The New Home Co. (NWHM) Misses Q4 EPS by 18c, Revenues Miss

The New Home Co. (NYSE: NWHM) reported Q4 EPS of $0.28, $0.18 worse than the analyst estimate of $0.46. Revenue for the quarter came in at $229.7 million versus the consensus estimate of $270.2 million.

• Net loss of $16.2 million, or $(0.80) per diluted share, including $30.0 million of pretax inventory and joint venture impairment charges
• Adjusted net income of $5.6 million*, or $0.28* per diluted share, compared to $14.2 million*, or $0.67* per diluted share, for the 2017 fourth quarter
• Total revenue of $229.7 million; home sales revenue of $187.3 million
• Deliveries up 35% to 187
• Backlog increased 25% to 191 units with total dollar value of $207.1 million
• Ending community count up 18%
• Repurchased 379,505 shares of common stock, or 2% of outstanding shares for $2.8 million

The Company reported a net loss of $16.2 million, or $(0.80) per diluted share for the 2018 fourth quarter. Adjusted net income for the period was $5.6 million*, or $0.28* per diluted share, after excluding $10.0 million in pretax inventory impairment charges and $20.0 million of pretax joint venture impairment charges. The Company\'s net income for the 2017 fourth quarter was $10.5 million, or $0.50 per diluted share. Adjusted net income for the 2017 period was $14.2 million*, or $0.67* per diluted share, and excluded $3.2 million in income tax charges related to the revaluation of deferred tax assets and $0.9 million in pretax inventory impairment charges.

“In 2018, we took another step forward in implementing our strategy to reach more buyers through more affordably priced communities as evidenced by a 46% increase in deliveries compared to 2017 and a 38% reduction in the average selling price of homes delivered,” said Larry Webb, Chairman and Chief Executive Officer of The New Home Company. "However, the fourth quarter of 2018 proved to be a challenge as potential buyers in our markets exercised a high degree of caution during what is already a seasonally slow period, which resulted in a slower absorption rate. In addition, we experienced some construction delays at a few communities, most notably at our multifamily condominium community in Playa Vista, which negatively impacted our fourth quarter revenues. While we continue to have confidence in the fundamental drivers of our business and strategy, we acknowledge the operational challenges a slowing housing market poses and have adjusted our outlook accordingly.”

Mr. Webb continued, “As a result of this revised outlook, we took impairment charges at two higher-priced communities in Southern California and one land development joint venture in Northern California. We believe these actions were necessary in light of the current demand environment and should allow us to turn through these communities at a more accelerated rate, redeploy capital within our existing or new markets and generate cash flow more quickly.”

Mr. Webb concluded. “We continue to be positive about the long-term outlook for our markets and our company, and we are taking steps to right-size our business and fortify our balance sheet. We anticipate that these initiatives will lead to a leaner cost structure, reduce debt leverage over time and improve shareholder returns."

For earnings history and earnings-related data on The New Home Co. (NWHM) click here.

You May Also Be Interested In

• Etsy upgraded to buy at BofA on durable growth, buyback potential
• Exchange Bank declares Q3 dividend, CEO to retire in 2027
• SuperCom wins third Texas electronic monitoring contract