UCP, Inc., San Jose (NYSE:UCP) on Thursday after market close reported net income for the first quarter ended March 31 attributable to stockholders of UCP was $1.1 million, or $0.14 per share of Class A common stock, compared to net income attributable to stockholders of UCP of $0.1 million, or $0.01 per share of Class A common stock, in the prior year period. There were no analysts following the stock at Dow Jones.a
Home building revenue increased 37.8% to $94.0 million, compared to $68.2 million in the prior year period. The improvement was driven by a 35.3% increase in homes delivered to 226, compared to 167 in the prior year period, led by increased deliveries of 40.0% in the West. The average selling price of a home increased 1.7% to approximately $416,000, compared to the prior year period, driven by an 18.6% increase in the Southeast.
Net new home orders increased 20.0% to 270, compared to 225 in the prior year period, led by a 25.0% increase in net new home orders in the West. Net new home orders in the Southeast grew 2.0% to 50, compared to the prior year period. The average number of selling communities was 27 compared to 28 in the prior year period. Unit backlog at the end of the quarter was up 32.2% to 406, compared to 307 at the end of the prior year period. The backlog on a dollar basis increased 29.6% to $176.6 million, compared to $136.2 million at the end of prior year period.
Total lots owned and controlled were 8,049, compared to 6,638 at December 31, 2016 attributable to an increase in controlled lots in the three Southeast markets and Pacific Northwest market as the company continues to prudently manage inventory and gain greater operating expense leverage in these rapidly growing divisions while striving to expand its return on equity and assets.
Home building gross margin percentage was 18.3%, compared to 17.6% in the prior year period. Adjusted home building gross margin percentage was 21.0%, compared to 19.9% in the prior year period. Consolidated gross margin percentage was 18.3%, compared to 16.9% in the prior year period.
Sales and marketing expense was $5.1 million, compared to $4.1 million in the prior year period. As a percentage of total revenue, sales and marketing expense decreased to 5.4%, compared to 6.0% in the prior year period, due to cost controls as well as higher overall revenues.
General and administrative expense was $8.5 million, compared to $7.3 million in the prior year period. As a percentage of total revenue, general and administrative expense was 9.0%, down from 10.7% in the prior year period. As a percentage of total revenue, selling, general and administrative expense was 14.4% compared to 16.6% for the prior year, driven by higher revenue and continued focus on operational initiatives.
In June 2016, the company’s board of directors authorized a stock repurchase program, under which the company may repurchase up to $5.0 million of its Class A common stock through June 1, 2018. As of March 31, 2017, the Company repurchased 146,346 shares of Class A common stock for approximately $1.2 million under this stock repurchase program. For the three months ended March 31, 2017, the company had no stock repurchases.
On April 11, 2017, UCP and Century Communities, Inc. (“Century”) (NYSE: CCS), a leading home builder of single-family homes, townhomes and flats in select U.S. markets, jointly announced the execution of a definitive merger agreement to create a combined company with an equity market capitalization of over $700 million and an enterprise value of over $1.3 billion. The combined company will operate in 10 states, 17 markets and 117 communities with approximately 25,000 total lots.
In the merger, each outstanding share of UCP Class A common stock will be converted into the right to receive $5.32 in cash and 0.2309 of a newly issued share of Century common stock. UCP’s stockholders will own, on a pro forma basis, approximately 16.4% of the combined company. The transaction is expected to close by the end of the third quarter of 2017, subject to customary closing conditions, including the adoption of the merger agreement by UCP’s stockholders.
Dustin Bogue, President and Chief Executive Officer of UCP, stated, “The continuation of strong momentum in our markets and the expanded reach of our Benchmark brand was evident with first quarter home deliveries growing 35.3% and homes in backlog up 32.2% compared to the prior period. We are especially pleased to report an improvement in home building gross margin, in part driven by our careful balancing of price and pace, along with ongoing efforts to tightly manage construction costs. ”
