- Second quarter revenues of $10.5 million from 12 deliveries,
including nine Brightwater homes. - Gross operating profit of $1.9
million generated primarily from nine Brightwater homes, compared
with $2.2 million of gross operating profit before impairment
charges for the comparable period of 2008. - Net loss of $7.3
million, or $.66 per share, reflects valuation allowances on
deferred tax assets aggregating $7.6 million, or $.69 per share,
partially offset by Brightwater gross operating profit, compared
with a net loss of $3.1 million in second quarter of 2008. IRVINE,
Calif., Aug. 7 /PRNewswire-FirstCall/ -- California Coastal
Communities, Inc. (NASDAQ:CALC) reported $1.9 million of gross
operating profit for the quarter ended June 30, 2009 compared with
$2.2 million of gross operating profit before inland project
impairment charges for the comparable period of 2008. Net loss for
the quarter was $7.3 million, or $.66 per diluted share compared
with a net loss of $3.1 million or $.28 per diluted share for the
second quarter of 2008. Results for the second quarter of 2009
reflect the delivery of 12 homes at the Company's homebuilding
projects in Southern California (including nine homes at its
Brightwater coastal development project) compared to delivery of 15
homes in the second quarter of 2008 (including seven Brightwater
deliveries). Gross operating profit of $1.9 million in the second
quarter of 2009 was offset by net operating expenses of $1.4
million, compared with $5.0 million of impairment charges and $2.4
million of net operating expenses in the second quarter of 2008.
Income tax expense of $7.8 million for the second quarter of 2009
includes $7.6 million of non-cash valuation allowances on deferred
tax assets. The decrease in net operating expenses for the second
quarter of 2009 compared with the second quarter of 2008 reflects a
$600,000 reduction in selling expenses primarily associated with
communities which were active during the first half of 2008 but had
reduced or no activity in the current year, as well as reduced
general and administrative expenses resulting from headcount
reductions and the absence of holding costs for the Corona project,
the majority of which was deeded to the lender on March 31, 2009.
Raymond J. Pacini, CEO of the Company commented: "While our
operating results continue to reflect the ongoing downturn in the
homebuilding industry, we are encouraged by steady sales of the
smaller homes at Brightwater during the quarter. During the last
five months (March-July), we generated 20 net sales orders at
Brightwater. However, the limited availability of jumbo mortgage
financing and excess supply of resale homes over $1.5 million in
Huntington Beach continues to constrain sales of the larger Cliffs
and Breakers homes." The Company's 105-acre Brightwater project is
located in Huntington Beach, California near the corner of Pacific
Coast Highway and Warner Avenue, overlooking the Pacific Ocean and
the 1,300-acre Bolsa Chica Wetlands. It is the largest asset in the
Company's portfolio, representing approximately 95% of real estate
inventories as of June 30, 2009. Due to the Company's low carrying
value in Brightwater, the project is currently expected to generate
gross margins of approximately 9%-28%, depending on the size of the
homes sold and other factors; however, there can be no assurance
that such margins will be realized. Second quarter revenues of
$10.5 million reflect a $100,000 increase compared with second
quarter 2008 revenues of $10.4 million. Although the Company
delivered three less homes in the second quarter of 2009, the
average sales price of homes delivered increased from $693,300 in
the second quarter of 2008 to $875,000 in the second quarter of
2009, primarily reflecting nine deliveries at Brightwater during
the quarter compared with seven Brightwater homes in the second
quarter of 2008. Homebuilding gross margin before impairment
charges for the second quarter of 2009 was 18.1%, compared with
21.2% in 2008. The Company generated $300,000 less in homebuilding
gross operating profit before impairment charges during the second
quarter of 2009 compared with 2008, primarily as a result of
reduced margins for The Trails and The Sands homes delivered at
Brightwater during the second quarter of 2009. The Company
delivered nine homes at Brightwater which generated an 18.1% gross
margin and gross operating profit of $1.7 million, compared with
seven deliveries at Brightwater in the second quarter of 2008 which
generated a 28.2% gross margin and gross operating profit of $2.0
million. Homebuilding gross margin before impairment charges for
the second quarter of 2009 decreased to 18.1% compared with 21.2%
in the comparable period of 2008 due to increased incentives in
order to move standing inventory and greater use of third-party
brokers. During the second quarter of 2009, net new orders
increased 186% to 20 homes compared with seven homes during the
first quarter of 2009, primarily reflecting increased net orders at
Brightwater (11 vs. five) and increased orders at the Company's
Hearthside Lane project in Corona. Cancellations as a percentage of
new orders were 9% during the second quarter of 2009, compared with
30% during the first quarter of 2009. During the second quarter of
2009, net new orders decreased 23% to 20 homes compared with 26
homes during the comparable period of 2008, primarily reflecting
the reduced number of active communities at the Company's inland
projects. Cancellations as a percentage of new orders were 9%
during the second quarter of 2009, compared with 19% during the
comparable period of 2008. Backlog as of June 30, 2009 increased to
16 homes compared with eight homes as of March 31, 2009. The total
value of backlog increased 43% from $9.1 million last quarter to
$13.0 million as of June 30, 2009 due to an increase in the number
of Brightwater homes in backlog (nine vs. seven) and an increase in
the number of Hearthside Lane project homes in backlog. The average
sales price of homes in backlog decreased from $1.1 million to
$800,000, primarily reflecting the additional Hearthside Lane homes
in backlog at June 30, 2009 compared with no Corona homes in
backlog at March 31, 2009. Backlog as of June 30, 2009 decreased to
16 homes compared with 23 homes as of June 30, 2008. The total
value of backlog decreased 60% from $32.3 million a year ago to
$13.0 million as of June 30, 2009 due to fewer of the larger
Brightwater homes (The Cliffs and The Breakers) in backlog (two as
of June 30, 2009, compared with 13 a year ago). The average sales
price of homes in backlog decreased from $1.4 million to $800,000,
primarily reflecting fewer Cliffs and Breakers homes in escrow at
June 30, 2009 compared with June 30, 2008. The Company's standing
inventory at its inland projects was reduced from eight homes as of
December 31, 2008 to two homes as of June 30, 2009 and total
standing inventory as of June 30, 2009 was four homes, including
two completed and unsold homes at Brightwater. The Company also
reported net income of $3.9 million or $.36 per diluted share for
the first six months of 2009. Results for the first six months of
2009 reflect a $20.7 million pre-tax gain from income attributable
to cancellation of indebtedness in addition to $5.9 million of
gross operating profit before impairment charges from the delivery
of 19 homes (including 14 at Brightwater). Gross operating profit
was offset by real estate impairment charges of $3.2 million, net
operating expenses of $4.0 million and income tax expense of $7.9
million. Income tax expense of $15.5 million includes $7.6 million
of non-cash valuation allowances on deferred tax assets. Selling,
general and administrative expenses decreased $1.0 million for the
first half of 2009 compared with the first half of 2008, reflecting
a $750,000 reduction in selling expenses associated with
communities which were active during the first half of 2008 but had
reduced or no activity in the current year and approximately
$100,000 decrease in selling expenses related to the grand opening
for Brightwater's Breakers and Cliffs products in March 2008, as
well as reduced general and administrative expenses resulting from
headcount reductions. The results for the second quarter of 2009
continue to reflect the severe recession affecting the national and
California economies and the sustained downturn in the homebuilding
industry. The weakness in the housing market continues to reflect a
supply-demand imbalance and continued weakness in national credit
markets, particularly the availability of jumbo mortgages which are
typically necessary to purchase higher-end homes such as The Cliffs
and The Breakers. Potential homebuyers remain reluctant to purchase
homes due to low consumer confidence, the significant downturn in
economic activity and continuing job losses. Potential homebuyers
also remain concerned that home prices may continue to fall and
about their ability to sell existing homes at a perceived fair
price. While some positive signs appear to be emerging, such as
modest improvements in some aspects of the economy, gradual
stabilization in the mortgage market, and recent increases in home
sales volumes for the smaller Trails and Sands homes at
Brightwater, the timing of a meaningful recovery in the housing
market or the broader economy remains uncertain. In view of present
circumstances, the Company believes that the weak demand it is
experiencing reflects the continued reluctance of many homebuyers
to make purchasing decisions until they are comfortable that home
price declines are near the bottom and economic conditions have
stabilized. The homebuilding downturn could continue during the
remainder of 2009 and perhaps beyond, and the Company's operations
may sustain periodic losses until the homebuilding industry and
economy as a whole begin to rebound. In light of the foregoing and
considering the liquidity needs of the Company during the fourth
quarter of 2009 and throughout 2010, the Company has determined
that it will need to modify the terms of its existing credit
facilities. Therefore, the Company has initiated discussions with
the agent bank for its revolving and term loans that are secured by
the Brightwater project, regarding proposed amendments necessary to
address its liquidity needs. The Company is working to complete
this debt restructuring during the fourth quarter of 2009 and prior
to the $25 million in principal repayments due on December 31,
2009; however, there can be no assurance that the debt will be
restructured within that time frame, if at all. The Company
currently has one active homebuilding project in Huntington Beach
in Orange County and one project in the entitlement stage on five
acres in Huntington Beach. In addition, the Company is actively
selling all remaining inventory at its Beaumont (Woodhaven), Corona
(Hearthside Lane) and Lancaster (Quartz Hill) projects. As of June
30, 2009, the Company has an inventory of 512 owned lots, reduced
by 27% compared with the 697 lots owned and controlled a year ago.
This decrease reflects 134 lots conveyed in connection with the
Hearthside Lane deed-in-lieu transaction, as well as deliveries and
the absence of lot acquisitions. The nature of the Company's
business is such that the number, location and specific market
conditions of active selling communities over any given time period
may cause significant fluctuations in operating results from
quarter-to-quarter and from year-to-year. The Company is a
residential land development and homebuilding company operating in
Southern California. The Company's principal subsidiaries are
Hearthside Homes which is a homebuilding company, and Signal
Landmark which owns 105 acres on the Bolsa Chica mesa where sales
commenced in August 2007 at the 356-home Brightwater community.
Hearthside Homes has delivered 2,200 homes to families throughout
Southern California since its formation in 1994. Safe Harbor
Statement under the Private Securities Litigation Reform Act of
1995 Certain of the foregoing information contains forward-looking
statements that relate to future events or the Company's future
financial performance. These statements involve known and unknown
risks, uncertainties and other factors which may cause the
Company's actual results, performance or achievements to be
materially different from any future results, performances or
achievements expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue," or the negative of such terms
or other comparable terminology. These forward-looking statements
include, but are not limited to, statements about the Company's
plans, objectives, goals, expectations and intentions, the number
and types of homes and number of acres of land that the Company may
develop and sell, the timing and outcomes of any such development,
the timing and outcomes of regulatory approval processes or
administrative proceedings, cash flows or sales, and other
statements contained herein that are not historical facts. These
statements also include but are not limited to statements
regarding: the Company's platform for continued growth; demographic
trends driving long-term demand; the outlook for the housing sector
and the general economy, including the relative impact of interest
rates, jobs, land constraints, demographic trends, and the
availability of mortgage financing; the employment outlook; housing
market conditions in the markets in which the Company operates;
orders and backlog; the Company's lot supply; the Company's
expected earnings, home deliveries and revenues; expected average
home prices; the Company's expected homebuilding gross margin
percentage; anticipated buyer demand; and expected home deliveries.
Forward-looking statements are based on 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 of the national credit market crisis, oil
prices, recession and inflation, 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; the demand for
residential real estate; 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; the significant amount of the Company's debt and the
impact of restrictive covenants in its loan agreements; adverse
weather conditions and natural disasters such as earthquakes and
wildfires; environmental matters; future business decisions and the
Company's ability to successfully implement its operational, growth
and other strategies; litigation and warranty claims; and other
risks. For a further discussion of these and other risks and
uncertainties applicable to the Company's business, see the
Company's Annual Report on Form 10-K for the year ended December
31, 2008 and its other future and past public filings with the
Securities and Exchange Commission ("SEC"), all of which may be
obtained free of charge through the website maintained by the SEC
at http://www.sec.gov/ or at the Company's website at
http://www.californiacoastalcommunities.com/. 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. ***TABLES FOLLOW***
CALIFORNIA COASTAL COMMUNITIES, INC. SELECTED FINANCIAL AND
OPERATING INFORMATION ($ in millions, except per home data)
(unaudited) Three Months Ended Six Months Ended June 30, June 30,
2009 2008 2009 2008 ---- ---- ---- ---- Homes delivered 12 15 19 23
Home sales revenue $10.5 $10.4 $23.3 $15.4 Cost of sales 8.6 8.2
17.4 12.1 Loss on impairment of real estate inventories - 5.0 3.2
5.0 --- --- --- --- 8.6 13.2 20.6 17.1 --- ---- ---- ---- Gross
operating (loss) profit $1.9 $(2.8) $2.7 $(1.7) ==== ===== ====
===== Gross margin percentage before loss on impairment 18.1% 21.2%
25.3% 21.4% ==== ==== ==== ==== PER HOME DATA ------------- Average
sales price (a) $875,000 $693,300 $1,226,300 $669,600 Average gross
margin before loss on impairment (a) $158,300 $146,700 $310,500
$143,500 NUMBER OF ACTIVE COMMUNITIES 1 4 1 4
---------------------------- NET NEW ORDERS 20 26 27 41
-------------- LOT INVENTORY AND BACKLOG -------------------------
Backlog of homes sold, but not completed at end of period 8 15
Completed homes in inventory, and in escrow 8 8 --- --- Total
backlog 16 23 Completed homes in inventory, unsold 4 19 Entitled
lots owned at end of period (b) 492 655 --- --- Total homes and
lots 512 697 === === ESTIMATED VALUE OF BACKLOG
-------------------------- Backlog of homes sold, but not completed
at end of period $9.2 $29.0 Completed homes in inventory, and in
escrow 3.8 3.3 --- --- Total value of backlog $13.0 $32.3 =====
===== (a) Changes are primarily due to changes in product mix and
location. (b) Change in six months ended June 30, 2009 is primarily
due to the conveyance of 134 finished lots at a subsidiary's
project in Corona which resulted from a deed-in-lieu transaction
completed during the first quarter of 2009. CALIFORNIA COASTAL
COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share amounts) (unaudited) Three Months Ended
Six Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ----
---- ---- Revenues Homebuilding $10.5 $10.4 $23.3 $15.4 Costs of
sales Homebuilding 8.6 8.2 17.4 12.1 Loss on impairment of real
estate inventories - 5.0 3.2 5.0 --- --- --- --- 8.6 13.2 20.6 17.1
Gross operating (loss) profit 1.9 (2.8) 2.7 (1.7) Selling, general
and administrative expenses 1.0 1.9 2.5 3.5 Interest expense .1 -
.8 - Income from unconsolidated joint ventures - (.1) - (.1) Gain
on debt restructuring - - (20.7) - Other expense, net .3 .6 .7 1.2
--- --- --- --- Income (loss) before income taxes .5 (5.2) 19.4
(6.3) Income tax expense (benefit) (a) 7.8 (2.1) 15.5 (2.5) ---
---- ---- ---- Net income (loss) $(7.3) $(3.1) $3.9 $(3.8) =====
===== ==== ===== Net earnings (loss) per common share: Basic and
diluted $(.66) $(.28) $.36 $(.35) Common equivalent shares: Basic
and diluted 11.0 10.9 11.0 10.9 (a) Income tax expense (benefit)
for the three and six months ended June 30, 2009 reflects valuation
allowance on deferred tax assets of $7.6 million. CALIFORNIA
COASTAL COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS (in millions,
except per share amounts) (unaudited) June 30, December 31, 2009
2008 ---- ---- ASSETS Cash and cash equivalents (a) $10.0 $2.3
Restricted cash 3.3 5.4 Real estate inventories 251.7 260.7
Deferred tax assets 21.6 37.1 Other assets, net 4.0 7.0 --- ---
Total assets $290.6 $312.5 ====== ====== LIABILITIES AND
STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued
liabilities $6.0 $5.0 Senior secured project revolver 80.4 74.4
Senior secured term loan 102.3 107.4 Model home financing 22.5 22.5
Other project debt 11.1 38.9 Other liabilities 8.9 8.8 --- ---
Total liabilities 231.2 257.0 Stockholders' equity 59.4 55.5 ----
---- $290.6 $312.5 ====== ====== Shares outstanding (b) 11.0 10.9
Stockholders' equity per common share (c) $5.40 $5.09 (a) The
Company had $4.5 million of available borrowing capacity under the
terms of the senior secured project revolver, resulting in $14.5
million of total liquidity, as of June 30, 2009. (b) Includes
outstanding options for 17,500 common shares. (c) The Company
believes that stockholders' equity per common share, which is
computed by dividing stockholders' equity by common shares
outstanding at the end of each period, is a useful supplemental
measure of the strength of the Company's balance sheet and an
indicator of the historical carrying value of the Company's net
assets. DATASOURCE: California Coastal Communities, Inc. CONTACT:
Raymond J. Pacini, Chief Executive Officer of California Coastal
Communities, Inc., +1-949-250-7781 Web Site:
http://www.californiacoastalcommunities.com/
Copyright