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) October 24, 2018
_______________________________________________________________________________________

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))	

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 October 24, 2018 , TRI Pointe Group, Inc., a Delaware corporation (the “Company”), announced in a press release its financial results for the quarter ended September 30, 2018 .  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 October 24, 2018	

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: October 24, 2018	By:	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs,
Chief Financial Officer and Treasurer	

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INDEX OF EXHIBITS

	
			
Exhibit
No.	  	Description of Document	
 	 	 	
99.1	  	Press Release dated October 24, 2018	

4

Exhibit 99.1

TRI POINTE GROUP, INC. REPORTS 2018 THIRD QUARTER RESULTS

-Home Sales Revenue up 19% on an 8% Increase in Deliveries and a 10% Increase in Average Sales Price- 
-Homebuilding Gross Margin Percentage Increased 180 Basis Points to 21.3%-
-Diluted Earnings Per Share of $0.43 -
-Repurchased $139.3 million of Common Stock-
Irvine, California, October 24, 2018 /Business Wire/ – TRI Pointe Group, Inc. (the "Company") (NYSE: TPH) today announced results for the third quarter ended September 30, 2018 .
Results and Operational Data for Third Quarter 2018 and Comparisons to Third Quarter 2017
		
•	Net income available to common stockholders was $64.0 million , or $0.43 per diluted share, compared to $72.3 million , or $0.48 per diluted share	
		
•	Home sales revenue of $771.8 million compared to $648.6 million , an increase of 19%	
		
◦	New home deliveries of 1,205 homes compared to 1,111 homes, an increase of 8%	
		
◦	Average sales price of homes delivered of $640,000 compared to $584,000, an increase of 10%	
		
•	Homebuilding gross margin percentage of 21.3% compared to 19.5% , an increase of 180 basis points	
		
◦	Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.0% *	
		
•	SG&A expense as a percentage of homes sales revenue of 10.7% compared to 10.2% , an increase of 50 basis points	
		
•	New home orders of 1,035 compared to 1,268 , a decrease of 18%	
		
•	Active selling communities averaged 127.3 compared to 129.8 , a decrease of 2%	
		
◦	New home orders per average selling community were 8.1 orders (2.7 monthly) compared to 9.8 orders (3.3 monthly)	
		
◦	Cancellation rate increased to 19% compared to 15%	
		
•	Backlog units at quarter end of 2,101 homes compared to 2,265 , a decrease of 7%	
		
◦	Dollar value of backlog at quarter end of $1.4 billion compared to $1.5 billion , a decrease of 3%	
		
◦	Average sales price of homes in backlog at quarter end of $681,000 compared to $654,000, an increase of 4%	
		
•	Ratios of debt-to-capital and net debt-to-net capital of 43.7% and 42.3% *, respectively, as of September 30, 2018	
		
•	Repurchased 9,852,009 shares of common stock at a weighted average price per share of $14.14 for an aggregate dollar amount of $139.3 million in the three months ended September 30, 2018	
		
•	Ended third quarter of 2018 with total liquidity of $569.9 million , including cash of $83.1 million and $486.8 million of availability under the Company's unsecured revolving credit facility	
 
*    See "Reconciliation of Non-GAAP Financial Measures"
“TRI Pointe Group turned in another strong operational performance in the third quarter, highlighted by year-over-year home sales revenue growth of 19% and gross margin expansion of 180 basis points,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Our absorption rates did slow in the quarter as compared to the same period last year, which we feel is a natural reaction by buyers confronted by higher mortgage interest rates and higher home prices. It is important to note that, while not as strong as the same period last year, our overall absorption rate of 2.7

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homes per community per month for the quarter was similar to the company's historical third quarter absorption rate in other years.”
Mr. Bauer continued, “We remain focused on the long-term outlook for our company and industry, which we believe is positive given the current strong economic fundamentals and favorable demographic trends. Our company’s leadership is comprised of industry veterans who know how to compete effectively in challenging demand environments. We believe this experience, coupled with our strong balance sheet, product differentiation, and market positioning, makes TRI Pointe Group well positioned for long-term success.”
Third Quarter 2018 Operating Results
Net income available to common stockholders was $64.0 million , or $0.43 per diluted share, for the third quarter of 2018 , compared to net income available to common stockholders of $72.3 million , or $0.48 per diluted share, for the third quarter of 2017 . Included in net income available to common stockholders for the third quarter of 2017 was gross margin of $55.4 million related to the sale of a land parcel consisting of 69 homebuilding lots located in the Pacific Highlands Ranch community in San Diego, California.
Home sales revenue increased $123.1 million , or 19% , to $771.8 million for the third quarter of 2018 , as compared to $648.6 million for the third quarter of 2017 .  The increase was primarily attributable to a 10% increase in the average sales price of homes delivered to $640,000, compared to $584,000 in the third quarter of 2017, and an 8% increase in new home deliveries to 1,205 , compared to 1,111 in the third quarter of 2017 .
Homebuilding gross margin percentage for the third quarter of 2018 increased to 21.3% , compared to 19.5% for the third quarter of 2017 .  Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.0% * for the third quarter of 2018 , compared to 22.0% * for the third quarter of 2017 .  
Selling, general and administrative ("SG&A") expense for the third quarter of 2018 increased to 10.7% of home sales revenue as compared to 10.2% for the third quarter of 2017 , primarily due to higher selling costs related to the timing of new community openings and the adoption of Accounting Standards Update 606, resulting in various sales office, model and other marketing related costs that were previously capitalized to inventory and amortized through cost of home sales being expensed when incurred to selling expense or capitalized to other assets and amortized to selling expense.
New home orders decreased 18% to 1,035 homes for the third quarter of 2018 , as compared to 1,268 homes for the same period in 2017 .  Average selling communities decreased 2% to 127.3 for the third quarter of 2018 compared to 129.8 for the third quarter of 2017 . The Company’s overall absorption rate per average selling community decreased 17% for the third quarter of 2018 to 8.1 orders ( 2.7 monthly) compared to 9.8 orders (3.3 monthly) during the third quarter of 2017.  
The Company ended the quarter with 2,101 homes in backlog, representing approximately $1.4 billion . The average sales price of homes in backlog as of September 30, 2018 increased $27,000, or 4%, to $681,000, compared to $654,000 as of September 30, 2017 .  
“We continue to focus on growing our premium lifestyle brand, improving the sales process, and implementing product offerings that are consistent with market demand profiles,” said TRI Pointe Group Chief Operating Officer Tom Mitchell. “We feel that this focus differentiates us from the competition and leaves us well positioned to compete effectively for home buyers in all markets and product segments.”
* See “Reconciliation of Non-GAAP Financial Measures”
Outlook
For the fourth quarter of 2018, the Company expects to open 19 new communities, and close out of 14, resulting in 130 active selling communities as of December 31, 2018.  In addition, the Company anticipates delivering 80% to 85% of its 2,101 units in backlog as of September 30, 2018 at an average sales price of $640,000.  For the full year,

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the Company expects to deliver between 5,025 and 5,130 homes at an average sales price of $635,000. The Company anticipates its homebuilding gross margin percentage will be in a range of 20.0% to 20.5% for the fourth quarter, resulting in a full year range of 21.0% to 21.5%. Finally, the Company expects its SG&A expense a s a percentage of home sales revenue to be in the range of 8.8% to 9.2% for the fourth quarter, resulting in a full year range of 10.1% to 10.5%.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Wednesday, October 24, 2018 .  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Mike Grubbs, Chief Financial Officer.
Interested parties can listen to the call live and view the related presentation slides on the internet through the Investor Relations section of the Company’s website at www.TRIPointeGroup.com . Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software.  The call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the TRI Pointe Group Third Quarter 2018 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start. The replay of the call will be available for two weeks following the call.  To access the replay, the domestic dial-in number is 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13683227.  An archive of the webcast will be available on the Company’s website for a limited time.
About TRI Pointe Group, Inc.
Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is among the largest public homebuilders in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, including Maracay TM in Arizona; Pardee Homes ® in California and Nevada; Quadrant Homes ® in Washington; Trendmaker ® Homes in Texas; TRI Pointe Homes ® in California and Colorado; and Winchester ® Homes in Maryland and Virginia. Additional information is available at www.TRIPointeGroup.com . Winchester is a registered trademark and is used with permission.

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 September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
Operating Data:	 	 	 	 	 	 	 	 	 	 	 	
Home sales revenue	$	771,768		 	$	648,638		 	$	123,130		 	$	2,123,135		 	$	1,609,458		 	$	513,677		
Homebuilding gross margin	$	164,715		 	$	126,720		 	$	37,995		 	$	461,484		 	$	314,895		 	$	146,589		
Homebuilding gross margin %	21.3	%	 	19.5	%	 	1.8	%	 	21.7	%	 	19.6	%	 	2.1	 %	
Adjusted homebuilding gross margin %*	24.0	%	 	22.0	%	 	2.0	%	 	24.3	%	 	22.0	%	 	2.3	 %	
SG&A expense	$	82,963		 	$	66,135		 	$	16,828		 	$	240,287		 	$	193,502		 	$	46,785		
SG&A expense as a % of home sales
   revenue	10.7	%	 	10.2	%	 	0.5	%	 	11.3	%	 	12.0	%	 	(0.7	)%	
Net income available to common
   stockholders	$	63,969		 	$	72,264		 	$	(8,295	)	 	$	170,529		 	$	113,171		 	$	57,358		
Adjusted EBITDA*	$	115,333		 	$	139,550		 	$	(24,217	)	 	$	312,221		 	$	237,755		 	$	74,466		
Interest incurred	$	23,942		 	$	22,865		 	$	1,077		 	$	67,089		 	$	61,669		 	$	5,420		
Interest in cost of home sales	$	20,128		 	$	15,623		 	$	4,505		 	$	53,926		 	$	38,448		 	$	15,478		
 	 	 	 	 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	
Net new home orders	1,035		 	1,268		 	(233	)	 	3,874		 	4,012		 	(138	)	
New homes delivered	1,205		 	1,111		 	94		 	3,344		 	2,940		 	404		
Average sales price of homes delivered	$	640		 	$	584		 	$	56		 	$	635		 	$	547		 	$	88		
Cancellation rate	19	%	 	15	%	 	4	%	 	16	%	 	15	%	 	1	 %	
Average selling communities	127.3		 	129.8		 	(2.5	)	 	129.0		 	127.4		 	1.6		
Selling communities at end of period	125		 	127		 	(2	)	 	 	 	 	 	 	
Backlog (estimated dollar value)	$	1,431,225		 	$	1,482,265		 	$	(51,040	)	 	 	 	 	 	 	
Backlog (homes)	2,101		 	2,265		 	(164	)	 	 	 	 	 	 	
Average sales price in backlog	$	681		 	$	654		 	$	27		 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	September 30,	 	December 31,	 	 	 	 	 	 	 	 	
 	2018	 	2017	 	Change	 	 	 	 	 	 	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	$	83,086		 	$	282,914		 	$	(199,828	)	 	 	 	 	 	 	
Real estate inventories	$	3,377,735		 	$	3,105,553		 	$	272,182		 	 	 	 	 	 	
Lots owned or controlled	28,401		 	27,312		 	1,089		 	 	 	 	 	 	
Homes under construction (1)	2,887		 	1,941		 	946		 	 	 	 	 	 	
Homes completed, unsold	213		 	269		 	(56	)	 	 	 	 	 	 	
Debt	$	1,519,198		 	$	1,471,302		 	$	47,896		 	 	 	 	 	 	
Stockholders' equity	$	1,960,397		 	$	1,929,722		 	$	30,675		 	 	 	 	 	 	
Book capitalization	$	3,479,595		 	$	3,401,024		 	$	78,571		 	 	 	 	 	 	
Ratio of debt-to-capital	43.7	%	 	43.3	%	 	0.4	%	 	 	 	 	 	 	
Ratio of net debt-to-net capital*	42.3	%	 	38.1	%	 	4.2	%	 	 	 	 	 	 	
__________
		
(1)  	Homes under construction included 91 and 60 models at September 30, 2018 and December 31, 2017 , respectively.	
		
*	See “Reconciliation of Non-GAAP Financial Measures”	

Page 5

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

	
								
 	September 30,	 	December 31,	
 	2018	 	2017	
Assets	(unaudited)	 	 	
Cash and cash equivalents	$	83,086		 	$	282,914		
Receivables	85,026		 	125,600		
Real estate inventories	3,377,735		 	3,105,553		
Investments in unconsolidated entities	4,275		 	5,870		
Goodwill and other intangible assets, net	160,560		 	160,961		
Deferred tax assets, net	59,113		 	76,413		
Other assets	107,309		 	48,070		
Total assets	$	3,877,104		 	$	3,805,381		
 	 	 	 	
Liabilities	 	 	 	
Accounts payable	$	83,711		 	$	72,870		
Accrued expenses and other liabilities	313,194		 	330,882		
Unsecured revolving credit facility	100,000		 	—		
Senior notes	1,419,198		 	1,471,302		
Total liabilities	1,916,103		 	1,875,054		
 	 	 	 	
Commitments and contingencies	 	 	 	
 	 	 	 	
Equity	 	 	 	
Stockholders' Equity:	 	 	 	
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
shares issued and outstanding as of September 30, 2018 and
December 31, 2017, respectively	—		 	—		
Common stock, $0.01 par value, 500,000,000 shares authorized;
  142,202,313 and 151,162,999 shares issued and outstanding at
   September 30, 2018 and December 31, 2017, respectively	1,422		 	1,512		
Additional paid-in capital	661,570		 	793,980		
Retained earnings	1,297,405		 	1,134,230		
Total stockholders' equity	1,960,397		 	1,929,722		
Noncontrolling interests	604		 	605		
Total equity	1,961,001		 	1,930,327		
Total liabilities and equity	$	3,877,104		 	$	3,805,381		

 

Page 6

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

	
																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
Homebuilding:	 		 	 		 	 	 	 	
Home sales revenue	$	771,768		 	$	648,638		 	$	2,123,135		 	$	1,609,458		
Land and lot sales revenue	2,225		 	68,218		 	3,966		 	69,661		
Other operations revenue	598		 	584		 	1,795		 	1,752		
Total revenues	774,591		 	717,440		 	2,128,896		 	1,680,871		
Cost of home sales	607,053		 	521,918		 	1,661,651		 	1,294,563		
Cost of land and lot sales	2,234		 	12,001		 	4,163		 	13,299		
Other operations expense	590		 	575		 	1,781		 	1,726		
Sales and marketing	44,854		 	33,179		 	128,881		 	92,209		
General and administrative	38,109		 	32,956		 	111,406		 	101,293		
Homebuilding income from operations	81,751		 	116,811		 	221,014		 	177,781		
Equity in income (loss) of unconsolidated entities	15		 	—		 	(384	)	 	1,646		
Other (expense) income, net	(477	)	 	26		 	(379	)	 	147		
Homebuilding income before income taxes	81,289		 	116,837		 	220,251		 	179,574		
Financial Services:	 	 	 	 	 	 	 	
Revenues	480		 	295		 	1,154		 	881		
Expenses	125		 	82		 	391		 	233		
Equity in income of unconsolidated entities	1,986		 	1,351		 	4,972		 	2,911		
Financial services income before income taxes	2,341		 	1,564		 	5,735		 	3,559		
Income before income taxes	83,630		 	118,401		 	225,986		 	183,133		
Provision for income taxes	(19,661	)	 	(46,112	)	 	(55,457	)	 	(69,824	)	
Net income	63,969		 	72,289		 	170,529		 	113,309		
Net income attributable to noncontrolling interests	—		 	(25	)	 	—		 	(138	)	
Net income available to common stockholders	$	63,969		 	$	72,264		 	$	170,529		 	$	113,171		
Earnings per share	 	 	 		 	 	 	 		
Basic	$	0.43		 	$	0.48		 	$	1.13		 	$	0.73		
Diluted	$	0.43		 	$	0.48		 	$	1.13		 	$	0.73		
Weighted average shares outstanding	 	 	 		 	 	 	 	
Basic	147,725,074		 	151,214,744		 	150,377,472		 	155,238,206		
Diluted	148,318,032		 	152,129,825		 	151,482,456		 	155,936,076		

Page 7

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

	
																												
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	
New Homes Delivered:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	137		 	$	487		 	164		 	$	477		 	383		 	$	476		 	447		 	$	459		
Pardee Homes	354		 	634		 	328		 	502		 	1,005		 	645		 	896		 	478		
Quadrant Homes	73		 	898		 	79		 	686		 	241		 	795		 	206		 	649		
Trendmaker Homes	150		 	516		 	104		 	504		 	389		 	501		 	343		 	493		
TRI Pointe Homes	367		 	721		 	332		 	720		 	983		 	723		 	783		 	669		
Winchester Homes	124		 	590		 	104		 	579		 	343		 	571		 	265		 	561		
Total	1,205		 	$	640		 	1,111		 	$	584		 	3,344		 	$	635		 	2,940		 	$	547		

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	 	New
Homes
Delivered	 	Average
Sales
Price	
New Homes Delivered:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California	513		 	$	718		 	535		 	$	640		 	1,429		 	$	733		 	1,272		 	$	603		
Colorado	63		 	598		 	30		 	591		 	182		 	594		 	97		 	593		
Maryland	87		 	533		 	77		 	562		 	253		 	539		 	192		 	534		
Virginia	37		 	724		 	27		 	625		 	90		 	661		 	73		 	633		
Arizona	137		 	487		 	164		 	477		 	383		 	476		 	447		 	459		
Nevada	145		 	571		 	95		 	458		 	377		 	538		 	310		 	414		
Texas	150		 	516		 	104		 	504		 	389		 	501		 	343		 	493		
Washington	73		 	898		 	79		 	686		 	241		 	795		 	206		 	649		
Total	1,205		 	$	640		 	1,111		 	$	584		 	3,344		 	$	635		 	2,940		 	$	547		

Page 8

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

	
																								
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	
Net New Home Orders:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	97		 	11.0		 	158		 	13.5		 	382		 	12.6		 	504		 	15.3		
Pardee Homes	357		 	36.8		 	421		 	30.8		 	1,294		 	34.3		 	1,282		 	29.3		
Quadrant Homes	64		 	7.0		 	84		 	8.3		 	226		 	6.8		 	311		 	7.6		
Trendmaker Homes	139		 	27.5		 	113		 	29.3		 	455		 	28.7		 	393		 	30.9		
TRI Pointe Homes	266		 	30.3		 	378		 	34.7		 	1,133		 	32.5		 	1,144		 	31.9		
Winchester Homes	112		 	14.7		 	114		 	13.2		 	384		 	14.1		 	378		 	12.4		
Total	1,035		 	127.3		 	1,268		 	129.8		 	3,874		 	129.0		 	4,012		 	127.4		

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Net New
Home
Orders	 	Average
Selling
Communities	
Net New Home Orders:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
California	416		 	45.3		 	632		 	45.2		 	1,651		 	45.0		 	1,885		 	43.1		
Colorado	72		 	6.8		 	40		 	8.0		 	251		 	6.9		 	144		 	6.5		
Maryland	69		 	9.0		 	81		 	10.0		 	254		 	9.2		 	265		 	9.0		
Virginia	43		 	5.7		 	33		 	3.2		 	130		 	4.9		 	113		 	3.4		
Arizona	97		 	11.0		 	158		 	13.5		 	382		 	12.6		 	504		 	15.3		
Nevada	135		 	15.0		 	127		 	12.3		 	525		 	14.9		 	397		 	11.6		
Texas	139		 	27.5		 	113		 	29.3		 	455		 	28.7		 	393		 	30.9		
Washington	64		 	7.0		 	84		 	8.3		 	226		 	6.8		 	311		 	7.6		
Total	1,035		 	127.3		 	1,268		 	129.8		 	3,874		 	129.0		 	4,012		 	127.4		

Page 9

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

	
																						
 	As of September 30, 2018	 	As of September 30, 2017	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
Maracay	216		 	$	122,617		 	$	568		 	305		 	$	154,324		 	$	506		
Pardee Homes	698		 	451,398		 	647		 	646		 	436,376		 	676		
Quadrant Homes	129		 	127,136		 	986		 	206		 	160,202		 	778		
Trendmaker Homes	239		 	143,000		 	598		 	213		 	107,968		 	507		
TRI Pointe Homes	627		 	460,700		 	735		 	659		 	481,537		 	731		
Winchester Homes	192		 	126,374		 	658		 	236		 	141,858		 	601		
Total	2,101		 	$	1,431,225		 	$	681		 	2,265		 	$	1,482,265		 	$	654		

 	As of September 30, 2018	 	As of September 30, 2017	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Backlog:	 	 	 	 	 	 	 	 	 	 	 	
California	888		 	$	654,929		 	$	738		 	1,015		 	$	750,947		 	$	740		
Colorado	169		 	92,037		 	545		 	106		 	65,563		 	619		
Maryland	114		 	64,672		 	567		 	175		 	98,920		 	565		
Virginia	78		 	61,701		 	791		 	61		 	42,937		 	704		
Arizona	216		 	122,617		 	568		 	305		 	154,324		 	506		
Nevada	268		 	165,133		 	616		 	184		 	101,404		 	551		
Texas	239		 	143,000		 	598		 	213		 	107,968		 	507		
Washington	129		 	127,136		 	986		 	206		 	160,202		 	778		
Total	2,101		 	$	1,431,225		 	$	681		 	2,265		 	$	1,482,265		 	$	654		

 

Page 10

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

	
						
 	September 30,	 	December 31,	
 	2018	 	2017	
Lots Owned or Controlled (1) :	 	 	 	
Maracay	3,211		 	2,519		
Pardee Homes	15,404		 	15,144		
Quadrant Homes	1,855		 	1,726		
Trendmaker Homes	1,821		 	1,855		
TRI Pointe Homes	4,214		 	3,964		
Winchester Homes	1,896		 	2,104		
Total	28,401		 	27,312		

 	September 30,	 	December 31,	
 	2018	 	2017	
Lots Owned or Controlled (1) :	 	 	 	
California	16,148		 	16,292		
Colorado	870		 	742		
Maryland	1,258		 	1,507		
Virginia	638		 	597		
Arizona	3,211		 	2,519		
Nevada	2,600		 	2,074		
Texas	1,821		 	1,855		
Washington	1,855		 	1,726		
Total	28,401		 	27,312		

 	September 30,	 	December 31,	
 	2018	 	2017	
Lots by Ownership Type:	 	 	 	
Lots owned	23,890		 	23,940		
Lots controlled (1)	4,511		 	3,372		
Total	28,401		 	27,312		
__________
		
(1)  	As of September 30, 2018 and December 31, 2017 , 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 September 30,	
 	2018	 	%	 	2017	 	%	
 	(dollars in thousands)	
Home sales revenue	$	771,768		 	100.0	%	 	$	648,638		 	100.0	%	
Cost of home sales	607,053		 	78.7	%	 	521,918		 	80.5	%	
Homebuilding gross margin	164,715		 	21.3	%	 	126,720		 	19.5	%	
Add:  interest in cost of home sales	20,128		 	2.6	%	 	15,623		 	2.4	%	
Add:  impairments and lot option abandonments	568		 	0.1	%	 	374		 	0.1	%	
Adjusted homebuilding gross margin	$	185,411		 	24.0	%	 	$	142,717		 	22.0	%	
Homebuilding gross margin percentage	21.3	%	 	 	 	19.5	%	 	 	
Adjusted homebuilding gross margin percentage	24.0	%	 	 	 	22.0	%	 	 	

	
														
 	Nine Months Ended September 30,	
 	2018	 	%	 	2017	 	%	
 	(dollars in thousands)	
Home sales revenue	$	2,123,135		 	100.0	%	 	$	1,609,458		 	100.0	%	
Cost of home sales	1,661,651		 	78.3	%	 	1,294,563		 	80.4	%	
Homebuilding gross margin	461,484		 	21.7	%	 	314,895		 	19.6	%	
Add:  interest in cost of home sales	53,926		 	2.5	%	 	38,448		 	2.4	%	
Add:  impairments and lot option abandonments	1,425		 	0.1	%	 	1,169		 	0.1	%	
Adjusted homebuilding gross margin	$	516,835		 	24.3	%	 	$	354,512		 	22.0	%	
Homebuilding gross margin percentage	21.7	%	 	 	 	19.6	%	 	 	
Adjusted homebuilding gross margin percentage	24.3	%	 	 	 	22.0	%	 	 	

 

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.

	
								
 	September 30, 2018	 	December 31, 2017	
Unsecured revolving credit facility	$	100,000		 	$	—		
Senior notes	1,419,198		 	1,471,302		
Total debt	1,519,198		 	1,471,302		
Stockholders’ equity	1,960,397		 	1,929,722		
Total capital	$	3,479,595		 	$	3,401,024		
Ratio of debt-to-capital (1)	43.7	%	 	43.3	%	
 			 			
Total debt	$	1,519,198		 	$	1,471,302		
Less: Cash and cash equivalents	(83,086	)	 	(282,914	)	
Net debt	1,436,112		 	1,188,388		
Stockholders’ equity	1,960,397		 	1,929,722		
Net capital	$	3,396,509		 	$	3,118,110		
Ratio of net debt-to-net capital (2)	42.3	%	 	38.1	%	
__________
		
(1)  	The ratio of debt-to-capital is computed as the quotient obtained by dividing debt by the sum of debt plus equity.	
		
(2)  	The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus equity.	

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, (f) impairments and lot option abandonments and (h) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

	
																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
 	(in thousands)	
Net income available to common stockholders	$	63,969		 	$	72,264		 	$	170,529		 	$	113,171		
Interest expense:	 	 	 	 	 	 	 	
Interest incurred	23,942		 	22,865		 	67,089		 	61,669		
Interest capitalized	(23,942	)	 	(22,865	)	 	(67,089	)	 	(61,669	)	
Amortization of interest in cost of sales	20,293		 	15,899		 	54,199		 	38,771		
Provision for income taxes	19,661		 	46,112		 	55,457		 	69,824		
Depreciation and amortization	7,002		 	867		 	19,581		 	2,567		
EBITDA	110,925		 	135,142		 	299,766		 	224,333		
Amortization of stock-based compensation	3,765		 	3,887		 	10,955		 	11,631		
Impairments and lot option abandonments	643		 	374		 	1,500		 	1,203		
Restructuring charges	—		 	147		 	—		 	588		
Adjusted EBITDA	$	115,333		 	$	139,550		 	$	312,221		 	$	237,755		

 

 

 

Page 14