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Actionable news in TPH: TRI POINTE HOMES Inc,

Tri Pointe Group, Inc. Reports 2015 Third Quarter Results

The following excerpt is from the company's SEC filing.

-Reports Net Income of $50.2 Million, or $0.31 per Diluted Share for the Quarter-

-New Home Orders up 24% and New Home Deliveries up 35% for the Quarter-

-Homebuilding Gross Margin increase to 21.0% for the Quarter-

-Selling, General and Administrative Expenses decrease to 8.8% of Home Sales Revenue for the Quarter-

Irvine, California, November 6, 2015 /Business Wire/ – TRI Pointe Group, Inc. (NYSE: TPH) today announced results for the third quarter ended September 30, 2015.

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

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

Net income available to common shareholders was $50.2 million, or $0.31 per diluted share compared to $11.0 million, or $0.07 per diluted share

New home orders increased to 996 compared to 803, an increase of 24%

Active selling communities averaged 120.8 compared to 107.0

New home orders per average selling community were 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly), an increase of 10%

Cancellation rate decreased to 16% compared to 18%

Backlog units of 1,856 homes with a dollar value increase of 28%, to approximately $1.1 billion

Average sales price in backlog of $598,000

Home sales revenue of $642.4 million, an increase of 36%

New homes deliveries of 1,138, up 35%

Average sales price of homes delivered of $564,000

Homebuilding gross margin percentage of 21.0%

Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.1%*

SG&A expense as a percentage of homes sales revenue improved to 8.8% compared to 10.5%

Ratios of debt and net debt to capital of 44.1% and 42.2%*, respectively, as of September 30 2015

Cash of $97.0 million and availability under unsecured revolving credit facility of $192.4 million

* See “Reconciliation of Non-GAAP Financial Measures”

“TRI Pointe Group delivered another strong quarter marked by year-over-year growth in revenues, net income and orders”, commented Chief Executive Officer Doug Bauer. “In addition, the Company’s third quarter results met or exceeded our guidance for new home deliveries, homebuilding gross margins and community openings. These achievements are a reflection of TRI Pointe Group’s success in combining and integrating the six homebuilding brands, and the strength of the deeply experienced operating teams in each of their local markets.”

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GAAP Third quarter 2015 operating results

Net income available to common shareholders was $50.2 million, or $0.31 per diluted share in the third quarter of 2015, compared to net income of $11.0 million, or $0.07 per diluted share for the third quarter of 2014.

The improvement in net income available to common shareholders was primarily driven by an increase of $48.4 million in home sales gross margin due to higher home sales revenue resulting from a 35% increase in new home deliveries in addition to a savings of $21.7 million related to restructuring and transaction related expenses incurred in the prior year. This was offset by current year increases in the Company’s provision for income taxes of $22.0 million and higher SG&A costs of $7.5 million.

Home sales revenue increased $170.6 million to $642.4 million for the third quarter of 2015, as compared to $471.8 million for the same period in 2014. The increase was attributable to a 35% increase in new home deliveries to 1,138 and a 1% increase in the Company's average sales price of homes delivered to $564,000. New home deliveries increased at all six of our reporting segments with the highest increase at TRI Pointe Homes, which was up 140 units, or 89% compared to the prior year, while delivering at an average sales price of $752,000.

New home orders increased 24% to 996 homes for the third quarter of 2015, as compared to 803 homes for the same period in 2014. Average active selling communities increased to 120.8 as compared to 107.0 for the same period in the prior year, mainly due to TRI Pointe Homes which increased average active selling communities by 12.3 in the current year. The Company’s overall quarterly absorption rate per average selling community for the three months ended September 30 2015 increased 10% to 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly) during the same period in 2014.

The Company ended the quarter with 1,856 homes in backlog, representing approximately $1.1 billion in future home sales revenue. The average sales price of homes in backlog as of September 30, 2015 decreased $6,000, or 1%, to $598,000 compared to $604,000 at September 30 2014.

Homebuilding gross margin percentage for the third quarter of 2015 increased to 21.0% compared to 18.3% for the same period in 2014 and increased sequentially from 20.0% during the second quarter of 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 23.1%* for the third quarter of 2015 versus 20.0%* for the same period in 2014.

Selling, general and administrative expense for the third quarter of 2015 improved to 8.8% of home sales revenue as compared to 10.5% for the same period in 2014. The decrease in the selling, general and administrative expense ratio was primarily attributable to increased home sales revenue.

“While California continues to be the main driver of earnings for our Company, each of the TRI Pointe brands continues to make solid contributions to the bottom line”, said Tom Mitchell, TRI Pointe Group’s President and Chief Operating Officer. “We are extremely pleased with the level of execution demonstrated by each of our brands.”

Outlook

For the fourth quarter...


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