Fourth Quarter Highlights
-Net New Home Orders Increased 143% to 1,078-
-Backlog Units Increased 58% to 2,320, and Backlog Dollar Value Increased 38% to $1.6 Billion-
-Active Selling Communities Increased 14% to 155-
-New Home Deliveries of 1,813 for Home Sales Revenue of $1.2 Billion-
-Homebuilding Gross Margin Percentage of 22.9%-
-Diluted Earnings Per Share of $1.36-
INCLINE VILLAGE, Nev., Feb. 20, 2024 (GLOBE NEWSWIRE) — Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the fourth quarter ended December 31, 2023 and full year 2023.
“2023 proved to be another strong year for Tri Pointe Homes, capped off by a successful fourth quarter, during which we reported home sales revenue of $1.2 billion, homebuilding gross margin percentage of 22.9%, and diluted earnings per share of $1.36,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer. “The strong finish to the year was accompanied by a 143% increase in net new home orders for the quarter, which led to a 40% increase for the full year. We ended the year with 155 active selling communities, which was a 14% increase over the prior year. Based on our strong land pipeline with approximately 32,000 owned or controlled lots, we expect to grow our community count by another 10% by the end of 2025.”
Mr. Bauer continued, “In the fourth quarter of 2023, our industry saw a notable change in mortgage interest rates, peaking above 8% in October, then rapidly decreasing with shifting market sentiment. Order activity subsequently increased as we moved through the quarter and that momentum has continued into 2024, with both January and February off to a strong start.”
“We remain encouraged by the fundamentals of the housing market, including household formations, strong demand from Millennial and Gen-Z buyers, a more normalized supply chain, and shorter cycle times,” stated Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “These dynamics, along with the lack of resale supply, should continue to support the homebuilding industry, whose market share of total home sales sits at historical highs.”
Mr. Bauer concluded, “As a growth-oriented company, we are focused on growing scale in our existing markets and targeting new markets through organic startups or M&A. Last year, we announced our organic entry into Utah, and we are actively looking for growth in the Southeast by expanding our footprint into the Coastal Carolinas and Florida markets. We believe our strong balance sheet positions us well to return capital to stockholders through share repurchases, while maintaining sufficient liquidity to expand our market scale and tap into new opportunities that fit within our growth strategy.”
Results and Operational Data for Fourth Quarter 2023 and Comparisons to Fourth Quarter 2022
Net income available to common stockholders was $132.8 million, or $1.36 per diluted share, compared to $203.0 million, or $1.98 per diluted share
Home sales revenue for the quarter was $1.2 billion, a decrease of 17%
New home deliveries of 1,813 homes compared to 2,016 homes, a decrease of 10%
Average sales price of homes delivered of $685,000 compared to $746,000
Homebuilding gross margin percentage of 22.9% compared to 25.0%, a decrease of 210 basis points
Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 26.5%*
Selling, general and administrative (“SG&A”) expense as a percentage of homes sales revenue of 9.3% compared to 7.6%, an increase of 170 basis points
Net new home orders of 1,078 compared to 444, an increase of 143%
Active selling communities averaged 159.3 compared to 136.8, an increase of 16%
Net new home orders per average selling community increased by 109% to 6.8 orders (2.3 monthly) compared to 3.2 orders (1.1 monthly)
Cancellation rate of 12% compared to 42%
Backlog units at quarter end of 2,320 homes compared to 1,472, an increase of 58%
Dollar value of backlog at quarter end of $1.6 billion compared to $1.2 billion, an increase of 38%
Average sales price in backlog at quarter end of $695,000 compared to $791,000, a decrease of 12%
Ratios of debt-to-capital and net debt-to-net capital of 31.5% and 14.6%*, respectively, as of December 31, 2023
Repurchased 1,836,177 shares of common stock at an average price of $27.23 for an aggregate dollar amount of $50.0 million during the quarter ended December 31, 2023
Ended fourth quarter of 2023 with total liquidity of $1.6 billion, including cash of $869.0 million and $697.7 million of availability under the Company’s unsecured revolving credit facility
* See “Reconciliation of Non-GAAP Financial Measures”
Results and Operational Data for Full Year 2023 and Comparisons to Full Year 2022
Net income available to common stockholders was $343.7 million, or $3.45 per diluted share, compared to $576.1 million, or $5.54 per diluted share
Home sales revenue of $3.7 billion compared to $4.3 billion, a decrease of 15%
New home deliveries of 5,274 homes compared to 6,063 homes, a decrease of 13%
Average sales price of homes delivered of $693,000 compared to $708,000, a decrease of 2%
Homebuilding gross margin percentage of 22.3% compared to 26.4%, a decrease of 410 basis points
Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 25.9%*
SG&A expense as a percentage of homes sales revenue of 11.0% compared to 9.0%, an increase of 200 basis points
Net new home orders of 6,122 compared to 4,377, an increase of 40%
Active selling communities averaged 147.5 compared to 124.7, an increase of 18%
Net new home orders per average selling community decreased by 21% to 41.5 orders (3.5 monthly) compared to 35.1 orders (2.9 monthly)
Cancellation rate of 10% compared to 19%
Repurchased 6,301,275 shares of common stock at an average price of $27.68 for an aggregate dollar amount of $174.4 million during the full year ended December 31, 2023
* See “Reconciliation of Non-GAAP Financial Measures”
Outlook
For the first quarter of 2024, the Company anticipates delivering between 1,200 and 1,400 homes at an average sales price between $645,000 and $655,000. The Company expects its homebuilding gross margin percentage to be in the range of 22.0% to 23.0% for the first quarter of 2024 and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 12.0% to 13.0%. Lastly, the Company expects its effective tax rate for the first quarter of 2024 to be approximately 26.5%.
For the full year of 2024, the Company anticipates delivering between 6,000 and 6,300 homes at an average sales price between $645,000 and $655,000. The Company expects its homebuilding gross margin percentage to be in the range of 21.5% to 22.5% for the full year of 2024 and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 10.5% to 11.5%. Lastly, the Company expects its effective tax rate for the year to be approximately 26.5%.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) on Tuesday, February 20, 2024. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, Glenn Keeler, Chief Financial Officer, and Linda Mamet, Chief Marketing Officer.
Interested parties can listen to the call live and view the related presentation slides on the internet through the Events & Presentations heading in the Investors section of the Company’s website at www.TriPointeHomes.com. Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at (877) 407-3982, or (201) 493-6780 for international participants. Participants should ask for the Tri Pointe Homes Fourth Quarter 2023 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the call. A replay of the call will be available for one week following the call toll free at (844) 512-2921, or (412) 317-6671 for international participants, using the reference number 13743992. An archive of the webcast will also be available on the Company’s website for a limited time.
About Tri Pointe Homes®
One of the largest homebuilders in the U.S., Tri Pointe Homes, Inc. (NYSE:TPH) is a publicly traded company and a recognized leader in customer experience, innovative design, and environmentally responsible business practices. The company builds premium homes and communities in 10 states, with deep ties to the communities it serves—some for as long as a century. Tri Pointe Homes combines the financial resources, technology platforms and proven leadership of a national organization with the regional insights, longstanding community connections and agility of empowered local teams. Tri Pointe has won multiple Builder of the Year awards, was named to the 2024 Fortune World’s Most Admired Companies™ list, is one of the 2023 Fortune 100 Best Companies to Work For®, and was designated as one of the 2023 PEOPLE Companies That Care®. The company was also named as a Great Place To Work-Certified™ company for three years in a row (2021 through 2023), and was named on several Great Place To Work® Best Workplaces lists in 2022 and 2023. For more information, please visit TriPointeHomes.com.
Forward-Looking Statements
Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending. Forward-looking statements that are included in this press release are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or other words that convey future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effects of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations, particularly within California; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; the prices and availability of supply chain inputs, including raw materials and labor; oil and other energy prices; the effects of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; the effects of weather, including the occurrence of drought conditions in 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 public health emergencies, including outbreaks of contagious diseases, such as COVID-19; transportation costs; federal and state tax policies; the effects of land use, environment and other governmental laws and regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.
Investor Relations Contact:
Media Contact:
InvestorRelations@TriPointeHomes.com, 949-478-8696
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
Change
%
Change
2023
2022
Change
%
Change
Operating Data:
Home sales revenue
$
1,241,258
$
1,504,177
$
(262,919
)
(17
)%
$
3,654,035
$
4,291,563
$
(637,528
)
(15
)%
Homebuilding gross margin
$
283,936
$
376,756
$
(92,820
)
(25
)%
$
815,522
$
1,130,982
$
(315,460
)
(28
)%
Homebuilding gross margin %
22.9
%
25.0
%
(2.1
)%
22.3
%
26.4
%
(4.1
)%
Adjusted homebuilding gross margin %*
26.5
%
27.9
%
(1.4
)%
25.9
%
29.0
%
(3.1
)%
SG&A expense
$
115,456
$
114,726
$
730
1
%
$
402,382
$
387,509
$
14,873
4
%
SG&A expense as a % of home sales revenue
9.3
%
7.6
%
1.7
%
11.0
%
9.0
%
2.0
%
Net income available to common stockholders
$
132,834
$
202,973
$
(70,139
)
(35
)%
$
343,702
$
576,060
$
(232,358
)
(40
)%
Adjusted EBITDA*
$
236,146
$
324,716
$
(88,570
)
(27
)%
$
639,727
$
929,081
$
(289,354
)
(31
)%
Interest incurred
$
35,377
$
35,294
$
83
0
%
$
147,169
$
124,529
$
22,640
18
%
Interest in cost of home sales
$
43,516
$
38,036
$
5,480
14
%
$
116,143
$
106,595
$
9,548
9
%
Other Data:
Net new home orders
1,078
444
634
143
%
6,122
4,377
1,745
40
%
New homes delivered
1,813
2,016
(203
)
(10
)%
5,274
6,063
(789
)
(13
)%
Average sales price of homes delivered
$
685
$
746
$
(61
)
(8
)%
$
693
$
708
$
(15
)
(2
)%
Cancellation rate
12
%
42
%
(30
)%
10
%
19
%
(9
)%
Average selling communities
159.3
136.8
22.5
16
%
147.5
124.7
22.8
18
%
Selling communities at end of period
155
136
19
14
%
Backlog (estimated dollar value)
$
1,612,114
$
1,164,678
$
447,436
38
%
Backlog (homes)
2,320
1,472
848
58
%
Average sales price in backlog
$
695
$
791
$
(96
)
(12
)%
December 31,
2023
December 31,
2022
Change
Balance Sheet Data:
Cash and cash equivalents
$
868,953
$
889,664
$
(20,711
)
Real estate inventories
$
3,337,483
$
3,173,849
$
163,634
Lots owned or controlled
31,960
33,794
(1,834
)
Homes under construction(1)
3,088
2,373
715
Homes completed, unsold
263
288
(25
)
Total debt, net
$
1,382,586
$
1,378,051
$
4,535
Stockholders’ equity
$
3,010,958
$
2,832,389
$
178,569
Book capitalization
$
4,393,544
$
4,210,440
$
183,104
Ratio of debt-to-capital
31.5
%
32.7
%
(1.2
)%
Ratio of net debt-to-net-capital*
14.6
%
14.7
%
(0.1
)%
_____________________________________
(1) Homes under construction included 69 and 78 models at December 31, 2023 and December 31, 2022, respectively.
* See “Reconciliation of Non-GAAP Financial Measures”
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31,
2023
December 31,
2022
Assets
(unaudited)
Cash and cash equivalents
$
868,953
$
889,664
Receivables
224,636
169,449
Real estate inventories
3,337,483
3,173,849
Investments in unconsolidated entities
131,824
129,837
Goodwill and other intangible assets, net
156,603
156,603
Deferred tax assets, net
37,996
34,851
Other assets
157,093
165,687
Total assets
$
4,914,588
$
4,719,940
Liabilities
Accounts payable
$
64,833
$
62,324
Accrued expenses and other liabilities
453,531