-Net New Home Orders up 50% Year-Over-Year-
-Backlog Dollar Value up 39% Year-Over-Year-
-Homebuilding Gross Margin Percentage of 22.1%-
-Diluted Earnings Per Share of $0.61-
IRVINE, Calif., Oct. 22, 2020 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the “Company”) (NYSE:TPH) today announced results for the third quarter ended September 30, 2020.
“TRI Pointe Group delivered another quarter of outstanding results in the third quarter of 2020, generating year-over-year net order growth of 50% and net income of $78.7 million, or earnings per share of $0.61,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Our homebuilding operations continue to benefit from extremely strong housing fundamentals, marked by low interest rates, scarcity of new and existing home inventory and highly motivated buyers. We believe these positive drivers will remain in place for the foreseeable future and will serve as tailwinds for our company as we grow our presence across the country.”
Mr. Bauer continued, “The robust demand we experienced in the quarter resulted in pricing power at our communities and allowed us to stay ahead of input cost inflation. As a result, home sales gross margin for the quarter came in at 22.1%, which was higher than we had forecast. The strong closing volumes also led to better operating leverage in the quarter, as evidenced by our SG&A ratio improving by 180 basis points year-over-year. We will continue to balance our growth objectives against our efforts to improve profitability in each of our markets.”
Mr. Bauer concluded, “Equally important are our ongoing efforts to improve returns. We remain focused on ways in which we can be more efficient with our capital and believe we can improve our return profile over time through a combination of better operating leverage, quicker inventory turns and additional share repurchases. We believe these initiatives will drive returns higher and create more value for our shareholders over time.”
Results and Operational Data for Third Quarter 2020 and Comparisons to Third Quarter 2019
- Net income was $78.7 million, or $0.61 per diluted share, compared to $62.9 million, or $0.44 per diluted share. In the third quarter of 2020, the Company recorded costs related to the early extinguishment and refinancing of the remaining portion of its Senior Notes due 2021 in connection with the issuance of its Senior Notes due 2028 during the second quarter. The current quarter charge incurred was $3.4 million and is included in other (expense) income, net on the Company's consolidated statements of operations. In addition, the Company incurred $54,000 of additional restructuring charges related to a workforce reduction plan that was implemented in the second quarter of 2020. Excluding these items, adjusted net income was $81.3 million, or $0.63 per diluted share, for the third quarter of 2020.*
- Home sales revenue of $826.0 million compared to $746.3 million, an increase of 11%
- New home deliveries of 1,303 homes compared to 1,187 homes, an increase of 10%
- Average sales price of homes delivered of $634,000 compared to $629,000, an increase of 1%
- New home deliveries of 1,303 homes compared to 1,187 homes, an increase of 10%
- Homebuilding gross margin percentage of 22.1% compared to 22.6%, a decrease of 50 basis points
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 25.0%*
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 25.0%*
- SG&A expense as a percentage of homes sales revenue of 9.8% compared to 11.6%, a decrease of 180 basis points
- Net new home orders of 1,933 compared to 1,291, an increase of 50%
- Active selling communities averaged 134.0 compared to 147.5, a decrease of 9%
- Net new home orders per average selling community were 14.4 orders (4.8 monthly) compared to 8.8 orders (2.9 monthly)
- Cancellation rate of 9% compared to 17%
- Net new home orders per average selling community were 14.4 orders (4.8 monthly) compared to 8.8 orders (2.9 monthly)
- Backlog units at quarter end of 3,188 homes compared to 2,312, an increase of 38%
- Dollar value of backlog at quarter end of $2.1 billion compared to $1.5 billion, an increase of 39%
- Average sales price of homes in backlog at quarter end of $648,000 compared to $645,000, an increase of 1%
- Dollar value of backlog at quarter end of $2.1 billion compared to $1.5 billion, an increase of 39%
- Ratios of debt-to-capital and net debt-to-net capital of 37.8% and 27.6%*, respectively, as of September 30, 2020
- Repurchased 3,662,738 shares of common stock at a weighted average price per share of $16.94 for an aggregate dollar amount of $62.1 million in the three months ended September 30, 2020
- Ended the third quarter of 2020 with total liquidity of $1.0 billion, including cash and cash equivalents of $493.6 million and $533.2 million of availability under the Company’s unsecured revolving credit facility
* See “Reconciliation of Non-GAAP Financial Measures”
“In keeping with our focus on operational efficiency, we have made the strategic decision to consolidate our homebuilding brands into one unified name – TRI Pointe Homes,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “This change will allow us to concentrate our sales and marketing efforts around one brand instead of six, while also creating a stronger national awareness for our company. Our operational mantra of leveraging the best of big and small, with local expertise and relationships powered by large scale financial resources and technology platforms, will continue to define who we are as a company as we look to the future.”
Outlook
For the fourth quarter of 2020, the Company anticipates delivering between 1,400 and 1,500 homes at an average sales price between $625,000 and $635,000. The Company expects its homebuilding gross margin percentage will be in the range of 20.5% to 21.5% for the fourth quarter of 2020 and anticipates its SG&A expense as a percentage of homes sales revenue will be in the range of 9.8% to 10.3% during such period. Lastly, the Company expects its effective tax rate for the fourth quarter of 2020 will be in the range of 25.0% to 25.5%.
For the full year, the Company anticipates delivering between 4,900 and 5,000 homes at an average sales price between $625,000 and $630,000. In addition, the Company expects homebuilding gross margin percentage will be in the range of 21.0% to 21.5% for the full year and anticipates its SG&A expense as a percentage of homes sales revenue will be in the range of 10.8% to 11.2%. Finally, the Company expects its effective tax rate for the full year will be in the range of 24.0% to 24.5%.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Thursday, October 22, 2020. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, and Glenn Keeler, Chief Financial Officer. Interested parties can listen to the call live and view the related slides on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at presentation slides on the internet through the Investors section of the Company’s website at www.TRIPointeGroup.com. Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at (877) 407-3982, or (201) 493-6780 for international participants. Participants should ask for the TRI Pointe Group Second Quarter 2020 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the call. A replay of the call will be available for two weeks following the call toll free at (844) 512-2921, or (412) 317-6671 for international participants, using the reference number 13711225. An archive of the webcast will also be available on the Company’s website for a limited time.
About TRI Pointe Group®
Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is a family of premium, regional homebuilders that designs, builds, and sells homes in major U.S. markets. As one of the top 10 largest public homebuilding companies based on revenue in the United States, TRI Pointe Group combines the resources, operational sophistication, and leadership of a national organization with the regional insights, community ties, and agility of local homebuilders. The TRI Pointe Group family includes Maracay® in Arizona, Pardee Homes® in California and Nevada, Quadrant Homes® in Washington, Trendmaker® Homes in Texas, TRI Pointe Homes® in California, Colorado and the Carolinas, and Winchester® Homes* in Maryland and Virginia. TRI Pointe Group was named 2019 Builder of the Year by Builder and Developer magazine, recognized in Fortune magazine’s 2017 100 Fastest-Growing Companies list, and garnered the 2015 Builder of the Year Award by Builder magazine. The company was also named one of the Best Places to Work in Orange County by the Orange County Business Journal in 2016, 2017, 2018 and 2019. For more information, please visit www.TriPointeGroup.com.
*Winchester is a registered trademark and is used with permission.
Forward-Looking Statements
Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending. Forward-looking statements that are included in this press release are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or other words that convey future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effects of the ongoing COVID-19 pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the severity and the duration of the outbreak, the duration of existing and future social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and efficacy of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain, the health of our employees, service providers and trade partners, and the reactions of U.S. and global markets and their effects on consumer confidence and spending; the effects of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations, particularly within California; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; raw material and labor prices and availability; oil and other energy prices; the effects of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; the effects of weather, including the re-occurrence of drought conditions in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; the risk of loss from acts of war, terrorism, civil unrest or outbreaks of contagious diseases, such as COVID-19; transportation costs; federal and state tax policies; the effects of land use, environment and other governmental laws and regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.
Investor Relations Contact:
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TRIPointeGroup.com, 949-478-8696
Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2020 | 2019 | Change | % Change | 2020 | 2019 | Change | % Change | ||||||||||||||||||||||
| Operating Data: | (unaudited) | ||||||||||||||||||||||||||||
| Home sales revenue | $ | 826,036 | $ | 746,269 | $ | 79,767 | 11 | % | $ | 2,187,816 | $ | 1,931,110 | $ | 256,706 | 13 | % | |||||||||||||
| Homebuilding gross margin | $ | 182,580 | $ | 168,642 | $ | 13,938 | 8 | % | $ | 470,044 | $ | 357,263 | $ | 112,781 | 32 | % | |||||||||||||
| Homebuilding gross margin % | 22.1 | % | 22.6 | % | (0.5 | )% | 21.5 | % | 18.5 | % | 3.0 | % | |||||||||||||||||
| Adjusted homebuilding gross margin %* | 25.0 | % | 25.3 | % | (0.3 | )% | 24.4 | % | 21.5 | % | 2.9 | % | |||||||||||||||||
| SG&A expense | $ | 81,037 | $ | 86,585 | $ | (5,548 | ) | (6 | )% | $ | 246,259 | $ | 248,090 | $ | (1,831 | ) | (1 | )% | |||||||||||
| SG&A expense as a % of home sales revenue | 9.8 | % | 11.6 | % | (1.8 | )% | 11.3 | % | 12.8 | % | (1.5 | )% | |||||||||||||||||
| Net income | $ | 78,682 | $ | 62,861 | $ | 15,821 | 25 | % | $ | 167,093 | $ | 89,194 | $ | 77,899 | 87 | % | |||||||||||||
| Adjusted net income* | $ | 81,309 | $ | 62,861 | $ | 18,448 | 29 | % | $ | 179,168 | $ | 89,194 | $ | 89,974 | 101 | % | |||||||||||||
| Adjusted EBITDA* | $ | 140,792 | $ | 115,605 | $ | 25,187 | 22 | % | $ | 329,519 | $ | 207,371 | $ | 122,148 | 59 | % | |||||||||||||
| Interest incurred | $ | 20,063 | $ | 22,405 | $ | (2,342 | ) | (10 | )% | $ | 62,670 | $ | 67,740 | $ | (5,070 | ) | (7 | )% | |||||||||||
| Interest in cost of home sales | $ | 23,495 | $ | 19,240 | $ | 4,255 | 22 | % | $ | 62,118 | $ | 51,502 | $ | 10,616 | 21 | % | |||||||||||||
| Other Data: | |||||||||||||||||||||||||||||
| Net new home orders | 1,933 | 1,291 | 642 | 50 | % | 4,926 | 4,103 | 823 | 20 | % | |||||||||||||||||||
| New homes delivered | 1,303 | 1,187 | 116 | 10 | % | 3,490 | 3,126 | 364 | 12 | % | |||||||||||||||||||
| Average sales price of homes delivered | $ | 634 | $ | 629 | $ | 5 | 1 | % | $ | 627 | $ | 618 | $ | 9 | 1 | % | |||||||||||||
| Cancellation rate | 9 | % | 17 | % | (8 | )% | 14 | % | 16 | % | (2 | )% | |||||||||||||||||
| Average selling communities | 134.0 | 147.5 | (13.5 | ) | (9 | )% | 138.8 | 147.3 | (8.5 | ) | (6 | )% | |||||||||||||||||
| Selling communities at end of period | 126 | 150 | (24 | ) | (16 | )% | |||||||||||||||||||||||
| Backlog (estimated dollar value) | $ | 2,067,366 | $ | 1,491,452 | $ | 575,914 | 39 | % | |||||||||||||||||||||
| Backlog (homes) | 3,188 | 2,312 | 876 | 38 | % | ||||||||||||||||||||||||
| Average sales price in backlog | $ | 648 | $ | 645 | $ | 3 | 0 | % | |||||||||||||||||||||
| September 30, | December 31, | ||||||||||||||||||||||||||||
| 2020 | 2019 | Change | % Change | ||||||||||||||||||||||||||
| Balance Sheet Data: | (unaudited) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 493,585 | $ | 329,011 | $ | 164,574 | 50 | % | |||||||||||||||||||||
| Real estate inventories | $ | 2,989,377 | $ | 3,065,436 | $ | (76,059 | ) | (2 | )% | ||||||||||||||||||||
| Lots owned or controlled | 31,860 | 30,029 | 1,831 | 6 | % | ||||||||||||||||||||||||
| Homes under construction (1) | 2,777 | 2,269 | 508 | 22 | % | ||||||||||||||||||||||||
| Homes completed, unsold | 109 | 343 | (234 | ) | (68 | )% | |||||||||||||||||||||||
| Debt | $ | 1,333,254 | $ | 1,283,985 | $ | 49,269 | 4 | % | |||||||||||||||||||||
| Stockholders’ equity | $ | 2,198,088 | $ | 2,186,530 | $ | 11,558 | 0.5 | % | |||||||||||||||||||||
| Book capitalization | $ | 3,531,342 | $ | 3,470,515 | $ | 60,827 | 2 | % | |||||||||||||||||||||
| Ratio of debt-to-capital | 37.8 | % | 37.0 | % | 0.8 | % | |||||||||||||||||||||||
| Ratio of net debt-to-net capital* | 27.6 | % | 30.4 | % | (2.8 | )% | |||||||||||||||||||||||
__________
(1) Homes under construction included 73 and 78 models at September 30, 2020 and December 31, 2019, respectively.
* See “Reconciliation of Non-GAAP Financial Measures”
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| September 30, | December 31, | ||||||
| 2020 | 2019 | ||||||
| Assets | (unaudited) | ||||||
| Cash and cash equivalents | $ | 493,585 | $ | 329,011 | |||
| Receivables | 73,419 | 69,276 | |||||
| Real estate inventories | 2,989,377 | 3,065,436 | |||||
| Investments in unconsolidated entities | 36,880 | 11,745 | |||||
| Goodwill and other intangible assets, net | 159,492 | 159,893 | |||||
| Deferred tax assets, net | 30,752 | 49,904 | |||||
| Other assets | 174,060 | 173,425 | |||||
| Total assets | $ | 3,957,565 | $ | 3,858,690 | |||
| Liabilities | |||||||
| Accounts payable | $ | 94,064 | $ | 66,120 | |||
| Accrued expenses and other liabilities | 332,147 | 322,043 | |||||
| Loans payable | 250,000 | 250,000 | |||||
| Senior notes | 1,083,254 | 1,033,985 | |||||
| Total liabilities | 1,759,465 | 1,672,148 | |||||
| Commitments and contingencies | |||||||
| Equity | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | — | — | |||||
| Common stock, $0.01 par value, 500,000,000 shares authorized; 126,825,194 and 136,149,633 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 1,268 | 1,361 | |||||
| Additional paid-in capital | 425,753 | 581,195 | |||||
| Retained earnings | 1,771,067 | 1,603,974 | |||||
| Total stockholders’ equity | 2,198,088 | 2,186,530 | |||||
| Noncontrolling interests | 12 | 12 | |||||
| Total equity | 2,198,100 | 2,186,542 | |||||
| Total liabilities and equity | $ | 3,957,565 | $ | 3,858,690 | |||
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Homebuilding: | |||||||||||||||||||
| Home sales revenue | $ | 826,036 | $ | 746,269 | $ | 2,187,816 | $ | 1,931,110 | |||||||||||
| Land and lot sales revenue | 3,242 | 607 | 3,462 | 6,819 | |||||||||||||||
| Other operations revenue | 634 | 618 | 1,900 | 1,853 | |||||||||||||||
| Total revenues | 829,912 | 747,494 | 2,193,178 | 1,939,782 | |||||||||||||||
| Cost of home sales | 643,456 | 577,627 | 1,717,772 | 1,573,847 | |||||||||||||||
| Cost of land and lot sales | 3,214 | 495 | 3,790 | 7,552 | |||||||||||||||
| Other operations expense | 624 | 609 | 1,872 | 1,826 | |||||||||||||||
| Sales and marketing | 44,714 | 47,834 | 132,545 | 133,888 | |||||||||||||||
| General and administrative | 36,323 | 38,751 | 113,714 | 114,202 | |||||||||||||||
| Restructuring charges | 54 | — | 5,603 | — | |||||||||||||||
| Homebuilding income from operations | 101,527 | 82,178 | 217,882 | 108,467 | |||||||||||||||
| Equity in loss of unconsolidated entities | 106 | 18 | 67 | (33 | ) | ||||||||||||||
| Other (expense) income, net | (3,120 | ) | 325 | (9,075 | ) | 6,719 | |||||||||||||
| Homebuilding income before income taxes | 98,513 | 82,521 | 208,874 | 115,153 | |||||||||||||||
| Financial Services: | |||||||||||||||||||
| Revenues | 2,552 | 901 | 6,442 | 1,959 | |||||||||||||||
| Expenses | 1,334 | 817 | 3,698 | 1,765 | |||||||||||||||
| Equity in income of unconsolidated entities | 3,273 | 2,114 | 7,761 | 4,861 | |||||||||||||||
| Financial services income before income taxes | 4,491 | 2,198 | 10,505 | 5,055 | |||||||||||||||
| Income before income taxes | 103,004 | 84,719 | 219,379 | 120,208 | |||||||||||||||
| Provision for income taxes | (24,322 | ) | (21,858 | ) | (52,286 | ) | (31,014 | ) | |||||||||||
| Net income | $ | 78,682 | $ | 62,861 | $ | 167,093 | $ | 89,194 | |||||||||||
| Earnings per share | |||||||||||||||||||
| Basic | $ | 0.61 | $ | 0.45 | $ | 1.27 | $ | 0.63 | |||||||||||
| Diluted | $ | 0.61 | $ | 0.44 | $ | 1.27 | $ | 0.63 | |||||||||||
| Weighted average shares outstanding | |||||||||||||||||||
| Basic | 128,941,901 | 141,088,381 | 131,190,301 | 141,729,759 | |||||||||||||||
| Diluted | 129,515,114 | 141,533,546 | 131,672,652 | 142,128,786 | |||||||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||
| New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | ||||||||||||||||||||
| Reporting Segment: | |||||||||||||||||||||||||||
| Maracay | 170 | $ | 559 | 138 | $ | 513 | 475 | $ | 534 | 318 | $ | 522 | |||||||||||||||
| Pardee Homes | 368 | 680 | 461 | 698 | 987 | 680 | 1,028 | 634 | |||||||||||||||||||
| Quadrant Homes | 78 | 927 | 56 | 880 | 170 | 897 | 167 | 976 | |||||||||||||||||||
| Trendmaker Homes | 235 | 454 | 224 | 459 | 698 | 464 | 628 | 462 | |||||||||||||||||||
| TRI Pointe Homes | 292 | 694 | 226 | 685 | 810 | 701 | 749 | 693 | |||||||||||||||||||
| Winchester Homes | 160 | 619 | 82 | 569 | 350 | 626 | 236 | 599 | |||||||||||||||||||
| Total | 1,303 | $ | 634 | 1,187 | $ | 629 | 3,490 | $ | 627 | 3,126 | $ | 618 | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||
| New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | ||||||||||||||||||||
| State: | |||||||||||||||||||||||||||
| Arizona | 170 | $ | 559 | 138 | $ | 513 | 475 | $ | 534 | 318 | $ | 522 | |||||||||||||||
| California | 481 | 726 | 494 | 758 | 1,310 | 740 | 1,230 | 705 | |||||||||||||||||||
| Colorado | 47 | 625 | 62 | 576 | 166 | 593 | 215 | 564 | |||||||||||||||||||
| Maryland | 98 | 578 | 66 | 467 | 228 | 567 | 172 | 493 | |||||||||||||||||||
| Nevada | 132 | 563 | 131 | 509 | 321 | 534 | 332 | 551 | |||||||||||||||||||
| Texas | 235 | 454 | 224 | 459 | 698 | 628 | 628 | 462 | |||||||||||||||||||
| Virginia | 62 | 684 | 16 | 992 | 122 | 736 | 64 | 885 | |||||||||||||||||||
| Washington | 78 | 927 | 56 | 880 | 170 | 167 | 167 | 976 | |||||||||||||||||||
| Total | 1,303 | $ | 634 | 1,187 | $ | 629 | 3,490 | $ | 627 | 3,126 | $ | 618 | |||||||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | ||||||||||||||||
| Reporting Segment: | |||||||||||||||||||||||
| Maracay | 244 | 18.7 | 157 | 15.5 | 646 | 17.4 | 571 | 14.0 | |||||||||||||||
| Pardee Homes | 696 | 40.0 | 424 | 43.0 | 1,594 | 41.5 | 1,379 | 43.9 | |||||||||||||||
| Quadrant Homes | 78 | 8.5 | 68 | 6.8 | 309 | 8.2 | 210 | 6.9 | |||||||||||||||
| Trendmaker Homes | 318 | 30.5 | 192 | 37.0 | 757 | 30.3 | 682 | 38.1 | |||||||||||||||
| TRI Pointe Homes | 422 | 25.3 | 293 | 29.7 | 1,163 | 29.2 | 882 | 29.7 | |||||||||||||||
| Winchester Homes | 175 | 11.0 | 157 | 15.5 | 457 | 12.2 | 379 | 14.7 | |||||||||||||||
| Total | 1,933 | 134.0 | 1,291 | 147.5 | 4,926 | 138.8 | 4,103 | 147.3 | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | ||||||||||||||||
| State: | |||||||||||||||||||||||
| Arizona | 244 | 18.7 | 157 | 15.5 | 646 | 17.4 | 571 | 14.0 | |||||||||||||||
| California | 895 | 45.2 | 526 | 53.0 | 2,157 | 51.1 | 1,659 | 53.8 | |||||||||||||||
| Colorado | 72 | 4.3 | 50 | 6.0 | 181 | 4.2 | 187 | 6.4 | |||||||||||||||
| Maryland | 131 | 8.0 | 87 | 10.8 | 334 | 8.8 | 255 | 10.2 | |||||||||||||||
| Nevada | 145 | 15.5 | 141 | 13.7 | 413 | 15.3 | 415 | 13.4 | |||||||||||||||
| South Carolina | 6 | 0.3 | — | — | 6 | 0.1 | — | — | |||||||||||||||
| Texas | 318 | 30.5 | 192 | 37.0 | 757 | 30.3 | 682 | 38.1 | |||||||||||||||
| Virginia | 44 | 3.0 | 70 | 4.7 | 123 | 3.4 | 124 | 4.5 | |||||||||||||||
| Washington | 78 | 8.5 | 68 | 6.8 | 309 | 8.2 | 210 | 6.9 | |||||||||||||||
| Total | 1,933 | 134.0 | 1,291 | 147.5 | 4,926 | 138.8 | 4,103 | 147.3 | |||||||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
| As of September 30, 2020 | As of September 30, 2019 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| Reporting Segment: | |||||||||||||||||||||
| Maracay | 501 | $ | 317,887 | $ | 635 | 404 | $ | 218,424 | $ | 541 | |||||||||||
| Pardee Homes | 1,067 | 696,520 | 653 | 753 | 542,370 | 720 | |||||||||||||||
| Quadrant Homes | 228 | 222,394 | 975 | 89 | 77,426 | 870 | |||||||||||||||
| Trendmaker Homes | 404 | 184,507 | 457 | 367 | 184,563 | 503 | |||||||||||||||
| TRI Pointe Homes | 682 | 461,574 | 677 | 451 | 306,337 | 679 | |||||||||||||||
| Winchester Homes | 306 | 184,484 | 603 | 248 | 162,332 | 655 | |||||||||||||||
| Total | 3,188 | $ | 2,067,366 | $ | 648 | 2,312 | $ | 1,491,452 | $ | 645 | |||||||||||
| As of September 30, 2020 | As of September 30, 2019 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| State: | |||||||||||||||||||||
| Arizona | 501 | $ | 317,887 | $ | 635 | 404 | $ | 218,424 | $ | 541 | |||||||||||
| California | 1,399 | 941,768 | 673 | 885 | 669,724 | 757 | |||||||||||||||
| Colorado | 115 | 65,576 | 570 | 116 | 65,469 | 564 | |||||||||||||||
| Maryland | 223 | 122,133 | 548 | 144 | 75,251 | 523 | |||||||||||||||
| Nevada | 229 | 148,899 | 650 | 203 | 113,514 | 559 | |||||||||||||||
| South Carolina | 6 | 1,851 | 309 | — | — | — | |||||||||||||||
| Texas | 404 | 184,507 | 457 | 367 | 184,563 | 503 | |||||||||||||||
| Virginia | 83 | 62,351 | 751 | 104 | 87,081 | 837 | |||||||||||||||
| Washington | 228 | 222,394 | 975 | 89 | 77,426 | 870 | |||||||||||||||
| Total | 3,188 | $ | 2,067,366 | $ | 648 | 2,312 | $ | 1,491,452 | $ | 645 | |||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
| September 30, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots Owned or Controlled(1): | |||||
| Maracay | 3,817 | 3,730 | |||
| Pardee Homes | 13,706 | 13,267 | |||
| Quadrant Homes | 932 | 1,103 | |||
| Trendmaker Homes | 4,445 | 4,034 | |||
| TRI Pointe Homes | 7,300 | 6,170 | |||
| Winchester Homes | 1,660 | 1,725 | |||
| Total | 31,860 | 30,029 | |||
| September 30, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots Owned or Controlled(1): | |||||
| Arizona | 3,817 | 3,730 | |||
| California | 14,544 | 14,677 | |||
| Colorado | 1,198 | 1,033 | |||
| Maryland | 1,000 | 1,140 | |||
| Nevada | 2,445 | 2,026 | |||
| North Carolina | 2,708 | 1,590 | |||
| South Carolina | 111 | 111 | |||
| Texas | 4,445 | 4,034 | |||
| Virginia | 660 | 585 | |||
| Washington | 932 | 1,103 | |||
| Total | 31,860 | 30,029 | |||
| September 30, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots by Ownership Type: | |||||
| Lots owned | 22,197 | 22,845 | |||
| Lots controlled(1) | 9,663 | 7,184 | |||
| Total | 31,860 | 30,029 | |||
__________
(1) As of September 30, 2020 and December 31, 2019, lots controlled included lots that were under land option contracts or purchase contracts.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
In this press release, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating the Company’s operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
The following tables reconcile homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non-GAAP measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion.
| Three Months Ended September 30, | |||||||||||||
| 2020 | % | 2019 | % | ||||||||||
| (dollars in thousands) | |||||||||||||
| Home sales revenue | $ | 826,036 | 100.0 | % | $ | 746,269 | 100.0 | % | |||||
| Cost of home sales | 643,456 | 77.9 | % | 577,627 | 77.4 | % | |||||||
| Homebuilding gross margin | 182,580 | 22.1 | % | 168,642 | 22.6 | % | |||||||
| Add: interest in cost of home sales | 23,495 | 2.8 | % | 19,240 | 2.6 | % | |||||||
| Add: impairments and lot option abandonments | 315 | 0.0 | % | 1,029 | 0.1 | % | |||||||
| Adjusted homebuilding gross margin | $ | 206,390 | 25.0 | % | $ | 188,911 | 25.3 | % | |||||
| Homebuilding gross margin percentage | 22.1 | % | 22.6 | % | |||||||||
| Adjusted homebuilding gross margin percentage | 25.0 | % | 25.3 | % | |||||||||
| Nine Months Ended September 30, | |||||||||||||
| 2020 | % | 2019 | % | ||||||||||
| Home sales revenue | $ | 2,187,816 | 100.0 | % | $ | 1,931,110 | 100.0 | % | |||||
| Cost of home sales | 1,717,772 | 78.5 | % | 1,573,847 | 81.5 | % | |||||||
| Homebuilding gross margin | 470,044 | 21.5 | % | 357,263 | 18.5 | % | |||||||
| Add: interest in cost of home sales | 62,118 | 2.8 | % | 51,502 | 2.7 | % | |||||||
| Add: impairments and lot option abandonments | 2,044 | 0.1 | % | 6,519 | 0.3 | % | |||||||
| Adjusted homebuilding gross margin(1) | $ | 534,206 | 24.4 | % | $ | 415,284 | 21.5 | % | |||||
| Homebuilding gross margin percentage | 21.5 | % | 18.5 | % | |||||||||
| Adjusted homebuilding gross margin percentage(1) | 24.4 | % | 21.5 | % | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
The following table reconciles the Company’s ratio of debt-to-capital to the non-GAAP ratio of net debt-to-net capital. We believe that the ratio of net debt-to-net capital is a relevant financial measure for management and investors to understand the leverage employed in our operations and as an indicator of the Company’s ability to obtain financing.
| September 30, 2020 | December 31, 2019 | ||||||||
| Loans payable | $ | 250,000 | $ | 250,000 | |||||
| Senior notes | 1,083,254 | 1,033,985 | |||||||
| Total debt | 1,333,254 | 1,283,985 | |||||||
| Stockholders’ equity | 2,198,088 | 2,186,530 | |||||||
| Total capital | $ | 3,531,342 | $ | 3,470,515 | |||||
| Ratio of debt-to-capital(1) | 37.8 | % | 37.0 | % | |||||
| Total debt | $ | 1,333,254 | $ | 1,283,985 | |||||
| Less: Cash and cash equivalents | (493,585 | ) | (329,011 | ) | |||||
| Net debt | 839,669 | 954,974 | |||||||
| Stockholders’ equity | 2,198,088 | 2,186,530 | |||||||
| Net capital | $ | 3,037,757 | $ | 3,141,504 | |||||
| Ratio of net debt-to-net capital(2) | 27.6 | % | 30.4 | % | |||||
__________
(1) The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.
(2) The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP. EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation, (f) impairments and lot option abandonments, (g) early loan termination costs and (h) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net income | $ | 78,682 | $ | 62,861 | $ | 167,093 | $ | 89,194 | |||||||||||
| Interest expense: | |||||||||||||||||||
| Interest incurred | 20,063 | 22,405 | 62,670 | 67,740 | |||||||||||||||
| Interest capitalized | (20,063 | ) | (22,405 | ) | (62,670 | ) | (67,740 | ) | |||||||||||
| Amortization of interest in cost of sales | 23,538 | 19,234 | 62,166 | 51,674 | |||||||||||||||
| Provision for income taxes | 24,322 | 21,858 | 52,286 | 31,014 | |||||||||||||||
| Depreciation and amortization | 7,020 | 6,795 | 19,196 | 18,356 | |||||||||||||||
| EBITDA | 133,562 | 110,748 | 300,741 | 190,238 | |||||||||||||||
| Amortization of stock-based compensation | 3,477 | 3,828 | 10,888 | 10,614 | |||||||||||||||
| Impairments and lot option abandonments | 315 | 1,029 | 2,044 | 6,519 | |||||||||||||||
| Early loan termination costs | 3,384 | — | 10,243 | — | |||||||||||||||
| Restructuring charges | 54 | — | 5,603 | — | |||||||||||||||
| Adjusted EBITDA | $ | 140,792 | $ | 115,605 | $ | 329,519 | $ | 207,371 | |||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
The following table contains information about our operating results reflecting certain adjustments to income before income taxes, provision for income taxes, net income, net income available to common stockholders and earnings per share (diluted). We believe reflecting these adjustments is useful to investors in understanding our recurring operations by eliminating the varying effects of certain non-routine events, and may be helpful in comparing the Company to other homebuilders to the extent they provide similar information.
| Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||
| As Reported | Adjustments | Adjusted | As Reported | Adjustments | Adjusted | ||||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
| Income before income taxes | $ | 103,004 | $ | 3,438 | (1 | ) | $ | 106,442 | $ | 219,379 | $ | 15,846 | (1 | ) | $ | 235,225 | |||||||||||||||
| Provision for income taxes | (24,322 | ) | (811 | ) | (2 | ) | (25,133 | ) | (52,286 | ) | (3,771 | ) | (2 | ) | (56,057 | ) | |||||||||||||||
| Net income | $ | 78,682 | $ | 2,627 | $ | 81,309 | $ | 167,093 | $ | 12,075 | $ | 179,168 | |||||||||||||||||||
| Earnings per share | |||||||||||||||||||||||||||||||
| Diluted | $ | 0.61 | $ | 0.63 | $ | 1.27 | $ | 1.36 | |||||||||||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||||||||||
| Diluted | 129,515 | 129,515 | 131,673 | 131,673 | |||||||||||||||||||||||||||
| Effective tax rate | 23.6 | % | 23.6 | % | 23.8 | % | 23.8 | % | |||||||||||||||||||||||
_________
(1) Includes (i) a $3.4 million and $10.2 million charge for the three and nine months ended September 30, 2020, respectively, related to the early extinguishment of a portion of our Senior Notes due 2021, which is included in other (expense) income, net on our consolidated statements of operations, and (ii) a $56,000 and $5.6 million charge for the three and nine months ended September 30, 2020, related to restructuring charges stemming from a workforce reduction plan.
(2) Includes a tax adjustment to reflect the higher pretax earnings associated with the aforementioned adjustments.