Tri Pointe Homes(TPH) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements show a decline in assets, revenue, and net income for the period Consolidated Balance Sheets Total assets decreased to $4.80 billion, driven by a significant reduction in cash and cash equivalents Balance Sheet Summary | Balance Sheet Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $622,642 | $970,045 | | Real estate inventories | $3,301,302 | $3,153,459 | | Total assets | $4,797,842 | $4,891,115 | | Liabilities & Equity | | | | Total liabilities | $1,507,748 | $1,555,393 | | Total stockholders' equity | $3,289,961 | $3,335,710 | | Total liabilities and equity | $4,797,842 | $4,891,115 | - Cash and cash equivalents decreased by approximately 36% from $970.0 million at the end of 2024 to $622.6 million as of June 30, 2025[13] - Real estate inventories increased from $3.15 billion to $3.30 billion during the first six months of 2025[13] Consolidated Statements of Operations The company reported a significant year-over-year decline in revenue and net income for Q2 and YTD 2025 Operations Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Home sales revenue | $879,832 | $1,133,008 | $1,600,618 | $2,051,361 | | Total revenues | $884,010 | $1,137,950 | $1,607,437 | $2,064,158 | | Income before income taxes | $84,350 | $159,229 | $170,860 | $289,809 | | Net income available to common stockholders | $60,748 | $118,002 | $124,784 | $217,057 | | Diluted EPS | $0.68 | $1.25 | $1.38 | $2.28 | Consolidated Statements of Equity Stockholders' equity decreased to $3.29 billion, impacted by net income and significant share repurchases - For the six months ended June 30, 2025, the company recorded net income of $124.7 million and repurchased shares for a total cost of $176.7 million[18] - The number of common shares outstanding decreased from 92,451,729 at December 31, 2024, to 87,506,511 at June 30, 2025, primarily due to share repurchases[18] Consolidated Statements of Cash Flows Net cash used in operations was $105.4 million, a reversal from cash provided in the prior-year period Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(105,416) | $167,894 | | Net cash used in investing activities | $(39,549) | $(15,410) | | Net cash used in financing activities | $(202,438) | $(528,497) | | Net decrease in cash and cash equivalents | $(347,403) | $(376,013) | - Share repurchases (excluding excise tax) amounted to $175.1 million in the first six months of 2025, compared to $86.7 million in the prior-year period[21] Notes to Consolidated Financial Statements Notes detail segment information, inventory impairments, debt structure, and stock compensation plans - The company operates in two principal businesses: homebuilding and financial services, with homebuilding further divided into West, Central, and East segments[41][42] - A real estate inventory impairment charge of $11.0 million was recorded in Q2 2025 related to one active community in the West reporting segment[54] - As of June 30, 2025, the company had $647.1 million in senior notes and $262.9 million in loans payable outstanding[75][79] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses challenging market conditions, declining operational results, and long-term positive fundamentals Overview and Outlook Q2 2025 market softness led to a 22% revenue decline, though long-term demand drivers remain intact - The U.S. housing market in Q2 2025 was challenged by policy uncertainty, leading to greater price sensitivity and a more measured approach from homebuyers[136] - Long-term housing demand fundamentals remain strong, supported by Millennial and Gen Z demographics and a persistent undersupply of housing[137] Q2 2025 Key Metrics | Metric | Value | YoY Change | | :--- | :--- | :--- | | Home Sales Revenue | $879.8 million | -22% | | Net Income | $60.7 million | -49% | | Diluted EPS | $0.68 | -46% | | New Home Deliveries | 1,326 | - | | Net New Home Orders | 1,131 | - | Results of Operations Operational metrics, including new orders, backlog, and gross margins, declined year-over-year - Net new home orders for Q2 2025 decreased 31% YoY to 1,131, driven by a 30% decrease in monthly absorption rates[142] - Backlog as of June 30, 2025, was down 44% in units to 1,520 and 41% in dollar value to $1.2 billion compared to the prior year[146] - Q2 2025 homebuilding gross margin percentage fell to 20.8% from 23.6% in Q2 2024, primarily due to an $11.0 million land impairment charge and higher incentives[151] - For the six months ended June 30, 2025, home sales revenue decreased 22% to $1.6 billion, and homebuilding gross margin percentage decreased to 22.2% from 23.3% YoY[163][167] Liquidity and Capital Resources The company maintained strong liquidity of $1.4 billion while actively repurchasing shares - Total liquidity as of June 30, 2025, was $1.4 billion, consisting of $622.6 million in cash and $785.7 million of availability under the Credit Facility[178] - In April 2025, the company amended its credit agreement, increasing the revolving facility from $750 million to $850 million and extending its maturity to April 2030[185] - During the six months ended June 30, 2025, the company repurchased 5,458,694 shares of common stock for $175.0 million[191] Leverage Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Ratio of homebuilding debt-to-capital | 21.7% | 21.6% | | Ratio of net homebuilding debt-to-net capital | 8.0% | (1.6)% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its debt, with no derivatives used for hedging - The primary market risk exposure is related to interest rate fluctuations on outstanding debt[206] - The company did not utilize any derivative financial instruments for hedging or speculative purposes during the six months ended June 30, 2025[206] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material internal control changes - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[207] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[208] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course lawsuits and claims but held zero legal reserves as of June 30, 2025 - Details on legal matters are referenced in Note 13, Commitments and Contingencies[210] Risk Factors No material changes to risk factors were reported since the company's 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K and subsequent quarterly report[211] Issuer Purchases of Equity Securities The company repurchased $100.0 million of shares in Q2 2025 and increased its repurchase authorization in July - In Q2 2025, the company repurchased 3,187,982 shares of its common stock for $100.0 million at an average price of $31.37 per share[212][213] - On July 23, 2025, the board of directors increased the total share repurchase authorization from $250 million to $300 million[213] Other Information No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025[214] Exhibits This section lists filed exhibits, including a credit facility modification and required CEO/CFO certifications - Key exhibits filed include the Fifth Modification Agreement to the company's credit facility and CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[215]