UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________
FORM 10-Q
_____________________________________________________________________________________________
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172020
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission File Number 1-35796
_____________________________________________________________________________________________
TRI Pointe Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________________________
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Delaware | | 61-1763235 |
(State or other Jurisdiction of Incorporation or Organization)
| | (I.R.S. Employer Identification No.)
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_____________________________________________________________________________________________
19540 Jamboree Road, Suite 300
Irvine, California 92612
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (949) 438-1400
_____________________________________________________________________________________________ Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
____________________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | | TPH | | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐(Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
| | Emerging Growth Companygrowth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
150,432,421 shares130,325,865 shares of the registrant's common stock were issued and outstanding as of October 16, 2017.
July 10, 2020.
EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q, references to “TRI Pointe”, “the Company”the “Company”, “we”, “us”, or “our” (including in the consolidated financial statements and related notes thereto in this report) refer to TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”) and its consolidated subsidiaries.
TRI POINTE GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
SeptemberJune 30, 20172020
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PART I. FINANCIAL INFORMATION
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Item 1. | Financial Statements |
Item 1. Financial Statements
TRI POINTE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| | | September 30, 2017 | | December 31, 2016 | | June 30, 2020 | | December 31, 2019 |
| (unaudited) | | | | (unaudited) | | |
Assets | | | | Assets | |
Cash and cash equivalents | $ | 162,396 |
| | $ | 208,657 |
| Cash and cash equivalents | $ | 474,545 | | | $ | 329,011 | |
Receivables | 84,583 |
| | 82,500 |
| Receivables | 87,580 | | | 69,276 | |
Real estate inventories | 3,303,421 |
| | 2,910,627 |
| Real estate inventories | 3,012,622 | | | 3,065,436 | |
Investments in unconsolidated entities | 17,616 |
| | 17,546 |
| Investments in unconsolidated entities | 36,040 | | | 11,745 | |
Goodwill and other intangible assets, net | 161,094 |
| | 161,495 |
| Goodwill and other intangible assets, net | 159,626 | | | 159,893 | |
Deferred tax assets, net | 108,664 |
| | 123,223 |
| Deferred tax assets, net | 39,744 | | | 49,904 | |
Other assets | 58,292 |
| | 60,592 |
| Other assets | 167,747 | | | 173,425 | |
Total assets | $ | 3,896,066 |
| | $ | 3,564,640 |
| Total assets | $ | 3,977,904 | | | $ | 3,858,690 | |
Liabilities | | | | Liabilities | | | |
Accounts payable | $ | 64,038 |
| | $ | 70,252 |
| Accounts payable | $ | 71,086 | | | $ | 66,120 | |
Accrued expenses and other liabilities | 316,487 |
| | 263,845 |
| Accrued expenses and other liabilities | 314,818 | | | 322,043 | |
Unsecured revolving credit facility | 200,000 |
| | 200,000 |
| |
Seller financed loan | — |
| | 13,726 |
| |
Loans payable | | Loans payable | 250,000 | | | 250,000 | |
Senior notes, net | 1,469,558 |
| | 1,168,307 |
| Senior notes, net | 1,166,189 | | | 1,033,985 | |
Total liabilities | 2,050,083 |
| | 1,716,130 |
| Total liabilities | 1,802,093 | | | 1,672,148 | |
| | | | | | | |
Commitments and contingencies (Note 13) |
| |
| Commitments and contingencies (Note 13) | |
| | | | |
Equity | | | | Equity | |
Stockholders’ Equity: | | | | |
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | — |
| | — |
| |
Common stock, $0.01 par value, 500,000,000 shares authorized; 150,429,021 and 158,626,229 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1,504 |
| | 1,586 |
| |
Stockholders’ equity: | | Stockholders’ equity: | |
Preferred stock, $0.01 par value, 50,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | | Preferred stock, $0.01 par value, 50,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | — | | | — | |
Common stock, $0.01 par value, 500,000,000 shares authorized; 130,325,865 and 136,149,633 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | | Common stock, $0.01 par value, 500,000,000 shares authorized; 130,325,865 and 136,149,633 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 1,303 | | | 1,361 | |
Additional paid-in capital | 780,715 |
| | 880,822 |
| Additional paid-in capital | 482,111 | | | 581,195 | |
Retained earnings | 1,060,210 |
| | 947,039 |
| Retained earnings | 1,692,385 | | | 1,603,974 | |
Total stockholders’ equity | 1,842,429 |
| | 1,829,447 |
| Total stockholders’ equity | 2,175,799 | | | 2,186,530 | |
Noncontrolling interests | 3,554 |
| | 19,063 |
| Noncontrolling interests | 12 | | | 12 | |
Total equity | 1,845,983 |
| | 1,848,510 |
| Total equity | 2,175,811 | | | 2,186,542 | |
Total liabilities and equity | $ | 3,896,066 |
| | $ | 3,564,640 |
| Total liabilities and equity | $ | 3,977,904 | | | $ | 3,858,690 | |
See accompanying condensed notes to the unaudited consolidated financial statements.
TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Homebuilding: | | | | | | | | Homebuilding: | | | | | | | |
Home sales revenue | $ | 648,638 |
| | $ | 578,653 |
| | $ | 1,609,458 |
| | $ | 1,558,633 |
| Home sales revenue | $ | 766,942 | | | $ | 692,138 | | | $ | 1,361,780 | | | $ | 1,184,841 | |
Land and lot sales revenue | 68,218 |
| | 2,535 |
| | 69,661 |
| | 70,204 |
| Land and lot sales revenue | 220 | | | 5,183 | | | 220 | | | 6,212 | |
Other operations revenue | 584 |
| | 606 |
| | 1,752 |
| | 1,790 |
| Other operations revenue | 648 | | | 637 | | | 1,266 | | | 1,235 | |
Total revenues | 717,440 |
| | 581,794 |
| | 1,680,871 |
| | 1,630,627 |
| Total revenues | 767,810 | | | 697,958 | | | 1,363,266 | | | 1,192,288 | |
Cost of home sales | 521,918 |
| | 462,323 |
| | 1,294,563 |
| | 1,219,560 |
| Cost of home sales | 601,434 | | | 574,684 | | | 1,074,316 | | | 996,220 | |
Cost of land and lot sales | 12,001 |
| | 1,734 |
| | 13,299 |
| | 16,973 |
| Cost of land and lot sales | 374 | | | 5,562 | | | 576 | | | 7,057 | |
Other operations expense | 575 |
| | 575 |
| | 1,726 |
| | 1,724 |
| Other operations expense | 624 | | | 627 | | | 1,248 | | | 1,217 | |
Sales and marketing | 33,179 |
| | 31,852 |
| | 92,209 |
| | 90,621 |
| Sales and marketing | 45,194 | | | 47,065 | | | 87,831 | | | 86,054 | |
General and administrative | 32,956 |
| | 31,278 |
| | 101,293 |
| | 90,293 |
| General and administrative | 37,554 | | | 36,854 | | | 77,391 | | | 75,451 | |
Restructuring charges | | Restructuring charges | 5,549 | | | — | | | 5,549 | | | — | |
Homebuilding income from operations | 116,811 |
| | 54,032 |
| | 177,781 |
| | 211,456 |
| Homebuilding income from operations | 77,081 | | | 33,166 | | | 116,355 | | | 26,289 | |
Equity in (loss) income of unconsolidated entities | — |
| | (20 | ) | | 1,646 |
| | 181 |
| |
Other income, net | 26 |
| | 21 |
| | 147 |
| | 287 |
| |
Equity in loss of unconsolidated entities | | Equity in loss of unconsolidated entities | (25) | | | (26) | | | (39) | | | (51) | |
Other (expense) income, net | | Other (expense) income, net | (6,328) | | | 153 | | | (5,955) | | | 6,394 | |
Homebuilding income before income taxes | 116,837 |
| | 54,033 |
| | 179,574 |
| | 211,924 |
| Homebuilding income before income taxes | 70,728 | | | 33,293 | | | 110,361 | | | 32,632 | |
Financial Services: | | | | | | | | Financial Services: | | | | | | | |
Revenues | 295 |
| | 235 |
| | 881 |
| | 762 |
| Revenues | 2,296 | | | 756 | | | 3,890 | | | 1,058 | |
Expenses | 82 |
| | 72 |
| | 233 |
| | 183 |
| Expenses | 1,285 | | | 627 | | | 2,364 | | | 948 | |
Equity in income of unconsolidated entities | 1,351 |
| | 1,247 |
| | 2,911 |
| | 3,246 |
| Equity in income of unconsolidated entities | 2,932 | | | 1,972 | | | 4,488 | | | 2,747 | |
Financial services income before income taxes | 1,564 |
| | 1,410 |
| | 3,559 |
| | 3,825 |
| Financial services income before income taxes | 3,943 | | | 2,101 | | | 6,014 | | | 2,857 | |
Income before income taxes | 118,401 |
| | 55,443 |
| | 183,133 |
| | 215,749 |
| Income before income taxes | 74,671 | | | 35,394 | | | 116,375 | | | 35,489 | |
Provision for income taxes | (46,112 | ) | | (20,298 | ) | | (69,824 | ) | | (77,701 | ) | Provision for income taxes | (18,143) | | | (9,132) | | | (27,964) | | | (9,156) | |
Net income | 72,289 |
| | 35,145 |
| | 113,309 |
| | 138,048 |
| Net income | $ | 56,528 | | | $ | 26,262 | | | $ | 88,411 | | | $ | 26,333 | |
Net income attributable to noncontrolling interests | (25 | ) | | (311 | ) | | (138 | ) | | (738 | ) | |
Net income available to common stockholders | $ | 72,264 |
| | $ | 34,834 |
| | $ | 113,171 |
| | $ | 137,310 |
| |
| Earnings per share | |
| | |
| | | | | Earnings per share | | | | | | | |
Basic | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
| Basic | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.19 | |
Diluted | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
| Diluted | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.18 | |
Weighted average shares outstanding | | | | | | | | Weighted average shares outstanding | |
Basic | 151,214,744 |
| | 160,614,055 |
| | 155,238,206 |
| | 161,456,520 |
| Basic | 130,292,563 | | | 142,244,166 | | | 132,326,856 | | | 142,055,766 | |
Diluted | 152,129,825 |
| | 161,267,509 |
| | 155,936,076 |
| | 161,916,352 |
| Diluted | 130,506,567 | | | 142,471,191 | | | 132,763,775 | | | 142,431,725 | |
See accompanying condensed notes to the unaudited consolidated financial statements.
TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Shares of Common Stock | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Total Stockholders’ Equity | | Noncontrolling Interests | | Total Equity |
Balance at March 31, 2020 | 130,236,981 | | | $ | 1,302 | | | $ | 478,122 | | | $ | 1,635,857 | | | $ | 2,115,281 | | | $ | 12 | | | $ | 2,115,293 | |
Net income | — | | | — | | | — | | | 56,528 | | | 56,528 | | | — | | | 56,528 | |
Shares issued under share-based awards | 88,884 | | | 1 | | | 230 | | | — | | | 231 | | | — | | | 231 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | — | | | — | | | (27) | | | — | | | (27) | | | — | | | (27) | |
Stock-based compensation expense | — | | | — | | | 3,786 | | | — | | | 3,786 | | | — | | | 3,786 | |
Share repurchases | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | |
Balance at June 30, 2020 | 130,325,865 | | | $ | 1,303 | | | $ | 482,111 | | | $ | 1,692,385 | | | $ | 2,175,799 | | | $ | 12 | | | $ | 2,175,811 | |
| | | | | | | | | | | | | |
| Number of Shares of Common Stock (Note 1) | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Total Stockholders' Equity | | Noncontrolling Interests | | Total Equity |
Balance at December 31, 2019 | 136,149,633 | | | $ | 1,361 | | | $ | 581,195 | | | $ | 1,603,974 | | | $ | 2,186,530 | | | $ | 12 | | | $ | 2,186,542 | |
Net income | — | | | — | | | — | | | 88,411 | | | 88,411 | | | — | | | 88,411 | |
Shares issued under share-based awards | 734,555 | | | 8 | | | 913 | | | — | | | 921 | | | — | | | 921 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | — | | | — | | | (5,473) | | | — | | | (5,473) | | | — | | | (5,473) | |
Stock-based compensation expense | — | | | — | | | 7,411 | | | — | | | 7,411 | | | — | | | 7,411 | |
Share repurchases | (6,558,323) | | | (66) | | | (101,935) | | | — | | | (102,001) | | | — | | | (102,001) | |
| | | | | | | | | | | | | |
Balance at June 30, 2020 | 130,325,865 | | | $ | 1,303 | | | $ | 482,111 | | | $ | 1,692,385 | | | $ | 2,175,799 | | | $ | 12 | | | $ | 2,175,811 | |
| | | | | | | | | | | | | |
| Number of Shares of Common Stock (Note 1) | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Total Stockholders' Equity | | Noncontrolling Interests | | Total Equity |
Balance at March 31, 2019 | 142,210,147 | | | $ | 1,422 | | | $ | 658,743 | | | $ | 1,396,858 | | | $ | 2,057,023 | | | $ | 13 | | | $ | 2,057,036 | |
| | | | | | | | | | | | | |
Net income | — | | | — | | | — | | | 26,262 | | | 26,262 | | | — | | | 26,262 | |
Shares issued under share-based awards | 48,516 | | | 1 | | | — | | | — | | | 1 | | | — | | | 1 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | — | | | — | | | (7) | | | — | | | (7) | | | — | | | (7) | |
Stock-based compensation expense | — | | | — | | | 3,351 | | | — | | | 3,351 | | | — | | | 3,351 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Balance at June 30, 2019 | 142,258,663 | | | $ | 1,423 | | | $ | 662,087 | | | $ | 1,423,120 | | | $ | 2,086,630 | | | $ | 13 | | | $ | 2,086,643 | |
| | | | | | | | | | | | | |
| Number of Shares of Common Stock (Note 1) | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Total Stockholders' Equity | | Noncontrolling Interests | | Total Equity |
Balance at December 31, 2018 | 141,661,713 | | | $ | 1,417 | | | $ | 658,720 | | | $ | 1,396,787 | | | $ | 2,056,924 | | | $ | 13 | | | $ | 2,056,937 | |
| | | | | | | | | | | | | |
Net income | — | | | — | | | — | | | 26,333 | | | 26,333 | | | — | | | 26,333 | |
Shares issued under share-based awards | 596,950 | | | 6 | | | 193 | | | — | | | 199 | | | — | | | 199 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | — | | | — | | | (3,612) | | | — | | | (3,612) | | | — | | | (3,612) | |
Stock-based compensation expense | | | — | | | 6,786 | | | | | 6,786 | | | | | 6,786 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Balance at June 30, 2019 | 142,258,663 | | | $ | 1,423 | | | $ | 662,087 | | | $ | 1,423,120 | | | $ | 2,086,630 | | | $ | 13 | | | $ | 2,086,643 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Shares of Common Stock (Note 1) | | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Total Stockholders' Equity | | Noncontrolling Interests | | Total Equity |
Balance at December 31, 2015 | 161,813,750 |
| | $ | 1,618 |
| | $ | 911,197 |
| | $ | 751,868 |
| | $ | 1,664,683 |
| | $ | 21,780 |
| | $ | 1,686,463 |
|
Net income | — |
| | — |
| | — |
| | 195,171 |
| | 195,171 |
| | 962 |
| | 196,133 |
|
Shares issued under share-based awards | 373,332 |
| | 4 |
| | 583 |
| | — |
| | 587 |
| | — |
| | 587 |
|
Excess tax deficit of share-based awards, net | — |
| | — |
| | (165 | ) | | — |
| | (165 | ) | | — |
| | (165 | ) |
Minimum tax withholding paid on behalf of employees for restricted stock units | — |
| | — |
| | (1,359 | ) | | — |
| | (1,359 | ) | | — |
| | (1,359 | ) |
Stock-based compensation expense | — |
| | — |
| | 12,612 |
| | — |
| | 12,612 |
| | — |
| | 12,612 |
|
Share repurchases | (3,560,853 | ) | | (36 | ) | | (42,046 | ) | | — |
| | (42,082 | ) | | — |
| | (42,082 | ) |
Distributions to noncontrolling interests, net | — |
| | — |
| | — |
| | — |
| | — |
| | (3,363 | ) | | (3,363 | ) |
Net effect of consolidations, de-consolidations and other transactions | — |
| | — |
| | — |
| | — |
| | — |
| | (316 | ) | | (316 | ) |
Balance at December 31, 2016 | 158,626,229 |
| | 1,586 |
| | 880,822 |
| | 947,039 |
| | 1,829,447 |
| | 19,063 |
| | 1,848,510 |
|
Net income | — |
| | — |
| | — |
| | 113,171 |
| | 113,171 |
| | 138 |
| | 113,309 |
|
Shares issued under share-based awards | 797,497 |
| | 8 |
| | 3,285 |
| | — |
| | 3,293 |
| | — |
| | 3,293 |
|
Minimum tax withholding paid on behalf of employees for restricted stock units | — |
| | — |
| | (2,896 | ) | | — |
| | (2,896 | ) | | — |
| | (2,896 | ) |
Stock-based compensation expense | — |
| | — |
| | 11,631 |
| | — |
| | 11,631 |
| | — |
| | 11,631 |
|
Share repurchases | (8,994,705 | ) | | (90 | ) | | (112,127 | ) | | — |
| | (112,217 | ) | | — |
| | (112,217 | ) |
Distributions to noncontrolling interests, net | — |
| | — |
| | — |
| | — |
| | — |
| | (987 | ) | | (987 | ) |
Net effect of consolidations, de-consolidations and other transactions | — |
| | — |
| | — |
| | — |
| | — |
| | (14,660 | ) | | (14,660 | ) |
Balance at September 30, 2017 | 150,429,021 |
| | $ | 1,504 |
| | $ | 780,715 |
| | $ | 1,060,210 |
| | $ | 1,842,429 |
| | $ | 3,554 |
| | $ | 1,845,983 |
|
See accompanying condensed notes to the unaudited consolidated financial statements.
TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | | Nine Months Ended September 30, | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2020 | | 2019 |
Cash flows from operating activities: | | | | Cash flows from operating activities: | | | |
Net income | $ | 113,309 |
| | $ | 138,048 |
| Net income | $ | 88,411 | | | $ | 26,333 | |
Adjustments to reconcile net income to net cash used in operating activities: | | | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | |
Depreciation and amortization | 2,567 |
| | 2,322 |
| Depreciation and amortization | 12,176 | | | 11,561 | |
Equity in income of unconsolidated entities, net | (4,557 | ) | | (3,427 | ) | Equity in income of unconsolidated entities, net | (4,449) | | | (2,696) | |
Deferred income taxes, net | 14,559 |
| | 18,770 |
| Deferred income taxes, net | 10,160 | | | 3,097 | |
Amortization of stock-based compensation | 11,631 |
| | 9,648 |
| Amortization of stock-based compensation | 7,411 | | | 6,786 | |
Charges for impairments and lot option abandonments | 1,203 |
| | 678 |
| Charges for impairments and lot option abandonments | 1,729 | | | 5,490 | |
Excess tax deficit of share-based awards | — |
| | (170 | ) | |
Changes in assets and liabilities: | | | | Changes in assets and liabilities: | | | |
Real estate inventories | (401,322 | ) | | (442,671 | ) | Real estate inventories | 53,902 | | | (50,700) | |
Receivables | (3,263 | ) | | 8,549 |
| Receivables | (18,304) | | | (6,778) | |
Other assets | 3,894 |
| | (16,806 | ) | Other assets | 3,677 | | | (1,774) | |
Accounts payable | (6,214 | ) | | 12,827 |
| Accounts payable | 4,966 | | | (18,221) | |
Accrued expenses and other liabilities | 52,640 |
| | 5,876 |
| Accrued expenses and other liabilities | (5,784) | | | (80,964) | |
Returns on investments in unconsolidated entities, net | 4,897 |
| | 5,049 |
| Returns on investments in unconsolidated entities, net | 5,475 | | | 3,927 | |
Net cash used in operating activities | (210,656 | ) | | (261,307 | ) | |
Loss on extinguishment of debt | | Loss on extinguishment of debt | 6,858 | | | — | |
Net cash provided by (used in) operating activities | | Net cash provided by (used in) operating activities | 166,228 | | | (103,939) | |
Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Purchases of property and equipment | (2,212 | ) | | (2,056 | ) | Purchases of property and equipment | (12,002) | | | (13,142) | |
Proceeds from sale of property and equipment | 6 |
| | — |
| Proceeds from sale of property and equipment | 17 | | | 46 | |
Investments in unconsolidated entities | (934 | ) | | (32 | ) | Investments in unconsolidated entities | (25,715) | | | (712) | |
Net cash used in investing activities | (3,140 | ) | | (2,088 | ) | Net cash used in investing activities | (37,700) | | | (13,808) | |
Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
Borrowings from debt | 500,000 |
| | 491,069 |
| Borrowings from debt | 850,000 | | | 400,000 | |
Repayment of debt | (213,726 | ) | | (276,826 | ) | Repayment of debt | (721,673) | | | (381,895) | |
Debt issuance costs | (5,932 | ) | | (5,061 | ) | Debt issuance costs | (4,768) | | | (3,125) | |
Net repayments of debt held by variable interest entities | — |
| | (2,442 | ) | |
Contributions from noncontrolling interests | — |
| | 1,955 |
| |
Distributions to noncontrolling interests | (987 | ) | | (5,059 | ) | |
| Proceeds from issuance of common stock under share-based awards | 3,293 |
| | 461 |
| Proceeds from issuance of common stock under share-based awards | 921 | | | 199 | |
Minimum tax withholding paid on behalf of employees for share-based awards | (2,896 | ) | | (1,359 | ) | Minimum tax withholding paid on behalf of employees for share-based awards | (5,473) | | | (3,612) | |
Share repurchases | (112,217 | ) | | (25,113 | ) | Share repurchases | (102,001) | | | — | |
Net cash provided by financing activities | 167,535 |
| | 177,625 |
| Net cash provided by financing activities | 17,006 | | | 11,567 | |
Net decrease in cash and cash equivalents | (46,261 | ) | | (85,770 | ) | |
Cash and cash equivalents - beginning of period | 208,657 |
| | 214,485 |
| |
Cash and cash equivalents - end of period | $ | 162,396 |
| | $ | 128,715 |
| |
Net increase (decrease) in cash and cash equivalents | | Net increase (decrease) in cash and cash equivalents | 145,534 | | | (106,180) | |
Cash and cash equivalents–beginning of period | | Cash and cash equivalents–beginning of period | 329,011 | | | 277,696 | |
Cash and cash equivalents–end of period | | Cash and cash equivalents–end of period | $ | 474,545 | | | $ | 171,516 | |
See accompanying condensed notes to the unaudited consolidated financial statements.
TRI POINTE GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| |
1. | Organization, Basis of Presentation and Summary of Significant Accounting Policies |
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies
Organization
TRI Pointe Group is engaged in the design, construction and sale of innovative single-family attached and detached homes through its portfolio of six6 quality brands across eight10 states, including Maracay Homes in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California, Colorado and Coloradothe Carolinas and Winchester Homes in Maryland and Virginia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.2019. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three months and ninesix months ended SeptemberJune 30, 20172020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other factors.factors, such as the effects of the novel coronavirus (“COVID-19”) and its influence on our future results.
The consolidated financial statements include the accounts of TRI Pointe Group and its wholly owned subsidiaries, as well as other entities in which TRI Pointe Group has a controlling interest and variable interest entities (“VIEs”) in which TRI Pointe Group is the primary beneficiary. The noncontrolling interests as of SeptemberJune 30, 20172020 and December 31, 20162019 represent the outside owners’ interests in the Company’s consolidated entities and the net equity of the VIE owners.entities. All significant intercompany accounts have been eliminated upon consolidation.
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of ourthese financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
ReclassificationsRevenue Recognition
Certain amountsWe recognize revenue in our consolidated financial statements for the prior year periods have been reclassified to conform to the presentation of the current year periods, including the Company's reclassification of restructuring charges, which was presented as a separate line item on the consolidated statement of operations in the prior year, and has been reclassified to general and administrative expense for both the current and prior years. This reclassification had no material impact on the Company's condensed consolidated financial statements.
Recently Issuedaccordance with Accounting Standards
In May 2014, the FASB issued Accounting Standards Update 2014-09, Topic 606 (“ASC 606”), Revenue from Contracts with Customers(Codified as "ASC 606"). The core principle ofUnder ASC 606, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity shouldwe apply the following steps:steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entityCompany satisfies a performance obligation. ASC 606 supersedes
Home sales revenue
We generate the revenue-recognition requirements in ASC Topic 605, Revenue Recognition, most industry-specific guidance throughout the industry topicsmajority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the accounting standards codification, and some cost guidance relatedhome is transferred to construction-type and production-type contracts. ASC 606the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is effective for public entities for the annual periods ending after December 15, 2017, and for annual and interim periods thereafter. Companies may use either a full retrospective or a modified retrospective approach to adopt ASC 606, and we expect to adopt the new standard under the modified retrospective approach. The Company's assessment efforts to date have included reviewing current accounting policies and processes, as well as assigning internal resources to assistgenerally satisfied in the process. Additionally, the Company has begun to review historical contracts and other arrangements to identify potential differences that could ariseless than one year from the adoptionoriginal contract date. Included in home sales revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.
Land and lot sales revenue
Historically, we have generated land and lot sales revenue from a small number of ASC 606.transactions, although in some years we have realized a significant amount of revenue and gross margin. We are still evaluating the accounting for certain marketing costsdo not expect our future land and it is likely that the adoption of ASC 606 will impact the timing of recognition and classification in our consolidated financial statements of certain marketing costs that we incur to obtainlot sales contracts from our customers. For example, we currently capitalize and amortize various marketing costs with each home delivered in a community. Under the new guidance, these costs may needrevenue to be expensed when incurred or capitalizedmaterial, but we still consider these sales to other assets and amortizedbe an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to selling expense. Although we are still evaluating our contracts, we do not believe the adoption of ASC 606 will have a material impact on the amount or timing of our home sales, revenue but could impact the amount and timing offrom land and lot sales.sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our homebuilding other operations revenue relates to a ground lease at our Quadrant Homes reporting segment. We are continuingresponsible for making lease payments to evaluate the exact impactlandowner, and we collect sublease payments from the new standard will havebuyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 842, Leases. We do not recognize a material profit on recording revenuethis ground lease.
Financial services revenues
TRI Pointe Solutions is a reportable segment and is comprised of our marketing costsTRI Pointe Connect mortgage financing operations, TRI Pointe Assurance title and escrow services operations, and TRI Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
TRI Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting. We record a percentage of income earned by TRI Pointe Connect based on our ownership percentage in this joint venture. TRI Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated financial statements of operations.
Title and escrow services operations
TRI Pointe Assurance provides title examinations for our homebuyers in Austin (Texas), Colorado and Maryland and both title examinations and escrow services for our homebuyers in Arizona, Nevada, Texas and Virginia. TRI Pointe Assurance is a wholly owned subsidiary of TRI Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. TRI Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
TRI Pointe Advantage is a wholly owned subsidiary of TRI Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. TRI Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related disclosures.costs, substantially all of which had been paid as of June 30, 2020.
Recently Issued Accounting Standards Not Yet Adopted
In February 2016,December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, (Codified as “ASC 842”2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which requires an entityis intended to recognize assetssimplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and liabilities on the balance sheet for the rightsalso clarifies and obligations created by leased assets and provide additional disclosures. ASC 842amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those years,the Company beginning after December 15, 2018, and, at that time, we will adopt the new standard using a modified retrospective approach.2020. We are currently evaluating the impact thatdo not expect the adoption of ASC 842 may have on our consolidated financial statements and disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, (“ASU 2016-09”), Compensation-Stock Compensation (Topic 718): Improvements2019-12 to Employee Share-Based Payment Accounting. On January 1, 2017, we adopted ASU 2016-09. This new guidance requires that we record excess tax benefit and tax deficiencies related to the settlement of employee stock-based compensation to the income tax expense line item on our consolidated statement of operations. We previously recorded the excess tax benefits and tax deficiencies to the additional paid-in capital line item on our consolidated balance sheets. Under the new guidance, the Company elected the option to no longer apply a forfeiture rate to our stock-based compensation expense, and to recognize forfeitures as they occur. The adoption of the aforementioned amendments in ASU 2016-09 were applied using the modified retrospective approach and did not have a material impact on our current or prior yearconsolidated financial statements, with no resulting cumulative-effect adjustment to retained earnings. The new guidance also requires excess tax benefits to be classified as an operating activity in the statement of cash flows rather than as a financing activity. Additionally, ASU 2016-09 requires that the minimum tax withholding paid on behalf of employees for share-based awards be classified as a financing activity in the statement of cash flows. statements.
Adoption of ASU 2016-09 did not result in any adjustments to prior period disclosures on the statement of cash flows.
In August 2016, the FASB issuedNew Accounting Standards Update No. 2016-15, (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that adoption of ASU 2016-15 may have on our consolidated financial statements and disclosures, however we do not believe the guidance will have a material impact on our financial statements upon adoption.
In January 2017, the FASB issued Accounting Standards UpdateASU No. 2017-04, (“ASU 2017-04”), Intangibles - –Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment(“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We do not expectadopted ASU 2017-04 toon January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses for financial instruments, including receivables from community facilities districts or similar municipalities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. We adopted ASU 2016-13 on January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.
2. Segment Information
We operate two2 principal businesses: homebuilding and financial services.
Our homebuilding operations consist of six6 homebuilding brands that acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon the abovethese factors, our homebuilding operations are comprised of the following six6 reportable segments: Maracay, Homes, consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; TRI Pointe Homes, consisting of operations in California and Colorado;Colorado, as well as early stage operations in the Carolinas; and Winchester Homes, consisting of operations in Maryland and Virginia.
Our TRI Pointe Solutions financial services operation (“TRI Pointe Solutions”) is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, (“TRI Pointe Connect”) and title services operations (“TRI Pointe Assurance”). While our homebuyers may obtain financing from any mortgage provider of their choice, TRI Pointe Connect, which was formed as a joint venture with an established mortgage lender, can act as a preferred mortgage broker to our homebuyers in all of the markets in which we operate, providing mortgage originations that help facilitate the sale and closing process as well as generate additional fee income for us. TRI Pointe Assurance provides title examinations forand escrow services operations, and our homebuyers at our Trendmaker Homes and Winchester Homes brands. TRI Pointe Assurance is a wholly owned subsidiaryAdvantage property and casualty insurance agency operations. For further details, seeNote 1, Organization, Basis of TRI PointePresentation and acts as a title agency for First American Title Insurance Company.Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate is allocated to the homebuilding reporting segments.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.
Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Revenues | | | | | | | | Revenues | | | | | | | |
Maracay Homes | $ | 78,167 |
| | $ | 68,024 |
| | $ | 204,981 |
| | $ | 161,318 |
| |
Maracay | | Maracay | $ | 86,674 | | | $ | 55,653 | | | $ | 158,426 | | | $ | 95,214 | |
Pardee Homes | 231,376 |
| | 188,148 |
| | 495,452 |
| | 547,311 |
| Pardee Homes | 242,282 | | | 194,699 | | | 420,684 | | | 329,562 | |
Quadrant Homes | 54,781 |
| | 48,354 |
| | 135,599 |
| | 153,575 |
| Quadrant Homes | 37,298 | | | 71,066 | | | 81,372 | | | 114,937 | |
Trendmaker Homes | 53,787 |
| | 64,251 |
| | 171,615 |
| | 172,509 |
| Trendmaker Homes | 121,257 | | | 121,963 | | | 217,377 | | | 192,784 | |
TRI Pointe Homes | 239,110 |
| | 167,769 |
| | 524,159 |
| | 452,553 |
| TRI Pointe Homes | 206,474 | | | 192,752 | | | 365,144 | | | 364,543 | |
Winchester Homes | 60,219 |
| | 45,248 |
| | 149,065 |
| | 143,361 |
| Winchester Homes | 73,825 | | | 61,825 | | | 120,263 | | | 95,248 | |
Total homebuilding revenues | 717,440 |
| | 581,794 |
| | 1,680,871 |
| | 1,630,627 |
| Total homebuilding revenues | 767,810 | | | 697,958 | | | 1,363,266 | | | 1,192,288 | |
Financial services | 295 |
| | 235 |
| | 881 |
| | 762 |
| Financial services | 2,296 | | | 756 | | | 3,890 | | | 1,058 | |
Total | $ | 717,735 |
| | $ | 582,029 |
| | $ | 1,681,752 |
| | $ | 1,631,389 |
| Total | $ | 770,106 | | | $ | 698,714 | | | $ | 1,367,156 | | | $ | 1,193,346 | |
| | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | | | | | | Income (loss) before income taxes | |
Maracay Homes | $ | 6,431 |
| | $ | 4,385 |
| | $ | 14,429 |
| | $ | 9,544 |
| |
Maracay | | Maracay | $ | 8,042 | | | $ | 2,986 | | | $ | 12,604 | | | $ | 4,176 | |
Pardee Homes | 82,407 |
| | 37,508 |
| | 128,570 |
| | 165,718 |
| Pardee Homes | 48,980 | | | 14,735 | | | 82,459 | | | 13,944 | |
Quadrant Homes | 6,251 |
| | 5,497 |
| | 13,104 |
| | 14,808 |
| Quadrant Homes | 2,246 | | | 5,193 | | | 4,943 | | | 2,554 | |
Trendmaker Homes | 3,233 |
| | 3,516 |
| | 9,657 |
| | 9,439 |
| Trendmaker Homes | 10,512 | | | 6,908 | | | 15,309 | | | 5,310 | |
TRI Pointe Homes | 24,382 |
| | 11,723 |
| | 39,779 |
| | 34,651 |
| TRI Pointe Homes | 15,741 | | | 12,280 | | | 20,101 | | | 22,489 | |
Winchester Homes | 4,284 |
| | 1,692 |
| | 6,903 |
| | 6,345 |
| Winchester Homes | 4,670 | | | 2,555 | | | 5,716 | | | 1,789 | |
Corporate | (10,151 | ) | | (10,288 | ) | | (32,868 | ) | | (28,581 | ) | Corporate | (19,463) | | | (11,364) | | | (30,771) | | | (17,630) | |
Total homebuilding income before income taxes | 116,837 |
| | 54,033 |
| | 179,574 |
| | 211,924 |
| Total homebuilding income before income taxes | 70,728 | | | 33,293 | | | 110,361 | | | 32,632 | |
Financial services | 1,564 |
| | 1,410 |
| | 3,559 |
| | 3,825 |
| Financial services | 3,943 | | | 2,101 | | | 6,014 | | | 2,857 | |
Total | $ | 118,401 |
| | $ | 55,443 |
| | $ | 183,133 |
| | $ | 215,749 |
| Total | $ | 74,671 | | | $ | 35,394 | | | $ | 116,375 | | | $ | 35,489 | |
Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Real estate inventories | | | |
Maracay | $ | 352,316 | | | $ | 338,259 | |
Pardee Homes | 1,209,444 | | | 1,218,384 | |
Quadrant Homes | 270,446 | | | 264,437 | |
Trendmaker Homes | 240,467 | | | 268,759 | |
TRI Pointe Homes | 699,708 | | | 737,662 | |
Winchester Homes | 240,241 | | | 237,935 | |
Total | $ | 3,012,622 | | | $ | 3,065,436 | |
| | | |
Total assets | | | |
Maracay | $ | 389,587 | | | $ | 382,262 | |
Pardee Homes | 1,306,846 | | | 1,300,047 | |
Quadrant Homes | 320,792 | | | 331,187 | |
Trendmaker Homes | 300,157 | | | 353,610 | |
TRI Pointe Homes | 893,417 | | | 930,348 | |
Winchester Homes | 304,466 | | | 291,456 | |
Corporate | 429,512 | | | 241,357 | |
Total homebuilding assets | 3,944,777 | | | 3,830,267 | |
Financial services | 33,127 | | | 28,423 | |
Total | $ | 3,977,904 | | | $ | 3,858,690 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Real estate inventories | | | |
Maracay Homes | $ | 246,223 |
| | $ | 228,965 |
|
Pardee Homes | 1,251,842 |
| | 1,098,608 |
|
Quadrant Homes | 281,272 |
| | 221,386 |
|
Trendmaker Homes | 213,179 |
| | 211,035 |
|
TRI Pointe Homes | 981,813 |
| | 868,088 |
|
Winchester Homes | 329,092 |
| | 282,545 |
|
Total | $ | 3,303,421 |
| | $ | 2,910,627 |
|
| | | |
Total assets | | | |
Maracay Homes | $ | 274,263 |
| | $ | 255,466 |
|
Pardee Homes | 1,338,304 |
| | 1,201,302 |
|
Quadrant Homes | 312,160 |
| | 242,208 |
|
Trendmaker Homes | 236,800 |
| | 225,025 |
|
TRI Pointe Homes | 1,162,397 |
| | 1,052,400 |
|
Winchester Homes | 351,717 |
| | 305,379 |
|
Corporate | 210,574 |
| | 275,923 |
|
Total homebuilding assets | 3,886,215 |
| | 3,557,703 |
|
Financial services | 9,851 |
| | 6,937 |
|
Total | $ | 3,896,066 |
| | $ | 3,564,640 |
|
3. Earnings Per Share
The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Numerator: | |
| | |
| | |
| | |
| Numerator: | | | | | | | |
Net income available to common stockholders | $ | 72,264 |
| | $ | 34,834 |
| | $ | 113,171 |
| | $ | 137,310 |
| |
Net income | | Net income | $ | 56,528 | | | $ | 26,262 | | | $ | 88,411 | | | $ | 26,333 | |
Denominator: | |
| | |
| | |
| | |
| Denominator: | | | | | | | |
Basic weighted-average shares outstanding | 151,214,744 |
| | 160,614,055 |
| | 155,238,206 |
| | 161,456,520 |
| Basic weighted-average shares outstanding | 130,292,563 | | | 142,244,166 | | | 132,326,856 | | | 142,055,766 | |
Effect of dilutive shares: | |
| | | | |
| | |
| Effect of dilutive shares: | | | | | |
Stock options and unvested restricted stock units | 915,081 |
| | 653,454 |
| | 697,870 |
| | 459,832 |
| Stock options and unvested restricted stock units | 214,004 | | | 227,025 | | | 436,919 | | | 375,959 | |
Diluted weighted-average shares outstanding | 152,129,825 |
| | 161,267,509 |
| | 155,936,076 |
| | 161,916,352 |
| Diluted weighted-average shares outstanding | 130,506,567 | | | 142,471,191 | | | 132,763,775 | | | 142,431,725 | |
Earnings per share | |
| | |
| | |
| | |
| Earnings per share | | | | | | | |
Basic | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
| Basic | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.19 | |
Diluted | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
| Diluted | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.18 | |
Antidilutive stock options and unvested restricted stock not included in diluted earnings per share | 3,406,498 |
| | 3,806,396 |
| | 3,710,674 |
| | 4,551,337 |
| |
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share | | Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share | 3,090,298 | | | 2,920,708 | | | 2,992,479 | | | 3,144,445 | |
4. Receivables
Receivables consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Escrow proceeds and other accounts receivable, net | $ | 47,836 | | | $ | 29,282 | |
Warranty insurance receivable (Note 13) | 39,744 | | | 39,994 | |
Total receivables | $ | 87,580 | | | $ | 69,276 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Escrow proceeds and other accounts receivable, net | $ | 38,660 |
| | $ | 35,625 |
|
Warranty insurance receivable (Note 13) | 45,923 |
| | 46,875 |
|
Total receivables | $ | 84,583 |
| | $ | 82,500 |
|
ReceivablesReceivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables when collection becomes doubtful. Receivables were net of allowances for doubtful accounts of $286,000$419,000 and $426,000 as of both SeptemberJune 30, 20172020 and December 31, 2016.2019, respectively.
| |
5. | Real Estate Inventories |
5. Real Estate Inventories
Real estate inventories consisted of the following (in thousands):
| | | September 30, 2017 | | December 31, 2016 | | June 30, 2020 | | December 31, 2019 |
Real estate inventories owned: | | | | Real estate inventories owned: | | | |
Homes completed or under construction | $ | 1,045,648 |
| | $ | 659,210 |
| Homes completed or under construction | $ | 1,039,681 | | | $ | 951,974 | |
Land under development | 1,873,806 |
| | 1,824,989 |
| Land under development | 1,452,440 | | | 1,641,354 | |
Land held for future development | 135,801 |
| | 226,915 |
| Land held for future development | 152,032 | | | 122,847 | |
Model homes | 218,274 |
| | 155,039 |
| Model homes | 286,760 | | | 275,204 | |
Total real estate inventories owned | 3,273,529 |
| | 2,866,153 |
| Total real estate inventories owned | 2,930,913 | | | 2,991,379 | |
Real estate inventories not owned: | | | | Real estate inventories not owned: | |
Land purchase and land option deposits | 26,992 |
| | 26,174 |
| Land purchase and land option deposits | 81,709 | | | 74,057 | |
Consolidated inventory held by VIEs | 2,900 |
| | 18,300 |
| |
| Total real estate inventories not owned | 29,892 |
| | 44,474 |
| Total real estate inventories not owned | 81,709 | | | 74,057 | |
Total real estate inventories | $ | 3,303,421 |
| | $ | 2,910,627 |
| Total real estate inventories | $ | 3,012,622 | | | $ | 3,065,436 | |
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvementimprovement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future. The increase in land held for future development is attributable to two projects located in the Inland Empire in California at our Pardee Homes reporting segment that were transferred from land under development.
Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements, as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities.
During the quarter ended September 30, 2017, our Pardee Homes reporting segment sold a parcel, consisting of 69 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. The land sold in this sale was classified as land under development and represented $66.8 million of land and lot sales revenue in the consolidated statements of operations for the three and nine months ended September 30, 2017.
During the quarter ended June 30, 2016, our Pardee Homes reporting segment sold two parcels, totaling 102 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. The land sold in this sale was classified as land under development and represented $61.6 million of land and lot sales revenue in the consolidated statements of operations for nine months ended September 30, 2016.
Interest incurred, capitalized and expensed were as follows (in thousands):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Interest incurred | $ | 22,865 |
| | $ | 18,601 |
| | $ | 61,669 |
| | $ | 50,030 |
| Interest incurred | $ | 21,828 | | | $ | 21,962 | | | $ | 42,607 | | | $ | 45,335 | |
Interest capitalized | (22,865 | ) | | (18,601 | ) | | (61,669 | ) | | (50,030 | ) | Interest capitalized | (21,828) | | | (21,962) | | | (42,607) | | | (45,335) | |
Interest expensed | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| Interest expensed | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Capitalized interest in beginning inventory | $ | 173,261 |
| | $ | 151,347 |
| | $ | 157,329 |
| | $ | 140,311 |
| Capitalized interest in beginning inventory | $ | 196,313 | | | $ | 193,440 | | | $ | 192,356 | | | $ | 184,400 | |
Interest capitalized as a cost of inventory | 22,865 |
| | 18,601 |
| | 61,669 |
| | 50,030 |
| Interest capitalized as a cost of inventory | 21,828 | | | 21,962 | | | 42,607 | | | 45,335 | |
Interest previously capitalized as a cost of inventory, included in cost of sales | (15,899 | ) | | (14,415 | ) | | (38,771 | ) | | (34,808 | ) | Interest previously capitalized as a cost of inventory, included in cost of sales | (21,806) | | | (18,107) | | | (38,628) | | | (32,440) | |
Capitalized interest in ending inventory | $ | 180,227 |
| | $ | 155,533 |
| | $ | 180,227 |
| | $ | 155,533 |
| Capitalized interest in ending inventory | $ | 196,335 | | | $ | 197,295 | | | $ | 196,335 | | | $ | 197,295 | |
Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered. Interest that is expensed as incurred is included in other (expense) income, net.
Real estate inventory impairmentsEstate Inventory Impairments and land option abandonmentsLand Option Abandonments
Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Real estate inventory impairments | $ | — |
| | $ | — |
| | $ | 267 |
| | $ | — |
| Real estate inventory impairments | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Land and lot option abandonments and pre-acquisition charges | 374 |
| | 389 |
| | 936 |
| | 678 |
| Land and lot option abandonments and pre-acquisition charges | 1,380 | | | 288 | | | 1,729 | | | 5,490 | |
Total | $ | 374 |
| | $ | 389 |
| | $ | 1,203 |
| | $ | 678 |
| Total | $ | 1,380 | | | $ | 288 | | | $ | 1,729 | | | $ | 5,490 | |
Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges. NaN real estate inventory impairments were recorded for the three or six-month periods ended June 30, 2020 or 2019.
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time.
Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.
| |
6. | Investments in Unconsolidated Entities |
6. Investments in Unconsolidated Entities
As of SeptemberJune 30, 2017,2020, we held equity investmentsinvestments in five6 active homebuilding partnerships or limited liability companies and one1 financial services limited liability company. Our participation in these entitiesentities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 65%, depending on the investment, with no controlling interest held in any of these investments.
Investments Held
Our cumulative investment in entities accounted for on the equity method, including our share of earnings and losses, consisted of the following (in thousands):
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Limited liability company interests | $ | 14,433 |
| | $ | 14,327 |
|
General partnership interests | 3,183 |
| | 3,219 |
|
Total | $ | 17,616 |
| | $ | 17,546 |
|
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.
Assets and liabilities of unconsolidated entities (in thousands):
| | | September 30, 2017 | | December 31, 2016 | | June 30, 2020 | | December 31, 2019 |
Assets | | | | Assets | | | |
Cash | $ | 11,895 |
| | $ | 9,796 |
| Cash | $ | 12,005 | | | $ | 8,537 | |
Receivables | 4,871 |
| | 10,203 |
| Receivables | 2,498 | | | 7,393 | |
Real estate inventories | 98,370 |
| | 97,402 |
| Real estate inventories | 198,789 | | | 116,760 | |
Other assets | 924 |
| | 1,087 |
| Other assets | 604 | | | 703 | |
Total assets | $ | 116,060 |
| | $ | 118,488 |
| Total assets | $ | 213,896 | | | $ | 133,393 | |
Liabilities and equity | | | | Liabilities and equity | | | |
Accounts payable and other liabilities | $ | 8,612 |
| | $ | 12,844 |
| Accounts payable and other liabilities | $ | 42,248 | | | $ | 11,009 | |
Company’s equity | 17,616 |
| | 17,546 |
| Company’s equity | 36,040 | | | 11,745 | |
Outside interests' equity | 89,832 |
| | 88,098 |
| |
Outside interests’ equity | | Outside interests’ equity | 135,608 | | | 110,639 | |
Total liabilities and equity | $ | 116,060 |
| | $ | 118,488 |
| Total liabilities and equity | $ | 213,896 | | | $ | 133,393 | |
Results of operations from unconsolidated entities (in thousands):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2017 | | 2016 | | 2017 | | 2016 | | 2020 | | 2019 | | 2020 | | 2019 |
Net sales | $ | 5,404 |
| | $ | 4,619 |
| | $ | 15,722 |
| | $ | 12,516 |
| Net sales | $ | 8,726 | | | $ | 6,353 | | | $ | 14,696 | | | $ | 10,464 | |
Other operating expense | (3,532 | ) | | (2,913 | ) | | (9,714 | ) | | (8,067 | ) | Other operating expense | (4,400) | | | (3,528) | | | (8,156) | | | (6,280) | |
Other income | 36 |
| | 1 |
| | 60 |
| | 3 |
| |
Other income, net | | Other income, net | (1) | | | (7) | | | (4) | | | 1 | |
Net income | $ | 1,908 |
| | $ | 1,707 |
| | $ | 6,068 |
| | $ | 4,452 |
| Net income | $ | 4,325 | | | $ | 2,818 | | | $ | 6,536 | | | $ | 4,185 | |
Company’s equity in income of unconsolidated entities | $ | 1,351 |
| | $ | 1,227 |
| | $ | 4,557 |
| | $ | 3,427 |
| Company’s equity in income of unconsolidated entities | $ | 2,907 | | | $ | 1,946 | | | $ | 4,449 | | | $ | 2,696 | |
| |
7. | Variable Interest Entities |
7. Variable Interest Entities
In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. SuchThese deposits are recorded as land purchase and land option deposits under real estate inventories not owned inon the accompanying consolidated balance sheets.
We analyze each of our land and lot option agreements and other similar contracts under the provisions of ASC 810, Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the land ownerlandowner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.
The following provides a summary of our interests in land and lot option agreements (in thousands):
| | | September 30, 2017 | | December 31, 2016 | | June 30, 2020 | | | December 31, 2019 | |
| Deposits | | Remaining Purchase Price | | Consolidated Inventory Held by VIEs | | Deposits | | Remaining Purchase Price | | Consolidated Inventory Held by VIEs | | Deposits | | Remaining Purchase Price | | Consolidated Inventory Held by VIEs | | Deposits | | Remaining Purchase Price | | Consolidated Inventory Held by VIEs |
Consolidated VIEs | $ | 75 |
| | $ | 2,828 |
| | $ | 2,900 |
| | $ | 400 |
| | $ | 17,900 |
| | $ | 18,300 |
| Consolidated VIEs | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Unconsolidated VIEs | 2,450 |
| | 74,034 |
| | N/A |
| | 2,375 |
| | 49,016 |
| | N/A |
| Unconsolidated VIEs | 39,070 | | | 441,528 | | | N/A | | 42,896 | | | 440,974 | | | N/A |
Other land option agreements | 24,542 |
| | 278,566 |
| | N/A |
| | 23,799 |
| | 246,658 |
| | N/A |
| Other land option agreements | 42,639 | | | 374,674 | | | N/A | | 31,161 | | | 358,345 | | | N/A |
Total | $ | 27,067 |
| | $ | 355,428 |
| | $ | 2,900 |
| | $ | 26,574 |
| | $ | 313,574 |
| | $ | 18,300 |
| Total | $ | 81,709 | | | $ | 816,202 | | | $ | — | | | $ | 74,057 | | | $ | 799,319 | | | $ | — | |
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not considered VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition costscosts of $3.7$7.9 million and $3.6and $6.0 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. These pre-acquisition costs wereare included in real estate inventories as land under development on our consolidated balance sheets.
| |
8. | Goodwill and Other Intangible Assets |
8. Goodwill and Other Intangible Assets
As of SeptemberJune 30, 20172020 and December 31, 2016,2019, $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets. The Company'sCompany’s goodwill balance is included in the TRI Pointe Homes reporting segment in Note 2, Segment Information.
We have two2 intangible assets as of SeptemberJune 30, 2017,2020, comprised of an existing trade name from the acquisition of Maracay Homes in 2006, which has a 20 year useful life, and a TRI Pointe Homes trade name resulting from the acquisition of Weyerhaeuser Real Estate Company (“WRECO”) in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):
| | | September 30, 2017 | | December 31, 2016 | | June 30, 2020 | | | December 31, 2019 | |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
Goodwill | $ | 139,304 |
| | $ | — |
| | $ | 139,304 |
| | $ | 139,304 |
| | $ | — |
| | $ | 139,304 |
| Goodwill | $ | 139,304 | | | $ | — | | | $ | 139,304 | | | $ | 139,304 | | | $ | — | | | $ | 139,304 | |
Trade names | 27,979 |
| | (6,189 | ) | | 21,790 |
| | 27,979 |
| | (5,788 | ) | | 22,191 |
| Trade names | 27,979 | | | (7,657) | | | 20,322 | | | 27,979 | | | (7,390) | | | 20,589 | |
Total | $ | 167,283 |
| | $ | (6,189 | ) | | $ | 161,094 |
| | $ | 167,283 |
| | $ | (5,788 | ) | | $ | 161,495 |
| Total | $ | 167,283 | | | $ | (7,657) | | | $ | 159,626 | | | $ | 167,283 | | | $ | (7,390) | | | $ | 159,893 | |
The remaining useful life of our amortizing intangible asset related to the Maracay Homes trade name was 8.45.7 and 9.26.2 years as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. The net carrying amount related to this intangible asset was $3.0 million and $3.3 million as of June 30, 2020 and December 31, 2019, respectively. Amortization expense related to this intangible asset was $134,000 for each of the three-month periods ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $401,000$267,000 for each of the nine-monthsix-month periods ended SeptemberJune 30, 20172020 and 2016,December 31, 2019, respectively. Amortization of this intangible was charged to sales and marketing expense. Our $17.3 million indefinite life intangible asset related to the TRI Pointe Homes trade name is not amortizing. All trade names and goodwill are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.
Expected amortization of our intangible asset related to Maracay Homes for the remainder of 2017,2020, the next four years and thereafter is (in thousands):
| | | | | |
Remainder of 2020 | $ | 267 | |
2021 | 534 | |
2022 | 534 | |
2023 | 534 | |
2024 | 534 | |
Thereafter | 619 | |
Total | $ | 3,022 | |
|
| | | |
Remainder of 2017 | $ | 133 |
|
2018 | 534 |
|
2019 | 534 |
|
2020 | 534 |
|
2021 | 534 |
|
Thereafter | 2,221 |
|
Total | $ | 4,490 |
|
9. Other Assets
Other assets consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Prepaid expenses | $ | 21,273 | | | $ | 24,070 | |
Refundable fees and other deposits | 29,785 | | | 30,242 | |
Development rights, held for future use or sale | 2,063 | | | 2,213 | |
Deferred loan costs—loans payable | 3,709 | | | 4,345 | |
Operating properties and equipment, net | 58,155 | | | 57,803 | |
Lease right-of-use assets | 49,506 | | | 50,947 | |
Other | 3,256 | | | 3,805 | |
Total | $ | 167,747 | | | $ | 173,425 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Prepaid expenses | $ | 19,117 |
| | $ | 24,495 |
|
Refundable fees and other deposits | 18,921 |
| | 17,731 |
|
Development rights, held for future use or sale | 2,569 |
| | 2,569 |
|
Deferred loan costs - unsecured revolving credit facility | 3,655 |
| | 2,101 |
|
Operating properties and equipment, net | 10,696 |
| | 10,884 |
|
Income tax receivable | 1,181 |
| | — |
|
Other | 2,153 |
| | 2,812 |
|
Total | $ | 58,292 |
| | $ | 60,592 |
|
10. Accrued Expenses and Other Liabilities
| |
10. | Accrued Expenses and Other Liabilities |
Accrued expenses and other liabilities consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Accrued payroll and related costs | $ | 25,015 | | | $ | 42,798 | |
Warranty reserves (Note 13) | 79,190 | | | 76,607 | |
Estimated cost for completion of real estate inventories | 78,601 | | | 90,899 | |
Customer deposits | 29,925 | | | 20,390 | |
Income tax liability to Weyerhaeuser | 346 | | | 346 | |
Accrued income taxes payable | 18,605 | | | 1,530 | |
Liability for uncertain tax positions (Note 15) | 486 | | | 486 | |
Accrued interest | 6,886 | | | 11,952 | |
| | | |
Other tax liability | 7,665 | | | 8,448 | |
Lease liabilities | 54,395 | | | 56,125 | |
Other | 13,704 | | | 12,462 | |
Total | $ | 314,818 | | | $ | 322,043 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Accrued payroll and related costs | $ | 26,133 |
| | $ | 33,761 |
|
Warranty reserves (Note 13) | 80,922 |
| | 83,135 |
|
Estimated cost for completion of real estate inventories | 84,793 |
| | 59,531 |
|
Customer deposits | 28,039 |
| | 13,437 |
|
Income tax liability to Weyerhaeuser (Note 16) | 7,200 |
| | 8,589 |
|
Accrued income taxes payable | 10,978 |
| | 1,200 |
|
Liability for uncertain tax positions (Note 16) | 1,416 |
| | — |
|
Accrued interest | 22,599 |
| | 11,570 |
|
Other tax liability | 36,657 |
| | 34,961 |
|
Other | 17,750 |
| | 17,661 |
|
Total | $ | 316,487 |
| | $ | 263,845 |
|
11. Senior Notes and Loans Payable
| |
11. | Senior Notes, Unsecured Revolving Credit Facility and Seller Financed Loans |
Senior Notes
The Senior NotesCompany’s outstanding senior notes (together, the “Senior Notes”) consisted of the following (in thousands):
| | | | | | | | June 30, 2020 | | December 31, 2019 |
| September 30, 2017 | | December 31, 2016 | |
4.375% Senior Notes due June 15, 2019 | $ | 450,000 |
| | $ | 450,000 |
| |
4.875% Senior Notes due July 1, 2021 | 300,000 |
| | 300,000 |
| 4.875% Senior Notes due July 1, 2021 | $ | 83,734 | | | $ | 300,000 | |
5.875% Senior Notes due June 15, 2024 | 450,000 |
| | 450,000 |
| 5.875% Senior Notes due June 15, 2024 | 450,000 | | | 450,000 | |
5.250% Senior Notes due June 1, 2027 | 300,000 |
| | — |
| 5.250% Senior Notes due June 1, 2027 | 300,000 | | | 300,000 | |
5.700% Senior Notes due June 15, 2028 | | 5.700% Senior Notes due June 15, 2028 | 350,000 | | | — | |
Discount and deferred loan costs | (30,442 | ) | | (31,693 | ) | Discount and deferred loan costs | (17,545) | | | (16,015) | |
Total | $ | 1,469,558 |
| | $ | 1,168,307 |
| Total | $ | 1,166,189 | | | $ | 1,033,985 | |
In June 2020, TRI Pointe Group issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15.
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the "2027 Notes"“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 on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1 of each year until maturity, beginning on December 1, 2017.1.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the "2021 Notes"“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 on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.
TRI Pointe Group and its 100%wholly owned subsidiary TRI Pointe Homes, Inc. ("(“TRI Pointe Homes"Homes”) are co-issuers of the 4.375% Senior Notes due 2019 (the "2019 Notes") and the$450 million aggregate principal amount 5.875% Senior Notes due 2024 (the "2024 Notes"“2024 Notes”). The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering were $861.3of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The 2019 Notes and 2024 Notes mature on June 15, 2019 and June 15, 2024, respectively. Interest iswith interest payable semiannually in arrears on June 15 and December 15.
As of SeptemberJune 30, 2017, no principal has been paid on the 2019 Notes, 2021 Notes, 2024 Notes and 2027 Notes (together, the "Senior Notes"), and2020, there was $21.1were $13.6 million of capitalized debt financing costs, included in senior notes, net on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $22.1$5.6 million and $10.7$9.8 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively.
Unsecured Revolving Credit FacilityLoans Payable
Unsecured revolving credit facilityThe Company’s outstanding loans payable consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Term loan facility | $ | 250,000 | | | $ | 250,000 | |
| | | |
Total | $ | 250,000 | | | $ | 250,000 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Unsecured revolving credit facility | $ | 200,000 |
| | $ | 200,000 |
|
On June 20, 2017,March 29, 2019, the Company modified its existing unsecuredentered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated the Company’s Amended and Restated Credit Agreement, dated as of July 7, 2015. The Credit Facility (as defined below), which matures on March 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 that allowed the Company to extenddraw the full
$250 million from the Term Facility in June 2019 in connection with the maturity date by two years to May 18, 2021, while decreasingof the total commitments under4.375% Senior Notes that matured on June 15, 2019. The Company may increase the Credit Facility to $600 million from $625 million. In addition,not more than $1 billion in the Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the facility in twelve-month increments, subject to theaggregate, at its request, upon satisfaction of certainspecified conditions. The CreditRevolving Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the CreditRevolving Facility in the ordinary course of business to repay senior notes and fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the CreditRevolving Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the CreditRevolving 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 the Company’s 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 of SeptemberJune 30, 2017, the2020, we had no outstanding balancedebt under the CreditRevolving Facility was $200.0 million with an interest rate of 2.99% per annum and there was $392.2was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of
credit. As of SeptemberJune 30, 20172020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there waswere $3.7 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility thatthat will amortize over the liferemaining term of the Credit Facility, maturing on May 18, 2021.Facility. Accrued interest, including loan commitment fees, related to the Credit Facility was $505,000$488,000 and $658,000$1.2 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively.
At SeptemberJune 30, 20172020 and December 31, 2019, we had outstanding letters ofof credit of $7.8 million.$40.6 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.
Seller Financed Loans
Seller financed loans consisted of the following (in thousands):
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Seller financed loans | $ | — |
| | $ | 13,726 |
|
Accrued interest on a seller financed loan outstanding as of December 31, 2016 was $519,000.
Interest Incurred
During the three-month periodsthree months ended SeptemberJune 30, 20172020 and 2016,2019, the Company incurred interest of $22.9$21.8 million and $18.6$22.0 million, respectively, related to all debt during the period. Included in interest incurred are amortization of deferred financing and Senior Note discount costs of $1.2 million and $1.9 million for the three months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2020 and 2019, the Company incurred interest of $42.6 million and $45.3 million, respectively, related to all debt during the period. Included in interest incurred was amortization of deferred financingfinancing and Senior Note discount costs of $2.0$2.4 million and $1.8$3.8 million for the threesix months ended SeptemberJune 30, 20172020 and 2016, respectively. During the nine-month periods ended September 30, 2017 and 2016, the Company incurred interest of $61.7 million and $50.0 million, respectively, related to all debt during the period. Included in interest incurred was amortization of deferred financing and Senior Notes discount costs of $5.6 million and $4.7 million for the nine months ended September 30, 2017 and 2016,2019, respectively. Accrued interest related to all outstanding debt at SeptemberJune 30, 20172020 and December 31, 20162019 was $22.6$6.9 million and $11.6$12.0 million, respectively.
Covenant Requirements
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.
Under the Credit Facility, the Company is required to comply with certain financial covenants, including but not limitedthose relating to (i) a minimum consolidated tangible net worth; (ii) a maximum totalworth, leverage, ratio; and (iii) a minimumliquidity or interest coverage, ratio.and a spec unit inventory test. The Credit Facility also 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.
The Company was in compliance with all applicable financial covenants as of SeptemberJune 30, 20172020 and December 31, 2016.2019.
12. Fair Value Disclosures
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12. | Fair Value Disclosures |
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
•Level 1—Quoted prices for identical instruments in active markets
•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date
•Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date
Fair Value of Financial Instruments
A summary of assets and liabilities at SeptemberJune 30, 20172020 and December 31, 2016,2019, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | June 30, 2020 | | | | December 31, 2019 | | |
| Hierarchy | | Book Value | | Fair Value | | Book Value | | Fair Value |
Senior Notes (1) | Level 2 | | $ | 1,179,783 | | | $ | 1,195,826 | | | $ | 1,045,072 | | | $ | 1,104,750 | |
| | | | | | | | | |
Term loan facility (2) | Level 2 | | $ | 250,000 | | | $ | 250,000 | | | $ | 250,000 | | | $ | 250,000 | |
| | | | | | | | | |
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | | |
| | | September 30, 2017 | | December 31, 2016 |
| Hierarchy | | Book Value | | Fair Value | | Book Value | | Fair Value |
Senior Notes (1) | Level 2 | | $ | 1,490,706 |
| | $ | 1,558,500 |
| | $ | 1,189,180 |
| | $ | 1,219,125 |
|
Unsecured revolving credit facility (2) | Level 2 | | $ | 200,000 |
| | $ | 195,058 |
| | $ | 200,000 |
| | $ | 177,410 |
|
Seller financed loan (3) | Level 2 | | $ | — |
| | $ | — |
| | $ | 13,726 |
| | $ | 13,189 |
|
____________________
| |
(1)
| The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $21.1 million and $20.9 million as of September 30, 2017 and December 31, 2016, respectively. The estimated fair value of the Senior Notes at September 30, 2017 and December 31, 2016 is based on quoted market prices. |
| |
(2)
| The estimated fair value of the Credit Facility at September 30, 2017 and December 31, 2016 is based on a treasury curve analysis. |
| |
(3)
| The estimated fair value of the seller financed loan at December 31, 2016 is based on a treasury curve analysis. |
At September(1)The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $13.6 million and $11.1 million as of June 30, 20172020 and December 31, 2016,2019, respectively. The estimated fair value of the Senior Notes at June 30, 2020 and December 31, 2019 is based on quoted market prices.
(2)The estimated fair value of the Term Loan Facility as of June 30, 2020 approximated book value due to the variable interest rate terms of this loan.
At June 30, 2020 and December 31, 2019, the carrying value of cash and cash equivalents and receivables approximated fair value.value due to their short-term nature and variable interest rate terms.
Fair Value of Nonfinancial Assets
Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicating the carrying value is not recoverable. The following table presents impairment charges and the remaining net fair value for nonfinancial assets that were measured during the periods presented (in thousands):
|
| | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 | | Year Ended December 31, 2016 |
| Impairment Charge | | Fair Value Net of Impairment | | Impairment Charge | | Fair Value Net of Impairment |
Real estate inventories (1) | $ | 267 |
| | $ | 1,574 |
| | $ | — |
| | $ | — |
|
__________
(1) Fair value of real estate inventories, net of impairment charges represents only those assets whoseNo carrying values were adjusted to fair value infor the respective periods presented. The fair value of these real estate inventories impaired was determined based on an analysis of future undiscounted net cash flows. Insix months ended June 30, 2020 or the case of lots for sale, fair value was determined based on recent landyear ended December 31, 2019.
13. Commitments and lot sales for similar assets.Contingencies
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13. | Commitments and Contingencies |
Legal Matters
Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices, environmental protection and financial services. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.
We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise thesethese estimates when necessary. In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements. For matters as to which the Company believes a loss is probable and reasonably estimable, we had legal$319,000 and $419,000 of legal reserves of $100,000 and $225,000 as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively.
On April 3, 2017, Pardee Homes was named as a defendant in a lawsuit filed in San Diego County Superior Court by Scripps Health (“Scripps”) related to the April 1989 sale by Pardee Homes of real property located in Carmel Valley, California to Scripps pursuant to a purchase agreement dated December 18, 1987 (as amended, the “Purchase Agreement”). In March 2003, Scripps contacted Pardee Homes and alleged Pardee Homes had breached a covenant in the Purchase Agreement by failing to record a restriction against the development of the surrounding property then owned by Pardee Homes for medical office use. In November 2003, the parties entered into a tolling agreement, pursuant to which the parties agreed to toll any applicable statutes of limitation from November 3, 2003 until the expiration of the agreement. The tolling agreement did not revive any cause of action already time barred by a statute of limitation as of November 3, 2003. The tolling agreement was terminated as of February 21, 2017. Pardee Homes became an indirect, wholly owned subsidiary of TRI Pointe on July 7, 2014 in connection with TRI Pointe’s acquisition of WRECO.
We intend to vigorously defend the action, and intend to continue challenging Scripps' claims. Although we cannot predict or determine the timing or final outcome of the lawsuit or the effect that any adverse findings or determinations may have on us, we believe Scripps' claims against Pardee Homes are without merit and that this dispute will not have a material impact on our business, liquidity, financial condition and results of operations. An unfavorable determination could result in the payment by us of monetary damages, which could be significant. The complaint does not indicate the amount of relief sought, and an estimate of possible loss or range of loss cannot presently be made with respect to this matter. No reserve with respect to this matter has been recorded on our consolidated financial statements.
Warranty
Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.
We maintain general liability insurance designed to protect us against a portion of our risk of loss from warranty and construction defect-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy.
Our warranty reserve and related estimated insurance recoveries are based on actuarial analysis that uses our historical claim and expense data, as well as industry data to estimate these overall costs and related recoveries. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a warranty or construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.
We also record expected recoveries from insurance carriers based on actual insurance claims made and actuarially determined amounts that depend on various factors, including the above-described reserve estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. Outstanding warranty insurance receivables were $45.9$39.7 million and $46.9$40.0 million as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheet.
sheets.
Warranty reserve activity consisted of the following (in thousands):
| | | | | | | | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | 2020 | | 2019 | | 2020 | | 2019 |
Warranty reserves, beginning of period | | Warranty reserves, beginning of period | $ | 76,487 | | | $ | 70,947 | | | $ | 76,607 | | | $ | 71,836 | |
Warranty reserves accrued | | Warranty reserves accrued | 6,988 | | | 6,385 | | | 12,144 | | | 10,655 | |
| 2017 | | 2016 | | 2017 | | 2016 | |
Warranty reserves, beginning of period(1) | $ | 80,128 |
| | $ | 45,272 |
| | $ | 83,135 |
| | $ | 45,948 |
| |
Warranty reserves accrued | 4,448 |
| | 3,329 |
| | 10,122 |
| | 8,373 |
| |
Adjustments to pre-existing reserves | 400 |
| | 200 |
| | 1,021 |
| | 460 |
| |
Warranty expenditures | (4,054 | ) | | (3,136 | ) | | (13,356 | ) | | (9,116 | ) | Warranty expenditures | (4,285) | | | (5,861) | | | (9,561) | | | (11,020) | |
Warranty reserves, end of period | $ | 80,922 |
| | $ | 45,665 |
| | $ | 80,922 |
| | $ | 45,665 |
| Warranty reserves, end of period | $ | 79,190 | | | $ | 71,471 | | | $ | 79,190 | | | $ | 71,471 | |
__________
| |
(1)
| Included in the 2017 opening balance is approximately $38.0 million of additional warranty liabilities estimated to be covered by our insurance policies that were adjusted to present the warranty reserves and related estimated warranty insurance receivable on a gross basis at December 31, 2016. Of the $38.0 million, approximately $36.5 million related to prior year estimated warranty insurance recoveries. |
Performance Bonds
We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. The beneficiaries of the bonds are various municipalities. As of SeptemberJune 30, 20172020 and December 31, 2016,2019, the Company had outstanding surety bonds totaling $544.3$614.2 million and $449.6$611.6 million, respectively. The beneficiariesAs of June 30, 2020 and December 31, 2019, our estimated cost to complete obligations related to these surety bonds was $390.8 million and $382.3 million, respectively.
Lease Obligations
Under ASC 842 we recognize a right-of-use lease asset and a lease liability for contracts deemed to contain a lease at the inception of the bondscontract. Our lease population is fully comprised of operating leases, which are various municipalities.now recorded at the net present value of future lease obligations existing at each balance sheet date. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Key estimates involved with ASC 842 include the discount rate used to measure our future lease obligations and the lease term, where considerations include renewal options and intent to renew. Lease right-of-use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities on our consolidated balance sheet.
Operating Leases
We lease certain property and equipment under non-cancelable operating leases. Office leases are for terms of up to ten years and generally provide renewal options. In most cases, we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases. Equipment leases are typically for terms of three to four years.
Ground Leases
In 1987, we obtained 2 55-year ground leases of commercial property that provided for 3 renewal options of ten years each and 1 45-year renewal option. We exercised the 3 ten-year extensions on 1 of these ground leases to extend
the lease through 2071. The commercial buildings on these properties have been sold and the ground leases have been sublet to the buyers.
For one of these leases, we are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease has been subleased through 2041 to the buyers of the commercial buildings. For the second lease, the buyers of the buildings are responsible for making lease payments directly to the landowner, however, we have guaranteed the performance of the buyers/lessees. See below for additional information on leases (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2020 | | Three Months Ended June 30, 2019 | | Six Months Ended June 30, 2020 | | Six Months Ended June 30, 2019 |
Lease Cost | | | | | | | |
Operating lease cost (included in SG&A expense) | $ | 2,456 | | | $ | 2,166 | | | $ | 4,794 | | | $ | 4,210 | |
Ground lease cost (included in other operations expense) | 624 | | | 627 | | | 1,248 | | | 1,217 | |
Sublease income, operating leases | — | | | — | | | — | | | — | |
Sublease income, ground leases (included in other operations revenue) | (648) | | | (637) | | | (1,266) | | | (1,235) | |
Net lease cost | $ | 2,432 | | | $ | 2,156 | | | $ | 4,776 | | | $ | 4,192 | |
| | | | | | | |
Other information | | | | | | | |
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating lease cash flows (included in operating cash flows) | $ | 2,220 | | | $ | 1,641 | | | $ | 4,234 | | | $ | 3,250 | |
Ground lease cash flows (included in operating cash flows) | $ | 624 | | | $ | 609 | | | $ | 1,248 | | | $ | 1,217 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 1,135 | | | $ | 346 | | | $ | 1,155 | | | $ | 2,053 | |
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Weighted-average discount rate: | | | |
Operating leases | 5.9 | % | | 5.9 | % |
Ground leases | 10.2 | % | | 10.2 | % |
Weighted-average remaining lease term (in years): | | | |
Operating leases | 5.8 | | 6.1 |
Ground leases | 47.5 | | 48.1 |
The future minimum lease payments under our operating leases are as follows (in thousands):
| | | | | | | | | | | |
| Property, Equipment and Other Leases | | Ground Leases (1) |
Remaining in 2020 | $ | 4,460 | | | $ | 1,535 | |
2021 | 7,855 | | | 3,070 | |
2022 | 5,610 | | | 3,070 | |
2023 | 4,503 | | | 3,070 | |
2024 | 2,779 | | | 3,070 | |
Thereafter | 6,410 | | | 83,515 | |
Total lease payments | $ | 31,617 | | | $ | 97,330 | |
Less: Interest | 4,762 | | | 69,790 | |
Present value of operating lease liabilities | $ | 26,855 | | | $ | 27,540 | |
__________
(1) Ground leases are fully subleased through 2041, representing $65.5 million of the $97.3 million future ground lease obligations.
14. Stock-Based Compensation
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14. | Stock-Based Compensation |
2013 Long-Term Incentive Plan
The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by TRI Pointe in January 2013 and amended, with the approval of our stockholders, in 2014 and 2015. In addition, our board of directors amended the 2013 Incentive Plan in 2014 to prohibit repricing (other than in connection with any equity restructuring or any change in capitalization) of outstanding options or stock appreciation rights without stockholder approval. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, bonus stock, restricted stock, restricted stock units (“RSUs”) and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.
As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive Plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of our common stock generally shall again be available under the 2013 Incentive Plan. As of SeptemberJune 30, 2017,2020, there were 6,207,8895,468,092 shares available for future grant under the 2013 Incentive Plan.
Converted Awards
On July 16, 2014, the Company filed a registration statement on Form S-8 (Registration No. 333-197461) to register 4,105,953 shares of common stock related to converted equity awards issued in connection with the Company's acquisition of WRECO. The converted awards have the same terms and conditions as the prior equity awards except that all performance share units were surrendered in exchange for time-vesting restricted stock units without any performance-based vesting conditions or requirements and the exercise price of each converted stock option is equal to the original exercise price divided by an exchange ratio of 2.1107, rounded down to the nearest whole number of shares of common stock. There will be no future grants under the WRECO equity incentive plans.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Total stock-based compensation | $ | 3,887 |
| | $ | 3,285 |
| | $ | 11,631 |
| | $ | 9,648 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Total stock-based compensation | $ | 3,786 | | | $ | 3,351 | | | $ | 7,411 | | | $ | 6,786 | |
Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations. As of SeptemberJune 30, 2017,2020, total unrecognized stock-based compensation related to all stock-based awards was $21.3$24.7 million and the weighted average term over which the expense was expected to be recognized was 1.72.1 years.
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the ninesix months ended SeptemberJune 30, 2017:2020:
| | | | | | | | | | | Options | | Weighted Average Exercise Price Per Share | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value (in thousands) |
| Options | | Weighted Average Exercise Price Per Share | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value (in thousands) | |
Options outstanding at December 31, 2016 | 2,971,370 |
| | $ | 13.12 |
| | 4.4 |
| | $ | 1,568 |
| |
Options outstanding at December 31, 2019 | | Options outstanding at December 31, 2019 | 891,343 | | | $ | 15.03 | | | 3.4 | | $ | 994 | |
Granted | — |
| | — |
| | — |
| | — |
| Granted | — | | | — | | | — | | | — | |
Exercised | (318,419 | ) | | 10.34 |
| | — |
| | — |
| Exercised | (78,506) | | | $ | 11.94 | | | — | | | — | |
Forfeited | (686,720 | ) | | 14.16 |
| | — |
| | — |
| Forfeited | (8,257) | | | $ | 14.37 | | | — | | | — | |
Options outstanding at September 30, 2017 | 1,966,231 |
| | 13.44 |
| | 5.0 |
| | 2,322 |
| |
Options exercisable at September 30, 2017 | 1,851,395 |
| | 13.39 |
| | 4.9 |
| | 2,322 |
| |
Options outstanding at June 30, 2020 | | Options outstanding at June 30, 2020 | 804,580 | | | $ | 15.34 | | | 3 | | $ | 247 | |
Options exercisable at June 30, 2020 | | Options exercisable at June 30, 2020 | 804,580 | | | $ | 15.34 | | | 3 | | $ | 247 | |
The intrinsic value of each stock option award outstanding or exercisable is the difference between the fair market value of the Company’s common stock at the end of the period and the exercise price of each stock option award to the extent it is considered “in-the-money”. A stock option award is considered to be “in-the-money” if the fair market value of the Company’s stock is greater than the exercise price of the stock option award. The aggregate intrinsic value of options outstanding and options exercisable represents the value that would have been received by the holders of stock option awards had they exercised their stock option award on the last trading day of the period and sold the underlying shares at the closing price on that day.
Summary of Restricted Stock Unit Activity
The following table presents a summary of restricted stock units (“RSUs”)RSUs for the ninesix months ended SeptemberJune 30, 2017:2020:
| | | | | | | | | Restricted Stock Units | | Weighted Average Grant Date Fair Value Per Share | | Aggregate Intrinsic Value (in thousands) |
| Restricted Stock Units | | Weighted Average Grant Date Fair Value Per Share | | Aggregate Intrinsic Value (in thousands) | |
Nonvested RSUs at December 31, 2016 | 3,412,719 |
| | $ | 9.77 |
| | $ | 39,178 |
| |
Nonvested RSUs at December 31, 2019 | | Nonvested RSUs at December 31, 2019 | 3,384,351 | | | $ | 12.39 | | | $ | 52,694 | |
Granted | 1,670,936 |
| | 11.00 |
| | 22,508 |
| Granted | 1,458,633 | | | $ | 18.45 | | | — | |
Vested | (714,612 | ) | | 12.34 |
| | — |
| Vested | (990,929) | | | $ | 13.36 | | | — | |
Forfeited | (40,362 | ) | | 11.68 |
| | — |
| Forfeited | (744,904) | | | $ | 10.81 | | | — | |
Nonvested RSUs at September 30, 2017 | 4,328,681 |
| | 9.80 |
| | 58,307 |
| |
Nonvested RSUs at June 30, 2020 | | Nonvested RSUs at June 30, 2020 | 3,107,151 | | | $ | 15.30 | | | $ | 43,997 | |
RSUs that vested, as reflected in the table above, during the six months ended June 30, 2020 include previously granted time-based RSUs. RSUs that were forfeited, as reflected in the table above, during the six months ended June 30, 2020 include performance-based RSUs and time-based RSUs that were forfeited for no consideration.
On March 1, 2016,April 27, 2020, the Company granted an aggregate of 1,120,677 time-vested47,080 time-based RSUs to employees and officers.the non-employee members of its board of directors. The RSUs granted to non-employee directors vest in equal installments annuallytheir entirety on the anniversaryday immediately prior to the Company’s 2021 annual meeting of the grant date over a three year period.stockholders. The fair value of each RSU granted on March 1, 2016April 27, 2020 was measured using a price of $10.49$10.62 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.
On March 1, 2016,9, 2020 and February 20, 2020, the Company granted 297,426, 285,986an aggregate of 17,692 and 125,834639,395, respectively, time-based RSUs to certain employees and officers. The RSUs granted vest in equal installment annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 9, 2020 and February 20, 2020 was measured using a price of $14.13 and $18.39 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.
On February 20, 2020, the Company granted an aggregate of 547,166 performance-based RSUs to the Company’s Chief Executive Officer, Chief Operating Officer and President, and Chief Financial Officer, respectively.General Counsel, Chief Marketing Officer and Chief Human Resources Officer. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue, and (ii) 50% to pre-tax earnings. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The percentage of these performance-based RSUs that vest willAny award earned based on performance achieved may be determinedincreased or decreased by comparing25% based on the Company’s total stockholder return (“TSR”TSR'”) relative to the TSRs of a group of peer homebuilding companies.its peer-group homebuilders. The performance period for these performance-based RSUs is January 1, 20162020 to December 31, 2018. These performance-based RSUs will not vest if the Company’s total stockholder return from January 1, 2016 to December 31, 2018 is not a positive number, provided that the executive will thereafter become vested in the award units, or portion thereof, that would have otherwise vested on December 31, 2018 if on any day after December 31, 2018 and on or before December 31, 2020, the Company’s total stockholder return is greater than zero and the executive is employed by the Company on that date. If the performance-based RSUs have not vested on or before December 31, 2020, such performance-based RSUs shall be cancelled and forfeited for no consideration.2022. The fair value of these performance-based RSUs was determined to be $4.76$19.36 per share based on a Monte Carlo simulation. Each award will be expensed over the requisite service period.
On June 6, 2016,February 20, 2020, the Company granted an aggregate of 74,466207,300 performance-based RSUs to the non-employee membersCompany’s division presidents. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue of its boardthe applicable Company division, and (ii) 50% to pre-tax earnings of directors. On March 27, 2017, 21,276the applicable Company division. The vesting, if at all, of these performance-based RSUs vested in their entiretymay range from 0% to 100% and will be based on May 25, 2017, 53,190the applicable Company division’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs vested in their entirety.is January 1, 2020 to December 31, 2022. The fair value of each RSU granted on June 6, 2016these performance-based RSUs was measured using a price of $11.75 per share,$18.39, which was the closing stock price on the date of grant. Each award waswill be expensed on a straight-line basis over the vestingrequisite service period.
On February 27, 2017,May 6, 2019, the Company granted an aggregate of 990,279 time-vested61,488 time-based RSUs to employeesthe non-employee members of its board of directors and officers.1,098 time-based RSUs to certain employees. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2020 annual meeting of stockholders and the RSUs granted to employees vest in equal installments annually on the anniversary of the grant date over a three year-year period. The fair value of each RSU granted on February 27, 2017May 6, 2019 was measured using a price of $12.10$13.66 per share which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.
On March 11, 2019 and February 28, 2019, the Company granted an aggregate of 3,025 and 990,723, respectively, of time-based RSUs to certain employees and officers. The RSUs granted vest in equal installments annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 11, 2019 and February 28, 2019 was measured using a price of $13.22 and $12.60 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.
On February 27, 2017,28, 2019, the Company granted 257,851, 247,933247,619, 238,095 and 119,008114,285 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated in equal parts to two separate performance metrics:metrics, as follows: (i) 30% to TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) 70% to earnings per share. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 20172019 to December 31, 2019.2021. The fair value of the performance-based RSUs related to the TSR metric was determined to be $6.16$8.16 per share based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of $12.10$12.60 per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.
On May 30, 2017, the Company granted an aggregate of 55,865 RSUs to the non-employee members of its board of directors. These RSUs vest in their entirety on the day immediately prior to the Company's 2018 Annual Meeting of Stockholders. The fair value of each RSU granted on May 30, 2017 was measured using a price of $12.53 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.
As RSUs vest for employees, a portion of the shares awarded is generally withheld to cover employee tax withholdings. As a result, the number of RSUs vested and the number of shares of TRI Pointe common stock issued will differ.
| |
15. | Stock Repurchase Program |
On February 23, 2017, our board of directors approved a new stock repurchase program, authorizing the repurchase of our common stock with an aggregate value of up to $100 million through March 31, 2018 (the “2017 Repurchase Program”)15. On July 25, 2017 our board of directors authorized the repurchase of up to an additional $50 million of our common stock under the 2017 Repurchase Program, increasing the aggregate authorization from $100 million to $150 million. Purchases of common stock pursuant to the 2017 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 of the Securities Exchange Act of 1934, as amended. We are not obligated under the 2017 Repurchase Program to repurchase any specific number or amount of shares of common stock, and we may modify, suspend or discontinue the 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. For the three months ended September 30, 2017, we repurchased and retired 975,700 shares of our common stock under the 2017 Repurchase Program at a weighted average price of $12.83 per share for a total cost of $12.5 million. For the nine months ended September 30, 2017, we repurchased and retired 8,994,705 shares of our common stock under the 2017 Repurchase Program at a weighted average price of $12.48 per share for a total cost of $112.2 million.Income Taxes
We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered. Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable. Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.
We had net deferred tax assets of $108.7$39.7 million and $123.2$49.9 million as of SeptemberJune 30, 20172020 and December 31, 2016, respectively.2019. We had a valuation allowance related to those net deferred tax assets of $323,000$3.5 million as of both SeptemberJune 30, 20172020 and December 31, 2016.2019. The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the Company'sCompany’s future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the Company'sCompany’s estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company'sCompany’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the Company'sCompany’s deferred tax assets.
TRI Pointe has certain liabilities withto Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement. As of Septemberboth June 30, 20172020 and December 31, 2016,2019, we had an income tax liability to Weyerhaeuser of $7.2 million and $8.6 million, respectively.$346,000. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets. During the six months ended June 30, 2019, we amended our existing tax sharing agreement with Weyerhaeuser, pursuant to which the parties agreed, among other things, that we had no further obligation to remit payment to Weyerhaeuser in connection with any potential utilization of certain deductions or losses associated with certain Weyerhaeuser entities with respect to federal and state taxes. As a result of the amendment, during the three months ended March 31, 2019, we decreased our income tax liability to Weyerhaeuser and recorded other income of $6.0 million, which is included in other income, net in the accompanying consolidated statements of operations.
Our provision for income taxes totaled $46.1$18.1 million and $20.3$9.1 million for the three months ended SeptemberJune 30, 20172020 and 2016, respectively. Our provision for income taxes totaled $69.82019, respectively and $28.0 million and $77.7$9.2 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company had $1.4 million$486,000 of uncertain tax positions recorded as of SeptemberJune 30, 2017. The Company had no uncertain tax positions as of2020 and December 31, 2016.2019. The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years.
| |
17. | Related Party Transactions |
16. Related Party Transactions
We had no0 related party transactions for the ninesix months ended SeptemberJune 30, 2017.2020 and 2019.
In May
17. Supplemental Disclosure to Consolidated Statements of 2016, we entered into an agreement with an affiliate of Starwood Capital Group, a then greater than 5% holder of our common stock, to acquire 52 lots located in Azusa, California, for an aggregate purchase price of $18.4 million. In October of 2016, we acquired 27 of these lots for a purchase price of $9.6 million. Our former Chairman of the Board is also the Chairman and Chief Executive Officer of Starwood Capital Group. This acquisition was approved by our independent directors. In August of 2016, we entered into an agreement with an affiliate of Starwood Capital Group to purchase 257 lots located in Castle Rock, Colorado, for an aggregate purchase price of approximately $8.6 million. In October of 2016, we acquired 126 of these lots for a purchase price of $4.2 million. This acquisition was approved by our independent directors. As of March 27, 2017, Starwood Capital Group is no longer a related party.Cash Flows
In 2016, we acquired 93 lots located in Dublin, California, for a purchase price of approximately $25.5 million from an affiliate of BlackRock, Inc., a greater than 5% holder of our common stock. This acquisition was approved by the vote of our independent directors in accordance with the requirements of the Company’s Code of Business Conduct and Ethics.
| |
18. | Supplemental Disclosure to Consolidated Statements of Cash Flows |
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):
|
| | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 |
Supplemental disclosure of cash flow information: | | | |
Cash paid during the period for: | | | |
Interest, net of amounts capitalized of $61,669 and $50,030 (Note 5) | $ | — |
| | $ | — |
|
Income taxes | $ | 44,784 |
| | $ | 89,269 |
|
Supplemental disclosures of noncash activities: | | | |
Amortization of senior note discount capitalized to real estate inventory | $ | 1,525 |
| | $ | 1,321 |
|
Amortization of deferred loan costs capitalized to real estate inventory | $ | 4,104 |
| | $ | 2,865 |
|
Effect of net consolidation and de-consolidation of variable interest entities: | | | |
Decrease in consolidated real estate inventory not owned | $ | (14,660 | ) | | $ | 3,484 |
|
Decrease in noncontrolling interests | $ | 14,660 |
| | $ | (3,484 | ) |
| | | | | | | | | | | |
| Six Months Ended June 30, | | |
| 2020 | | 2019 |
Supplemental disclosure of cash flow information: | | | |
Interest paid (capitalized), net | $ | 1,191 | | | $ | (3,104) | |
Income taxes paid (refunded), net | $ | (12) | | | $ | 10,601 | |
Supplemental disclosures of noncash activities: | | | |
Amortization of senior note discount capitalized to real estate inventory | $ | 579 | | | $ | 981 | |
Amortization of deferred loan costs capitalized to real estate inventory | $ | 1,844 | | | $ | 2,826 | |
- 25 -18. Supplemental Guarantor Information
| |
19. | Supplemental Guarantor Information |
2021 Notes, and 2027 Notes and 2028 Notes
On May 26, 2016, TRI Pointe Group issued the 2021 Notes. OnNotes, on June 5, 2017, TRI Pointe Group issued the 2027 Notes and on June 10, 2020, TRI Pointe Group issued the 2028 Notes. All of TRI Pointe Group’s 100% owned subsidiaries that are guarantors (each a “Guarantor” and, collectively, the “Guarantors”) of the Credit Facility, including TRI Pointe Homes, are party to supplemental indentures pursuant to which they jointly and severally guarantee TRI Pointe Group’s obligations with respect to the 2021 Notes and the 2027these Notes. Each Guarantor of the 2021 Notes, the 2027 Notes and the 20272028 Notes is 100% owned by TRI Pointe Group, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2021 Notes, the 2027 Notes and the 20272028 Notes, as described in the following paragraph. All of our non-Guarantor subsidiaries have nominal assets and operations and are considered minor, as defined in Rule 3-10(h) of Regulation S-X. In addition, TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X. There are no significant restrictions upon the ability of TRI Pointe Group or any Guarantor to obtain funds from any of their respective wholly owned subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X.
A Guarantor of the 2021 Notes, the 2027 Notes and the 20272028 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe Group or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe Group or another Guarantor, with TRI Pointe Group or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe Group or any other Guarantor which gave rise to such Guarantor guaranteeing the 2021 Notes, the 2027 Notes or the 20272028 Notes; (vi) TRI Pointe Group exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable supplemental indenture are discharged.
2019 Notes and 2024 Notes
TRI Pointe Group and TRI Pointe Homes are co-issuers of the 2019 Notes and the 2024 Notes. All of the Guarantors (other than TRI Pointe Homes) have entered into supplemental indentures pursuant to which they jointly and severally guarantee the obligations of TRI Pointe Group and TRI Pointe Homes with respect to the 2019 Notes and the 2024 Notes. Each Guarantor of the 2019 Notes and the 2024 Notes is 100% owned by TRI Pointe Group and TRI Pointe Homes, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2019 Notes and the 2024 Notes, as described below.
A Guarantor of the 2019 Notes and the 2024 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe or another Guarantor, with TRI Pointe or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe or any other Guarantor which gave rise to such Guarantor guaranteeing the 2019 Notes and 2024 Notes; (vi) TRI Pointe exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable indenture are discharged.
Presented below are the condensed consolidating balance sheets at SeptemberJune 30, 20172020 and December 31, 2016,2019, condensed consolidating statements of operations for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 and condensed consolidating statement of cash flows for the ninesix months ended SeptemberJune 30, 20172020 and 2016. 2019. Because TRI Pointe’s non-Guarantor subsidiaries are considered minor, as defined in Rule 3-10(h) of Regulation S-X, the non-Guarantor subsidiaries’ information is not
separately presented in the tables below, but is included with the Guarantors. Additionally, because TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X, the condensed consolidated financial information of TRI Pointe Group and TRI Pointe Homes, the co-issuers of the 2019 Notes and 2024 Notes, is presented together in the column titled “Issuer”.
Condensed Consolidating Balance Sheet (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2020 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Assets | | | | | | | |
Cash and cash equivalents | $ | 393,481 | | | $ | 81,064 | | | $ | — | | | $ | 474,545 | |
Receivables | 27,555 | | | 60,025 | | | — | | | 87,580 | |
Intercompany receivables | 421,075 | | | — | | | (421,075) | | | — | |
Real estate inventories | 699,708 | | | 2,312,914 | | | — | | | 3,012,622 | |
Investments in unconsolidated entities | — | | | 36,040 | | | — | | | 36,040 | |
Goodwill and other intangible assets, net | 156,604 | | | 3,022 | | | — | | | 159,626 | |
Investments in subsidiaries | 1,968,697 | | | — | | | (1,968,697) | | | — | |
Deferred tax assets, net | 9,021 | | | 30,723 | | | — | | | 39,744 | |
Other assets | 5,192 | | | 162,555 | | | — | | | 167,747 | |
Total assets | $ | 3,681,333 | | | $ | 2,686,343 | | | $ | (2,389,772) | | | $ | 3,977,904 | |
| | | | | | | |
Liabilities | | | | | | | |
Accounts payable | $ | 16,911 | | | $ | 54,175 | | | $ | — | | | $ | 71,086 | |
Intercompany payables | — | | | 421,075 | | | (421,075) | | | — | |
Accrued expenses and other liabilities | 72,434 | | | 242,384 | | | — | | | 314,818 | |
Loans payable | 250,000 | | | — | | | — | | | 250,000 | |
Senior notes | 1,166,189 | | | — | | | — | | | 1,166,189 | |
Total liabilities | 1,505,534 | | | 717,634 | | | (421,075) | | | 1,802,093 | |
| | | | | | | |
Equity | | | | | | | |
Total stockholders’ equity | 2,175,799 | | | 1,968,697 | | | (1,968,697) | | | 2,175,799 | |
Noncontrolling interests | — | | | 12 | | | — | | | 12 | |
Total equity | 2,175,799 | | | 1,968,709 | | | (1,968,697) | | | 2,175,811 | |
Total liabilities and equity | $ | 3,681,333 | | | $ | 2,686,343 | | | $ | (2,389,772) | | | $ | 3,977,904 | |
|
| | | | | | | | | | | | | | | |
| September 30, 2017 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Assets | | | | | | | |
Cash and cash equivalents | $ | 86,046 |
| | $ | 76,350 |
| | $ | — |
| | $ | 162,396 |
|
Receivables | 29,963 |
| | 54,620 |
| | — |
| | 84,583 |
|
Intercompany receivables | 940,894 |
| | — |
| | (940,894 | ) | | — |
|
Real estate inventories | 981,813 |
| | 2,321,608 |
| | — |
| | 3,303,421 |
|
Investments in unconsolidated entities | — |
| | 17,616 |
| | — |
| | 17,616 |
|
Goodwill and other intangible assets, net | 156,604 |
| | 4,490 |
| | — |
| | 161,094 |
|
Investments in subsidiaries | 1,388,227 |
| | — |
| | (1,388,227 | ) | | — |
|
Deferred tax assets, net | 15,644 |
| | 93,020 |
| | — |
| | 108,664 |
|
Other assets | 7,953 |
| | 50,339 |
| | — |
| | 58,292 |
|
Total Assets | $ | 3,607,144 |
| | $ | 2,618,043 |
| | $ | (2,329,121 | ) | | $ | 3,896,066 |
|
| | | | | | | |
Liabilities | | | | | | | |
Accounts payable | $ | 8,561 |
| | $ | 55,477 |
| | $ | — |
| | $ | 64,038 |
|
Intercompany payables | — |
| | 940,894 |
| | (940,894 | ) | | — |
|
Accrued expenses and other liabilities | 86,596 |
| | 229,891 |
| | — |
| | 316,487 |
|
Unsecured revolving credit facility | 200,000 |
| | — |
| | — |
| | 200,000 |
|
Senior notes | 1,469,558 |
| | — |
| | — |
| | 1,469,558 |
|
Total Liabilities | 1,764,715 |
| | 1,226,262 |
| | (940,894 | ) | | 2,050,083 |
|
| | | | | | | |
Equity | | | | | | | |
Total stockholders’ equity | 1,842,429 |
| | 1,388,227 |
| | (1,388,227 | ) | | 1,842,429 |
|
Noncontrolling interests | — |
| | 3,554 |
| | — |
| | 3,554 |
|
Total Equity | 1,842,429 |
| | 1,391,781 |
| | (1,388,227 | ) | | 1,845,983 |
|
Total Liabilities and Equity | $ | 3,607,144 |
| | $ | 2,618,043 |
| | $ | (2,329,121 | ) | | $ | 3,896,066 |
|
Condensed Consolidating Balance Sheet (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2019 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Assets | | | | | | | |
Cash and cash equivalents | $ | 186,200 | | | $ | 142,811 | | | $ | — | | | $ | 329,011 | |
Receivables | 26,016 | | | 43,260 | | | — | | | 69,276 | |
Intercompany receivables | 576,846 | | | — | | | (576,846) | | | — | |
Real estate inventories | 737,662 | | | 2,327,774 | | | — | | | 3,065,436 | |
Investments in unconsolidated entities | — | | | 11,745 | | | — | | | 11,745 | |
Goodwill and other intangible assets, net | 156,604 | | | 3,289 | | | — | | | 159,893 | |
Investments in subsidiaries | 1,870,885 | | | — | | | (1,870,885) | | | — | |
Deferred tax assets, net | 9,020 | | | 40,884 | | | — | | | 49,904 | |
Other assets | 14,676 | | | 158,749 | | | — | | | 173,425 | |
Total assets | $ | 3,577,909 | | | $ | 2,728,512 | | | $ | (2,447,731) | | | $ | 3,858,690 | |
| | | | | | | |
Liabilities | | | | | | | |
Accounts payable | $ | 14,915 | | | $ | 51,205 | | | $ | — | | | $ | 66,120 | |
Intercompany payables | — | | | 576,846 | | | (576,846) | | | — | |
Accrued expenses and other liabilities | 92,479 | | | 229,564 | | | — | | | 322,043 | |
Loans payable | 250,000 | | | — | | | — | | | 250,000 | |
| | | | | | | |
Senior notes | 1,033,985 | | | — | | | — | | | 1,033,985 | |
Total liabilities | 1,391,379 | | | 857,615 | | | (576,846) | | | 1,672,148 | |
| | | | | | | |
Equity | | | | | | | |
Total stockholders’ equity | 2,186,530 | | | 1,870,885 | | | (1,870,885) | | | 2,186,530 | |
Noncontrolling interests | — | | | 12 | | | — | | | 12 | |
Total equity | 2,186,530 | | | 1,870,897 | | | (1,870,885) | | | 2,186,542 | |
Total liabilities and equity | $ | 3,577,909 | | | $ | 2,728,512 | | | $ | (2,447,731) | | | $ | 3,858,690 | |
|
| | | | | | | | | | | | | | | |
| December 31, 2016 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Assets | | | | | | | |
Cash and cash equivalents | $ | 141,568 |
| | $ | 67,089 |
| | $ | — |
| | $ | 208,657 |
|
Receivables | 26,692 |
| | 55,808 |
| | — |
| | 82,500 |
|
Intercompany receivables | 775,321 |
| | — |
| | (775,321 | ) | | — |
|
Real estate inventories | 868,088 |
| | 2,042,539 |
| | — |
| | 2,910,627 |
|
Investments in unconsolidated entities | — |
| | 17,546 |
| | — |
| | 17,546 |
|
Goodwill and other intangible assets, net | 156,604 |
| | 4,891 |
| | — |
| | 161,495 |
|
Investments in subsidiaries | 1,285,295 |
| | — |
| | (1,285,295 | ) | | — |
|
Deferred tax assets, net | 15,644 |
| | 107,579 |
| | — |
| | 123,223 |
|
Other assets | 11,401 |
| | 49,191 |
| | — |
| | 60,592 |
|
Total Assets | $ | 3,280,613 |
| | $ | 2,344,643 |
| | $ | (2,060,616 | ) | | $ | 3,564,640 |
|
| | | | | | | |
Liabilities | | | | | | | |
Accounts payable | $ | 20,637 |
| | $ | 49,615 |
| | $ | — |
| | $ | 70,252 |
|
Intercompany payables | — |
| | 775,321 |
| | (775,321 | ) | | — |
|
Accrued expenses and other liabilities | 48,496 |
| | 215,349 |
| | — |
| | 263,845 |
|
Unsecured revolving credit facility | 200,000 |
| | — |
| | — |
| | 200,000 |
|
Seller financed loans | 13,726 |
| | — |
| | — |
| | 13,726 |
|
Senior notes | 1,168,307 |
| | — |
| | — |
| | 1,168,307 |
|
Total Liabilities | 1,451,166 |
| | 1,040,285 |
| | (775,321 | ) | | 1,716,130 |
|
| | | | | | | |
Equity | | | | | | | |
Total stockholders’ equity | 1,829,447 |
| | 1,285,295 |
| | (1,285,295 | ) | | 1,829,447 |
|
Noncontrolling interests | — |
| | 19,063 |
| | — |
| | 19,063 |
|
Total Equity | 1,829,447 |
| | 1,304,358 |
| | (1,285,295 | ) | | 1,848,510 |
|
Total Liabilities and Equity | $ | 3,280,613 |
| | $ | 2,344,643 |
| | $ | (2,060,616 | ) | | $ | 3,564,640 |
|
Condensed Consolidating Statement of Operations (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2020 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | |
Home sales revenue | $ | 206,473 | | | $ | 560,469 | | | $ | — | | | $ | 766,942 | |
Land and lot sales revenue | — | | | 220 | | | — | | | 220 | |
Other operations revenue | — | | | 648 | | | — | | | 648 | |
Total revenues | 206,473 | | | 561,337 | | | — | | | 767,810 | |
Cost of home sales | 172,086 | | | 429,348 | | | — | | | 601,434 | |
Cost of land and lot sales | — | | | 374 | | | — | | | 374 | |
Other operations expense | — | | | 624 | | | — | | | 624 | |
Sales and marketing | 10,667 | | | 34,527 | | | — | | | 45,194 | |
General and administrative | 19,875 | | | 17,679 | | | — | | | 37,554 | |
Restructuring charges | 1,111 | | | 4,438 | | | — | | | 5,549 | |
Homebuilding income from operations | 2,734 | | | 74,347 | | | — | | | 77,081 | |
Equity in loss of unconsolidated entities | — | | | (25) | | | — | | | (25) | |
Other loss, net | (6,320) | | | (8) | | | — | | | (6,328) | |
Homebuilding (loss) income before income taxes | (3,586) | | | 74,314 | | | — | | | 70,728 | |
Financial Services: | | | | | | | |
Revenues | — | | | 2,296 | | | — | | | 2,296 | |
Expenses | — | | | 1,285 | | | — | | | 1,285 | |
Equity in income of unconsolidated entities | — | | | 2,932 | | | — | | | 2,932 | |
Financial services income before income taxes | — | | | 3,943 | | | — | | | 3,943 | |
(Loss) income before income taxes | (3,586) | | | 78,257 | | | — | | | 74,671 | |
Equity of net income of subsidiaries | 60,114 | | | — | | | (60,114) | | | — | |
Provision for income taxes | — | | | (18,143) | | | — | | | (18,143) | |
Net income | $ | 56,528 | | | $ | 60,114 | | | $ | (60,114) | | | $ | 56,528 | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2017 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | |
Home sales revenue | $ | 239,110 |
| | $ | 409,528 |
| | $ | — |
| | $ | 648,638 |
|
Land and lot sales revenue | — |
| | 68,218 |
| | — |
| | 68,218 |
|
Other operations revenue | — |
| | 584 |
| | — |
| | 584 |
|
Total revenues | 239,110 |
| | 478,330 |
| | — |
| | 717,440 |
|
Cost of home sales | 200,384 |
| | 321,534 |
| | — |
| | 521,918 |
|
Cost of land and lot sales | — |
| | 12,001 |
| | — |
| | 12,001 |
|
Other operations expense | — |
| | 575 |
| | — |
| | 575 |
|
Sales and marketing | 8,816 |
| | 24,363 |
| | — |
| | 33,179 |
|
General and administrative | 15,560 |
| | 17,396 |
| | — |
| | 32,956 |
|
Homebuilding income from operations | 14,350 |
| | 102,461 |
| | — |
| | 116,811 |
|
Equity in income of unconsolidated entities | — |
| | — |
| | — |
| | — |
|
Other income, net | 15 |
| | 11 |
| | — |
| | 26 |
|
Homebuilding income before income taxes | 14,365 |
| | 102,472 |
| | — |
| | 116,837 |
|
Financial Services: | | | | | | | |
Revenues | — |
| | 295 |
| | — |
| | 295 |
|
Expenses | — |
| | 82 |
| | — |
| | 82 |
|
Equity in income of unconsolidated entities | — |
| | 1,351 |
| | — |
| | 1,351 |
|
Financial services income before income taxes | — |
| | 1,564 |
| | — |
| | 1,564 |
|
Income before income taxes | 14,365 |
| | 104,036 |
| | — |
| | 118,401 |
|
Equity of net income of subsidiaries | 59,725 |
| | — |
| | (59,725 | ) | | — |
|
Provision for income taxes | (1,826 | ) | | (44,286 | ) | | — |
| | (46,112 | ) |
Net income | 72,264 |
| | 59,750 |
| | (59,725 | ) | | 72,289 |
|
Net income attributable to noncontrolling interests | — |
| | (25 | ) | | — |
| | (25 | ) |
Net income available to common stockholders | $ | 72,264 |
| | $ | 59,725 |
| | $ | (59,725 | ) | | $ | 72,264 |
|
Condensed Consolidating Statement of Operations (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2019 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | |
Home sales revenue | $ | 192,752 | | | $ | 499,386 | | | $ | — | | | $ | 692,138 | |
Land and lot sales revenue | — | | | 5,183 | | | — | | | 5,183 | |
Other operations revenue | — | | | 637 | | | — | | | 637 | |
Total revenues | 192,752 | | | 505,206 | | | — | | | 697,958 | |
Cost of home sales | 163,356 | | | 411,328 | | | — | | | 574,684 | |
Cost of land and lot sales | — | | | 5,562 | | | — | | | 5,562 | |
Other operations expense | — | | | 627 | | | — | | | 627 | |
Sales and marketing | 9,961 | | | 37,104 | | | — | | | 47,065 | |
General and administrative | 18,391 | | | 18,463 | | | — | | | 36,854 | |
| | | | | | | |
Homebuilding income from operations | 1,044 | | | 32,122 | | | — | | | 33,166 | |
Equity in loss of unconsolidated entities | — | | | (26) | | | — | | | (26) | |
Other income, net | 8 | | | 145 | | | — | | | 153 | |
Homebuilding income before income taxes | 1,052 | | | 32,241 | | | — | | | 33,293 | |
Financial Services: | | | | | | | |
Revenues | — | | | 756 | | | — | | | 756 | |
Expenses | — | | | 627 | | | — | | | 627 | |
Equity in income of unconsolidated entities | — | | | 1,972 | | | — | | | 1,972 | |
Financial services income before income taxes | — | | | 2,101 | | | — | | | 2,101 | |
Income before income taxes | 1,052 | | | 34,342 | | | — | | | 35,394 | |
Equity of net income of subsidiaries | 25,215 | | | — | | | (25,215) | | | — | |
Provision for income taxes | (5) | | | (9,127) | | | — | | | (9,132) | |
Net income | $ | 26,262 | | | $ | 25,215 | | | $ | (25,215) | | | $ | 26,262 | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2016 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | |
Home sales revenue | $ | 167,769 |
| | $ | 410,884 |
| | $ | — |
| | $ | 578,653 |
|
Land and lot sales revenue | — |
| | 2,535 |
| | — |
| | 2,535 |
|
Other operations revenue | — |
| | 606 |
| | — |
| | 606 |
|
Total revenues | 167,769 |
| | 414,025 |
| | — |
| | 581,794 |
|
Cost of home sales | 144,217 |
| | 318,106 |
| | — |
| | 462,323 |
|
Cost of land and lot sales | — |
| | 1,734 |
| | — |
| | 1,734 |
|
Other operations expense | — |
| | 575 |
| | — |
| | 575 |
|
Sales and marketing | 6,598 |
| | 25,254 |
| | — |
| | 31,852 |
|
General and administrative | 15,192 |
| | 16,086 |
| | — |
| | 31,278 |
|
Homebuilding income from operations | 1,762 |
| | 52,270 |
| | — |
| | 54,032 |
|
Equity in loss of unconsolidated entities | — |
| | (20 | ) | | — |
| | (20 | ) |
Other (loss) income, net | (345 | ) | | 366 |
| | — |
| | 21 |
|
Homebuilding income before income taxes | 1,417 |
| | 52,616 |
| | — |
| | 54,033 |
|
Financial Services: | | | | | | | |
Revenues | — |
| | 235 |
| | — |
| | 235 |
|
Expenses | — |
| | 72 |
| | — |
| | 72 |
|
Equity in income of unconsolidated entities | — |
| | 1,247 |
| | — |
| | 1,247 |
|
Financial services income before income taxes | — |
| | 1,410 |
| | — |
| | 1,410 |
|
Income before income taxes | 1,417 |
| | 54,026 |
| | — |
| | 55,443 |
|
Equity of net income of subsidiaries | 34,639 |
| | — |
| | (34,639 | ) | | — |
|
Provision for income taxes | (1,222 | ) | | (19,076 | ) | | — |
| | (20,298 | ) |
Net income | 34,834 |
| | 34,950 |
| | (34,639 | ) | | 35,145 |
|
Net income attributable to noncontrolling interests | — |
| | (311 | ) | | — |
| | (311 | ) |
Net income available to common stockholders | $ | 34,834 |
| | $ | 34,639 |
| | $ | (34,639 | ) | | $ | 34,834 |
|
Condensed Consolidating Statement of Operations (in thousands):
| | | Nine Months Ended September 30, 2017 | | Six Months Ended June 30, 2020 | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. | | Issuer (1) | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | | Homebuilding: | | | | | | | |
Home sales revenue | $ | 524,159 |
| | $ | 1,085,299 |
| | $ | — |
| | $ | 1,609,458 |
| Home sales revenue | $ | 365,143 | | | $ | 996,637 | | | $ | — | | | $ | 1,361,780 | |
Land and lot sales revenue | — |
| | 69,661 |
| | — |
| | 69,661 |
| Land and lot sales revenue | — | | | 220 | | | — | | | 220 | |
Other operations revenue | — |
| | 1,752 |
| | — |
| | 1,752 |
| Other operations revenue | — | | | 1,266 | | | — | | | 1,266 | |
Total revenues | 524,159 |
| | 1,156,712 |
| | — |
| | 1,680,871 |
| Total revenues | 365,143 | | | 998,123 | | | — | | | 1,363,266 | |
Cost of home sales | 445,501 |
| | 849,062 |
| | — |
| | 1,294,563 |
| Cost of home sales | 307,986 | | | 766,330 | | | — | | | 1,074,316 | |
Cost of land and lot sales | — |
| | 13,299 |
| | — |
| | 13,299 |
| Cost of land and lot sales | — | | | 576 | | | — | | | 576 | |
Other operations expense | — |
| | 1,726 |
| | — |
| | 1,726 |
| Other operations expense | — | | | 1,248 | | | — | | | 1,248 | |
Sales and marketing | 22,265 |
| | 69,944 |
| | — |
| | 92,209 |
| Sales and marketing | 21,102 | | | 66,729 | | | — | | | 87,831 | |
General and administrative | 49,113 |
| | 52,180 |
| | — |
| | 101,293 |
| General and administrative | 39,218 | | | 38,173 | | | — | | | 77,391 | |
Homebuilding income from operations | 7,280 |
| | 170,501 |
| | — |
| | 177,781 |
| |
Equity in income of unconsolidated entities | — |
| | 1,646 |
| | — |
| | 1,646 |
| |
Other income, net | 33 |
| | 114 |
| | — |
| | 147 |
| |
Homebuilding income before income taxes | 7,313 |
| | 172,261 |
| | — |
| | 179,574 |
| |
Restructuring charges | | Restructuring charges | 1,111 | | | 4,438 | | | — | | | 5,549 | |
Homebuilding (loss) income from operations | | Homebuilding (loss) income from operations | (4,274) | | | 120,629 | | | — | | | 116,355 | |
Equity in loss of unconsolidated entities | | Equity in loss of unconsolidated entities | — | | | (39) | | | — | | | (39) | |
Other (loss) income, net | | Other (loss) income, net | (6,128) | | | 173 | | | — | | | (5,955) | |
Homebuilding (loss) income before income taxes | | Homebuilding (loss) income before income taxes | (10,402) | | | 120,763 | | | — | | | 110,361 | |
Financial Services: | | | | | | | | Financial Services: | | | | | | | |
Revenues | — |
| | 881 |
| | — |
| | 881 |
| Revenues | — | | | 3,890 | | | — | | | 3,890 | |
Expenses | — |
| | 233 |
| | — |
| | 233 |
| Expenses | — | | | 2,364 | | | — | | | 2,364 | |
Equity in income of unconsolidated entities | — |
| | 2,911 |
| | — |
| | 2,911 |
| Equity in income of unconsolidated entities | — | | | 4,488 | | | — | | | 4,488 | |
Financial services income before income taxes | — |
| | 3,559 |
| | — |
| | 3,559 |
| Financial services income before income taxes | — | | | 6,014 | | | — | | | 6,014 | |
Income before income taxes | 7,313 |
| | 175,820 |
| | — |
| | 183,133 |
| |
(Loss) income before income taxes | | (Loss) income before income taxes | (10,402) | | | 126,777 | | | — | | | 116,375 | |
Equity of net income of subsidiaries | 103,177 |
| | — |
| | (103,177 | ) | | — |
| Equity of net income of subsidiaries | 98,813 | | | — | | | (98,813) | | | — | |
Benefit (provision) for income taxes | 2,681 |
| | (72,505 | ) | | | | (69,824 | ) | |
Provision for income taxes | | Provision for income taxes | — | | | (27,964) | | | — | | | (27,964) | |
Net income | 113,171 |
| | 103,315 |
| | (103,177 | ) | | 113,309 |
| Net income | $ | 88,411 | | | $ | 98,813 | | | $ | (98,813) | | | $ | 88,411 | |
Net income attributable to noncontrolling interests | — |
| | (138 | ) | | — |
| | (138 | ) | |
Net income available to common stockholders | $ | 113,171 |
| | $ | 103,177 |
| | $ | (103,177 | ) | | $ | 113,171 |
| |
Condensed Consolidating Statement of Operations (in thousands):
| | | Nine Months Ended September 30, 2016 | | Six Months Ended June 30, 2019 | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. | | Issuer (1) | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Homebuilding: | | | | | | | | Homebuilding: | | | | | | | |
Home sales revenue | $ | 452,553 |
| | $ | 1,106,080 |
| | $ | — |
| | $ | 1,558,633 |
| Home sales revenue | $ | 364,543 | | | $ | 820,298 | | | $ | — | | | $ | 1,184,841 | |
Land and lot sales revenue | — |
| | 70,204 |
| | — |
| | 70,204 |
| Land and lot sales revenue | — | | | 6,212 | | | — | | | 6,212 | |
Other operations revenue | — |
| | 1,790 |
| | — |
| | 1,790 |
| Other operations revenue | — | | | 1,235 | | | — | | | 1,235 | |
Total revenues | 452,553 |
| | 1,178,074 |
| | — |
| | 1,630,627 |
| Total revenues | 364,543 | | | 827,745 | | | — | | | 1,192,288 | |
Cost of home sales | 383,574 |
| | 835,986 |
| | — |
| | 1,219,560 |
| Cost of home sales | 308,431 | | | 687,789 | | | — | | | 996,220 | |
Cost of land and lot sales | — |
| | 16,973 |
| | — |
| | 16,973 |
| Cost of land and lot sales | — | | | 7,057 | | | — | | | 7,057 | |
Other operations expense | — |
| | 1,724 |
| | — |
| | 1,724 |
| Other operations expense | — | | | 1,217 | | | — | | | 1,217 | |
Sales and marketing | 19,683 |
| | 70,938 |
| | — |
| | 90,621 |
| Sales and marketing | 19,260 | | | 66,794 | | | — | | | 86,054 | |
General and administrative | 42,984 |
| | 47,309 |
| | — |
| | 90,293 |
| General and administrative | 37,870 | | | 37,581 | | | — | | | 75,451 | |
Homebuilding income from operations | 6,312 |
| | 205,144 |
| | — |
| | 211,456 |
| |
Equity in income of unconsolidated entities | — |
| | 181 |
| | — |
| | 181 |
| |
| Homebuilding (loss) income from operations | | Homebuilding (loss) income from operations | (1,018) | | | 27,307 | | | — | | | 26,289 | |
Equity in loss of unconsolidated entities | | Equity in loss of unconsolidated entities | — | | | (51) | | | — | | | (51) | |
Other income, net | 157 |
| | 130 |
| | — |
| | 287 |
| Other income, net | 6,148 | | | 246 | | | — | | | 6,394 | |
Homebuilding income before income taxes | 6,469 |
| | 205,455 |
| | — |
| | 211,924 |
| |
Homebuilding income before taxes | | Homebuilding income before taxes | 5,130 | | | 27,502 | | | — | | | 32,632 | |
Financial Services: | | | | | | | | Financial Services: | | | | | | | |
Revenues | — |
| | 762 |
| | — |
| | 762 |
| Revenues | — | | | 1,058 | | | — | | | 1,058 | |
Expenses | — |
| | 183 |
| | — |
| | 183 |
| Expenses | — | | | 948 | | | — | | | 948 | |
Equity in income of unconsolidated entities | — |
| | 3,246 |
| | — |
| | 3,246 |
| |
Financial services income before income taxes | — |
| | 3,825 |
| | — |
| | 3,825 |
| |
Income before income taxes | 6,469 |
| | 209,280 |
| | — |
| | 215,749 |
| |
Equity in loss of unconsolidated entities | | Equity in loss of unconsolidated entities | — | | | 2,747 | | | — | | | 2,747 | |
Financial services income from operations before taxes | | Financial services income from operations before taxes | — | | | 2,857 | | | — | | | 2,857 | |
Income before taxes | | Income before taxes | 5,130 | | | 30,359 | | | — | | | 35,489 | |
Equity of net income of subsidiaries | 135,024 |
| | — |
| | (135,024 | ) | | — |
| Equity of net income of subsidiaries | 21,208 | | | — | | | (21,208) | | | — | |
Provision for income taxes | (4,183 | ) | | (73,518 | ) | | — |
| | (77,701 | ) | Provision for income taxes | (5) | | | (9,151) | | | — | | | (9,156) | |
Net income | 137,310 |
| | 135,762 |
| | (135,024 | ) | | 138,048 |
| Net income | $ | 26,333 | | | $ | 21,208 | | | $ | (21,208) | | | $ | 26,333 | |
Net income attributable to noncontrolling interests | — |
| | (738 | ) | | — |
| | (738 | ) | |
Net income available to common stockholders | $ | 137,310 |
| | $ | 135,024 |
| | $ | (135,024 | ) | | $ | 137,310 |
| |
|
Condensed Consolidating Statement of Cash Flows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2020 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Cash flows from operating activities: | | | | | | | |
Net cash provided by operating activities | $ | 36,321 | | | $ | 129,907 | | | $ | — | | | $ | 166,228 | |
Cash flows from investing activities: | | | | | | | |
Purchases of property and equipment | (4,162) | | | (7,840) | | | — | | | (12,002) | |
Proceeds from sale of property and equipment | — | | | 17 | | | — | | | 17 | |
Investments in unconsolidated entities | — | | | (25,715) | | | — | | | (25,715) | |
Intercompany | 158,116 | | | — | | | (158,116) | | | — | |
Net cash used in (provided by) investing activities | 153,954 | | | (33,538) | | | (158,116) | | | (37,700) | |
Cash flows from financing activities: | | | | | | | |
Borrowings from debt | 850,000 | | | — | | | — | | | 850,000 | |
Repayment of debt | (721,673) | | | — | | | — | | | (721,673) | |
Debt issuance costs | (4,768) | | | — | | | — | | | (4,768) | |
| | | | | | | |
Proceeds from issuance of common stock under share-based awards | 921 | | | — | | | — | | | 921 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | (5,473) | | | — | | | — | | | (5,473) | |
Share repurchases | (102,001) | | | — | | | — | | | (102,001) | |
Intercompany | — | | | (158,116) | | | 158,116 | | | — | |
Net cash provided by (used in) financing activities | 17,006 | | | (158,116) | | | 158,116 | | | 17,006 | |
Net increase (decrease) in cash and cash equivalents | 207,281 | | | (61,747) | | | — | | | 145,534 | |
Cash and cash equivalents–beginning of period | 186,200 | | | 142,811 | | | — | | | 329,011 | |
Cash and cash equivalents–end of period | $ | 393,481 | | | $ | 81,064 | | | $ | — | | | $ | 474,545 | |
|
| | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Cash flows from operating activities | | | | | | | |
Net cash used in operating activities | $ | (60,816 | ) | | $ | (149,840 | ) | | $ | — |
| | $ | (210,656 | ) |
Cash flows from investing activities: | | | | | | | |
Purchases of property and equipment | (1,473 | ) | | (739 | ) | | — |
| | (2,212 | ) |
Proceeds from sale of property and equipment | — |
| | 6 |
| | — |
| | 6 |
|
Investments in unconsolidated entities | — |
| | (934 | ) | | — |
| | (934 | ) |
Intercompany | (161,755 | ) | | — |
| | 161,755 |
| | — |
|
Net cash (used in) provided by investing activities | (163,228 | ) | | (1,667 | ) | | 161,755 |
| | (3,140 | ) |
Cash flows from financing activities: | | | | | | | |
Borrowings from debt | 500,000 |
| | — |
| | — |
| | 500,000 |
|
Repayment of debt | (213,726 | ) | | — |
| | — |
| | (213,726 | ) |
Debt issuance costs | (5,932 | ) | | — |
| | — |
| | (5,932 | ) |
Distributions to noncontrolling interests | — |
| | (987 | ) | | — |
| | (987 | ) |
Proceeds from issuance of common stock under share-based awards | 3,293 |
| | — |
| | — |
| | 3,293 |
|
Minimum tax withholding paid on behalf of employees for restricted stock units | (2,896 | ) | | — |
| | — |
| | (2,896 | ) |
Share repurchases | (112,217 | ) | | — |
| | — |
| | (112,217 | ) |
Intercompany | — |
| | 161,755 |
| | (161,755 | ) | | — |
|
Net cash provided by (used in) financing activities | 168,522 |
| | 160,768 |
| | (161,755 | ) | | 167,535 |
|
Net (decrease) increase in cash and cash equivalents | (55,522 | ) | | 9,261 |
| | — |
| | (46,261 | ) |
Cash and cash equivalents - beginning of period | 141,568 |
| | 67,089 |
| | — |
| | 208,657 |
|
Cash and cash equivalents - end of period | $ | 86,046 |
| | $ | 76,350 |
| | $ | — |
| | $ | 162,396 |
|
Condensed Consolidating Statement of Cash Flows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2019 | | | | | | |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Cash flows from operating activities: | | | | | | | |
Net cash provided by (used in) operating activities | $ | 32,114 | | | $ | (136,053) | | | $ | — | | | $ | (103,939) | |
Cash flows from investing activities: | | | | | | | |
Purchases of property and equipment | (4,532) | | | (8,610) | | | — | | | (13,142) | |
Proceeds from sale of property and equipment | — | | | 46 | | | — | | | 46 | |
Investments in unconsolidated entities | — | | | (712) | | | — | | | (712) | |
Intercompany | (133,658) | | | — | | | 133,658 | | | — | |
Net cash used in investing activities | (138,190) | | | (9,276) | | | 133,658 | | | (13,808) | |
Cash flows from financing activities: | | | | | | | |
Borrowings from notes payable | 400,000 | | | — | | | — | | | 400,000 | |
Repayment of notes payable | (381,895) | | | — | | | — | | | (381,895) | |
Debt issuance costs | (3,125) | | | — | | | — | | | (3,125) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Proceeds from issuance of common stock under share-based awards | 199 | | | — | | | — | | | 199 | |
Minimum tax withholding paid on behalf of employees for restricted stock units | (3,612) | | | — | | | — | | | (3,612) | |
| | | | | | | |
Intercompany | — | | | 133,658 | | | (133,658) | | | — | |
Net cash provided by (used in) financing activities | 11,567 | | | 133,658 | | | (133,658) | | | 11,567 | |
Net decrease in cash and cash equivalents | (94,509) | | | (11,671) | | | — | | | (106,180) | |
Cash and cash equivalents–beginning of period | 148,129 | | | 129,567 | | | — | | | 277,696 | |
Cash and cash equivalents–end of period | $ | 53,620 | | | $ | 117,896 | | | $ | — | | | $ | 171,516 | |
|
| | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2016 |
| Issuer | | Guarantor Subsidiaries | | Consolidating Adjustments | | Consolidated TRI Pointe Group, Inc. |
Cash flows from operating activities | | | | | | | |
Net cash used in operating activities | $ | (186,487 | ) | | $ | (74,820 | ) | | $ | — |
| | $ | (261,307 | ) |
Cash flows from investing activities: | | | | | | | |
Purchases of property and equipment | (831 | ) | | (1,225 | ) | | — |
| | (2,056 | ) |
Investments in unconsolidated entities | — |
| | (32 | ) | | — |
| | (32 | ) |
Intercompany | (82,951 | ) | | — |
| | 82,951 |
| | — |
|
Net cash (used in) provided by investing activities | (83,782 | ) | | (1,257 | ) | | 82,951 |
| | (2,088 | ) |
Cash flows from financing activities: | | | | | | | |
Borrowings from notes payable | 491,069 |
| | — |
| | — |
| | 491,069 |
|
Repayment of notes payable | (276,426 | ) | | (400 | ) | | — |
| | (276,826 | ) |
Debt issuance costs | (5,061 | ) | | — |
| | — |
| | (5,061 | ) |
Net repayments of debt held by variable interest entities | — |
| | (2,442 | ) | | — |
| | (2,442 | ) |
Contributions from noncontrolling interests | — |
| | 1,955 |
| | — |
| | 1,955 |
|
Distributions to noncontrolling interests | — |
| | (5,059 | ) | | — |
| | (5,059 | ) |
Proceeds from issuance of common stock under share-based awards | 461 |
| | — |
| | — |
| | 461 |
|
Minimum tax withholding paid on behalf of employees for restricted stock units | (1,359 | ) | | — |
| | — |
| | (1,359 | ) |
Share repurchases | (25,113 | ) | | — |
| | — |
| | (25,113 | ) |
Intercompany | — |
| | 82,951 |
| | (82,951 | ) | | — |
|
Net cash provided by (used in) financing activities | 183,571 |
| | 77,005 |
| | (82,951 | ) | | 177,625 |
|
Net (decrease) increase in cash and cash equivalents | (86,698 | ) | | 928 |
| | — |
| | (85,770 | ) |
Cash and cash equivalents - beginning of period | 147,771 |
| | 66,714 |
| | — |
| | 214,485 |
|
Cash and cash equivalents - end of period | $ | 61,073 |
| | $ | 67,642 |
| | $ | — |
| | $ | 128,715 |
|
| |
Item 2. | Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain statements that are “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"“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–section—as well as other factors not included–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
These forward-lookingForward-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–uncertainties—and assumptions that are made–made—that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
•the effecteffects of the ongoing novel coronavirus (“COVID-19”) pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the severity and 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 efficacy of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19;
•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;
global economic conditions;
•raw material prices;and labor prices and availability;
•oil and other energy prices;
•the effecteffects 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 re-occurrence of drought conditions in California;
•the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;
•the risk of loss from acts of war, terrorism, civil unrest or outbreaks of contagious diseases, such as COVID-19;
•transportation costs;
•federal and state tax policies;
•the effecteffects 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;
change•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.”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 Securities and Exchange Commission (“SEC”),SEC, including our Annual Report on Form 10-K for the year ended December 31, 20162019 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 investmentinvestment in, our common stock.
Overview
Our second quarter 2020 results reflect a sharp rebound from the COVID-19-related economic uncertainty and Outlook
We continue to be encouraged byreduced demand environment we experienced towards the strengthend of the overall U.S. new-home market, which continuesfirst quarter and through the beginning of the second quarter. In May, as state and local governments began relaxing restrictions related to be supported by strong generalCOVID-19 and economic conditions in our local markets regained strength, new home demand began to steadily improve. This demand continued to increase in June, which resulted in particularly strong new home orders for the month, which increased approximately 28% as compared to June 2019. We believe this demand environment was aided by favorable housing market fundamentals, including low unemployment levels, modest wage gains, favorable interest rates and increasing consumer confidence combined with a limitedrelatively constrained supply of homes in many of our markets. Additionally, we believe our results for the most recent quarter reflect the effects of fiscal and monetary stimulus programs, a degree of pent-up demand among consumers, as well as evolving consumer preferences as it relates to new and existing homes. We believe demand will continue to be strong across the U.S.home characteristics in general and in a majoritylight of the markets inCOVID-19 pandemic and the degree to which we operate overmany individuals are working from home. Notwithstanding our positive results during the next several years. Nevertheless,second quarter 2020 and the strong demand we continue to see variability from market to market with demand mostly driven by general local economic conditions. In certain markets, price and affordability issues are potentially limiting demand. Additionally, homebuilding activityexperience in many markets continues to be constrained by land and labor availability, as well as fee increases and delays imposed by local municipalities, which we expect will continue to constrict supply. WhileJuly, the limited supply and production deficits have supported price appreciation in many markets, these increases have been partially or sometimes fully offset by increases in labor and material costsCOVID-19 pandemic has impacted, and we expect that these construction cost pressuresit will continue. We believe these demand and supply trends will result in a continued growth trajectory in the homebuilding market, with consumer, job and household formation growth serving as leading indicators of positive demand, offset by certain downward pressures.
The Houston area was severely impacted by Hurricane Harvey, which caused significant flooding and widespread damagecontinue to existing homes, commercial buildings, and infrastructure. While our active projects in Houston sustained minimal damage, and the hurricane did not significantly impact, our overallbusiness and operations due to the high level of uncertainty that still exists as to future developments, including the duration of the outbreak. With several states (and local authorities within those states) re-imposing restrictions as a result of recent increases in new COVID-19 cases and an historically high unemployment rate, we remain cautious as we enter the back half of 2020.
Highlights of the quarter include an increase in homebuilding gross margin percentage to 21.6% and a reduction in selling, general and administrative expense as a percentage of home sales revenue to 10.8%. These improvements, along with a slight increase in average sales price of homes delivered to $624,000, helped us achieve net income of $56.5 million, representing a 115% increase compared to the prior-year period. Despite a substantially reduced sales pace in April due to COVID-19, we ended the quarter with a monthly absorption rate of 3.1, resulting in 1,332 net new home orders, down 11% from the prior-year period. As of the end of the quarter, we had 2,558 units in backlog, representing $1.7 billion in backlog dollar value, up 16% and 17% from the prior-year period, respectively. In addition, we ended the quarter with total liquidity of $1.0 billion, including cash and cash equivalents of $474.5 million and $559.4 million of availability under our Credit Facility.
Our results for the three or nine months ended SeptemberJune 30, 2017,2020 are not indicative of trends that we did experience some delivery delays duringexpect to persist as uncertainty caused by COVID-19 and government responses to the third quarterpandemic have impacted, and will continue to impact, our business and operations.
Impact of 2017COVID-19 and Business Outlook
On March 11, 2020, the World Health Organization 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, a number of states and local governments issued shelter-in-place orders or guidance for individuals not engaged in essential activities to remain at home other than for essential needs. While our TRI Pointe Homes—Bay Area and Quadrant Homes divisions were prohibited from engaging in residential construction activities in the Bay Area in California and Seattle, Washington, respectively, for several weeks beginning in late March 2020, residential homebuilding operations are currently designated as approximately 30 deliveriesan essential business activity and remain exempt from the application of “stay-at-home” orders in all of our markets. However, there can be no assurance that wouldour homebuilding operations will continue to remain exempt in all of our markets.
In response to the COVID-19 pandemic and measures taken by applicable governmental authorities, in mid-March 2020, 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 encouraged employees at our corporate and division offices whose duties could be performed from home to work remotely; our new home galleries and design studios transitioned to virtual appointments or appointment-only with pre-screened individuals, as permitted by law; we instituted social distancing, hygiene and 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 postponed non-essential customer care service and warranty requests. As of the date of this report, as permitted by applicable government orders or guidelines, we have deliveredtransitioned substantially all of our employees back to our corporate and division offices (in many cases, using staggered or flexible schedules to limit the number of individuals in 2017 will instead deliverour offices on a given day), have resumed non-essential customer care service and warranty requests in early 2018. Additionally,substantially all of our Houston operations,markets, and are no longer appointment-only in many of our new home galleries. Our field-based team members continue to report to their assigned communities in all 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.
The COVID-19 outbreak and the measures taken by governmental authorities to delay and contain its spread have resulted in substantial adverse effects on the United States economy and could result in a severe and/or prolonged economic recession. The ongoing impact of COVID-19 on the United States economy and our consolidatedbusiness and operations is unknown, as the velocity of this economic slowdown and the subsequent job losses are unprecedented. While demand for new homes has rebounded substantially over the last couple months, given the dynamic nature of the situation, recent increases in new COVID-19 cases in many states and the re-imposition by local and state governments throughout the U.S. of restrictive measures, we cannot estimate the duration and severity of the impact of COVID-19 on the homebuilding industry or whether the current demand environment will persist. To the extent we experience further negative impacts, 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, if any, 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 statements, could be further impacted in future quarters by,performance will depend on, among other things, a declineexisting 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, we continue to build and sell homes in homebuyer trafficall of our markets, and net new home orders; land developmentorders and home construction delays, resultingtraffic in delayed deliveries;our sales offices have increased significantly as compared to the beginning of the second quarter. Notwithstanding, the new protocols we implemented in response to the COVID-19 outbreak and increased costs stemming from general hurricane-related recovery efforts that heighten the demand for,measures taken by governmental authorities to contain its spread continue to affect our business and constrainoperations as of the supplydate of building materialsthis report, in many regards, including by requiring a substantial investment of time and available labor;resources by our management and warranty repair claims fromorganization and causing other material disruptions to our affected homeowners. normal operations.
As noted above, as of June 30, 2020, we had total liquidity of $1.0 billion. 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.
Consolidated Financial Data (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Homebuilding: | | | | | | | |
Home sales revenue | $ | 766,942 | | | $ | 692,138 | | | $ | 1,361,780 | | | $ | 1,184,841 | |
Land and lot sales revenue | 220 | | | 5,183 | | | 220 | | | 6,212 | |
Other operations revenue | 648 | | | 637 | | | 1,266 | | | 1,235 | |
Total revenues | 767,810 | | | 697,958 | | | 1,363,266 | | | 1,192,288 | |
Cost of home sales | 601,434 | | | 574,684 | | | 1,074,316 | | | 996,220 | |
Cost of land and lot sales | 374 | | | 5,562 | | | 576 | | | 7,057 | |
Other operations expense | 624 | | | 627 | | | 1,248 | | | 1,217 | |
Sales and marketing | 45,194 | | | 47,065 | | | 87,831 | | | 86,054 | |
General and administrative | 37,554 | | | 36,854 | | | 77,391 | | | 75,451 | |
Restructuring charges | 5,549 | | | — | | | 5,549 | | | — | |
Homebuilding income from operations | 77,081 | | | 33,166 | | | 116,355 | | | 26,289 | |
Equity in loss of unconsolidated entities | (25) | | | (26) | | | (39) | | | (51) | |
Other (expense) income, net | (6,328) | | | 153 | | | (5,955) | | | 6,394 | |
Homebuilding income before income taxes | 70,728 | | | 33,293 | | | 110,361 | | | 32,632 | |
Financial Services: | | | | | | | |
Revenues | 2,296 | | | 756 | | | 3,890 | | | 1,058 | |
Expenses | 1,285 | | | 627 | | | 2,364 | | | 948 | |
Equity in income of unconsolidated entities | 2,932 | | | 1,972 | | | 4,488 | | | 2,747 | |
Financial services income before income taxes | 3,943 | | | 2,101 | | | 6,014 | | | 2,857 | |
Income before income taxes | 74,671 | | | 35,394 | | | 116,375 | | | 35,489 | |
Provision for income taxes | (18,143) | | | (9,132) | | | (27,964) | | | (9,156) | |
Net income | $ | 56,528 | | | $ | 26,262 | | | $ | 88,411 | | | $ | 26,333 | |
| | | | | | | |
| | | | | | | |
Earnings per share | | | | | | | |
Basic | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.19 | |
Diluted | $ | 0.43 | | | $ | 0.18 | | | $ | 0.67 | | | $ | 0.18 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Homebuilding: | |
| | |
| | | | |
Home sales revenue | $ | 648,638 |
| | $ | 578,653 |
| | $ | 1,609,458 |
| | $ | 1,558,633 |
|
Land and lot sales revenue | 68,218 |
| | 2,535 |
| | 69,661 |
| | 70,204 |
|
Other operations revenue | 584 |
| | 606 |
| | 1,752 |
| | 1,790 |
|
Total revenues | 717,440 |
| | 581,794 |
| | 1,680,871 |
| | 1,630,627 |
|
Cost of home sales | 521,918 |
| | 462,323 |
| | 1,294,563 |
| | 1,219,560 |
|
Cost of land and lot sales | 12,001 |
| | 1,734 |
| | 13,299 |
| | 16,973 |
|
Other operations expense | 575 |
| | 575 |
| | 1,726 |
| | 1,724 |
|
Sales and marketing | 33,179 |
| | 31,852 |
| | 92,209 |
| | 90,621 |
|
General and administrative | 32,956 |
| | 31,278 |
| | 101,293 |
| | 90,293 |
|
Homebuilding income from operations | 116,811 |
| | 54,032 |
| | 177,781 |
| | 211,456 |
|
Equity in (loss) income of unconsolidated entities | — |
| | (20 | ) | | 1,646 |
| | 181 |
|
Other income, net | 26 |
| | 21 |
| | 147 |
| | 287 |
|
Homebuilding income before income taxes | 116,837 |
| | 54,033 |
| | 179,574 |
| | 211,924 |
|
Financial Services: | | | | | | | |
Revenues | 295 |
| | 235 |
| | 881 |
| | 762 |
|
Expenses | 82 |
| | 72 |
| | 233 |
| | 183 |
|
Equity in income of unconsolidated entities | 1,351 |
| | 1,247 |
| | 2,911 |
| | 3,246 |
|
Financial services income before income taxes | 1,564 |
| | 1,410 |
| | 3,559 |
| | 3,825 |
|
Income before income taxes | 118,401 |
| | 55,443 |
| | 183,133 |
| | 215,749 |
|
Provision for income taxes | (46,112 | ) | | (20,298 | ) | | (69,824 | ) | | (77,701 | ) |
Net income | 72,289 |
| | 35,145 |
| | 113,309 |
| | 138,048 |
|
Net income attributable to noncontrolling interests | (25 | ) | | (311 | ) | | (138 | ) | | (738 | ) |
Net income available to common stockholders | $ | 72,264 |
| | $ | 34,834 |
| | $ | 113,171 |
| | $ | 137,310 |
|
Earnings per share | | | |
| | | | |
|
Basic | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
|
Diluted | $ | 0.48 |
| | $ | 0.22 |
| | $ | 0.73 |
| | $ | 0.85 |
|
Three Months Ended SeptemberJune 30, 20172020 Compared to Three Months Ended SeptemberJune 30, 20162019
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
| | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, 2020 | | | Three Months Ended June 30, 2019 | | | Percentage Change | |
| Three Months Ended September 30, 2017 | | Three Months Ended September 30, 2016 | | Percentage Change | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates |
| Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | |
Maracay Homes | 158 |
| | 13.5 |
| | 3.9 |
| | 134 |
| | 17.8 |
| | 2.5 |
| | 18 | % | | (24 | )% | | 56 | % | |
Maracay | | Maracay | 162 | | | 19.0 | | | 2.8 | | | 253 | | | 15.0 | | | 5.6 | | | (36) | % | | 27 | % | | (49) | % |
Pardee Homes | 421 |
| | 30.8 |
| | 4.6 |
| | 283 |
| | 22.5 |
| | 4.2 |
| | 49 | % | | 37 | % | | 10 | % | Pardee Homes | 423 | | | 44.0 | | | 3.2 | | | 522 | | | 44.5 | | | 3.9 | | | (19) | % | | (1) | % | | (18) | % |
Quadrant Homes | 84 |
| | 8.3 |
| | 3.4 |
| | 49 |
| | 7.3 |
| | 2.3 |
| | 71 | % | | 14 | % | | 48 | % | Quadrant Homes | 105 | | | 9.5 | | | 3.7 | | | 67 | | | 6.5 | | | 3.4 | | | 57 | % | | 46 | % | | 7 | % |
Trendmaker Homes | 113 |
| | 29.3 |
| | 1.3 |
| | 130 |
| | 29.0 |
| | 1.5 |
| | (13 | )% | | 1 | % | | (13 | )% | Trendmaker Homes | 205 | | | 29.8 | | | 2.3 | | | 247 | | | 37.5 | | | 2.2 | | | (17) | % | | (21) | % | | 4 | % |
TRI Pointe Homes | 378 |
| | 34.7 |
| | 3.6 |
| | 239 |
| | 28.7 |
| | 2.8 |
| | 58 | % | | 21 | % | | 29 | % | TRI Pointe Homes | 327 | | | 30.3 | | | 3.6 | | | 294 | | | 28.5 | | | 3.4 | | | 11 | % | | 6 | % | | 5 | % |
Winchester Homes | 114 |
| | 13.2 |
| | 2.9 |
| | 97 |
| | 13.7 |
| | 2.4 |
| | 18 | % | | (4 | )% | | 21 | % | Winchester Homes | 110 | | | 11.7 | | | 3.1 | | | 108 | | | 14.0 | | | 2.6 | | | 2 | % | | (16) | % | | 22 | % |
Total | 1,268 |
| | 129.8 |
| | 3.3 |
| | 932 |
| | 119.0 |
| | 2.6 |
| | 36 | % | | 9 | % | | 27 | % | Total | 1,332 | | | 144.3 | | | 3.1 | | | 1,491 | | | 146.0 | | | 3.4 | | | (11) | % | | (1) | % | | (10) | % |
Net new home orders for the three months ended SeptemberJune 30, 2017 increased2020 decreased by 336159 orders, or 36%11%, to 1,268,1,332, compared to 9321,491 during the prior yearprior-year period. The increasedecrease in net new home orders was due primarily to a 9% increase in average selling communities and a 27% increase10% decrease in monthly absorption rates. New home order demand was severely impacted during the month of April, though began to slowly and steadily improve in May, followed by exceptionally strong demand in June. We believe this order demand volatility during the quarter can be attributed to the impacts of COVID-19 pandemic. As our results for the three months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.
Maracay Homes reported an 18% increasea 36% decrease in net new home orders driven by a 56% increase49% decrease in monthly absorption rate as a result of improved market conditions compared to the prior year period. We experienced a 24% decrease in average selling communities due to the timing of community openings and closings compared to the prior year period. Pardee Homes increased net new home orders by 49% due to a 37% increase in average community count and a 10% increase in monthly absorption rate. The increase in monthly absorption rate was driven by strong demand for new community openings, particularly in the San Diego and Los Angeles markets. Net new home orders increased 71% at Quadrant Homes due primarily to a 55% increase in monthly absorption rate, and enhancedoffset by a 14%27% increase in average selling communities. The increase inWhile the monthly absorption rate was 2.8 for the resultquarter, Maracay experienced extreme demand volatility during the quarter, with a substantially slow pace in April before increasing to a more robust pace in June, during which we achieved a monthly absorption rate of our well located communities and continued strong market fundamentals. Trendmaker Homes'4.7. Pardee Homes reported a 19% decrease in net new home orders decreased 13% due to a 13%driven by an 18% decrease in monthly absorption raterates and a relatively flat1% decrease in average selling community count.communities. The decrease in monthly absorption rate was due in part to the loss of two weeks of selling homesextreme market slowdown we experienced during and after Hurricane Harvey, as well as the continued challenges with the Houston marketApril as a result of COVID-19. The absorption rates in the continued economic pressure on oil pricesInland Empire, Los Angeles, San Diego and Las Vegas all improved significantly during May and June as restrictions related to COVID-19 were reduced. Net new home orders increased 57% at Quadrant Homes due to a 46% increase in average selling communities and a 7% increase in monthly absorption rate as compared to the prior-year period. Despite experiencing slow demand in the month of April due to COVID-19, market conditions improved significantly during the second half of the current-year period, as evidenced by a monthly absorption rate of 3.7 for the quarter. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 17% due to a 21% decrease in average selling communities offset by a 4% increase in monthly absorption rate. Despite being impacted by COVID-19 and the related impactvolatility in the oil market, our Houston division achieved a monthly absorption rate of 2.1 for the current quarter, which represents a decrease of 0.2 as compared to the prior-year period. Our sales pace in both our Austin and Dallas–Fort Worth markets improved on job growth.a year-over-year basis, despite noticeable slowdown in both markets during April resulting from COVID-19. TRI Pointe Homes’ net new home orders increased 58%11% due to a 29% increase in monthly absorption rate and a 21%6% increase in average selling communities. Demand remains strongcommunities and a 5% increase in the marketsmonthly absorption rate. The increase in which TRI Pointe Homes builds, as evidenced by aHomes’ monthly absorption rate of 3.6 homes at average selling prices abovewas driven by stronger market conditions in both our Bay Area and Colorado markets compared to the Company average.prior-year period. Winchester Homes experienced an 18%reported a 2% increase in net new home orders largely as a result of a 21%22% increase in monthly absorption rate partially offset by a 4%16% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong customerorder demand in some of our larger master plan communities.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 June 30, 2020 | | | As of June 30, 2019 | | | Percentage Change | |
| As of September 30, 2017 | | As of September 30, 2016 | | Percentage Change | | Backlog Units | | Backlog Dollar Value | | Average Sales Price | | Backlog Units | | Backlog Dollar Value | | Average Sales Price | | Backlog Units | | Backlog Dollar Value | | Average Sales Price |
| Backlog Units | | Backlog Dollar Value | | Average Sales Price | | Backlog Units | | Backlog Dollar Value | | Average Sales Price | | Backlog Units | | Backlog Dollar Value | | Average Sales Price | |
Maracay Homes | 305 |
| | $ | 154,324 |
| | $ | 506 |
| | 329 |
| | $ | 144,127 |
| | $ | 438 |
| | (7 | )% | | 7 | % | | 16 | % | |
Maracay | | Maracay | 427 | | | $ | 255,916 | | | $ | 599 | | | 385 | | | $ | 211,935 | | | $ | 550 | | | 11 | % | | 21 | % | | 9 | % |
Pardee Homes | 646 |
| | 436,376 |
| | 676 |
| | 382 |
| | 182,263 |
| | 477 |
| | 69 | % | | 139 | % | | 42 | % | Pardee Homes | 739 | | | 494,785 | | | 670 | | | 790 | | | 602,054 | | | 762 | | | (6) | % | | (18) | % | | (12) | % |
Quadrant Homes | 206 |
| | 160,202 |
| | 778 |
| | 130 |
| | 83,467 |
| | 642 |
| | 58 | % | | 92 | % | | 21 | % | Quadrant Homes | 228 | | | 213,093 | | | 935 | | | 77 | | | 65,968 | | | 857 | | | 196 | % | | 223 | % | | 9 | % |
Trendmaker Homes | 213 |
| | 107,968 |
| | 507 |
| | 186 |
| | 98,874 |
| | 532 |
| | 15 | % | | 9 | % | | (5 | )% | Trendmaker Homes | 321 | | | 146,650 | | | 457 | | | 399 | | | 195,871 | | | 491 | | | (20) | % | | (25) | % | | (7) | % |
TRI Pointe Homes | 659 |
| | 481,537 |
| | 731 |
| | 495 |
| | 319,823 |
| | 646 |
| | 33 | % | | 51 | % | | 13 | % | TRI Pointe Homes | 552 | | | 383,826 | | | 695 | | | 384 | | | 252,708 | | | 658 | | | 44 | % | | 52 | % | | 6 | % |
Winchester Homes | 236 |
| | 141,858 |
| | 601 |
| | 189 |
| | 121,617 |
| | 643 |
| | 25 | % | | 17 | % | | (7 | )% | Winchester Homes | 291 | | | 184,798 | | | 635 | | | 173 | | | 110,012 | | | 636 | | | 68 | % | | 68 | % | | — | % |
Total | 2,265 |
| | $ | 1,482,265 |
| | $ | 654 |
| | 1,711 |
| | $ | 950,171 |
| | $ | 555 |
| | 32 | % | | 56 | % | | 18 | % | Total | 2,558 | | | $ | 1,679,068 | | | $ | 656 | | | 2,208 | | | $ | 1,438,548 | | | $ | 652 | | | 16 | % | | 17 | % | | 1 | % |
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 did not close escrowcancelled prior to delivery of the home (as a percentage of overall orders) decreased to 15% from 17% forwas 21% and 16% during the same period in 2016.three-month periods ended June 30, 2020 and 2019, respectively. The dollar value of backlog was approximately $1.5$1.7 billion as of SeptemberJune 30, 2017,2020, an increase of $532.1$240.5 million, or 56%17%, compared to $950.2 million$1.4 billion as of SeptemberJune 30, 2016.2019. This increase was due to an increase in backlog units of 554,350, or 32%16%, to 2,2652,558 as of SeptemberJune 30, 2017,2020, compared to 1,7112,208 as of SeptemberJune 30, 20162019, and an 18%a 1% increase in the average sales price of homes in backlog to $654,000$656,000 as of SeptemberJune 30, 2017,2020, compared to $555,000$652,000 as of SeptemberJune 30, 2016.2019.
MaracayMaracay’s backlog dollar value increased 21% compared to the prior-year period due to an 11% increase in backlog units and a 9% increase in average sales price. The increase in backlog units is due to the strong market conditions in Arizona
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 decreased 18% due to a decrease in backlog average sales price of 12% and a decrease in backlog units of 6%. The decrease in backlog units is largely due to the decrease in net new home orders we experienced during the quarter, particularly in the month of April due to uncertainty surrounding COVID-19. Quadrant Homes’ backlog dollar value increased 7%223% as a result of a 196% increase in backlog units and a 9% increase 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 57% increase in net new home orders during the period, as market conditions in Seattle remained strong for most of the quarter despite COVID-19. Trendmaker Homes’ backlog dollar value decreased 25% due primarily to a 20% decrease in backlog units. The decrease in backlog units resulted primarily from a 21% decrease in average selling communities for the quarter. TRI Pointe Homes’ backlog dollar value increased 52% mainly due to a 44% increase in backlog units. The increase in backlog units resulted primarily from a strong demand environment in both California and Colorado during the quarter. Winchester Homes’ backlog dollar value increased 68% due to a 68% increase in backlog units. The increase in backlog units is a result of a 27% increase in net new home orders for the six months ended June 30, 2020, in addition to a significantly higher unit backlog to start the current-year period compared to the prior yearprior-year period.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2020 | | | | | | Three Months Ended June 30, 2019 | | | | | | Percentage Change | | | | |
| New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price |
Maracay | 165 | | | $ | 86,674 | | | $ | 525 | | | 106 | | | $ | 55,653 | | | $ | 525 | | | 56 | % | | 56 | % | | — | % |
Pardee Homes | 362 | | | 242,282 | | | 669 | | | 325 | | | 194,700 | | | 599 | | | 11 | % | | 24 | % | | 12 | % |
Quadrant Homes | 40 | | | 36,649 | | | 916 | | | 67 | | | 70,429 | | | 1,051 | | | (40) | % | | (48) | % | | (13) | % |
Trendmaker Homes | 254 | | | 121,257 | | | 477 | | | 250 | | | 117,010 | | | 468 | | | 2 | % | | 4 | % | | 2 | % |
TRI Pointe Homes | 292 | | | 206,474 | | | 707 | | | 281 | | | 192,752 | | | 686 | | | 4 | % | | 7 | % | | 3 | % |
Winchester Homes | 116 | | | 73,606 | | | 635 | | | 96 | | | 61,594 | | | 642 | | | 21 | % | | 20 | % | | (1) | % |
Total | 1,229 | | | $ | 766,942 | | | $ | 624 | | | 1,125 | | | $ | 692,138 | | | $ | 615 | | | 9 | % | | 11 | % | | 1 | % |
Home sales revenue increased $74.8 million, or 11%, to $766.9 million for the three months ended June 30, 2020. The increase was comprised of (i) $64.0 million related to an increase of 104 new homes delivered in the three months ended June 30, 2020 compared to the prior-year period, and (ii) $10.8 million related to an increase of $9,000 in average sales price of homes delivered in the three months ended June 30, 2020 compared to the prior-year period.
Maracay home sales revenue increased 56% due to a 16%56% 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 24% due to a 12% increase in average sales price offset by a 7% decreaseand an 11% increase in units.new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of move-up and luxury product compared to the prior year. Pardee Homes' backlog dollar value increased 139% due to an increase in both backlog units and average selling price. The increase in backlog units was due to the 49% increase in orders during the quarter while the increase in average selling price was due to increased pricing power indeliveries from our markets and a higher end product mix with higher price points. Quadrant Homes’ backlog dollar value increased 92% as a result of an increase in backlog units and average sales price. The increase in backlog units directly relates to the 71% increase in orders during the quarter and the increase in average sales price was related to a higher mix of homes in backlog from the core Seattle markets of King and Snohomish counties, which have higher price points. Trendmaker Homes' backlog dollar value increased 9% primarily due to a 15% increase in backlog units. TRI Pointe Homes’ backlog dollar value increased 51%
due to an increase in backlog units and average selling price. The increase in backlog units was the result of a 58% increase in orders for the three months ended September 30, 2017. Winchester Homes’ backlog dollar value increased 17% largely driven by the increase in backlog units as a result of the 18% increase in orders during the quarter.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2017 | | Three Months Ended September 30, 2016 | | Percentage Change |
| New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price |
Maracay Homes | 164 |
| | $ | 78,166 |
| | $ | 477 |
| | 165 |
| | $ | 68,024 |
| | $ | 412 |
| | (1 | )% | | 15 | % | | 16 | % |
Pardee Homes | 328 |
| | 164,548 |
| | 502 |
| | 302 |
| | 188,148 |
| | 623 |
| | 9 | % | | (13 | )% | | (19 | )% |
Quadrant Homes | 79 |
| | 54,197 |
| | 686 |
| | 90 |
| | 47,749 |
| | 531 |
| | (12 | )% | | 14 | % | | 29 | % |
Trendmaker Homes | 104 |
| | 52,453 |
| | 504 |
| | 121 |
| | 62,408 |
| | 516 |
| | (14 | )% | | (16 | )% | | (2 | )% |
TRI Pointe Homes | 332 |
| | 239,110 |
| | 720 |
| | 260 |
| | 167,769 |
| | 645 |
| | 28 | % | | 43 | % | | 12 | % |
Winchester Homes | 104 |
| | 60,164 |
| | 579 |
| | 81 |
| | 44,555 |
| | 550 |
| | 28 | % | | 35 | % | | 5 | % |
Total | 1,111 |
| | $ | 648,638 |
| | $ | 584 |
| | 1,019 |
| | $ | 578,653 |
| | $ | 568 |
| | 9 | % | | 12 | % | | 3 | % |
Home sales revenue increased $70.0 million, or 12%, to $648.6 million for the three months ended September 30, 2017. The increase was comprised of (i) $52.2 million related to an increase in homes delivered to 1,111 for the three months ended September 30, 2017 from 1,019higher-priced California assets in the prior yearcurrent-year period, and (ii) a $16,000, or 3%, increase in the average sales price of homes delivered to $584,000 for the three months ended September 30, 2017,particularly from $568,000 in the prior year period.
Maracay Homes had a 15% increase in home sales revenue due to an increase in average sales price and relatively flat new home deliveries. The increase in average sales price was due to a product mix shift that included a greater proportion of move-up and luxury products compared to the prior year. Pardeeour San Diego market. Quadrant Homes’ home sales revenue decreased 13%48% due to a 19% decrease in average sales price, offset by a 9% increase in new homes delivered. The decrease in average sales price was due to a product mix shift that included a greater proportion of entry-level product, specifically in our San Diego market. Quadrant Homes increased home sales revenue by 14% due to a 29% increase in average sales price offset by a 12% decrease in new homes delivered. The increase in average sales price was the result of delivering more units in the core Seattle markets of King and Snohomish counties, which have higher price points. Trendmaker Homes' home sales revenue decreased 16% due to a 14%40% decrease in new homes delivered and a 2%13% decrease in average sales price of homes delivered.price. The decrease in new homes delivered was due in part to Hurricane Harvey, which caused significant floodingtiming and widespread damage in Houston, and was responsible for delivery delays during the third quarterimpact of 2017. Approximately 30 deliveries that would have delivered in the third quarter of 2017 will instead deliver in early 2018 atCOVID-19-related construction delays. Trendmaker Homes. TRI Pointe Homes had a 43% increase inHomes’ home sales revenue increased 4% due to a 28%2% increase in new homes delivered and a 12%2% increase in average sales price. TRI Pointe Homes’ home sales revenue increased 7% due primarily to a 4% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was driven by higher backlog to start the quarter compared to the same prior year period.timing of deliveries. Home sales revenue increased at Winchester Homes by 35% largely20% due to ana 21% increase in new homes delivered. The increase in new homes delivered aswas due to a resulthigher number of higher backlog tounits at the start of the quartercurrent-year period compared to the same prior yearprior-year period.
Homebuilding Gross Margins (dollars in thousands)
| | | Three Months Ended September 30, | | Three Months Ended June 30, | |
| 2017 | | % | | 2016 | | % | | 2020 | | % | | 2019 | | % |
Home sales revenue | $ | 648,638 |
| | 100.0 | % | | $ | 578,653 |
| | 100.0 | % | Home sales revenue | $ | 766,942 | | | 100.0 | % | | $ | 692,138 | | | 100.0 | % |
Cost of home sales | 521,918 |
| | 80.5 | % | | 462,323 |
| | 79.9 | % | Cost of home sales | 601,434 | | | 78.4 | % | | 574,684 | | | 83.0 | % |
Homebuilding gross margin | 126,720 |
| | 19.5 | % | | 116,330 |
| | 20.1 | % | Homebuilding gross margin | 165,508 | | | 21.6 | % | | 117,454 | | | 17.0 | % |
Add: interest in cost of home sales | 15,623 |
| | 2.4 | % | | 14,385 |
| | 2.5 | % | Add: interest in cost of home sales | 21,801 | | | 2.8 | % | | 18,071 | | | 2.6 | % |
Add: impairments and lot option abandonments | 374 |
| | 0.1 | % | | 389 |
| | 0.1 | % | Add: impairments and lot option abandonments | 1,380 | | | 0.2 | % | | 288 | | | 0.0 | % |
Adjusted homebuilding gross margin(1) | $ | 142,717 |
| | 22.0 | % | | $ | 131,104 |
| | 22.7 | % | Adjusted homebuilding gross margin(1) | $ | 188,689 | | | 24.6 | % | | $ | 135,813 | | | 19.6 | % |
Homebuilding gross margin percentage | 19.5 | % | | | | 20.1 | % | | | Homebuilding gross margin percentage | 21.6 | % | | | | 17.0 | % | | |
Adjusted homebuilding gross margin percentage(1) | 22.0 | % | | | | 22.7 | % | | | Adjusted homebuilding gross margin percentage(1) | 24.6 | % | | | | 19.6 | % | | |
__________
| |
(1)(1)Non-GAAP financial measure (as discussed below). | Non-GAAP financial measure (as discussed below). |
Our homebuilding gross margin percentage decreasedincreased to 19.5%21.6% for the three months ended SeptemberJune 30, 20172020 as compared to 20.1%17.0% for the prior yearprior-year period. The decreaseincrease in gross margin percentage was primarily due to a decrease in incentives as compared to the mixprior-year period, during which we experienced weaker pricing trends, in addition to higher current-year period revenue from some of deliveries from our long-dated California communities,assets, which produce gross margins above the Company average, having less of an impact on our overall gross margin percentage compared to the same period in the prior year.average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 22.0%24.6% for the three months ended SeptemberJune 30, 2017,2020, compared to 22.7%19.6% for the prior yearprior-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 nearestmost directly comparable GAAP equivalent.measure.
LandSales and Lot Gross MarginsMarketing, General and Administrative Expense (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | As a Percentage of Home Sales Revenue | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Sales and marketing | $ | 45,194 | | | $ | 47,065 | | | 5.9 | % | | 6.8 | % |
General and administrative (G&A) | 37,554 | | | 36,854 | | | 4.9 | % | | 5.3 | % |
Total sales and marketing and G&A | $ | 82,748 | | | $ | 83,919 | | | 10.8 | % | | 12.1 | % |
|
| | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | % | | 2016 | | % |
Land and lot sales revenue | $ | 68,218 |
| | 100.0 | % | | $ | 2,535 |
| | 100.0 | % |
Cost of land and lot sales | 12,001 |
| | 17.6 | % | | 1,734 |
| | 68.4 | % |
Land and lot gross margin | $ | 56,217 |
| | 82.4 | % | | $ | 801 |
| | 31.6 | % |
Our landTotal sales and lot gross marginmarketing and general and administrative (“SG&A”) as a percentage increasedof home sales revenue decreased to 82.4%10.8% for the three months ended SeptemberJune 30, 2017 as2020, compared to 31.6%12.1% in the prior-year period. Total SG&A expense decreased $1.2 million to $82.7 million for the prior year period. During the quarterthree months ended SeptemberJune 30, 2017, our Pardee Homes reporting segment sold a parcel consisting of 69 homebuilding lots, located2020 from $83.9 million in the Pacific Highlands Ranch community in San Diego, California, representing $66.8 million in land and lot sales revenue and $56.1 million in land and lot gross margin. This sale resulted in significant gross margin due to the low land basis of the Pacific Highlands Ranch community, which was acquired in 1981. Land and lot sales gross margin percentage can vary significantly due to the type of land and its related cost basis. Additionally, we expect land and lot sales revenue to vary significantly between reporting periods based on our business decisions to maintain or decrease our land ownership in various markets. Our land and lot sale decisions will be based on a variety of factors, including, without limitation, prevailing market conditions.
Sales and Marketing, General and Administrative Expense (dollars in thousands)
|
| | | | | | | | | | | | | |
| Three Months Ended September 30, | | As a Percentage of Home Sales Revenue |
| 2017 | | 2016 | | 2017 | | 2016 |
Sales and marketing | $ | 33,179 |
| | $ | 31,852 |
| | 5.1 | % | | 5.5 | % |
General and administrative (G&A) | 32,956 |
| | 31,278 |
| | 5.1 | % | | 5.4 | % |
Total sales and marketing and G&A | $ | 66,135 |
| | $ | 63,130 |
| | 10.2 | % | | 10.9 | % |
prior-year period.
Sales and marketing expense as a percentage of home sales revenue decreased to 5.1%5.9% for the three months ended SeptemberJune 30, 2017,2020, compared to 5.5%6.8% for the prior yearprior-year period. The decrease was the result ofdue primarily to lower advertising expense and higher operating leverage on the fixed components of sales and marketing expensesexpense as a result of the 12%11% increase in homes sales revenue.homebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense decreased to $45.2 million for the three months ended June 30, 2020 compared to $47.1 million in the prior-year period due primarily to the decrease in advertising expense.
General and administrative (“G&A”) expensesexpense as a percentage of home sales revenue decreased to 5.1%4.9% of home sales revenue for the three months ended SeptemberJune 30, 20172020 compared to 5.4%5.3% for the prior yearprior-year period largely due to higher leverage on our G&A expense as a result of higher operating leverage duethe 11% increase in homebuilding revenue compared to the 12% increaseprior-year period. In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in home sales revenue.May
2020. G&A expensesexpense increased to $33.0$37.6 million for the three months ended SeptemberJune 30, 20172020 compared to $31.3$36.9 million infor the prior year period primarily asprior-year period.
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, substantially all of which had been paid as of June 30, 2020. We believe that our restructuring activities are substantially complete as of June 30, 2020. However, until market conditions stabilize, we may incur additional headcount to support future growth, along withrestructuring charges. We expect that this workforce reduction will decrease our continued expansion into Austin, Texas and Los Angeles, California and the recently announced expansion into the Sacramento, California market. G&A expense was positively impactedoverhead expenses by approximately $33 million on an annualized basis.
Other Income (Expense), Net
Other income (expense), net for the three months ended SeptemberJune 30, 2017 by2020 included a decrease$6.9 million loss in connection with the income tax liabilityearly extinguishment of a portion of our 4.875% Senior Notes due 2021 (the “2021 Notes”). In June 2020, we commenced and settled a cash tender offer for any and all of our then outstanding $300 million principal amount of 2021 Notes as part of a plan to Weyerhaeuser of $1.4 million related to therefinance our long-term debt due in 2021 with longer maturity financing. Upon expiration of stock options whose benefit would have been passed on to Weyerhaeuser under our tax sharing agreement.
Total salesthe tender offer in June 2020, $216.3 million, or 72% of the outstanding principal amount, of the 2021 Notes were validly tendered and marketing and G&A (“SG&A”) as a percentage of home sales revenue decreased to 10.2%accepted for the three months ended September 30, 2017, compared to 10.9% in the prior year period. Total SG&A expense increased $3.0 million, to $66.1 million for the three months ended September 30, 2017 from $63.1 million in the prior year period. purchase.
Interest
Interest, which waswe incurred principally to finance land acquisitions, land development and home construction, totaled $22.9$21.8 million and $18.6$22.0 million for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. All interest incurred in both periods was capitalized. The increase in interest incurred during the three months ended September 30, 2017 as compared to the prior year period was primarily attributable to an increase in our debt balance and our weighted average interest rate as a result of the issuance in June of 2017 of our $300 million aggregate principal amount of 5.250% Senior Notes due 2027 ("the 2027 Notes").
Income Tax
For the three months ended SeptemberJune 30, 2017,2020, we recorded a tax provision of $46.1$18.1 million based on an effective tax rate of 38.9%24.3%. For the three months ended SeptemberJune 30, 2016,2019, we recorded a tax provision of $20.3$9.1 million based on an effective tax rate of 36.6%25.8%. The increase in the current year income tax rate is due to the expiration of federal energy tax credits in 2017 as well as a negative impact on the tax rate from the expiration of non-qualified stock options. The increase in provision for income taxes is due to ana $39.3 million increase in income before income taxes of $63.0 million to $118.4$74.7 million for the three months ended SeptemberJune 30, 2017,2020, compared to $55.4$35.4 million for the prior yearprior-year period.
During the three months ended June 30, 2020, California enacted tax legislation that approved the suspension of California net operating loss deductions for tax years 2020, 2021 and 2022. The suspension of California net operating loss deductions did not have an impact on our tax provision for the three months ended June 30, 2020.
Financial Services Segment
Income before income taxes from our financial services operations increased to $3.9 million for the three months ended June 30, 2020 compared to $2.1 million for the prior-year period. This increase is due to higher home sales volume in the three months ended June 30, 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 services, and property and casualty insurance operations.
NineSix Months Ended SeptemberJune 30, 20172020 Compared to NineSix Months Ended SeptemberJune 30, 20162019
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
| | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2020 | | | Six Months Ended June 30, 2019 | | | Percentage Change | |
| Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 | | Percentage Change | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates |
| Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | | Net New Home Orders | | Average Selling Communities | | Monthly Absorption Rates | |
Maracay Homes | 504 |
| | 15.3 |
| | 3.7 |
| | 526 |
| | 18.1 |
| | 3.2 |
| | (4 | )% | | (15 | )% | | 16 | % | |
Maracay | | Maracay | 402 | | | 16.9 | | | 4.0 | | | 414 | | | 13.4 | | | 5.1 | | | (3) | % | | 26 | % | | (22) | % |
Pardee Homes | 1,282 |
| | 29.3 |
| | 4.9 |
| | 936 |
| | 22.8 |
| | 4.6 |
| | 37 | % | | 29 | % | | 7 | % | Pardee Homes | 898 | | | 43.0 | | | 3.5 | | | 955 | | | 44.4 | | | 3.6 | | | (6) | % | | (3) | % | | (3) | % |
Quadrant Homes | 311 |
| | 7.6 |
| | 4.5 |
| | 274 |
| | 8.5 |
| | 3.6 |
| | 14 | % | | (11 | )% | | 25 | % | Quadrant Homes | 231 | | | 8.3 | | | 4.6 | | | 142 | | | 6.9 | | | 3.4 | | | 63 | % | | 20 | % | | 35 | % |
Trendmaker Homes | 393 |
| | 30.9 |
| | 1.4 |
| | 385 |
| | 26.8 |
| | 1.6 |
| | 2 | % | | 15 | % | | (13 | )% | Trendmaker Homes | 439 | | | 30.1 | | | 2.4 | | | 490 | | | 38.6 | | | 2.1 | | | (10) | % | | (22) | % | | 14 | % |
TRI Pointe Homes | 1,144 |
| | 31.9 |
| | 4.0 |
| | 883 |
| | 27.3 |
| | 3.6 |
| | 30 | % | | 17 | % | | 11 | % | TRI Pointe Homes | 741 | | | 31.4 | | | 3.9 | | | 589 | | | 29.6 | | | 3.3 | | | 26 | % | | 6 | % | | 18 | % |
Winchester Homes | 378 |
| | 12.4 |
| | 3.4 |
| | 335 |
| | 13.5 |
| | 2.8 |
| | 13 | % | | (8 | )% | | 21 | % | Winchester Homes | 282 | | | 12.7 | | | 3.7 | | | 222 | | | 14.1 | | | 2.6 | | | 27 | % | | (10) | % | | 42 | % |
Total | 4,012 |
| | 127.4 |
| | 3.5 |
| | 3,339 |
| | 117.0 |
| | 3.2 |
| | 20 | % | | 9 | % | | 9 | % | Total | 2,993 | | | 142.4 | | | 3.5 | | | 2,812 | | | 147.0 | | | 3.2 | | | 6 | % | | (3) | % | | 9 | % |
Net new home orders for the ninesix months ended SeptemberJune 30, 20172020 increased by 673181 orders, or 20%6%, to 4,012,2,993, compared to 3,3392,812 during the prior yearprior-year period. The increase in net new home orders was due to a 9% increase in monthly absorption rates, offset by a 3% decrease in average selling communitiescommunities. New home order demand was exceptionally strong through January and February of 2020, followed by a 9% increasesignificant decline in monthly absorption rates.March and April, a slow and steady improvement in May and exceptionally strong demand in June. This unusual volatility was due to the COVID-19 pandemic and the measures taken to contain its spread, as well as the impacts on consumers and the overall economy. As our results for the six months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.
Maracay Homes hadreported a 4%3% decrease in net new home orders driven by a 15%22% decrease in monthly absorption rates, offset by a 26% increase in average selling communities. The decrease in Maracay’s monthly absorption rate to 4.0 for the six months ended June 30, 2020 was due to the impact of COVID-19 and the slower market conditions experienced through March and April. Despite this impact, our monthly absorption rate of 4.0 for the current year demonstrates strong demand for Maracay’s new community openings during the current-year period as well as strong market fundamentals in Arizona throughout most of the quarter. Pardee Homes reported a 6% decrease in net new home orders driven by a 3% decrease in monthly absorption rates and a 3% decrease in average selling communities. The decrease in monthly absorption rate was due to the impact of COVID-19, as net new home order activity slowed considerably during parts of March, April and May. Net new home orders increased 63% at Quadrant Homes due to a 35% increase in monthly absorption rate and a 20% increase in average selling communities during the current-year period as compared to the prior-year period. The increase in monthly absorption rate to 4.6 was due to an exceptionally strong demand environment in January and February of the current-year period, as well as a significant improvement in market conditions during the latter half of May and into June, notwithstanding reduced demand in the month of April due to COVID-19. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 10% due to a 22% decrease in average selling communities due to the timing of community openings and closings compared to the prior year period. This was offset by a 16%14% increase in monthly absorption rate as a result of improved market conditions compared to the prior year period. Pardee Homes increased net new home orders by 37% largely due to a 29% increase in average selling communities and a 7% increase in absorption rate to 4.9 orders per community per month. Net new home orders increased 14% at Quadrant Homes mainly due to a 25% increase inrate. Though we experienced stronger monthly absorption rate due to continued strong market fundamentals. This was offset by an 11% decreaserates at each of our Houston, Austin and Dallas–Fort Worth markets in average selling communities due to the timing of new community openings and closings. Trendmaker Homes increased net new home orders by 2% primarily based on a 15% increase in average selling communities. Trendmaker Homes’ monthly absorption rate declined compared to the prior yearcurrent-year period, as a result of the loss of two weeks of selling due to the impact of Hurricane HarveyCOVID-19 and the continued softer market conditions due to the decrease in oil prices and the related impact on job growthvolatility in the Houston market.oil market negatively impacted our sales pace in the current-year period, particularly in March and April. TRI Pointe Homes’ net new home orders increased 30%26% due to an 18% increase in the monthly absorption rate and a 17%6% increase in average selling communities and an 11%communities. The increase in monthly absorption rate. Demand remains strong in the markets in which TRI Pointe Homes builds, as evidenced by aHomes’ monthly absorption rate of 4.0 homes at average selling prices abovewas driven by stronger market conditions in both our Bay Area and Colorado markets compared to the Company average.prior-year period. Winchester Homes experiencedreported a 13%27% increase in net new home orders due toas a 21%result of a 42% increase in monthly absorption rate partially offset by an 8%a 10% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong customerorder demand in some of our larger master plan communities.and more favorable overall market conditions compared to the prior-year period.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2020 | | | Six Months Ended June 30, 2019 | | | Percentage Change | |
| Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 | | Percentage Change | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price |
| New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | | New Homes Delivered | | Home Sales Revenue | | Average Sales Price | |
Maracay Homes | 447 |
| | $ | 204,981 |
| | $ | 459 |
| | 400 |
| | $ | 161,318 |
| | $ | 403 |
| | 12 | % | | 27 | % | | 14 | % | |
Maracay | | Maracay | 305 | | | $ | 158,426 | | | $ | 519 | | | 180 | | | $ | 95,214 | | | $ | 529 | | | 69 | % | | 66 | % | | (2) | % |
Pardee Homes | 896 |
| | 428,624 |
| | 478 |
| | 828 |
| | 485,683 |
| | 587 |
| | 8 | % | | (12 | )% | | (19 | )% | Pardee Homes | 619 | | | 420,684 | | | 680 | | | 567 | | | 329,562 | | | 581 | | | 9 | % | | 28 | % | | 17 | % |
Quadrant Homes | 206 |
| | 133,747 |
| | 649 |
| | 287 |
| | 147,935 |
| | 515 |
| | (28 | )% | | (10 | )% | | 26 | % | Quadrant Homes | 92 | | | 80,106 | | | 871 | | | 111 | | | 113,702 | | | 1,024 | | | (17) | % | | (30) | % | | (15) | % |
Trendmaker Homes | 343 |
| | 169,189 |
| | 493 |
| | 335 |
| | 169,423 |
| | 506 |
| | 2 | % | | — | % | | (3 | )% | Trendmaker Homes | 463 | | | 217,377 | | | 469 | | | 404 | | | 187,130 | | | 463 | | | 15 | % | | 16 | % | | 1 | % |
TRI Pointe Homes | 783 |
| | 524,159 |
| | 669 |
| | 678 |
| | 452,553 |
| | 667 |
| | 15 | % | | 16 | % | | — | % | TRI Pointe Homes | 518 | | | 365,143 | | | 705 | | | 523 | | | 364,543 | | | 697 | | | (1) | % | | — | % | | 1 | % |
Winchester Homes | 265 |
| | 148,758 |
| | 561 |
| | 256 |
| | 141,721 |
| | 554 |
| | 4 | % | | 5 | % | | 1 | % | Winchester Homes | 190 | | | 120,044 | | | 632 | | | 154 | | | 94,690 | | | 615 | | | 23 | % | | 27 | % | | 3 | % |
Total | 2,940 |
| | 1,609,458 |
| | $ | 547 |
| | 2,784 |
| | $ | 1,558,633 |
| | $ | 560 |
| | 6 | % | | 3 | % | | (2 | )% | Total | 2,187 | | | $ | 1,361,780 | | | $ | 623 | | | 1,939 | | | $ | 1,184,841 | | | $ | 611 | | | 13 | % | | 15 | % | | 2 | % |
Home sales revenue increased $50.8$176.9 million, or 3%15%, to $1.6$1.4 billion for the ninesix months ended SeptemberJune 30, 2017.2020. The increase was comprised of:of (i) $87.3$151.5 million related to a 156, or 6%,an increase inof 248 new homes delivered to 2,940 for the nine months
ended September 30, 2017, from 2,784 in the prior yearsix months ended June 30, 2020 compared to the prior-year period, offset byand (ii) a decrease of $36.5$25.4 million related to the decreasean increase of $12,000 in average sales price of homes delivered by 2%, or $13,000, to $547,000 forin the ninesix months ended SeptemberJune 30, 2017, from $560,000 in2020 compared to the prior yearprior-year period.
Maracay Homes had a 27% increase in home sales revenue increased 66% due to increasesan 69% increase in both new homes delivered and average sales price.during the current-year period. The increase in new homes delivered wasis due to starting the year with more homes in backlog. Thea 119% increase in average sales price was driven by a product mix shift that included a greater proportion of move-up and luxury productbacklog units to start the current-year period compared to the prior yearprior-year period. Pardee Homes’ home sales revenue decreased by 12% largelyincreased 28% due to a 19% decrease17% increase in average sales price.price and a 9% increase in new homes delivered. The decreaseincrease in average sales price was due to a product mix shift that included a greater proportion of entry level homes delivered, specificallydeliveries from our higher-priced California assets in the current-year period, particularly from our San Diego market. This difference in product mix was due to the timing of deliveries compared to the prior year period. Quadrant Homes decreasedHomes’ home sales revenue by 10%,decreased 30% due to a result of a 28%17% decrease in new homes delivered partially offset byand a 26% increase15% decrease in average sales price. The large decrease in new homes delivered was due to startingtiming and the year with a lower numberimpact of backlog units compared to the prior year period as a result of lower average selling communities. The large increase in average sales price was the result of delivering more homes in the core Seattle markets of King and Snohomish counties, which have higher price points. HomeCOVID-19-related construction delays. Trendmaker Homes’ home sales revenue was flat at Trendmaker Homes due to relatively flat new homes delivered and average sales price of homes delivered. Hurricane Harvey, which caused significant flooding and widespread damage in Houston, was responsible for delivery delays during the third quarter of 2017 at Trendmaker Homes. Approximately 30 deliveries that would have delivered in the third quarter of 2017 will instead deliver in early 2018 at Trendmaker Homes. Home sales revenue at TRI Pointe Homes increased by 16% due to a 15% increase in new homes delivered. The increase in new homes delivered was due to the timing of deliveries. TRI Pointe Homes’ home sales revenue was flat, as we achieved consistent new homes delivered and average sales price. Home sales revenue increased at Winchester Homes by 5% mainly27% due to a 4%23% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was due to a higher number of backlog units at the timingstart of deliveries.the current-year period compared to the prior-year period.
Homebuilding Gross Margins (dollars in thousands)
| | | Nine Months Ended September 30, | | Six Months Ended June 30, | |
| 2017 | | % | | 2016 | | % | | 2020 | | % | | 2019 | | % |
Home sales revenue | $ | 1,609,458 |
| | 100.0 | % | | $ | 1,558,633 |
| | 100.0 | % | Home sales revenue | $ | 1,361,780 | | | 100.0 | % | | $ | 1,184,841 | | | 100.0 | % |
Cost of home sales | 1,294,563 |
| | 80.4 | % | | 1,219,560 |
| | 78.2 | % | Cost of home sales | 1,074,316 | | | 78.9 | % | | 996,220 | | | 84.1 | % |
Homebuilding gross margin | 314,895 |
| | 19.6 | % | | 339,073 |
| | 21.8 | % | Homebuilding gross margin | 287,464 | | | 21.1 | % | | 188,621 | | | 15.9 | % |
Add: interest in cost of home sales | 38,448 |
| | 2.4 | % | | 34,653 |
| | 2.2 | % | Add: interest in cost of home sales | 38,623 | | | 2.8 | % | | 32,262 | | | 2.7 | % |
Add: impairments and lot option abandonments | 1,169 |
| | 0.1 | % | | 678 |
| | — | % | Add: impairments and lot option abandonments | 1,729 | | | 0.1 | % | | 5,490 | | | 0.5 | % |
Adjusted homebuilding gross margin(1) | $ | 354,512 |
| | 22.0 | % | | $ | 374,404 |
| | 24.0 | % | Adjusted homebuilding gross margin(1) | $ | 327,816 | | | 24.1 | % | | $ | 226,373 | | | 19.1 | % |
Homebuilding gross margin percentage | 19.6 | % | | | | 21.8 | % | | | Homebuilding gross margin percentage | 21.1 | % | | | | 15.9 | % | | |
Adjusted homebuilding gross margin percentage(1) | 22.0 | % | | | | 24.0 | % | | | Adjusted homebuilding gross margin percentage(1) | 24.1 | % | | 19.1 | % | |
__________
| |
(1)(1)Non-GAAP financial measure (as discussed below). | Non-GAAP financial measure (as discussed below). |
Our homebuilding gross margin percentage decreasedincreased to 19.6%21.1% for the ninesix months ended SeptemberJune 30, 20172020 as compared to 21.8%15.9% for the prior yearprior-year period. The decreaseincrease in gross margin percentage was primarily due to a decrease in incentives as compared to the mixprior-year period, during which we delivered homes impacted by the weaker pricing trends experienced in the second half of homes delivered and increased labor and materials cost.2018. In addition, we benefited from the favorable impact of higher current-year period revenue from some of our long-dated California assets, 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 22.0%24.1% for the ninesix months ended SeptemberJune 30, 2017,2020, compared to 24.0%19.1% for the prior yearprior-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 nearestmost directly comparable GAAP equivalent.measure.
Land and Lot Gross Margins (dollars in thousands) |
| | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | % | | 2016 | | % |
Land and lot sales revenue | $ | 69,661 |
| | 100.0 | % | | $ | 70,204 |
| | 100.0 | % |
Cost of land and lot sales | 13,299 |
| | 19.1 | % | | 16,973 |
| | 24.2 | % |
Land and lot gross margin | $ | 56,362 |
| | 80.9 | % | | $ | 53,231 |
| | 75.8 | % |
Our land and lot gross margin percentage increased to 80.9% for the nine months ended September 30, 2017 as compared to 75.8% for the prior year period. During the quarter ended September 30, 2017, our Pardee Homes reporting segment sold a parcel consisting of 69 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California, representing $66.8 million in land and lot sales revenue and $56.1 million in land and lot gross margin. This sale resulted in significant gross margin due to the low land basis of the Pacific Highlands Ranch community, which was acquired in 1981. In June of 2016, our Pardee Homes reporting segment sold two parcels, totaling 102 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. Pardee Homes received $61.6 million in cash proceeds from the related sales in 2016. Land and lot sales gross margin percentage can vary significantly due to the type of land and its related cost basis. Additionally, we expect land and lot sales revenue to vary significantly between reporting periods based on our business decisions to maintain or decrease our land ownership in various markets. Our land and lot sale decisions will be based on a variety of factors, including, without limitation, prevailing market conditions.
Sales and Marketing, General andand Administrative Expense (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | As a Percentage of Home Sales Revenue | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Sales and marketing | $ | 87,831 | | | $ | 86,054 | | | 6.4 | % | | 7.3 | % |
General and administrative (G&A) | 77,391 | | | 75,451 | | | 5.7 | % | | 6.4 | % |
Total sales and marketing and G&A | $ | 165,222 | | | $ | 161,505 | | | 12.1 | % | | 13.6 | % |
|
| | | | | | | | | | | | | |
| Nine Months Ended September 30, | | As a Percentage of Home Sales Revenue |
| 2017 | | 2016 | | 2017 | | 2016 |
Sales and marketing | $ | 92,209 |
| | $ | 90,621 |
| | 5.7 | % | | 5.8 | % |
General and administrative (G&A) | 101,293 |
| | 90,293 |
| | 6.3 | % | | 5.8 | % |
Total sales and marketing and G&A | $ | 193,502 |
| | $ | 180,914 |
| | 12.0 | % | | 11.6 | % |
Total SG&A as a percentage of home sales revenue decreased to 12.1% for the six months ended June 30, 2020, compared to 13.6% in the prior-year period. Total SG&A expense increased $3.7 million to $165.2 million for the six months ended June 30, 2020 from $161.5 million in the prior-year period.
Sales and marketing expense as a percentage of home sales revenue decreased to 5.7%6.4% for the ninesix months ended SeptemberJune 30, 2017,2020, compared to 5.8%7.3% for the prior yearprior-year period. The decrease was due primarily the result ofto higher operating leverage on the fixed components of sales and marketing expensesexpense as a result of the 3%15% increase in homes sales revenue. Total saleshomebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense increased by $1.6 million to $92.2$87.8 million for the ninesix months ended SeptemberJune 30, 2017,2020 compared to $90.6$86.1 million in the prior year period.prior-year period due primarily to higher variable commission costs associated with higher home sales revenue.
G&A expensesexpense as a percentage of home sales revenue increaseddecreased to 6.3%5.7% of home sales revenue for the ninesix months ended SeptemberJune 30, 20172020 compared to 5.8%6.4% for the prior year period.prior-year period largely due to higher leverage on our G&A expenses increased to $101.3 million for the nine months ended September 30, 2017 compared to $90.3 million in the prior year period primarilyexpense as a result of additional headcount to support future growth, along with our continued expansion into Austin, Texas and Los Angeles, California and the recently announced expansion into the Sacramento, California market.
SG&A as a percentage of home sales15% increase in homebuilding revenue increased to 12.0% for the nine months ended September 30, 2017, compared to 11.6%the prior-year period. In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in the prior year period. Total SGMay 2020. G&A expense increased $12.6 million, to $193.5$77.4 million for the ninesix months ended SeptemberJune 30, 2017 from $180.92020 compared to $75.5 million infor the prior yearprior-year period.
Interest
Interest, which waswe incurred principally to finance land acquisitions, land development and home construction, totaled $61.7$42.6 million and $50.0$45.3 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. All interest incurred in both periods was capitalized. The increase in interest incurred during the nine months ended September 30, 2017 as compared to the prior year period was primarily attributable to an increase in our debt balance and our weighted average interest rate as a result of the issuance of the 2021 Notes in May of 2016, along with the 2027 Notes in June of 2017.
Income Tax
For the ninesix months ended SeptemberJune 30, 2017,2020, we recorded a tax provision of $69.8$28.0 million based on an effective tax rate of 38.1%24.0%. For the ninesix months ended SeptemberJune 30, 2016,2019, we recorded a tax provision of $77.7$9.2 million based on an effective tax rate of 36.0%25.8%. The increase in the current year income tax rate is due to the expiration of federal energy tax credits in 2017 as well as a negative impact on the tax rate from the expiration of non-qualified stock options. The decrease in provision for income taxes is due to a decrease$80.9 million increase in income before income taxes of $32.6 million to $183.1$116.4 million for the ninesix months ended SeptemberJune 30, 2017,2020, compared to $215.7$35.5 million for the prior yearprior-year period.
Financial Services Segment
Income before income taxes from our financial services operations increased to $6.0 million for the six months ended June 30, 2020 compared to $2.9 million for the prior-year period. This increase is due to higher home sales volume in the six months ended June 30, 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 services, 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:
| | | September 30, | | Increase (Decrease) | | June 30, | | | Increase (Decrease) | |
| 2017 | | 2016 | | Amount | | % | | 2020 | | 2019 | | Amount | | % |
Lots Owned | | | | | | | | Lots Owned | | | | | | | |
Maracay Homes | 1,855 |
| | 1,662 |
| | 193 |
| | 12 | % | |
Maracay | | Maracay | 2,070 | | | 2,234 | | | (164) | | | (7) | % |
Pardee Homes | 15,348 |
| | 15,906 |
| | (558 | ) | | (4 | )% | Pardee Homes | 12,622 | | | 13,649 | | | (1,027) | | | (8) | % |
Quadrant Homes | 1,169 |
| | 969 |
| | 200 |
| | 21 | % | Quadrant Homes | 1,010 | | | 853 | | | 157 | | | 18 | % |
Trendmaker Homes | 1,542 |
| | 1,757 |
| | (215 | ) | | (12 | )% | Trendmaker Homes | 2,672 | | | 1,924 | | | 748 | | | 39 | % |
TRI Pointe Homes | 3,117 |
| | 3,048 |
| | 69 |
| | 2 | % | TRI Pointe Homes | 2,497 | | | 2,759 | | | (262) | | | (9) | % |
Winchester Homes | 1,772 |
| | 1,886 |
| | (114 | ) | | (6 | )% | Winchester Homes | 878 | | | 1,211 | | | (333) | | | (27) | % |
Total | 24,803 |
| | 25,228 |
| | (425 | ) | | (2 | )% | Total | 21,749 | | | 22,630 | | | (881) | | | (4) | % |
Lots Controlled(1) | | | | | | | | Lots Controlled(1) | | | | | | | |
Maracay Homes | 751 |
| | 596 |
| | 155 |
| | 26 | % | |
Maracay | | Maracay | 1,420 | | | 1,377 | | | 43 | | | 3 | % |
Pardee Homes | 307 |
| | 1,081 |
| | (774 | ) | | (72 | )% | Pardee Homes | 328 | | | 755 | | | (427) | | | (57) | % |
Quadrant Homes | 516 |
| | 926 |
| | (410 | ) | | (44 | )% | Quadrant Homes | — | | | 589 | | | (589) | | | (100) | % |
Trendmaker Homes | 314 |
| | 373 |
| | (59 | ) | | (16 | )% | Trendmaker Homes | 1,541 | | | 778 | | | 763 | | | 98 | % |
TRI Pointe Homes | 667 |
| | 912 |
| | (245 | ) | | (27 | )% | TRI Pointe Homes | 3,872 | | | 1,646 | | | 2,226 | | | 135 | % |
Winchester Homes | 534 |
| | 597 |
| | (63 | ) | | (11 | )% | Winchester Homes | 890 | | | 342 | | | 548 | | | 160 | % |
Total | 3,089 |
| | 4,485 |
| | (1,396 | ) | | (31 | )% | Total | 8,051 | | | 5,487 | | | 2,564 | | | 47 | % |
Total Lots Owned or Controlled(1) | 27,892 |
| | 29,713 |
| | (1,821 | ) | | (6 | )% | Total Lots Owned or Controlled(1) | 29,800 | | | 28,117 | | | 1,683 | | | 6 | % |
__________
| |
(1)
| As of September 30, 2017 and 2016, lots controlled included lots that were under land or lot option contracts or purchase contracts. |
(1)As of June 30, 2020 and 2019, lots controlled represented lots that were under land or lot option contracts or purchase contracts.
Liquidity and Capital Resources
Overview
Our principal uses of capital for the ninesix months ended SeptemberJune 30, 20172020 were operating expenses, land purchases, land development and home construction. We used funds generated by our operations and available borrowings 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 March 2020, we borrowed a total of $500 million under our revolving credit facility to, in part, safeguard our balance sheet as the credit and banking market showed signs of distress in the wake of the COVID-19 outbreak. In June 2020, we determined that any concerns regarding near term access to liquidity had sufficiently receded and, as a result, we repaid all outstanding amounts under our revolving credit facility. While the current economic environment resulting from the COVID-19 pandemic 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 andoperations. While acquiring desirable land positions in orderis critical to maintainour long-term growth initiatives, under the current conditions we are focused on maintaining a strong balance sheet and keep us poised for growth.while maximizing flexibility as to future land spend. As of SeptemberJune 30, 2017,2020, we had total liquidity of $554.6 million,$1.0 billion, including cash and cash equivalents of $162.4$474.5 million and $392.2$559.4 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 abilityavailability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service. Our charter does not contain a limitation on the amount of debt we may incur and our board of directors may change our target debt levels at any time without the approval of our stockholders.
Senior Notes
In June 2020, TRI Pointe Group issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15.
In June 2017, TRI Pointe Group issued the$300 million aggregate principal amount of 5.250% Senior Notes due 2027 Notes(the “2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance waswere $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior2021 Notes due 2021 (the “2021 Notes”) at 99.44% of their aggregate principal amount. Net proceeds of this issuance waswere $293.9 million, after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.
TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the $450 million aggregate principal amount of 4.375% Senior Notes due 2019 (“2019 Notes”) and $450 million aggregate principal amount of 5.875% Senior Notes due 2024 (“2024(the “2024 Notes”). The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering were $861.3of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The 2019 Notes and 2024 Notes mature on June 15, 2019 and June 15, 2024. Interest is2024, with interest payable semiannually in arrears on June 15 and December 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 of SeptemberJune 30, 2017, no principal has been paid on2020, we were in compliance with the covenants required by our Senior Notes.
Loans Payable
On March 29, 2019, Notes, 2021 Notes, 2024 Noteswe entered into a Second Amended and 2027 Notes (together, the "Senior Notes"Restated Credit Agreement (the “Credit Agreement”), which amended and there was $21.1 million of capitalized debt financing costs, included in senior notes, net onrestated our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $22.1 millionAmended and $10.7 millionRestated Credit Agreement, dated as of September 30, 2017 and December 31, 2016, respectively.
Unsecured RevolvingJuly 7, 2015. The Credit Facility
On June 20, 2017, the Company modified its existing unsecured (as defined below), which matures on March 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 extenddraw the full $250 million from the Term Facility in June 2019 in connection with the maturity date by two years to May 18, 2021, while decreasingof the total commitments under4.375% Senior Notes that matured on June 15, 2019. We may increase the Credit Facility to $600 million from $625 million. In addition,not more than $1 billion in the Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the facility in twelve-month increments, subject to theaggregate, at our request, upon satisfaction of certainspecified conditions. The CreditRevolving Facility contains a sublimit of $75 million for letters of credit. The CompanyWe may borrow under the CreditRevolving Facility in the ordinary course of business to repay senior notes and fund itsour operations, including itsour land acquisition, land development and homebuilding activities. Borrowings under the CreditRevolving Facility will be governed by, among other things, a borrowing base. The Credit Facility contains customary affirmative and negative covenants, including financial covenants relating to consolidated tangible net worth, leverage, and liquidity or interest coverage. 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 of SeptemberJune 30, 2017, the2020, we had no outstanding balancedebt under the CreditRevolving Facility was $200.0 million with an interest rate 2.99% per annum and $392.2there was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of credit. As of June 30, 2020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there were $3.7 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 $488,000 and $1.2 million as of June 30, 2020 and December 31, 2019, respectively.
At SeptemberJune 30, 2017,2020 and December 31, 2019, we had outstanding letters of credit of $7.8 million.$40.6 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):
| | | | | | | | | | | |
| Actual at June 30, | | Covenant Requirement at June 30, |
Financial Covenants | 2020 | | 2020 |
Consolidated Tangible Net Worth | $ | 2,016,173 | | | $ | 1,497,799 | |
(Not less than $1.35 billion plus 50% of net income and 50% of the net proceeds from equity offerings after December 31, 2018) | | | |
Leverage Test | 32.4 | % | | ≤55% |
(Not to exceed 55%) | | | |
Interest Coverage Test | 6.0 | | | ≥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 of June 30, 2020, we were in compliance with all of these financial covenants.
Stock Repurchase Program
On February 23, 2017,13, 2020, our board of directors discontinued and cancelled our 2019 Repurchase Program and approved the 2017our 2020 Repurchase Program. On July 25, 2017 our board of directors authorizedProgram, authorizing the repurchase of shares of common stock with an aggregate value of up to an additional $50$200 million of our common stock under the 2017 Repurchase Program, increasing the aggregate authorization from $100 million to $150 million.through March 31, 2021. Purchases of common stock pursuant to the 20172020 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 ofunder the Exchange Act. We are not obligated under the 20172020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the program2020 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. ForDuring the three months ended SeptemberJune 30, 2017,2020, we did not repurchase any shares under the 2020 Repurchase Program. For the six months ended June 30, 2020, we repurchased and retired 975,700an aggregate of 6,558,323 shares of our common stock under this program at a weightedan average price of $12.83 per share$15.55 under the 2019 Repurchase Program and 2020 Repurchase Program for a total cost of $12.5$102.0 million. For the nine months ended September 30, 2017, we repurchased and retired 8,994,705 shares of common stock under this program at a weighted average price of $12.48 per share, for a total cost of $112.2 million.
Covenant Compliance
Under our 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):
|
| | | | | | | |
| Actual at September 30, | | Covenant Requirement at September 30, |
Financial Covenants | 2017 | | 2017 |
Consolidated Tangible Net Worth | $ | 1,681,335 |
| | $ | 1,152,489 |
|
(Not less than $1.1 billion plus 50% of net income and 50% of the net proceeds from equity offerings after March 31, 2017) | | | |
|
Leverage Test | 47.7 | % | | ≤55% |
|
(Not to exceed 55%) | | | |
|
Interest Coverage Test | 4.3 |
| | ≥1.5 |
|
(Not less than 1.5:1.0) | | | |
|
As of September 30, 2017, we were in compliance with all of these financial covenants.
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):
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Unsecured revolving credit facility | $ | 200,000 |
| | $ | 200,000 |
|
Seller financed loans | — |
| | 13,726 |
|
Senior Notes | 1,469,558 |
| | 1,168,307 |
|
Total debt | 1,669,558 |
| | 1,382,033 |
|
Stockholders’ equity | 1,842,429 |
| | 1,829,447 |
|
Total capital | $ | 3,511,987 |
| | $ | 3,211,480 |
|
Ratio of debt-to-capital(1) | 47.5 | % | | 43.0 | % |
| | | |
Total debt | $ | 1,669,558 |
| | $ | 1,382,033 |
|
Less: Cash and cash equivalents | (162,396 | ) | | (208,657 | ) |
Net debt | 1,507,162 |
| | 1,173,376 |
|
Stockholders’ equity | 1,842,429 |
| | 1,829,447 |
|
Net capital | $ | 3,349,591 |
| | $ | 3,002,823 |
|
Ratio of net debt-to-net capital(2) | 45.0 | % | | 39.1 | % |
__________
| |
(1)
| The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus equity. |
| |
(2)
| The ratio of net debt-to-net capital is a non-GAAP 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 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. |
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Loans Payable | $ | 250,000 | | | $ | 250,000 | |
Senior Notes | 1,166,189 | | | 1,033,985 | |
Total debt | 1,416,189 | | | 1,283,985 | |
Stockholders’ equity | 2,175,799 | | | 2,186,530 | |
Total capital | $ | 3,591,988 | | | $ | 3,470,515 | |
Ratio of debt-to-capital(1) | 39.4 | % | | 37.0 | % |
| | | |
Total debt | $ | 1,416,189 | | | $ | 1,283,985 | |
Less: Cash and cash equivalents | (474,545) | | | (329,011) | |
Net debt | 941,644 | | | 954,974 | |
Stockholders’ equity | 2,175,799 | | | 2,186,530 | |
Net capital | $ | 3,117,443 | | | $ | 3,141,504 | |
Ratio of net debt-to-net capital(2) | 30.2 | % | | 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—NineSix Months Ended SeptemberJune 30, 20172020 Compared to NineSix Months Ended SeptemberJune 30, 20162019
For the ninesix months ended SeptemberJune 30, 20172020 as compared to the ninesix months ended SeptemberJune 30, 2016, the comparison of cash flows is as follows:2019:
•Net cash used inprovided by operating activities decreasedincreased by $50.7$270.2 million to $210.7$166.2 million for the ninesix months ended SeptemberJune 30, 2017,2020, from $261.3net cash used of $103.9 million for the ninesix months ended SeptemberJune 30, 2016.2019. The change was comprised of offsetting activity, including (i) a decrease in cash used for real estate inventory purchases of $104.6 million, (ii) an increase in real estate inventory of $401.3net income to $88.4 million for the six months ended June 30, 2020 compared to $26.3 million in 2017the prior-year period, (iii) a decrease in cash used for accrued expenses and other liabilities of $75.2 million to $5.8 million in the six months ended June 30, 2020 compared to an increase of $442.7$81.0 million in 2016,the prior-year period, (iv) offset by (ii) decrease in net income of $24.7 million in 2017 compared to the prior year period, and (iii) other offsetting activity including changes in other assets, receivables, accounts payable, deferred income taxes and accrued expenses.returns on investments in unconsolidated entities.
•Net cash used in investing activities was $3.1$37.7 million for the ninesix months ended SeptemberJune 30, 2017,2020, compared to $2.1$13.8 million for the prior year period in 2016.prior-year period. The increase in cash used in investing activities was due mainly to increasedan increase in investments in unconsolidated entities.
•Net cash provided by financing activities decreased to $167.5was $17.0 million for the ninesix months ending Septemberended June 30, 2017, from $177.62020, compared to net cash provided by financing activities of $11.6 million for the same periodprior-year period. Net cash provided by financing activities in the prior year. The changecurrent-year period was primarilycomprised of the issuance of $350 million principal amount of 2028 Notes, of which we used approximately $216 million to purchase a resultportion of higherour 2021 Notes pursuant to a tender offer, resulting in a net borrowings from debtborrowing of $280.3 million during the nine months ended September 30, 2017, compared to $209.2 million for the nine months ended September 30, 2016,approximately $134 million. This activity was offset by higher$102.0 million of cash used for share repurchases of $112.2 million duringfor the nine months ended September 30, 2017,current-year period, compared to $25.1 millionno similar cash transactions for the nine months ended September 30, 2016.prior-year period.
As of September 30, 2017, our cash and cash equivalents balance was $162.4 million.
Off-Balance Sheet Arrangements and Contractual Obligations
In the ordinary course of business, we enter into land and lot optionpurchase 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. OptionThese 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 SeptemberJune 30, 2017,2020, we had $27.1$81.7 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 $355.4$816.2 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 option takedownsuch 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.
As of September 30, 2017, we had total liquidity of $554.6 million, including cash of $162.4 million and $392.2 million of availability under our Credit Facility after considering the borrowing base provisions and outstanding letters of credit.
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.industry and the impacts of the COVID-19 pandemic.
Description of Projects and Communities underUnder Development
The following table presents project information relating to each of our markets as of SeptemberJune 30, 20172020 and includes informationinformation on current projects under development where we are building and selling homes.
Maracay
Maracay Homes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) |
Phoenix, Arizona | | | | | | | | | | | | | |
City of Buckeye: | | | | | | | | | | | | | |
Arroyo Seco | 2020 | | 44 | | | — | | | 44 | | | 20 | | | — | | | $414 - $478 |
City of Chandler: | | | | | | | | | | | | | |
Mission Estates | 2019 | | 26 | | | 21 | | | 5 | | | 5 | | | 9 | | | $537 - $598 |
Windermere Ranch | 2019 | | 91 | | | 39 | | | 52 | | | 34 | | | 19 | | | $532 - $572 |
Canopy North | 2020 | | 129 | | | — | | | 12 | | | — | | | — | | | $471 - $540 |
Canopy South | 2020 | | 112 | | | — | | | 11 | | | — | | | — | | | $556 - $578 |
City of Gilbert: | | | | | | | | | | | | | |
Lakes At Annecy | 2019 | | 216 | | | 66 | | | 150 | | | 47 | | | 30 | | | $289 - $363 |
Annecy P3 | 2021 | | 251 | | | — | | | 251 | | | — | | | — | | | $259 - $331 |
Lakeview Trails | 2019 | | 92 | | | 64 | | | 28 | | | 20 | | | 23 | | | $570 - $655 |
Lakeview Trails II | 2021 | | 68 | | | — | | | 68 | | | 6 | | | — | | | $570 - $655 |
Copper Bend | 2020 | | 38 | | | 9 | | | 29 | | | 21 | | | 9 | | | $492 - $511 |
Avocet at Waterston | 2020 | | 115 | | | — | | | 115 | | | 24 | | | — | | | $526 - $611 |
Brighton at Waterston | 2020 | | 88 | | | — | | | 88 | | | 24 | | | — | | | $632 - $676 |
Domaine at Waterston | 2020 | | 128 | | | — | | | 128 | | | 18 | | | — | | | $774 - $819 |
City of Goodyear: | | | | | | | | | | | | | |
Villages at Rio Paseo | 2018 | | 117 | | | 101 | | | 16 | | | 7 | | | 40 | | | $204 - $234 |
Cottages at Rio Paseo | 2018 | | 93 | | | 84 | | | 9 | | | 4 | | | 3 | | | $243 - $264 |
Sedella | 2021 | | 75 | | | — | | | 75 | | | — | | | — | | | $441 - $521 |
City of Mesa: | | | | | | | | | | | | | |
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 | | | 191 | | | 81 | | | 22 | | | 29 | | | $530 - $616 |
Enclave at The Meadows | 2018 | | 126 | | | 98 | | | 28 | | | 21 | | | 28 | | | $417 - $512 |
Deseo | 2019 | | 94 | | | 23 | | | 71 | | | 34 | | | 17 | | | $528 - $622 |
City of Phoenix: | | | | | | | | | | | | | |
Loma @ Avance | 2019 | | 124 | | | 47 | | | 77 | | | 17 | | | 25 | | | $400 - $459 |
Ranger @ Avance | 2019 | | 145 | | | 28 | | | 117 | | | 33 | | | 26 | | | $439 - $511 |
Piedmont @ Avance | 2019 | | 99 | | | 21 | | | 78 | | | 16 | | | 19 | | | $515 - $530 |
Alta @ Avance | 2020 | | 26 | | | 5 | | | 21 | | | 9 | | | 5 | | | $630 - $659 |
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 | | | 29 | | | — | | | $494 - $514 |
Pathfinder North At Spur Cross | 2020 | | 65 | | | 1 | | | 64 | | | 16 | | | 1 | | | $575 - $589 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 20 | | | |
Phoenix, Arizona Total | | | 3,154 | | | 866 | | | 2,070 | | | 427 | | | 303 | | | |
Tucson, Arizona | | | | | | | | | | | | | |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 2 | | | |
Tucson, Arizona Total | | | — | | | — | | | — | | | — | | | 2 | | | |
Maracay Total | | | 3,154 | | | 866 | | | 2,070 | | | 427 | | | 305 | | | |
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
Phoenix, Arizona | | | | | | | | | | | | | |
City of Buckeye: | | | | | | | | | | | | | |
Verrado Palisades | 2015 | | 63 |
| | 55 |
| | 8 |
| | 6 |
| | 22 |
| | $301 - $374 |
Verrado Victory | 2015 | | 98 |
| | 43 |
| | 55 |
| | 15 |
| | 13 |
| | $363 - $396 |
City of Chandler: | | | | | | | | | | | | | |
Sendera Place | 2015 | | 79 |
| | 79 |
| | — |
| | — |
| | 21 |
| | $277 - $324 |
Hawthorn Manor | 2017 | | 84 |
| | 12 |
| | 72 |
| | 31 |
| | 12 |
| | $517 - $559 |
Mission Estates | 2019 | | 26 |
| | — |
| | 26 |
| | — |
| | — |
| | $545 - $570 |
City of Gilbert: | | | | | | | | | | | | | |
Marquis at Morrison Ranch | 2016 | | 66 |
| | 61 |
| | 5 |
| | 3 |
| | 25 |
| | $414 - $501 |
Artisan at Morrison Ranch | 2016 | | 105 |
| | 69 |
| | 36 |
| | 20 |
| | 34 |
| | $339 - $392 |
The Preserve at Adora Trails | 2017 | | 82 |
| | 11 |
| | 71 |
| | 30 |
| | 11 |
| | $408 - $451 |
Marathon Ranch | 2018 | | 63 |
| | — |
| | 63 |
| | — |
| | — |
| | $486 - $535 |
Lakes At Annecy | 2018 | | 216 |
| | — |
| | 216 |
| | — |
| | — |
| | $276 - $309 |
Lakeview Trails | 2019 | | 92 |
| | — |
| | 92 |
| | — |
| | — |
| | $451 - $511 |
City of Goodyear: | | | | | | | | | | | | | |
Rio Paseo Villages | 2018 | | 117 |
| | — |
| | 117 |
| | — |
| | — |
| | $213 - $227 |
Rio Paseo Cottages | 2018 | | 93 |
| | — |
| | 93 |
| | — |
| | — |
| | $253 - $271 |
City of Mesa: | | | | | | | | | | | | | |
Kinetic Point at Eastmark | 2013 | | 80 |
| | 77 |
| | 3 |
| | — |
| | 2 |
| | $294 - $373 |
Lumiere Garden at Eastmark | 2013 | | 85 |
| | 82 |
| | 3 |
| | 3 |
| | 7 |
| | $332 - $409 |
Aileron Square at Eastmark | 2016 | | 58 |
| | 46 |
| | 12 |
| | 12 |
| | 22 |
| | $332 - $409 |
Curie Court at Eastmark | 2016 | | 106 |
| | 50 |
| | 56 |
| | 26 |
| | 20 |
| | $294 - $373 |
Palladium Point | 2016 | | 53 |
| | 22 |
| | 31 |
| | 24 |
| | 18 |
| | $321 - $390 |
The Vista at Granite Crossing | 2018 | | 37 |
| | — |
| | 37 |
| | — |
| | — |
| | $412 - $488 |
Town of Peoria: | | | | | | | | | | | | | |
The Reserve at Plaza del Rio | 2013 | | 162 |
| | 162 |
| | — |
| | — |
| | 27 |
| | $227 - $270 |
Maracay at Northlands | 2014 | | 90 |
| | 90 |
| | — |
| | — |
| | 13 |
| | $330 - $411 |
Legacy at The Meadows | 2017 | | 74 |
| | 19 |
| | 55 |
| | 25 |
| | 19 |
| | $415 - $441 |
Estates at The Meadows | 2017 | | 272 |
| | 27 |
| | 245 |
| | 31 |
| | 27 |
| | $471 - $545 |
Enclave at The Meadows | 2018 | | 126 |
| | — |
| | 126 |
| | 5 |
| | — |
| | $377 - $472 |
City of Phoenix: | | | | | | | | | | | | | |
Navarro Groves | 2018 | | 54 |
| | — |
| | 54 |
| | — |
| | — |
| | $402 - $447 |
Vistal | 2019 | | 204 |
| | — |
| | 204 |
| | — |
| | — |
| | $336 - $598 |
Town of Queen Creek: | | | | | | | | | | | | | |
The Preserve at Hastings Farms | 2014 | | 89 |
| | 89 |
| | — |
| | — |
| | 1 |
| | $300 - $385 |
Villagio | 2013 | | 135 |
| | 135 |
| | — |
| | — |
| | 6 |
| | $291 - $352 |
Phoenix, Arizona Total | | | 2,809 |
| | 1,129 |
| | 1,680 |
| | 231 |
| | 300 |
| | |
Tucson, Arizona | | | | | | | | | | | | | |
Marana: | | | | | | | | | | | | | |
Tortolita Vistas | 2014 | | 55 |
| | 55 |
| | — |
| | — |
| | 14 |
| | $458 - $515 |
Oro Valley: | | | | | | | | | | | | | |
Rancho del Cobre | 2014 | | 68 |
| | 66 |
| | 2 |
| | — |
| | 11 |
| | $410 - $478 |
Desert Crest - Center Pointe Vistoso | 2016 | | 103 |
| | 40 |
| | 63 |
| | 17 |
| | 27 |
| | $257 - $302 |
The Cove - Center Pointe Vistoso | 2016 | | 83 |
| | 37 |
| | 46 |
| | 24 |
| | 19 |
| | $344 - $404 |
Summit N & S - Center Pointe Vistoso | 2016 | | 88 |
| | 55 |
| | 33 |
| | 11 |
| | 32 |
| | $393 - $428 |
The Pinnacle - Center Pointe Vistoso | 2016 | | 69 |
| | 51 |
| | 18 |
| | 12 |
| | 29 |
| | $446 - $478 |
Tucson: | | | | | | | | | | | | | |
Ranches at Santa Catalina | 2016 | | 34 |
| | 21 |
| | 13 |
| | 10 |
| | 15 |
| | $414 - $460 |
Tucson, Arizona Total | | | 500 |
| | 325 |
| | 175 |
| | 74 |
| | 147 |
| | |
Maracay Total | | | 3,309 |
| | 1,454 |
| | 1,855 |
| | 305 |
| | 447 |
| | |
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
California | | | | | | | | | | | | | |
San Diego County: | | | | | | | | | | | | | |
Casabella | 2015 | | 139 |
| | 139 |
| | — |
| | — |
| | 39 |
| | $900 - $1,000 |
Casavia | 2017 | | 83 |
| | 34 |
| | 49 |
| | 47 |
| | 34 |
| | $980 - $1,070 |
Artesana | 2017 | | 56 |
| | 11 |
| | 45 |
| | 33 |
| | 11 |
| | $1,680 - $1,910 |
Almeria | 2017 | | 80 |
| | — |
| | 80 |
| | 18 |
| | — |
| | $1,440 - $1,530 |
Olvera | 2017 | | 84 |
| | — |
| | 84 |
| | 27 |
| | — |
| | $1,310 - $1,425 |
Pacific Highlands Ranch Future | TBD | | 605 |
| | — |
| | 536 |
| | — |
| | — |
| | TBD |
Olive Hill Estate | 2016 | | 37 |
| | 35 |
| | 2 |
| | 2 |
| | 19 |
| | $650 - $770 |
Sandstone (Castlerock) | 2018 | | 81 |
| | — |
| | 81 |
| | — |
| | — |
| | $650 - $680 |
Lake Ridge (Castlerock) | 2018 | | 129 |
| | — |
| | 129 |
| | — |
| | — |
| | $740 - $800 |
Meadowood | TBD | | 844 |
| | — |
| | 844 |
| | — |
| | — |
| | $290 - $590 |
Parkview Condos | 2016 | | 73 |
| | 73 |
| | — |
| | — |
| | 37 |
| | $435 - $515 |
Luna | 2017 | | 96 |
| | 36 |
| | 60 |
| | 48 |
| | 36 |
| | $370 - $470 |
Azul | 2017 | | 121 |
| | 48 |
| | 73 |
| | 45 |
| | 48 |
| | $360 - $460 |
Ocean View Hills Future | 2017 | | 691 |
| | — |
| | 691 |
| | — |
| | — |
| | TBD |
South Otay Mesa | TBD | | 893 |
| | — |
| | 893 |
| | — |
| | — |
| | TBD |
Los Angeles County: | | | | | | | | | | | | | |
Aliento - Verano | 2017 | | 95 |
| | — |
| | 95 |
| | 11 |
| | — |
| | $540 - $660 |
Aliento - Arista | 2017 | | 112 |
| | 11 |
| | 101 |
| | 25 |
| | 11 |
| | $695 - $760 |
Aliento - 55x100 | 2018 | | 94 |
| | — |
| | 94 |
| | — |
| | — |
| | TBD |
Aliento - 70x100 | 2018 | | 67 |
| | — |
| | 67 |
| | — |
| | — |
| | TBD |
Skyline Ranch | TBD | | 1,220 |
| | — |
| | 1,220 |
| | — |
| | — |
| | $550 - $810 |
Riverside County: | | | | | | | | | | | | | |
Meadow Glen | 2014 | | 142 |
| | 142 |
| | — |
| | — |
| | 2 |
| | $350 - $410 |
Senterra | 2016 | | 82 |
| | 61 |
| | 21 |
| | 16 |
| | 36 |
| | $415 - $480 |
Vantage | 2016 | | 83 |
| | 40 |
| | 43 |
| | 11 |
| | 25 |
| | $370 - $390 |
Viewpoint | 2016 | | 75 |
| | 69 |
| | 6 |
| | 4 |
| | 51 |
| | $305 - $330 |
Overlook | 2016 | | 112 |
| | 60 |
| | 52 |
| | 33 |
| | 36 |
| | $315 - $345 |
Aura | 2017 | | 79 |
| | 34 |
| | 45 |
| | 11 |
| | 34 |
| | $350 - $375 |
Starling | 2017 | | 107 |
| | 4 |
| | 103 |
| | 13 |
| | 4 |
| | $410 - $425 |
Canyon Hills Future 70 x 115 | 2018 | | 125 |
| | — |
| | 125 |
| | — |
| | — |
| | TBD |
Tournament Hills Future | TBD | | 268 |
| | — |
| | 268 |
| | — |
| | — |
| | TBD |
Northstar | 2015 | | 102 |
| | 96 |
| | 6 |
| | 4 |
| | 30 |
| | $320 - $340 |
Skycrest | 2015 | | 131 |
| | 90 |
| | 41 |
| | 17 |
| | 22 |
| | $370 - $390 |
Flagstone | 2016 | | 79 |
| | 52 |
| | 27 |
| | 11 |
| | 18 |
| | $420 - $450 |
Lunetta | 2016 | | 89 |
| | 88 |
| | 1 |
| | 1 |
| | 33 |
| | $290 - $320 |
Elara | 2016 | | 215 |
| | 80 |
| | 135 |
| | 39 |
| | 60 |
| | $290 - $310 |
Daybreak | 2017 | | 139 |
| | — |
| | 139 |
| | 29 |
| | — |
| | $325 - $340 |
Cascade | 2017 | | 105 |
| | — |
| | 105 |
| | 17 |
| | — |
| | $296 - $312 |
Abrio | 2018 | | 83 |
| | — |
| | 83 |
| | — |
| | — |
| | TBD |
Beacon | 2018 | | 108 |
| | — |
| | 108 |
| | — |
| | — |
| | TBD |
Sundance Future Active Adult | TBD | | 704 |
| | — |
| | 704 |
| | — |
| | — |
| | TBD |
Sundance Future | TBD | | 101 |
| | — |
| | 101 |
| | — |
| | — |
| | TBD |
Avena | 2017 | | 84 |
| | — |
| | 84 |
| | — |
| | — |
| | $400 - $440 |
Tamarack | 2017 | | 84 |
| | — |
| | 84 |
| | — |
| | — |
| | $430 - $460 |
Centennial | TBD | | 359 |
| | — |
| | 359 |
| | — |
| | — |
| | $375 - $450 |
Banning | TBD | | 4,318 |
| | — |
| | 4,318 |
| | — |
| | — |
| | TBD |
San Joaquin County: | | | | | | | | | | | | | |
Bear Creek | TBD | | 1,252 |
| | — |
| | 1,252 |
| | — |
| | — |
| | TBD |
California Total | | | 14,626 |
| | 1,203 |
| | 13,354 |
| | 462 |
| | 586 |
| | |
Nevada | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) |
California | | | | | | | | | | | | | |
San Diego County: | | | | | | | | | | | | | |
Sendero | 2019 | | 112 | | | 80 | | | 32 | | | 20 | | | 19 | | | $1,470 - $1,600 |
Vista Santa Fe | 2019 | | 44 | | | 30 | | | 14 | | | 13 | | | 12 | | | $1,910 - $2,010 |
Terraza | 2019 | | 81 | | | 70 | | | 11 | | | 11 | | | 24 | | | $1,360 - $1,430 |
Carmel | 2019 | | 105 | | | 62 | | | 43 | | | 12 | | | 15 | | | $1,530 - $1,640 |
Vista Del Mar | 2019 | | 79 | | | 46 | | | 33 | | | 12 | | | 13 | | | $1,670 - $1,800 |
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 | | | 95 | | | 34 | | | 12 | | | 18 | | | $790 - $865 |
Veraz | 2018 | | 111 | | | 74 | | | 37 | | | 13 | | | 28 | | | $425 - $500 |
Solmar | 2019 | | 74 | | | 37 | | | 37 | | | 9 | | | 28 | | | $390 - $485 |
Solmar Sur | 2021 | | 108 | | | — | | | 108 | | | — | | | — | | | $390 - $485 |
Marea | 2020 | | 143 | | | — | | | 143 | | | — | | | — | | | $365 - $435 |
PA61 Townhomes | 2021 | | 170 | | | — | | | 170 | | | — | | | — | | | TBD |
Meadowood | TBD | | 844 | | | — | | | 844 | | | — | | | — | | | $390 - $630 |
South Otay Mesa | TBD | | 893 | | | — | | | 893 | | | — | | | — | | | TBD |
Los Angeles County: | | | | | | | | | | | | | |
Cresta | 2018 | | 67 | | | 42 | | | 25 | | | 11 | | | 8 | | | $830 - $890 |
Verano | 2017 | | 95 | | | 65 | | | 30 | | | 10 | | | 10 | | | $550 - $650 |
Arista | 2017 | | 143 | | | 101 | | | 42 | | | 10 | | | 10 | | | $740 - $800 |
Lyra | 2019 | | 141 | | | 53 | | | 88 | | | 27 | | | 20 | | | $650 - $720 |
Sola | 2019 | | 189 | | | 79 | | | 110 | | | 39 | | | 18 | | | $560 - $610 |
Luna | 2020 | | 114 | | | — | | | 114 | | | 19 | | | — | | | $615 - $660 |
Strata | 2021 | | 292 | | | — | | | 292 | | | — | | | — | | | $550 - $670 |
Skyline Ranch Future | TBD | | 334 | | | — | | | 334 | | | — | | | — | | | TBD |
Riverside County: | | | | | | | | | | | | | |
Canyon Hills Future 70 x 115 | TBD | | 125 | | | — | | | 125 | | | — | | | — | | | TBD |
Westlake | 2020 | | 163 | | | — | | | 163 | | | 26 | | | — | | | $310 - $325 |
Daybreak | 2017 | | 159 | | | 140 | | | 19 | | | 16 | | | 17 | | | $360 - $385 |
Abrio | 2018 | | 113 | | | 89 | | | 24 | | | 16 | | | 19 | | | $415 - $450 |
Cascade | 2017 | | 194 | | | 169 | | | 25 | | | 21 | | | 11 | | | $335 - $360 |
Beacon | 2018 | | 106 | | | 83 | | | 23 | | | 17 | | | 12 | | | $510 - $560 |
Alisio | 2019 | | 84 | | | 69 | | | 15 | | | 14 | | | 18 | | | $300 - $335 |
Elan | 2019 | | 96 | | | 18 | | | 78 | | | 17 | | | 6 | | | $390 - $425 |
Mira | 2019 | | 95 | | | 13 | | | 82 | | | 9 | | | 3 | | | $365 - $395 |
Avid | 2019 | | 68 | | | 21 | | | 47 | | | 4 | | | 4 | | | $340 - $365 |
Vita | 2019 | | 115 | | | 32 | | | 83 | | | 11 | | | 4 | | | $315 - $340 |
Sundance Future Active Adult | TBD | | 330 | | | — | | | 330 | | | — | | | — | | | TBD |
Avena | 2018 | | 84 | | | 66 | | | 18 | | | 10 | | | 14 | | | $455 - $485 |
Braeburn | 2018 | | 82 | | | 65 | | | 17 | | | 13 | | | 20 | | | $415 - $450 |
Overland at Spencer's Crossing | 2021 | | 85 | | | — | | | 85 | | | — | | | — | | | $485 - $515 |
Canvas | 2018 | | 89 | | | 85 | | | 4 | | | 4 | | | 27 | | | $405 - $430 |
Kadence | 2018 | | 85 | | | 64 | | | 21 | | | 15 | | | 15 | | | $420 - $435 |
Newpark | 2018 | | 93 | | | 56 | | | 37 | | | 17 | | | 14 | | | $445 - $490 |
Easton | 2018 | | 92 | | | 46 | | | 46 | | | 16 | | | 12 | | | $480 - $530 |
Compass at Audie Murphy Ranch | 2021 | | 52 | | | — | | | 52 | | | — | | | — | | | $450 - $510 |
Tournament Hills Future | TBD | | 268 | | | — | | | 268 | | | — | | | — | | | TBD |
Terramor | 2022 | | 75 | | | — | | | 75 | | | — | | | — | | | TBD |
Arroyo | 2020 | | 110 | | | — | | | 110 | | | 38 | | | — | | | $305 - $350 |
Cienega | 2020 | | 106 | | | — | | | 106 | | | 41 | | | — | | | $310 - $345 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Centerstone | 2021 | | 120 | | | — | | | 120 | | | — | | | — | | | $320 - $335 |
Landmark | 2021 | | 130 | | | — | | | 130 | | | — | | | — | | | $340 - $365 |
Horizon | 2021 | | 130 | | | — | | | 130 | | | — | | | — | | | $395 - $420 |
Atwell Future | TBD | | 3,742 | | | — | | | 3,742 | | | — | | | — | | | TBD |
San Joaquin County: | | | | | | | | | | | | | |
Bear Creek | TBD | | 1,252 | | | — | | | 1,252 | | | — | | | — | | | TBD |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 11 | | | |
California Total | | | 12,681 | | | 1,850 | | | 10,831 | | | 523 | | | 430 | | | |
Nevada | | | | | | | | | | | | | |
Clark County: | | | | | | | | | | | | | |
Tera Luna | 2018 | | 116 | | | 39 | | | 77 | | | 7 | | | 10 | | | $560 - $670 |
Linea | 2018 | | 123 | | | 121 | | | 2 | | | 2 | | | 13 | | | $370 - $410 |
Strada 2.0 | 2019 | | 62 | | | 17 | | | 45 | | | 29 | | | 12 | | | $460 - $550 |
Strada III | 2021 | | 30 | | | — | | | 30 | | | — | | | — | | | |
Arden | 2020 | | 79 | | | — | | | 79 | | | 7 | | | — | | | $390 - $430 |
Capri | 2020 | | 114 | | | — | | | 114 | | | 13 | | | — | | | $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 | | | 48 | | | 26 | | | 12 | | | 23 | | | $305 - $335 |
Midnight Ridge | 2020 | | 104 | | | 9 | | | 95 | | | 26 | | | 9 | | | $525 - $645 |
Axis | 2017 | | 52 | | | 53 | | | — | | | — | | | 3 | | | $860 - $1,125 |
Axis at the Canyons | 2019 | | 26 | | | 15 | | | 10 | | | 4 | | | 3 | | | $800 - $920 |
Cobalt | 2017 | | 107 | | | 86 | | | 21 | | | 4 | | | 12 | | | $380 - $460 |
Onyx | 2018 | | 88 | | | 65 | | | 23 | | | 19 | | | 13 | | | $470 - $510 |
Pivot | 2017 | | 88 | | | 87 | | | 1 | | | — | | | 1 | | | $405 - $470 |
Nova Ridge | 2017 | | 78 | | | 74 | | | 4 | | | — | | | 5 | | | $670 - $850 |
Nova Ridge at the Cliffs | 2019 | | 30 | | | 7 | | | 23 | | | 6 | | | 4 | | | $670 - $850 |
Corterra | 2018 | | 53 | | | 44 | | | 9 | | | 3 | | | 10 | | | $455 - $545 |
Highline | 2020 | | 59 | | | 1 | | | 58 | | | 8 | | | 1 | | | $470 - $570 |
Indogo | 2018 | | 202 | | | 101 | | | 101 | | | 15 | | | 24 | | | $300 - $370 |
Larimar | 2018 | | 106 | | | 49 | | | 57 | | | 8 | | | 18 | | | $355 - $420 |
Blackstone | 2018 | | 105 | | | 60 | | | 45 | | | 10 | | | 11 | | | $410 - $510 |
35 x 90 Product | TBD | | 140 | | | — | | | 140 | | | — | | | — | | | TBD |
Cirrus | 2019 | | 54 | | | 20 | | | 34 | | | 15 | | | 13 | | | $370 - $410 |
Sandalwood | 2020 | | 116 | | | — | | | 116 | | | 28 | | | — | | | $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 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 4 | | | |
Nevada Total | | | 2,687 | | | 896 | | | 1,791 | | | 216 | | | 189 | | | |
Pardee Total | | | 15,368 | | | 2,746 | | | 12,622 | | | 739 | | | 619 | | | |
|
| | | | | | | | | | | | | | | | | | |
Clark County: | | | | | | | | | | | | | |
LivingSmart Sandstone | 2013 | | 145 |
| | 145 |
| | — |
| | — |
| | 1 |
| | $228 - $255 |
North Peak | 2015 | | 171 |
| | 96 |
| | 75 |
| | 24 |
| | 39 |
| | $299 - $350 |
Castle Rock | 2015 | | 188 |
| | 98 |
| | 90 |
| | 18 |
| | 37 |
| | $340 - $430 |
Camino | 2016 | | 86 |
| | 82 |
| | 4 |
| | 4 |
| | 59 |
| | $255 - $270 |
Solano | 2014 | | 132 |
| | 132 |
| | — |
| | — |
| | 15 |
| | $300 - $335 |
Alterra | 2014 | | 47 |
| | 47 |
| | — |
| | — |
| | 2 |
| | $425 - $505 |
Bella Verdi | 2015 | | 57 |
| | 49 |
| | 8 |
| | 4 |
| | 2 |
| | $400 - $440 |
Escala | 2016 | | 103 |
| | 39 |
| | 64 |
| | 10 |
| | 20 |
| | $520 - $590 |
Montero | 2016 | | 77 |
| | 33 |
| | 44 |
| | 26 |
| | 25 |
| | $420 - $500 |
Strada | 2017 | | 119 |
| | 13 |
| | 106 |
| | 11 |
| | 13 |
| | $405 - $440 |
Linea | 2018 | | 87 |
| | — |
| | 87 |
| | — |
| | — |
| | $300 - $350 |
Meridian | 2016 | | 62 |
| | 30 |
| | 32 |
| | 20 |
| | 10 |
| | $590 - $680 |
Encanto | 2016 | | 51 |
| | 26 |
| | 25 |
| | 8 |
| | 15 |
| | $470 - $525 |
Luma | 2017 | | 71 |
| | — |
| | 71 |
| | — |
| | — |
| | $470 - $526 |
Encanto Townhomes | 2018 | | 70 |
| | — |
| | 70 |
| | — |
| | — |
| | TBD |
Horizon Terrace | 2014 | | 165 |
| | 124 |
| | 41 |
| | 14 |
| | 30 |
| | $410 - $465 |
Horizon Valle Verde | 2018 | | 53 |
| | — |
| | 53 |
| | — |
| | — |
| | $450 - $470 |
Summerglen | 2014 | | 140 |
| | 140 |
| | — |
| | — |
| | 27 |
| | $300 - $305 |
Keystone | 2017 | | 70 |
| | 15 |
| | 55 |
| | 9 |
| | 14 |
| | $450 - $540 |
Cobalt | 2017 | | 107 |
| | — |
| | 107 |
| | 5 |
| | — |
| | $355 - $420 |
Axis | 2017 | | 78 |
| | 1 |
| | 77 |
| | 16 |
| | 1 |
| | $825 - $1,035 |
The Canyons at MacDonald Ranch - R | 2017 | | 22 |
| | — |
| | 22 |
| | — |
| | — |
| | $515 - $585 |
Pivot | 2017 | | 88 |
| | — |
| | 88 |
| | 8 |
| | — |
| | $400 - $440 |
Strada at Pivot | 2017 | | 27 |
| | — |
| | 27 |
| | 7 |
| | — |
| | $440 - $475 |
Nova Ridge | 2018 | | 108 |
| | — |
| | 108 |
| | — |
| | — |
| | $620 - $760 |
Tera Luna | 2017 | | 116 |
| | — |
| | 116 |
| | — |
| | — |
| | $540 - $590 |
Onyx | 2018 | | 88 |
| | — |
| | 88 |
| | — |
| | — |
| | $425 - $465 |
Tule Springs | TBD | | 339 |
| | — |
| | 339 |
| | — |
| | — |
| | TBD |
Cactus/Jones | TBD | | 54 |
| | — |
| | 54 |
| | — |
| | — |
| | TBD |
Commerce & Deer Springs | TBD | | 143 |
| | — |
| | 143 |
| | — |
| | — |
| | TBD |
Nevada Total | | | 3,064 |
| | 1,070 |
| | 1,994 |
| | 184 |
| | 310 |
| | |
Pardee Total | | | 17,690 |
| | 2,273 |
| | 15,348 |
| | 646 |
| | 896 |
| | |
Quadrant Homes
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) |
Washington | | | | | | | | | | | | | |
Snohomish County: | | | | | | | | | | | | | |
Grove North, Bothell | 2019 | | 43 | | | 21 | | | 22 | | | 22 | | | 10 | | | $780 - $910 |
Trailside at Meadowdale Beach, Edmonds | 2021 | | 38 | | | — | | | 38 | | | — | | | — | | | $735 - $785 |
Cypress, Lynnwood | 2021 | | 42 | | | — | | | 42 | | | — | | | — | | | $535 - $655 |
King County: | | | | | | | | | | | | | |
Vareze, Kirkland | 2020 | | 82 | | | 14 | | | 68 | | | 28 | | | 14 | | | $720 - $895 |
Cedar Landing, North Bend | 2019 | | 138 | | | 35 | | | 103 | | | 47 | | | 11 | | | $780 - $920 |
Monarch Ridge, Sammamish | 2019 | | 59 | | | 20 | | | 39 | | | 34 | | | 7 | | | $1,000 - $1,285 |
Overlook at Summit Park, Maple Valley | 2019 | | 126 | | | 43 | | | 83 | | | 30 | | | 14 | | | $595 - $765 |
Aurea, Sammamish | 2019 | | 41 | | | 21 | | | 20 | | | 15 | | | 12 | | | $675 - $821 |
Aldea, Newcastle | 2019 | | 129 | | | 52 | | | 77 | | | 18 | | | 14 | | | $685 - $838 |
Lario, Bellevue | 2020 | | 46 | | | 7 | | | 39 | | | 25 | | | 7 | | | $905 - $1,197 |
Lakeview Crest, Renton | 2020 | | 17 | | | — | | | 17 | | | 1 | | | — | | | $1,400 - $1,875 |
Eagles Glen, Sammamish | 2020 | | 10 | | | — | | | 10 | | | 5 | | | — | | | $1,150 - $1,525 |
Willows 124, Redmond | 2023 | | 173 | | | — | | | 173 | | | — | | | — | | | $745 - $930 |
Finn Meadows, Kirkland | 2020 | | 10 | | | 2 | | | 8 | | | 3 | | | 2 | | | $1,050 - $1,245 |
Woodlands Reserve, Kirkland | 2022 | | 37 | | | — | | | 37 | | | — | | | — | | | $945 - $1,350 |
Hazelwood Gardens, Newcastle | 2021 | | 15 | | | — | | | 15 | | | — | | | — | | | $1,180 - $1,340 |
Kitsap County: | | | | | | | | | | | | | |
Blue Heron, Poulsbo | 2022 | | 85 | | | — | | | 85 | | | — | | | — | | | $536 - $706 |
McCormick Villages, Port Orchard | 2021 | | 88 | | | — | | | 88 | | | — | | | — | | | $470 - $525 |
Poulsbo Meadows, Poulsbo | 2021 | | 46 | | | — | | | 46 | | | — | | | — | | | $515 - $551 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 1 | | | N/A |
Washington Total | | | 1,225 | | | 215 | | | 1,010 | | | 228 | | | 92 | | | |
Quadrant Total | | | 1,225 | | | 215 | | | 1,010 | | | 228 | | | 92 | | | |
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
Washington | | | | | | | | | | | | | |
Snohomish County: | | | | | | | | | | | | | |
Evergreen Heights, Monroe | 2016 | | 71 |
| | 46 |
| | 25 |
| | 25 |
| | 43 |
| | $459 - $558 |
The Grove at Canyon Park, Bothell | 2017 | | 60 |
| | 9 |
| | 51 |
| | 46 |
| | 9 |
| | $645 - $780 |
Greenstone Heights, Bothell | 2017 | | 41 |
| | — |
| | 41 |
| | 12 |
| | — |
| | $920 - $1,102 |
King County: | | | | | | | | | | | | | |
Viscaia, Bellevue | 2017 | | 18 |
| | 17 |
| | 1 |
| | 1 |
| | 17 |
| | $880 |
Trailside, Redmond | 2017 | | 9 |
| | 2 |
| | 7 |
| | 5 |
| | 2 |
| | $1,119 - $1,317 |
Vareze, Kirkland | 2019 | | 82 |
| | — |
| | 82 |
| | — |
| | — |
| | $661 - $871 |
Parkwood Terrace, Woodinville | 2017 | | 15 |
| | 2 |
| | 13 |
| | 13 |
| | 2 |
| | $759 - $960 |
Hazelwood Ridge, Newcastle | 2017 | | 30 |
| | 3 |
| | 27 |
| | 25 |
| | 3 |
| | $805 - $1,025 |
Inglewood Landing, Sammamish | 2018 | | 21 |
| | — |
| | 21 |
| | — |
| | — |
| | $1,100 - $1,280 |
Jacobs Landing, Issaquah | 2017 | | 20 |
| | — |
| | 20 |
| | 1 |
| | — |
| | $1,160 - $1,289 |
Kirkwood Terrace, Sammamish | 2018 | | 12 |
| | — |
| | 12 |
| | — |
| | — |
| | $1,725 - $2,026 |
English Landing P2, Redmond | 2017 | | 25 |
| | — |
| | 25 |
| | 9 |
| | — |
| | $1,084 - $1,340 |
English Landing P1, Redmond | 2018 | | 50 |
| | — |
| | 50 |
| | — |
| | — |
| | $1,100 - $1,350 |
Cedar Landing, North Bend | 2018 | | 138 |
| | — |
| | 138 |
| | — |
| | — |
| | $660 - $810 |
Monarch Ridge, Sammamish | 2018 | | 59 |
| | — |
| | 59 |
| | — |
| | — |
| | $915 - $1,065 |
Overlook at Summit Park, Maple Valley | 2018 | | 122 |
| | — |
| | 122 |
| | — |
| | — |
| | $600 - $765 |
Ray Meadows, Redmond | 2018 | | 27 |
| | — |
| | 27 |
| | — |
| | — |
| | $1,094 - $1,355 |
Wynstone, Federal Way | TBD | | 4 |
| | — |
| | 4 |
| | — |
| | — |
| | TBD |
Breva, Bellevue | 2017 | | 29 |
| | — |
| | 29 |
| | 15 |
| | — |
| | $777 - $888 |
Canton Crossing, Maple Valley | 2017 | | 51 |
| | 2 |
| | 49 |
| | 14 |
| | 2 |
| | $563 - $655 |
Aurea, Sammamish | 2018 | | 41 |
| | — |
| | 41 |
| | — |
| | — |
| | $670 - $860 |
Aldea (Avalon Townhomes), Newcastle | 2018 | | 129 |
| | — |
| | 129 |
| | — |
| | — |
| | $620 - $885 |
Pierce County: | | | | | | | | | | | | | |
Harbor Hill S-5/6, Gig Harbor | 2017 | | 72 |
| | 12 |
| | 60 |
| | 10 |
| | 12 |
| | $443 - $501 |
Harbor Hill S-2, Gig Harbor | 2017 | | 41 |
| | — |
| | 41 |
| | 5 |
| | — |
| | $425 - $464 |
Kitsap County: | | | | | | | | | | | | | |
Mountain Aire, Poulsbo | 2016 | | 145 |
| | 69 |
| | 76 |
| | 25 |
| | 40 |
| | $412 - $473 |
Winslow Grove, Bainbridge Island | 2018 | | 19 |
| | — |
| | 19 |
| | — |
| | — |
| | $1,067 - $1,212 |
Closed Communities | N/A | | — |
| | — |
| | — |
| | — |
| | 76 |
| | N/A |
Washington Total | | | 1,331 |
| | 162 |
| | 1,169 |
| | 206 |
| | 206 |
| | |
Quadrant Total | | | 1,331 |
| | 162 |
| | 1,169 |
| | 206 |
| | 206 |
| | |
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
Texas | | | | | | | | | | | | | |
Brazoria County: | | | | | | | | | | | | | |
Sedona Lakes, Pearland | 2014 | | 34 |
| | 27 |
| | 7 |
| | 6 |
| | 6 |
| | $380 |
Pomona, Manvel | 2015 | | 49 |
| | 18 |
| | 31 |
| | 8 |
| | 13 |
| | $360 - $455 |
Rise Meridiana | 2016 | | 31 |
| | 14 |
| | 17 |
| | 4 |
| | 13 |
| | $288 - $346 |
Fort Bend County: | | | | | | | | | | | | | |
Cross Creek Ranch 60', Fulshear | 2013 | | 35 |
| | 13 |
| | 22 |
| | 4 |
| | 9 |
| | $370 - $465 |
Cross Creek Ranch 65', Fulshear | 2013 | | 61 |
| | 47 |
| | 14 |
| | 4 |
| | 14 |
| | $429 - $488 |
Cross Creek Ranch 70', Fulshear | 2013 | | 100 |
| | 70 |
| | 30 |
| | 5 |
| | 10 |
| | $485 - $548 |
Cross Creek Ranch 80', Fulshear | 2013 | | 68 |
| | 63 |
| | 5 |
| | 2 |
| | 10 |
| | $551 - $666 |
Cross Creek Ranch 90', Fulshear | 2013 | | 28 |
| | 22 |
| | 6 |
| | 4 |
| | 10 |
| | $654 - $718 |
Villas at Cross Creek Ranch, Fulshear | 2013 | | 101 |
| | 101 |
| | — |
| | — |
| | 1 |
| | $454 - $496 |
Fulshear Run, Richmond | 2016 | | 45 |
| | 11 |
| | 34 |
| | 4 |
| | 10 |
| | $562 - $668 |
Harvest Green 75', Richmond | 2015 | | 21 |
| | 16 |
| | 5 |
| | 2 |
| | 7 |
| | $426 - $500 |
Sienna Plantation 85', Missouri City | 2015 | | 39 |
| | 20 |
| | 19 |
| | 1 |
| | 10 |
| | $546 - $645 |
Villas at Sienna South, Missouri City | 2015 | | 19 |
| | 17 |
| | 2 |
| | 2 |
| | 8 |
| | $383 - $407 |
Lakes of Bella Terra, Richmond | 2013 | | 109 |
| | 109 |
| | — |
| | — |
| | 8 |
| | $465 - $553 |
Villas at Aliana, Richmond | 2013 | | 117 |
| | 98 |
| | 19 |
| | 5 |
| | 11 |
| | $399 - $451 |
Riverstone 55', Sugar Land | 2013 | | 97 |
| | 97 |
| | — |
| | — |
| | 1 |
| | $437 - $467 |
Harris County: | | | | | | | | | | | | | |
Towne Lake Living Views, Cypress | 2013 | | 122 |
| | 122 |
| | — |
| | — |
| | 4 |
| | $468 - $561 |
The Groves, Humble | 2015 | | 72 |
| | 41 |
| | 31 |
| | 2 |
| | 12 |
| | $323 - $524 |
Lakes of Creekside | 2015 | | 21 |
| | 7 |
| | 14 |
| | 1 |
| | 6 |
| | $512 - $585 |
Bridgeland '80, Cypress | 2015 | | 117 |
| | 96 |
| | 21 |
| | 6 |
| | 12 |
| | $522 - $611 |
Bridgeland Patio, Cypress | 2017 | | 30 |
| | 8 |
| | 22 |
| | 10 |
| | 7 |
| | $344 - $413 |
Bridgeland 70' | TBD | | 4 |
| | — |
| | 4 |
| | — |
| | — |
| | TBD |
Villas at Bridgeland 50' | TBD | | 1 |
| | — |
| | 1 |
| | — |
| | — |
| | TBD |
Elyson 70', Cypress | 2017 | | 20 |
| | 4 |
| | 16 |
| | 3 |
| | 4 |
| | $454 - $496 |
Hidden Arbor, Cypress | 2015 | | 129 |
| | 66 |
| | 63 |
| | 26 |
| | 42 |
| | $366 - $586 |
Clear Lake, Houston | 2015 | | 770 |
| | 255 |
| | 515 |
| | 54 |
| | 53 |
| | $330 - $655 |
Montgomery County: | | | | | | | | | | | | | |
Woodtrace, Woodtrace | 2014 | | 39 |
| | 26 |
| | 13 |
| | 3 |
| | 8 |
| | $438 - $480 |
Northgrove, Tomball | 2015 | | 25 |
| | 5 |
| | 20 |
| | — |
| | 4 |
| | $454 - $498 |
Bender's Landing Estates, Spring | 2014 | | 104 |
| | 50 |
| | 54 |
| | 11 |
| | 11 |
| | $468 - $563 |
The Woodlands, Creekside Park | 2015 | | 100 |
| | 29 |
| | 71 |
| | 10 |
| | 15 |
| | $410 - $624 |
Waller County: | | | | | | | | | | | | | |
Cane Island, Katy | 2015 | | 23 |
| | 17 |
| | 6 |
| | 1 |
| | 3 |
| | $525 - $634 |
Mustang Estates | TBD | | 350 |
| | — |
| | 350 |
| | — |
| | — |
| | TBD |
Williamson County: | | | | | | | | | | | | | |
Crystal Falls | 2016 | | 29 |
| | 7 |
| | 22 |
| | 8 |
| | 4 |
| | $460 - $535 |
Rancho Sienna 60' | 2017 | | 26 |
| | 1 |
| | 25 |
| | 4 |
| | 1 |
| | $350 - $422 |
Hays County: | | | | | | | | | | | | | |
Belterra 60', Austin | 2017 | | 28 |
| | 3 |
| | 25 |
| | 7 |
| | 3 |
| | $375 - $466 |
Belterra 80', Austin | 2016 | | 37 |
| | 14 |
| | 23 |
| | 5 |
| | 8 |
| | $535 - $603 |
Headwaters, Dripping Springs | 2017 | | 30 |
| | 3 |
| | 27 |
| | 9 |
| | 3 |
| | $420 - $479 |
Travis County: | | | | | | | | | | | | | |
Lakes Edge 70' | TBD | | 6 |
| | — |
| | 6 |
| | 1 |
| | — |
| | $620 - $806 |
Other: | | | | | | | | | | | | | |
Avanti Custom Homes | 2007 | | 125 |
| | 123 |
| | 2 |
| | 1 |
| | 2 |
| | $480 - $856 |
Texas Total | | | 3,162 |
| | 1,620 |
| | 1,542 |
| | 213 |
| | 343 |
| | |
Trendmaker Homes Total | | | 3,162 |
| | 1,620 |
| | 1,542 |
| | 213 |
| | 343 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) |
Texas | | | | | | | | | | | | | |
Brazoria County: | | | | | | | | | | | | | |
Rise Meridiana | 2016 | | 47 | | | 46 | | | 1 | | | — | | | 3 | | | $348 - $369 |
Fort Bend County: | | | | | | | | | | | | | |
Cross Creek Ranch 60', Fulshear | 2013 | | 48 | | | 26 | | | 22 | | | 3 | | | 14 | | | $431 - $567 |
Cross Creek Ranch 65', Fulshear | 2013 | | 89 | | | 66 | | | 23 | | | 4 | | | 7 | | | $463 - $677 |
Cross Creek Ranch 70', Fulshear | 2013 | | 107 | | | 87 | | | 20 | | | 9 | | | 16 | | | $525 - $663 |
Cross Creek Ranch 80', Fulshear | 2013 | | 71 | | | 67 | | | 4 | | | 3 | | | 18 | | | $664 - $785 |
Cross Creek Ranch 90', Fulshear | 2013 | | 49 | | | 36 | | | 13 | | | 8 | | | 2 | | | $700 - $816 |
Fulshear Run 1/2 Acre, Richmond | 2016 | | 145 | | | 54 | | | 91 | | | — | | | 4 | | | $646 |
Harvest Green 75', Richmond | 2015 | | 63 | | | 52 | | | 11 | | | 6 | | | 9 | | | $454 - $581 |
Sienna Plantation 80', Missouri City | TBD | | 25 | | | — | | | 25 | | | 1 | | | — | | | $573 - $640 |
Sienna Plantation 85', Missouri City | 2015 | | 54 | | | 45 | | | 9 | | | 2 | | | 9 | | | $589 - $636 |
Grayson Woods 60' | 2019 | | 37 | | | 8 | | | 29 | | | 10 | | | 7 | | | $434 - $438 |
Grayson Woods 70' | 2019 | | 26 | | | 10 | | | 16 | | | 10 | | | 8 | | | $502 - $577 |
Katy Gaston | TBD | | 129 | | | — | | | 129 | | | — | | | — | | | TBD |
Harris County: | | | | | | | | | | | | | |
The Groves, Humble | 2015 | | 117 | | | 99 | | | 18 | | | 5 | | | 10 | | | $315 - $371 |
Lakes of Creekside 80' | 2016 | | 17 | | | 15 | | | 2 | | | — | | | 6 | | | $475 - $611 |
Lakes of Creekside 65' | TBD | | 18 | | | — | | | 18 | | | — | | | — | | | $400 - $450 |
Balmoral 50' | 2019 | | 46 | | | 11 | | | 35 | | | 3 | | | 4 | | | $255 - $337 |
Bridgeland '80, Cypress | 2015 | | 141 | | | 120 | | | 21 | | | 8 | | | 12 | | | $621 - $705 |
Bridgeland 70' | 2018 | | 41 | | | 32 | | | 9 | | | 3 | | | 15 | | | $498 - $583 |
Villas at Bridgeland 50' | 2018 | | 48 | | | 20 | | | 28 | | | 2 | | | 4 | | | $350 - $405 |
Falls at Dry Creek | 2019 | | 20 | | | 9 | | | 11 | | | 4 | | | 6 | | | $530 - $685 |
Grant-Cyp-Rosehill | TBD | | 428 | | | — | | | 428 | | | — | | | — | | | TBD |
Hidden Arbor, Cypress (Land) | TBD | | 156 | | | 129 | | | 27 | | | 2 | | | — | | | $365 - $465 |
Clear Lake, Houston (Land) | 2015 | | 772 | | | 661 | | | 111 | | | 28 | | | 65 | | | $439 - $707 |
Northgrove, Tomball | TBD | | 25 | | | 7 | | | 18 | | | — | | | — | | | TBD |
The Woodlands, Creekside Park | 2015 | | 131 | | | 128 | | | 3 | | | 1 | | | 11 | | | $450 - $459 |
Montgomery County: | | | | | | | | | | | | | |
Grand Central Park | TBD | | 17 | | | — | | | 17 | | | — | | | — | | | $299 - $340 |
Rodriguez | TBD | | 342 | | | — | | | 342 | | | — | | | — | | | TBD |
Royal Brook, Porter | 2019 | | 26 | | | 7 | | | 19 | | | 4 | | | 4 | | | $349 - $450 |
Waller County: | | | | | | | | | | | | | |
LakeHouse | 2019 | | 351 | | | 68 | | | 283 | | | 27 | | | 37 | | | $269 - $619 |
Williamson County: | | | | | | | | | | | | | |
Crystal Falls - Lots for Sale | 2016 | | 29 | | | 25 | | | 4 | | | — | | | — | | | TBD |
Rancho Sienna 60' | 2016 | | 51 | | | 41 | | | 10 | | | 3 | | | 8 | | | $380 - $500 |
Highlands at Mayfield Ranch 50' | 2019 | | 63 | | | 42 | | | 21 | | | 23 | | | 12 | | | $303 - $420 |
Highlands at Mayfield Ranch 60' | 2019 | | 46 | | | 24 | | | 22 | | | 18 | | | 10 | | | $351 - $485 |
Meyer Ranch | TBD | | 10 | | | — | | | 10 | | | 3 | | | — | | | $300 - $485 |
Rancho Sienna 50' | 2019 | | 54 | | | 15 | | | 39 | | | 9 | | | 7 | | | $300 - $439 |
Palmera Ridge | 2019 | | 49 | | | 30 | | | 19 | | | 15 | | | 14 | | | $291 - $360 |
Hays County: | | | | | | | | | | | | | |
6 Creeks 50' Section 1 & 2 | 2020 | | 35 | | | 12 | | | 23 | | | 10 | | | 12 | | | $269 - $352 |
6 Creeks 60' Section 1 & 2 | 2020 | | 15 | | | 4 | | | 11 | | | 5 | | | 4 | | | $309 - $375 |
Travis County: | | | | | | | | | | | | | |
Lakes Edge 80' | 2018 | | 14 | | | 13 | | | 1 | | | 1 | | | 3 | | | $797 |
Turner's Crossing (Land) | TBD | | 324 | | | — | | | 324 | | | — | | | — | | | TBD |
Williamson County: | | | | | | | | | | | | | |
Cressman Tract (Land) | TBD | | 85 | | | — | | | 85 | | | — | | | — | | | TBD |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collin County: | | | | | | | | | | | | | |
Creeks of Legacy, Celina | 2020 | | 24 | | | — | | | 24 | | | — | | | — | | | $349 - $379 |
Miramonte, Frisco | 2016 | | 62 | | | 60 | | | 2 | | | 2 | | | 8 | | | $475 - $560 |
Retreat at Craig Ranch, McKinney | 2012 | | 165 | | | 159 | | | 6 | | | 1 | | | 5 | | | $375 - $415 |
Dallas County: | | | | | | | | | | | | | |
Vineyards, Rowlett | 2017 | | 40 | | | 36 | | | 4 | | | 3 | | | 8 | | | $368 - $480 |
Denton County: | | | | | | | | | | | | | |
Glenview, Frisco | 2017 | | 50 | | | 42 | | | 8 | | | 5 | | | 10 | | | $345 - $485 |
Paloma Creek, Little Elm | 2015 | | 267 | | | 187 | | | 80 | | | 19 | | | 10 | | | $275 - $390 |
Parks at Legacy, Prosper | 2017 | | 55 | | | 39 | | | 16 | | | 8 | | | 7 | | | $384 - $495 |
Valencia, Little Elm | 2016 | | 82 | | | 63 | | | 19 | | | 4 | | | 6 | | | $350 - $444 |
Villages of Carmel, Denton | 2017 | | 96 | | | 92 | | | 4 | | | 2 | | | 12 | | | $290 - $360 |
Kaufman County: | | | | | | | | | | | | | |
Gateway Parks, Forney | 2020 | | 12 | | | — | | | 12 | | | — | | | — | | | $270 - $355 |
Rockwall County: | | | | | | | | | | | | | |
Heath Golf and Yacht, Heath | 2016 | | 112 | | | 88 | | | 24 | | | 7 | | | 14 | | | $294 - $490 |
Woodcreek, Fate | 2017 | | 153 | | | 102 | | | 51 | | | 13 | | | 14 | | | $267 - $330 |
Tarrant County: | | | | | | | | | | | | | |
Chisholm Trail Ranch, Fort Worth | 2017 | | 104 | | | 75 | | | 29 | | | 9 | | | 11 | | | $270 - $375 |
Lakes of River Trails, Fort Worth | 2011 | | 172 | | | 158 | | | 14 | | | 10 | | | 4 | | | $317 - $416 |
Ventana, Benbrook | 2017 | | 94 | | | 67 | | | 27 | | | 8 | | | 12 | | | $318 - $430 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 1 | | | |
Texas Total | | | 5,849 | | | 3,177 | | | 2,672 | | | 321 | | | 463 | | | |
Trendmaker Homes Total | | | 5,849 | | | 3,177 | | | 2,672 | | | 321 | | | 463 | | | |
TRI Pointe Homes
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) |
Southern California | | | | | | | | | | | | | |
Orange County: | | | | | | | | | | | | | |
Varenna at Orchard Hills, Irvine | 2016 | | 135 | | | 112 | | | 23 | | | 6 | | | 11 | | | $1,223 - $1,306 |
Lyric | 2019 | | 70 | | | 62 | | | 8 | | | 5 | | | 21 | | | $779 - $946 |
Windbourne | 2019 | | 46 | | | 20 | | | 26 | | | 24 | | | 14 | | | $1,164 - $1,276 |
Cerise at Canvas | 2020 | | 40 | | | 2 | | | 38 | | | 5 | | | 2 | | | $795 - $823 |
Violet at Canvas | 2020 | | 48 | | | 7 | | | 41 | | | 12 | | | 7 | | | $545 - $735 |
Claret at Canvas | 2020 | | 48 | | | 5 | | | 43 | | | 16 | | | 5 | | | $560 - $671 |
San Diego County: | | | | | | | | | | | | | |
Prism at Weston | 2018 | | 142 | | | 106 | | | 36 | | | 32 | | | 15 | | | $574 - $644 |
Riverside County: | | | | | | | | | | | | | |
Citron at Bedford | 2019 | | 101 | | | 70 | | | 31 | | | 14 | | | 24 | | | $387 - $398 |
Cassis at Rancho Soleo | 2020 | | 79 | | | — | | | 79 | | | 17 | | | — | | | $492 - $507 |
Cava at Rancho Soleo | 2020 | | 63 | | | — | | | 63 | | | 13 | | | — | | | $386 - $417 |
Cerro at Rancho Soleo | 2020 | | 103 | | | — | | | 103 | | | 14 | | | — | | | $375 - $430 |
Los Angeles County: | | | | | | | | | | | | | |
Tierno at Aliento | 2017 | | 63 | | | 49 | | | 14 | | | 3 | | | — | | | $667 - $710 |
Tierno II at Aliento | 2018 | | 63 | | | 47 | | | 16 | | | 13 | | | 16 | | | $667 - $701 |
Paloma at West Creek | 2018 | | 155 | | | 151 | | | 4 | | | 4 | | | 19 | | | $475 - $550 |
Mystral | 2019 | | 78 | | | 53 | | | 25 | | | 25 | | | 5 | | | $629 - $685 |
Celestia | 2019 | | 72 | | | 67 | | | 5 | | | 5 | | | 17 | | | $597 - $633 |
San Bernardino County: | | | | | | | | | | | | | |
Ivy at The Preserve | 2019 | | 113 | | | 19 | | | 94 | | | 21 | | | 14 | | | $355 - $427 |
Hazel at The Preserve | 2020 | | 133 | | | 24 | | | 109 | | | 35 | | | 24 | | | $360 - $426 |
Tempo at The Resort | 2020 | | 80 | | | — | | | 80 | | | 16 | | | — | | | $504 - $565 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 27 | | | |
Southern California Total | | | 1,632 | | | 794 | | | 838 | | | 280 | | | 221 | | | |
Northern California | | | | | | | | | | | | | |
Contra Costa County: | | | | | | | | | | | | | |
Greyson Place | 2019 | | 44 | | | 28 | | | 16 | | | 12 | | | 12 | | | $835 - $960 |
Santa Clara County: | | | | | | | | | | | | | |
Madison Gate | 2018 | | 65 | | | 60 | | | 5 | | | 5 | | | 13 | | | $729 - $1,134 |
Blanc at Glen Loma | 2019 | | 49 | | | 15 | | | 34 | | | 28 | | | 10 | | | $735 - $785 |
Noir at Glen Loma | 2019 | | 64 | | | 15 | | | 49 | | | 14 | | | 6 | | | $815 - $865 |
Lotus at Urban Oak | 2023 | | 65 | | | — | | | 65 | | | — | | | — | | | $940 - $1,064 |
Solano County: | | | | | | | | | | | | | |
Bloom at Green Valley, Fairfield | 2018 | | 91 | | | 87 | | | 4 | | | 4 | | | 12 | | | $557 - $597 |
Lantana, Fairfield | 2019 | | 133 | | | 75 | | | 58 | | | 13 | | | 20 | | | $483 - $528 |
One Lake | 2021 | | 45 | | | — | | | 45 | | | — | | | — | | | |
San Joaquin County: | | | | | | | | | | | | | |
Sundance, Mountain House | 2015 | | 113 | | | 108 | | | 5 | | | 5 | | | — | | | $668 - $760 |
Sundance II, Mountain House | 2017 | | 138 | | | 113 | | | 25 | | | 25 | | | 14 | | | $653 - $731 |
River Islands | 2021 | | 24 | | | — | | | 24 | | | 7 | | | — | | | $467 - $519 |
Alameda County: | | | | | | | | | | | | | |
Onyx at Jordan Ranch, Dublin | 2017 | | 105 | | | 93 | | | 12 | | | 6 | | | 13 | | | $914 - $966 |
Apex, Fremont | 2018 | | 77 | | | 76 | | | 1 | | | 1 | | | 19 | | | $734 - $996 |
Palm, Fremont | 2019 | | 31 | | | 15 | | | 16 | | | 8 | | | 7 | | | $2,250 - $2,392 |
Ellis at Central Station, Oakland | 2020 | | 128 | | | — | | | 128 | | | 5 | | | — | | | $740 - $815 |
Sonoma County: | | | | | | | | | | | | | |
Riverfront Petaluma | 2021 | | 5 | | | — | | | 5 | | | — | | | — | | | $740 - $901 |
Sacramento County: | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
Southern California | | | | | | | | | | | | | |
Orange County: | | | | | | | | | | | | | |
Messina, Irvine | 2014 | | 102 |
| | 88 |
| | 14 |
| | 8 |
| | 18 |
| | $1,565 - $1,710 |
Aria, Rancho Mission Viejo | 2016 | | 151 |
| | 82 |
| | 69 |
| | 17 |
| | 34 |
| | $623 - $688 |
Aubergine, Rancho Mission Viejo | 2016 | | 66 |
| | 38 |
| | 28 |
| | 24 |
| | 15 |
| | $983 - $1,129 |
Viridian | 2017 | | 57 |
| | — |
| | 57 |
| | — |
| | — |
| | $855 - $920 |
Carlisle 10-Pack Garden Court, Irvine | 2017 | | 74 |
| | 8 |
| | 66 |
| | 39 |
| | 8 |
| | $670 - $780 |
Sterling Row Townhomes, Irvine | 2017 | | 96 |
| | 11 |
| | 85 |
| | 33 |
| | 11 |
| | $574 - $754 |
Varenna at Orchard Hills, Irvine | 2016 | | 71 |
| | 26 |
| | 18 |
| | 13 |
| | 18 |
| | $1,170 - $1,235 |
Alston, Anaheim | 2017 | | 75 |
| | — |
| | 75 |
| | 19 |
| | — |
| | $805 - $850 |
StrataPointe, Buena Park | 2017 | | 149 |
| | 10 |
| | 139 |
| | 55 |
| | 10 |
| | $515 - $656 |
Cadence Park | 2018 | | 70 |
| | — |
| | 70 |
| | — |
| | — |
| | TBD |
San Diego County: | | | | | | | | | | | | | |
Prism at Weston | 2018 | | 142 |
| | — |
| | 142 |
| | — |
| | — |
| | $585 - $620 |
Talus at Weston | 2018 | | 63 |
| | — |
| | 63 |
| | — |
| | — |
| | $680 - $705 |
Riverside County: | | | | | | | | | | | | | |
Kite Ridge, Riverside | 2014 | | 87 |
| | 87 |
| | — |
| | — |
| | 25 |
| | $472 - $500 |
Serrano Ridge at Sycamore Creek, Riverside | 2015 | | 87 |
| | 87 |
| | — |
| | — |
| | 24 |
| | $403 - $429 |
Terrassa Court, Corona | 2015 | | 94 |
| | 51 |
| | 43 |
| | 29 |
| | 38 |
| | $421 - $474 |
Terrassa Villas, Corona | 2015 | | 52 |
| | 14 |
| | 38 |
| | — |
| | 8 |
| | $453 - $495 |
Los Angeles County: | | | | | | | | | | | | | |
Grayson at Five Knolls, Santa Clarita | 2015 | | 119 |
| | 89 |
| | 30 |
| | 16 |
| | 40 |
| | $559 - $586 |
VuePointe, El Monte | 2017 | | 102 |
| | — |
| | 102 |
| | 22 |
| | — |
| | $452 - $552 |
Bradford @ Rosedale, Azusa | 2017 | | 52 |
| | 5 |
| | 22 |
| | 13 |
| | 5 |
| | $816 - $871 |
Golden Valley/ Lucera at Aliento | 2017 | | 67 |
| | 6 |
| | 61 |
| | 16 |
| | 6 |
| | $622 - $645 |
Golden Valley/Tierno at Aliento | 2017 | | 63 |
| | 8 |
| | 55 |
| | 20 |
| | 8 |
| | $667 - $695 |
Sonrisa | 2017 | | 155 |
| | — |
| | 155 |
| | — |
| | — |
| | TBD |
San Bernardino County: | | | | | | | | | | | | | |
Sedona at Parkside, Ontario | 2015 | | 152 |
| | 140 |
| | 12 |
| | 12 |
| | 48 |
| | $405 - $443 |
Kensington at Park Place, Ontario | 2015 | | 67 |
| | 67 |
| | — |
| | — |
| | 22 |
| | $507 - $539 |
St. James at Park Place, Ontario | 2015 | | 125 |
| | 89 |
| | 36 |
| | 29 |
| | 38 |
| | $514 - $544 |
Ventura County: | | | | | | | | | | | | | |
The Westerlies, Oxnard | 2015 | | 116 |
| | 95 |
| | 21 |
| | 21 |
| | 50 |
| | $435 - $552 |
Southern California Total | | | 2,454 |
| | 1,001 |
| | 1,401 |
| | 386 |
| | 426 |
| | |
Northern California | | | | | | | | | | | | | |
Contra Costa County: | | |
| |
| |
| |
| |
| | |
Berkshire at Barrington, Brentwood | 2014 | | 123 |
| | 122 |
| | 1 |
| | — |
| | 16 |
| | $508 - $587 |
Hawthorne at Barrington, Brentwood | 2014 | | 105 |
| | 103 |
| | 2 |
| | 1 |
| | 9 |
| | $572 - $620 |
Marquette at Barrington, Brentwood | 2015 | | 90 |
| | 64 |
| | 26 |
| | 9 |
| | 20 |
| | $695 - $730 |
Wynstone at Barrington, Brentwood | 2017 | | 92 |
| | 19 |
| | 73 |
| | 18 |
| | 19 |
| | $480 - $634 |
Santa Clara County: | | | | | | | | | | | | | |
Derose, Morgan Hill | 2018 | | 65 |
| | — |
| | 65 |
| | — |
| | — |
| | $600 - $820 |
Solano County: | | | | | | | | | | | | | |
Redstone, Vacaville | 2015 | | 141 |
| | 91 |
| | 50 |
| | 16 |
| | 31 |
| | $470 - $533 |
Green Valley-Lewis, Fairfield | 2018 | | 91 |
| | — |
| | 91 |
| | — |
| | — |
| | $510 - $550 |
Green Valley-Westgate, Fairfield | 2018 | | 56 |
| | — |
| | 56 |
| | — |
| | — |
| | $555 - $599 |
San Joaquin County: | | | | | | | | | | | | | |
Ventana, Tracy | 2015 | | 93 |
| | 85 |
| | 8 |
| | 4 |
| | 29 |
| | $457 - $557 |
Sundance, Mountain House | 2015 | | 113 |
| | 102 |
| | 11 |
| | 5 |
| | 28 |
| | $595 - $675 |
Sundance II, Mountain House | 2018 | | 138 |
| | — |
| | 138 |
| | 8 |
| | — |
| | $600 - $710 |
|
| | | | | | | | | | | | | | | | | | |
Alameda County: | | |
| |
| |
| |
| |
| | |
Cadence, Alameda Landing | 2015 | | 91 |
| | 77 |
| | 14 |
| | 13 |
| | 15 |
| | $1,182 - $1,390 |
Linear, Alameda Landing | 2015 | | 106 |
| | 69 |
| | 37 |
| | 15 |
| | 5 |
| | $769 - $1,020 |
Symmetry, Alameda Landing | 2016 | | 56 |
| | 51 |
| | 5 |
| | — |
| | 25 |
| | $865 - $950 |
Commercial, Alameda Landing | | | 2 |
| | — |
| | 2 |
| | — |
| | — |
| | $620 |
Parasol, Fremont | 2016 | | 39 |
| | 39 |
| | — |
| | — |
| | 15 |
| | $770 - $1,050 |
Blackstone at the Cannery, Hayward SFA | 2016 | | 105 |
| | 40 |
| | 65 |
| | 32 |
| | 16 |
| | $626 - $726 |
Blackstone at the Cannery, Hayward SFD | 2016 | | 52 |
| | 47 |
| | 5 |
| | 8 |
| | 28 |
| | $709 - $769 |
Coopers Place, Livermore | 2017 | | 31 |
| | 2 |
| | 29 |
| | 18 |
| | 2 |
| | $660 - $670 |
Slate at Jordan Ranch, Dublin | 2017 | | 56 |
| | 2 |
| | 54 |
| | 12 |
| | 2 |
| | $1,050 - $1,169 |
Onyx at Jordan Ranch, Dublin | 2017 | | 105 |
| | — |
| | 105 |
| | 8 |
| | — |
| | $875 - $925 |
Jordan Ranch II, Dublin | 2018 | | 45 |
| | — |
| | 45 |
| | — |
| | — |
| | $855 - $1,035 |
Mission Stevenson, Fremont | 2018 | | 77 |
| | — |
| | 77 |
| | — |
| | — |
| | $675 - $965 |
Palm Avenue, Fremont | 2018 | | 31 |
| | — |
| | 31 |
| | — |
| | — |
| | $2,080 - $2,235 |
Pleasant Hill | 2018 | | 44 |
| | — |
| | 44 |
| | — |
| | — |
| | TBD |
Sacramento County: | | | | | | | | | | | | | |
Natomas | 2018 | | 94 |
| | — |
| | 94 |
| | — |
| | — |
| | TBD |
Northern California Total | | | 2,041 |
| | 913 |
| | 1,128 |
| | 167 |
| | 260 |
| | |
California Total | | | 4,495 |
| | 1,914 |
| | 2,529 |
| | 553 |
| | 686 |
| | |
Colorado | | |
| |
| |
| |
| |
| | |
Douglas County: | | | | | | | | | | | | | |
Terrain 4000 Series, Castle Rock | 2013 | | 149 |
| | 147 |
| | 2 |
| | — |
| | 5 |
| | $358 - $411 |
Terrain 3500 Series, Castle Rock | 2015 | | 67 |
| | 64 |
| | 3 |
| | — |
| | — |
| | $327 - $350 |
Terrain Ravenwood Village (3500) | 2017 | | 157 |
| | — |
| | 88 |
| | 7 |
| | — |
| | $379 - $426 |
Terrain Ravenwood Village (4000) | 2017 | | 100 |
| | — |
| | 38 |
| | 5 |
| | — |
| | $400 - $463 |
Jefferson County: | | | | | | | | | | | | | |
Leyden Rock 5000 Series, Arvada | 2015 | | 67 |
| | 67 |
| | — |
| | — |
| | 3 |
| | $454 - $509 |
Candelas 6000 Series, Arvada | 2015 | | 76 |
| | 40 |
| | 36 |
| | 19 |
| | 19 |
| | $534 - $671 |
Candelas 3500 Series, Arvada | 2016 | | 97 |
| | 22 |
| | 75 |
| | 18 |
| | 18 |
| | $405 - $467 |
Candelas 5000 Series, Arvada | 2017 | | 62 |
| | — |
| | 62 |
| | 12 |
| | — |
| | $510 - $564 |
Crown Pointe, Westminster | 2018 | | 64 |
| | — |
| | 64 |
| | — |
| | — |
| | $415 - $486 |
Larimer County: | | | | | | | | | | | | | |
Centerra 5000 Series, Loveland | 2015 | | 79 |
| | 63 |
| | 16 |
| | 9 |
| | 24 |
| | $411 - $469 |
Arapahoe County: | | |
| |
| |
| |
| |
| | |
Whispering Pines, Aurora | 2015 | | 115 |
| | 19 |
| | 96 |
| | 21 |
| | 16 |
| | $589 - $656 |
Adams County: | | | | | | | | | | | | | |
Amber Creek, Thornton | 2017 | | 121 |
| | 13 |
| | 108 |
| | 15 |
| | 12 |
| | $386 - $469 |
Colorado Total | | | 1,154 |
| | 435 |
| | 588 |
| | 106 |
| | 97 |
| | |
TRI Pointe Total | | | 5,649 |
| | 2,349 |
| | 3,117 |
| | 659 |
| | 783 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Natomas | TBD | | 94 | | | — | | | 94 | | | — | | | — | | | $360 - $412 |
Mangini - Brookstone | 2020 | | 47 | | | 15 | | | 32 | | | 19 | | | 15 | | | $576 - $655 |
Mangini - Waterstone | 2020 | | 40 | | | 12 | | | 28 | | | 18 | | | 12 | | | $630 - $733 |
Placer County: | | | | | | | | | | | | | |
La Madera | 2019 | | 102 | | | 33 | | | 69 | | | 12 | | | 23 | | | $461 - $546 |
San Francisco County: | | | | | | | | | | | | | |
Cambridge Street (SFA) | 2020 | | 54 | | | — | | | 54 | | | — | | | — | | | $1,145 - $1,388 |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 2 | | | |
Northern California Total | | | 1,514 | | | 745 | | | 769 | | | 182 | | | 178 | | | |
California Total | | | 3,146 | | | 1,539 | | | 1,607 | | | 462 | | | 399 | | | |
Colorado | | | | | | | | | | | | | |
Douglas County: | | | | | | | | | | | | | |
Terrain Ravenwood Village (3500) | 2018 | | 157 | | | 110 | | | 47 | | | 21 | | | 22 | | | $390 - $429 |
Terrain Ravenwood Village (4000) | 2018 | | 100 | | | 92 | | | 8 | | | 8 | | | 22 | | | $415 - $481 |
Trails at Crowfoot | 2021 | | 100 | | | — | | | 100 | | | — | | | — | | | TBD |
Sterling Ranch Alley | 2020 | | 80 | | | — | | | 80 | | | 1 | | | — | | | TBD |
Sterling Ranch TH | 2021 | | 46 | | | — | | | 46 | | | — | | | — | | | TBD |
Canyons 4500 | 2020 | | 89 | | | 1 | | | 88 | | | 12 | | | 1 | | | $774 - $974 |
Terrain Sunstone | 2021 | | 74 | | | — | | | 74 | | | — | | | — | | | TBD |
Jefferson County: | | | | | | | | | | | | | |
Candelas 4020 Series, Arvada | 2019 | | 98 | | | 72 | | | 26 | | | 23 | | | 26 | | | $471 - $531 |
Crown Point, Westminster | 2019 | | 64 | | | 57 | | | 7 | | | 6 | | | 26 | | | $449 - $491 |
Candelas TH, Arvada | 2022 | | 92 | | | — | | | 92 | | | — | | | — | | | TBD |
Arapahoe County: | | | | | | | | | | | | | |
Whispering Pines, Aurora | 2016 | | 115 | | | 108 | | | 7 | | | 7 | | | 13 | | | $611 - $681 |
Adonea 3500, Aurora | 2020 | | 71 | | | — | | | 71 | | | 12 | | | — | | | $393 - $435 |
Adams County: | | | | | | | | | | | | | |
Reunion Alley, Commerce City | 2021 | | 50 | | | — | | | 50 | | | — | | | — | | | TBD |
Closed Communities | N/A | | — | | | — | | | — | | | — | | | 9 | | | |
Colorado Total | | | 1,136 | | | 440 | | | 696 | | | 90 | | | 119 | | | |
North Carolina | | | | | | | | | | | | | |
Wake County: | | | | | | | | | | | | | |
Lakeview Townhomes, Raleigh, NC | 2020 | | 23 | | | — | | | 23 | | | — | | | — | | | $335 - $351 |
Townes at North Salem St., Apex, NC | 2021 | | 55 | | | — | | | 55 | | | — | | | — | | | $312 - $339 |
Mecklenburg County: | | | | | | | | | | | | | |
Mayes Hall, Davidson, NC | 2021 | | 50 | | | — | | | 50 | | | — | | | — | | | $335 - $406 |
North Carolina Total | | | 128 | | | — | | | 128 | | | — | | | — | | | |
South Carolina | | | | | | | | | | | | | |
York County: | | | | | | | | | | | | | |
Balsam, Rock Hill, SC | 2021 | | 53 | | | — | | | 53 | | | — | | | — | | | $279 - $304 |
Ashburn, York County, SC | 2020 | | 13 | | | — | | | 13 | | | — | | | — | | | $258 - $294 |
South Carolina Total | | | 66 | | | — | | | 66 | | | — | | | — | | | |
TRI Pointe Total | | | 4,476 | | | 1,979 | | | 2,497 | | | 552 | | | 518 | | | |
Winchester Homes
|
| | | | | | | | | | | | | | | | | | |
County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of September 30, 2017 | | Lots Owned as of September 30, 2017(3) | | Backlog as of September 30, 2017(4)(5) | | Homes Delivered for the Nine Months Ended September 30, 2017 | | Sales Price Range (in thousands)(6) |
Maryland | | | | | | | | | | | | | |
Anne Arundel County: | | | | | | | | | | | | | |
Two Rivers Townhomes, Crofton | 2017 | | 36 |
| | — |
| | 36 |
| | 17 |
| | — |
| | $440 - $520 |
Two Rivers Cascades SFD, Crofton | 2018 | | 7 |
| | — |
| | 7 |
| | — |
| | — |
| | $600 - $620 |
Watson's Glen, Millersville | 2015 | | 103 |
| | 4 |
| | 99 |
| | — |
| | — |
| | Closed |
Frederick County: | | | | | | | | | | | | | |
Landsdale, Monrovia | | | — |
| | | | | | | | | | |
Landsdale SFD | 2015 | | 222 |
| | 69 |
| | 153 |
| | 26 |
| | 29 |
| | $495 - $597 |
Landsdale Townhomes | 2015 | | 100 |
| | 33 |
| | 67 |
| | 12 |
| | 7 |
| | $320 - $378 |
Landsdale TND Neo SFD | 2015 | | 77 |
| | 25 |
| | 52 |
| | 5 |
| | 11 |
| | $440 - $473 |
Montgomery County: | | | | | | | | | | | | | |
Cabin Branch, Clarksburg | | | | | | | | | | | | | |
Cabin Branch SFD | 2014 | | 359 |
| | 123 |
| | 236 |
| | 33 |
| | 32 |
| | $480 - $745 |
Cabin Branch Avenue Townhomes | 2017 | | 121 |
| | 1 |
| | 120 |
| | 16 |
| | 1 |
| | $425 - $485 |
Cabin Branch Townhomes | 2014 | | 507 |
| | 192 |
| | 315 |
| | 22 |
| | 61 |
| | $391 - $435 |
Preserve at Stoney Spring | N/A | | 5 |
| | — |
| | 5 |
| | — |
| | — |
| | N/A |
Poplar Run, Silver Spring | | | | | | | | | | | | | |
Poplar Run SFD | 2010 | | 305 |
| | 270 |
| | 35 |
| | 19 |
| | 21 |
| | $562 - $786 |
Poplar Run Single Family Neos | 2016 | | 29 |
| | 26 |
| | 3 |
| | 1 |
| | 11 |
| | $545 - $635 |
Potomac Highlands, Potomac | 2017 | | 23 |
| | 5 |
| | 18 |
| | 7 |
| # | 5 |
| | $1,191 - $1,289 |
Glenmont MetroCenter, Silver Spring | 2016 | | 171 |
| | 20 |
| | 151 |
| | 17 |
| | 13 |
| | $435 - $513 |
Chapman Row, Rockville | 2018 | | 61 |
| | — |
| | 61 |
| | — |
| | — |
| | TBD |
Closed Communities | N/A | | — |
| | — |
| | — |
| | — |
| | 1 |
| | |
Maryland Total | | | 2,126 |
| | 768 |
| | 1,358 |
| | 175 |
| | 192 |
| | |
Virginia | | | | | | | | | | | | | |
Fairfax County: | | | | | | | | | | | | | |
Stuart Mill & Timber Lake, Oakton | 2014 | | 14 |
| | 8 |
| | 6 |
| | 4 |
| | 1 |
| | $1,363 - $1,675 |
Stuart Mill, Oakton | N/A | | 5 |
| | — |
| | 5 |
| | — |
| | — |
| | N/A |
Westgrove, Fairfax | 2018 | | 24 |
| | — |
| | 24 |
| | — |
| | — |
| | TBD |
West Oaks Corner | 2019 | | 188 |
| | — |
| | 188 |
| | — |
| | — |
| | TBD |
Prince William County: | | | | | | | | | | | | | |
Villages of Piedmont, Haymarket | 2015 | | 168 |
| | 84 |
| | 84 |
| | 31 |
| | 35 |
| | $370 - $440 |
Loudoun County: | | | | | | | | | | | | | |
Brambleton, Ashburn | | |
| |
| |
| |
| |
| | |
West Park SFD | 2018 | | 12 |
| | — |
| | 12 |
| | 4 |
| | — |
| | $708 - $724 |
Vistas at Lansdowne, Lansdowne | 2015 | | 120 |
| | 52 |
| | 68 |
| | 17 |
| | 14 |
| | $574 - $674 |
Willowsford Grant II, Aldie | 2017 | | 29 |
| | 7 |
| | 22 |
| | 5 |
| | 7 |
| | $1,000 - $1,326 |
Willowsford Greens | N/A | | 5 |
| | — |
| | 5 |
| | — |
| | — |
| | N/A |
Closed Communities | N/A | | — |
| | — |
| | — |
| | — |
| | 16 |
| | |
Virginia Total | | | 565 |
| | 151 |
| | 414 |
| | 61 |
| | 73 |
| | |
Winchester Total | | | 2,691 |
| | 919 |
| | 1,772 |
| | 236 |
| | 265 |
| | |
| | | | | | | | | | | | | |
Combined Company Total | | | 33,832 |
| | 8,777 |
| | 24,803 |
| | 2,265 |
| | 2,940 |
| | |
__________
| |
(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 September 30, 2017 include owned lots in backlog as of September 30, 2017. |
| |
(4)
| Backlog consists of homes under sales contracts that had 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 September 30, 2017, 1,695 homes are under construction, 278 homes have completed construction, and 292 homes have not started construction. |
Winchester Homes
| |
(6) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | County, Project, City | Year of First Delivery(1) | | Total Number of Lots(2) | | Cumulative Homes Delivered as of June 30, 2020 | | Lots Owned as of June 30, 2020(3) | | Backlog as of June 30, 2020(4)(5) | | Homes Delivered for the Six Months Ended June 30, 2020 | | Sales Price Range (in thousands)(6) | Maryland | | | | | | | | | | | | | | Anne Arundel County: | | | | | | | | | | | | | | Two Rivers Townhomes, Crofton | 2017 | | 152 | | | 79 | | | 73 | | | 9 | | | 14 | | | $454 - $535 | Two Rivers Cascades SFD, Crofton | 2018 | | 43 | | | 35 | | | 8 | | | 8 | | | 10 | | | $520 - $590 | Watson's Glen, Millersville | 2015 | | 103 | | | 9 | | | 94 | | | 20 | | | 5 | | | $368 - $381 | Frederick County: | | | | | | | | | | | | | | Landsdale, Monrovia | | | | | | | | | | | | | | Landsdale SFD | 2015 | | 222 | | | 180 | | | 42 | | | 20 | | | 20 | | | $515 - $607 | Landsdale Townhomes | 2015 | | 100 | | | 100 | | | — | | | — | | | 3 | | | Closed Out | Landsdale TND Neo SFD | 2015 | | 77 | | | 66 | | | 11 | | | 11 | | | 7 | | | $450 - $483 | Montgomery County: | | | | | | | | | | | | | | Cabin Branch, Clarksburg | | | | | | | | | | | | | | Cabin Branch SFD | 2014 | | 359 | | | 252 | | | 107 | | | 21 | | | 15 | | | $560 - $775 | Cabin Branch Avenue Townhomes | 2017 | | 86 | | | 86 | | | — | | | — | | | 4 | | | Closed Out | Cabin Branch Crossings Townhomes | 2019 | | 114 | | | 7 | | | 107 | | | 29 | | | 6 | | | $422 - $493 | Cabin Branch Manor Townhomes | 2014 | | 428 | | | 367 | | | 61 | | | 13 | | | 16 | | | $393 - $464 | Preserve at Stoney Spring - Lots for Sale | TBD | | 2 | | | — | | | 2 | | | — | | | — | | | | Glenmont MetroCenter, Silver Spring | 2016 | | 171 | | | 146 | | | 25 | | | 25 | | | 15 | | | $460 - $518 | Chapman Row, Rockville | 2019 | | 61 | | | 16 | | | 45 | | | 22 | | | 6 | | | $700 - $750 | North Quarter, North Bethesda | 2020 | | 104 | | | 9 | | | 95 | | | 12 | | | 9 | | | $620 - $670 | Maryland Total | | | 2,022 | | | 1,352 | | | 670 | | | 190 | | | 130 | | | | Virginia | | | | | | | | | | | | | | Fairfax County: | | | | | | | | | | | | | | Stuart Mill, Oakton - Lots for Sale | TBD | | 5 | | | — | | | 5 | | | — | | | — | | | TBD | Westgrove, Fairfax | 2018 | | 24 | | | 22 | | | 2 | | | 2 | | | 3 | | | $1,001 - $1,107 | West Oaks Corner, Fairfax | 2019 | | 188 | | | 41 | | | 147 | | | 53 | | | 15 | | | $705 - $830 | Bren Pointe SFA, Fairfax | 2020 | | 13 | | | — | | | 13 | | | — | | | — | | | TBD | Loudoun County: | | | | | | | | | | | | | | Brambleton, Ashburn | | | | | | | | | | | | | | Birchwood Bungalows AA | 2018 | | 55 | | | 43 | | | 8 | | | 12 | | | 10 | | | $582 - $639 | Birchwood Carriages AA | 2019 | | 45 | | | 20 | | | 25 | | | 26 | | | 19 | | | $537 - $570 | Willowsford Grant II, Aldie | 2017 | | 55 | | | 47 | | | 8 | | | 8 | | | 9 | | | $1,000 - $1,255 | Closed Communities | N/A | | — | | | — | | | — | | | — | | | 4 | | | | Virginia Total | | | 385 | | | 173 | | | 208 | | | 101 | | | 60 | | | | Winchester Total | | | 2,407 | | | 1,525 | | | 878 | | | 291 | | | 190 | | | | | | | | | | | | | | | | | | Combined Company Total | | | 32,479 | | | 10,508 | | | 21,749 | | | 2,558 | | | 2,187 | | | |
__________ (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 June 30, 2020 include owned lots in backlog as of June 30, 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 June 30, 2020, 1,679 homes are under construction, 345 homes have completed construction, and 534 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.
| 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. |
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements contained elsewhereincluded in this report,Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP. Our condensed notes to the unaudited consolidated financial statements contained elsewhereincluded in this reportQuarterly Report on Form 10-Q and the audited financial statements containedincluded in our Annual Report on Form 10-K for the year ended December 31, 20162019 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 ended December 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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Item 3. | Item 3. Quantitative and Qualitative Disclosures about Market Risk |
We are exposed to market risks related to fluctuations in interest rates on our outstanding debt. We did not utilize swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments as of or during the ninesix months ended SeptemberJune 30, 2017.2020. We did not enter into during the ninesix months ended SeptemberJune 30, 2017,2020, and currently do not hold, derivatives for trading or speculative purposes.
| |
Item 4. | Item 4. Controls and Procedures |
We have established disclosure controls and procedures to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to management, including the Chief Executive Officer (the “Principal Executive Officer”) and Chief Financial Officer (the “Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of senior management, including our Principal Executive Officer and Principal Financial Officer, we evaluated our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2017.2020.
Our management, including our Principal Executive Officer and Principal Financial Officer, has evaluated our internal control over financial reporting to determine whether any change occurred during the ninethree months ended SeptemberJune 30, 20172020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the ninethree or six months ended SeptemberJune 30, 2017.2020.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information required with respect to this item can be found under Note 13, Commitments and Contingencies-LegalContingencies—Legal Matters, ofto the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and is incorporated by reference into this Item 1.
Item 1A. Risk Factors
The following supplements and updates the risk factors in Part I, Item 1A “Risk Factors,”Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.2019, as revised or supplemented by any Quarterly Reports on Form 10-Q filed with the SEC since the filing of our Annual Report on Form 10-K for the year ended December 31, 2019. If any of the risks discussed below or in our Annual Report on Form 10-K (as revised or supplemented by any Quarterly Reports on Form 10-Q) occur, our business, prospects, liquidity, financial condition and results of operations (individually and collectively referred to in the following risk factor as “Financial Performance”) could be materially and adversely affected, in which case the trading price of our common stock could decline significantly and you could lose all or a part of your investment. Some statements in this Quarterly Report on Form 10-Q, including statements in the following risk factor, constitute forward-looking statements. Please refer to Part I, Item 2 of this Quarterly Report on Form 10-Q entitled “Cautionary Note Concerning Forward-Looking Statements.”
Risks Related to Our Business
We
Our Financial Performance has been and may continue to be materially and adversely affected by the ongoing COVID-19 pandemic.
In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of coronavirus first identified in Wuhan, China in December 2019, a pandemic. This outbreak, which has spread widely throughout the United States and nearly all other regions of the world, has prompted federal, state and local governmental authorities in the United States to declare states of emergency and institute preventative measures to contain and/or mitigate the public health effects. These preventative measures, which include quarantines, shelter-in-place orders and similar mandates that substantially restrict daily activities for many individuals, as well as orders requiring the closure and/or curtailment of operations for many businesses, have caused and continue to cause significant disruption to businesses in affected areas, as well as the financial markets both globally and in the United States, more broadly.
In response to the COVID-19 pandemic and measures taken by applicable governmental authorities, in mid-March 2020, we began encouraging all employees at our corporate and division offices whose duties could be responsible for employment-related liabilitiesperformed from home to work remotely until further notice, transitioned all of our new home galleries and design studios to appointment-only with pre-screened individuals or virtual appointments, instituted mandatory social distancing and hygiene/sanitation guidelines in accordance with recommended protocols throughout the organization (including in our new home galleries and design studios, and with respect to trade partners and their employees on our contractors’ employees.
Severaljobsites) and postponed non-essential customer care service and warranty requests. While we believe these measures were advisable and in the best interests of our employees, trade partners, customers and communities, such measures, in combination with other homebuildersfactors, reduced traffic in our new home galleries and design studios, slowed the pace of our home sales, delayed home deliveries and caused other material disruptions to our normal operations, including a substantial investment of time and resources by our management and organization, and may continue to do so during the pendency of such measures. We have received inquiries from regulatory agencies concerning whether homebuilders using contractorstransitioned substantially all of our employees back to our corporate and division offices, have resumed non-essential customer care service and warranty requests in substantially all of our markets, and, to the extent permitted by applicable law, are deemedno longer appointment-only in many of our new home galleries. However, in the event that we are required or believe it is advisable to re-implement these or other measures in all or some of our markets in response to a resurgence of COVID-19 or orders by applicable governmental authorities, our Financial Performance could be employersmaterially and adversely affected. Additionally, certain of our service providers and trade partners have instituted or may institute similar preventative measures, which could result in reductions in the availability, capacity and/or efficiency of the services upon which we depend for our operations, which could materially and adversely affect our Financial Performance. Further, in the event any of our employees, and/or employees of our service providers or trade partners, contract COVID-19 or are otherwise compelled to self-quarantine, we may experience shortages in labor and services that we require for our operations. Our increased use of remote work environments and virtual platforms in response to the COVID-19 pandemic may also increase our risk of cyber-attack or data security breaches.
While residential homebuilding operations are currently exempt from the application of “stay-at-home” orders in all of our markets, existing and future orders by governmental authorities in any of our markets may require us to cease our homebuilding operations for an uncertain or indefinite period of time, which could significantly affect new home orders and deliveries and negatively impact our home sales revenue in such contractors under certain circumstances. Although contractors are independentmarkets. For example, in late March 2020, authorities in Seattle, Washington and the Bay Area in California revised then-existing restrictions against non-essential business activities to extend to most residential construction activities. As a result, our TRI Pointe Homes—Bay Area and Quadrant Homes divisions were prohibited for several weeks from engaging in residential construction activities. We anticipate that any further such orders will have a material and adverse impact on our ability to meet applicable development and construction timelines, as well as sales activity, in applicable markets in the event such prohibitions remain in effect for a significant duration.
We may also be materially and adversely affected by the disruptions to U.S. and local economies that result from the COVID-19 pandemic, including reduced consumer confidence, availability of financing for potential homebuyers, shortages of or increased costs associated with obtaining building materials, unemployment levels, wage growth and fluctuating interest rates. The COVID-19 pandemic has also resulted in substantial volatility in U.S. and international debt and equity markets and has caused significant fluctuations in the market prices of equity securities, including our common stock. The possibility of a prolonged recession or economic downturn could result in, among other things, a decrease in demand and prices for our homes; an increase in selling incentives required to sell homes; an oversupply of new and existing homes available for sale; increased home order cancellation rates; diminished value of our real estate investments, including potential impairments, write downs or dispositions of real estate assets, or lot option abandonments; and an inability to access our Credit Facility, service or refinance our existing indebtedness or access the debt and equity capital markets on commercially reasonable terms or at all.
Ultimately, the effects of the homebuilders that contract with them under normal management practices and the terms of trade contracts and subcontracts within the homebuilding industry, if regulatory agencies reclassify the employees of contractors as employees of homebuilders, homebuilders using contractors could be responsible for wage and hour labor laws, employment discrimination, workers’ compensation and other employment-related liabilities of their contractors. A 2015 National Labor Relations Board ruling held that for labor law purposes a firm could under some circumstances be responsible as a joint employer of its contractors' employees. This ruling has been appealed and legislation has been introduced to limit joint-employer liability. If the ruling is not overturned on appeal, limited by legislation, or revisited by the National Labor Relations Board, it could make us responsible for collective bargaining obligations and labor law violations by our subcontractors. Governmental rulings that make us responsible for labor practices by our subcontractors could create substantial exposures for us in situations that are not within our control. Even if we are not deemed to be joint employers with our contractors, we may be subject to legislation, such as California Labor Code Section 2810.3 that requires us to share liability with our contractors for the payment of wages and the failure to secure valid workers’ compensation coverage. In addition, California’s Governor recently signed legislation, AB 1701, that will require direct construction contractors to assume and be liable for unpaid wages, fringe or other benefit payments or contributions, including interest, incurred by a subcontractor at any tier for contracts entered into on or after January 1, 2018. While we are still analyzing the ultimate impact this legislation could haveCOVID-19 pandemic on our business we believe itand Financial Performance, which are highly uncertain and cannot be predicted, will depend upon future developments, including the severity of COVID-19 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 of a vaccine, 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. Such adverse effects, however, may resultinclude decreases in increased costs. While we attempthome sales revenue, new home deliveries, average sales prices of homes, homebuilding gross margin percentages, active selling communities and backlog units, and increases in cancellation rates of home sales contracts, which may materially impact our Financial Performance during the third quarter of 2020 and beyond, as well as our ability to passsatisfy the covenants in our existing and any future debt agreements, including our Credit Facility, and service our outstanding indebtedness. The impact of COVID-19 may also exacerbate other risks discussed in Part I, Item 1A “Risk Factors” in our Annual Report on cost increases to homebuyers through increased prices, we may be unable to offset cost increasesForm 10-K, as revised or supplemented by our Quarterly Reports on Form 10-Q filed with higher selling prices.the SEC since the filing of our most recent Annual Report on Form 10-K, any of which could have a material effect on us.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 28, 2017, we announced that21, 2019, our board of directors approved the 2017our 2019 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, 2018.2020. On July 25, 2017December 16, 2019, we announced that our board of directors had authorized the repurchase of up to an additional $50 million of our common stock under the 2017 Repurchase Program,through March 31, 2020, increasing the aggregate authorizationvalue of shares of common stock authorized to be repurchased under the 2019 Repurchase Program to $150 million from $100 million.
On February 13, 2020, our board of directors discontinued and cancelled the 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 to $150 million.through March 31, 2021. Purchases of common stock pursuant to the 20172020 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 ofunder the Exchange Act. We are not obligated under the 20172020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the program2020 Repurchase Program at any time. Our management will determine the timing and amount of repurchaserepurchases 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 During the three months ended SeptemberJune 30, 2017,2020, we repurchased and retireddid not repurchase any shares under the following shares pursuant to our 20172020 Repurchase Program:
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| | | | | | | | | | | | | | |
| | Total number of shares purchased | | Average price paid per share | | Total number of shares purchased as part of publicly announced program | | Approximate dollar value of shares that may yet be purchased under the program (1) |
July 1, 2017 to July 31, 2017 | | — |
| | $ | — |
| | — |
| | $ | 50,303,199 |
|
August 1, 2017 to August 31, 2017 | | 310,000 |
| | $ | 12.84 |
| | 310,000 |
| | $ | 46,321,839 |
|
September 1, 2017 to September 30, 2017 | | 665,700 |
| | $ | 12.83 |
| | 665,700 |
| | $ | 37,783,295 |
|
Total | | 975,700 |
| | $ | 12.83 |
| | 975,700 |
| | |
__________
(1) DuringProgram. For the threesix months ended SeptemberJune 30, 2017,2020, we repurchased and retired an aggregate of 975,7006,558,323 shares of our common stock at an average price of $15.55 under the 2019 Repurchase Program and 2020 Repurchase Program for $12,519,904.a total of $102.0 million.
Item 6. Exhibits
| | | | | | | | |
Item 6.Exhibit Number | Exhibits
|
Exhibit Description |
| | |
Exhibit
| | Exhibit Description |
| | |
| | Amended and Restated Certificate of Incorporation of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company'sCompany’s Current Report on Form 8-K (filed July 7, 2015)) |
| | |
| | Amended and Restated Bylaws of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (filed October 27, 2016)) |
| | |
| | Fifth Supplemental Indenture, dated as of June 10, 2020, among TRI Pointe Group, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (filed June 10, 2020)) |
| | |
| | Form of 5.700% Senior Note due 2028 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (filed June 10, 2020)) |
| | |
| | Chief Executive Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002 |
| | |
| | Chief Financial Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002 |
| | |
| | Chief Executive Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002 |
| | |
| | Chief Financial Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002 |
| | |
101 | | The following materials from TRI Pointe Group, Inc.’s Quarterly Report on Form 10-Q for the ninethree months ended SeptemberJune 30, 2017,2020, formatted in Inline eXtensible Business Reporting Language (XBRL)(iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v)(iv) Condensed Notes to Consolidated Financial Statement. |
| | |
104 | | Cover page from TRI Pointe Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| TRI Pointe Group, Inc. | |
| | |
Date: July 24, 2020 | TRI Pointe Group, Inc. |
By: | | |
| By: | /s/ Douglas F. Bauer |
| | Douglas F. Bauer |
| | Chief Executive Officer |
| By: | /s/ Michael D. Grubbs(Principal Executive Officer) |
Date: July 24, 2020 | By: | Michael D. Grubbs/s/ Glenn J. Keeler |
Date: October 25, 2017 | | Glenn J. Keeler |
| | Chief Financial Officer |
| | (Principal Financial Officer) |