The New Home Co. (NWHM) Reports Q1 Loss of $0.05, Revenues Beat

The New Home Co. (NYSE: NWHM) reported Q1 EPS of ($0.05), versus $0.00 reported last year. Revenue for the quarter came in at $132 million versus the consensus estimate of $80.3 million.

• Cash flow from operations of $17.3 million and cash and cash equivalents of $87.9 million
• Debt-to-capital ratio of 57.5% and a net debt-to-capital ratio of 48.8%*, a 40 basis point sequential improvement from the fourth quarter and a 1,130 basis point improvement from the 2019 first quarter
• Net orders up 18% on a monthly absorption rate of 2.0 vs. 1.7 for the 2019 first quarter
• Total revenues of $132.0 million vs. $118.8 million for the 2019 first quarter
• Home sales revenue of $95.7 million vs. $99.2 million for the 2019 first quarter
• Net loss of $8.5 million, or ($0.42) per diluted share, including $16.3 million of project abandonment and joint venture exit charges, compared to a net loss of $2.0 million, or ($0.10) per diluted share, for the 2019 first quarter
• Adjusted net loss of $1.1 million*, or ($0.05) per diluted share*, excluding impairment charges and a net deferred tax asset remeasurement benefit, compared to an adjusted net loss of $0.8 million*, or ($0.04) per diluted share*, for the 2019 first quarter
• Repurchased 2,011,183 shares since the beginning of the year through May 7, 2020 for $3.6 million, or $1.78 per share, which represented 10% of outstanding shares as of the beginning of the year

First Quarter 2020 Financial Results

"These are unprecedented times for our nation and our industry," remarked Larry Webb, Executive Chairman of The New Home Company. "While we are finding ways to continue our operations in the midst of this pandemic, our first order of business remains the health and safety of our employees, trade partners and home buyers. We have been vigilant in our response to the virus’ outbreak and have implemented policies and practices that adhere to the guidelines issued by the CDC and government and public health agencies to combat its spread. Although the road ahead is uncertain, I remain confident in the resiliency of our industry and the talented people of our organization to adjust to this new reality.”

Leonard Miller, President and Chief Executive Officer, stated, "While The New Home Company experienced a successful start to the year, demand trends softened during March as we began to experience the negative impact stemming from the COVID-19 pandemic. Year-over-year orders for January and February increased 32% and 82%, respectively, before declining 28% in March. This order softness carried into April, as shelter-in-place mandates and concerns over the virus weighed on our sales efforts. Fortunately, due in part to homebuilding being recognized as an “essential business” in most of the markets in which we operate, we were able to deliver a number of homes in backlog during the quarter, allowing us to exceed our stated home sales revenue guidance and generate $17.3 million in operating cash flow.”

Mr. Miller continued, “We ended the quarter with approximately $88 million in cash and cash equivalents, no borrowings outstanding on our bank credit facility and a net debt-to-total capital ratio of 48.8%. We have taken steps to preserve capital by implementing additional cost cutting measures, curtailing the acquisition and development of land, and renegotiating lot takedown arrangements. We have also made the strategic decision to walk away from some projects altogether, which resulted in one-time charges of approximately $16.3 million during the quarter, but will unburden us from substantial future capital outlays and should provide us with tax refunds resulting from NOL carrybacks. We believe these actions are in the company’s best interest in light of current market conditions and recent tax law changes.”

Mr. Miller concluded, "While there are several issues surrounding our industry that remain in flux and no one knows how long this period of uncertainty will last or how it will evolve, I remain confident that The New Home Company is doing the things within our control to successfully navigate through these challenges. We have been decisive in our response to the virus, both from a safety perspective and a business perspective, and I believe that our actions this quarter have put us in a good position to overcome the challenges ahead."

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

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