Tri Pointe Homes reports Q4 2013 net income of US$8.3M, up from US$6.4M year-over-year, on net home sales revenue of US$119M, up 116%; revenue boosted by significant increase in new homes delivered, higher average sales price of delivered homes
February 27, 2014
– -Reports Record Quarterly and Full Year Home Sales Revenue and Earnings-
-Announced Agreement to Combine with the Weyerhaeuser Real Estate Company (“WRECO”)-
TRI Pointe Homes, Inc. (NYSE:TPH) today announced record results for the fourth quarter and full year ended December 31, 2013.
2013 Fourth Quarter Highlights and Comparisons to the 2012 Fourth Quarter
Douglas F. Bauer, Chief Executive Officer stated, “2013 was a significant year for the company across all operating and financial metrics as we grew from our IPO in January 2013. Our team was able to execute on our 2013 plan while also working diligently towards a successful transaction with WRECO, which will transform the company to one of the largest builders in our industry. As we work hand-in-hand with the WRECO management to streamline the integration of these outstanding companies, we look forward to hitting the ground running in some of the strongest housing markets in the nation.”
Fourth quarter 2013 operating results
Net income was $8.3 million, or $0.26 per diluted share in the fourth quarter of 2013, compared to net income of $6.4 million, or $0.30 per diluted share for the fourth quarter of 2012. The improvement in net income was primarily driven by a $16.2 million increase in homebuilding gross margin due to higher home sales revenue and increased homebuilding gross margin percentages, offset by an increase in SG&A expense of $3.9 million and an increase in our provision for income taxes of $7.0 million. The reduction in earnings per diluted share reflects a higher share count as a result of our initial public offering in January 2013. Net income for the fourth quarter of 2013 was impacted by $3.6 million of expenses associated with the WRECO transaction. Excluding the WRECO transaction expenses, net income would have been $10.3 million*, or $0.33* per diluted share.
Home sales revenue increased $63.8 million to $119.0 million for the 2013 fourth quarter, as compared to $55.2 million for the same period in 2012, primarily attributable to a significant increase in new homes delivered to 166 and an improvement in the Company's average sales price of homes delivered to $717,000. The growth in new home deliveries was due to a significant increase in our absorption during the first three quarters of 2013 which resulted in higher backlog going into the 2013 fourth quarter. The increase in the average sales price of homes delivered reflects increased pricing power and a change in product mix to more move-up product at our new communities compared to the prior year.
New home orders increased to 88 homes for the 2013 fourth quarter, as compared to 75 homes for the same period in 2012. The Company’s overall absorption rate per average selling community for the three months ended December 31, 2013 was 10.6 orders (3.53 monthly), compared to 10.7 orders (3.57 monthly) during the same period in 2012. The increase in new home orders for the 2013 fourth quarter resulted in an increase in the number of homes in backlog to 149, representing approximately $111.6 million in home sales revenue. The average sales price of homes in backlog increased $259,000, or 53%, to $749,000 compared to December 31, 2012. The increase in average sales price of homes in backlog was the result of increased pricing power and a change in product mix to more move-up product at our new communities compared to the prior year. We expect our average sales price will continue to vary from quarter to quarter due to the mix of products and the timing of our new communities.
The Company’s homebuilding gross margin percentage for the 2013 fourth quarter increased 280 basis points to 23.0% compared to 20.2% for the same period in 2012. This increase compared to the same period in 2012 was primarily due to price increases during 2013 and the delivery unit mix from new projects which are achieving higher homebuilding gross margins. Excluding interest in cost of home sales, adjusted homebuilding gross margin percentage was 23.6%* for the 2013 fourth quarter versus 21.4%* for the same period in 2012.
SG&A expense for the 2013 fourth quarter was $8.8 million (7.4% of home sales revenue) compared to $4.9 million (8.9% of home sales revenue) for the same period in 2012. The increase was attributable to a $1.0 million increase in sales and marketing expenses related to the planned growth in the number of active selling communities and the number of homes delivered. In addition, general and administrative expenses increased $2.9 million primarily due to compensation related expenses as a result of increased office headcount and other costs incurred to support the Company’s continued growth.
The Company purchased 758 lots valued at $111.4 million during the 2013 fourth quarter, 364 of which were located in Southern California, 234 in Northern California and 160 in Colorado. Furthermore, an additional 349 lots were contracted or controlled during the fourth quarter, the majority of which were located in Southern California. As of December 31, 2013, the Company owned or controlled 3,466 lots, of which 2,282 are owned and actively selling or under development and 1,184 are controlled under land option contracts or purchase contracts. Of the 3,466 lots owned and controlled, 1,746 are in Southern California, 1,139 in Northern California and 581 in Colorado.
Thomas J. Mitchell, President and Chief Operating Officer, commented, “We continue to execute on our communicated strategy of growing our presence in high demand markets as evidenced by the ongoing additions of well-located land in our three core markets. Into 2014, we remain focused on adding new lots, diversifying our product offering and enhancing our operations as we continue to benefit from improving housing and economic momentum in our regional markets.”
* See “Reconciliation of Non-GAAP Financial Measures”
On November 4, 2013, TRI Pointe announced that its Board of Directors approved a definitive agreement pursuant to which WRECO, the wholly-owned homebuilding and real estate subsidiary of Weyerhaeuser Company (NYSE: WY) (“Weyerhaeuser”), will combine with a subsidiary of TRI Pointe in a transaction valued at approximately $2.7 billion as of that date. The transaction, which is expected to close in the third quarter of 2014, will establish TRI Pointe as one of the 10 largest homebuilders in the United States based on estimated combined equity market value.
In 2014, the Company, exclusive of the WRECO transaction, expects to open 24 new selling communities, of which 18 are in California and 6 in Colorado. During the first quarter, we will open two new selling communities offset by final net new home orders at two selling communities, resulting in 10 active selling communities at the end of the first quarter. The remaining new selling communities will open evenly throughout the balance of the year. The Company expects to deliver approximately 55% of its 149 units in backlog as of December 31, 2013 during the first quarter of 2014. For the full year 2014, the Company is establishing initial guidance for deliveries of 660 homes and home sales revenue of $475 million, exclusive of the WRECO transaction.
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, February 27, 2014. The call will be hosted by, Doug Bauer, Chief Executive Officer, Tom Mitchell, Chief Operating Officer and Mike Grubbs, Chief Financial Officer.
Participants may access the live webcast by visiting the Company’s investor relations website at www.TRIPointeHomes.com. The call can also be accessed by dialing (877) 407-3982, or (201) 493-6780 for international participants.
The replay of the call will be available from approximately 1:00 p.m. Eastern Time on February 27, 2014 through midnight Eastern Time on March 13, 2014. To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 13575869. The archive of the webcast will be available on the Company’s Web site for a limited time.
About TRI Pointe Homes, Inc.
TRI Pointe Homes, Inc (NYSE: TPH) is engaged in the design, construction and sale of innovative single-family homes in planned communities in major metropolitan areas located throughout California and Colorado. The Company is headquartered in Irvine, California. For more information about the Company and its new home developments please visit the Company’s website at www.TRIPointeHomes.com.
© 2017 Business Wire, Inc., All rights reserved.