TRI Pointe Group, Inc. Reports 2017 Fourth Quarter and Full Year Results and Announces New Stock Repurchase Program

February 20, 2018
  • New Home Orders up 17% and New Home Deliveries up 23% for the Quarter
  • Backlog Dollar Value up 56% on a 32% Increase in Backlog Units
  • Home Sales Revenue of $1.1 Billion, up 46% for the Quarter
  • Homebuilding Gross Margin of 21.7% for the Quarter
  • Authorizes New Stock Repurchase Program of $100 Million 

IRVINE, Calif., Feb. 20, 2018 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the "Company") (NYSE:TPH) today announced results for the fourth quarter ended December 31, 2017 and full year 2017.  The Company also announced that its Board of Directors has approved a new stock repurchase program authorizing the repurchase of up to $100 million of Company common stock through March 31, 2019 (the “Repurchase Program”).

Results and Operational Data for Fourth Quarter 2017 and Comparisons to Fourth Quarter 2016

  • Net income available to common stockholders was $74.0 million, or $0.49 per diluted share, compared to $57.9 million, or $0.36 per diluted share.  In the fourth quarter 2017, the Company recorded a $22.0 million tax charge related to the re-measurement of the Company’s net deferred tax assets as a result of the recently enacted Tax Cuts and Jobs Act, as well as a pretax charge of $13.2 million related to the impairment of an investment in an unconsolidated entity.  Excluding these items, adjusted net income available to common stockholders was $107.4 million, or $0.70 per diluted share.*  No similar adjustments existed in the fourth quarter of 2016.
  • New home orders of 1,063 compared to 909, an increase of 17%
  • Active selling communities averaged 127.5 compared to 122.8, an increase of 4%
    • New home orders per average selling community increased by 13% to 8.3 orders (2.8 monthly) compared to 7.4 orders (2.5 monthly)
    • Cancellation rate of 17% compared to 20%, a decrease of 300 basis points
  • Backlog units at quarter end of 1,571 homes compared to 1,193, an increase of 32%
    • Dollar value of backlog at quarter end of $1.0 billion compared to $661.1 million, an increase of 56%
    • Average sales price in backlog at quarter end of $657,000 compared to $554,000, an increase of 19%
  • Home sales revenue of $1.1 billion compared to $770.7 million, an increase of 46%
    • New home deliveries of 1,757 homes compared to 1,427 homes, an increase of 23%
    • Average sales price of homes delivered of $639,000 compared to $540,000, an increase of 18%
  • Homebuilding gross margin percentage of 21.7% compared to 20.0%, an increase of 170 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.2%*
  • SG&A expense as a percentage of homes sales revenue of 7.2% compared to 9.2%, a decrease of 200 basis points
  • Ratios of debt-to-capital and net debt-to-net capital of 43.3% and 38.1%*, respectively, as of December 31, 2017
  • Ended fourth quarter of 2017 with total liquidity of 875.2 million, including cash of $282.9 million and $592.3 million of availability under the Company's unsecured revolving credit facility

    *   See "Reconciliation of Non-GAAP Financial Measures"

Results and Operational Data for Full Year 2017 and Comparisons to Full Year 2016

  • Net income available to common stockholders was $187.2 million, or $1.21 per diluted share, compared to $195.2 million, or $1.21 per diluted share.  Adjusted net income available to common stockholders was $220.6 million, or $1.42 per diluted share, after excluding the $22.0 million tax charge related to the re-measurement of the Company’s net deferred tax assets and the $13.2 million pretax charge related to the impairment of an investment in an unconsolidated entity.*  No similar adjustments existed in 2016.
  • New home orders of 5,075 compared to 4,248, an increase of 19%
  • Active selling communities averaged 127.5 compared to 118.3, an increase of 8%
    • New home orders per average selling community increased by 11% to 39.8 orders (3.3 monthly) compared to 35.9 orders (3.0 monthly)
    • Cancellation rate of 15% in both full year periods
  • Home sales revenue of $2.7 billion compared to $2.3 billion, an increase of 17%
    • New home deliveries of 4,697 homes compared to 4,211 homes, an increase of 12%
    • Average sales price of homes delivered of $582,000 compared to $553,000, an increase of 5%
  • Homebuilding gross margin percentage of 20.5% compared to 21.2%, a decrease of 70 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 22.9%*
  • SG&A expense as a percentage of homes sales revenue of 10.1% compared to 10.8%, a decrease of 70 basis points
  • Repurchased 8,994,705 shares of common stock at an average price of $12.48 for an aggregate dollar amount of $112.2 million in the full year ended December 31, 2017

    *   See "Reconciliation of Non-GAAP Financial Measures"

“We ended 2017 on a very strong note,” said TRI Pointe Group CEO Doug Bauer.  “Fourth quarter home sales revenue grew 46% year-over-year, thanks to a 23% increase in new home deliveries and an 18% rise in average selling price.  We also posted solid year-over-year operating margin expansion, as both homebuilding gross margins and SG&A as a percentage of revenue improved during the quarter, culminating in an 81% increase in pretax income.  New home orders during the quarter also surpassed last year’s comparable quarter total, as our average sales pace per community was a healthy 2.8 homes per community per month compared to 2.5 in the same period last year.”

“For the full year 2017, we posted double digit gains in new home orders of 19%, home sales revenue of 17% and pretax income of 13%, and we ended the year with a backlog dollar value 56% higher than the prior year,” said Mr. Bauer.  These results are a testament to the ongoing strength of our homebuilding markets, the quality of our land positions and the value created by our unique operating strategy.”

Fourth Quarter 2017 Operating Results

Net income available to common stockholders was $74.0 million, or $0.49 per diluted share, for the fourth quarter of 2017, compared to net income available to common stockholders of $57.9 million, or $0.36 per diluted share, for the fourth quarter of 2016.  The increase in net income available to common stockholders was primarily driven by higher home sales revenue and homebuilding gross margin, partially offset by a $22.0 million tax charge related to the re-measurement of the Company’s net deferred tax assets and a pretax charge of $13.2 million related to the impairment of an investment in an unconsolidated entity.  Excluding these items, adjusted net income available to common stockholders was $107.4 million or $0.70 per diluted share.*  No similar adjustments existed in the fourth quarter of 2016.

Home sales revenue increased $352.1 million, or 46%, to $1.1 billion for the fourth quarter of 2017, as compared to $770.7 million for the fourth quarter of 2016.  The increase was primarily attributable to a 23% increase in new home deliveries to 1,757, and an 18% increase in average selling price of homes delivered to $639,000 compared to $540,000 in the fourth quarter of 2016. 

New home orders increased 17% to 1,063 homes for the fourth quarter of 2017, as compared to 909 homes for the same period in 2016.  Average selling communities was 127.5 for the fourth quarter of 2017 compared to 122.8 for the fourth quarter of 2016.  New home orders per average selling community for the fourth quarter of 2017 was 8.3 orders (2.8 monthly) compared to 7.4 orders (2.5 monthly) during the fourth quarter of 2016.  

The Company ended the quarter with 1,571 homes in backlog, representing approximately $1.0 billion. The average selling price of homes in backlog as of December 31, 2017 increased $103,000, or 19%, to $657,000 compared to $554,000 at December 31, 2016.  

Homebuilding gross margin percentage for the fourth quarter of 2017 increased to 21.7% compared to 20.0% for the fourth quarter of 2016.  Excluding interest, impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.2% for the fourth quarter of 2017 compared to 22.2% for the fourth quarter of 2016.*  The increase in homebuilding gross margin percentage was largely due to the mix of homes delivered during the quarter, with 225 more homes delivered from our California assets, which have gross margins above the Company average.   

Selling, general and administrative ("SG&A") expense for the fourth quarter of 2017 decreased to 7.2% of home sales revenue as compared to 9.2% for the fourth quarter of 2016 due to increased leverage as a result of the 46% increase in home sales revenue.  

“We continue to be at the forefront of homebuilding innovation, both in terms of community planning and new home design,” said TRI Pointe Group COO Tom Mitchell.  “We strive to create a unique home buying experience for our customers, one that takes into account the distinct aesthetic of our local markets and the lifestyle wants and needs of each buyer segment.  We believe that this emphasis on design and innovation played a key role in our strong financial performance in 2017.  We are in the process of rolling out several communities with new home concepts that we expect will appeal to two of the largest home buying segments - Active Adults and Millennials - and we are excited about their prospects.”

*  See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the full year 2018, the Company expects to grow average selling communities by 5% compared to 2017 and deliver between 5,100 and 5,400 homes at an average sales price of approximately $610,000.  The Company expects its homebuilding gross margin percentage for the full year 2018 to be in the range of 20.5% to 21.5% and expects its SG&A expense as a percentage of home sales revenue to be in the range of 9.9% to 10.3%.  Finally, the Company expects its effective tax rate to be in the range of 25% to 26%.

For the first quarter of 2018, the Company expects to open 8 new communities and close out of 11 communities, resulting in 127 active selling communities as of March 31, 2018.  In addition, the Company anticipates delivering approximately 55% of its 1,571 homes in backlog as of December 31, 2017 at an average sales price of $630,000 to $640,000.  The Company anticipates its homebuilding gross margin percentage to be in a range of 21.5% to 22.5% for the first quarter of 2018.  Finally, the Company expects its SG&A expense as a percentage of home sales revenue to be in the range of 13.0% to 13.5% for the first quarter of 2018.

Stock Repurchase Program

On February 16, 2018, our Board of Directors cancelled the share repurchase program approved in 2017, which had approximately $37.8 million remaining in authorized repurchases, and approved the Repurchase Program, which authorizes the repurchase of up to $100 million of Company common stock through March 31, 2019.  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 under the Securities Exchange Act of 1934, as amended.  We are not obligated under the Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the Repurchase Program at any time.  Our management will determine the timing and amount of any repurchases 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.

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 Tuesday, February 20, 2018.  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 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 Fourth 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 #13675667.  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 among the largest public homebuilders 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, 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:             Media Contact:
   
Chris Martin, TRI Pointe Group Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
Drew Mackintosh, Mackintosh Investor Relations  
InvestorRelations@TRIPointeGroup.com, 949-478-8696  
   
   
   



KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)

    
 Three Months Ended December 31, Year Ended December 31,
 2017 2016 Change 2017 2016 Change
Operating Data:             
Home sales revenue$1,122,841  $770,703  $352,138  $2,732,299  $2,329,336  $402,963 
Homebuilding gross margin$244,153  $153,936  $90,217  $559,048  $493,009  $66,039 
Homebuilding gross margin %21.7% 20.0% 1.7% 20.5% 21.2% (0.7)%
Adjusted homebuilding gross margin %*24.2% 22.2% 2.0% 22.9% 23.4% (0.5)%
Land and lot sales revenue$4,608  $2,068  $2,540  $74,269  $72,272  $1,997 
Land and lot gross margin$3,019  $1,674  $1,345  $59,381  $54,905  $4,476 
Land and lot gross margin %65.5% 80.9% (15.4)% 80.0% 76.0% 4.0%
SG&A expense$81,328  $71,108  $10,220  $274,830  $252,022  $22,808 
SG&A expense as a % of home sales revenue7.2% 9.2% (2.0)% 10.1% 10.8% (0.7)%
Net income available to common
  stockholders
$74,020  $57,861  $16,159  $187,191  $195,171  $(7,980)
Adjusted net income available to common
  stockholders*
$107,403  $57,861  $49,542  $220,574  $195,171  $25,403 
Adjusted EBITDA*$202,178  $107,425  $94,753  $439,932  $370,371  $69,561 
Interest incurred$22,595  $18,276  $4,319  $84,264  $68,306  $15,958 
Interest in cost of home sales$26,387  $16,458  $9,929  $64,835  $51,111  $13,724 
            
Other Data:           
Net new home orders1,063  909  154  5,075  4,248  827 
New homes delivered1,757  1,427  330  4,697  4,211  486 
Average selling price of homes delivered$639  $540  $99  $582  $553  $29 
Average selling communities127.5  122.8  4.7  127.5  118.3  9.2 
Selling communities at end of period130  124  6  N/A
  N/A
  N/A
 
Cancellation rate17% 20% (3)% 15% 15% 0%
Backlog (estimated dollar value)$1,032,775  $661,146  $371,629       
Backlog (homes)1,571  1,193  378       
Average selling price in backlog$657  $554  $103       
            
 December 31,
 2017
 December 31,
 2016
 Change      
Balance Sheet Data:           
Cash and cash equivalents$282,914  $208,657  $74,257       
Real estate inventories$3,105,553  $2,910,627  $194,926       
Lots owned or controlled27,312  28,309  (997)      
Homes under construction (1)1,941  1,605  336       
Homes completed, unsold269  405  (136)      
Debt$1,471,302  $1,382,033  $89,269       
Stockholders' equity$1,929,722  $1,829,447  $100,275       
Book capitalization$3,401,024  $3,211,480  $189,544       
Ratio of debt-to-capital43.3% 43.0% 0.3%      
Ratio of net debt-to-net-capital*38.1% 39.1% (1.0)%      

_____________________________________
(1)   Homes under construction included 60 and 65 models at December 31, 2017 and December 31, 2016, respectively.
*      See “Reconciliation of Non-GAAP Financial Measures”


CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

 
 December 31,
 2017
 December 31,
 2016
Assets(unaudited)  
Cash and cash equivalents$282,914 $208,657
Receivables125,600 82,500
Real estate inventories3,105,553 2,910,627
Investments in unconsolidated entities5,870 17,546
Goodwill and other intangible assets, net160,961 161,495
Deferred tax assets, net76,413 123,223
Other assets48,070 60,592
Total assets$3,805,381 $3,564,640
    
Liabilities   
Accounts payable$72,870 $70,252
Accrued expenses and other liabilities330,882 263,845
Unsecured revolving credit facility 200,000
Seller financed loans 13,726
Senior notes1,471,302 1,168,307
Total liabilities1,875,054 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 December 31, 2017 and 
  December 31, 2016, respectively
 
Common stock, $0.01 par value, 500,000,000 shares authorized;
  151,162,999 and 158,626,229 shares issued and outstanding at
  December 31, 2017 and December 31, 2016, respectively
1,512 1,586
Additional paid-in capital793,980 880,822
Retained earnings1,134,230 947,039
Total stockholders' equity1,929,722 1,829,447
Noncontrolling interests605 19,063
Total equity1,930,327 1,848,510
Total liabilities and equity$3,805,381 $3,564,640
 
 


CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)

    
 Three Months Ended December 31, Year Ended December 31,
 2017 2016 2017 2016
Homebuilding:         
Home sales revenue$1,122,841  $770,703  $2,732,299  $2,329,336 
Land and lot sales revenue4,608  2,068  74,269  72,272 
Other operations revenue581  524  2,333  2,314 
Total revenues1,128,030  773,295  2,808,901  2,403,922 
Cost of home sales878,688  616,767  2,173,251  1,836,327 
Cost of land and lot sales1,589  394  14,888  17,367 
Other operations expense572  523  2,298  2,247 
Sales and marketing44,857  37,282  137,066  127,903 
General and administrative36,471  33,826  137,764  124,119 
Homebuilding income from operations165,853  84,503  343,634  295,959 
Equity in (loss) income of unconsolidated entities(13,079) (2) (11,433) 179 
Other income, net4  25  151  312 
Homebuilding income before income taxes152,778  84,526  332,352  296,450 
Financial Services:       
Revenues490  458  1,371  1,220 
Expenses98  70  331  253 
Equity in income of unconsolidated entities3,515  1,564  6,426  4,810 
Financial services income before income taxes3,907  1,952  7,466  5,777 
Income before income taxes156,685  86,478  339,818  302,227 
Provision for income taxes(82,443) (28,393) (152,267) (106,094)
Net income74,242  58,085  187,551  196,133 
Net income attributable to noncontrolling interests(222) (224) (360) (962)
Net income available to common stockholders$74,020  $57,861  $187,191  $195,171 
Earnings per share       
Basic$0.49  $0.36  $1.21  $1.21 
Diluted$0.49  $0.36  $1.21  $1.21 
Weighted average shares outstanding       
Basic150,859,014  159,082,568  154,134,411  160,859,782 
Diluted152,568,093  159,789,940  155,085,366  161,381,499 
            
            


MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)

    
 Three Months Ended December 31, Year Ended December 31,
 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 Homes181  $507  225  $417  628  $473  625  $408 
Pardee Homes535  613  392  467  1,431  529  1,220  548 
Quadrant Homes146  765  96  616  352  697  383  541 
Trendmaker Homes163  496  139  506  506  494  474  506 
TRI Pointe Homes530  761  411  658  1,313  706  1,089  664 
Winchester Homes202  532  164  570  467  549  420  560 
Total1,757  $639  1,427  $540  4,697  $582  4,211  $553 
                
                      
 Three Months Ended December 31, Year Ended December 31,
 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:               
California821  $726  596  $601  2,093  $651  1,689  $669 
Colorado75  600  42  579  172  596  160  524 
Maryland154  507  96  544  346  522  265  518 
Virginia48  613  68  608  121  625  155  631 
Arizona181  507  225  417  628  473  625  408 
Nevada169  531  165  433  479  456  460  386 
Texas163  496  139  506  506  494  474  506 
Washington146  765  96  616  352  697  383  541 
Total1,757  $639  1,427  $540  4,697  $582  4,211  $553 
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)

    
 Three Months Ended December 31, Year Ended December 31,
 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 Homes93  12.7  144  18.0  597  14.8  670  18.0 
Pardee Homes298  31.3  270  26.0  1,580  29.9  1,206  23.6 
Quadrant Homes84  7.8  67  6.5  395  7.5  341  8.0 
Trendmaker Homes123  28.5  116  30.8  516  30.4  501  27.8 
TRI Pointe Homes348  32.7  214  28.5  1,492  32.0  1,097  27.6 
Winchester Homes117  14.5  98  13.0  495  12.9  433  13.3 
Total1,063  127.5  909  122.8  5,075  127.5  4,248  118.3 
                
                
 Three Months Ended December 31, Year Ended December 31,
 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:               
California472  42.8  357  38.8  2,357  43.0  1,690  35.4 
Colorado69  7.5  28  4.5  213  6.7  135  4.8 
Maryland92  10.5  76  8.0  357  9.4  290  7.0 
Virginia25  4.0  22  5.0  138  3.5  143  6.3 
Arizona93  12.7  144  18.0  597  14.8  670  18.0 
Nevada105  13.7  99  11.2  502  12.2  478  11.0 
Texas123  28.5  116  30.8  516  30.4  501  27.8 
Washington84  7.8  67  6.5  395  7.5  341  8.0 
Total1,063  127.5  909  122.8  5,075  127.5  4,248  118.3 
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)

    
 As of December 31, 2017 As of December 31, 2016
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
Backlog:           
Maracay Homes               217  $106,061  $489  248  $114,203  $460 
Pardee Homes409  299,083  731  260  134,128  516 
Quadrant Homes144  107,714  748  101  68,461  678 
Trendmaker Homes173  93,974  543  163  85,579  525 
TRI Pointe Homes477  331,562  695  298  180,012  604 
Winchester Homes151  94,381  625  123  78,763  640 
Total1,571  $1,032,775  $657  1,193  $661,146  $554 
            
            
 As of December 31, 2017 As of December 31, 2016
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
Backlog:           
California666  $496,626  $746  402  $237,748  $591 
Colorado100  60,253  603  59  35,764  606 
Maryland113  64,942  575  102  60,904  597 
Virginia38  29,439  775  21  17,859  850 
Arizona217  106,061  489  248  114,203  460 
Nevada120  73,766  615  97  40,628  419 
Texas173  93,974  543  163  85,579  525 
Washington144  107,714  748  101  68,461  678 
Total1,571  $1,032,775  $657  1,193  $661,146  $554 
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)

    
 December 31,
 2017
 December 31,
 2016
Lots Owned or Controlled(1):                        
Maracay Homes2,519 2,053
Pardee Homes15,144 16,912
Quadrant Homes1,726 1,582
Trendmaker Homes1,855 1,999
TRI Pointe Homes3,964 3,479
Winchester Homes2,104 2,284
Total27,312 28,309
    
    
 December 31,
 2017
 December 31,
 2016
Lots Owned or Controlled(1):   
California16,292 17,245
Colorado742 918
Maryland1,507 1,779
Virginia597 505
Arizona2,519 2,053
Nevada2,074 2,228
Texas1,855 1,999
Washington1,726 1,582
Total27,312 28,309
    
    
 December 31,
 2017
 December 31,
 2016
Lots by Ownership Type:   
Lots owned23,940 25,283
Lots controlled (1)3,372 3,026
Total27,312 28,309

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


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)

In this press release, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating the Company’s operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The following tables reconcile homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non-GAAP financial measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage and non-cash impairments and lot option abandonments have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who may adjust gross margins in a similar fashion.

  
 Three Months Ended December 31,
 2017 % 2016 %
              
 (dollars in thousands)
  
Home sales revenue$1,122,841  100.0% $770,703  100.0%
Cost of home sales878,688  78.3% 616,767  80.0%
Homebuilding gross margin244,153  21.7% 153,936  20.0%
Add: interest in cost of home sales26,387  2.4% 16,458  2.1%
Add: impairments and lot option abandonments         851  0.1% 792  0.1%
Adjusted homebuilding gross margin$271,391  24.2% $171,186  22.2%
Homebuilding gross margin percentage21.7%   20.0%  
Adjusted homebuilding gross margin percentage24.2%   22.2%  


 Year Ended December 31,
 2017 % 2016 %
              
 (dollars in thousands)
  
Home sales revenue$2,732,299  100.0% $2,329,336  100.0%
Cost of home sales2,173,251  79.5% 1,836,327  78.8%
Homebuilding gross margin559,048  20.5% 493,009  21.2%
Add: interest in cost of home sales64,835  2.4% 51,111  2.2%
Add: impairments and lot option abandonments             2,020  0.1% 1,470  0.1%
Adjusted homebuilding gross margin$625,903  22.9% $545,590  23.4%
Homebuilding gross margin percentage20.5%   21.2%  
Adjusted homebuilding gross margin percentage22.9%   23.4%  
 
 

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.

    
 December 31, 2017 December 31, 2016
Unsecured revolving credit facility                                                                           $  $200,000 
Seller financed loans  13,726 
Senior notes1,471,302  1,168,307 
Total debt1,471,302  1,382,033 
Stockholders’ equity1,929,722  1,829,447 
Total capital$3,401,024  $3,211,480 
Ratio of debt-to-capital(1) 43.3% 43.0%
    
Total debt$1,471,302  $1,382,033 
Less: Cash and cash equivalents                       (282,914) (208,657)
Net debt1,188,388  1,173,376 
Stockholders’ equity1,929,722  1,829,447 
Net capital$3,118,110  $3,002,823 
Ratio of net debt-to-net capital(2)38.1% 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.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)

The following table contains information about our operating results reflecting certain adjustments to income before income taxes, (provision) benefit for income taxes, net income, net income available to common stockholders and earnings per share (diluted).  We believe reflecting these adjustments is useful to investors in understanding our recurring operations by eliminating the varying effects of certain non-routine events, and may be helpful in comparing the Company to other homebuilders to the extent they provide similar information.

    
 Three Months Ended December 31, 2017 Year Ended December 31, 2017
 As Reported Adjustments Adjusted   As Reported Adjustments Adjusted
                        
 (in thousands, except per share amounts)
  
Income before income taxes156,685  13,182 (1)169,867  339,818  13,182 (1)353,000 
(Provision) benefit for income taxes(82,443) 20,201 (2)(62,242) (152,267) 20,201 (2)(132,066)
Net income74,242  33,383  107,625  187,551  33,383  220,934 
Net income attributable to noncontrolling interests(222)   (222) (360)   (360)
Net income available to common stockholders$74,020  $33,383  $107,403  $187,191    $33,383  $220,574 
Earnings per share             
Diluted$0.49      $0.70  $1.21    $1.42 
Weighted average shares outstanding           
Diluted152,568    152,568  155,085    155,085 
            
Effective tax rate52.6%   36.6% 44.8%   37.4%

__________
(1)   Includes a charge related to the impairment of an investment in an unconsolidated entity.
(2)   Includes a tax charge related to the re-measurement of the Company’s net deferred tax assets as a result of the Tax Cuts and Jobs Act enacted in the fourth quarter of 2017, net of the impact of the charge related to the impairment of an investment in an unconsolidated entity.


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, (f) real estate inventory impairments and lot option abandonments, (g) impairments of investments in unconsolidated entities and (h) 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 December 31, Year Ended December 31,
 2017 2016 2017   2016
                
 (in thousands)
  
Net income available to common stockholders$74,020  $57,861  $187,191  $195,171 
Interest expense:       
Interest incurred22,595  18,276  84,264  68,306 
Interest capitalized(22,595) (18,276) (84,264) (68,306)
Amortization of interest in cost of sales26,474  16,480  65,245  51,288 
Provision for income taxes82,443  28,393  152,267  106,094 
Depreciation and amortization934  764  3,500  3,087 
EBITDA183,871  103,498  408,203  355,640 
Amortization of stock-based compensation4,275  2,964  15,906  12,612 
Real estate inventory impairments and land option abandonments850  792  2,053  1,470 
Impairments of investments in unconsolidated entities13,182    13,182   
Restructuring charges  171  588  649 
Adjusted EBITDA$202,178  $107,425  $439,932  $370,371 

 

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Source: TRI Pointe Group Inc.
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19540 Jamboree Road, Suite 300, Irvine, CA 92612 | 949-438-1400 |info@TriPointeGroup.com

2015 Builder of the year and 2014 Developer of the year.