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UCP Reports Fourth Quarter and Full Year 2015 Results

- Net Income Increases to $0.40 Per Share in Fourth Quarter 2015 -
- Higher Revenue, Improved Gross Margin, Significant SG&A Leverage Drive Enhanced Earnings in Full Year 2015 -

SAN JOSE, Calif.--(BUSINESS WIRE)--Mar. 14, 2016--UCP, Inc. (NYSE:UCP) today announced its results of operations for the three months and full year ended Deecmber 31, 2015.

Fourth Quarter 2015 Highlights Compared to Fourth Quarter 2014

  • Net income increased to $7.6 million, or net income attributable to shareholders of UCP of $0.40 per share
  • Total consolidated revenue grew 131.3% to $106.9 million
  • Revenue from homebuilding operations increased 98.1% to $88.9 million
  • Revenue from land development increased to $18.0 million at a 29.0% adjusted gross margin
  • Homes delivered grew 70.2% to 223 units
  • Adjusted homebuilding gross margin percentage increased to 21.2%, compared to 17.3%
  • Selling, general and administrative expense as a percentage of total revenue improved to 12.4%, compared to 24.7%
  • Net new home orders improved 19.5% to 184 units
  • Backlog units expanded to 249, compared to 91 units
  • Average active selling communities of 28, compared to 20

Full Year 2015 Highlights Compared to Full Year 2014

  • Net income increased to $5.8 million, or net income attributable to shareholders of UCP of $0.30 per share
  • Total consolidated revenue grew 45.8% to $278.8 million
  • Revenue from homebuilding operations grew 62.5% to $252.6 million
  • Homes delivered improved 62.3% to 701 units
  • Net new home orders improved 81.8% to 860 units
  • Adjusted homebuilding gross margin percentage increased to 20.3%, compared to 18.4%
  • General and administrative expense reduced by 1.9%, or approximately $500,000, to $26.9 million
  • Average active selling communities of 28, compared to 16

“2015 was a great year for our business, characterized by positive momentum, discipline, and transformation,” stated Dustin Bogue, President and Chief Executive Officer of UCP. “We maintained strong momentum throughout the year to capitalize on improving demand in our markets resulting in home deliveries and homebuilding revenue each up in excess of 60% for the full year. Our disciplined focus on increasing our mix of traditional dirt sales and cost saving initiatives generated a 390 basis point year-over-year increase in our adjusted homebuilding gross margin for the fourth quarter, building on the sequential improvement throughout the year. We achieved this growth and improvement while reducing our G&A expense by $500,000 to $26.9 million year-over-year, which drove exceptional operating leverage on our platform. As a result we delivered record net income of $0.30 per share for the full year.”

Mr. Bogue continued, “We believe 2015 was a transformative year for our company. We met our goals to increase revenue, improve gross margin and control G&A to drive profitable results. We fully integrated and benefitted immensely from our first full year of operations in the Southeast. We opened a range of well-located communities to end the year with our average active selling communities up 75% compared to the prior year. We closed 2015 with a healthy backlog, strong land inventory and efficient capital base to continue delivering improvement in our results. In all, we believe we further positioned our company as a leading home builder in our West and Southeast markets. Our scalable corporate infrastructure is now largely built out for the next chapter of our growth trajectory which we expect to result in further success as we move forward in 2016 and beyond.”

Fourth Quarter 2015 Operating Results

Net income grew to $7.6 million in the fourth quarter 2015, compared to a net loss of $4.2 million in the fourth quarter 2014. Net income attributable to shareholders of UCP was $3.2 million, or $0.40 per share, compared to a net loss attributable to shareholders of UCP of $2.0 million, or a $0.25 loss per share, in the prior year period. The Company’s weighted average basic and diluted shares outstanding attributable to shareholders of UCP was 8.0 million, compared to 7.9 million shares in the prior year period.

Total consolidated revenue, including homebuilding and land development revenue, increased 131.3% to $106.9 million, compared to $46.2 million in the prior year period, attributable to a near doubling of homebuilding revenue and higher land development revenue.

Revenue from homebuilding operations grew 98.1% to $88.9 million, compared to $44.9 million for the prior year period. The improvement was primarily the result of an increase in the number of homes delivered to 223 during the fourth quarter, compared to 131 homes during the prior year period. The growth in deliveries was partly due to an increase in the number of average active selling communities to 28 in the fourth quarter, compared to an average of 20 active selling communities in the prior year period. Active selling communities consist of those communities where we have more than 15 homes remaining to deliver. The average selling price for home sales was approximately $399,000, compared to approximately $343,000 during the prior year period. The increase in average selling price was primarily a result of geographic mix. Revenue from land development was $18.0 million, compared to no land sales in the prior year period.

Consolidated gross margin percentage was 19.6%, compared to 15.6% in the prior year period. Homebuilding gross margin percentage was 18.0%, compared to 15.6% in the prior year period. Adjusted homebuilding gross margin percentage was 21.2%, compared to 17.3% in the prior year period, due to a shift in product mix of the homes sold, along with ongoing cost initiatives. Adjusted land development gross margin percentage was 29.0% in the fourth quarter 2015.

Sales and marketing expense was $5.7 million, compared to $3.9 million in the same prior year period, due to the increase in homes delivered and the number of active selling communities being marketed. As a percentage of total revenue, sales and marketing expense was 5.3% in the fourth quarter, compared to 8.5% in the prior year period, primarily as a result of a lower transaction cost per home and higher revenue from land development.

General and administrative expense was $7.6 million, compared to $7.5 million in the prior year period. As a percentage of total revenue, general and administrative expense was 7.1% for the fourth quarter, compared to 16.2% for the prior year period, driven by higher revenue.

Net new home orders in the quarter increased 19.5% to 184 from 154 in the prior year period, primarily as the result of an increase in average active selling communities. Unit backlog at the end of the quarter was 249, compared to 91 at the end of prior year period and backlog on a dollar basis increased to $108.8 million, compared to $32.5 million at the end of prior year period.

Total lots owned and controlled were 5,878, compared to 6,368 at December 31, 2014. The Company continues to actively pursue opportunities to acquire land in desirable and high growth areas in its attractive markets.

Full Year 2015 Operating Results

Net income grew to $5.8 million for the full year 2015, compared to a net loss of $7.7 million for the full year 2014.

Net income attributable to shareholders of UCP was $2.4 million, or $0.30 per share compared to a net loss attributable to shareholders of UCP of $5.0 million, or a $0.63 loss per share, in the prior year.

Total consolidated revenue increased 45.8% to $278.8 million, compared to $191.2 million in the prior year. Revenue from homebuilding operations rose 62.5% to $252.6 million, compared to $155.4 million in the prior year. The improvement was primarily the result of an increase in the number of homes delivered to 701 during 2015, compared to 432 homes during the prior year. Revenue from land development was $21.1 million, compared to $32.5 million in the prior year.

Consolidated gross margin percentage was 18.5%, compared to 17.4% in the prior year. Homebuilding gross margin percentage was 17.8%, compared to 16.6% in the prior year. Adjusted homebuilding gross margin percentage was 20.3%, compared to 18.4% in the prior year. Adjusted land development gross margin percentage was 29.3%, compared to 22.2% in the prior year.

Sales and marketing expense was $18.9 million, compared to $13.7 million in the prior year. As a percentage of total revenue, sales and marketing expense was 6.8% compared to 7.2% in the prior year. General and administrative expense was $26.9 million, compared to $27.4 million in the prior year. As a percentage of total revenue, general and administrative expense was 9.6%, compared to 14.3% in the prior year.

Net new home orders increased to 860 from 473 in the prior year, primarily as the result of an increase in average active selling communities to 28 from 16 in the prior year.

Webcast and Conference Call

The Company will host a conference call for investors and other interested parties on Monday, March 14, 2016, 12:00 p.m. Eastern Time, 9:00 a.m. Pacific Time. Interested parties can listen to the call live on the Internet and locate accompanying presentations slides through the Investor Relations section of the Company’s website at www.unioncommunityllc.com.

Listeners are advised to log on to the website at least 15 minutes prior to the call to download and / or install any necessary audio software. The conference call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the UCP Fourth Quarter 2015 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the conference call. A replay of the conference call will be available through April 14, 2016, by dialing 1-877-870-5176 for domestic participants or 1-858-384-5517 for international participants and entering the pass code 13631795. An archive of the webcast will be available on the Company’s website for a limited time.

About UCP, Inc.

UCP is a leading homebuilder and land developer with expertise in residential land acquisition, entitlement, and development as well as home design, construction and sales. UCP operates in the States of California, Washington, North Carolina, South Carolina and Tennessee. UCP designs and builds high-quality, sustainable single-family homes for a variety of lifestyles and budgets through its wholly-owned subsidiary, Benchmark Communities, LLC. The Benchmark Communities brand is recognized by homebuyers for its high-quality construction and craftsmanship, cutting-edge home design and customer-centric service and warranty programs.

Forward-Looking Statements

This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of the Company's business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that the Company 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. Although the Company believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance they will prove to be correct. Therefore, 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 in the forward-looking statements.

Any forward-looking statement made by the Company herein, or elsewhere, speaks only as of the date on which it was made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160314005502/en/

Source: UCP, Inc.

UCP, Inc.
Investor Relations:
408-207-7499 Ext. 476
Investorrelations@unioncommunityllc.com
or
Media:
Phil Denning / Jason Chudoba
203-682-8246 / 646-277-1249
Phil.denning@icrinc.com / Jason.chudoba@icrinc.com