Document
false0001561680 0001561680 2020-02-18 2020-02-18


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) February 18, 2020
_______________________________________________________________________________________
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
TPH
 
New York Stock Exchange

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 February 18, 2020, TRI Pointe Group, Inc., a Delaware corporation (the “Company”), announced in a press release its financial results for the quarter ended December 31, 2019 and full year 2019.  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 9.01
Financial Statements and Exhibits

(d)
Exhibits

Press Release dated February 18, 2020
104
Cover Page Interactive Data File, formatted in Inline XBRL



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: February 18, 2020
By:
/s/ Glenn J. Keeler
 
 
Glenn J. Keeler,
Chief Financial Officer and Treasurer


3
 Exhibit
Exhibit 99.1

TRI POINTE GROUP, INC. REPORTS 2019 FOURTH QUARTER AND FULL YEAR RESULTS AND ANNOUNCES NEW STOCK REPURCHASE PROGRAM
Fourth Quarter Highlights
-New Home Orders up 52% Year-Over-Year-
-Homebuilding Gross Margin Percentage of 21.9%-
-Diluted Earnings Per Share of $0.85-
 
Irvine, California, February 18, 2020 / Business Wire / – TRI Pointe Group, Inc. (the “Company”) (NYSE: TPH) today announced results for the fourth quarter ended December 31, 2019 and full year 2019. The Company also announced that its Board of Directors has approved a new stock repurchase program authorizing the repurchase of up to $200 million of common stock through March 31, 2021 (the “Repurchase Program”).
Results and Operational Data for Fourth Quarter 2019 and Comparisons to Fourth Quarter 2018
•
Net income available to common stockholders was $118.0 million, or $0.85 per diluted share, compared to $99.4 million, or $0.70 per diluted share
•
Home sales revenue for the quarter was $1.1 billion, an increase of 2%
◦
New home deliveries of 1,795 homes compared to 1,727 homes, an increase of 4%
◦
Average sales price of homes delivered of $634,000 compared to $649,000, a decrease of 2%
•
Homebuilding gross margin percentage was 21.9%, consistent with the prior year period
◦
Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 26.2%*
•
Selling, general and administrative (“SG&A”) expense as a percentage of homes sales revenue of 9.2% compared to 9.1%, an increase of 10 basis points
•
New home orders of 1,235 compared to 812, an increase of 52%
•
Active selling communities averaged 142.8 compared to 131.5, an increase of 9%
◦
New home orders per average selling community increased by 40% to 8.6 orders (2.9 monthly) compared to 6.2 orders (2.1 monthly)
◦
Cancellation rate of 14% compared to 25%
•
Backlog units at quarter end of 1,752 homes compared to 1,335, an increase of 31%
◦
Dollar value of backlog at quarter end of $1.1 billion compared to $897.3 million, an increase of 27%
◦
Average sales price in backlog at quarter end of $648,000 compared to $672,000, a decrease of 4%
•
Ratios of debt-to-capital and net debt-to-net capital of 37.0% and 30.4%*, respectively, as of December 31, 2019
•
Repurchased 3,100,202 shares of common stock at an average price of $15.32 for an aggregate dollar amount of $47.5 million in the three months ended December 31, 2019
•
Ended fourth quarter of 2019 with total liquidity of $896.4 million, including cash of $329.0 million and $567.4 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 2019 and Comparisons to Full Year 2018
•
Net income available to common stockholders was $207.2 million, or $1.47 per diluted share, compared to $269.9 million, or $1.81 per diluted share
•
Home sales revenue of $3.1 billion compared to $3.2 billion, a decrease of 5%

Page 1

◦
New home deliveries of 4,921 homes compared to 5,071 homes, a decrease of 3%
◦
Average sales price of homes delivered of $624,000 compared to $640,000, a decrease of 3%
•
Homebuilding gross margin percentage of 19.8% compared to 21.8%, a decrease of 200 basis points
◦
Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.2%*
•
SG&A expense as a percentage of homes sales revenue of 11.5% compared to 10.6%, an increase of 90 basis points
•
New home orders of 5,338 compared to 4,686, an increase of 14%
•
Active selling communities averaged 145.7 compared to 130.1, an increase of 12%
◦
New home orders per average selling community increased by 3% to 36.6 orders (3.1 monthly) compared to 36.0 orders (3.0 monthly)
◦
Cancellation rate of 15% compared to 18%, a decrease of 300 basis points
•
Repurchased 6,135,622 shares of common stock at an average price of $14.54 for an aggregate dollar amount of $89.2 million in the full year ended December 31, 2019
 
*    See “Reconciliation of Non-GAAP Financial Measures”
“The fourth quarter of 2019 capped another successful year for TRI Pointe Group, highlighted by year-over-year unit order growth of 52%, homebuilding gross margins of 21.9% and earnings per share growth of 21%,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Demand was consistent throughout the quarter and broad-based across the country, as each of our brands posted year-over-year order growth in excess of 25%. These results are a testament to the health of our industry and the appeal of our homes.”
Mr. Bauer continued, “We made further progress during the quarter in diversifying our operations from a geographic standpoint by making additional investments in our early stage markets, while continuing to grow our presence in our established markets. We also increased our diversification on the product front by rolling out more communities that cater to the affordable segments of the market, while staying true to our premium lifestyle brand positioning. We believe that these efforts will allow TRI Pointe Group to reach a broader segment of the home buying population over time and provide us with a bigger platform from which to grow.”
Mr. Bauer concluded, “We enter 2020 with a lot of momentum, aided by a strong economy, favorable industry fundamentals and a great product portfolio. In addition, we begin the year with 31% more homes in backlog than we did at the beginning of 2019. These positives, coupled with our strong balance sheet, strategic focus and unique corporate culture, have us excited for the future of TRI Pointe Group.”
Fourth Quarter 2019 Operating Results
Net income available to common stockholders was $118.0 million, or $0.85 per diluted share, for the fourth quarter of 2019, compared to net income available to common stockholders of $99.4 million, or $0.70 per diluted share, for the fourth quarter of 2018.  The increase in net income available to common stockholders was primarily driven by lower legal settlement expenses compared to the prior year as well as a lower income tax provision in the current year as a result of the energy tax credit that was approved by Congress in December 2019.
Home sales revenue was consistent at $1.1 billion for the fourth quarter of 2019 and 2018.  The average selling price of homes delivered during the fourth quarter of 2019 decreased 2% to $634,000 from $649,000, offset by a 4% increase in new homes delivered in the fourth quarter of 2019 to 1,795 from 1,727.
Homebuilding gross margin percentage was consistent at 21.9% for both the fourth quarter of 2019 and 2018.  Excluding interest, impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 26.2% for the fourth quarter of 2019 compared to 24.8% for the fourth quarter of 2018.*  

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SG&A expense for the fourth quarter of 2019 increased slightly to 9.2% of home sales revenue as compared to 9.1% for the fourth quarter of 2018.
New home orders increased 52% to 1,235 homes for the fourth quarter of 2019, as compared to 812 homes for the same period in 2018.  Average selling communities was 142.8 for the fourth quarter of 2019 compared to 131.5 for the fourth quarter of 2018. New home orders per average selling community for the fourth quarter of 2019 was 8.6 orders (2.9 monthly) compared to 6.2 orders (2.1 monthly) during the fourth quarter of 2018.  
The Company ended the quarter with 1,752 homes in backlog, representing approximately $1.1 billion. The average selling price of homes in backlog as of December 31, 2019 decreased $24,000, or 4%, to $648,000 compared to $672,000 at December 31, 2018.  
“TRI Pointe Group continues to be recognized by its customers as a premium homebuilder, and I have never been more optimistic about our future,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “We continue to optimize our operations, and the consumer has really responded to our emphasis on design, innovation, and the customer experience.”
* See “Reconciliation of Non-GAAP Financial Measures”
Outlook
For the first quarter of 2020, the Company expects to open 15 new communities and close out of 7 communities, which would result in 145 active selling communities as of March 31, 2020. In addition, the Company anticipates delivering between 875 and 950 homes at an average sales price of approximately $600,000. The Company expects its homebuilding gross margin percentage to be in the range of 19.5% to 20.5% for the first quarter of 2020 and anticipates its SG&A expense as a percentage of homes sales revenue will be approximately 15% during such period. Lastly, the Company expects its effective tax rate for the first quarter of 2020 to be approximately 25%.
For the full year, the Company anticipates delivering between 5,100 and 5,300 homes at an average sales price between $605,000 to $615,000. In addition, the Company expects homebuilding gross margin percentage to be in the range of 19.5% to 20.5% for the full year and anticipates its SG&A expense as a percentage of homes sales revenue will be approximately 11.5%. Finally, the Company expects its effective tax rate for the full year to be approximately 25%.
Stock Repurchase Program
On February 13, 2020, our Board of Directors cancelled the share repurchase program approved in 2019, which had approximately $60.8 million remaining in authorized repurchases, and approved the Repurchase Program, which authorizes the repurchase of up to $200 million of Company common stock through March 31, 2021. 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. The Company is not obligated under the Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and it may modify, suspend or discontinue the Repurchase Program at any time. Company 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 the Company’s 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 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Tuesday, February 18, 2020.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Glenn Keeler, Chief Financial Officer.
Interested parties can listen to the call live on the internet through the Events & Presentations heading of the Investors section of the Company’s website at www.TRIPointeGroup.com. Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software.  The call can also be accessed by dialing (877) 407-3982 for domestic participants or (201) 493-6780 for international participants. Participants should ask for the TRI Pointe Group Fourth Quarter 2019 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start. The replay of the call will be available for two weeks following the call.  To access the replay, the domestic dial-in number is (844) 512-2921, the

Page 3

international dial-in number is (412) 317-6671, and the reference code is #13698212.  An archive of the webcast will also be available on the Company’s website for a limited time.
About TRI Pointe Group, Inc.
Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is a family of premium, regional homebuilders that designs, builds, and sells homes in major U.S. markets. As one of the top 10 largest public homebuilding companies based on revenue in the United States, TRI Pointe Group combines the resources, operational sophistication, and leadership of a national organization with the regional insights, community ties, and agility of local homebuilders. The TRI Pointe Group family includes Maracay® in Arizona, Pardee Homes® in California and Nevada, Quadrant Homes® in Washington, Trendmaker® Homes in Texas, TRI Pointe Homes® in California, Colorado and the Carolinas, and Winchester® Homes* in Maryland and Virginia. TRI Pointe Group was named 2019 Builder of the Year by Builder and Developer magazine, recognized in Fortune magazine’s 2017 100 Fastest-Growing Companies list, and garnered the 2015 Builder of the Year Award by Builder magazine. The company was also named one of the Best Places to Work in Orange County by the Orange County Business Journal in 2016, 2017, 2018 and 2019. For more information, please visit www.TriPointeGroup.com.
*Winchester is a registered trademark and is used with permission.
Forward-Looking Statements
Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements.  These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending.  Forward-looking statements that are included in this press release are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or other words that convey future events or outcomes.  The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly.  These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.  The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations, particularly within California; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; raw material and labor prices and availability; oil and other energy prices; the effect of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; the effect of weather, including the re-occurrence of drought conditions in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental laws and regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber attack; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission.  The foregoing list is not exhaustive.  New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.


Page 4

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
 

 
 

 


Page 5

KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Operating Data:
 
 
 
 
 
 
 
 
 
 
 
Home sales revenue
$
1,138,265

 
$
1,120,952

 
$
17,313

 
$
3,069,375

 
$
3,244,087

 
$
(174,712
)
Homebuilding gross margin
$
249,404

 
$
245,704

 
$
3,700

 
$
606,667

 
$
707,188

 
$
(100,521
)
Homebuilding gross margin %
21.9
%
 
21.9
%
 
0.0
 %
 
19.8
%
 
21.8
%
 
(2.0
)%
Adjusted homebuilding gross margin %*
26.2
%
 
24.8
%
 
1.4
 %
 
23.2
%
 
24.5
%
 
(1.3
)%
SG&A expense
$
104,219

 
$
102,010

 
$
2,209

 
$
352,309

 
$
342,297

 
$
10,012

SG&A expense as a % of home sales revenue
9.2
%
 
9.1
%
 
0.1
 %
 
11.5
%
 
10.6
%
 
0.9
 %
Net income available to common
   stockholders
$
117,993

 
$
99,382

 
$
18,611

 
$
207,187

 
$
269,911

 
$
(62,724
)
Adjusted EBITDA*
$
213,528

 
$
199,314

 
$
14,214

 
$
420,899

 
$
511,534

 
$
(90,635
)
Interest incurred
$
21,951

 
$
24,542

 
$
(2,591
)
 
$
89,691

 
$
91,631

 
$
(1,940
)
Interest in cost of home sales
$
30,065

 
$
29,235

 
$
830

 
$
81,567

 
$
83,161

 
$
(1,594
)
 
 
 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
 
 
Net new home orders
1,235

 
812

 
423

 
5,338

 
4,686

 
652

New homes delivered
1,795

 
1,727

 
68

 
4,921

 
5,071

 
(150
)
Average selling price of homes delivered
$
634

 
$
649

 
$
(15
)
 
$
624

 
$
640

 
$
(16
)
Cancellation rate
14
%
 
25
%
 
(11
)%
 
15
%
 
18
%
 
(3
)%
Average selling communities
142.8

 
131.5

 
11.3

 
145.7

 
130.1

 
15.6

Selling communities at end of period
137

 
146

 
(9
)
 
 
 
 
 


Backlog (estimated dollar value)
$
1,136,163

 
$
897,343

 
$
238,820

 
 
 
 
 
 
Backlog (homes)
1,752

 
1,335

 
417

 
 
 
 
 
 
Average selling price in backlog
$
648

 
$
672

 
$
(24
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2019
 
December 31,
2018
 
Change
 
 
 
 
 
 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
329,011

 
$
277,696

 
$
51,315

 
 
 
 
 
 
Real estate inventories
$
3,065,436

 
$
3,216,059

 
$
(150,623
)
 
 
 
 
 
 
Lots owned or controlled
30,029

 
27,740

 
2,289

 
 
 
 
 
 
Homes under construction (1)
2,269

 
2,166

 
103

 
 
 
 
 
 
Homes completed, unsold
343

 
417

 
(74
)
 
 
 
 
 
 
Total debt, net
$
1,283,985

 
$
1,410,804

 
$
(126,819
)
 
 
 
 
 
 
Stockholders' equity
$
2,186,530

 
$
2,056,924

 
$
129,606

 
 
 
 
 
 
Book capitalization
$
3,470,515

 
$
3,467,728

 
$
2,787

 
 
 
 
 
 
Ratio of debt-to-capital
37.0
%
 
40.7
%
 
(3.7
)%
 
 
 
 
 
 
Ratio of net debt-to-net-capital*
30.4
%
 
35.5
%
 
(5.1
)%
 
 
 
 
 
 
_____________________________________
(1)  
Homes under construction included 78 and 40 models at December 31, 2019 and December 31, 2018, respectively.
*
See “Reconciliation of Non-GAAP Financial Measures”


Page 6

CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
December 31,
2019
 
December 31,
2018
Assets
(unaudited)
 
 
Cash and cash equivalents
$
329,011

 
$
277,696

Receivables
69,276

 
51,592

Real estate inventories
3,065,436

 
3,216,059

Investments in unconsolidated entities
11,745

 
5,410

Goodwill and other intangible assets, net
159,893

 
160,427

Deferred tax assets, net
49,904

 
67,768

Other assets
173,425

 
105,251

Total assets
$
3,858,690

 
$
3,884,203

 
 
 
 
Liabilities
 
 
 
Accounts payable
$
66,120

 
$
81,313

Accrued expenses and other liabilities
322,043

 
335,149

Loans payable
250,000

 
—

Senior notes
1,033,985

 
1,410,804

Total liabilities
1,672,148

 
1,827,266

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity
 
 
 
Stockholders' Equity:
 
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
shares issued and outstanding as of December 31, 2019 and
December 31, 2018, respectively
—

 
—

Common stock, $0.01 par value, 500,000,000 shares authorized;
   136,149,633 and 141,661,713 shares issued and outstanding at
   December 31, 2019 and December 31, 2018, respectively
1,361

 
1,417

Additional paid-in capital
581,195

 
658,720

Retained earnings
1,603,974

 
1,396,787

Total stockholders' equity
2,186,530

 
2,056,924

Noncontrolling interests
12

 
13

Total equity
2,186,542

 
2,056,937

Total liabilities and equity
$
3,858,690

 
$
3,884,203



Page 7

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Homebuilding:
 

 
 

 
 
 
 
Home sales revenue
$
1,138,265

 
$
1,120,952

 
$
3,069,375

 
$
3,244,087

Land and lot sales revenue
357

 
4,792

 
7,176

 
8,758

Other operations revenue
617

 
6,369

 
2,470

 
8,164

Total revenues
1,139,239

 
1,132,113

 
3,079,021

 
3,261,009

Cost of home sales
888,861

 
875,248

 
2,462,708

 
2,536,899

Cost of land and lot sales
159

 
21,272

 
7,711

 
25,435

Other operations expense
608

 
1,393

 
2,434

 
3,174

Sales and marketing
61,260

 
58,386

 
195,148

 
187,267

General and administrative
42,959

 
43,624

 
157,161

 
155,030

Homebuilding income from operations
145,392

 
132,190

 
253,859

 
353,204

Equity in loss of unconsolidated entities
(19
)
 
(9
)
 
(52
)
 
(393
)
Other income (expense), net
138

 
(40
)
 
6,857

 
(419
)
Homebuilding income before income taxes
145,511

 
132,141

 
260,664

 
352,392

Financial Services:
 
 
 
 
 
 
 
Revenues
2,035

 
584

 
3,994

 
1,738

Expenses
1,122

 
191

 
2,887

 
582

Equity in income of unconsolidated entities
4,455

 
3,545

 
9,316

 
8,517

Financial services income before income taxes
5,368

 
3,938

 
10,423

 
9,673

Income before income taxes
150,879

 
136,079

 
271,087

 
362,065

Provision for income taxes
(32,886
)
 
(35,095
)
 
(63,900
)
 
(90,552
)
Net income
117,993

 
100,984

 
207,187

 
271,513

Net income attributable to noncontrolling interests
—

 
(1,602
)
 
—

 
(1,602
)
Net income available to common stockholders
$
117,993

 
$
99,382

 
$
207,187

 
$
269,911

Earnings per share
 
 
 

 
 
 
 

Basic
$
0.85

 
$
0.70

 
$
1.47

 
$
1.82

Diluted
$
0.85

 
$
0.70

 
$
1.47

 
$
1.81

Weighted average shares outstanding
 

 
 

 
 

 
 

Basic
138,245,130

 
142,191,174

 
140,851,444

 
148,183,431

Diluted
139,219,179

 
142,673,662

 
141,394,227

 
149,004,690

 
 


Page 8

MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
New Homes Delivered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maracay
212

 
$
503

 
155

 
$
524

 
530

 
$
515

 
538

 
$
489

Pardee Homes
647

 
696

 
577

 
609

 
1,675

 
658

 
1,582

 
632

Quadrant Homes
90

 
853

 
118

 
962

 
257

 
933

 
359

 
850

Trendmaker Homes
254

 
459

 
221

 
505

 
882

 
461

 
610

 
502

TRI Pointe Homes
414

 
671

 
487

 
745

 
1,163

 
685

 
1,470

 
730

Winchester Homes
178

 
621

 
169

 
592

 
414

 
609

 
512

 
578

Total
1,795

 
$
634

 
1,727

 
$
649

 
4,921

 
$
624

 
5,071

 
$
640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
 
New
Homes
Delivered
 
Average
Sales
Price
New Homes Delivered:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
California
821

 
$
725

 
788

 
$
711

 
2,051

 
$
713

 
2,217

 
$
725

Colorado
63

 
569

 
69

 
550

 
278

 
565

 
251

 
582

Maryland
117

 
489

 
115

 
518

 
289

 
491

 
368

 
532

Virginia
61

 
875

 
54

 
751

 
125

 
880

 
144

 
695

Arizona
212

 
503

 
155

 
524

 
530

 
515

 
538

 
489

Nevada
177

 
548

 
207

 
564

 
509

 
550

 
584

 
547

Texas
254

 
459

 
221

 
505

 
882

 
461

 
610

 
502

Washington
90

 
853

 
118

 
962

 
257

 
933

 
359

 
850

Total
1,795

 
$
634

 
1,727

 
$
649

 
4,921

 
$
624

 
5,071

 
$
640


 

Page 9

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
Net New Home Orders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maracay
138

 
14.0

 
90

 
10.0

 
709

 
13.8

 
472

 
12.0

Pardee Homes
354

 
41.8

 
281

 
40.0

 
1,733

 
43.5

 
1,575

 
35.9

Quadrant Homes
90

 
6.5

 
35

 
7.5

 
300

 
6.8

 
261

 
6.9

Trendmaker Homes
232

 
34.7

 
146

 
29.5

 
914

 
37.1

 
601

 
29.1

TRI Pointe Homes
292

 
31.3

 
178

 
30.5

 
1,174

 
30.0

 
1,311

 
32.1

Winchester Homes
129

 
14.5

 
82

 
14.0

 
508

 
14.5

 
466

 
14.1

Total
1,235

 
142.8

 
812

 
131.5

 
5,338

 
145.7

 
4,686

 
130.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
 
Net New
Home
Orders
 
Average
Selling
Communities
Net New Home Orders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
California
488

 
53.8

 
356

 
50.0

 
2,147

 
53.7

 
2,007

 
46.5

Colorado
47

 
5.8

 
44

 
6.5

 
234

 
6.2

 
295

 
6.8

Maryland
90

 
10.5

 
62

 
9.0

 
345

 
10.2

 
316

 
9.2

Virginia
39

 
4.0

 
20

 
5.0

 
163

 
4.4

 
150

 
4.9

Arizona
138

 
14.0

 
90

 
10.0

 
709

 
13.8

 
472

 
12.0

Nevada
111

 
13.5

 
59

 
14.0

 
526

 
13.5

 
584

 
14.7

Texas
232

 
34.7

 
146

 
29.5

 
914

 
37.1

 
601

 
29.1

Washington
90

 
6.5

 
35

 
7.5

 
300

 
6.8

 
261

 
6.9

Total
1,235

 
142.8

 
812

 
131.5

 
5,338

 
145.7

 
4,686

 
130.1


 

Page 10

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
 
 
As of December 31, 2019
 
As of December 31, 2018
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
Backlog:
 
 
 
 
 
 
 
 
 
 
 
Maracay
330

 
$
180,954

 
$
548

 
151

 
$
91,532

 
$
606

Pardee Homes
460

 
336,837

 
732

 
402

 
309,453

 
770

Quadrant Homes
89

 
79,789

 
897

 
46

 
47,777

 
1,039

Trendmaker Homes
345

 
169,946

 
493

 
313

 
159,483

 
510

TRI Pointe Homes
329

 
234,189

 
712

 
318

 
217,767

 
685

Winchester Homes
199

 
134,448

 
676

 
105

 
71,331

 
679

Total
1,752

 
$
1,136,163

 
$
648

 
1,335

 
$
897,343

 
$
672

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2019
 
As of December 31, 2018
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
 
Backlog
Units
 
Backlog
Dollar
Value
 
Average
Sales
Price
Backlog:
 
 
 
 
 
 
 
 
 
 
 
California
552

 
$
437,926

 
$
793

 
456

 
$
367,823

 
$
807

Colorado
100

 
58,060

 
581

 
144

 
81,685

 
567

Maryland
117

 
68,954

 
589

 
61

 
32,399

 
531

Virginia
82

 
65,494

 
799

 
44

 
38,934

 
885

Arizona
330

 
180,954

 
548

 
151

 
91,532

 
606

Nevada
137

 
75,040

 
548

 
120

 
77,710

 
648

Texas
345

 
169,946

 
493

 
313

 
159,483

 
510

Washington
89

 
79,789

 
897

 
46

 
47,777

 
1,039

Total
1,752

 
$
1,136,163

 
$
648

 
1,335

 
$
897,343

 
$
672



 

Page 11

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
 
December 31,
2019
 
December 31,
2018
Lots Owned or Controlled(1):
 
 
 
Maracay
3,730

 
3,308

Pardee Homes
13,267

 
14,376

Quadrant Homes
1,103

 
1,744

Trendmaker Homes
4,034

 
2,492

TRI Pointe Homes
6,170

 
4,095

Winchester Homes
1,725

 
1,725

Total
30,029

 
27,740

 
 
 
 
 
 
 
 
 
December 31,
2019
 
December 31,
2018
Lots Owned or Controlled(1):
 
 
 
California
14,677

 
15,218

Colorado
1,033

 
866

Maryland
1,140

 
1,142

Virginia
585

 
583

Arizona
3,730

 
3,308

Nevada
2,026

 
2,387

North Carolina
1,590

 
—

South Carolina
111

 
—

Texas
4,034

 
2,492

Washington
1,103

 
1,744

Total
30,029

 
27,740

 
 
 
 
 
 
 
 
 
December 31,
2019
 
December 31,
2018
Lots by Ownership Type:
 
 
 
Lots owned
22,845

 
23,057

Lots controlled (1)
7,184

 
4,683

Total
30,029

 
27,740

__________
(1) 
As of December 31, 2019 and December 31, 2018, lots controlled included lots that were under land option contracts or purchase contracts.
 
 


Page 12

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,
 
2019
 
%
 
2018
 
%
 
(dollars in thousands)
Home sales revenue
$
1,138,265

 
100.0
%
 
$
1,120,952

 
100.0
%
Cost of home sales
888,861

 
78.1
%
 
875,248

 
78.1
%
Homebuilding gross margin
249,404

 
21.9
%
 
245,704

 
21.9
%
Add:  interest in cost of home sales
30,065

 
2.6
%
 
29,235

 
2.6
%
Add:  impairments and lot option abandonments
18,356

 
1.6
%
 
3,585

 
0.3
%
Adjusted homebuilding gross margin
$
297,825

 
26.2
%
 
$
278,524

 
24.8
%
Homebuilding gross margin percentage
21.9
%
 
 
 
21.9
%
 
 
Adjusted homebuilding gross margin percentage
26.2
%
 
 
 
24.8
%
 
 


 
Year Ended December 31,
 
2019
 
%
 
2018
 
%
 
(dollars in thousands)
Home sales revenue
$
3,069,375

 
100.0
%
 
$
3,244,087

 
100.0
%
Cost of home sales
2,462,708

 
80.2
%
 
2,536,899

 
78.2
%
Homebuilding gross margin
606,667

 
19.8
%
 
707,188

 
21.8
%
Add:  interest in cost of home sales
81,567

 
2.7
%
 
83,161

 
2.6
%
Add:  impairments and lot option abandonments
24,875

 
0.8
%
 
5,010

 
0.2
%
Adjusted homebuilding gross margin
$
713,109

 
23.2
%
 
$
795,359

 
24.5
%
Homebuilding gross margin percentage
19.8
%
 
 
 
21.8
%
 
 
Adjusted homebuilding gross margin percentage
23.2
%
 
 
 
24.5
%
 
 

 






Page 13

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, 2019
 
December 31, 2018
Loans payable
$
250,000

 
$
—

Senior notes
1,033,985

 
1,410,804

Total debt
1,283,985

 
1,410,804

Stockholders’ equity
2,186,530

 
2,056,924

Total capital
$
3,470,515

 
$
3,467,728

Ratio of debt-to-capital(1)
37.0
%
 
40.7
%
 
 
 
 
Total debt
$
1,283,985

 
$
1,410,804

Less: Cash and cash equivalents
(329,011
)
 
(277,696
)
Net debt
954,974

 
1,133,108

Stockholders’ equity
2,186,530

 
2,056,924

Net capital
$
3,141,504

 
$
3,190,032

Ratio of net debt-to-net capital(2)
30.4
%
 
35.5
%
__________
(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 14

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) legal settlements, (i) transaction expenses and (j) 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,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Net income available to common stockholders
$
117,993

 
$
99,382

 
$
207,187

 
$
269,911

Interest expense:
 
 
 
 
 
 
 
Interest incurred
21,951

 
24,542

 
89,691

 
91,631

Interest capitalized
(21,951
)
 
(24,542
)
 
(89,691
)
 
(91,631
)
Amortization of interest in cost of sales
30,061

 
29,380

 
81,735

 
83,579

Provision for income taxes
32,886

 
35,095

 
63,900

 
90,552

Depreciation and amortization
10,040

 
9,517

 
28,396

 
29,097

EBITDA
190,980

 
173,374

 
381,218

 
473,139

Amortization of stock-based compensation
4,192

 
3,859

 
14,806

 
14,814

Real estate inventory impairments and land option abandonments
18,356

 
3,585

 
24,875

 
5,085

Legal settlement
—

 
17,500

 
—

 
17,500

Transaction expenses
—

 
686

 
—

 
686

Restructuring charges
—

 
310

 
—

 
310

Adjusted EBITDA
$
213,528

 
$
199,314

 
$
420,899

 
$
511,534

 
 
 
 
 
 
 
 
 
 
 




Page 15
v3.19.3.a.u2
Cover Page
Feb. 18, 2020
Cover page.  
Document Type 8-K
Document Period End Date Feb. 18, 2020
Entity Registrant Name TRI Pointe Group, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 1-35796
Entity Tax Identification Number 61-1763235
Entity Address, Address Line One 19540 Jamboree Road
Entity Address, Address Line Two Suite 300
Entity Address, City or Town Irvine
Entity Address, State or Province CA
Entity Address, Postal Zip Code 92612
City Area Code 949
Local Phone Number 438-1400
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol TPH
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001561680
Amendment Flag false