TRI Pointe Homes Hits Record Quarterly Mark

IRVINE, CA-TRI Pointe Homes, Inc. has achieved record results for the third quarter ended September 30, with home sales revenue jumping from $10 million to $56.8 million compared to the same period in 2012.

“Our team continued to execute on our plan by delivering record home sales revenue, homebuilding gross margins, backlog and average selling price in backlog,” said Douglas Bauer, CEO. “As a result of this strong performance, we are excited to announce that we are raising our full year 2013 guidance.”

“With our recent announcement of an agreement to acquire Weyerhaeuser Real Estate Company, we have accelerated our long term plan to be a leading regional homebuilder in some of the nation's fastest growing markets,” Bauer continued.

2013 Third Quarter Highlights and Comparisons to the 2012 Third Quarter

• Net income was $4.7 million, or $0.15 per diluted share compared to a net loss of $(1.5) million, or $(0.10) per diluted share

• New home orders increased to 135 compared to 74

• Active selling communities averaged 7.6 compared to 6.0

  • New home orders per average selling community were 17.8 orders (5.92 monthly) compared to 12.3 orders (4.11 monthly)

  • Cancellation rate improved to 11% compared to 17%

• Backlog of 227 homes with a dollar value of $162.7 million

  • Average sales price in backlog of $717,000

• Home sales revenue was $56.8 million compared to $10.0 million

  • New homes delivered increased to 91 compared to 25

  • Average sales price of homes delivered grew 57% to $624,000

• Homebuilding gross margin percentage improved to 23.0% from 11.7%

• Acquired 252 lots valued at $48.1 million and controlled an additional 520 lots

• Cash, cash equivalents and marketable securities were $62.2 million compared to $19.8 million as of December 31, 2012

• Ratio of debt to capital improved to 22.8% compared to 27.8% as of December 31, 2012

Third quarter 2013 operating results

Net income was $4.7 million, or $0.15 per diluted share in the third quarter of 2013, compared to a net loss of $(1.5) million, or $(0.10) per diluted share for the third quarter of 2012, primarily driven by a $11.9 million increase in homebuilding gross margin due to higher home sales revenue and increased homebuilding gross margin percentages, offset by an increase in SG&A expense of $3.6 million and an increase in our provision for income taxes of $1.8 million. Net income for the third quarter of 2013 was positively impacted by $906,000 in tax benefit recorded to the Company's provision for income taxes related to the reversal of the valuation allowance on the Company's deferred tax assets. The valuation allowance was reversed as a result of, among other things, the Company's recent financial and operating results including three years of cumulative income, four consecutive quarters of profitability and strong growth in orders and backlog. Net income for the third quarter of 2013 impacted by $(490,000) related to costs associated with the WRECO transaction.

Home sales revenue increased $46.8 million to $56.8 million for the 2013 third quarter, as compared to $10.0 million for the same period in 2012, primarily attributable to a significant increase in new homes delivered to 91 and a growth in the Company's average sales price of homes delivered to $624,000. The increase in the average sales price of homes delivered was reflective of increased pricing power and product mix including deliveries in our Northern California projects which have higher average sales prices. Furthermore, the growth in new home deliveries was due to an increase in the average number of selling communities to 7.6 for the 2013 third quarter as compared to 6.0 for the same period in 2012.

New home orders increased to 135 homes for the 2013 third quarter, the highest amount of quarterly orders since the company began acquiring land in 2010. The company's overall absorption rate per average selling community for the three months ended September 30, 2013 increased to 17.8 orders (5.92 monthly), compared to 12.3 orders (4.11 monthly) during the same period in 2012.

The company's homebuilding gross margin percentage for the 2013 third quarter increased to 23.0% compared to 11.7% for the same period in 2012. This increase compared to the same period in 2012 was primarily due to price increases during 2013 and the delivery unit mix from new projects which are achieving higher homebuilding gross margins.

TPI Pointe purchased 252 lots valued at $48.1 million during the 2013 third quarter, 166 of which were located in Southern California, 32 in Northern California and 54 in Colorado. Furthermore, an additional 520 lots were contracted or controlled during the third quarter, 294 of which were located in Southern California, 38 in Northern California and 188 in Colorado. As of September 30, 2013, the company owned or controlled 3,160 lots, of which 1,690 are owned and actively selling or under development and 1,470 are controlled under land option contracts, purchase contracts, or non-binding letters of intent.

Thomas Mitchell, president and COO, commented, “We are excited that in addition to executing on our homebuilding operations, we have been extremely successful acquiring new land in all three of our core markets. This additional land will facilitate our rapid growth, further diversify our product portfolio, and increase our market share.”