Tri Pointe Homes, Inc. Reports 2022 Third Quarter Results
Tri Pointe Homes, Inc. (NYSE:TPH) reported a strong performance in Q3 2022, with net income of $149 million, or $1.45 per diluted share, marking a 24% increase year-over-year. Home sales revenue reached $1.1 billion, up 3% from 2021, with an average sales price of $723,000, a 15% rise. However, new home orders dropped 50% to 681, and the cancellation rate rose to 27%. The backlog remained stable at $2.4 billion, with an average price of $797,000. The company aims to deliver 1,700 to 1,900 homes in Q4 and expects a gross margin of 25% to 26%.
- Net income increased to $149 million, or $1.45 per diluted share, representing a 24% YoY growth.
- Home sales revenue rose to $1.1 billion, a 3% increase from Q3 2021.
- Homebuilding gross margin improved to 27.1%, up 80 basis points YoY.
- Average sales price of homes delivered increased by 15% to $723,000.
- Total liquidity at quarter-end was $914.3 million.
- New home orders decreased significantly by 50% to 681 units.
- Cancellation rate increased sharply to 27% from 9% YoY.
- New home deliveries fell to 1,463, down 10% from the previous year.
- Backlog units decreased by 16% to 3,044 homes.
-Diluted Earnings Per Share of
-Home Sales Revenue of
-Homebuilding Gross Margin Percentage of
-Backlog Dollar Value of
INCLINE VILLAGE, Nev., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the third quarter ended September 30, 2022.
“Tri Pointe Homes delivered strong profitability in the third quarter of 2022 with net income available to common stockholders of
Mr. Bauer continued, “As the housing market continued to weaken due to the rapid rise in interest rates, our order demand slowed during the quarter. To navigate today’s reality, we have implemented several tactics designed to help our customers purchase and close their homes. Our main goals for the remainder of the year will be to close homes in backlog and generate cash from operations, while staying price competitive at our communities by utilizing incentives and targeted pricing. We will also continue to streamline our cost structure and adjust our land pipeline to reflect the current demand environment. With this comprehensive plan in place, coupled with our strong balance sheet and experienced leadership team, we are confident that Tri Pointe is well positioned for success over the long term.”
Results and Operational Data for Third Quarter 2022 and Comparisons to Third Quarter 2021
- Net income available to common stockholders was
$149.2 million , or$1.45 per diluted share, compared to$133.2 million , or$1.17 per diluted share - Home sales revenue of
$1.1 billion compared to$1.0 billion , an increase of3% - New home deliveries of 1,463 homes compared to 1,632 homes, a decrease of
10% - Average sales price of homes delivered of
$723,000 compared to$630,000 , an increase of15%
- New home deliveries of 1,463 homes compared to 1,632 homes, a decrease of
- Homebuilding gross margin percentage of
27.1% compared to26.3% , an increase of 80 basis points- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was
29.9% *
- Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was
- SG&A expense as a percentage of homes sales revenue of
9.1% compared to9.6% , a decrease of 50 basis points - Net new home orders of 681 compared to 1,349, a decrease of
50% - Active selling communities averaged 128.3 compared to 109.0, an increase of
18% - Net new home orders per average selling community were 5.3 orders (1.8 monthly) compared to 12.4 orders (4.1 monthly)
- Cancellation rate of
27% compared to9%
- Backlog units at quarter end of 3,044 homes compared to 3,619, a decrease of
16% - Dollar value of backlog at quarter end flat at
$2.4 billion - Average sales price of homes in backlog at quarter end of
$797,000 compared to$671,000 , an increase of19%
- Dollar value of backlog at quarter end flat at
- Ratios of debt-to-capital and net debt-to-net capital of
33.8% and29.7% *, respectively, as of September 30, 2022 - Repurchased 948,911 shares of common stock at a weighted average price per share of
$17.66 for an aggregate dollar amount of$16.8 million in the three months ended September 30, 2022 - Ended the third quarter of 2022 with total liquidity of
$914.3 million , including cash and cash equivalents of$228.1 million and$686.2 million of availability under our revolving credit facility
| * | See “Reconciliation of Non-GAAP Financial Measures” |
“Our team members once again demonstrated their ability to execute in a difficult operating environment in the third quarter, as we met or exceeded our stated guidance for new home deliveries, home sales gross margin and SG&A leverage,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “While we expect the demand environment to remain choppy in the near term, we remain confident that the long-term macro environment for the housing industry continues to be very bright due to the lack of supply and the housing deficit that has resulted from new home construction failing to meet the pace of household formations since 2009, coupled with the high cost of rental alternatives. We are positioning our company to take advantage of these long-term opportunities and feel that we have the right people, resources and strategies in place to be successful.”
Outlook
For the fourth quarter, the Company anticipates delivering between 1,700 and 1,900 homes at an average sales price between
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, October 27, 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 Third 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 13733444. 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. The company made Fortune magazine’s 2017 100 Fastest-Growing Companies list, was named as a Great Place to Work-Certified™ company in both 2021 and 2022 and was selected by Great Place to Work® as one of the Best Workplaces for Millennials™ in 2022, Best Workplaces in Construction™ in 2022 and Best Workplaces for Women™ in 2022. 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 parts of the western United States; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; the risk of loss from acts of war, terrorism, civil unrest or 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | 2022 | 2021 | Change | % Change | ||||||||||||||||||||||
| Operating Data: | (unaudited) | ||||||||||||||||||||||||||||
| Home sales revenue | $ | 1,057,491 | $ | 1,028,950 | $ | 28,541 | 3 | % | $ | 2,787,386 | $ | 2,754,932 | $ | 32,454 | 1 | % | |||||||||||||
| Homebuilding gross margin | $ | 286,343 | $ | 270,926 | $ | 15,417 | 6 | % | $ | 754,226 | $ | 690,337 | $ | 63,889 | 9 | % | |||||||||||||
| Homebuilding gross margin % | 27.1 | % | 26.3 | % | 0.8 | % | 27.1 | % | 25.1 | % | 2.0 | % | |||||||||||||||||
| Adjusted homebuilding gross margin %* | 29.9 | % | 28.8 | % | 1.1 | % | 29.7 | % | 27.9 | % | 1.8 | % | |||||||||||||||||
| SG&A expense | $ | 96,736 | $ | 98,365 | $ | (1,629 | ) | (2 | )% | $ | 272,783 | $ | 276,926 | $ | (4,143 | ) | (1 | )% | |||||||||||
| SG&A expense as a % of home sales revenue | 9.1 | % | 9.6 | % | (0.5 | )% | 9.8 | % | 10.1 | % | (0.3 | )% | |||||||||||||||||
| Net income available to common stockholders | $ | 149,226 | $ | 133,156 | $ | 16,070 | 12 | % | $ | 373,087 | $ | 321,827 | $ | 51,260 | 16 | % | |||||||||||||
| Adjusted EBITDA* | $ | 237,369 | $ | 215,880 | $ | 21,489 | 10 | % | $ | 604,365 | $ | 543,945 | $ | 60,420 | 11 | % | |||||||||||||
| Interest incurred | $ | 31,893 | $ | 24,280 | $ | 7,613 | 31 | % | $ | 89,235 | $ | 68,017 | $ | 21,218 | 31 | % | |||||||||||||
| Interest in cost of home sales | $ | 26,531 | $ | 25,656 | $ | 875 | 3 | % | $ | 68,559 | $ | 77,185 | $ | (8,626 | ) | (11 | )% | ||||||||||||
| Other Data: | |||||||||||||||||||||||||||||
| Net new home orders | 681 | 1,349 | (668 | ) | (50 | )% | 3,933 | 4,958 | (1,025 | ) | (21 | )% | |||||||||||||||||
| New homes delivered | 1,463 | 1,632 | (169 | ) | (10 | )% | 4,047 | 4,303 | (256 | ) | (6 | )% | |||||||||||||||||
| Average sales price of homes delivered | $ | 723 | $ | 630 | $ | 93 | 15 | % | $ | 689 | $ | 640 | $ | 49 | 8 | % | |||||||||||||
| Cancellation rate | 27 | % | 9 | % | 18 | % | 15 | % | 7 | % | 8 | % | |||||||||||||||||
| Average selling communities | 128.3 | 109.0 | 19.3 | 18 | % | 120.7 | 112.1 | 8.6 | 8 | % | |||||||||||||||||||
| Selling communities at end of period | 133 | 109 | 24 | 22 | % | ||||||||||||||||||||||||
| Backlog (estimated dollar value) | $ | 2,427,301 | $ | 2,428,412 | $ | (1,111 | ) | 0 | % | ||||||||||||||||||||
| Backlog (homes) | 3,044 | 3,619 | (575 | ) | (16 | )% | |||||||||||||||||||||||
| Average sales price in backlog | $ | 797 | $ | 671 | $ | 126 | 19 | % | |||||||||||||||||||||
| September 30, | December 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | ||||||||||||||||||||||||||
| Balance Sheet Data: | (unaudited) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 228,137 | $ | 681,528 | $ | (453,391 | ) | (67 | )% | ||||||||||||||||||||
| Real estate inventories | $ | 3,608,305 | $ | 3,054,743 | $ | 553,562 | 18 | % | |||||||||||||||||||||
| Lots owned or controlled | 37,269 | 41,675 | (4,406 | ) | (11 | )% | |||||||||||||||||||||||
| Homes under construction (1) | 4,120 | 3,632 | 488 | 13 | % | ||||||||||||||||||||||||
| Homes completed, unsold | 102 | 27 | 75 | 278 | % | ||||||||||||||||||||||||
| Debt | $ | 1,339,752 | $ | 1,337,723 | $ | 2,029 | 0 | % | |||||||||||||||||||||
| Stockholders’ equity | $ | 2,625,730 | $ | 2,447,621 | $ | 178,109 | 7 | % | |||||||||||||||||||||
| Book capitalization | $ | 3,965,482 | $ | 3,785,344 | $ | 180,138 | 5 | % | |||||||||||||||||||||
| Ratio of debt-to-capital | 33.8 | % | 35.3 | % | (1.5 | )% | |||||||||||||||||||||||
| Ratio of net debt-to-net capital* | 29.7 | % | 21.1 | % | 8.6 | % | |||||||||||||||||||||||
__________
(1) Homes under construction included 85 models at both September 30, 2022 and December 31, 2021, respectively.
* See “Reconciliation of Non-GAAP Financial Measures”
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| September 30, | December 31, | ||||
| 2022 | 2021 | ||||
| Assets | (unaudited) | ||||
| Cash and cash equivalents | $ | 228,137 | $ | 681,528 | |
| Receivables | 169,496 | 116,996 | |||
| Real estate inventories | 3,608,305 | 3,054,743 | |||
| Investments in unconsolidated entities | 132,998 | 118,095 | |||
| Goodwill and other intangible assets, net | 156,603 | 156,603 | |||
| Deferred tax assets, net | 57,095 | 57,096 | |||
| Other assets | 173,404 | 151,162 | |||
| Total assets | $ | 4,526,038 | $ | 4,336,223 | |
| Liabilities | |||||
| Accounts payable | $ | 64,109 | $ | 84,854 | |
| Accrued expenses and other liabilities | 494,727 | 466,013 | |||
| Loans payable | 250,000 | 250,504 | |||
| Senior notes | 1,089,752 | 1,087,219 | |||
| Total liabilities | 1,898,588 | 1,888,590 | |||
| Commitments and contingencies | |||||
| Equity | |||||
| Stockholders’ equity: | |||||
| Preferred stock, | — | — | |||
| Common stock, | 1,009 | 1,096 | |||
| Additional paid-in capital | — | 91,077 | |||
| Retained earnings | 2,624,721 | 2,355,448 | |||
| Total stockholders’ equity | 2,625,730 | 2,447,621 | |||
| Noncontrolling interests | 1,720 | 12 | |||
| Total equity | 2,627,450 | 2,447,633 | |||
| Total liabilities and equity | $ | 4,526,038 | $ | 4,336,223 | |
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Homebuilding: | |||||||||||||||
| Home sales revenue | $ | 1,057,491 | $ | 1,028,950 | $ | 2,787,386 | $ | 2,754,932 | |||||||
| Land and lot sales revenue | 2,626 | 581 | 4,337 | 7,520 | |||||||||||
| Other operations revenue | 674 | 646 | 2,021 | 1,969 | |||||||||||
| Total revenues | 1,060,791 | 1,030,177 | 2,793,744 | 2,764,421 | |||||||||||
| Cost of home sales | 771,148 | 758,024 | 2,033,160 | 2,064,595 | |||||||||||
| Cost of land and lot sales | 1,256 | 891 | 2,075 | 5,918 | |||||||||||
| Other operations expense | 670 | 801 | 2,020 | 2,111 | |||||||||||
| Sales and marketing | 41,950 | 44,875 | 112,712 | 130,824 | |||||||||||
| General and administrative | 54,786 | 53,490 | 160,071 | 146,102 | |||||||||||
| Homebuilding income from operations | 190,981 | 172,096 | 483,706 | 414,871 | |||||||||||
| Equity in loss of unconsolidated entities | (122 | ) | (43 | ) | (34 | ) | (72 | ) | |||||||
| Other income, net | 463 | 171 | 852 | 428 | |||||||||||
| Homebuilding income before income taxes | 191,322 | 172,224 | 484,524 | 415,227 | |||||||||||
| Financial Services: | |||||||||||||||
| Revenues | 11,005 | 3,016 | 31,985 | 7,802 | |||||||||||
| Expenses | 5,827 | 1,618 | 17,457 | 4,510 | |||||||||||
| Equity in income of unconsolidated entities | — | 3,946 | 46 | 10,586 | |||||||||||
| Financial services income before income taxes | 5,178 | 5,344 | 14,574 | 13,878 | |||||||||||
| Income before income taxes | 196,500 | 177,568 | 499,098 | 429,105 | |||||||||||
| Provision for income taxes | (45,923 | ) | (44,412 | ) | (122,084 | ) | (107,278 | ) | |||||||
| Net income | 150,577 | 133,156 | 377,014 | 321,827 | |||||||||||
| Net income attributable to noncontrolling interests | (1,351 | ) | — | (3,927 | ) | — | |||||||||
| Net income available to common stockholders | $ | 149,226 | $ | 133,156 | $ | 373,087 | $ | 321,827 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 1.47 | $ | 1.18 | $ | 3.60 | $ | 2.77 | |||||||
| Diluted | $ | 1.45 | $ | 1.17 | $ | 3.57 | $ | 2.75 | |||||||
| Weighted average shares outstanding | |||||||||||||||
| Basic | 101,242,708 | 112,781,663 | 103,555,717 | 116,296,265 | |||||||||||
| Diluted | 102,661,222 | 113,782,251 | 104,526,594 | 117,188,893 | |||||||||||
MARKET DATA BY REPORTING SEGMENT & GEOGRAPHY
(dollars in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | New Homes Delivered | Average Sales Price | ||||||||||||
| Arizona | 166 | $ | 773 | 187 | $ | 685 | 363 | $ | 751 | 570 | $ | 667 | |||||||
| California | 636 | 768 | 708 | 646 | 1,729 | 718 | 1,863 | 674 | |||||||||||
| Nevada | 122 | 771 | 180 | 611 | 363 | 731 | 381 | 607 | |||||||||||
| Washington | 46 | 853 | 76 | 983 | 172 | 978 | 223 | 984 | |||||||||||
| West total | 970 | 773 | 1,151 | 669 | 2,627 | 742 | 3,037 | 687 | |||||||||||
| Colorado | 82 | 753 | 55 | 589 | 201 | 699 | 154 | 584 | |||||||||||
| Texas | 250 | 571 | 274 | 492 | 788 | 527 | 721 | 483 | |||||||||||
| Central total | 332 | 616 | 329 | 508 | 989 | 562 | 875 | 501 | |||||||||||
| Carolinas(1) | 80 | 469 | 25 | 386 | 152 | 464 | 64 | 383 | |||||||||||
| Washington D.C. Area(2) | 81 | 805 | 127 | 643 | 279 | 762 | 327 | 628 | |||||||||||
| East total | 161 | 638 | 152 | 601 | 431 | 657 | 391 | 588 | |||||||||||
| Total | 1,463 | $ | 723 | 1,632 | $ | 630 | 4,047 | $ | 689 | 4,303 | $ | 640 | |||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
| Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | Net New Home Orders | Average Selling Communities | ||||||||||||
| Arizona | 74 | 13.5 | 182 | 13.2 | 484 | 13.5 | 676 | 14.4 | |||||||||||
| California | 275 | 53.7 | 545 | 38.3 | 1,577 | 47.5 | 1,865 | 38.9 | |||||||||||
| Nevada | 56 | 6.8 | 133 | 10.2 | 317 | 7.6 | 568 | 11.1 | |||||||||||
| Washington | 34 | 3.0 | 68 | 6.5 | 103 | 2.8 | 229 | 5.7 | |||||||||||
| West total | 439 | 77.0 | 928 | 68.2 | 2,481 | 71.4 | 3,338 | 70.1 | |||||||||||
| Colorado | 15 | 7.3 | 55 | 6.5 | 180 | 7.7 | 218 | 5.7 | |||||||||||
| Texas | 123 | 23.5 | 238 | 21.5 | 691 | 22.8 | 945 | 22.6 | |||||||||||
| Central total | 138 | 30.8 | 293 | 28.0 | 871 | 30.5 | 1,163 | 28.3 | |||||||||||
| Carolinas(1) | 76 | 13.7 | 41 | 3.0 | 372 | 11.3 | 129 | 3.1 | |||||||||||
| Washington D.C. Area(2) | 28 | 6.8 | 87 | 9.8 | 209 | 7.5 | 328 | 10.6 | |||||||||||
| East total | 104 | 20.5 | 128 | 12.8 | 581 | 18.8 | 457 | 13.7 | |||||||||||
| Total | 681 | 128.3 | 1,349 | 109.0 | 3,933 | 120.7 | 4,958 | 112.1 | |||||||||||
(1) Carolinas comprises North Carolina and South Carolina.
(2) Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.
MARKET DATA BY REPORTING SEGMENT & GEOGRAPHY, continued
(dollars in thousands)
(unaudited)
| As of September 30, 2022 | As of September 30, 2021 | ||||||||||||||
| Backlog Units | Backlog Dollar Value | Average Sales Price | Backlog Units | Backlog Dollar Value | Average Sales Price | ||||||||||
| Arizona | 641 | $ | 531,135 | $ | 829 | 585 | $ | 438,093 | $ | 749 | |||||
| California | 884 | 836,320 | 946 | 1,260 | 843,994 | 670 | |||||||||
| Nevada | 280 | 232,850 | 832 | 323 | 226,035 | 700 | |||||||||
| Washington | 60 | 48,387 | 806 | 145 | 155,172 | 1,070 | |||||||||
| West total | 1,865 | 1,648,692 | 884 | 2,313 | 1,663,294 | 719 | |||||||||
| Colorado | 163 | 128,733 | 790 | 190 | 135,851 | 715 | |||||||||
| Texas | 539 | 346,530 | 643 | 722 | 364,537 | 505 | |||||||||
| Central total | 702 | 475,263 | 677 | 912 | 500,388 | 549 | |||||||||
| Carolinas(1) | 341 | 161,675 | 474 | 80 | 34,358 | 429 | |||||||||
| Washington D.C. Area(2) | 136 | 141,671 | 1,042 | 314 | 230,372 | 734 | |||||||||
| East total | 477 | 303,346 | 636 | 394 | 264,730 | 672 | |||||||||
| Total | 3,044 | $ | 2,427,301 | $ | 797 | 3,619 | $ | 2,428,412 | $ | 671 | |||||
| September 30, | December 31, | ||||||||||||||
| 2022 | 2021 | ||||||||||||||
| Lots Owned or Controlled: | |||||||||||||||
| Arizona | 3,355 | 4,607 | |||||||||||||
| California | 12,863 | 15,091 | |||||||||||||
| Nevada | 1,815 | 2,161 | |||||||||||||
| Washington | 891 | 1,010 | |||||||||||||
| West total | 18,924 | 22,869 | |||||||||||||
| Colorado | 1,973 | 1,683 | |||||||||||||
| Texas | 10,994 | 12,297 | |||||||||||||
| Central total | 12,967 | 13,980 | |||||||||||||
| Carolinas(1) | 3,929 | 3,458 | |||||||||||||
| Washington D.C. Area(2) | 1,449 | 1,368 | |||||||||||||
| East total | 5,378 | 4,826 | |||||||||||||
| Total | 37,269 | 41,675 | |||||||||||||
| September 30, | December 31, | ||||||||||||||
| 2022 | 2021 | ||||||||||||||
| Lots by Ownership Type: | |||||||||||||||
| Lots owned | 20,698 | 22,136 | |||||||||||||
| Lots controlled (3) | 16,571 | 19,539 | |||||||||||||
| Total | 37,269 | 41,675 | |||||||||||||
(1) Carolinas comprises North Carolina and South Carolina.
(2) Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.
(3) As of September 30, 2022 and December 31, 2021, lots controlled included lots that were under land option contracts or purchase contracts. As of September 30, 2022 and December 31, 2021, lots controlled for Central include 3,388 and 2,950 lots, respectively, and lots controlled for East include 154 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 tables reconcile 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 September 30, | |||||||||||||
| 2022 | % | 2021 | % | ||||||||||
| (dollars in thousands) | |||||||||||||
| Home sales revenue | $ | 1,057,491 | 100.0 | % | $ | 1,028,950 | 100.0 | % | |||||
| Cost of home sales | 771,148 | 72.9 | % | 758,024 | 73.7 | % | |||||||
| Homebuilding gross margin | 286,343 | 27.1 | % | 270,926 | 26.3 | % | |||||||
| Add: interest in cost of home sales | 26,531 | 2.5 | % | 25,656 | 2.5 | % | |||||||
| Add: impairments and lot option abandonments | 3,034 | 0.3 | % | 268 | 0.0 | % | |||||||
| Adjusted homebuilding gross margin | $ | 315,908 | 29.9 | % | $ | 296,850 | 28.8 | % | |||||
| Homebuilding gross margin percentage | 27.1 | % | 26.3 | % | |||||||||
| Adjusted homebuilding gross margin percentage | 29.9 | % | 28.8 | % | |||||||||
| Nine Months Ended September 30, | |||||||||||||
| 2022 | % | 2021 | % | ||||||||||
| Home sales revenue | $ | 2,787,386 | 100.0 | % | $ | 2,754,932 | 100.0 | % | |||||
| Cost of home sales | 2,033,160 | 72.9 | % | 2,064,595 | 74.9 | % | |||||||
| Homebuilding gross margin | 754,226 | 27.1 | % | 690,337 | 25.1 | % | |||||||
| Add: interest in cost of home sales | 68,559 | 2.5 | % | 77,185 | 2.8 | % | |||||||
| Add: impairments and lot option abandonments | 4,495 | 0.2 | % | 713 | 0.0 | % | |||||||
| Adjusted homebuilding gross margin | $ | 827,280 | 29.7 | % | $ | 768,235 | 27.9 | % | |||||
| Homebuilding gross margin percentage | 27.1 | % | 25.1 | % | |||||||||
| Adjusted homebuilding gross margin percentage | 29.7 | % | 27.9 | % | |||||||||
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.
| September 30, 2022 | December 31, 2021 | ||||||
| Loans payable | $ | 250,000 | $ | 250,504 | |||
| Senior notes | 1,089,752 | 1,087,219 | |||||
| Total debt | 1,339,752 | 1,337,723 | |||||
| Stockholders’ equity | 2,625,730 | 2,447,621 | |||||
| Total capital | $ | 3,965,482 | $ | 3,785,344 | |||
| Ratio of debt-to-capital(1) | 33.8 | % | 35.3 | % | |||
| Total debt | $ | 1,339,752 | $ | 1,337,723 | |||
| Less: Cash and cash equivalents | (228,137 | ) | (681,528 | ) | |||
| Net debt | 1,111,615 | 656,195 | |||||
| Stockholders’ equity | 2,625,730 | 2,447,621 | |||||
| Net capital | $ | 3,737,345 | $ | 3,103,816 | |||
| Ratio of net debt-to-net capital(2) | 29.7 | % | 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 available to common stockholders, as reported and prepared in accordance with GAAP. EBITDA means net income available to common stockholders before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation and (f) impairments and lot option abandonments. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| (in thousands) | |||||||||||||||
| Net income available to common stockholders | $ | 149,226 | $ | 133,156 | $ | 373,087 | $ | 321,827 | |||||||
| Interest expense: | |||||||||||||||
| Interest incurred | 31,893 | 24,280 | 89,235 | 68,017 | |||||||||||
| Interest capitalized | (31,893 | ) | (24,280 | ) | (89,235 | ) | (68,017 | ) | |||||||
| Amortization of interest in cost of sales | 26,611 | 25,655 | 68,639 | 77,457 | |||||||||||
| Provision for income taxes | 45,923 | 44,412 | 122,084 | 107,278 | |||||||||||
| Depreciation and amortization | 6,615 | 7,979 | 18,641 | 24,098 | |||||||||||
| EBITDA | 228,375 | 211,202 | 582,451 | 530,660 | |||||||||||
| Amortization of stock-based compensation | 5,717 | 4,410 | 16,740 | 12,572 | |||||||||||
| Impairments and lot option abandonments | 3,277 | 268 | 5,174 | 713 | |||||||||||
| Adjusted EBITDA | $ | 237,369 | $ | 215,880 | $ | 604,365 | $ | 543,945 | |||||||
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