Tri Pointe Homes, Inc. Reports 2024 First Quarter Results

Source: Nasdaq GlobeNewswire / 25 Apr 2024 05:00:00 America/Chicago

–Net New Home Orders Increased 12% Year-Over-Year to 1,814–
–Backlog Units Increased 35% Year-Over-Year to 2,741–
–Active Selling Communities Increased 15% Year-Over-Year to 156–
–Home Sales Revenue of $918 Million–
–Homebuilding Gross Margin Percentage of 23.0%–
–Diluted Earnings Per Share of $1.03–
–Debt-to-Capital Ratio of 31.2% and Total Liquidity of $1.6 Billion–

INCLINE VILLAGE, Nev., April 25, 2024 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the first quarter ended March 31, 2024.

“I am pleased to report our first quarter results, which again met or exceeded the high end of our guidance across all key operating metrics,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer. “We delivered 1,393 homes at an average sales price of $659,000, resulting in home sales revenue of $918 million, a 20% increase compared to the previous year. Homebuilding gross margin percentage was 23.0% for the quarter, a sequential improvement compared to our most recent quarter. These outstanding results culminated in net income of $99 million and diluted earnings per share of $1.03, marking a 41% improvement year-over-year.”

Mr. Bauer continued, “In addition to the strong financial results for the quarter, we wrote 1,814 net new home orders, an increase of 12% compared to the prior year, on a healthy absorption pace for the quarter of 3.9 homes per community per month. Consumer demand has been strong to start the year as the new homebuilders continue to benefit from the lack of resale supply.”

“Building on our successful start to 2024, we are thrilled to have recently announced the official expansion of our national footprint with the opening of new divisions in Orlando, Florida, and the Coastal Carolinas, further enhancing our presence in two of the fastest-growing regions in the nation,” said Tom Mitchell, Tri Pointe Homes Chief Operating Officer. “This move aligns perfectly with our strategic vision of building scale within existing markets, while also driving organic growth where value-enhancing market opportunities exist.”

Mr. Bauer concluded, “The strong demand we have experienced to start the year has allowed us to reduce incentives and increase pricing in select communities. As a result, we are raising full-year guidance for deliveries, average sales price, and homebuilding gross margin percentage. The underlying fundamentals continue to be strong for homebuilders and we feel Tri Pointe is in a great position to thrive in this environment.”

Results and Operational Data for First Quarter 2024 and Comparisons to First Quarter 2023

Net income available to common stockholders was $99.1 million, or $1.03 per diluted share, compared to $74.7 million, or $0.73 per diluted share
Home sales revenue of $918.4 million compared to $768.4 million, an increase of 20%
- New home deliveries of 1,393 homes compared to 1,065 homes, an increase of 31%
- Average sales price of homes delivered of $659,000 compared to $722,000, a decrease of 9%
Homebuilding gross margin percentage of 23.0% compared to 23.5%, a decrease of 50 basis points
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 26.4%*
SG&A expense as a percentage of home sales revenue of 11.1% compared to 11.5%, a decrease of 40 basis points
Net new home orders of 1,814 compared to 1,619, an increase of 12%
Active selling communities averaged 153.8 compared to 136.0, an increase of 13%
- Net new home orders per average selling community were 11.8 orders (3.9 monthly) compared to 11.9 orders (4.0 monthly)
- Cancellation rate of 7% compared to 10%
Backlog units at quarter end of 2,741 homes compared to 2,026, an increase of 35%
- Dollar value of backlog at quarter end of $2.0 billion compared to $1.5 billion, an increase of 30%
- Average sales price of homes in backlog at quarter end of $712,000 compared to $742,000, a decrease of 4%
Ratios of debt-to-capital and net debt-to-net capital of 31.2% and 12.6%*, respectively, as of March 31, 2024
Repurchased 1,442,785 shares of common stock at a weighted average price per share of $34.66 for an aggregate dollar amount of $50.0 million in the three months ended March 31, 2024
Ended the first quarter of 2024 with total liquidity of $1.6 billion, including cash and cash equivalents of $944.0 million and $703.2 million of availability under our revolving credit facility

^{* See “Reconciliation of Non-GAAP Financial Measures”}

Outlook

For the second quarter, the Company anticipates delivering between 1,500 and 1,600 homes at an average sales price between $670,000 and $680,000. The Company expects homebuilding gross margin percentage to be in the range of 22.5% to 23.5% for the second quarter and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 11.0% to 11.5%. Finally, the Company expects its effective tax rate for the second quarter to be approximately 26.0%.

For the full year, the Company anticipates delivering between 6,200 and 6,400 homes at an average sales price between $660,000 and $670,000. The Company expects homebuilding gross margin percentage to be in the range of 22.5% to 23.5% for the full year and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 10.5% to 11.0%. Finally, the Company expects its effective tax rate for the full year to be approximately 26.0%.

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 Thursday, April 25, 2024. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, Glenn Keeler, Chief Financial Officer, and Linda Mamet, Executive Vice President and Chief Marketing Officer. Interested parties can listen to the call live and view the related slides on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at www.TriPointeHomes.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 toll free at (877) 407-3982, or (201) 493-6780 for international participants. Participants should ask for the Tri Pointe Homes First Quarter 2024 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the call. A replay of the call will be available for two weeks following the call toll free at (844) 512-2921, or (412) 317-6671 for international participants, using the reference number 13745505. An archive of the webcast will also be available on the Company’s website for a limited time.

About Tri Pointe Homes, Inc.

One of the largest homebuilders in the U.S., Tri Pointe Homes, Inc. (NYSE: TPH) is a publicly traded company operating in 12 states and the District of Columbia, and is a recognized leader in customer experience, innovative design, and environmentally responsible business practices. The company builds premium homes and communities with deep ties to the communities it serves—some for as long as a century. Tri Pointe Homes combines the financial resources, technology platforms and proven leadership of a national organization with the regional insights, longstanding community connections and agility of empowered local teams. Tri Pointe has won multiple Builder of the Year awards, was named to the 2024 Fortune World’s Most Admired Companies™ list, is one of the 2023 Fortune 100 Best Companies to Work For® and was designated as one of the 2023 PEOPLE Companies That Care®. The company was also named as a Great Place To Work-Certified™ company for three years in a row (2021 through 2023), and was named on several Great Place To Work® Best Workplaces lists in 2022 and 2023. For more information, please visit TriPointeHomes.com.

Forward-Looking Statements

Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending. Forward-looking statements that are included in this press release are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or other words that convey future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effects of general economic conditions, including employment rates, housing starts, interest rate levels, home affordability, inflation, consumer sentiment, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; the prices and availability of supply chain inputs, including raw materials, labor and home components; oil and other energy prices; the effects of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; the effects of weather, including the occurrence of drought conditions in parts of the western United States; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; the risk of loss from acts of war, terrorism, civil unrest or public health emergencies, including outbreaks of contagious disease, such as COVID-19; transportation costs; federal and state tax policies; the effects of land use, environment and other governmental laws and regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.

Investor Relations Contact:
InvestorRelations@TriPointeHomes.com, 949-478-8696

Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045


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

	Three Months Ended March 31,
		2024			2023		Change			% Change
Operating Data:	(unaudited)
Home sales revenue	$	918,353		$	768,405		$	149,948		20	%
Homebuilding gross margin	$	211,049		$	180,287		$	30,762		17	%
Homebuilding gross margin %		23.0	%		23.5	%		(0.5	)%
Adjusted homebuilding gross margin %*		26.4	%		26.2	%		0.2	%
SG&A expense	$	101,552		$	88,228		$	13,324		15	%
SG&A expense as a % of home sales revenue		11.1	%		11.5	%		(0.4	)%
Net income available to common stockholders	$	99,055		$	74,742		$	24,313		33	%
Adjusted EBITDA*	$	175,893		$	133,975		$	41,918		31	%
Interest incurred	$	36,156		$	37,479		$	(1,323	)	(4	)%
Interest in cost of home sales	$	30,649		$	20,226		$	10,423		52	%

Other Data:
Net new home orders		1,814			1,619			195		12	%
New homes delivered		1,393			1,065			328		31	%
Average sales price of homes delivered	$	659		$	722		$	(63	)	(9	)%
Cancellation rate		7	%		10	%		(3	)%
Average selling communities		153.8			136.0			17.8		13	%
Selling communities at end of period		156			136			20		15	%
Backlog (estimated dollar value)	$	1,950,590		$	1,503,382		$	447,208		30	%
Backlog (homes)		2,741			2,026			715		35	%
Average sales price in backlog	$	712		$	742		$	(30	)	(4	)%

	March 31,			December 31,
		2024			2023		Change			% Change
Balance Sheet Data:	(unaudited)
Cash and cash equivalents	$	943,998		$	868,953		$	75,045		9	%
Real estate inventories	$	3,422,883		$	3,337,483		$	85,400		3	%
Lots owned or controlled		34,153			31,960			2,193		7	%
Homes under construction ⁽¹⁾		3,317			3,088			229		7	%
Homes completed, unsold		232			263			(31	)	(12	)%
Debt	$	1,383,529		$	1,382,586		$	943		0	%
Stockholders’ equity	$	3,049,646		$	3,010,958		$	38,688		1	%
Book capitalization	$	4,433,175		$	4,393,544		$	39,631		1	%
Ratio of debt-to-capital		31.2	%		31.5	%		(0.3	)%
Ratio of net debt-to-net capital*		12.6	%		14.6	%		(2.0	)%

__________
^{(1) Homes under construction included 60 and 69 models as of March 31, 2024 and December 31, 2023, respectively.}
^{* See “Reconciliation of Non-GAAP Financial Measures”}

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

	March 31,		December 31,
		2024		2023
Assets	(unaudited)
Cash and cash equivalents	$	943,998	$	868,953
Receivables		125,133		224,636
Real estate inventories		3,422,883		3,337,483
Investments in unconsolidated entities		124,723		131,824
Goodwill and other intangible assets, net		156,603		156,603
Deferred tax assets, net		37,996		37,996
Other assets		158,639		157,093
Total assets	$	4,969,975	$	4,914,588

Liabilities
Accounts payable	$	51,736	$	64,833
Accrued expenses and other liabilities		485,052		453,531
Loans payable		288,337		288,337
Senior notes		1,095,192		1,094,249
Total liabilities		1,920,317		1,900,950

Commitments and contingencies

Equity
Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 94,877,377 and 95,530,512 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		949		955
Additional paid-in capital		—		—
Retained earnings		3,048,697		3,010,003
Total stockholders’ equity		3,049,646		3,010,958
Noncontrolling interests		12		2,680
Total equity		3,049,658		3,013,638
Total liabilities and equity	$	4,969,975	$	4,914,588

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

	Three Months Ended March 31,
		2024			2023
Homebuilding:
Home sales revenue	$	918,353		$	768,405
Land and lot sales revenue		7,068			1,706
Other operations revenue		787			674
Total revenues		926,208			770,785
Cost of home sales		707,304			588,118
Cost of land and lot sales		5,757			1,443
Other operations expense		765			665
Sales and marketing		50,224			41,862
General and administrative		51,328			46,366
Homebuilding income from operations		110,830			92,331
Equity in income of unconsolidated entities		57			227
Other income, net		15,226			7,604
Homebuilding income before income taxes		126,113			100,162
Financial Services:
Revenues		13,194			8,876
Expenses		8,727			5,831
Financial services income before income taxes		4,467			3,045
Income before income taxes		130,580			103,207
Provision for income taxes		(31,584	)		(27,350	)
Net income		98,996			75,857
Net income attributable to noncontrolling interests		59			(1,115	)
Net income available to common stockholders	$	99,055		$	74,742
Earnings per share
Basic	$	1.04		$	0.74
Diluted	$	1.03		$	0.73
Weighted average shares outstanding
Basic		95,232,315			101,019,253
Diluted		95,846,756			101,706,438

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

	Three Months Ended March 31,
	2024			2023
	New Homes Delivered	Average Sales Price		New Homes Delivered	Average Sales Price
Arizona	137	$	736	135	$	785
California	417		771	339		829
Nevada	113		684	98		761
Washington	53		901	18		956
West total	720		760	590		811
Colorado	42		738	44		788
Texas	440		549	210		625
Central total	482		565	254		653
Carolinas(1)	174		462	175		438
Washington D.C. Area(2)	17		1,056	46		1,023
East total	191		515	221		560
Total	1,393	$	659	1,065	$	722

	Three Months Ended March 31,
	2024			2023
	Net New Home Orders	Average Selling Communities		Net New Home Orders	Average Selling Communities
Arizona	156		12.2	117		13.0
California	613		46.0	701		53.2
Nevada	154		9.5	84		7.0
Washington	107		5.8	52		5.0
West total	1,030		73.5	954		78.2
Colorado	47		11.0	41		6.0
Texas	483		52.5	314		33.8
Central total	530		63.5	355		39.8
Carolinas(1)	179		11.5	251		14.5
Washington D.C. Area(2)	75		5.3	59		3.5
East total	254		16.8	310		18.0
Total	1,814		153.8	1,619		136.0

^{(1) Carolinas comprises North Carolina and South Carolina.}
^{(2) Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.}

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

	As of March 31, 2024					As of March 31, 2023
	Backlog Units	Backlog Dollar Value		Average Sales Price		Backlog Units	Backlog Dollar Value		Average Sales Price
Arizona	278	$	205,547	$	739	360	$	308,514	$	857
California	894		713,036		798	660		506,979		768
Nevada	172		105,211		612	111		86,919		783
Washington	144		130,336		905	69		61,148		886
West total	1,488		1,154,130		776	1,200		963,560		803
Colorado	53		36,840		695	47		35,511		756
Texas	749		442,134		590	386		236,386		612
Central total	802		478,974		597	433		271,897		628
Carolinas(1)	287		148,286		517	296		139,815		472
Washington D.C. Area(2)	164		169,200		1,032	97		128,110		1,321
East total	451		317,486		704	393		267,925		682
Total	2,741	$	1,950,590	$	712	2,026	$	1,503,382	$	742

	March 31,	December 31,
	2024		2023
Lots Owned or Controlled:
Arizona	2,258		2,394
California	10,846		10,148
Nevada	1,771		1,785
Washington	659		712
West total	15,534		15,039
Colorado	2,517		1,908
Texas	10,321		10,056
Utah	61		—
Central total	12,899		11,964
Carolinas(1)	4,457		4,038
Washington D.C. Area(2)	1,263		919
East total	5,720		4,957
Total	34,153		31,960

	March 31,	December 31,
	2024		2023
Lots by Ownership Type:
Lots owned	18,480		18,739
Lots controlled(3)	15,673		13,221
Total	34,153		31,960

^{(1) Carolinas comprises North Carolina and South Carolina.}
^{(2) Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.}
^{(3) As of March 31, 2024 and December 31, 2023, lots controlled included lots that were under land option contracts or purchase contracts. As of March 31, 2024 and December 31, 2023, lots controlled for Central include 3,566 and 3,561 lots, respectively, and lots controlled for East include 58 and 71 lots, respectively, which represent our expected share of lots owned by our investments in unconsolidated land development joint ventures.}

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)

In this press release, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating the Company’s operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The following table reconciles the homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non-GAAP measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion.

	Three Months Ended March 31,
		2024		%			2023		%
	(dollars in thousands)
Home sales revenue	$	918,353		100.0	%	$	768,405		100.0	%
Cost of home sales		707,304		77.0	%		588,118		76.5	%
Homebuilding gross margin		211,049		23.0	%		180,287		23.5	%
Add: interest in cost of home sales		30,649		3.3	%		20,226		2.6	%
Add: impairments and lot option abandonments		402		0.0	%		717		0.1	%
Adjusted homebuilding gross margin	$	242,100		26.4	%	$	201,230		26.2	%
Homebuilding gross margin percentage		23.0	%				23.5	%
Adjusted homebuilding gross margin percentage		26.4	%				26.2	%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)

The following table reconciles the Company’s ratio of debt-to-capital to the non-GAAP ratio of net debt-to-net capital. We believe that the ratio of net debt-to-net capital is a relevant financial measure for management and investors to understand the leverage employed in our operations and as an indicator of the Company’s ability to obtain financing.

	March 31, 2024			December 31, 2023
Loans payable	$	288,337		$	288,337
Senior notes		1,095,192			1,094,249
Total debt		1,383,529			1,382,586
Stockholders’ equity		3,049,646			3,010,958
Total capital	$	4,433,175		$	4,393,544
Ratio of debt-to-capital⁽¹⁾		31.2	%		31.5	%

Total debt	$	1,383,529		$	1,382,586
Less: Cash and cash equivalents		(943,998	)		(868,953	)
Net debt		439,531			513,633
Stockholders’ equity		3,049,646			3,010,958
Net capital	$	3,489,177		$	3,524,591
Ratio of net debt-to-net capital⁽²⁾		12.6	%		14.6	%

__________
^{(1) The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.}
^{(2) The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity.}

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 available to common stockholders, as reported and prepared in accordance with GAAP. EBITDA means net income available to common stockholders before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation and (f) impairments and lot option abandonments. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

	Three Months Ended March 31,
		2024			2023
	(in thousands)
Net income available to common stockholders	$	99,055		$	74,742
Interest expense:
Interest incurred		36,156			37,479
Interest capitalized		(36,156	)		(37,479	)
Amortization of interest in cost of sales		30,846			20,251
Provision for income taxes		31,584			27,350
Depreciation and amortization		7,327			7,054
EBITDA		168,812			129,397
Amortization of stock-based compensation		6,679			3,861
Impairments and lot option abandonments		402			717
Adjusted EBITDA	$	175,893		$	133,975

Tri Pointe Homes, Inc. Reports 2024 First Quarter Results

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