Market Overview

CalAtlantic Group, Inc. Reports 2016 Fourth Quarter Results

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IRVINE, Calif., Feb. 8, 2017 /PRNewswire/ -- CalAtlantic Group, Inc. (NYSE: CAA) today announced results for the fourth quarter ended December 31, 2016.

Larry Nicholson, President and Chief Executive Officer of CalAtlantic Group, Inc. commented, "I am pleased with our strong finish to this transformational year for CalAtlantic.  In 2016 we delivered double digit top line growth and grew our adjusted pre-tax income by over $145 million.  At the same time, we invested approximately $1.6 billion in land acquisition and development, we reduced our net debt-to-cap by 290 basis points and returned over $250 million to shareholders in the form of dividends and share buybacks.  We enter 2017 well positioned for continued long-term, profitable growth."

2016 CalAtlantic Fourth Quarter Highlights and Comparisons to 2015 Fourth Quarter

  • Net new orders of 2,848, up 6%; Dollar value of net new orders up 7%
  • 580 average active selling communities, flat
  • 4,338 new home deliveries, up 14%
  • Average selling price of $450 thousand, up 3%
  • Home sale revenues of $2.0 billion, up 18%
  • Gross margin from home sales of 21.8%, compared to 19.8%
    • Adjusted gross margin from home sales of 21.8% compared to 23.7%* (2015 excludes $64.2 million of purchase accounting impact related to the merger)
  • SG&A rate from home sales of 9.8%, compared to 10.3%
  • Operating margin from home sales of $234.0 million, or 12.0%, compared to $158.0 million, or 9.5%
  • Net income of $167.0 million, or $1.25 per diluted share, vs. net income of $77.5 million, or $0.56 per diluted share (2016 fourth quarter results include the impact of $2.7 million of merger costs, compared to $44.8 million of merger costs and $64.2 million of purchase accounting adjustments for the 2015 fourth quarter)
  • $436.0 million of land purchases and development costs, compared to $398.0 million
  • Repurchased 3.0 million shares during the quarter at an average price of $32.10 and a total expenditure of $95.1 million

Orders.  Net new orders for the 2016 fourth quarter were up 6% from the 2015 fourth quarter, to 2,848 homes, with the dollar value of these orders up 7%.  The Company's monthly sales absorption rate was 1.64 per community for the 2016 fourth quarter, up 5% compared to the 2015 fourth quarter and down 21% from the 2016 third quarter, consistent with normal seasonal patterns.  The Company's cancellation rate for the 2016 fourth quarter was 20%, down compared to 22% for the 2015 fourth quarter and up from 16% for the 2016 third quarter.

Backlog.  The dollar value of homes in backlog increased 4% to $2.7 billion, or 5,817 homes, compared to $2.6 billion, or 5,611 homes, for the 2015 fourth quarter, and decreased 20% compared to $3.3 billion, or 7,307 homes, for the 2016 third quarter.  The increase in year-over-year backlog value was driven primarily by the 5% increase in the Company's monthly sales absorption rate.  As of December 31, 2016, the average gross margin of the 5,817 total homes in backlog was 20.4%.  For the 2,757 homes scheduled to close in the first quarter of 2017, the gross margin in backlog as of such date was 19.5%. 

Revenue.  Revenues from home sales for the 2016 fourth quarter increased 18%, to $2.0 billion, as compared to the 2015 fourth quarter, resulting from a 14% increase in new home deliveries and a 3% increase in the Company's average home price to $450 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 21.8% for the 2016 fourth quarter.  Our 2016 gross margin was negatively impacted by a shift in community 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 fourth quarter were $191.2 million, or 9.8%, as compared to $171.5 million, or 10.3%, for the 2015 fourth quarter.  This 50 basis point improvement was primarily the result of an 18% increase in home sale revenues and the operating leverage associated with the increase in revenue and the synergies gained in connection with our merger with Ryland.

Provision for Income Taxes. The provision for income taxes for the 2016 fourth quarter was $80.6 million, representing an effective tax rate of 33%. The 2016 fourth quarter effective tax rate includes the impact of the update to the Company's state apportionment factors during the quarter which reduced the effective tax rate from 37% recognized during the first three quarters of 2016 to 36% recognized for the full year. The 2016 full year effective tax rate of 36% is consistent with the Company's expectations going forward and includes the impact of the domestic manufacturing deduction and an estimate of the homes qualifying for energy efficient home tax credits.

Land.  During the 2016 fourth quarter, the Company spent $436.0 million on land purchases and development costs, compared to $398.0 million for the 2015 fourth quarter. The Company purchased $279.8 million of land, consisting of 3,518 homesites, of which 27% (based on homesites) is located in the North region, 25% in the Southeast region, 21% in the Southwest region, and 27% in the West region.  As of December 31, 2016, the Company owned or controlled 65,424 homesites, of which 45,699 were owned and actively selling or under development, 14,689 were controlled or under option, and the remaining 5,036 homesites were held for future development or for sale.

Liquidity.  The Company ended the quarter with $829.0 million of available liquidity, including $191.1 million of unrestricted homebuilding cash and $637.9 million available to borrow under its $750 million revolving credit facility. The Company's homebuilding debt to book capitalization as of December 31, 2016 and 2015 was 44.8% and 47.5%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 43.2%* and 46.1%*, respectively.  In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending December 31, 2016 and 2015 was 3.4x* and 5.4x*, respectively.

Share Repurchases.  During the fourth quarter, the Company repurchased 3.0 million shares of its common stock for $95.1 million or an average price of $32.10 per share.  For the twelve months ended December 31, 2016 the Company repurchased 7.3 million shares at an average price of $32.04 and a total spend of $232.5 million.

Earnings Conference Call

A conference call to discuss the Company's 2016 fourth quarter results will be held at 11:00 a.m. Eastern time February 9, 2017.  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) 227-9428 (domestic) or (785) 830-1925 (international); Passcode: 3897396.  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: 3897396.  

About CalAtlantic Group, Inc.

CalAtlantic Group, Inc. (NYSE: CAA), one 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.

This news release and the referenced earnings conference call contain forward-looking statements.  These statements include but are not limited to 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 financial services 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 December 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


December 31,


December 31,


Percentage


September 30,


Percentage


2016


2015


or % Change


2016


or % Change

Select Operating Data

(Dollars in thousands)














Deliveries


4,338



3,795


14%



3,680


18%

Average selling price

$

450


$

437


3%


$

452


(0%)

Home sale revenues

$

1,951,973


$

1,659,982


18%


$

1,665,030


17%

Gross margin % (including land sales)


21.9%



19.7%


2.2%



22.4%


(0.5%)

Gross margin % from home sales


21.8%



19.8%


2.0%



22.5%


(0.7%)

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


21.8%



23.7%


(1.9%)



22.5%


(0.7%)

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


24.6%



26.4%


(1.8%)



25.2%


(0.6%)

Incentive and stock-based compensation expense

$

19,562


$

21,239


(8%)


$

18,594


5%

Selling expenses

$

98,778


$

79,586


24%


$

84,723


17%

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

$

72,909


$

70,645


3%


$

67,498


8%

SG&A expenses

$

191,249


$

171,470


12%


$

170,815


12%

SG&A % from home sales


9.8%



10.3%


(0.5%)



10.3%


(0.5%)

Operating margin from home sales

$

233,995


$

157,954


48%


$

203,587


15%

Operating margin % from home sales


12.0%



9.5%


2.5%



12.2%


(0.2%)

Adjusted operating margin from home sales*

$

233,995


$

222,124


5%


$

203,587


15%

Adjusted operating margin % from home sales*


12.0%



13.4%


(1.4%)



12.2%


(0.2%)

Net new orders


2,848



2,699


6%



3,531


(19%)

Net new orders (dollar value)

$

1,273,176


$

1,194,094


7%


$

1,520,358


(16%)

Average active selling communities


580



579


0%



566


2%

Monthly sales absorption rate per community


1.64



1.55


5%



2.08


(21%)

Cancellation rate


20%



22%


(2%)



16%


4%

Gross cancellations


705



763


(8%)



679


4%

Backlog (homes)


5,817



5,611


4%



7,307


(20%)

Backlog (dollar value)

$

2,663,851


$

2,572,092


4%


$

3,314,883


(20%)














Land purchases (incl. seller financing)

$

279,833


$

212,210


32%


$

227,596


23%

Adjusted Homebuilding EBITDA*

$

314,070


$

297,581


6%


$

267,835


17%

Adjusted Homebuilding EBITDA Margin %*


16.1%



17.8%


(1.7%)



16.0%


0.1%

Homebuilding interest incurred

$

58,018


$

45,545


27%


$

56,872


2%

Homebuilding interest capitalized to inventories owned

$

57,031


$

44,713


28%


$

55,761


2%

Homebuilding interest capitalized to investments in JVs

$

987


$

832


19%


$

1,111


(11%)

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

$

54,738


$

46,857


17%


$

44,751


22%

 


For the Year Ended


December 31,


December 31,


Percentage


2016


2015


or % Change

Select Operating Data

(Dollars in thousands)









Deliveries


14,229



7,237


97%

Average selling price

$

447


$

477


(6%)

Home sale revenues

$

6,354,869


$

3,449,047


84%

Gross margin % (including land sales)


21.8%



22.2%


(0.4%)

Gross margin % from home sales


21.8%



22.4%


(0.6%)

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


22.1%



24.3%


(2.2%)

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


24.8%



28.1%


(3.3%)

Incentive and stock-based compensation expense

$

65,701


$

38,113


72%

Selling expenses

$

327,957


$

174,269


88%

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

$

270,801


$

178,328


52%

SG&A expenses

$

664,459


$

390,710


70%

SG&A % from home sales


10.5%



11.3%


(0.8%)

Operating margin from home sales

$

723,132


$

381,671


89%

Operating margin % from home sales


11.4%



11.1%


0.3%

Adjusted operating margin from home sales*

$

741,667


$

445,841


66%

Adjusted operating margin % from home sales*


11.6%



13.0%


(1.4%)

Net new orders


14,435



7,163


102%

Net new orders (dollar value)

$

6,340,803


$

3,650,329


74%

Average active selling communities


570



299


91%

Monthly sales absorption rate per community


2.11



2.00


6%

Cancellation rate


16%



18%


(2%)

Gross cancellations


2,666



1,533


74%

Backlog (homes)


5,817



5,611


4%

Backlog (dollar value)

$

2,663,851


$

2,572,092


4%









Land purchases (incl. seller financing)

$

960,773


$

515,315


86%

Adjusted Homebuilding EBITDA*

$

996,183


$

648,313


54%

Adjusted Homebuilding EBITDA Margin %*


15.6%



18.5%


(2.9%)

Homebuilding interest incurred

$

233,225


$

171,509


36%

Homebuilding interest capitalized to inventories owned

$

229,200


$

169,233


35%

Homebuilding interest capitalized to investments in JVs

$

4,025


$

2,276


77%

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

$

171,701


$

139,381


23%






As of 


December 31,


December 31,


Percentage


2016


2015


or % Change

Select Balance Sheet Data

(Dollars in thousands, except per share amounts)









Homebuilding cash (including restricted cash)

$

219,407


$

187,066


17%

Inventories owned

$

6,438,792


$

6,069,959


6%

Goodwill

$

970,185


$

933,360


4%

Homesites owned and controlled


65,424



70,494


(7%)

Homes under construction


5,792



6,081


(5%)

Completed specs


1,255



1,325


(5%)

Homebuilding debt

$

3,419,787


$

3,487,699


(2%)

Stockholders' equity

$

4,207,586


$

3,861,436


9%

Stockholders' equity per share

$

36.77


$

31.84


15%

Total consolidated debt to book capitalization


46.6%



49.5%


(2.9%)

Adjusted net homebuilding debt to total adjusted book capitalization*


43.2%



46.1%


(2.9%)

 

 PRO FORMA KEY STATISTICS AND FINANCIAL DATA1

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.  To aid analysts and other investors with year-over-year comparability for the entire merged business, we are providing the following limited pro forma information, which combines the stand-alone Standard Pacific and Ryland financial and operating data for the first nine months of the year ended December 31, 2015.  Such pro forma data was not prepared to comply with Regulation S-X of the SEC Rules and Regulations.  The pro forma results 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. Limited historical Ryland operating data is also presented in the tables at the end of this release for informational purposes.




For the Year Ended




Actual
December 31,


Pro Forma
December 31,


Percentage




2016


2015


or % Change

Select Operating Data

(Dollars in thousands)











Deliveries


14,229



12,560


13%

Average selling price

$

447


$

420


6%

Home sale revenues

$

6,354,869


$

5,280,297

*

20%

Pretax income

$

753,116


$

515,932

*

46%

Pretax income (excluding purchase accounting adjustments








  included in cost of home sales and merger costs)*

$

788,136


$

641,839


23%

Net new orders


14,435



13,851


4%

Net new orders (dollar value)

$

6,340,803


$

5,921,611


7%

Average active selling communities


570



558


2%

Monthly sales absorption rate per community


2.11



2.07


2%

Cancellation rate


16%



17%


(1%)

Gross cancellations


2,666



2,890


(8%)

Backlog (homes)


5,817



5,611


4%

Backlog (dollar value)

$

2,663,851


$

2,572,092


4%











Land purchases (incl. seller financing)

$

960,773


$

875,118


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
December 31,


Year Ended
December 31,


2016


2015


2016


2015


(Dollars in thousands, except per share amounts)


(Unaudited)

Homebuilding:













Home sale revenues

$

1,951,973


$

1,659,982


$

6,354,869


$

3,449,047


Land sale revenues


1,064



14,329



33,171



47,364



Total revenues


1,953,037



1,674,311



6,388,040



3,496,411


Cost of home sales


(1,526,729)



(1,330,558)



(4,967,278)



(2,676,666)


Cost of land sales


1,085



(13,084)



(30,132)



(43,274)



Total cost of sales


(1,525,644)



(1,343,642)



(4,997,410)



(2,719,940)




Gross margin


427,393



330,669



1,390,630



776,471




Gross margin %


21.9%



19.7%



21.8%



22.2%


Selling, general and administrative expenses


(191,249)



(171,470)



(664,459)



(390,710)


Income from unconsolidated joint ventures


1,414



2,347



4,057



1,966


Other income (expense)


(4,734)



(45,435)



(16,726)



(62,177)




Homebuilding pretax income 


232,824



116,111



713,502



325,550

Financial Services:













Revenues


29,171



23,887



88,695



43,702


Expenses


(14,446)



(13,821)



(49,081)



(26,763)




Financial services pretax income


14,725



10,066



39,614



16,939

Income before taxes


247,549



126,177



753,116



342,489

Provision for income taxes


(80,588)



(48,648)



(268,386)



(128,980)

Net income 


166,961



77,529



484,730



213,509

  Less: Net income allocated to preferred shareholder


         ―     



         ―     



         ―     



(32,997)

  Less: Net income allocated to unvested restricted stock


(613)



(95)



(1,168)



(369)

Net income available to common stockholders

$

166,348


$

77,434


$

483,562


$

180,143
















Income Per Common Share:













Basic


$

1.44


$

0.64


$

4.09


$

2.51


Diluted

$

1.25


$

0.56


$

3.60


$

2.26
















Weighted Average Common Shares Outstanding:













Basic



115,307,730



121,132,872



118,212,740



71,713,747


Diluted


133,105,462



138,971,598



135,984,985



81,512,953
















Weighted average additional common shares outstanding if preferred shares converted to common shares


         ―     



         ―     



         ―     



13,135,814
















Total weighted average diluted common shares outstanding if preferred shares converted to common shares


133,105,462



138,971,598



135,984,985



94,648,767
















Cash Dividends Declared Per Common Share

$

0.04


$

0.04


$

0.16


$

0.04

 

CONDENSED CONSOLIDATED BALANCE SHEETS








December 31,


December 31,







2016


2015







(Dollars in thousands)

ASSETS

(Unaudited)




Homebuilding:







Cash and equivalents

$

191,086


$

151,076


Restricted cash



28,321



35,990


Inventories:










Owned




6,438,792



6,069,959



Not owned



66,267



83,246


Investments in unconsolidated joint ventures


127,127



132,763


Deferred income taxes, net


330,378



396,194


Goodwill




970,185



933,360


Other assets




204,489



202,665




Total Homebuilding Assets


8,356,645



8,005,253

Financial Services:







Cash and equivalents


17,041



35,518


Restricted cash



21,710



22,914


Mortgage loans held for sale, net


262,058



325,770


Mortgage loans held for investment, net


24,924



22,704


Other assets




26,666



17,243




Total Financial Services Assets


352,399



424,149





Total Assets

$

8,709,044


$

8,429,402












LIABILITIES AND EQUITY






Homebuilding:







Accounts payable


$

211,780


$

191,681


Accrued liabilities



599,905



562,690


Secured project debt and other notes payable


27,579



25,683


Senior notes payable


3,392,208



3,462,016




Total Homebuilding Liabilities


4,231,472



4,242,070

Financial Services:







Accounts payable and other liabilities


22,559



22,474


Mortgage credit facilities


247,427



303,422




Total Financial Services Liabilities


269,986



325,896





Total Liabilities


4,501,458



4,567,966

Equity:







Stockholders' Equity:








Preferred stock


   ―   



   ―   



Common stock


1,144



1,213



Additional paid-in capital


3,204,835



3,324,328



Accumulated earnings


1,001,779



535,890



Accumulated other comprehensive income, net of tax


(172)



5




Total Equity


4,207,586



3,861,436





Total Liabilities and Equity

$

8,709,044


$

8,429,402

 




INVENTORIES




December 31,


December 31,


2016


2015


(Dollars in thousands)

Inventories Owned:

(Unaudited)










     Land and land under development

$

3,627,740


$

3,546,289

     Homes completed and under construction


2,304,109



2,039,597

     Model homes


506,943



484,073

        Total inventories owned

$

6,438,792


$

6,069,959







Inventories Owned by Segment:












     North

$

851,972


$

703,651

     Southeast


1,896,552



1,753,301

     Southwest


1,421,669



1,400,524

     West


2,268,599



2,212,483

        Total inventories owned

$

6,438,792


$

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). 





Three Months Ended December 31,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:















North

914


$

335


787


$

334


16%


0%


Southeast

1,281



385


1,143



377


12%


2%


Southwest

1,140



433


1,033



403


10%


7%


West

1,003



657


832



662


21%


(1%)




Consolidated total

4,338


$

450


3,795


$

437


14%


3%















Year Ended December 31,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:















North

3,034


$

333


787


$

334


286%


(0%)


Southeast

4,029



387


2,471



395


63%


(2%)


Southwest

3,891



426


1,891



462


106%


(8%)


West

3,275



649


2,088



640


57%


1%




Consolidated total

14,229


$

447


7,237


$

477


97%


(6%)















Three Months Ended December 31,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:















North

682


$

356


556


$

348


23%


2%


Southeast

817



394


831



384


(2%)


3%


Southwest

696



437


715



416


(3%)


5%


West

653



619


597



643


9%


(4%)




Consolidated total

2,848


$

447


2,699


$

442


6%


1%















Year Ended December 31,





2016


2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:















North

3,329


$

337


556


$

348


499%


(3%)


Southeast

4,201



378


2,342



422


79%


(10%)


Southwest

3,603



430


1,838



481


96%


(11%)


West

3,302



630


2,427



653


36%


(4%)




Consolidated total

14,435


$

439


7,163


$

510


102%


(14%)







Three Months Ended
December 31,


Year Ended
December 31,





2016


2015


% Change


2016


2015


% Change

Average number of selling communities 














  during the period:















North

140



119


18%



129


30


330%


Southeast

190



181


5%



183


111


65%


Southwest

163



183


(11%)



168


87


93%


West

87



96


(9%)



90


71


27%




Consolidated total

580



579


0%



570


299


91%















At December 31,





2016


2015


% Change





Homes


Dollar
Value


Homes


Dollar
Value


Homes


Dollar
Value





(Dollars in thousands)

Backlog:















North

1,298


$

464,253


1,003


$

348,285


29%


33%


Southeast

1,793



776,402


1,621



702,388


11%


11%


Southwest

1,614



764,583


1,902



845,499


(15%)


(10%)


West

1,112



658,613


1,085



675,920


2%


(3%)




Consolidated total

 

5,817


$

2,663,851


 

5,611


$

2,572,092


 

4%


 

4%

 







At December 31,





2016


2015


% Change

Homesites owned and controlled:







North

15,087


15,222


(1%)


Southeast

22,358


24,393


(8%)


Southwest

14,151


16,151


(12%)


West


13,828


14,728


(6%)



Total (including joint ventures)

65,424


70,494


(7%)











Homesites owned

50,735


52,583


(4%)


Homesites optioned or subject to contract 

13,142


15,972


(18%)


Joint venture homesites

1,547


1,939


(20%)



Total (including joint ventures)

65,424


70,494


(7%)



















Homesites owned:







Raw lots

13,018


8,814


48%


Homesites under development

13,239


23,395


(43%)


Finished homesites

13,516


9,488


42%


Under construction or completed homes

8,567


9,092


(6%)


Held for sale

2,395


1,794


34%



Total

50,735


52,583


(4%)

 

PRO FORMA REGIONAL OPERATING DATA

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.  To aid analysts and other investors with year-over-year comparability for the entire merged business, we are providing the following limited pro forma information, which combines the stand-alone Standard Pacific and Ryland financial and operating data for the first nine months of the year ended December 31, 2015.  Such pro forma data was not prepared to comply with Regulation S-X of the SEC Rules and Regulations.  The pro forma results 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. Limited historical Ryland operating data is also presented in the tables at the end of this release for informational purposes. 






Year Ended December 31,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

New homes delivered:















North

3,034


$

333


2,727


$

339


11%


(2%)


Southeast

4,029



387


3,732



360


8%


8%


Southwest

3,891



426


3,552



406


10%


5%


West

3,275



649


2,549



616


28%


5%




Consolidated total

14,229


$

447


12,560


$

420


13%


6%















Year Ended December 31,





Actual
2016


Pro Forma
2015


% Change





Homes


ASP


Homes


ASP


Homes


ASP





(Dollars in thousands)

Net new orders:















North

3,329


$

337


2,757


$

339


21%


(1%)


Southeast

4,201



378


3,976



369


6%


2%


Southwest

3,603



430


4,029



413


(11%)


4%


West

3,302



630


3,089



602


7%


5%




Consolidated total

 

14,435


$

439


 

13,851


$

428


 

4%


 

3%















Year Ended December 31,





Actual
2016


Pro Forma
2015


% Change

Average number of selling 






  communities during the period:







North

129


117


10%


Southeast

183


173


6%


Southwest

168


183


(8%)


West

90


85


6%




Consolidated total

570


558


2%

 

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


December 31,
2016


Gross
Margin %


December 31,
2015


Gross
Margin %


September 30,
2016


Gross
Margin %


(Dollars in thousands)
















Home sale revenues

$

1,951,973




$

1,659,982




$

1,665,030



Less: Cost of home sales


(1,526,729)





(1,330,558)





(1,290,628)



Gross margin from home sales


425,244


21.8%



329,424


19.8%



374,402


22.5%

Add: Purchase accounting adjustments included in cost of home sales


   ―  


n/a



64,170


3.9%



   ―  


n/a

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


425,244


21.8%



393,594


23.7%



374,402


22.5%

Add: Capitalized interest included in cost of home sales


54,738


2.8%



43,890


2.7%



44,636


2.7%

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

$

479,982


24.6%


$

437,484


26.4%


$

419,038


25.2%
















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

$

425,244


21.8%


$

393,594


23.7%


$

374,402


22.5%

Less: Selling, general and administrative expenses


(191,249)


(9.8%)



(171,470)


(10.3%)



(170,815)


(10.3%)

Adjusted operating margin from home sales, excluding purchase accounting adjustments

$

233,995


12.0%


$

222,124


13.4%


$

203,587


12.2%






Year Ended


December 31,
2016


Gross
Margin %


December 31,
2015


Gross
Margin %


(Dollars in thousands)











Home sale revenues

$

6,354,869




$

3,449,047



Less: Cost of home sales


(4,967,278)





(2,676,666)



Gross margin from home sales


1,387,591


21.8%



772,381


22.4%

Add: Purchase accounting adjustments included in cost of home sales


18,535


0.3%



64,170


1.9%

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


1,406,126


22.1%



836,551


24.3%

Add: Capitalized interest included in cost of home sales


170,105


2.7%



131,611


3.8%

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

$

1,576,231


24.8%


$

968,162


28.1%











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

$

1,406,126


22.1%


$

836,551


24.3%

Less: Selling, general and administrative expenses


(664,459)


(10.5%)



(390,710)


(11.3%)

Adjusted operating margin from home sales, excluding purchase accounting adjustments

$

741,667


11.6%


$

445,841


13.0%

 

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. 




Year Ended




December 31, 2016


December 31, 2015




(Dollars in thousands)









Pretax income

$

753,116


$

342,489

Add:








Purchase accounting adjustments included in cost of home sales


18,535



64,170


Merger and other one-time transaction related costs


16,485



61,737

Adjusted pretax income

$

788,136


$

468,396

 

Because the closing of the merger occurred after the 2015 third quarter, financial statement information for 2015 includes full year stand-alone data for predecessor Standard Pacific Corp. and three months of Ryland Group, Inc. data (from October 1, 2015 through December 31, 2015).  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.


Year Ended


December 31, 2015


(Dollars in thousands)




Home sale revenues

$

3,449,047

Add: Ryland home sale revenues


1,831,250

Pro forma combined home sale revenues

$

5,280,297







Pretax income

$

342,489

Add: Ryland pretax income


173,443

Pro forma combined pretax income

$

515,932

Add:



         Purchase accounting adjustments included in cost of home sales


64,170

         Merger and other one-time transaction related costs


61,737

Adjusted pro forma combined pretax income

$

641,839

 

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.




December 31,
2016


December 31,
2015




(Dollars in thousands)









Total consolidated debt

$

3,667,214


$

3,791,121

Less:








Financial services indebtedness


(247,427)



(303,422)


Homebuilding cash, including restricted cash


(219,407)



(187,066)

Adjusted net homebuilding debt


3,200,380



3,300,633

Stockholders' equity


4,207,586



3,861,436

Total adjusted book capitalization

$

7,407,966


$

7,162,069









Total consolidated debt to book capitalization


46.6%



49.5%









Adjusted net homebuilding debt to total adjusted book capitalization


43.2%



46.1%

















Homebuilding debt

$

3,419,787


$

3,487,699

LTM adjusted homebuilding EBITDA

$

996,183


$

648,313









Homebuilding debt to adjusted homebuilding EBITDA


 3.4x 



 5.4x 

 

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) 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


Year Ended December 31,




December 31,
2016


December 31,
2015


September 30,
2016


2016


2015




(Dollars in thousands)


















Net income 

$

166,961


$

77,529


$

132,348


$

484,730


$

213,509


Provision for income taxes


80,588



48,648



78,398



268,386



128,980


Homebuilding interest amortized to cost of sales


54,738



46,857



44,751



171,701



139,381


Homebuilding depreciation and amortization


18,424



18,699



15,735



61,552



40,987

EBITDA


320,711



191,733



271,232



986,369



522,857

Add:
















Amortization of stock-based compensation


6,578



7,004



3,704



17,794



15,624


Cash distributions of income from unconsolidated joint ventures


221



2,238



         ―    



671



2,830


Purchase accounting adjustments included in cost of home sales


         ―    



64,170



         ―    



18,535



64,170


Merger and other one-time costs


2,699



44,849



3,937



16,485



61,737

Less:

















Income from unconsolidated joint ventures


1,414



2,347



1,231



4,057



1,966


Income from financial services subsidiaries


14,725



10,066



9,807



39,614



16,939

Adjusted Homebuilding EBITDA

$

314,070


$

297,581


$

267,835


$

996,183


$

648,313

Homebuilding revenues

$

1,953,037


$

1,674,311


$

1,670,958


$

6,388,040


$

3,496,411

Adjusted Homebuilding EBITDA Margin %


16.1%



17.8%



16.0%



15.6%



18.5%




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-fourth-quarter-results-300404554.html

SOURCE CalAtlantic Group, Inc.

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