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) April 22, 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 April 23, 2020, TRI Pointe Group, Inc., a Delaware corporation (the “Company”), announced in a press release its financial results for the quarter ended March 31, 2020.  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 5.07     Submission of Matters to a Vote of Security Holders

The Company held its 2020 annual meeting of stockholders on April 22, 2020 (the “Annual Meeting”). A total of 124,023,649 shares of the Company’s common stock were present or represented by proxy at the Annual Meeting, representing more than 92% of the Company’s shares outstanding as of the March 3, 2020 record date. The matters submitted for a stockholder vote and the related results are set forth below.
Proposal No. 1—Election of six nominees to serve as directors:

					
Director	Votes
For	Votes
Against	Votes
Abstained	Broker
Non-Votes	
Douglas F. Bauer	117,871,590	989,213	76,984	5,085,862	
Lawrence B. Burrows	117,427,725	1,431,943	78,119	5,085,862	
Daniel S. Fulton	117,870,958	987,691	79,139	5,085,861	
Steven J. Gilbert	115,114,041	3,746,087	77,659	5,085,862	
Vicki D. McWilliams	118,205,658	659,124	73,006	5,085,861	
Constance B. Moore	118,040,814	824,268	72,706	5,085,861	

Proposal No. 2—Non-binding, advisory vote on the compensation of the Company’s named executive officers:

				
Votes
For	Votes
Against	Votes
Abstained	Broker
Non-Votes	
117,166,042	1,668,101	103,644	5,085,862	

Proposal No. 3—Non-binding, advisory vote on the frequency of future advisory votes to approve the compensation of the Company’s named executive officers:

					
Votes For
Every One Year	Votes For
Every Two Years	Votes For
Every Three Years	Votes
Abstained	Broker
Non-Votes	
107,138,687	32,708	11,663,105	103,287	5,085,862	

Proposal No. 4—Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2020 fiscal year:

			
Votes
For	Votes
Against	Votes
Abstained	
122,857,729	1,122,876	43,044	
Based on the foregoing votes, all six nominees were elected and Proposals No. 2 and No. 4 were approved. In light of the vote with respect to Proposal No. 3, the Company has determined to include an advisory vote on the compensation of the Company’s named executive officers in its proxy materials every year until the next required vote on the frequency of the advisory vote on the compensation of the Company’s named executive officers.

2

		
Item 9.01	Exhibits	

(d)	Exhibits	
		
99.1	Press Release dated April 23, 2020	
		
104	Cover Page Interactive Data File, formatted in Inline XBRL	

3

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: April 23, 2020	By:	/s/ Glenn J. Keeler	
 	 	Glenn J. Keeler,
Chief Financial Officer and Treasurer	

4

Exhibit 99.1

TRI POINTE GROUP, INC. REPORTS 2020 FIRST QUARTER RESULTS

-New Home Orders up 26% Year-Over-Year-
-Backlog Dollar Value up 31% Year-Over-Year-
-Homebuilding Gross Margin Percentage of 20.5%-
-Diluted Earnings Per Share of $0.24-
-Ended the Quarter with $678 Million of Total Liquidity-
IRVINE, CALIFORNIA, April 23, 2020 / Business Wire / TRI Pointe Group, Inc. (the “Company”) (NYSE:TPH) today announced results for the first quarter ended March 31, 2020.
“While I am extremely pleased with our results this quarter, TRI Pointe Group’s primary focus over the past several weeks has been the health and well-being of its employees, trade partners and customers since the outbreak of COVID-19,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “As soon as the threat of the virus became evident, we adjusted our business practices to substantially limit in-person interaction and promote social distancing. Overcoming this pandemic will require everyone’s collective efforts to stop the spread of the virus, and TRI Pointe is dedicated to doing its part.”
Mr. Bauer continued, “The measures we’ve taken as a nation to combat the virus will no doubt have a lasting impact on the economy and our industry. Fortunately, TRI Pointe enters this period of uncertainty in a position of relative strength, with a quarter-end net debt-to-net capital ratio of 35.4% and over $670 million in cash and available liquidity. This financial strength, coupled with the experience of our seasoned leadership team in navigating through difficult times, gives me confidence that TRI Pointe is well positioned to deal with the current market environment.”
Mr. Bauer concluded, “From a macro perspective, I remain optimistic about the long-term outlook for our industry post COVID-19. The demographic shifts occurring in this country have created a need for more housing, while the supply of existing homes remains low. These two factors, along with my belief in the resiliency of the American economy, give me confidence in the future of our industry and TRI Pointe in particular.”
Results and Operational Data for First Quarter 2020 and Comparisons to First Quarter 2019
		
•	Net income was $31.9 million, or $0.24 per diluted share, compared to $71,000, or $0.00 per diluted share	
		
•	Home sales revenue of $594.8 million compared to $492.7 million, an increase of 21%	
		
◦	New home deliveries of 958 homes compared to 814 homes, an increase of 18%	
		
◦	Average sales price of homes delivered of $621,000 compared to $605,000, an increase of 3%	
		
•	Homebuilding gross margin percentage of 20.5% compared to 14.4%, an increase of 610 basis points	
		
◦	Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.4%*	
		
•	SG&A expense as a percentage of homes sales revenue of 13.9% compared to 15.7%, a decrease of 180 basis points	
		
•	Net new home orders of 1,661 compared to 1,321, an increase of 26%	
		
•	Active selling communities averaged 140.8 compared to 147.8, a decrease of 5%	
		
◦	New home orders per average selling community were 11.8 orders (3.9 monthly) compared to 8.9 orders (3.0 monthly)	
		
◦	Cancellation rate of 13% compared to 15%	
		
•	Backlog units at quarter end of 2,455 homes compared to 1,842, an increase of 33%	
		
◦	Dollar value of backlog at quarter end of $1.6 billion compared to $1.2 billion, an increase of 31%	

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◦	Average sales price of homes in backlog at quarter end of $659,000 compared to $672,000, a decrease of 2%	
		
•	Ratios of debt-to-capital and net debt-to-net capital of 45.8% and 35.4%*, respectively, as of March 31, 2020	
		
•	Repurchased 6,558,323 shares of common stock at a weighted average price per share of $15.55 for an aggregate dollar amount of $102.0 million in the three months ended March 31, 2020	
		
•	Ended the first quarter of 2020 with total liquidity of $677.5 million, including cash and cash equivalents of $624.1 million and $53.4 million of availability under the Company’s unsecured revolving credit facility	
 
*    See “Reconciliation of Non-GAAP Financial Measures”
“I am extremely pleased with how our team members have adapted to the new reality brought on by the pandemic,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “We continue to effectively manage all aspects of the business on a day-to-day basis. I am proud that our teams continue to find creative ways to satisfy our customers through sales, construction and service. In many ways, the changes we’ve had to make as an industry play to TRI Pointe’s strengths, thanks to the investments we’ve made in our digital platform. Our ability to market and sell our homes using virtual tools has allowed us to continue to generate sales leads and convert web traffic into orders in this environment.  In addition, we have provided customers with alternatives to conduct their new home closing, from curbside and window signing, to limited power of attorney with their settlement agent and remote online notarization.  We believe our online presence will be a significant asset during this time of limited or no in-person interaction and will have an enduring cost-benefit to our business going forward.”
Outlook
Due to the uncertainty regarding the effects of the COVID-19 pandemic on both the U.S. economy and the Company’s business operations and financial performance, the Company has withdrawn its previously issued guidance for fiscal 2020.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 5:00 p.m. Eastern Time on Thursday, April 23, 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 and view the related presentation slides on the internet through 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 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the TRI Pointe Group First Quarter 2020 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 #13701509.  An archive of the webcast will be available on the Company’s website for a limited time.
About TRI Pointe Group®
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

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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 effects of the ongoing COVID-19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of COVID-19 and the duration of the outbreak, the duration of existing social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain, the health of our employees, service providers and trade partners, and the reactions of U.S. and global markets and their effects on consumer confidence and spending; 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; the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as COVID-19; 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.

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

 

Page 4

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

															
 	Three Months Ended March 31,	
 	2020	 	2019	 	Change	 	% Change	
Operating Data:	 	 	 	 	 	 	 	
Home sales revenue	$	594,838		 	$	492,703		 	$	102,135		 	20.7	 %	
Homebuilding gross margin	$	121,956		 	$	71,167		 	$	50,789		 	71.4	 %	
Homebuilding gross margin %	20.5	%	 	14.4	%	 	6.1	 %	 		
Adjusted homebuilding gross margin %*	23.4	%	 	18.4	%	 	5.0	 %	 		
SG&A expense	$	82,474		 	$	77,586		 	$	4,888		 	6.3	 %	
SG&A expense as a % of home sales
   revenue	13.9	%	 	15.7	%	 	(1.8	)%	 		
Net income	$	31,883		 	$	71		 	$	31,812		 	44,805.6	 %	
Adjusted EBITDA*	$	67,956		 	$	28,150		 	$	39,806		 	141.4	 %	
Interest incurred	$	20,779		 	$	23,373		 	$	(2,594	)	 	(11.1	)%	
Interest in cost of home sales	$	16,822		 	$	14,191		 	$	2,631		 	18.5	 %	
 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	
Net new home orders	1,661		 	1,321		 	340		 	25.7	 %	
New homes delivered	958		 	814		 	144		 	17.7	 %	
Average sales price of homes delivered	$	621		 	$	605		 	$	16		 	2.6	 %	
Cancellation rate	13	%	 	15	%	 	(2	)%	 	 	
Average selling communities	140.8		 	147.8		 	(7.0	)	 	(4.7	)%	
Selling communities at end of period	143		 	146		 	(3	)	 	(2.1	)%	
Backlog (estimated dollar value)	$	1,618,481		 	$	1,237,838		 	$	380,643		 	30.8	 %	
Backlog (homes)	2,455		 	1,842		 	613		 	33.3	 %	
Average sales price in backlog	$	659		 	$	672		 	$	(13	)	 	(1.9	)%	
 	 	 	 	 	 	 	 	
 	March 31,	 	December 31,	 	 	 	 	
 	2020	 	2019	 	Change	 	% Change	
Balance Sheet Data:	(unaudited)	 	 	 	 	 	 	
Cash and cash equivalents	$	624,129		 	$	329,011		 	$	295,118		 	89.7	 %	
Real estate inventories	$	3,194,148		 	$	3,065,436		 	$	128,712		 	4.2	 %	
Lots owned or controlled	32,007		 	30,029		 	1,978		 	6.6	 %	
Homes under construction (1)	2,564		 	2,269		 	295		 	13.0	 %	
Homes completed, unsold	308		 	343		 	(35	)	 	(10.2	)%	
Debt	$	1,784,925		 	$	1,283,985		 	$	500,940		 	39.0	 %	
Stockholders’ equity	$	2,115,281		 	$	2,186,530		 	$	(71,249	)	 	(3.3	)%	
Book capitalization	$	3,900,206		 	$	3,470,515		 	$	429,691		 	12.4	 %	
Ratio of debt-to-capital	45.8	%	 	37.0	%	 	8.8	 %	 		
Ratio of net debt-to-net capital*	35.4	%	 	30.4	%	 	5.0	 %	 		
__________
		
(1)  	Homes under construction included 55 and 78 models at March 31, 2020 and December 31, 2019, respectively.	
		
*	See “Reconciliation of Non-GAAP Financial Measures”	

Page 5

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

	
								
 	March 31,	 	December 31,	
 	2020	 	2019	
Assets	(unaudited)	 	 	
Cash and cash equivalents	$	624,129		 	$	329,011		
Receivables	83,701		 	69,276		
Real estate inventories	3,194,148		 	3,065,436		
Investments in unconsolidated entities	11,091		 	11,745		
Goodwill and other intangible assets, net	159,759		 	159,893		
Deferred tax assets, net	46,266		 	49,904		
Other assets	173,959		 	173,425		
Total assets	$	4,293,053		 	$	3,858,690		
 	 	 	 	
Liabilities	 	 	 	
Accounts payable	$	77,275		 	$	66,120		
Accrued expenses and other liabilities	315,560		 	322,043		
Loans payable	750,000		 	250,000		
Senior notes	1,034,925		 	1,033,985		
Total liabilities	2,177,760		 	1,672,148		
 	 	 	 	
Commitments and contingencies	 	 	 	
 	 	 	 	
Equity	 	 	 	
Stockholders’ equity:	 	 	 	
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
shares issued and outstanding as of March 31, 2020 and
December 31, 2019, respectively	—		 	—		
Common stock, $0.01 par value, 500,000,000 shares authorized;
  130,236,981 and 136,149,633 shares issued and outstanding at
   March 31, 2020 and December 31, 2019, respectively	1,302		 	1,361		
Additional paid-in capital	478,122		 	581,195		
Retained earnings	1,635,857		 	1,603,974		
Total stockholders’ equity	2,115,281		 	2,186,530		
Noncontrolling interests	12		 	12		
Total equity	2,115,293		 	2,186,542		
Total liabilities and equity	$	4,293,053		 	$	3,858,690		

 

Page 6

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

	
								
 	Three Months Ended March 31,	
 	2020	 	2019	
Homebuilding:	 		 	 		
Home sales revenue	$	594,838		 	$	492,703		
Land and lot sales revenue	—		 	1,029		
Other operations revenue	618		 	598		
Total revenues	595,456		 	494,330		
Cost of home sales	472,882		 	421,536		
Cost of land and lot sales	202		 	1,495		
Other operations expense	624		 	590		
Sales and marketing	42,637		 	38,989		
General and administrative	39,837		 	38,597		
Homebuilding income (loss) from operations	39,274		 	(6,877	)	
Equity in loss of unconsolidated entities	(14	)	 	(25	)	
Other income, net	373		 	6,241		
Homebuilding income (loss) before income taxes	39,633		 	(661	)	
Financial Services:	 	 	 	
Revenues	1,594		 	302		
Expenses	1,079		 	321		
Equity in income of unconsolidated entities	1,556		 	775		
Financial services income before income taxes	2,071		 	756		
Income before income taxes	41,704		 	95		
Provision for income taxes	(9,821	)	 	(24	)	
Net income	$	31,883		 	$	71		
Earnings per share	 	 	 		
Basic	$	0.24		 	$	0.00		
Diluted	$	0.24		 	$	0.00		
Weighted average shares outstanding	 	 	 		
Basic	134,361,148		 	141,865,270		
Diluted	135,038,481		 	142,390,163		

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

	
														
 	Three Months Ended March 31,	
 	2020	 	2019	
 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	
New Homes Delivered:	 	 	 	 	 	 	 	
Maracay	140		 	$	513		 	74		 	$	535		
Pardee Homes	257		 	694		 	242		 	557		
Quadrant Homes	52		 	836		 	44		 	983		
Trendmaker Homes	209		 	460		 	154		 	455		
TRI Pointe Homes	226		 	702		 	242		 	710		
Winchester Homes	74		 	628		 	58		 	571		
Total	958		 	$	621		 	814		 	$	605		

 	Three Months Ended March 31,	
 	2020	 	2019	
 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	
New Homes Delivered:	 	 	 	 	 	 	 	
California	339		 	$	763		 	328		 	$	679		
Colorado	64		 	568		 	72		 	549		
Maryland	55		 	561		 	38		 	466		
Virginia	19		 	819		 	20		 	769		
Arizona	140		 	513		 	74		 	535		
Nevada	80		 	528		 	84		 	529		
Texas	209		 	460		 	154		 	455		
Washington	52		 	836		 	44		 	983		
Total	958		 	$	621		 	814		 	$	605		

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

	
												
 	Three Months Ended March 31,	
 	2020	 	2019	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	
Net New Home Orders:	 	 	 	 	 	 	 	
Maracay	240		 	15.3		 	161		 	11.8		
Pardee Homes	475		 	41.5		 	433		 	44.5		
Quadrant Homes	126		 	7.0		 	75		 	7.2		
Trendmaker Homes	234		 	30.2		 	243		 	39.3		
TRI Pointe Homes	414		 	32.8		 	295		 	30.8		
Winchester Homes	172		 	14.0		 	114		 	14.2		
Total	1,661		 	140.8		 	1,321		 	147.8		

 	Three Months Ended March 31,	
 	2020	 	2019	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	
Net New Home Orders:	 	 	 	 	 	 	 	
California	664		 	55.6		 	517		 	54.7		
Colorado	59		 	4.5		 	81		 	7.0		
Maryland	123		 	10.0		 	84		 	9.8		
Virginia	49		 	4.0		 	30		 	4.5		
Arizona	240		 	15.3		 	161		 	11.8		
Nevada	166		 	14.2		 	130		 	13.5		
Texas	234		 	30.2		 	243		 	39.3		
Washington	126		 	7.0		 	75		 	7.2		
Total	1,661		 	140.8		 	1,321		 	147.8		

Page 9

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

	
																						
 	As of March 31, 2020	 	As of March 31, 2019	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
Maracay	430		 	$	239,555		 	$	557		 	238		 	$	139,862		 	$	588		
Pardee Homes	678		 	491,236		 	725		 	593		 	472,729		 	797		
Quadrant Homes	163		 	145,873		 	895		 	77		 	75,599		 	982		
Trendmaker Homes	370		 	183,012		 	495		 	402		 	196,256		 	488		
TRI Pointe Homes	517		 	365,638		 	707		 	371		 	247,399		 	667		
Winchester Homes	297		 	193,167		 	650		 	161		 	105,993		 	658		
Total	2,455		 	$	1,618,481		 	$	659		 	1,842		 	$	1,237,838		 	$	672		

 	As of March 31, 2020	 	As of March 31, 2019	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
California	877		 	$	670,672		 	$	765		 	645		 	$	530,031		 	$	822		
Colorado	95		 	56,278		 	592		 	153		 	86,570		 	566		
Maryland	185		 	104,737		 	566		 	107		 	56,087		 	524		
Virginia	112		 	88,430		 	790		 	54		 	49,906		 	924		
Arizona	430		 	239,555		 	557		 	238		 	139,862		 	588		
Nevada	223		 	129,924		 	583		 	166		 	103,527		 	624		
Texas	370		 	183,012		 	495		 	402		 	196,256		 	488		
Washington	163		 	145,873		 	895		 	77		 	75,599		 	982		
Total	2,455		 	$	1,618,481		 	$	659		 	1,842		 	$	1,237,838		 	$	672		

 

Page 10

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

	
						
 	March 31,	 	December 31,	
 	2020	 	2019	
Lots Owned or Controlled(1):	 	 	 	
Maracay	3,727		 	3,730		
Pardee Homes	13,327		 	13,267		
Quadrant Homes	1,051		 	1,103		
Trendmaker Homes	5,398		 	4,034		
TRI Pointe Homes	6,804		 	6,170		
Winchester Homes	1,700		 	1,725		
Total	32,007		 	30,029		

 	March 31,	 	December 31,	
 	2020	 	2019	
Lots Owned or Controlled(1):	 	 	 	
California	14,802		 	14,677		
Colorado	1,133		 	1,033		
Maryland	947		 	1,140		
Virginia	753		 	585		
Arizona	3,727		 	3,730		
Nevada	2,133		 	2,026		
North Carolina	2,010		 	1,590		
South Carolina	53		 	111		
Texas	5,398		 	4,034		
Washington	1,051		 	1,103		
Total	32,007		 	30,029		

 	March 31,	 	December 31,	
 	2020	 	2019	
Lots by Ownership Type:	 	 	 	
Lots owned	22,860		 	22,845		
Lots controlled(1)	9,147		 	7,184		
Total	32,007		 	30,029		
__________
		
(1) 	As of March 31, 2020 and December 31, 2019, lots controlled included lots that were under land option contracts or purchase contracts.	

Page 11

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 table reconciles 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 March 31,	
 	2020	 	%	 	2019	 	%	
 	(dollars in thousands)	
Home sales revenue	$	594,838		 	100.0	%	 	$	492,703		 	100.0	%	
Cost of home sales	472,882		 	79.5	%	 	421,536		 	85.6	%	
Homebuilding gross margin	121,956		 	20.5	%	 	71,167		 	14.4	%	
Add:  interest in cost of home sales	16,822		 	2.8	%	 	14,191		 	2.9	%	
Add:  impairments and lot option abandonments	349		 	0.1	%	 	5,202		 	1.1	%	
Adjusted homebuilding gross margin	$	139,127		 	23.4	%	 	$	90,560		 	18.4	%	
Homebuilding gross margin percentage	20.5	%	 	 	 	14.4	%	 	 	
Adjusted homebuilding gross margin percentage	23.4	%	 	 	 	18.4	%	 	 	

Page 12

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.

	
								
 	March 31, 2020	 	December 31, 2019	
Loans payable	$	750,000		 	$	250,000		
Senior notes	1,034,925		 	1,033,985		
Total debt	1,784,925		 	1,283,985		
Stockholders’ equity	2,115,281		 	2,186,530		
Total capital	$	3,900,206		 	$	3,470,515		
Ratio of debt-to-capital(1)	45.8	%	 	37.0	%	
 			 			
Total debt	$	1,784,925		 	$	1,283,985		
Less: Cash and cash equivalents	(624,129	)	 	(329,011	)	
Net debt	1,160,796		 	954,974		
Stockholders’ equity	2,115,281		 	2,186,530		
Net capital	$	3,276,077		 	$	3,141,504		
Ratio of net debt-to-net capital(2)	35.4	%	 	30.4	%	
__________
		
(1) 	The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.	
		
(2) 	The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity.	

Page 13

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
 
The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP.  EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation and (f) impairments and lot option abandonments. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

	
								
 	Three Months Ended March 31,	
 	2020	 	2019	
 	(in thousands)	
Net income	$	31,883		 	$	71		
Interest expense:	 	 	 	
Interest incurred	20,779		 	23,373		
Interest capitalized	(20,779	)	 	(23,373	)	
Amortization of interest in cost of sales	16,822		 	14,333		
Provision for income taxes	9,821		 	24		
Depreciation and amortization	5,456		 	5,085		
EBITDA	63,982		 	19,513		
Amortization of stock-based compensation	3,625		 	3,435		
Impairments and lot option abandonments	349		 	5,202		
Adjusted EBITDA	$	67,956		 	$	28,150		

 

 

 

Page 14