Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AV Homes, Inc. | earningsreleaseq313v6.htm |
AV Homes, Inc. Announces Third Quarter Results
Strong Revenue Growth Drives Improved Results
Scottsdale, AZ (November 6, 2013) - AV Homes, Inc. (Nasdaq: AVHI), a developer and builder of active adult and conventional home communities in Arizona, Florida and North Carolina, today announced results for its third quarter ended September 30, 2013. AV Homes reported third quarter revenue of $35.0 million, a 22% increase from $28.7 million in the third quarter of 2012. Net loss to stockholders for the third quarter of 2013 improved to $1.9 million, from a loss of $11.6 million in the third quarter of 2012.
For loss per share calculation purposes, net loss attributable to common stockholders in the third quarter of 2013 was $13.8 million, or $0.86 per share, which includes a reduction of $11.9 million, or $0.74 per share, for deemed dividends related to the recognition of a beneficial conversion feature embedded in the convertible preferred stock issued in connection with the $135 million investment made by TPG in June. This non-cash item was recorded in accordance with ASC 470-20 and has no net impact on total stockholders’ equity or book value. This compares to a net loss attributable to common stockholders of $11.6 million, or $0.92 per share, in the third quarter of 2012.
President and Chief Executive Officer Roger A. Cregg said the Company continues to generate momentum on its strategy to increase revenues, improve gross margins, leverage its overhead expense and expand its geographic footprint. “Despite the slower market conditions the industry experienced in the third quarter as a result of the higher mortgage rates, increasing home prices and the political uncertainty in Washington, our order rates improved over the prior year on fewer community counts,” Cregg said.
The increase in revenue for the third quarter of 2013 compared to the prior year period was driven by strong volume increases and improved pricing. During the third quarter of 2013, the Company closed on 147 homes, a 79% increase from the 82 homes closed during the third quarter of 2012. The dollar value of the closings reported in the third quarter of 2013 increased 83% to $31.9 million, from $17.4 million during the third quarter of 2012 as the average unit price per closing rose to $217,000 from $212,000 in the third quarter of 2012.
The number of new housing contracts signed, net of cancellations, during the three months ended September 30, 2013 increased 5% to 104 units, compared to 99 units during the same period in 2012. The dollar value of the contracts signed during the third quarter increased 6% to $26.2 million, compared to $24.6 million during the same period one year ago. The backlog of homes under contract but not yet closed at
September 30, 2013 increased 17% to 233 units, representing a dollar volume of $58.2 million, compared to 200 units with a dollar volume of $48.5 million at September 30, 2012.
During the three months ended September 30, 2013, the Company reported $0.7 million in revenue from the sale of commercial, industrial and other land, which generated $0.6 million in operating income to the Company compared to $8.7 million in revenue and $0.4 million in operating income during the third quarter of 2012.
During the third quarter 2013, the Company recorded two non-recurring items. The Company changed its plans to sell certain assets in Florida resulting in a reclassification of the assets from held for sale to land held and used. Accordingly, a $0.9 million credit was recorded to reverse the previous impairment charge. Secondly, the Company made a correction to the amount of interest that was capitalized, resulting in an additional $1.6 million of capitalized interest recorded in the third quarter 2013 that related to prior quarters in 2013.
Results for the Nine Months ended September 30, 2013
For the nine-month period ended September 30, 2013, the Company reported a net loss to common stockholders of $11.3 million, on revenues of $89.7 million, compared to a net loss to common stockholders of $31.4 million, on revenues of $74.3 million for the nine months ended September 30, 2012.
For loss per share calculation purposes, the 2013 year to date net loss attributable to common stockholders was $23.2 million, or $1.67 per share, which includes the reduction of $11.9 million, or $0.85 per share, for deemed dividends related to the recognition of a beneficial conversion embedded in the convertible preferred stock issued in connection with the $135 million investment made by TPG in June. This compares to a loss attributable to common shareholders of $31.4 million, or $2.50 per share, in the third quarter 2012.
During the nine months ended September 30, 2013, the Company reported 310 home closings, a 52% increase from the 204 homes closed during the first nine months of 2012, and a corresponding increase in the dollar volume of closings during the nine months of 2013 to $71.8 million, a 58% increase from $45.5 million in the same period of 2012. For the nine month period ended September 30, 2013, the average unit price per closing increased 4% to $232,000, from $223,000 as reported for the same period one year ago.
For the nine-month period ended September 30, 2013, the Company reported 358 new housing contracts signed, net of cancellations, a 17% increase over the 306 contracts signed during the nine months
ended September 30, 2012. The dollar value of the contracts signed during the first nine months of 2013 increased 19% to $86.1 million as compared to $72.4 million in the same period of 2012.
For the nine-month period ended September 30, 2013, the Company reported revenue from the sale of commercial, industrial and other land of $9.6 million, generating $4.2 million in operating income, compared to $20.8 million of revenue and $5.2 million of operating income in the same period during 2012.
The Company will hold a conference call and webcast on Thursday, November 7, 2013 to discuss its third quarter financial results. The conference call will begin at 8:30 a.m. EST. The conference call can be accessed live over the telephone by dialing (877) 643-7158 or for international callers by dialing (914) 495-8565; please dial-in 10 minutes before the start of the call. A replay will be available on November 7, 2013 at 11:30 a.m. and can be accessed by dialing (855) 859-2056 or for international callers by dialing (404) 537-3406; the conference ID is 94193835. The replay will be available until November 14, 2013. In order to access the live webcast, please go to the Investors section of AV Homes’ website at www.avhomesinc.com and click on the webcast link that will be made available. A replay will be available shortly after the original webcast.
AV Homes, Inc. is engaged in homebuilding, community development and land sales in Florida, Arizona and North Carolina. Its principal operations are conducted near Orlando, Florida, Phoenix, Arizona and Raleigh, North Carolina markets. The Company builds communities that serve active adults 55 years and older and people of all ages. AV Homes common shares trade on NASDAQ under the symbol AVHI.
This news release, the conference call and the webcast contain "forward-looking statements" within the meaning of the U.S. federal securities laws, which statements may include information regarding the plans, intentions, expectations, future financial performance, or future operating performance of AV Homes, Inc. Forward-looking statements are based on the expectations, estimates, or projections of management as of the date of this news release, the conference call and the webcast. Although our management believes these expectations, estimates, or projections to be reasonable as of the date of this news release, the conference call and the webcast, forward-looking statements are inherently subject to significant business risks, economic and competitive uncertainties, or other contingencies which could cause our actual results or performance to differ materially from what may be expressed or implied in the forward-looking statements. Important factors that could cause our actual results or performance to differ materially from our forward-looking statements include those set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2012, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013 and in our other filings with the Securities and Exchange Commission, which filings are available on www.sec.gov. AV Homes disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events and circumstances, except to the extent required by applicable law.
Investor Contact:
Mike Burnett
480-214-7408
m.burnett@avhomesinc.com
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the nine and three months ended September 30, 2013 and 2012
(unaudited)
(Dollars in thousands except per share amounts)
Nine Months | Three Months | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Real estate revenues | |||||||||||||||
Homebuilding | $ | 79,420 | $ | 52,645 | $ | 34,167 | $ | 19,673 | |||||||
Commercial and industrial and other land sales | 9,556 | 20,753 | 674 | 8,696 | |||||||||||
Other real estate | 496 | 367 | 57 | 157 | |||||||||||
Total real estate revenues | 89,472 | 73,765 | 34,898 | 28,526 | |||||||||||
Interest income | 130 | 95 | 96 | 32 | |||||||||||
Other | 73 | 468 | 5 | 94 | |||||||||||
Total revenues | 89,675 | 74,328 | 34,999 | 28,652 | |||||||||||
Expenses | |||||||||||||||
Real estate expenses | |||||||||||||||
Homebuilding | 78,515 | 60,119 | 32,725 | 21,456 | |||||||||||
Commercial and industrial and other land sales | 5,352 | 15,592 | 95 | 8,142 | |||||||||||
Other real estate | 2,654 | 3,344 | 1,255 | 102 | |||||||||||
Total real estate expenses | 86,521 | 79,055 | 34,075 | 29,700 | |||||||||||
Impairment charges (reversal of impairment charges) | (925 | ) | 7,364 | (970 | ) | 3,784 | |||||||||
Loss on extinguishment of debt | — | 1,144 | — | 1,144 | |||||||||||
General and administrative expenses | 11,882 | 10,296 | 3,885 | 3,633 | |||||||||||
Interest expense | 2,515 | 6,256 | (1,020 | ) | 1,903 | ||||||||||
Total expenses | 99,993 | 104,115 | 35,970 | 40,164 | |||||||||||
Loss from unconsolidated entities | (84 | ) | (117 | ) | (7 | ) | (38 | ||||||||
Loss before income taxes | (10,402 | ) | (29,904 | ) | (978 | ) | (11,550 | ) | |||||||
Income tax (expense) benefit | — | — | — | — | |||||||||||
Net loss and comprehensive loss | (10,402 | ) | (29,904 | ) | (978 | ) | (11,550 | ) | |||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | 899 | 1,475 | 899 | 33 | |||||||||||
Net loss and comprehensive loss attributable to AV Homes stockholders | $ | (11,301 | ) | $ | (31,379 | ) | $ | (1,877 | ) | $ | (11,583 | ) | |||
Reconciliation of net loss to loss attributable to common stockholders | |||||||||||||||
Net loss | $ | (11,301 | ) | $ | (31,379 | ) | $ | (1,877 | ) | $ | (11,583 | ) | |||
Deemed dividend related to beneficial conversion feature of convertible preferred stock (see Note A and Note J for additional information) | (11,894 | — | (11,894 | ) | — | ||||||||||
Loss attributable to AV Homes common stockholders | $ | (23,195 | ) | $ | (31,379 | ) | $ | (13,771 | ) | $ | (11,583 | ) | |||
Basic and Diluted Loss Per Share | $ | (1.67 | ) | $ | (2.5 | ) | $ | (0.86 | ) | $ | (0.92 | ) | |||
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2013 and 2012
(unaudited)
(Dollars in thousands)
Nine Months | |||||||
2013 | 2012 | ||||||
OPERATING ACTIVITIES | |||||||
Net loss (including net gain or loss attributable to non-controlling interests) | $ | (10,402 | ) | $ | (29,904 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 2,064 | 3,522 | |||||
Amortization of stock-based compensation | 976 | 1,113 | |||||
Impairment of land and other inventories | (925 | 7,364 | |||||
Loss on extinguishment of debt | — | 1,144 | |||||
Loss from unconsolidated entities | 84 | 117 | |||||
Loss from disposal of assets | 22 | — | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | 334 | 2,788 | |||||
Receivables, net | 406 | 340 | |||||
Income tax receivable | 1,293 | — | |||||
Land and other inventories | (32,071 | ) | (6,194 | ) | |||
Assets held for sale | (1,228 | 8,028 | |||||
Prepaid expenses and other assets | 744 | (1,116 | |||||
Accounts payable, estimated development liability, and accrued and other liabilities | 5,298 | (814 | |||||
Customer deposits and deferred revenues | 2,310 | 188 | |||||
NET CASH USED IN OPERATING ACTIVITIES | (31,095 | ) | (13,424 | ) | |||
INVESTING ACTIVITIES | |||||||
Investment in property and equipment | (856 | ) | (3,466 | ) | |||
Return of capital from unconsolidated entities | — | 13 | |||||
Investment in unconsolidated entities | (99 | ) | (98 | ) | |||
NET CASH USED IN INVESTING ACTIVITIES | (955 | ) | (3,551 | ) | |||
FINANCING ACTIVITIES | |||||||
Issuance of common shares | 35,805 | — | |||||
Issuance of preferred shares | 92,042 | — | |||||
Debt issuance costs | (1,683 | ) | |||||
Contributions from consolidated joint venture partner | 596 | 294 | |||||
Distributions to consolidated joint venture partner | (7 | ) | (1,785 | ) | |||
Payment of withholding taxes related to restricted stock and units withheld | (34 | ) | (445 | ) | |||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 128,402 | (3,619 | ) | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 96,352 | (20,594 | ) | ||||
Cash and cash equivalents at beginning of period | 79,815 | 124,316 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 176,167 | $ | 103,722 | |||
Non-cash transaction: | |||||||
Transfer from assets held for sale to land and other inventories and property and equipment | 6,341 | ||||||
Beneficial conversion feature (deemed dividend) | 11,894 | ||||||
Common stock issued for conversion of preferred stock | 92,042 | ||||||
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
September 30, 2013 | December 31, 2012 | ||||||
Assets | (unaudited) | ||||||
Cash and cash equivalents | $ | 176,167 | $ | 79,815 | |||
Restricted cash | 4,348 | 4,682 | |||||
Land and other inventories | 204,040 | 171,044 | |||||
Receivables, net | 6,324 | 6,730 | |||||
Income tax receivable | — | 1,293 | |||||
Property and equipment, net | 38,431 | 36,661 | |||||
Investments in and notes receivable from unconsolidated entities | 1,235 | 1,220 | |||||
Prepaid expenses and other assets | 10,033 | 10,777 | |||||
Assets held for sale | 23,877 | 25,649 | |||||
Total Assets | $ | 464,455 | $ | 337,871 | |||
Liabilities and Equity | |||||||
Liabilities | |||||||
Accounts payable | 8,927 | 4,656 | |||||
Accrued and other liabilities | 13,738 | 12,978 | |||||
Customer deposits and deferred revenues | 4,295 | 1,985 | |||||
Estimated development liability for sold land | 33,241 | 32,974 | |||||
Notes payable | 105,402 | 105,402 | |||||
Total Liabilities | $ | 165,603 | $ | 157,995 | |||
Contingent convertible cumulative redeemable preferred stock | — | — | |||||
Equity | |||||||
Common Stock, par value $1 per share | |||||||
Authorized: 50,000,000 shares | |||||||
Issued: 22,112,813 shares at September 30, 2013 | |||||||
12,938,157 shares at December 31, 2012 | 22,113 | 12,938 | |||||
Additional paid-in capital | 393,871 | 262,363 | |||||
Retained (deficit) earnings | (129,305 | ) | (106,110 | ) | |||
286,679 | 169,191 | ||||||
Treasury stock: at cost, 110,874 shares at September 30, 2013 and December 31, 2012 | (3,019 | ) | (3,019 | ) | |||
Total AV Homes stockholders’ equity | 283,660 | 166,172 | |||||
Non-controlling interests | 15,192 | 13,704 | |||||
Total Equity | 298,852 | 179,876 | |||||
Total Liabilities and Equity | $ | 464,455 | $ | 337,871 | |||
The following table provides a comparison of certain financial data related to our operations for the nine and three months ended September 30, 2013 and 2012:
Nine Months | Three Months | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Operating income (loss): | ||||||||||||||
Active adult communities | ||||||||||||||
Revenues | ||||||||||||||
Homebuilding | $ | 35,910 | $ | 24,072 | $ | 17,304 | 7,732 | |||||||
Amenity | 5,349 | 5,200 | 1,988 | 1,644 | ||||||||||
Expenses | ||||||||||||||
Homebuilding | 30,160 | 25,467 | 14,214 | 10,741 | ||||||||||
Homebuilding selling, general and administrative | 6,380 | 9,439 | 1,838 | 2,838 | ||||||||||
Amenity | 6,177 | 5,426 | 2,070 | 1,599 | ||||||||||
Segment operating income (loss) | (1,458 | ) | (11,060 | ) | 1,170 | (5,802) | ||||||||
Primary residential | ||||||||||||||
Revenues | ||||||||||||||
Homebuilding | 36,330 | 21,533 | 14,658 | 9,672 | ||||||||||
Amenity | 1,831 | 1,840 | 217 | 625 | ||||||||||
Expenses | ||||||||||||||
Homebuilding | 30,747 | 20,995 | 13,029 | 10,158 | ||||||||||
Homebuilding selling, general and administrative | 3,198 | 3,295 | 1,063 | 1,015 | ||||||||||
Amenity | 1,923 | — | 536 | (1,168) | ||||||||||
Segment operating income (loss) | 2,293 | (917 | ) | 247 | 292 | |||||||||
Commercial and industrial and other land sales | ||||||||||||||
Revenues | 9,556 | 20,753 | 674 | 8,696 | ||||||||||
Expenses | 5,352 | 15,592 | 95 | 8,248 | ||||||||||
Segment operating income | 4,204 | 5,161 | 579 | 448 | ||||||||||
Other operations | ||||||||||||||
Revenues | 496 | 367 | 58 | 157 | ||||||||||
Expenses | 303 | 212 | 119 | 70 | ||||||||||
Segment operating income (loss) | 193 | 155 | (61 | ) | 87 | |||||||||
Operating income (loss) | 5,232 | (6,661 | ) | 1,935 | (4,975) | |||||||||
Unallocated income (expenses): | ||||||||||||||
Interest income | 130 | 95 | 96 | 32 | ||||||||||
Equity loss from unconsolidated entities | (84 | ) | (117 | ) | (7 | ) | (38) | |||||||
Loss on extinguishment of debt | — | (1,144 | ) | — | (1,144) | |||||||||
Net (gain)/loss attributable to non-controlling interests | (899 | ) | (1,475 | ) | (899 | ) | (33 | |||||||
Corporate general and administrative expenses | (11,882 | ) | (10,296 | ) | (3,885 | ) | (3,633) | |||||||
Interest expense | (2,515 | ) | (6,256 | ) | 1,020 | (1,903) | ||||||||
Other real estate expenses, net | (2,241 | ) | (2,664 | ) | (1,095 | ) | 125 | |||||||
(Impairment) reversal of impairment charge of land developed or held for future development | 958 | (2,861 | ) | 958 | (14) | |||||||||
Loss before income taxes | (11,301 | ) | (31,379 | ) | (1,877 | ) | (11,583) | |||||||
Income tax benefit | — | — | — | — | ||||||||||
Net loss attributable to AV Homes | $ | (11,301 | ) | $ | (31,379 | ) | $ | (1,877 | ) | (11,583 | ||||
Data from closings for the active adult and primary residential homebuilding segments for the nine and three months ended September 30, 2013 and 2012 is summarized as follows:
For the nine months ended September 30, | Number of Units | Revenues | Average Price Per Unit | ||||||
2013 | |||||||||
Active adult communities | 149 | $ | 35,705 | $ | 240 | ||||
Primary residential | 161 | 36,127 | $ | 224 | |||||
Total | 310 | $ | 71,832 | $ | 232 | ||||
2012 | |||||||||
Active adult communities | 100 | $ | 24,021 | $ | 240 | ||||
Primary residential | 104 | 21,497 | $ | 207 | |||||
Total | 204 | $ | 45,518 | $ | 223 | ||||
For the three months ended September 30, | Number of Units | Revenues | Average Price Per Unit | ||||||
2013 | |||||||||
Active adult communities | 76 | $ | 17,257 | $ | 227 | ||||
Primary residential | 71 | 14,634 | $ | 206 | |||||
Total | 147 | $ | 31,891 | $ | 217 | ||||
2012 | |||||||||
Active adult communities | 34 | $ | 7,731 | $ | 227 | ||||
Primary residential | 48 | 9,674 | $ | 202 | |||||
Total | 82 | $ | 17,405 | $ | 212 | ||||
Data from contracts signed for the active adult and primary residential homebuilding segments for the nine and three months ended September 30, 2013 and 2012 is summarized as follows:
For the nine months ended September 30, | Gross Number of Contracts Signed | Cancellations | Contracts Signed, Net of Cancellations | Dollar Value | Average Price Per Unit | ||||||||
2013 | |||||||||||||
Active adult communities | 292 | (39) | 253 | $ | 60,353 | $ | 239 | ||||||
Primary residential | 173 | (68) | 105 | 25,769 | $ | 245 | |||||||
Total | 465 | (107) | 358 | $ | 86,122 | $ | 241 | ||||||
2012 | |||||||||||||
Active adult communities | 169 | (46) | 123 | $ | 30,880 | $ | 251 | ||||||
Primary residential | 215 | (32) | 183 | 41,551 | $ | 227 | |||||||
Total | 384 | (78) | 306 | $ | 72,431 | $ | 237 | ||||||
For the three months ended September 30, | |||||||||||||
2013 | |||||||||||||
Active adult communities | 93 | (14) | 79 | $ | 19,670 | $ | 249 | ||||||
Primary residential | 49 | (24) | 25 | 6,536 | $ | 261 | |||||||
Total | 142 | (38) | 104 | $ | 26,206 | $ | 252 | ||||||
2012 | |||||||||||||
Active adult communities | 48 | (9) | 39 | $ | 9,973 | $ | 256 | ||||||
Primary residential | 68 | (8) | 60 | 14,659 | $ | 244 | |||||||
Total | 116 | (17) | 99 | $ | 24,632 | $ | 249 | ||||||
Backlog for the active adult and primary residential homebuilding segments as of September 30, 2013 and 2012 is summarized as follows:
As of September 30, | Number of Units | Dollar Volume | Average Price Per Unit | ||||
2013 | |||||||
Active adult communities | 167 | 41,401 | $ | 248 | |||
Primary residential | 66 | 16,837 | $ | 255 | |||
Total | 233 | 58,238 | $ | 250 | |||
2012 | |||||||
Active adult communities | 68 | 18,578 | $ | 273 | |||
Primary residential | 132 | 29,903 | $ | 227 | |||
Total | 200 | 48,481 | $ | 242 | |||