Earnings seasons continued, with the second release from CalAtlantic Group, the company that arose from Standard Pacific Corp. and The Ryland Group merger of equals in October. While earnings per share came in at below estimates, orders hit expectations.
"Organic orders rise 7%, roughly in-line with our 8% estimate, driven by community count. fourth quarter pro forma order growth of 7% was driven by average community count growth of 11% versus our 12% estimate, while absorption growth of 4% was in-line with our estimate," wrote J.P. Morgan's Michael Rehaut. "By region, on a pro forma basis, the West, North and Southeast rose 29%, 13% and 4%, respectively, while the Southwest fell 8%. Lastly, the cancellation rate of 22% was up slightly from 19% last quarter and 21% last year."
"Core operating margins of 9.5% were below our 10.7% estimate. Fourth quarter gross margins of 19.8% were below our 20.3% estimate, while SG&A of 10.3% was above our 9.6%E. We believe higher incentive compensation possibly related to the transaction may have been part of the reason for the higher SG&A. As a result, core operating margins of 9.5% were below our 10.7% estimate."
Here are more quarterly highlights from CalAtlantic's earnings release (versus Ryland and StanPac combined 2014 numbers):
- Net new orders of 2,699, up 7%; Dollar value of net new orders up 16%
- 579 average active selling communities, up 11%
- 3,795 new home deliveries, down 4%
- Average selling price of $437 thousand, up 11%
- Home sale revenues of $1.7 billion, up 6%
- Pretax income of $126.2 million vs. $219.5 million (includes the impact of $44.8 million of 2015 fourth quarter merger and other one-time costs and $64.2 million of purchase accounting adjustments)
- Adjusted pretax income of $235.2 million*, up 7%
- $398.0 million of land purchases and development costs, compared to $524.6 million