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, Ariz., Oct. 29, 2015 (GLOBE NEWSWIRE) -- 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.

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):

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):  

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):

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