Market Overview

CalAtlantic Group, Inc. Reports 2016 Third Quarter Results

Share:

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 nine months ended September 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 nine months ended September 30, 2015. Limited historical Ryland operating data is also presented in the tables at the end of this release for informational purposes.

IRVINE, Calif., Oct. 26, 2016 /PRNewswire/ -- CalAtlantic Group, Inc. (NYSE: CAA) today announced results for the third quarter ended September 30, 2016.

Larry Nicholson, President and Chief Executive Officer of CalAtlantic Group, Inc. commented, "We continue to execute our business at a high level.  With orders growth of 9%, revenue from home sales growth of 26%, and earnings per share growth of 64%, I am pleased with the result of our total team effort."

2016 CalAtlantic Third Quarter Highlights and Comparisons to 2015 Third Quarter

2016 third quarter results are for the combined company and include merger costs. The 2015 third quarter includes only the stand-alone results of Standard Pacific and includes merger related costs.

  • Net new orders of 3,531, up 166%; Dollar value of net new orders up 98%
  • 566 average active selling communities, up 163%
  • 3,680 new home deliveries, up 216%
  • Average selling price of $452 thousand, down 16%
  • Home sale revenues of $1.7 billion, up 166%
  • Gross margin from home sales of 22.5%, compared to 25.3%
  • SG&A rate from home sales of 10.3%, compared to 11.7%
  • Operating margin from home sales of $203.6 million, or 12.2%, compared to $85.4 million, or 13.6%
  • Net income of $132.3 million, or $0.97 per diluted share, vs. net income of $47.2 million, or $0.59 per diluted share (2016 third quarter results include the impact of $3.9 million of merger costs, compared to $11.2 million for the 2015 third quarter)
  • $387.1 million of land purchases and development costs, compared to $262.2 million
  • Repurchased 1.1 million shares during the quarter at an average price of $34.12 and a total expenditure of $37.6 million

2016 CalAtlantic Third Quarter Highlights and Comparisons to Pro Forma 2015 CalAtlantic Third 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 third quarter 2015 Standard Pacific and Ryland financial and operating data compared to actual 2016 CalAtlantic third 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 3,531, up 9%; Dollar value of net new orders up 8%
  • 566 average active selling communities, flat
  • 3,680 new home deliveries, up 15%
  • Average selling price of $452 thousand, up 10%
  • Home sale revenues of $1.7 billion, up 26%
  • Pretax income of $210.7 million vs. $143.9 million* (2016 third quarter results include the impact of $3.9 million of merger costs, compared to $11.2 million for the 2015 third quarter)
  • $387.1 million of land purchases and development costs, compared to $432.8 million

Orders.  Net new orders for the 2016 third quarter were up 9% from the pro forma 2015 third quarter, to 3,531 homes, with the dollar value of these orders up 8%.  The Company's monthly sales absorption rate was 2.1 per community for the 2016 third quarter, up 9% from the pro forma 2015 third quarter and down 10% from the 2016 second quarter, approximately half the decline associated with normal seasonal patterns.  The Company's cancellation rate for the 2016 third quarter was 16%, down compared to 20% for the pro forma 2015 third quarter and slightly up from 15% for the 2016 second quarter.

Backlog.  The dollar value of homes in backlog increased 10% to $3.3 billion, or 7,307 homes, compared to $3.0 billion, or 6,707 homes, for the pro forma 2015 third quarter, and decreased 3% compared to $3.4 billion, or 7,456 homes, for the 2016 second quarter.  The increase in pro forma year-over-year backlog value was driven primarily by the 9% increase in the Company's monthly sales absorption rate.  As of September 30, 2016, the average gross margin of the 7,307 total homes in backlog was 21.4%.  For the 4,306 homes scheduled to close in the fourth quarter of 2016, the gross margin in backlog as of such date was 21.2%.

Revenue.  Revenues from home sales for the 2016 third quarter increased 26%, to $1.7 billion, as compared to the pro forma 2015 third quarter, resulting from a 15% increase on a pro forma basis in new home deliveries and a 10% increase on a pro forma basis in the Company's average home price to $452 thousand.  The increase in average home price was primarily attributable to product mix and general price increases within select markets.   

Gross Margin.  The Company achieved gross margin from homes sales of 22.5% for the 2016 third quarter.  Excluding 270 bps of capitalized interest amortized to cost of home sales, our pre-interest gross margin was 25.2%*.  Our 2016 gross margin was negatively impacted by a shift in product mix, a competitive pricing environment, and an increase in direct construction costs per home. 

SG&A Expenses.  Selling, general and administrative expenses for the 2016 third quarter were $170.8 million, or 10.3%, as compared to $73.3 million, or 11.7%, for the 2015 third quarter.  This 140 basis point improvement was primarily the result of a 166% increase in home sale revenues and the operating leverage associated with the increase in revenue and the synergies gained in connection with the merger.   

Land.  During the 2016 third quarter, the Company spent $387.1 million on land purchases and development costs, compared to $432.8 million for the pro forma 2015 third quarter. The Company purchased $227.6 million of land, consisting of 3,798 homesites, of which 20% (based on homesites) is located in the North region, 37% in the Southeast region, 33% in the Southwest region, and 10% in the West region.  As of September 30, 2016, the Company owned or controlled 67,964 homesites, of which 46,119 were owned and actively selling or under development, 16,579 were controlled or under option, and the remaining 5,266 homesites were held for future development or for sale. 

Liquidity.  The Company ended the quarter with $675.1 million of available liquidity, including $184.0 million of unrestricted homebuilding cash and $491.1 million available to borrow under its $750 million revolving credit facility. The Company's homebuilding debt to book capitalization as of September 30, 2016 and 2015 was 46.4% and 56.8%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 44.9%* and 55.4%*, respectively.  In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending September 30, 2016 and 2015 was 3.7x* and 4.7x*, respectively.

Share Repurchase.  During the third quarter, the Company repurchased 1.1 million shares of its common stock at an average price of $34.12 and a total third quarter spend of $37.6 million.  This brings the year-to-date repurchases for the nine months ended September 30, 2016 to 4.3 million shares at an average price of $31.99 and a total year-to-date spend of $137.5 million.

Earnings Conference Call

A conference call to discuss the Company's 2016 third quarter results will be held at 11:00 a.m. Eastern time October 27, 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 (800) 723-6604 (domestic) or (785) 830-7977 (international); Passcode: 3619958.  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: 3619958.  

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 nine 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; our ability to execute our business; 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




September 30,


September 30,


Percentage


June 30,


Percentage




2016


2015


or % Change


2016


or % Change

Select Operating Data

(Dollars in thousands)
















Deliveries


3,680



1,165


216%



3,484


6%

Average selling price

$

452


$

537


(16%)


$

447


1%

Home sale revenues

$

1,665,030


$

626,008


166%


$

1,558,701


7%

Gross margin % (including land sales)


22.4%



24.5%


(2.1%)



21.6%


0.8%

Gross margin % from home sales


22.5%



25.3%


(2.8%)



21.9%


0.6%

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


22.5%



25.3%


(2.8%)



22.2%


0.3%

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


25.2%



30.2%


(5.0%)



24.8%


0.4%

Incentive and stock-based compensation expense

$

18,594


$

5,932


213%


$

17,275


8%

Selling expenses

$

84,723


$

32,687


159%


$

81,396


4%

G&A expenses (excluding incentive and stock-based 

compensation expenses)

$

67,498


$

34,641


95%


$

67,023


1%

SG&A expenses

$

170,815


$

73,260


133%


$

165,694


3%

SG&A % from home sales


10.3%



11.7%


(1.4%)



10.6%


(0.3%)

Operating margin from home sales

$

203,587


$

85,390


138%


$

175,214


16%

Operating margin % from home sales


12.2%



13.6%


(1.4%)



11.2%


1.0%

Adjusted operating margin from home sales*

$

203,587


$

85,390


138%


$

181,072


12%

Adjusted operating margin % from home sales*


12.2%



13.6%


(1.4%)



11.6%


0.6%

Net new orders


3,531



1,326


166%



3,921


(10%)

Net new orders (dollar value)

$

1,520,358


$

768,557


98%


$

1,749,217


(13%)

Average active selling communities


566



215


163%



567


(0%)

Monthly sales absorption rate per community


2.1



2.1


1%



2.3


(10%)

Cancellation rate


16%



19%


(3%)



15%


1%

Gross cancellations


679



302


125%



711


(5%)

Backlog (homes)


7,307



2,733


167%



7,456


(2%)

Backlog (dollar value)

$

3,314,883


$

1,655,496


100%


$

3,428,713


(3%)
















Land purchases (incl. seller financing)

$

227,596


$

125,982


81%


$

237,925


(4%)

Adjusted Homebuilding EBITDA*

$

267,835


$

130,769


105%


$

243,048


10%

Adjusted Homebuilding EBITDA Margin %*


16.0%



20.1%


(4.1%)



15.4%


0.6%

Homebuilding interest incurred

$

56,872


$

42,304


34%


$

55,610


2%

Homebuilding interest capitalized to inventories owned

$

55,761


$

41,611


34%


$

54,564


2%

Homebuilding interest capitalized to investments in JVs

$

1,111


$

693


60%


$

1,046


6%

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

$

44,751


$

33,323


34%


$

41,830


7%












As of 




September 30,


December 31,


Percentage




2016


2015


or % Change

Select Balance Sheet Data

(Dollars in thousands, except per share amounts)











Homebuilding cash (including restricted cash)

$

213,829


$

187,066


14%

Inventories owned

$

6,533,047


$

6,069,959


8%

Goodwill

$

970,185


$

933,360


4%

Homesites owned and controlled


67,964



70,494


(4%)

Homes under construction


7,365



6,081


21%

Completed specs


973



1,325


(27%)

Homebuilding debt

$

3,580,729


$

3,487,699


3%

Stockholders' equity

$

4,134,435


$

3,861,436


7%

Stockholders' equity per share

$

35.23


$

31.84


11%

Total consolidated debt to book capitalization


47.5%



49.5%


(2.0%)

Adjusted net homebuilding debt to total adjusted book capitalization*


44.9%



46.1%


(1.2%)







PRO FORMA KEY STATISTICS AND FINANCIAL DATA1






As of or For the Three Months Ended



Actual
September 30,


Pro Forma
September 30,


Percentage


Actual
June 30,


Percentage



2016


2015


or % Change


2016


or % Change

Select Operating Data

(Dollars in thousands)















Deliveries


3,680



3,211


15%



3,484


6%

Average selling price

$

452


$

411


10%


$

447


1%

Home sale revenues

$

1,665,030


$

1,318,885 *


26%


$

1,558,701


7%

Pretax income

$

210,746


$

143,852 *


47%


$

179,617


17%

Pretax income (excluding purchase accounting adjustments













  included in cost of home sales and merger costs)*

$

214,683


$

155,068


38%


$

190,480


13%

Net new orders


3,531



3,238


9%



3,921


(10%)

Net new orders (dollar value)

$

1,520,358


$

1,413,512


8%


$

1,749,217


(13%)

Average active selling communities


566



567


(0%)



567


(0%)

Monthly sales absorption rate per community


2.1



1.9


9%



2.3


(10%)

Cancellation rate


16%



20%


(4%)



15%


1%

Gross cancellations


679



797


(15%)



711


(5%)

Backlog (homes)


7,307



6,707


9%



7,456


(2%)

Backlog (dollar value)

$

3,314,883


$

3,014,957


10%


$

3,428,713


(3%)















Land purchases (incl. seller financing)

$

227,596


$

211,588


8%


$

237,925


(4%)














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
September 30,


Nine Months Ended
September 30,





2016


2015


2016


2015





(Dollars in thousands, except per share amounts)





(Unaudited)

Homebuilding:













Home sale revenues

$

1,665,030


$

626,008


$

4,402,896


$

1,789,065


Land sale revenues


5,928



26,182



32,107



33,035



Total revenues


1,670,958



652,190



4,435,003



1,822,100


Cost of home sales


(1,290,628)



(467,358)



(3,440,549)



(1,346,108)


Cost of land sales


(5,638)



(25,076)



(31,217)



(30,190)



Total cost of sales


(1,296,266)



(492,434)



(3,471,766)



(1,376,298)




Gross margin


374,692



159,756



963,237



445,802




Gross margin %


22.4%



24.5%



21.7%



24.5%


Selling, general and administrative expenses


(170,815)



(73,260)



(473,210)



(219,240)


Income (loss) from unconsolidated joint ventures


1,231



121



2,643



(381)


Other income (expense)


(4,169)



(11,170)



(11,992)



(16,742)




Homebuilding pretax income 


200,939



75,447



480,678



209,439

Financial Services:













Revenues


21,433



7,011



59,524



19,815


Expenses


(11,626)



(4,164)



(34,635)



(12,942)




Financial services pretax income


9,807



2,847



24,889



6,873

Income before taxes


210,746



78,294



505,567



216,312

Provision for income taxes


(78,398)



(31,117)



(187,798)



(80,332)

Net income 


132,348



47,177



317,769



135,980

  Less: Net income allocated to preferred shareholder


         ―     



(11,342)



         ―     



(32,818)

  Less: Net income allocated to unvested restricted stock


(294)



(93)



(635)



(274)

Net income available to common stockholders

$

132,054


$

35,742


$

317,134


$

102,888
















Income Per Common Share:













Basic


$

1.12


$

0.65


$

2.66


$

1.87


Diluted

$

0.97


$

0.59


$

2.34


$

1.71
















Weighted Average Common Shares Outstanding:













Basic



118,338,891



55,345,443



119,188,145



55,059,683


Diluted


136,077,415



62,292,524



136,888,927



62,152,754
















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


136,077,415



79,855,081



136,888,927



79,715,311
















Cash Dividends Declared Per Common Share

$

0.04


$

         ―     


$

0.12


$

         ―     

















CONDENSED CONSOLIDATED BALANCE SHEETS














September 30,


December 31,






2016


2015






(Dollars in thousands)

ASSETS

(Unaudited)



Homebuilding:






Cash and equivalents

$

184,033


$

151,076


Restricted cash


29,796



35,990


Inventories:









Owned



6,533,047



6,069,959



Not owned


75,484



83,246


Investments in unconsolidated joint ventures


139,373



132,763


Deferred income taxes, net


323,955



396,194


Goodwill



970,185



933,360


Other assets



109,348



118,768




Total Homebuilding Assets


8,365,221



7,921,356

Financial Services:






Cash and equivalents


30,241



35,518


Restricted cash


21,799



22,914


Mortgage loans held for sale, net


171,262



325,770


Mortgage loans held for investment, net


24,450



22,704


Other assets



19,488



17,243




Total Financial Services Assets


267,240



424,149





Total Assets

$

8,632,461


$

8,345,505











LIABILITIES AND EQUITY





Homebuilding:






Accounts payable

$

204,803


$

191,681


Accrued liabilities


533,794



478,793


Revolving credit facility


146,000



   ―   


Secured project debt and other notes payable


40,930



25,683


Senior notes payable


3,393,799



3,462,016




Total Homebuilding Liabilities


4,319,326



4,158,173

Financial Services:






Accounts payable and other liabilities


16,802



22,474


Mortgage credit facilities


161,898



303,422




Total Financial Services Liabilities


178,700



325,896





Total Liabilities


4,498,026



4,484,069

Equity:






Stockholders' Equity:







Preferred stock


   ―   



   ―   



Common stock


1,173



1,213



Additional paid-in capital


3,293,823



3,324,328



Accumulated earnings


839,395



535,890



Accumulated other comprehensive income, net of tax


44



5




Total Equity


4,134,435



3,861,436





Total Liabilities and Equity

$

8,632,461


$

8,345,505









INVENTORIES






September 30,


December 31,


2016


2015


(Dollars in thousands)

Inventories Owned:

(Unaudited)







     Land and land under development

$     3,452,896


$     3,546,289

     Homes completed and under construction

2,581,562


2,039,597

     Model homes

498,589


484,073

        Total inventories owned

$     6,533,047


$     6,069,959





Inventories Owned by Segment:








     North

$        859,559


$        703,651

     Southeast

1,904,047


1,753,301

     Southwest

1,460,966


1,400,524

     West

2,308,475


2,212,483

        Total inventories owned

$     6,533,047


$     6,069,959




REGIONAL OPERATING DATA






In connection with the merger with Ryland, the Company began evaluating the business and allocating resources based on each of the four post-merger homebuilding regions of CalAtlantic. The Company's four homebuilding reportable segments include: 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 September 30,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:



















North


848


$

332



 n/a 


$

 n/a 



n/a



n/a


Southeast


1,052



380



467



437



125%



(13%)


Southwest


894



435



282



552



217%



(21%)


West


886



671



416



641



113%



5%




Consolidated total


3,680


$

452



1,165


$

537



216%



(16%)















Nine Months Ended September 30,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:



















North


2,120


$

335



 n/a 


$

 n/a 



n/a



n/a


Southeast


2,748



387



1,328



411



107%



(6%)


Southwest


2,751



424



858



533



221%



(20%)


West


2,272



645



1,256



625



81%



3%




Consolidated total


9,891


$

445



3,442


$

520



187%



(14%)















Three Months Ended September 30,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:



















North


823


$

337



 n/a 


$

 n/a 



 n/a 



 n/a 


Southeast


1,071



375



429



463



150%



(19%)


Southwest


831



428



325



559



156%



(23%)


West


806



603



572



679



41%



(11%)




Consolidated total


3,531


$

431



1,326


$

580



166%



(26%)















Nine Months Ended September 30,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:



















North


2,647


$

333



 n/a 


$

 n/a 



 n/a 



 n/a 


Southeast


3,384



374



1,511



442



124%



(15%)


Southwest


2,907



429



1,123



523



159%



(18%)


West


2,649



632



1,830



656



45%



(4%)




Consolidated total


11,587


$

437



4,464


$

550



160%



(21%)













Three Months Ended
September 30,


Nine Months Ended
September 30,





2016


2015


% Change


2016


2015


% Change

Average number of selling communities 












  during the period:













North

134


n/a


n/a


125


n/a


n/a


Southeast

182


96


90%


180


88


105%


Southwest

165


54


206%


170


54


215%


West

85


65


31%


91


63


44%




Consolidated total

566


215


163%


566


205


176%















At September 30,





2016


2015


% Change





Homes


Dollar
Value


Homes


Dollar
Value


Homes


Dollar
Value





(Dollars in thousands)

Backlog:



















North


1,530


$

523,882



 n/a 


$

 n/a 



 n/a 



 n/a 


Southeast


2,257



934,797



954



511,449



137%



83%


Southwest


2,058



945,052



811



438,753



154%



115%


West


1,462



911,152



968



705,294



51%



29%




Consolidated total


7,307


$

3,314,883



2,733


$

1,655,496



167%



100%















At September 30,





2016


2015


% Change

Homesites owned and controlled:







North

15,966


 n/a 


 n/a 


Southeast

22,993


16,098


43%


Southwest

15,113


6,537


131%


West


13,892


12,880


8%



Total (including joint ventures)

67,964


35,515


91%











Homesites owned

51,385


28,343


81%


Homesites optioned or subject to contract 

15,209


5,792


163%


Joint venture homesites

1,370


1,380


(1%)



Total (including joint ventures)

67,964


35,515


91%



















Homesites owned:







Raw lots

13,168


6,916


90%


Homesites under development

11,836


7,717


53%


Finished homesites

14,235


7,674


85%


Under construction or completed homes

10,055


4,323


133%


Held for sale

2,091


1,713


22%



Total

51,385


28,343


81%



PRO FORMA REGIONAL OPERATING DATA










Three Months Ended September 30,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:



















North


848


$

332



768


$

339



10%



(2%)


Southeast


1,052



380



976



365



8%



4%


Southwest


894



435



857



410



4%



6%


West


886



671



610



575



45%



17%




Consolidated total


3,680


$

452



3,211


$

411



15%



10%















Nine Months Ended September 30,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:



















North


2,120


$

335



1,940


$

340



9%



(1%)


Southeast


2,748



387



2,589



353



6%



10%


Southwest


2,751



424



2,519



407



9%



4%


West


2,272



645



1,717



594



32%



9%




Consolidated total


9,891


$

445



8,765


$

413



13%



8%




































Three Months Ended September 30,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:



















North


823


$

337



636


$

337



29%



         ―  


Southeast


1,071



375



905



376



18%



(0%)


Southwest


831



428



926



427



(10%)



0%


West


806



603



771



601



5%



0%




Consolidated total


3,531


$

431



3,238


$

437



9%



(1%)















Nine Months Ended September 30,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:



















North


2,647


$

333



2,201


$

336



20%



(1%)


Southeast


3,384



374



3,145



364



8%



3%


Southwest


2,907



429



3,314



412



(12%)



4%


West


2,649



632



2,492



592



6%



7%




Consolidated total


11,587


$

437



11,152


$

424



4%



3%



















Three Months Ended September 30,


Nine Months Ended September 30,





Actual
2016


Pro Forma
2015


% Change


Actual
2016


Pro Forma
2015


% Change

Average number of selling communities during the period:












North

134


118


14%


125


116


8%


Southeast

182


177


3%


180


171


5%


Southwest

165


185


(11%)


170


183


(7%)


West

85


87


(2%)


91


83


10%




Consolidated total

566


567


(0%)


566


553


2%















At September 30,





Actual
2016


Pro Forma
2015


% Change





Homes


Dollar
Value


Homes


Dollar
Value


Homes


Dollar
Value





(Dollars in thousands)

Backlog:



















North


1,530


$

523,882



1,234


$

417,931



24%



25%


Southeast


2,257



934,797



1,933



805,356



17%



16%


Southwest


2,058



945,052



2,220



957,390



(7%)



(1%)


West


1,462



911,152



1,320



834,279



11%



9%




Consolidated total


7,307


$

3,314,883



6,707


$

3,014,956



9%



10%













At September 30,






Actual
2016


Pro Forma
2015


% Change

Homesites owned and controlled:








North


15,966


16,848


(5%)


Southeast


22,993


26,695


(14%)


Southwest


15,113


17,223


(12%)


West



13,892


14,994


(7%)



Total (including joint ventures)


67,964


75,760


(10%)












Homesites owned


51,385


54,014


(5%)


Homesites optioned or subject to contract 


15,209


19,760


(23%)


Joint venture homesites


1,370


1,986


(31%)



Total (including joint ventures)


67,964


75,760


(10%)





















Homesites owned:








Raw lots


13,168


10,334


27%


Homesites under development


11,836


22,935


(48%)


Finished homesites


14,235


8,737


63%


Under construction or completed homes


10,055


10,200


(1%)


Held for sale


2,091


1,808


16%



Total


51,385


54,014


(5%)



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 extraordinary 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 extraordinary 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


September 30,
2016

Gross
Margin %

September 30,
2015

Gross
Margin %

June 30,
2016

Gross
Margin %


(Dollars in thousands)











Home sale revenues

$

1,665,030


$

626,008


$

1,558,701


Less: Cost of home sales


(1,290,628)



(467,358)



(1,217,793)


Gross margin from home sales


374,402

22.5%


158,650

25.3%


340,908

21.9%

Add: Purchase accounting adjustments included in cost of home sales


   ―  

n/a


   ―  

n/a


5,858

0.3%

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


374,402

22.5%


158,650

25.3%


346,766

22.2%

Add: Capitalized interest included in cost of home sales


44,636

2.7%


30,275

4.9%


40,528

2.6%

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

$

419,038

25.2%

$

188,925

30.2%

$

387,294

24.8%





















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

$

374,402

22.5%

$

158,650

25.3%

$

346,766

22.2%

Less: Selling, general and administrative expenses


(170,815)

(10.3%)


(73,260)

(11.7%)


(165,694)

(10.6%)

Adjusted operating margin from home sales, excluding purchase accounting adjustments

$

203,587

12.2%

$

85,390

13.6%

$

181,072

11.6%



The table set forth below reconciles the Company's pretax income to adjusted pretax income, excluding extraordinary purchase accounting adjustments and merger and other one-time 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




September 30, 2016


June 30, 2016




(Dollars in thousands)









Pretax income

$

210,746


$

179,617

Add:








Purchase accounting adjustments included in cost of home sales


   ―  



5,858


Merger and other one-time transaction related costs


3,937



5,005

Adjusted pretax income

$

214,683


$

190,480










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.





September 30,
2016


June 30,
2016


December 31,
2015


September 30,
2015




(Dollars in thousands)















Total consolidated debt

$

3,742,627


$

3,890,212


$

3,791,121


$

2,457,626

Less:














Financial services indebtedness


(161,898)



(174,514)



(303,422)



(78,859)


Homebuilding cash, including restricted cash


(213,829)



(286,840)



(187,066)



(135,279)

Adjusted net homebuilding debt


3,366,900



3,428,858



3,300,633



2,243,488

Stockholders' equity


4,134,435



4,039,955



3,861,436



1,807,327

Total adjusted book capitalization

$

7,501,335


$

7,468,813


$

7,162,069


$

4,050,815















Total consolidated debt to book capitalization


47.5%



49.1%



49.5%



57.6%















Adjusted net homebuilding debt to total adjusted book capitalization


44.9%



45.9%



46.1%



55.4%





























Homebuilding debt

$

3,580,729


$

3,715,698


$

3,487,699


$

2,378,767

LTM adjusted homebuilding EBITDA

$

979,694


$

842,628


$

648,313


$

501,458















Homebuilding debt to adjusted homebuilding EBITDA


 3.7x 



 4.4x 



 5.4x 



 4.7x 



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) extraordinary 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 September 30,




September 30,
2016


September 30,
2015


June 30,
2016


2016


2015




(Dollars in thousands)


















Net income 

$

132,348


$

47,177


$

112,760


$

395,298


$

200,624


Provision for income taxes


78,398



31,117



66,857



236,446



120,070


Homebuilding interest amortized to cost of sales


44,751



33,323



41,830



163,820



131,878


Homebuilding depreciation and amortization


15,735



7,368



15,381



61,827



30,691

EBITDA


271,232



118,985



236,828



857,391



483,263

Add:
















Amortization of stock-based compensation


3,704



3,536



3,726



18,220



9,353


Cash distributions of income from unconsolidated joint ventures


         ―    



         ―    



         ―    



2,688



592


Purchase accounting adjustments included in cost of home sales


         ―    



         ―    



5,858



82,705



         ―    


Merger and other one-time costs


3,937



11,216



5,005



58,635



16,888

Less:

















Income (loss) from unconsolidated joint ventures


1,231



121



223



4,990



(707)


Income from financial services subsidiaries


9,807



2,847



8,146



34,955



9,345

Adjusted Homebuilding EBITDA

$

267,835


$

130,769


$

243,048


$

979,694


$

501,458


















Homebuilding revenues

$

1,670,958


$

652,190


$

1,578,362


$

6,109,314


$

2,575,744


















Adjusted Homebuilding EBITDA Margin %


16.0%



20.1%



15.4%



16.0%



19.5%



Because the closing of the merger occurred after the 2015 third quarter, financial statement information for the three months ended September 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 excluding merger and other one-time transaction related costs.  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


September 30, 2015


(Dollars in thousands)




Home sale revenues

$

626,008

Add: Ryland home sale revenues


692,877

Pro forma combined home sale revenues

$

1,318,885







Pretax income

$

78,294

Add: Ryland pretax income


65,558

Pro forma combined pretax income

$

143,852

Add:



         Merger and other one-time transaction related costs


11,216

Adjusted pro forma combined pretax income

$

155,068



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-third-quarter-results-300351958.html

SOURCE CalAtlantic Group, Inc.

View Comments and Join the Discussion!
 

Partner Center