AV Homes Reports Financial Results for Fourth Quarter 2013

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| Source: AV Homes, Inc.

Earnings per share increased to $0.08

Homebuilding revenue increased 72% to $45.2 million

Home closings increased 68% to 171

SCOTTSDALE, Ariz., March 13, 2014 (GLOBE NEWSWIRE) -- AV Homes, Inc. (Nasdaq:AVHI) ("AV Homes" or the "Company"), a developer and builder of active adult and conventional home communities in Arizona, Florida and North Carolina, today announced results for its fourth quarter and full year ended December 31, 2013. AV Homes reported fourth quarter net income of $1.8 million, or $0.08 per share, compared to a net loss of ($58.9) million, or ($4.67) per share in the fourth quarter of 2012, which included a non-cash impairment charge of ($51.7) million. Total revenue for the fourth quarter of 2013 increased 63% to $54.0 million from $33.2 million in the fourth quarter of 2012.

Roger A. Cregg, President and Chief Executive Officer, commented, "2013 was a very good year for AV Homes, with homebuilding revenue growing by 65% and net new orders increasing 18%, homes delivered up by 57%, improving gross margin by 550 basis points, and significantly improving our SG&A leverage, each improving over 2012 performance. While the improving housing market contributed to these results, they also reflect our strategic efforts to improve our operational performance and expand our presence in our core markets." Mr. Cregg continued, "We are entering 2014 with newly acquired land positions for deliveries in the year, a strong balance sheet ending 2013 with $145 million in cash and a low debt-to-total capital ratio. We remain optimistic about our business and continue to focus on improving our profitability."

The increase in total revenue for the fourth quarter of 2013 compared to the prior year period included a 72% increase in total homebuilding-related revenue to $45.2 million, and a $0.9 million increase in land sales to $6.7 million. The increase in homebuilding revenue was driven by strong volume increases and improved selling prices. During the fourth quarter of 2013, the Company closed on 171 homes, a 68% increase from the 102 homes closed during the fourth quarter of 2012, and the average unit price per closing rose 6.0% to $249,000 from $235,000 in the fourth quarter of 2012.

The number of new housing contracts signed, net of cancellations, during the three months ended December 31, 2013 increased 21% to 105 units, compared to 87 units during the same period in 2012. The dollar value of the contracts signed during the fourth quarter increased 31% to $24.2 million, compared to $18.6 million during the same period one year ago. The backlog of homes under contract but not yet closed at December 31, 2013 decreased 10% to 167 units, representing a dollar volume of $39.9 million, compared to 185 units with a dollar volume of $43.1 million at December 31, 2012.

Results for the Year ended December 31, 2013

For the year ended December 31, 2013, the Company reported a net loss to common stockholders of $9.5 million, or a loss of $1.34 per share, on revenues of $143.7 million. For loss per share calculation purposes, net loss attributable to common stockholders for 2013 was $21.4 million, which includes a reduction of $11.9 million, or $0.75 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, which converted to common stock in the third quarter of 2013. 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 to common stockholders of $90.2 million, or $7.19 per share, on revenues of $107.5 million for the year ended December 31, 2012. The net loss to common stockholders in 2012 includes a non-cash impairment charge of $59.0 million.

Total revenue for the year ended December 31, 2013 increased 34% to $143.7 million compared to the prior year, including a 58% increase in total homebuilding-related revenue to $124.7 million, partially offset by a $10.3 million decrease in land sales. The increase in homebuilding revenue was driven by strong volume increases and improved selling prices. During 2013, the Company reported 481 home closings, a 57% increase from the 306 homes closed during 2012, and the average unit price per closing increased 5% to $238,000, from $227,000 one year ago.

For the year ended December 31, 2013, the Company reported 463 new housing contracts signed, net of cancellations, an 18% increase over the 393 contracts signed during 2012. The dollar value of the contracts signed during 2013 increased 21% to $110.4 million as compared to $91.0 million in 2012.

For the year ended December 31, 2013, the Company reported revenue from the sale of commercial, industrial and other land of $16.3 million, generating $8.2 million in operating income, compared to $26.6 million of revenue and $8.0 million of operating income in 2012.

In a separate press release issued earlier today, AV Homes announced the acquisition of privately held, Central Florida-based Royal Oak Homes LLC and certain land positions from affiliated land development companies, for an aggregate purchase price of approximately $65 million in cash.

The Company will hold a conference call and webcast on Friday, March 14, 2014 to discuss its fourth quarter and full year financial results, as well as the acquisition of Royal Oak Homes. The conference call will begin at 8:30 a.m. EDT. 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 March 14, 2014 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 6267041. The replay will be available until March 21, 2014. 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/Durham, 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, June 30, 2013 and September 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.

 
 
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Dollars in thousands, except per share amounts)
         
  Three Months Ended December 31 Twelve Months Ended December 31
  2013 2012 2013 2012
Revenues        
Real estate revenues        
Homebuilding $ 45,231 $ 26,323 $ 124,651 $ 78,968
Commercial and industrial and other land sales 6,747 5,842 16,303 26,595
Other real estate 32 231 528 598
Total real estate revenues 52,010 32,396 141,482 106,161
Interest income 2,018 32 2,148 127
Other (3) 731 70 1,199
Total revenues 54,025 33,159 143,700 107,487
         
Expenses        
Real estate expenses        
Homebuilding 43,238 26,142 121,753 86,261
Commercial and industrial and other land sales 2,759 2,989 8,111 18,581
Other real estate 796 2,935 3,450 6,279
Total real estate expenses 46,793 32,066 133,314 111,121
Impairment charges (reversal of impairment charges) 677 51,679 (248) 59,043
Loss on extinguishment of debt 1,144
General and administrative expenses 4,093 5,852 15,975 16,148
Interest expense 315 1,717 2,830 7,973
Total expenses 51,878 91,314 151,871 195,429
Income (Loss) from unconsolidated entities (17) 376 (101) 259
Income (Loss) before income taxes 2,130 (57,779) (8,272) (87,683)
Income tax (expense) benefit
Net income (loss) and comprehensive loss 2,132 (57,779) (8,272) (87,683)
Net income (loss) attributable to non-controlling interests in consolidated entities 306 1,077 1,205 2,552
Net income (loss) and comprehensive loss attributable to AV Homes stockholders $ 1,824 $ (58,856) $ (9,477) $ (90,235)
         
Reconciliation of net income (loss) to loss attributable to common stockholders        
Net loss $ 1,824 $ (58,856) $ (9,477) $ (90,235)
Deemed dividend related to beneficial conversion feature of convertible preferred stock (see Note A and Note J for additional information) (11,894)
Income (Loss) attributable to AV Homes common stockholders $ 1,824 $ (58,856) $ (21,371) $ (90,235)
         
Basic and Diluted Income (Loss) Per Share $ 0.08 $ (4.67) $ (1.34) $ (7.19)
 
 
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
 
 
  December 31, December 31,
  2013 2012
Assets    
Cash and cash equivalents $ 144,727 $ 79,815
Restricted cash 3,956 4,682
Land and other inventories 240,078 171,044
Receivables, net 3,893 6,730
Income tax receivable 1,293
Property and equipment, net 37,844 36,661
Investments in unconsolidated entities 1,230 1,220
Prepaid expenses and other assets 11,138 10,777
Assets held for sale 23,862 25,649
Total Assets $ 466,728 $ 337,871
     
Liabilities and Equity    
     
Liabilities    
Accounts payable $ 9,757 $ 4,656
Accrued and other liabilities 14,280 12,978
Customer deposits and deferred revenues 2,323 1,985
Estimated development liability for sold land 33,232 32,974
Notes payable 105,402 105,402
Total Liabilities $ 164,994 $ 157,995
     
Contingent convertible cumulative redeemable preferred stock
     
Equity    
Common Stock, par value $1 per share    
Authorized: 50,000,000 shares    
Issued:  22,097,252 shares at December 31, 2013    
     12,938,157 shares at December 31, 2012 $ 22,097 $ 12,938
Additional paid-in capital 394,504 262,363
Retained deficit (127,481) (106,110)
  289,120 169,191
Treasury stock: at cost, 110,874 shares at December 31, 2013 and December 31, 2012 (3,019) (3,019)
Total AV Homes stockholders' equity 286,101 166,172
Non-controlling interests 15,633 13,704
Total Equity $ 301,734 $ 179,876
Total Liabilities and Equity $ 466,728 $ 337,871
 
 
AV HOMES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2013 and 2012
(Dollars in thousands)
     
  For the Year Ended
  2013 2012
OPERATING ACTIVITIES    
Net loss (including net gain or loss attributable to non-controlling interests) $ (8,272) $ (87,683)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 2,804 4,405
Amortization of stock-based compensation 1,648 3,034
Impairment of land and other inventories (248) 59,043
Loss on extinguishment of debt 1,144
Loss (income) from unconsolidated entities 101 (259)
Loss from disposal of assets 36 1,130
Changes in operating assets and liabilities:    
Restricted cash 726 3,190
Receivables, net 2,837 999
Income tax receivable 1,293
Land and other inventories (68,787) (40,576)
Assets held for sale (1,213) 4,429
Prepaid expenses and other assets (361) (786)
Accounts payable, estimated development liability, and accrued and other liabilities 6,661 3,243
Customer deposits and deferred revenues 338 374
NET CASH USED IN OPERATING ACTIVITIES (62,437) (48,313)
     
INVESTING ACTIVITIES    
Investment in property and equipment (1,023) (4,421)
Proceeds from sales of property and equipment 150
Return of capital from unconsolidated entities 19
Investment in unconsolidated entities (111) (135)
NET CASH USED IN INVESTING ACTIVITIES (1,134) (4,387)
     
FINANCING ACTIVITIES    
Issuance of common shares 35,805
Issuance of preferred shares 92,030
Debt issuance costs (1,683)
Contributions from consolidated joint venture partner 731 13,779
Distributions to consolidated joint venture partner (7) (3,076)
Payment of withholding taxes related to restricted stock and units withheld (76) (821)
NET CASH PROVIDED BY FINANCING ACTIVITIES 128,483 8,199
     
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 64,912 (44,501)
Cash and cash equivalents at beginning of year 79,815 124,316
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 144,727 $ 79,815
     
Non-cash transactions:    
Transfer from assets held for sale to land and other inventories and property and equipment $ 13,767 $ —
Beneficial conversion feature (deemed dividend) $ 11,894 $ —
Common stock issued for conversion of preferred stock $ 92,030 $ —
 
 
The following table provides a comparison of certain financial data related to our operations for three months and year ended December 31, 2013 and 2012: 
         
  Three Months Ended Twelve Months Ended
  December 31  December 31
  2013 2012 2013 2012
Operating income (loss):        
Active adult communities        
Revenues        
Homebuilding $ 33,452 $ 11,946 $ 69,362 $ 36,018
Amenity 1,878 1,814 7,227 7,014
Expenses        
Homebuilding 27,891 10,434 58,051 32,937
Homebuilding selling, general and administrative 3,717 2,393 10,097 11,832
Amenity 1,836 1,756 8,013 7,182
Segment operating income (loss) $ 1,886 $ (823) $ 428 $ (8,919)
         
Primary residential        
Revenues        
Homebuilding $ 9,281 $ 11,963 $ 45,611 $ 33,496
Amenity 620 600 2,451 2,440
Expenses        
Homebuilding 8,005 10,124 38,752 29,397
Homebuilding selling, general and administrative 1,235 972 4,433 4,168
Amenity 517 558 2,440 2,380
Segment operating income (loss) $ 144 $ 909 $ 2,437 $ (9)
         
Commercial and industrial and other land sales        
Revenues $ 6,747 $ 5,842 $ 16,303 $ 26,595
Expenses 2,759 2,994 8,111 18,581
Segment operating income $ 3,988 $ 2,853 $ 8,192 $ 8,014
         
Other operations        
Revenues $ 32 $ 231 $ 528 $ 598
Expenses 243 (245) 546 (33)
Segment operating income (loss) $ (211) $ 476 $ (18) $ 631
         
Operating income (loss) 5,807 3,415 11,039 (283)
         
Unallocated income (expenses):        
Interest income $ 2,018 $ 32 $ 2,148 $ 127
Equity loss from unconsolidated entities (17) 376 (101) 259
Loss on extinguishment of debt (1,144)
Net (gain)/loss attributable to non-controlling interests (306) (1,077) (1,205) (2,552)
Corporate general and administrative expenses (4,093) (5,852) (15,975) (16,148)
Interest expense (315) (1,717) (2,830) (7,973)
Other real estate expenses, net (593) (2,449) (2,834) (5,113)
(Impairment) reversal of impairment charge of land developed or held for future development (677) (51,584) 281 (57,408)
Income (loss )before income taxes $ 1,824 $ (58,856) $ (9,477) $ (90,235)
Income tax benefit
Net income (loss) attributable to AV Homes $ 1,824 $ (58,856) $ (9,477) $ (90,235)
         

Data from closings for the active adult and primary residential homebuilding segments for three months and year ended December 31, 2013 and 2012 is summarized as follows:

For the three months ended December 31, Number of
Units

Revenues
Average Price
Per Unit
2013      
Active adult communities 132 $ 33,398 $ 253
Primary residential 39 9,222 $ 236
Total 171 $ 42,620 $ 249
2012      
Active adult communities 48 $ 11,991 $ 250
Primary residential 54 11,963 $ 222
Total 102 $ 23,954 $ 235
       
For the year ended December 31, Number of
Units

Revenues
Average Price
Per Unit
2013      
Active adult communities 281 $ 69,103 $ 246
Primary residential 200 45,349 $ 227
Total 481 $ 114,452 $ 238
2012      
Active adult communities 148 $ 36,012 $ 243
Primary residential 158 33,460 $ 212
Total 306 $ 69,472 $ 227
       

Data from contracts signed for the active adult and primary residential homebuilding segments for three months and year ended December 31, 2013 and 2012 is summarized as follows:

  Gross Number   Contracts Signed,   Average
  of Contracts   Net of Dollar Price Per
For the three months ended December 31, Signed Cancellations Cancellations Value Unit
2013          
Active adult communities 106 (14) 92 $ 21,359 $ 232
Primary residential 19 (6) 13 2,885 $ 222
 Total 125 (20) 105 $ 24,244 $ 231
           
2012          
Active adult communities 52 (9) 43 $ 9,642 $ 224
Primary residential 60 (16) 44 8,930 $ 203
Total 112 (25) 87 $ 18,572 $ 213
           
For the year ended December 31,          
2013          
Active adult communities 398 (53) 345 $ 81,712 $ 237
Primary residential 192 (74) 118 28,654 $ 243
Total 590 (127) 463 $ 110,366 $ 238
           
2012          
Active adult communities 221 (55) 166 $ 40,522 $ 244
Primary residential 275 (48) 227 50,481 $ 222
Total 496 (103) 393 $ 91,003 $ 232

Backlog for the active adult and primary residential homebuilding segments as of December 31, 2013 and 2012 is summarized as follows:

  Number of Dollar Average Price
As of December 31, Units Volume Per Unit
2013      
Active adult communities 127 $ 29,362 $ 231
Primary residential 40 10,500 $ 263
 Total 167 $ 39,862 $ 239
       
2012      
Active adult communities 63 $ 16,158 $ 256
Primary residential 122 26,906 $ 221
 Total 185 $ 43,064 $ 233
Investor Contact:

Mike Burnett
EVP, Chief Financial Officer
480-214-7408