TRI Pointe Group, Inc. Reports 2018 Second Quarter Results

July 27, 2018

-Home Sales Revenue up 35% on a 13% Increase in Deliveries and a 19% Increase in Average Sales Price-
-Backlog Dollar Value up 13% on an 8% Increase in Backlog Units-
-Homebuilding Gross Margin Percentage Increased 130 Basis Points to 21.4%-
-Diluted Earnings Per Share of $0.42 , up from $0.21 in the Prior Year-

IRVINE, Calif. , July 27, 2018 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the "Company") (NYSE: TPH) today announced results for the second quarter ended June 30, 2018 .

Results and Operational Data for Second Quarter 2018 and Comparisons to Second Quarter 2017

  • Net income available to common stockholders was $63.7 million , or $0.42 per diluted share, compared to $32.7 million , or $0.21 per diluted share
  • New home orders of 1,343 compared to 1,445, a decrease of 7%
  • Active selling communities averaged 130.8 compared to 126.8, an increase of 3%
    • New home orders per average selling community were 10.3 orders (3.4 monthly) compared to 11.4 orders (3.8 monthly)
    • Cancellation rate increased to 16% compared to 15%
  • Backlog units at quarter end of 2,271 homes compared to 2,108, an increase of 8%
    • Dollar value of backlog at quarter end of $1.5 billion compared to $1.3 billion , an increase of 13%
    • Average sales price of homes in backlog at quarter end of $668,000 compared to $635,000 , an increase of 5%
  • Home sales revenue of $768.8 million compared to $568.8 million , an increase of 35%
    • New home deliveries of 1,215 homes compared to 1,071 homes, an increase of 13%
    • Average sales price of homes delivered of $633,000 compared to $531,000 , an increase of 19%
  • Homebuilding gross margin percentage of 21.4% compared to 20.1%, an increase of 130 basis points
    • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.0%*
  • SG&A expense as a percentage of homes sales revenue of 10.7% compared to 11.6%, a decrease of 90 basis points
  • Ratios of debt-to-capital and net debt-to-net capital of 41.7% and 37.4%*, respectively, as of June 30, 2018
  • Ended second quarter of 2018 with total liquidity of $826.7 million , including cash of $239.9 million and $586.8 million of availability under the Company's unsecured revolving credit facility

* See "Reconciliation of Non-GAAP Financial Measures"

“We are very pleased with our results this quarter as we met or exceeded our guidance for deliveries, ASPs, homebuilding gross margin and SG&A leverage,” said TRI Pointe Group CEO Doug Bauer . “We generated pretax income of nearly $85 million in the quarter, representing a 63% increase over the second quarter of last year. This year-over-year increase in profits was a function of both higher revenues and better gross margins, a strong indication that our business remains on solid footing. We continue to see positive fundamentals in the overall housing market, characterized by low inventory levels, improving wage gains, employment growth and consumer demand from millennials to baby boomers. These macro fundamentals, coupled with our strong balance sheet, consistent execution and strategic focus on design and innovation have TRI Pointe Group well positioned as we head into the second half of the year.”

Second Quarter 2018 Operating Results

Net income available to common stockholders was $63.7 million , or $0.42 per diluted share, for the second quarter of 2018, compared to net income available to common stockholders of $32.7 million , or $0.21 per diluted share, for the second quarter of 2017.

Home sales revenue increased $200.0 million , or 35%, to $768.8 million for the second quarter of 2018, as compared to $568.8 million for the second quarter of 2017. The increase was primarily attributable to a 19% increase in the average sales price of homes delivered to $633,000 , compared to $531,000 in the second quarter of 2017, and a 13% increase in new home deliveries to 1,215, compared to 1,071 in the second quarter of 2017.

New home orders decreased 7% to 1,343 homes for the second quarter of 2018, as compared to 1,445 homes for the same period in 2017. Average selling communities increased 3% to 130.8 for the second quarter of 2018 compared to 126.8 for the second quarter of 2017. The Company’s overall absorption rate per average selling community decreased 10% for the second quarter of 2018 to 10.3 orders (3.4 monthly) compared to 11.4 orders (3.8 monthly) during the second quarter of 2017.

The Company ended the quarter with 2,271 homes in backlog, representing approximately $1.5 billion . The average sales price of homes in backlog as of June 30, 2018 increased $33,000 , or 5%, to $668,000 , compared to $635,000 as of June 30, 2017 .

Homebuilding gross margin percentage for the second quarter of 2018 increased to 21.4%, compared to 20.1% for the second quarter of 2017. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.0%* for the second quarter of 2018, compared to 22.5%* for the second quarter of 2017. Gross margin percentage increased at each of our homebuilding segments for the quarter as compared to the prior-year period. In addition, the percentage of deliveries from California , which generally produce gross margins above the company average, increased compared to the same period in the prior year.

Selling, general and administrative ("SG&A") expense for the second quarter of 2018 decreased to 10.7% of home sales revenue as compared to 11.6% for the second quarter of 2017, primarily due to increased leverage as a result of a 35% increase in home sales revenue.

“While we pride ourselves on consistent execution every quarter, our attention remains squarely focused on positioning our company for longer-term success,” said TRI Pointe Group Chief Operating Officer Tom Mitchell . “For TRI Pointe, that meant continuing to build out the longer-dated assets we acquired in the WRECO transaction rather than booking short term land-sale profits. Now over four years removed from this transaction, these assets continue to contribute significantly to our bottom line and provide us with a healthy runway of lots. Today, we are taking the same long-term approach with each of our brands with an eye toward increasing our local market scale and creating a more diversified company.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the third quarter of 2018, the Company expects to open 15 new communities, and close out of 17, resulting in 128 active selling communities as of September 30, 2018 . In addition, the Company anticipates delivering 50% to 55% of its 2,271 units in backlog as of June 30, 2018 at an average sales price of $630,000 . The Company anticipates its homebuilding gross margin percentage will be in a range of 21.0% to 21.5% for the third quarter. Finally, the Company expects its SG&A expense as a percentage of home sales revenue to be in the range of 10.8% to 11.2% for the third quarter.

For the full year 2018, the Company is reiterating its guidance of growing average selling communities by 5% compared to 2017 and delivering between 5,100 and 5,400 homes. The Company is increasing its expected average sales price for the full year to $625,000 from $610,000 . The Company continues to expect its homebuilding gross margin percentage for the full year 2018 to be in the range of 21.0% to 21.5%, SG&A expense as a percentage of home sales revenue to be in the range of 9.9% to 10.3% and its effective tax rate 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 10:00 a.m. Eastern Time on Friday, July 27, 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 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 2018 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 #13681373. 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 TM 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:

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

KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 Change 2018 2017 Change
Operating Data:
Home sales revenue $ 768,795 $ 568,816 $ 199,979 $ 1,351,367 $ 960,820 $ 390,547
Homebuilding gross margin $ 164,699 $ 114,575 $ 50,124 $ 296,769 $ 188,175 $ 108,594
Homebuilding gross margin % 21.4 % 20.1 % 1.3 % 22.0 % 19.6 % 2.4 %
Adjusted homebuilding gross margin %* 24.0 % 22.5 % 1.5 % 24.5 % 22.0 % 2.5 %
SG&A expense $ 82,227 $ 66,018 $ 16,209 $ 157,324 $ 127,367 $ 29,957
SG&A expense as a % of home sales
revenue
10.7 % 11.6 % (0.9 )% 11.6 % 13.3 % (1.7 )%
Net income available to common
stockholders
$ 63,680 $ 32,714 $ 30,966 $ 106,560 $ 40,907 $ 65,653
Adjusted EBITDA* $ 115,901 $ 70,522 $ 45,379 $ 196,888 $ 98,202 $ 98,686
Interest incurred $ 21,627 $ 19,931 $ 1,696 $ 43,147 $ 38,804 $ 4,343
Interest in cost of home sales $ 19,569 $ 13,145 $ 6,424 $ 33,798 $ 22,825 $ 10,973
Other Data:
Net new home orders 1,343 1,445 (102 ) 2,839 2,744 95
New homes delivered 1,215 1,071 144 2,139 1,829 310
Average sales price of homes delivered $ 633 $ 531 $ 102 $ 632 $ 525 $ 107
Cancellation rate 16 % 15 % 1 % 15 % 15 % 0 %
Average selling communities 130.8 126.8 4.0 130.1 126.6 3.5
Selling communities at end of period 130 131 (1 )
Backlog (estimated dollar value) $ 1,518,096 $ 1,339,217 $ 178,879
Backlog (homes) 2,271 2,108 163
Average sales price in backlog $ 668 $ 635 $ 33
June 30 , December 31 ,
2018 2017 Change
Balance Sheet Data:
Cash and cash equivalents $ 239,906 $ 282,914 $ (43,008 )
Real estate inventories $ 3,247,786 $ 3,105,553 $ 142,233
Lots owned or controlled 28,829 27,312 1,517
Homes under construction (1) 2,925 1,941 984
Homes completed, unsold 172 269 (97 )
Debt $ 1,453,366 $ 1,471,302 $ (17,936 )
Stockholders' equity $ 2,031,702 $ 1,929,722 $ 101,980
Book capitalization $ 3,485,068 $ 3,401,024 $ 84,044
Ratio of debt-to-capital 41.7 % 43.3 % (1.6 )%
Ratio of net debt-to-net capital* 37.4 % 38.1 % (0.7 )%

__________
(1) Homes under construction included 88 and 60 models at June 30, 2018 and December 31, 2017 , respectively.
* See “Reconciliation of Non-GAAP Financial Measures”

 

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
June 30 , December 31 ,
2018 2017
Assets (unaudited)
Cash and cash equivalents $ 239,906 $ 282,914
Receivables 59,611 125,600
Real estate inventories 3,247,786 3,105,553
Investments in unconsolidated entities 4,169 5,870
Goodwill and other intangible assets, net 160,694 160,961
Deferred tax assets, net 66,414 76,413
Other assets 94,105 48,070
Total assets $ 3,872,685 $ 3,805,381
Liabilities
Accounts payable $ 88,936 $ 72,870
Accrued expenses and other liabilities 298,077 330,882
Senior notes 1,453,366 1,471,302
Total liabilities 1,840,379 1,875,054
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, 2018 and
December 31, 2017 , respectively
Common stock, $0.01 par value, 500,000,000 shares authorized;
152,027,014 and 151,162,999 shares issued and outstanding at
June 30, 2018 and December 31, 2017 , respectively
1,520 1,512
Additional paid-in capital 796,746 793,980
Retained earnings 1,233,436 1,134,230
Total stockholders' equity 2,031,702 1,929,722
Noncontrolling interests 604 605
Total equity 2,032,306 1,930,327
Total liabilities and equity $ 3,872,685 $ 3,805,381

 

 

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 2018 2017
Homebuilding:
Home sales revenue $ 768,795 $ 568,816 $ 1,351,367 $ 960,820
Land and lot sales revenue 1,518 865 1,741 1,443
Other operations revenue 599 600 1,197 1,168
Total revenues 770,912 570,281 1,354,305 963,431
Cost of home sales 604,096 454,241 1,054,598 772,645
Cost of land and lot sales 1,426 644 1,929 1,298
Other operations expense 589 591 1,191 1,151
Sales and marketing 45,744 32,330 84,027 59,030
General and administrative 36,483 33,688 73,297 68,337
Homebuilding income from operations 82,574 48,787 139,263 60,970
Equity in income (loss) of unconsolidated entities 69 1,508 (399 ) 1,646
Other (expense) income, net (73 ) 44 98 121
Homebuilding income before income taxes 82,570 50,339 138,962 62,737
Financial Services:
Revenues 391 345 674 586
Expenses 129 77 266 151
Equity in income of unconsolidated entities 1,984 1,294 2,986 1,560
Financial services income before income taxes 2,246 1,562 3,394 1,995
Income before income taxes 84,816 51,901 142,356 64,732
Provision for income taxes (21,136 ) (19,098 ) (35,796 ) (23,712 )
Net income 63,680 32,803 106,560 41,020
Net income attributable to noncontrolling interests (89 ) (113 )
Net income available to common stockholders $ 63,680 $ 32,714 $ 106,560 $ 40,907
Earnings per share
Basic $ 0.42 $ 0.21 $ 0.70 $ 0.26
Diluted $ 0.42 $ 0.21 $ 0.70 $ 0.26
Weighted average shares outstanding
Basic 151,983,886 155,603,699 151,725,651 157,335,296
Diluted 153,355,965 156,140,543 153,067,342 157,924,561

 

 

MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 2018 2017
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 121 $ 471 164 $ 462 246 $ 469 283 $ 448
Pardee Homes 377 645 372 485 651 651 568 465
Quadrant Homes 85 762 64 620 168 751 127 626
Trendmaker Homes 155 492 133 487 239 491 239 488
TRI Pointe Homes 347 737 243 635 616 724 451 632
Winchester Homes 130 553 95 569 219 560 161 550
Total 1,215 $ 633 1,071 $ 531 2,139 $ 632 1,829 $ 525
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 2018 2017
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 516 $ 746 438 $ 580 916 $ 741 737 $ 576
Colorado 59 605 37 617 119 593 67 593
Maryland 100 540 69 526 166 542 115 515
Virginia 30 596 26 681 53 617 46 638
Arizona 121 471 164 462 246 469 283 448
Nevada 149 526 140 412 232 518 215 395
Texas 155 492 133 487 239 491 239 488
Washington 85 762 64 620 168 751 127 626
Total 1,215 $ 633 1,071 $ 531 2,139 $ 632 1,829 $ 525

 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 2018 2017
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 132 14.2 162 16.0 285 13.6 346 16.1
Pardee Homes 464 33.5 483 28.8 937 33.1 861 28.6
Quadrant Homes 54 6.3 107 6.8 162 6.6 227 7.3
Trendmaker Homes 161 29.0 129 31.7 316 29.3 280 31.9
TRI Pointe Homes 408 33.8 413 31.5 867 33.6 766 30.7
Winchester Homes 124 14.0 151 12.0 272 13.9 264 12.0
Total 1,343 130.8 1,445 126.8 2,839 130.1 2,744 126.6
Three Months Ended June 30 , Six Months Ended June 30 ,
2018 2017 2018 2017
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 607 45.3 689 42.5 1,235 44.8 1,253 42.3
Colorado 77 6.8 51 6.5 179 6.9 104 5.9
Maryland 85 9.0 117 9.0 185 9.3 184 8.6
Virginia 39 5.0 34 3.0 87 4.5 80 3.4
Arizona 132 14.2 162 16.0 285 13.7 346 16.1
Nevada 188 15.2 156 11.3 390 15.0 270 11.1
Texas 161 29.0 129 31.7 316 29.3 280 31.9
Washington 54 6.3 107 6.8 162 6.6 227 7.3
Total 1,343 130.8 1,445 126.8 2,839 130.1 2,744 126.6

 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
As of June 30, 2018 As of June 30, 2017
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog:
Maracay 256 $ 134,138 $ 524 311 $ 156,611 $ 504
Pardee Homes 695 451,860 650 553 369,021 667
Quadrant Homes 138 130,270 944 201 144,204 717
Trendmaker Homes 250 145,046 580 204 105,663 518
TRI Pointe Homes 728 523,907 720 613 428,281 699
Winchester Homes 204 132,875 651 226 135,437 599
Total 2,271 $ 1,518,096 $ 668 2,108 $ 1,339,217 $ 635
As of June 30, 2018 As of June 30, 2017
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog:
California 985 $ 719,113 $ 730 918 $ 660,548 $ 720
Colorado 160 88,902 556 96 60,686 632
Maryland 132 75,129 569 171 96,443 564
Virginia 72 57,746 802 55 38,994 709
Arizona 256 134,138 524 311 156,611 504
Nevada 278 167,752 603 152 76,068 500
Texas 250 145,046 580 204 105,663 518
Washington 138 130,270 944 201 144,204 717
Total 2,271 $ 1,518,096 $ 668 2,108 $ 1,339,217 $ 635

 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
June 30 , December 31 ,
2018 2017
Lots Owned or Controlled (1) :
Maracay 3,056 2,519
Pardee Homes 15,824 15,144
Quadrant Homes 1,832 1,726
Trendmaker Homes 1,924 1,855
TRI Pointe Homes 4,168 3,964
Winchester Homes 2,025 2,104
Total 28,829 27,312
June 30 , December 31 ,
2018 2017
Lots Owned or Controlled (1) :
California 16,608 16,292
Colorado 723 742
Maryland 1,345 1,507
Virginia 680 597
Arizona 3,056 2,519
Nevada 2,661 2,074
Texas 1,924 1,855
Washington 1,832 1,726
Total 28,829 27,312
June 30 , December 31 ,
2018 2017
Lots by Ownership Type:
Lots owned 23,561 23,940
Lots controlled (1) 5,268 3,372
Total 28,829 27,312

__________
(1) As of June 30, 2018 and December 31, 2017 , lots controlled included lots that were under land option contracts or purchase contracts.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)

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

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

Three Months Ended June 30 ,
2018 % 2017 %
(dollars in thousands)
Home sales revenue $ 768,795 100.0 % $ 568,816 100.0 %
Cost of home sales 604,096 78.6 % 454,241 79.9 %
Homebuilding gross margin 164,699 21.4 % 114,575 20.1 %
Add: interest in cost of home sales 19,569 2.5 % 13,145 2.3 %
Add: impairments and lot option abandonments 609 0.1 % 507 0.1 %
Adjusted homebuilding gross margin $ 184,877 24.0 % $ 128,227 22.5 %
Homebuilding gross margin percentage 21.4 % 20.1 %
Adjusted homebuilding gross margin percentage 24.0 % 22.5 %

 

Six Months Ended June 30 ,
2018 % 2017 %
(dollars in thousands)
Home sales revenue $ 1,351,367 100.0 % $ 960,820 100.0 %
Cost of home sales 1,054,598 78.0 % 772,645 80.4 %
Homebuilding gross margin 296,769 22.0 % 188,175 19.6 %
Add: interest in cost of home sales 33,798 2.5 % 22,825 2.4 %
Add: impairments and lot option abandonments 857 0.1 % 795 0.1 %
Adjusted homebuilding gross margin $ 331,424 24.5 % $ 211,795 22.0 %
Homebuilding gross margin percentage 22.0 % 19.6 %
Adjusted homebuilding gross margin percentage 24.5 % 22.0 %

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, 2018 December 31, 2017
Senior notes $ 1,453,366 $ 1,471,302
Total debt 1,453,366 1,471,302
Stockholders’ equity 2,031,702 1,929,722
Total capital $ 3,485,068 $ 3,401,024
Ratio of debt-to-capital (1) 41.7 % 43.3 %
Total debt $ 1,453,366 $ 1,471,302
Less: Cash and cash equivalents (239,906 ) (282,914 )
Net debt 1,213,460 1,188,388
Stockholders’ equity 2,031,702 1,929,722
Net capital $ 3,245,162 $ 3,118,110
Ratio of net debt-to-net capital (2) 37.4 % 38.1 %

__________
(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 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) impairments 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 ,
2018 2017 2018 2017
(in thousands)
Net income available to common stockholders $ 63,680 $ 32,714 $ 106,560 $ 40,907
Interest expense:
Interest incurred 21,627 19,931 43,147 38,804
Interest capitalized (21,627 ) (19,931 ) (43,147 ) (38,804 )
Amortization of interest in cost of sales 19,664 13,185 33,906 22,872
Provision for income taxes 21,136 19,098 35,796 23,712
Depreciation and amortization 7,092 877 12,579 1,698
EBITDA 111,572 65,874 188,841 89,189
Amortization of stock-based compensation 3,720 3,903 7,190 7,744
Impairments and lot option abandonments 609 507 857 828
Restructuring charges 238 441
Adjusted EBITDA $ 115,901 $ 70,522 $ 196,888 $ 98,202

 

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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.