ALISO VIEJO, Calif.--(BUSINESS WIRE)-- The New Home Company Inc. (NYSE: NWHM), Aliso Viejo, CA., on Friday reported a net loss of $0.8 million, or -$0.04 per share, for the first quarter ended March 31 compared to a net profit of $4.6 million, or $0.28 per share, in the comparable quarter last year. The company said the loss was "primarily due to anticipated decreases in home sales revenue and home building gross margin due to a shift in mix, a $1.9 million reduction in joint venture income, and an increase in selling, general and administrative expenses related to increased community count and growth in our business."
Analysts were expecting a gain of 2 cents a share.
Revenue for the period dropped to $85.2 million from $102.9 million in the prior-year period.
Home closing revenue was $42.3 million down from to $56.2 million in last year's quarter, driven down by a 22% decrease in the average selling price of homes delivered from $1.9 million in the prior year period to $1.5 million. The decrease in average selling price was largely attributable to a product mix shift to lower-priced homes in Northern California communities, the company said.
Home building gross margin percentage was 13.3%, compared to 15.7% in the prior year period. Adjusted home building gross margin percentage, which excludes interest in cost of home sales, was 14.8%*, compared to 16.3%* in the prior year period.
SG&A as a percentage of home sales revenue was 20.4% versus 10.3% in the prior year period. The company attributed the increase in SG&A to a 150% increase in active community count, increased G&A to support growth, and lower home-sales revenue.
New home orders were up 124% to 56 homes, compared to 25 homes in the prior year period. The company's monthly sales absorption pace was 1.8 sales per average selling community, as compared to 2.1 sales per average selling community in last year's quarter. The Company increased active selling communities to 10 at the end of the 2016 first quarter, compared to four as of the end of the prior year quarter. The dollar value of the Company's wholly owned backlog at the end of the 2016 first quarter was up 183% year-over-year to $234.0 million and totaled 104 homes compared to 37 homes in the prior year period.
Fee building revenue for the 2016 first quarter decreased 8% to $42.9 million due to a decrease in management fees from joint ventures and a reduction in fee building construction activity. Fee building gross margin was $2.0 million, compared to $2.9 million in the prior year period. The decrease in fee building gross margin was primarily the result of a decline in management fees due to lower joint venture home deliveries and land sales revenue.
The company also provided non-GAAP information of its JVs. Total revenue from JVs was $42.0 million; net income was $2.1 million, compared to $81.2 million and $10.8 million in the prior year period, respectively. Home sales revenue of the JVs was $38.2 million, compared to $51.2 million in the prior year period. Home building gross margin percentage generated by the JVs during the quarter decreased slightly to 18.1%, compared to 18.6% in the prior year period.
At the end of the 2016 first quarter, the JVs had six active selling communities, down from nine at the end of the prior year period. New home orders from JVs for the 2016 first quarter declined 57% to 46 as compared to the prior year period of 108 homes. The dollar value of homes in backlog from unconsolidated JVs at the end of the 2016 first quarter was down 44% to $94.7 million from 101 homes, compared to $170.6 million from 129 homes in the prior year period. The decline in JV orders, monthly sales absorption rate and the dollar value of joint venture backlog was due largely to fewer actively selling JV communities as well as having fewer homes available to sell within each of the remaining communities as many of these joint ventures wind down. In addition, the dollar value backlog of JV lots at the end of the 2016 first quarter was approximately $36.9 million versus $45.7 million in the year earlier period.
During the quarter, real estate inventories increased by $124.1 million primarily due to the investment of approximately $85 million in land and land deposits. As of March 31, 2016, the Company had $43.9 million of cash and cash equivalents, $10.1 million in available loan commitments and $194.7 million of total debt outstanding. The Company ended the 2016 first quarter with a net debt-to-capital ratio of 40.5%.
The company maintained its full year guidance for 2016 as follows:
- Home sales revenue of $450 - $500 million
- Fee building revenue of $100 - $120 million
- Income from unconsolidated joint ventures of $10 - $12 million
- Wholly owned active year-end community count of 13
“The New Home Company continues to lay the foundation for long-term growth," said Larry Webb, the New Home CEO. "We increased our wholly owned community count by 150% and ended the 2016 first quarter with over 180% more homes in backlog than we had in the first quarter of 2015. These factors should lead to materially better results as the year progresses and we convert our substantially larger backlog and generate additional sales from our new communities.”