Form 8-K AV Homes, Inc. For: Oct 29

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 29, 2015

 

 

AV Homes, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-07395		23-1739078
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

8601 N. Scottsdale Rd. Suite 225 Scottsdale, Arizona		85253
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (480) 214-7400

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

---

Item 2.02

Results of Operations and Financial Condition.

On October 29, 2015, AV Homes, Inc. (the “Company”) issued a press release announcing its results for the quarter ended September 30, 2015. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		Press Release dated October 29, 2015.

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				AV Homes, Inc.
Date: October 29, 2015				By:		/s/ Roger A. Cregg
				Name:		Roger A. Cregg
				Title:		President and Chief Executive Officer
						(Principal Executive Officer)

---

Exhibit Index

 

Exhibit No.		Description
99.1		Press Release dated October 29, 2015.

Exhibit 99.1

AV Homes Reports Results for Third Quarter 2015 and Increases

2015 Outlook to reflect the Acquisition of Bonterra Builders

Third Quarter 2015 Highlights - as compared to the prior year third quarter (unless otherwise noted)

 

•

Net income increased to $5.5 million, or $0.25 per diluted share, compared to $0.7 million, or $0.03 per diluted share

 

•

Total revenue increased 78% to $153.8 million

 

•

Homebuilding revenue increased 112% to $151.1 million

 

•

Closings increased 84% to 515 units

 

•

Average selling price for closed homes increased 15.5% to $293,000 per home

 

•

Net new order value increased 144% to $164.0 million on a 106% increase in units

 

•

Backlog value increased 154% to $307.5 million on 1,026 units

 

•

Selling communities increased to 60 from 25 and communities with closings increased to 51 from 18

Scottsdale, AZ (October 29, 2015) – AV Homes, Inc. (Nasdaq: AVHI), a developer and builder of active adult and primary residential communities in Florida, Arizona and the Carolinas, today announced results for its third quarter ended September 30, 2015. Total revenue for the third quarter of 2015 increased 78% to $153.8 million from $86.6 million in the third quarter of 2014. Net income and diluted earnings per share increased to $5.5 million and $0.25 per share, respectively, compared to $0.6 million, and $0.03 per share in the third quarter of 2014. Results from the third quarter of 2015 include the contribution from our recent acquisition of Bonterra Builders, which closed on July 1, 2015. The Company is substantially complete with its preliminary analysis of its business combination accounting and the current period results reflect the associated impact.

Roger A. Cregg, President and Chief Executive Officer, commented, “We are pleased with our results for the third quarter as we continued to improve our operating performance throughout this year, highlighted by an increase in homes delivered, net new orders and homebuilding revenue in the third quarter compared to last year. Our gross margin increased and our SG&A expense leverage improved from the prior year quarter, while generating net income of $5.5 million. Our backlog sales value also increased 154% to $308 million and backlog units increased 118% to 1,026 homes. We continue to support our long-term growth strategy, increasing our selling communities in the third quarter to 60 from 25 last year and increasing our communities with closings to 51 compared to 18 last year.”

---

Mr. Cregg added, “Our third quarter results were also highlighted by the completion of the acquisition of Bonterra Builders in Charlotte, North Carolina, which closed on July 1st. The integration of Bonterra Builders is well on its way to increasing our scale and market share in the greater Charlotte area and improving our geographic and customer segment diversification. In addition, we increased our full year 2015 guidance inclusive of the acquisition.”

The increase in total revenue for the third quarter of 2015 compared to the prior year period included a 112% increase in homebuilding revenue to $151.1 million. The increase in homebuilding revenue was driven by the acquisition of Bonterra Builders, volume increases due to a greater number of communities with closings in each of our existing markets, and higher average selling prices due to price increases and improvements in the mix of homes sold. During the third quarter of 2015, the Company closed 515 homes, an 84% increase from the 280 homes closed during the third quarter of 2014, and the average unit price per closing improved 15.5% to approximately $293,000 from approximately $254,000 in the third quarter of 2014.

Homebuilding gross margin improved to 19.9% in the third quarter of 2015 from 17.7% in the third quarter of 2014. The increase in gross margin year-over-year was primarily due to a change in the mix of communities as a significant number of new communities in each of our markets came on line within the past year due to both organic and acquisition growth. Additionally, we continue to opportunistically raise prices and have reduced our construction costs in the Florida market.

---

Homebuilding SG&A expense as a percentage of homebuilding revenue was 12.8% in the third quarter of 2015 compared to 13.2% in the third quarter of 2014. The improvement was primarily due to the increased scale of the business which allows us to leverage the cost base, particularly in the Carolinas with the acquisition of Bonterra Builders. Corporate general and administrative expenses as a percentage of homebuilding revenue improved to 2.5% in the third quarter of 2015 from 5.6% in the same period a year ago driven by the favorable cost leverage the Company is achieving in continuing to effectively manage its costs while growing the revenue of the business.

The number of new housing contracts signed, net of cancellations, during the three months ended September 30, 2015 increased 106% to 555, compared to 270 units during the same period in 2014. The increase in housing contracts was primarily attributable to the increase in selling communities to 60 from 25 as a result of both acquisition and organic growth. The average sales price on contracts signed in the third quarter of 2015 increased 18.5% to approximately $295,000 from approximately $249,000 in the third quarter of 2014. The aggregate dollar value of the contracts signed during the third quarter increased 144% to $164.0 million, compared to $67.1 million during the same period one year ago. The backlog value of homes under contract but not yet closed at September 30, 2015 increased 154% to $307.5 million on 1,026 units, compared to $120.9 million on 470 units at September 30, 2014.

2015 Updated Outlook

AV Homes issued the following expectations for its financial performance for the fourth quarter and full year 2015 based on the year to date results and the July 1^st acquisition of Bonterra Builders:

 

•

The Company expects to have approximately 57 communities with closings at the end of 2015;

 

•

The number of homes closed for the full year 2015 is expected to be approximately 1,800 units;

 

•

Homebuilding Revenue for the full year 2015 is expected to be approximately $510 million to $520 million;

---

•

Homebuilding Gross Margins for the full year 2015 are expected to be in a range of approximately 18.2% to 18.5%; and

 

•

Net Income for the full year 2015 is expected to be in a range of approximately $12 million to $14 million.

The Company will hold a conference call and webcast on Friday, October 30, 2015 to discuss its third quarter financial results. The conference call will begin at 8:30 a.m. EDT. The conference call can be accessed live over the telephone by dialing (877) 643-7158 or for international callers by dialing (914) 495-8565; please dial-in 10 minutes before the start of the call. A replay will be available on October 30, 2015 beginning at 11:30 a.m. and can be accessed by dialing (855) 859-2056 or for international callers by dialing (404) 537-3406; the conference ID is 60974254. The telephonic replay will be available until November 6, 2015. The webcast, which can be accessed by going to the Investor Relations section of AV Homes’ website at www.avhomesinc.com, is accompanied by an Investor Presentation. A replay of the original webcast will be available shortly after the call.

AV Homes, Inc. is engaged in homebuilding and community development in Florida, Arizona and North Carolina. Its principal operations are conducted in the greater Orlando, Jacksonville, Phoenix, Charlotte and Raleigh markets. The Company builds communities that serve both active adults (55 years and older) as well as people of all ages. AV Homes common shares trade on NASDAQ under the symbol AVHI. For more information, visit www.avhomesinc.com.

---

This news release, the conference call, webcast and other related items contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements, which include references to our updated outlook for 2015, involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the cyclical nature of the homebuilding industry and its dependence on broader economic conditions; competition for home buyers, properties, financing, raw materials and skilled labor; overall market supply and demand for new homes; our ability to successfully integrate acquired businesses; conflicts of interest involving our largest stockholder; contractual restrictions under a stockholders agreement with our largest stockholder; our ability to access sufficient capital; our ability to generate sufficient cash to service our indebtedness and potential need for additional financing; terms of our financing documents that may restrict our operations and corporate actions; fluctuations in interest rates; our ability to purchase outstanding notes upon certain fundamental changes; contingent liabilities that may affect our liquidity; development liabilities that may impose payment obligations on us; the availability of mortgage financing for home buyers; increased regulation of the mortgage industry; changes in federal lending programs and other regulations; cancellations of home sale orders; declines in home prices in our primary regions; inflation affecting homebuilding costs; the prices and supply of building materials and skilled labor; elimination or reduction of tax benefits associated with home ownership; warranty and construction defect claims; health and safety incidents in homebuilding activities; availability and suitability of undeveloped land and improved lots; ability to develop communities within expected timeframes; the seasonal nature of our business; impacts of weather conditions and natural disasters; resource shortages and rate fluctuations; value and costs related to our land and lot inventory; our ability to recover our costs in the event of reduced home sales; dependence on our senior management; effect of our expansion efforts on our cash flows and profitability; effects of government regulation of development and homebuilding projects; raising healthcare costs; our ability to realize our deferred income tax asset; costs of environmental compliance; impact of environmental changes; dependence on digital technologies and potential interruptions; and potential dilution related to future financing activities, all as described in “Risk Factors” in our most recent Annual Report on Form 10-K for and our other filings with the Securities and Exchange Commission, which filings are available on www.sec.gov. Forward-looking statements are based on the expectations, estimates, or projections of management as of the date of this news release, the conference call, the Investor Presentation and the webcast. AV Homes disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events and circumstances, except to the extent required by applicable law.

Investor Contact:

Mike Burnett

EVP, Chief Financial Officer

480-214-7408

[email protected]

---

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

		September 30, 2015				December 31, 2014
		(unaudited)
Assets
Cash and cash equivalents		$	22,252			$	180,334
Restricted cash			26,273				16,447
Land and other inventories			619,881				383,184
Receivables			7,662				2,906
Property and equipment, net			35,556				36,922
Investments in unconsolidated entities			1,173				17,991
Prepaid expenses and other assets			22,326				20,980
Goodwill			21,017				6,071
Assets held for sale			—				4,051
Total Assets		$	756,140			$	668,886
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable		$	38,534			$	16,087
Accrued and other liabilities			33,404				28,134
Customer deposits			9,679				4,966
Estimated development liability			32,738				33,003
Notes payable			326,719				299,956
Credit facility			30,000				—
Total Liabilities			471,074				382,146
Stockholders’ Equity
Common stock			22,456				22,183
Additional paid-in capital			398,996				396,989
Accumulated deficit			(133,367	)			(129,413	)
			288,085				289,759
Treasury stock			(3,019	)			(3,019	)
Total Stockholders’ Equity			285,066				286,740
Total Liabilities and Stockholders’ Equity		$	756,140			$	668,886

---

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share data)

(unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Revenues
Homebuilding		$	151,130			$	71,127			$	280,381			$	145,155
Amenity and other			2,691				2,572				8,195				7,630
Land sales			6				12,942				3,470				29,168
Total revenues			153,827				86,641				292,046				181,953
Expenses
Homebuilding			140,460				67,911				269,647				141,068
Amenity and other			2,221				2,603				7,034				8,215
Land sales			2				8,672				385				20,910
Total real estate expenses			142,683				79,186				277,066				170,193
General and administrative expenses			3,820				4,016				11,756				12,264
Interest income and other			(41	)			(85	)			(165	)			(258	)
Interest expense			1,840				2,841				7,503				2,952
Total expenses			148,302				85,958				296,160				185,151
Equity in earnings (loss) in unconsolidated entities			(5	)			(5	)			160				(10	)
Net income (loss) before income taxes			5,520				678				(3,954	)			(3,208	)
Income tax expense (benefit)			—				—				—				—
Net income (loss) and comprehensive income (loss)			5,520				678				(3,954	)			(3,208	)
Net income attributable to non-controlling interests in consolidated entities			—				—				—				329
Net income (loss) and comprehensive income (loss) attributable to AV Homes stockholders		$	5,520			$	678			$	(3,954	)		$	(3,537	)
Basic Earnings (Loss) Per Share		$	0.25			$	0.03			$	(0.18	)		$	(0.16	)
Diluted Earnings (Loss) Per Share		$	0.25			$	0.03			$	(0.18	)		$	(0.16	)

---

The following table provides a comparison of certain financial data related to our operations for the three and nine months ended September 30, 2015 and 2014 (in thousands):

 

		Three Months								Nine Months
		2015				2014				2015				2014
Operating income (loss):
Florida
Revenues
Homebuilding		$	86,892			$	53,669			$	185,484			$	114,600
Amenity and other			2,691				2,572				8,195				7,630
Land sales			6				12,942				3,470				15,300
Total Revenues			89,589				69,183				197,149				137,530
Expenses
Homebuilding			68,409				43,891				149,033				93,118
Homebuilding selling, general and administrative			11,419				6,613				26,172				15,923
Amenity and other			2,199				2,537				6,938				7,888
Land sales			2				8,688				385				9,388
Segment operating income			7,560				7,454				14,621				11,213
Arizona
Revenues
Homebuilding		$	20,012			$	17,458			$	45,196			$	30,555
Land sales			—				—				—				13,868
Total Revenues			20,012				17,458				45,196				44,423
Expenses
Homebuilding			16,497				14,660				38,704				25,640
Homebuilding selling, general and administrative			3,009				2,209				7,846				5,150
Amenity and other			22				66				96				327
Land sales			—				(16	)			—				11,522
Segment operating income (loss)			484				539				(1,450	)			1,784
Carolinas
Revenues
Homebuilding		$	44,226			$	—			$	49,701			$	—
Total Revenues			44,226				—				49,701				—
Expenses
Homebuilding			36,182				—				41,174				—
Homebuilding selling, general and administrative			4,944				538				6,718				1,237
Segment operating income (loss)			3,100				(538	)			1,809				(1,237	)
Operating income		$	11,144			$	7,455			$	14,980			$	11,760
Unallocated income (expenses):
Interest income and other			41				85				165				258
Equity in earnings (loss) in unconsolidated entities			(5	)			(5	)			160				(10	)
Corporate general and administrative expenses			(3,820	)			(4,016	)			(11,756	)			(12,264	)
Interest expense			(1,840	)			(2,841	)			(7,503	)			(2,952	)
Income (loss) before income taxes			5,520				678				(3,954	)			(3,208	)
Income tax expense (benefit)			—				—				—				—
Net income attributable to non-controlling interests			—				—				—				329
Net income (loss) attributable to AV Homes		$	5,520			$	678			$	(3,954	)		$	(3,537	)

 

---

Data from closings for the Florida, Arizona and the Carolinas segments for the three and nine months ended September 30, 2015 and 2014 is summarized as follows (dollars in thousands):

 

For the three months ended September 30,		Number of Units				Revenues				Average Price Per Unit
2015
Florida			317			$	86,892			$	274
Arizona			71				20,012				282
Carolinas			127				44,226				348
Total			515			$	151,130			$	293
2014
Florida			212			$	53,670			$	253
Arizona			68				17,458				257
Carolinas			—				—				—
Total			280			$	71,128			$	254
For the nine months ended September 30,		Number of Units				Revenues				Average Price Per Unit
2015
Florida			704			$	185,483			$	263
Arizona			170				45,196				266
Carolinas			145				49,702				343
Total			1,019			$	280,381			$	275
2014
Florida			451			$	114,600			$	254
Arizona			120				30,555				255
Carolinas			—				—				—
Total			571			$	145,155			$	254

---

Data from contracts signed for the Florida, Arizona and the Carolinas segments for the three and nine months ended September 30, 2015 and 2014 is summarized as follows (dollars in thousands):

 

For the three months ended September 30,		Gross Number of Contracts Signed				Cancellations				Contracts Signed, Net of Cancellations				Dollar Value				Average Price Per Unit
2015
Florida			335				(57	)			278			$	75,308			$	271
Arizona			173				(31	)			142				40,425				285
Carolinas			152				(17	)			135				48,229				357
Total			660				(105	)			555			$	163,962			$	295
2014
Florida			261				(36	)			225			$	55,760			$	248
Arizona			57				(15	)			42				10,605				253
Carolinas			3				—				3				774				258
Total			321				(51	)			270			$	67,139			$	249
For the nine months ended September 30,		Gross Number of Contracts Signed				Cancellations				Contracts Signed, Net of Cancellations				Dollar Value				Average Price Per Unit
2015
Florida			1,143				(176	)			967			$	260,492			$	269
Arizona			460				(79	)			381				110,189				289
Carolinas			209				(26	)			183				63,635				348
Total			1,812				(281	)			1,531			$	434,316			$	284
2014
Florida			673				(70	)			603			$	152,262			$	253
Arizona			177				(32	)			145				36,539				252
Carolinas			3				—				3				774				258
Total			853				(102	)			751			$	189,575			$	252

 

---

Backlog for the Florida, Arizona and the Carolinas segments as of September 30, 2015 and 2014 is summarized as follows (dollars in thousands):

 

As of September 30,		Number of Backlog Units				Dollar Volume				Average Price Per Unit
2015
Florida			536			$	147,085			$	274
Arizona			263				78,799				300
Carolinas			227				81,635				360
Total			1,026			$	307,519			$	300
2014
Florida			372			$	95,815			$	258
Arizona			95				24,347				256
Carolinas			3				774				258
Total			470			$	120,936			$	257

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Nykredit Bank A/S to redeem Additional Tier 1 Capital Notes - Nykredit Bank A/S
• TISE Reports H1 2026 Listing Results; Sets Records for Total Number and Value of Listings
• Live Summer Out Loud: How Huawei's Ecosystem Powers Every Summer Adventure