UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________________
FORM 8-K
_______________________________________________________________________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 25, 2019
_______________________________________________________________________________________

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 July 25, 2019 , TRI Pointe Group, Inc., a Delaware corporation (the “Company”), announced in a press release its financial results for the quarter ended June 30, 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	
		
99.1	Press Release dated July 25, 2019	

2

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
			
 	TRI Pointe Group, Inc.	
 	 	 	
Date: July 25, 2019	By:	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs,
Chief Financial Officer and Treasurer	

3

INDEX OF EXHIBITS

	
			
Exhibit
No.	  	Description of Document	
 	 	 	
99.1	  	Press Release dated July 25, 2019	

4

Exhibit 99.1

TRI POINTE GROUP, INC. REPORTS 2019 SECOND QUARTER RESULTS
IRVINE, CALIFORNIA, July 25, 2019 / Business Wire / TRI Pointe Group, Inc. (the “Company”) (NYSE:TPH) today announced results for the second quarter ended June 30, 2019 .
“TRI Pointe Group posted solid results for the second quarter of 2019, generating net income of $26.3 million or $0.18 per diluted share,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Our team members did an excellent job executing this quarter, as we met or exceeded our stated guidance for deliveries and margins for the quarter and grew our average community count by 12% year-over-year. Our orders for the quarter were up 11% year-over-year with a strong sales pace of 3.4 homes per community per month. While the recent decline in interest rates likely aided our sales efforts, we believe the quality of our home offerings and our execution of our 12 point sales and marketing program provided the tools for success during the quarter.”
Mr. Bauer continued, “We continue to focus on growing our operations through the build-out of our long-term California assets and the expansion of our presence in a number of markets around the country. We believe the investments we are making today will result in a more diverse and profitable business in the coming years.”
Mr. Bauer concluded, “Thanks to our strong results in the first half of 2019, a healthy backlog at quarter-end and a double digit increase to our active community count, TRI Pointe Group is well positioned to deliver on the full year guidance we issued at the beginning of the year. These positives, coupled with our strong balance sheet, have me very optimistic about the future of our company.”
Results and Operational Data for Second Quarter 2019 and Comparisons to Second Quarter 2018
		
•	Net income was $26.3 million , or $0.18 per diluted share, compared to $63.7 million , or $0.42 per diluted share	
		
•	Home sales revenue of $692.1 million compared to $768.8 million , a decrease of 10%	
		
◦	New home deliveries of 1,125 homes compared to 1,215 homes, a decrease of 7%	
		
◦	Average sales price of homes delivered of $615,000 compared to $633,000, a decrease of 3%	
		
•	Homebuilding gross margin percentage of 17.0% compared to 21.4% , a decrease of 440 basis points	
		
◦	Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 19.6% *	
		
•	SG&A expense as a percentage of homes sales revenue of 12.1% compared to 10.7% , an increase of 140 basis points	
		
•	New home orders of 1,491 compared to 1,343 , an increase of 11%	
		
•	Active selling communities averaged 146.0 compared to 130.8 , an increase of 12%	
		
◦	New home orders per average selling community were 10.2 orders (3.4 monthly) compared to 10.3 orders (3.4 monthly)	
		
◦	Cancellation rate remained flat at 16%	
		
•	Backlog units at quarter end of 2,208 homes compared to 2,271 , a decrease of 3%	
		
◦	Dollar value of backlog at quarter end of $1.4 billion compared to $1.5 billion , a decrease of 5%	
		
◦	Average sales price of homes in backlog at quarter end of $652,000 compared to $668,000, a decrease of 2%	
		
•	Ratios of debt-to-capital and net debt-to-net capital of 40.7% and 37.7% *, respectively, as of June 30, 2019	
		
•	Repaid 4.375% Senior Notes due in June of 2019 using proceeds from both the Company's unsecured revolving credit facility and term loan facility	

Page 1

		
•	Ended the second quarter of 2019 with total liquidity of $590.4 million , including cash and cash equivalents of $171.5 million and $418.9 million of availability under the Company’s unsecured revolving credit facility	
 
*    See “Reconciliation of Non-GAAP Financial Measures”
Second Quarter 2019 Operating Results
Net income was $26.3 million , or $0.18 per diluted share, for the second quarter of 2019 , compared to net income of $63.7 million , or $0.42 per diluted share, for the second quarter of 2018 .
Home sales revenue decreased $76.7 million , or 10% , to $692.1 million for the second quarter of 2019 , as compared to $768.8 million for the second quarter of 2018 .  The decrease was primarily attributable to a 7% decrease in new home deliveries to 1,125 , compared to 1,215 in the second quarter of 2018 , and a 3% decrease in the average sales price of homes delivered to $615,000, compared to $633,000 in the second quarter of 2018.
Homebuilding gross margin percentage for the second quarter of 2019 decreased to 17.0% , compared to 21.4% for the second quarter of 2018 . The decrease in homebuilding gross margin was due to a lower mix of deliveries from certain long-dated California communities, which produce gross margins above the Company average, as well as the impact of increased incentives in the second half of 2018 on inventory homes that delivered in the first half of 2019. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 19.6% * for the second quarter of 2019 , compared to 24.0% * for the second quarter of 2018 .  
Sales and marketing and general and administrative (“SG&A”) expense for the second quarter of 2019 increased to 12.1% of home sales revenue as compared to 10.7% for the second quarter of 2018 , primarily the result of lower operating leverage on the fixed components of SG&A as a result of the 10% decrease in home sales revenue and higher overhead costs as a result of our expansion efforts into the Charlotte, Raleigh, Sacramento and Dallas–Fort Worth markets.
New home orders increased 11% to 1,491 homes for the second quarter of 2019 , as compared to 1,343 homes for the same period in 2018 .  Average selling communities increased 12% to 146.0 for the second quarter of 2019 compared to 130.8 for the second quarter of 2018 . The Company’s overall absorption rate per average selling community remained flat for the second quarter of 2019 at 10.2 orders ( 3.4 monthly) compared to 10.3 orders (3.4 monthly) during the second quarter of 2018.  
The Company ended the quarter with 2,208 homes in backlog, representing approximately $1.4 billion . The average sales price of homes in backlog as of June 30, 2019 decreased $16,000, or 2%, to $652,000, compared to $668,000 as of June 30, 2018 .  
“We continue to excel at selling homes with our emphasis on our premium lifestyle brand,” said President and Chief Operating Officer Tom Mitchell. “Our local teams have done an excellent job positioning our brands for success at a number of price points by creating unique and differentiated places to live. We feel that this attention to detail resonates with buyers, enhances our reputation in the market and sets us apart from the competition.”
* See “Reconciliation of Non-GAAP Financial Measures”
Outlook
For the third quarter of 2019, the Company expects to open 14 new communities and close out of 12 communities, which would result in 148 active selling communities as of September 30, 2019. In addition, the Company anticipates delivering 45% to 50% of its 2,208 homes in backlog as of June 30, 2019 at an average sales price of $620,000. The Company expects its homebuilding gross margin percentage to be in a range of 21.0% to 22.0% for the third quarter. The Company anticipates its SG&A expense as a percentage of homes sales revenue will be in a range of 12.0% to 12.5%. Lastly, the Company expects its effective tax rate to be in the range of 25% to 26%.
For the full year, the Company reiterates its previous guidance of delivering between 4,600 and 5,000 homes at an average sales price of $610,000 to $620,000. In addition, the Company expects homebuilding gross margin

Page 2

percentage to be in the range of 19% to 20% for the full year. The Company expects full year SG&A expense as a percentage of homes sales revenue will be in a range of 11% to 12%. Finally, the Company expects its effective tax rate for the full year 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 12:00 p.m. Eastern Time on Thursday, July 25, 2019 .  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 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 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13692313.  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 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 North Carolina, and Winchester® Homes* in Maryland and Virginia. TRI Pointe Group was recognized in  Fortune  magazine’s 2017 100 Fastest-Growing Companies list, named 2015 Builder of the Year by  Builder  magazine, and 2014 Developer of the Year by  Builder and Developer  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.

Page 3

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

 

Page 4

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

																								
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	Change	 	2019	 	2018	 	Change	
Operating Data:	 	 	 	 	 	 	 	 	 	 	 	
Home sales revenue	$	692,138		 	$	768,795		 	$	(76,657	)	 	$	1,184,841		 	$	1,351,367		 	$	(166,526	)	
Homebuilding gross margin	$	117,454		 	$	164,699		 	$	(47,245	)	 	$	188,621		 	$	296,769		 	$	(108,148	)	
Homebuilding gross margin %	17.0	%	 	21.4	%	 	(4.4	)%	 	15.9	%	 	22.0	%	 	(6.1	)%	
Adjusted homebuilding gross margin %*	19.6	%	 	24.0	%	 	(4.4	)%	 	19.1	%	 	24.5	%	 	(5.4	)%	
SG&A expense	$	83,919		 	$	82,227		 	$	1,692		 	$	161,505		 	$	157,324		 	$	4,181		
SG&A expense as a % of home sales
   revenue	12.1	%	 	10.7	%	 	1.4	 %	 	13.6	%	 	11.6	%	 	2.0	 %	
Net income	$	26,262		 	$	63,680		 	$	(37,418	)	 	$	26,333		 	$	106,560		 	$	(80,227	)	
Adjusted EBITDA*	$	63,617		 	$	115,901		 	$	(52,284	)	 	$	91,766		 	$	196,888		 	$	(105,122	)	
Interest incurred	$	21,962		 	$	21,627		 	$	335		 	$	45,335		 	$	43,147		 	$	2,188		
Interest in cost of home sales	$	18,071		 	$	19,569		 	$	(1,498	)	 	$	32,262		 	$	33,798		 	$	(1,536	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	
Net new home orders	1,491		 	1,343		 	148		 	2,812		 	2,839		 	(27	)	
New homes delivered	1,125		 	1,215		 	(90	)	 	1,939		 	2,139		 	(200	)	
Average sales price of homes delivered	$	615		 	$	633		 	$	(18	)	 	$	611		 	$	632		 	$	(21	)	
Cancellation rate	16	%	 	16	%	 	0	 %	 	15	%	 	15	%	 	0	 %	
Average selling communities	146.0		 	130.8		 	15.2		 	147.0		 	130.1		 	16.9		
Selling communities at end of period	146		 	130		 	16		 	 	 	 	 	 	
Backlog (estimated dollar value)	$	1,438,548		 	$	1,518,096		 	$	(79,548	)	 	 	 	 	 	 	
Backlog (homes)	2,208		 	2,271		 	(63	)	 	 	 	 	 	 	
Average sales price in backlog	$	652		 	$	668		 	$	(16	)	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	June 30,	 	December 31,	 	 	 	 	 	 	 	 	
 	2019	 	2018	 	Change	 	 	 	 	 	 	
Balance Sheet Data:	(unaudited)	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	$	171,516		 	$	277,696		 	$	(106,180	)	 	 	 	 	 	 	
Real estate inventories	$	3,253,601		 	$	3,216,059		 	$	37,542		 	 	 	 	 	 	
Lots owned or controlled	28,117		 	27,740		 	377		 	 	 	 	 	 	
Homes under construction (1)	2,777		 	2,166		 	611		 	 	 	 	 	 	
Homes completed, unsold	303		 	417		 	(114	)	 	 	 	 	 	 	
Debt	$	1,432,145		 	$	1,410,804		 	$	21,341		 	 	 	 	 	 	
Stockholders’ equity	$	2,086,630		 	$	2,056,924		 	$	29,706		 	 	 	 	 	 	
Book capitalization	$	3,518,775		 	$	3,467,728		 	$	51,047		 	 	 	 	 	 	
Ratio of debt-to-capital	40.7	%	 	40.7	%	 	0.0	 %	 	 	 	 	 	 	
Ratio of net debt-to-net capital*	37.7	%	 	35.5	%	 	2.2	 %	 	 	 	 	 	 	
__________
		
(1)  	Homes under construction included 64 and 40 models at June 30, 2019 and December 31, 2018 , respectively.	
		
*	See “Reconciliation of Non-GAAP Financial Measures”	

Page 5

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

	
								
 	June 30,	 	December 31,	
 	2019	 	2018	
Assets	(unaudited)	 	 	
Cash and cash equivalents	$	171,516		 	$	277,696		
Receivables	58,370		 	51,592		
Real estate inventories	3,253,601		 	3,216,059		
Investments in unconsolidated entities	4,241		 	5,410		
Goodwill and other intangible assets, net	160,160		 	160,427		
Deferred tax assets, net	64,671		 	67,768		
Other assets	164,991		 	105,251		
Total assets	$	3,877,550		 	$	3,884,203		
 	 	 	 	
Liabilities	 	 	 	
Accounts payable	$	63,091		 	$	81,313		
Accrued expenses and other liabilities	295,671		 	335,149		
Loans payable	400,000		 	—		
Senior notes	1,032,145		 	1,410,804		
Total liabilities	1,790,907		 	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 June 30, 2019 and
December 31, 2018, respectively	—		 	—		
Common stock, $0.01 par value, 500,000,000 shares authorized;
  142,258,663 and 141,661,713 shares issued and outstanding at
   June 30, 2019 and December 31, 2018, respectively	1,423		 	1,417		
Additional paid-in capital	662,087		 	658,720		
Retained earnings	1,423,120		 	1,396,787		
Total stockholders ’  equity	2,086,630		 	2,056,924		
Noncontrolling interests	13		 	13		
Total equity	2,086,643		 	2,056,937		
Total liabilities and equity	$	3,877,550		 	$	3,884,203		

 

Page 6

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

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Homebuilding:	 		 	 		 	 	 	 	
Home sales revenue	$	692,138		 	$	768,795		 	$	1,184,841		 	$	1,351,367		
Land and lot sales revenue	5,183		 	1,518		 	6,212		 	1,741		
Other operations revenue	637		 	599		 	1,235		 	1,197		
Total revenues	697,958		 	770,912		 	1,192,288		 	1,354,305		
Cost of home sales	574,684		 	604,096		 	996,220		 	1,054,598		
Cost of land and lot sales	5,562		 	1,426		 	7,057		 	1,929		
Other operations expense	627		 	589		 	1,217		 	1,191		
Sales and marketing	47,065		 	45,744		 	86,054		 	84,027		
General and administrative	36,854		 	36,483		 	75,451		 	73,297		
Homebuilding income from operations	33,166		 	82,574		 	26,289		 	139,263		
Equity in (loss) income of unconsolidated entities	(26	)	 	69		 	(51	)	 	(399	)	
Other income (expense), net	153		 	(73	)	 	6,394		 	98		
Homebuilding income before income taxes	33,293		 	82,570		 	32,632		 	138,962		
Financial Services:	 	 	 	 	 	 	 	
Revenues	756		 	391		 	1,058		 	674		
Expenses	627		 	129		 	948		 	266		
Equity in income of unconsolidated entities	1,972		 	1,984		 	2,747		 	2,986		
Financial services income before income taxes	2,101		 	2,246		 	2,857		 	3,394		
Income before income taxes	35,394		 	84,816		 	35,489		 	142,356		
Provision for income taxes	(9,132	)	 	(21,136	)	 	(9,156	)	 	(35,796	)	
Net income	$	26,262		 	$	63,680		 	$	26,333		 	$	106,560		
Earnings per share	 	 	 		 	 	 	 		
Basic	$	0.18		 	$	0.42		 	$	0.19		 	$	0.70		
Diluted	$	0.18		 	$	0.42		 	$	0.18		 	$	0.70		
Weighted average shares outstanding	 	 	 		 	 	 	 	
Basic	142,244,166		 	151,983,886		 	142,055,766		 	151,725,651		
Diluted	142,471,191		 	153,355,965		 	142,431,725		 	153,067,342		

Page 7

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

	
																												
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	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	106		 	$	525		 	121		 	$	471		 	180		 	$	529		 	246		 	$	469		
Pardee Homes	325		 	599		 	377		 	645		 	567		 	581		 	651		 	651		
Quadrant Homes	67		 	1,051		 	85		 	762		 	111		 	1,024		 	168		 	751		
Trendmaker Homes	250		 	468		 	155		 	492		 	404		 	463		 	239		 	491		
TRI Pointe Homes	281		 	686		 	347		 	737		 	523		 	697		 	616		 	724		
Winchester Homes	96		 	642		 	130		 	553		 	154		 	615		 	219		 	560		
Total	1,125		 	$	615		 	1,215		 	$	633		 	1,939		 	$	611		 	2,139		 	$	632		

 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	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	408		 	$	661		 	516		 	$	746		 	736		 	$	669		 	916		 	$	741		
Colorado	81		 	569		 	59		 	605		 	153		 	559		 	119		 	593		
Maryland	68		 	533		 	100		 	540		 	106		 	509		 	166		 	542		
Virginia	28		 	906		 	30		 	596		 	48		 	849		 	53		 	617		
Arizona	106		 	525		 	121		 	471		 	180		 	529		 	246		 	469		
Nevada	117		 	613		 	149		 	526		 	201		 	578		 	232		 	518		
Texas	250		 	468		 	155		 	492		 	404		 	463		 	239		 	491		
Washington	67		 	1,051		 	85		 	762		 	111		 	1,024		 	168		 	751		
Total	1,125		 	$	615		 	1,215		 	$	633		 	1,939		 	$	611		 	2,139		 	$	632		

Page 8

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

	
																								
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	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	253		 	15.0		 	132		 	14.2		 	414		 	13.4		 	285		 	13.6		
Pardee Homes	522		 	44.5		 	464		 	33.5		 	955		 	44.4		 	937		 	33.1		
Quadrant Homes	67		 	6.5		 	54		 	6.3		 	142		 	6.9		 	162		 	6.6		
Trendmaker Homes	247		 	37.5		 	161		 	29.0		 	490		 	38.6		 	316		 	29.3		
TRI Pointe Homes	294		 	28.5		 	408		 	33.8		 	589		 	29.6		 	867		 	33.6		
Winchester Homes	108		 	14.0		 	124		 	14.0		 	222		 	14.1		 	272		 	13.9		
Total	1,491		 	146.0		 	1,343		 	130.8		 	2,812		 	147.0		 	2,839		 	130.1		

 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	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	616		 	54.0		 	607		 	45.3		 	1,133		 	54.3		 	1,235		 	44.8		
Colorado	56		 	6.3		 	77		 	6.8		 	137		 	6.6		 	179		 	6.9		
Maryland	84		 	10.0		 	85		 	9.0		 	168		 	9.9		 	185		 	9.3		
Virginia	24		 	4.0		 	39		 	5.0		 	54		 	4.2		 	87		 	4.5		
Arizona	253		 	15.0		 	132		 	14.2		 	414		 	13.4		 	285		 	13.7		
Nevada	144		 	12.7		 	188		 	15.2		 	274		 	13.1		 	390		 	15.0		
Texas	247		 	37.5		 	161		 	29.0		 	490		 	38.6		 	316		 	29.3		
Washington	67		 	6.5		 	54		 	6.3		 	142		 	6.9		 	162		 	6.6		
Total	1,491		 	146.0		 	1,343		 	130.8		 	2,812		 	147.0		 	2,839		 	130.1		

Page 9

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

	
																						
 	As of June 30, 2019	 	As of June 30, 2018	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
Maracay	385		 	$	211,935		 	$	550		 	256		 	$	134,138		 	$	524		
Pardee Homes	790		 	602,054		 	762		 	695		 	451,860		 	650		
Quadrant Homes	77		 	65,968		 	857		 	138		 	130,270		 	944		
Trendmaker Homes	399		 	195,871		 	491		 	250		 	145,046		 	580		
TRI Pointe Homes	384		 	252,708		 	658		 	728		 	523,907		 	720		
Winchester Homes	173		 	110,012		 	636		 	204		 	132,875		 	651		
Total	2,208		 	$	1,438,548		 	$	652		 	2,271		 	$	1,518,096		 	$	668		

 	As of June 30, 2019	 	As of June 30, 2018	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
California	853		 	$	671,695		 	$	787		 	985		 	$	719,113		 	$	730		
Colorado	128		 	73,429		 	574		 	160		 	88,902		 	556		
Maryland	123		 	63,321		 	515		 	132		 	75,129		 	569		
Virginia	50		 	46,691		 	934		 	72		 	57,746		 	802		
Arizona	385		 	211,935		 	550		 	256		 	134,138		 	524		
Nevada	193		 	109,638		 	568		 	278		 	167,752		 	603		
Texas	399		 	195,871		 	491		 	250		 	145,046		 	580		
Washington	77		 	65,968		 	857		 	138		 	130,270		 	944		
Total	2,208		 	$	1,438,548		 	$	652		 	2,271		 	$	1,518,096		 	$	668		

 

Page 10

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

	
						
 	June 30,	 	December 31,	
 	2019	 	2018	
Lots Owned or Controlled (1) :	 	 	 	
Maracay	3,611		 	3,308		
Pardee Homes	14,404		 	14,376		
Quadrant Homes	1,442		 	1,744		
Trendmaker Homes	2,702		 	2,492		
TRI Pointe Homes	4,405		 	4,095		
Winchester Homes	1,553		 	1,725		
Total	28,117		 	27,740		

 	June 30,	 	December 31,	
 	2019	 	2018	
Lots Owned or Controlled (1) :	 	 	 	
California	14,933		 	15,218		
Colorado	969		 	866		
Maryland	1,019		 	1,142		
Virginia	534		 	583		
Arizona	3,611		 	3,308		
Nevada	2,603		 	2,387		
North Carolina	304		 	—		
Texas	2,702		 	2,492		
Washington	1,442		 	1,744		
Total	28,117		 	27,740		

 	June 30,	 	December 31,	
 	2019	 	2018	
Lots by Ownership Type:	 	 	 	
Lots owned	22,630		 	23,057		
Lots controlled (1)	5,487		 	4,683		
Total	28,117		 	27,740		
__________
		
(1)  	As of June 30, 2019 and December 31, 2018 , 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 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,	
 	2019	 	%	 	2018	 	%	
 	(dollars in thousands)	
Home sales revenue	$	692,138		 	100.0	%	 	$	768,795		 	100.0	%	
Cost of home sales	574,684		 	83.0	%	 	604,096		 	78.6	%	
Homebuilding gross margin	117,454		 	17.0	%	 	164,699		 	21.4	%	
Add:  interest in cost of home sales	18,071		 	2.6	%	 	19,569		 	2.5	%	
Add:  impairments and lot option abandonments	288		 	0.0	%	 	609		 	0.1	%	
Adjusted homebuilding gross margin	$	135,813		 	19.6	%	 	$	184,877		 	24.0	%	
Homebuilding gross margin percentage	17.0	%	 	 	 	21.4	%	 	 	
Adjusted homebuilding gross margin percentage	19.6	%	 	 	 	24.0	%	 	 	

	
														
 	Six Months Ended June 30,	
 	2019	 	%	 	2018	 	%	
Home sales revenue	$	1,184,841		 	100.0	%	 	$	1,351,367		 	100.0	%	
Cost of home sales	996,220		 	84.1	%	 	1,054,598		 	78.0	%	
Homebuilding gross margin	188,621		 	15.9	%	 	296,769		 	22.0	%	
Add:  interest in cost of home sales	32,262		 	2.7	%	 	33,798		 	2.5	%	
Add:  impairments and lot option abandonments	5,490		 	0.5	%	 	857		 	0.1	%	
Adjusted homebuilding gross margin (1)	$	226,373		 	19.1	%	 	$	331,424		 	24.5	%	
Homebuilding gross margin percentage	15.9	%	 	 	 	22.0	%	 	 	
Adjusted homebuilding gross margin percentage (1)	19.1	%	 	 	 	24.5	%	 	 	

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.

	
								
 	June 30, 2019	 	December 31, 2018	
Loans payable	$	400,000		 	$	—		
Senior notes	1,032,145		 	1,410,804		
Total debt	1,432,145		 	1,410,804		
Stockholders’ equity	2,086,630		 	2,056,924		
Total capital	$	3,518,775		 	$	3,467,728		
Ratio of debt-to-capital (1)	40.7	%	 	40.7	%	
 			 			
Total debt	$	1,432,145		 	$	1,410,804		
Less: Cash and cash equivalents	(171,516	)	 	(277,696	)	
Net debt	1,260,629		 	1,133,108		
Stockholders’ equity	2,086,630		 	2,056,924		
Net capital	$	3,347,259		 	$	3,190,032		
Ratio of net debt-to-net capital (2)	37.7	%	 	35.5	%	
__________
		
(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 June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
 	(in thousands)	
Net income	$	26,262		 	$	63,680		 	$	26,333		 	$	106,560		
Interest expense:	 	 	 	 	 	 	 	
Interest incurred	21,962		 	21,627		 	45,335		 	43,147		
Interest capitalized	(21,962	)	 	(21,627	)	 	(45,335	)	 	(43,147	)	
Amortization of interest in cost of sales	18,107		 	19,664		 	32,440		 	33,906		
Provision for income taxes	9,132		 	21,136		 	9,156		 	35,796		
Depreciation and amortization	6,477		 	7,092		 	11,561		 	12,579		
EBITDA	59,978		 	111,572		 	79,490		 	188,841		
Amortization of stock-based compensation	3,351		 	3,720		 	6,786		 	7,190		
Impairments and lot option abandonments	288		 	609		 	5,490		 	857		
Adjusted EBITDA	$	63,617		 	$	115,901		 	$	91,766		 	$	196,888		

 

 

 

Page 14