The New Home Company Inc. (NYSE:NWHM) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 10:00 am ET
Greetings, and welcome to The New Home Company Second Quarter 2020 Results Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]
It is now my pleasure to introduce your host, Drew Mackintosh with Mackintosh Investor Relations. Thank you, you may begin.
Good morning. Welcome to The New Home Company's earnings conference call. Earlier today, the company released its financial results for the second quarter of 2020. Documents detailing these results are available in the Investor Relations section of the company's website at nwhm.com.
Before the call begins, I would like to remind everyone that certain statements made in the course of this call, which are not historical facts, are forward-looking statements that involve risks and uncertainties. A discussion of such risks and uncertainties and other important factors that could cause actual operating results to differ materially from those in the forward-looking statements are detailed in the company's filings made with the SEC, including its most recent annual report on Form 10-K and in its quarterly reports on Form 10-Q.
The company undertakes no duty to update these forward-looking statements that are made during the course of this call. Additionally, non-GAAP financial measures may be discussed on this conference call. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through The New Home Company's website and in its filings with the SEC. Hosting the call today is Larry Webb, Executive Chairman; Leonard Miller, President and Chief Executive Officer; and John Stephens, Chief Financial Officer.
With that, I will now turn the call over to Larry.
Thanks, Drew and good morning to everyone joining us on the call today. As we go over our results for the second quarter of 2020, provide an update to our strategic outlook and give some additional color on our operations. The New Home Company made progress on a number of fronts in the second quarter of 2020 and proactively addressed some lingering issues that whilst creating a significant loss in the quarter, put the company in a much better position to succeed over the long-term.
Specifically, we took $39 million in impairment charges in the quarter, of which $20 million related to our Russell Ranch joint venture in Northern California and $19 million to address five underperforming wholly-owned communities. With respect to Russell Ranch, we are planning to exit from the joint venture, following an extensive review of the project, weighing further investment and future returns against the tax benefits associated with leaving the project altogether.
Ultimately, we believe that the future estimated returns and capital needed to move the joint venture forward do not outweigh the risk to stay in the venture with the current structure. In addition, we determined that five of our wholly-owned communities required some level of impairment based on our future expectations and budgets for these communities. These communities are scattered throughout our footprint, with three in Southern California, one being a closeout, one in Northern California