• New Home Orders up 17% and New Home Deliveries up 23% for the Quarter
  • Backlog Dollar Value up 56% on a 32% Increase in Backlog Units
  • Home Sales Revenue of $1.1 Billion, up 46% for the Quarter
  • Homebuilding Gross Margin of 21.7% for the Quarter
  • Authorizes New Stock Repurchase Program of $100 Million 

IRVINE, Calif., Feb. 20, 2018 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the "Company") (NYSE:TPH) today announced results for the fourth quarter ended December 31, 2017 and full year 2017.  The Company also announced that its Board of Directors has approved a new stock repurchase program authorizing the repurchase of up to $100 million of Company common stock through March 31, 2019 (the "Repurchase Program").

Results and Operational Data for Fourth Quarter 2017 and Comparisons to Fourth Quarter 2016
  • Net income available to common stockholders was $74.0 million, or $0.49 per diluted share, compared to $57.9 million, or $0.36 per diluted share.  In the fourth quarter 2017, the Company recorded a $22.0 million tax charge related to the re-measurement of the Company's net deferred tax assets as a result of the recently enacted Tax Cuts and Jobs Act, as well as a pretax charge of $13.2 million related to the impairment of an investment in an unconsolidated entity.  Excluding these items, adjusted net income available to common stockholders was $107.4 million, or $0.70 per diluted share.*  No similar adjustments existed in the fourth quarter of 2016.
  • New home orders of 1,063 compared to 909, an increase of 17%
  • Active selling communities averaged 127.5 compared to 122.8, an increase of 4%
    • New home orders per average selling community increased by 13% to 8.3 orders (2.8 monthly) compared to 7.4 orders (2.5 monthly)
    • Cancellation rate of 17% compared to 20%, a decrease of 300 basis points
  • Backlog units at quarter end of 1,571 homes compared to 1,193, an increase of 32%
    • Dollar value of backlog at quarter end of $1.0 billion compared to $661.1 million, an increase of 56%
    • Average sales price in backlog at quarter end of $657,000 compared to $554,000, an increase of 19%
  • Home sales revenue of $1.1 billion compared to $770.7 million, an increase of 46%
    • New home deliveries of 1,757 homes compared to 1,427 homes, an increase of 23%
    • Average sales price of homes delivered of $639,000 compared to $540,000, an increase of 18%
  • Homebuilding gross margin percentage of 21.7% compared to 20.0%, an increase of 170 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.2%*
  • SG&A expense as a percentage of homes sales revenue of 7.2% compared to 9.2%, a decrease of 200 basis points
  • Ratios of debt-to-capital and net debt-to-net capital of 43.3% and 38.1%*, respectively, as of December 31, 2017
  • Ended fourth quarter of 2017 with total liquidity of 875.2 million, including cash of $282.9 million and $592.3 million of availability under the Company's unsecured revolving credit facility*   See "Reconciliation of Non-GAAP Financial Measures"

Results and Operational Data for Full Year 2017 and Comparisons to Full Year 2016
  • Net income available to common stockholders was $187.2 million, or $1.21 per diluted share, compared to $195.2 million, or $1.21 per diluted share.  Adjusted net income available to common stockholders was $220.6 million, or $1.42 per diluted share, after excluding the $22.0 million tax charge related to the re-measurement of the Company's net deferred tax assets and the $13.2 million pretax charge related to the impairment of an investment in an unconsolidated entity.*  No similar adjustments existed in 2016.
  • New home orders of 5,075 compared to 4,248, an increase of 19%
  • Active selling communities averaged 127.5 compared to 118.3, an increase of 8%
    • New home orders per average selling community increased by 11% to 39.8 orders (3.3 monthly) compared to 35.9 orders (3.0 monthly)
    • Cancellation rate of 15% in both full year periods
  • Home sales revenue of $2.7 billion compared to $2.3 billion, an increase of 17%
    • New home deliveries of 4,697 homes compared to 4,211 homes, an increase of 12%
    • Average sales price of homes delivered of $582,000 compared to $553,000, an increase of 5%
  • Homebuilding gross margin percentage of 20.5% compared to 21.2%, a decrease of 70 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 22.9%*
  • SG&A expense as a percentage of homes sales revenue of 10.1% compared to 10.8%, a decrease of 70 basis points
  • Repurchased 8,994,705 shares of common stock at an average price of $12.48 for an aggregate dollar amount of $112.2 million in the full year ended December 31, 2017*   See "Reconciliation of Non-GAAP Financial Measures"

"We ended 2017 on a very strong note," said TRI Pointe Group CEO Doug Bauer.  "Fourth quarter home sales revenue grew 46% year-over-year, thanks to a 23% increase in new home deliveries and an 18% rise in average selling price.  We also posted solid year-over-year operating margin expansion, as both homebuilding gross margins and SG&A as a percentage of revenue improved during the quarter, culminating in an 81% increase in pretax income.  New home orders during the quarter also surpassed last year's comparable quarter total, as our average sales pace per community was a healthy 2.8 homes per community per month compared to 2.5 in the same period last year."

"For the full year 2017, we posted double digit gains in new home orders of 19%, home sales revenue of 17% and pretax income of 13%, and we ended the year with a backlog dollar value 56% higher than the prior year," said Mr. Bauer.  These results are a testament to the ongoing strength of our homebuilding markets, the quality of our land positions and the value created by our unique operating strategy."

Fourth Quarter 2017 Operating Results

Net income available to common stockholders was $74.0 million, or $0.49 per diluted share, for the fourth quarter of 2017, compared to net income available to common stockholders of $57.9 million, or $0.36 per diluted share, for the fourth quarter of 2016.  The increase in net income available to common stockholders was primarily driven by higher home sales revenue and homebuilding gross margin, partially offset by a $22.0 million tax charge related to the re-measurement of the Company's net deferred tax assets and a pretax charge of $13.2 million related to the impairment of an investment in an unconsolidated entity.  Excluding these items, adjusted net income available to common stockholders was $107.4 million or $0.70 per diluted share.*  No similar adjustments existed in the fourth quarter of 2016.

Home sales revenue increased $352.1 million, or 46%, to $1.1 billion for the fourth quarter of 2017, as compared to $770.7 million for the fourth quarter of 2016.  The increase was primarily attributable to a 23% increase in new home deliveries to 1,757, and an 18% increase in average selling price of homes delivered to $639,000 compared to $540,000 in the fourth quarter of 2016. 

New home orders increased 17% to 1,063 homes for the fourth quarter of 2017, as compared to 909 homes for the same period in 2016.  Average selling communities was 127.5 for the fourth quarter of 2017 compared to 122.8 for the fourth quarter of 2016.  New home orders per average selling community for the fourth quarter of 2017 was 8.3 orders (2.8 monthly) compared to 7.4 orders (2.5 monthly) during the fourth quarter of 2016.  

The Company ended the quarter with 1,571 homes in backlog, representing approximately $1.0 billion. The average selling price of homes in backlog as of December 31, 2017 increased $103,000, or 19%, to $657,000 compared to $554,000 at December 31, 2016.  

Homebuilding gross margin percentage for the fourth quarter of 2017 increased to 21.7% compared to 20.0% for the fourth quarter of 2016.  Excluding interest, impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.2% for the fourth quarter of 2017 compared to 22.2% for the fourth quarter of 2016.*  The increase in homebuilding gross margin percentage was largely due to the mix of homes delivered during the quarter, with 225 more homes delivered from our California assets, which have gross margins above the Company average.   

Selling, general and administrative ("SG&A") expense for the fourth quarter of 2017 decreased to 7.2% of home sales revenue as compared to 9.2% for the fourth quarter of 2016 due to increased leverage as a result of the 46% increase in home sales revenue.  

"We continue to be at the forefront of homebuilding innovation, both in terms of community planning and new home design," said TRI Pointe Group COO Tom Mitchell.  "We strive to create a unique home buying experience for our customers, one that takes into account the distinct aesthetic of our local markets and the lifestyle wants and needs of each buyer segment.  We believe that this emphasis on design and innovation played a key role in our strong financial performance in 2017.  We are in the process of rolling out several communities with new home concepts that we expect will appeal to two of the largest home buying segments - Active Adults and Millennials - and we are excited about their prospects."

*  See "Reconciliation of Non-GAAP Financial Measures"

Outlook

For the full year 2018, the Company expects to grow average selling communities by 5% compared to 2017 and deliver between 5,100 and 5,400 homes at an average sales price of approximately $610,000.  The Company expects its homebuilding gross margin percentage for the full year 2018 to be in the range of 20.5% to 21.5% and expects its SG&A expense as a percentage of home sales revenue to be in the range of 9.9% to 10.3%.  Finally, the Company expects its effective tax rate to be in the range of 25% to 26%.

For the first quarter of 2018, the Company expects to open 8 new communities and close out of 11 communities, resulting in 127 active selling communities as of March 31, 2018.  In addition, the Company anticipates delivering approximately 55% of its 1,571 homes in backlog as of December 31, 2017 at an average sales price of $630,000 to $640,000.  The Company anticipates its homebuilding gross margin percentage to be in a range of 21.5% to 22.5% for the first quarter of 2018.  Finally, the Company expects its SG&A expense as a percentage of home sales revenue to be in the range of 13.0% to 13.5% for the first quarter of 2018.

Stock Repurchase Program

On February 16, 2018, our Board of Directors cancelled the share repurchase program approved in 2017, which had approximately $37.8 million remaining in authorized repurchases, and approved the Repurchase Program, which authorizes the repurchase of up to $100 million of Company common stock through March 31, 2019.  Purchases of common stock pursuant to the Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.  We are not obligated under the Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the Repurchase Program at any time.  Our management will determine the timing and amount of any repurchases in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements.

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 Tuesday, February 20, 2018.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Mike Grubbs, Chief Financial Officer.

Interested parties can listen to the call live on the internet through the Investor Relations section of the Company's website at www.TRIPointeGroup.com . Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software.  The call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants.  Participants should ask for the TRI Pointe Group Fourth Quarter 2017 Earnings Conference Call.  Those dialing in should do so at least ten minutes prior to the start.  The replay of the call will be available for two weeks following the call.  To access the replay, the domestic dial-in number is 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13675667.  An archive of the webcast will be available on the Company's website for a limited time.

About TRI Pointe Group, Inc.

Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE:TPH) is among the largest public homebuilders in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, including Maracay Homes ® in Arizona; Pardee Homes ® in California and Nevada; Quadrant Homes ® in Washington; Trendmaker ® Homes in Texas; TRI Pointe Homes ® in California and Colorado; and Winchester ® Homes in Maryland and Virginia.  Additional information is available at www.TRIPointeGroup.com. Winchester is a registered trademark and is used with permission.

Forward-Looking Statements

Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements.  These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending.  Forward-looking statements that are included in this press release are generally accompanied by words such as "anticipate," "believe," "could," "estimate," "expect," "future," "goal," "guidance," "intend," "likely," "may," "might," "outlook," "plan," "potential," "predict," "project," "should," "strategy," "target," "will," "would," or other words that convey future events or outcomes.  The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly.  These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.  The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; levels of competition; the successful execution of our internal performance plans, including any restructuring and cost reduction initiatives; global economic conditions; raw material prices; oil and other energy prices; the effect of weather, including the re-occurrence of drought conditions in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our customers' confidential information or other forms of cyber-attack; and additional factors discussed under the sections captioned "Risk Factors" included in our annual and quarterly reports filed with the Securities and Exchange Commission.  The foregoing list is not exhaustive.  New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.
     
Investor Relations Contact:               Media Contact:
     
Chris Martin, TRI Pointe Group   Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
Drew Mackintosh, Mackintosh Investor Relations    
InvestorRelations@TRIPointeGroup.com, 949-478-8696    
     
     
     

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

       
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   Change   2017   2016   Change
Operating Data:                        
Home sales revenue $ 1,122,841     $ 770,703     $ 352,138     $ 2,732,299     $ 2,329,336     $ 402,963  
Homebuilding gross margin $ 244,153     $ 153,936     $ 90,217     $ 559,048     $ 493,009     $ 66,039  
Homebuilding gross margin % 21.7 %   20.0 %   1.7 %   20.5 %   21.2 %   (0.7 )%
Adjusted homebuilding gross margin %* 24.2 %   22.2 %   2.0 %   22.9 %   23.4 %   (0.5 )%
Land and lot sales revenue $ 4,608     $ 2,068     $ 2,540     $ 74,269     $ 72,272     $ 1,997  
Land and lot gross margin $ 3,019     $ 1,674     $ 1,345     $ 59,381     $ 54,905     $ 4,476  
Land and lot gross margin % 65.5 %   80.9 %   (15.4 )%   80.0 %   76.0 %   4.0 %
SG&A expense $ 81,328     $ 71,108     $ 10,220     $ 274,830     $ 252,022     $ 22,808  
SG&A expense as a % of home sales revenue 7.2 %   9.2 %   (2.0 )%   10.1 %   10.8 %   (0.7 )%
Net income available to common  stockholders $ 74,020     $ 57,861     $ 16,159     $ 187,191     $ 195,171     $ (7,980 )
Adjusted net income available to common   stockholders* $ 107,403     $ 57,861     $ 49,542     $ 220,574     $ 195,171     $ 25,403  
Adjusted EBITDA* $ 202,178     $ 107,425     $ 94,753     $ 439,932     $ 370,371     $ 69,561  
Interest incurred $ 22,595     $ 18,276     $ 4,319     $ 84,264     $ 68,306     $ 15,958  
Interest in cost of home sales $ 26,387     $ 16,458     $ 9,929     $ 64,835     $ 51,111     $ 13,724  
                       
Other Data:                      
Net new home orders 1,063     909     154     5,075     4,248     827  
New homes delivered 1,757     1,427     330     4,697     4,211     486  
Average selling price of homes delivered $ 639     $ 540     $ 99     $ 582     $ 553     $ 29  
Average selling communities 127.5     122.8     4.7     127.5     118.3     9.2  
Selling communities at end of period 130     124     6     N/A     N/A     N/A  
Cancellation rate 17 %   20 %   (3 )%   15 %   15 %   0 %
Backlog (estimated dollar value) $ 1,032,775     $ 661,146     $ 371,629              
Backlog (homes) 1,571     1,193     378              
Average selling price in backlog $ 657     $ 554     $ 103              
                       
  December 31,  2017   December 31,  2016   Change            
Balance Sheet Data:                      
Cash and cash equivalents $ 282,914     $ 208,657     $ 74,257              
Real estate inventories $ 3,105,553     $ 2,910,627     $ 194,926              
Lots owned or controlled 27,312     28,309     (997 )            
Homes under construction (1) 1,941     1,605     336              
Homes completed, unsold 269     405     (136 )            
Debt $ 1,471,302     $ 1,382,033     $ 89,269              
Stockholders' equity $ 1,929,722     $ 1,829,447     $ 100,275              
Book capitalization $ 3,401,024     $ 3,211,480     $ 189,544              
Ratio of debt-to-capital 43.3 %   43.0 %   0.3 %            
Ratio of net debt-to-net-capital* 38.1 %   39.1 %   (1.0 )%            

_____________________________________ (1)   Homes under construction included 60 and 65 models at December 31, 2017 and December 31, 2016, respectively.*      See "Reconciliation of Non-GAAP Financial Measures"

CONSOLIDATED BALANCE SHEETS(in thousands, except share amounts)

 
  December 31,  2017   December 31,  2016
Assets (unaudited)    
Cash and cash equivalents $ 282,914   $ 208,657
Receivables 125,600   82,500
Real estate inventories 3,105,553   2,910,627
Investments in unconsolidated entities 5,870   17,546
Goodwill and other intangible assets, net 160,961   161,495
Deferred tax assets, net 76,413   123,223
Other assets 48,070   60,592
Total assets $ 3,805,381   $ 3,564,640
       
Liabilities      
Accounts payable $ 72,870   $ 70,252
Accrued expenses and other liabilities 330,882   263,845
Unsecured revolving credit facility   200,000
Seller financed loans   13,726
Senior notes 1,471,302   1,168,307
Total liabilities 1,875,054   1,716,130
       
Commitments and contingencies      
       
Equity      
Stockholders' Equity:      
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no   shares issued and outstanding as of December 31, 2017 and    December 31, 2016, respectively  
Common stock, $0.01 par value, 500,000,000 shares authorized;   151,162,999 and 158,626,229 shares issued and outstanding at   December 31, 2017 and December 31, 2016, respectively 1,512   1,586
Additional paid-in capital 793,980   880,822
Retained earnings 1,134,230   947,039
Total stockholders' equity 1,929,722   1,829,447
Noncontrolling interests 605   19,063
Total equity 1,930,327   1,848,510
Total liabilities and equity $ 3,805,381   $ 3,564,640
 
 

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

       
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
Homebuilding:                
Home sales revenue $ 1,122,841     $ 770,703     $ 2,732,299     $ 2,329,336  
Land and lot sales revenue 4,608     2,068     74,269     72,272  
Other operations revenue 581     524     2,333     2,314  
Total revenues 1,128,030     773,295     2,808,901     2,403,922  
Cost of home sales 878,688     616,767     2,173,251     1,836,327  
Cost of land and lot sales 1,589     394     14,888     17,367  
Other operations expense 572     523     2,298     2,247  
Sales and marketing 44,857     37,282     137,066     127,903  
General and administrative 36,471     33,826     137,764     124,119  
Homebuilding income from operations 165,853     84,503     343,634     295,959  
Equity in (loss) income of unconsolidated entities (13,079 )   (2 )   (11,433 )   179  
Other income, net 4     25     151     312  
Homebuilding income before income taxes 152,778     84,526     332,352     296,450  
Financial Services:              
Revenues 490     458     1,371     1,220  
Expenses 98     70     331     253  
Equity in income of unconsolidated entities 3,515     1,564     6,426     4,810  
Financial services income before income taxes 3,907     1,952     7,466     5,777  
Income before income taxes 156,685     86,478     339,818     302,227  
Provision for income taxes (82,443 )   (28,393 )   (152,267 )   (106,094 )
Net income 74,242     58,085     187,551     196,133  
Net income attributable to noncontrolling interests (222 )   (224 )   (360 )   (962 )
Net income available to common stockholders $ 74,020     $ 57,861     $ 187,191     $ 195,171  
Earnings per share              
Basic $ 0.49     $ 0.36     $ 1.21     $ 1.21  
Diluted $ 0.49     $ 0.36     $ 1.21     $ 1.21  
Weighted average shares outstanding              
Basic 150,859,014     159,082,568     154,134,411     160,859,782  
Diluted 152,568,093     159,789,940     155,085,366     161,381,499  
                       
                       

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

       
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price
New Homes Delivered:                              
Maracay Homes 181     $ 507     225     $ 417     628     $ 473     625     $ 408  
Pardee Homes 535     613     392     467     1,431     529     1,220     548  
Quadrant Homes 146     765     96     616     352     697     383     541  
Trendmaker Homes 163     496     139     506     506     494     474     506  
TRI Pointe Homes 530     761     411     658     1,313     706     1,089     664  
Winchester Homes 202     532     164     570     467     549     420     560  
Total 1,757     $ 639     1,427     $ 540     4,697     $ 582     4,211     $ 553  
                               
                                     
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price
New Homes Delivered:                              
California 821     $ 726     596     $ 601     2,093     $ 651     1,689     $ 669  
Colorado 75     600     42     579     172     596     160     524  
Maryland 154     507     96     544     346     522     265     518  
Virginia 48     613     68     608     121     625     155     631  
Arizona 181     507     225     417     628     473     625     408  
Nevada 169     531     165     433     479     456     460     386  
Texas 163     496     139     506     506     494     474     506  
Washington 146     765     96     616     352     697     383     541  
Total 1,757     $ 639     1,427     $ 540     4,697     $ 582     4,211     $ 553  
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
       
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities
Net New Home Orders:                                           
Maracay Homes 93     12.7     144     18.0     597     14.8     670     18.0  
Pardee Homes 298     31.3     270     26.0     1,580     29.9     1,206     23.6  
Quadrant Homes 84     7.8     67     6.5     395     7.5     341     8.0  
Trendmaker Homes 123     28.5     116     30.8     516     30.4     501     27.8  
TRI Pointe Homes 348     32.7     214     28.5     1,492     32.0     1,097     27.6  
Winchester Homes 117     14.5     98     13.0     495     12.9     433     13.3  
Total 1,063     127.5     909     122.8     5,075     127.5     4,248     118.3  
                               
                               
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017   2016
  Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities   Net New Home Orders   Average Selling Communities
Net New Home Orders:                              
California 472     42.8     357     38.8     2,357     43.0     1,690     35.4  
Colorado 69     7.5     28     4.5     213     6.7     135     4.8  
Maryland 92     10.5     76     8.0     357     9.4     290     7.0  
Virginia 25     4.0     22     5.0     138     3.5     143     6.3  
Arizona 93     12.7     144     18.0     597     14.8     670     18.0  
Nevada 105     13.7     99     11.2     502     12.2     478     11.0  
Texas 123     28.5     116     30.8     516     30.4     501     27.8  
Washington 84     7.8     67     6.5     395     7.5     341     8.0  
Total 1,063     127.5     909     122.8     5,075     127.5     4,248     118.3  
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued(dollars in thousands)(unaudited)
       
  As of December 31, 2017   As of December 31, 2016
  Backlog Units   Backlog Dollar Value   Average Sales Price   Backlog Units   Backlog Dollar Value   Average Sales Price
Backlog:                      
Maracay Homes                217     $ 106,061     $ 489     248     $ 114,203     $ 460  
Pardee Homes 409     299,083     731     260     134,128     516  
Quadrant Homes 144     107,714     748     101     68,461     678  
Trendmaker Homes 173     93,974     543     163     85,579     525  
TRI Pointe Homes 477     331,562     695     298     180,012     604  
Winchester Homes 151     94,381     625     123     78,763     640  
Total 1,571     $ 1,032,775     $ 657     1,193     $ 661,146     $ 554  
                       
                       
  As of December 31, 2017   As of December 31, 2016
  Backlog Units   Backlog Dollar Value   Average Sales Price   Backlog Units   Backlog Dollar Value   Average Sales Price
Backlog:                      
California 666     $ 496,626     $ 746     402     $ 237,748     $ 591  
Colorado 100     60,253     603     59     35,764     606  
Maryland 113     64,942     575     102     60,904     597  
Virginia 38     29,439     775     21     17,859     850  
Arizona 217     106,061     489     248     114,203     460  
Nevada 120     73,766     615     97     40,628     419  
Texas 173     93,974     543     163     85,579     525  
Washington 144     107,714     748     101     68,461     678  
Total 1,571     $ 1,032,775     $ 657     1,193     $ 661,146     $ 554  
 
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
       
  December 31,  2017   December 31,  2016
Lots Owned or Controlled (1):                           
Maracay Homes 2,519   2,053
Pardee Homes 15,144   16,912
Quadrant Homes 1,726   1,582
Trendmaker Homes 1,855   1,999
TRI Pointe Homes 3,964   3,479
Winchester Homes 2,104   2,284
Total 27,312   28,309
       
       
  December 31,  2017   December 31,  2016
Lots Owned or Controlled (1):      
California 16,292   17,245
Colorado 742   918
Maryland 1,507   1,779
Virginia 597   505
Arizona 2,519   2,053
Nevada 2,074   2,228
Texas 1,855   1,999
Washington 1,726   1,582
Total 27,312   28,309
       
       
  December 31,  2017   December 31,  2016
Lots by Ownership Type:      
Lots owned 23,940   25,283
Lots controlled (1) 3,372   3,026
Total 27,312   28,309

__________ (1)   As of December 31, 2017 and December 31, 2016, lots controlled included lots that were under land option contracts or purchase contracts.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(unaudited)

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

The following tables reconcile homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non-GAAP financial measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage and non-cash impairments and lot option abandonments have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who may adjust gross margins in a similar fashion.
   
  Three Months Ended December 31,
  2017   %   2016   %
                           
  (dollars in thousands)
   
Home sales revenue $ 1,122,841     100.0 %   $ 770,703     100.0 %
Cost of home sales 878,688     78.3 %   616,767     80.0 %
Homebuilding gross margin 244,153     21.7 %   153,936     20.0 %
Add: interest in cost of home sales 26,387     2.4 %   16,458     2.1 %
Add: impairments and lot option abandonments          851     0.1 %   792     0.1 %
Adjusted homebuilding gross margin $ 271,391     24.2 %   $ 171,186     22.2 %
Homebuilding gross margin percentage 21.7 %       20.0 %    
Adjusted homebuilding gross margin percentage 24.2 %       22.2 %    

  Year Ended December 31,
  2017   %   2016   %
                           
  (dollars in thousands)
   
Home sales revenue $ 2,732,299     100.0 %   $ 2,329,336     100.0 %
Cost of home sales 2,173,251     79.5 %   1,836,327     78.8 %
Homebuilding gross margin 559,048     20.5 %   493,009     21.2 %
Add: interest in cost of home sales 64,835     2.4 %   51,111     2.2 %
Add: impairments and lot option abandonments              2,020     0.1 %   1,470     0.1 %
Adjusted homebuilding gross margin $ 625,903     22.9 %   $ 545,590     23.4 %
Homebuilding gross margin percentage 20.5 %       21.2 %    
Adjusted homebuilding gross margin percentage 22.9 %       23.4 %    
 
 

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.
       
  December 31, 2017   December 31, 2016
Unsecured revolving credit facility                                                                            $     $ 200,000  
Seller financed loans     13,726  
Senior notes 1,471,302     1,168,307  
Total debt 1,471,302     1,382,033  
Stockholders' equity 1,929,722     1,829,447  
Total capital $ 3,401,024     $ 3,211,480  
Ratio of debt-to-capital (1)   43.3 %   43.0 %
       
Total debt $ 1,471,302     $ 1,382,033  
Less: Cash and cash equivalents                        (282,914 )   (208,657 )
Net debt 1,188,388     1,173,376  
Stockholders' equity 1,929,722     1,829,447  
Net capital $ 3,118,110     $ 3,002,823  
Ratio of net debt-to-net capital (2) 38.1 %   39.1 %

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

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

The following table contains information about our operating results reflecting certain adjustments to income before income taxes, (provision) benefit for income taxes, net income, net income available to common stockholders and earnings per share (diluted).  We believe reflecting these adjustments is useful to investors in understanding our recurring operations by eliminating the varying effects of certain non-routine events, and may be helpful in comparing the Company to other homebuilders to the extent they provide similar information.
       
  Three Months Ended December 31, 2017   Year Ended December 31, 2017
  As Reported   Adjustments   Adjusted     As Reported   Adjustments   Adjusted
                                               
  (in thousands, except per share amounts)
   
Income before income taxes 156,685     13,182   (1) 169,867     339,818     13,182   (1) 353,000  
(Provision) benefit for income taxes (82,443 )   20,201   (2) (62,242 )   (152,267 )   20,201   (2) (132,066 )
Net income 74,242     33,383     107,625     187,551     33,383     220,934  
Net income attributable to noncontrolling interests (222 )       (222 )   (360 )       (360 )
Net income available to common stockholders $ 74,020     $ 33,383     $ 107,403     $ 187,191       $ 33,383     $ 220,574  
Earnings per share                        
Diluted $ 0.49           $ 0.70     $ 1.21         $ 1.42  
Weighted average shares outstanding                      
Diluted 152,568         152,568     155,085         155,085  
                       
Effective tax rate 52.6 %       36.6 %   44.8 %       37.4 %

__________ (1)   Includes a charge related to the impairment of an investment in an unconsolidated entity. (2)   Includes a tax charge related to the re-measurement of the Company's net deferred tax assets as a result of the Tax Cuts and Jobs Act enacted in the fourth quarter of 2017, net of the impact of the charge related to the impairment of an investment in an unconsolidated entity.

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

The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP.  EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation, (f) real estate inventory impairments and lot option abandonments, (g) impairments of investments in unconsolidated entities and (h) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company's ability to service debt and obtain financing.
         
  Three Months Ended December 31,   Year Ended December 31,
  2017   2016   2017     2016
                               
  (in thousands)
   
Net income available to common stockholders $ 74,020     $ 57,861     $ 187,191     $ 195,171  
Interest expense:              
Interest incurred 22,595     18,276     84,264     68,306  
Interest capitalized (22,595 )   (18,276 )   (84,264 )   (68,306 )
Amortization of interest in cost of sales 26,474     16,480     65,245     51,288  
Provision for income taxes 82,443     28,393     152,267     106,094  
Depreciation and amortization 934     764     3,500     3,087  
EBITDA 183,871     103,498     408,203     355,640  
Amortization of stock-based compensation 4,275     2,964     15,906     12,612  
Real estate inventory impairments and land option abandonments 850     792     2,053     1,470  
Impairments of investments in unconsolidated entities 13,182         13,182      
Restructuring charges     171     588     649  
Adjusted EBITDA $ 202,178     $ 107,425     $ 439,932     $ 370,371  

 

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