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TRI Pointe Group, Inc. (TPH)
Q2 2017 Earnings Conference Call
July 26, 2017 10:00 AM ET
Chris Martin - VP, Finance and IR
Doug Bauer - CEO
Mike Grubbs - CFO
Tom Mitchell - COO and President
Alan Ratner - Zelman & Associates
Stephen Kim - Evercore ISI
Mark Weintraub - Buckingham Research Group
Jack Micenko - SIG
Mike Dahl - Barclays
Jay McCanless - Wedbush
Nishu Sood - Deutsche Bank
Carl Reichardt - BTIG
Alex Barron - Housing Research Center
Ivy Zelman - Zelman & Associates
Previous Statements by TPH
» TRI Pointe's (TPH) CEO Doug Bauer on Q1 2017 Results - Earnings Call Transcript
» TRI Pointe's (TPH) CEO Doug Bauer on Q4 2016 Results - Earnings Call Transcript
» TRI Pointe Homes' (TPH) CEO Douglas Bauer on Q3 2016 Results - Earnings Call Transcript
» TRI Pointe Homes' (TPH) CEO Douglas Bauer on Q2 2016 Results - Earnings Call Transcript
I would now like to turn the conference over to our host, Mr. Chris Martin, Vice President of Finance and Investor Relations for TRI Pointe Group. Thank you. You may begin.
Good morning and welcome to the TRI Pointe Group earnings conference call. Earlier today, the company released its financial results for the second quarter of 2017. Documents detailing these results, including a deck -- a slide deck under the presentations tab are available on the company's Investor Relations website at www.tripointegroup.com.
Before the call begins, I would like to remind everyone that certain statements made in the course of this call, which are not historical facts, are forward-looking statements that involve risks and uncertainties.
A discussion of such risks and uncertainties and other important factors that could cause actual operating results to differ materially from those in the forward-looking statements are detailed in the company's filings made with the SEC, including in its most recent annual report on Form 10-K and its quarterly reports on Form 10-Q.
The company undertakes no duty to update these forward-looking statements that are made during the course of this call. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through the TRI Pointe website and in its filings with the SEC.
Hosting the call today is Doug Bauer, the company's Chief Executive Officer; Mike Grubbs, the company's Chief Financial Officer; and Tom Mitchell, the company's Chief Operating Officer and President.
With that, I will now turn the call over to Doug.
Thank you, Chris and good morning everyone joining us on the call today. I'm pleased to report that TRI Pointe Group recorded another quarter of strong operational and financial performance, highlighted by the 15% increase in net new home orders and in net income of $32.7 million or $0.21 per diluted share.
We met and exceeded our previously stated guidance for new home deliveries, home billing gross margins and quarter end community count and put ourselves in a great position to achieve our goals for the back half of the year, thanks in part to a 31% increase in the value of our backlog.
In general, the excellent sales momentum we experienced in the first quarter continued into second quarter and in certain markets, our momentum accelerated as the quarter progressed.
The majority of our communities continue to generate sales at a pace that allowed us to push pricing higher, which helped offset cost increases and resulting in improved margins in a number of our markets.
Part of our strong sales faced this quarter can be attributed to the overall strength of the markets in which we build. But I believe an equally important factor is the uniqueness of our home offerings and the attention to detail we put into the design and development of our communities.
We pride ourselves on being on the forefront for homebuilding design and innovation and believe that this is a key differentiator for our company as well as an important factor on why we have delivered a better-than-peer group average sales phase on a consistent basis.
TRI Pointe Group has appointed particular emphasis on creating new homes and living spaces that appeal to two of the biggest market segments in our industry, Millennials and Active Adults.
For Millennials, it started out with our award-winning Responsive Home, which we launched at the International Builders Show in Las Vegas in 2016. These homes feature the latest in-home technology, flexible floor plans, and authentic functional exterior and interior designs that cater to the wants and needs of millennials.
We have put this content into production community at our Strata community at Las Vegas and the response has been overwhelmingly positive, with 31 orders since its debut this past March.
We plan to build on our success of Strata implementing some of the core concepts of the Responsive Homes throughout our homebuilding brands. We are also broadening our product offerings for the Active Adults in several of our markets by designing age-targeted communities that are integrated into our existing master plans.
Our research has shown that this age cohort has increasingly interested in staying connected to the community as a whole rather than living in an isolated age-restricted development.
We have recently previewed Verano, a new Active Adult neighborhood at our Aliento master plan community at Santa Clarita, California. Response has been extremely positive and we anticipate strong sales after our grand opening in mid-August.
At our Pardee Homes in the Inland Empire, we are currently planning and developing Aldous, a 700-unit Active Adult community within our Sundance master plan. This strategy will enable us to increase our deliveries from Sundance by a 150 to 200 homes per year and is formula that will help maximize our adjacent 4,000-unit master plan as well and increase our overall returns.