TRI Pointe Group, Inc. Reports 2019 Second Quarter Results
IRVINE, Calif., July 25, 2019 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the “Company”) (NYSE: TPH) today announced results for the second quarter ended June 30, 2019.
“TRI Pointe Group posted solid results for the second quarter of 2019, generating net income of $26.3 million or $0.18 per diluted share,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Our team members did an excellent job executing this quarter, as we met or exceeded our stated guidance for deliveries and margins for the quarter and grew our average community count by 12% year-over-year. Our orders for the quarter were up 11% year-over-year with a strong sales pace of 3.4 homes per community per month. While the recent decline in interest rates likely aided our sales efforts, we believe the quality of our home offerings and our execution of our 12 point sales and marketing program provided the tools for success during the quarter.”
Mr. Bauer continued, “We continue to focus on growing our operations through the build-out of our long-term California assets and the expansion of our presence in a number of markets around the country. We believe the investments we are making today will result in a more diverse and profitable business in the coming years.”
Mr. Bauer concluded, “Thanks to our strong results in the first half of 2019, a healthy backlog at quarter-end and a double digit increase to our active community count, TRI Pointe Group is well positioned to deliver on the full year guidance we issued at the beginning of the year. These positives, coupled with our strong balance sheet, have me very optimistic about the future of our company.”
Results and Operational Data for Second Quarter 2019 and Comparisons to Second Quarter 2018
- Net income was $26.3 million, or $0.18 per diluted share, compared to $63.7 million, or $0.42 per diluted share
- Home sales revenue of $692.1 million compared to $768.8 million, a decrease of 10%
- New home deliveries of 1,125 homes compared to 1,215 homes, a decrease of 7%
- Average sales price of homes delivered of $615,000 compared to $633,000, a decrease of 3%
- Homebuilding gross margin percentage of 17.0% compared to 21.4%, a decrease of 440 basis points
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 19.6%*
- SG&A expense as a percentage of homes sales revenue of 12.1% compared to 10.7%, an increase of 140 basis points
- New home orders of 1,491 compared to 1,343, an increase of 11%
- Active selling communities averaged 146.0 compared to 130.8, an increase of 12%
- New home orders per average selling community were 10.2 orders (3.4 monthly) compared to 10.3 orders (3.4 monthly)
- Cancellation rate remained flat at 16%
- Backlog units at quarter end of 2,208 homes compared to 2,271, a decrease of 3%
- Dollar value of backlog at quarter end of $1.4 billion compared to $1.5 billion, a decrease of 5%
- Average sales price of homes in backlog at quarter end of $652,000 compared to $668,000, a decrease of 2%
- Ratios of debt-to-capital and net debt-to-net capital of 40.7% and 37.7%*, respectively, as of June 30, 2019
- Repaid 4.375% Senior Notes due in June of 2019 using proceeds from both the Company's unsecured revolving credit facility and term loan facility
- Ended the second quarter of 2019 with total liquidity of $590.4 million, including cash and cash equivalents of $171.5 million and $418.9 million of availability under the Company’s unsecured revolving credit facility
* See “Reconciliation of Non-GAAP Financial Measures”
Second Quarter 2019 Operating Results
Net income was $26.3 million, or $0.18 per diluted share, for the second quarter of 2019, compared to net income of $63.7 million, or $0.42 per diluted share, for the second quarter of 2018.
Home sales revenue decreased $76.7 million, or 10%, to $692.1 million for the second quarter of 2019, as compared to $768.8 million for the second quarter of 2018. The decrease was primarily attributable to a 7% decrease in new home deliveries to 1,125, compared to 1,215 in the second quarter of 2018, and a 3% decrease in the average sales price of homes delivered to $615,000, compared to $633,000 in the second quarter of 2018.
Homebuilding gross margin percentage for the second quarter of 2019 decreased to 17.0%, compared to 21.4% for the second quarter of 2018. The decrease in homebuilding gross margin was due to a lower mix of deliveries from certain long-dated California communities, which produce gross margins above the Company average, as well as the impact of increased incentives in the second half of 2018 on inventory homes that delivered in the first half of 2019. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 19.6%* for the second quarter of 2019, compared to 24.0%* for the second quarter of 2018.
Sales and marketing and general and administrative (“SG&A”) expense for the second quarter of 2019 increased to 12.1% of home sales revenue as compared to 10.7% for the second quarter of 2018, primarily the result of lower operating leverage on the fixed components of SG&A as a result of the 10% decrease in home sales revenue and higher overhead costs as a result of our expansion efforts into the Charlotte, Raleigh, Sacramento and Dallas–Fort Worth markets.
New home orders increased 11% to 1,491 homes for the second quarter of 2019, as compared to 1,343 homes for the same period in 2018. Average selling communities increased 12% to 146.0 for the second quarter of 2019 compared to 130.8 for the second quarter of 2018. The Company’s overall absorption rate per average selling community remained flat for the second quarter of 2019 at 10.2 orders (3.4 monthly) compared to 10.3 orders (3.4 monthly) during the second quarter of 2018.
The Company ended the quarter with 2,208 homes in backlog, representing approximately $1.4 billion. The average sales price of homes in backlog as of June 30, 2019 decreased $16,000, or 2%, to $652,000, compared to $668,000 as of June 30, 2018.
“We continue to excel at selling homes with our emphasis on our premium lifestyle brand,” said President and Chief Operating Officer Tom Mitchell. “Our local teams have done an excellent job positioning our brands for success at a number of price points by creating unique and differentiated places to live. We feel that this attention to detail resonates with buyers, enhances our reputation in the market and sets us apart from the competition.”
* See “Reconciliation of Non-GAAP Financial Measures”
Outlook
For the third quarter of 2019, the Company expects to open 14 new communities and close out of 12 communities, which would result in 148 active selling communities as of September 30, 2019. In addition, the Company anticipates delivering 45% to 50% of its 2,208 homes in backlog as of June 30, 2019 at an average sales price of $620,000. The Company expects its homebuilding gross margin percentage to be in a range of 21.0% to 22.0% for the third quarter. The Company anticipates its SG&A expense as a percentage of homes sales revenue will be in a range of 12.0% to 12.5%. Lastly, the Company expects its effective tax rate to be in the range of 25% to 26%.
For the full year, the Company reiterates its previous guidance of delivering between 4,600 and 5,000 homes at an average sales price of $610,000 to $620,000. In addition, the Company expects homebuilding gross margin percentage to be in the range of 19% to 20% for the full year. The Company expects full year SG&A expense as a percentage of homes sales revenue will be in a range of 11% to 12%. Finally, the Company expects its effective tax rate for the full year to be in the range of 25% to 26%.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 12:00 p.m. Eastern Time on Thursday, July 25, 2019. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Mike Grubbs, Chief Financial Officer.
Interested parties can listen to the call live and view the related presentation slides on the internet through the Investor Relations 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 by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the TRI Pointe Group Second Quarter 2019 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start. The replay of the call will be available for two weeks following the call. To access the replay, the domestic dial-in number is 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13692313. An archive of the webcast will be available on the Company’s website for a limited time.
About TRI Pointe Group, Inc.
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 North Carolina, and Winchester® Homes* in Maryland and Virginia. TRI Pointe Group was recognized in Fortune magazine’s 2017 100 Fastest-Growing Companies list, named 2015 Builder of the Year by Builder magazine, and 2014 Developer of the Year by Builder and Developer 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 effect 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; levels of competition; the successful execution of our internal performance plans, including any restructuring and cost reduction initiatives; global economic conditions; raw material prices; oil and other energy prices; the effect 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; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental 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 customers’ 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:
Chris Martin, TRI Pointe GroupDrew Mackintosh, Mackintosh Investor Relations[email protected], 949-478-8696
Media Contact:Carol Ruiz, [email protected], 310-437-0045
KEY OPERATIONS AND FINANCIAL DATA(dollars in thousands)(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
| Operating Data: | |||||||||||||||||||||||
| Home sales revenue | $ | 692,138 | $ | 768,795 | $ | (76,657 | ) | $ | 1,184,841 | $ | 1,351,367 | $ | (166,526 | ) | |||||||||
| Homebuilding gross margin | $ | 117,454 | $ | 164,699 | $ | (47,245 | ) | $ | 188,621 | $ | 296,769 | $ | (108,148 | ) | |||||||||
| Homebuilding gross margin % | 17.0 | % | 21.4 | % | (4.4 | )% | 15.9 | % | 22.0 | % | (6.1 | )% | |||||||||||
| Adjusted homebuilding gross margin %* | 19.6 | % | 24.0 | % | (4.4 | )% | 19.1 | % | 24.5 | % | (5.4 | )% | |||||||||||
| SG&A expense | $ | 83,919 | $ | 82,227 | $ | 1,692 | $ | 161,505 | $ | 157,324 | $ | 4,181 | |||||||||||
| SG&A expense as a % of home sales revenue | 12.1 | % | 10.7 | % | 1.4 | % | 13.6 | % | 11.6 | % | 2.0 | % | |||||||||||
| Net income | $ | 26,262 | $ | 63,680 | $ | (37,418 | ) | $ | 26,333 | $ | 106,560 | $ | (80,227 | ) | |||||||||
| Adjusted EBITDA* | $ | 63,617 | $ | 115,901 | $ | (52,284 | ) | $ | 91,766 | $ | 196,888 | $ | (105,122 | ) | |||||||||
| Interest incurred | $ | 21,962 | $ | 21,627 | $ | 335 | $ | 45,335 | $ | 43,147 | $ | 2,188 | |||||||||||
| Interest in cost of home sales | $ | 18,071 | $ | 19,569 | $ | (1,498 | ) | $ | 32,262 | $ | 33,798 | $ | (1,536 | ) | |||||||||
| Other Data: | |||||||||||||||||||||||
| Net new home orders | 1,491 | 1,343 | 148 | 2,812 | 2,839 | (27 | ) | ||||||||||||||||
| New homes delivered | 1,125 | 1,215 | (90 | ) | 1,939 | 2,139 | (200 | ) | |||||||||||||||
| Average sales price of homes delivered | $ | 615 | $ | 633 | $ | (18 | ) | $ | 611 | $ | 632 | $ | (21 | ) | |||||||||
| Cancellation rate | 16 | % | 16 | % | 0 | % | 15 | % | 15 | % | 0 | % | |||||||||||
| Average selling communities | 146.0 | 130.8 | 15.2 | 147.0 | 130.1 | 16.9 | |||||||||||||||||
| Selling communities at end of period | 146 | 130 | 16 | ||||||||||||||||||||
| Backlog (estimated dollar value) | $ | 1,438,548 | $ | 1,518,096 | $ | (79,548 | ) | ||||||||||||||||
| Backlog (homes) | 2,208 | 2,271 | (63 | ) | |||||||||||||||||||
| Average sales price in backlog | $ | 652 | $ | 668 | $ | (16 | ) | ||||||||||||||||
| June 30, | December 31, | ||||||||||||||||||||||
| 2019 | 2018 | Change | |||||||||||||||||||||
| Balance Sheet Data: | (unaudited) | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 171,516 | $ | 277,696 | $ | (106,180 | ) | ||||||||||||||||
| Real estate inventories | $ | 3,253,601 | $ | 3,216,059 | $ | 37,542 | |||||||||||||||||
| Lots owned or controlled | 28,117 | 27,740 | 377 | ||||||||||||||||||||
| Homes under construction (1) | 2,777 | 2,166 | 611 | ||||||||||||||||||||
| Homes completed, unsold | 303 | 417 | (114 | ) | |||||||||||||||||||
| Debt | $ | 1,432,145 | $ | 1,410,804 | $ | 21,341 | |||||||||||||||||
| Stockholders’ equity | $ | 2,086,630 | $ | 2,056,924 | $ | 29,706 | |||||||||||||||||
| Book capitalization | $ | 3,518,775 | $ | 3,467,728 | $ | 51,047 | |||||||||||||||||
| Ratio of debt-to-capital | 40.7 | % | 40.7 | % | 0.0 | % | |||||||||||||||||
| Ratio of net debt-to-net capital* | 37.7 | % | 35.5 | % | 2.2 | % | |||||||||||||||||
__________(1) Homes under construction included 64 and 40 models at June 30, 2019 and December 31, 2018, respectively.* See “Reconciliation of Non-GAAP Financial Measures”
CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)
| June 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| Assets | (unaudited) | |||||||
| Cash and cash equivalents | $ | 171,516 | $ | 277,696 | ||||
| Receivables | 58,370 | 51,592 | ||||||
| Real estate inventories | 3,253,601 | 3,216,059 | ||||||
| Investments in unconsolidated entities | 4,241 | 5,410 | ||||||
| Goodwill and other intangible assets, net | 160,160 | 160,427 | ||||||
| Deferred tax assets, net | 64,671 | 67,768 | ||||||
| Other assets | 164,991 | 105,251 | ||||||
| Total assets | $ | 3,877,550 | $ | 3,884,203 | ||||
| Liabilities | ||||||||
| Accounts payable | $ | 63,091 | $ | 81,313 | ||||
| Accrued expenses and other liabilities | 295,671 | 335,149 | ||||||
| Loans payable | 400,000 | — | ||||||
| Senior notes | 1,032,145 | 1,410,804 | ||||||
| Total liabilities | 1,790,907 | 1,827,266 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | — | — | ||||||
| Common stock, $0.01 par value, 500,000,000 shares authorized; 142,258,663 and 141,661,713 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 1,423 | 1,417 | ||||||
| Additional paid-in capital | 662,087 | 658,720 | ||||||
| Retained earnings | 1,423,120 | 1,396,787 | ||||||
| Total stockholders’ equity | 2,086,630 | 2,056,924 | ||||||
| Noncontrolling interests | 13 | 13 | ||||||
| Total equity | 2,086,643 | 2,056,937 | ||||||
| Total liabilities and equity | $ | 3,877,550 | $ | 3,884,203 | ||||
CONSOLIDATED STATEMENT OF OPERATIONS(in thousands, except share and per share amounts)(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Homebuilding: | |||||||||||||||
| Home sales revenue | $ | 692,138 | $ | 768,795 | $ | 1,184,841 | $ | 1,351,367 | |||||||
| Land and lot sales revenue | 5,183 | 1,518 | 6,212 | 1,741 | |||||||||||
| Other operations revenue | 637 | 599 | 1,235 | 1,197 | |||||||||||
| Total revenues | 697,958 | 770,912 | 1,192,288 | 1,354,305 | |||||||||||
| Cost of home sales | 574,684 | 604,096 | 996,220 | 1,054,598 | |||||||||||
| Cost of land and lot sales | 5,562 | 1,426 | 7,057 | 1,929 | |||||||||||
| Other operations expense | 627 | 589 | 1,217 | 1,191 | |||||||||||
| Sales and marketing | 47,065 | 45,744 | 86,054 | 84,027 | |||||||||||
| General and administrative | 36,854 | 36,483 | 75,451 | 73,297 | |||||||||||
| Homebuilding income from operations | 33,166 | 82,574 | 26,289 | 139,263 | |||||||||||
| Equity in (loss) income of unconsolidated entities | (26 | ) | 69 | (51 | ) | (399 | ) | ||||||||
| Other income (expense), net | 153 | (73 | ) | 6,394 | 98 | ||||||||||
| Homebuilding income before income taxes | 33,293 | 82,570 | 32,632 | 138,962 | |||||||||||
| Financial Services: | |||||||||||||||
| Revenues | 756 | 391 | 1,058 | 674 | |||||||||||
| Expenses | 627 | 129 | 948 | 266 | |||||||||||
| Equity in income of unconsolidated entities | 1,972 | 1,984 | 2,747 | 2,986 | |||||||||||
| Financial services income before income taxes | 2,101 | 2,246 | 2,857 | 3,394 | |||||||||||
| Income before income taxes | 35,394 | 84,816 | 35,489 | 142,356 | |||||||||||
| Provision for income taxes | (9,132 | ) | (21,136 | ) | (9,156 | ) | (35,796 | ) | |||||||
| Net income | $ | 26,262 | $ | 63,680 | $ | 26,333 | $ | 106,560 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 0.18 | $ | 0.42 | $ | 0.19 | $ | 0.70 | |||||||
| Diluted | $ | 0.18 | $ | 0.42 | $ | 0.18 | $ | 0.70 | |||||||
| Weighted average shares outstanding | |||||||||||||||
| Basic | 142,244,166 | 151,983,886 | 142,055,766 | 151,725,651 | |||||||||||
| Diluted | 142,471,191 | 153,355,965 | 142,431,725 | 153,067,342 | |||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE(dollars in thousands)(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
| NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | ||||||||||||||||||||
| New Homes Delivered: | |||||||||||||||||||||||||||
| Maracay | 106 | $ | 525 | 121 | $ | 471 | 180 | $ | 529 | 246 | $ | 469 | |||||||||||||||
| Pardee Homes | 325 | 599 | 377 | 645 | 567 | 581 | 651 | 651 | |||||||||||||||||||
| Quadrant Homes | 67 | 1,051 | 85 | 762 | 111 | 1,024 | 168 | 751 | |||||||||||||||||||
| Trendmaker Homes | 250 | 468 | 155 | 492 | 404 | 463 | 239 | 491 | |||||||||||||||||||
| TRI Pointe Homes | 281 | 686 | 347 | 737 | 523 | 697 | 616 | 724 | |||||||||||||||||||
| Winchester Homes | 96 | 642 | 130 | 553 | 154 | 615 | 219 | 560 | |||||||||||||||||||
| Total | 1,125 | $ | 615 | 1,215 | $ | 633 | 1,939 | $ | 611 | 2,139 | $ | 632 | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
| NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | ||||||||||||||||||||
| New Homes Delivered: | |||||||||||||||||||||||||||
| California | 408 | $ | 661 | 516 | $ | 746 | 736 | $ | 669 | 916 | $ | 741 | |||||||||||||||
| Colorado | 81 | 569 | 59 | 605 | 153 | 559 | 119 | 593 | |||||||||||||||||||
| Maryland | 68 | 533 | 100 | 540 | 106 | 509 | 166 | 542 | |||||||||||||||||||
| Virginia | 28 | 906 | 30 | 596 | 48 | 849 | 53 | 617 | |||||||||||||||||||
| Arizona | 106 | 525 | 121 | 471 | 180 | 529 | 246 | 469 | |||||||||||||||||||
| Nevada | 117 | 613 | 149 | 526 | 201 | 578 | 232 | 518 | |||||||||||||||||||
| Texas | 250 | 468 | 155 | 492 | 404 | 463 | 239 | 491 | |||||||||||||||||||
| Washington | 67 | 1,051 | 85 | 762 | 111 | 1,024 | 168 | 751 | |||||||||||||||||||
| Total | 1,125 | $ | 615 | 1,215 | $ | 633 | 1,939 | $ | 611 | 2,139 | $ | 632 | |||||||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net NewHomeOrders | AverageSellingCommunities | Net NewHomeOrders | AverageSellingCommunities | ||||||||||||||||
| Net New Home Orders: | |||||||||||||||||||||||
| Maracay | 253 | 15.0 | 132 | 14.2 | 414 | 13.4 | 285 | 13.6 | |||||||||||||||
| Pardee Homes | 522 | 44.5 | 464 | 33.5 | 955 | 44.4 | 937 | 33.1 | |||||||||||||||
| Quadrant Homes | 67 | 6.5 | 54 | 6.3 | 142 | 6.9 | 162 | 6.6 | |||||||||||||||
| Trendmaker Homes | 247 | 37.5 | 161 | 29.0 | 490 | 38.6 | 316 | 29.3 | |||||||||||||||
| TRI Pointe Homes | 294 | 28.5 | 408 | 33.8 | 589 | 29.6 | 867 | 33.6 | |||||||||||||||
| Winchester Homes | 108 | 14.0 | 124 | 14.0 | 222 | 14.1 | 272 | 13.9 | |||||||||||||||
| Total | 1,491 | 146.0 | 1,343 | 130.8 | 2,812 | 147.0 | 2,839 | 130.1 | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| 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 | ||||||||||||||||
| Net New Home Orders: | |||||||||||||||||||||||
| California | 616 | 54.0 | 607 | 45.3 | 1,133 | 54.3 | 1,235 | 44.8 | |||||||||||||||
| Colorado | 56 | 6.3 | 77 | 6.8 | 137 | 6.6 | 179 | 6.9 | |||||||||||||||
| Maryland | 84 | 10.0 | 85 | 9.0 | 168 | 9.9 | 185 | 9.3 | |||||||||||||||
| Virginia | 24 | 4.0 | 39 | 5.0 | 54 | 4.2 | 87 | 4.5 | |||||||||||||||
| Arizona | 253 | 15.0 | 132 | 14.2 | 414 | 13.4 | 285 | 13.7 | |||||||||||||||
| Nevada | 144 | 12.7 | 188 | 15.2 | 274 | 13.1 | 390 | 15.0 | |||||||||||||||
| Texas | 247 | 37.5 | 161 | 29.0 | 490 | 38.6 | 316 | 29.3 | |||||||||||||||
| Washington | 67 | 6.5 | 54 | 6.3 | 142 | 6.9 | 162 | 6.6 | |||||||||||||||
| Total | 1,491 | 146.0 | 1,343 | 130.8 | 2,812 | 147.0 | 2,839 | 130.1 | |||||||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(dollars in thousands)(unaudited)
| As of June 30, 2019 | As of June 30, 2018 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| Backlog: | |||||||||||||||||||||
| Maracay | 385 | $ | 211,935 | $ | 550 | 256 | $ | 134,138 | $ | 524 | |||||||||||
| Pardee Homes | 790 | 602,054 | 762 | 695 | 451,860 | 650 | |||||||||||||||
| Quadrant Homes | 77 | 65,968 | 857 | 138 | 130,270 | 944 | |||||||||||||||
| Trendmaker Homes | 399 | 195,871 | 491 | 250 | 145,046 | 580 | |||||||||||||||
| TRI Pointe Homes | 384 | 252,708 | 658 | 728 | 523,907 | 720 | |||||||||||||||
| Winchester Homes | 173 | 110,012 | 636 | 204 | 132,875 | 651 | |||||||||||||||
| Total | 2,208 | $ | 1,438,548 | $ | 652 | 2,271 | $ | 1,518,096 | $ | 668 | |||||||||||
| As of June 30, 2019 | As of June 30, 2018 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| Backlog: | |||||||||||||||||||||
| California | 853 | $ | 671,695 | $ | 787 | 985 | $ | 719,113 | $ | 730 | |||||||||||
| Colorado | 128 | 73,429 | 574 | 160 | 88,902 | 556 | |||||||||||||||
| Maryland | 123 | 63,321 | 515 | 132 | 75,129 | 569 | |||||||||||||||
| Virginia | 50 | 46,691 | 934 | 72 | 57,746 | 802 | |||||||||||||||
| Arizona | 385 | 211,935 | 550 | 256 | 134,138 | 524 | |||||||||||||||
| Nevada | 193 | 109,638 | 568 | 278 | 167,752 | 603 | |||||||||||||||
| Texas | 399 | 195,871 | 491 | 250 | 145,046 | 580 | |||||||||||||||
| Washington | 77 | 65,968 | 857 | 138 | 130,270 | 944 | |||||||||||||||
| Total | 2,208 | $ | 1,438,548 | $ | 652 | 2,271 | $ | 1,518,096 | $ | 668 | |||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
| June 30, | December 31, | ||||
| 2019 | 2018 | ||||
| Lots Owned or Controlled(1): | |||||
| Maracay | 3,611 | 3,308 | |||
| Pardee Homes | 14,404 | 14,376 | |||
| Quadrant Homes | 1,442 | 1,744 | |||
| Trendmaker Homes | 2,702 | 2,492 | |||
| TRI Pointe Homes | 4,405 | 4,095 | |||
| Winchester Homes | 1,553 | 1,725 | |||
| Total | 28,117 | 27,740 | |||
| June 30, | December 31, | ||||
| 2019 | 2018 | ||||
| Lots Owned or Controlled(1): | |||||
| California | 14,933 | 15,218 | |||
| Colorado | 969 | 866 | |||
| Maryland | 1,019 | 1,142 | |||
| Virginia | 534 | 583 | |||
| Arizona | 3,611 | 3,308 | |||
| Nevada | 2,603 | 2,387 | |||
| North Carolina | 304 | — | |||
| Texas | 2,702 | 2,492 | |||
| Washington | 1,442 | 1,744 | |||
| Total | 28,117 | 27,740 | |||
| June 30, | December 31, | ||||
| 2019 | 2018 | ||||
| Lots by Ownership Type: | |||||
| Lots owned | 22,630 | 23,057 | |||
| Lots controlled(1) | 5,487 | 4,683 | |||
| Total | 28,117 | 27,740 | |||
__________(1) As of June 30, 2019 and December 31, 2018, 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 June 30, | |||||||||||||
| 2019 | % | 2018 | % | ||||||||||
| (dollars in thousands) | |||||||||||||
| Home sales revenue | $ | 692,138 | 100.0 | % | $ | 768,795 | 100.0 | % | |||||
| Cost of home sales | 574,684 | 83.0 | % | 604,096 | 78.6 | % | |||||||
| Homebuilding gross margin | 117,454 | 17.0 | % | 164,699 | 21.4 | % | |||||||
| Add: interest in cost of home sales | 18,071 | 2.6 | % | 19,569 | 2.5 | % | |||||||
| Add: impairments and lot option abandonments | 288 | 0.0 | % | 609 | 0.1 | % | |||||||
| Adjusted homebuilding gross margin | $ | 135,813 | 19.6 | % | $ | 184,877 | 24.0 | % | |||||
| Homebuilding gross margin percentage | 17.0 | % | 21.4 | % | |||||||||
| Adjusted homebuilding gross margin percentage | 19.6 | % | 24.0 | % | |||||||||
| Six Months Ended June 30, | |||||||||||||
| 2019 | % | 2018 | % | ||||||||||
| Home sales revenue | $ | 1,184,841 | 100.0 | % | $ | 1,351,367 | 100.0 | % | |||||
| Cost of home sales | 996,220 | 84.1 | % | 1,054,598 | 78.0 | % | |||||||
| Homebuilding gross margin | 188,621 | 15.9 | % | 296,769 | 22.0 | % | |||||||
| Add: interest in cost of home sales | 32,262 | 2.7 | % | 33,798 | 2.5 | % | |||||||
| Add: impairments and lot option abandonments | 5,490 | 0.5 | % | 857 | 0.1 | % | |||||||
| Adjusted homebuilding gross margin(1) | $ | 226,373 | 19.1 | % | $ | 331,424 | 24.5 | % | |||||
| Homebuilding gross margin percentage | 15.9 | % | 22.0 | % | |||||||||
| Adjusted homebuilding gross margin percentage(1) | 19.1 | % | 24.5 | % | |||||||||
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.
| June 30, 2019 | December 31, 2018 | ||||||
| Loans payable | $ | 400,000 | $ | — | |||
| Senior notes | 1,032,145 | 1,410,804 | |||||
| Total debt | 1,432,145 | 1,410,804 | |||||
| Stockholders’ equity | 2,086,630 | 2,056,924 | |||||
| Total capital | $ | 3,518,775 | $ | 3,467,728 | |||
| Ratio of debt-to-capital(1) | 40.7 | % | 40.7 | % | |||
| Total debt | $ | 1,432,145 | $ | 1,410,804 | |||
| Less: Cash and cash equivalents | (171,516 | ) | (277,696 | ) | |||
| Net debt | 1,260,629 | 1,133,108 | |||||
| Stockholders’ equity | 2,086,630 | 2,056,924 | |||||
| Net capital | $ | 3,347,259 | $ | 3,190,032 | |||
| Ratio of net debt-to-net capital(2) | 37.7 | % | 35.5 | % | |||
__________(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 and (f) impairments and lot option abandonments. 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 June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (in thousands) | |||||||||||||||
| Net income | $ | 26,262 | $ | 63,680 | $ | 26,333 | $ | 106,560 | |||||||
| Interest expense: | |||||||||||||||
| Interest incurred | 21,962 | 21,627 | 45,335 | 43,147 | |||||||||||
| Interest capitalized | (21,962 | ) | (21,627 | ) | (45,335 | ) | (43,147 | ) | |||||||
| Amortization of interest in cost of sales | 18,107 | 19,664 | 32,440 | 33,906 | |||||||||||
| Provision for income taxes | 9,132 | 21,136 | 9,156 | 35,796 | |||||||||||
| Depreciation and amortization | 6,477 | 7,092 | 11,561 | 12,579 | |||||||||||
| EBITDA | 59,978 | 111,572 | 79,490 | 188,841 | |||||||||||
| Amortization of stock-based compensation | 3,351 | 3,720 | 6,786 | 7,190 | |||||||||||
| Impairments and lot option abandonments | 288 | 609 | 5,490 | 857 | |||||||||||
| Adjusted EBITDA | $ | 63,617 | $ | 115,901 | $ | 91,766 | $ | 196,888 | |||||||
