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FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 001-36283
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Delaware
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27-0560089
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(State or other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
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¨
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Non-accelerated filer (Do not check if smaller reporting company)
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¨
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Accelerated filer
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ý
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Smaller reporting company
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¨
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Emerging growth company
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ý
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Page
Number
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PART I Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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September 30,
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December 31,
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||||
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2017
|
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2016
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||||
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(Unaudited)
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||||
Assets
|
|
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||||
Cash and cash equivalents
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$
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62,443
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|
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$
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30,496
|
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Restricted cash
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213
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|
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585
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||
Contracts and accounts receivable
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14,446
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27,833
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Due from affiliates
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554
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1,138
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||
Real estate inventories
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478,541
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286,928
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||
Investment in and advances to unconsolidated joint ventures
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56,814
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50,857
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Other assets
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25,096
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21,299
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Total assets
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$
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638,107
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$
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419,136
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||||
Liabilities and equity
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||||
Accounts payable
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$
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36,078
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$
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33,094
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Accrued expenses and other liabilities
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30,684
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|
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23,418
|
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||
Unsecured revolving credit facility
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—
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118,000
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||
Senior notes, net
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318,452
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|
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—
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||
Total liabilities
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385,214
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174,512
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||
Commitments and contingencies (Note 10)
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||||
Equity:
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||||
Stockholders' equity:
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||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding
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—
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—
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Common stock, $0.01 par value, 500,000,000 shares authorized, 20,876,623 and 20,712,166, shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
209
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207
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||
Additional paid-in capital
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198,757
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197,161
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Retained earnings
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53,836
|
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47,155
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Total stockholders' equity
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252,802
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|
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244,523
|
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||
Noncontrolling interest in subsidiary
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91
|
|
|
101
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||
Total equity
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252,893
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|
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244,624
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Total liabilities and equity
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$
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638,107
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$
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419,136
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
Revenues:
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||||||||
Home sales
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$
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114,622
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$
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125,142
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$
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280,957
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$
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246,281
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Fee building, including management fees from unconsolidated joint ventures of $1,324, $1,539, $3,755 and $6,251, respectively
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43,309
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52,761
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146,107
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125,726
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||||
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157,931
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177,903
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427,064
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372,007
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||||
Cost of Sales:
|
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||||||||
Home sales
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95,992
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105,799
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238,545
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211,859
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||||
Home sales impairments
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—
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—
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1,300
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|
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—
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||||
Fee building
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41,808
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50,832
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141,633
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120,063
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||||
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137,800
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156,631
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381,478
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331,922
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Gross Margin:
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Home sales
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18,630
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19,343
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41,112
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34,422
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||||
Fee building
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1,501
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1,929
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4,474
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5,663
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||||
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20,131
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21,272
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45,586
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40,085
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Selling and marketing expenses
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(6,860
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)
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(6,055
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)
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(18,237
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)
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(14,577
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)
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||||
General and administrative expenses
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(6,465
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)
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(6,468
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)
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(17,150
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)
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(17,476
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)
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||||
Equity in net income of unconsolidated joint ventures
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99
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|
|
488
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|
606
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4,428
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|
||||
Other income (expense), net
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69
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(195
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)
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34
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(590
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)
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||||
Income before income taxes
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6,974
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9,042
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10,839
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11,870
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||||
Provision for income taxes
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(2,656
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)
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(3,465
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)
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(4,168
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)
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(4,718
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)
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||||
Net income
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4,318
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5,577
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6,671
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7,152
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||||
Net (income) loss attributable to noncontrolling interest
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—
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(30
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)
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10
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90
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|
||||
Net income attributable to The New Home Company Inc.
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$
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4,318
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$
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5,547
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$
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6,681
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$
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7,242
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||||||||
Earnings per share attributable to The New Home Company Inc.:
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Basic
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$
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0.21
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$
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0.27
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$
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0.32
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$
|
0.35
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Diluted
|
$
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0.21
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$
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0.27
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$
|
0.32
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|
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$
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0.35
|
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Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
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20,876,315
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20,711,952
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20,839,507
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|
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20,675,233
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|
||||
Diluted
|
20,999,673
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|
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20,797,731
|
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20,949,499
|
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20,764,480
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Stockholders’ Equity
|
|
Noncontrolling Interest in Subsidiary
|
|
Total Equity
|
|||||||||||||||||||||
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Number of Shares of
Common
Stock
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained Earnings
|
|
Total
Stockholders’
Equity
|
|
|
|||||||||||||||
Balance at December 31, 2015
|
20,543,130
|
|
|
$
|
205
|
|
|
$
|
194,437
|
|
|
$
|
26,133
|
|
|
$
|
220,775
|
|
|
$
|
922
|
|
|
$
|
221,697
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
7,242
|
|
|
7,242
|
|
|
(90
|
)
|
|
7,152
|
|
||||||
Noncontrolling interest distribution
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(725
|
)
|
|
(725
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,602
|
|
|
—
|
|
|
2,602
|
|
|
—
|
|
|
2,602
|
|
||||||
Shares net settled with the Company to satisfy minimum employee personal income tax liabilities resulting from share based compensation plans
|
(62,467
|
)
|
|
—
|
|
|
(647
|
)
|
|
—
|
|
|
(647
|
)
|
|
—
|
|
|
(647
|
)
|
||||||
Excess tax provision from stock-based compensation
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
||||||
Shares issued through stock plans
|
231,289
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at September 30, 2016
|
20,711,952
|
|
|
$
|
207
|
|
|
$
|
196,293
|
|
|
$
|
33,375
|
|
|
$
|
229,875
|
|
|
$
|
107
|
|
|
$
|
229,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2016
|
20,712,166
|
|
|
$
|
207
|
|
|
$
|
197,161
|
|
|
$
|
47,155
|
|
|
$
|
244,523
|
|
|
$
|
101
|
|
|
$
|
244,624
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
6,681
|
|
|
6,681
|
|
|
(10
|
)
|
|
6,671
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,086
|
|
|
—
|
|
|
2,086
|
|
|
—
|
|
|
2,086
|
|
||||||
Shares net settled with the Company to satisfy minimum employee personal income tax liabilities resulting from share based compensation plans
|
(55,962
|
)
|
|
—
|
|
|
(590
|
)
|
|
—
|
|
|
(590
|
)
|
|
—
|
|
|
(590
|
)
|
||||||
Shares issued through stock plans
|
220,419
|
|
|
2
|
|
|
100
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
102
|
|
||||||
Balance at September 30, 2017
|
20,876,623
|
|
|
$
|
209
|
|
|
$
|
198,757
|
|
|
$
|
53,836
|
|
|
$
|
252,802
|
|
|
$
|
91
|
|
|
$
|
252,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
6,671
|
|
|
$
|
7,152
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Deferred taxes
|
(54
|
)
|
|
1,181
|
|
||
Amortization of equity based compensation
|
2,086
|
|
|
2,602
|
|
||
Excess income tax provision from stock-based compensation
|
—
|
|
|
97
|
|
||
Distributions of earnings from unconsolidated joint ventures
|
1,588
|
|
|
1,931
|
|
||
Inventory impairments
|
1,300
|
|
|
—
|
|
||
Equity in net income of unconsolidated joint ventures
|
(606
|
)
|
|
(4,428
|
)
|
||
Deferred profit from unconsolidated joint ventures
|
560
|
|
|
541
|
|
||
Depreciation
|
344
|
|
|
381
|
|
||
Abandoned project costs
|
238
|
|
|
498
|
|
||
Net changes in operating assets and liabilities:
|
|
|
|
||||
Restricted cash
|
372
|
|
|
11
|
|
||
Contracts and accounts receivable
|
13,448
|
|
|
2,717
|
|
||
Due from affiliates
|
504
|
|
|
91
|
|
||
Real estate inventories
|
(179,607
|
)
|
|
(159,778
|
)
|
||
Other assets
|
(3,766
|
)
|
|
(4,894
|
)
|
||
Accounts payable
|
2,859
|
|
|
11,927
|
|
||
Accrued expenses and other liabilities
|
(6,257
|
)
|
|
(6,430
|
)
|
||
Due to affiliates
|
—
|
|
|
(293
|
)
|
||
Net cash used in operating activities
|
(160,320
|
)
|
|
(146,694
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(145
|
)
|
|
(379
|
)
|
||
Cash assumed from joint venture at consolidation
|
995
|
|
|
2,009
|
|
||
Contributions and advances to unconsolidated joint ventures
|
(21,296
|
)
|
|
(7,707
|
)
|
||
Distributions of capital and repayment of advances to unconsolidated joint ventures
|
13,650
|
|
|
13,977
|
|
||
Interest collected on advances to unconsolidated joint ventures
|
468
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(6,328
|
)
|
|
7,900
|
|
||
Financing activities:
|
|
|
|
||||
Borrowings from credit facility
|
72,000
|
|
|
193,000
|
|
||
Repayments of credit facility
|
(190,000
|
)
|
|
(38,000
|
)
|
||
Proceeds from senior notes
|
324,465
|
|
|
—
|
|
||
Borrowings from other notes payable
|
—
|
|
|
343
|
|
||
Repayments of other notes payable
|
—
|
|
|
(15,636
|
)
|
||
Payment of debt issuance costs
|
(7,382
|
)
|
|
(1,064
|
)
|
||
Cash distributions to noncontrolling interest in subsidiary
|
—
|
|
|
(725
|
)
|
||
Minimum tax withholding paid on behalf of employees for stock awards
|
(590
|
)
|
|
(647
|
)
|
||
Excess income tax provision from stock-based compensation
|
—
|
|
|
(97
|
)
|
||
Proceeds from exercise of stock options
|
102
|
|
|
—
|
|
||
Net cash provided by financing activities
|
198,595
|
|
|
137,174
|
|
||
Net increase (decrease) in cash and cash equivalents
|
31,947
|
|
|
(1,620
|
)
|
||
Cash and cash equivalents – beginning of period
|
30,496
|
|
|
45,874
|
|
||
Cash and cash equivalents – end of period
|
$
|
62,443
|
|
|
$
|
44,254
|
|
•
|
Participating rights - provide the noncontrolling equity holders the ability to direct significant financial and operational decision made in the ordinary course of business that most significantly influence the entity's economic performance.
|
•
|
Kick-out rights - allow the noncontrolling equity holders to remove the general partner or managing member without cause.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to The New Home Company Inc.
|
$
|
4,318
|
|
|
$
|
5,547
|
|
|
$
|
6,681
|
|
|
$
|
7,242
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average shares outstanding
|
20,876,315
|
|
|
20,711,952
|
|
|
20,839,507
|
|
|
20,675,233
|
|
||||
Effect of dilutive shares:
|
|
|
|
|
|
|
|
||||||||
Stock options and unvested restricted stock units
|
123,358
|
|
|
85,779
|
|
|
109,992
|
|
|
89,247
|
|
||||
Diluted weighted-average shares outstanding
|
20,999,673
|
|
|
20,797,731
|
|
|
20,949,499
|
|
|
20,764,480
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share attributable to The New Home Company Inc.
|
$
|
0.21
|
|
|
$
|
0.27
|
|
|
$
|
0.32
|
|
|
$
|
0.35
|
|
Diluted earnings per share attributable to The New Home Company Inc.
|
$
|
0.21
|
|
|
$
|
0.27
|
|
|
$
|
0.32
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
||||||||
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share
|
831,270
|
|
|
845,331
|
|
|
838,572
|
|
|
866,139
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Contracts receivable:
|
|
|
|
||||
Costs incurred on fee building projects
|
$
|
141,633
|
|
|
$
|
178,103
|
|
Estimated earnings
|
4,474
|
|
|
8,404
|
|
||
|
146,107
|
|
|
186,507
|
|
||
Less: amounts collected during the period
|
(134,400
|
)
|
|
(162,203
|
)
|
||
Contracts receivable
|
$
|
11,707
|
|
|
$
|
24,304
|
|
|
|
|
|
||||
Contracts receivable:
|
|
|
|
||||
Billed
|
$
|
—
|
|
|
$
|
—
|
|
Unbilled
|
11,707
|
|
|
24,304
|
|
||
|
11,707
|
|
|
24,304
|
|
||
Accounts receivable:
|
|
|
|
||||
Escrow receivables
|
2,666
|
|
|
3,385
|
|
||
Other receivables
|
73
|
|
|
144
|
|
||
Contracts and accounts receivable
|
$
|
14,446
|
|
|
$
|
27,833
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Deposits and pre-acquisition costs
|
$
|
41,262
|
|
|
$
|
38,723
|
|
Land held and land under development
|
75,179
|
|
|
98,596
|
|
||
Homes completed or under construction
|
336,229
|
|
|
93,628
|
|
||
Model homes
|
25,871
|
|
|
55,981
|
|
||
|
$
|
478,541
|
|
|
$
|
286,928
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in Thousands)
|
||||||||||||||
Inventory impairments:
|
|
|
|
|
|
|
|
||||||||
Home sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,300
|
|
|
$
|
—
|
|
Total inventory impairments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,300
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Remaining carrying value of inventory impaired at period end
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,310
|
|
|
$
|
—
|
|
Number of projects impaired during the period
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total number of projects subject to periodic impairment review during the year
(1)
|
26
|
|
|
24
|
|
|
26
|
|
|
24
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Interest incurred
|
$
|
6,780
|
|
|
$
|
2,273
|
|
|
$
|
15,217
|
|
|
$
|
5,243
|
|
Interest capitalized to inventory
|
(6,232
|
)
|
|
(2,273
|
)
|
|
(13,982
|
)
|
|
(5,243
|
)
|
||||
Interest capitalized to investments in unconsolidated joint ventures
|
(548
|
)
|
|
—
|
|
|
(1,235
|
)
|
|
—
|
|
||||
Interest expensed
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Capitalized interest in beginning inventory
|
$
|
10,821
|
|
|
$
|
5,449
|
|
|
$
|
6,342
|
|
|
$
|
4,190
|
|
Interest capitalized as a cost of inventory
|
6,232
|
|
|
2,273
|
|
|
13,982
|
|
|
5,243
|
|
||||
Capitalized interest acquired from unconsolidated joint venture at consolidation
|
76
|
|
|
—
|
|
|
76
|
|
|
—
|
|
||||
Previously capitalized interest included in cost of sales
|
(2,448
|
)
|
|
(1,306
|
)
|
|
(5,719
|
)
|
|
(3,017
|
)
|
||||
Capitalized interest in ending inventory
|
$
|
14,681
|
|
|
$
|
6,416
|
|
|
14,681
|
|
|
6,416
|
|
||
|
|
|
|
|
|
|
|
||||||||
Capitalized interest in beginning investment in unconsolidated joint ventures
|
687
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest capitalized to investments in unconsolidated joint ventures
|
548
|
|
|
—
|
|
|
1,235
|
|
|
—
|
|
||||
Capitalized interest transferred from investment in unconsolidated joint venture to inventory upon consolidation
|
(76
|
)
|
|
—
|
|
|
(76
|
)
|
|
—
|
|
||||
Previously capitalized interest included in equity in net income of unconsolidated joint ventures
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
||||
Capitalized interest in ending investments in unconsolidated joint ventures
|
1,154
|
|
|
—
|
|
|
1,154
|
|
|
—
|
|
||||
Total capitalized interest in ending inventory and investments in unconsolidated joint ventures
|
$
|
15,835
|
|
|
$
|
6,416
|
|
|
$
|
15,835
|
|
|
$
|
6,416
|
|
|
|
|
|
|
|
|
|
||||||||
Capitalized interest as a percentage of inventory
|
3.1
|
%
|
|
1.7
|
%
|
|
3.1
|
%
|
|
1.7
|
%
|
||||
Interest included in cost of sales as a percentage of home sales revenue
|
2.1
|
%
|
|
1.0
|
%
|
|
2.0
|
%
|
|
1.2
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Capitalized interest as a percentage of investments in and advances to unconsolidated joint ventures
|
2.0
|
%
|
|
—
|
%
|
|
2.0
|
%
|
|
—
|
%
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Cash and cash equivalents
|
$
|
27,380
|
|
|
$
|
33,683
|
|
Restricted cash
|
15,003
|
|
|
8,374
|
|
||
Real estate inventories
|
409,633
|
|
|
386,487
|
|
||
Other assets
|
3,283
|
|
|
1,664
|
|
||
Total assets
|
$
|
455,299
|
|
|
$
|
430,208
|
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
34,452
|
|
|
$
|
28,706
|
|
Notes payable
|
89,664
|
|
|
97,664
|
|
||
Total liabilities
|
124,116
|
|
|
126,370
|
|
||
The New Home Company's equity
|
50,593
|
|
|
46,857
|
|
||
Other partners' equity
|
280,590
|
|
|
256,981
|
|
||
Total equity
|
331,183
|
|
|
303,838
|
|
||
Total liabilities and equity
|
$
|
455,299
|
|
|
$
|
430,208
|
|
Debt-to-capitalization ratio
|
21.3
|
%
|
|
24.3
|
%
|
||
Debt-to-equity ratio
|
27.1
|
%
|
|
32.1
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Revenues
|
$
|
45,889
|
|
|
$
|
34,464
|
|
|
$
|
107,680
|
|
|
$
|
146,525
|
|
Cost of sales and expenses
|
45,463
|
|
|
32,047
|
|
|
108,772
|
|
|
130,147
|
|
||||
Net income (loss) of unconsolidated joint ventures
|
$
|
426
|
|
|
$
|
2,417
|
|
|
$
|
(1,092
|
)
|
|
$
|
16,378
|
|
Equity in net income of unconsolidated joint ventures reflected in the accompanying consolidated statements of operations
|
$
|
99
|
|
|
$
|
488
|
|
|
$
|
606
|
|
|
$
|
4,428
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Capitalized selling and marketing costs
(1)
|
$
|
12,539
|
|
|
$
|
10,101
|
|
Deferred tax asset, net
|
8,488
|
|
|
8,434
|
|
||
Property and equipment, net of accumulated depreciation
|
658
|
|
|
857
|
|
||
Prepaid expenses
|
3,411
|
|
|
1,907
|
|
||
|
$
|
25,096
|
|
|
$
|
21,299
|
|
|
|
(1)
|
The Company amortized
$1.8 million
,
$5.1 million
,
$1.6 million
, and
$4.0 million
of capitalized selling and marketing project costs to selling and marketing expenses during the three and
nine
months ended
September 30, 2017
and
2016
, respectively.
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Warranty accrual
|
$
|
5,531
|
|
|
$
|
4,931
|
|
Accrued compensation and benefits
|
5,284
|
|
|
6,786
|
|
||
Accrued interest
|
13,076
|
|
|
648
|
|
||
Completion reserve
|
2,258
|
|
|
1,355
|
|
||
Income taxes payable
|
1,669
|
|
|
7,147
|
|
||
Deferred profit from unconsolidated joint ventures
|
396
|
|
|
957
|
|
||
Other accrued expenses
|
2,470
|
|
|
1,594
|
|
||
|
$
|
30,684
|
|
|
$
|
23,418
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Beginning warranty accrual for homebuilding projects
|
$
|
5,076
|
|
|
$
|
4,874
|
|
|
$
|
4,608
|
|
|
$
|
3,846
|
|
Warranty provision for homebuilding projects
|
411
|
|
|
369
|
|
|
1,013
|
|
|
1,174
|
|
||||
Warranty assumed from joint venture at consolidation
|
—
|
|
|
—
|
|
|
358
|
|
|
469
|
|
||||
Adjustment to warranty accrual
|
—
|
|
|
(1,065
|
)
|
|
—
|
|
|
(1,065
|
)
|
||||
Warranty payments for homebuilding projects
|
(279
|
)
|
|
(168
|
)
|
|
(771
|
)
|
|
(414
|
)
|
||||
Ending warranty accrual for homebuilding projects
|
5,208
|
|
|
4,010
|
|
|
5,208
|
|
|
4,010
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Beginning warranty accrual for fee building projects
|
323
|
|
|
331
|
|
|
323
|
|
|
335
|
|
||||
Warranty provision for fee building projects
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Warranty efforts for fee building projects
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Ending warranty accrual for fee building projects
|
323
|
|
|
325
|
|
|
323
|
|
|
325
|
|
||||
Total ending warranty accrual
|
$
|
5,531
|
|
|
$
|
4,335
|
|
|
$
|
5,531
|
|
|
$
|
4,335
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
7.25% Senior Notes due 2022, net
|
$
|
318,452
|
|
|
$
|
—
|
|
Senior unsecured revolving credit facility
|
—
|
|
|
118,000
|
|
||
Total Notes Payable
|
$
|
318,452
|
|
|
$
|
118,000
|
|
•
|
Level 1 – Quoted prices for identical instruments in active markets
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date
|
•
|
Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
7.25% Senior Notes due 2022, net
(1)
|
$
|
318,452
|
|
|
$
|
335,563
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Number of Shares
|
|
Weighted-Average Exercise Price per Share
|
|
Number of Shares
|
|
Weighted-Average Exercise Price per Share
|
||||||
Stock Option Activity
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
835,786
|
|
|
$
|
11.00
|
|
|
840,298
|
|
|
$
|
11.00
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
(9,288
|
)
|
|
$
|
11.00
|
|
|
—
|
|
|
$
|
—
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
(4,512
|
)
|
|
$
|
11.00
|
|
Outstanding, end of period
|
826,498
|
|
|
$
|
11.00
|
|
|
835,786
|
|
|
$
|
11.00
|
|
Exercisable, end of period
|
826,498
|
|
|
$
|
11.00
|
|
|
44,442
|
|
|
$
|
11.00
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value per Share
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value per Share
|
||||||
Restricted Stock Unit Activity
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
474,989
|
|
|
$
|
10.66
|
|
|
308,386
|
|
|
$
|
14.20
|
|
Granted
|
343,933
|
|
|
$
|
10.84
|
|
|
414,045
|
|
|
$
|
10.05
|
|
Vested
|
(211,131
|
)
|
|
$
|
10.75
|
|
|
(231,289
|
)
|
|
$
|
14.22
|
|
Forfeited
|
(26,194
|
)
|
|
$
|
10.82
|
|
|
(11,796
|
)
|
|
$
|
12.10
|
|
Outstanding, end of period
|
581,597
|
|
|
$
|
10.72
|
|
|
479,346
|
|
|
$
|
10.66
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Expense related to:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
11
|
|
|
$
|
747
|
|
Restricted stock units
|
780
|
|
|
560
|
|
|
2,075
|
|
|
1,855
|
|
||||
|
$
|
780
|
|
|
$
|
860
|
|
|
$
|
2,086
|
|
|
$
|
2,602
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
$
|
114,622
|
|
|
$
|
125,142
|
|
|
$
|
280,957
|
|
|
$
|
246,281
|
|
Fee building, including management fees
|
43,309
|
|
|
52,761
|
|
|
146,107
|
|
|
125,726
|
|
||||
Total
|
$
|
157,931
|
|
|
$
|
177,903
|
|
|
$
|
427,064
|
|
|
$
|
372,007
|
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes:
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
$
|
5,473
|
|
|
$
|
7,113
|
|
|
$
|
6,365
|
|
|
$
|
6,207
|
|
Fee building, including management fees
|
1,501
|
|
|
1,929
|
|
|
4,474
|
|
|
5,663
|
|
||||
Total
|
$
|
6,974
|
|
|
$
|
9,042
|
|
|
$
|
10,839
|
|
|
$
|
11,870
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Assets:
|
|
|
|
||||
Homebuilding
|
$
|
625,300
|
|
|
$
|
393,095
|
|
Fee building
|
12,807
|
|
|
26,041
|
|
||
Total
|
$
|
638,107
|
|
|
$
|
419,136
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes paid
|
$
|
9,700
|
|
|
$
|
8,270
|
|
Supplemental disclosures of non-cash transactions
|
|
|
|
||||
Assets assumed from unconsolidated joint ventures
|
$
|
3,877
|
|
|
$
|
46,811
|
|
Liabilities and equity assumed from unconsolidated joint ventures
|
$
|
4,872
|
|
|
$
|
47,197
|
|
|
September 30, 2017
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
37,378
|
|
|
$
|
24,861
|
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
62,443
|
|
Restricted cash
|
—
|
|
|
213
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|||||
Contracts and accounts receivable
|
20
|
|
|
15,609
|
|
|
6
|
|
|
(1,189
|
)
|
|
14,446
|
|
|||||
Intercompany receivables
|
108,012
|
|
|
—
|
|
|
—
|
|
|
(108,012
|
)
|
|
—
|
|
|||||
Due from affiliates
|
—
|
|
|
554
|
|
|
—
|
|
|
—
|
|
|
554
|
|
|||||
Real estate inventories
|
—
|
|
|
478,541
|
|
|
—
|
|
|
—
|
|
|
478,541
|
|
|||||
Investment in and advances to unconsolidated joint ventures
|
—
|
|
|
56,814
|
|
|
—
|
|
|
—
|
|
|
56,814
|
|
|||||
Investment in subsidiaries
|
429,469
|
|
|
—
|
|
|
—
|
|
|
(429,469
|
)
|
|
—
|
|
|||||
Other assets
|
10,222
|
|
|
14,874
|
|
|
—
|
|
|
—
|
|
|
25,096
|
|
|||||
Total assets
|
$
|
585,101
|
|
|
$
|
591,466
|
|
|
$
|
210
|
|
|
$
|
(538,670
|
)
|
|
$
|
638,107
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
270
|
|
|
$
|
35,808
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36,078
|
|
Accrued expenses and other liabilities
|
13,577
|
|
|
18,189
|
|
|
107
|
|
|
(1,189
|
)
|
|
30,684
|
|
|||||
Intercompany payables
|
—
|
|
|
108,012
|
|
|
—
|
|
|
(108,012
|
)
|
|
—
|
|
|||||
Senior notes, net
|
318,452
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
318,452
|
|
|||||
Total liabilities
|
332,299
|
|
|
162,009
|
|
|
107
|
|
|
(109,201
|
)
|
|
385,214
|
|
|||||
Stockholders' equity
|
252,802
|
|
|
429,457
|
|
|
12
|
|
|
(429,469
|
)
|
|
252,802
|
|
|||||
Noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
91
|
|
|||||
Total equity
|
252,802
|
|
|
429,457
|
|
|
103
|
|
|
(429,469
|
)
|
|
252,893
|
|
|||||
Total liabilities and equity
|
$
|
585,101
|
|
|
$
|
591,466
|
|
|
$
|
210
|
|
|
$
|
(538,670
|
)
|
|
$
|
638,107
|
|
|
December 31, 2016
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
16,385
|
|
|
$
|
13,842
|
|
|
$
|
269
|
|
|
$
|
—
|
|
|
$
|
30,496
|
|
Restricted cash
|
—
|
|
|
585
|
|
|
—
|
|
|
—
|
|
|
585
|
|
|||||
Contracts and accounts receivable
|
30
|
|
|
29,774
|
|
|
—
|
|
|
(1,971
|
)
|
|
27,833
|
|
|||||
Intercompany receivables
|
73,972
|
|
|
—
|
|
|
—
|
|
|
(73,972
|
)
|
|
—
|
|
|||||
Due from affiliates
|
—
|
|
|
1,138
|
|
|
—
|
|
|
—
|
|
|
1,138
|
|
|||||
Real estate inventories
|
—
|
|
|
286,928
|
|
|
—
|
|
|
—
|
|
|
286,928
|
|
|||||
Investment in and advances to unconsolidated joint ventures
|
—
|
|
|
50,857
|
|
|
—
|
|
|
—
|
|
|
50,857
|
|
|||||
Investment in subsidiaries
|
268,411
|
|
|
—
|
|
|
—
|
|
|
(268,411
|
)
|
|
—
|
|
|||||
Other assets
|
9,381
|
|
|
11,918
|
|
|
—
|
|
|
—
|
|
|
21,299
|
|
|||||
Total assets
|
$
|
368,179
|
|
|
$
|
395,042
|
|
|
$
|
269
|
|
|
$
|
(344,354
|
)
|
|
$
|
419,136
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
167
|
|
|
$
|
32,900
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
33,094
|
|
Accrued expenses and other liabilities
|
5,489
|
|
|
19,763
|
|
|
108
|
|
|
(1,942
|
)
|
|
23,418
|
|
|||||
Intercompany payables
|
—
|
|
|
73,972
|
|
|
—
|
|
|
(73,972
|
)
|
|
—
|
|
|||||
Due to affiliates
|
—
|
|
|
29
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|||||
Unsecured revolving credit facility
|
118,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118,000
|
|
|||||
Total liabilities
|
123,656
|
|
|
126,664
|
|
|
135
|
|
|
(75,943
|
)
|
|
174,512
|
|
|||||
Stockholders' equity
|
244,523
|
|
|
268,378
|
|
|
33
|
|
|
(268,411
|
)
|
|
244,523
|
|
|||||
Noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
101
|
|
|
—
|
|
|
101
|
|
|||||
Total equity
|
244,523
|
|
|
268,378
|
|
|
$
|
134
|
|
|
(268,411
|
)
|
|
244,624
|
|
||||
Total liabilities and equity
|
$
|
368,179
|
|
|
$
|
395,042
|
|
|
$
|
269
|
|
|
$
|
(344,354
|
)
|
|
$
|
419,136
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
$
|
—
|
|
|
$
|
114,622
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
114,622
|
|
Fee building
|
—
|
|
|
43,309
|
|
|
—
|
|
|
—
|
|
|
43,309
|
|
|||||
|
—
|
|
|
157,931
|
|
|
—
|
|
|
—
|
|
|
157,931
|
|
|||||
Cost of Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
95,992
|
|
|
—
|
|
|
—
|
|
|
95,992
|
|
|||||
Fee building
|
364
|
|
|
41,444
|
|
|
—
|
|
|
—
|
|
|
41,808
|
|
|||||
|
364
|
|
|
137,436
|
|
|
—
|
|
|
—
|
|
|
137,800
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
18,630
|
|
|
—
|
|
|
—
|
|
|
18,630
|
|
|||||
Fee building
|
(364
|
)
|
|
1,865
|
|
|
—
|
|
|
—
|
|
|
1,501
|
|
|||||
|
(364
|
)
|
|
20,495
|
|
|
—
|
|
|
—
|
|
|
20,131
|
|
|||||
Selling and marketing expenses
|
—
|
|
|
(6,860
|
)
|
|
—
|
|
|
—
|
|
|
(6,860
|
)
|
|||||
General and administrative expenses
|
(350
|
)
|
|
(6,115
|
)
|
|
—
|
|
|
—
|
|
|
(6,465
|
)
|
|||||
Equity in net income of unconsolidated joint ventures
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|||||
Equity in net income of subsidiaries
|
4,695
|
|
|
—
|
|
|
—
|
|
|
(4,695
|
)
|
|
—
|
|
|||||
Other income (expense), net
|
127
|
|
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Income before income taxes
|
4,108
|
|
|
7,561
|
|
|
—
|
|
|
(4,695
|
)
|
|
6,974
|
|
|||||
Benefit (provision) for income taxes
|
210
|
|
|
(2,866
|
)
|
|
—
|
|
|
—
|
|
|
(2,656
|
)
|
|||||
Net income
|
4,318
|
|
|
4,695
|
|
|
—
|
|
|
(4,695
|
)
|
|
4,318
|
|
|||||
Net (income) loss attributable to noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to The New Home Company Inc.
|
$
|
4,318
|
|
|
$
|
4,695
|
|
|
$
|
—
|
|
|
$
|
(4,695
|
)
|
|
$
|
4,318
|
|
|
Three Months Ended September 30, 2016
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
$
|
—
|
|
|
$
|
125,142
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
125,142
|
|
Fee building
|
—
|
|
|
52,761
|
|
|
—
|
|
|
—
|
|
|
52,761
|
|
|||||
|
—
|
|
|
177,903
|
|
|
—
|
|
|
—
|
|
|
177,903
|
|
|||||
Cost of Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
105,791
|
|
|
8
|
|
|
—
|
|
|
105,799
|
|
|||||
Fee building
|
540
|
|
|
50,292
|
|
|
—
|
|
|
—
|
|
|
50,832
|
|
|||||
|
540
|
|
|
156,083
|
|
|
8
|
|
|
—
|
|
|
156,631
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
19,351
|
|
|
(8
|
)
|
|
—
|
|
|
19,343
|
|
|||||
Fee building
|
(540
|
)
|
|
2,469
|
|
|
—
|
|
|
—
|
|
|
1,929
|
|
|||||
|
(540
|
)
|
|
21,820
|
|
|
(8
|
)
|
|
—
|
|
|
21,272
|
|
|||||
Selling and marketing expenses
|
—
|
|
|
(6,053
|
)
|
|
(2
|
)
|
|
—
|
|
|
(6,055
|
)
|
|||||
General and administrative expenses
|
(3,566
|
)
|
|
(2,902
|
)
|
|
—
|
|
|
—
|
|
|
(6,468
|
)
|
|||||
Equity in net income of unconsolidated joint ventures
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|||||
Equity in net income of subsidiaries
|
8,230
|
|
|
—
|
|
|
—
|
|
|
(8,230
|
)
|
|
—
|
|
|||||
Other income (expense), net
|
(22
|
)
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
(195
|
)
|
|||||
Income (loss) before income taxes
|
4,102
|
|
|
13,180
|
|
|
(10
|
)
|
|
(8,230
|
)
|
|
9,042
|
|
|||||
Benefit (provision) for income taxes
|
1,445
|
|
|
(4,910
|
)
|
|
—
|
|
|
—
|
|
|
(3,465
|
)
|
|||||
Net income (loss)
|
5,547
|
|
|
8,270
|
|
|
(10
|
)
|
|
(8,230
|
)
|
|
5,577
|
|
|||||
Net income attributable to noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||
Net income (loss) attributable to The New Home Company Inc.
|
$
|
5,547
|
|
|
$
|
8,270
|
|
|
$
|
(40
|
)
|
|
$
|
(8,230
|
)
|
|
$
|
5,547
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
$
|
—
|
|
|
$
|
280,957
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280,957
|
|
Fee building
|
—
|
|
|
146,107
|
|
|
—
|
|
|
—
|
|
|
146,107
|
|
|||||
|
—
|
|
|
427,064
|
|
|
—
|
|
|
—
|
|
|
427,064
|
|
|||||
Cost of Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
238,514
|
|
|
31
|
|
|
—
|
|
|
238,545
|
|
|||||
Home sales impairments
|
—
|
|
|
1,300
|
|
|
—
|
|
|
—
|
|
|
1,300
|
|
|||||
Fee building
|
1,449
|
|
|
140,184
|
|
|
—
|
|
|
—
|
|
|
141,633
|
|
|||||
|
1,449
|
|
|
379,998
|
|
|
31
|
|
|
—
|
|
|
381,478
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
41,143
|
|
|
(31
|
)
|
|
—
|
|
|
41,112
|
|
|||||
Fee building
|
(1,449
|
)
|
|
5,923
|
|
|
—
|
|
|
—
|
|
|
4,474
|
|
|||||
|
(1,449
|
)
|
|
47,066
|
|
|
(31
|
)
|
|
—
|
|
|
45,586
|
|
|||||
Selling and marketing expenses
|
—
|
|
|
(18,237
|
)
|
|
—
|
|
|
—
|
|
|
(18,237
|
)
|
|||||
General and administrative expenses
|
(1,504
|
)
|
|
(15,646
|
)
|
|
—
|
|
|
—
|
|
|
(17,150
|
)
|
|||||
Equity in net income of unconsolidated joint ventures
|
—
|
|
|
606
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|||||
Equity in net income of subsidiaries
|
8,389
|
|
|
—
|
|
|
—
|
|
|
(8,389
|
)
|
|
—
|
|
|||||
Other income (expense), net
|
171
|
|
|
(137
|
)
|
|
—
|
|
|
—
|
|
|
34
|
|
|||||
Income (loss) before income taxes
|
5,607
|
|
|
13,652
|
|
|
(31
|
)
|
|
(8,389
|
)
|
|
10,839
|
|
|||||
Benefit (provision) for income taxes
|
1,074
|
|
|
(5,242
|
)
|
|
—
|
|
|
—
|
|
|
(4,168
|
)
|
|||||
Net income (loss)
|
6,681
|
|
|
8,410
|
|
|
(31
|
)
|
|
(8,389
|
)
|
|
6,671
|
|
|||||
Net loss attributable to noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Net income (loss) attributable to The New Home Company Inc.
|
$
|
6,681
|
|
|
$
|
8,410
|
|
|
$
|
(21
|
)
|
|
$
|
(8,389
|
)
|
|
$
|
6,681
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
$
|
—
|
|
|
$
|
241,124
|
|
|
$
|
5,157
|
|
|
$
|
—
|
|
|
$
|
246,281
|
|
Fee building
|
—
|
|
|
125,881
|
|
|
—
|
|
|
(155
|
)
|
|
125,726
|
|
|||||
|
—
|
|
|
367,005
|
|
|
5,157
|
|
|
(155
|
)
|
|
372,007
|
|
|||||
Cost of Sales:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
207,213
|
|
|
4,646
|
|
|
—
|
|
|
211,859
|
|
|||||
Fee building
|
1,506
|
|
|
118,557
|
|
|
—
|
|
|
—
|
|
|
120,063
|
|
|||||
|
1,506
|
|
|
325,770
|
|
|
4,646
|
|
|
—
|
|
|
331,922
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Margin:
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales
|
—
|
|
|
33,911
|
|
|
511
|
|
|
—
|
|
|
34,422
|
|
|||||
Fee building
|
(1,506
|
)
|
|
7,324
|
|
|
—
|
|
|
(155
|
)
|
|
5,663
|
|
|||||
|
(1,506
|
)
|
|
41,235
|
|
|
511
|
|
|
(155
|
)
|
|
40,085
|
|
|||||
Selling and marketing expenses
|
—
|
|
|
(13,891
|
)
|
|
(686
|
)
|
|
—
|
|
|
(14,577
|
)
|
|||||
General and administrative expenses
|
(10,032
|
)
|
|
(7,444
|
)
|
|
—
|
|
|
—
|
|
|
(17,476
|
)
|
|||||
Equity in net income of unconsolidated joint ventures
|
—
|
|
|
4,428
|
|
|
—
|
|
|
—
|
|
|
4,428
|
|
|||||
Equity in net income of subsidiaries
|
14,678
|
|
|
—
|
|
|
—
|
|
|
(14,678
|
)
|
|
—
|
|
|||||
Other income (expense), net
|
(61
|
)
|
|
(542
|
)
|
|
(142
|
)
|
|
155
|
|
|
(590
|
)
|
|||||
Income (loss) before income taxes
|
3,079
|
|
|
23,786
|
|
|
(317
|
)
|
|
(14,678
|
)
|
|
11,870
|
|
|||||
Benefit (provision) for income taxes
|
4,163
|
|
|
(8,881
|
)
|
|
—
|
|
|
—
|
|
|
(4,718
|
)
|
|||||
Net income (loss)
|
7,242
|
|
|
14,905
|
|
|
(317
|
)
|
|
(14,678
|
)
|
|
7,152
|
|
|||||
Net loss attributable to noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
|||||
Net income (loss) attributable to The New Home Company Inc.
|
$
|
7,242
|
|
|
$
|
14,905
|
|
|
$
|
(227
|
)
|
|
$
|
(14,678
|
)
|
|
$
|
7,242
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Net cash used in operating activities
|
$
|
(20,466
|
)
|
|
$
|
(135,368
|
)
|
|
$
|
(65
|
)
|
|
$
|
(4,421
|
)
|
|
$
|
(160,320
|
)
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(46
|
)
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|||||
Cash assumed from joint venture at consolidation
|
—
|
|
|
995
|
|
|
—
|
|
|
—
|
|
|
995
|
|
|||||
Contributions and advances to unconsolidated joint ventures
|
—
|
|
|
(21,296
|
)
|
|
—
|
|
|
—
|
|
|
(21,296
|
)
|
|||||
Contributions to subsidiaries from corporate
|
(207,849
|
)
|
|
—
|
|
|
—
|
|
|
207,849
|
|
|
—
|
|
|||||
Distributions of capital from subsidiaries
|
50,759
|
|
|
—
|
|
|
—
|
|
|
(50,759
|
)
|
|
—
|
|
|||||
Distributions of capital from unconsolidated joint ventures
|
—
|
|
|
13,650
|
|
|
—
|
|
|
—
|
|
|
13,650
|
|
|||||
Interest collected on advances to unconsolidated joint ventures
|
$
|
—
|
|
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
468
|
|
Net cash used in investing activities
|
$
|
(157,136
|
)
|
|
$
|
(6,282
|
)
|
|
$
|
—
|
|
|
$
|
157,090
|
|
|
$
|
(6,328
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from senior notes
|
324,465
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324,465
|
|
|||||
Borrowings from credit facility
|
72,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,000
|
|
|||||
Repayments of credit facility
|
(190,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(190,000
|
)
|
|||||
Payment of debt issuance costs
|
(7,382
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,382
|
)
|
|||||
Contributions to subsidiaries from corporate
|
—
|
|
|
207,849
|
|
|
—
|
|
|
(207,849
|
)
|
|
—
|
|
|||||
Distributions to corporate from subsidiaries
|
—
|
|
|
(55,180
|
)
|
|
—
|
|
|
55,180
|
|
|
—
|
|
|||||
Minimum tax withholding paid on behalf of employees for stock awards
|
(590
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(590
|
)
|
|||||
Proceeds from exercise of stock options
|
102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|||||
Net cash provided by financing activities
|
$
|
198,595
|
|
|
$
|
152,669
|
|
|
$
|
—
|
|
|
$
|
(152,669
|
)
|
|
$
|
198,595
|
|
Net increase (decrease) in cash and cash equivalents
|
20,993
|
|
|
11,019
|
|
|
(65
|
)
|
|
—
|
|
|
31,947
|
|
|||||
Cash and cash equivalents – beginning of period
|
16,385
|
|
|
13,842
|
|
|
269
|
|
|
—
|
|
|
30,496
|
|
|||||
Cash and cash equivalents – end of period
|
$
|
37,378
|
|
|
$
|
24,861
|
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
62,443
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||
|
NWHM Inc.
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated NWHM
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
(16,393
|
)
|
|
$
|
(122,367
|
)
|
|
$
|
3,293
|
|
|
$
|
(11,227
|
)
|
|
$
|
(146,694
|
)
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(175
|
)
|
|
(204
|
)
|
|
—
|
|
|
—
|
|
|
(379
|
)
|
|||||
Cash assumed from joint venture at consolidation
|
—
|
|
|
2,009
|
|
|
—
|
|
|
—
|
|
|
2,009
|
|
|||||
Contributions and advances to unconsolidated joint ventures
|
—
|
|
|
(7,707
|
)
|
|
—
|
|
|
—
|
|
|
(7,707
|
)
|
|||||
Contributions to subsidiaries from corporate
|
(179,004
|
)
|
|
—
|
|
|
—
|
|
|
179,004
|
|
|
—
|
|
|||||
Distributions of capital from subsidiaries
|
41,573
|
|
|
725
|
|
|
—
|
|
|
(42,298
|
)
|
|
—
|
|
|||||
Distributions of capital and repayment of advances to unconsolidated joint ventures
|
—
|
|
|
13,977
|
|
|
—
|
|
|
—
|
|
|
13,977
|
|
|||||
Net cash (used in) provided by investing activities
|
$
|
(137,606
|
)
|
|
$
|
8,800
|
|
|
$
|
—
|
|
|
$
|
136,706
|
|
|
$
|
7,900
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings from senior notes and credit facility
|
193,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193,000
|
|
|||||
Repayments of credit facility
|
(38,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,000
|
)
|
|||||
Borrowings from other notes payable
|
—
|
|
|
—
|
|
|
343
|
|
|
—
|
|
|
343
|
|
|||||
Repayments of other notes payable
|
—
|
|
|
(13,135
|
)
|
|
(2,501
|
)
|
|
—
|
|
|
(15,636
|
)
|
|||||
Payment of debt issuance costs
|
(1,064
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,064
|
)
|
|||||
Cash distributions to noncontrolling interest in subsidiary
|
—
|
|
|
—
|
|
|
(725
|
)
|
|
—
|
|
|
(725
|
)
|
|||||
Contributions to subsidiaries from corporate
|
—
|
|
|
179,004
|
|
|
—
|
|
|
(179,004
|
)
|
|
—
|
|
|||||
Distributions to corporate from subsidiaries
|
—
|
|
|
(52,800
|
)
|
|
(725
|
)
|
|
53,525
|
|
|
—
|
|
|||||
Minimum tax withholding paid on behalf of employees for stock awards
|
(647
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(647
|
)
|
|||||
Excess income tax provision from stock-based compensation
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||||
Net cash provided by (used in) financing activities
|
$
|
153,192
|
|
|
$
|
113,069
|
|
|
$
|
(3,608
|
)
|
|
$
|
(125,479
|
)
|
|
$
|
137,174
|
|
Net decrease in cash and cash equivalents
|
(807
|
)
|
|
(498
|
)
|
|
(315
|
)
|
|
—
|
|
|
(1,620
|
)
|
|||||
Cash and cash equivalents – beginning of period
|
18,129
|
|
|
27,140
|
|
|
605
|
|
|
—
|
|
|
45,874
|
|
|||||
Cash and cash equivalents – end of period
|
$
|
17,322
|
|
|
$
|
26,642
|
|
|
$
|
290
|
|
|
$
|
—
|
|
|
$
|
44,254
|
|
Item 2
.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Risks related to our business, including among other things:
|
◦
|
our geographic concentration primarily in California;
|
◦
|
the cyclical nature of the homebuilding industry which is affected by general economic real estate and other business conditions;
|
◦
|
availability of land to acquire and our ability to acquire such land on favorable terms or at all;
|
◦
|
shortages of or increased prices for labor, land or raw materials used in housing construction;
|
◦
|
the illiquid nature of real estate investments;
|
◦
|
economic changes either nationally or in the markets in which we operate, including declines in employment, volatility of mortgage interest rates and inflation;
|
◦
|
the degree and nature of our competition;
|
◦
|
a large proportion of our fee building revenue being dependent upon one customer;
|
◦
|
delays in land development or home construction resulting from adverse weather conditions, regulatory approval delays, or other events outside our control;
|
◦
|
product liability and warranty claims, including the cost and availability of insurance;
|
◦
|
information systems interruption or breach in security;
|
•
|
Risks related to laws and regulations, including among other things:
|
◦
|
changes in, or the failure or inability to comply with, governmental laws and regulations; including environmental laws and regulations;
|
◦
|
mortgage financing, as well as our customer’s ability to obtain such financing, interest rate increases or changes in federal lending programs;
|
◦
|
the timing of receipt of regulatory approvals and the opening of projects;
|
◦
|
the impact of recent accounting standards;
|
◦
|
our retention of suitable contractors and subcontractors at reasonable rates;
|
•
|
Risks related to financing and indebtedness, including among other things:
|
◦
|
Volatility and uncertainty in the credit markets and broader financial markets;
|
◦
|
our liquidity and availability, terms and deployment of capital;
|
◦
|
issues concerning our joint venture partnerships, in which we have less than a controlling interest;
|
◦
|
our leverage, interest expense, debt service obligations and restrictive covenants related to our operations in our current or future financing arrangements, including under our unsecured credit facility and our senior notes;
|
•
|
Risks related to our structure and ownership of our common stock, including among other things:
|
◦
|
availability of qualified personnel and our ability to retain our key personnel;
|
◦
|
our status as an emerging growth company with a limited operating history;
|
◦
|
the price of our common stock is subject to volatility and our trading volume is relatively low;
|
◦
|
our senior notes rank senior to our common stock upon bankruptcy or liquidation.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Home sales
|
$
|
114,622
|
|
|
$
|
125,142
|
|
|
$
|
280,957
|
|
|
$
|
246,281
|
|
Fee building, including management fees from unconsolidated joint ventures of $1,324, $1,539, $3,755 and $6,251, respectively
|
43,309
|
|
|
52,761
|
|
|
146,107
|
|
|
125,726
|
|
||||
|
157,931
|
|
|
177,903
|
|
|
427,064
|
|
|
372,007
|
|
||||
Cost of Sales:
|
|
|
|
|
|
|
|
||||||||
Home sales
|
95,992
|
|
|
105,799
|
|
|
238,545
|
|
|
211,859
|
|
||||
Home sales impairments
|
—
|
|
|
—
|
|
|
1,300
|
|
|
—
|
|
||||
Fee building
|
41,808
|
|
|
50,832
|
|
|
141,633
|
|
|
120,063
|
|
||||
|
137,800
|
|
|
156,631
|
|
|
381,478
|
|
|
331,922
|
|
||||
Gross Margin:
|
|
|
|
|
|
|
|
||||||||
Home sales
|
18,630
|
|
|
19,343
|
|
|
41,112
|
|
|
34,422
|
|
||||
Fee building
|
1,501
|
|
|
1,929
|
|
|
4,474
|
|
|
5,663
|
|
||||
|
20,131
|
|
|
21,272
|
|
|
45,586
|
|
|
40,085
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Home sales gross margin
|
16.3
|
%
|
|
15.5
|
%
|
|
14.6
|
%
|
|
14.0
|
%
|
||||
Home sales gross margin before impairments
(1)
|
16.3
|
%
|
|
15.5
|
%
|
|
15.1
|
%
|
|
14.0
|
%
|
||||
Fee building gross margin
|
3.5
|
%
|
|
3.7
|
%
|
|
3.1
|
%
|
|
4.5
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and marketing expenses
|
(6,860
|
)
|
|
(6,055
|
)
|
|
(18,237
|
)
|
|
(14,577
|
)
|
||||
General and administrative expenses
|
(6,465
|
)
|
|
(6,468
|
)
|
|
(17,150
|
)
|
|
(17,476
|
)
|
||||
Equity in net income of unconsolidated joint ventures
|
99
|
|
|
488
|
|
|
606
|
|
|
4,428
|
|
||||
Other income (expense), net
|
69
|
|
|
(195
|
)
|
|
34
|
|
|
(590
|
)
|
||||
Income before income taxes
|
6,974
|
|
|
9,042
|
|
|
10,839
|
|
|
11,870
|
|
||||
Provision for income taxes
|
(2,656
|
)
|
|
(3,465
|
)
|
|
(4,168
|
)
|
|
(4,718
|
)
|
||||
Net income
|
4,318
|
|
|
5,577
|
|
|
6,671
|
|
|
7,152
|
|
||||
Net (income) loss attributable to noncontrolling interest
|
—
|
|
|
(30
|
)
|
|
10
|
|
|
90
|
|
||||
Net income attributable to The New Home Company Inc.
|
$
|
4,318
|
|
|
$
|
5,547
|
|
|
$
|
6,681
|
|
|
$
|
7,242
|
|
|
|
|
|
|
|
|
|
||||||||
Interest incurred
|
$
|
6,780
|
|
|
$
|
2,273
|
|
|
$
|
15,217
|
|
|
$
|
5,243
|
|
Adjusted EBITDA
(2)
|
$
|
10,248
|
|
|
$
|
11,855
|
|
|
$
|
21,508
|
|
|
$
|
15,871
|
|
Adjusted EBITDA margin percentage
|
6.5
|
%
|
|
6.7
|
%
|
|
5.0
|
%
|
|
4.3
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
LTM
(3)
Ended September 30,
|
||||||||||
|
|
|
|
|
2017
|
|
2016
|
||||||||
Interest incurred
|
|
|
|
|
$
|
17,458
|
|
|
$
|
6,670
|
|
||||
Adjusted EBITDA
(2)
|
|
|
|
|
$
|
48,781
|
|
|
$
|
41,766
|
|
||||
Adjusted EBITDA margin percentage
(2)
|
|
|
|
|
6.5
|
%
|
|
7.4
|
%
|
||||||
Ratio of Adjusted EBITDA to total interest incurred
(2)
|
|
|
|
|
2.8x
|
|
|
6.3x
|
|
|
(1)
|
Home sales gross margin before impairments (also referred to as homebuilding gross margin before impairments) is a non-GAAP measure. The table below reconciles this non-GAAP financial measure to homebuilding gross margin, the nearest GAAP equivalent.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2017
|
|
%
|
|
2016
|
|
%
|
|
2017
|
|
%
|
|
2016
|
|
%
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Home sales revenue
|
$
|
114,622
|
|
|
100.0
|
%
|
|
$
|
125,142
|
|
|
100.0
|
%
|
|
$
|
280,957
|
|
|
100.0
|
%
|
|
$
|
246,281
|
|
|
100.0
|
%
|
Cost of home sales
|
95,992
|
|
|
83.7
|
%
|
|
105,799
|
|
|
84.5
|
%
|
|
239,845
|
|
|
85.4
|
%
|
|
211,859
|
|
|
86.0
|
%
|
||||
Homebuilding gross margin
|
18,630
|
|
|
16.3
|
%
|
|
19,343
|
|
|
15.5
|
%
|
|
41,112
|
|
|
14.6
|
%
|
|
34,422
|
|
|
14.0
|
%
|
||||
Add: Home sales impairments
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
1,300
|
|
|
0.5
|
%
|
|
—
|
|
|
—
|
%
|
||||
Homebuilding gross margin before impairments
(1)
|
$
|
18,630
|
|
|
16.3
|
%
|
|
$
|
19,343
|
|
|
15.5
|
%
|
|
$
|
42,412
|
|
|
15.1
|
%
|
|
$
|
34,422
|
|
|
14.0
|
%
|
(2)
|
Adjusted EBITDA, Adjusted EBITDA margin percentage and ratio of Adjusted EBITDA to total interest incurred are non-GAAP measures. Adjusted EBITDA margin percentage is calculated as a percentage of total revenue. Management believes that Adjusted EBITDA, which is a non-GAAP measure, assists investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective capitalization, interest costs, tax position and inventory impairments. Due to the significance of the GAAP components excluded, Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operations or any other performance measure prescribed by GAAP. The table below reconciles net income (loss), calculated and presented in accordance with GAAP, to Adjusted EBITDA, Adjusted EBITDA margin percentage and ratio of Adjusted EBITDA to total interest incurred.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30,
|
|
LTM
(3)
Ended
September 30,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Net income
|
$
|
4,318
|
|
|
$
|
5,577
|
|
|
$
|
6,671
|
|
|
$
|
7,152
|
|
|
$
|
20,445
|
|
|
$
|
19,365
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest amortized to cost of sales and other expense
|
2,453
|
|
|
1,306
|
|
|
5,719
|
|
|
3,017
|
|
|
8,033
|
|
|
4,698
|
|
||||||
Provision for income taxes
|
2,656
|
|
|
3,465
|
|
|
4,168
|
|
|
4,718
|
|
|
12,474
|
|
|
11,976
|
|
||||||
Depreciation and amortization
|
108
|
|
|
130
|
|
|
344
|
|
|
381
|
|
|
474
|
|
|
505
|
|
||||||
Amortization of equity-based compensation
|
780
|
|
|
860
|
|
|
2,086
|
|
|
2,602
|
|
|
2,955
|
|
|
3,761
|
|
||||||
Cash distributions of income from unconsolidated joint ventures
|
—
|
|
|
836
|
|
|
1,588
|
|
|
1,931
|
|
|
3,399
|
|
|
9,894
|
|
||||||
Non-cash impairments and abandonments
|
32
|
|
|
169
|
|
|
1,538
|
|
|
498
|
|
|
5,120
|
|
|
582
|
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gain from notes payable principal reduction
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
||||||
Equity in income of unconsolidated joint ventures
|
(99
|
)
|
|
(488
|
)
|
|
(606
|
)
|
|
(4,428
|
)
|
|
(3,869
|
)
|
|
(9,015
|
)
|
||||||
Adjusted EBITDA
|
$
|
10,248
|
|
|
$
|
11,855
|
|
|
$
|
21,508
|
|
|
$
|
15,871
|
|
|
$
|
48,781
|
|
|
$
|
41,766
|
|
Total Revenue
|
$
|
157,931
|
|
|
$
|
177,903
|
|
|
$
|
427,064
|
|
|
$
|
372,007
|
|
|
$
|
749,513
|
|
|
$
|
566,633
|
|
Adjusted EBITDA margin percentage
|
6.5
|
%
|
|
6.7
|
%
|
|
5.0
|
%
|
|
4.3
|
%
|
|
6.5
|
%
|
|
7.4
|
%
|
||||||
Interest incurred
|
$
|
6,780
|
|
|
$
|
2,273
|
|
|
$
|
15,217
|
|
|
$
|
5,243
|
|
|
$
|
17,458
|
|
|
$
|
6,670
|
|
Ratio of Adjusted EBITDA to total interest incurred
|
|
|
|
|
|
|
|
|
2.8x
|
|
|
6.3x
|
|
(3)
|
"LTM" indicates amounts for the trailing 12 months.
|
|
Three Months Ended
September 30, |
|
Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Increase/(Decrease)
|
||||||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|
2017
|
|
2016
|
|
Amount
|
|
%
|
||||||||
|
|
||||||||||||||||||||||
Net new home orders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Southern California
|
43
|
|
|
39
|
|
|
4
|
|
|
10
|
%
|
|
143
|
|
|
105
|
|
|
38
|
|
|
36
|
%
|
Northern California
|
38
|
|
|
25
|
|
|
13
|
|
|
52
|
%
|
|
162
|
|
|
79
|
|
|
83
|
|
|
105
|
%
|
Total
|
81
|
|
|
64
|
|
|
17
|
|
|
27
|
%
|
|
305
|
|
|
184
|
|
|
121
|
|
|
66
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Selling communities at end of period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Southern California
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
8
|
|
|
(1
|
)
|
|
(13
|
)%
|
||
Northern California
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
%
|
||
Total
|
|
|
|
|
|
|
|
|
|
12
|
|
|
13
|
|
|
(1
|
)
|
|
(8
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average selling communities
|
11
|
|
|
12
|
|
|
(1
|
)
|
|
(8
|
)%
|
|
12
|
|
|
11
|
|
|
1
|
|
|
9
|
%
|
Monthly sales absorption rate per community
(1)
|
2.5
|
|
|
1.7
|
|
|
0.8
|
|
|
47
|
%
|
|
2.8
|
|
|
1.8
|
|
|
1.0
|
|
|
56
|
%
|
Cancellation rate
|
11
|
%
|
|
11
|
%
|
|
—
|
%
|
|
N/A
|
|
|
9
|
%
|
|
12
|
%
|
|
(3
|
)%
|
|
N/A
|
|
|
|
As of September 30,
|
|||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
% Change
|
|||||||||||||||||||||||||
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||
Southern California
|
103
|
|
|
$
|
274,037
|
|
|
$
|
2,661
|
|
|
92
|
|
|
$
|
262,224
|
|
|
$
|
2,850
|
|
|
12
|
%
|
|
5
|
%
|
|
(7
|
)%
|
Northern California
|
79
|
|
|
56,602
|
|
|
716
|
|
|
37
|
|
|
27,971
|
|
|
756
|
|
|
114
|
%
|
|
102
|
%
|
|
(5
|
)%
|
||||
Total
|
182
|
|
|
$
|
330,639
|
|
|
$
|
1,817
|
|
|
129
|
|
|
$
|
290,195
|
|
|
$
|
2,250
|
|
|
41
|
%
|
|
14
|
%
|
|
(19
|
)%
|
|
September 30,
|
|
Increase/(Decrease)
|
||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
||||
Lots Owned:
|
|
|
|
|
|
|
|
||||
Southern California
|
579
|
|
|
287
|
|
|
292
|
|
|
102
|
%
|
Northern California
|
268
|
|
|
339
|
|
|
(71
|
)
|
|
(21
|
)%
|
Total
|
847
|
|
|
626
|
|
|
221
|
|
|
35
|
%
|
Lots Controlled:
(1)
|
|
|
|
|
|
|
|
||||
Southern California
|
348
|
|
|
693
|
|
|
(345
|
)
|
|
(50
|
)%
|
Northern California
|
669
|
|
|
265
|
|
|
404
|
|
|
152
|
%
|
Arizona
|
339
|
|
|
—
|
|
|
339
|
|
|
NA
|
|
Total
|
1,356
|
|
|
958
|
|
|
398
|
|
|
42
|
%
|
Total Lots Owned and Controlled - Wholly Owned
|
2,203
|
|
|
1,584
|
|
|
619
|
|
|
39
|
%
|
Fee Building
(2)
|
815
|
|
|
981
|
|
|
(166
|
)
|
|
(17
|
)%
|
Total Lots Owned and Controlled
|
3,018
|
|
|
2,565
|
|
|
453
|
|
|
18
|
%
|
|
(1)
|
Includes lots that we control under purchase and sale agreements or option agreements subject to customary conditions and have not yet closed. There can be no assurance that such acquisitions will occur.
|
(2)
|
Lots owned by third party property owners for which we perform general contracting services.
|
|
Three Months Ended September 30,
|
|||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
% Change
|
|||||||||||||||||||||||||
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||
Southern California
|
39
|
|
|
$
|
79,494
|
|
|
$
|
2,038
|
|
|
36
|
|
|
$
|
105,789
|
|
|
$
|
2,939
|
|
|
8
|
%
|
|
(25
|
)%
|
|
(31
|
)%
|
Northern California
|
45
|
|
|
35,128
|
|
|
781
|
|
|
24
|
|
|
19,353
|
|
|
806
|
|
|
88
|
%
|
|
82
|
%
|
|
(3
|
)%
|
||||
Total
|
84
|
|
|
$
|
114,622
|
|
|
$
|
1,365
|
|
|
60
|
|
|
$
|
125,142
|
|
|
$
|
2,086
|
|
|
40
|
%
|
|
(8
|
)%
|
|
(35
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
% Change
|
|||||||||||||||||||||||||
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|
Homes
|
|
Dollar Value
|
|
Average Price
|
|||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||
Southern California
|
88
|
|
|
$
|
190,696
|
|
|
$
|
2,167
|
|
|
67
|
|
|
$
|
189,996
|
|
|
$
|
2,836
|
|
|
31
|
%
|
|
—
|
%
|
|
(24
|
)%
|
Northern California
|
114
|
|
|
90,261
|
|
|
792
|
|
|
64
|
|
|
56,285
|
|
|
879
|
|
|
78
|
%
|
|
60
|
%
|
|
(10
|
)%
|
||||
Total
|
202
|
|
|
$
|
280,957
|
|
|
$
|
1,391
|
|
|
131
|
|
|
$
|
246,281
|
|
|
$
|
1,880
|
|
|
54
|
%
|
|
14
|
%
|
|
(26
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2017
|
|
%
|
|
2016
|
|
%
|
|
2017
|
|
%
|
|
2016
|
|
%
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Home sales revenue
|
$
|
114,622
|
|
|
100.0
|
%
|
|
$
|
125,142
|
|
|
100.0
|
%
|
|
$
|
280,957
|
|
|
100.0
|
%
|
|
$
|
246,281
|
|
|
100.0
|
%
|
Cost of home sales
|
95,992
|
|
|
83.7
|
%
|
|
105,799
|
|
|
84.5
|
%
|
|
239,845
|
|
|
85.4
|
%
|
|
211,859
|
|
|
86.0
|
%
|
||||
Homebuilding gross margin
|
18,630
|
|
|
16.3
|
%
|
|
19,343
|
|
|
15.5
|
%
|
|
41,112
|
|
|
14.6
|
%
|
|
34,422
|
|
|
14.0
|
%
|
||||
Add: Home sales impairments
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
1,300
|
|
|
0.5
|
%
|
|
—
|
|
|
—
|
%
|
||||
Homebuilding gross margin before impairments
(1)
|
18,630
|
|
|
16.3
|
%
|
|
19,343
|
|
|
15.5
|
%
|
|
42,412
|
|
|
15.1
|
%
|
|
34,422
|
|
|
14.0
|
%
|
||||
Add: Interest in cost of home sales
|
2,448
|
|
|
2.1
|
%
|
|
1,306
|
|
|
1.0
|
%
|
|
5,719
|
|
|
2.0
|
%
|
|
3,017
|
|
|
1.2
|
%
|
||||
Adjusted homebuilding gross margin
(1)
|
$
|
21,078
|
|
|
18.4
|
%
|
|
$
|
20,649
|
|
|
16.5
|
%
|
|
$
|
48,131
|
|
|
17.1
|
%
|
|
$
|
37,439
|
|
|
15.2
|
%
|
|
(1)
|
Homebuilding gross margin before impairments and adjusted homebuilding gross margin are non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that home sales impairments and leverage have on homebuilding gross margin and permits investors to make better comparisons with our competitors who also break out and adjust gross margins in a similar fashion.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2017
|
|
%
|
|
2016
|
|
%
|
|
2017
|
|
%
|
|
2016
|
|
%
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Fee building revenues
|
$
|
43,309
|
|
|
100.0
|
%
|
|
$
|
52,761
|
|
|
100.0
|
%
|
|
$
|
146,107
|
|
|
100.0
|
%
|
|
$
|
125,726
|
|
|
100.0
|
%
|
Cost of fee building
|
41,808
|
|
|
96.5
|
%
|
|
50,832
|
|
|
96.3
|
%
|
|
141,633
|
|
|
96.9
|
%
|
|
120,063
|
|
|
95.5
|
%
|
||||
Fee building gross margin
|
$
|
1,501
|
|
|
3.5
|
%
|
|
$
|
1,929
|
|
|
3.7
|
%
|
|
$
|
4,474
|
|
|
3.1
|
%
|
|
$
|
5,663
|
|
|
4.5
|
%
|
|
Three Months Ended
September 30, |
|
As a Percentage of Home Sales Revenue
|
|
Nine Months Ended
September 30, |
|
As a Percentage of Home Sales Revenue
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Selling and marketing expenses
|
$
|
6,860
|
|
|
$
|
6,055
|
|
|
6.0
|
%
|
|
4.8
|
%
|
|
$
|
18,237
|
|
|
$
|
14,577
|
|
|
6.5
|
%
|
|
5.9
|
%
|
General and administrative expenses (“G&A”)
|
6,465
|
|
|
6,468
|
|
|
5.6
|
%
|
|
5.2
|
%
|
|
17,150
|
|
|
17,476
|
|
|
6.1
|
%
|
|
7.1
|
%
|
||||
Total selling, marketing and G&A (“SG&A”)
|
$
|
13,325
|
|
|
$
|
12,523
|
|
|
11.6
|
%
|
|
10.0
|
%
|
|
$
|
35,387
|
|
|
$
|
32,053
|
|
|
12.6
|
%
|
|
13.0
|
%
|
|
Three Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
||||||||||||||||||||||
|
|
Increase/(Decrease)
|
|
|
Increase/(Decrease)
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|
2017
|
|
2016
|
|
Amount
|
|
%
|
||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||
Unconsolidated Joint Ventures
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net new home orders
|
43
|
|
|
35
|
|
|
8
|
|
|
23
|
%
|
|
136
|
|
|
111
|
|
|
25
|
|
|
23
|
%
|
||||||
New homes delivered
|
50
|
|
|
23
|
|
|
27
|
|
|
117
|
%
|
|
115
|
|
|
123
|
|
|
(8
|
)
|
|
(7
|
)%
|
||||||
Average sales price of homes delivered
|
$
|
905
|
|
|
$
|
855
|
|
|
$
|
50
|
|
|
6
|
%
|
|
$
|
910
|
|
|
$
|
858
|
|
|
$
|
52
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Home sales revenue
|
$
|
45,242
|
|
|
$
|
19,659
|
|
|
$
|
25,583
|
|
|
130
|
%
|
|
$
|
104,628
|
|
|
$
|
105,558
|
|
|
$
|
(930
|
)
|
|
(1
|
)%
|
Land sales revenue
|
647
|
|
|
14,805
|
|
|
(14,158
|
)
|
|
(96
|
)%
|
|
3,052
|
|
|
40,967
|
|
|
(37,915
|
)
|
|
(93
|
)%
|
||||||
Total revenue
|
$
|
45,889
|
|
|
$
|
34,464
|
|
|
$
|
11,425
|
|
|
33
|
%
|
|
$
|
107,680
|
|
|
$
|
146,525
|
|
|
$
|
(38,845
|
)
|
|
(27
|
)%
|
Net income (loss)
|
$
|
426
|
|
|
$
|
2,417
|
|
|
$
|
(1,991
|
)
|
|
(82
|
)%
|
|
$
|
(1,092
|
)
|
|
$
|
16,378
|
|
|
$
|
(17,470
|
)
|
|
(107
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Selling communities at end of period
|
|
8
|
|
|
8
|
|
|
—
|
|
|
—
|
%
|
|||||||||||||||||
Backlog (dollar value)
|
|
$
|
69,834
|
|
|
$
|
85,317
|
|
|
$
|
(15,483
|
)
|
|
(18
|
)%
|
||||||||||||||
Backlog (homes)
|
|
83
|
|
|
88
|
|
|
(5
|
)
|
|
(6
|
)%
|
|||||||||||||||||
Average sales price of backlog
|
|
$
|
841
|
|
|
$
|
970
|
|
|
$
|
(129
|
)
|
|
(13
|
)%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Homebuilding lots owned and controlled
|
|
398
|
|
|
661
|
|
|
(263
|
)
|
|
(40
|
)%
|
|||||||||||||||||
Land development lots owned and controlled
|
|
2,415
|
|
|
2,415
|
|
|
—
|
|
|
—
|
%
|
|||||||||||||||||
Total lots owned and controlled
|
|
2,813
|
|
|
3,076
|
|
|
(263
|
)
|
|
(9
|
)%
|
|
September 30, 2017
|
|||
Financial Conditions
|
Actual
|
|
Requirement
|
|
|
|
|||
Fixed Charge Coverage Ratio: EBITDA to Consolidated Interest Incurred
|
2.8
|
|
|
> 2.0 : 1.0
|
Leverage Ratio: Indebtedness to Tangible Net Worth
|
1.26
|
|
|
< 2.25 : 1.0
|
|
September 30, 2017
|
|
||||||
Financial Covenants
|
Actual
|
|
Covenant
Requirement
|
|
||||
|
(Dollars in thousands)
|
|
||||||
Unencumbered Liquid Assets (Minimum Liquidity Covenant)
|
$
|
62,443
|
|
|
$
|
10,000
|
|
(1)
|
EBITDA to Interest Incurred
(2)
|
2.8
|
|
|
> 1.75 : 1.0
|
|
|
||
Tangible Net Worth
|
$
|
252,802
|
|
|
$
|
182,159
|
|
|
Leverage Ratio
|
51.3
|
%
|
|
< 65%
|
|
|
||
Adjusted Leverage Ratio
(3)
|
NA
|
|
|
< 50%
|
|
|
|
(1)
|
So long as the Company is in compliance with the interest coverage test, the minimum unencumbered liquid assets that the Company must maintain as of the quarter end measurement date is $10 million. If the Company is not in compliance with the interest coverage test, the minimum liquidity requirement as of each quarter end measurement date is not less than the trailing 12 month consolidated interest incurred.
|
(2)
|
The modification of the Credit Facility executed September 27, 2017, provides relief on compliance with the interest coverage test. If the test is not
|
(3)
|
Adjusted Leverage Ratio is computed as total joint venture debt divided by total joint venture equity. The Adjusted Leverage Ratio requirement ceases to apply as of and after the fiscal quarter in which consolidated tangible net worth is at least $250 million. During any period when the Adjusted Leverage Ratio ceases to apply, consolidated tangible net worth shall be reduced by an adjustment equal to the aggregate amount of investments in and advance to unconsolidated joint ventures that exceed 35% of consolidated tangible net worth as calculated without giving effect to this adjustment (the "Adjustment Amount"). At September 30, 2017, the Company's consolidated tangible net worth exceeded $250 million and the Adjusted Leverage Ratio ceased to apply. In addition, the Adjustment Amount was considered in the calculation of consolidated tangible net worth.
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Total debt, net
|
$
|
318,452
|
|
|
$
|
118,000
|
|
Equity, exclusive of noncontrolling interest
|
252,802
|
|
|
244,523
|
|
||
Total capital
|
$
|
571,254
|
|
|
$
|
362,523
|
|
Ratio of debt-to-capital
(1)
|
55.7
|
%
|
|
32.5
|
%
|
||
|
|
|
|
||||
Total debt, net
|
$
|
318,452
|
|
|
$
|
118,000
|
|
Less: cash, cash equivalents and restricted cash
|
62,656
|
|
|
31,081
|
|
||
Net debt
|
255,796
|
|
|
86,919
|
|
||
Equity, exclusive of noncontrolling interest
|
252,802
|
|
|
244,523
|
|
||
Total capital
|
$
|
508,598
|
|
|
$
|
331,442
|
|
Ratio of net debt-to-capital
(2)
|
50.3
|
%
|
|
26.2
|
%
|
|
(1)
|
The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt, net by the sum of total debt plus equity, exclusive of noncontrolling interest.
|
(2)
|
The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is total debt, net less cash to the extent necessary to reduce the debt balance to zero) by total capital, exclusive of noncontrolling interest. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We believe that by deducting our cash from our debt, we provide a measure of our indebtedness that takes into account our cash liquidity. We believe this provides useful information as the ratio of debt-to-capital does not take into
|
•
|
Net cash used in operating activities was
$160.3 million
for the
nine
months ended
September 30, 2017
versus
$146.7 million
for the
nine
months ended
September 30, 2016
. The year-over-year change was primarily a result of a net increase in cash outflows for real estate inventories of
$179.6 million
in the 2017 period compared to
$159.8 million
in the 2016 period due to greater land spend and increased construction in progress offset partially by increased home sales revenues as compared to the prior year period.
|
•
|
Net cash used in investing activities was
$6.3 million
for the
nine
months ended
September 30, 2017
compared to
$7.9 million
provided by investing activities for the
nine
months ended
September 30, 2016
. For the
nine
months ended
September 30, 2017
, our net contributions and advances to unconsolidated joint ventures were
$7.6 million
compared to a net distribution from unconsolidated joint ventures of
$6.3 million
during the
nine
months ended
September 30, 2016
and was the primary reason net cash used in investing activities increased. The reduction in distributions from unconsolidated joint ventures primarily related to the reduction in revenues and profits, and the completion of certain joint venture communities.
|
•
|
Net cash provided by financing activities was
$198.6 million
for the
nine
months ended
September 30, 2017
versus
$137.2 million
for the
nine
months ended
September 30, 2016
. The increase was primarily due to an increase in net borrowings, in particular the issuance of our Senior Notes due 2022.
|
•
|
leveraging our capital base
|
•
|
accessing larger or desirable lot positions
|
•
|
expanding our market opportunities
|
•
|
managing financial and market risk associated with land holdings
|
•
|
establishing strategic alliances
|
|
(1)
|
The carrying value of the debt is presented net of $0.6 million in unamortized debt issuance costs. Scheduled maturities of the unconsolidated joint venture debt as of
September 30, 2017
are as follows: $12.7 million matures in 2017, $44.2 matures in 2018 and $33.4 million matures in 2019. Projects at McKinley Village and Mountain Shadows have multiple debt instruments, some of which do not have LTV maintenance agreements.
|
(2)
|
Represents the Company's equity in unconsolidated joint ventures. Equity does not include $5.1 million in advances to unconsolidated joint ventures and $1.1 million of interest capitalized to certain investments in unconsolidated joint ventures which along with equity, are included in investments in and advances to unconsolidated joint ventures in the accompanying condensed consolidated balance sheets.
|
(3)
|
Estimated future capital commitment represents our proportionate share of estimated future contributions to the respective unconsolidated joint ventures as of
September 30, 2017
. Actual contributions may differ materially.
|
(4)
|
Certain members of the Company's board of directors are affiliated with entities that have an investment in these joint ventures.
|
(5)
|
Land development joint venture.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
•
|
our ability to obtain additional financing as needed for working capital, land acquisition costs, building costs, other capital expenditures, or general corporate purposes, or to refinance existing indebtedness before its scheduled maturity, may be limited;
|
•
|
our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs;
|
•
|
we may be required to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing funds available for other purposes such as land and lot acquisition, development and construction activities;
|
•
|
our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt, which would likely result in acceleration of the maturity of such debt;
|
•
|
we may be put at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and
|
•
|
the terms of any refinancing may not be as favorable as the terms of the debt being refinanced.
|
•
|
incur or guarantee additional indebtedness or issue certain equity interests;
|
•
|
pay dividends or distributions, repurchase equity or prepay subordinated debt;
|
•
|
make certain investments;
|
•
|
sell assets;
|
•
|
incur liens;
|
•
|
create certain restrictions on the ability of restricted subsidiaries to transfer assets;
|
•
|
enter into transactions with affiliates;
|
•
|
create unrestricted subsidiaries; and
|
•
|
consolidate, merge or sell all or substantially all of our assets.
|
•
|
limited in how we conduct our business;
|
•
|
unable to raise additional debt or equity financing to operate during general economic or business downturns; or
|
•
|
unable to compete effectively or to take advantage of new business opportunities. These restrictions may affect our ability to grow in accordance with our plans.
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3*
|
|
|
|
|
|
4.4*
|
|
|
|
|
|
10.1*+
|
|
|
|
|
|
10.2*+
|
|
|
|
|
|
10.3
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101*
|
|
The following materials from The New Home Company Inc.’s Annual Report on Form 10-Q for the quarter ended September 30, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Consolidated Financial Statements.
|
*
|
Filed herewith
|
**
|
Furnished herewith. The information in Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.
|
+
|
Certain confidential information contained in this Exhibit was omitted by means of redacting a portion of the text and replacing it with an asterisk. This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the redaction pursuant to a Confidential Treatment Request under Rule 24b-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
The New Home Company Inc.
|
||
|
|
|
|
|||
|
|
|
|
By:
|
|
/s/ H. Lawrence Webb
|
|
|
|
|
|
|
H. Lawrence Webb
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ John M. Stephens
|
|
|
|
|
|
|
John M. Stephens
|
|
|
|
|
|
|
Chief Financial Officer
|
By:
|
THE NEW HOME COMPANY NORTHERN CALIFORNIA LLC
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
By:
|
TNHC ARIZONA LLC
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
Its:
|
Chief Financial Officer
|
Page
|
||
Article I ORGANIZATION
|
1
|
|
|
|
|
1.01
|
Formation; Admission of Members
|
1
|
1.02
|
Name and Principal Place of Business
|
1
|
1.03
|
Term
|
2
|
1.04
|
Registered Agent and Registered Office
|
2
|
1.05
|
Project and Business Plan
|
2
|
|
|
|
Article II CAPITAL AND LOANS
|
5
|
|
|
|
|
2.01
|
Company Accounts
|
5
|
2.02
|
Capital Contributions
|
6
|
2.03
|
Company Financing
|
9
|
|
|
|
Article III CASH MANAGEMENT AND DISTRIBUTIONS
|
9
|
|
|
|
|
3.01
|
Bank Accounts
|
9
|
3.02
|
Distributions of Cash Flow
|
11
|
|
|
|
Article IV MANAGEMENT
|
12
|
|
|
|
|
4.01
|
Authority; Major Decisions
|
12
|
4.02
|
Representatives of Members
|
13
|
4.03
|
Day-to-Day Operations
|
14
|
4.04
|
Miscellaneous Covenants
|
17
|
4.05
|
Emergency Authority
|
18
|
4.06
|
Fees and Reimbursements
|
18
|
|
|
|
Article V REPLACEMENT OF MANAGING MEMBER
|
20
|
|
|
|
|
5.01
|
Agreement of Members
|
20
|
5.02
|
Replacement Event
|
20
|
5.03
|
Replacement of Managing Member; Loss of Participation in Management
|
21
|
|
|
|
Article VI DEFAULTS AND REMEDIES
|
22
|
|
|
|
|
6.01
|
Event of Default
|
22
|
6.02
|
Effect of Event of Default
|
23
|
6.03
|
Failure to Fund
|
23
|
6.04
|
Cross-Default
|
24
|
|
|
|
Article VII CALL AND BUY/SELL AGREEMENT
|
24
|
|
|
|
|
7.01
|
Rights Arising From a Call Event
|
24
|
7.02
|
Determination of Appraised Value
|
25
|
7.03
|
Buy/Sell
|
26
|
7.04
|
Determination of the Purchase Price
|
27
|
7.05
|
Other Disclosures
|
29
|
7.06
|
Closing of Purchase and Sale
|
29
|
7.07
|
Release and Indemnity
|
30
|
7.08
|
Bonds and Guaranties
|
30
|
7.09
|
Activities Prior to Closing
|
30
|
|
|
|
Article VIII DISSOLUTION OF THE COMPANY
|
31
|
|
|
|
|
8.01
|
Events of Dissolution
|
31
|
8.02
|
Effect of Dissolution
|
31
|
8.03
|
Liquidation of Assets
|
32
|
8.04
|
Distributions Upon Liquidation
|
32
|
8.05
|
Completion of Winding-Up
|
33
|
8.06
|
No Capital Account Restoration; Economic Shortfall and Loss Sharing
|
33
|
|
|
|
Article IX INDEMNIFICATION
|
34
|
|
|
|
|
9.01
|
Limitation on Liability
|
34
|
9.02
|
Indemnification by Members
|
34
|
9.03
|
Indemnification of Members and Others by the Company
|
35
|
9.04
|
Survival
|
36
|
|
|
|
Article X ACCOUNTING
|
36
|
|
|
|
|
10.01
|
Books and Records
|
36
|
10.02
|
Location and Availability of Records
|
36
|
10.03
|
Reports
|
36
|
10.04
|
Consolidation Reporting
|
39
|
|
|
|
Article XI TRANSFER OF MEMBERSHIP INTERESTS AND PARTITION
|
39
|
|
|
|
|
11.01
|
Restriction on Transfer
|
39
|
11.02
|
Partition
|
40
|
11.03
|
Admission of Substituted Member
|
40
|
11.04
|
Compliance
|
40
|
11.05
|
Permitted Transfers
|
41
|
11.06
|
Transferor Remains Liable
|
41
|
11.07
|
Restrictions on Assignees
|
41
|
11.08
|
IHP Transfers
|
41
|
|
|
|
Article XII MISCELLANEOUS
|
42
|
|
|
|
|
12.01
|
Integration/Amendment
|
42
|
12.02
|
Attorneys’ Fees
|
42
|
12.03
|
Notices
|
42
|
12.04
|
Execution of Other Documents
|
43
|
12.05
|
Brokers
|
43
|
12.06
|
Waiver
|
43
|
12.07
|
Equitable Remedies
|
43
|
12.08
|
Captions, Gender
|
43
|
12.09
|
Benefits and Obligations
|
44
|
12.10
|
Severability
|
44
|
12.11
|
Applicable Law
|
44
|
12.12
|
No Third Party Beneficiary
|
44
|
12.13
|
Exhibits
|
44
|
12.14
|
Estoppels
|
44
|
12.15
|
References to this Agreement
|
45
|
12.16
|
Counterparts
|
45
|
12.17
|
Time
|
45
|
12.18
|
Investment Representations
|
45
|
12.19
|
Nondiscrimination
|
45
|
12.20
|
Exculpation and Waiver
|
46
|
12.21
|
Responsible Contractor Policy and Guidelines
|
46
|
12.22
|
Hazardous Material
|
46
|
12.23
|
Confidentiality
|
49
|
12.24
|
Standard for Consent
|
50
|
Exhibit “A”
|
Legal Description of Property
|
|
Exhibit “B”
|
Approved Project Budget
|
|
Exhibit “C”
|
Tax Provisions
|
|
Exhibit “D”
|
Funding Requirements
|
|
Exhibit “E”
|
Permitted Exceptions
|
|
Exhibit “F”
|
List of Assets
|
|
Exhibit “G”
|
Representations and Warranties
|
|
Exhibit “H”
|
Reserved
|
|
Exhibit “I”
|
Insurance Requirements
|
|
Exhibit “J”
|
Reserved
|
|
Exhibit “K”
|
Reserved
|
|
Exhibit “L”
|
Assumed Liabilities
|
|
Exhibit “M”
|
Form of Reports
|
|
Exhibit “N”
|
Reserved
|
|
Exhibit “O”
|
Pending and Historical Litigation
|
|
Exhibit “P”
|
Responsible Contractor Policy and Guidelines
|
|
|
Section
|
Act
|
1.01
|
Additional Capital
|
2.02(e)
|
Affiliate
|
4.04(b)
|
Agreement
|
Introduction
|
Appraised Value
|
7.02
|
Approved Business Plan
|
1.05(d)
|
Approved Environmental Parameters
|
12.22(d)
|
Approved Phase Budget
|
1.05(e)
|
Approved Project Budget
|
1.05(d)(i)
|
Assigned Property
|
2.02(d)(ii)
|
Base Capital Preferred Return
|
2.01(c)(ii)
|
Base Capital Preferred Return Rate
|
2.01(c)(ii)
|
Buy/Sell Event
|
7.03(a)
|
Buy/Sell Notice
|
7.03(b)(i)
|
Buy/Sell Value
|
7.03(b)(i)
|
Call Event
|
7.01(a)
|
Capital Account
|
2.01(a)
|
Capital Proceeds
|
3.01(b)
|
Cash Deficit
|
6.03
|
Cash Flow
|
3.02
|
Certificate of Formation
|
1.01
|
City
|
1.05(b)
|
Close-Out Period
|
8.04(b)(i)
|
Closing
|
7.06
|
Code
|
EXHIBIT “C”, 1(a)
|
Collection Account
|
3.01(a)
|
Company
|
Introduction
|
Company Assets
|
5.03(b)
|
Company Financing
|
2.03
|
Company Minimum Gain
|
EXHIBIT “C”, 1(b)
|
Confidential Information
|
12.23(a)
|
Constituent Member Transfers
|
11.05(a)
|
Contributing Member
|
6.03
|
DA Amendment
|
1.05(b)(i)
|
Damages
|
12.22(f)
|
Due Care
|
4.01(b)
|
Economic Shortfall
|
8.06
|
Electing Member
|
7.01(b)
|
Election Notice
|
7.01(b)
|
Entitlements
|
1.05(b)
|
Environmental Remediation
|
12.22(c)
|
Environmental Requirements
|
12.22(b)
|
Event of Bankruptcy
|
6.01(c)
|
Event of Default
|
6.01
|
Excess Additional Capital
|
2.02(e)(iii)
|
Executive Committee
|
4.02(a)
|
Fiscal Year
|
10.01
|
Force Majeure
|
5.02(c)
|
Funding Date
|
2.02(e)(ii)
|
General Contractor
|
4.03(h)
|
Gross Asset Value
|
EXHIBIT “C”, 1(c)
|
Guarantor
|
2.02(d)(iii)
|
Guaranty
|
2.02(d)(iii)
|
Hazardous Material
|
12.22(a)
|
Hazardous Materials
|
12.22(b)(i)
|
Holdback Amount
|
7.04(b)
|
IHP
|
Introduction
|
IHP Indemnitees
|
9.02(a)
|
IHP Project Commitment Fee
|
4.06(b)
|
IHP’s Maximum Capital Commitment
|
2.02(a)
|
Indemnified Party
|
9.03
|
Laws
|
4.03(b)
|
Liabilities
|
9.02(a)
|
Liquidating Trustee
|
8.03
|
Loss of Control Event
|
7.03(a)
|
Lot
|
1.05(b)
|
Lots
|
1.05(b)
|
Major Decision
|
4.01(c)
|
Major Decisions
|
4.01(c)
|
Managing Member
|
1.01
|
Member
|
1.01
|
Member Minimum Gain
|
EXHIBIT “C”, 1(d)
|
Member Nonrecourse Debt
|
EXHIBIT “C”, 1(e)
|
Member Nonrecourse Deductions
|
EXHIBIT “C”, 1(f)
|
Member’s Share of Loss
|
8.06
|
Members
|
1.01
|
Membership Interest
|
1.01
|
Membership Interests
|
11.01
|
Net Losses
|
EXHIBIT “C”, 1(g)
|
Net Proceeds
|
3.01(a)
|
Net Profits
|
4.06(a)
|
Net Revenues
|
4.06(a)
|
New Home
|
11.05(a)
|
Non-Contributing Member
|
6.03
|
Non-Electing Member
|
7.01(b)
|
Nonrecourse Deductions
|
EXHIBIT “C”, 1(i)
|
Offeree Member
|
7.03(a)
|
Offeree’s Notice
|
7.03(b)(ii)
|
Offeror Member
|
7.03(a)
|
Original Budget
|
1.05(d)(i)
|
Other Entities
|
6.04
|
Other Entity
|
6.04
|
Parties
|
12.23(a)
|
Percentage Interest
|
7.02
|
Permitted Exceptions
|
2.02(d)(i)
|
Permitted Transfer
|
11.05
|
Permitted Transferee
|
11.05(c)
|
Person
|
4.04(b)
|
Phase
|
1.05(e)
|
Phases
|
1.05(e)
|
Preferred Return
|
2.01(c)(iii)
|
Prime Rate
|
2.01(c)(iii)
|
Project
|
1.05(a)
|
Project Cost Account
|
3.01(b)
|
Project Costs
|
1.05(d)(i)
|
Project Proforma
|
1.05(d)(ii)
|
Property
|
1.05(a)
|
Purchase Agreement
|
2.02(d)(i)
|
Purchase Price
|
7.04(c)
|
Purchase Price Notice
|
7.04(c)
|
Regulatory Allocations
|
EXHIBIT “C”, 1(j)
|
Replacement Event
|
5.02
|
Replacement Events
|
5.02
|
Replacement Manager
|
5.01
|
Request for Funds
|
2.02
|
Seller
|
2.02(d)(i)
|
Seller Purchase Money Loan
|
2.03
|
Senior Capital Preferred Return
|
2.01(c)(i)
|
Senior Capital Preferred Return Rate
|
2.01(c)(i)
|
SIR Amount
|
3.01(d)
|
SPA
|
1.05(b)(i)
|
Statement of Liabilities
|
7.04(a)(i)
|
Substitute Statement of Liabilities
|
7.04(a)(iii)
|
System
|
4.01(d)
|
TNHC
|
Introduction
|
TNHC Management Fee
|
4.06(a)
|
TNHC Partners
|
11.05(a)
|
TNHC Reorganization
|
11.01
|
TNHC’s Liabilities Reps and Warranties
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7.04(a)(v)
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TNHC’s Maximum Capital Commitment
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2.02(b)
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Treasury Regulation
|
EXHIBIT “C”, 1(k)
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Unfunded SIR Amount
|
3.01(d)
|
Unrecovered Capital Account
|
2.01(b)
|
Working Capital Reserve
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3.01(c)
|
In the case of MP:
|
c/o IHP Capital Partners
100 Bayview Circle, Suite 2000 Newport Beach, California 92660 Attention: Douglas C. Neff Telephone: (949) 655-7003 Facsimile: (949) 851-8284 Email: dneff@ihpinc.com |
With a copy to:
|
IHP Capital Partners
100 Bayview Circle, Suite 2000 Newport Beach, California 92660 Attention: Legal Department Telephone: (949) 851-2121 Facsimile: (949) 655-9035 Email: legalnotices@ihpinc.com |
In the case of TNHC:
|
TNHC Land Company LLC
95 Enterprise, Suite 325 Aliso Viejo, California 92656 Attention: Joseph Davis Telephone: (949) 382-7813 Facsimile: (949) 382-7801 Email: jdavis@thenewhomecompany.com |
With a copy to:
|
Dzida, Carey & Steinman
3 Park Plaza, Suite 750 Irvine, California 92614 Attention: Steven J. Dzida Telephone: (949) 399-0363 Facsimile: (949) 399-0361 Email: sdzida@dcslaw.com |
“
TNHC
”
|
TNHC LAND COMPANY LLC,
a Delaware limited liability company
By:
/s/ Andrew Jarvis
Its: President
By:
/s/ Joseph Davis
Its: Executive Vice President |
|
|
|
|
“
IHP
”
|
IHP CAPITAL PARTNERS VI LLC., a Delaware limited liability company
By: Institutional Housing Partners VI L.P., a California limited partnership, Its Manager
By: IHP Capital Partners, a California corporation, Its General Partner
By: _
/s/ Donald S. Grant
Donald S. Grant
Executive Vice President
By: _
/s/ Douglas C. Neff
Douglas C. Neff
President
|
|
|
ITEM B-1:
|
PROJECT PROFORMA (CASHFLOW)
|
ITEM B-2:
|
CRITICAL DATES SCHEDULE
|
ITEM B-3:
|
ORIGINAL/APPROVED PHASE BUDGET
|
|
Finish Date
|
Critical Completion
Date (1) |
Entitlement Approvals
|
May 2014
|
Q1-2015
|
Commencement of Phase I Rough Grading
|
July 2014
|
Q3-2015
|
First Lot Disposition
|
August 2015
|
Q4-2016
|
(1)
|
The dates set forth in this column shall be the only dates referenced in Section 5.02(c) of this Agreement referenced as the Critical Date Schedule. The Finish Date column above reflects target dates and are not applicable to Section 5.02(c) of this Agreement.
|
A.
|
Any easement or Lessors Rights which the owner or owners of those certain phone panels, electric pull boxes and electric control boxes may claim as set forth on that certain ALTA/ACSM Land Title Survey.
|
B.
|
Any easement or Lessors Rights which the owner or owners of those certain single pole signs may claim as set forth on that certain ALTA/ACSM Land Title Survey.
|
C.
|
Any easement or Lessors rights which the owner or owners of those certain utilities shown as power poles may claim asset forth on that certain ALTA/ACSM Land Title Survey.
|
D.
|
An encroachment of fences from the property to the Southwest and Southeast onto the herein described property, as disclosed on that certain ALTA/ACSM Land Title Survey.
|
E.
|
Any easement or Lessors rights of the owner of that certain AC drainage basin from the property to the North may claim, as disclosed on that certain ALTA/ACSM Land Title Survey.
|
F.
|
Any easement or Lessors rights of the owner of that certain concrete box culvert from the property to the South may claim, as disclosed on that certain ALTA/ACSM Land Title Survey.
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a.
|
Premises and Operations coverage with no explosion, collapse, or underground damage (XCU) exclusions.
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b.
|
Products and completed operations coverage. Managing Member agrees to maintain this coverage for the Company for the greater of ten (10) years following substantial completion of the Project or until all statutes of limitations expire.
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d.
|
Broad Form Property Damage coverage including completed operations or its equivalent.
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f.
|
An
endorsement
stating: “Such coverage as is afforded by this policy for the benefit of the additional insured(s) is primary and any other coverage maintained by such additional insured(s) shall be non-contributing with the coverage provided under this policy.”
|
g.
|
Coverage on an “occurrence” form. “Claims made” and “modified occurrence” forms are not acceptable.
|
h.
|
An
endorsement
stating that any aggregate limits apply on a “per project” and on a “per location” basis.
|
(a)
|
All policies must contain an
endorsement
affording an unqualified thirty (30) days notice of cancellation to the additional insured(s) in the event of cancellation or non-renewal, and Managing Member shall endeavor to cause the policies to contain an
endorsement
with thirty (30) days notice of material change in coverage.
|
(b)
|
All policies must be written by insurance companies whose rating in the most recent Best’s Rating Guide, is not less than A- IX. All coverage forms must be acceptable to IHP. Managing Member shall provide certified copies of all such policies to IHP, upon request.
|
(c)
|
Certificates of Insurance with the required
endorsements
evidencing the required coverages must be delivered to IHP. All certificates of insurance shall show the amount of any self-insured retention or deductible.
|
(a)
|
If Managing Member fails to secure and maintain the required insurance, IHP shall have the right (without any obligation to do so, however) to secure same in the name and for the account of the Company, in which event Managing Member shall pay the costs thereof and furnish upon demand all information that may be required in connection therewith.
|
(b)
|
IHP reserves the right, but shall have no obligation, to procure the insurance, or any portion thereof, for which Managing Member is herein responsible and which is described in this Exhibit. IHP shall notify Managing Member if IHP exercises this right, whereupon Managing Member’s responsibility to carry such insurance shall cease and all premiums and other charges associated with such insurance shall be refunded to IHP.
|
(c)
|
IHP further reserves the right at any time, with thirty (30) days written notice to Managing Member, to require that Managing Member resume the procurement and maintenance of any insurance for which IHP has elected to become responsible pursuant to this subsection. In such event, all premiums and other charges associated with such insurance shall be equitably pro-rated based upon Managing Member’s completed work.
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(d)
|
IHP reserves the right, in its discretion and at the Company’s cost, to require higher limits of liability coverage if, in IHP’s opinion, operations
|
(e)
|
IHP reserves the right to obtain complete copies of all insurance policies as requested, and to review annually (or as needed) the limits of liability provided thereunder and the total number of units and projects being insured under one policy.
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(f)
|
In the event that rental of equipment is undertaken to complete and/or perform the work, Managing Member agrees that it shall be solely responsible for such rental equipment. Such responsibility shall include, but not be limited to, theft, fire, vandalism and use by unauthorized persons.
|
(g)
|
Managing Member shall be responsible for causing the agreements with design and engineering professionals to require that such professionals maintain professional liability insurance, automobile liability, general liability, and statutory workers’ compensations and employers’ liability (if applicable). All policies should contain a minimum limit of liability of One Million Dollars ($1,000,000).
|
a.
|
Premises and Operations coverage with no explosion, collapse, or underground damage (XCU) exclusions.
|
b.
|
Products and completed operations coverage. Managing Member agrees to maintain this coverage for the Company for the greater of ten (10) years following substantial completion of the Project or until all statutes of limitations expire.
|
c.
|
Blanket contractual coverage or its equivalent.
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d.
|
Modification or deletion of the Alienated Premises Exclusion.
|
e.
|
Broad Form Property Damage coverage including completed operations or its equivalent.
|
f.
|
The Company shall be the first named insured, and IHP Capital Partners VI, LLC (“
IHP
”),
Institutional Housing Partners VI L.P., IHP Fund VI Investors LLC, IHP Fund VI Incentive Holdings LLC, California State Teachers’ Retirement System and any other parties in interest as Additional Named Insureds. Since the Policy is a “wrap-up” the eligible and enrolled subcontractors are also insured under the Policy. The design and engineering professionals are included for coverage under the Policy, but only for bodily injury and property damage claims.
|
h.
|
An
endorsement
stating: “Such coverage as is afforded by this policy for the benefit of the additional insured(s) is primary and any other coverage maintained by such additional insured(s) shall be non-contributing with the coverage provided under this policy.”
|
i.
|
Coverage on an “occurrence” form. “Claims made” and “
modified occurrence
” forms are not acceptable.
|
j.
|
An
endorsement
stating that any aggregate limits apply on a “per project” and on a “per location” basis.
|
a.
|
Flood, Earthquake, and Windstorm Hazards. If the Project is in a designated flood area (zone A or V), then Flood coverage shall be required. The limits of coverage shall be the maximum limits available from the National Flood Insurance Program, at a minimum. Additionally, if the Project is in a seismically active area, then earthquake coverage shall be required in a form reasonably satisfactory to IHP, in an amount not less than thirty percent (30%) of the building replacement cost. If the Project is in a Tier One windstorm zone, then windstorm coverage shall be required to the full replacement cost, subject to a deductible of not more than three percent (3%).
|
(a)
|
All policies must contain an
endorsement
affording an unqualified thirty (30) days notice of cancellation to the additional insured(s) in the event of cancellation or non-renewal, and Managing Member shall endeavor to cause the policies to contain an
endorsement
with thirty (30) days notice of material change in coverage.
|
(b)
|
All policies must be written by insurance companies whose rating in the most recent Best’s Rating Guide, is not less than A- IX. All coverage forms must be acceptable to IHP. Managing Member shall provide certified copies of all such policies to IHP,
upon request.
|
(c)
|
Certificates of Insurance with the required
endorsements
evidencing the required coverages must be delivered to IHP prior to entry upon the Property and each year thereafter for the greater of ten (10) years following substantial completion of the Project or until all applicable Statutes of Limitations expire. Managing Member further agrees to continue naming IHP and any other parties in interest as Additional Insured(s) for such coverage period. All certificates of insurance shall show the amount of any self-insured retention or deductible.
|
(a)
|
Managing Member agrees to include in its agreements with all subcontractors the provisions of Part II, Section 1 (Commercial General Liability) and Part II, Section 5 (Worker’s Compensation, Commercial Automobile liability, etc.). In addition, subcontractors performing work on behalf of Managing Member shall be required to name IHP as an additional insured on their general liability policies under the terms and conditions previously set forth in item 1(f) above.
|
(b)
|
Also, the Managing Member shall cause its standard form of subcontract agreement to contain the following, to the extent necessary, to permit the Managing Member to (i) use subcontractor indemnity provisions to contribute to the Company’s self-insured retention obligations under the policy, and (ii) enroll subcontractors (and lower tier contractors) in the wrap policy and carve out the cost of insurance from the gross contract amount.
|
(c)
|
IHP reserves the right, in its discretion and at the Company’s cost, to require higher limits of liability coverage if, in IHP’s opinion, operations by or on behalf of Managing Member create higher than normal hazards and, to require Managing Member to name additional parties in interest to be Additional Named Insureds.
|
ASSETS
|
|
REAL ESTATE INVENTORY
|
|
LAND:
|
|
RAW LAND
|
0
|
FINISHED LOTS
|
0
|
TOTAL
|
0
|
HOMES
|
|
CONSTRUCTION-IN-PROCESS
|
0
|
COMPLETED HOMES / MODELS (STANDING INVENTORY)
|
0
|
TOTAL
|
0
|
REAL ESTATE TOTAL
|
0
|
|
|
CASH
|
0
|
PREPAID EXPENSES
|
0
|
UTILITY DEPOSITS
|
0
|
OTHER
|
0
|
TOTAL ASSETS
|
0
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
THIRD-PARTY LOANS
|
|
PRINCIPAL
|
0
|
ACCRUED INTEREST
|
0
|
TOTAL
|
0
|
|
|
CUSTOMER DEPOSITS
|
0
|
ACCRUED PROPERTY TAXES
|
0
|
CONSTRUCTION PAYABLES
|
0
|
OTHER LIABILITIES
|
0
|
WARRANTY RESERVE
|
0
|
TOTAL LIABILITIES
|
0
|
EQUITY
|
|
CONTRIBUTED CAPITAL
|
0
|
RETAINED EARNINGS (PRIOR YEARS’ PROFIT (LOSS))
|
0
|
CURRENT YEAR PROFIT (LOSS)
|
0
|
TOTAL EQUITY
|
0
|
TOTAL LIABILITIES AND EQUITY
|
0
|
REVENUES
|
|
|
GROSS SALES
|
0
|
|
WARRANTY RESERVE
|
0
|
|
SELLING EXPENSES (COMMISSIONS & CLOSING COSTS)
|
0
|
|
OTHER INCOME
|
0
|
|
NET REVENUES
|
0
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
COST OF SALES
|
0
|
|
|
|
|
TOTAL COST OF SALES
|
0
|
|
|
|
|
GROSS INCOME FROM SALE OF HOMES
|
0
|
|
GROSS MARGIN
|
0.00
|
%
|
|
|
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
0
|
|
SALES AND MARKETING
|
0
|
|
|
|
|
NET PROFIT (LOSS)
|
0
|
|
|
IHP Capital Partners VI, LLC
|
|
DEVELOPER
|
TOTAL
|
|
|
|
|
|
BALANCE BEGINNING OF QUARTER
|
0
|
|
0
|
0
|
|
|
|
|
|
CONTRIBUTIONS
|
0
|
|
0
|
0
|
|
|
|
|
|
DISTRIBUTIONS:
|
|
|
|
|
RETURN OF CAPITAL-PREFERRED RETURN (_%)
|
0
|
|
0
|
0
|
RETURN OF CAPITAL-CONSTRUCTION LOAN EQUIVALENT (_%)
|
0
|
|
0
|
0
|
PREFERRED RETURN EARNINGS (_%)
|
0
|
|
0
|
0
|
CONSTRUCTION LOAN EQUIVALENT EARNINGS (_%)
|
0
|
|
0
|
0
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
0
|
|
0
|
0
|
|
|
|
|
|
BALANCE END OF QUARTER
|
0
|
|
0
|
0
|
|
IHP Capital Partners VI, LLC
|
|
DEVELOPER
|
TOTAL
|
|
|
|
|
|
BALANCE BEGINNING OF YEAR
|
0
|
|
0
|
0
|
|
|
|
|
|
CONTRIBUTIONS
|
0
|
|
0
|
0
|
|
|
|
|
|
DISTRIBUTIONS:
|
|
|
|
|
RETURN OF CAPITAL- PREF. (___%)
|
0
|
|
0
|
0
|
RETURN OF CAPITAL-CLE (___%)
|
0
|
|
0
|
0
|
PREFERRED RETURN EARNINGS (___%)
|
0
|
|
0
|
0
|
CONSTRUCTION LOAN EQUIVALENT EARNINGS (___%)
|
0
|
|
0
|
0
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
0
|
|
0
|
0
|
|
|
|
|
|
BALANCE END OF PERIOD
|
0
|
|
0
|
0
|
FROM
|
TO
|
DAYS
OUT.
|
CAPITAL
CONTRIBUTION
|
CAPITAL
DISTRIBUTION
|
|
TOTAL UNRETURNED
CAPITAL
|
RATE
|
PREFERRED RETURN
EARNED
|
PREFERRED RETURN
DISTRIBUTION
|
UNPAID PREFERRED
RETURN
|
<Closing Date>
|
<Current Date>
|
|
<Init. Cap. Contrib.>
|
0.00
|
|
0.00
|
<Per Agrmnt>
|
0.00
|
0.00
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTALS
|
|
0.00
|
0.00
|
|
|
|
0.00
|
0.00
|
0.00
|
A.
|
Duty of Loyalty
: Notwithstanding any other considerations, assets shall be managed for the exclusive benefit of the participants and the beneficiaries of CalSTRS. CalSTRS’ as well as its advisors’, duty to the participants and their beneficiaries shall take precedence over any other duty.
|
B.
|
Prudence
: CalSTRS’ Board, staff and advisors are charged with the fiduciary duty to exercise the care, skill, prudence and diligence appropriate to the task.
|
C.
|
Competitive Return
: To comply with duties of loyalty and prudence, all investments and services must be made and managed in a manner that produces a competitive risk-adjusted return.
|
D.
|
Competitive Bidding
: Contractors and their subcontractors for construction, maintenance, and services shall be selected through a competitive bidding and selection process. The purpose of this provision is to encourage fair competition and to actively seek bids from all qualified sources within an area, particularly those identified as Responsible Contractors. Advisors and their subcontractors shall create
|
E.
|
Local, state and national laws
. All advisors, property managers, contractors, and their subcontractors shall observe all local, state, and national laws (including by way of illustration those pertaining to insurance, withholding taxes, minimum wage, labor relations, health, and occupational safety).
|
A.
|
Applicable Investments and Phasing
: This Policy shall apply to all applicable real estate advisors. The Policy shall not apply to investments such as hybrid debt, joint ventures, opportunity funds and other real estate investments where CalSTRS does not have 100% ownership and/or full control of the investment. However, in those instances where CalSTRS does not have 100% ownership and/or full control of the investment, staff will make reasonable attempts to encourage partners to comply with the spirit and practice of Responsible Contracting.
|
B.
|
Notification
: CalSTRS shall provide all applicable current and prospective real estate advisors with a copy of this Policy, including investments where CalSTRS does not have 100% ownership and/or full control of the investment.
|
C.
|
Solicitation Documents
: All requests for proposal and invitations to bid covered by this Policy shall include the terms of this Policy. Responses by bidders shall include information to assist the staff in evaluating a bid.
|
D.
|
Contracts and Renewals
: All contracts entered into after the effective date of this Policy and pertaining to applicable real estate investments, including renewals of such contracts, shall include the terms of this Policy.
|
E.
|
Responsibilities
: The responsibilities of CalSTRS’ staff, advisors, property managers, contractors, and unions are defined as follows:
|
1.
|
Staff
: CalSTRS staff shall have the following responsibilities:
|
a.
|
Review the advisors’ annual certification statement regarding compliance with the Policy.
|
b.
|
Develop and maintain contact lists for all CalSTRS’ properties and provide a copy to inquiring parties.
|
c.
|
Insert appropriate contract language where applicable.
|
d.
|
In those instances where CalSTRS does not have 100% ownership and/or full control of an investment, make reasonable attempts to encourage partners to comply with the spirit and practice of Responsible Contracting.
|
2.
|
Advisors
: Advisors’ responsibilities shall include:
|
a.
|
Communicate the Policy to all property managers.
|
b.
|
Review a contract listing for each property prepared by each property manager.
|
c.
|
Maintain a simplified bid summary for each applicable contract. The summary should include identifying contract, successful bidder, and bidder’s status as Responsible Contractor.
|
d.
|
Maintain an annual report in their home office, describing their own efforts as well as those by property managers and their subcontractors.
|
e.
|
Monitor and enforce the Policy including investigation of potential violations.
|
f.
|
Annually, the signatory to the CalSTRS contract will file a certification statement that their firm complied with the Responsible Contractor Policy for the preceding year and upon request will provide written substantiation of such compliance. This provision will be subject to periodic audits.
|
3.
|
Property Managers
: Property managers will have responsibility for the following:
|
a.
|
Communicate in bid documents the Responsible Contractor Program Policy to contractors seeking to secure construction or building service contracts.
|
b.
|
Communicate the Policy to any interested party.
|
c.
|
Ensure there is a competitive bidding process that is inclusive of potentially eligible Responsible Contractors.
|
d.
|
Require bidders to provide to property manager a Responsible Contractor self-certification on a form approved by CalSTRS.
|
e.
|
Prepare and send to advisors a contract listing for applicable service contracts for each property under management. The building trades and service trades and other potential bidders will have access to this list.
|
f.
|
Provide advisors with a simplified bid summary for each contract.
|
g.
|
Provide property level annual report information to advisor.
|
h.
|
Maintain documentation for successful bidders.
|
i.
|
Seek from trade unions/service unions input in the development of Responsible Contractor lists.
|
j.
|
Maintain list of any interested Responsible Contractors. (Names, addresses and telephone numbers).
|
4.
|
Contractors
: Contractors will have the responsibility for the following:
|
a.
|
Submit to property manager a Responsible Contractor self-certification on a form approved by CalSTRS.
|
b.
|
Communicate to subcontractors the Responsible Contractor Program Policy.
|
c.
|
Provide to property manager Responsible Contractor documentation.
|
5.
|
Unions
: Trade unions/service unions shall be asked to perform the following tasks:
|
a.
|
Deliver to the property manager or advisor lists of names and phone numbers of Responsible Contractors.
|
b.
|
Refer interested and qualified Responsible Contractors to the property manager.
|
c.
|
Continually monitor the local labor markets to update the lists.
|
d.
|
Provide technical input as appropriate.
|
F.
|
Outreach
: CalSTRS’ staff will develop and maintain a list of all CalSTRS 100% owned and/or fully controlled properties. The list will include the property name, address, advisor and property manager, and phone number of the property manager and real estate advisors. The CalSTRS’ staff will provide this list to anyone who requests a copy. Actual contract expiration inquiries will be referred to the property level. Property managers shall provide solicitation documents to any potential contractor who has, in writing, expressed an interest in bidding for the relevant contract.
|
G.
|
Minimum Contract Size
: The Policy shall absolutely apply to all contracts of a minimum size of $25,000, individually or annually as applicable. Minimum contract size refers to the total project value of the work being contracted for and not to any desegregation by trade or task. For example, a $25,000 contract to paint two buildings in a single office complex would not be treated as two $12,500 contracts, each less than the minimum contract size. Desegregation designed to evade the requirements of the Policy is not permitted.
|
H.
|
Applicable Expenditures Categories
: The Policy shall apply to tenant improvements, capital expenditures, and operational service contracts (such as cleaning).
|
I.
|
Fair Wage, Fair Benefits, Training
: The Policy avoids a narrow definition of “fair wage”, “fair benefits”, and “training” that might not be practical in all markets. Furthermore, the Policy does not require a “prevailing wage”, as defined by government surveys. Instead, the Policy looks to local practices with regard to type of trade and type of project. The Policy recognizes that practices and labor market conditions vary across the country and that flexibility in its implementation is very important.
|
J.
|
Competitive Bidding
: Property managers and contractors should give notice for applicable bids in local trade publications, bulletin boards and union building trades councils. Property managers should seek input from building trades councils to develop lists of Responsible Contractors for inclusion in the bidding process.
|
K.
|
Neutrality
: CalSTRS recognizes the rights of employees to representation, and supports and strongly encourages a position of neutrality, in the event there is a legitimate attempt by a labor organization to organize workers employed in the construction, maintenance, operation, and services at a CalSTRS owned property.
|
L.
|
Enforcement
: If Staff becomes aware of non-compliance, this System will place a non-complying advisor or property manager on a probation watch list. If the advisor or property manager does not modify this pattern of conduct even after discussions with CalSTRS’ staff, the System will consider this pattern of conduct along with other information when it reviews the advisor or property manager contract for possible renewal. The key indicator is a pattern of conduct that is inconsistent with the provisions of the Policy.
|
(i)
|
Completion and City Council Approval of the Folsom Plan Area Specific Plan (“
SPA
”) Tier 2 or Amended Development Agreement (“
DA Amendment
”). Critical components of the DA Amendment include: School Financing Plan; Affordable Housing; and Specific Plan Infrastructure Fee Program.
|
(i)
|
All costs and liabilities (“
Project Costs
”) to be paid or assumed by the Company in connection with the Project, which is hereby approved by the Members (as amended from time to time with IHP’s approval the “
Approved Project Budget
”). No changes or departures from the Approved Project Budget shall be made without the prior consent of IHP, which consent may be withheld in its discretion.
|
(ii)
|
The projected cash flow for the Project (“
Project Proforma
”).
|
(iii)
|
Te anticipated revenues and Project Costs of the Company for the balance of the first calendar year of the Company through the estimated life of the Project.
|
(iv)
|
Critical Dates Schedule (which replaces the prior Critical Dates Schedule(s)).”
|
“
TNHC
”
|
TNHC LAND COMPANY LLC,
a Delaware limited liability company
|
|
By:
/s/ John Stephens
Name: John Stephens
Its: Chief Financial Officer
By:
/s/ Leonard Miller
Name: Leonard Miller
Its: Chief Operating Officer
|
“
IHP
”
|
IHP CAPITAL PARTNERS VI LLC,
a Delaware limited liability company
By: Institutional Housing Partners VI L.P.,
a California limited partnership,
Its Manager
By: IHP Capital Partners,
a California corporation
Its General Partner
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By:
/s/ Douglas C. Neff
Douglas C. Neff
President
By:
/s/ Barry S. Villines
Barry S. Villines
Chief Financial Officer
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(1)
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Backbone improvements required for Phase 1 development, […***…]
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(2)
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Common area landscape improvements on […***…]; and
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(3)
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Recreation center (to be HOA-maintained and accessible to all 3 major project phases of Russell Ranch).
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Certified Final Environmental Impact Report, Adopted Findings of Fact and Statement of Overriding Considerations and Approved Mitigation Monitoring and Reporting Program for the Russell Ranch Project (City of Folsom Resolution No. 9564)
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General Plan Amendment for the Russell Ranch Project (City of Folsom Resolution No. 9565)
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Amendment to Folsom Plan Area Specific Plan for the Russell Ranch Project (City of Folsom Resolution No. 9566)
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Vesting Large Lot Tentative Subdivision Map for the Russell Ranch Project (City of Folsom Resolution No. 9567)
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Vesting Small Lot Tentative Subdivision Map for the Russell Ranch Project (City of Folsom Resolution No. 9567)
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Planned Development Permit for the Russell Ranch Project (City of Folsom Resolution No. 9567)
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Project Design Guidelines for the Russell Ranch Project (City of Folsom Resolution No. 9567)
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Inclusionary Housing Plan and Inclusionary Housing Agreement for the Russell Ranch Project (City of Folsom Resolution No. 9567)
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Amendment No. 1 to the First Amended and Restated Development Agreement (ARDA) between the City of Folsom and TNHC Russell Ranch, LLC Relative to the Russell Ranch Project (Ordinance No. 1226) –
Recorded on July 10, 2015, in the Official Records of the County Recorder of Sacramento County in Book 20150710, Page 0642
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Amended Vesting Large Lot Tentative Subdivision Map for the Russell Ranch Project (City of Folsom Resolution No. 9783)
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Amended Vesting Small Lot Tentative Subdivision Map for the Russell Ranch Project (City of Folsom Resolution No. 9783)
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Amended Vesting Large Lot and Small Lot Tentative Subdivision Maps for Proposed Changes to Phase 2 of Russell Ranch
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General Plan Amendment
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Specific Plan Amendment
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Amendment to Project Design Guidelines for the Russell Ranch Project
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Amendment to Development Agreement
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(1)
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I have reviewed this quarterly report on Form 10-Q of The New Home Company Inc.;
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(2)
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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(3)
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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(4)
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(5)
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 27, 2017
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/s/ H. Lawrence Webb
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H. Lawrence Webb
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Chief Executive Officer (Principal Executive Officer)
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(1)
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I have reviewed this quarterly report on Form 10-Q of The New Home Company Inc.;
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(2)
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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(3)
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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(4)
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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||
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(5)
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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October 27, 2017
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/s/ John M. Stephens
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John M. Stephens
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Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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October 27, 2017
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/s/ H. Lawrence Webb
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H. Lawrence Webb
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Chief Executive Officer (Principal Executive Officer)
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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October 27, 2017
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/s/ John M. Stephens
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John M. Stephens
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Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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