TRI POINTE HOMES, INC., 10-Q filed on 7/22/2021
Quarterly Report
v3.21.2
Cover - shares
6 Months Ended
Jun. 30, 2021
Jul. 12, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2021  
Document Transition Report false  
Entity File Number 1-35796  
Entity Registrant Name Tri Pointe Homes, Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 61-1763235  
Entity Address, Address Line One 940 Southwood Blvd  
Entity Address, Address Line Two Suite 200  
Entity Address, City or Town Incline Village  
Entity Address, State or Province NV  
Entity Address, Postal Zip Code 89451  
City Area Code 775  
Local Phone Number 413-1030  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Trading Symbol TPH  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   113,789,302
Amendment Flag false  
Document Fiscal year Focus 2021  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001561680  
Current Fiscal Year End Date --12-31  
v3.21.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
Assets    
Cash and cash equivalents $ 556,483 $ 621,295
Receivables 91,348 63,551
Real estate inventories 3,085,582 2,910,142
Investments in unconsolidated entities 74,051 75,056
Goodwill and other intangible assets, net 156,604 158,529
Deferred tax assets, net 44,388 47,525
Other assets 151,701 145,882
Total assets 4,160,157 4,021,980
Liabilities    
Accounts payable 141,143 79,690
Accrued expenses and other liabilities 395,138 366,740
Loans payable 258,979 258,979
Senior notes, net 1,085,595 1,084,022
Total liabilities 1,880,855 1,789,431
Commitments and contingencies
Stockholders’ equity:    
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 0 0
Common stock, $0.01 par value, 500,000,000 shares authorized;    115,211,206 and 121,882,778 shares issued and outstanding at    June 30, 2021 and December 31, 2020, respectively 1,150 1,219
Additional paid-in capital 203,288 345,137
Retained earnings 2,074,852 1,886,181
Total stockholders’ equity 2,279,290 2,232,537
Noncontrolling interests 12 12
Total equity 2,279,302 2,232,549
Total liabilities and equity $ 4,160,157 $ 4,021,980
v3.21.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (shares) 50,000,000 50,000,000
Preferred stock, shares issued (shares) 0 0
Preferred stock, shares outstanding (shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (shares) 500,000,000 500,000,000
Common stock, shares issued (shares) 115,211,206 121,882,778
Common stock, shares outstanding (shares) 115,211,206 121,882,778
v3.21.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Other operations revenue $ 660 $ 648 $ 1,323 $ 1,266
Total revenues 1,018,064 770,106 1,739,030 1,367,156
Other operations expense 686 624 1,310 1,248
Sales and marketing 45,489 45,194 85,949 87,831
General and administrative 51,263 37,554 92,612 77,391
Restructuring charges 0 5,549 0 5,549
Homebuilding income from operations 151,856 77,081 242,775 116,355
Equity in loss of unconsolidated entities (16) (25) (29) (39)
Other income (loss), net 149 (6,328) 257 (5,955)
Homebuilding income before income taxes 151,989 70,728 243,003 110,361
Equity in income of unconsolidated entities 3,949 2,932 6,640 4,488
Financial services income before income taxes 5,145 3,943 8,534 6,014
Income before income taxes 157,134 74,671 251,537 116,375
Provision for income taxes (39,265) (18,143) (62,866) (27,964)
Net income $ 117,869 $ 56,528 $ 188,671 $ 88,411
Earnings per share        
Basic (in dollars per share) $ 1.01 $ 0.43 $ 1.60 $ 0.67
Diluted (in dollars per share) $ 1.00 $ 0.43 $ 1.59 $ 0.67
Weighted average shares outstanding        
Basic (shares) 116,824,108 130,292,563 118,082,691 132,326,856
Diluted (shares) 117,770,084 130,506,567 118,921,340 132,763,775
Homebuilding        
Total revenues $ 1,015,383 $ 767,810 $ 1,734,244 $ 1,363,266
Income before income taxes 151,989 70,728 243,003 110,361
Home sales        
Home sales and land and lot sales revenue 1,009,307 766,942 1,725,982 1,361,780
Cost of sales and expenses 761,215 601,434 1,306,571 1,074,316
Land and lots        
Home sales and land and lot sales revenue 5,416 220 6,939 220
Cost of sales and expenses 4,874 374 5,027 576
Financial services        
Total revenues 2,681 2,296 4,786 3,890
Cost of sales and expenses $ 1,485 $ 1,285 $ 2,892 $ 2,364
v3.21.2
CONSOLIDATED STATEMENTS OF EQUITY - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Total Stockholders’ Equity
Noncontrolling Interests
Beginning balance at Dec. 31, 2019 $ 2,186,542 $ 1,361 $ 581,195 $ 1,603,974 $ 2,186,530 $ 12
Beginning balance (shares) at Dec. 31, 2019   136,149,633        
Increase (Decrease) in Stockholders' Equity            
Net income 88,411     88,411 88,411  
Shares issued under share-based awards 921 $ 8 913   921  
Shares issued under share-based awards (shares)   734,555        
Minimum tax withholding paid on behalf of employees for restricted stock units (5,473)   (5,473)   (5,473)  
Stock-based compensation expense 7,411   7,411   7,411  
Share repurchases (102,001) $ (66) (101,935)   (102,001)  
Share repurchases (shares)   (6,558,323)        
Ending balance at Jun. 30, 2020 2,175,811 $ 1,303 482,111 1,692,385 2,175,799 12
Ending balance (shares) at Jun. 30, 2020   130,325,865        
Beginning balance at Mar. 31, 2020 2,115,293 $ 1,302 478,122 1,635,857 2,115,281 12
Beginning balance (shares) at Mar. 31, 2020   130,236,981        
Increase (Decrease) in Stockholders' Equity            
Net income 56,528     56,528 56,528  
Shares issued under share-based awards 231 $ 1 230   231  
Shares issued under share-based awards (shares)   88,884        
Minimum tax withholding paid on behalf of employees for restricted stock units (27)   (27)   (27)  
Stock-based compensation expense 3,786   3,786   3,786  
Ending balance at Jun. 30, 2020 2,175,811 $ 1,303 482,111 1,692,385 2,175,799 12
Ending balance (shares) at Jun. 30, 2020   130,325,865        
Beginning balance at Dec. 31, 2020 $ 2,232,549 $ 1,219 345,137 1,886,181 2,232,537 12
Beginning balance (shares) at Dec. 31, 2020 121,882,778 121,882,778        
Increase (Decrease) in Stockholders' Equity            
Net income $ 188,671     188,671 188,671  
Shares issued under share-based awards 2,834 $ 6 2,828   2,834  
Shares issued under share-based awards (shares)   654,665        
Minimum tax withholding paid on behalf of employees for restricted stock units (4,636)   (4,636)   (4,636)  
Stock-based compensation expense 8,162   8,162   8,162  
Share repurchases (148,278) $ (75) (148,203)   (148,278)  
Share repurchases (shares)   (7,326,237)        
Ending balance at Jun. 30, 2021 $ 2,279,302 $ 1,150 203,288 2,074,852 2,279,290 12
Ending balance (shares) at Jun. 30, 2021 115,211,206 115,211,206        
Beginning balance at Mar. 31, 2021 $ 2,239,774 $ 1,188 281,591 1,956,983 2,239,762 12
Beginning balance (shares) at Mar. 31, 2021   118,824,242        
Increase (Decrease) in Stockholders' Equity            
Net income 117,869     117,869 117,869  
Shares issued under share-based awards 18 $ 1 17   18  
Shares issued under share-based awards (shares)   53,640        
Minimum tax withholding paid on behalf of employees for restricted stock units (14)   (14)   (14)  
Stock-based compensation expense 4,506   4,506   4,506  
Share repurchases (82,851) $ (39) (82,812)   (82,851)  
Share repurchases (shares)   (3,666,676)        
Ending balance at Jun. 30, 2021 $ 2,279,302 $ 1,150 $ 203,288 $ 2,074,852 $ 2,279,290 $ 12
Ending balance (shares) at Jun. 30, 2021 115,211,206 115,211,206        
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Cash flows from operating activities:    
Net income $ 188,671 $ 88,411
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 16,120 12,176
Equity in income of unconsolidated entities, net (6,610) (4,449)
Deferred income taxes, net 3,136 10,160
Amortization of stock-based compensation 8,162 7,411
Charges for impairments and lot option abandonments 445 1,729
Changes in assets and liabilities:    
Real estate inventories (173,740) 53,902
Receivables (27,797) (18,304)
Other assets (7,996) 3,677
Accounts payable 61,453 4,966
Accrued expenses and other liabilities 28,325 (5,784)
Returns on investments in unconsolidated entities, net 7,135 5,475
Loss on extinguishment of debt 0 6,858
Net cash provided by operating activities 97,304 166,228
Cash flows from investing activities:    
Purchases of property and equipment (8,946) (12,002)
Proceeds from sale of property and equipment 0 17
Returns of (investments in) unconsolidated entities, net 480 (25,715)
Net cash used in investing activities (8,466) (37,700)
Cash flows from financing activities:    
Borrowings from debt 0 850,000
Repayment of debt 0 (721,673)
Debt issuance costs (3,570) (4,768)
Proceeds from issuance of common stock under share-based awards 2,834 921
Minimum tax withholding paid on behalf of employees for share-based awards (4,636) (5,473)
Share repurchases (148,278) (102,001)
Net cash (used in) provided by financing activities (153,650) 17,006
Net (decrease) increase in cash and cash equivalents (64,812) 145,534
Cash and cash equivalents–beginning of period 621,295 329,011
Cash and cash equivalents–end of period $ 556,483 $ 474,545
v3.21.2
Organization, Basis of Presentation and Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Basis of Presentation and Summary of Significant Accounting Policies Organization, Basis of Presentation and Summary of Significant Accounting Policies
Organization
Effective January 15, 2021, the Company changed its corporate name from “TRI Pointe Group, Inc.” to “Tri Pointe Homes, Inc.” As part of this name change, the Company consolidated its six regional homebuilding brands into one unified name—Tri Pointe Homes. For further details on the impact to our reporting segments, see Note 2, Segment Information.
Tri Pointe is engaged in the design, construction and sale of innovative single-family attached and detached homes across ten states, including Arizona, California, Colorado, Maryland, Nevada, North Carolina, South Carolina, Texas, Virginia and Washington, and the District of Columbia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its potential impacts on our future results.
The consolidated financial statements include the accounts of Tri Pointe Homes and its wholly owned subsidiaries, as well as other entities in which Tri Pointe Homes has a controlling interest and variable interest entities (“VIEs”) in which Tri Pointe Homes is the primary beneficiary. The noncontrolling interests as of June 30, 2021 and December 31, 2020 represent the outside owners’ interests in the Company’s consolidated entities. All significant intercompany accounts have been eliminated upon consolidation.
Unless the context otherwise requires, the terms “Tri Pointe”, “the Company”, “we”, “us”, and “our” used herein refer to Tri Pointe Homes, Inc., a Delaware corporation, and its consolidated subsidiaries.
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, we apply the following steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
Home sales revenue
We generate the majority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the home are transferred to the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied in less than one year from the original contract date. Included in home sales
revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.
Land and lot sales revenue
We generate revenue from the sale of land and lots to third-parties in the ordinary course of business and these transactions are considered to meet the definition of contracts with customers. Similar to our home sales, revenue from land and lot sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our homebuilding other operations revenue relates to a ground lease included in our West segment. We are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 842, Leases. We do not recognize a material profit on this ground lease.
Financial services revenues
Tri Pointe Solutions is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, Tri Pointe Assurance title and escrow services operations, and Tri Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
Tri Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting. We record a percentage of income earned by Tri Pointe Connect based on our ownership percentage in this joint venture. Tri Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated statements of operations.
Title and escrow services operations
Tri Pointe Assurance provides title examinations for our homebuyers in the Carolinas and Colorado and both title examinations and escrow services for our homebuyers in Arizona, Texas, Maryland, Nevada and Virginia. Tri Pointe Assurance is a wholly owned subsidiary of Tri Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. Tri Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
Tri Pointe Advantage is a wholly owned subsidiary of Tri Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. Tri Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, during the three months ended June 30, 2020 we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, all of which had been paid as of December 31, 2020.
Adoption of New Accounting Standards
In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 on January 1, 2021 and our adoption did not have a material impact on our consolidated financial statements.
v3.21.2
Segment Information
6 Months Ended
Jun. 30, 2021
Segment Reporting [Abstract]  
Segment Information Segment Information
We operate two principal businesses: homebuilding and financial services.
Effective January 15, 2021, we consolidated our six regional homebuilding brands into one unified name, Tri Pointe Homes, under which we continue to acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon these factors and in consideration of the geographical layout of our homebuilding markets, we have identified three homebuilding operating and reporting segments, and as a result of such change, beginning in the quarter ended March 31, 2021, our homebuilding segments are reported under the following hierarchy:
West region: Arizona, California, Nevada and Washington
Central region: Colorado and Texas
East region: District of Columbia, Maryland, North Carolina, South Carolina and Virginia
Prior to the consolidation of our six regional homebuilding brands into one unified name, Tri Pointe Homes, our homebuilding operations were comprised of the following six reportable segments: Maracay, consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; Tri Pointe Homes, consisting of operations in California, Colorado and the Carolinas; and Winchester Homes, consisting of operations in Maryland, Virginia and the District of Columbia. The realignment of our reporting segments did not have any impact on our historical consolidated results of operations and we have restated prior period segment information in this report to conform to the new segment reporting structure.
Our Tri Pointe Solutions financial services operation is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, our Tri Pointe Assurance title and escrow services operations, and our Tri Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. All of the expenses incurred by Corporate are allocated to each of the homebuilding reporting segments based on their respective percentage of revenues.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.
Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Revenues
West $784,952 $540,027 $1,324,998 $956,570 
Central149,620 153,957 270,738 286,433 
East80,811 73,826 138,508 120,263 
Total homebuilding revenues1,015,383 767,810 1,734,244 1,363,266 
Financial services2,681 2,296 4,786 3,890 
Total$1,018,064 $770,106 $1,739,030 $1,367,156 
Income before taxes
West$130,254 $61,363 $209,831 $97,217 
Central15,853 7,504 25,550 12,069 
East5,882 1,861 7,622 1,075 
Total homebuilding income before income taxes151,989 70,728 243,003 110,361 
Financial services5,145 3,943 8,534 6,014 
Total$157,134 $74,671 $251,537 $116,375 
 
Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
June 30, 2021December 31, 2020
Real estate inventories
West$2,309,478 $2,296,013 
Central485,744 386,204 
East290,360 227,925 
Total$3,085,582 $2,910,142 
Total assets(1)
West$2,581,096 $2,556,961 
Central572,420 468,699 
East344,144 284,437 
Corporate621,710 672,536 
Total homebuilding assets4,119,370 3,982,633 
Financial services40,787 39,347 
Total$4,160,157 $4,021,980 
__________
(1)    Total assets as of June 30, 2021 and December 31, 2020 includes $139.3 million of goodwill, with $125.4 million included in the West segment, $8.3 million included in the Central segment and $5.6 million included in the East segment. Total Corporate assets as of June 30, 2021 and December 31, 2020 includes our Tri Pointe Homes trade name, which was historically included in our Tri Pointe Homes reportable segment. For further details on goodwill and our intangible assets, see Note 8, Goodwill and Other Intangible Assets.
v3.21.2
Earnings Per Share
6 Months Ended
Jun. 30, 2021
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per ShareThe following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Numerator:    
Net income$117,869 $56,528 $188,671 $88,411 
Denominator:    
Basic weighted-average shares outstanding116,824,108 130,292,563 118,082,691 132,326,856 
Effect of dilutive shares:   
Stock options and unvested restricted stock units945,976 214,004 838,649 436,919 
Diluted weighted-average shares outstanding117,770,084 130,506,567 118,921,340 132,763,775 
Earnings per share    
Basic$1.01 $0.43 $1.60 $0.67 
Diluted$1.00 $0.43 $1.59 $0.67 
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share1,805,413 3,090,298 2,101,688 2,992,479 
v3.21.2
Receivables
6 Months Ended
Jun. 30, 2021
Receivables [Abstract]  
Receivables Receivables
Receivables consisted of the following (in thousands):
June 30, 2021December 31, 2020
Escrow proceeds and other accounts receivable, net$44,829 $16,642 
Warranty insurance receivable (Note 13)46,519 46,909 
Total receivables$91,348 $63,551 

Receivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables based on an expected credit loss approach. Receivables were net of allowances for doubtful accounts of $476,000 and $39,000 as of June 30, 2021 and December 31, 2020, respectively.
v3.21.2
Real Estate Inventories
6 Months Ended
Jun. 30, 2021
Inventory Disclosure [Abstract]  
Real Estate Inventories Real Estate Inventories
Real estate inventories consisted of the following (in thousands):
June 30, 2021December 31, 2020
Real estate inventories owned:
Homes completed or under construction$1,331,086 $1,006,980 
Land under development1,157,181 1,328,481 
Land held for future development200,214 212,939 
Model homes230,429 241,345 
Total real estate inventories owned2,918,910 2,789,745 
Real estate inventories not owned:
Land purchase and land option deposits166,672 120,397 
Total real estate inventories not owned166,672 120,397 
Total real estate inventories$3,085,582 $2,910,142 
 
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future.
Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements, as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities.
Interest incurred, capitalized and expensed were as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Interest incurred$22,558 $21,828 $43,737 $42,607 
Interest capitalized(22,558)(21,828)(43,737)(42,607)
Interest expensed$— $— $— $— 
Capitalized interest in beginning inventory$182,729 $196,313 $182,228 $192,356 
Interest capitalized as a cost of inventory22,558 21,828 43,737 42,607 
Interest previously capitalized as a cost of
inventory, included in cost of sales
(31,124)(21,806)(51,802)(38,628)
Capitalized interest in ending inventory$174,163 $196,335 $174,163 $196,335 
 
Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered. Interest that is expensed as incurred is included in other (expense) income, net.
Real Estate Inventory Impairments and Land Option Abandonments
Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Real estate inventory impairments$— $— $— $— 
Land and lot option abandonments and pre-acquisition charges232 1,380 445 1,729 
Total$232 $1,380 $445 $1,729 
 
Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges.
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time. 
Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.
v3.21.2
Investments in Unconsolidated Entities
6 Months Ended
Jun. 30, 2021
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Entities Investments in Unconsolidated Entities
As of June 30, 2021, we held equity investments in nine active homebuilding partnerships or limited liability companies and one financial services limited liability company. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 65%, depending on the investment, with no controlling interest held in any of these investments.
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.
Assets and liabilities of unconsolidated entities (in thousands):
 
June 30, 2021December 31, 2020
Assets
Cash$25,640 $15,430 
Receivables2,606 3,820 
Real estate inventories281,721 235,437 
Other assets699 546 
Total assets$310,666 $255,233 
Liabilities and equity
Accounts payable and other liabilities$60,839 $43,534 
Company’s equity74,051 75,056 
Outside interests’ equity175,776 136,643 
Total liabilities and equity$310,666 $255,233 
 
Results of operations from unconsolidated entities (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net sales$12,588 $8,726 $20,397 $14,696 
Other operating expense(6,973)(4,400)(10,821)(8,156)
Other loss, net(4)(1)(4)(4)
Net income $5,611 $4,325 $9,572 $6,536 
Company’s equity in income of unconsolidated entities$3,933 $2,907 $6,611 $4,449 
v3.21.2
Variable Interest Entities
6 Months Ended
Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest Entities Variable Interest Entities
In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. These deposits are recorded as land purchase and land option deposits under real estate inventories not owned on the accompanying consolidated balance sheets.
We analyze each of our land and lot option agreements and other similar contracts under the provisions of ASC 810, Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the landowner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.
The following provides a summary of our interests in land and lot option agreements (in thousands):
 June 30, 2021December 31, 2020
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
Consolidated VIEs$— $— $— $— $— $— 
Unconsolidated VIEs133,105 784,069 N/A81,723 599,025 N/A
Other land option agreements33,567 341,753 N/A38,674 336,326 N/A
Total$166,672 $1,125,822 $— $120,397 $935,351 $— 
 
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not with VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition costs of $11.0 million and $9.5 million as of June 30, 2021 and December 31, 2020, respectively. These pre-acquisition costs are included in real estate inventories as land under development on our consolidated balance sheets.
v3.21.2
Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
As of June 30, 2021 and December 31, 2020, $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets.
We have one intangible asset as of June 30, 2021, comprised of a Tri Pointe Homes trade name resulting from the acquisition of WRECO in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):
June 30, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Goodwill$139,304 $— $139,304 $139,304 $— $139,304 
Trade names27,979 (10,679)17,300 27,979 (8,754)19,225 
Total$167,283 $(10,679)$156,604 $167,283 $(8,754)$158,529 
 
In October 2020, in conjunction with the announcement of our move to a single brand, Tri Pointe Homes, we modified the useful life of the former Maracay trade name which expired in June 2021. The intangible asset related to the Maracay trade name was fully amortized during the three months ended June 30, 2021 compared to an ending balance of $1.9 million as of December 31, 2020. Amortization expense related to this intangible asset was $963,000 and $134,000 for the three-month periods ended June 30, 2021 and 2020, respectively and $1.9 million and $267,000 for the six-month periods ended June 30, 2021 and 2020, respectively. Amortization of this intangible was charged to sales and marketing expense. Our $17.3 million indefinite life intangible asset related to the Tri Pointe Homes trade name is not amortizing. All trade names and goodwill are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.
v3.21.2
Other Assets
6 Months Ended
Jun. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Assets Other Assets Other assets consisted of the following (in thousands):
June 30, 2021December 31, 2020
Prepaid expenses$9,115 $14,984 
Refundable fees and other deposits20,324 22,029 
Development rights, held for future use or sale1,193 1,528 
Deferred loan costs—loans payable6,013 3,073 
Operating properties and equipment, net49,492 52,494 
Lease right-of-use assets48,871 48,798 
Income tax receivable13,693 — 
Other3,000 2,976 
Total$151,701 $145,882 
v3.21.2
Accrued Expenses and Other Liabilities
6 Months Ended
Jun. 30, 2021
Payables and Accruals [Abstract]  
Accrued Expenses and Other Liabilities Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
June 30, 2021December 31, 2020
Accrued payroll and related costs$39,246 $48,893 
Warranty reserves (Note 13)
93,522 94,475 
Estimated cost for completion of real estate inventories102,976 93,292 
Customer deposits61,096 43,602 
Income tax liability to Weyerhaeuser307 240 
Accrued income taxes payable17,336 13,329 
Accrued interest5,512 4,655 
Other tax liability2,478 2,180 
Lease liabilities52,900 53,239 
Other19,765 12,835 
Total$395,138 $366,740 
v3.21.2
Senior Notes and Loans Payable
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Senior Notes and Loans Payable Senior Notes and Loans Payable
Senior Notes
The Company’s outstanding senior notes (together, the “Senior Notes”) consisted of the following (in thousands):
June 30, 2021December 31, 2020
5.875% Senior Notes due June 15, 2024
$450,000 $450,000 
5.250% Senior Notes due June 1, 2027
300,000 300,000 
5.700% Senior Notes due June 15, 2028
350,000 350,000 
Discount and deferred loan costs(14,405)(15,978)
Total$1,085,595 $1,084,022 
 
In June 2020, Tri Pointe issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15 of each year until maturity.
In June 2017, Tri Pointe issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1 of each year until maturity.
Tri Pointe and its wholly owned subsidiary Tri Pointe Homes Holdings, Inc. are co-issuers of the $450 million aggregate principal amount 5.875% Senior Notes due 2024 (the “2024 Notes”). The 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The 2024 Notes mature on June 15, 2024, with interest payable semiannually in arrears on June 15 and December 15 of each year until maturity.
As of June 30, 2021, there were $11.4 million of capitalized debt financing costs, included in senior notes, net on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $3.2 million as of both June 30, 2021 and December 31, 2020.
Loans Payable
The Company’s outstanding loans payable consisted of the following (in thousands):
June 30, 2021December 31, 2020
Term loan facility$250,000 $250,000 
Seller financed loans8,979 8,979 
Total$258,979 $258,979 
On June 10, 2021, we entered into a Second Modification Agreement (the “Modification”) to our Second Amended and Restated Credit Agreement dated as of March 29, 2019. The Modification, among other things, (i) increases the maximum amount of the revolving credit facility (the “Revolving Facility”) under the Credit Agreement from $600.0 million to $650.0 million and (ii) extends the maturity date of both the Revolving Facility and term loan facility (the “Term Facility”) under the Credit Agreement to June 10, 2026; provided that the maturity date for $45.0 million of commitments under the Revolving Facility and $30.0 million of loans under the Term Facility, respectively, were not extended and remain scheduled to mature on March 29, 2023. We may increase the Credit Facility to not more than $1 billion in the aggregate, at our request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of $100 million for letters of credit. We may borrow under the Revolving Facility in the ordinary course of business to repay senior notes and fund our operations, including our land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 1.90%, depending on the Company’s leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company’s leverage ratio.
As of June 30, 2021, we had no outstanding debt under the Revolving Facility and there was $593.1 million of availability after considering the borrowing base provisions and outstanding letters of credit. As of June 30, 2021, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.19%. As of June 30, 2021, there were $6.0 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the remaining term of the Credit Facility. Accrued interest, including loan commitment fees, related to the Credit Facility was $528,000 and $617,000 as of June 30, 2021 and December 31, 2020, respectively.
At June 30, 2021 and December 31, 2020, we had outstanding letters of credit of $47.9 million and $64.1 million, respectively. These letters of credit were issued to secure various financial obligations. We believe it is not probable that any outstanding letters of credit will be drawn upon.
Interest Incurred
During the three months ended June 30, 2021 and 2020, the Company incurred interest of $22.6 million and $21.8 million, respectively, related to all debt during the period. Included in interest incurred are amortization of deferred financing and Senior Note discount costs of $1.1 million and $1.2 million for the three months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021 and 2020, the Company incurred interest of $43.7 million and $42.6 million, respectively, related to all debt during the period and amortization of deferred financing and Senior Note discount costs of $2.2 million and $2.4 million for the six months ended June 30, 2021 and 2020, respectively. Accrued interest related to all outstanding debt at June 30, 2021 and December 31, 2020 was $5.5 million and $4.7 million, respectively. 
Covenant Requirements
The Senior Notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions.
Under the Credit Facility, the Company is required to comply with certain financial covenants, including those relating to consolidated tangible net worth, leverage, liquidity or interest coverage, and a spec unit inventory test. The Credit Facility also requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods.
The Company was in compliance with all applicable financial covenants as of June 30, 2021 and December 31, 2020.
v3.21.2
Fair Value Disclosures
6 Months Ended
Jun. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Fair Value Disclosures
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
Level 1—Quoted prices for identical instruments in active markets
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date
Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date
Fair Value of Financial Instruments
A summary of assets and liabilities at June 30, 2021 and December 31, 2020, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):
June 30, 2021December 31, 2020
HierarchyBook ValueFair ValueBook ValueFair Value
Senior Notes(1)
Level 2$1,096,953 $1,220,300 $1,096,494 $1,207,665 
Term loan(2)
Level 2$250,000 $250,000 $250,000 $250,000 
Seller financed loans(3)
Level 2$8,979 $8,979 $8,979 $8,979 
 __________
(1)The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $11.4 million and $12.5 million as of June 30, 2021 and December 31, 2020, respectively. The estimated fair value of the Senior Notes at June 30, 2021 and December 31, 2020 is based on quoted market prices.
(2)The estimated fair value of the Term Loan Facility as of June 30, 2021 and December 31, 2020 approximated book value due to the variable interest rate terms of this loan.
(3)The estimated fair value of our seller financed loans as of June 30, 2021 and December 31, 2020 approximated book value due to the short term nature of these loans, both of which are scheduled to mature in 2021.

At June 30, 2021 and December 31, 2020, the carrying value of cash and cash equivalents and receivables approximated fair value due to their short-term nature and variable interest rate terms.
Fair Value of Nonfinancial Assets
Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicating the carrying value is not recoverable. The following table presents impairment charges and the remaining net fair value for nonfinancial assets that were measured during the periods presented (in thousands):
Six Months Ended June 30, 2021Year Ended December 31, 2020
HierarchyImpairment
Charge
Fair Value
Net of
Impairment
Impairment
Charge
Fair Value
Net of
Impairment
Real estate inventories(1)
Level 3$— $— $1,460 $2,243 
 __________
(1)Fair value of real estate inventories, net of impairment charges represents only those assets whose carrying     values were adjusted to fair value in the respective periods presented,
v3.21.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Legal Matters
Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices, environmental protection and financial services. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.
We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise these estimates when necessary. In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements. For matters as to which the Company believes a loss is probable and reasonably estimable, we had zero and $1.3 million of legal reserves as of June 30, 2021 and December 31, 2020, respectively.
Warranty
Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.
We maintain general liability insurance designed to protect us against a portion of our risk of loss from warranty and construction defect-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy. 
Our warranty reserve and related estimated insurance recoveries are based on actuarial analysis that uses our historical claim and expense data, as well as industry data to estimate these overall costs and related recoveries. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. Our warranty reserve may also include an estimate of future fit and finish warranty claims to the extent not contemplated in the actuarial analysis. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a warranty or construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out
of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.
We also record expected recoveries from insurance carriers based on actual insurance claims made and actuarially determined amounts that depend on various factors, including the above-described reserve estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. Outstanding warranty insurance receivables were $46.5 million and $46.9 million as of June 30, 2021 and December 31, 2020, respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheets.
Warranty reserve activity consisted of the following (in thousands):
 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Warranty reserves, beginning of period$94,793 $76,487 $94,475 $76,607 
Warranty reserves accrued5,779 6,988 12,293 12,144 
Warranty expenditures(7,050)(4,285)(13,246)(9,561)
Warranty reserves, end of period$93,522 $79,190 $93,522 $79,190 
 
Performance Bonds
We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. The beneficiaries of the bonds are various municipalities. As of June 30, 2021 and December 31, 2020, the Company had outstanding surety bonds totaling $650.5 million and $615.4 million, respectively. As of June 30, 2021 and December 31, 2020, our estimated cost to complete obligations related to these surety bonds was $422.4 million and $323.2 million, respectively.
Lease Obligations
Under ASC 842 we recognize a right-of-use lease asset and a lease liability for contracts deemed to contain a lease at the inception of the contract. Our lease population is fully comprised of operating leases, which are now recorded at the net present value of future lease obligations existing at each balance sheet date. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Key estimates involved with ASC 842 include the discount rate used to measure our future lease obligations and the lease term, where considerations include renewal options and intent to renew. Lease right-of-use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities on our consolidated balance sheet.
Operating Leases
We lease certain property and equipment under non-cancelable operating leases. Office leases are for terms of up to ten years and generally provide renewal options. In most cases, we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases. Equipment leases are typically for terms of three to four years.
Ground Leases
In 1987, we obtained two 55-year ground leases of commercial property that provided for three renewal options of ten years each and one 45-year renewal option. We exercised the three ten-year extensions on one of these ground leases to extend the lease through 2071. The commercial buildings on these properties have been sold and the ground leases have been sublet to the buyers.
For one of these leases, we are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease has been subleased through 2041 to the buyers of the commercial buildings. For the second lease, the buyers of the buildings are responsible for making lease payments directly to the landowner, however, we have guaranteed the performance of the buyers/lessees. See below for additional information on leases (dollars in thousands):
Three Months Ended June 30, 2021Three Months Ended June 30, 2020Six Months Ended June 30, 2021Six Months Ended June 30, 2020
Lease Cost
Operating lease cost (included in SG&A expense)$2,443 $2,456 $4,924 $4,794 
Ground lease cost (included in other operations expense)645 624 1,269 1,248 
Sublease income, operating leases— — — — 
Sublease income, ground leases (included in other operations revenue)(655)(648)(1,288)(1,266)
Net lease cost$2,433 $2,432 $4,905 $4,776 
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease cash flows (included in operating cash flows)$1,838 $2,220 $4,626 $4,234 
Ground lease cash flows (included in operating cash flows)$634 $624 $1,269 $1,248 
Right-of-use assets obtained in exchange for new operating lease liabilities$— $1,135 $3,006 $1,155 
June 30, 2021December 31, 2020
Weighted-average discount rate:
Operating leases5.4 %5.7 %
Ground leases10.2 %10.2 %
Weighted-average remaining lease term (in years):
Operating leases6.05.5
Ground leases46.647.0
The future minimum lease payments under our operating leases are as follows (in thousands):
Property, Equipment and Other Leases
Ground Leases (1)
Remaining in 2021$4,687 $1,561 
20226,255 3,122 
20235,260 3,122 
20243,522 3,122 
20252,376 3,122 
Thereafter7,608 81,808 
Total lease payments$29,708 $95,857 
Less: Interest4,563 68,101 
Present value of operating lease liabilities$25,145 $27,756 
 __________
(1)    Ground leases are fully subleased through 2041, representing $63.5 million of the $95.9 million future ground lease obligations.
v3.21.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
2013 Long-Term Incentive Plan
The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by Tri Pointe in January 2013 and amended, with the approval of our stockholders, in 2014 and 2015. In addition, our board of directors amended the 2013 Incentive Plan in 2014 to prohibit repricing (other than in connection with any equity restructuring or any change in capitalization) of outstanding options or stock appreciation rights without stockholder approval. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock
appreciation rights, bonus stock, restricted stock, restricted stock units (“RSUs”) and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.
As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive Plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of our common stock generally shall again be available under the 2013 Incentive Plan. As of June 30, 2021, there were 4,709,017 shares available for future grant under the 2013 Incentive Plan.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):
 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Total stock-based compensation$4,506 $3,786 $8,162 $7,411 
 
Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations. As of June 30, 2021, total unrecognized stock-based compensation related to all stock-based awards was $29.6 million and the weighted average term over which the expense was expected to be recognized was 2.0 years.
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the six months ended June 30, 2021:
OptionsWeighted
Average
Exercise
Price
Per Share
Weighted
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
(in thousands)
Options outstanding at December 31, 2020650,770 $15.78 2.5$1,155 
Granted— — — — 
Exercised(196,049)$15.90 — — 
Forfeited— $— — — 
Options outstanding at June 30, 2021454,721 $15.73 2.0$2,566 
Options exercisable at June 30, 2021454,721 $15.73 2.0$2,566 
 
The intrinsic value of each stock option award outstanding or exercisable is the difference between the fair market value of the Company’s common stock at the end of the period and the exercise price of each stock option award to the extent it is considered “in-the-money”. A stock option award is considered to be “in-the-money” if the fair market value of the Company’s stock is greater than the exercise price of the stock option award. The aggregate intrinsic value of options outstanding and options exercisable represents the value that would have been received by the holders of stock option awards had they exercised their stock option award on the last trading day of the period and sold the underlying shares at the closing price on that day.

Summary of Restricted Stock Unit Activity
The following table presents a summary of RSUs for the six months ended June 30, 2021:
Restricted
Stock
Units
Weighted
Average
Grant Date
Fair Value
Per Share
Aggregate
Intrinsic
Value
(in thousands)
Nonvested RSUs at December 31, 20202,873,655 $15.35 $50,404 
Granted1,559,588 $18.79 — 
Vested(716,879)$15.26 — 
Forfeited(321,809)$12.84 — 
Nonvested RSUs at June 30, 20213,394,555 $17.19 $72,542 

RSUs that vested, as reflected in the table above, during the six months ended June 30, 2021 include previously granted time-based RSUs. RSUs that were forfeited, as reflected in the table above, during the six months ended June 30, 2021 include performance-based RSUs and time-based RSUs that were forfeited for no consideration.

On April 26, 2021, the Company granted an aggregate of 3,190 time-based RSUs to certain employees. The RSUs granted vest in equal installment annually beginning on April 26, 2022 over a three-year period. The fair value of each RSU granted on April 26, 2021 was measured using a price of $23.51 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On April 26, 2021, the Company granted an aggregate of 32,960 time-based RSUs to the non-employee members of its board of directors. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2022 annual meeting of stockholders. The fair value of each RSU granted on April 26, 2021 was measured using a price of $23.51 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 22, 2021, the Company granted an aggregate of 625,000 time-based RSUs to certain employees and officers. The RSUs granted vest in equal installment annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on February 22, 2021 was measured using a price of $18.26 per share per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 22, 2021, the Company granted an aggregate of 669,141 performance-based RSUs to the Company’s Chief Executive Officer, Chief Operating Officer and President, Chief Financial Officer, General Counsel, Chief Marketing Officer and Chief Human Resources Officer. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue, and (ii) 50% to pre-tax earnings. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. Any award earned based on performance achieved may be increased or decreased by 25% based on the Company’s total stockholder return (“TSR'”) relative to its peer-group homebuilders. The performance period for these performance-based RSUs is January 1, 2021 to December 31, 2023. The fair value of these performance-based RSUs was determined to be $19.22 per share based on a Monte Carlo simulation. Each award will be expensed over the requisite service period.

On February 22, 2021, the Company granted an aggregate of 229,297 performance-based RSUs to the Company’s division presidents. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue of the applicable Company division, and (ii) 50% to pre-tax earnings of the applicable Company division. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the applicable Company division’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2021 to December 31, 2023. The fair value of these performance-based RSUs was measured using a price of $18.26, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.

On July 28, 2020, the Company granted an aggregate of 5,632 time-based RSUs to certain employees. The RSUs granted vest in equal installment annually beginning on February 20, 2021 over a three-year period. The fair value of each RSU granted on July 28, 2020 was measured using a price of $16.79 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On April 27, 2020, the Company granted an aggregate of 47,080 time-based RSUs to the non-employee members of its board of directors. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2021 annual meeting of stockholders. The fair value of each RSU granted on April 27, 2020 was measured using a
price of $10.62 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On March 9, 2020 and February 20, 2020, the Company granted an aggregate of 17,692 and 639,395, respectively, time-based RSUs to certain employees and officers. The RSUs granted vest in equal installment annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 9, 2020 and February 20, 2020 was measured using a price of $14.13 and $18.39 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 20, 2020, the Company granted an aggregate of 547,166 performance-based RSUs to the Company’s Chief Executive Officer, Chief Operating Officer and President, Chief Financial Officer, General Counsel, Chief Marketing Officer and Chief Human Resources Officer. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue, and (ii) 50% to pre-tax earnings. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. Any award earned based on performance achieved may be increased or decreased by 25% based on the Company’s TSR relative to its peer-group homebuilders. The performance period for these performance-based RSUs is January 1, 2020 to December 31, 2022. The fair value of these performance-based RSUs was determined to be $19.36 per share based on a Monte Carlo simulation. Each award will be expensed over the requisite service period.

On February 20, 2020, the Company granted an aggregate of 207,300 performance-based RSUs to the Company’s division presidents. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue of the applicable Company division, and (ii) 50% to pre-tax earnings of the applicable Company division. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the applicable Company division’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2020 to December 31, 2022. The fair value of these performance-based RSUs was measured using a price of $18.39, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.
As RSUs vest for employees, a portion of the shares awarded is generally withheld to cover employee tax withholdings. As a result, the number of RSUs vested and the number of shares of Tri Pointe common stock issued will differ.
v3.21.2
Income Taxes
6 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered. Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable. Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.
We had net deferred tax assets of $44.4 million and $47.5 million as of June 30, 2021 and December 31, 2020. We had a valuation allowance related to those net deferred tax assets of $3.4 million as of both June 30, 2021 and December 31, 2020. The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the Company’s future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the Company’s estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the Company’s deferred tax assets.
Tri Pointe has certain liabilities to Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement. As of June 30, 2021 and December 31, 2020, we had an income tax liability to Weyerhaeuser of $307,000 and $240,000, respectively. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets.
Our provision for income taxes totaled $39.3 million and $18.1 million for the three months ended June 30, 2021 and 2020, respectively and $62.9 million and $28.0 million for the six months ended June 30, 2021 and 2020, respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company did not have any uncertain tax positions recorded as of June 30, 2021 and December 31, 2020. The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years.
v3.21.2
Related Party Transactions
6 Months Ended
Jun. 30, 2021
Related Party Transactions [Abstract]  
Related Party Transactions Related Party TransactionsWe had no related party transactions for the six months ended June 30, 2021 and 2020.
v3.21.2
Supplemental Disclosure to Consolidated Statements of Cash Flows
6 Months Ended
Jun. 30, 2021
Supplemental Cash Flow Elements [Abstract]  
Supplemental Disclosure to Consolidated Statements of Cash Flows Supplemental Disclosure to Consolidated Statements of Cash Flows
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):
Six Months Ended June 30,
20212020
Supplemental disclosure of cash flow information:
Interest paid (capitalized), net$(3,061)$1,191 
Income taxes paid (refunded), net$69,308 $(12)
Supplemental disclosures of noncash activities:
Amortization of senior note discount capitalized to real estate inventory$460 $579 
Amortization of deferred loan costs capitalized to real estate inventory$1,744 $1,844 
v3.21.2
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Organization and Basis of Presentation
Organization
Effective January 15, 2021, the Company changed its corporate name from “TRI Pointe Group, Inc.” to “Tri Pointe Homes, Inc.” As part of this name change, the Company consolidated its six regional homebuilding brands into one unified name—Tri Pointe Homes. For further details on the impact to our reporting segments, see Note 2, Segment Information.
Tri Pointe is engaged in the design, construction and sale of innovative single-family attached and detached homes across ten states, including Arizona, California, Colorado, Maryland, Nevada, North Carolina, South Carolina, Texas, Virginia and Washington, and the District of Columbia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its potential impacts on our future results.
The consolidated financial statements include the accounts of Tri Pointe Homes and its wholly owned subsidiaries, as well as other entities in which Tri Pointe Homes has a controlling interest and variable interest entities (“VIEs”) in which Tri Pointe Homes is the primary beneficiary. The noncontrolling interests as of June 30, 2021 and December 31, 2020 represent the outside owners’ interests in the Company’s consolidated entities. All significant intercompany accounts have been eliminated upon consolidation.
Unless the context otherwise requires, the terms “Tri Pointe”, “the Company”, “we”, “us”, and “our” used herein refer to Tri Pointe Homes, Inc., a Delaware corporation, and its consolidated subsidiaries.
Use of Estimates
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Revenue Recognition
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, we apply the following steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
Home sales revenue
We generate the majority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the home are transferred to the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied in less than one year from the original contract date. Included in home sales
revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.
Land and lot sales revenue
We generate revenue from the sale of land and lots to third-parties in the ordinary course of business and these transactions are considered to meet the definition of contracts with customers. Similar to our home sales, revenue from land and lot sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our homebuilding other operations revenue relates to a ground lease included in our West segment. We are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 842, Leases. We do not recognize a material profit on this ground lease.
Financial services revenues
Tri Pointe Solutions is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, Tri Pointe Assurance title and escrow services operations, and Tri Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
Tri Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting. We record a percentage of income earned by Tri Pointe Connect based on our ownership percentage in this joint venture. Tri Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated statements of operations.
Title and escrow services operations
Tri Pointe Assurance provides title examinations for our homebuyers in the Carolinas and Colorado and both title examinations and escrow services for our homebuyers in Arizona, Texas, Maryland, Nevada and Virginia. Tri Pointe Assurance is a wholly owned subsidiary of Tri Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. Tri Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
Tri Pointe Advantage is a wholly owned subsidiary of Tri Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. Tri Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.
Restructurings Charges
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, during the three months ended June 30, 2020 we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, all of which had been paid as of December 31, 2020.
Adoption of New Accounting Standards
Adoption of New Accounting Standards
In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 on January 1, 2021 and our adoption did not have a material impact on our consolidated financial statements.
Segment Information
We operate two principal businesses: homebuilding and financial services.
Effective January 15, 2021, we consolidated our six regional homebuilding brands into one unified name, Tri Pointe Homes, under which we continue to acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon these factors and in consideration of the geographical layout of our homebuilding markets, we have identified three homebuilding operating and reporting segments, and as a result of such change, beginning in the quarter ended March 31, 2021, our homebuilding segments are reported under the following hierarchy:
West region: Arizona, California, Nevada and Washington
Central region: Colorado and Texas
East region: District of Columbia, Maryland, North Carolina, South Carolina and Virginia
Prior to the consolidation of our six regional homebuilding brands into one unified name, Tri Pointe Homes, our homebuilding operations were comprised of the following six reportable segments: Maracay, consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; Tri Pointe Homes, consisting of operations in California, Colorado and the Carolinas; and Winchester Homes, consisting of operations in Maryland, Virginia and the District of Columbia. The realignment of our reporting segments did not have any impact on our historical consolidated results of operations and we have restated prior period segment information in this report to conform to the new segment reporting structure.
Our Tri Pointe Solutions financial services operation is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, our Tri Pointe Assurance title and escrow services operations, and our Tri Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. All of the expenses incurred by Corporate are allocated to each of the homebuilding reporting segments based on their respective percentage of revenues.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.
Fair Value Measurements
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
Level 1—Quoted prices for identical instruments in active markets
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date
Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date
v3.21.2
Segment Information (Tables)
6 Months Ended
Jun. 30, 2021
Segment Reporting [Abstract]  
Summary of Financial Information Relating to Reportable Segments
Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Revenues
West $784,952 $540,027 $1,324,998 $956,570 
Central149,620 153,957 270,738 286,433 
East80,811 73,826 138,508 120,263 
Total homebuilding revenues1,015,383 767,810 1,734,244 1,363,266 
Financial services2,681 2,296 4,786 3,890 
Total$1,018,064 $770,106 $1,739,030 $1,367,156 
Income before taxes
West$130,254 $61,363 $209,831 $97,217 
Central15,853 7,504 25,550 12,069 
East5,882 1,861 7,622 1,075 
Total homebuilding income before income taxes151,989 70,728 243,003 110,361 
Financial services5,145 3,943 8,534 6,014 
Total$157,134 $74,671 $251,537 $116,375 
 
Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
June 30, 2021December 31, 2020
Real estate inventories
West$2,309,478 $2,296,013 
Central485,744 386,204 
East290,360 227,925 
Total$3,085,582 $2,910,142 
Total assets(1)
West$2,581,096 $2,556,961 
Central572,420 468,699 
East344,144 284,437 
Corporate621,710 672,536 
Total homebuilding assets4,119,370 3,982,633 
Financial services40,787 39,347 
Total$4,160,157 $4,021,980 
__________
(1)    Total assets as of June 30, 2021 and December 31, 2020 includes $139.3 million of goodwill, with $125.4 million included in the West segment, $8.3 million included in the Central segment and $5.6 million included in the East segment. Total Corporate assets as of June 30, 2021 and December 31, 2020 includes our Tri Pointe Homes trade name, which was historically included in our Tri Pointe Homes reportable segment. For further details on goodwill and our intangible assets, see Note 8, Goodwill and Other Intangible Assets.
v3.21.2
Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2021
Earnings Per Share [Abstract]  
Computation of Basic and Diluted Earnings Per Share The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Numerator:    
Net income$117,869 $56,528 $188,671 $88,411 
Denominator:    
Basic weighted-average shares outstanding116,824,108 130,292,563 118,082,691 132,326,856 
Effect of dilutive shares:   
Stock options and unvested restricted stock units945,976 214,004 838,649 436,919 
Diluted weighted-average shares outstanding117,770,084 130,506,567 118,921,340 132,763,775 
Earnings per share    
Basic$1.01 $0.43 $1.60 $0.67 
Diluted$1.00 $0.43 $1.59 $0.67 
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share1,805,413 3,090,298 2,101,688 2,992,479 
v3.21.2
Receivables (Tables)
6 Months Ended
Jun. 30, 2021
Receivables [Abstract]  
Components of Receivables
Receivables consisted of the following (in thousands):
June 30, 2021December 31, 2020
Escrow proceeds and other accounts receivable, net$44,829 $