Current report Shea Homes Limited Partnership

8-K - Current report

Published: 2013-05-01 13:26:57
Submitted: 2013-05-01
Period Ending In: 2013-05-01
d527597d8k.htm FORM 8-K


> ENT> 8-K 1 d527597d8k.htm FORM 8-K

Form 8-K

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 


FORM 8-K

 

 


Current Report

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2013 

 

 


SHEA HOMES LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

 

 


 

CALIFORNIA   333-177328   95-4240219

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

655 Brea Canyon Road, Walnut, California 91789

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (909) 594-9500

Not Applicable

(Former name or former address, if changed since last report):

 

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition

On May 1, 2013, Shea Homes Limited Partnership issued a press release announcing its results of operations for the three months ended March 31, 2013. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein.

The information contained in this Item 2.02 and in the accompanying Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Shea Homes Limited Partnership under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

 

Item 9.01. Financial Statements and Exhibits

The information contained in this Item 9.01 and in the accompanying Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Shea Homes Limited Partnership under the Securities Act or the Exchange Act.

(d) Exhibits

 

Exhibit
Number

  

Description

99.1    Press Release dated May 1, 2013


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

SHEA HOMES LIMITED PARTNERSHIP
By:  

/s/ Andrew H. Parnes

Name:   Andrew H. Parnes
Title:   Chief Financial Officer

Date: May 1, 2013


Exhibit Index

 

Exhibit

Number

  

Description

99.1    Press Release dated May 1, 2013
d527597dex991.htm EX-99.1


ENT> EX-99.1 2 d527597dex991.htm EX-99.1

EX-99.1

Exhibit 99.1

LOGO

Shea Homes Reports First Quarter 2013 Results

Walnut, Calif., May 1, 2013

Shea Homes, one of America’s largest private homebuilders, today reported results for the first quarter ended March 31, 2013.

Three Months Ended 3/31/13 Highlights and Comparisons to Three Months Ended 3/31/12

 

 
 

Net income (loss) attributable to Shea Homes was $6.8 million for the 2013 first quarter compared to $(0.4) million

 

 
 

Home sales orders were 519 compared to 499, a 4% increase

 

 
 

Active selling communities averaged 56 and 71 in the first quarter of 2013 and 2012, respectively

 

 
 

Home sales per community for the quarter were 9.3 homes, or 3.1 per month, in 2013 compared to 7.0 homes, or 2.3 per month, in 2012, a 33% increase

 

 
 

Cancellation rate was 14% compared to 15%

 

 
 

Backlog units at March 31, 2013 were 1,128 compared to 722 at March 31, 2012, a 56% increase

 

 
 

Backlog sales value was $524.4 million at March 31, 2013 compared to $283.9 million at March 31, 2012, an 85% increase

 

 
 

The average selling price in backlog was $465,000 at March 31, 2013 compared to $393,000 at March 31, 2012, an 18% increase

 

 
 

Total revenues were $135.0 million compared to $105.6 million, a 28% increase

 

 
 

House revenues were $131.5 million* compared to $100.9 million*, a 30% increase

 

 
 

Homes closed were 302 compared to 238, a 27% increase

 

 
 

Average selling price of homes closed was $435,000 compared to $424,000, a 3% increase

 

 
 

Gross margin was 23.4% compared to 19.5%

 

 
 

House gross margin was 23.1%* compared to 20.7%*

 

 
 

SG&A expense was $22.1 million (16.4% of revenues) compared to $17.6 million (16.7% of revenues)

 

 
 

Adjusted EBITDA was $18.7 million* compared to $14.2 million*

 

 
 

Cash, restricted cash and investments at March 31, 2013 were $263.4 million compared to $304.9 million at December 31, 2012

 

*See
“Reconciliation of Non-GAAP Financial Measures” beginning on page 9

Bert Selva, President and CEO, commented, “We are pleased with the positive start to 2013, as our orders, deliveries, backlog and, most importantly, margins and profits were up year over year. Although our average community count for the quarter was down 21% versus prior year, our monthly sales rate per community was up 33%, reflecting the improved housing market conditions nationwide and, in particular, the strength of our individual markets. Our monthly sales rate of 3.1 homes per community was the highest quarterly rate since the first quarter of 2006 even as we increased prices in most of our projects.

There are many positive factors driving new home demand today. These conditions, combined with the limited lot development activity over the past several years, have resulted in an increasingly constrained supply of finished lots creating a very competitive land market. Since our current land position substantially supports our anticipated closings for the next two years, new land acquisitions will generally help position the Company for 2015 and beyond. In addition, as a result of the tight supply of finished lots, coupled with the healthy demand for new homes, we have micromanaged our new home pricing and starts to optimize our existing land holdings. While this approach will slow our sales absorption pace it is designed to maximize our overall profitability.”

 

page 1


New home sales orders increased 4% year over year for the 2013 first quarter. Notwithstanding our lower community count, the monthly sales rate per community increased in each segment reflecting the positive demand for our homes. For 2013, we expect to open 26 new communities, compared to 15 in 2012. The positive order trend for the 2013 first quarter and the second half of 2012 produced a 56% year over year increase in our March 31, 2013 backlog.

For the 2013 first quarter, net income (loss) attributable to Shea Homes was $6.8 million compared to $(0.4) million for 2012, primarily due to an $11.0 million improvement in gross margin (driven by higher revenues and gross margin percentages) and a $2.9 million decrease in interest expense. These improvements were offset, in part, by a $3.7 million increase in general and administrative expenses, a $0.8 million increase in selling expenses and a $1.6 million decrease in other income (expense).

For the 2013 first quarter, total revenues were $135.0 million compared to $105.6 million for 2012, a 28% increase, and house revenues for the 2013 first quarter were $131.5 million* compared to $100.9 million* for 2012, a 30% increase. The increase in house revenues was primarily due to a 27% increase in home closings to 302 and a 3% increase in average selling price to $435,000. Home closings increased year over year in each segment except San Diego. The decrease in San Diego was due to a 36% reduction in active selling community count compared to 2012. The increase in the average selling price of homes closed was primarily due to price increases in our Southern California and South West segments, partially offset by a shift to lower-priced homes delivered in our San Diego and Mountain West segments.

Total gross margin for the 2013 first quarter was 23.4% compared to 19.5% for 2012, a 390 basis point (bp) increase, and house gross margin for the 2013 first quarter was 23.1%* compared to 20.7%* for 2012, a 240 bp increase. The increase in our house gross margin percentage reflected our ability to raise home prices in each market, which was partially offset by higher labor and material costs.

SG&A expense for the 2013 first quarter was $22.1 million (16.4% of revenues) compared to $17.6 million (16.7% of revenues) for 2012. The increase was primarily due to increased headcount and sales commissions resulting in higher compensation expenses as a direct result of increased starts and deliveries. Our first quarter SG&A rate is typically the highest quarterly level during the year due to the lower relative revenue volume. The full year 2013 SG&A rate for the Company is expected to be meaningfully lower.

Interest incurred for the 2013 first quarter was $16.8 million compared to $16.7 million in 2012, while interest expense for the 2013 first quarter was $3.4 million versus $6.3 million for 2012. The 45% decrease in interest expense for the 2013 first quarter was due to a higher level of qualified inventory for interest capitalization.

Net operating cash flows for the 2013 first quarter were $(28.0) million compared to $9.7 million for 2012. The decrease was primarily due to increased land acquisitions, land development and construction costs, partially offset by increased cash receipts from home closings. Land acquisitions and land development costs for the 2013 first quarter were $44.9 million compared to $23.7 million in 2012. House construction costs for the 2013 first quarter were $76.7 million compared to $37.9 million in 2012, and reflected increases in home closings and backlog as well as general increases in the cost of labor and materials.

About Shea Homes

Shea Homes is one of the largest private homebuilders in the nation. Since its founding in 1968, Shea Homes has closed more than 89,000 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.

 

page 2


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.

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, our well located lot supply, our current lot supply that supports our anticipated closings over the next two years, the expectation that new land acquisitions will generally help position the Company for 2015 and beyond, that our management of new home starts and pricing will slow our absorptions pace and maximize our overall profitability, and the expectation that our full year SG&A rate in 2013 will be meaningfully lower than the 2013 first quarter SG&A rate, which 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 Annual Report on Form 10-K and 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 3


KEY OPERATIONAL AND FINANCIAL DATA

(dollars in thousands)

 

 
  
At or For the Three Months Ended March 31,
 
 
  
2013
 
 
2012
 
 
Change
 
 
  
(unaudited)
 
 
(unaudited)
 
 
 
 

Operating Data:

  
 
 

Revenues

  
$
134,960
  
 
$
105,603
  
 
 
28

Gross margin %

  
 
23.4
 
 
19.5
 
 
390 bp’s
  

Homebuilding revenues
(a) 
*

  
$
134,839
  
 
$
105,360
  
 
 
28

Homebuilding gross margin %
(a) 
*

  
 
23.3
 
 
19.3
 
 
400 bp’s
  

House revenues *

  
$
131,486
  
 
$
100,905
  
 
 
30

House gross margin

  
$
30,338
  
 
$
20,929
  
 
 
45

House gross margin % *

  
 
23.1
 
 
20.7
 
 
240 bp’s
  

Adjusted house gross margin % excluding interestin cost of sales *

  
 
30.3
 
 
28.3
 
 
200 bp’s
  

SG&A expense

  
$
22,111
  
 
$
17,603
  
 
 
26

SG&A % of total revenue

  
 
16.4
 
 
16.7
 
 
-30 bp’s
  

Net income (loss) attributable to Shea Homes

  
$
6,838
  
 
$
(411
 
 
—  
  

Adjusted EBITDA
(b) 
*

  
$
18,678
  
 
$
14,218
  
 
 
31

Interest incurred

  
$
16,768
  
 
$
16,661
  
 
 
1

Interest capitalized to inventory

  
$
13,078
  
 
$
10,195
  
 
 
28

Interest capitalized to investments in joint ventures

  
$
257
  
 
$
177
  
 
 
45

Interest expense

  
$
3,433
  
 
$
6,288
  
 
 
-45

Interest in cost of sales
(c)

  
$
9,511
  
 
$
7,784
  
 
 
22

Other Data
(d)
:

  
 
 

Home sales orders (units)

  
 
519
  
 
 
499
  
 
 
4

Homes closed (units)

  
 
302
  
 
 
238
  
 
 
27

Average selling price

  
$
435
  
 
$
424
  
 
 
3

Average active selling communities

  
 
56
  
 
 
71
  
 
 
-21

Home sales orders per community

  
 
9.3
  
 
 
7.0
  
 
 
33

Cancellation rate

  
 
14
 
 
15
 

Backlog at end of period (units)

  
 
1,128
  
 
 
722
  
 
 
56

Backlog at end of period (estimated sales value)

  
$
524,439
  
 
$
283,899
  
 
 
85

Lots owned or controlled (units)

  
 
18,694
  
 
 
17,803
  
 
 
5

Homes under construction (units)
(e)

  
 
958
  
 
 
591
  
 
 
62

 

(a)
Homebuilding revenue and gross margin include house, land and other homebuilding activities.
(b)
See page 10 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 9.

 

page 4


CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 
  
March 31,
 
  
December 31,
 
 
  
2013
 
  
2012
 
 
  
(unaudited)
 
  
(unaudited)
 

Assets

  
  

Cash and cash equivalents

  
$
251,478
  
  
$
279,756
  

Restricted cash

  
 
2,688
  
  
 
13,031
  

Investments

  
 
—  
  
  
 
—  
  

Accounts and other receivables, net

  
 
144,751
  
  
 
141,289
  

Receivables from related parties, net

  
 
34,253
  
  
 
34,028
  

Inventory

  
 
881,632
  
  
 
837,653
  

Investments in joint ventures

  
 
31,806
  
  
 
28,653
  

Other assets, net

  
 
36,895
  
  
 
39,127
  
  

 

 

    

 

 

 

Total assets

  
$
1,383,503
  
  
$
1,373,537
  
  

 

 

    

 

 

 

Liabilities and equity

  
  

Liabilities:

  
  

Notes payable

  
$
758,897
  
  
$
758,209
  

Other liabilities

  
 
298,392
  
  
 
296,081
  
  

 

 

    

 

 

 

Total liabilities

  
 
1,057,289
  
  
 
1,054,290
  

Total equity

  
 
326,214
  
  
 
319,247
  
  

 

 

    

 

 

 

Total liabilities and equity

  
$
1,383,503
  
  
$
1,373,537
  
  

 

 

    

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 

 
  
Three Months Ended

March  31,
 
 
  
2013
 
 
2012
 
 
  
(unaudited)
 
 
(unaudited)
 

Revenues

  
$
134,960
  
 
$
105,603
  

Cost of sales

  
 
(103,424
 
 
(85,035
  

 

 

   

 

 

 

Gross margin

  
 
31,536
  
 
 
20,568
  

Selling, general and administrative expenses

  
 
(22,111
 
 
(17,603

Interest expense

  
 
(3,433
 
 
(6,288

Other income (expense), net

  
 
786
  
 
 
2,373
  
  

 

 

   

 

 

 

Income (loss) before income taxes

  
 
6,778
  
 
 
(950

Income tax benefit (expense)

  
 
59
  
 
 
752
  
  

 

 

   

 

 

 

Net income (loss)

  
 
6,837
  
 
 
(198

Less: Net loss (income) attributable to non-controlling interests

  
 
1
  
 
 
(213
  

 

 

   

 

 

 

Net income (loss) attributable to Shea Homes

  
$
6,838
  
 
$
(411
  

 

 

   

 

 

 

 

page 5


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 
  
Three Months Ended

March 31,
 
 
  
2013
 
 
2012
 
 
  
(unaudited)
 
 
(unaudited)
 

Operating activities

  
 

Net income (loss)

  
$
6,837
  
 
$
(198

Adjustments to reconcile net income (loss) to net cash provided by

  
 

(used in) operating activities:

  
 

Depreciation and amortization expense

  
 
1,759
  
 
 
1,812
  

Gain on sale of available-for-sale investments

  
 
(10
 
 
(23

Other operating activities, net

  
 
(273
 
 
(540

Changes in operating assets and liabilities:

  
 

Inventory

  
 
(44,743
 
 
(3,908

Payables and other liabilities

  
 
2,879
  
 
 
4,036
  

Other operating assets

  
 
5,588
  
 
 
8,512
  
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

  
 
(27,963
 
 
9,691
  

Investing activities

  
 

Proceeds from sale of investments

  
 
3,069
  
 
 
203
  

Net proceeds from promissory notes from related parties

  
 
385
  
 
 
(108

Other investing activities, net

  
 
(3,528
 
 
(447
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

  
 
(74
 
 
(352

Financing activities

  
 

Net decrease in notes payable

  
 
(241
 
 
(601

Contributions from owners

  
 
—  
  
 
 
1,746
  

Other financing activities, net

  
 
—  
  
 
 
(512
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  
 
(241
 
 
633
  
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  
 
(28,278
 
 
9,972
  

Cash and cash equivalents at beginning of period

  
 
279,756
  
 
 
268,366
  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

  
$
251,478
  
 
$
278,338
  
  

 

 

   

 

 

 

 

page 6


SEGMENT OPERATING DATA

(dollars in thousands)

(unaudited)

 

 
  
Three Months Ended March 31,
 
 
  
2013
 
  
2012
 
 
  
Homes

Closed
 
  
Avg. Selling

Price
 
  
Homes

Closed
 
  
Avg. Selling

Price
 

Homes closed:

  
  
  
  

Southern California

  
 
51
  
  
$
745
  
  
 
47
  
  
$
496
  

San Diego

  
 
23
  
  
 
419
  
  
 
27
  
  
 
522
  

Northern California

  
 
61
  
  
 
451
  
  
 
57
  
  
 
453
  

Mountain West

  
 
53
  
  
 
403
  
  
 
38
  
  
 
462
  

South West

  
 
108
  
  
 
310
  
  
 
65
  
  
 
297
  

Other

  
 
6
  
  
 
261
  
  
 
4
  
  
 
201
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  
 
302
  
  
$
435
  
  
 
238
  
  
$
424
  

Unconsolidated joint ventures

  
 
27
  
  
 
340
  
  
 
20
  
  
 
310
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

  
 
329
  
  
$
428
  
  
 
258
  
  
$
415
  
  

 

 

    

 

 

    

 

 

    

 

 

 
 
  
Three Months Ended March 31,
 
 
 
  
2013
 
  
2012
 
 
  
Home
Sales
Orders
 
  
Avg. Active
Selling
Communities
 
  
Home
Sales
Orders
 
  
Avg. Active
Selling
Communities
 

Home sales orders:

  
  
  
  

Southern California

  
 
54
  
  
 
5
  
  
 
70
  
  
 
10
  

San Diego

  
 
91
  
  
 
7
  
  
 
53
  
  
 
11
  

Northern California

  
 
120
  
  
 
12
  
  
 
121
  
  
 
15
  

Mountain West

  
 
112
  
  
 
14
  
  
 
89
  
  
 
13
  

South West

  
 
140
  
  
 
16
  
  
 
154
  
  
 
19
  

Other

  
 
2
  
  
 
2
  
  
 
12
  
  
 
3
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  
 
519
  
  
 
56
  
  
 
499
  
  
 
71
  

Unconsolidated joint ventures

  
 
46
  
  
 
11
  
  
 
43
  
  
 
12
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

  
 
565
  
  
 
67
  
  
 
542
  
  
 
83
  
  

 

 

    

 

 

    

 

 

    

 

 

 
 
  
At March 31,
 
 
  
2013
 
  
2012
 
 
  
Backlog
Units
 
  
Backlog
Sales

Value
 
  
Backlog
Units
 
  
Backlog
Sales

Value
 

Backlog:

  
  
  
  

Southern California

  
 
126
  
  
$
93,404
  
  
 
82
  
  
$
38,831
  

San Diego

  
 
175
  
  
 
80,748
  
  
 
65
  
  
 
27,037
  

Northern California

  
 
300
  
  
 
143,452
  
  
 
169
  
  
 
85,626
  

Mountain West

  
 
271
  
  
 
125,073
  
  
 
146
  
  
 
63,873
  

South West

  
 
244
  
  
 
78,580
  
  
 
241
  
  
 
64,259
  

Other

  
 
12
  
  
 
3,182
  
  
 
19
  
  
 
4,273
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  
 
1,128
  
  
$
524,439
  
  
 
722
  
  
$
283,899
  

Unconsolidated joint ventures

  
 
103
  
  
 
31,837
  
  
 
57
  
  
 
17,917
  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

  
 
1,231
  
  
$
556,276
  
  
 
779
  
  
$
301,816
  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

page 7


SEGMENT OPERATING DATA (continued)

(unaudited)

 

 
  
At March 31,
 
 
  
2013
 
  
2012
 

Lots owned or controlled:

  
  

Southern California

  
 
1,938
  
  
 
1,197
  

San Diego

  
 
746
  
  
 
752
  

Northern California

  
 
3,166
  
  
 
3,968
  

Mountain West

  
 
10,383
  
  
 
9,988
  

South West

  
 
2,442
  
  
 
1,846
  

Other

  
 
19
  
  
 
52
  
  

 

 

    

 

 

 

Total consolidated

  
 
18,694
  
  
 
17,803
  

Unconsolidated joint ventures

  
 
3,802
  
  
 
1,956
  
  

 

 

    

 

 

 

Total

  
 
22,496
  
  
 
19,759
  
  

 

 

    

 

 

 

Lots by ownership type:

  
  

Owned for homebuilding

  
 
6,459
  
  
 
6,467
  

Owned and held for sale

  
 
3,293
  
  
 
3,510
  

Optioned or subject to contract for homebuilding

  
 
5,908
  
  
 
4,792
  

Optioned or subject to contract held for sale

  
 
3,034
  
  
 
3,034
  

Joint venture

  
 
3,802
  
  
 
1,956
  
  

 

 

    

 

 

 

Total

  
 
22,496
  
  
 
19,759
  
  

 

 

    

 

 

 

 

page 8


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 March 31, 2013
 
 
Three Months Ended March 31, 2012
 
 
  
Revenue
 
 
Cost of

Sales
 
 
Gross

Margin $
 
 
Gross

Margin %
 
 
Revenue
 
 
Cost of

Sales
 
 
Gross

Margin $
 
 
Gross

Margin %
 

Total

  
$
134,960
  
 
$
(103,424
 
$
31,536
  
 
 
23.4
 
$
105,603
  
 
$
(85,035
 
$
20,568
  
 
 
19.5

Less: Other

  
 
(121
 
 
 
(121
 
 
 
(243
 
 
 
(243
 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Homebuilding

  
 
134,839
  
 
 
(103,424
 
 
31,415
  
 
 
23.3
 
 
105,360
  
 
 
(85,035
 
 
20,325
  
 
 
19.3

Less: Land

  
 
(2,929
 
 
511
  
 
 
(2,418
 
 
82.6
 
 
(3,963
 
 
1,749
  
 
 
(2,214
 
 
55.9

Less: Impairment

  
 
—  
  
 
 
—  
  
 
 
—  
  
 
 
 
—  
  
 
 
—  
  
 
 
—  
  
 

Less: Other homebuilding

  
 
(424
 
 
1,765
  
 
 
1,341
  
 
 
 
(492
 
 
3,310
  
 
 
2,818
  
 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

House

  
$
131,486
  
 
$
(101,148
 
$
30,338
  
 
 
23.1
 
$
100,905
  
 
$
(79,976
 
$
20,929
  
 
 
20.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Add: Interest in house cost of sales 
(a)

  
 
 
9,464
  
 
 
9,464
  
 
 
 
 
7,654
  
 
 
7,654
  
 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted house excluding interest in cost of sales

  
$
131,486
  
 
$
(91,684
 
$
39,802
  
 
 
30.3
 
$
100,905
  
 
$
(72,322
 
$
28,583
  
 
 
28.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)
Interest incurred is generally capitalized to inventory, then expensed in cost of sales as related units close.

 

page 9


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 amortization of deferred gain resulting from a series of novation and reinsurance transactions entered into by Partners Insurance Company, a wholly-owned subsidiary (“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 March 31,
 
 
  
2013
 
 
2012
 

Net income (loss)

  
$
6,837
  
 
$
(198

Adjustments:

  
 

Income tax expense (benefit)

  
 
(59
 
 
(752

Depreciation and amortization expense

  
 
1,759
  
 
 
1,812
  

Interest in cost of sales

  
 
9,511
  
 
 
7,784
  

Interest in equity in income (loss) from joint ventures

  
 
257
  
 
 
177
  

Interest expense

  
 
3,433
  
 
 
6,288
  
  

 

 

   

 

 

 

EBITDA

  
 
21,738
  
 
 
15,111
  

Adjustments:

  
 

Project write-offs and abandonments

  
 
112
  
 
 
252
  

Realized gain on sale of investments

  
 
(10
 
 
(22

Deferred loss (gain) recognition from PIC Transaction

  
 
(648
 
 
(796

Loss (income) from joint ventures and non-guarantor subsidiaries

  
 
(2,515
 
 
(804

Distributions of earnings from joint ventures and non-guarantor subsidiaries

  
 
—  
  
 
 
463
  

Other

  
 
1
  
 
 
14
  
  

 

 

   

 

 

 

Adjusted EBITDA

  
$
18,678
  
 
$
14,218
  
  

 

 

   

 

 

 

 

page 10

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