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AV Homes, Inc. Announces Third Quarter Results



AV Homes, Inc. Announces Third Quarter Results

Strong Revenue Growth Drives Improved Results

SCOTTSDALE, Ariz., Nov. 6, 2013 (GLOBE NEWSWIRE) -- 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.

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   9,556        20,753       674         8,696
and other land sales
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   5,352        15,592       95          8,142
and other land sales
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     (925)        7,364        (970)       3,784
charges)
Loss on extinguishment of   —            1,144        —           1,144
debt
General and administrative  11,882       10,296       3,885       3,633
expenses
Interest expense            2,515        6,256        (1,020)     1,903
Total expenses              99,993       104,115      35,970      40,164
Loss from unconsolidated    (84)         (117)        (7)         (38)
entities
Loss before income taxes    (10,402)     (29,904)     (978)       (11,550)
Income tax (expense)        —            —            —           —
benefit
Net loss and comprehensive  (10,402)     (29,904)     (978)       (11,550)
loss
Net income (loss)
attributable to             899          1,475        899         33
non-controlling interests
in consolidated entities
Net loss and comprehensive
loss attributable to AV      $ (11,301)   $ (31,379)   $ (1,877)   $ (11,583) 
Homes stockholders
                                                                   
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      (11,894)     —            (11,894)    —
preferred stock (see Note A
and Note J for additional
information)
Loss attributable to AV     $ (23,195)   $ (31,379)   $ (13,771)  $ (11,583)
Homes common stockholders
                                                                   
Basic and Diluted Loss Per  $ (1.67)     $ (2.50)     $ (0.86)    $ (0.92)
Share

 
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     $ (10,402) $ (29,904)
non-controlling interests)
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   5,298      (814)
accrued and other liabilities
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 (34)       (445)
and units withheld
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      $ 6,341    
inventories and property and equipment
Beneficial conversion feature (deemed dividend)           $ 11,894   
Common stock issued for conversion of preferred stock     $ 92,976   

 
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  1,235              1,220
unconsolidated entities
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  33,241             32,974
land
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       22,113             12,938
December 31, 2012
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,    (3,019)            (3,019)
2012
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   6,380      9,439      1,838     2,838
administrative
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   3,198      3,295      1,063     1,015
administrative
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     (84)       (117)      (7)       (38)
entities
Loss on extinguishment of debt      —          (1,144)    —         (1,144)
Net (gain)/loss attributable to     (899)      (1,475)    (899)     (33)
non-controlling interests
Corporate general and               (11,882)   (10,296)   (3,885)   (3,633)
administrative expenses
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    958        (2,861)    958       (14)
for future development
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:

                                         Number of           Average
For the nine months ended September 30,  Units     Revenues  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
                                                              
                                         Number of           Average
For the three months ended September 30, Units     Revenues  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      Gross                      Contracts               Average
months ended      Number       Cancellations Signed,       Dollar    Price Per
September 30,     of Contracts               Net of        Value     Unit
                  Signed                     Cancellations
2013                                                                  
Active adult      292          (39)          253            $ 60,353  $ 239
communities
Primary           173          (68)          105           25,769     $ 245
residential
Total             465          (107)         358            $ 86,122  $ 241
                                                                      
2012                                                                  
Active adult      169          (46)          123            $ 30,880  $ 251
communities
Primary           215          (32)          183           41,551     $ 227
residential
Total             384          (78)          306            $ 72,431  $ 237
                                                                      
For the three
months ended                                                          
September 30,
2013                                                                  
Active adult      93           (14)          79             $ 19,670  $ 249
communities
Primary           49           (24)          25            6,536      $ 261
residential
Total             142          (38)          104            $ 26,206  $ 252
                                                                      
2012                                                                  
Active adult      48           (9)           39             $ 9,973   $ 256
communities
Primary           68           (8)           60            14,659     $ 244
residential
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:

                         Number of Dollar    Average
                         Units     Volume    Price
                                             Per Unit
As of September 30,                           
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

CONTACT: Investor Contact:
        
         Mike Burnett
         480-214-7408
         m.burnett@avhomesinc.com

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