Revenue — API Ninjas revenue difference does not reconcile with local math
Verdict
Total revenues of $705.7m missed the API Ninjas estimate of $723.5m by 2.5%, and the diluted loss per share of $(0.70) missed the $(0.56) estimate by 25%.
Revenue fell 11.9% year over year and the company swung to a $2.8m pre-tax loss from $23.8m of pre-tax income.
Management says this is the first time in more than five years adjusted pre-tax income has come in below the guided range, blaming income from unconsolidated joint ventures at the low end.
Backlog is the counterweight: consolidated domestic contract backlog rose 5.1% to $881.9m even as orders fell 4.6% to 1,155 homes.
Key metrics
Metric
Reported
Prior year
Change
Total revenues
$705.7m
$800.6m
-11.9%
Homebuilding gross margin (before interest and land charges)
14.6%
17.3%
-270bps
(Loss) income before income taxes
-$2.8m
$23.8m
swing to loss
Adjusted EBITDA
$31.9m
$77.1m
-58.6%
Consolidated domestic contract backlog value
$881.9m
$838.8m
+5.1%
Total domestic quick move-in homes (QMIs)
820
1,016
-19.3%
Guidance changes
Item
New guidance
Prior guidance
Q4 2026 total revenues
$800 million to $900 million
—
Q4 2026 adjusted homebuilding gross margin
15.0% to 16.5%
—
Q4 2026 adjusted income before income taxes
$15 million to $30 million
—
Q4 2026 adjusted EBITDA
$50 million to $65 million
—
Quality of earnings
Gross margin before interest and land charges of 14.6% is 270 basis points below last year, while the margin after those charges rose 10 basis points to 11.8% -- the two measures point opposite ways.
SG&A of $86.9m fell in absolute terms but rose to 12.3% of revenue from 11.3% on the smaller sales base.
Adjusted EBITDA of $31.9m is down 58.6% year over year, a far steeper fall than the 11.9% revenue decline.
Gotchas & watch items
Land and land development spending rose to $231.9m from $192.6m even as revenue fell, so cash went out faster while sales slowed.
Controlled consolidated lots fell to 34,373 from 40,246, a 14.6% reduction that caps how quickly community count can grow.
Total domestic quick move-in homes fell 19.3% to 820, cutting the inventory available to convert into fourth-quarter deliveries guided at $800m-$900m of revenue.
Guidance excludes further phantom stock expense tied to the $123.90 July 31 closing price, leaving SG&A exposed to the share price.