AV Homes Reports Results for First Quarter 2016

First Quarter 2016 Highlights - as compared to the prior year first quarter (unless otherwise noted)

• Net income increased to $0.8 million, or $0.04 per diluted share, compared to a net loss of ($5.0) million, or ($0.23) per diluted share 
• Total revenue increased 111% to $124.1 million
• Homebuilding revenue increased 127% to $121.2 million
• Closings increased by 215 units to 428 units
• Average selling price for closed homes increased 13% to $283,000 per home
• Net new order value increased 61% to $209.9 million on a 41% increase in units
• Backlog value increased 103% to $334.8 million on 1,053 units
• Selling communities increased to 60 from 36 and communities with closings increased to 58 from 30

SCOTTSDALE, Ariz., April 28, 2016 (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 first quarter ended March 31, 2016. Total revenue for the first quarter of 2016 increased 111% to $124.1 million from $58.8 million in the first quarter of 2015.  Net income and diluted earnings per share increased to $0.8 million and $0.04 per share, respectively, compared to a net loss of ($5.0) million and ($0.23) per share in the first quarter of 2015.  Results from the first quarter of 2016 include the contribution from our acquisition of Bonterra Builders, which closed on July 1, 2015. 

Roger A. Cregg, President and Chief Executive Officer, commented, "AV Homes has continued its positive momentum of producing profitable growth with a strong start to 2016.  Homebuilding revenue increased 127% in the quarter, driven by a doubling of the number of homes closed and increases in our average selling price.”  Mr. Cregg continued, “Our revenue growth and improving margins, combined with our strong first quarter sales and backlog reflect the favorable market positions and execution of our business plan.”

The increase in total revenue for the first quarter of 2016 compared to the prior year period included a 127% increase in homebuilding revenue to $121.2 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 first quarter of 2016, the Company closed 428 homes, a 101% increase from the 213 homes closed during the first quarter of 2015, and the average unit price per closing improved 13% to approximately $283,000 from approximately $250,000 in the first quarter of 2015.  

Homebuilding gross margin improved to 18.3% in the first quarter of 2016 from 16.4% in the first quarter of 2015.  Homebuilding gross margin is inclusive of the impact associated with the expensing of previously capitalized interest of 2.6% and 2.3% in the 2016 and 2015 periods, respectively.  Gross margins increased in each of our geographic segments, primarily due to selective price increases, certain cost reduction measures and changes in the mix of communities due to both organic and acquisition growth. 

Homebuilding SG&A expense as a percentage of homebuilding revenue was 13.4% in the first quarter of 2016 compared to 18.2% in the first quarter of 2015.  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 3.3% in the first quarter of 2016 from 6.2% in the same period a year ago driven by the continued achievement of favorable cost leverage by effectively managing costs while growing the revenue of the business.

The number of new housing contracts signed, net of cancellations, during the three months ended March 31, 2016 increased 41% to 682, compared to 485 units during the same period in 2015.  The increase in housing contracts was primarily attributable to the increase in selling communities to 60 from 36 as a result of both acquisition and organic growth.  The average sales price on contracts signed in the first quarter of 2016 increased 15% to approximately $308,000 from approximately $269,000 in the first quarter of 2015.  The aggregate dollar value of the contracts signed during the first quarter increased 61% to $209.9 million, compared to $130.5 million during the same period one year ago.  The backlog value of homes under contract but not yet closed at March 31, 2016 increased 103% to $334.8 million on 1,053 units, compared to $164.7 million on 603 units at March 31, 2015.

Beginning with the quarter ended March 31, 2016, the selling, general and administrative expenses related to homebuilding previously included in our “Homebuilding Expenses” line item on the Statement of Operations have been combined with corporate general and administrative expenses and reclassified into a separate new line item called "Selling, general and administrative expenses" to enhance the visibility to our core homebuilding operations and conform with standard industry presentation. 

The Company will hold a conference call and webcast on Friday, April 29, 2016 to discuss its first 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 April 29, 2016 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 93630887. The telephonic replay will be available until May 6, 2016. 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 the Carolinas. 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, 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; availability and suitability of undeveloped land and improved lots; ability to develop communities within expected timeframes; increases in interest rates and availability of mortgage financing; 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; our ability to obtain letters of credit and surety bonds; cancellations of home sale orders; competition for home buyers, properties, financing, raw materials and skilled labor; declines in home prices in our primary regions; inflation affecting homebuilding costs or deflation affecting declines in spending and borrowing levels; the prices and supply of building materials and skilled labor; the availability and skill of subcontractors; elimination or reduction of tax benefits associated with home ownership; warranty and construction defect claims; health and safety incidents in homebuilding activities; 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; overall market supply and demand for new homes; our ability to recover our costs in the event of reduced home sales; conflicts of interest involving our largest stockholder; contractual restrictions under a stockholders agreement with our largest stockholder; 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; development liabilities that may impose payment obligations on us; our ability to realize our deferred income tax asset; costs of environmental compliance; impact of environmental changes; dependence on digital technologies and potential interruptions; future sales or dilution of our equity; impairment of intangible assets; and other factors described 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.