EX-99.1 2 tphex991q22019.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
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TRI POINTE GROUP, INC. REPORTS 2019 SECOND QUARTER RESULTS
IRVINE, CALIFORNIA, July 25, 2019 / Business Wire / 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

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•
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

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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.

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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 Group
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TRIPointeGroup.com, 949-478-8696
Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
 
 

 

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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”

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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



 

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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

 
 

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MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
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
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
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


 

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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 New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
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


 

Page 9
logoa06.jpg

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



 

Page 10
logoa06.jpg

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.
 
 

Page 11
logoa06.jpg

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
%
 
 








Page 12
logoa06.jpg

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.































Page 13
logoa06.jpg


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

 
 
 
 
 
 
 
 
 
 
 

Page 14