Earnings season wound down with a flourish at the end of last week as New Home Company, Century Communities, William Lyon Homes, and TRI Pointe all posted strong order growth, continuing the theme of the strong spring selling season.
On Thursday, Century Communities announced its net new home contracts increased 336% to 706 homes and its home deliveries increased 323% to 542 homes. That shouldn’t be a surprise considering the builder absorbed multiple acquisitions in the past year. But improvement in the market also played a role in the results.
“Our markets continue to exhibit strong fundamentals and we are encouraged by the higher levels of traffic and an improvement in the absorption pace across our platform throughout the quarter with a record backlog of 920 homes,” said Rob Francescon, Co-Chief Executive Officer said in a release. “We are capitalizing on this increasing demand while exercising strict control of our incentives.”
J.P. Morgan’s Michael Rehaut sees upside for Century, which saw margins expand to 19.1% in the first quarter. He estimates second-quarter orders to move up 238% year over year and 2015 orders to increase 172%.
“Century noted that it was able to reduce incentives and/or raise prices across most of its markets, including Denver, Atlanta, Nevada, and Central Texas,” Rehaut said in a report. “Looking forward, the company noted that the overall robust momentum it saw during 1Q has continued into April and May, while it also noted it was reasonable to expect continued solid YOY growth in sales pace for the rest of the year given its changed mix of communities (1Q sales pace was up 18% YOY).”
On Friday, New Home posted a 191% increase in net income and an increase in home sales revenue to $56.2 million from $5.0 million. It also saw a five-times increase in backlog dollar value to $82.7 million. New Home’s orders rose to 25 homes, compared to 10 a year earlier, and its margins sat at 14.1%.
“The benefits of our diverse growth strategy were evident during the quarter and we are pleased by the strong execution across our entire operating platform,” said CEO Larry Webb in a statement. “During the first quarter, we significantly expanded our revenues and improved our profitability across all project activities.”
Also on Friday, William Lyons Homes reported that orders jumped 47%, the dollar value of its orders improved to 35%, and its gross margins were 18.8%.
“While our focus last year was on expanding our geographic footprint and bolstering our supply of land within our existing markets, this year we are keenly focused on executing our financial and operational objectives and believe we are off to a good start,” said CEO William Lyon in a statement. “As the economy gains momentum and jobs continue to be created across our key Western regional markets, we are confident that we are on our way to another successful year for William Lyon Homes.”
Rehaut said Lyon’s orders and margins were below his estimates, though he did add that April orders were strong.
“Importantly, the company noted that it is ‘experiencing an orderly progression of new home sales and absorption rates throughout the Spring selling season, as orders have picked up momentum on a month-over-month basis throughout the quarter’ and continued into April, which saw orders rise 148% to 283,” Rehaut said in his report. “We believe April order growth was positively impacted by an increase in community count, as the company guided to an average of 70 during 2Q versus an average of 54 during 1Q.”
Finally, TRI Pointe, which consummated the merger with Weyerhaeuser Real Estate Company, saw new home orders rise 79% and home sales revenue increase of 55%.
“2015 is off to a great start for TRI Pointe”, commented CEO Doug Bauer in a statement. “We sold 3.5 homes per community per month in the first quarter of 2015, compared to 2.5 homes per community in the first quarter of 2014. This improvement in sales pace can be attributed to the implementation of TRI Pointe’s operating philosophy across our home building platform as well as an overall improvement in market conditions.”