Salt Lake City-based Woodside Homes--the 29th rank BUILDER 100 company--somewhat expectedly announced it will offer shares of its equity to the public in an upcoming initial public offering, the third company in 2014 to do so, and the ninth in since January 2013. Having exited bankruptcy in 2009, Woodside's debt-holders-turned-investors now get their own exit options.
On the heels of Colorado-based Century Communities' launch last week into the public home builder pantheon, Woodside's move gives the a number of investors in the company an exit opportunity just about five years since chief executive officer Joel Shine led Woodside out of bankruptcy and got it on its operational feet again.
What's more, Woodside gets access to growth capital it will need to make a go of it in its seven geographical operating arenas, and will seek up to $200 million through the IPO.
Here's a brief highlight from the company's Securities and Exchange Commission Form S-1.
Woodside Homes is one of the largest Western U.S. regional homebuilders. Headquartered in North Salt Lake, Utah, we develop, design, build, market and sell single-family homes across seven primary markets in Arizona, California, Nevada, Texas and Utah, as detailed above, and we maintain strong market positions within each of these seven markets. Based on MetroStudy data, we believe we hold top ten market share positions within four of our markets (California—Central Valley, California—Inland Empire, California—Sacramento and Salt Lake City) and top 25 market share positions within our other three markets (Las Vegas, Phoenix, and San Antonio), based on home closings for the twelve months ended March 31, 2014. We build and sell homes across a diverse range of product lines at a variety of price points, with an emphasis on sales to move-up and entry-level homebuyers. We believe executing our established operating model in markets exhibiting strong homebuilding fundamentals provides a significant opportunity for revenue growth and enhanced profitability.
Our Company has a legacy of more than 35 years of homebuilding operations, over which time we have sold over 40,000 homes. At the beginning of 2010, we put in place a new and highly experienced senior management team, led by our Chairman and Chief Executive Officer Joel Shine. Our senior management team repositioned the Company and implemented operating strategies to allow us to capitalize on the ongoing recovery in our markets. Our repositioning consisted of right-sizing our operations, reducing our geographic footprint to our current Western U.S. markets and bolstering our land positions. In addition, we strengthened our land acquisition and development criteria and processes as well as our transparency and accountability to our stakeholders. These improvements have helped us achieve significant operating momentum since the beginning of 2012.
We believe our operational excellence distinguishes us from other homebuilders, as evidenced by our profitability in each of our last nine quarters and our gross margin and homebuilding gross margin that have placed us among the top quartile of public homebuilders for the trailing twelve months (based on the last quarter reported), based on data from public filings. During the three months ended March 31, 2014, we closed 300 homes at an average sales price of $315,000, representing an 8.7% and a 14.8% increase, respectively, over the same metrics for the three months ended March 31, 2013. In 2013, we closed 1,507 homes at an average sales price of $290,700, representing a 17.9% and 18.2% increase, respectively, over the same metrics in 2012. In addition, homebuilding revenue increased 24.8% to $94.5 million and net income increased 149.9% to $11.4 million for the three months ended March 31, 2014 compared to the prior year period, and homebuilding revenue increased 39.4% to $438.1 million and net income increased 81.2% to $32.1 million for the year ended December 31, 2013 compared to the prior year. As of March 31, 2014, we had a backlog of 420 homes sold but not closed with an associated sales value of $130.2 million and a substantial land supply in our markets of 9,634 lots owned and controlled through option or purchase agreements. Our current land position represents approximately a six-year supply of lots based upon our home closings during the twelve-month period ended March 31, 2014.
While Woodside's capital strategy may be the right course of action for the organization to consolidate its holdings and give investors options, it's increasingly clear that a new wave of consolidation among home building companies--public and private--is underway. Few observers believe that 22 or 23 publicly-traded home building enterprises will be sustainable, even as recovery takes firmer hold as dispersion in demand widens beyond the highest-end buyer segment of the market.
We'll have more on this.