TRI POINTE HOMES, INC.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements are based on our current intentions,
beliefs, expectations and predictions for the future, and you should not place
undue reliance on these statements. These statements use forward-looking
terminology, are based on various assumptions made by us, and may not be
accurate because of risks and uncertainties surrounding the assumptions that are
made.
Factors listed in this section-as well as other factors not included-may cause
actual results to differ significantly from the forward-looking statements
included in this Quarterly Report on Form 10-Q. There is no guarantee that any
of the events anticipated by the forward-looking statements in this Quarterly
Report on Form 10-Q will occur, or if any of the events occurs, there is no
guarantee what effect it will have on our operations, financial condition, or
share price.
We undertake no, and hereby disclaim any, obligation to update or revise any
forward-looking statements, unless required by law. However, we reserve the
right to make such updates or revisions from time to time by press release,
periodic report, or other method of public disclosure without the need for
specific reference to this Quarterly Report on Form 10-Q. No such update or
revision shall be deemed to indicate that other statements not addressed by such
update or revision remain correct or create an obligation to provide any other
updates or revisions.
Forward-Looking Statements
Forward-looking statements that are included in this Quarterly Report on Form
10-Q are generally accompanied by words such as "anticipate," "believe,"
"could," "estimate," "expect," "future," "goal," "intend," "likely," "may,"
"might," "plan," "potential," "predict," "project," "should," "target," "will,"
"would," or other words that convey the uncertainty of future events or
outcomes. 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, the outcome of legal proceedings, the anticipated impact of natural
disasters or contagious diseases on our operations, operational and financial
results, including our estimates for growth, financial condition, sales prices,
prospects and capital spending.
Risks, Uncertainties and Assumptions
The major risks and uncertainties-and assumptions that are made-that affect our
business and may cause actual results to differ from these forward-looking
statements include, but are not limited to:
• the effects of the ongoing novel coronavirus ("COVID-19") pandemic,
which are highly uncertain, cannot be predicted and will depend upon
future developments, including the severity of COVID-19 and the
duration of the outbreak, the duration of existing socialdistancing
and shelter-in-place orders, further mitigation strategies taken by
applicable government authorities, the availability of a vaccine,
adequate testing and treatments and the prevalence of widespread
immunity to COVID-19;
• 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;
• 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
• levels of competition;
• the successful execution of our internal performance plans, including
restructuring and cost reduction initiatives;
• raw material and labor prices and availability;
• oil and other energy prices;
• the effect ofU.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; - 32 -
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• 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 naturaldisasters,
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 or outbreaks of
contagious diseases, such as COVID-19;
• transportation costs;
• federal and state tax policies;
• the effect 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
• other factors described in "Risk Factors" included in our Annual
Report on Form 10-K for the year ended December 31, 2019 and in other
filings we make with the Securities and Exchange Commission ("SEC").
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and related condensed notes thereto contained
elsewhere in this Quarterly Report on Form 10-Q. The information contained in
this Quarterly Report on Form 10-Q is not a complete description of our business
or the risks associated with an investment in our securities. We urge investors
to review and consider carefully the various disclosures made by us in this
report and in our other reports filed with the SEC , including our Annual Report
on Form 10-K for the year ended December 31, 2019 and subsequent reports on Form
8-K, which discuss our business in greater detail. The section entitled "Risk
Factors" set forth in Item 1A of our Annual Report on Form 10-K, and similar
disclosures in our other SEC filings, discuss some of the important risk factors
that may affect our business, results of operations and financial condition.
Investors should carefully consider those risks, in addition to the information
in this report and in our other filings with the SEC , before deciding to invest
in, or maintain an investment in, our common stock.
Overview
Our first quarter 2020 results reflect positive momentum from 2019, aided by
favorable housing market fundamentals, including low interest rates and a
relatively constrained supply of homes. While our first quarter 2020 results
were positive, and reflect the highest first quarter demand in our history, the
emergence of COVID-19 has impacted, and will continue to impact, our business
and operations.
On March 11, 2020 , the World Health Organization ("WHO") declared the outbreak
of COVID-19 a global pandemic, and on March 13, 2020 , the United States issued a
proclamation declaring a national emergency concerning COVID-19. As a result of
the pandemic, in the United States , a number of states and municipalities issued
shelter-in-place orders or similar mandates for individuals not engaged in
essential activities to remain at home other than for essential needs. Most of
the states, counties and cities in which we operate have designated residential
homebuilding as an essential business activity, which has allowed us to continue
operations in such markets. However, in jurisdictions where homebuilding has not
been deemed an essential business activity, including Seattle, Washington and
the Bay Area in California , we have generally ceased construction activities.
Notwithstanding, we can continue to sell homes in these jurisdictions through
digital platforms.
In response to the WHO declaration and governmental shelter-in-place orders, we
implemented new operating measures relating to our sales, construction and other
operations, including protocols relating to social distancing, enhanced
sanitation, monitoring of symptoms related to COVID-19 and other processes.
Under these measures, we have encouraged employees at our corporate and division
offices whose duties could be performed from home to work remotely until further
notice; our new home galleries and design studios have transitioned to virtual
appointments or appointment-only with pre-screened individuals, as permitted by
law; we have instituted mandatory social distancing and hygiene/sanitation
guidelines in accordance with recommended protocols throughout the organization
(including in our new home sales galleries and design studios, and with respect
to trade partners and their employees on our jobsites); and we have postponed
non-essential customer care service and warranty requests. We have continued to
encourage our construction team members to report to their assigned communities
in the jurisdictions where homebuilding has been deemed an essential activity or
is otherwise permitted by applicable government authorities. We have also
encouraged our employees to use our virtual working and communication platforms
in lieu of holding in-person meetings whenever possible.
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Highlights of the quarter include a monthly absorption rate of 3.9, resulting in
1,661 net new home orders, up 26% from the prior year. As of the end of the
quarter, we had 2,455 units in backlog, representing $1.6 billion in backlog
dollar value, up 33% and 31% from the prior-year period, respectively. For the
quarter, we delivered 958 homes at an average sales price of $621,000 during the
quarter, resulting in home sales revenue of $594.8 million . Our homebuilding
gross margin percentage for the quarter was 20.5% and we ended the quarter with
net income of $31.9 million . In addition, we ended the quarter with total
liquidity of $677.5 million , including cash and cash equivalents of $624.1
million and $53.4 million of availability under our unsecured revolving credit
facility.
Our results for the three months ended March 31, 2020 are not indicative of
trends that we expect to persist as uncertainty caused by COVID-19 has impacted,
and will continue to impact, our business and operations.
Impact of COVID-19 and Business Outlook
The COVID-19 outbreak and the measures taken by governmental authorities to
contain its spread have resulted in substantial adverse effects on the United
States economy, and while we cannot predict with any certainty what the future
will hold, we expect that the United States will experience an economic
recession along with financial stress that is reminiscent of the 2008 global
financial crisis. The full impact of COVID-19 on the United States economy and
our business and operations remains unknown, as the velocity of this economic
slowdown and the subsequent job losses are unique and historical in many ways.
While we expect that the homebuilding industry will be impacted by these events,
given the dynamic nature of the situation, we cannot reasonably estimate the
duration and severity of such impact. However, we anticipate that such impacts
may include reduced consumer confidence, difficulties in obtaining financing for
potential homebuyers, shortages of or increased costs associated with obtaining
building materials, increased unemployment levels, declining wage growth and
fluctuating interest rates. The uncertainty surrounding the containment of this
virus, in the form of testing, vaccination and/or treatments, is a key unknown,
and the ultimate strategy adopted to address the pandemic will substantially
impact the form of any resulting economic recovery. Similarly, the extent of the
impact of COVID-19 on our liquidity and operational and financial performance
will depend on, among other things, existing and future federal, state and local
restrictions regarding virus containment, as we believe these factors are highly
correlated with consumer strength as it relates to employment and economic
well-being.
As of the date of this report, applicable authorities in the State of Washington
and the Bay Area in California have issued orders that have required us to cease
construction activities, which we anticipate will have a material and adverse
impact on our ability to meet applicable development and construction timelines,
as well as sales activity, in such markets in the event such prohibitions remain
in effect for a significant duration. While we continue to build and sell homes
in almost all of our markets, net new orders and traffic in our sales offices
have both slowed significantly due to the impact of COVID-19. With a near
shutdown of large portions of our national economy, we expect home sales to
continue to slow and both incentives and cancellations to increase, even while
we maintain and enhance our sales, construction and closing operations. Further,
the new protocols we implemented in response to the WHO declaration and
governmental shelter-in-place orders affected our business and operations during
the last several weeks of the first quarter, and continue to affect our business
and operations as of the date of this report, in many regards, including by
delaying home deliveries, requiring a substantial investment of time and
resources by our management and organization and causing other material
disruptions to our normal operations.
As noted above, as of March 31, 2020 , we had total liquidity of $677.5 million .
We have implemented a strategy to maximize operating cash flows and maintain our
existing liquidity by reducing or deferring cash expenditures as much as
possible, including negotiating with land sellers and developers to extend the
closing date of land acquisitions and lot take-downs, as well as postponing land
development activities for certain communities.
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--------------------------------------------------------------------------------Consolidated Financial Data (in thousands, except per share amounts):
Three Months Ended March 31,
2020 2019
Homebuilding:
Home sales revenue $ 594,838 $ 492,703
Land and lot sales revenue - 1,029
Other operations revenue 618 598
Total revenues 595,456 494,330
Cost of home sales 472,882 421,536
Cost of land and lot sales 202 1,495
Other operations expense 624 590
Sales and marketing 42,637 38,989
General and administrative 39,837 38,597
Homebuilding income (loss) from operations 39,274 (6,877 )
Equity in loss of unconsolidated entities (14 ) (25 )
Other income, net 373 6,241
Homebuilding income (loss) before income taxes 39,633 (661 ) Financial Services: Revenues 1,594 302 Expenses 1,079 321 Equity in income of unconsolidated entities 1,556
775
Financial services income before income taxes 2,071 756 Income before income taxes 41,704 95 Provision for income taxes (9,821 ) (24 ) Net income$ 31,883 $ 71 Earnings per share Basic $ 0.24 $ 0.00 Diluted $ 0.24 $ 0.00 Three Months EndedMarch 31, 2020 Compared to Three Months EndedMarch 31, 2019 Net New Home Orders , Average Selling Communities and Monthly Absorption Rates by Segment Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Percentage Change Net New Average Monthly Net New Average Monthly Net New Average Monthly Home Selling Absorption Home Selling Absorption Home Selling Absorption Orders Communities Rates Orders Communities Rates Orders Communities Rates Maracay 240 15.3 5.2 161 11.8 4.5 49 % 30 % 15 % Pardee Homes 475 41.5 3.8 433 44.5 3.2 10 % (7 )% 18 % Quadrant Homes 126 7.0 6.0 75 7.2 3.5 68 % (3 )% 73 % Trendmaker Homes 234 30.2 2.6 243 39.3 2.1 (4 )% (23 )% 25 % TRI Pointe Homes 414 32.8 4.2 295 30.8 3.2 40 % 6 % 32 % Winchester Homes 172 14.0 4.1 114 14.2 2.7 51 % (1 )% 53 % Total 1,661 140.8 3.9 1,321 147.8 3.0 26 % (5 )% 32 % - 35 -
-------------------------------------------------------------------------------- Net new home orders for the three months endedMarch 31, 2020 increased by 340 orders, or 26%, to 1,661, compared to 1,321 during the prior-year period. The increase in net new home orders was due to a 32% increase in monthly absorption rates, offset by a 5% decrease in average selling communities. New home order demand was exceptionally strong through January and February of 2020, and remained strong into early March before the COVID-19 pandemic and the measures taken to contain its spread, as well as the resulting consumer impact, dramatically shifted demand across all of our markets. Net new home orders and monthly absorption rates were severely impacted during the second half of March and, as of the date of this report, continue to be impacted into April. As a result, our results for the three months endedMarch 31, 2020 are not indicative of trends that we expect to persist as uncertainty caused by COVID-19 has impacted, and will continue to impact, our business and operations. Maracay reported a 49% increase in net new home orders driven by a 30% increase in average selling communities and a 15% increase in monthly absorption rates. The increase in Maracay's monthly absorption rate to 5.2 for the three months endedMarch 31, 2020 was driven by strong demand for Maracay's new community openings during the current-year period as well as strong market fundamentals inArizona throughout most of the quarter.Pardee Homes reported a 10% increase in net new home orders largely driven by an 18% increase in monthly absorption rates offset by a 7% decrease in average selling communities. The increase in monthly absorption rate was due to strong demand environments in ourLos Angeles , Inland Empire,San Diego andLas Vegas markets. Net new home orders increased 68% atQuadrant Homes due to a 73% increase in monthly absorption rate during the current-year period as compared to the prior-year period. The increase in monthly absorption rate to 6.0 was due to a more stable demand environment for most of the quarter compared to the prior-year period.Trendmaker Homes' net new home orders decreased 4% due to a 23% decrease in average selling communities offset by a 25% increase in monthly absorption rate. We experienced stronger demand in ourHouston andAustin markets for most of the quarter, while demand in ourDallas-Fort Worth market decreased slightly. In addition to the impacts from COVID-19 beginning inmid-March 2020 , we believe theHouston market was impacted during the last several weeks of the quarter by theRussia andSaudi Arabia oil price conflict, as the energy sector comprises a substantial percentage of theHouston economy and the uncertainty stemming from these events likely resulted in a negative impact on housing demand.TRI Pointe Homes' net new home orders increased 40% due to a 32% increase in the monthly absorption rate and a 6% increase in average selling communities. The increase inTRI Pointe Homes' monthly absorption rate was driven by stronger market conditions in both ourCalifornia andColorado markets compared to the prior-year period.Winchester Homes reported a 51% increase in net new home orders as a result of a 53% increase in monthly absorption rate. The increase inWinchester Homes' monthly absorption rate was due to strong order demand and more favorable overall market conditions compared to the prior-year period. Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands) As of March 31, 2020 As of March 31, 2019 Percentage Change Backlog Average Backlog Average Backlog Average Backlog Dollar Sales Backlog Dollar Sales Backlog Dollar Sales Units Value Price Units Value Price Units Value Price Maracay 430$ 239,555 $ 557 238$ 139,862 $ 588 81 % 71 % (5 )% Pardee Homes 678 491,236 725 593 472,729 797 14 % 4 % (9 )% Quadrant Homes 163 145,873 895 77 75,599 982 112 % 93 % (9 )% Trendmaker Homes 370 183,012 495 402 196,256 488 (8 )% (7 )% 1 % TRI Pointe Homes 517 365,638 707 371 247,399 667 39 % 48 % 6 % Winchester Homes 297 193,167 650 161 105,993 658 84 % 82 % (1 )% Total 2,455$ 1,618,481 $ 659 1,842$ 1,237,838 $ 672 33 % 31 % (2 )% Backlog units reflect the number of homes, net of actual cancellations experienced during the period, for which we have entered into a sales contract with a homebuyer but for which we have not yet delivered the home. Homes in backlog are generally delivered within three to nine months, although we may experience cancellations of sales contracts prior to delivery. Our cancellation rate of homebuyers who contracted to buy a home but cancelled prior to delivery of the home (as a percentage of overall orders) was 13% and 15% during the three-month periods endedMarch 31, 2020 and 2019, respectively. Due to the timing of the COVID-19 pandemic relative to the current-year period end, the impact of cancellations on our results for the three months endedMarch 31, 2020 is not representative of the cancellation volume we expect to experience as a result of the COVID-19 pandemic and the related preventative and mitigative measures taken by applicable governmental authorities. As of the date of this report, our cancellation rates continued to increase as economic uncertainties continue to develop. The dollar value of backlog was$1.6 billion as ofMarch 31, 2020 , an increase of$380.6 million , or 31%, compared to$1.2 billion as ofMarch 31, 2019 . This increase was due to an increase in backlog units of 613, or 33%, to 2,455 as ofMarch 31, 2020 , compared to 1,842 as ofMarch 31, 2019 , offset by a 2% decrease in the average sales price of homes in backlog to$659,000 as - 36 - -------------------------------------------------------------------------------- ofMarch 31, 2020 , compared to$672,000 as ofMarch 31, 2019 . Our results for the three months endedMarch 31, 2020 are not indicative of trends that we expect to persist as uncertainty caused by COVID-19 has impacted, and will continue to impact, our business and operations. Maracay's backlog dollar value increased 71% compared to the prior-year period due to an 81% increase in backlog units offset by a 5% decrease in average sales price. The increase in backlog units is due to the strong market conditions inArizona for most of the current-year period and the success of recently opened communities. In addition, we opened the current-year period with a higher number of backlog units, which resulted in higher carryforward of opening backlog units in the current-year period compared to the prior-year period, which had been impacted by the housing slowdown in late 2018.Pardee Homes' backlog dollar value increased 4% due to an increase in backlog units of 14% offset by a decrease in average sales price of 9%. The increase in backlog units is largely due to the strong demand environment we experienced for most of the quarter, in addition to a higher carryforward of backlog to start the current-year period.Quadrant Homes' backlog dollar value increased 93% as a result of a 112% increase in backlog units offset by a 9% decrease in average sales price. The increase in backlog units was a result of starting the current-year period with an increase in backlog units, which further increased due to the 68% increase in net new home orders during the period, as market conditions inSeattle were very strong for most of the quarter.Trendmaker Homes' backlog dollar value decreased 7% due primarily to an 8% decrease in backlog units. The decrease in backlog units resulted primarily from a 23% decrease in average selling communities for the quarter, as we experienced a strong demand environment for most of the quarter.TRI Pointe Homes' backlog dollar value increased 48% mainly due to a 39% increase in backlog units, which correlates to the 40% increase in net new home orders for the quarter.Winchester Homes' backlog dollar value increased 82% due primarily to an 84% increase in backlog units. The increase in backlog units is a result of the 51% increase in net new home orders for the three months endedMarch 31, 2020 in addition to a significantly higher unit backlog to start the current-year period compared to the prior-year period. New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands) Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Percentage Change New Home Average New Home Average New Home Average Homes Sales Sales Homes Sales Sales Homes Sales Sales Delivered Revenue Price Delivered Revenue Price Delivered Revenue Price Maracay 140$ 71,752 $ 513 74$ 39,561 $ 535 89 % 81 % (4 )% Pardee Homes 257 178,402 694 242 134,863 557 6 % 32 % 25 % Quadrant Homes 52 43,457 836 44 43,273 983 18 % - % (15 )% Trendmaker Homes 209 96,120 460 154 70,120 455 36 % 37 % 1 % TRI Pointe Homes 226 158,670 702 242 171,791 710 (7 )% (8 )% (1 )% Winchester Homes 74 46,437 628 58 33,095 571 28 % 40 % 10 % Total 958$ 594,838 $ 621 814$ 492,703 $ 605 18 % 21 % 3 % Home sales revenue increased$102.1 million , or 21%, to$594.8 million for the three months endedMarch 31, 2020 . The increase was comprised of (i)$87.1 million related to an increase of 144 new homes delivered in the three months endedMarch 31, 2020 compared to the prior-year period, and (ii)$15.0 million related to an increase of$16,000 in average sales price of homes delivered in the three months endedMarch 31, 2020 compared to the prior-year period. Our results for the three months endedMarch 31, 2020 are not indicative of trends that we expect to persist as uncertainty caused by COVID-19 has impacted, and will continue to impact, our business and operations. Maracay home sales revenue increased 81% due to an 89% increase in new homes delivered during the current-year period. The increase in new homes delivered is due to a 119% increase in backlog units to start the current-year period compared to the prior-year period.Pardee Homes' home sales revenue increased 32% due to a 25% increase in average sales price and a 6% increase in new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of deliveries from our higher-pricedCalifornia assets in the current-year period, particularly from ourSan Diego market.Quadrant Homes' home sales revenue remained steady due to the offsetting impacts of an 18% increase in new homes delivered and a 15% decrease in average sales price. The increase in new homes delivered was due to starting the current-year period with a higher number of backlog units compared to the prior-year period.Trendmaker Homes' home sales revenue increased 37% due to a 36% increase in new homes delivered. The increase in new homes delivered was due to the timing of deliveries and starting the current-year period with a higher number of backlog units.TRI Pointe Homes' home sales revenue decreased 8% due primarily to a 7% decrease in new homes delivered. The decrease in new homes delivered was driven by the timing of deliveries. Home sales revenue increased atWinchester Homes by 40% due to a 28% increase in new - 37 - -------------------------------------------------------------------------------- homes delivered and a 10% increase in average sales price. The increase in new homes delivered was due to a higher number of backlog units at the start of the current-year period compared to the prior-year period. Homebuilding Gross Margins (dollars in thousands) Three Months Ended March 31, 2020 % 2019 % Home sales revenue$ 594,838 100.0 %$ 492,703 100.0 % Cost of home sales 472,882 79.5 % 421,536 85.6 % Homebuilding gross margin 121,956 20.5 % 71,167 14.4 % Add: interest in cost of home sales 16,822 2.8 % 14,191 2.9 % Add: impairments and lot option abandonments 349 0.1 % 5,202 1.1 % Adjusted homebuilding gross margin(1)$ 139,127 23.4 %$ 90,560 18.4 % Homebuilding gross margin percentage 20.5 % 14.4 % Adjusted homebuilding gross margin percentage(1) 23.4 % 18.4 % __________
(1) Non-GAAP financial measure (as discussed below).
Our homebuilding gross margin percentage increased to 20.5% for the three months endedMarch 31, 2020 as compared to 14.4% for the prior-year period. The increase in gross margin percentage was due to a decrease in incentives as compared to the prior-year period, during which we experienced weaker pricing trends, in addition to higher current quarter revenue from some of our long-termCalifornia communities, which produce gross margins above the Company average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 23.4% for the three months endedMarch 31, 2020 , compared to 18.4% for the prior-year period. Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it 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. See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the most directly comparable GAAP measure. Sales and Marketing, General and Administrative Expense (dollars in thousands) As a Percentage of Three Months Ended March 31, Home Sales Revenue 2020 2019 2020 2019 Sales and marketing$ 42,637 $ 38,989 7.2 % 7.9 % General and administrative (G&A) 39,837 38,597 6.7 % 7.8 %
Total sales and marketing and G&A
13.9 % 15.7 %
Total sales and marketing and general and administrative ("SG&A") as a
percentage of home sales revenue decreased to 13.9% for the three months ended
March 31, 2020 , compared to 15.7% in the prior-year period. Total SG&A expense
increased $4.9 million to $82.5 million for the three months ended March 31,
2020 from $77.6 million in the prior-year period.
Sales and marketing expense as a percentage of home sales revenue decreased to
7.2% for the three months ended March 31, 2020 , compared to 7.9% for the
prior-year period. The decrease was due primarily to higher leverage on the
fixed components of sales and marketing expense as a result of the 21% increase
in homebuilding revenue compared to the prior-year period. Sales and marketing
expense increased to $42.6 million for the three months ended March 31, 2020
compared to $39.0 million in the prior-year period due primarily to higher
variable commission costs associated with higher home sales revenue.
General and administrative ("G&A") expense as a percentage of home sales revenue
decreased to 6.7% of home sales revenue for the three months ended March 31,
2020 compared to 7.8% for the prior-year period largely due to higher leverage
on our G&A expense as a result of the 21% increase in homebuilding revenue
compared to the prior-year period. G&A
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expense increased to $39.8 million for the three months ended March 31, 2020
compared to $38.6 million for the prior-year period.
Interest
Interest, which we incurred principally to finance land acquisitions, land
development and home construction, totaled $20.8 million and $23.4 million for
the three months ended March 31, 2020 and 2019, respectively. All interest
incurred in both periods was capitalized.
Income Tax
For the three months ended March 31, 2020 , we recorded a tax provision of $9.8
million based on an effective tax rate of 23.5%. For the three months ended
March 31, 2019 , we recorded a tax provision of $24,000 based on an effective tax
rate of 25.3%. The increase in provision for income taxes is due to a $41.6
million increase in income before income taxes to $41.7 million for the three
months ended March 31, 2020 , compared to $95,000 for the prior-year period.
Financial Services Segment
Income before income taxes from our financial services operations increased to
$2.1 million for the three months ended March 31, 2020 compared to $756,000 for
the prior-year period. This increase is due to higher home sales volume in the
three months ended March 31, 2020 compared to the prior-year period, resulting
in a corresponding increase in financial services captured in the current year.
We experienced higher financial services profit in all three areas of our
financial services segment, represented by mortgage financing, title and escrow,
and property and casualty insurance operations.
Lots Owned or Controlled by Segment
Excluded from owned and controlled lots are those related to Note 6, Investments
in Unconsolidated Entities, to the accompanying condensed notes to unaudited
consolidated financial statements included in this Quarterly Report on Form
10-Q. The table below summarizes our lots owned or controlled by segment as of
the dates presented:
Increase
March 31, (Decrease)
2020 2019 Amount %
Lots Owned
Maracay 2,234 2,272 (38 ) (2 )%
Pardee Homes 12,999 13,523 (524 ) (4 )%
Quadrant Homes 1,013 854 159 19 %
Trendmaker Homes 2,891 1,787 1,104 62 %
TRI Pointe Homes 2,736 2,914 (178 ) (6 )%
Winchester Homes 987 1,291 (304 ) (24 )%
Total 22,860 22,641 219 1 %
Lots Controlled(1)
Maracay 1,493 738 755 102 %
Pardee Homes 328 731 (403 ) (55 )%
Quadrant Homes 38 694 (656 ) (95 )%
Trendmaker Homes 2,507 611 1,896 310 %
TRI Pointe Homes 4,068 927 3,141 339 %
Winchester Homes 713 359 354 99 %
Total 9,147 4,060 5,087 125 %Total Lots Owned or Controlled(1) 32,007 26,701 5,306 20 %
__________
(1) As ofMarch 31, 2020 and 2019, lots controlled represented lots that were under land or lot option contracts or purchase contracts. - 39 -
-------------------------------------------------------------------------------- Liquidity and Capital Resources Overview Our principal uses of capital for the three months endedMarch 31, 2020 were operating expenses, land purchases, land development, home construction and repurchases of our common stock. We used funds generated by our operations to meet our short-term working capital requirements. We monitor financing requirements to evaluate potential financing sources, including bank credit facilities and note offerings. In earlyMarch 2020 , we borrowed$100 million under our revolving credit facility for normal operating purposes. Due to the economic impact of the COVID-19 pandemic, and for the purpose of safeguarding our balance sheet as the credit and banking market showed signs of distress in the wake of the outbreak, later inMarch 2020 , we borrowed an additional$400 million under our revolving credit facility. While the current economic environment is unprecedented, and the ultimate effects of COVID-19 and the related restrictions imposed on businesses and individuals across the world remain unknown, we continue to monitor the credit markets as we remain focused on generating positive margins in our homebuilding operations. While acquiring desirable land positions is critical to our long-term growth initiatives, under the current conditions we are focused primarily on maintaining a strong balance sheet while maximizing flexibility as to future land spend. As ofMarch 31, 2020 , we had total liquidity of$677.5 million , including cash and cash equivalents of$624.1 million and$53.4 million of availability under our Credit Facility, as described below, after considering the borrowing base provisions and outstanding letters of credit. Our board of directors will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the availability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service. Senior Notes InJune 2017 ,TRI Pointe Group issued$300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the "2027 Notes") at 100.00% of their aggregate principal amount. Net proceeds of this issuance were$296.3 million , after debt issuance costs and discounts. The 2027 Notes mature onJune 1, 2027 and interest is paid semiannually in arrears onJune 1 andDecember 1 . InMay 2016 ,TRI Pointe Group issued$300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the "2021 Notes") at 99.44% of their aggregate principal amount. Net proceeds of this issuance were$293.9 million , after debt issuance costs and discounts. The 2021 Notes mature onJuly 1, 2021 and interest is paid semiannually in arrears onJanuary 1 andJuly 1 .TRI Pointe Group and its wholly owned subsidiaryTRI Pointe Homes, Inc. ("TRI Pointe Homes ") are co-issuers of the$450 million aggregate principal amount 5.875% Senior Notes due 2024 (the "2024 Notes"). The 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering of the 2024 Notes was$429.0 million , after debt issuance costs and discounts. The 2024 Notes mature onJune 15, 2024 , with interest payable semiannually in arrears onJune 15 andDecember 15 . Our outstanding senior notes (the "Senior Notes") contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions. As ofMarch 31, 2020 , we were in compliance with the covenants required by our Senior Notes. Loans Payable OnMarch 29, 2019 , we entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement"), which amended and restated our Amended and Restated Credit Agreement, dated as ofJuly 7, 2015 . The Credit Facility (as defined below), which matures onMarch 29, 2023 , consists of a$600 million revolving credit facility (the "Revolving Facility") and a$250 million term loan facility (the "Term Facility" and together with the Revolving Facility, the "Credit Facility"). The Term Facility includes a 90-day delayed draw provision, which allowed us to draw the full$250 million from the Term Facility inJune 2019 in connection with the maturity of the 4.375% Senior Notes that matured onJune 15, 2019 . We may increase the Credit Facility to not more than$1 billion in the aggregate, at our request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of$75 million for letters of credit. We may borrow under the Revolving Facility in the ordinary course of business to repay senior notes and fund our operations, including our land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a - 40 - -------------------------------------------------------------------------------- borrowing base. Interest rates on borrowings under the Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00%, depending on our leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company's leverage ratio. As ofMarch 31, 2020 , we had$500 million of outstanding debt under the Revolving Facility with an interest rate of 2.15% per annum and there was$53.4 million of availability after considering the borrowing base provisions and outstanding letters of credit. As ofMarch 31, 2020 , we had$250 million outstanding debt under the Term Facility with an interest rate of 2.93%. As ofMarch 31, 2020 , there were$4.0 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the remaining term of the Credit Facility. Accrued interest, including loan commitment fees, related to the Credit Facility was$1,400,000 and$1.2 million as ofMarch 31, 2020 andDecember 31, 2019 , respectively. AtMarch 31, 2020 andDecember 31, 2019 , we had outstanding letters of credit of$46.6 million and$32.6 million , respectively. These letters of credit were issued to secure various financial obligations. We believe it is not probable that any outstanding letters of credit will be drawn upon. Under the Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands): Covenant Actual at Requirement at March 31, March 31, Financial Covenants 2020 2020 Consolidated Tangible Net Worth$ 1,954,707 $
1,469,129
(Not less than
50% of the net proceeds from equity offerings after
December 31, 2018 ) Leverage Test 37.8 % ?55% (Not to exceed 55%) Interest Coverage Test 5.3 ?1.5 (Not less than 1.5:1.0) In addition, the Credit Facility limits the aggregate number of single family dwellings (where construction has commenced) owned by the Company or any guarantor that are not presold or model units to no more than the greater of (i) 50% of the number of housing unit closings (as defined) during the preceding 12 months; or (ii) 100% of the number of housing unit closings during the preceding 6 months. However, a failure to comply with this "Spec Unit Inventory Test" will not be an event of default or default, but will be excluded from the borrowing base as of the last day of the quarter in which the non-compliance occurs. The Credit Facility further requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods. As ofMarch 31, 2020 , we were in compliance with all of these financial covenants. Stock Repurchase Program OnFebruary 13, 2020 , our board of directors discontinued and cancelled our 2019 Repurchase Program and approved our 2020 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to$200 million throughMarch 31, 2021 . Purchases of common stock pursuant to the 2020 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 Exchange Act. We are not obligated under the 2020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the 2020 Repurchase Program at any time. Our management will determine the timing and amount of repurchase 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. During the three months endedMarch 31, 2020 , we repurchased and retired an aggregate of 6,558,323 shares of our common stock under the 2020 Repurchase Program for$102.0 million . - 41 - -------------------------------------------------------------------------------- Leverage Ratios We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-net capital are calculated as follows (dollars in thousands): March 31, 2020 December 31, 2019 Loans Payable$ 750,000 $ 250,000 Senior Notes 1,034,925 1,033,985 Total debt 1,784,925 1,283,985 Stockholders' equity 2,115,281 2,186,530 Total capital$ 3,900,206 $ 3,470,515 Ratio of debt-to-capital(1) 45.8 % 37.0 % Total debt$ 1,784,925 $ 1,283,985 Less: Cash and cash equivalents (624,129 ) (329,011 ) Net debt 1,160,796 954,974 Stockholders' equity 2,115,281 2,186,530 Net capital$ 3,276,077 $ 3,141,504 Ratio of net debt-to-net capital(2) 35.4 % 30.4 %
__________
(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 a non-GAAP financial measure and 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. The most directly comparable GAAP financial measure is the ratio of
debt-to-capital. We believe the ratio of net debt-to-net capital is a
relevant financial measure for investors to understand the leverage
employed in our operations and as an indicator of our ability to obtain
financing. See the table above reconciling this non-GAAP financial measure
to the ratio of debt-to-capital. Because the ratio of net debt-to-net
capital is not calculated in accordance with GAAP, it 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.
Cash Flows-Three Months EndedMarch 31, 2020 Compared to Three Months EndedMarch 31, 2019 For the three months endedMarch 31, 2020 as compared to the three months endedMarch 31, 2019 : • Net cash used in operating activities decreased by$26.0 million to$89.0 million for the three months endedMarch 31, 2020 , from net cash used of$114.9 million for the three months endedMarch 31, 2019 . The
change was comprised of offsetting activity, including (i) an increase
in net income to
2020 compared to
cash used for accrued expenses and other liabilities to
the three months ended
prior-year period, offset by (iii) an increase in cash used for real
estate inventory to
2020 compared to
offsetting activity included changes in other assets, receivables,
accounts payable, deferred income taxes and returns on investments in
unconsolidated entities.
• Net cash used in investing activities was $9.2 million for the three
months ended March 31, 2020 , compared to $7.4 million for theprior-year period. The increase in cash used in investing activities
was due mainly to an increase in purchases of property and equipment.
• Net cash provided by financing activities was $393.2 million for the
three months ended March 31, 2020 , compared to net cash used in
financing activities of $6.5 million for the prior-year period. Theincrease in net cash provided by financing activities was due primarily
to our borrowing of
$102.0 million of cash used for share repurchases for the three months endedMarch 31, 2020 compared to no similar cash transaction for the prior-year period.
Off-Balance Sheet Arrangements and Contractual Obligations
- 42 -
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In the ordinary course of business, we enter into purchase contracts in order to
procure lots for the construction of our homes. We are subject to customary
obligations associated with entering into contracts for the purchase of land and
improved lots. These purchase contracts typically require a cash deposit and the
purchase of properties under these contracts is generally contingent upon
satisfaction of certain requirements by the sellers, including obtaining
applicable property and development entitlements. We also utilize option
contracts with land sellers and land banking arrangements as a method of
acquiring land in staged takedowns, to help us manage the financial and market
risk associated with land holdings, and to reduce the use of funds from our
corporate financing sources. These option contracts and land banking
arrangements generally require a non-refundable deposit for the right to acquire
land and lots over a specified period of time at pre-determined prices. We
generally have the right, at our discretion, to terminate our obligations under
both purchase contracts and option contracts by forfeiting our cash deposit with
no further financial responsibility to the land seller. In some cases, however,
we may be contractually obligated to complete development work even if we
terminate the option to procure land or lots. As of March 31, 2020 , we had $90.9
million of cash deposits, the majority of which are non-refundable, pertaining
to land and lot option contracts and purchase contracts with an aggregate
remaining purchase price of $896.6 million (net of deposits). See Note 7,
Variable Interest Entities, to the accompanying condensed notes to unaudited
consolidated financial statements included in this Quarterly Report on Form
10-Q.
Our utilization of land and lot option contracts and land banking arrangements
is dependent on, among other things, the availability of land sellers or land
banking firms willing to enter into such arrangements, the availability of
capital to finance the development of optioned land and lots, general housing
market conditions, and local market dynamics. Options may be more difficult to
procure from land sellers in strong housing markets and are more prevalent in
certain geographic regions.
Inflation
Our operations can be adversely impacted by inflation, primarily from higher
land, financing, labor, material and construction costs. In addition, inflation
can lead to higher mortgage rates, which can significantly affect the
affordability of mortgage financing to homebuyers. While we attempt to pass on
cost increases to customers through increased prices, when weak housing market
conditions exist, we are often unable to offset cost increases with higher
selling prices.
Seasonality
Historically, the homebuilding industry experiences seasonal fluctuations in
quarterly operating results and capital requirements. We typically experience
the highest new home order activity during the first and second quarters of our
fiscal year, although this activity is also highly dependent on the number of
active selling communities, timing of new community openings and other market
factors. Since it typically takes three to nine months to construct a new home,
the number of homes delivered and associated home sales revenue typically
increases in the third and fourth quarters of our fiscal year as new home orders
sold earlier in the year convert to home deliveries. Because of this
seasonality, home starts, construction costs and related cash outflows have
historically been highest in the second and third quarters of our fiscal year,
and the majority of cash receipts from home deliveries occur during the second
half of the year. We expect this seasonal pattern to continue over the
long-term, although it may be affected by volatility in the homebuilding
industry.
Description of Projects and Communities Under Development
The following table presents project information relating to each of our markets
as of
- 43 -
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Maracay
Cumulative Homes
Homes Lots Delivered
Year of Total Delivered Owned as of Backlog as for the Three Sales Price
County, Project, First Number of as of March 31, of March 31, Months Ended Range
City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6)
Phoenix, Arizona
City of Buckeye:
Arroyo Seco 2020 44 - 44 12 - $414 - $478
City of Chandler:
Mission Estates 2019 26 18 8 8 6 $537 - $598
Windermere Ranch 2019 91 28 63 34 8 $521 - $561
Canopy North 2020 129 - 12 - - $459 - $528
Canopy South 2020 112 - 11 - - $539 - $563
City of Gilbert:
Lakes at Annecy 2019 216 48 168 54 12 $285 - $362
Annecy P3 2021 250 - 250 - - $236 - $313
Lakeview Trails 2019 92 50 42 30 9 $570 - $655
Lakeview Trails II 2020 68 - 68 - - $570 - $655
Copper Bend 2020 38 1 37 26 1 $492 - $511
Avocet at
Waterston 2020 115 - 115 2 - $512 - $597
Brighton at
Waterston 2020 88 - 88 5 - $616 - $660
Domaine at
Waterston 2020 128 - 128 2 - $764 - $809
City of Goodyear:
Villages at Rio
Paseo 2018 117 81 36 19 20 $204 - $233
Cottages at Rio
Paseo 2018 93 82 11 1 1 $243 - $264
Preserve at
Sedella 2021 75 - 75 - - $441 - $521
City of Mesa:
Electron at
Eastmark 2019 53 48 5 5 10 $364 - $441
Cadence 2021 127 - 127 - - $312 - $345
City of Peoria:
Legacy at The
Meadows 2017 74 68 6 - - $425 - $451
Estates at The
Meadows 2017 272 178 94 25 16 $524 - $613
Enclave at The
Meadows 2018 126 85 41 31 15 $417 - $512
Deseo 2019 94 10 84 38 4 $525 - $619
City of Phoenix:
Navarro Groves 2018 54 53 1 - - $439 - $484
Loma @ Avance 2019 124 32 92 28 10 $381 - $440
Ranger @ Avance 2019 145 10 135 41 8 $426 - $498
Piedmont @ Avance 2019 99 14 85 20 12 $505 - $520
Alta @ Avance 2020 26 2 24 10 2 $623 - $652
Town of Queen
Creek
Madera 50's 2022 105 - 105 - - $330 - $410
Madera 60's 2022 70 - 70 - - $391 - $453
Madera 75's 2022 91 - 91 - - $463 - $510
Pathfinder South
at Spur Cross 2020 53 - 53 23 - $491 - $511
Pathfinder North
at Spur Cross 2020 65 - 65 16 - $575 - $589
Closed Communities N/A - - - - 4
Phoenix, Arizona
Total 3,260 808 2,234 430 138
Tucson, Arizona
Closed Communities N/A - - - - 2
Tucson, Arizona
Total - - - - 2
Maracay Total 3,260 808 2,234 430 140
- 44 ---------------------------------------------------------------------------------
Pardee Homes Cumulative Lots Homes Homes Owned as Delivered Year of Total Delivered of Backlog as for the Three Sales Price County, First Number of as of March 31, of March 31, Months Ended Range Project, City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6)California San Diego County: Sendero 2019 112 72 40 24 11$1,440 -$1,580 Vista Santa Fe 2019 44 27 17 9 9$1,910 -$2.010 Terraza 2019 81 60 21 18 14$1,360 -$1,430 Carmel 2019 105 48 57 21 1$1,530 -$1,640 Vista Del Mar 2019 79 37 42 17 4$1,640 -$1,770 Highlands 2021 52 - 52 - -$1,640 -$1,930 Sendero Collection 2021 76 - 76 - -$1,350 -$1,400 Pacific Highlands Ranch Future 2021 42 - 42 - - TBD Lake Ridge 2018 129 90 39 9 13$790 -$865 Veraz 2018 111 55 56 11 9$410 -$490 Solmar 2019 74 21 53 9 12$390 -$485 Solmar Sur 2021 108 - 108 - -$390 -$485 Marea 2020 143 - 143 - -$365 -$435 PA61 Townhomes 2021 170 - 170 - - TBD Meadowood 2021 844 - 844 - -$390 -$630 South Otay Mesa TBD 893 - 893 - - TBD Los Angeles County: Cresta 2018 67 36 31 14 2$830 -$890 Verano 2017 95 61 34 3 6$550 -$650 Arista 2017 143 92 51 17 1$735 -$800 Lyra 2019 141 41 100 26 8$650 -$720 Sola 2019 189 63 126 41 2$580 -$610 Luna 2020 114 - 114 - -$615 -$660 Strata 2021 292 - 292 - -$550 -$670 Skyline Ranch Future TBD 334 - 334 - - TBD Riverside County: Starling 2017 68 67 1 1 1$425 -$440 Canyon Hills Future 70 x 115 TBD 125 - 125 - - TBD Westlake 2020 163 - 163 - -$310 -$325 Daybreak 2017 159 128 31 19 5$360 -$385 Abrio 2018 113 77 36 15 7$415 -$450 Cascade 2017 194 162 32 16 4$335 -$360 Beacon 2018 106 77 29 22 6$510 -$560 Alisio 2019 84 54 30 22 3$300 -$335 Elan 2019 98 14 84 18 2$390 -$425 Mira 2019 93 10 83 12 -$365 -$395 Avid 2019 68 19 49 5 2$340 -$365 Vita 2019 115 31 84 11 3$315 -$340 Sundance Future Active Adult TBD 330 - 330 - - TBD Avena 2018 84 58 26 12 6$455 -$485 Tamarack 2018 84 81 3 3 3$480 -$510 Braeburn 2018 82 54 28 16 9$415 -$450 Overland at Spencer's Crossing 2021 85 - 85 - -$485 -$515 Canvas 2018 89 67 22 19 9$405 -$430 Kadence 2018 85 57 28 20 8$420 -$435 Newpark 2018 93 53 40 6 11$445 -$490 Easton 2018 92 37 55 19 3$480 -$530 Compass at Audie Murphy Ranch 2021 52 - 52 - -$450 -$510 Tournament Hills Future TBD 268 - 268 - - TBD Terramor 2022 75 - 75 - - TBD - 45 -
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Arroyo 2020 110 - 110 - -$305 -$350 Cienega 2020 106 - 106 - -$310 -$345 Centerstone 2020 120 - 120 - -$320 -$335 Landmark 2020 86 - 86 - -$340 -$365 Horizon 2020 57 - 57 - -$395 -$420 Atwell Future 2020 3,874 - 3,874 - - TBDSan Joaquin County : Bear Creek TBD 1,252 - 1,252 - - TBD Closed Communities N/A - - - - 3 California Total 12,848 1,749 11,099 455 177 Nevada Clark County: Tera Luna 2018 116 35 81 5 6$560 -$670 Strada 2017 83 82 1 1 3$425 -$490 Linea 2018 123 115 8 7 7$370 -$410 Strada 2.0 2019 92 10 82 25 5$460 -$550 Arden 2020 79 - 79 - -$380 -$422 Capri 2020 114 - 114 - -$302 -$328 Arden 2.0 2022 154 - 154 - -$370 -$400 Capri 2.0 2022 214 - 214 - -$300 -$325 Pebble Estate Future TBD 8 - 8 - - TBD Evolve 2019 74 33 41 27 8$305 -$335 Midnight Ridge 2020 104 - 104 29 -$525 -$645 Axis 2017 52 53 - - 3$860 -$1,125 Axis at the Canyons 2019 26 13 12 6 1$800 -$920 Cobalt 2017 107 80 27 6 6$380 -$460 Onyx 2018 88 59 29 22 7$470 -$505 Pivot 2017 88 87 1 - 1$405 -$470 Nova Ridge 2017 79 71 8 1 2$685 -$850 Nova Ridge at the Cliffs 2019 29 4 25 7 1$685 -$850 Corterra 2018 53 36 17 7 2$455 -$545 Highline 2020 59 - 59 9$460 -$570 Indigo 2018 202 86 116 20 9$300 -$370 Larimar 2018 106 40 66 9 9$355 -$420 Blackstone 2018 105 55 50 12 6$410 -$510 35 x 90 Product TBD 140 - 140 - - TBD Cirrus 2019 54 11 43 14 4$370 -$410 Sandalwood 2020 116 - 116 16 -$740 -$910 Silverado Entry-Level 2021 96 - 96 - -$400 -$450 Silverado Move-Up 2021 93 - 93 - -$440 -$485 Silverado Courtyard Townhome 2021 116 - 116 - -$300 -$320 Nevada Total 2,770 870 1,900 223 80 Pardee Total 15,618 2,619 12,999 678 257 - 46 -
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Quadrant Homes Cumulative Lots Homes Homes Owned as Delivered Year of Total Delivered of Backlog as for the Three Sales Price County, Project, First Number of as of March 31, of March 31, Months Ended Range City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6)Washington Snohomish County: Grove North, Bothell 2019 43 17 26 23 6$805 -$910 Trailside at Meadowdale Beach, Edmonds 2021 38 - 38 - -$730 -$780 Perrinville Townhomes, Lynnwood 2021 42 - 42 - -$535 -$655 King County: Vareze, Kirkland 2020 82 13 69 14 13$720 -$880 Cedar Landing, North Bend 2019 138 31 107 33 7$765 -$910 Monarch Ridge, Sammamish 2019 59 14 45 33 1$1,000 -$1,285 Overlook at Summit Park, Maple Valley 2019 126 36 90 25 7$585 -$765 Aurea, Sammamish 2019 41 16 25 17 7$722 -$821 Aldea, Newcastle 2019 129 48 81 16 10$685 -$838 Lario, Bellevue 2020 46 - 46 2 -$870 -$1,167 Lakeview Crest, Renton 2020 17 - 17 - -$1,450 -$1,925 Eagles Glen, Sammamish 2020 10 - 10 - -$1,150 -$1,525 Willows 124, Redmond 2023 173 - 173 - -$680 -$890 Finn Meadows, Kirkland 2020 10 - 10 - -$1,050 -$1,245 Hazelwood Gardens, Newcastle 2021 15 - 15 - -$1,100 -$1,260 Kitsap County: Blue Heron, Poulsbo 2022 85 - 85 - -$489 -$664 McCormick Villages 2021 88 88 - -$470 -$510 Poulsbo Meadows, Poulsbo 2021 46 - 46 - -$500 -$536 Closed Communities N/A - - - - 1 N/A Washington Total 1,188 175 1,013 163 52 Quadrant Total 1,188 175 1,013 163 52 - 47 -
--------------------------------------------------------------------------------Trendmaker Homes Cumulative Lots Homes Homes Owned as Delivered Year of Total Delivered of Backlog as for the Three Sales Price First Number of as of March 31, of March 31, Months Ended Range County, Project, City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6)Texas Brazoria County: Rise Meridiana 2016 47 44 3 - 1$292 -$352 Fort Bend County: CrossCreek Ranch 60', Fulshear 2013 48 19 29 7 7$428 -$478 Cross Creek Ranch 65', Fulshear 2013 89 61 28 8 2$463 -$558 Cross Creek Ranch 70', Fulshear 2013 104 78 26 13 7$476 -$615 Cross Creek Ranch 80', Fulshear 2013 71 58 13 11 9$664 -$707 Cross Creek Ranch 90', Fulshear 2013 47 34 13 8 -$666 -$793 Fulshear Run 1/2 Acre, Richmond 2016 145 52 93 - 2$646 -$675 Harvest Green 75', Richmond 2015 63 48 15 4 5$446 -$562 Sienna Plantation 80', Missouri City TBD 25 - 25 - -$545 -$675 Sienna Plantation 85', Missouri City 2015 54 41 13 2 5$556 -$671 Grayson Woods 60' 2019 35 5 30 13 4$407 -$513 Grayson Woods 70' 2019 19 4 15 13 2$502 -$594 Katy Gaston TBD 129 - 129 - - TBD Harris County: The Groves, Humble 2015 117 91 26 5 2$295 -$543 Lakes of Creekside 80' 2016 17 13 4 2 4$460 -$637 Lakes of Creekside 65' TBD 18 - 18 - - TBD Balmoral 50' 2019 46 9 37 2 2$243 -$328 Bridgeland '80, Cypress 2015 135 111 24 12 3$573 -$703 Bridgeland 70' 2018 41 21 20 8 4$497 -$595 Villas at Bridgeland 50' 2018 48 17 31 4 1$356 -$395 Falls at Dry Creek 2019 20 5 15 5 2$495 -$654 Grant-Cyp-Rosehill TBD 428 - 428 - - Hidden Arbor, Cypress TBD 156 129 27 - - TBD Clear Lake, Houston 2015 772 624 148 45 28$335 -$725 Northgrove, Tomball TBD 25 7 18 - - TBDThe Woodlands , Creekside Park 2015 131 123 8 5 6$415 -$668 Montgomery County: Grand Central Park TBD 17 - 17 - -$299 -$344 Rodriguez TBD 342 - 342 - - TBD Royal Brook, Porter 2019 26 4 22 2 1$343 -$384 Waller County: LakeHouse 2019 351 45 306 30 14$269 -$615 Williamson County:Crystal Falls - Lots for Sale 2016 29 25 4 - - TBD Rancho Sienna 60' 2016 51 38 13 4 5$314 -$438 Highlands atMayfield Ranch 50' 2019 63 33 30 18 3$295 -$363 Highlands atMayfield Ranch 60' 2019 46 17 29 18 3$337 -$430 Meyer Ranch TBD 10 - 10 - - TBD Rancho Sienna 50' 2019 54 10 44 10 2$300 -$417 Palmera Ridge 2019 39 27 12 9 11$85 -$356 Hays County: 6 Creeks 50' Section 1 & 2 2020 35 5 30 12 5$269 -$323 6 Creeks 60' Section 1 & 2 2020 15 1 14 6 1$308 -$366 Travis County: Lakes Edge 80' 2018 14 13 1 1 3$630 -$835 Turner's Crossing (Land) TBD 324 - 324 - - TBD Williamson County: Cressman Tract TBD 85 - 85 - - TBD - 48 -
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Collin County : Creeks of Legacy, Celina 2020 24 - 24 - -$349 -$379 Miramonte, Frisco 2016 62 57 5 4 5$475 -$560 Retreat at Craig Ranch, McKinney 2012 165 158 7 - 4$375 -$415 Dallas County : Vineyards, Rowlett 2017 40 34 6 3 6$368 -$480 Denton County: Glenview, Frisco 2017 50 39 11 6 7$345 -$485 Paloma Creek, Little Elm 2015 267 182 85 18 5$275 -$390 Parks at Legacy, Prosper 2017 55 34 21 11 2$384 -$495 Valencia, Little Elm 2016 82 59 23 7 2$350 -$444 Villages of Carmel, Denton 2017 96 87 9 5 7$290 -$360 Kaufman County: Gateway Parks, Forney 2020 12 - 12 - -$270 -$355 Rockwall County: Heath Golf and Yacht, Heath 2016 112 77 35 10 3$294 -$490 Woodcreek, Fate 2017 149 95 54 13 7$267 -$330 Tarrant County: Chisholm Trail Ranch, Fort Worth 2017 103 70 33 8 6$270 -$375 Lakes of River Trails, Fort Worth 2011 172 158 14 - 4$317 -$416 Ventana, Benbrook 2017 94 61 33 8 6$318 -$430 Closed Communities N/A - - - - 1 Texas Total 5,814 2,923 2,891 370 209 Trendmaker Homes Total 5,814 2,923 2,891 370 209 - 49 -
--------------------------------------------------------------------------------TRI Pointe Homes Cumulative Lots Homes Homes Owned as Delivered Year of Total Delivered of Backlog as for the Three Sales Price County, Project, First Number of as of March 31, of March 31, Months Ended Range City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6) Southern California Orange County: Viridian 2018 72 60 12 11 9$895 -$985 Varenna at Orchard Hills, Irvine 2016 128 108 20 4 7$1,208 -$1,293 Lyric 2019 70 53 17 5 12$810 -$946 Windbourne 2019 38 12 26 22 6$1,069 -$1,255 Cerise at Canvas 2020 28 - 28 5 -$795 -$838 Violet at Canvas 2020 35 - 35 11 -$545 -$735 Claret at Canvas 2020 48 - 48 13 -$560 -$671 San Diego County: Prism at Weston 2018 142 96 46 30 5$574 -$644 Riverside County: Citron @ Bedford 2019 101 55 46 10 9$375 -$398 Cassis at Rancho Soleo 2020 79 - 79 8 -$492 -$507 Cava at Rancho Soleo 2020 63 - 63 4 -$401 -$427 Cerro at Rancho Soleo 2020 103 - 103 9 -$375 -$430 Los Angeles County: Tierno at Aliento 2017 63 49 14 - -$667 -$695 Tierno II at Aliento 2018 63 44 19 8 13$642 -$697 Paloma at West Creek 2018 155 143 12 9 11$469 -$549 Mystral 2019 78 51 27 15 3$629 -$685 Celestia 2019 72 56 16 10 6$597 -$633 San Bernardino County: St. James at Park Place, Ontario 2015 125 124 1 1 2$522 -$560 Ivy at The Preserve 2019 113 7 106 21 2$355 -$427 Hazel at The Preserve 2020 133 13 120 27 13$360 -$426 Tempo at The Resort 2020 80 - 80 8 -$519 -$587 Closed Communities N/A - - - - 3 Southern California Total 1,789 871 918 231 101 Northern California Contra Costa County: Greyson Place 2019 44 23 21 17 7$815 -$925 Santa Clara County: Madison Gate 2018 65 52 13 8 5$729 -$1,134 Blanc at Glen Loma 2019 49 12 37 11 7$715 -$765 Noir at Glen Loma 2019 64 14 50 9 5$810 -$860 Lotus at Urban Oak 2023 65 - 65 - -$940 -$1,064 Solano County: Bloom at Green Valley, Fairfield 2018 91 76 15 12 1$557 -$597 Lantana, Fairfield 2019 133 61 72 15 6$483 -$528 One Lake 2021 45 - 45 - - San Joaquin County: Sundance, Mountain House 2015 113 108 5 - -$653 -$731 Sundance II, Mountain House 2017 138 101 37 37 2$653 -$731 River Islands 2022 24 - 24 - - TBD Alameda County: Onyx at Jordan Ranch, Dublin 2017 105 83 22 9 3$914 -$966 Apex, Fremont 2018 77 60 17 15 3$734 -$966 Palm, Fremont 2019 31 11 20 8 3$2,250 -$2,392 Ellis at Central Station, Oakland 2020 128 - 128 - -$745 -$815 Sonoma County: - 50 -
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Riverfront Petaluma 2021 5 - 5 - - TBD Sacramento County: Natomas TBD 94 - 94 - -$350 -$402 Mangini - Brookstone 2020 47 3 44 17 3$589 -$653 Mangini - Waterstone 2020 40 3 37 17 3$648 -$719 Placer County: La Madera 2019 102 21 81 16 11$451 -$545 San Francisco County: Cambridge Street (SFA) 2020 54 - 54 - -$1,145 -$1,388 Closed Communities N/A - - - - 2 Northern California Total 1,514 628 886 191 61 California Total 3,303 1,499 1,804 422 162 Colorado Douglas County: Terrain Ravenwood Village (3500) 2018 157 99 58 26 11$390 -$429 Terrain Ravenwood Village (4000) 2018 100 83 17 12 13$415 -$481 Trails at Crowfoot 2020 100 - 100 - - TBD Sterling Ranch 2020 80 - 80 - - TBD Sterling Ranch TH 2020 46 - 46 - - TBD Canyons 4500 2020 89 - 89 5 -$774 -$974 Terrain Sunstone 2020 74 - 74 - - TBD Jefferson County: Candelas 4020 Series, Arvada 2019 98 59 39 20 13$471 -$528 Crown Point, Westminster 2019 64 44 20 20 13$453 -$491 Cadelas TH, Arvada 2020 92 - 92 - - TBD Arapahoe County: Whispering Pines, Aurora 2016 115 100 15 12 5$648 -$681 Adonea 3500, Aurora 2020 71 - 71 - - TBD Adams County: Reunion Alley 2020 50 - 50 - - TBD Closed Communities N/A - - - - 9 Colorado Total 1,136 385 751 95 64 North Carolina Wake County: Lakeview Townhomes, Raleigh, NC 2020 23 - 23 - -$335 Townes at North Salem St., Apex, NC 2021 55 - 55 - - TBD Mecklenburg County: Mayes Hall, Davidson, NC 2020 50 - 50 - -$335 -$406 North Carolina Total 128 - 128 - - South Carolina York County: Garrison Estates, Rock Hill, SC 2020 53 - 53 - -$279 -$297 South Carolina Total 53 - 53 - - TRI Pointe Total 4,620 1,884 2,736 517 226 - 51 -
--------------------------------------------------------------------------------Winchester Homes Cumulative Lots Homes Homes Owned as Delivered Year of Total Delivered of Backlog as for the Three Sales Price County, Project, First Number of as of March 31, of March 31, Months Ended Range City Delivery(1) Lots(2) March 31, 2020 2020(3) 2020(4)(5) March 31, 2020 (in thousands)(6)Maryland Anne Arundel County: Two Rivers Townhomes, Crofton 2017 152 70 82 16 5$454 -$535 Two Rivers Cascades SFD, Crofton 2018 43 28 15 13 3$520 -$590 Watson's Glen, Millersville 2015 103 4 99 17 -$365 -$378 Frederick County: Landsdale, Monrovia Landsdale SFD 2015 222 170 52 19 10$515 -$607 Landsdale Townhomes 2015 100 100 - - 3$330 -$383 Landsdale TND Neo SFD 2015 77 63 14 10 4$450 -$483 Montgomery County: Cabin Branch, Clarksburg Cabin Branch SFD 2014 359 240 119 30 3$560 -$775 Cabin Branch Avenue Townhomes 2017 86 85 1 1 3$420 -$488 Cabin Branch Crossings Townhomes 2019 114 3 111 20 2$422 -$493 Cabin Branch Manor Townhomes 2014 428 359 69 4 8$393 -$464 Preserve at Stoney Spring - Lots for Sale TBD 3 - 3 - - TBD Glenmont MetroCenter, Silver Spring 2016 171 135 36 32 4$460 -$518 Chapman Row, Rockville 2019 61 15 46 15 5$700 -$750 North Quarter, North Bethesda 2020 104 5 99 8 5$620 -$670 Maryland Total 2,023 1,277 746 185 55 Virginia Fairfax County: Stuart Mill, Oakton - Lots for Sale TBD 5 - 5 - - TBD Westgrove, Fairfax 2018 24 19 5 5 -$1,001 -$1,107 West Oaks Corner, Fairfax 2019 188 33 155 45 7$705 -$820 Bren Pointe SFA, Alexandria 2020 13 - 13 - - TBD Loudoun County: Brambleton, Ashburn West Park SFD 2018 53 51 2 2 2$700 -$724 Birchwood Bungalows AA 2018 55 36 19 16 3$582 -$639 Birchwood Carriages AA 2019 33 5 28 32 4$534 -$568 Willowsford Grant II, Aldie 2017 55 41 14 12 3$1,000 -$1,255 Virginia Total 426 185 241 112 19 Winchester Total 2,449 1,462 987 297 74 Combined Company Total 32,949 9,871 22,860 2,455 958 __________
(1) Year of first delivery for future periods is based upon management's
estimates and is subject to change.
(2) The number of homes to be built at completion is subject to change, and
there can be no assurance that we will build these homes.
(3) Owned lots as of March 31, 2020 include owned lots in backlog as of
March 31, 2020 .
(4) Backlog consists of homes under sales contracts that have not yet been
delivered, and there can be no assurance that delivery of sold homes will
occur.
(5) Of the total homes subject to pending sales contracts that have not been
delivered as of March 31, 2020 , 1,621 homes are under construction, 278
homes have completed construction, and 556 homes have not started
construction.
(6) Sales price range reflects base price only and excludes any lot premium,
buyer incentives and buyer-selected options, which may vary from project to
project. Sales prices for homes required to be sold pursuant to affordable
housing requirements are excluded from sales price range. Sales prices
reflect current pricing and might not be indicative of past or future
pricing.
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Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP. Our condensed notes to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and the audited financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. The preparation of our financial statements requires our management to make estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there is a material difference between these estimates, judgments and assumptions and actual facts, our financial statements may be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the condensed notes to the unaudited consolidated financial statements that contain additional information regarding our accounting policies and other disclosures. There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019 . Recently Issued Accounting Standards See Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
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