- Net Income Improved to $0.01 Per
Share -
- Revenue from Homebuilding Increased 60.0%
to $68.2 million -
- Adjusted Homebuilding Gross Margin
Expanded 130 basis points to 19.9% -
UCP, Inc. (NYSE: UCP) today announced its results of operations
for the three months ended March 31, 2016.
First Quarter 2016 Highlights Compared to First Quarter
2015
- Net income increased to $0.2 million,
or net income attributable to shareholders of UCP of $0.01 per
share
- Total consolidated revenue grew 56.8%
to $68.2 million
- Revenue from homebuilding operations
increased 60.0% to $68.2 million
- Homes delivered grew 36.9% to 167
units
- Adjusted homebuilding gross margin
percentage increased 130 basis points to 19.9%
- Selling, general and administrative
expense as a percentage of total revenue improved to 16.6%,
compared to 26.5%
- General and administrative expense
reduced by 0.6% to $7.3 million
- Backlog on a dollar basis increased
64.7% to $136.2 million
- Backlog units expanded 37.7% to 307
units
- Average active selling communities of
28, compared to 25
“We are pleased to start the year with significant homebuilding
revenue growth, margin improvement and positive earnings,” stated
Dustin Bogue, President and Chief Executive Officer of UCP. “We
capitalized on positive momentum to grow home deliveries 36.9% and
homebuilding revenue 60.0% compared to a year ago. We accomplished
this while remaining disciplined to gain additional gross margin
and significant G&A leverage on our scalable platform. We ended
the quarter on a stronger footing with backlog on a dollar basis up
64.7%, primarily in the West. This collective improvement
demonstrates the continued transformation of our company into a
leading homebuilder in our markets. As we move forward in 2016, we
are committed to accomplishing our goal to grow homebuilding
revenue and gain additional leverage on our cost base to drive
earnings improvement.”
First Quarter 2016 Operating Results
Net income grew to $0.2 million in the first quarter 2016,
compared to a net loss of $4.2 million in the first quarter 2015.
Net income attributable to shareholders of UCP was $0.1 million, or
$0.01 per share, compared to a net loss attributable to
shareholders of UCP of $1.8 million, or a $0.23 loss per share, in
the prior year period. The Company’s weighted average basic and
diluted shares outstanding attributable to shareholders of UCP was
8.0 million, compared to 7.9 million shares in the prior year
period.
Revenue from homebuilding operations grew 60.0% to $68.2
million, compared to $42.6 million for the prior year period. The
improvement was primarily the result of a 36.9% increase in the
number of homes delivered to 167 during the first quarter, compared
to 122 homes during the prior year period due to a stronger backlog
at the beginning of the first quarter 2016 compared to the prior
year period. The average selling price for home sales was
approximately $409,000, compared to approximately $349,000 during
the prior year period. The increase in average selling price was
primarily a result of favorable geographic mix and core price
gains.
Consolidated gross margin percentage was 16.9%, compared to
16.6% in the prior year period. Homebuilding gross margin
percentage was 17.6%, compared to 16.5% in the prior year period.
Adjusted homebuilding gross margin percentage was 19.9%, compared
to 18.6% in the prior year period, due to a shift in product mix of
the homes sold, along with ongoing cost initiatives.
Sales and marketing expense was $4.1 million, compared to $4.2
million in the same prior year period. As a percentage of total
revenue, sales and marketing expense decreased to 6.0% in the first
quarter, compared to roughly 9.6% in the prior year period,
primarily due to higher overall revenues and deferred expenses
related to opening fewer communities.
General and administrative expense was approximately $7.3
million for both the current and prior year period. As a percentage
of total revenue, general and administrative expense was 10.7% for
the first quarter, compared to 16.8% for the prior year period,
primarily driven by higher revenues.
Net new home orders were 225, compared to 254 in the prior year
period, primarily as the result of a greater number of higher-paced
communities in the East during 2015. The Company has since adjusted
the price structure across most communities to moderate the order
pace in the East. Net new home orders in the West increased 11.4%
to 176, compared to the prior year period. Unit backlog at the end
of the quarter was 307, compared to 223 at the end of prior year
period and backlog on a dollar basis increased to $136.2 million,
compared to $82.7 million at the end of prior year period.
Total lots owned and controlled decreased to 5,349, from 6,886
at March 31, 2015 as the Company continues to improve its return on
equity and return on assets by reducing its supply of owned
lots.
Webcast and Conference Call
The Company will host a conference call for investors and other
interested parties on Monday, May 9, 2016, 12:00 p.m. Eastern Time,
9:00 a.m. Pacific Time. Interested parties can listen to the call
live on the Internet and locate accompanying presentation slides
through the Investor Relations section of the Company’s website at
www.unioncommunityllc.com.
Listeners are advised to log on to the website at least 15
minutes prior to the call to download and / or install any
necessary audio software. The conference call can also be accessed
by dialing 1-877-407-3982 for domestic participants or
1-201-493-6780 for international participants. Participants should
ask for the UCP First Quarter 2016 Earnings Conference Call. Those
dialing in should do so at least ten minutes prior to the start of
the conference call. A replay of the conference call will be
available through June 9, 2016, by dialing 1-877-870-5176 for
domestic participants or 1-858-384-5517 for international
participants and entering the pass code 13635401. An archive of the
webcast will be available on the Company’s website for a limited
time.
About UCP, Inc.
UCP is a leading homebuilder and land developer with expertise
in residential land acquisition, development and entitlement, as
well as home design, construction and sales. UCP operates in the
States of California, Washington, North Carolina, South Carolina
and Tennessee. UCP designs and builds high-quality, sustainable
single-family homes for a variety of lifestyles and budgets through
its wholly-owned subsidiary, Benchmark Communities, LLC. The
Benchmark Communities brand is recognized by homebuyers for its
high-quality construction and craftsmanship, cutting-edge home
design and customer-centric service and warranty programs.
Forward-Looking Statements
This press release contains forward-looking statements. You
should not place undue reliance on those statements because they
are subject to numerous uncertainties and factors relating to the
Company's operations and business environment, all of which are
difficult to predict and many of which are beyond the Company's
control. Forward-looking statements include information concerning
the Company's possible or assumed future results of operations,
including descriptions of the Company's business strategy. These
statements often include words such as "may," "will," "should,"
"believe," "expect," "anticipate," "intend," "plan," "estimate" or
similar expressions. These statements are based on assumptions that
the Company has made in light of its experience in the industry as
well as its perceptions of historical trends, current conditions,
expected future developments and other factors it believes are
appropriate under the circumstances. Although the Company believes
that these forward-looking statements are based on reasonable
assumptions, it can give no assurance they will prove to be
correct. Therefore, you should be aware that many factors could
affect the Company's actual financial results or results of
operations and could cause actual results to differ materially from
those in the forward-looking statements.
Any forward-looking statement made by the Company herein, or
elsewhere, speaks only as of the date on which it was made. New
risks and uncertainties come up from time to time, and it is
impossible for the Company to predict these events or how they may
affect it. The Company has no obligation to update any
forward-looking statements after the date hereof, except as
required by federal securities laws.
Homebuilding adjusted gross margin, land development adjusted
gross margin and net debt to capital are non-U.S. GAAP financial
measures. A reconciliation to the most comparable U.S. GAAP
financial measures is presented in Appendix A hereto.
UCP, INC. CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share data)
March 31, 2016
December 31, 2015 Assets Cash and cash
equivalents $ 29,769 $ 39,829 Restricted cash 900 900 Real estate
inventories 371,545 360,989 Fixed assets, net 1,189 1,314
Intangible assets, net 207 236 Goodwill 4,223 4,223 Receivables
1,388 1,317 Other assets 4,934 5,889
Total
assets $ 414,155 $ 414,697
Liabilities
and equity Accounts payable $ 12,185 $ 14,882 Accrued
liabilities 23,329 24,616 Customer deposits 2,279 1,825 Notes
payable, net 84,890 82,486 Senior notes, net 73,694 73,480
Total liabilities 196,377 197,289
Commitments and contingencies (Note 12)
Equity
Preferred stock, par value $0.01 per
share, 50,000,000 authorized, no shares issued and
outstanding as of March 31, 2016; no shares issued
and outstanding as of December 31, 2015
— —
Class A common stock, $0.01 par value;
500,000,000 authorized, 8,025,591 issued and
outstanding as of March 31, 2016; 8,014,434 issued
and outstanding as of December 31, 2015
80 80
Class B common stock, $0.01 par value;
1,000,000 authorized, 100 issued and outstanding as ofMarch 31,
2016; 100 issued and outstanding as of December 31, 2015
— — Additional paid-in capital 94,743 94,683 Accumulated deficit
(4,467 ) (4,563 ) Total UCP, Inc. stockholders’ equity 90,356
90,200 Noncontrolling interest 127,422 127,208
Total equity 217,778 217,408
Total
liabilities and equity $ 414,155 $ 414,697
UCP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME OR LOSS (In thousands,
except shares and per share data)
Three Months Ended March 31, 2016
2015 REVENUE: Homebuilding $ 68,225 $ 42,635 Land
development — 120 Other revenue — 768 Total revenue:
68,225 43,523
COSTS AND EXPENSES: Cost
of sales - homebuilding 56,206 35,618 Cost of sales - land
development 461 5 Cost of sales - other revenue — 663
Total cost of sales 56,667 36,286 Gross margin -
homebuilding 12,019 7,017 Gross margin - land development (461 )
115 Gross margin - other revenue — 105 Sales and marketing 4,076
4,196 General and administrative 7,275 7,320 Total
costs and expenses 68,018 47,802 Income (loss) from
operations 207 (4,279 ) Other income, net 28 102 Net
income (loss) before income taxes $ 235 $ (4,177 ) Provision for
income taxes (5 ) — Net income (loss) $ 230 $ (4,177
) Net income (loss) attributable to noncontrolling interest $ 134 $
(2,337 ) Net income (loss) attributable to UCP, Inc. 96 (1,840 )
Other comprehensive income (loss), net of tax — —
Comprehensive income (loss) $ 230 $ (4,177 ) Comprehensive
income (loss) attributable to noncontrolling interest $ 134
$ (2,337 ) Comprehensive income (loss) attributable to UCP, Inc. $
96 $ (1,840 ) Earnings (loss) per share of Class A
common stock: Basic $ 0.01 $ (0.23 ) Diluted $ 0.01 $
(0.23 ) Weighted average shares of Class A common stock:
Basic 8,021,747 7,923,329 Diluted 8,022,601
7,923,329
UCP, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
Three months ended March 31,
2016 2015 Operating activities
Net income (loss) $ 230 $ (4,177 ) Adjustments to reconcile net
income (loss) to net cash used in operating activities: Stock-based
compensation 185 631 Abandonment charges 419 2 Depreciation and
amortization 156 149 Fair value adjustment of contingent
consideration 8 220 Changes in operating assets and liabilities:
Real estate inventories (10,839 ) (6,587 ) Receivables (71 ) (729 )
Other assets 1,104 (292 ) Accounts payable (2,697 ) 1,887 Accrued
liabilities (1,230 ) (4,919 ) Customer deposits 454 593 Income
taxes payable (64 ) — Net cash used in operating activities
(12,345 ) (13,222 )
Investing activities Purchases of fixed
assets (22 ) (181 ) Net cash used in investing activities (22 )
(181 )
Financing activities Distribution to noncontrolling
interest — (726 ) Proceeds from notes payable 35,476 24,003
Repayment of notes payable (33,112 ) (17,322 ) Debt issuance costs
(12 ) (171 ) Withholding taxes paid for vested RSU's (45 ) (21 )
Net cash provided by financing activities 2,307 5,763
Net decrease in cash and cash equivalents (10,060 ) (7,640 ) Cash
and cash equivalents – beginning of period 39,829 42,033
Cash and cash equivalents – end of period $ 29,769 $
34,393
Non-cash investing and financing
activity Exercise of land purchase options acquired with
acquisition of business $ 6 $ 72 Issuance of Class A common
stock for vested restricted stock units $ 113 $ 27
Supplemental cash flow information Income taxes paid $ 70 $
—
Appendix A
Select Operating
Data by Region
Three months ended March 31,
Three months ended March 31, 2016
2015 % Change 2016
2015 % Change Revenue from
Homebuilding Operations (in thousands) West $ 56,758 $
33,227 70.8 % $ 56,758 $ 33,227 70.8 % East
11,467 9,408 21.9 % 11,467 9,408 21.9 %
Total $ 68,225 $ 42,635 60.0 % $ 68,225 $ 42,635 60.0 %
Homes Delivered West 115 78 47.4 % 115 78 47.4 % East 52
44 18.2 % 52 44 18.2 % Total 167 122
36.9 % 167 122 36.9 %
Average Selling Price for Home
Sales (in thousands) West $ 494 $ 426 16.0 % $ 494 $ 426 16.0 %
East 221 214 3.3 % 221 214 3.3 % Total
$ 409 $ 349 17.2 % $ 409 $ 349 17.2 %
Net New Home
Orders West 176 158 11.4 % 176 158 11.4 % East 49 96
(49.0 )% 49 96 (49.0 )% Total 225 254 (11.4 )%
225 254 (11.4 )%
Average Selling Communities West 19
16 18.8 % 19 16 18.8 % East 9 9 — % 9 9
— % Total 28 25 12.0 % 28 25 12.0 %
Backlog Units
West 246 141 74.5 % East 61 82 (25.6 )% Total 307 223
37.7 %
Backlog Dollar Basis (in thousands) West $
122,026 $ 65,811 85.4 % East 14,194 16,892 (16.0 )%
Total $ 136,220 $ 82,703 64.7 %
Owned Lots West 3,761
4,340 (13.3 )% East 861 1,041 (17.3 )% Total 4,622
5,381 (14.1 )%
Controlled Lots West 407 517 (21.3 )%
East 320 988 (67.6 )% Total 727 1,505 (51.7 )%
Appendix B
Reconciliation of
GAAP and Non-GAAP Measures
Gross Margin and Adjusted Gross Margin
Three Months Ended March 31,
2016 %
2015
% (Dollars in thousands)
Consolidated Adjusted Gross Margin
Revenue $ 68,225 100.0 % $ 43,523 100.0 % Cost of
Sales 56,667 83.1 % 36,286 83.4 % Gross Margin 11,558
16.9 % 7,237 16.6 % Add: interest in cost of sales 1,539 2.3 % 924
2.1 % Add: impairment and abandonment charges 419 0.6 % 2
— % Adjusted Gross Margin (1) $ 13,516 19.8 %
$ 8,163 18.8 % Consolidated Gross margin percentage
16.9 % 16.6 % Consolidated Adjusted gross margin percentage (1)
19.8 % 18.8 %
Homebuilding Adjusted Gross Margin
Homebuilding revenue $ 68,225 100.0 % $ 42,635 100.0 % Cost of home
sales 56,206 82.4 % 35,618 83.5 % Homebuilding gross
margin 12,019 17.6 % 7,017 16.5 % Add: interest in cost of home
sales 1,539 2.3 % 924 2.2 % Add: impairment and abandonment charges
— — % — — % Adjusted homebuilding gross margin(1) $
13,558 19.9 % $ 7,941 18.6 %
Homebuilding gross margin percentage 17.6 % 16.5 % Adjusted
homebuilding gross margin percentage (1) 19.9 % 18.6 %
Land Development Adjusted Gross Margin Land development
revenue $ — — % $ 120 100.0 % Cost of land development 461 —
% 5 4.2 % Land development gross margin (461 ) — % 115 95.8
% Add: interest in cost of land development — — % — — % Add:
Impairment and abandonment charges 419 — % 2 1.7 %
Adjusted land development gross margin (1) $ (42 ) — % $
117 97.5 % Land development gross margin percentage —
% 95.8 % Adjusted land development gross margin percentage (1) — %
97.5 %
Other Revenue Gross and Adjusted Margin
Revenue $ — — % $ 768 100.0 % Cost of revenue — — % 663
86.3 % Other revenue gross and adjusted margin $ —
— % $ 105 13.7 % Other revenue gross and
adjusted margin percentage — % 13.7 %
* Percentages may not add due to
rounding.
(1) Adjusted gross margin, adjusted homebuilding gross margin and
adjusted land development gross margin are non-U.S. GAAP financial
measures. These metrics have been adjusted to add back capitalized
interest, and impairment and abandonment charges. We use adjusted
gross margin information as a supplemental measure when evaluating
our operating performance. We believe this information is
meaningful, because it isolates the impact that leverage and
non-cash impairment and abandonment charges have on gross margin.
However, because adjusted gross margin information excludes
interest expense and impairment and abandonment charges, all of
which have real economic effects and could materially impact our
results, the utility of adjusted gross margin information as a
measure of our operating performance is limited. In addition, other
companies may not calculate adjusted gross margin information in
the same manner that we do. Accordingly, adjusted gross margin
information should be considered only as a supplement to gross
margin information as a measure of our performance. The table above
provides a reconciliation of adjusted gross margin numbers to the
most comparable U.S. GAAP financial measure.
Debt-to-Capital Ratio and Net
Debt-to-Capital Ratio
As of March 31, 2016
As of December 31, 2015 Debt $ 158,584 $ 155,966 Equity
217,778 217,408 Total capital $ 376,362 $ 373,374
Ratio of debt-to-capital 42.1 % 41.8 % Debt $ 158,584 $ 155,966
Net cash and cash equivalents $ 30,669 $ 40,729 Less:
restricted cash and minimum liquidity requirement 15,900
15,900 Unrestricted cash and cash equivalents $ 14,769
$ 24,829 Net debt $ 143,815 $ 131,137
Equity 217,778 217,408 Total adjusted capital $
361,593 $ 348,545 Ratio of net debt-to-capital (1) 39.8 % 37.6 %
(1) The ratio of net debt-to-capital is computed as the quotient
obtained by dividing net debt (which is debt less cash and cash
equivalents, including restricted cash balance requirements) by the
sum of net debt plus stockholders’ and member's equity. The most
directly comparable U.S. GAAP financial measure is the ratio of
debt-to-capital. We believe the ratio of net debt-to-capital is a
relevant financial measure for investors to understand the leverage
employed in our operations and as an indicator of our ability to
obtain financing. We reconcile this non-U.S. GAAP financial measure
to the ratio of debt-to-capital in the table above. The Company’s
calculation of net debt-to-capital ratio might not be comparable
with other issuers or issuers in other industries.
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UCP, Inc.Investor Relations:Investorrelations@unioncommunityllc.com408-207-9499
Ext. 476orMedia:Phil Denning / Jason ChudobaPhil.denning@icrinc.com
/ Jason.chudoba@icrinc.com
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