0001561680-17-000081.txt : 20170726 0001561680-17-000081.hdr.sgml : 20170726 20170726084626 ACCESSION NUMBER: 0001561680-17-000081 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20170725 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170726 DATE AS OF CHANGE: 20170726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRI Pointe Group, Inc. CENTRAL INDEX KEY: 0001561680 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 273201111 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35796 FILM NUMBER: 17981730 BUSINESS ADDRESS: STREET 1: 19540 JAMBOREE ROAD, SUITE 300 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: (949) 478-8600 MAIL ADDRESS: STREET 1: 19540 JAMBOREE ROAD, SUITE 300 CITY: IRVINE STATE: CA ZIP: 92612 FORMER COMPANY: FORMER CONFORMED NAME: TRI Pointe Homes, Inc. DATE OF NAME CHANGE: 20130130 FORMER COMPANY: FORMER CONFORMED NAME: TRI Pointe Homes, LLC DATE OF NAME CHANGE: 20121218 FORMER COMPANY: FORMER CONFORMED NAME: TRI Pointe Homes, Inc. DATE OF NAME CHANGE: 20121106 8-K 1 tphq28-k72117.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________________
FORM 8-K
_______________________________________________________________________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 2017
_______________________________________________________________________________________
tphlogo.jpg
TRI Pointe Group, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________________________________________

Delaware
 
1-35796
 
61-1763235
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
19540 Jamboree Road, Suite 300, Irvine, California
 
 
 
92612
(Address of principal executive offices)
 
 
 
(Zip Code)
Registrant’s telephone number, including area code (949) 438-1400
Not Applicable
(Former name or former address, if changed since last report.)
_______________________________________________________________________________________ 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

1


Item 2.02
Results of Operations and Financial Condition  

On July 26, 2017, TRI Pointe Group, Inc., a Delaware corporation (the “Company”), announced in a press release its financial results for the quarter ended June 30, 2017.  A copy of the Company’s press release announcing these financial results is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished pursuant to this Item 2.02, including the exhibits attached hereto, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth in such filing. In addition, the press release furnished as an exhibit to this report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Item 8.01
Other Events  

On July 25, 2017, the Company's Board of Directors authorized the repurchase of up to an additional $50 million of Company common stock under its existing stock repurchase program (the “Repurchase Program”), increasing the aggregate authorization from $100 million to $150 million. Under the Repurchase Program, the Company may repurchase shares of its outstanding common stock with an aggregate value of up to $150 million through March 31, 2018. Repurchases of the Company’s common stock may be made in open-market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Repurchase Program does not obligate the Company to repurchase any particular amount or number of shares of common stock, and it may be modified, suspended or discontinued at any time. The timing and amount of repurchases, if any, will be determined by the Company’s management at its discretion based on a variety of factors, such as the market price of the Company’s common stock, corporate requirements, general market and economic conditions and legal requirements.
On July 26, 2017, the Company issued a press release announcing the stock repurchase authorization. The full text of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits

(d)
Exhibits
99.1
Press Release dated July 26, 2017


2


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TRI Pointe Group, Inc.
 
 
 
Date: July 26, 2017
By:
/s/ Michael D. Grubbs
 
 
Michael D. Grubbs,
Chief Financial Officer and Treasurer


3


INDEX OF EXHIBITS
 
Exhibit
No.
  
Description of Document
 
 
 
99.1
  
Press Release dated July 26, 2017


4
 EX-99.1 2 tphex991q272117.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
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TRI POINTE GROUP, INC. REPORTS 2017 SECOND QUARTER RESULTS AND ANNOUNCES INCREASE TO ITS STOCK REPURCHASE PROGRAM

-New Home Orders up 15% Year-Over-Year on a 6% Increase in Average Selling Communities- 
-Reports Net Income Available to Common Stockholders of $32.7 Million, or $0.21 per Diluted Share-
-Home Sales Revenue of $568.8 Million and Homebuilding Gross Margin Percentage of 20.1%-
-Repurchased $99.2 Million of Common Stock at a Weighted Average Price of $12.43-
-Issued $300 Million Aggregate Principal Amount of 5.25% Senior Notes Due 2027-
-Authorizes Additional $50 Million for Share Repurchases-
Irvine, California, July 26, 2017 /Business Wire/ – TRI Pointe Group, Inc. (the "Company") (NYSE: TPH) today announced results for the second quarter ended June 30, 2017. The Company also announced that its Board of Directors has authorized the repurchase of up to an additional $50 million of Company common stock under its existing stock repurchase program (the “Repurchase Program”), increasing the aggregate authorization from $100 million to $150 million.
Results and Operational Data for Second Quarter 2017 and Comparisons to Second Quarter 2016
•
Net income available to common stockholders was $32.7 million, or $0.21 per diluted share, compared to $73.9 million, or $0.46 per diluted share
◦
2016 included two land transactions representing $61.6 million in land and lot sales revenue and $52.7 million in land and lot gross margin, with no significant comparable transactions in the current year
•
New home orders of 1,445 compared to 1,258, an increase of 15%
•
Active selling communities averaged 126.8 compared to 119.5, an increase of 6%
◦
New home orders per average selling community were 11.4 orders (3.8 monthly) compared to 10.5 orders (3.5 monthly)
◦
Cancellation rate of 15% compared to 13%, an increase of 200 basis points
•
Backlog units at quarter end of 2,108 homes compared to 1,798, an increase of 17%
◦
Dollar value of backlog at quarter end of $1.3 billion compared to $1.0 billion, an increase of 31%
◦
Average sales price in backlog at quarter end of $635,000 compared to $571,000, an increase of 11%
•
Home sales revenue of $568.8 million compared to $556.9 million, an increase of 2%
◦
New home deliveries of 1,071 homes compared to 994 homes, an increase of 8%
◦
Average sales price of homes delivered of $531,000 compared to $560,000, a decrease of 5%
•
Homebuilding gross margin percentage of 20.1% compared to 22.3%, a decrease of 220 basis points
◦
Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 22.5%*
•
SG&A expense as a percentage of homes sales revenue of 11.6% compared to 11.3%, an increase of 30 basis points
•
Ratios of debt-to-capital and net debt-to-net capital of 47.6% and 45.8%*, respectively, as of June 30, 2017
•
Successfully issued $300 million aggregate principal amount of 5.25% Senior Notes due 2027
•
Extended existing unsecured revolving credit facility maturity date by two years to May 18, 2021, while decreasing total commitments from $625 million to $600 million
•
Ended second quarter of 2017 with cash of $114.9 million and $442.2 million of availability under the Company's unsecured revolving credit facility

Page 1
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*    See "Reconciliation of Non-GAAP Financial Measures"
“I am pleased to announce that TRI Pointe Group recorded another quarter of strong operational and financial performance for the second quarter of 2017, highlighted by a 15% increase in net new home orders and net income of $32.7 million, or $0.21 per diluted share,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “We met or exceeded our previously stated guidance for backlog conversion, homebuilding gross margin and quarter-end community count, and put ourselves in a great position to achieve our goals for the back half of the year, thanks in part to a 31% increase in the dollar value of our backlog. These results are a testament to the overall health of the housing market, TRI Pointe’s strong market positioning and our ongoing commitment to operational excellence.”
Second Quarter 2017 Operating Results
Net income available to common stockholders was $32.7 million, or $0.21 per diluted share in the second quarter of 2017, compared to net income available to common stockholders of $73.9 million, or $0.46 per diluted share for the second quarter of 2016.  The decrease in net income available to common stockholders was primarily driven by two land transactions in the second quarter of 2016 representing $61.6 million in land and lot sales revenue and $52.7 million in land and lot gross margin, with no comparable transactions in the current year period.
Home sales revenue increased $11.9 million, or 2%, to $568.8 million for the second quarter of 2017, as compared to $556.9 million for the second quarter of 2016.  The increase was primarily attributable to an 8% increase in new home deliveries to 1,071, offset by a 5% decrease in average selling price of homes delivered to $531,000 compared to $560,000 in the second quarter of 2016.
New home orders increased 15% to 1,445 homes for the second quarter of 2017, as compared to 1,258 homes for the same period in 2016.  Average selling communities increased 6% to 126.8 for the second quarter of 2017 compared to 119.5 for the second quarter of 2016. The Company’s overall absorption rate per average selling community for the second quarter of 2017 was 11.4 orders (3.8 monthly) compared to 10.5 orders (3.5 monthly) during the second quarter of 2016.  
The Company ended the quarter with 2,108 homes in backlog, representing approximately $1.3 billion. The average sales price of homes in backlog as of June 30, 2017 increased $64,000, or 11%, to $635,000 compared to $571,000 at June 30, 2016.  
Homebuilding gross margin percentage for the second quarter of 2017 decreased to 20.1% compared to 22.3% for the second quarter of 2016; however, it increased 130 basis points sequentially from the first quarter of 2017.  Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 22.5%* for the second quarter of 2017 compared to 24.4%* for the second quarter of 2016.  The decrease in homebuilding gross margin percentage was largely due to the mix of homes delivered, in particular a lower portion of homes delivered from our long-dated California communities, which produce gross margins above the Company average.
Selling, general and administrative ("SG&A") expense for the second quarter of 2017 increased to 11.6% of home sales revenue as compared to 11.3% for the second quarter of 2016 due to the incremental general and administrative costs associated with growing our Company. 
“TRI Pointe continues to be at the forefront of homebuilding, with unique home designs and thoughtfully engineered communities that cater to the lifestyles of today’s homebuyers,” said TRI Pointe Group Chief Operating Officer Tom Mitchell. “We have placed an added emphasis on creating living spaces that appeal to two of the biggest buyer segments in the marketplace - Millennials and Active Adults - and our strong performance this quarter is a direct result of these efforts. We believe that our commitment to homebuilding design and innovation gives us a competitive advantage over other production homebuilders, and creates long-term value for our stockholders.”
* See “Reconciliation of Non-GAAP Financial Measures”


Page 2
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Outlook
For the third quarter of 2017, the Company expects to open 10 new communities, and close out of 19, resulting in 122 active selling communities as of June 30, 2017.  In addition, the Company anticipates delivering approximately 50% to 55% of its 2,108 units in backlog as of June 30, 2017 at an average sales price of approximately $570,000.  The Company anticipates its homebuilding gross margin percentage to be in a range of 19.0% to 20.0% for the third quarter.
For the full year 2017, the Company is lowering its original guidance of growing average selling communities by 10% to 8% due to the higher than anticipated absorption rate through the second quarter of 2017, causing early close out of communities. In addition, the Company is raising the lower end of its anticipated delivery range from 4,500 to 4,600 homes, resulting in a delivery range between 4,600 and 4,800 homes. The Company is reiterating its original guidance of a full year average sales price of $570,000, a homebuilding gross margin percentage in a range of 20.0% to 21.0% and a SG&A expense ratio in the range of 10.2% to 10.4% of home sales revenue.  In addition, the Company is raising its original guidance of land and lot sales gross margin to approximately $50 million, from $45 million, most of which is expected to be realized in the third quarter of 2017.
Stock Repurchase Program
On July 25, 2017, our Board of Directors authorized the repurchase of up to an additional $50 million of Company common stock under the Company's existing Repurchase Program, increasing the aggregate authorization from $100 million to $150 million. Under the Repurchase Program, the Company may repurchase shares of its outstanding common stock with an aggregate value of up to $150 million through March 31, 2018. Purchases of common stock pursuant to the Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.  We are not obligated under the Repurchase Program to repurchase any specific number or amount of shares of common stock, and we may modify, suspend or discontinue the program at any time.  Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. For the three months ended June 30, 2017, we repurchased and retired 7,979,618 shares of our common stock under the Repurchase Program at a weighted average price of $12.43 per share for a total cost of $99.2 million. For the six months ended June 30, 2017, we repurchased and retired 8,019,005 shares of our common stock under the Repurchase Program at a weighted average price of $12.43 per share for a total cost of $99.7 million. With the increase to the Repurchase Program, the total remaining authorization for future repurchases under the Repurchase Program is approximately $50.3 million.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Wednesday, July 26, 2017.  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 2017 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 #13665509.  An archive of the webcast will be available on the Company’s website for a limited time.

Page 3
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About TRI Pointe Group, Inc.
Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is one of the top ten largest public homebuilders by equity market capitalization in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, including Maracay Homes® in Arizona; Pardee Homes® in California and Nevada; Quadrant Homes® in Washington; Trendmaker® Homes in Texas; TRI Pointe Homes® in California and Colorado; and Winchester® Homes in Maryland and Virginia. Additional information is available at 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 projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, financial condition, prospects, and capital spending.  Our forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “goal,” “guidance,” “expect,” “intend,” “outlook,” “project,” “potential,” “plan,” “predict,” “target,” “will,” 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 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; 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
 
 

 

Page 4
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KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Operating Data:
 
 
 
 
 
 
 
 
 
 
 
Home sales revenue
$
568,816

 
$
556,925

 
$
11,891

 
$
960,820

 
$
979,980

 
$
(19,160
)
Homebuilding gross margin
$
114,575

 
$
124,187

 
$
(9,612
)
 
$
188,175

 
$
222,743

 
$
(34,568
)
Homebuilding gross margin %
20.1
%
 
22.3
%
 
(2.2
)%
 
19.6
%
 
22.7
%
 
(3.1
)%
Adjusted homebuilding gross margin %*
22.5
%
 
24.4
%
 
(1.9
)%
 
22.0
%
 
24.8
%
 
(2.8
)%
Land and lot sales revenue
$
865

 
$
67,314

 
$
(66,449
)
 
$
1,443

 
$
67,669

 
$
(66,226
)
Land and lot gross margin
$
221

 
$
52,854

 
$
(52,633
)
 
$
145

 
$
52,430

 
$
(52,285
)
Land and lot gross margin %
25.5
%
 
78.5
%
 
(53.0
)%
 
10.0
%
 
77.5
%
 
(67.5
)%
SG&A expense
$
66,018

 
$
62,932

 
$
3,086

 
$
127,367

 
$
117,784

 
$
9,583

SG&A expense as a % of home sales revenue
11.6
%
 
11.3
%
 
0.3
 %
 
13.3
%
 
12.0
%
 
1.3
 %
Net income available to common stockholders
$
32,714

 
$
73,926

 
$
(41,212
)
 
$
40,907

 
$
102,476

 
$
(61,569
)
Adjusted EBITDA*
$
70,522

 
$
132,214

 
$
(61,692
)
 
$
98,202

 
$
188,731

 
$
(90,529
)
Interest incurred
$
19,931

 
$
16,280

 
$
3,651

 
$
38,804

 
$
31,429

 
$
7,375

Interest in cost of home sales
$
13,145

 
$
11,438

 
$
1,707

 
$
22,825

 
$
20,268

 
$
2,557

 
 
 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
 
 
Net new home orders
1,445

 
1,258

 
187

 
2,744

 
2,407

 
337

New homes delivered
1,071

 
994

 
77

 
1,829

 
1,765

 
64

Average selling price of homes delivered
$
531

 
$
560

 
$
(29
)
 
$
525

 
$
555

 
$
(30
)
Average selling communities
126.8

 
119.5

 
7.3

 
126.6

 
115.9

 
10.7

Selling communities at end of period
131

 
117

 
14

 
N/A

 
N/A

 
N/A

Cancellation rate
15
%
 
13
%
 
2
 %
 
15
%
 
13
%
 
2
 %
Backlog (estimated dollar value)
$
1,339,217

 
$
1,026,219

 
$
312,998

 
 
 
 
 
 
Backlog (homes)
2,108

 
1,798

 
310

 
 
 
 
 
 
Average selling price in backlog
$
635

 
$
571

 
$
64

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
 
 
 
 
 
 
 
 
 
2017
 
2016
 
Change
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
$
114,945

 
$
208,657

 
$
(93,712
)
Real estate inventories
 
 
 
 
 
 
$
3,208,341

 
$
2,910,627

 
$
297,714

Lots owned or controlled
 
 
 
 
 
 
28,892

 
28,309

 
583

Homes under construction (1)
 
 
 
 
 
 
2,488

 
1,605

 
883

Homes completed, unsold
 
 
 
 
 
 
239

 
405

 
(166
)
Debt
 
 
 
 
 
 
$
1,617,861

 
$
1,382,033

 
$
235,828

Stockholders' equity
 
 
 
 
 
 
$
1,777,954

 
$
1,829,447

 
$
(51,493
)
Book capitalization
 
 
 
 
 
 
$
3,395,815

 
$
3,211,480

 
$
184,335

Ratio of debt-to-capital
 
 
 
 
 
 
47.6
%
 
43.0
%
 
4.6
 %
Ratio of net debt-to-net capital*
 
 
 
 
 
 
45.8
%
 
39.1
%
 
6.7
 %
__________
(1)  
Homes under construction included 80 and 65 models at June 30, 2017 and December 31, 2016, respectively.
*
See “Reconciliation of Non-GAAP Financial Measures”

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CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
June 30,
 
December 31,
 
2017
 
2016
Assets
(unaudited)
 
 
Cash and cash equivalents
$
114,945

 
$
208,657

Receivables
73,003

 
82,500

Real estate inventories
3,208,341

 
2,910,627

Investments in unconsolidated entities
18,787

 
17,546

Goodwill and other intangible assets, net
161,228

 
161,495

Deferred tax assets, net
117,582

 
123,223

Other assets
58,111

 
60,592

Total assets
$
3,751,997

 
$
3,564,640

 
 
 
 
Liabilities
 
 
 
Accounts payable
$
63,251

 
$
70,252

Accrued expenses and other liabilities
278,017

 
263,845

Unsecured revolving credit facility
150,000

 
200,000

Seller financed loans
—

 
13,726

Senior notes
1,467,861

 
1,168,307

Total liabilities
1,959,129

 
1,716,130

 
 
 
 
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, 2017 and
December 31, 2016, respectively
—

 
—

Common stock, $0.01 par value, 500,000,000 shares authorized;
   151,320,521 and 158,626,229 shares issued and outstanding at
   June 30, 2017 and December 31, 2016, respectively
1,513

 
1,586

Additional paid-in capital
788,495

 
880,822

Retained earnings
987,946

 
947,039

Total stockholders' equity
1,777,954

 
1,829,447

Noncontrolling interests
14,914

 
19,063

Total equity
1,792,868

 
1,848,510

Total liabilities and equity
$
3,751,997

 
$
3,564,640



 

Page 6
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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,
 
2017
 
2016
 
2017
 
2016
Homebuilding:
 

 
 

 
 
 
 
Home sales revenue
$
568,816

 
$
556,925

 
$
960,820

 
$
979,980

Land and lot sales revenue
865

 
67,314

 
1,443

 
67,669

Other operations revenue
600

 
604

 
1,168

 
1,184

Total revenues
570,281

 
624,843

 
963,431

 
1,048,833

Cost of home sales
454,241

 
432,738

 
772,645

 
757,237

Cost of land and lot sales
644

 
14,460

 
1,298

 
15,239

Other operations expense
591

 
583

 
1,151

 
1,149

Sales and marketing
32,330

 
32,448

 
59,030

 
58,769

General and administrative
33,688

 
30,484

 
68,337

 
59,015

Homebuilding income from operations
48,787

 
114,130

 
60,970

 
157,424

Equity in income of unconsolidated entities
1,508

 
215

 
1,646

 
201

Other income, net
44

 
151

 
121

 
266

Homebuilding income before income taxes
50,339

 
114,496

 
62,737

 
157,891

Financial Services:
 
 
 
 
 
 
 
Revenues
345

 
379

 
586

 
527

Expenses
77

 
53

 
151

 
111

Equity in income of unconsolidated entities
1,294

 
1,284

 
1,560

 
1,999

Financial services income before income taxes
1,562

 
1,610

 
1,995

 
2,415

Income before income taxes
51,901

 
116,106

 
64,732

 
160,306

Provision for income taxes
(19,098
)
 
(41,913
)
 
(23,712
)
 
(57,403
)
Net income
32,803

 
74,193

 
41,020

 
102,903

Net income attributable to noncontrolling interests
(89
)
 
(267
)
 
(113
)
 
(427
)
Net income available to common stockholders
$
32,714

 
$
73,926

 
$
40,907

 
$
102,476

Earnings per share
 
 
 

 
 
 
 

Basic
$
0.21

 
$
0.46

 
$
0.26

 
$
0.63

Diluted
$
0.21

 
$
0.46

 
$
0.26

 
$
0.63

Weighted average shares outstanding
 
 
 

 
 
 
 
Basic
155,603,699

 
161,826,275

 
157,335,296

 
161,882,378

Diluted
156,140,543

 
162,259,283

 
157,924,561

 
162,245,399

 
 

Page 7
tphlogo.jpg

MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
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 Homes
164

 
$
462

 
120

 
$
399

 
283

 
$
448

 
235

 
$
397

Pardee Homes
372

 
485

 
318

 
562

 
568

 
465

 
526

 
566

Quadrant Homes
64

 
620

 
105

 
521

 
127

 
626

 
197

 
509

Trendmaker Homes
133

 
487

 
126

 
502

 
239

 
488

 
214

 
500

TRI Pointe Homes
243

 
635

 
217

 
704

 
451

 
632

 
418

 
681

Winchester Homes
95

 
569

 
108

 
553

 
161

 
550

 
175

 
555

Total
1,071

 
$
531

 
994

 
$
560

 
1,829

 
$
525

 
1,765

 
$
555

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
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
438

 
$
580

 
367

 
$
718

 
737

 
$
576

 
681

 
$
701

Colorado
37

 
617

 
50

 
509

 
67

 
593

 
88

 
497

Maryland
69

 
526

 
66

 
499

 
115

 
515

 
114

 
501

Virginia
26

 
681

 
42

 
638

 
46

 
638

 
61

 
657

Arizona
164

 
462

 
120

 
399

 
283

 
448

 
235

 
397

Nevada
140

 
412

 
118

 
359

 
215

 
395

 
175

 
349

Texas
133

 
487

 
126

 
502

 
239

 
488

 
214

 
500

Washington
64

 
620

 
105

 
521

 
127

 
626

 
197

 
509

Total
1,071

 
$
531

 
994

 
$
560

 
1,829

 
$
525

 
1,765

 
$
555


 

Page 8
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MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
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 Homes
162

 
16.0

 
191

 
18.5

 
346

 
16.1

 
392

 
18.3

Pardee Homes
483

 
28.8

 
340

 
22.3

 
861

 
28.6

 
653

 
22.7

Quadrant Homes
107

 
6.8

 
92

 
9.0

 
227

 
7.3

 
225

 
9.0

Trendmaker Homes
129

 
31.7

 
133

 
28.0

 
280

 
31.9

 
255

 
25.7

TRI Pointe Homes
413

 
31.5

 
379

 
28.2

 
766

 
30.7

 
644

 
26.8

Winchester Homes
151

 
12.0

 
123

 
13.5

 
264

 
12.0

 
238

 
13.4

Total
1,445

 
126.8

 
1,258

 
119.5

 
2,744

 
126.6

 
2,407

 
115.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
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
689

 
42.5

 
547

 
34.4

 
1,253

 
42.3

 
953

 
33.7

Colorado
51

 
6.5

 
33

 
4.8

 
104

 
5.9

 
76

 
4.9

Maryland
117

 
9.0

 
78

 
6.5

 
184

 
8.6

 
142

 
6.4

Virginia
34

 
3.0

 
45

 
7.0

 
80

 
3.4

 
96

 
7.0

Arizona
162

 
16.0

 
191

 
18.5

 
346

 
16.1

 
392

 
18.3

Nevada
156

 
11.3

 
139

 
11.3

 
270

 
11.1

 
268

 
10.9

Texas
129

 
31.7

 
133

 
28.0

 
280

 
31.9

 
255

 
25.7

Washington
107

 
6.8

 
92

 
9.0

 
227

 
7.3

 
225

 
9.0

Total
1,445

 
126.8

 
1,258

 
119.5

 
2,744

 
126.6

 
2,407

 
115.9


 

Page 9
tphlogo.jpg

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
 
 
As of June 30, 2017
 
As of June 30, 2016
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
Backlog:
 
 
 
 
 
 
 
 
 
 
 
Maracay Homes
311

 
$
156,611

 
$
504

 
360

 
$
153,107

 
$
425

Pardee Homes
553

 
369,021

 
667

 
401

 
236,903

 
591

Quadrant Homes
201

 
144,204

 
717

 
171

 
99,366

 
581

Trendmaker Homes
204

 
105,663

 
518

 
177

 
94,850

 
536

TRI Pointe Homes
613

 
428,281

 
699

 
516

 
330,262

 
640

Winchester Homes
226

 
135,437

 
599

 
173

 
111,731

 
646

Total
2,108

 
$
1,339,217

 
$
635

 
1,798

 
$
1,026,219

 
$
571

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2017
 
As of June 30, 2016
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
Backlog:
 
 
 
 
 
 
 
 
 
 
 
California
918

 
$
660,548

 
$
720

 
673

 
$
454,935

 
$
676

Colorado
96

 
60,686

 
632

 
72

 
39,928

 
555

Maryland
171

 
96,443

 
564

 
105

 
64,884

 
618

Virginia
55

 
38,994

 
709

 
68

 
46,846

 
689

Arizona
311

 
156,611

 
504

 
360

 
153,107

 
425

Nevada
152

 
76,068

 
500

 
172

 
72,302

 
420

Texas
204

 
105,663

 
518

 
177

 
94,850

 
536

Washington
201

 
144,204

 
717

 
171

 
99,367

 
581

Total
2,108

 
$
1,339,217

 
$
635

 
1,798

 
$
1,026,219

 
$
571



 

Page 10
tphlogo.jpg

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
 
June 30,
 
December 31,
 
2017
 
2016
Lots Owned or Controlled:
 
 
 
Maracay Homes
3,023

 
2,053

Pardee Homes
16,162

 
16,912

Quadrant Homes
1,852

 
1,582

Trendmaker Homes
1,912

 
1,999

TRI Pointe Homes
3,494

 
3,479

Winchester Homes
2,449

 
2,284

Total
28,892

 
28,309

 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
 
2017
 
2016
Lots Owned or Controlled:
 
 
 
California
16,668

 
17,245

Colorado
847

 
918

Maryland
1,742

 
1,779

Virginia
707

 
505

Arizona
3,023

 
2,053

Nevada
2,141

 
2,228

Texas
1,912

 
1,999

Washington
1,852

 
1,582

Total
28,892

 
28,309

 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
 
2017
 
2016
Lots by Ownership Type:
 
 
 
Lots owned
25,308

 
25,283

Lots controlled (1)
3,584

 
3,026

Total
28,892

 
28,309

__________
(1) 
As of June 30, 2017 and December 31, 2016, lots controlled included lots that were under land option contracts or purchase contracts.
 
 

Page 11
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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,
 
2017
 
%
 
2016
 
%
 
(dollars in thousands)
Home sales revenue
$
568,816

 
100.0
%
 
$
556,925

 
100.0
%
Cost of home sales
454,241

 
79.9
%
 
432,738

 
77.7
%
Homebuilding gross margin
114,575

 
20.1
%
 
124,187

 
22.3
%
Add:  interest in cost of home sales
13,145

 
2.3
%
 
11,438

 
2.1
%
Add:  impairments and lot option abandonments
507

 
0.1
%
 
107

 
0.0
%
Adjusted homebuilding gross margin
$
128,227

 
22.5
%
 
$
135,732

 
24.4
%
Homebuilding gross margin percentage
20.1
%
 
 
 
22.3
%
 
 
Adjusted homebuilding gross margin percentage
22.5
%
 
 
 
24.4
%
 
 


 
Six Months Ended June 30,
 
2017
 
%
 
2016
 
%
 
(dollars in thousands)
Home sales revenue
$
960,820

 
100.0
%
 
$
979,980

 
100.0
%
Cost of home sales
772,645

 
80.4
%
 
757,237

 
77.3
%
Homebuilding gross margin
188,175

 
19.6
%
 
222,743

 
22.7
%
Add:  interest in cost of home sales
22,825

 
2.4
%
 
20,268

 
2.1
%
Add:  impairments and lot option abandonments
795

 
0.1
%
 
289

 
0.0
%
Adjusted homebuilding gross margin
$
211,795

 
22.0
%
 
$
243,300

 
24.8
%
Homebuilding gross margin percentage
19.6
%
 
 
 
22.7
%
 
 
Adjusted homebuilding gross margin percentage
22.0
%
 
 
 
24.8
%
 
 




 



Page 12
tphlogo.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, 2017
 
December 31, 2016
Unsecured revolving credit facility
$
150,000

 
$
200,000

Seller financed loans
—

 
13,726

Senior notes
1,467,861

 
1,168,307

Total debt
1,617,861

 
1,382,033

Stockholders’ equity
1,777,954

 
1,829,447

Total capital
$
3,395,815

 
$
3,211,480

Ratio of debt-to-capital(1)
47.6
%
 
43.0
%
 


 


Total debt
$
1,617,861

 
$
1,382,033

Less: Cash and cash equivalents
(114,945
)
 
(208,657
)
Net debt
1,502,916

 
1,173,376

Stockholders’ equity
1,777,954

 
1,829,447

Net capital
$
3,280,870

 
$
3,002,823

Ratio of net debt-to-net capital(2)
45.8
%
 
39.1
%
__________
(1) 
The ratio of debt-to-capital is computed as the quotient obtained by dividing debt by the sum of debt plus equity.
(2) 
The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus equity.




























Page 13
tphlogo.jpg


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
 
The following table calculates the non-GAAP 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) income taxes, (c) depreciation and amortization, (d) expensing of previously capitalized interest included in costs of home sales and (e) amortization of stock-based compensation. Adjusted EBITDA means EBITDA before (f) impairment and lot option abandonments and (g) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(in thousands)
Net income available to common stockholders
$
32,714

 
$
73,926

 
$
40,907

 
$
102,476

Interest expense:
 
 
 
 
 
 
 
Interest incurred
19,931

 
16,280

 
38,804

 
31,429

Interest capitalized
(19,931
)
 
(16,280
)
 
(38,804
)
 
(31,429
)
Amortization of interest in cost of sales
13,185

 
11,563

 
22,872

 
20,393

Provision for income taxes
19,098

 
41,913

 
23,712

 
57,403

Depreciation and amortization
877

 
732

 
1,698

 
1,457

Amortization of stock-based compensation
3,903

 
3,758

 
7,744

 
6,363

EBITDA
69,777

 
131,892

 
96,933

 
188,092

Impairments and lot abandonments
507

 
107

 
828

 
289

Restructuring charges
238

 
215

 
441

 
350

Adjusted EBITDA
$
70,522

 
$
132,214

 
$
98,202

 
$
188,731

 
 
 
 
 
 
 
 
 
 
 

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