | (595 | ) | (2,429 | ) | (52,401 | ) | ||||||||
| Amortization of notes payable discount |
— | — | — | 7,366 | ||||||||||||
| Contributions from owners |
2,352 | 2,033 | 2,352 | 2,033 | ||||||||||||
| Other financing activities, net |
— | (4,575 | ) | 1,234 | 639 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) financing activities |
1,464 | (3,137 | ) | 1,157 | (42,363 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
74,116 | 59,330 | 11,390 | 101,492 | ||||||||||||
| Cash and cash equivalents at beginning of period |
205,640 | 209,036 | 268,366 | 166,874 | ||||||||||||
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|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents at end of period |
$ | 279,756 | $ | 268,366 | $ | 279,756 | $ | 268,366 | ||||||||
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Page 7
SEGMENT OPERATING DATA
(dollars in thousands)
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Homes Closed |
Avg. Selling Price |
Homes Closed |
Avg. Selling Price |
Homes Closed |
Avg. Selling Price |
Homes Closed |
Avg. Selling Price |
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| Homes closed: |
||||||||||||||||||||||||||||||||
| Southern California |
81 | $ | 566 | 122 | $ | 545 | 249 | $ | 523 | 313 | $ | 534 | ||||||||||||||||||||
| San Diego |
123 | 410 | 103 | 477 | 194 | 441 | 172 | 505 | ||||||||||||||||||||||||
| Northern California |
153 | 472 | 76 | 529 | 323 | 487 | 215 | 501 | ||||||||||||||||||||||||
| Mountain West |
124 | 447 | 86 | 416 | 284 | 446 | 215 | 419 | ||||||||||||||||||||||||
| South West |
207 | 279 | 143 | 288 | 492 | 280 | 406 | 276 | ||||||||||||||||||||||||
| Other |
12 | 253 | 12 | 210 | 31 | 231 | 27 | 224 | ||||||||||||||||||||||||
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|
|||||||||||||||||
| Total consolidated |
700 | $ | 407 | 542 | $ | 434 | 1,573 | $ | 410 | 1,348 | $ | 423 | ||||||||||||||||||||
| Unconsolidated joint ventures |
57 | 297 | 27 | 301 | 149 | 305 | 107 | 307 | ||||||||||||||||||||||||
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|
|||||||||||||||||
| Total |
757 | $ | 399 | 569 | $ | 428 | 1,722 | $ | 401 | 1,455 | $ | 414 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
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|
|
|
|
|||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Home Sales Orders |
Avg. Active Selling Communities |
Home Sales Orders |
Avg. Active Selling Communities |
Home Sales Orders |
Avg. Active Selling Communities |
Home Sales Orders |
Avg. Active Selling Communities |
|||||||||||||||||||||||||
| Home sales orders: |
||||||||||||||||||||||||||||||||
| Southern California |
66 | 7 | 62 | 11 | 313 | 8 | 281 | 12 | ||||||||||||||||||||||||
| San Diego |
81 | 8 | 32 | 11 | 262 | 9 | 169 | 10 | ||||||||||||||||||||||||
| Northern California |
83 | 14 | 62 | 15 | 459 | 14 | 221 | 15 | ||||||||||||||||||||||||
| Mountain West |
85 | 14 | 63 | 13 | 401 | 14 | 251 | 13 | ||||||||||||||||||||||||
| South West |
85 | 17 | 95 | 18 | 552 | 17 | 411 | 23 | ||||||||||||||||||||||||
| Other |
7 | 3 | 7 | 3 | 36 | 3 | 32 | 3 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total consolidated |
407 | 63 | 321 | 71 | 2,023 | 65 | 1,365 | 76 | ||||||||||||||||||||||||
| Unconsolidated joint ventures |
48 | 10 | 32 | 13 | 199 | 11 | 119 | 13 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
455 | 73 | 353 | 84 | 2,222 | 76 | 1,484 | 89 | ||||||||||||||||||||||||
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|
|
|
|
|
|
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|
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|
|||||||||||||||||
| At December 31, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Backlog Units |
Backlog Sales Value |
Backlog Units |
Backlog Sales Value |
|||||||||||||
| Backlog: |
||||||||||||||||
| Southern California |
123 | $ | 87,675 | 59 | $ | 26,715 | ||||||||||
| San Diego |
107 | 47,580 | 39 | 18,837 | ||||||||||||
| Northern California |
241 | 107,497 | 105 | 51,269 | ||||||||||||
| Mountain West |
212 | 98,733 | 95 | 44,489 | ||||||||||||
| South West |
212 | 67,519 | 152 | 41,309 | ||||||||||||
| Other |
16 | 4,192 | 11 | 2,111 | ||||||||||||
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|
|
|
|
|
|
|
|||||||||
| Total consolidated |
911 | $ | 413,196 | 461 | $ | 184,730 | ||||||||||
| Unconsolidated joint ventures |
84 | 25,724 | 34 | 11,933 | ||||||||||||
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|
|
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|
|
|
|
|||||||||
| Total |
995 | $ | 438,920 | 495 | $ | 196,663 | ||||||||||
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|||||||||
Page 8
SEGMENT OPERATING DATA (continued)
(unaudited)
| At December 31, | ||||||||
| 2012 | 2011 | |||||||
| Lots owned or controlled: |
||||||||
| Southern California |
1,989 | 1,241 | ||||||
| San Diego |
764 | 774 | ||||||
| Northern California |
3,182 | 3,927 | ||||||
| Mountain West |
10,074 | 9,910 | ||||||
| South West |
1,876 | 1,854 | ||||||
| Other |
25 | 56 | ||||||
|
|
|
|
|
|||||
| Total consolidated |
17,910 | 17,762 | ||||||
| Unconsolidated joint ventures |
3,874 | 1,976 | ||||||
|
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|
|
|
|||||
| Total |
21,784 | 19,738 | ||||||
|
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|
|
|
|||||
| Lots by ownership type: |
||||||||
| Lots owned |
9,830 | 9,722 | ||||||
| Lots optioned or subject to contract |
8,080 | 8,040 | ||||||
| Joint venture lots |
3,874 | 1,976 | ||||||
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|
|
|
|||||
| Total |
21,784 | 19,738 | ||||||
|
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|
|
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Page 9
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands)
(unaudited)
In this earnings release, we utilize certain financial measures that in each case are not recognized under GAAP. We present these measures because we believe they and similar measures are useful to investors in evaluating a company’s operating performance and financing structure and, in certain cases, because they could be used to determine compliance with contractual covenants or as one measure of the Company’s ability to service debt and obtain financing. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with GAAP, they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
The following table reconciles revenues, cost of sales and gross margins, as reported and prepared in accordance with GAAP, to the non-GAAP measures house revenues, house cost of sales, house gross margin and house gross margin percentage, which exclude land sales, impairment charges and other transactions, and to adjusted house revenues, adjusted house cost of sales, adjusted house gross margin and adjusted house gross margin percentage, which add back interest in cost of sales.
| Three Months Ended December 31, 2012 | Three Months Ended December 31, 2011 | |||||||||||||||||||||||||||||||
| Cost of | Gross | Gross | Cost of | Gross | Gross | |||||||||||||||||||||||||||
| Revenue | Sales | Margin $ | Margin % | Revenue | Sales | Margin $ | Margin % | |||||||||||||||||||||||||
| Total |
$ | 295,655 | $ | (230,196 | ) | $ | 65,459 | 22.1 | % | $ | 241,477 | $ | (213,631 | ) | $ | 27,846 | 11.5 | % | ||||||||||||||
| Less: Other |
(247 | ) | (247 | ) | (533 | ) | (533 | ) | ||||||||||||||||||||||||
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|
|||||||||||||||||
| Homebuilding |
295,408 | (230,196 | ) | 65,212 | 22.1 | % | 240,944 | (213,631 | ) | 27,313 | 11.3 | % | ||||||||||||||||||||
| Less: Land |
(10,810 | ) | 5,866 | (4,944 | ) | 45.7 | % | (4,276 | ) | 3,033 | (1,243 | ) | 29.1 | % | ||||||||||||||||||
| Less: Impairment |
— | — | — | — | 20,298 | 20,298 | ||||||||||||||||||||||||||
| Less: Other homebuilding |
168 | (857 | ) | (689 | ) | (1,376 | ) | (695 | ) | (2,071 | ) | |||||||||||||||||||||
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|
|||||||||||||||||
| House |
$ | 284,766 | $ | (225,187 | ) | $ | 59,579 | 20.9 | % | $ | 235,292 | $ | (190,995 | ) | $ | 44,297 | 18.8 | % | ||||||||||||||
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|
|
|
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|
|
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|
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|
|
|
|||||||||||||||||
| Add: Interest in house cost of sales (a) |
24,418 | 24,418 | 18,930 | 18,930 | ||||||||||||||||||||||||||||
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|
|||||||||||||||||
| Adjusted house excluding interest in cost of sales |
$ | 284,766 | $ | (200,769 | ) | $ | 83,997 | 29.5 | % | $ | 235,292 | $ | (172,065 | ) | $ | 63,227 | 26.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Year Ended December 31, 2012 | Year Ended December 31, 2011 | |||||||||||||||||||||||||||||||
| Cost of | Gross | Gross | Cost of | Gross | Gross | |||||||||||||||||||||||||||
| Revenue | Sales | Margin $ | Margin % | Revenue | Sales | Margin $ | Margin % | |||||||||||||||||||||||||
| Total |
$ | 680,147 | $ | (538,434 | ) | $ | 141,713 | 20.8 | % | $ | 587,770 | $ | (515,578 | ) | $ | 72,192 | 12.3 | % | ||||||||||||||
| Less: Other |
(985 | ) | (985 | ) | (1,385 | ) | (1,385 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|||||||||||||||||
| Homebuilding |
679,162 | (538,434 | ) | 140,728 | 20.7 | % | 586,385 | (515,578 | ) | 70,807 | 12.1 | % | ||||||||||||||||||||
| Less: Land |
(32,583 | ) | 18,797 | (13,786 | ) | 42.3 | % | (11,261 | ) | 8,861 | (2,400 | ) | 21.3 | % | ||||||||||||||||||
| Less: Impairment |
— | — | — | — | 30,600 | 30,600 | ||||||||||||||||||||||||||
| Less: Other homebuilding |
(1,579 | ) | 4,730 | 3,151 | (4,857 | ) | 8,802 | 3,945 | ||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|||||||||||||||||
| House |
$ | 645,000 | $ | (514,907 | ) | $ | 130,093 | 20.2 | % | $ | 570,267 | $ | (467,315 | ) | $ | 102,952 | 18.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Add: Interest in house cost of sales (a) |
54,733 | 54,733 | 45,944 | 45,944 | ||||||||||||||||||||||||||||
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|
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|
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|
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|
|||||||||||||||||
| Adjusted house excluding interest in cost of sales |
$ | 645,000 | $ | (460,174 | ) | $ | 184,826 | 28.7 | % | $ | 570,267 | $ | (421,371 | ) | $ | 148,896 | 26.1 | % | ||||||||||||||
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|
|
|||||||||||||||||
| (a) | Interest incurred is generally capitalized to inventory, then expensed in cost of sales as related units close. |
Page 10
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(in thousands)
(unaudited)
The following table calculates the non-GAAP measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income as reported and prepared in accordance with GAAP. Adjusted EBITDA means net income (loss) (plus cash distributions of income from consolidated and unconsolidated joint ventures and non-guarantor subsidiaries) before (a) income taxes, (b) interest expense, (c) expensing of previously capitalized interest included in costs of sales and in equity in income (loss) from joint ventures, (d) impairment charges and project write-offs and abandonments, (e) loss on debt extinguishment, (f) depreciation and amortization, (g) realized gain on sale of investments, (h) income (loss) from joint ventures and non-guarantor subsidiaries, (i) deferred (gain) loss recognition from the PIC Transaction, and (j) gain on sale of investment in joint ventures. Other companies may calculate Adjusted EBITDA (or similarly titled measures) differently.
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income (loss) |
$ | 33,202 | $ | (648 | ) | $ | 29,184 | $ | (107,242 | ) | ||||||
| Adjustments: |
||||||||||||||||
| Income tax expense (benefit) |
(287 | ) | 799 | 616 | (3,069 | ) | ||||||||||
| Depreciation and amortization expense |
3,383 | 4,083 | 8,638 | 11,296 | ||||||||||||
| Interest in cost of sales |
24,418 | 18,930 | 54,733 | 45,944 | ||||||||||||
| Interest in equity in income (loss) from joint ventures |
245 | 950 | 849 | 1,619 | ||||||||||||
| Interest expense |
3,084 | 4,170 | 19,862 | 16,806 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
64,045 | 28,284 | 113,882 | (34,646 | ) | |||||||||||
| Adjustments: |
||||||||||||||||
| Loss on debt extinguishment |
— | — | — | 88,384 | ||||||||||||
| Impairment charge |
— | 22,673 | — | 32,975 | ||||||||||||
| Project write-offs and abandonments |
1,266 | 26 | 2,039 | 236 | ||||||||||||
| Realized gain on sale of investments |
(4 | ) | (26 | ) | (8,806 | ) | (565 | ) | ||||||||
| Deferred loss (gain) recognition from PIC Transaction |
4,845 | (2,939 | ) | 12,013 | (3,072 | ) | ||||||||||
| Gain on sale of investment in joint ventures |
— | (5,939 | ) | — | (5,939 | ) | ||||||||||
| Loss (income) from joint ventures and non-guarantor subsidiaries |
5,126 | (2,223 | ) | 11,366 | (485 | ) | ||||||||||
| Distributions of earnings from joint ventures and non-guarantor subsidiaries |
— | 544 | 678 | 544 | ||||||||||||
| Other |
8 | 45 | 29 | (302 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | 75,286 | $ | 40,445 | $ | 131,201 | $ | 77,130 | ||||||||
|
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|||||||||
Page 11