TRI Pointe Group, Inc. Reports 2015 Fourth Quarter and Full Year Results

-Reports Net Income of $85.1 Million, or $0.52 per Diluted Share for the Quarter-

-New Home Orders up 5% and New Home Deliveries up 30% for the Quarter-

-Homebuilding Gross Margin increase to 22.2% for the Quarter-

-Selling, General and Administrative Expenses decrease to 8.4% of Home Sales Revenue for the Quarter-

IRVINE, Calif.--()--TRI Pointe Group, Inc. (NYSE: TPH) today announced results for the fourth quarter ended December 31, 2015 and full year 2015.

On July 7, 2014, TRI Pointe consummated the merger with Weyerhaeuser Real Estate Company (“WRECO”). The merger was accounted for as a “reverse acquisition” of TRI Pointe by WRECO. As a result, legacy TRI Pointe’s financial results are only included in the combined company’s financial statements from the closing date forward and are not reflected in the combined company’s historical financial statements. Accordingly, legacy TRI Pointe’s financial results are not included in the Generally Accepted Accounting Principles (“GAAP”) results for the periods prior to July 7, 2014 included in this press release.

Results and Operational Data for Fourth Quarter 2015 and Comparisons to Fourth Quarter 2014

  • Net income available to common stockholders was $85.1 million, or $0.52 per diluted share compared to $41.4 million, or $0.26 per diluted share
  • New home orders increased to 753 compared to 714, an increase of 5%
  • Active selling communities averaged 112.8 compared to 105.6
    • New home orders per average selling community were 6.7 orders (2.23 monthly) compared to 6.8 orders (2.25 monthly)
    • Cancellation rate increased to 21% compared to 17%
  • Backlog units increased to 1,156 homes compared to 1,032, an increase of 12%
    • Dollar value of backlog increased to $697.3 million compared to $653.1 million, an increase of 7%
    • Average sales price in backlog of $603,000 compared to $633,000, a decline of 5%
  • Home sales revenue of $847.4 million, an increase of 36%
    • New homes deliveries of 1,453, up 30%
    • Average sales price of homes delivered of $583,000, up 5%
  • Homebuilding gross margin percentage of 22.2%
    • 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 improved to 8.4% compared to 8.9%
  • Ratios of debt and net debt to capital of 41.3% and 36.5%*, respectively, as of December 31, 2015
  • Cash of $214.5 million and availability under unsecured revolving credit facility of $242.4 million

* See “Reconciliation of Non-GAAP Financial Measures”

Results and Operational Data for Full Year 2015 and Comparisons to Full Year 2014

  • Net income available to common stockholders was $205.5 million, or $1.27 per diluted share compared to $84.2 million, or $0.58 per diluted share
  • New home orders increased to 4,181 compared to 2,947, an increase of 42%
  • Active selling communities averaged 115.9 compared to 99.1
    • New home orders per average selling community were 36.1 orders (3.01 monthly) compared to 29.7 orders (2.48 monthly), an increase of 21%
    • Cancellation rate remained flat at 16%
  • Home sales revenue of $2.3 billion, an increase of 39%
    • New home deliveries of 4,057, up 31%
    • Average sales price of homes delivered of 565,000, up 6%
  • Homebuilding gross margin percentage of 21.1%
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.1%*
  • SG&A expense as a percentage of home sales revenue improved to 10.2% compared to 11.3%

* See “Reconciliation of Non-GAAP Financial Measures”

“2015 was a banner year for our Company,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “Revenues increased 41% versus 2014, and earnings per share more than doubled. We also met or exceeded our stated guidance for home closings, homebuilding gross margin and SG&A leverage. These results reflect the strides we have made since the close of the WRECO acquisition nineteen months ago and should give us a great foundation upon which to build in 2016.”

GAAP Fourth Quarter 2015 Operating Results

Net income available to common stockholders was $85.1 million, or $0.52 per diluted share in the fourth quarter of 2015, compared to net income of $41.4 million, or $0.26 per diluted share for the fourth quarter of 2014. The improvement in net income available to common stockholders was primarily driven by an increase of $64.1 million in homebuilding gross margin due to higher home sales revenue resulting from a 30% increase in new home deliveries, offset by an increase in selling, general and administrative expenses and the provision for income taxes.

Home sales revenue increased $224.4 million or 36% to $847.4 million for the fourth quarter of 2015, as compared to $623.0 million for the same period in 2014. The increase was attributable to a 30% increase in new home deliveries to 1,453 and a 5% increase in the Company's average sales price of homes delivered to $583,000. New home deliveries increased at five of our six reporting segments with the highest increase at TRI Pointe Homes, which was up 203 units, or 83% compared to the prior year, while delivering at an average sales price of $696,000.

New home orders increased 5% to 753 homes for the fourth quarter of 2015, as compared to 714 homes for the same period in 2014. Average active selling communities increased to 112.8 as compared to 105.6 for the same period in the prior year, mainly due to TRI Pointe Homes which increased average active selling communities by 5.7 in the current year. The Company’s overall quarterly absorption rate per average selling community for the fourth quarter ended December 31, 2015 decreased slightly to 6.7 orders (2.23 monthly) compared to 6.8 orders (2.25 monthly) during the same period in 2014.

The Company ended the quarter with 1,156 homes in backlog, representing approximately $697.3 million in future home sales revenue. The average sales price of homes in backlog as of December 31, 2015 decreased $30,000, or 5%, to $603,000 compared to $633,000 at December 31, 2014.

Homebuilding gross margin percentage for the fourth quarter of 2015 increased to 22.2% compared to 19.9% for the same period in 2014 and increased sequentially from 21.0% during the third quarter of 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.2%* for the fourth quarter of 2015 versus 22.0%* for the same period in 2014.

Selling, general and administrative expense for the fourth quarter of 2015 improved to 8.4% of home sales revenue as compared to 8.9% for the same period in 2014. The decrease in the selling, general and administrative expense ratio was primarily attributable to increased home sales revenue.

“Our homebuilding teams did an excellent job getting over 75% of our beginning backlog closed this quarter,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “Thanks to careful planning and great execution, we were able to avoid some of the construction delays that have plagued other builders and once again deliver on our stated closings guidance. We were able to achieve this goal while also improving our gross margins and SG&A as a percentage of revenue. In short, I am very pleased with the operational excellence our teams demonstrated in 2015 as we head into the spring selling season.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the first quarter of 2016, the Company anticipates delivering approximately 60% of its 1,156 units in backlog as of December 31, 2015. In addition, the Company expects to open 25 new communities, and close out of 11, resulting in 118 active selling communities as of March 31, 2016.

For the full year 2016, the Company expects to grow communities by 20% and deliver between 4,200 and 4,400 homes at an average sales price of $550,000. The Company expects its homebuilding gross margin for the full year of 2016 will be in a range of 20% to 21%, with quarterly fluctuations based on the mix of California deliveries and expects SG&A expense will be in the range of 10.3% to 10.5%. In addition, the Company anticipates gross profit of between $45 million and $50 million from land and lot sales, most of which are expected to close in the second and third quarter of 2016. The Company anticipates spending between $800 million and $1.0 billion in land acquisition and land development for 2016.

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 Friday, February 26, 2016. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, 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 15 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 2015 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 1-877-870-5176, the international dial-in number is 1-858-384-5517, and the pass code is 13628663. 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 one of the top ten largest public homebuilders by equity market capitalization in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, included 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.

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 projections and estimates concerning the timing and success of specific projects and our future production, operational and financial results, financial condition, prospects, and capital spending. Our forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “goal,” “expect,” “intend,” “project,” “potential,” “plan,” “predict,” “will,” 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 restructuring and cost reduction initiatives; global economic conditions; raw material prices; oil and other energy prices; the effect of weather, including the continuing drought in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings; 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; our relationship, and actual and potential conflicts of interest, with Starwood Capital Group or its affiliates; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”). 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.

KEY OPERATIONS AND FINANCIAL DATA

(dollars in thousands)

(unaudited)

 
  Three Months Ended   Year Ended
December 31, December 31,
  2015       2014     Change   2015       2014     Change
Operating Data:
Home sales revenue $ 847,409 $ 622,962 $ 224,447 $ 2,291,264 $ 1,646,274 $ 644,990
Homebuilding gross margin $ 187,824 $ 123,722 $ 64,102 $ 482,488 $ 327,657 $ 154,831
Homebuilding gross margin % 22.2 % 19.9 % 2.3 % 21.1 % 19.9 % 1.2 %
Adjusted homebuilding gross margin %* 24.2 % 22.0 % 2.2 % 23.1 % 21.8 % 1.3 %
Land and lot gross margin $ 9,154 $ 3,547 $ 5,607 $ 66,196 $ 9,754 $ 56,442
Land and lot gross margin % 34.0 % 31.6 % 2.4 % 65.4 % 20.5 % 44.9 %
SG&A expense $ 71,605 $ 55,722 $ 15,883 $ 233,713 $ 185,958 $ 47,755

SG&A expense as a % of home sales revenue

8.4 % 8.9 % (0.5 )% 10.2 % 11.3 % (1.1 )%

Net income available to common stockholders

$ 85,072 $ 41,426 $ 43,646 $ 205,461 $ 84,197 $ 121,264
Adjusted EBITDA* $ 155,196 $ 88,030 $ 67,166 $ 388,121 $ 233,562 $ 154,559
Interest incurred $ 15,185 $ 15,988 $ (803 ) $ 60,964 $ 41,706 $ 19,258

Interest expense, net of interest capitalized

$ $ $ $ $ 2,731 $ (2,731 )
Interest in cost of home sales $ 16,759 $ 12,012 $ 4,747 $ 44,299 $ 28,354 $ 15,945
 
Other Data:
Net new home orders 753 714 39 4,181 2,947 1,234
New homes delivered 1,453 1,122 331 4,057 3,100 957
Average selling price of homes delivered $ 583 $ 555 $ 28 $ 565 $ 531 $ 34
Average selling communities (QTD) 112.8 105.6 7.2 N/A N/A N/A
Average selling communities (YTD) N/A N/A N/A 115.9 99.1 16.8
Selling communities at end of period 104 108 (4 ) N/A N/A N/A
Cancellation rate 21 % 17 % 4 % 16 % 16 % 0 %
Backlog (estimated dollar value) $ 697,334 $ 653,096 $ 44,238
Backlog (homes) 1,156 1,032 124
Average selling price in backlog $ 603 $ 633 $ (30 )
 
December 31, December 31,
  2015     2014   Change
Balance Sheet Data:
Cash and cash equivalents $ 214,485 $ 170,629 $ 43,856
Real estate inventories $ 2,519,273 $ 2,280,183 $ 239,090
Lots owned or controlled 27,602 29,718 (2,116 )
Homes under construction (1) 2,280 1,887 393
Debt $ 1,170,505 $ 1,138,493 $ 32,012
Stockholders' equity $ 1,664,683 $ 1,454,180 $ 210,503
Book capitalization $ 2,835,188 $ 2,592,673 $ 242,515
Ratio of debt-to-capital 41.3 % 43.9 % (2.6 )%
Ratio of net debt-to-capital* 36.5 % 40.0 % (3.5 )%
 
(1) Homes under construction includes completed homes
* See “Reconciliation of Non-GAAP Financial Measures”

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 
  December 31,   December 31,
2015 2014
Assets (unaudited)
Cash and cash equivalents $ 214,485 $ 170,629
Receivables 43,710 20,118
Real estate inventories 2,519,273 2,280,183
Investments in unconsolidated entities 18,999 16,805
Goodwill and other intangible assets, net 162,029 162,563
Deferred tax assets, net 130,657 157,821
Other assets   48,918   81,719
Total assets $ 3,138,071 $ 2,889,838
 
Liabilities
Accounts payable $ 64,840 $ 68,860
Accrued expenses and other liabilities 216,263 210,009
Unsecured revolving credit facility 299,392 260,000
Seller financed loans 2,434 14,677
Senior notes   868,679   863,816
Total liabilities   1,451,608   1,417,362
Commitments and contingencies
 
Equity
Stockholders' Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively

Common stock, $0.01 par value, 500,000,000 shares authorized; 161,813,750 and 161,355,490 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively

1,618 1,614
Additional paid-in capital 911,197 906,159
Retained earnings   751,868   546,407
Total stockholders' equity 1,664,683 1,454,180
Noncontrolling interests   21,780   18,296
Total equity   1,686,463   1,472,476
Total liabilities and equity $ 3,138,071 $ 2,889,838
 
CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 
  Three Months Ended   Year Ended
December 31, December 31,
  2015       2014     2015       2014  
Homebuilding:
Home sales revenue $ 847,409 $ 622,962 $ 2,291,264 $ 1,646,274
Land and lot sales revenue 26,918 11,211 101,284 47,660
Other operations   5,388     828     7,601     9,682  
Total revenues   879,715     635,001     2,400,149     1,703,616  
Cost of home sales 659,492 497,990 1,807,091 1,316,470
Cost of land and lot sales 17,677 7,525 34,844 37,560
Other operations 2,656 586 4,360 3,324
Impairments and lot option abandonments 181 1,391 1,930 2,515
Sales and marketing 37,259 30,504 116,217 103,600
General and administrative 34,346 25,218 117,496 82,358
Restructuring charges   599     1,341     3,329     10,543  
Homebuilding income from operations 127,505 70,446 314,882 147,246
Equity in income (loss) of unconsolidated entities 1,542 (59 ) 1,460 (278 )
Transaction expenses (744 ) (17,960 )
Other income (loss), net   586     (777 )   858     (1,019 )
Homebuilding income from continuing operations before taxes 129,633 68,866 317,200 127,989
Financial Services:
Revenues 528 1,010
Expenses 50 15 181 15
Equity in income (loss) of unconsolidated entities   1,233     (10 )   1,231     (10 )
Financial services income (loss) from continuing operations before taxes 1,711 (25 ) 2,060 (25 )
Income from continuing operations before taxes 131,344 68,841 319,260 127,964
Provision for income taxes   (45,991 )   (27,415 )   (112,079 )   (43,767 )
Income from continuing operations 85,353 41,426 207,181 84,197
Discontinued operations, net of income taxes                
Net income 85,353 41,426 207,181 84,197
Net income attributable to noncontrolling interests   (281 )       (1,720 )    
Net income available to common stockholders $ 85,072   $ 41,426   $ 205,461   $ 84,197  
 
Amounts attributable to TRI Pointe Group, Inc. common stockholders:
Income from continuing operations $ 85,072 $ 41,426 $ 205,461 $ 84,197
Income from discontinued operations                
Net income available to common stockholders $ 85,072   $ 41,426   $ 205,461   $ 84,197  
 
Earnings per share
Basic
Continuing operations $ 0.53 $ 0.26 $ 1.27 $ 0.58
Discontinued operations                
Net earnings per share $ 0.53   $ 0.26   $ 1.27   $ 0.58  
Diluted
Continuing operations $ 0.52 $ 0.26 $ 1.27 $ 0.58
Discontinued operations                
Net earnings per share $ 0.52   $ 0.26   $ 1.27   $ 0.58  
 
Weighted average shares outstanding
Basic 161,813,750 161,345,594 161,692,152 145,044,351
Diluted 162,379,826 162,208,756 162,319,758 145,531,289
 
MARKET DATA BY REPORTING SEGMENT & STATE

(dollars in thousands)

(unaudited)

 
  Three Months Ended December 31,   Year Ended December 31,
2015   2014 2015   2014
  Avg.   Avg.   Avg.   Avg.
Homes Selling Homes Selling Homes Selling Homes Selling
Delivered Price Delivered Price Delivered Price Delivered Price
New Homes Delivered:
Maracay Homes 173 $ 399 110 $ 392 480 $ 387 396 $ 381
Pardee Homes 406 591 374 455 1,130 536 1,032 471
Quadrant Homes 114 475 101 452 411 440 320 420
Trendmaker Homes 145 511 157 504 539 511 561 496
TRI Pointe Homes 449 696 246 816 1,060 730 404 803
Winchester Homes 166   590 134   627 437   616 387   705
Total 1,453 $ 583 1,122 $ 555 4,057 $ 565 3,100 $ 531
 
 
Three Months Ended December 31, Year Ended December 31,
2015 2014 2015 2014
Avg. Avg. Avg. Avg.
Homes Selling Homes Selling Homes Selling Homes Selling
Delivered Price Delivered Price Delivered Price Delivered Price
New Homes Delivered:
California 654 $ 717 486 $ 659 1,623 $ 707 1,119 $ 620
Colorado 65 512 22 416 193 496 37 421
Maryland 89 467 67 480 209 502 181 571
Virginia 77 732 67 773 228 720 206 823
Arizona 173 399 110 392 480 387 396 381
Nevada 136 368 112 370 374 368 280 360
Texas 145 511 157 504 539 511 561 496
Washington 114   475 101   452 411   440 320   420
Total 1,453 $ 583 1,122 $ 555 4,057 $ 565 3,100 $ 531
 
MARKET DATA BY REPORTING SEGMENT & STATE, continued

(unaudited)

 
  Three Months Ended December 31,   Year Ended December 31,
2015   2014 2015   2014
New   Average New   Average New   Average New   Average
Home Selling Home Selling Home Selling Home Selling
Orders Communities Orders Communities Orders Communities Orders Communities
Net New Home Orders:
Maracay Homes 83 15.0 72 16.5 578 16.6 385 16.4
Pardee Homes 232 24.0 177 20.5 1,186 23.1 970 20.2
Quadrant Homes 88 10.5 51 10.3 441 10.7 337 12.2
Trendmaker Homes 76 22.3 121 25.5 457 25.1 557 24.0
TRI Pointe Homes 172 27.5 207 21.8 1,107 26.9 359 9.2
Winchester Homes 102 13.5 86 11.0 412 13.5 339 17.1
Total 753 112.8 714 105.6 4,181 115.9 2,947 99.1
 
 
Three Months Ended December 31, Year Ended December 31,
2015 2014 2015 2014
New Average New Average New Average New Average
Home Selling Home Selling Home Selling Home Selling
Orders Communities Orders Communities Orders Communities Orders Communities
Net New Home Orders:
California 285 34.9 281 27.5 1,706 33.5 967 19.5
Colorado 25 5.8 55 5.8 193 6.2 86 2.2
Maryland 68 6.5 48 3.8 233 6.0 165 7.2
Virginia 34 7.0 38 7.2 179 7.5 174 10.0
Arizona 83 15.0 72 16.5 578 16.6 385 16.4
Nevada 94 10.8 48 9.0 394 10.3 276 7.6
Texas 76 22.3 121 25.5 457 25.1 557 24.0
Washington 88 10.5 51 10.3 441 10.7 337 12.2
Total 753 112.8 714 105.6 4,181 115.9 2,947 99.1
 
MARKET DATA BY REPORTING SEGMENT & STATE, continued

(dollars in thousands)

(unaudited)

 
  As of December 31, 2015   As of December 31, 2014
  Backlog   Average   Backlog   Average
Backlog Dollar Selling Backlog Dollar Selling
Units Value Price Units Value Price
Backlog:
Maracay Homes 203 $ 82,171 $ 405 105 $ 40,801 $ 389
Pardee Homes 274 200,588 732 218 147,044 675
Quadrant Homes 143 72,249 505 113 51,568 456
Trendmaker Homes 136 72,604 534 218 114,948 527
TRI Pointe Homes 290 192,097 662 243 192,802 793
Winchester Homes 110   77,625   706 135   105,933   785
Total 1,156 $ 697,334 $ 603 1,032 $ 653,096 $ 633
 
 
As of December 31, 2015 As of December 31, 2014
Backlog Average Backlog Average
Backlog Dollar Selling Backlog Dollar Selling
Units Value Price Units Value Price
Backlog:
California 401 $ 321,753 $ 802 318 $ 273,263 $ 859
Colorado 84 41,026 488 84 42,329 504
Maryland 77 49,760 646 53 37,151 701
Virginia 33 27,865 844 82 68,782 839
Arizona 203 82,171 405 105 40,801 389
Nevada 79 29,906 379 59 24,254 411
Texas 136 72,604 534 218 114,948 527
Washington 143   72,249   505 113   51,568   456
Total 1,156 $ 697,334 $ 603 1,032 $ 653,096 $ 633
 
MARKET DATA BY REPORTING SEGMENT & STATE, continued

(unaudited)

 
  December 31,   December 31,
2015 2014
Lots Owned or Controlled:
Maracay Homes 1,811 1,985
Pardee Homes 16,679 17,639
Quadrant Homes 1,274 1,544
Trendmaker Homes 1,858 2,073
TRI Pointe Homes 3,628 3,726
Winchester Homes 2,352 2,751
Total 27,602 29,718
 
 
December 31, December 31,
2015 2014
Lots Owned or Controlled:
California 17,527 18,842
Colorado 876 639
Maryland 1,716 2,048
Virginia 636 703
Arizona 1,811 1,985
Nevada 1,904 1,884
Texas 1,858 2,073
Washington 1,274 1,544
Total 27,602 29,718
 
 
December 31, December 31,
2015 2014
Lots by Ownership Type:
Lots owned 24,733 25,535

Lots controlled(1)

2,869 4,183
Total 27,602 29,718
 

(1)

As of December 31, 2015 and December 31, 2014, 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 table reconciles 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 December 31,
  2015     %     2014     %
(dollars in thousands)
Home sales revenue $ 847,409 100.0% $ 622,962 100.0%
Cost of home sales 659,492 77.8% 497,990 79.9%
Homebuilding impairments and lot option abandonments   93   0.0%   1,250   0.2%
Homebuilding gross margin 187,824 22.2% 123,722 19.9%
Add: interest in cost of home sales 16,759 2.0% 12,012 1.9%
Add: impairments and lot option abandonments   93   0.0%   1,250   0.2%
Adjusted homebuilding gross margin $ 204,676   24.2% $ 136,984   22.0%
Homebuilding gross margin percentage   22.2 %   19.9 %
Adjusted homebuilding gross margin percentage   24.2 %   22.0 %
 
 
Year Ended December 31,
  2015   %   2014   %
(dollars in thousands)
Home sales revenue $ 2,291,264 100.0% $ 1,646,274 100.0%
Cost of home sales 1,807,091 78.9% 1,316,470 80.0%
Homebuilding impairments and lot option abandonments   1,685   0.1%   2,147   0.1%
Homebuilding gross margin 482,488 21.1% 327,657 19.9%
Add: interest in cost of home sales 44,299 1.9% 28,354 1.7%
Add: impairments and lot option abandonments   1,685   0.1%   2,147   0.1%
Adjusted homebuilding gross margin $ 528,472   23.1% $ 358,158   21.8%
Homebuilding gross margin percentage   21.1 %   19.9 %
Adjusted homebuilding gross margin percentage   23.1 %   21.8 %
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)

(unaudited)

 

The following table reconciles the Company’s ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debt-to-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,   December 31,
  2015     2014  
(dollars in thousands)
Unsecured revolving credit facility $ 299,392 $ 260,000
Seller financed loans 2,434 14,677
Senior Notes   868,679     863,816  
Total debt 1,170,505 1,138,493
Stockholders' equity   1,664,683     1,454,180  
Total capital $ 2,835,188   $ 2,592,673  
Ratio of debt-to-capital(1)   41.3 %   43.9 %
 
Total debt $ 1,170,505 $ 1,138,493
Less: Cash and cash equivalents   (214,485 )   (170,629 )
Net debt 956,020 967,864
Stockholders' equity   1,664,683     1,454,180  
Total capital $ 2,620,703   $ 2,422,044  
Ratio of net debt-to-capital(2)   36.5 %   40.0 %
 
(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-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. The most directly comparable GAAP financial measure is the ratio of debt-to-capital.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)

(unaudited)

 

The following table calculates the non-GAAP 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) income taxes, (c) depreciation and amortization, (d) expensing of previously capitalized interest included in costs of home sales and (e) amortization of stock-based compensation. Adjusted EBITDA means EBITDA before (f) impairment and lot option abandonments (g) restructuring charges and (h) transaction related expenses. 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   Year Ended
December 31, December 31,
  2015       2014     2015       2014  
(in thousands)
Net income available to common stockholders $ 85,072 $ 41,426 $ 205,461 $ 84,197
 
Interest expense:
Interest incurred 15,185 15,988 60,964 41,706
Interest capitalized (15,185 ) (15,988 ) (60,964 ) (38,975 )
Amortization of interest in cost of sales 17,095 12,296 45,114 52,747
Provision for income taxes 45,991 27,415 112,079 43,767
Depreciation and amortization 2,859 1,987 8,273 11,423
Amortization of stock-based compensation   3,399     1,430     11,935     7,679  
EBITDA 154,416 84,554 382,862 202,544
Impairments and lot abandonments 181 1,391 1,930 2,515
Restructuring charges 599 1,341 3,329 10,543
Transaction expenses       744         17,960  
Adjusted EBITDA $ 155,196   $ 88,030   $ 388,121   $ 233,562  
 
SUPPLEMENTAL COMBINED COMPANY INFORMATION

(unaudited)

 

The merger with Weyerhaeuser Real Estate Company (“WRECO”) was accounted for as a “reverse acquisition” of TRI Pointe by WRECO in accordance with ASC Topic 805, “Business Combinations.” As a result, legacy TRI Pointe’s financial results are not included in the combined company’s GAAP results for any period prior to July 7, 2014, the closing date of the merger. This schedule provides certain supplemental financial and operations information of the combined company that is “Adjusted” to include legacy TRI Pointe stand-alone operations. No other adjustments have been made to the supplemental combined company information provided and this information is summary only and may not necessarily be indicative of the results had the merger occurred at the beginning of the periods presented or the financial condition to be expected for the remainder of the year or any future date or period.

 

The following schedule provides certain supplemental financial and operations information of the Company that is “Adjusted” to include legacy TRI Pointe stand-alone operations for the year ending December 31, 2014 as though the WRECO merger was completed on January 1, 2014.

 
  Year Ended
December 31, 2015   December 31, 2014
Combined   Legacy   Combined Combined   Legacy   Combined
Reported Adjustments Adjusted Reported Adjustments Adjusted
Supplemental Operating Data: (dollars in thousands)
Home sales revenue $ 2,291,264 NA $ 2,291,264 $ 1,646,274 $ 162,107 $ 1,808,381
Net new home orders 4,181 NA 4,181 2,947 336 3,283
New homes delivered 4,057 NA 4,057 3,100 197 3,297
Average selling price of homes delivered $ 565 NA $ 565 $ 531 $ 823 $ 548

Contacts

Investor Relations Contact:
Chris Martin, TRI Pointe Group
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TRIPointeGroup.com, 949-478-8696
or
Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045

Contacts

Investor Relations Contact:
Chris Martin, TRI Pointe Group
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TRIPointeGroup.com, 949-478-8696
or
Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045