EX-99.1 2 exhibit991.htm EXHIBIT Exhibit 99.1
 
EXHIBIT 99.1

UCP REPORTS FOURTH QUARTER AND YEAR END RESULTS

-Homebuilding Revenue Grew 416% In 2013-
-Added 1,350 Lots in Nine Projects During 2013 -
- Revenue of $29.6 Million in Fourth Quarter 2013 -
- ASP in Backlog Increases 39% -

San Jose, California, March 13, 2014. UCP, Inc. (NYSE: UCP) today announced its results of operations for the three months and full year ended December 31, 2013.

Fourth Quarter 2013 Highlights
•
Total consolidated revenue of $29.6 million
•
Revenue from homebuilding operations of $25.9 million
•
Home deliveries of 65 units
•
Net new home orders of 40 units
•
Land development revenue of $3.7 million
•
Consolidated gross margin of 20.0%

2013 Annual Highlights
•
Total consolidated revenue of $92.7 million
•
Revenue from homebuilding operations of $72.5 million
•
Lots owned and controlled increased to 5,380
•
Consolidated gross margin of 23.1%
•
Home deliveries of 196 units

“2013 was a hallmark year for UCP as we grew our homebuilding platform at a rapid pace, expanded in our existing markets and added a new region, Southern California, while strengthening our already robust land position. We are well positioned with a low leveraged balance sheet that provides us with capacity and flexibility that will support our growth,” stated Dustin Bogue, President and Chief Executive Officer of UCP. “During 2013, our homebuilding segment revenues grew 416% and we added nine new projects to our land portfolio encompassing 1,350 lots.”

Mr. Bogue continued, “Though we did experience a deceleration in our homebuilding operations in the second half of the year, primarily due to macroeconomic issues, including volatile mortgage interest rates and political uncertainty impacting buyer confidence, we believe the long term housing recovery remains intact. Our markets continue to exhibit strong fundamentals, including low housing stock, rising employment,

 
EXHIBIT 99.1

and strong affordability. As we look to 2014, we are well positioned to grow revenue with both a strong pipeline of new opportunities as well as a continuation our community count expansion from our existing land base. To that end, in 2014 we opened models in two important multi-phase, master-planned communities; three neighborhoods at East Garrison in Monterey, California, and two neighborhoods at The Preserve in Tumwater, Washington.”

Fourth Quarter 2013 Operating Results

Total consolidated revenue including both homebuilding and land development segments for the three months ended December 31, 2013 was relatively flat, at $29.6 million, as compared to $29.9 million for the three months ended December 31, 2012.
 
Revenue from homebuilding operations in the fourth quarter rose by $16.2 million, to $25.9 million, as compared to $9.7 million for the same period last year. The improvement was primarily the result of a 170.8% increase in the number of homes delivered to 65 during the 2013 period, as compared to 24 homes during the 2012 period. An increase in the number of selling communities to nine communities at year end 2013 compared to four at year end last year was the primary driver of growth in deliveries. Average selling price declined slightly to $398,000 during the fourth quarter of 2013, as compared to, approximately $406,000 during the fourth quarter of 2012. The decrease in average selling price was primarily a result of geographic mix.

Revenue from land sales for the three months ended December 31, 2013 was $3.7 million compared to $20.1 million in the same period in 2012. This decline in land development revenue reflected both our shift in focus to our homebuilding operations during 2013 and moderated demand for land in the second half of 2013.

Consolidated gross margins in the current quarter were 20.0% compared to 27.6% in the same period in 2012. Homebuilding gross margins during the fourth quarter were 18.9%, compared to 30.9% in the same period in 2012, due to an increase in the cost of sales, primarily attributable to a higher cost basis in the homes sold.

Sales and marketing expense for the current quarter was $1.9 million as compared to $1.5 million in the 2012 quarter; due to the significant increase in the number of selling communities being marketed and an increase of home delivery transaction costs in the quarter. As a percentage of total revenue, sales and marketing expenses increased to 6.4% in the current quarter as compared to 5.2% last year, primarily as a result of additional sales and marketing headcount in 2013.

General and administrative expense for the current quarter was $6.1 million as compared to $3.0 million in the 2012 quarter. The increase of $3.1 million is largely due to increased payroll costs associated with higher headcount and $1.2 million of stock based compensation. As a percentage of total revenue, general and administrative expenses were 20.5% for the fourth quarter 2013, compared to 10.1% for the same period in 2012.

UCP’s net loss for the fourth quarter was $2.0 million (of this, $0.1 million loss relates to non-controlling interest) versus net income of $3.7 million in the same period last year.

Net new home orders in the quarter increased to 40 from 34 in the same period in 2012, primarily as the result of an increase in average active selling communities to nine from four in the fourth quarter of 2012.

 
EXHIBIT 99.1

Unit backlog in the quarter increased to 35 from 26. Backlog on a dollar basis increased to $17.1 million and the average selling price of homes in backlog increased 38.5% in the fourth quarter versus the same period last year.

UCP increased total lots owned and controlled to 5,380 from 4,853 in the same period last year. The Company remains active acquiring land in desirable and high growth areas of the Puget Sound market in Washington State, and certain markets in California including the South San Francisco Bay Area, select markets of the Central Valley, and Southern California.

Year 2013 Operating Results

Total consolidated revenue for the year ended December 31, 2013 increased by $34.6 million, or 59.5%, to $92.7 million, as compared to $58.1 million for the year ended December 31, 2012. Revenue growth was primarily the result of an increase number of selling communities and higher average sales prices.

Revenue from homebuilding operations in 2013 rose by $58.5 million, to $72.5 million, as compared to $14.1 million last year. The improvement was primarily the result of an increase in the number of homes delivered to 196 during 2013, as compared to 41 homes during 2012, and the increase in the average selling price of homes to approximately $370,000 during 2013, as compared to approximately $343,000 during 2012. Average selling price during the year grew primarily as the result of stronger geographic mix.

Revenue from land sales for 2013 was $20.2 million compared to $44.1 million in 2012.

Consolidated gross margins in 2013 were 23.1% compared to 26.5% in 2012, due to an increase in the cost of sales, primarily attributable to a higher cost basis in the homes sold. Homebuilding gross margins 2013 were 20.7%, compared to 30.1% in 2012, due to an increase in the cost of sales, primarily attributable to a higher cost basis in the homes sold.

Sales and marketing expense for 2013 was $6.6 million as compared to $2.9 million in 2012; due to the significant increase in the number of selling communities and homes delivered during the year. As a percentage of total revenue, sales and marketing expenses increased to 7.2% in 2013 as compared to 4.9% last year, as a result of additional sales and marketing headcount in 2013.

General and administrative expenses for the year was $19.4 million as compared to $10.1 million in 2012, the increase of $9.3 million was largely a result of a increased payroll cost associated with a higher headcount, $2.2 million of stock based compensation and $1.2 million of non-recurring IPO costs. As a percentage of total revenue, general and administrative expenses were 20.9% compared to 17.4% for the year 2012; excluding the non-recurring IPO costs, general and administrative expenses were 19.6% of total revenue for the year 2013.

UCP’s net loss for 2013 was $4.3 million (of this, $2.3 million relates to non-controlling interest) versus net income of $3.0 million in 2012.

Net new home orders for 2013 increased to 205 from 61 in 2012, primarily as the result of an increase in average active selling communities to seven from three in the prior year.




 
EXHIBIT 99.1

Webcast and Conference Call

The Company will host a conference call for investors and other interested parties on Thursday, March 13, 2014, beginning at 12:00 p.m. Eastern Time, 9:00 a.m. Pacific Standard Time. Interested parties can listen to the call live on the internet through the Investor Relations section of the Company’s website at www.unioncommunityllc.com.

Listeners are advised to log on to the website at least 15 minutes prior to the call to download and / or install any necessary audio software. The conference call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the Union Community Partners Fourth Quarter 2013 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the conference call. A replay of the conference call will be available through April 13, 2014, by dialing 1-877-870-5176 for domestic participants or 1-858-384-5517 for international participants and entering the pass code 13578027. An archive of the webcast will be available on the Company’s website for a limited time.

About UCP, Inc.

UCP, Inc. is a homebuilder and land developer, with significant land acquisition and entitlement expertise, in growth markets in California and with a growing presence in attractive markets in the Puget Sound area of Washington State.

Forward-Looking Statements

This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of the Company's business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Although the Company believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance they will prove to be correct. Therefore, you should be aware that many factors could affect the Company's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.
Any forward-looking statement made by the Company herein, or elsewhere, speaks only as of the date on which it was made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Non-GAAP Financial Measures
Homebuilding adjusted gross margin, land development adjusted gross margin and net debt to capital are non-U.S. GAAP financial measures. A reconciliation to the most comparable U.S. GAAP financial measures is presented in Appendix A hereto.

Contact:
Investor Relations:

 
EXHIBIT 99.1

Investorrelations@unioncommunityllc.com
408-207-9499 Ext. 476

Media:
Phil Denning/Jason Chudoba
Phil.denning@icrinc.com / Jason.chudoba@icrinc.com
























 
EXHIBIT 99.1

UCP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share data)



 
December 31,
2013
 
December 31,
2012
Assets:
 
 
 
Cash and cash equivalents
$
87,503

 
$
10,324

Real estate inventories
176,848

 
125,367

Fixed assets, net
1,028

 
680

Receivables
785

 
243

Other assets
1,156

 
920

Total assets
$
267,320

 
$
137,534

 
 
 
 
Liabilities and equity:
 
 
 
Accounts payable and accrued liabilities
$
18,654

 
$
6,107

Debt
30,950

 
29,112

Total liabilities
49,604

 
35,219

 
 
 
 
 
 
 
 
Member’s equity
 
 
102,315

 
 
 
 
Stockholders’ equity
 
 
 
Preferred stock, par value $0.01 per share, 50,000,000 authorized, no shares issued and outstanding at December 31, 2013; no shares authorized, issued and outstanding at December 31, 2012
—

 
 
Class A common stock, $0.01 par value; 500,000,000 authorized, 7,750,000 issued and outstanding at December 31,2013; no shares authorized, issued and outstanding at December 31, 2012
78

 
 
Class B common stock, $0.01 par value; 1,000,000 authorized, 100 issued and outstanding at December 31,2013; no shares authorized, issued and outstanding at December 31, 2012
 
 
 
Additional paid-in capital
93,117

 
 
Accumulated Deficit
(1,941
)
 
 
Total UCP, Inc. stockholders’ equity
91,254

 
—

Noncontrolling interest
126,462

 
—

Total stockholders’/ member’s equity
217,716

 
102,315

Total liabilities and equity
$
267,320

 
$
137,534




 
EXHIBIT 99.1


UCP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME OR LOSS
(In thousands, except shares and per share data)
 


 
Year Ended
 
December 31,
2013
 
December 31,
2012
 
December 31,
2011
REVENUE:
 
 
 
 
 
Homebuilding
$
72,511

 
$
14,060

 
$
8,285

Land development
20,215

 
44,066

 
15,893

Total revenue
92,726

 
58,126

 
24,178

 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
Cost of sales - homebuilding
57,500

 
9,832

 
5,621

Cost of sales - land development
13,820

 
32,876

 
17,280

Sales and marketing
6,647

 
2,875

 
1,414

General and administrative
19,368

 
10,103

 
6,464

Total costs and expenses
97,335

 
55,686

 
30,779

(Loss) income from operations
(4,609
)
 
2,440

 
(6,601
)
Other income, net
322

 
578

 
34

Net (loss) income before income taxes
(4,287
)
 
3,018

 
(6,567
)
Provision for income taxes
—

 
—

 
—

Net (loss) income
$
(4,287
)
 
$
3,018

 
$
(6,567
)
Net (loss) income attributable to noncontrolling interest
$
(2,346
)
 
$
3,018

 
$
(6,567
)
Net loss attributable to UCP, Inc.
(1,941
)
 
—

 
—

Other comprehensive income (loss), net of tax
—

 
—

 
—

Comprehensive (loss) income
$
(4,287
)
 
$
3,018

 
$
(6,567
)
Comprehensive (loss) income attributable to noncontrolling interest
$
(2,346
)
 
$
3,018

 
$
(6,567
)
Comprehensive loss attributable to UCP, Inc.
$
(1,941
)
 
$
—

 
$
—

 
 
 
 
 
 
 
IPO to
December 31, 2013
 
 
 
 
Weighted average common shares:
 
 
 
 
 
Basic and diluted shares outstanding
7,750,000
 
 
 
 
 
 
 
 
 
 
Basic and diluted loss per share
$(0.25)
 
 
 
 


 
EXHIBIT 99.1



UCP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


 
Year Ended December 31,
 
2013
 
2012
 
2011
Operating activities:
 
 
 
 
 
Net (loss) income
$
(4,287
)
 
$
3,018

 
$
(6,567
)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
 
 
 
 
 
Stock-based compensation
2,165

 
—

 
—

Abandonment charges
309

 
665

 
338

Impairment charges
—

 
—

 
5,184

Depreciation
271

 
147

 
36

Changes in operating assets and liabilities:
 
 
 
 
 
Real estate inventories
(45,137
)
 
735

 
(13,005
)
Receivables
(542
)
 
641

 
(883
)
Other assets
(236
)
 
29

 
(471
)
Accounts payable and accrued liabilities
12,547

 
3,562

 
2,153

Net cash (used in) provided by operating activities
(34,910
)
 
8,797

 
(13,215
)
Investing activities:
 
 
 
 
 
Purchases of fixed assets
(619
)
 
(712
)
 
(96
)
Net cash used in investing activities
(619
)
 
(712
)
 
(96
)
Financing activities:
 
 
 
 
 
Cash contributions from member
37,512

 
41,005

 
30,531

Repayments of member contributions
(25,443
)
 
(34,700
)
 
(18,311
)
Proceeds from debt
33,637

 
7,392

 
5,520

Repayment of debt
(38,452
)
 
(13,734
)
 
(3,787
)
Proceeds from IPO (net of offering costs)
105,454

 
—

 
—

Net cash provided by (used in) financing activities
112,708

 
(37
)
 
13,953

Net increase in cash and cash equivalents
77,179

 
8,048

 
642

Cash and cash equivalents – beginning of period
10,324

 
2,276

 
1,634

Cash and cash equivalents – end of period
$
87,503

 
$
10,324

 
$
2,276

 
 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
 
Debt incurred to acquire real estate inventories
$
6,653

 
$
5,420

 
$
5,276

 
 
 
 
 
 









 
EXHIBIT 99.1



UCP, INC.
QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except shares and per share data)

                                                             
 
Three Months Ended
 
December 31,
2013
 
December 31,
2012
Homebuilding revenue
$
25,902

 
$
9,736

Land development revenue
3,680

 
20,119

Total revenue
29,582

 
29,855

Gross margin – homebuilding
4,902

 
3,011

Gross margin – land development
1,009

 
5,221

Gross margin
5,911

 
8,232

 
 
 
 
Sales and marketing expenses
1,900

 
1,543

General and administrative expenses
6,059

 
3,028

Total expenses
7,959

 
4,571

Other income
4

 
50

Net loss
$
(2,044
)
 
$
3,711

Net loss attributable to stockholders
$
(1,926
)
 
$
—

Net loss per common share:
 
 
 
Basic and diluted
$
(0.25
)
 
$
—




 
EXHIBIT 99.1


Appendix A

Reconciliation of GAAP and Non-GAAP Measures

A)
Gross Margin and Adjusted Gross Margin

 
Year ended December 31.
 
 
2013
 
     %
 
2012
 
     %
 
(Dollars in thousands)
 
Consolidated Adjusted Gross Margin
 
 
 
 
 
 
 
Revenue
$
92,726

 
 
100.0

%
 
$
58,126

 
 
100.0

%
Cost of sales
71,320
 
 
 
76.9

%
 
42,708
 
 
 
73.5

%
Gross margin
21,406
 
 
 
23.1

%
 
15,418
 
 
 
26.5

%
Add: interest in cost of sales
1,183
 
 
 
1.3

%
 
760
 
 
 
1.3

%
Add: impairment and abandonment charges
309
 
 
 
—

%
 
665
 
 
 
1.1

%
Adjusted gross margin(1)
$
22,898

 
 
24.7

%
 
$
16,843

 
 
29.0

%
Consolidated gross margin percentage
23.1
 
%
 
 
 
26.5
 
%
 
 
Consolidated adjusted gross margin percentage(1)
24.7
 
%
 
 
 
29.0
 
%
 
 
 
 
 
 
 
 
 
 
Homebuilding Adjusted Gross Margin
 
 
 
 
 
 
 
Homebuilding revenue
$
72,511

 
 
100.0

%
 
$
14,060

 
 
100.0

%
Cost of home sales
57,500
 
 
 
79.3

%
 
9,832
 
 
 
69.9

%
Homebuilding gross margin
15,011
 
 
 
20.7

%
 
4,228
 
 
 
30.1

%
Add: interest in cost of home sales
1,174
 
 
 
1.6

%
 
122
 
 
 
0.9

%
Add: impairment and abandonment charges
—
 
 
 
—

%
 
—
 
 
 
—

%
Adjusted homebuilding gross margin(1)
$
16,185

 
 
22.3

%
 
$
4,350

 
 
30.9

%
Homebuilding gross margin percentage
20.7
 
%
 
 
 
30.1
 
%
 
 
Adjusted homebuilding gross margin percentage(1)
22.3
 
%
 
 
 
30.9
 
%
 
 
 
 
 
 
 
 
 
 
Land Development Adjusted Gross Margin
 
 
 
 
 
 
 
Land development revenue
$
20,215

 
 
100.0

%
 
$
44,066

 
 
100.0

%
Cost of land development
13,820
 
 
 
68.4

%
 
32,876
 
 
 
74.6

%
Land development gross margin
6,395
 
 
 
31.6

%
 
11,190
 
 
 
25.4

%
Add: interest in cost of land development
9
 
 
 
—

%
 
638
 
 
 
1.4

%
Add: impairment and abandonment charges
309
 
 
 
1.6

%
 
665
 
 
 
1.5

%
Adjusted land development gross margin(1)
$
6,713

 
 
33.2

%
 
$
12,493

 
 
28.4

%
Land development gross margin percentage
31.6
 
%
 
 
 
25.4
 
%
 
 
Adjusted land development gross margin percentage(1)
33.2
 
%
 
 
 
28.4
 
%
 
 

* Percentages may not add due to rounding. 

(1) 
Consolidated adjusted gross margin percentage, homebuilding adjusted gross margin percentage and land development adjusted gross margin percentage are non-U.S. GAAP financial measures. Adjusted gross margin is defined as gross margin plus capitalized interest, impairment and abandonment charges. We use adjusted gross margin information as a supplemental measure when evaluating our operating performance.

 
EXHIBIT 99.1

We believe this information is meaningful, because it isolates the impact that leverage and non-cash impairment and abandonment charges have on gross margin. However, because adjusted gross margin information excludes interest expense and impairment and abandonment charges, all of which have real economic effects and could materially impact our results, the utility of adjusted gross margin information as a measure of our operating performance is limited. In addition, other companies may not calculate gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. The table above provides a reconciliation of adjusted gross margin numbers to the most comparable U.S. GAAP financial measure.



B)
Debt-to-Capital Ratio and Net Debt-to-Capital Ratio

 
At December 31,
2013
 
At December 31,
 2012
Debt
$
30,950

 
 
$
29,112
 
Stockholders’ and member's equity
217,716
 
 
 
102,315
 
Total capital
$
248,666

 
 
$
131,427
 
Ratio of debt-to-capital
12.4
 
%
 
22.2
%
Debt
$
30,950

 
 
$
29,112
 
Less: cash and cash equivalents
$
87,503

 
 
10,324
 
Net debt
—
 
 
 
18,788
 
Stockholders’ and member's equity
217,716
 
 
 
102,315
 
Total capital
$
217,716

 
 
$
121,103
 
Ratio of net debt-to-capital(1)
—
 
%
 
15.5
%

(1)     The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus stockholders’ and member's equity. The most directly comparable U.S. GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We reconcile this non-U.S. GAAP financial measure to the ratio of debt-to-capital in the table above.