TRI Pointe Group, Inc. Reports 2020 First Quarter Results
-New Home Orders up 26% Year-Over-Year- -Backlog Dollar Value up 31% Year-Over-Year- -Homebuilding Gross Margin Percentage of 20.5%- -Diluted Earnings Per Share of $0.24- -Ended the Quarter with $678 Million of Total Liquidity-
IRVINE, Calif., April 23, 2020 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the “Company”) (NYSE: TPH) today announced results for the first quarter ended March 31, 2020.
“While I am extremely pleased with our results this quarter, TRI Pointe Group’s primary focus over the past several weeks has been the health and well-being of its employees, trade partners and customers since the outbreak of COVID-19,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “As soon as the threat of the virus became evident, we adjusted our business practices to substantially limit in-person interaction and promote social distancing. Overcoming this pandemic will require everyone’s collective efforts to stop the spread of the virus, and TRI Pointe is dedicated to doing its part.”
Mr. Bauer continued, “The measures we’ve taken as a nation to combat the virus will no doubt have a lasting impact on the economy and our industry. Fortunately, TRI Pointe enters this period of uncertainty in a position of relative strength, with a quarter-end net debt-to-net capital ratio of 35.4% and over $670 million in cash and available liquidity. This financial strength, coupled with the experience of our seasoned leadership team in navigating through difficult times, gives me confidence that TRI Pointe is well positioned to deal with the current market environment.”
Mr. Bauer concluded, “From a macro perspective, I remain optimistic about the long-term outlook for our industry post COVID-19. The demographic shifts occurring in this country have created a need for more housing, while the supply of existing homes remains low. These two factors, along with my belief in the resiliency of the American economy, give me confidence in the future of our industry and TRI Pointe in particular.”
Results and Operational Data for First Quarter 2020 and Comparisons to First Quarter 2019
- Net income was $31.9 million, or $0.24 per diluted share, compared to $71,000, or $0.00 per diluted share
- Home sales revenue of $594.8 million compared to $492.7 million, an increase of 21%
- New home deliveries of 958 homes compared to 814 homes, an increase of 18%
- Average sales price of homes delivered of $621,000 compared to $605,000, an increase of 3%
- Homebuilding gross margin percentage of 20.5% compared to 14.4%, an increase of 610 basis points
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.4%*
- SG&A expense as a percentage of homes sales revenue of 13.9% compared to 15.7%, a decrease of 180 basis points
- Net new home orders of 1,661 compared to 1,321, an increase of 26%
- Active selling communities averaged 140.8 compared to 147.8, a decrease of 5%
- New home orders per average selling community were 11.8 orders (3.9 monthly) compared to 8.9 orders (3.0 monthly)
- Cancellation rate of 13% compared to 15%
- Backlog units at quarter end of 2,455 homes compared to 1,842, an increase of 33%
- Dollar value of backlog at quarter end of $1.6 billion compared to $1.2 billion, an increase of 31%
- Average sales price of homes in backlog at quarter end of $659,000 compared to $672,000, a decrease of 2%
- Ratios of debt-to-capital and net debt-to-net capital of 45.8% and 35.4%*, respectively, as of March 31, 2020
- Repurchased 6,558,323 shares of common stock at a weighted average price per share of $15.55 for an aggregate dollar amount of $102.0 million in the three months ended March 31, 2020
- Ended the first quarter of 2020 with total liquidity of $677.5 million, including cash and cash equivalents of $624.1 million and $53.4 million of availability under the Company’s unsecured revolving credit facility
* See “Reconciliation of Non-GAAP Financial Measures”
“I am extremely pleased with how our team members have adapted to the new reality brought on by the pandemic,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “We continue to effectively manage all aspects of the business on a day-to-day basis. I am proud that our teams continue to find creative ways to satisfy our customers through sales, construction and service. In many ways, the changes we’ve had to make as an industry play to TRI Pointe’s strengths, thanks to the investments we’ve made in our digital platform. Our ability to market and sell our homes using virtual tools has allowed us to continue to generate sales leads and convert web traffic into orders in this environment. In addition, we have provided customers with alternatives to conduct their new home closing, from curbside and window signing, to limited power of attorney with their settlement agent and remote online notarization. We believe our online presence will be a significant asset during this time of limited or no in-person interaction and will have an enduring cost-benefit to our business going forward.”
Outlook
Due to the uncertainty regarding the effects of the COVID-19 pandemic on both the U.S. economy and the Company’s business operations and financial performance, the Company has withdrawn its previously issued guidance for fiscal 2020.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 5:00 p.m. Eastern Time on Thursday, April 23, 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 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 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 First Quarter 2020 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 #13701509. An archive of the webcast will 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, cannot be predicted and will depend upon future developments, including the severity of COVID-19 and the duration of the outbreak, the duration of existing social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability 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 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; 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 effect of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; 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; the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as COVID-19; transportation costs; federal and state tax policies; the effect 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:
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 March 31, | ||||||||||||||
| 2020 | 2019 | Change | % Change | |||||||||||
| Operating Data: | ||||||||||||||
| Home sales revenue | $ | 594,838 | $ | 492,703 | $ | 102,135 | 20.7 | % | ||||||
| Homebuilding gross margin | $ | 121,956 | $ | 71,167 | $ | 50,789 | 71.4 | % | ||||||
| Homebuilding gross margin % | 20.5 | % | 14.4 | % | 6.1 | % | ||||||||
| Adjusted homebuilding gross margin %* | 23.4 | % | 18.4 | % | 5.0 | % | ||||||||
| SG&A expense | $ | 82,474 | $ | 77,586 | $ | 4,888 | 6.3 | % | ||||||
| SG&A expense as a % of home sales revenue | 13.9 | % | 15.7 | % | (1.8 | )% | ||||||||
| Net income | $ | 31,883 | $ | 71 | $ | 31,812 | 44,805.6 | % | ||||||
| Adjusted EBITDA* | $ | 67,956 | $ | 28,150 | $ | 39,806 | 141.4 | % | ||||||
| Interest incurred | $ | 20,779 | $ | 23,373 | $ | (2,594 | ) | (11.1 | )% | |||||
| Interest in cost of home sales | $ | 16,822 | $ | 14,191 | $ | 2,631 | 18.5 | % | ||||||
| Other Data: | ||||||||||||||
| Net new home orders | 1,661 | 1,321 | 340 | 25.7 | % | |||||||||
| New homes delivered | 958 | 814 | 144 | 17.7 | % | |||||||||
| Average sales price of homes delivered | $ | 621 | $ | 605 | $ | 16 | 2.6 | % | ||||||
| Cancellation rate | 13 | % | 15 | % | (2 | )% | ||||||||
| Average selling communities | 140.8 | 147.8 | (7.0 | ) | (4.7 | )% | ||||||||
| Selling communities at end of period | 143 | 146 | (3 | ) | (2.1 | )% | ||||||||
| Backlog (estimated dollar value) | $ | 1,618,481 | $ | 1,237,838 | $ | 380,643 | 30.8 | % | ||||||
| Backlog (homes) | 2,455 | 1,842 | 613 | 33.3 | % | |||||||||
| Average sales price in backlog | $ | 659 | $ | 672 | $ | (13 | ) | (1.9 | )% | |||||
| March 31, | December 31, | |||||||||||||
| 2020 | 2019 | Change | % Change | |||||||||||
| Balance Sheet Data: | (unaudited) | |||||||||||||
| Cash and cash equivalents | $ | 624,129 | $ | 329,011 | $ | 295,118 | 89.7 | % | ||||||
| Real estate inventories | $ | 3,194,148 | $ | 3,065,436 | $ | 128,712 | 4.2 | % | ||||||
| Lots owned or controlled | 32,007 | 30,029 | 1,978 | 6.6 | % | |||||||||
| Homes under construction (1) | 2,564 | 2,269 | 295 | 13.0 | % | |||||||||
| Homes completed, unsold | 308 | 343 | (35 | ) | (10.2 | )% | ||||||||
| Debt | $ | 1,784,925 | $ | 1,283,985 | $ | 500,940 | 39.0 | % | ||||||
| Stockholders’ equity | $ | 2,115,281 | $ | 2,186,530 | $ | (71,249 | ) | (3.3 | )% | |||||
| Book capitalization | $ | 3,900,206 | $ | 3,470,515 | $ | 429,691 | 12.4 | % | ||||||
| Ratio of debt-to-capital | 45.8 | % | 37.0 | % | 8.8 | % | ||||||||
| Ratio of net debt-to-net capital* | 35.4 | % | 30.4 | % | 5.0 | % | ||||||||
__________(1) Homes under construction included 55 and 78 models at March 31, 2020 and December 31, 2019, respectively.* See “Reconciliation of Non-GAAP Financial Measures”
CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)
| March 31, | December 31, | ||||||
| 2020 | 2019 | ||||||
| Assets | (unaudited) | ||||||
| Cash and cash equivalents | $ | 624,129 | $ | 329,011 | |||
| Receivables | 83,701 | 69,276 | |||||
| Real estate inventories | 3,194,148 | 3,065,436 | |||||
| Investments in unconsolidated entities | 11,091 | 11,745 | |||||
| Goodwill and other intangible assets, net | 159,759 | 159,893 | |||||
| Deferred tax assets, net | 46,266 | 49,904 | |||||
| Other assets | 173,959 | 173,425 | |||||
| Total assets | $ | 4,293,053 | $ | 3,858,690 | |||
| Liabilities | |||||||
| Accounts payable | $ | 77,275 | $ | 66,120 | |||
| Accrued expenses and other liabilities | 315,560 | 322,043 | |||||
| Loans payable | 750,000 | 250,000 | |||||
| Senior notes | 1,034,925 | 1,033,985 | |||||
| Total liabilities | 2,177,760 | 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 March 31, 2020 and December 31, 2019, respectively | — | — | |||||
| Common stock, $0.01 par value, 500,000,000 shares authorized; 130,236,981 and 136,149,633 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 1,302 | 1,361 | |||||
| Additional paid-in capital | 478,122 | 581,195 | |||||
| Retained earnings | 1,635,857 | 1,603,974 | |||||
| Total stockholders’ equity | 2,115,281 | 2,186,530 | |||||
| Noncontrolling interests | 12 | 12 | |||||
| Total equity | 2,115,293 | 2,186,542 | |||||
| Total liabilities and equity | $ | 4,293,053 | $ | 3,858,690 | |||
CONSOLIDATED STATEMENT OF OPERATIONS(in thousands, except share and per share amounts)(unaudited)
| Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Homebuilding: | |||||||
| Home sales revenue | $ | 594,838 | $ | 492,703 | |||
| Land and lot sales revenue | — | 1,029 | |||||
| Other operations revenue | 618 | 598 | |||||
| Total revenues | 595,456 | 494,330 | |||||
| Cost of home sales | 472,882 | 421,536 | |||||
| Cost of land and lot sales | 202 | 1,495 | |||||
| Other operations expense | 624 | 590 | |||||
| Sales and marketing | 42,637 | 38,989 | |||||
| General and administrative | 39,837 | 38,597 | |||||
| Homebuilding income (loss) from operations | 39,274 | (6,877 | ) | ||||
| Equity in loss of unconsolidated entities | (14 | ) | (25 | ) | |||
| Other income, net | 373 | 6,241 | |||||
| Homebuilding income (loss) before income taxes | 39,633 | (661 | ) | ||||
| Financial Services: | |||||||
| Revenues | 1,594 | 302 | |||||
| Expenses | 1,079 | 321 | |||||
| Equity in income of unconsolidated entities | 1,556 | 775 | |||||
| Financial services income before income taxes | 2,071 | 756 | |||||
| Income before income taxes | 41,704 | 95 | |||||
| Provision for income taxes | (9,821 | ) | (24 | ) | |||
| Net income | $ | 31,883 | $ | 71 | |||
| Earnings per share | |||||||
| Basic | $ | 0.24 | $ | 0.00 | |||
| Diluted | $ | 0.24 | $ | 0.00 | |||
| Weighted average shares outstanding | |||||||
| Basic | 134,361,148 | 141,865,270 | |||||
| Diluted | 135,038,481 | 142,390,163 | |||||
MARKET DATA BY REPORTING SEGMENT & STATE(dollars in thousands)(unaudited)
| Three Months Ended March 31, | |||||||||||||
| 2020 | 2019 | ||||||||||||
| NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | ||||||||||
| New Homes Delivered: | |||||||||||||
| Maracay | 140 | $ | 513 | 74 | $ | 535 | |||||||
| Pardee Homes | 257 | 694 | 242 | 557 | |||||||||
| Quadrant Homes | 52 | 836 | 44 | 983 | |||||||||
| Trendmaker Homes | 209 | 460 | 154 | 455 | |||||||||
| TRI Pointe Homes | 226 | 702 | 242 | 710 | |||||||||
| Winchester Homes | 74 | 628 | 58 | 571 | |||||||||
| Total | 958 | $ | 621 | 814 | $ | 605 | |||||||
| Three Months Ended March 31, | |||||||||||||
| 2020 | 2019 | ||||||||||||
| NewHomesDelivered | AverageSalesPrice | NewHomesDelivered | AverageSalesPrice | ||||||||||
| New Homes Delivered: | |||||||||||||
| California | 339 | $ | 763 | 328 | $ | 679 | |||||||
| Colorado | 64 | 568 | 72 | 549 | |||||||||
| Maryland | 55 | 561 | 38 | 466 | |||||||||
| Virginia | 19 | 819 | 20 | 769 | |||||||||
| Arizona | 140 | 513 | 74 | 535 | |||||||||
| Nevada | 80 | 528 | 84 | 529 | |||||||||
| Texas | 209 | 460 | 154 | 455 | |||||||||
| Washington | 52 | 836 | 44 | 983 | |||||||||
| Total | 958 | $ | 621 | 814 | $ | 605 | |||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | ||||||||
| Net New Home Orders: | |||||||||||
| Maracay | 240 | 15.3 | 161 | 11.8 | |||||||
| Pardee Homes | 475 | 41.5 | 433 | 44.5 | |||||||
| Quadrant Homes | 126 | 7.0 | 75 | 7.2 | |||||||
| Trendmaker Homes | 234 | 30.2 | 243 | 39.3 | |||||||
| TRI Pointe Homes | 414 | 32.8 | 295 | 30.8 | |||||||
| Winchester Homes | 172 | 14.0 | 114 | 14.2 | |||||||
| Total | 1,661 | 140.8 | 1,321 | 147.8 | |||||||
| Three Months Ended March 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | ||||||||
| Net New Home Orders: | |||||||||||
| California | 664 | 55.6 | 517 | 54.7 | |||||||
| Colorado | 59 | 4.5 | 81 | 7.0 | |||||||
| Maryland | 123 | 10.0 | 84 | 9.8 | |||||||
| Virginia | 49 | 4.0 | 30 | 4.5 | |||||||
| Arizona | 240 | 15.3 | 161 | 11.8 | |||||||
| Nevada | 166 | 14.2 | 130 | 13.5 | |||||||
| Texas | 234 | 30.2 | 243 | 39.3 | |||||||
| Washington | 126 | 7.0 | 75 | 7.2 | |||||||
| Total | 1,661 | 140.8 | 1,321 | 147.8 | |||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(dollars in thousands)(unaudited)
| As of March 31, 2020 | As of March 31, 2019 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| Backlog: | |||||||||||||||||||||
| Maracay | 430 | $ | 239,555 | $ | 557 | 238 | $ | 139,862 | $ | 588 | |||||||||||
| Pardee Homes | 678 | 491,236 | 725 | 593 | 472,729 | 797 | |||||||||||||||
| Quadrant Homes | 163 | 145,873 | 895 | 77 | 75,599 | 982 | |||||||||||||||
| Trendmaker Homes | 370 | 183,012 | 495 | 402 | 196,256 | 488 | |||||||||||||||
| TRI Pointe Homes | 517 | 365,638 | 707 | 371 | 247,399 | 667 | |||||||||||||||
| Winchester Homes | 297 | 193,167 | 650 | 161 | 105,993 | 658 | |||||||||||||||
| Total | 2,455 | $ | 1,618,481 | $ | 659 | 1,842 | $ | 1,237,838 | $ | 672 | |||||||||||
| As of March 31, 2020 | As of March 31, 2019 | ||||||||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||||||||
| Backlog: | |||||||||||||||||||||
| California | 877 | $ | 670,672 | $ | 765 | 645 | $ | 530,031 | $ | 822 | |||||||||||
| Colorado | 95 | 56,278 | 592 | 153 | 86,570 | 566 | |||||||||||||||
| Maryland | 185 | 104,737 | 566 | 107 | 56,087 | 524 | |||||||||||||||
| Virginia | 112 | 88,430 | 790 | 54 | 49,906 | 924 | |||||||||||||||
| Arizona | 430 | 239,555 | 557 | 238 | 139,862 | 588 | |||||||||||||||
| Nevada | 223 | 129,924 | 583 | 166 | 103,527 | 624 | |||||||||||||||
| Texas | 370 | 183,012 | 495 | 402 | 196,256 | 488 | |||||||||||||||
| Washington | 163 | 145,873 | 895 | 77 | 75,599 | 982 | |||||||||||||||
| Total | 2,455 | $ | 1,618,481 | $ | 659 | 1,842 | $ | 1,237,838 | $ | 672 | |||||||||||
MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
| March 31, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots Owned or Controlled(1): | |||||
| Maracay | 3,727 | 3,730 | |||
| Pardee Homes | 13,327 | 13,267 | |||
| Quadrant Homes | 1,051 | 1,103 | |||
| Trendmaker Homes | 5,398 | 4,034 | |||
| TRI Pointe Homes | 6,804 | 6,170 | |||
| Winchester Homes | 1,700 | 1,725 | |||
| Total | 32,007 | 30,029 | |||
| March 31, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots Owned or Controlled(1): | |||||
| California | 14,802 | 14,677 | |||
| Colorado | 1,133 | 1,033 | |||
| Maryland | 947 | 1,140 | |||
| Virginia | 753 | 585 | |||
| Arizona | 3,727 | 3,730 | |||
| Nevada | 2,133 | 2,026 | |||
| North Carolina | 2,010 | 1,590 | |||
| South Carolina | 53 | 111 | |||
| Texas | 5,398 | 4,034 | |||
| Washington | 1,051 | 1,103 | |||
| Total | 32,007 | 30,029 | |||
| March 31, | December 31, | ||||
| 2020 | 2019 | ||||
| Lots by Ownership Type: | |||||
| Lots owned | 22,860 | 22,845 | |||
| Lots controlled(1) | 9,147 | 7,184 | |||
| Total | 32,007 | 30,029 | |||
__________(1) As of March 31, 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 table reconciles 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 March 31, | |||||||||||||
| 2020 | % | 2019 | % | ||||||||||
| (dollars in thousands) | |||||||||||||
| Home sales revenue | $ | 594,838 | 100.0 | % | $ | 492,703 | 100.0 | % | |||||
| Cost of home sales | 472,882 | 79.5 | % | 421,536 | 85.6 | % | |||||||
| Homebuilding gross margin | 121,956 | 20.5 | % | 71,167 | 14.4 | % | |||||||
| Add: interest in cost of home sales | 16,822 | 2.8 | % | 14,191 | 2.9 | % | |||||||
| Add: impairments and lot option abandonments | 349 | 0.1 | % | 5,202 | 1.1 | % | |||||||
| Adjusted homebuilding gross margin | $ | 139,127 | 23.4 | % | $ | 90,560 | 18.4 | % | |||||
| Homebuilding gross margin percentage | 20.5 | % | 14.4 | % | |||||||||
| Adjusted homebuilding gross margin percentage | 23.4 | % | 18.4 | % | |||||||||
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.
| March 31, 2020 | December 31, 2019 | ||||||
| Loans payable | $ | 750,000 | $ | 250,000 | |||
| Senior notes | 1,034,925 | 1,033,985 | |||||
| Total debt | 1,784,925 | 1,283,985 | |||||
| Stockholders’ equity | 2,115,281 | 2,186,530 | |||||
| Total capital | $ | 3,900,206 | $ | 3,470,515 | |||
| Ratio of debt-to-capital(1) | 45.8 | % | 37.0 | % | |||
| Total debt | $ | 1,784,925 | $ | 1,283,985 | |||
| Less: Cash and cash equivalents | (624,129 | ) | (329,011 | ) | |||
| Net debt | 1,160,796 | 954,974 | |||||
| Stockholders’ equity | 2,115,281 | 2,186,530 | |||||
| Net capital | $ | 3,276,077 | $ | 3,141,504 | |||
| Ratio of net debt-to-net capital(2) | 35.4 | % | 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 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 March 31, | |||||||
| 2020 | 2019 | ||||||
| (in thousands) | |||||||
| Net income | $ | 31,883 | $ | 71 | |||
| Interest expense: | |||||||
| Interest incurred | 20,779 | 23,373 | |||||
| Interest capitalized | (20,779 | ) | (23,373 | ) | |||
| Amortization of interest in cost of sales | 16,822 | 14,333 | |||||
| Provision for income taxes | 9,821 | 24 | |||||
| Depreciation and amortization | 5,456 | 5,085 | |||||
| EBITDA | 63,982 | 19,513 | |||||
| Amortization of stock-based compensation | 3,625 | 3,435 | |||||
| Impairments and lot option abandonments | 349 | 5,202 | |||||
| Adjusted EBITDA | $ | 67,956 | $ | 28,150 | |||
