TRI Pointe Homes Posts Q3 Profit; Lifts 2013 Outlook - Quick Facts

(RTTNews) - TRI Pointe Homes Inc. (TPH) reported that its third quarter of 2013 net income was $4.7 million, or $0.15 per share, compared to a net loss of $1.5 million, or $0.10 per 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 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 its 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 improved order trends for the 2013 third quarter resulted in an increase in the number of homes in backlog to 227, representing approximately $162.7 million in home sales revenue.

Total revenues for the quarter jumped to $58.54 million from last year's $10.06 million.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.09 per share and revenues of $44.89 million for the quarter. Analysts' estimates typically exclude special items.

On November 4, 2013, the Company announced that its Board of Directors had approved a definitive agreement pursuant to which Weyerhaeuser Real Estate Company or "WRECO", the wholly owned homebuilding and real estate subsidiary of Weyerhaeuser Company (WY) will combine with a subsidiary of TRI Pointe in a transaction valued at approximately $2.7 billion.

With the addition of two new selling communities in the fourth quarter of 2013, the company noted that it will have nine active selling communities at the end of 2013. The company expects to deliver approximately 65% of its 227 units in backlog as of September 30, 2013 during the fourth quarter of 2013. The Company is maintaining deliveries between 370 and 380 units.

Based on the success of its new community openings and continued price appreciation as evidenced by its average sales price in backlog, the company said it raised guidance on 2013 home sales revenue to the range of $225 million to $230 million from the previous range of $215 million to $220 million and earnings per share to the range of $0.46 to $0.48 from the previous range of $0.40 to $0.42, exclusive of expenses associated with the WRECO transaction.

Analysts expect the company to report earnings of $0.41 per share and revenues of $227.00 million for fiscal 2013.