The New Home Co. (NWHM) Tops Q1 EPS by 4c, Revenues Beat; Offers 2Q Revenue Guidance Above Consensus

The New Home Co. (NYSE: NWHM) reported Q1 EPS of ($0.04), $0.04 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $118.8 million versus the consensus estimate of $107.2 million.

First Quarter 2019 Financial Results

• Net loss of $2.0 million, or $(0.10) per diluted share, including $1.8 million of pretax severance charges, compared to net loss of $0.6 million, or $(0.03) per diluted share, for the 2018 first quarter
• Adjusted net loss of $0.8 million*, or $(0.04)* per diluted share, excluding severance charges
• Home sales revenue up 25% to $99.2 million; deliveries up 18%
• Total revenues of $118.8 million vs. $123.2 million
• Backlog dollar value of $212.6 million vs. $228.1 million
• Ending community count up 22%
• Repurchased $5.0 million of the Company\'s 7.25% Senior Notes due 2022, resulting in a pretax gain of $0.4 million
• Repurchased 153,916 shares of common stock for $1.0 million

“Lower interest rates, moderating home prices, and improvement in the equity markets helped spur buyer demand and order activity during the first quarter, with March being the strongest month,” said Larry Webb, Chairman and Chief Executive Officer of The New Home Company. “While sales demand and first quarter absorption rates were lower than the prior year first quarter, absorption rates were up 42% over the fourth quarter which led to a 62% sequential increase in net new orders. In addition, we made progress on our diversification strategy and increased home sales revenue by 25%, deliveries by 18%, and home sales gross margins by 40 basis points over the prior year first quarter.”

Mr. Webb continued, “We remain focused on repositioning our portfolio to include more affordable product where we believe sales demand is deeper and sales pace is more robust. We opened three new communities during the quarter with base pricing below $600,000 and anticipate opening three more during the second quarter at similar price points. In addition, we took steps to right-size our operations and cost structure by reducing headcount to better align our business with recent demand levels.”

Mr. Webb concluded, “We continue to take steps to lower our cost structure, strengthen our balance sheet, pursue opportunities to reduce our leverage, and thoughtfully allocate resources to best position the Company for long-term success. We acknowledge the challenges that currently face our business and believe our Company has the right team in place to generate long-term value for our shareholders.”

GUIDANCE:

The New Home Co. sees Q2 2019 revenue of $125-150 million, versus the consensus of $123 million.

• Home sales revenue of $110 - $130 million
• Fee building revenue of $15 - $20 million
• Home sales gross margin of 12.0% - 12.5%

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

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