Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - WCI Communities, Inc. | d89118d8k.htm |
| EX-99.1 - EARNINGS PRESS RELEASE - WCI Communities, Inc. | d89118dex991.htm |
 WCI
Communities Third Quarter 2015 Earnings Conference Call
October 28, 2015 Exhibit 99.2 |
 Disclosure
Statement 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 these and other important factors that could cause actual results to differ materially from those contained in the forward-looking statements, please refer to the Company’s: (i) “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; (ii) “Risk Factors” in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 that was filed by the Company with the Securities and Exchange Commission on July
29, 2015; and (iii) subsequent filings by the Company. As you read and consider this
press release, you should understand that the forward-looking
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 or implied 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 statement, there should be no inference that it will make additional updates with respect to those or its 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. 2 |
 Loan to Value Percentage (“LTV”) – 3Q15 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 - $472,000 on YTD deliveries High proportion of cash buyers – 50% of YTD deliveries Low cancellation rate – 7.0% YTD Approximately 14,400 home sites owned or controlled as of September 30, 2015 Conservative balance sheet with $149 million of cash Complementary and value-add Real Estate Services (“RES”) and Amenities businesses 3 Buyer Profile with Low Reliance on Financing Cash 49% LTV > 80% 5% LTV 65-80% 33% LTV 1-64% 13% |
 Compelling
Florida Real Estate Market Florida is a leading growth state
(1) (2) Job growth rate of 3.0%; higher than national average of 2.0% Gaining about 800 people per day; equivalent to adding a city bigger than Orlando every year Net in-migration dominated by people in the their 50’s and 60’s Florida building permits (3) Second highest in the U.S. in 2014 and YTD 2015 Permits still ~70% off peak YTD August 2015 building permits are up 18% vs. prior year 2015 resale statistics (4) YTD closings up 13.3% over 2014 46 th consecutive month median sales prices increased year-over-year 4 (1) Florida Department of Economic Opportunity; October 16, 2015 (2) Florida Trend – September 2015 (3) U.S. Census Bureau – August 2015 (4) Florida Realtors ® ; Data through September 2015 Florida Annual Permit Activity (3) Age 65+ Population by Decade of Birth 0 50,000 100,000 150,000 200,000 250,000 300,000 Single-Family Multi-Family 20 Year Average 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 55,000,000 60,000,000 65,000,000 70,000,000 1960s 1950s 1940s 1930s Pre-1930s Sources: U.S. Census Bureau; John Burns Real Estate Consulting, LLC 66 million 48 million |
 81 141 146 258 3Q12 3Q13 3Q14 3Q15 105 128 172 277 3Q12 3Q13 3Q14 3Q15 Homebuilding – 3Q15 Highlights Revenues from homes delivered up 91.2% to $119.3 million Deliveries up 76.7% to 258 homes Average selling price per delivered home of $462,000, up 8.2% New orders up 61.0% to 277 homes Contract value of new orders up 48.6% to $124.8 million Sales mix weighted more toward active adult segment in 3Q15 Neighborhood count up 46.7% Backlog units up 40.7% to 646 homes Backlog contract value up 19.1% to $300.5 million Adjusted gross margin from homes delivered of 29.5%, up 90 basis points All cash buyers accounted for 49% of 3Q15 deliveries 5 Third Quarter – New Orders Trend Third Quarter – Deliveries Trend Note: All comparisons are to 3Q14 38.2% CAGR 47.1% CAGR |
 Real
Estate Services – 3Q15 Highlights
6 RES Revenues Brokerage Transactions Brokerage ASP Brokerage revenues increased 8.2% Brokerage average home sale selling price up 11.3% to $324,000 Brokerage transactions down 2.9% Title revenues increased 31.3% Total revenues up 9.2% Total gross margin up 125.0% to $0.9 million RES Gross Margin Note: All comparisons are to 3Q14 ($ in thousands) ($ in thousands) ($ in thousands) 3Q14 3Q15 -2.9% 2,445 2,373 $291 $324 3Q14 3Q15 +11.3% $22,886 $24,998 3Q14 3Q15 +9.2% $431 $950 3Q14 3Q15 +125.0% |
 Executing
on the WCI Growth Strategy Year-to-Date September 2015 Comparisons
to Prior Year Periods Increasing revenues driven by Homebuilding and Real
Estate Services Continued Homebuilding gross margin strength
Improved SG&A leverage by 370 basis points
119.0% growth in Adjusted EBITDA
7 (1) Represents adjusted gross margin from homes delivered (2) Measured as a percentage of Homebuilding revenues (3) Measured as a percentage of total revenues Revenues ($ in millions) Adjusted EBITDA (3) SG&A % (2) Adjusted GM % (1) ($ in millions) Note: Totals may not foot due to rounding $145 $171 $303 $61 $68 $77 $17 $17 $19 $223 $256 $399 YTD13 YTD14 YTD15 HB RES AM 32.6% 29.5% 29.5% YTD13 YTD14 YTD15 $25.7 $23.7 $51.9 11.6% 9.3% 13.0% YTD13 YTD14 YTD15 17.0% 17.2% 13.9% 3.0% 1.5% 1.0% 20.0% 18.7% 15.0% YTD13 YTD14 YTD15 Stock-based compensation expense |
 Land
Portfolio Positioned for Growth High quality land positions in
land- constrained markets
Land portfolio totals approximately 14,400
owned or controlled home sites; up 39%
from 3Q14 56% owned / 44% optioned Experienced team with extensive land entitlement and development experience Actively pursuing additional land acquisition opportunities throughout Florida 8 Owned or Controlled Home Sites 8,676 8,061 1,691 6,385 10,367 14,446 3Q14 3Q15 Owned Optioned |
 Selected
Operating Results 9
$ in thousands, except per share amounts
2015 2014 Variance % 2015 2014 Variance % Homebuilding revenues 120,509 $ 62,381 $ 93.1% 303,121 $ 171,294 $ 76.9% Real estate services revenues 24,998 22,886 9.2% 76,871 67,848 13.4% Amenities revenues 4,681 4,393 6.8% 18,608 17,257 7.5% Total revenues 150,188 $ 89,660 $ 67.4% 398,600 $ 256,399 $ 55.5% Total gross margin 32,039 $ 15,698 $ 103.8% 84,383 $ 47,539 $ 77.7% Net income attributable to common shareholders 10,183 $ 3,140 $
229.0% 25,655 $ 8,958 $
185.6% Earnings per share - diluted 0.38 $
0.12 $
216.7% 0.97 $
0.34 $
185.3% SG&A expenses as a percent of Homebuilding revenues 13.3% 17.7% -440 bps 15.0% 18.7% -370 bps Adjusted gross margin percentage 29.5% 28.6% +90 bps 29.5% 29.5% 0 bps Adjusted EBITDA 21,181 $ 7,847 $
171.8% 51,927 $ 23,740 $ 119.0% Adjusted EBITDA percentage 14.1% 8.8% +530 bps 13.0% 9.3% +370 bps Homes delivered 258 146 76.7% 639 406 57.4% Average selling price per home delivered 462 $
427 $
8.2% 472 $
422 $
11.8% New orders 277 172 61.0% 893 572 56.1% Average selling price per new order 450 $
488 $
-7.8% 441 $
487 $
-9.4% Backlog units 646 459 40.7% Average selling price in backlog 465 $
550 $
-15.5% Three Months Ended September 30, Nine Months Ended September 30, |
 Conservative Balance Sheet
Balance sheet positioned to
execute the growth strategy
Undrawn $75 million revolving credit facility Invested $63 million year-to- date on land and land development 10 (1) Available liquidity includes the $75 million of borrowing capacity under a four-year revolving credit
facility and $8.4 million of borrowing capacity as of September 30, 2015 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 149,383 $
174,756 $
Real estate inventories
527,120 449,249
Total
debt 251,069
251,179 Total equity
463,102 434,443
Total
capital 714,171
685,622 Available liquidity
(1) 232,740 257,756
Debt to capital
(2) 35.2% 36.6% Net debt to net capitalization (3) 17.8% 14.8% (Cash + inventories) / total debt 2.69 2.48
September 30, 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. 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 September 30, 2015 that we plan to file with the
Securities and Exchange Commission on or before October 30,
2015. 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 back 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 (i) meaningful
because it eliminates the impact that our indebtedness and asset impairments have on gross margin and (ii) 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 2015 2014 Homebuilding gross margin 32,460 $
16,444
$
81,848
$
46,940
$
Less:
gross margin from land and home sites
353
-
353
-
Gross margin from homes delivered
32,107
16,444
81,495
46,940
Add: capitalized interest in cost of sales
3,061
1,386
7,425
3,653
Adjusted gross margin from homes delivered
35,168
$
17,830
$
88,920
$
50,593
$
Gross
margin from homes delivered as a percentage
of revenues from homes delivered
26.9%
26.4%
27.0%
27.4%
Adjusted gross margin from homes delivered as
a percentage of revenues from homes
delivered 29.5%
28.6%
29.5%
29.5%
Three Months Ended September 30,
($ in thousands)
Nine Months Ended September 30,
|
 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. EBITDA and Adjusted 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 under 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. 14 |
 Reconciliation of Non-GAAP Financial Measures
(continued) EBITDA and Adjusted EBITDA
(continued) 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. 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
2015
2014
Net income attributable to common
shareholders of WCI Communities,
Inc. 10,183
$
3,140
$
25,655 $
8,958
$
Interest expense 200 191
658 876
Capitalized interest in cost of sales (1) 3,061 1,386
7,425 3,653
Income tax expense 6,289 1,703
13,392 6,337
Depreciation 767 678
2,234 1,910
EBITDA 20,500 7,098
49,364 21,734
Other income, net (398) (107)
(593) (535)
Stock-based compensation expense (2) 1,079 856
3,156 2,541
Adjusted EBITDA 21,181 $
7,847
$
51,927 $
23,740
$
Adjusted EBITDA margin
14.1%
8.8%
13.0%
9.3%
Three Months Ended September 30,
($ in thousands)
Nine Months Ended September 30,
|
 Reconciliation of Non-GAAP Financial Measures
(continued) 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. By deducting cash and cash equivalents from our
outstanding debt, we provide a measure of our debt that considers our cash position. 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 other companies in our industry.
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 leverage ratios such as net
debt to net capitalization, including any adjustments to such amounts,
before comparing our measures to those of such other companies. 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. 16 September 30, December 31, 2015 2014 Senior Notes due 2021 251,069 $
251,179
$
Total equity 463,102 434,443
Total capital 714,171 $
685,622
$
Debt to capital (1) 35.2% 36.6% Senior Notes due 2021 251,069 $
251,179
$
Less: unamortized premium 1,069 1,179 Principal amount of Senior Notes due 2021 250,000 250,000
Less: cash and cash equivalents 149,383 174,756
Net debt 100,617 75,244
Total equity 463,102 434,443
Net capitalization 563,719 $
509,687
$
Net debt to net capitalization (2) 17.8% 14.8% ($ in thousands) (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 September 30, 2015 and
December 31, 2014. (2) Net debt to net capitalization is computed by dividing net debt by net capitalization. |