Current report Shea Homes Limited Partnership

8-K - Current report

Published: 2015-02-19 16:02:06
Submitted: 2015-02-19
Period Ending In: 2015-02-19
d874910d8k.htm 8-K


> ENT> 8-K 1 d874910d8k.htm 8-K

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): February 19, 2015

 

 


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 February 19, 2015, Shea Homes Limited Partnership issued a press release announcing its results of operations for the year ended December 31, 2014. 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 February 19, 2015

 


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: February 19, 2015


Exhibit Index

 

Exhibit
Number

  

Description

99.1    Press Release dated February 19, 2015

 

d874910dex991.htm EX-99.1


ENT> EX-99.1 2 d874910dex991.htm EX-99.1

EX-99.1

Exhibit 99.1

 

LOGO

Shea Homes Reports Fourth Quarter and Full Year 2014 Results

Walnut, California, February 19, 2015

Shea Homes, one of America’s largest private homebuilders, today reported results for the fourth quarter and year ended December 31, 2014.

Three Months Ended December 31, 2014 Highlights and Comparisons to Three Months Ended December 31, 2013

 

  Net income attributable to Shea Homes was $59.7 million compared to $73.8 million, a 19% decrease. The 2014 fourth quarter results reflect $9.0 million of inventory impairment charges and a $13.4 million legal charge, both of which were included in cost of sales. Excluding these charges, net income after tax would have been $16.9 million higher.

 

  Home sales orders were 436 compared to 361, a 21% increase

 

  Active selling communities averaged 66 compared to 60

 

    Home sales per community were 6.6, or 2.2 per month, compared to 6.0, or 2.0 per month, a 10% increase

 

    Cancellation rate was 18.7% compared to 21.0%

 

  Backlog units were 918 compared to 849, an 8% increase

 

    Backlog sales value was $551.7 million compared to $466.6 million, an 18% increase

 

    Average selling price in backlog was $601,000 compared to $550,000, a 9% increase

 

  Total revenues were $419.9 million compared to $340.0 million, a 23% increase

 

  House revenues were $412.1 million* compared to $315.5 million*, a 31% increase

 

    Home deliveries were 715 compared to 636, a 12% increase

 

    Average selling price of home deliveries was $576,000 compared to $496,000, a 16% increase

 

  Gross margin was 19.7% compared to 25.1%, reflecting the 2014 fourth quarter impairment and legal charges noted above

 

  House gross margin was 24.8%* compared to 23.4%*

 

  SG&A expenses were $28.6 million (6.8% of revenues) compared to $27.0 million (7.9% of revenues)

 

  Income tax expense/(benefit) was $1.7 million compared to $(15.8) million

 

  Adjusted EBITDA was $101.0 million* compared to $81.9 million*

 

  Unrestricted cash at December 31, 2014 was $236.9 million compared to $206.2 million at December 31, 2013

 

Page 1


Year Ended December 31, 2014 Highlights and Comparisons to Year Ended December 31, 2013

 

  Net income attributable to Shea Homes was $133.4 million compared to $125.9 million, a 6% increase. The 2014 results reflect $9.0 million of inventory impairment charges and a $16.9 million legal charge, both of which were included in cost of sales. Excluding these charges, net income after tax would have been $19.0 million higher.

 

  Home sales orders were 2,054 compared to 1,828, a 12% increase

 

  Active selling communities averaged 64 compared to 58

 

    Home sales per community were 32.1, or 2.7 per month, compared to 31.5, or 2.6 per month, a 2% increase

 

    Cancellation rate was 15.8% compared to 15.4%

 

  Total revenues were $1,140.6 million compared to $930.6 million, a 23% increase

 

  House revenues were $1,120.0 million* compared to $894.3 million*, a 25% increase

 

    Home deliveries were 1,985 compared to 1,890, a 5% increase

 

    Average selling price of home deliveries was $564,000 compared to $473,000, a 19% increase

 

  Gross margin was 22.4% compared to 23.8%, reflecting the 2014 impairment and legal charges noted above

 

  House gross margin was 24.5%* compared to 23.2%*

 

  SG&A expenses were $118.4 million (10.4% of revenues) compared to $104.4 million (11.2% of revenues)

 

  Income tax expense/(benefit) was $18.2 million compared to $(14.1) million

 

  Adjusted EBITDA was $234.8 million* compared to $185.8 million*

 

* See “Reconciliation of Non-GAAP Financial Measures” beginning on page 10

 

Page 2


For the 2014 fourth quarter, new home sales orders were 436 compared to 361 in the 2013 fourth quarter, a 21% increase, primarily due to a 10% increase in our wholly-owned active selling communities and a higher sales rate per community in our Northern California and Mountain West segments. Overall, demand for new homes remained healthy in our Southern California, San Diego, Northern California and Mountain West segments, while we saw an improvement in demand in our South West segment and, specifically, in our Phoenix communities, which have been more sluggish until recently.

At December 31, 2014, our backlog was 918 homes compared to 849 at December 31, 2013, an 8% increase, which was primarily attributable to the higher level of sales during the fourth quarter. For the 2014 fourth quarter, the Company’s cancellation rate was 18.7% compared to 21.0% in the 2013 fourth quarter.

For the 2014 fourth quarter, net income attributable to Shea Homes was $59.7 million compared to $73.8 million in the 2013 fourth quarter. This decrease was primarily due to a $2.8 million decrease in gross margin (primarily due to the $9.0 million in impairment charges for two communities in our South West segment, and a $13.4 million legal charge), a $4.5 million increase in selling expense, and a $17.5 million increase in tax expense, partially offset by a $3.0 million decrease in general and administrative expenses and a $7.4 million increase in equity income from unconsolidated joint ventures. The increase in income tax expense is primarily due to a $15.6 million income tax benefit in 2013 for the reversal of our deferred tax asset valuation allowance. Net income after tax for the 2014 fourth quarter excluding the impairment and legal charges would have been $16.9 million higher.

For the 2014 fourth quarter, total revenues were $419.9 million compared to $340.0 million in the 2013 fourth quarter, a 23% increase, and house revenues were $412.1 million* for the 2014 fourth quarter compared to $315.5 million* in the 2013 fourth quarter, a 31% increase. The increase in house revenues was primarily attributable to a 12% increase in deliveries, driven by higher totals in our Southern California and San Diego segments, and an increase in average selling price to $576,000 from $496,000, a result of general home price increases in most segments, and a greater percentage of deliveries from our Southern California segment, which has a higher average selling price than our other segments.

For the 2014 fourth quarter, total gross margin was 19.7% compared to 25.1% in the 2013 fourth quarter, a 600 basis point (bp) decrease, and house gross margin was 24.8%* for the 2014 fourth quarter compared to 23.4%* in the 2013 fourth quarter, a 110 bp increase. The lower total gross margin reflects the impairment and legal charges noted above. For the 2014 fourth quarter, our house gross margin excluding interest was 30.4%* compared to 29.6%* in the 2013 fourth quarter.

For the 2014 fourth quarter, SG&A expenses were $28.6 million (6.8% of revenues) compared to $27.0 million (7.9% of revenues) in the 2013 fourth quarter. This increase was primarily due to higher volume related costs, such as advertising and model costs. However, our SG&A rate was lower as we continue to leverage our fixed overhead costs over a larger revenue base.

For the 2014 fourth quarter, net operating cash flows were $70.6 million compared to $76.6 million in the 2013 fourth quarter. This decrease was primarily due to higher land acquisition, land development and house construction costs, partially offset by higher cash receipts from home deliveries. For the 2014 fourth quarter, land acquisition and land development spending were $179.0 million compared to $88.0 million in the 2013 fourth quarter; and cash receipts from home deliveries were $412.1 million for the 2014 fourth quarter compared to $315.5 million in the 2013 fourth quarter.

For the year ended December 31, 2014, net income attributable to Shea Homes was $133.4 million compared to $125.9 million for the year ended December 31, 2013. The year over year increase in full year results was primarily attributable to a $34.4 million increase in gross margin (from higher revenues, partially offset by a $9.0 million impairment charge, primarily for two communities in our South West segment, and a $16.9 million legal charge), a $10.2 million increase in equity income from unconsolidated joint ventures, a $5.2 million increase in our reinsurance transaction results (as a result of the 2009 PIC Transaction, see page 10), and a $4.5 million decrease in interest expense. These increases were partially offset by a $13.9 million increase in selling, general and administrative expenses and a $32.3 million increase in income tax expense. The decrease in interest expense was attributable to higher qualified assets, and the increase in income tax expense was attributable to a $15.6 million income tax benefit recorded in 2013 for the reversal of our deferred tax asset valuation allowance. Net income after tax for the 2014 full year excluding the impairment and legal charges would have been $19.0 million higher.

 

Page 3


For the year ended December 31, 2014, net operating cash flows were $2.5 million compared to $(47.9) million for the year ended December 31, 2013. This improvement was primarily attributable to increased cash receipts from home deliveries, partially offset by higher land acquisition, land development and house construction costs. For the year ended December 31, 2014, land acquisition and land development spending was $453.3 million compared to $329.5 million for the year ended December 31, 2013; and cash receipts from home deliveries were $1,120.0 million for the year ended December 31, 2014 compared to $894.3 million for the year ended December 31, 2013.

The note receivable from J.F. Shea Co., Inc., which had a balance of $11.6 million at September 30, 2014, was paid in full at December 31, 2014. In January 2014, we acquired property from a related party under common control for $4.4 million cash, assumption of a $1.3 million net liability and estimated future revenue participation payments of $19.6 million. The $25.3 million of consideration was recorded as an equity distribution to our owners and, accordingly, resulted in a reduction in equity during the year.

Earnings Conference Call

A conference call to discuss the Company’s 2014 fourth quarter results will be held at 1:00 p.m., Eastern time, February 20, 2015. The call will be broadcast live over the internet and can be accessed through the Company’s website at http://www.sheahomes.com/investor. The call will also be accessible by dialing (866) 318-8617 (domestic) or (617) 399-5136 (international); Passcode 54131203. The audio transmission with the slide presentation will be available on our website for replay 2 to 3 hours following the live broadcast. A replay of the presentation will be available by the end of the day and for 31 days thereafter.

About Shea Homes Limited Partnership

Shea Homes is one of the largest private homebuilders in the nation. Since its founding in 1968, Shea Homes has delivered almost 94,000 homes. Shea Homes builds homes with quality craftsmanship and designs that 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.

This news release contains forward-looking statements and information relating to Shea Homes Limited Partnership and its subsidiaries, such as the strength or weakness of the housing market, 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 are difficult to forecast and 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 demand; 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 @ 909-594-0954 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,  
     2014     2013     Change     2014     2013     Change  
     (unaudited)     (unaudited)           (unaudited)     (unaudited)        

Operating Data:

            

Revenues

   $ 419,919      $ 340,031        23   $ 1,140,606      $ 930,610        23

Gross margin %

     19.7     25.1     (540) bp’s        22.4     23.8     (140) bp’s   

Homebuilding revenues (a) *

   $ 419,801      $ 339,806        24   $ 1,140,025      $ 929,697        23

Homebuilding gross margin % (a) *

     19.6     25.1     (550) bp’s        22.4     23.7     (130) bp’s   

House revenues *

   $ 412,122      $ 315,488        31   $ 1,120,019      $ 894,305        25

House gross margin*

   $ 102,023      $ 73,765        38   $ 273,912      $ 207,828        32

House gross margin % *

     24.8     23.4     140 bp’s        24.5     23.2     130 bp’s   

Adjusted house gross margin % excluding interest in cost of sales *

     30.4     29.6     80 bp’s        30.4     29.9     50 bp’s   

SG&A expenses

   $ 28,557      $ 26,993        6   $ 118,350      $ 104,418        13

SG&A % of total revenues

     6.8     7.9     (110) bp’s        10.4     11.2     (80) bp’s   

Net income attributable to Shea Homes

   $ 59,682      $ 73,751        -19   $ 133,436      $ 125,947        6

Adjusted EBITDA (b) *

   $ 100,999      $ 81,879        23   $ 234,792      $ 185,801        26

Interest incurred

   $ 17,112      $ 16,726        2   $ 68,204      $ 67,048        2

Interest capitalized to inventory

   $ 16,606      $ 15,825        5   $ 64,697      $ 59,699        8

Interest capitalized to investments in joint ventures

   $ 347      $ 805        -57   $ 2,912      $ 2,278        28

Interest expense

   $ 159      $ 96        66   $ 595      $ 5,071        -88

Interest in cost of sales (c)

   $ 23,644      $ 20,434        16   $ 68,780      $ 60,448        14

Other Data (d):

            

Home sales orders (units)

     436        361        21     2,054        1,828        12

Home deliveries (units)

     715        636        12     1,985        1,890        5

Average selling price

   $ 576      $ 496        16   $ 564      $ 473        19

Average active selling communities

     66        60        10     64        58        10

Home sales orders per community

     6.6        6.0        10     32.1        31.5        2

Cancellation rate

     18.7     21.0       15.8     15.0  

Backlog at end of period (units)

     918        849        8      

Backlog at end of period (est. sales value)

   $ 551,727      $ 466,638        18      

Backlog at end of period (est. average selling price)

   $ 601      $ 550        9      

Lots owned or controlled (units)

     19,552        18,930        3      

Homes under construction (units) (e)

     907        843        8      

 

(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.
(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

(dollars in thousands)

 

     December 31,
2014
     December 31,
2013
 
     (unaudited)         

Assets

     

Cash and cash equivalents

   $ 236,902       $ 206,205   

Restricted cash

     426         1,189   

Accounts and other receivables, net

     147,508         147,499   

Receivables from related parties, net

     6,403         31,313   

Inventory

     1,173,585         1,013,272   

Investments and advances to unconsolidated joint ventures

     42,764         48,785   

Other assets, net

     59,122         57,070   
  

 

 

    

 

 

 

Total assets

$ 1,666,710    $ 1,505,333   
  

 

 

    

 

 

 

Liabilities and equity

Liabilities:

Notes payable

$ 761,404    $ 751,708   

Other liabilities

  350,448      308,168   
  

 

 

    

 

 

 

Total liabilities

  1,111,852      1,059,876   

Total equity

  554,858      445,457   
  

 

 

    

 

 

 

Total liabilities and equity

$ 1,666,710    $ 1,505,333   
  

 

 

    

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2014     2013     2014     2013  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Revenues

   $ 419,919      $ 340,031      $ 1,140,606      $ 930,610   

Cost of sales

     (337,355     (254,643     (885,018     (709,412
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

  82,564      85,388      255,588      221,198   

Selling, general and administrative expenses

  (28,557   (26,993   (118,350   (104,418

Interest expense

  (159   (96   (595   (5,071

Other income (expense), net

  7,480      (357   14,969      129   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  61,328      57,942      151,612      111,838   

Income tax benefit (expense)

  (1,658   15,802      (18,213   14,101   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  59,670      73,744      133,399      125,939   

Less: Net loss attributable to non-controlling interests

  12      7      37      8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Shea Homes

$ 59,682    $ 73,751    $ 133,436    $ 125,947   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 6


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2014     2013     2014     2013  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Operating activities

        

Net income

   $ 59,670      $ 73,744      $ 133,399      $ 125,939   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

        

Gain on reinsurance transaction

     (1,002     (412     (7,177     (2,011

Depreciation and amortization expense

     4,542        3,296        12,630        10,608   

Inventory impairment

     9,035        —          9,035        —     

Distribution of earnings from unconsolidated joint ventures

     9,365        1,100        18,790        7,100   

Other operating activities, net

     (7,383     (471     (12,054     (1,189

Changes in operating assets and liabilities:

        

Inventory

     (8,717     27,027        (178,700     (185,596

Payables and other liabilities

     7,942        (3,495     28,375        14,231   

Other operating assets

     (2,876     (24,207     (1,844     (16,949
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

  70,576      76,582      2,454      (47,867

Investing activities

Proceeds from sale of investments

  10      2      184      3,165   

Net collections on promissory notes from related parties

  15,968      1,067      25,183      4,104   

Distributions from (investments in) unconsolidated joint ventures, net

  12,035      (5,757   9,609      (22,073
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

  28,013      (4,688   34,976      (14,804

Financing activities

Net decrease in notes payable

  (969   (8,887   (3,308   (10,880

Contributions from owners

  —        —        945      —     

Distributions to owners

  —        —        (4,385   —     

Other financing activities, net

  —        —        15      —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  (969   (8,887   (6,733   (10,880
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  97,620      63,007      30,697      (73,551

Cash and cash equivalents at beginning of period

  139,282      143,198      206,205      279,756   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

$ 236,902    $ 206,205    $ 236,902    $ 206,205   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 7


SEGMENT OPERATING DATA

(dollars in thousands)

(unaudited)

 

     Three Months Ended December 31,      Year Ended December 31,  
     2014      2013      2014      2013  
     Homes
Delivered
     Avg. Selling
Price
     Homes
Delivered
     Avg. Selling
Price
     Homes
Delivered
     Avg. Selling
Price
     Homes
Delivered
     Avg. Selling
Price
 

Home deliveries:

                       

Southern California

     170       $ 759         92       $ 775         481       $ 812         271       $ 757   

San Diego

     115         622         80         550         252         568         256         490   

Northern California

     133         721         141         575         385         668         456         510   

Mountain West

     156         458         143         448         356         458         372         444   

South West

     141         313         178         305         511         324         510         312   

East

     —           —           2         374         —           —           25         262   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  715    $ 576      636    $ 496      1,985    $ 564      1,890    $ 473   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Southern California

  42    $ 477      11    $ 337      107    $ 417      47    $ 293   

Northern California

  26      531      19      484      60      524      31      510   

Mountain West

  22      402      21      363      73      390      55      368   

East

  50      304      31      262      96      290      69      258   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total unconsolidated joint ventures

  140    $ 414      82    $ 349      336    $ 394      202    $ 335   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  855    $ 550      718    $ 479      2,321    $ 540      2,092    $ 460   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended December 31,      Year Ended December 31,  
     2014      2013      2014      2013  
     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

     107         11         97         8         514         11         308         6   

San Diego

     43         9         51         7         254         9         249         7   

Northern California

     75         12         54         14         376         13         359         13   

Mountain West

     84         14         61         14         424         12         367         15   

South West

     105         18         98         17         447         18         536         16   

East

     22         2         —           —           39         1         9         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  436      66      361      60      2,054      64      1,828      58   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Southern California

  15      5      11      3      111      4      46      4   

Northern California

  12      4      11      4      52      4      44      2   

Mountain West

  13      5      8      5      91      5      67      5   

South West

  14      —        —        —        14      —        —        —     

East

  21      3      22      2      120      3      83      2   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total unconsolidated joint ventures

  75      17      52      14      388      16      240      13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  511      83      413      74      2,442      80      2,068      71   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 8


SEGMENT OPERATING DATA (continued)

(dollars in thousands)

(unaudited)

 

 

     December 31,  
     2014      2013  
     Backlog
Units
     Estimated
Backlog Sales
Value
     Estimated
Avg. Selling
Price
     Backlog
Units
     Estimated
Backlog Sales
Value
     Estimated
Avg. Selling
Price
 

Backlog:

                 

Southern California

     193       $ 166,087       $ 861         160       $ 139,059       $ 869   

San Diego

     102         71,164         698         100         50,223         502   

Northern California

     135         100,946         748         144         94,605         657   

Mountain West

     275         140,995         513         207         100,186         484   

South West

     174         56,293         324         238         82,565         347   

East

     39         16,242         416         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consolidated

  918    $ 551,727    $ 601      849    $ 466,638    $ 550   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Southern California

  30    $ 14,257    $ 475      26    $ 9,383    $ 361   

Northern California

  15      8,865      591      23      12,562      546   

Mountain West

  41      17,935      437      23      9,413      409   

South West

  14      6,983      499      —        —        —     

East

  74      22,221      300      50      14,447      289   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total unconsolidated joint ventures

  174    $ 70,261    $ 404      122    $ 45,805    $ 375   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  1,092    $ 621,988    $ 570      971    $ 512,443    $ 528   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31,  
     2014      2013  

Lots owned or controlled:

     

Southern California

     1,628         1,890   

San Diego

     838         640   

Northern California

     4,033         3,731   

Mountain West

     9,519         9,841   

South West

     2,261         2,063   

East

     1,273         765   
  

 

 

    

 

 

 

Total consolidated

  19,552      18,930   

Unconsolidated joint ventures

  4,935      4,455   
  

 

 

    

 

 

 

Total

  24,487      23,385   
  

 

 

    

 

 

 

Lots by ownership type:

Owned for homebuilding

  7,033      6,277   

Owned and held for sale

  3,176      3,313   

Optioned or subject to contract for homebuilding

  6,309      6,306   

Optioned or subject to contract held for sale

  3,034      3,034   

Joint venture

  4,935      4,455   
  

 

 

    

 

 

 

Total

  24,487      23,385   
  

 

 

    

 

 

 

 

Page 9


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(dollars 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, impairments 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 house cost of sales.

 

     Three Months Ended December 31, 2014     Three Months Ended December 31, 2013  
     Revenue     Cost of
Sales
    Gross
Margin $
    Gross
Margin %
    Revenue     Cost of
Sales
    Gross
Margin $
    Gross
Margin %
 

Total

   $ 419,919      $ (337,355   $ 82,564        19.7   $ 340,031      $ (254,643   $ 85,388        25.1

Less: Other

     (118     —          (118     —          (225     —          (225     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Homebuilding

  419,801      (337,355   82,446      19.6   339,806      (254,643   85,163      25.1

Less: Land

  (5,197   2,221      (2,976   57.3   (21,572   12,201      (9,371   43.4

Less: Impairment

  —        9,035      9,035      —        —        —     

Less: Other homebuilding

  (2,482   16,000      13,518      —        (2,746   719      (2,027   —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

House

$ 412,122    $ (310,099 $ 102,023      24.8 $ 315,488    $ (241,723 $ 73,765      23.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Add: Interest in house cost of sales (a)

  —        23,273      23,273      —        —        19,695      19,695      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted house excluding interest in cost of sales

$ 412,122    $ (286,826 $ 125,296      30.4 $ 315,488    $ (222,028 $ 93,460      29.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Year Ended December 31, 2014     Year Ended December 31, 2013  
     Revenue     Cost of
Sales
    Gross
Margin $
    Gross
Margin %
    Revenue     Cost of
Sales
    Gross
Margin $
    Gross
Margin %
 

Total

   $ 1,140,606      $ (885,018   $ 255,588        22.4   $ 930,610      $ (709,412   $ 221,198        23.8

Less: Other

     (581     —          (581     —          (913     —          (913     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Homebuilding

  1,140,025      (885,018   255,007      22.4   929,697      (709,412   220,285      23.7

Less: Land

  (14,028   8,493      (5,535   39.5   (31,462   17,726      (13,736   43.7

Less: Impairment

  —        9,035      9,035      —        —        —     

Less: Other homebuilding

  (5,978   21,383      15,405      —        (3,930   5,209      1,279      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

House

$ 1,120,019    $ (846,107 $ 273,912      24.5 $ 894,305    $ (686,477 $ 207,828      23.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Add: Interest in house cost of sales (a)

  —        66,951      66,951      —        —        59,142      59,142      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted house excluding interest in cost of sales

$ 1,120,019    $ (779,156 $ 340,863      30.4 $ 894,305    $ (627,335 $ 266,970      29.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 is net income, plus distributions of earnings from joint ventures and non-guarantor subsidiaries, before (a) income taxes, (b) depreciation and amortization, (c) expensing of previously capitalized interest included in costs of sales and in equity in income (loss) from unconsolidated joint ventures, (d) interest expense, (e) impairment charges and project write-offs and abandonments, (f) realized gain on sale of investments, (g) deferred gain 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 (h) income (loss) from joint ventures and non-guarantor subsidiaries. Other companies may calculate Adjusted EBITDA (or similarly titled measures) differently.

 

     Three Months Ended December 31,      Year Ended December 31,  
     2014      2013      2014      2013  

Net income

   $ 59,670       $ 73,744       $ 133,399       $ 125,939   

Adjustments:

           

Income tax expense (benefit)

     1,658         (15,802      18,213         (14,101

Depreciation and amortization expense

     4,542         3,296         12,630         10,608   

Interest in cost of sales

     23,644         20,434         68,780         60,448   

Interest in equity in income (loss) from unconsolidated joint ventures

     1,947         360         2,444         1,189   

Interest expense

     159         96         595         5,071   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

  91,620      82,128      236,061      189,154   

Adjustments:

Impairment charge

  9,035      —        9,035      —     

Project write-offs and abandonments

  641      854      1,303      1,436   

Realized gain on sale of investments

  —        —        —        (15

Deferred gain recognition from PIC Transaction

  (1,002   (412   (7,177   (2,011

Income from joint ventures and non-guarantor subsidiaries

  (5,394   (2,142   (20,912   (13,146

Distributions of earnings from joint ventures and non-guarantor subsidiaries

  6,048      1,447      16,414      10,378   

Other

  51      4      68      5   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

$ 100,999    $ 81,879    $ 234,792    $ 185,801   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 11

Additional Files
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0001193125-15-054188.txt   Complete submission text file   352680

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SEC CFR Title 17 of the Code of Federal Regulations.