After a brief lull, builder earnings releases picked back up today with WCI Communities posting higher than expected gross margins of 27.6% and 54% year-over-year order growth.
Additionally, WCI’s contract value of new orders jumped 39.3%, its active selling neighborhood rose 64.0%, community count increased 56%, deliveries nudged up 17.9%, backlog units increased 49.6%, and revenues from homes delivered moved up 39.6%.
“This year is off to a strong start as the positive trends that we experienced in 2014 continued in the first quarter of 2015,” said Keith Bass WCI’s CEO in a statement. “We continue to deliver solid year-over-year growth across most of our key operating metrics. Traffic and new order activity in both our existing and new neighborhoods were particularly strong in the first quarter.”
Bass also pointed out that the company’s brokerage business increased 15%, shoring up the strength of the Florida market.
Analyst Michael Rehaut at J.P. Morgan also likes WCI’s prospects going forward. “Overall, we continue to rate WCIC Neutral, as we believe its relative valuation properly reflects its attractive fundamental profile, featuring industry leading gross margins, a long, attractive land position and a less interest rate sensitive buyer, which supports our outlook for strong order growth acceleration in 2015 and beyond,” J.P. Morgan’s Michael Rehaut said in a research note.
WCI’s absorption fell 1% year-over-year, but the Florida builder’s average sales price grew 10% to $446,000. With its cash at $158 million, Rehaut says the builder's “balance sheet remains very strong with a net debt-to-cap of 17.5%, up 460 bps sequentially.”
Keith Bass, CEO of WCI, says the balance sheet sets the company up for future growth. "We believe the combination of our strong balance sheet and our long land strategy positions us well to be opportunistic and highly strategic in our future land acquisitions," he said in his earnings call.