CalAtlantic Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 30, 2014

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Exhibit 99.1
 
News Release

Standard Pacific Corp. Reports 2014 Third Quarter Results

Q3 2014 pretax income of $92.1 million, up 31% from Q3 2013
Q3 2014 backlog value of $1.1 billion, up 17% from Q3 2013

IRVINE, CALIFORNIA, October 30, 2014.  Standard Pacific Corp. (NYSE: SPF) today announced results for the third quarter ended September 30, 2014.

2014 Third Quarter Highlights and Comparisons to the 2013 Third Quarter

·
Net income of $56.6 million, or $0.14 per diluted share, vs. $58.9 million, or $0.15 per diluted share
·
Pretax income of $92.1 million, up 31%
·
Net new orders of 1,154, up 4%; Dollar value of net new orders up 11%
·
Backlog of 2,208 homes, up 2%; Dollar value of backlog up 17%
·
185 average active selling communities, up 10%
·
Home sale revenues of $603.8 million, up 18%
·
Average selling price of $483 thousand, up 15%
·
1,250 new home deliveries, up 3%
·
Gross margin from home sales of 26.3%, compared to 25.3%
·
Operating margin from home sales of $88.7 million, or 14.7%, compared to $67.4 million, or 13.2%
·
$251.2 million of land purchases and development costs, compared to $156.3 million

Scott Stowell, the Company's Chief Executive Officer commented, "The solid performance we achieved during the first half of 2014 continued into the third quarter, with pretax income, home sale revenues and backlog value up 31%, 18% and 17%, respectively, over the prior year period." Mr. Stowell added, "In addition, I am pleased with the growth in our operating margin from home sales, which was 14.7% for the 2014 third quarter, compared to 13.2% for the prior year period."

Revenue.  Revenues from home sales for the 2014 third quarter increased 18%, to $603.8 million, as compared to the prior year period, resulting primarily from a 15% increase in the Company's average home price to $483 thousand, the highest quarterly average home price in the Company's nearly 50 year history, and a 3% increase in new home deliveries.  The increase in average home price was primarily attributable to a shift to more move-up product and general price increases within a majority of the Company's markets.  The increase in new home deliveries compared to the prior year period was driven primarily by the increase in deliveries from the Company's Southwest region where the Company's average active selling communities grew 31%, and an 81% increase in speculative homes sold and closed during the quarter.

Orders.  Net new orders for the 2014 third quarter were up slightly from the 2013 third quarter, to 1,154 homes, with the dollar value of these orders up 11%.  The Company's monthly sales absorption rate was 2.1 per community for the 2014 third quarter, relatively flat compared to 2.2 per community for the 2013 third quarter and 2.8 per community for the 2014 second quarter (or 2.6 per community for the 2014 second quarter excluding the backlog the Company acquired in connection with the acquisition of an Austin, Texas homebuilder in June 2014). The decrease in sales absorption rate from the 2014 second quarter to the 2014 third quarter (excluding the impact of the second quarter acquisition) was consistent with the seasonality we typically experience in our business. The Company's cancellation rate for the 2014 third quarter was 19%, compared to 20% for the 2013 third quarter and 14% for the 2014 second quarter.  Our 2014 third quarter
cancellation rate remains below our average historical cancellation rate of approximately 21% over the last 10 years.
 
Backlog.  The dollar value of homes in backlog increased 17% to $1.1 billion, or 2,208 homes, compared to $964.1 million, or 2,165 homes, for the 2013 third quarter, and decreased 1% compared to $1.1 billion, or 2,304 homes, for the 2014 second quarter.  The increase in year-over-year backlog value was driven primarily by a 15% increase in the average selling price of the homes in backlog, reflecting the continued execution of our move-up homebuyer focused strategy and a favorable pricing environment in select markets.

Land.  During the 2014 third quarter, the Company spent $251.2 million on land purchases and development costs, compared to $156.3 million for the 2013 third quarter. The Company purchased $155.7 million of land, consisting of 1,377 homesites, of which 37% (based on homesites) is located in California, 35% in Florida, 13% in the Carolinas, 8% in Colorado and 7% in Texas.  As of September 30, 2014, the Company owned or controlled 36,307 homesites, of which 23,997 were owned and actively selling or under development, 7,370 were controlled or under option, and the remaining 4,940 homesites were held for future development or for sale.  The homesites owned that are actively selling or under development represent a 5.0 year supply based on the Company's deliveries for the trailing twelve months ended September 30, 2014.

Liquidity.  The Company ended the quarter with $465 million of available liquidity, including $15 million of unrestricted homebuilding cash and a $450 million untapped revolving credit facility. The revolving credit facility has an accordion feature under which the aggregate commitment may be increased to a maximum amount of $750 million, subject to the Company's future needs and the availability of additional bank capacity.  The Company's homebuilding debt to book capitalization as of September 30, 2014 and 2013 was 52.9% and 56.8%, respectively, and adjusted net homebuilding debt to adjusted book capitalization was 52.2%* and 51.1%*, respectively.  In addition, the Company's homebuilding debt to adjusted homebuilding EBITDA for the LTM period ending September 30, 2014 and 2013 was 3.9x* and 5.8x*, respectively.

Earnings Conference Call

A conference call to discuss the Company's 2014 third quarter results will be held at 12:00 p.m. Eastern time October 31, 2014.  The call will be broadcast live over the Internet and can be accessed through the Company's website at http://ir.standardpacifichomes.com.  The call will also be accessible via telephone by dialing (888) 312-3055 (domestic) or (719) 325-2165 (international); Passcode: 3386276. The audio transmission with the slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 3386276.

About Standard Pacific

Standard Pacific Homes (NYSE: SPF) has been building beautiful, high-quality homes and neighborhoods since its founding in Southern California in 1965.  With a trusted reputation for quality craftsmanship, an outstanding customer experience and exceptional architectural design, the Company utilizes its decades of land acquisition, development and homebuilding expertise to successfully navigate today's complex landscape to acquire and build desirable communities in locations that meet the high expectations of the Company's targeted move-up homebuyers.  Currently offering new homes in major metropolitan areas in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas, we invite you to learn more about us by visiting standardpacifichomes.com.


This news release contains forward-looking statements.  These statements include but are not limited to statements regarding the strength of our land position and product portfolio; construction quality and customer experience; new home orders; deliveries; backlog; absorption rates; cancellation rates; average home price; favorable pricing environment; revenue; profitability; cash flow; liquidity; gross margin; operating margin; product mix; land supply; the benefit of, and execution on, our strategy; our future cash needs and the availability of additional bank commitments; and our future performance.  Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements.  Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company's control and difficult to forecast that may cause actual
2
results to differ materially from those that may be described or implied.  Such factors include but are not limited to: local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions, terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our debt agreements; our ability to repay our debt as it comes due; changes in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company's mortgage banking operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2013 and subsequent Quarterly Reports on Form 10-Q.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements.  The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release.  No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
Contact:
Jeff McCall, EVP & CFO (949) 789-1655, jmccall@stanpac.com

*Please see "Reconciliation of Non-GAAP Financial Measures" beginning on page 10.

###

(Note: Tables Follow)
 

3
 
KEY STATISTICS AND FINANCIAL DATA1
 
As of or For the Three Months Ended
September 30,
September 30,
Percentage
June 30,
Percentage
2014
2013
or % Change
2014
or % Change
Operating Data
(Dollars in thousands)
 
Deliveries
 1,250
 1,217
3%
 1,236
1%
Average selling price
$
 483
$
 420
15%
$
 479
1%
Home sale revenues
$
 603,788
$
 511,059
18%
$
 591,706
2%
Gross margin % (including land sales)
26.3%
25.3%
1.0%
26.7%
(0.4%)
Gross margin % from home sales
26.3%
25.3%
1.0%
26.6%
(0.3%)
Adjusted gross margin % from home sales (excluding interest amortized
to cost of home sales)*
31.1%
31.2%
(0.1%)
31.7%
(0.6%)
Incentive and stock-based compensation expense
$
 7,527
$
 8,023
(6%)
$
 6,724
12%
Selling expenses
$
 29,424
$
 24,301
21%
$
 28,782
2%
G&A expenses (excluding incentive and stock-based
compensation expenses)
$
 33,213
$
 29,615
12%
$
 32,329
3%
SG&A expenses
$
 70,164
$
 61,939
13%
$
 67,835
3%
SG&A % from home sales
11.6%
12.1%
(0.5%)
11.5%
0.1%
Operating margin from home sales
$
 88,726
$
 67,426
32%
$
 89,675
(1%)
Operating margin % from home sales
14.7%
13.2%
1.5%
15.2%
(0.5%)
Net new orders (homes)
 1,154
 1,110
4%
 1,524
(24%)
Net new orders (dollar value)
$
 568,977
$
 510,668
11%
$
 713,347
(20%)
Average active selling communities
 185
 168
10%
 183
1%
Monthly sales absorption rate per community
 2.1
 2.2
(6%)
 2.8
(25%)
Cancellation rate
19%
20%
(1%)
14%
36%
Gross cancellations
 278
 272
2%
 247
13%
Cancellations from current quarter sales
 107
 124
(14%)
 93
15%
Backlog (homes)
 2,208
 2,165
2%
 2,304
(4%)
Backlog (dollar value)
$
 1,126,125
$
 964,148
17%
$
 1,138,886
(1%)
 
Cash flows (uses) from operating activities
$
 (115,034)
$
 22,808
$
 (25,949)
(343%)
Cash flows (uses) from investing activities
$
 434
$
 (2,296)
$
 (36,050)
Cash flows (uses) from financing activities
$
 (7,271)
$
 261,980
$
 4,426
Land purchases (incl. seller financing)
$
 155,670
$
 69,196
125%
$
 113,001
38%
Adjusted Homebuilding EBITDA*
$
 121,737
$
 101,953
19%
$
 125,730
(3%)
Adjusted Homebuilding EBITDA Margin %*
20.1%
19.9%
0.2%
21.2%
(1.1%)
Homebuilding interest incurred
$
 37,308
$
 34,766
7%
$
 37,641
(1%)
Homebuilding interest capitalized to inventories owned
$
 36,927
$
 34,118
8%
$
 37,228
(1%)
Homebuilding interest capitalized to investments in JVs
$
 381
$
 648
(41%)
$
 413
(8%)
Interest amortized to cost of sales (incl. cost of land sales)
$
 28,959
$
 30,322
(4%)
$
 29,816
(3%)
  
As of
September 30,
December 31,
Percentage
2014
2013
or % Change
Balance Sheet Data
(Dollars in thousands, except per share amounts)
 
Homebuilding cash (including restricted cash)
$
 52,322
$
 376,949
(86%)
Inventories owned
$
 3,145,369
$
 2,536,102
24%
Homesites owned and controlled
 36,307
 35,175
3%
Homes under construction
 2,550
 2,001
27%
Completed specs
 406
 327
24%
Deferred tax asset valuation allowance
$
 4,591
$
 4,591
      ― 
Homebuilding debt
$
 1,835,314
$
 1,839,595
(0%)
Stockholders' equity
$
 1,634,664
$
 1,468,960
11%
Adjusted stockholders' equity per share (including if-converted
preferred stock)*
$
 4.45
$
 4.02
11%
Total consolidated debt to book capitalization
53.8%
56.9%
(3.1%)
Adjusted net homebuilding debt to total adjusted
book capitalization*
52.2%
49.9%
2.3%
 
 
1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.
*Please see "Reconciliation of Non-GAAP Financial Measures" beginning on page 10.
 
4
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Three Months Ended
 September 30,
    
Nine Months Ended
 September 30,
  
   
2014
    
2013
    
2014
    
2013
  
   
(Dollars in thousands, except per share amounts)
  
   
(Unaudited)
  
Homebuilding:
                
Home sale revenues
  
$
603,788
    
$
511,059
    
$
1,642,412
    
$
1,300,493
  
Land sale revenues
    
1,061
      
697
      
15,122
      
7,665
  
Total revenues
    
604,849
      
511,756
      
1,657,534
      
1,308,158
  
Cost of home sales
    
(444,898
)
    
(381,694
)
    
(1,207,339
)
    
(993,809
)
Cost of land sales
    
(891
)
    
(672
)
    
(14,245
)
    
(7,671
)
Total cost of sales
    
(445,789
)
    
(382,366
)
    
(1,221,584
)
    
(1,001,480
)
Gross margin
    
159,060
      
129,390
      
435,950
      
306,678
  
Gross margin %
    
26.3
%
    
25.3
%
    
26.3
%
    
23.4
%
Selling, general and administrative expenses
    
(70,164
)
    
(61,939
)
    
(196,589
)
    
(162,831
)
Income (loss) from unconsolidated joint ventures
    
557
      
(32
)
    
(342
)
    
1,249
  
Other income (expense)
    
(69
)
    
301
      
(445
)
    
2,624
  
Homebuilding pretax income
    
89,384
      
67,720
      
238,574
      
147,720
  
Financial Services:
                                
Revenues
    
6,179
      
5,839
      
17,275
      
18,927
  
Expenses
    
(3,673
)
    
(3,590
)
    
(10,873
)
    
(10,394
)
Other income
    
231
      
167
      
606
      
420
  
Financial services pretax income
    
2,737
      
2,416
      
7,008
      
8,953
  
Income before taxes
    
92,121
      
70,136
      
245,582
      
156,673
  
Provision for income taxes
    
(35,522
)
    
(11,201
)
    
(94,361
)
    
(32,778
)
Net income
    
56,599
      
58,935
      
151,221
      
123,895
  
  Less: Net income allocated to preferred shareholder
    
(13,511
)
    
(14,166
)
    
(36,165
)
    
(40,353
)
  Less: Net income allocated to unvested restricted stock
    
(77
)
    
(90
)
    
(211
)
    
(169
)
Net income available to common stockholders
  
$
43,011
    
$
44,679
    
$
114,845
    
$
83,373
  
                                 
Income Per Common Share:
                                
Basic $
0.15
 $
0.16
 $
0.41
 $
0.34
Diluted
  
$
0.14
    
$
0.15
    
$
0.37
    
$
0.31
  
                                 
Weighted Average Common Shares Outstanding:
                                
Basic
279,547,711
276,966,995
278,863,014
244,998,581
Diluted
    
317,116,924
      
314,897,098
      
316,691,803
      
283,189,878
  
                                 
Weighted average additional common shares outstanding
                                
if preferred shares converted to common shares
    
87,812,786
      
87,812,786
      
87,812,786
      
118,582,017
  
                                 
Total weighted average diluted common shares outstanding
                                
if preferred shares converted to common shares
    
404,929,710
      
402,709,884
      
404,504,589
      
401,771,895
  

5
  
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
September 30,
    
December 31,
  
   
2014
    
2013
  
   
(Dollars in thousands)
  
ASSETS
  
(Unaudited)
      
Homebuilding:
        
Cash and equivalents
  
$
15,295
    
$
355,489
  
Restricted cash
37,027
21,460
Trade and other receivables
    
30,910
      
14,431
  
Inventories:
     Owned
3,145,369
2,536,102
     Not owned
86,791
98,341
Investments in unconsolidated joint ventures
    
47,922
      
66,054
  
Deferred income taxes, net
    
285,540
      
375,400
  
Other assets  
44,977
  
45,977
Total Homebuilding Assets
    
3,693,831
      
3,513,254
  
Financial Services:
                
Cash and equivalents
    
10,373
      
7,802
  
Restricted cash
1,295
1,295
Mortgage loans held for sale, net
    
68,746
      
122,031
  
Mortgage loans held for investment, net
    
11,730
      
12,220
  
Other assets  
7,095
  
5,503
Total Financial Services Assets
    
99,239
      
148,851
  
Total Assets
  
$
3,793,070
    
$
3,662,105
  
                 
LIABILITIES AND EQUITY
                
Homebuilding:
                
Accounts payable
  
$
51,297
    
$
35,771
  
Accrued liabilities
204,678
214,266
Secured project debt and other notes payable
    
4,748
      
6,351
  
Senior notes payable
    
1,830,566
      
1,833,244
  
Total Homebuilding Liabilities
    
2,091,289
      
2,089,632
  
Financial Services:
                
Accounts payable and other liabilities
    
2,419
      
2,646
  
Mortgage credit facilities
    
64,698
      
100,867
  
Total Financial Services Liabilities
    
67,117
      
103,513
  
Total Liabilities
    
2,158,406
      
2,193,145
  
Equity:
                
Stockholders' Equity:
                
Preferred stock, $0.01 par value; 10,000,000 shares
                
    authorized; 267,829 shares issued and outstanding
                
    at September 30, 2014 and December 31, 2013
    
3
      
3
  
Common stock, $0.01 par value; 600,000,000 shares
                
    authorized; 279,866,166 and 277,618,177 shares
                
    issued and outstanding at September 30, 2014 and
                
    December 31, 2013, respectively
    
2,799
      
2,776
  
Additional paid-in capital
    
1,369,274
      
1,354,814
  
Accumulated earnings
    
262,588
      
111,367
  
Total Equity
    
1,634,664
      
1,468,960
  
Total Liabilities and Equity
  
$
3,793,070
    
$
3,662,105
  

INVENTORIES
 
 
September 30,
    
December 31,
  
 
2014
    
2013
  
 
(Dollars in thousands)
  
 
  
(Unaudited)
      
Inventories Owned:
        
     Land and land under development
  
$
2,048,167
    
$
1,771,661
  
     Homes completed and under construction
    
940,448
      
628,371
  
     Model homes
    
156,754
      
136,070
  
        Total inventories owned
  
$
3,145,369
    
$
2,536,102
  
               
Inventories Owned by Segment:
                
     California
  
$
1,373,645
    
$
1,182,520
  
     Southwest
    
788,886
      
603,303
  
     Southeast
    
982,838
      
750,279
  
        Total inventories owned
  
$
3,145,369
    
$
2,536,102
  
6
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Three Months Ended
 September 30,
    
Nine Months Ended
 September 30,
  
   
2014
    
2013
    
2014
    
2013
  
 
(Dollars in thousands)
  
 
(Unaudited)
  
Cash Flows From Operating Activities:
                
Net income
  
$
56,599
    
$
58,935
    
$
151,221
    
$
123,895
  
Adjustments to reconcile net income to net cash
                                
provided by (used in) operating activities:
                                
Amortization of stock-based compensation
    
2,505
      
2,681
      
7,736
      
6,656
  
Excess tax benefits from share-based payment arrangements (960 )
―
 (960 )
―
Deferred income tax provision
    
35,469
      
27,306
      
94,474
      
48,489
  
Other operating activities
    
698
      
1,096
      
5,909
      
4,592
  
Changes in cash and equivalents due to:
                                
Trade and other receivables
    
(5,464
)
    
11,186
      
(16,597
)
    
(8,462
)
Mortgage loans held for sale
    
10,534
      
32,221
      
53,108
      
44,179
  
Inventories - owned
    
(231,567
)
    
(84,352
)
    
(547,590
)
    
(314,375
)
Inventories - not owned
    
(5,090
)
    
(21,990
)
    
(19,884
)
    
(31,700
)
Other assets
    
3,927
      
1,655
      
1,952
 
    
401
  
Accounts payable
    
8,604
      
7,235
      
14,753
      
6,855
  
Accrued liabilities
    
9,711
      
(13,165
)
    
(2,668
)
    
(6,926
)
Net cash provided by (used in) operating activities
    
(115,034
)
    
22,808
      
(258,546
)
    
(126,396
)
                                 
Cash Flows From Investing Activities:
                                
Investments in unconsolidated homebuilding joint ventures
    
(2,271
)
    
(2,190
)
    
(7,948
)
    
(12,942
)
Distributions of capital from unconsolidated joint ventures
    
3,202
      
750
      
18,010
      
2,319
  
Net cash paid for acquisitions
    
―
      
―
      
(33,408
)
    
(113,793
)
Other investing activities
    
(497
)
    
(856
)
    
(1,984
)
    
(4,734
)
Net cash provided by (used in) investing activities
    
434
      
(2,296
)
    
(25,330
)
    
(129,150
)
                                 
Cash Flows From Financing Activities:
                                
Change in restricted cash
    
(5,642
)
    
(2,062
)
    
(15,567
)
    
1
  
Principal payments on secured project debt and other notes payable
    
(338
)
    
(72
)
    
(1,399
)
    
(7,289
)
Principal payments on senior notes payable
    
―
      
―
      
(4,971
)
    
―
  
Proceeds from the issuance of senior notes payable
    
―
      
300,000
      
―
      
300,000
  
Payment of debt issuance costs
    
(2,387
 )     
(4,045
)
    
(2,387
 )     
(4,045
)
Net proceeds from (payments on) mortgage credit facilities
    
(1,881
)
    
(32,784
)
    
(36,169
)
    
(27,979
)
Payment of issuance costs in connection with preferred
                                
shareholder equity transaction
    
―
      
(3
)
    
―
      
(350
)
Proceeds from the exercise of stock options
    
2,017
      
946
      
5,786
      
11,781
  
Excess tax benefits from share-based payment arrangements   960  
―
   960  
―
Net cash provided by (used in) financing activities
    
(7,271
)
    
261,980
      
(53,747
)
    
272,119
  
                                 
Net increase (decrease) in cash and equivalents
    
(121,871
)
    
282,492
      
(337,623
)
    
16,573
  
Cash and equivalents at beginning of period
    
147,539
      
80,636
      
363,291
      
346,555
  
Cash and equivalents at end of period
  
$
25,668
    
$
363,128
    
$
25,668
    
$
363,128
  
                                 
Cash and equivalents at end of period
  
$
25,668
    
$
363,128
    
$
25,668
    
$
363,128
  
Homebuilding restricted cash at end of period
    
37,027
      
27,524
      
37,027
      
27,524
  
Financial services restricted cash at end of period
    
1,295
      
1,795
      
1,295
      
1,795
  
Cash and equivalents and restricted cash at end of period
  
$
63,990
    
$
392,447
    
$
63,990
    
$
392,447
  





7
  
REGIONAL OPERATING DATA
 
Three Months Ended September 30,
2014
2013
% Change
Homes
ASP
Homes
ASP
Homes
ASP
(Dollars in thousands)
New homes delivered:
California
 
 437
$
 640
 
 467
$
 586
 
(6%)
 
9%
Arizona
 69
 362
 51
 286
35%
27%
Texas
 225
 468
 170
 385
32%
22%
Colorado
  
 47
  
 504
  
 36
  
 484
  
31%
  
4%
Southwest
 
 341
 
 451
 
 257
 
 379
 
33%
 
19%
Florida
 266
 385
 285
 283
(7%)
36%
Carolinas
  
 206
  
 329
  
 208
  
 284
  
(1%)
  
16%
Southeast
 
 472
 
 360
 
 493
 
 284
 
(4%)
 
27%
Consolidated total
 1,250
 483
 1,217
 420
3%
15%
Unconsolidated joint ventures
  
           ―   
 
           ―  
 
 2
  
 578
  
(100%)
  
           ―  
Total (including joint ventures)
 
 1,250
$
 483
 
 1,219
$
 420
 
3%
 
15%
 
Nine Months Ended September 30,
2014
2013
% Change
Homes
ASP
Homes
ASP
Homes
ASP
(Dollars in thousands)
New homes delivered:
California
 
 1,215
$
 643
 
 1,286
$
 541
 
(6%)
 
19%
Arizona
 192
 327
 171
 260
12%
26%
Texas
 553
 453
 458
 379
21%
20%
Colorado
  
 158
  
 500
  
 117
  
 439
  
35%
  
14%
Southwest
 
 903
 
 434
 
 746
 
 361
 
21%
 
20%
Florida
 766
 368
 707
 269
8%
37%
Carolinas
  
 597
  
 312
  
 520
  
 279
  
15%
  
12%
Southeast
 
 1,363
 
 344
 
 1,227
 
 273
 
11%
 
26%
Consolidated total
 3,481
 472
 3,259
 399
7%
18%
Unconsolidated joint ventures
  
           ―   
 
           ―  
 
 23
  
 505
  
(100%)
  
           ―  
Total (including joint ventures)
 
 3,481
$
 472
 
 3,282
$
 400
 
6%
 
18%
 
Three Months Ended September 30,
2014
2013
% Change
Homes
ASP
Homes
ASP
Homes
ASP
(Dollars in thousands)
Net new orders:
California
 
 399
$
 645
 
 386
$
 630
 
3%
 
2%
Arizona
 64
 325
 95
 291
(33%)
12%
Texas
 206
 472
 154
 423
34%
12%
Colorado
  
 39
  
 521
  
 29
  
 499
  
34%
  
4%
Southwest
 
 309
 
 448
 
 278
 
 386
 
11%
 
16%
Florida
 243
 428
 274
 389
(11%)
10%
Carolinas
  
 203
  
 341
  
 172
  
 311
  
18%
  
10%
Southeast
 
 446
 
 388
 
 446
 
 359
 
           ―  
 
8%
Consolidated total
 1,154
 493
 1,110
 460
4%
7%
Unconsolidated joint ventures
  
           ―   
 
           ―  
 
 2
  
 585
  
(100%)
  
           ―  
Total (including joint ventures)
 
 1,154
$
 493
 
 1,112
$
 460
 
4%
 
7%
 
Nine Months Ended September 30,
2014
2013
% Change
Homes
ASP
Homes
ASP
Homes
ASP
(Dollars in thousands)
Net new orders:
California
 
 1,370
$
 633
 
 1,381
$
 582
 
(1%)
 
9%
Arizona
 206
 313
 248
 298
(17%)
5%
Texas
 800
 454
 612
 403
31%
13%
Colorado
  
 167
  
 510
  
 156
  
 452
  
7%
  
13%
Southwest
 
 1,173
 
 437
 
 1,016
 
 385
 
15%
 
14%
Florida
 784
 413
 1,010
 336
(22%)
23%
Carolinas
  
 662
  
 320
  
 613
  
 283
  
8%
  
13%
Southeast
 
 1,446
 
 371
 
 1,623
 
 316
 
(11%)
 
17%
Consolidated total
 3,989
 480
 4,020
 425
(1%)
13%
Unconsolidated joint ventures
  
           ―   
 
            ―   
 
 12
  
 546
  
(100%)
  
            ― 
Total (including joint ventures)
 
 3,989
$
 480
 
 4,032
$
 425
 
(1%)
 
13%
 
8
 
REGIONAL OPERATING DATA (Continued)
 
Three Months Ended September 30,
Nine Months Ended September 30,
2014
2013
% Change
2014
2013
% Change
Average number of selling communities
  during the period:
California
 48
 48
        ― 
 47
 46
2%
Arizona
 10
 10
        ― 
 10
 9
11%
Texas
 42
 30
40%
 39
 30
30%
Colorado
 11
 8
38%
 11
 7
57%
Southwest
 63
 48
31%
 60
 46
30%
Florida
 47
 41
15%
 44
 40
10%
Carolinas
 27
 31
(13%)
 30
 31
(3%)
Southeast
 74
 72
3%
 74
 71
4%
Consolidated total
 185
 168
10%
 181
 163
11%
 
At September 30,
2014
2013
% Change
Homes
Dollar Value
Homes
Dollar Value
Homes
Dollar Value
(Dollars in thousands)
Backlog:
California
 
 551
$
 362,388
 
 535
$
 341,743
 
3%
 
6%
Arizona
 119
 40,433
 154
 50,512
(23%)
(20%)
Texas
 537
 258,724
 358
 158,863
50%
63%
Colorado
  
 117
  
 65,634
  
 114
  
 56,528
  
3%
  
16%
Southwest
 
 773
 
 364,791
 
 626
 
 265,903
 
23%
 
37%
Florida
 522
 270,797
 669
 250,241
(22%)
8%
Carolinas
  
 362
  
 128,149
  
 335
  
 106,261
  
8%
  
21%
Southeast
 
 884
 
 398,946
 
 1,004
 
 356,502
 
(12%)
 
12%
Consolidated total
 2,208
 1,126,125
 2,165
 964,148
2%
17%
Unconsolidated joint ventures
  
           ―   
 
           ―  
 
 1
  
 599
  
(100%)
  
(100%)
Total (including joint ventures)
 
 2,208
$
 1,126,125
 
 2,166
$
 964,747
 
2%
 
17%
 
At September 30,
2014
2013
% Change
Homesites owned and controlled:
California
 9,881
 9,979
(1%)
Arizona
 2,173
 2,291
(5%)
Texas
 4,986
 4,468
12%
Colorado
 1,182
 1,216
(3%)
Nevada
 1,124
 1,124
          ―  
Southwest
 9,465
 9,099
4%
Florida
 12,683
 11,409
11%
Carolinas
 4,278
 5,156
(17%)
Southeast
 16,961
 16,565
2%
Total (including joint ventures)
 36,307
 35,643
2%
 
Homesites owned
 28,937
 26,936
7%
Homesites optioned or subject to contract
 7,172
 8,192
(12%)
Joint venture homesites
 198
 515
(62%)
Total (including joint ventures)
 36,307
 35,643
2%
Homesites owned:
Raw lots
 6,745
 6,101
11%
Homesites under development
 9,379
 8,549
10%
Finished homesites
 6,448
 6,871
(6%)
Under construction or completed homes
 3,594
 3,061
17%
Held for sale
 2,771
 2,354
18%
Total
 28,937
 26,936
7%

9
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
Each of the below measures are non-GAAP financial measures and other companies may calculate such non-GAAP measures differently.  Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
 
The table set forth below reconciles the Company's gross margin percentage from home sales to adjusted gross margin percentage from home sales, excluding interest amortized to cost of home sales.  We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group.
 
Three Months Ended
September 30,
 2014
Gross
 Margin %
September 30,
 2013
Gross
 Margin %
June 30,
 2014
Gross
 Margin %
(Dollars in thousands)
 
Home sale revenues
$
 603,788
$
 511,059
$
 591,706
Less: Cost of home sales
 
 (444,898)
 
 (381,694)
 
 (434,196)
Gross margin from home sales
 158,890
26.3%
 129,365
25.3%
 157,510
26.6%
Add: Capitalized interest included in cost
  of home sales
 
 28,872
4.8%
 
 30,303
5.9%
 
 29,812
5.1%
Adjusted gross margin from home sales, excluding
  interest amortized to cost of home sales
$
 187,762
31.1%
$
 159,668
31.2%
$
 187,322
31.7%
 
The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total consolidated debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios.  In addition, the table set forth below calculates homebuilding debt to adjusted homebuilding EBITDA.  We believe these ratios are useful to management and investors as a measure of the Company's ability to obtain financing.  For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity.  Adjusted net homebuilding debt excludes indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents.
 
September 30,
 2014
June 30,
 2014
December 31,
 2013
September 30,
 2013
(Dollars in thousands)
 
Total consolidated debt
$
 1,900,012
$
 1,901,416
$
 1,940,462
$
 1,901,802
Less:
Financial services indebtedness
 (64,698)
 (66,579)
 (100,867)
 (64,180)
Homebuilding cash
  
 (52,322)
  
 (161,121)
  
 (376,949)
  
 (373,523)
Adjusted net homebuilding debt
 
 1,782,992
 
 1,673,716
 
 1,462,646
 
 1,464,099
Stockholders' equity
 
 1,634,664
 
 1,572,583
 
 1,468,960
 
 1,400,026
Total adjusted book capitalization
$
 3,417,656
$
 3,246,299
$
 2,931,606
$
 2,864,125
 
Total consolidated debt to book capitalization
 
53.8%
 
54.7%
 
56.9%
 
57.6%
 
Adjusted net homebuilding debt to total adjusted book capitalization
 
52.2%
 
51.6%
 
49.9%
 
51.1%
 
Homebuilding debt
$
 1,835,314
$
 1,837,622
LTM adjusted homebuilding EBITDA
 
 471,944
 
 316,954
Homebuilding debt to adjusted homebuilding EBITDA
 
 3.9x
 
 5.8x
 
The table set forth below calculates adjusted stockholders' equity per common share.  The Company believes that the adjusted stockholders' equity per common share information is useful to management and investors as a measure to determine the book value per common share after giving the pro forma effect to the conversion of our outstanding preferred shares assuming full conversion to common stock.
 
September 30,
June 30,
December 31,
2014
2014
2013
 
Actual common shares outstanding
 279,866,166
 279,287,853
 277,618,177
Add: Conversion of preferred shares to common shares
  
 87,812,786
  
 87,812,786
  
 87,812,786
Pro forma common shares outstanding
 
 367,678,952
 
 367,100,639
 
 365,430,963
 
Stockholders' equity (Dollars in thousands)
$
 1,634,664
$
 1,572,583
$
 1,468,960
Divided by pro forma common shares outstanding
÷
 367,678,952
÷
 367,100,639
÷
 365,430,963
Adjusted stockholders' equity per common share
$
 4.45
$
 4.28
$
 4.02

10
  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)
 
The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA.  Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges and deposit write-offs, (e) (gain) loss on early extinguishment of debt (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) income (loss) from financial services subsidiary.  Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently.  We believe Adjusted Homebuilding EBITDA information is useful to management and investors as one measure of the Company's ability to service debt and obtain financing.  Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.
 
Three Months Ended
LTM Ended September 30,
September 30,
 2014
September 30,
 2013
June 30,
 2014
2014
2013
(Dollars in thousands)
 
Net income
$
 56,599
$
 58,935
$
 56,463
$
 216,041
$
 610,820
Provision (benefit) for income taxes
 35,522
 11,201
 35,383
 130,566
 (421,026)
Homebuilding interest amortized to cost of sales and interest expense
 28,959
 30,322
 29,816
 116,667
 123,233
Homebuilding depreciation and amortization
 1,215
 1,031
 1,224
 4,678
 2,978
Amortization of stock-based compensation
 
 2,505
 
 2,681
 
 2,859
 
 10,095
 
 9,289
EBITDA
 124,800
 104,170
 125,745
 478,047
 325,294
Add:
Cash distributions of income from unconsolidated joint ventures
         ―   
         ―   
 1,875
 1,875
 6,000
Less:
Income (loss) from unconsolidated joint ventures
 557
 (32)
 (462)
 (642)
 1,866
Income from financial services subsidiary
 
 2,506
 
 2,249
 
 2,352
 
 8,620
 
 12,474
Adjusted Homebuilding EBITDA
$
 121,737
$
 101,953
$
 125,730
$
 471,944
$
 316,954
Homebuilding revenues
$
 604,849
$
 511,756
$
 592,486
$
 2,263,985
$
 1,728,001
Adjusted Homebuilding EBITDA Margin %
 
20.1%
 
19.9%
 
21.2%
 
20.8%
 
18.3%
 
The table set forth below reconciles net cash provided by (used in) operating activities, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:
 
Three Months Ended
LTM Ended September 30,
September 30,
 2014
September 30,
 2013
June 30,
 2014
2014
2013
(Dollars in thousands)
 
Net cash provided by (used in) operating activities
$
 (115,034)
$
 22,808
$
 (25,949)
$
 (286,366)
$
 (238,376)
Add:
Provision (benefit) for income taxes
 35,522
 11,201
 35,383
 130,566
(421,026)
Deferred income tax benefit (provision)
 (35,469)
        (27,306)
 (35,383)
 (130,199)
       405,511
Homebuilding interest amortized to cost of sales and interest expense
 28,959
 30,322
 29,816
 116,667
 123,233
  Excess tax benefits from share-based payment arrangements 960 ―   ―   960 ―  
Less:
Income from financial services subsidiary
 2,506
 2,249
 2,352
 8,620
 12,474
Depreciation and amortization from financial services subsidiary
 35
 33
 34
 134
 121
Loss on disposal of property and equipment
 5
        ―  
        ―  
 7
 38
Net changes in operating assets and liabilities:
Trade and other receivables
 5,464
 (11,186)
 (6,416)
 11,379
 (4,482)
Mortgage loans held for sale
 (10,534)
 (32,221)
 9,364
 (6,386)
 (11,856)
Inventories-owned
 231,567
 84,352
 127,264
 648,527
 444,182
Inventories-not owned
 5,090
 21,990
 6,629
 31,503
 52,561
Other assets
 (3,927)
 (1,655)
 1,142
 (2,516)
 (2,097)
Accounts payable
 (8,604)
 (7,235)
 (4,773)
 (21,223)
 (12,843)
Accrued liabilities
  
 (9,711)
  
 13,165
  
 (8,961)
  
 (12,207)
  
 (5,220)
Adjusted Homebuilding EBITDA
$
 121,737
$
 101,953
$
 125,730
$
 471,944
$
 316,954

 
 
11
 

CalAtlantic Group, Inc. Reports