UCP, Inc. Reports Third Quarter 2013 Results

- Delivers Revenue of $23.6 Million - Backlog of 60 Homes Valued at $25.5 Million -

- Land and Lot Position Increases 35.5% -

- ASP in Backlog Increases 20.7% -

Business Wire

SAN JOSE, Calif.--(BUSINESS WIRE)--

UCP, Inc. (UCP) today announced its results of operations for the three months ended September 30, 2013.

Third Quarter 2013 Highlights

  • Total consolidated revenue of $23.6 million
  • Revenues from homebuilding operations of $21.4 million
  • Land and lots under control increase to 6,659
  • Homebuilding adjusted gross margin of 24.3%
  • Home deliveries of 62 units
  • Net new home orders of 44 units
  • Land development revenue of $2.2 million
  • Land development adjusted gross margin of 36.4%

“In the third quarter we made great strides on the homebuilding segment of our business. We achieved strong growth in the number of our active selling communities, homebuilding revenues, land position and backlog,” stated Dustin Bogue, President and Chief Executive Officer of UCP. “The investments we have made in our business are driving continued growth in our operations. Specifically, our success in building our land under control in key high demand markets in California and our backlog, positions UCP very well for the future.”

Third Quarter 2013 Operating Results

Total revenue for the three months ended September 30, 2013 increased by $0.3 million, or 1.4%, to $23.6 million, as compared to $23.3 million for the three months ended September 30, 2012. Revenue growth was primarily the result of an increase number of selling communities and higher average sales prices.

Revenue from homebuilding operations in the third quarter rose by $20.0 million, to $21.4 million, as compared to $1.4 million for the same period last year. The improvement was primarily the result of an increase in the number of homes delivered to 62 during the 2013 period, as compared to five homes during the 2012 period, and the increase in the average selling price of homes to approximately $345,000 during the 2013 period, as compared to approximately $271,000 during the third quarter of 2012. Of this increase, $15.4 million was related to the growth in units delivered and $4.6 million was related to the rise in average selling price. Average selling price during the third quarter grew primarily as the result of strong geographic mix.

Revenue from land sales for the three months ended September 30, 2013 was $2.2 million compared to $21.9 million in the same period in 2012.

Gross margins in the quarter of 23.8% was slightly lower compared to 24.4% in the same period in 2012; adjusted gross margins were 25.5% as compared to 28.6% last year. Homebuilding gross margins were 22.5% from 27.1% in the same period in 2012, due to an increase in the cost of sales, primarily attributable to a higher cost basis in the homes sold.

Sales and marketing expense for the current quarter was $1.5 million as compared to approximately $873 thousand in 2012 quarter; due to the significant increase in the number of selling communities and homes delivered in the quarter. As a percentage of total revenue, sales and marketing expenses increased to 6.4% in the current quarter as compared to 3.7% last year, as a result of additional sales and marketing headcount in 2013.

UCP’s net operating loss for the third quarter was $336,000 (of this, $321,000 loss relates to non-controlling interest) versus net income of $2.6 million in the same period last year. These results include approximately $299 thousand of IPO costs. Importantly, the Company’s net operating results in this quarter also reflect investments made to further the growth of the Company’s homebuilding operations. Progress towards this goal is evidenced by the 250% increase in the number of average selling communities, and $20.0 million increase in homebuilding revenue.

Net new home orders in the quarter increased to 44 from 17 in the same period in 2012, primarily as the result of an increase in active selling communities to seven from three in the third quarter of 2012. Unit backlog in the quarter increased to 60 from 16. Backlog on a dollar basis increased to $25.5 million and the average selling price of homes in backlog increased 20.7% in the third quarter versus the same period last year.

During the quarter, UCP increased total lots owned and controlled by 18 and 796, respectively. The Company remains focused on strategically acquiring land in the most advantageous areas of the Puget Sound market in Washington State, the San Francisco Bay Area, and select markets of the Central Valley area of California.

Webcast and Conference Call

The Company will host a conference call for investors and other interested parties on Tuesday, November 12, 2013, beginning at 12:00 p.m. Eastern Time, 9:00 a.m. Pacific Standard Time. Interested parties can listen to the call live on the internet 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 Union Community Partners Third Quarter 2013 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 November 26, 2013, by dialing 877-870-5176 for domestic participants or 1-858-384-5517 for international participants and entering the pass code 10000606. An archive of the webcast will be available on the Company’s website for a limited time.

About UCP, Inc.

UCP, Inc. is a homebuilder and land developer, with significant land acquisition and entitlement expertise, in growth markets in California and with a growing presence in attractive markets in the Puget Sound area of Washington State.

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.

Non-GAAP Financial Measures

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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except shares and per share data)

 
September 30,
2013
December 31,
2012
Assets:
Cash and cash equivalents $ 103,002 $ 10,324
Real estate inventories 170,680 125,367
Fixed assets, net 1,016 680
Receivables 369 243
Other assets 1,537   920
Total assets $ 276,604   $ 137,534
 
Liabilities and equity:
Accounts payable and accrued liabilities $ 13,130 $ 6,107
Debt 44,945   29,112
Total liabilities 58,075 35,219
 
Commitments and contingencies (Note 9)
 
Member’s equity
PICO Holdings, Inc.’s member’s equity 102,315
 
Stockholders’ Equity
Class A common stock, $0.01 par value; 500,000,000 authorized, 7,750,000 issued and outstanding at September 30, 2013; no shares authorized, issued and outstanding at December 31, 2012 78
Class B common stock, $0.01 par value; 1,000,000 authorized, 100 issued and outstanding at September 30, 2013; no shares authorized, issued and outstanding at December 31, 2012
Additional paid-in capital 92,266
Retained deficit (15 )  
Total UCP, Inc. stockholders’ equity 92,329
Noncontrolling interest 126,200  
Total stockholders’/ member’s equity 218,529   102,315
Total liabilities and equity $ 276,604   $ 137,534
 
       

UCP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME OR LOSS
(Unaudited)
(In thousands, except shares and per share data)
 

Three Months
Ended

Three Months
Ended

Nine Months
Ended

Nine Months
Ended

September 30,
2013

 

September 30,
2012

September 30,
2013

 

September 30,
2012

REVENUE:
Homebuilding $ 21,369 $ 1,356 $ 46,609 $ 4,324
Land development 2,250   21,945 16,535   23,947  
Total revenue 23,619 23,301 63,144 28,271
 
COSTS AND EXPENSES:
Cost of sales - homebuilding 16,558 988 36,500 3,107
Cost of sales - land development 1,433 16,620 11,149 17,978
Sales and marketing 1,516 873 4,747 1,332
General and administrative 4,503   2,481 13,310   7,075  
Total costs and expenses 24,010   20,962 65,706   29,492  
(Loss) income from operations (391 ) 2,339 (2,562 ) (1,221 )
Other income, net 55   227 318   528  
Net (loss) income before income taxes (336 ) 2,566 (2,244 ) (693 )
Provision for income taxes      
Net (loss) income (336 ) 2,566 (2,244 ) (693 )
Net (loss) income attributable to noncontrolling interest (321 ) 2,566 (2,229 ) (693 )
Net loss attributable to UCP, Inc. (15 ) (15 )
Other comprehensive income (loss), net of tax      
Comprehensive (loss) income $ (15 ) $ $ (15 ) $
Comprehensive (loss) income attributable to noncontrolling interest      
Comprehensive loss attributable to UCP, Inc. $ (15 ) $ $ (15 ) $  
 

IPO
to
September 30,
2013

IPO
to
September 30,
2013

 
 
Weighted average common shares:
Basic and diluted shares outstanding 7,750,000 7,750,000
 
Basic and diluted earnings (loss) per share $0.00 $0.00
 
   
 

UCP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

 

Nine Months Ended September 30,

2013   2012
Operating activities:
Net loss $ (2,244 ) $ (693 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation 935
Abandonment of real estate inventories 12 656
Depreciation 189 103
Changes in operating assets and liabilities:
Real estate inventories (32,113 ) (11,013 )
Receivables (126 ) 636
Other assets (676 ) 419
Accounts payable and accrued liabilities 7,022   2,129  
Net cash used in operating activities (27,001 ) (7,763 )
Investing activities:
Purchases of fixed assets (525 ) (486 )
Net cash used in investing activities (525 ) (486 )
Financing activities:
Cash contributions from member 37,512 33,732
Repayments of member contributions (25,443 ) (14,432 )
Proceeds from debt 21,394 5,638
Repayment of debt (18,713 ) (8,012 )
Proceeds from IPO (net of offering costs) 105,454    
Net cash provided by financing activities 120,204   16,926  
Net increase in cash and cash equivalents 92,678 8,677
Cash and cash equivalents – beginning of period 10,324   2,276  
Cash and cash equivalents – end of period $ 103,002   $ 10,953  
 
Supplemental disclosure of cash flow information:
Debt incurred to acquire real estate inventories $ 13,153 $

5,420

     

Appendix A

Reconciliation of GAAP and Non-GAAP Measures

 

A) Gross Margin and Adjusted Gross Margin

Three Months Ended September 30,

Nine Months Ended
September 30,

     
2013   %   2012   % 2013   % 2012   %
(Dollars in thousands)
Consolidated Adjusted Gross Margin
Sales $ 23,619 100.0 % $ 23,301 100.0 % $ 63,144 100.0 % $ 28,271 100.0 %
Cost of Sales 17,991   76.2 % 17,608   75.6 % 47,649   75.5 % 21,085   74.6 %
Gross Margin 5,628 23.8 % 5,693 24.4 % 15,495 24.5 % 7,186 25.4 %
Add: interest in cost of sales 394 1.7 % 394 1.7 % 759 1.3 % 468 1.7 %
Add: impairment and abandonment charges   % 588   2.5 % 12   % 656   2.3 %
Adjusted Gross Margin(1) $ 6,022   25.5 % $ 6,675   28.6 % $ 16,266   25.8 % $ 8,310   29.4 %
Consolidated Gross margin percentage 23.8 % 24.4 % 24.5 % 25.4 %
Consolidated Adjusted gross margin percentage(1) 25.5 % 28.6 % 25.8 % 29.4 %
 
Homebuilding Adjusted Gross Margin
Home sales $ 21,369 100.0 % $ 1,356 100.0 % $ 46,609 100.0 % $ 4,324 100.0 %
Cost of home sales 16,558   77.5 % 988   72.9 % 36,500   78.3 % 3,107   71.9 %
Homebuilding gross margin 4,811 22.5 % 368 27.1 % 10,109 21.7 % 1,217 28.1 %
Add: interest in cost of home sales 392 1.8 % 23 1.7 % 750 1.6 % 56 1.3 %
Add: impairment and abandonment charges   %   %   %   %
Adjusted homebuilding gross margin(1) $ 5,203   24.3 % $ 391   28.8 % $ 10,859   23.3 % $ 1,273   29.4 %
Homebuilding gross margin percentage 22.5 % 27.1 % 21.7 % 28.1 %
Adjusted homebuilding gross margin percentage(1) 24.3 % 28.8 % 23.3 % 29.4 %
 
Land Development Adjusted Gross Margin
Land development $ 2,250 100.0 % $ 21,945 100.0% $ 16,535 100.0 % $ 23,947 100 %
Cost of land development 1,433   63.7 % 16,620   75.7% 11,149   67.4 % 17,978   75.1 %
Land development gross margin 817 36.3 % 5,325 24.3% 5,386 32.6 % 5,969 24.9 %
Add: interest in cost of land development 2 0.1 % 371 1.7% 9 % 412 1.7 %
Add: Impairment and abandonment charges   % 588   2.7% 12   0.1 % 656   2.8 %
Adjusted land development gross margin(1) $ 819   36.4 % $ 6,284   28.6% $ 5,407   32.7 % $ 7,037   29.4 %
Land development gross margin percentage 36.3 % 24.3 % 32.6 % 24.9 %
Adjusted land development gross margin percentage(1) 36.4 % 28.6 % 32.7 % 29.4 %
 
 
(1) Consolidated adjusted gross margin percentage, homebuilding adjusted gross margin percentage and land development adjusted gross margin percentage are non-U.S. GAAP financial measures. Adjusted gross margin is defined as gross margin plus capitalized interest, 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 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.
 
       

B) Debt-to-Capital Ratio and Net debt-to-Capital Ratio

 

At September
30, 2013

At December 31,
2012

Debt 44,945 $ 29,112
Stockholders’ and member's equity $ 218,529   102,315  
Total capital 263,474 $ 131,427
Ratio of debt-to-capital 17.1 % 22.2 %
Debt 44,945 $ 29,112
Less: cash and cash equivalents $ 103,002   10,324  
Cash (net of debt) 58,057 $ 18,788
Stockholders’ and member's equity 218,529   102,315  
Total capital 160,472 $ 121,103
Ratio of net debt-to-capital(1) n/a 15.5 %
 
(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) 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.
 

Contact:
For UCP, Inc.
Investor Relations:
408-207-7499 Ext. 476
Investorrelations@unioncommunityllc.com
or
Media:
Phil Denning/Jason Chudoba
Phil.denning@icrinc.com / Jason.chudoba@icrinc.com

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