Tri Pointe Homes, Inc. Reports 2022 First Quarter Results

-Diluted Earnings Per Share of $0.81-
-Homebuilding Gross Margin Percentage of 26.8%-
-Monthly Absorption Rate of 5.7-
-Backlog Units up 3% Year-Over-Year-
-Backlog Dollar Value up 19% Year-Over-Year-

INCLINE VILLAGE, Nev., April 21, 2022 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the first quarter ended March 31, 2022.

“Tri Pointe Homes delivered another quarter of outstanding results in the first quarter of 2022, highlighted by earnings of $0.81 per diluted share,” said Doug Bauer, Chief Executive Officer of Tri Pointe Homes. “We came in at the high end or above our stated guidance for deliveries, average sales price and homebuilding gross margin percentage, once again demonstrating our ability to successfully execute through the operational challenges that persist in our industry. We also increased the dollar value of our backlog by 19% on a year-over-year basis, putting our company in a great position to deliver on our full-year guidance for 2022.”

Mr. Bauer continued, “Tri Pointe remains focused on improving its operational and financial performance by executing on the strategic initiatives we have emphasized for several quarters now. These include the continued monetization of our long-dated California assets, the growth and build-out of our early-stage markets, a disciplined approach to land acquisition, further improvements to our cost structure across our homebuilding platform and a consistent stock repurchase program. We made progress on each of these fronts in the first quarter of 2022 and expect to see the continued benefits of these efforts in the years to come.”

Mr. Bauer concluded, “Tri Pointe remains focused on delivering long-term stockholder value by executing on these major initiatives and by capitalizing on the opportunities that our industry currently presents. We believe we have charted a path for continued success thanks to our strategic focus, our well-capitalized balance sheet and our seasoned management team, and I am excited for what the future holds for our company.”

Results and Operational Data for First Quarter 2022 and Comparisons to First Quarter 2021

• Net income was $88.5 million, or $0.81 per diluted share, compared to $70.8 million, or $0.59 per diluted share
• Home sales revenue of $725.3 million compared to $716.7 million, an increase of 1%
  • New home deliveries of 1,099 homes compared to 1,126 homes, a decrease of 2%
  • Average sales price of homes delivered of $660,000 compared to $636,000, an increase of 4%
• Homebuilding gross margin percentage of 26.8% compared to 23.9%, an increase of 290 basis points
  • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 29.3%*
• SG&A expense as a percentage of homes sales revenue of 11.1% compared to 11.4%, a decrease of 30 basis points
• Net new home orders of 1,896 compared to 1,987, a decrease of 5%
• Active selling communities averaged 111.5 compared to 113.3, a decrease of 2%
  • Net new home orders per average selling community were 17.0 orders (5.7 monthly) compared to 17.5 orders (5.8 monthly)
  • Cancellation rate of 8% compared to 6%
• Backlog units at quarter end of 3,955 homes compared to 3,825, an increase of 3%
  • Dollar value of backlog at quarter end of $2.9 billion compared to $2.5 billion, an increase of 19%
  • Average sales price of homes in backlog at quarter end of $741,000 compared to $641,000, an increase of 16%
• Ratios of debt-to-capital and net debt-to-net capital of 35.7% and 27.8%*, respectively, as of March 31, 2022
• Repurchased 5,295,236 shares of common stock at a weighted average price per share of $23.25 for an aggregate dollar amount of $123.1 million in the three months ended March 31, 2022
• Ended the first quarter of 2022 with total liquidity of $1.0 billion, including cash and cash equivalents of $412.7 million and $568.0 million of availability under the Company’s unsecured revolving credit facility
  

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

“While the housing industry experienced a material rise in mortgage rates during the first quarter of 2022, it did not dampen the demand for our homes as evidenced by our sales pace of 5.7 homes per community per month,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “We continued to see motivated buyers at our communities, particularly from the Millennial-aged cohort, which represents a significant pool of buyers for our industry. Other demand drivers include the persistent lack of existing home inventory, the ongoing migration to lower cost areas and a heightened desire for home ownership brought about by the pandemic. We believe these positive demand factors will propel the homebuilding industry forward for years to come.”

Outlook

For the second quarter, the Company anticipates delivering between 1,300 and 1,500 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 26.0% to 27.0% for the second quarter and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 10.0% to 11.0%. Finally, the Company expects its effective tax rate for the second quarter to be in the range of 25.0% to 26.0%.

For the full year, the Company anticipates delivering between 6,500 and 6,800 homes at an average sales price between $680,000 and $690,000. The Company expects homebuilding gross margin percentage to be in the range of 26.0% to 27.0% for the full year and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 9.7% to 10.2%. Finally, the Company expects its effective tax rate for the full year to be in the range of 25.0% to 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 21, 2022. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, and Glenn Keeler, Chief Financial 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 2022 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 13728529. 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 and a recognized leader in customer experience, innovative design, and environmentally responsible business practices. The company builds premium homes and communities in 10 states, 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, most recently in 2019, and made Fortune magazine’s 2017 100 Fastest-Growing Companies list. Named one of the Best Places to Work by the Orange County Business Journal for four consecutive years, Tri Pointe Homes also became a Great Place to Work-Certified™ company in 2021. 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 the ongoing COVID-19 pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the emergence and spread of new strains or variants of COVID-19, the severity and the duration of the outbreak, the duration of existing and future social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and acceptance of effective vaccines, adequate testing and treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain, the health of our employees, service providers and trade partners, and the reactions of U.S. and global markets and their effects on consumer confidence and spending; the effects 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; 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, particularly within California; 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 and labor; 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 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; the risk of loss from acts of war, terrorism, civil unrest or outbreaks of contagious diseases, 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:

Drew Mackintosh, Mackintosh Investor Relations
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,
			2022				2021			Change				% Change
Operating Data:		(unaudited)
Home sales revenue		$	725,251			$	716,675			$	8,576			1	%
Homebuilding gross margin		$	194,591			$	171,319			$	23,272			14	%
Homebuilding gross margin %			26.8	%			23.9	%			2.9	%
Adjusted homebuilding gross margin %*			29.3	%			26.8	%			2.5	%
SG&A expense		$	80,695			$	81,809			$	(1,114	)		(1	)%
SG&A expense as a % of home sales revenue			11.1	%			11.4	%			(0.3	)%
Net income		$	88,499			$	70,802			$	17,697			25	%
Adjusted EBITDA*		$	146,091			$	126,080			$	20,011			16	%
Interest incurred		$	28,553			$	21,179			$	7,374			35	%
Interest in cost of home sales		$	17,065			$	20,678			$	(3,613	)		(17	)%
Other Data:
Net new home orders			1,896				1,987				(91	)		(5	)%
New homes delivered			1,099				1,126				(27	)		(2	)%
Average sales price of homes delivered		$	660			$	636			$	24			4	%
Cancellation rate			8	%			6	%			2	%
Average selling communities			111.5				113.3				(1.8	)		(2	)%
Selling communities at end of period			116				117				(1	)		(1	)%
Backlog (estimated dollar value)		$	2,929,187			$	2,451,805			$	477,382			19	%
Backlog (homes)			3,955				3,825				130			3	%
Average sales price in backlog		$	741			$	641			$	100			16	%
		March 31,				December 31,
			2022				2021			Change				% Change
Balance Sheet Data:		(unaudited)
Cash and cash equivalents		$	412,703			$	681,528			$	(268,825	)		(39	)%
Real estate inventories		$	3,288,347			$	3,054,743			$	233,604			8	%
Lots owned or controlled			41,828				41,675				153			0	%
Homes under construction(1)			4,214				3,632				582			16	%
Homes completed, unsold			25				27				(2	)		(7	)%
Debt		$	1,338,050			$	1,337,723			$	327			0	%
Stockholders’ equity		$	2,408,234			$	2,447,621			$	(39,387	)		(2	)%
Book capitalization		$	3,746,284			$	3,785,344			$	(39,060	)		(1	)%
Ratio of debt-to-capital			35.7	%			35.3	%			0.4	%
Ratio of net debt-to-net capital*			27.8	%			21.1	%			6.7	%
(1) Homes under construction included 98 and 85 models at March 31, 2022 and December 31, 2021, respectively. * See “Reconciliation of Non-GAAP Financial Measures”

CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)
		March 31,				December 31,
			2022				2021
Assets		(unaudited)
Cash and cash equivalents		$	412,703			$	681,528
Receivables			116,749				116,996
Real estate inventories			3,288,347				3,054,743
Investments in unconsolidated entities			122,366				118,095
Goodwill and other intangible assets, net			156,603				156,603
Deferred tax assets, net			57,096				57,096
Other assets			160,208				151,162
Total assets		$	4,314,072			$	4,336,223
Liabilities
Accounts payable		$	76,015			$	84,854
Accrued expenses and other liabilities			490,877				466,013
Loans payable			250,000				250,504
Senior notes			1,088,050				1,087,219
Total liabilities			1,904,942				1,888,590
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, 2022 and December 31, 2021, respectively			—				—
Common stock, $0.01 par value, 500,000,000 shares authorized; 104,980,860 and 109,644,474 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively			1,050				1,096
Additional paid-in capital			—				91,077
Retained earnings			2,407,184				2,355,448
Total stockholders’ equity			2,408,234				2,447,621
Noncontrolling interests			896				12
Total equity			2,409,130				2,447,633
Total liabilities and equity		$	4,314,072			$	4,336,223

CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except share and per share amounts) (unaudited)
		Three Months Ended March 31,
			2022				2021
Homebuilding:
Home sales revenue		$	725,251			$	716,675
Land and lot sales revenue			1,597				1,523
Other operations revenue			644				663
Total revenues			727,492				718,861
Cost of home sales			530,660				545,356
Cost of land and lot sales			475				153
Other operations expense			646				624
Sales and marketing			32,239				40,460
General and administrative			48,456				41,349
Homebuilding income from operations			115,016				90,919
Equity in loss of unconsolidated entities			(55	)			(13	)
Other income, net			273				108
Homebuilding income before income taxes			115,234				91,014
Financial Services:
Revenues			8,752				2,105
Expenses			5,308				1,407
Equity in income of unconsolidated entities			46				2,691
Financial services income before income taxes			3,490				3,389
Income before income taxes			118,724				94,403
Provision for income taxes			(30,225	)			(23,601	)
Net income			88,499				70,802
Net income attributable to noncontrolling interests			(1,021	)			—
Net income available to common stockholders		$	87,478			$	70,802
Earnings per share
Basic		$	0.82			$	0.59
Diluted		$	0.81			$	0.59
Weighted average shares outstanding
Basic			107,326,911				119,355,252
Diluted			108,197,485				120,086,573

MARKET DATA BY REPORTING SEGMENT & STATE (dollars in thousands) (unaudited)
		Three Months Ended March 31,
		2022							2021
		New Homes Delivered			Average Sales Price				New Homes Delivered			Average Sales Price
Arizona		70			$	733			160			$	665
California		514				680			457				672
Nevada		84				686			74				626
Washington		72				972			78				1,001
West total		740				714			769				699
Colorado		43				626			40				602
Texas		220				501			214				453
Central total		263				521			254				477
Maryland		29				579			58				546
North Carolina		18				481			14				368
South Carolina		10				397			4				290
Virginia		39				782			27				730
East total		96				624			103				560
Total		1,099			$	660			1,126			$	636
		Three Months Ended March 31,
		2022							2021
		Net New Home Orders			Average Selling Communities				Net New Home Orders			Average Selling Communities
Arizona		215				13.3			261				15.2
California		701				39.0			690				38.8
Nevada		145				9.0			255				12.0
Washington		48				3.0			71				4.5
West total		1,109				64.3			1,277				70.5
Colorado		131				8.0			105				5.0
Texas		415				22.5			429				24.0
Central total		546				30.5			534				29.0
Maryland		52				5.2			63				6.0
North Carolina		122				8.0			42				1.8
South Carolina		4				0.5			6				1.0
Virginia		63				3.0			65				5.0
East total		241				16.7			176				13.8
Total		1,896				111.5			1,987				113.3

MARKET DATA BY REPORTING SEGMENT & STATE, continued (dollars in thousands) (unaudited)
		As of March 31, 2022											As of March 31, 2021
		Backlog Units			Backlog Dollar Value				Average Sales Price				Backlog Units			Backlog Dollar Value				Average Sales Price
Arizona		665			$	515,500			$	775			580			$	394,390			$	680
California		1,223				1,016,024				831			1,491				1,004,571				674
Nevada		387				302,271				781			317				216,693				684
Washington		105				102,756				979			132				137,379				1,041
West total		2,380				1,936,551				814			2,520				1,753,033				696
Colorado		272				198,666				730			191				115,836				606
Texas		831				473,755				570			713				337,533				473
Central total		1,103				672,421				610			904				453,369				502
Maryland		106				85,952				811			206				118,960				577
North Carolina		201				95,714				476			40				15,770				394
South Carolina		18				7,255				403			5				1,641				328
Virginia		147				131,294				893			150				109,032				727
East total		472				320,215				678			401				245,403				612
Total		3,955			$	2,929,187			$	741			3,825			$	2,451,805			$	641
		March 31,			December 31,
		2022				2021
Lots Owned or Controlled:
Arizona		4,278				4,607
California		14,226				15,091
Nevada		2,427				2,161
Washington		938				1,010
West total		21,869				22,869
Colorado		2,121				1,683
Texas		11,467				12,297
Central total		13,588				13,980
District of Columbia		105				15
Maryland		725				558
North Carolina		4,693				3,044
South Carolina		18				414
Virginia		830				795
East total		6,371				4,826
Total		41,828				41,675
		March 31,			December 31,
		2022				2021
Lots by Ownership Type:
Lots owned		22,317				22,136
Lots controlled (1)		19,511				19,539
Total		41,828				41,675
(1) As of March 31, 2022 and December 31, 2021, lots controlled included lots that were under land option contracts or purchase contracts. As of March 31, 2022 and December 31, 2021, lots controlled for Central include 3,317 and 2,950 lots, respectively, and lots controlled for East include 174 and 179 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 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,
			2022			%				2021			%
		(dollars in thousands)
Home sales revenue		$	725,251			100.0	%		$	716,675			100.0	%
Cost of home sales			530,660			73.2	%			545,356			76.1	%
Homebuilding gross margin			194,591			26.8	%			171,319			23.9	%
Add: interest in cost of home sales			17,065			2.4	%			20,678			2.9	%
Add: impairments and lot option abandonments			489			0.1	%			213			0.0	%
Adjusted homebuilding gross margin		$	212,145			29.3	%		$	192,210			26.8	%
Homebuilding gross margin percentage			26.8	%						23.9	%
Adjusted homebuilding gross margin percentage			29.3	%						26.8	%

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, 2022				December 31, 2021
Loans payable		$	250,000			$	250,504
Senior notes			1,088,050				1,087,219
Total debt			1,338,050				1,337,723
Stockholders’ equity			2,408,234				2,447,621
Total capital		$	3,746,284			$	3,785,344
Ratio of debt-to-capital(1)			35.7	%			35.3	%
Total debt		$	1,338,050			$	1,337,723
Less: Cash and cash equivalents			(412,703	)			(681,528	)
Net debt			925,347				656,195
Stockholders’ equity			2,408,234				2,447,621
Net capital		$	3,333,581			$	3,103,816
Ratio of net debt-to-net capital(2)			27.8	%			21.1	%
(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, 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,
			2022				2021
		(in thousands)
Net income available to common stockholders		$	87,478			$	70,802
Interest expense:
Interest incurred			28,553				21,179
Interest capitalized			(28,553	)			(21,179	)
Amortization of interest in cost of sales			17,065				20,678
Provision for income taxes			30,225				23,601
Depreciation and amortization			5,285				7,130
EBITDA			140,053				122,211
Amortization of stock-based compensation			5,272				3,656
Impairments and lot option abandonments			766				213
Adjusted EBITDA		$	146,091			$	126,080