Attached files
| file | filename |
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| 8-K - FORM 8-K - WCI Communities, Inc. | d915152d8k.htm |
| EX-99.1 - PRESS RELEASE - WCI Communities, Inc. | d915152dex991.htm |
 WCI
Communities April 29, 2015
Exhibit 99.2
First Quarter 2015 Earnings Conference Call |
 Disclosure Statement
2
This presentation contains forward-looking statements. All statements that are not statements of
historical fact, including statements about the Company’s beliefs and expectations, are
forward-looking statements within the meaning of the federal securities laws and should be
evaluated as such. Forward-looking statements include information concerning the Company’s future
goals, expected growth, market conditions and outlook (including the estimates, forecasts, statements
and projections relating to Florida or national markets prepared by John Burns Real Estate
Consulting), expected liquidity and possible or assumed future results of operations, including
descriptions of its business plan and strategies. These forward-looking statements may be identified
by the use of such forward-looking terminology, including the terms “believe,”
“estimate,” “project,” “anticipate,” “expect,” “seek,”
“predict,” “contemplate,” “continue,” “possible,”
“intend,” “may,” “might,” “will,” “could,” “would,” “should,” “forecast,” or “assume” or,
in each case, their negative, or other variations or comparable terminology. For
more information concerning factors that could cause actual results to differ materially from those contained in the forward-
looking statements, please refer to “Risk Factors” in Item 1A of Part I of our Annual Report
on Form 10-K for the year ended December 31, 2014 that was filed by the Company with the
Securities and Exchange Commission on February 25, 2015 and elsewhere therein, and subsequent
filings by the Company. The Company bases these forward-looking statements or projections
on its current expectations, plans and assumptions that it has made in light of its experience in the
industry, as well as its perceptions of historical trends, current conditions, expected future
developments and other factors it believes are appropriate under the circumstances and at such
time. As you read and consider this presentation, you should understand that these statements
are not guarantees of performance or results. The forward-looking statements and projections are subject to and
involve risks, uncertainties and assumptions and you should not place undue reliance on these
forward-looking statements or projections. Although the Company believes that these
forward-looking statements and projections are based on reasonable assumptions at the time
they are made, you should be aware that many factors could affect the Company’s actual financial results
or results of operations and could cause actual results to differ materially from those expressed in
the forward-looking statements and projections. The Company undertakes no obligation to
update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. If the Company does update one or more forward-looking statements, there should be
no inference that it will make additional updates with respect to those or other forward-looking
statements.
In addition to the financial measures prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”), this presentation contains the non-GAAP
financial measures EBITDA, Adjusted EBITDA, Adjusted gross margin from homes delivered and net
debt to net capitalization. The reasons for the use of these measures, a reconciliation of these measures to the most
directly comparable GAAP measures and other information relating to these measures are included in the
appendix to this presentation.
|
 Loan to Value Percentage (“LTV”) –
1Q15 Deliveries
WCI Communities at a Glance
Lifestyle community developer
and luxury homebuilder
throughout Florida
Target move-up, second-home
and active adult customers
High average selling prices -
$486,000 on 1Q15 deliveries
High proportion of cash buyers –
49% of 1Q15 deliveries
Low cancellation rate –
6.8%
during 1Q15
Approximately 12,700 home
sites owned or controlled as of
March 31, 2015
Conservative balance sheet with
$145 million of cash
Complementary and value-add
Real Estate Services (“RES”)
and Amenities businesses
3
Buyer Profile with Low Reliance on Financing
Cash
48.6%
LTV > 80%
5.8%
LTV 65 -
80%
26.8%
LTV 1 -
64%
18.8% |
 14,628
16,087
15,712
18,701
19,911
24,811
7,418
7,294
7,692
8,260
9,750
11,083
22,046
23,381
23,404
26,961
29,661
35,894
Jan-14
Jan-15
Feb-14
Feb-15
Mar-14
Mar-15
Single-Family Resale
Condo/Townhouse Resale
0
50,000
100,000
150,000
200,000
250,000
300,000
Single-Family
Multi-Family
20 Year Average
Compelling Florida Real Estate Market
Florida building permits
Second highest in the U.S. in 2014
(1)
Permits still ~70% off peak
YTD March 2015 building permits are
up 15.3% vs. prior year
Florida is a leading growth state
Six metro areas in Florida were
among the top 20 fastest growing in
the U.S.
(1)
Job growth rate of 3.7%; higher than
national average of 2.3%
(2)
Florida consumer sentiment at its
highest point in 10 years as of March
2015
(3)
2015 resale statistics
(4)
1Q15 closings up 14.8% over 1Q14
40
th
consecutive month median sales
prices increased year-over-year
4
(1)
U.S. Census Bureau
(2)
Florida Department of Economic Opportunity; April 17, 2015
(3)
University
of
Florida;
Bureau
of
Economic
and
Business
Research;
published
March
27,
2015
(4)
Florida Realtors ®
Florida Annual Permit Activity
(1)
Strong Growth in Florida Resale Closings in 1Q15
(4) |
 19
79
117
138
2012
2013
2014
2015
114
140
205
316
2012
2013
2014
2015
Homebuilding –
1Q15 Highlights
Revenues from homes delivered up
39.6% to $67.0 million
Deliveries up 17.9% to 138 homes
Average selling price per delivered
home of $486,000, up 18.5%
New orders up 54.1% to 316 homes
Contract value of new orders of
$140.8 million, up 39.3%
Sales mix weighted more toward
primary and active adult segment in
1Q15
Neighborhood count up 64.0%
Backlog units up 49.6% to 570 homes
Backlog contract value of $282.4
million, up 43.6%
Adjusted gross margin from homes
delivered of 30.0%
All cash buyers accounted for 49% of
1Q15 deliveries
5
First
Quarter
–
New
Orders
Trend
First
Quarter
–
Deliveries
Trend
Note: All comparisons are to 1Q14 |
 Real
Estate
Services
–
1Q15
Highlights
6
RES Revenues
Brokerage Transactions
Brokerage ASP
Brokerage closed home sales
transactions up 15.3%
Brokerage average selling price up 8.7%
to $314,000
Title revenues increased 37.5%
Total revenues up 23.2%
Total gross margin up $1.0 million
RES Gross Margin
Note: All comparisons are to 1Q14
($ in thousands)
($ in thousands)
($ in thousands)
1,915
2,208
1Q14
1Q15
+15.3%
$289
$314
1Q14
1Q15
+8.7%
$18,463
$22,766
1Q14
1Q15
+23.2%
$(119)
$882
1Q14
1Q15 |
 Executing on the WCI Growth Strategy
Increasing revenues driven by Homebuilding and Real Estate Services
Continued Homebuilding gross margin strength
Improved SG&A leverage by 200 basis points
77% growth in Adjusted EBITDA
7
(1)
Represents adjusted gross margin from homes delivered
(2)
Measured as a percentage of Homebuilding revenues
(3)
Measured as a percentage of total revenues
$30.5
$48.0
$67.0
$16.4
$18.5
$22.8
$6.8
$7.3
$7.9
$53.7
$73.8
$97.7
1Q13
1Q14
1Q15
HB
RES
AM
33.9%
30.1%
30.0%
1Q13
1Q14
1Q15
$3.7
$5.7
$10.0
6.9%
7.7%
10.3%
1Q13
1Q14
1Q15
Revenues
($ in millions)
Adjusted EBITDA
(3)
SG&A %
(2)
Adjusted GM %
(1)
($ in millions)
24.9%
19.8%
18.1%
5.2%
1.7%
1.4%
30.1%
21.5%
19.5%
1Q13
1Q14
1Q15
Stock-based compensation expense |
  Land
Portfolio Positioned for Growth High quality land positions in
land-constrained markets
Land portfolio totals
approximately 12,700 owned or
controlled home sites; up 46%
from 1Q14
67% owned / 33% optioned
Experienced team with extensive
land entitlement and
development experience
Actively pursuing additional land
acquisition opportunities
throughout Florida
8
Owned or Controlled Home Sites
7,735
8,536
957
4,143
8,692
12,679
1Q14
1Q15
Owned
Optioned |
 Selected Operating Results
9
$ in thousands, except per share amounts
2015
2014
Variance %
Homebuilding revenues
67,047
$
47,995
$
39.6%
Real estate services revenues
22,766
18,463
23.2%
Amenities revenues
7,889
7,322
8.2%
Total revenues
97,702
73,780
32.4%
Total gross margin
20,128
13,834
45.5%
Income tax expense
916
1,660
-44.8%
Net income attributable to common shareholders
5,652
$
1,480
$
280.0%
Earnings per share - diluted
0.21
$
0.06
$
250.0%
SG&A expenses as a percent of Homebuilding revenues
19.5%
21.5%
-200 bps
Adjusted gross margin percentage
30.0%
30.1%
-10 bps
Adjusted EBITDA
10,032
$
5,658
$
77.3%
Adjusted EBITDA percentage
10.3%
7.7%
+260 bps
Homes delivered
138
117
17.9%
Average selling price per home delivered
486
$
410
$
18.5%
New orders
316
205
54.1%
Average selling price per new order
446
$
493
$
-9.5%
Backlog units
570
381
49.6%
Average selling price in backlog
496
$
516
$
-3.9%
Three Months Ended March 31, |
 Conservative Balance Sheet
Balance sheet positioned to
execute the growth strategy
Undrawn $75 million revolving
credit facility
Invested $23 million in 1Q15
on land and land development
Completed secondary offering
of 3.7 million shares in April
2015; no primary shares or
proceeds to the company
10
(1)
Available liquidity includes the $75 million of borrowing capacity under a
four-year revolving credit facility and $8 million of borrowing capacity
under a revolving credit facility with Stonegate Bank (2)
Debt to capital is computed by dividing the carrying value of our total debt, as
reported on our consolidated balance sheets, by total capital
(3)
Net
debt
represents
total
debt,
excluding
premium,
less
cash
and
cash
equivalents;
net
capitalization
represents net debt plus total equity
$ in thousands
Cash and cash equivalents
144,556
$
174,756
$
Real estate inventories
499,353
449,249
Total debt
251,143
251,179
Total equity
441,311
434,443
Total capital
692,454
685,622
Available liquidity
(1)
227,556
257,756
Debt to capital
(2)
36.3%
36.6%
Net debt to net capitalization
(3)
19.3%
14.8%
(Cash + inventories) / total debt
2.56
2.48
March 31,
2015 December 31, 2014 |
 Key
Takeaways Florida real estate market remains strong
Fully integrated Florida luxury homebuilder and
community developer
Executing the strategy
Focus on move-up, second-home and active adult
customer segments
Differentiate via extensive amenity offerings
Operational discipline
Positioned for continued growth
Growing new orders and deliveries
Increasing active selling neighborhood count
Growing revenues and Adjusted EBITDA
Complementary Real Estate Services and Amenities
businesses
Actively pursuing land acquisition opportunities
Conservative balance sheet with liquidity and flexibility
for growth
Experienced and talented team
11 |
 Appendix |
 Reconciliation of Non-GAAP Financial Measures
In addition to the results reported in accordance with U.S. generally accepted
accounting principles (“GAAP”), we have provided information in
this
presentation
relating
to
adjusted
gross
margin
from
homes
delivered,
EBITDA,
Adjusted
EBITDA
(both
terms
defined
below)
and
net
debt
to
net capitalization.
Adjusted Gross Margin from Homes Delivered
We calculate adjusted gross margin from homes delivered by subtracting the gross
margin from land and home sites, if any, from Homebuilding gross
margin
to
arrive
at
gross
margin
from
homes
delivered.
Adjusted
gross
margin
from
homes
delivered
is
calculated
by
adding
asset
impairments, if any, and capitalized interest in cost of sales to gross margin from
homes delivered. Management uses adjusted gross margin from homes
delivered to evaluate operating performance in our Homebuilding segment and make strategic decisions regarding sales price,
construction and development pace, product mix and other operating decisions.
We believe that adjusted gross margin from homes delivered is relevant
and
useful
to
shareholders,
investors
and
other
interested
parties
for
evaluating
our
comparative
operating
performance
from
period
to
period and among companies within the homebuilding industry as it is reflective of
overall profitability during any given reporting period. This measure
is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable
GAAP
financial
measures
when
evaluating
our
operating
performance.
Although
other
companies
in
the
homebuilding
industry
report
similar
information,
they
may
calculate
this
measure
differently
than
we
do
and,
therefore,
it
may
not
be
comparable.
We
urge
shareholders,
investors
and other interested parties to understand the methods used by other companies in
the homebuilding industry to calculate gross margins and any adjustments to
such amounts before comparing our measures to those of such other
companies. The table below reconciles adjusted gross margin from homes
delivered to the most directly comparable GAAP financial measure,
Homebuilding gross margin, for the periods presented herein.
13
2015
2014
Homebuilding gross margin
18,499
$
13,447
$
Less: gross margin from land and home sites
-
-
Gross margin from homes delivered
18,499
13,447
Add: capitalized interest in cost of sales
1,624
985
Adjusted gross margin from homes delivered
20,123
$
14,432
$
Gross margin from homes delivered as a percentage
of revenues from homes delivered
27.6%
28.0%
Adjusted gross margin from homes delivered as a
percentage of revenues from homes delivered
30.0%
30.1%
($ in thousands)
Three Months Ended March 31, |
 Reconciliation of Non-GAAP Financial Measures
(continued) EBITDA and Adjusted EBITDA
Adjusted
EBITDA
measures
performance
by
adjusting
net
income
(loss)
attributable
to
common
shareholders
of
WCI
Communities,
Inc.
to
exclude, if any, interest expense, capitalized interest in cost of sales, income
taxes, depreciation (‘‘EBITDA’’), preferred stock dividends, income
(loss) from discontinued operations, other income, stock-based compensation
expense, asset impairments and expenses related to early repayment
of
debt.
We
believe
that
the
presentation
of
Adjusted
EBITDA
provides
useful
information
to
shareholders,
investors
and
other
interested parties regarding our results of operations because it assists those
parties and us when analyzing and benchmarking the performance and value of
our business. We also believe that Adjusted EBITDA is useful as a measure of comparative operating performance
from
period
to
period
and
among
companies
in
the
homebuilding
industry
as
it
is
reflective
of
changes
in
pricing
decisions,
cost
controls
and
other factors that affect operating performance, and it removes the effects of our
capital structure (such as preferred stock dividends and interest expense),
asset base (primarily depreciation), items outside of our control (primarily income taxes) and the volatility related to the timing and
extent of non-operating activities (such as discontinued operations and asset
impairments). Accordingly, we believe that this measure is useful
for
comparing
general
operating
performance
from
period
to
period.
Other
companies
may
define
Adjusted
EBITDA
differently
and,
as
a
result,
our
measure
of
Adjusted
EBITDA
may
not
be
directly
comparable
to
Adjusted
EBITDA
of
other
companies.
Although
we
use
Adjusted
EBITDA
as a financial measure to assess the performance of our business, the use of
Adjusted EBITDA is limited because it does not include certain material
costs, such as interest and income taxes, necessary to operate our business. Adjusted EBITDA and EBITDA should be considered in
addition to, and not as substitutes for, net income (loss) in accordance with GAAP
as a measure of performance. Our presentation of EBITDA and Adjusted
EBITDA should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Our
EBITDA-based measures have limitations as analytical tools and, therefore,
shareholders, investors and other interested parties should not
consider
them
in
isolation
or
as
substitutes
for
analyses
of
our
results
as
reported
under
GAAP.
Some
such
limitations
are:
they do not reflect the impact of earnings or charges resulting from matters that
we consider not to be indicative of our ongoing operations; they are not
adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows;
they do not reflect the interest that is necessary to service our debt; and
other companies in our industry may calculate these measures differently than we
do, thereby limiting their usefulness as comparative measures.
Because
of
these
limitations,
our
EBITDA-based
measures
are
not
intended
to
be
alternatives
to
net
income
(loss),
indicators
of
our
operating
performance,
alternatives
to
any
other
measure
of
performance
in
conformity
with
GAAP
or
alternatives
to
cash
flow
provided
by
(used
in)
operating activities as measures of liquidity. Shareholders, investors and
other interested parties should therefore not place undue reliance on our
EBITDA-based measures or ratios calculated using those measures. Our GAAP-based measures can be found in our unaudited
consolidated financial statements in Item 1 of the Quarterly Report on Form
10-Q for the quarter ended March 31, 2015 that we plan to file with the
Securities and Exchange Commission on or before May 1, 2015. 14
|
 Reconciliation of Non-GAAP Financial Measures
(continued) EBITDA and Adjusted EBITDA (continued)
15
(1)
Represents capitalized interest expensed in cost of sales on home deliveries and
land and home site sales. (2)
Represents
the
expense
recorded
in
the
Company’s
unaudited
consolidated
statements
of
operations
related
to
its
stock-based
compensation plans.
2015
2014
Net income attributable to common
shareholders of WCI Communities, Inc.
5,652
$
1,480
$
Interest expense
260
498
Capitalized interest in cost of sales (1)
1,624
985
Income taxes
916
1,660
Depreciation
709
588
EBITDA
9,161
5,211
Other income, net
(96)
(365)
Stock-based compensation expense (2)
967
812
Adjusted EBITDA
10,032
$
5,658
$
Adjusted EBITDA margin
10.3%
7.7%
($ in thousands)
Three Months Ended March 31,
The table below reconciles EBITDA and Adjusted EBITDA to the most directly
comparable GAAP financial measure, net income (loss) attributable to common
shareholders of WCI Communities, Inc., for the periods presented herein. |
 Reconciliation of Non-GAAP Financial Measures
(continued) 16
(1) Debt to capital is computed by dividing the carrying value of our Senior
Notes due 2021, as reported on our consolidated balance sheets, by total
capital as calculated above. The Senior Notes due 2021 were our
only outstanding debt as of March 31, 2015 and December 31, 2014.
(2) Net debt to net capitalization is computed by dividing net debt by net
capitalization. Net Debt to Net Capitalization
We believe that net debt to net capitalization provides useful information to
shareholders, investors and other interested parties regarding our financial
position and cash and debt management. It is also a relevant financial measure for understanding the leverage employed in our
operations and as an indicator of our ability to obtain future financing.
We believe that by deducting cash and cash equivalents from our outstanding
debt, we provide a measure of our debt that considers our cash
position. Furthermore, we believe that this approach provides useful
information because the ratio of debt to capital does not consider our cash and
cash equivalents and we believe that a debt ratio net of cash, such as net debt to
net capitalization, provides supplemental information by which our
financial
position
may
be
considered.
Shareholders,
investors
and
other
interested
parties
may
also
find
this
information
to
be
helpful
when
comparing our leverage to the leverage of our competitors that present similar
information. The
table
below
presents
the
computations
of
our
net
debt
to
net
capitalization
and
reconciles
such
amounts
to
the
most
directly
comparable
GAAP
financial measure, debt to capital.
March 31,
December 31,
2015
2014
Senior Notes due 2021
251,143
$
251,179
$
Total equity
441,311
434,443
Total capital
692,454
$
685,622
$
Debt to capital (1)
36.3%
36.6%
Senior Notes due 2021
251,143
$
251,179
$
Less: unamortized premium
1,143
1,179
Principal
amount
of
Senior
Notes
due
2021
250,000
250,000
Less: cash and cash equivalents
144,556
174,756
Net debt
105,444
75,244
Total equity
441,311
434,443
Net capitalization
546,755
$
509,687
$
Net debt to net capitalization (2)
19.3%
14.8%
($ in thousands) |