TRI Pointe Group (TPH) Tops Q4 EPS by 15c, Revenues Beat

TRI Pointe Group (NYSE: TPH) reported Q4 EPS of $0.85, $0.15 better than the analyst estimate of $0.70. Revenue for the quarter came in at $1.14 billion versus the consensus estimate of $1.09 billion.

Results and Operational Data for Fourth Quarter 2019 and Comparisons to Fourth Quarter 2018

• Net income available to common stockholders was $118.0 million, or $0.85 per diluted share, compared to $99.4 million, or $0.70 per diluted share
• Home sales revenue for the quarter was $1.1 billion, an increase of 2% -- New home deliveries of 1,795 homes compared to 1,727 homes, an increase of 4% -- Average sales price of homes delivered of $634,000 compared to $649,000, a decrease of 2%
• Homebuilding gross margin percentage was 21.9%, consistent with the prior year period -- Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 26.2%*
• Selling, general and administrative (“SG&A”) expense as a percentage of homes sales revenue of 9.2% compared to 9.1%, an increase of 10 basis points
• New home orders of 1,235 compared to 812, an increase of 52%
• Active selling communities averaged 142.8 compared to 131.5, an increase of 9% -- New home orders per average selling community increased by 40% to 8.6 orders (2.9 monthly) compared to 6.2 orders (2.1 monthly) -- Cancellation rate of 14% compared to 25%
• Backlog units at quarter end of 1,752 homes compared to 1,335, an increase of 31% -- Dollar value of backlog at quarter end of $1.1 billion compared to $897.3 million, an increase of 27% -- Average sales price in backlog at quarter end of $648,000 compared to $672,000, a decrease of 4%
• Ratios of debt-to-capital and net debt-to-net capital of 37.0% and 30.4%*, respectively, as of December 31, 2019
• Repurchased 3,100,202 shares of common stock at an average price of $15.32 for an aggregate dollar amount of $47.5 million in the three months ended December 31, 2019
• Ended fourth quarter of 2019 with total liquidity of $896.4 million, including cash of $329.0 million and $567.4 million of availability under the Company’s unsecured revolving credit facility

“The fourth quarter of 2019 capped another successful year for TRI Pointe Group, highlighted by year-over-year unit order growth of 52%, homebuilding gross margins of 21.9% and earnings per share growth of 21%,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Demand was consistent throughout the quarter and broad-based across the country, as each of our brands posted year-over-year order growth in excess of 25%. These results are a testament to the health of our industry and the appeal of our homes.”

Mr. Bauer continued, “We made further progress during the quarter in diversifying our operations from a geographic standpoint by making additional investments in our early stage markets, while continuing to grow our presence in our established markets. We also increased our diversification on the product front by rolling out more communities that cater to the affordable segments of the market, while staying true to our premium lifestyle brand positioning. We believe that these efforts will allow TRI Pointe Group to reach a broader segment of the home buying population over time and provide us with a bigger platform from which to grow.”

Mr. Bauer concluded, “We enter 2020 with a lot of momentum, aided by a strong economy, favorable industry fundamentals and a great product portfolio. In addition, we begin the year with 31% more homes in backlog than we did at the beginning of 2019. These positives, coupled with our strong balance sheet, strategic focus and unique corporate culture, have us excited for the future of TRI Pointe Group.”

Outlook

For the first quarter of 2020, the Company expects to open 15 new communities and close out of 7 communities, which would result in 145 active selling communities as of March 31, 2020. In addition, the Company anticipates delivering between 875 and 950 homes at an average sales price of approximately $600,000. The Company expects its homebuilding gross margin percentage to be in the range of 19.5% to 20.5% for the first quarter of 2020 and anticipates its SG&A expense as a percentage of homes sales revenue will be approximately 15% during such period. Lastly, the Company expects its effective tax rate for the first quarter of 2020 to be approximately 25%.

For the full year, the Company anticipates delivering between 5,100 and 5,300 homes at an average sales price between $605,000 to $615,000. In addition, the Company expects homebuilding gross margin percentage to be in the range of 19.5% to 20.5% for the full year and anticipates its SG&A expense as a percentage of homes sales revenue will be approximately 11.5%. Finally, the Company expects its effective tax rate for the full year to be approximately 25%.

For earnings history and earnings-related data on TRI Pointe Group (TPH) click here.

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