Market Overview

CalAtlantic Group, Inc. Reports 2016 Second Quarter Results and Announces $500 Million Share Repurchase Program

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On October 1, 2015, Standard Pacific Corp. completed its merger transaction with The Ryland Group, Inc., with Standard Pacific continuing as the surviving corporation and changing its name to CalAtlantic Group, Inc. Because the closing of the merger occurred in the 2015 fourth quarter, the highlights and comparisons below and the other financial information included in this earnings release includes only stand-alone data for predecessor Standard Pacific for the three and six months ended June 30, 2015. To aid analysts and other investors with year-over-year comparability for the entire merged business, we also are providing limited pro forma information, which combines the stand-alone Standard Pacific and Ryland financial and operating data for the three and six months ended June 30, 2015. Limited historical Ryland operating data is also presented in the tables at the end of this release.

IRVINE, Calif., July 28, 2016 /PRNewswire/ -- CalAtlantic Group, Inc. (NYSE: CAA) today announced results for the second quarter ended June 30, 2016.

Larry Nicholson, President and Chief Executive Officer of CalAtlantic Group, Inc. commented, "The CalAtlantic team delivered a strong second quarter, with home sales revenue up 17% and adjusted pretax income up 22%*, compared to the pro forma prior year period.  In addition, our SG&A percentage reached a second quarter decade low 10.6% that, when combined with our 21.9% gross margin, delivered an operating margin of 11.2% and EPS of $0.83."  Nicholson continued, "It is gratifying to see the benefits we anticipated from our October 2015 merger showing up in our results."

2016 CalAtlantic Second Quarter Highlights and Comparisons to 2015 Second Quarter
2016 second quarter results are for the combined company and include merger costs and the impact of purchase accounting. The 2015 second quarter includes only the stand-alone results of Standard Pacific.

  • Net new orders of 3,921, up 150%; Dollar value of net new orders up 104%
  • 567 average active selling communities, up 179%
  • 3,484 new home deliveries, up 167%
  • Average selling price of $447 thousand, down 16%
  • Home sale revenues of $1.6 billion, up 124%
  • Gross margin from home sales of 21.9%, compared to 24.6%
    • Adjusted gross margin from home sales of 22.2%* compared to 24.6% (adjusted 2016 second quarter margin excludes $5.9 million of purchase accounting impact related to the merger)
  • SG&A rate from home sales of 10.6%, compared to 11.5%
  • Operating margin from home sales of $175.2 million, or 11.2%, compared to $90.8 million, or 13.1%
    • Adjusted operating margin from home sales of $181.1 million*, or 11.6%*
  • Net income of $112.8 million, or $0.83 per diluted share, vs. net income of $57.2 million, or $0.72 per diluted share (2016 second quarter results include the impact of $5.0 million of merger costs and $5.9 million of purchase accounting adjustments)
    • Adjusted net income of $119.6 million*, or $0.88 per diluted share*
  • $394.8 million of land purchases and development costs, compared to $190.0 million

2016 CalAtlantic Second Quarter Highlights and Comparisons to Pro Forma 2015 CalAtlantic Second Quarter
To aid analysts and other investors with year-over-year comparability for the entire merged business, we provide the below pro forma information.  This pro forma information is a combination of stand-alone second quarter 2015 Standard Pacific and Ryland financial and operating data compared to actual 2016 CalAtlantic second quarter results.  Such pro forma data was not prepared to comply with Regulation S-X of the SEC Rules and Regulations.

  • Net new orders of 3,921, down 1%; Dollar value of net new orders up 5%
  • 567 average active selling communities, up 4%
  • 3,484 new home deliveries, up 12%
  • Average selling price of $447 thousand, up 5%
  • Home sale revenues of $1.6 billion, up 17%
  • Pretax income of $179.6 million vs. $156.1 million* (2016 second quarter results include the impact of $5.0 million of merger costs and $5.9 million of purchase accounting adjustments)
    • Adjusted pretax income of $190.5 million*, up 22%
  • $394.8 million of land purchases and development costs, compared to $418.9 million

Orders.  Net new orders for the 2016 second quarter were down 1% from the pro forma 2015 second quarter, to 3,921 homes, with the dollar value of these orders up 5%, and the Company's monthly sales absorption rate was 2.3 per community for the 2016 second quarter, down 5% from both the pro forma 2015 second quarter and the 2016 first quarter, consistent with normal seasonal patterns.  The Company's cancellation rate for the 2016 second quarter was 15%, flat compared to the pro forma 2015 second quarter and up from 12% for the 2016 first quarter.

Backlog.  The dollar value of homes in backlog increased 19% to $3.4 billion, or 7,456 homes, compared to $2.9 billion, or 6,688 homes, for the pro forma 2015 second quarter, and increased 7% compared to $3.2 billion, or 7,019 homes, for the 2016 first quarter.  The increase in pro forma year-over-year backlog value was driven primarily by our continued growth in community count and a 6% increase in the average selling price of the homes in backlog on a pro forma basis, reflecting product mix, geographic mix and continued pricing power in many of our markets.

Revenue.  Revenues from home sales for the 2016 second quarter increased 17%, to $1.6 billion, as compared to the pro forma 2015 second quarter, resulting from a 12% increase on a pro forma basis in new home deliveries and a 5% increase on a pro forma basis in the Company's average home price to $447 thousand.  The increase in average home price was primarily attributable to product mix and general price increases within select markets.   

Gross Margin.  Excluding the impact of purchasing accounting, the Company achieved adjusted gross margin from home sales of 22.2%* for the 2016 second quarter.  Unadjusted, the gross margin from homes sales was 21.9%.  The unadjusted second quarter gross margin was adversely impacted by the required fair value adjustment to homes in backlog, speculative homes and models under construction acquired from Ryland in the merger, of which $5.9 million was recognized as an increase to cost of sales during the quarter. 

SG&A Expenses.  Selling, general and administrative expenses for the 2016 second quarter were $165.7 million, or 10.6%, as compared to $79.9 million, or 11.5%, for the 2015 second quarter.  This 90 basis point improvement was primarily the result of a 124% increase in home sale revenues and the operating leverage gained in connection with the merger.   

Land.  During the 2016 second quarter, the Company spent $394.8 million on land purchases and development costs, compared to $418.9 million for the pro forma 2015 second quarter. The Company purchased $237.9 million of land, consisting of 3,348 homesites, of which 32% (based on homesites) is located in the North region, 20% in the Southeast region, 19% in the Southwest region, and 29% in the West region.  As of June 30, 2016, the Company owned or controlled 67,741 homesites, of which 44,980 were owned and actively selling or under development, 16,794 were controlled or under option, and the remaining 5,967 homesites were held for future development or for sale. 

Liquidity.  The Company ended the quarter with $892.6 million of available liquidity, including $256.0 million of unrestricted homebuilding cash and $636.6 million available to borrow under its $750 million revolving credit facility. The Company's homebuilding debt to book capitalization as of June 30, 2016 and 2015 was 47.9% and 55.3%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 45.9%* and 53.9%*, respectively.  In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending June 30, 2016 and 2015 was 4.4x* and 4.4x*, respectively.

Bond Offering. During the 2016 second quarter, the Company raised $300 million in proceeds from the issuance of 5.25% Senior Notes due 2026. A portion of the proceeds were initially used to pay down the outstanding balance of the Company's revolving credit facility and will ultimately be used to repay or repurchase the Company's $280 million senior notes which mature in September 2016.

Share Repurchase Program.  The Company's Board of Directors has authorized the repurchase of up to $500 million of the Company's common stock.  This authorization replaces the previous February 2016 $200 million authorization.  The Company's share repurchases may be made, from time to time, on the open market or otherwise.  The amount of any shares purchased and the timing of the purchases will be subject to general business conditions and other factors.  The share repurchase authorization will continue in effect until terminated by the Board of Directors.  The Company intends to retire the repurchased shares. 

Earnings Conference Call

A conference call to discuss the Company's 2016 second quarter results will be held at 11:00 a.m. Eastern time July 29, 2016.  The call will be broadcast live over the Internet and can be accessed through the Company's website at http://investors.calatlantichomes.com.  The call will also be accessible via telephone by dialing (877) 780-3379 (domestic) or (719) 325-2100 (international); Passcode: 5476851.  The audio transmission with the slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 5476851.  

About CalAtlantic Group, Inc.

CalAtlantic Group, Inc. (NYSE: CAA), a combination of Standard Pacific Corp. and Ryland Group, Inc., two of the nation's largest and most respected homebuilders, offers well-crafted homes in thoughtfully designed communities that meet the desires of customers across the homebuilding spectrum, from entry level to luxury, in 41 Metropolitan Statistical Areas spanning 17 states.  With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design earned over its 50 year history, CalAtlantic Group, Inc. utilizes its over five decades of land acquisition, development and homebuilding expertise to acquire and build desirable communities in locations that meet the high expectations of the company's homebuyers.  We invite you to learn more about us by visiting www.calatlantichomes.com.

The pro forma results presented above are not necessarily indicative of how the Company would have performed if Ryland and Standard Pacific were combined for the first six months of 2015 and are not necessarily indicative of the combined Company's future performance. This news release and the referenced earnings conference call contain forward-looking statements.  These statements include but are not limited to statements regarding the integration of the operations of Standard Pacific and Ryland, the future success of those combined operations; new home orders; deliveries; backlog; absorption rates; cancellation rates; average home price; revenue; profitability; cash flow; liquidity; gross margin; operating margin; product mix; land supply; our liquidity; the repayment of our September 2016 senior notes; and the amount and timing of share repurchases. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements.  Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company's control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied.  Such factors include but are not limited to:  local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions, terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company's mortgage banking operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2015 and subsequent Quarterly Reports on Form 10-Q.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements.  The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release.  No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

Contact:
Jeff McCall, EVP & CFO (240) 532-3888, jeff.mccall@calatl.com

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

(Note: Tables Follow)

KEY STATISTICS AND FINANCIAL DATA1







As of or For the Three Months Ended





June 30,


June 30,


Percentage


March 31,


Percentage





2016


2015


or % Change


2016


or % Change


Select Operating Data

(Dollars in thousands)


















Deliveries


3,484



1,305


167%



2,727


28%


Average selling price

$

447


$

532


(16%)


$

432


3%


Home sale revenues

$

1,558,701


$

694,678


124%


$

1,179,165


32%


Gross margin % (including land sales)


21.6%



24.6%


(3.0%)



20.8%


0.8%


Gross margin % from home sales


21.9%



24.6%


(2.7%)



21.0%


0.9%


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


 

22.2%



 

24.6%


 

(2.4%)



 

22.0%


 

0.2%


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


24.8%



29.6%


(4.8%)



24.6%


0.2%


Incentive and stock-based compensation expense

$

17,275


$

6,520


165%


$

10,270


68%


Selling expenses

$

81,396


$

35,873


127%


$

63,060


29%


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

$

67,023


$

37,517


79%


$

63,371


6%


SG&A expenses

$

165,694


$

79,910


107%


$

136,701


21%


SG&A % from home sales


10.6%



11.5%


(0.9%)



11.6%


(1.0%)


Operating margin from home sales

$

175,214


$

90,835


93%


$

110,336


59%


Operating margin % from home sales


11.2%



13.1%


(1.9%)



9.4%


1.8%


Adjusted operating margin from home sales*

$

181,072


$

90,835


99%


$

123,013


47%


Adjusted operating margin % from home sales*


11.6%



13.1%


(1.5%)



10.4%


1.2%


Net new orders


3,921



1,567


150%



4,135


(5%)


Net new orders (dollar value)

$

1,749,217


$

857,747


104%


$

1,798,050


(3%)


Average active selling communities


567



203


179%



571


(1%)


Monthly sales absorption rate per community


2.3



2.6


(10%)



2.4


(5%)


Cancellation rate


15%



15%


         ―  



12%


3%


Gross cancellations


711



268


165%



571


25%


Backlog (homes)


7,456



2,572


190%



7,019


6%


Backlog (dollar value)

$

3,428,713


$

1,484,544


131%


$

3,212,079


7%


















Land purchases (incl. seller financing)

$

237,925


$

98,627


141%


$

215,419


10%


Adjusted Homebuilding EBITDA*

$

243,048


$

140,728


73%


$

171,230


42%


Adjusted Homebuilding EBITDA Margin %*


15.4%



20.1%


(4.7%)



14.4%


1.0%


Homebuilding interest incurred

$

55,610


$

41,857


33%


$

62,725


(11%)


Homebuilding interest capitalized to inventories owned

$

54,564


$

41,508


31%


$

61,845


(12%)


Homebuilding interest capitalized to investments in JVs

$

1,046


$

349


200%


$

880


19%


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

$

41,830


$

36,563


14%


$

30,382


38%


 




As of 




June 30,


December 31,


Percentage




2016


2015


or % Change

Select Balance Sheet Data

(Dollars in thousands, except per share amounts)











Homebuilding cash (including restricted cash)

$

286,840


$

187,066


53%

Inventories owned

$

6,421,737


$

6,069,959


6%

Goodwill

$

969,048


$

933,360


4%

Homesites owned and controlled


67,741



70,494


(4%)

Homes under construction


7,338



6,081


21%

Completed specs


957



1,325


(28%)

Homebuilding debt

$

3,715,698


$

3,487,699


7%

Stockholders' equity

$

4,039,955


$

3,861,436


5%

Stockholders' equity per share

$

34.12


$

31.84


7%

Total consolidated debt to book capitalization


49.1%



49.5%


(0.4%)

Adjusted net homebuilding debt to total adjusted book capitalization*


45.9%



46.1%


(0.2%)

 

PRO FORMA KEY STATISTICS AND FINANCIAL DATA1





As of or For the Three Months Ended




Actual
June 30,


Pro Forma
June 30,


Percentage


Actual
March 31,


Percentage




2016


2015


or % Change


2016


or % Change

Select Operating Data

(Dollars in thousands)
















Deliveries


3,484



3,119


12%



2,727


28%

Average selling price

$

447


$

427


5%


$

432


3%

Home sale revenues

$

1,558,701


$

1,331,079*


17%


$

1,179,165


32%

Pretax income

$

179,617


$

156,066*


15%


$

115,204


56%

Pretax income (excluding purchase accounting adjustments included in cost of home sales and merger costs)*

$

190,480


$

156,066


22%


$

132,725


44%

Net new orders


3,921



3,954


(1%)



4,135


(5%)

Net new orders (dollar value)

$

1,749,217


$

1,670,731


5%


$

1,798,050


(3%)

Average active selling communities


567



546


4%



571


(1%)

Monthly sales absorption rate per community


2.3



2.4


(5%)



2.4


(5%)

Cancellation rate


15%



15%


         ―  



12%


3%

Gross cancellations


711



704


1%



571


25%

Backlog (homes)


7,456



6,688


11%



7,019


6%

Backlog (dollar value)

$

3,428,713


$

2,891,927


19%


$

3,212,079


7%

Land purchases (incl. seller financing)

$

237,925


$

250,860


(5%)


$

215,419


10%



1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS








Three Months Ended June 30,


Six Months Ended June 30,






2016


2015


2016


2015






(Dollars in thousands, except per share amounts)






(Unaudited)


Homebuilding:














Home sale revenues

$

1,558,701


$

694,678


$

2,737,866


$

1,163,057



Land sale revenues


19,661



4,954



26,179



6,853




Total revenues


1,578,362



699,632



2,764,045



1,169,910



Cost of home sales


(1,217,793)



(523,933)



(2,149,921)



(878,750)



Cost of land sales


(19,212)



(3,758)



(25,579)



(5,114)




Total cost of sales


(1,237,005)



(527,691)



(2,175,500)



(883,864)





Gross margin


341,357



171,941



588,545



286,046





Gross margin %


21.6%



24.6%



21.3%



24.5%



Selling, general and administrative expenses


(165,694)



(79,910)



(302,395)



(145,980)



Income (loss) from unconsolidated joint ventures


223



(51)



1,412



(502)



Other income (expense)


(4,415)



(5,276)



(7,823)



(5,572)





Homebuilding pretax income 


171,471



86,704



279,739



133,992


Financial Services:














Revenues


20,539



7,411



38,091



12,804



Expenses


(12,393)



(4,593)



(23,009)



(8,778)





Financial services pretax income


8,146



2,818



15,082



4,026


Income before taxes


179,617



89,522



294,821



138,018


Provision for income taxes


(66,857)



(32,324)



(109,400)



(49,215)


Net income 


112,760



57,198



185,421



88,803


  Less: Net income allocated to preferred shareholder


         ―     



(13,798)



         ―     



(21,475)


  Less: Net income allocated to unvested restricted stock


(251)



(112)



(350)



(181)


Net income available to common stockholders

$

112,509


$

43,288


$

185,071


$

67,147


















Income Per Common Share:














Basic


$

0.95


$

0.79


$

1.55


$

1.22



Diluted

$

0.83


$

0.72


$

1.36


$

1.12


















Weighted Average Common Shares Outstanding:














Basic



118,419,937



55,099,690



119,617,438



54,914,435



Diluted


136,088,146



62,110,779



137,277,899



62,081,531


















Weighted average additional common shares outstanding

if preferred shares converted to common shares

         ―     



17,562,557



         ―     



17,562,557


















Total weighted average diluted common shares outstanding

if preferred shares converted to common shares

136,088,146



79,673,336



137,277,899



79,644,088


















Cash Dividends Per Common Share

$

0.04


$

         ―     


$

0.08


$

         ―     


 

CONDENSED CONSOLIDATED BALANCE SHEETS








June 30,


December 31,







2016


2015







(Dollars in thousands)

ASSETS

(Unaudited)




Homebuilding:







Cash and equivalents

$

256,007


$

151,076


Restricted cash



30,833



35,990


Inventories:










Owned




6,421,737



6,069,959



Not owned



81,603



83,246


Investments in unconsolidated joint ventures


147,631



132,763


Deferred income taxes, net


337,538



396,194


Goodwill




969,048



933,360


Other assets




117,484



118,768




Total Homebuilding Assets


8,361,881



7,921,356

Financial Services:







Cash and equivalents


31,863



35,518


Restricted cash



22,008



22,914


Mortgage loans held for sale, net


188,977



325,770


Mortgage loans held for investment, net


25,394



22,704


Other assets




19,854



17,243




Total Financial Services Assets


288,096



424,149





Total Assets

$

8,649,977


$

8,345,505












LIABILITIES AND EQUITY






Homebuilding:







Accounts payable


$

215,761


$

191,681


Accrued liabilities



477,950



478,793


Secured project debt and other notes payable


41,139



25,683


Senior notes payable


3,674,559



3,462,016




Total Homebuilding Liabilities


4,409,409



4,158,173

Financial Services:







Accounts payable and other liabilities


26,099



22,474


Mortgage credit facilities


174,514



303,422




Total Financial Services Liabilities


200,613



325,896





Total Liabilities


4,610,022



4,484,069

Equity:







Stockholders' Equity:








Preferred stock


   ―   



   ―   



Common stock


1,184



1,213



Additional paid-in capital


3,326,943



3,324,328



Accumulated earnings


711,784



535,890



Accumulated other comprehensive income, net of tax


44



5




Total Equity


4,039,955



3,861,436





Total Liabilities and Equity

$

8,649,977


$

8,345,505

 

INVENTORIES



June 30,


December 31,



2016


2015



(Dollars in thousands)

Inventories Owned:


(Unaudited)







     Land and land under development


$     3,440,809


$     3,546,289

     Homes completed and under construction


2,468,011


2,039,597

     Model homes


512,917


484,073

        Total inventories owned


$     6,421,737


$     6,069,959






Inventories Owned by Segment:










     North


$        821,897


$        703,651

     Southeast


1,834,044


1,753,301

     Southwest


1,422,325


1,400,524

     West


2,343,471


2,212,483

        Total inventories owned


$     6,421,737


$     6,069,959

REGIONAL OPERATING DATA

During the 2015 third quarter, in connection with the transition planning related to the merger, the Company began evaluating the business and allocating resources based on the post-merger homebuilding operating segments of CalAtlantic. The Company's homebuilding operating segments are grouped into four reportable segments: North (Baltimore, Chicago, Delaware, Indianapolis, Metro Washington, D.C., Minneapolis/St. Paul, New Jersey, Northern Virginia, Philadelphia and Atlanta); Southeast (Florida and the Carolinas); Southwest (Texas, Colorado and Nevada) and West (California and Arizona).  All prior periods have been restated to conform to CalAtlantic's new presentation.






Three Months Ended June 30,







2016


2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


New homes delivered:





















North



711


$

339



 n/a 


$

 n/a 



n/a



n/a



Southeast



983



392



476



414



107%



(5%)



Southwest



1,003



432



338



538



197%



(20%)



West



787



634



491



643



60%



(1%)





Consolidated total



3,484


$

447



1,305


$

532



167%



(16%)


 






Six Months Ended June 30,







2016


2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


New homes delivered:





















North



1,272


$

336



 n/a 


$

 n/a 



n/a



n/a



Southeast



1,696



391



861



398



97%



(2%)



Southwest



1,857



418



576



524



222%



(20%)



West



1,386



629



840



618



65%



2%





Consolidated total



6,211


$

441



2,277


$

511



173%



(14%)


 






Three Months Ended June 30,







2016


2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


Net new orders:





















North



933


$

331



 n/a 


$

 n/a 



 n/a 



 n/a 



Southeast



1,112



377



524



446



112%



(15%)



Southwest



945



431



406



509



133%



(15%)



West



931



659



637



655



46%



1%





Consolidated total



3,921


$

446



1,567


$

547



150%



(18%)


 






Six Months Ended June 30,







2016


2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


Net new orders:





















North



1,824


$

331



 n/a 


$

 n/a 



 n/a 



 n/a 



Southeast



2,313



374



1,082



434



114%



(14%)



Southwest



2,076



429



798



509



160%



(16%)



West



1,843



645



1,258



646



47%



(0%)





Consolidated total



8,056


$

440



3,138


$

538



157%



(18%)


 






Three Months Ended June 30,


Six Months Ended June 30,






2016


2015


% Change


2016


2015


% Change

Average number of selling communities during the period:














North


126


n/a


n/a


121


n/a


n/a


Southeast


179


88


103%


180


85


112%


Southwest


169


55


207%


172


55


213%


West


93


60


55%


94


60


57%




Consolidated total


567


203


179%


567


200


184%

 






At June 30,







2016


2015


% Change







Homes


Dollar
Value


Homes


Dollar
Value


Homes


Dollar
Value







(Dollars in thousands)


Backlog:





















North



1,555


$

524,001



 n/a 


$

 n/a 



 n/a 



 n/a 



Southeast



2,238



923,385



992



507,937



126%



82%



Southwest



2,121



970,020



768



406,427



176%



139%



West



1,542



1,011,307



812



570,180



90%



77%





Consolidated total



7,456


$

3,428,713



2,572


$

1,484,544



190%



131%


 






At June 30,







2016


2015


% Change


Homesites owned and controlled:









North


15,636


 n/a 


 n/a 



Southeast


23,033


16,765


37%



Southwest


15,006


6,324


137%



West



14,066


12,945


9%




Total (including joint ventures)


67,741


36,034


88%














Homesites owned


50,947


28,866


76%



Homesites optioned or subject to contract 


15,412


6,123


152%



Joint venture homesites


1,382


1,045


32%




Total (including joint ventures)


67,741


36,034


88%













Homesites owned:









Raw lots


11,880


7,116


67%



Homesites under development


13,200


8,361


58%



Finished homesites


13,618


7,397


84%



Under construction or completed homes


10,015


4,010


150%



Held for sale


2,234


1,982


13%




Total


50,947


28,866


76%


 

PRO FORMA REGIONAL OPERATING DATA









Three Months Ended June 30,







Actual
2016


Pro Forma
2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


New homes delivered:





















North



711


$

339



650


$

339



9%



        ― 



Southeast



983



392



901



356



9%



10%



Southwest



1,003



432



920



421



9%



3%



West



787



634



648



622



21%



2%





Consolidated total



3,484


$

447



3,119


$

427



12%



5%


 






Six Months Ended June 30,







Actual
2016


Pro Forma
2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


New homes delivered:





















North



1,272


$

336



1,172


$

341



9%



(1%)



Southeast



1,696



391



1,613



346



5%



13%



Southwest



1,857



418



1,662



406



12%



3%



West



1,386



629



1,107



604



25%



4%





Consolidated total



6,211


$

441



5,554


$

414



12%



7%


 






Three Months Ended June 30,







Actual
2016


Pro Forma
2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


Net new orders:





















North



933


$

331



747


$

338



25%



(2%)



Southeast



1,112



377



1,103



365



1%



3%



Southwest



945



431



1,243



409



(24%)



5%



West



931



659



861



590



8%



12%





Consolidated total



3,921


$

446



3,954


$

423



(1%)



5%


 






Six Months Ended June 30,







Actual
2016


Pro Forma
2015


% Change







Homes


ASP


Homes


ASP


Homes


ASP







(Dollars in thousands)


Net new orders:





















North



1,824


$

331



1,565


$

336



17%



(1%)



Southeast



2,313



374



2,240



360



3%



4%



Southwest



2,076



429



2,388



406



(13%)



6%



West



1,843



645



1,721



589



7%



10%





Consolidated total



8,056


$

440



7,914


$

419



2%



5%


 






Three Months Ended June 30,


Six Months Ended June 30,






Actual
2016


Pro Forma
2015


% Change


Actual
2016


Pro Forma
2015


% Change

Average number of selling communities during the period:














North


126


113


12%


121


116


4%


Southeast


179


169


6%


180


167


8%


Southwest


169


184


(8%)


172


182


(5%)


West


93


80


16%


94


81


16%




Consolidated total


567


546


4%


567


546


4%

 






At June 30,







Actual
2016


Pro Forma
2015


% Change







Homes


Dollar
Value


Homes


Dollar
Value


Homes


Dollar
Value







(Dollars in thousands)


Backlog:





















North



1,555


$

524,001



1,366


$

463,663



14%



13%



Southeast



2,238



923,385



2,005



812,686



12%



14%



Southwest



2,121



970,020



2,152



906,891



(1%)



7%



West



1,542



1,011,307



1,165



708,687



32%



43%





Consolidated total



7,456


$

3,428,713



6,688


$

2,891,927



11%



19%


 






At June 30,







Actual
2016


Pro Forma
2015


% Change


Homesites owned and controlled:









North


15,636


16,350


(4%)



Southeast


23,033


27,636


(17%)



Southwest


15,006


17,167


(13%)



West



14,066


15,298


(8%)




Total (including joint ventures)


67,741


76,451


(11%)














Homesites owned


50,947


54,961


(7%)



Homesites optioned or subject to contract 


15,412


19,834


(22%)



Joint venture homesites


1,382


1,656


(17%)




Total (including joint ventures)


67,741


76,451


(11%)













Homesites owned:









Raw lots


11,880


10,890


9%



Homesites under development


13,200


24,079


(45%)



Finished homesites


13,618


8,269


65%



Under construction or completed homes


10,015


9,622


4%



Held for sale


2,234


2,101


6%




Total


50,947


54,961


(7%)


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently.  Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.

The table set forth below reconciles the Company's gross margin percentage from home sales to adjusted gross margin percentage from home sales, excluding purchase accounting adjustments related to the merger and interest amortized to cost of home sales.  The table set forth below also calculates adjusted operating margin percentage from home sales, excluding purchase accounting adjustments related to the merger.  We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group.


Three Months Ended



June 30,
2016


Gross
Margin %


June 30,
2015


Gross
Margin %


March 31,
2016


Gross
Margin %



(Dollars in thousands)


















Home sale revenues

$

1,558,701




$

694,678




$

1,179,165




Less: Cost of home sales


(1,217,793)





(523,933)





(932,128)




Gross margin from home sales


340,908


21.9%



170,745


24.6%



247,037


21.0%


Add: Purchase accounting adjustments included in cost of home sales


5,858


0.3%



   ―  


n/a



12,677


1.0%


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


346,766


22.2%



170,745


24.6%



259,714


22.0%


Add: Capitalized interest included in cost of home sales


40,528


2.6%



35,051


5.0%



30,203


2.6%


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

$

387,294


24.8%


$

205,796


29.6%


$

289,917


24.6%


















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

$

346,766


22.2%


$

170,745


24.6%


$

259,714


22.0%


Less: Selling, general and administrative expenses


(165,694)


(10.6%)



(79,910)


(11.5%)



(136,701)


(11.6%)


Adjusted operating margin from home sales, excluding purchase accounting adjustments

$

181,072


11.6%


$

90,835


13.1%


$

123,013


10.4%


The table set forth below reconciles the Company's pretax income to adjusted pretax income and adjusted net income, excluding purchase accounting adjustments and merger transaction related costs.  We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group. 




Three Months Ended




June 30, 2016


March 31, 2016




(Dollars in thousands, except per share amounts)









Pretax income

$

179,617


$

115,204

Add:








Purchase accounting adjustments included in cost of home sales


5,858



12,677


Merger transaction related costs


5,005



4,844

Adjusted pretax income


190,480



132,725


Less: Adjusted tax provision including the add back of purchase accounting adjustments and merger costs


(70,900)



(49,013)









Adjusted net income

$

119,580


$

83,712










Less: Net income allocated to unvested restricted stock


(266)



(130)


Add: Interest on convertible senior notes


235



(226)







Adjusted net income available to common stock for diluted earnings per share

$

119,549


$

83,356

Adjusted diluted earnings per share

$

0.88


$

0.60

Total weighted average diluted common shares outstanding


136,088,146



138,430,580

The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios.  In addition, the table set forth below calculates homebuilding debt to adjusted homebuilding EBITDA.  We believe these ratios are useful to management and investors as a measure of the Company's ability to obtain financing.  For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity.  Adjusted net homebuilding debt excludes indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents. 




June 30,
2016


March 31,
2016


December 31,
2015


June 30,
2015




(Dollars in thousands)















Total consolidated debt

$

3,890,212


$

3,831,755


$

3,791,121


$

2,259,379

Less:














Financial services indebtedness


(174,514)



(164,943)



(303,422)



(90,341)


Homebuilding cash, including restricted cash


(286,840)



(204,180)



(187,066)



(116,802)

Adjusted net homebuilding debt


3,428,858



3,462,632



3,300,633



2,052,236

Stockholders' equity


4,039,955



3,941,969



3,861,436



1,752,543

Total adjusted book capitalization

$

7,468,813


$

7,404,601


$

7,162,069


$

3,804,779















Total consolidated debt to book capitalization


49.1%



49.3%



49.5%



56.3%















Adjusted net homebuilding debt to total adjusted book capitalization


45.9%



46.8%



46.1%



53.9%





























Homebuilding debt

$

3,715,698


$

3,666,812


$

3,487,699


$

2,169,038

LTM adjusted homebuilding EBITDA

$

842,628


$

740,308


$

648,313


$

498,060















Homebuilding debt to adjusted homebuilding EBITDA


 4.4x 



 5.0x 



 5.4x 



 4.4x 

The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA.  Adjusted Homebuilding EBITDA means net income (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense, (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges and deposit write-offs, (e) (gain) loss on early extinguishment of debt, (f) homebuilding depreciation and amortization, including amortization of capitalized model costs, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures, (i) income (loss) from financial services subsidiaries, (j) purchase accounting adjustments and (k) merger and other one-time transaction related costs.  Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently.  We believe Adjusted Homebuilding EBITDA information is useful to management and investors as it provides perspective on the underlying performance of the business.  Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.




Three Months Ended


LTM Ended June 30,




June 30,
2016


June 30,
2015


March 31,
2016


2016


2015




(Dollars in thousands)


















Net income 

$

112,760


$

57,198


$

72,661


$

310,127


$

210,046


Provision for income taxes


66,857



32,324



42,543



189,165



124,475


Homebuilding interest amortized to cost of sales 


41,830



36,563



30,382



152,392



127,514


Homebuilding depreciation and amortization


15,381



8,964



12,012



53,460



30,172


Amortization of stock-based compensation


3,726



2,389



3,786



18,052



8,322

EBITDA


240,554



137,438



161,384



723,196



500,529

Add:
















Cash distributions of income from unconsolidated joint ventures


         ―    



592



450



2,688



592


Purchase accounting adjustments included in cost of home sales


5,858



         ―    



12,677



82,705



         ―    


Merger and other one-time costs


5,005



5,465



4,844



65,914



5,672

Less:

















Income (loss) from unconsolidated joint ventures


223



(51)



1,189



3,880



(271)


Income from financial services subsidiaries


8,146



2,818



6,936



27,995



9,004

Adjusted Homebuilding EBITDA

$

243,048


$

140,728


$

171,230


$

842,628


$

498,060


















Homebuilding revenues

$

1,578,362


$

699,632


$

1,185,683


$

5,090,546


$

2,528,403


















Adjusted Homebuilding EBITDA Margin %


15.4%



20.1%



14.4%



16.6%



19.7%

Because the closing of the merger occurred after the 2015 second quarter, financial statement information for the three months ended June 30, 2015 includes only stand-alone data for predecessor Standard Pacific Corp.  The table set forth below reconciles the Company's reported home sale revenues and pretax income to comparative financial measures on a combined basis for periods prior to the merger.  Certain adjustments, including those related to conforming accounting policies and adjusting acquired inventory to fair value, have not been reflected in the pro forma financial measures below due to the impracticability of estimating such impacts.  Such pro forma data was not prepared to comply with Regulation S-X of the SEC Rules and Regulations.  The following non-GAAP financial measures have been provided as we believe this data is useful to investors for purposes of assessing the Company's operating performance on a combined basis for year-over-year comparison purposes.


Three Months Ended


June 30, 2015


(Dollars in thousands)




Home sale revenues

$

694,678

Add: Ryland home sale revenues


636,401

Pro forma combined home sale revenues

$

1,331,079







Pretax income

$

89,522

Add: Ryland pretax income


66,544

Pro forma combined pretax income

$

156,066

 

RYLAND REGIONAL QUARTERLY OPERATING DATA







Q3 2015


Q2 2015


Q1 2015


Q4 2014


Q3 2014


Q2 2014


Q1 2014






(Dollars in thousands)

New homes delivered:
















North


768


650


522


890


731


574


516


Southeast


509


425


327


575


478


386


354


Southwest


575


582


504


817


656


596


508


West


194


157


110


207


153


144


92




Consolidated total


2,046


1,814


1,463


2,489


2,018


1,700


1,470



















Average selling price (deliveries):
















North


$      339


$      339


$      345


$      335


$      330


$      337


$      322


Southeast


300


291


281


286


278


261


264


Southwest


341


353


332


327


319


325


319


West


434


555


566


541


548


539


638




Consolidated total


$      339


$      351


$      343


$      338


$      331


$      333


$      327



















Net new orders:
















North


636


747


818


493


607


820


744


Southeast


476


579


579


402


376


507


501


Southwest


601


837


753


533


567


724


753


West


199


224


239


119


157


177


188




Consolidated total


1,912


2,387


2,389


1,547


1,707


2,228


2,186



















Average selling price (orders):
















North


$      337


$      338


$      335


$      338


$      343


$      345


$      325


Southeast


298


292


289


288


304


283


279


Southwest


356


360


347


344


334


330


325


West


375


403


463


591


516


543


548




Consolidated total


$      337


$      341


$      340


$      347


$      347


$      342


$      334



















Average number of selling communities
















during the period:
















North


118


113


117


117


116


109


98


Southeast


81


81


85


87


81


78


78


Southwest


131


129


123


114


101


98


102


West


22


20


21


18


16


17


17




Consolidated total


352


343


346


336


314


302


295



















Backlog:
















North


1,234


1,366


1,269


973


1,370


1,494


1,248


Southeast


979


1,013


859


607


780


882


761


Southwest


1,409


1,384


1,129


880


1,164


1,253


1,125


West


352


353


286


157


245


241


208




Consolidated total


3,974


4,116


3,543


2,617


3,559


3,870


3,342



















 

STANDARD PACIFIC REGIONAL QUARTERLY OPERATING DATA







Q3 2015


Q2 2015


Q1 2015


Q4 2014


Q3 2014


Q2 2014


Q1 2014






(Dollars in thousands)

New homes delivered:
















Southeast


467


476


385


508


472


500


391


Southwest


282


338


238


348


272


237


202


West


416


491


349


619


506


499


402




Consolidated total


1,165


1,305


972


1,475


1,250


1,236


995



















Average selling price (deliveries):
















Southeast


$      437


$      414


$      377


$      382


$      360


$      339


$      329


Southwest


552


538


504


469


474


477


433


West


641


643


583


593


602


619


574




Consolidated total


$      537


$      532


$      482


$      491


$      483


$      479


$      449



















Net new orders:
















Southeast


429


524


558


395


446


517


483


Southwest


325


406


392


240


245


434


288


West


572


637


621


343


463


573


540




Consolidated total


1,326


1,567


1,571


978


1,154


1,524


1,311



















Average selling price (orders):
















Southeast


$      463


$      446


$      423


$      385


$      388


$      367


$      359


Southwest


559


509


509


509


480


452


467


West


679


655


636


641


601


572


604




Consolidated total


$      580


$      547


$      528


$      505


$      493


$      468


$      483


































Average number of selling communities

during the period:















Southeast


96


88


81


73


74


76


72


Southwest


54


55


56


54


53


49


45


West


65


60


61


57


58


58


57




Consolidated total


215


203


198


184


185


183


174



















Backlog:
















Southeast


954


992


944


771


884


910


893


Southwest


811


768


700


546


654


681


484


West


968


812


666


394


670


713


639




Consolidated total


2,733


2,572


2,310


1,711


2,208


2,304


2,016

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/calatlantic-group-inc-reports-2016-second-quarter-results-and-announces-500-million-share-repurchase-program-300305851.html

SOURCE CalAtlantic Group, Inc.

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