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Tri Pointe Homes (TPH)

Filed: 24 Jul 20, 4:23pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________ 
FORM 10-Q
_____________________________________________________________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number 1-35796
_____________________________________________________________________________________________ 

tph-20200630_g1.jpg 
TRI Pointe Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 _____________________________________________________________________________________________ 
Delaware 61-1763235
(State or other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
_____________________________________________________________________________________________ 
19540 Jamboree Road, Suite 300
Irvine, California 92612
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (949) 438-1400
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
____________________________________________________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTPHNew York Stock Exchange
        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
130,325,865 shares of the registrant's common stock were issued and outstanding as of July 10, 2020.



EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q, references to “TRI Pointe”, the “Company”, “we”, “us”, or “our” (including in the consolidated financial statements and related notes thereto in this report) refer to TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”) and its consolidated subsidiaries.





TRI POINTE GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
June 30, 2020
 

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TRI POINTE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
June 30, 2020December 31, 2019
(unaudited)
Assets
Cash and cash equivalents$474,545  $329,011  
Receivables87,580  69,276  
Real estate inventories3,012,622  3,065,436  
Investments in unconsolidated entities36,040  11,745  
Goodwill and other intangible assets, net159,626  159,893  
Deferred tax assets, net39,744  49,904  
Other assets167,747  173,425  
Total assets$3,977,904  $3,858,690  
Liabilities  
Accounts payable$71,086  $66,120  
Accrued expenses and other liabilities314,818  322,043  
Loans payable250,000  250,000  
Senior notes, net1,166,189  1,033,985  
Total liabilities1,802,093  1,672,148  
Commitments and contingencies (Note 13)
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; 0
   shares issued and outstanding as of June 30, 2020 and
   December 31, 2019, respectively
—  —  
Common stock, $0.01 par value, 500,000,000 shares authorized;
   130,325,865 and 136,149,633 shares issued and outstanding at
   June 30, 2020 and December 31, 2019, respectively
1,303  1,361  
Additional paid-in capital482,111  581,195  
Retained earnings1,692,385  1,603,974  
Total stockholders’ equity2,175,799  2,186,530  
Noncontrolling interests12  12  
Total equity2,175,811  2,186,542  
Total liabilities and equity$3,977,904  $3,858,690  
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Homebuilding:
Home sales revenue$766,942  $692,138  $1,361,780  $1,184,841  
Land and lot sales revenue220  5,183  220  6,212  
Other operations revenue648  637  1,266  1,235  
Total revenues767,810  697,958  1,363,266  1,192,288  
Cost of home sales601,434  574,684  1,074,316  996,220  
Cost of land and lot sales374  5,562  576  7,057  
Other operations expense624  627  1,248  1,217  
Sales and marketing45,194  47,065  87,831  86,054  
General and administrative37,554  36,854  77,391  75,451  
Restructuring charges5,549  —  5,549  —  
Homebuilding income from operations77,081  33,166  116,355  26,289  
Equity in loss of unconsolidated entities(25) (26) (39) (51) 
Other (expense) income, net(6,328) 153  (5,955) 6,394  
Homebuilding income before income taxes70,728  33,293  110,361  32,632  
Financial Services:
Revenues2,296  756  3,890  1,058  
Expenses1,285  627  2,364  948  
Equity in income of unconsolidated entities2,932  1,972  4,488  2,747  
Financial services income before income taxes3,943  2,101  6,014  2,857  
Income before income taxes74,671  35,394  116,375  35,489  
Provision for income taxes(18,143) (9,132) (27,964) (9,156) 
Net income$56,528  $26,262  $88,411  $26,333  
Earnings per share  
Basic$0.43  $0.18  $0.67  $0.19  
Diluted$0.43  $0.18  $0.67  $0.18  
Weighted average shares outstanding
Basic130,292,563  142,244,166  132,326,856  142,055,766  
Diluted130,506,567  142,471,191  132,763,775  142,431,725  
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)
 
Number of
Shares of Common
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at March 31, 2020130,236,981  $1,302  $478,122  $1,635,857  $2,115,281  $12  $2,115,293  
Net income—  —  —  56,528  56,528  —  56,528  
Shares issued under share-based awards88,884   230  —  231  —  231  
Minimum tax withholding paid on behalf of employees for restricted stock units—  —  (27) —  (27) —  (27) 
Stock-based compensation expense—  —  3,786  —  3,786  —  3,786  
Share repurchases—  —  —  —  —  —  —  
Balance at June 30, 2020130,325,865  $1,303  $482,111  $1,692,385  $2,175,799  $12  $2,175,811  
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2019136,149,633  $1,361  $581,195  $1,603,974  $2,186,530  $12  $2,186,542  
Net income—  —  —  88,411  88,411  —  88,411  
Shares issued under share-based awards734,555   913  —  921  —  921  
Minimum tax withholding paid on behalf of employees for restricted stock units—  —  (5,473) —  (5,473) —  (5,473) 
Stock-based compensation expense—  —  7,411  —  7,411  —  7,411  
Share repurchases(6,558,323) (66) (101,935) —  (102,001) —  (102,001) 
Balance at June 30, 2020130,325,865  $1,303  $482,111  $1,692,385  $2,175,799  $12  $2,175,811  
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at March 31, 2019142,210,147  $1,422  $658,743  $1,396,858  $2,057,023  $13  $2,057,036  
Net income—  —  —  26,262  26,262  —  26,262  
Shares issued under share-based awards48,516   —  —   —   
Minimum tax withholding paid on behalf of employees for restricted stock units—  —  (7) —  (7) —  (7) 
Stock-based compensation expense—  —  3,351  —  3,351  —  3,351  
Balance at June 30, 2019142,258,663  $1,423  $662,087  $1,423,120  $2,086,630  $13  $2,086,643  
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2018141,661,713  $1,417  $658,720  $1,396,787  $2,056,924  $13  $2,056,937  
Net income—  —  —  26,333  26,333  —  26,333  
Shares issued under share-based awards596,950   193  —  199  —  199  
Minimum tax withholding paid on behalf of employees for restricted stock units—  —  (3,612) —  (3,612) —  (3,612) 
Stock-based compensation expense—  6,786  6,786  6,786  
Balance at June 30, 2019142,258,663  $1,423  $662,087  $1,423,120  $2,086,630  $13  $2,086,643  

See accompanying condensed notes to the unaudited consolidated financial statements.



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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 Six Months Ended June 30,
 20202019
Cash flows from operating activities:  
Net income$88,411  $26,333  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation and amortization12,176  11,561  
Equity in income of unconsolidated entities, net(4,449) (2,696) 
Deferred income taxes, net10,160  3,097  
Amortization of stock-based compensation7,411  6,786  
Charges for impairments and lot option abandonments1,729  5,490  
Changes in assets and liabilities:  
Real estate inventories53,902  (50,700) 
Receivables(18,304) (6,778) 
Other assets3,677  (1,774) 
Accounts payable4,966  (18,221) 
Accrued expenses and other liabilities(5,784) (80,964) 
Returns on investments in unconsolidated entities, net5,475  3,927  
Loss on extinguishment of debt6,858  —  
Net cash provided by (used in) operating activities166,228  (103,939) 
Cash flows from investing activities:
Purchases of property and equipment(12,002) (13,142) 
Proceeds from sale of property and equipment17  46  
Investments in unconsolidated entities(25,715) (712) 
Net cash used in investing activities(37,700) (13,808) 
Cash flows from financing activities:
Borrowings from debt850,000  400,000  
Repayment of debt(721,673) (381,895) 
Debt issuance costs(4,768) (3,125) 
Proceeds from issuance of common stock under share-based awards921  199  
Minimum tax withholding paid on behalf of employees for share-based awards(5,473) (3,612) 
Share repurchases(102,001) —  
Net cash provided by financing activities17,006  11,567  
Net increase (decrease) in cash and cash equivalents145,534  (106,180) 
Cash and cash equivalents–beginning of period329,011  277,696  
Cash and cash equivalents–end of period$474,545  $171,516  
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization
TRI Pointe is engaged in the design, construction and sale of innovative single-family attached and detached homes through its portfolio of 6 quality brands across 10 states, including Maracay in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California, Colorado and the Carolinas and Winchester Homes in Maryland and Virginia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its influence on our future results.
The consolidated financial statements include the accounts of TRI Pointe Group and its wholly owned subsidiaries, as well as other entities in which TRI Pointe Group has a controlling interest and variable interest entities (“VIEs”) in which TRI Pointe Group is the primary beneficiary.  The noncontrolling interests as of June 30, 2020 and December 31, 2019 represent the outside owners’ interests in the Company’s consolidated entities.  All significant intercompany accounts have been eliminated upon consolidation.
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, we apply the following steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
Home sales revenue
We generate the majority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the home is transferred to the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied in less than one year from the original contract date. Included in home sales revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.
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Land and lot sales revenue
Historically, we have generated land and lot sales revenue from a small number of transactions, although in some years we have realized a significant amount of revenue and gross margin. We do not expect our future land and lot sales revenue to be material, but we still consider these sales to be an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to our home sales, revenue from land and lot sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our homebuilding other operations revenue relates to a ground lease at our Quadrant Homes reporting segment. We are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 842, Leases. We do not recognize a material profit on this ground lease.
Financial services revenues
TRI Pointe Solutions is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, TRI Pointe Assurance title and escrow services operations, and TRI Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
TRI Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting.  We record a percentage of income earned by TRI Pointe Connect based on our ownership percentage in this joint venture. TRI Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated statements of operations.
Title and escrow services operations
TRI Pointe Assurance provides title examinations for our homebuyers in Austin (Texas), Colorado and Maryland and both title examinations and escrow services for our homebuyers in Arizona, Nevada, Texas and Virginia.  TRI Pointe Assurance is a wholly owned subsidiary of TRI Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. TRI Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
TRI Pointe Advantage is a wholly owned subsidiary of TRI Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. TRI Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, substantially all of which had been paid as of June 30, 2020.
Recently Issued Accounting Standards Not Yet Adopted
In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning after December 15, 2020. We do not expect the adoption of ASU 2019-12 to have a material impact on our consolidated financial statements.
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Adoption of New Accounting Standards
In January 2017, the FASB issued ASU No. 2017-04, IntangiblesGoodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We adopted ASU 2017-04 on January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses for financial instruments, including receivables from community facilities districts or similar municipalities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. We adopted ASU 2016-13 on January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.


2. Segment Information
We operate 2 principal businesses: homebuilding and financial services.
Our homebuilding operations consist of 6 homebuilding brands that acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon these factors, our homebuilding operations are comprised of the following 6 reportable segments: Maracay, consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; TRI Pointe Homes, consisting of operations in California and Colorado, as well as early stage operations in the Carolinas; and Winchester Homes, consisting of operations in Maryland and Virginia.
Our TRI Pointe Solutions financial services operation is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, our TRI Pointe Assurance title and escrow services operations, and our TRI Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate is allocated to the homebuilding reporting segments.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

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Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues  
Maracay$86,674  $55,653  $158,426  $95,214  
Pardee Homes242,282  194,699  420,684  329,562  
Quadrant Homes37,298  71,066  81,372  114,937  
Trendmaker Homes121,257  121,963  217,377  192,784  
TRI Pointe Homes206,474  192,752  365,144  364,543  
Winchester Homes73,825  61,825  120,263  95,248  
Total homebuilding revenues767,810  697,958  1,363,266  1,192,288  
Financial services2,296  756  3,890  1,058  
Total$770,106  $698,714  $1,367,156  $1,193,346  
Income (loss) before income taxes
Maracay$8,042  $2,986  $12,604  $4,176  
Pardee Homes48,980  14,735  82,459  13,944  
Quadrant Homes2,246  5,193  4,943  2,554  
Trendmaker Homes10,512  6,908  15,309  5,310  
TRI Pointe Homes15,741  12,280  20,101  22,489  
Winchester Homes4,670  2,555  5,716  1,789  
Corporate(19,463) (11,364) (30,771) (17,630) 
Total homebuilding income before income taxes70,728  33,293  110,361  32,632  
Financial services3,943  2,101  6,014  2,857  
Total$74,671  $35,394  $116,375  $35,489  
 
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Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
June 30, 2020December 31, 2019
Real estate inventories
Maracay$352,316  $338,259  
Pardee Homes1,209,444  1,218,384  
Quadrant Homes270,446  264,437  
Trendmaker Homes240,467  268,759  
TRI Pointe Homes699,708  737,662  
Winchester Homes240,241  237,935  
Total$3,012,622  $3,065,436  
Total assets
Maracay$389,587  $382,262  
Pardee Homes1,306,846  1,300,047  
Quadrant Homes320,792  331,187  
Trendmaker Homes300,157  353,610  
TRI Pointe Homes893,417  930,348  
Winchester Homes304,466  291,456  
Corporate429,512  241,357  
Total homebuilding assets3,944,777  3,830,267  
Financial services33,127  28,423  
Total$3,977,904  $3,858,690  


3. Earnings Per Share
The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Numerator:    
Net income$56,528  $26,262  $88,411  $26,333  
Denominator:    
Basic weighted-average shares outstanding130,292,563  142,244,166  132,326,856  142,055,766  
Effect of dilutive shares:   
Stock options and unvested restricted stock units214,004  227,025  436,919  375,959  
Diluted weighted-average shares outstanding130,506,567  142,471,191  132,763,775  142,431,725  
Earnings per share    
Basic$0.43  $0.18  $0.67  $0.19  
Diluted$0.43  $0.18  $0.67  $0.18  
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share3,090,298  2,920,708  2,992,479  3,144,445  
  
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4. Receivables
Receivables consisted of the following (in thousands):
June 30, 2020December 31, 2019
Escrow proceeds and other accounts receivable, net$47,836  $29,282  
Warranty insurance receivable (Note 13)39,744  39,994  
Total receivables$87,580  $69,276  

Receivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables when collection becomes doubtful.  Receivables were net of allowances for doubtful accounts of $419,000 and $426,000 as of June 30, 2020 and December 31, 2019, respectively.
 

5. Real Estate Inventories
Real estate inventories consisted of the following (in thousands):
June 30, 2020December 31, 2019
Real estate inventories owned:
Homes completed or under construction$1,039,681  $951,974  
Land under development1,452,440  1,641,354  
Land held for future development152,032  122,847  
Model homes286,760  275,204  
Total real estate inventories owned2,930,913  2,991,379  
Real estate inventories not owned:
Land purchase and land option deposits81,709  74,057  
Total real estate inventories not owned81,709  74,057  
Total real estate inventories$3,012,622  $3,065,436  
 
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future. The increase in land held for future development is attributable to two projects located in the Inland Empire in California at our Pardee Homes reporting segment that were transferred from land under development.
Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements, as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities.
Interest incurred, capitalized and expensed were as follows (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Interest incurred$21,828  $21,962  $42,607  $45,335  
Interest capitalized(21,828) (21,962) (42,607) (45,335) 
Interest expensed$—  $—  $—  $—  
Capitalized interest in beginning inventory$196,313  $193,440  $192,356  $184,400  
Interest capitalized as a cost of inventory21,828  21,962  42,607  45,335  
Interest previously capitalized as a cost of
inventory, included in cost of sales
(21,806) (18,107) (38,628) (32,440) 
Capitalized interest in ending inventory$196,335  $197,295  $196,335  $197,295  
 
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Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered.  Interest that is expensed as incurred is included in other (expense) income, net.
Real Estate Inventory Impairments and Land Option Abandonments
Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Real estate inventory impairments$—  $—  $—  $—  
Land and lot option abandonments and pre-acquisition charges1,380  288  1,729  5,490  
Total$1,380  $288  $1,729  $5,490  
 
Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges. NaN real estate inventory impairments were recorded for the three or six-month periods ended June 30, 2020 or 2019.
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time. 
Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.
  

6. Investments in Unconsolidated Entities
As of June 30, 2020, we held equity investments in 6 active homebuilding partnerships or limited liability companies and 1 financial services limited liability company. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 65%, depending on the investment, with no controlling interest held in any of these investments.
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.
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Assets and liabilities of unconsolidated entities (in thousands):
 
June 30, 2020December 31, 2019
Assets
Cash$12,005  $8,537  
Receivables2,498  7,393  
Real estate inventories198,789  116,760  
Other assets604  703  
Total assets$213,896  $133,393  
Liabilities and equity
Accounts payable and other liabilities$42,248  $11,009  
Company’s equity36,040  11,745  
Outside interests’ equity135,608  110,639  
Total liabilities and equity$213,896  $133,393  
 
Results of operations from unconsolidated entities (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net sales$8,726  $6,353  $14,696  $10,464  
Other operating expense(4,400) (3,528) (8,156) (6,280) 
Other income, net(1) (7) (4)  
Net income$4,325  $2,818  $6,536  $4,185  
Company’s equity in income of unconsolidated entities$2,907  $1,946  $4,449  $2,696  
  

7. Variable Interest Entities
In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. These deposits are recorded as land purchase and land option deposits under real estate inventories not owned on the accompanying consolidated balance sheets.
We analyze each of our land and lot option agreements and other similar contracts under the provisions of ASC 810, Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the landowner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.
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The following provides a summary of our interests in land and lot option agreements (in thousands):
 June 30, 2020December 31, 2019
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
Consolidated VIEs$—  $—  $—  $—  $—  $—  
Unconsolidated VIEs39,070  441,528  N/A42,896  440,974  N/A
Other land option agreements42,639  374,674  N/A31,161  358,345  N/A
Total$81,709  $816,202  $—  $74,057  $799,319  $—  
 
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not considered VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition costs of $7.9 million and $6.0 million as of June 30, 2020 and December 31, 2019, respectively. These pre-acquisition costs are included in real estate inventories as land under development on our consolidated balance sheets.  
  

8. Goodwill and Other Intangible Assets
As of June 30, 2020 and December 31, 2019, $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets. The Company’s goodwill balance is included in the TRI Pointe Homes reporting segment in Note 2, Segment Information
We have 2 intangible assets as of June 30, 2020, comprised of an existing trade name from the acquisition of Maracay in 2006, which has a 20 year useful life, and a TRI Pointe Homes trade name resulting from the acquisition of Weyerhaeuser Real Estate Company in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):
June 30, 2020December 31, 2019
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Goodwill$139,304  $—  $139,304  $139,304  $—  $139,304  
Trade names27,979  (7,657) 20,322  27,979  (7,390) 20,589  
Total$167,283  $(7,657) $159,626  $167,283  $(7,390) $159,893  
 
The remaining useful life of our amortizing intangible asset related to the Maracay trade name was 5.7 and 6.2 years as of June 30, 2020 and December 31, 2019, respectively. The net carrying amount related to this intangible asset was $3.0 million and $3.3 million as of June 30, 2020 and December 31, 2019, respectively. Amortization expense related to this intangible asset was $134,000 for each of the three-month periods ended June 30, 2020 and 2019, respectively, and $267,000 for each of the six-month periods ended June 30, 2020 and December 31, 2019, respectively. Amortization of this intangible was charged to sales and marketing expense.  Our $17.3 million indefinite life intangible asset related to the TRI Pointe Homes trade name is not amortizing.  All trade names and goodwill are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.
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Expected amortization of our intangible asset related to Maracay for the remainder of 2020, the next four years and thereafter is (in thousands):
Remainder of 2020$267  
2021534  
2022534  
2023534  
2024534  
Thereafter619  
Total$3,022  


9. Other Assets
Other assets consisted of the following (in thousands):
June 30, 2020December 31, 2019
Prepaid expenses$21,273  $24,070  
Refundable fees and other deposits29,785  30,242  
Development rights, held for future use or sale2,063  2,213  
Deferred loan costs—loans payable3,709  4,345  
Operating properties and equipment, net58,155  57,803  
Lease right-of-use assets49,506  50,947  
Other3,256  3,805  
Total$167,747  $173,425  


10. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
June 30, 2020December 31, 2019
Accrued payroll and related costs$25,015  $42,798  
Warranty reserves (Note 13)
79,190  76,607  
Estimated cost for completion of real estate inventories78,601  90,899  
Customer deposits29,925  20,390  
Income tax liability to Weyerhaeuser346  346  
Accrued income taxes payable18,605  1,530  
Liability for uncertain tax positions (Note 15)486  486  
Accrued interest6,886  11,952  
Other tax liability7,665  8,448  
Lease liabilities54,395  56,125  
Other13,704  12,462  
Total$314,818  $322,043  

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11. Senior Notes and Loans Payable
Senior Notes
The Company’s outstanding senior notes (together, the “Senior Notes”) consisted of the following (in thousands):
June 30, 2020December 31, 2019
4.875% Senior Notes due July 1, 2021$83,734  $300,000  
5.875% Senior Notes due June 15, 2024450,000  450,000  
5.250% Senior Notes due June 1, 2027300,000  300,000  
5.700% Senior Notes due June 15, 2028350,000  —  
Discount and deferred loan costs(17,545) (16,015) 
Total$1,166,189  $1,033,985  
 
In June 2020, TRI Pointe Group issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15.
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the “2021 Notes”) at 99.44% of their aggregate principal amount. Net proceeds of this issuance were $293.9 million, after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.
TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the $450 million aggregate principal amount 5.875% Senior Notes due 2024 (the “2024 Notes”). The 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The 2024 Notes mature on June 15, 2024, with interest payable semiannually in arrears on June 15 and December 15.
As of June 30, 2020, there were $13.6 million of capitalized debt financing costs, included in senior notes, net on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $5.6 million and $9.8 million as of June 30, 2020 and December 31, 2019, respectively.
Loans Payable
The Company’s outstanding loans payable consisted of the following (in thousands):
June 30, 2020December 31, 2019
Term loan facility$250,000  $250,000  
Total$250,000  $250,000  

On March 29, 2019, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated the Company’s Amended and Restated Credit Agreement, dated as of July 7, 2015. The Credit Facility (as defined below), which matures on March 29, 2023, consists of a $600 million revolving credit facility (the “Revolving Facility”) and a $250 million term loan facility (the “Term Facility” and together with the Revolving Facility, the “Credit Facility”). The Term Facility includes a 90-day delayed draw provision that allowed the Company to draw the full
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$250 million from the Term Facility in June 2019 in connection with the maturity of the 4.375% Senior Notes that matured on June 15, 2019. The Company may increase the Credit Facility to not more than $1 billion in the aggregate, at its request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the Revolving Facility in the ordinary course of business to repay senior notes and fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00%, depending on the Company’s leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company’s leverage ratio.
As of June 30, 2020, we had no outstanding debt under the Revolving Facility and there was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of credit. As of June 30, 2020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there were $3.7 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the remaining term of the Credit Facility.  Accrued interest, including loan commitment fees, related to the Credit Facility was $488,000 and $1.2 million as of June 30, 2020 and December 31, 2019, respectively.
At June 30, 2020 and December 31, 2019, we had outstanding letters of credit of $40.6 million and $32.6 million, respectively.  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
Interest Incurred
During the three months ended June 30, 2020 and 2019, the Company incurred interest of $21.8 million and $22.0 million, respectively, related to all debt during the period.  Included in interest incurred are amortization of deferred financing and Senior Note discount costs of $1.2 million and $1.9 million for the three months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2020 and 2019, the Company incurred interest of $42.6 million and $45.3 million, respectively, related to all debt during the period.  Included in interest incurred was amortization of deferred financing and Senior Note discount costs of $2.4 million and $3.8 million for the six months ended June 30, 2020 and 2019, respectively. Accrued interest related to all outstanding debt at June 30, 2020 and December 31, 2019 was $6.9 million and $12.0 million, respectively. 
Covenant Requirements
The Senior Notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions.
Under the Credit Facility, the Company is required to comply with certain financial covenants, including those relating to consolidated tangible net worth, leverage, liquidity or interest coverage, and a spec unit inventory test. The Credit Facility also requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods.
The Company was in compliance with all applicable financial covenants as of June 30, 2020 and December 31, 2019.

12. Fair Value Disclosures
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
Level 1—Quoted prices for identical instruments in active markets
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date
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Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date
Fair Value of Financial Instruments
A summary of assets and liabilities at June 30, 2020 and December 31, 2019, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):
June 30, 2020December 31, 2019
HierarchyBook ValueFair ValueBook ValueFair Value
Senior Notes (1)
Level 2$1,179,783  $1,195,826  $1,045,072  $1,104,750  
Term loan facility (2)
Level 2$250,000  $250,000  $250,000  $250,000  
 __________
(1)The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $13.6 million and $11.1 million as of June 30, 2020 and December 31, 2019, respectively. The estimated fair value of the Senior Notes at June 30, 2020 and December 31, 2019 is based on quoted market prices.
(2)The estimated fair value of the Term Loan Facility as of June 30, 2020 approximated book value due to the variable interest rate terms of this loan.

At June 30, 2020 and December 31, 2019, the carrying value of cash and cash equivalents and receivables approximated fair value due to their short-term nature and variable interest rate terms.
Fair Value of Nonfinancial Assets
Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicating the carrying value is not recoverable. No carrying values were adjusted to fair value for the six months ended June 30, 2020 or the year ended December 31, 2019.

13. Commitments and Contingencies
Legal Matters
Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices, environmental protection and financial services. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.
We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise these estimates when necessary.  In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements.  For matters as to which the Company believes a loss is probable and reasonably estimable, we had $319,000 and $419,000 of legal reserves as of June 30, 2020 and December 31, 2019, respectively.
Warranty
Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.
We maintain general liability insurance designed to protect us against a portion of our risk of loss from warranty and construction defect-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy. 
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Our warranty reserve and related estimated insurance recoveries are based on actuarial analysis that uses our historical claim and expense data, as well as industry data to estimate these overall costs and related recoveries. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a warranty or construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.
We also record expected recoveries from insurance carriers based on actual insurance claims made and actuarially determined amounts that depend on various factors, including the above-described reserve estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. Outstanding warranty insurance receivables were $39.7 million and $40.0 million as of June 30, 2020 and December 31, 2019, respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheets.
Warranty reserve activity consisted of the following (in thousands):
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Warranty reserves, beginning of period$76,487  $70,947  $76,607  $71,836  
Warranty reserves accrued6,988  6,385  12,144  10,655  
Warranty expenditures(4,285) (5,861) (9,561) (11,020) 
Warranty reserves, end of period$79,190  $71,471  $79,190  $71,471  
 
Performance Bonds
We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. The beneficiaries of the bonds are various municipalities. As of June 30, 2020 and December 31, 2019, the Company had outstanding surety bonds totaling $614.2 million and $611.6 million, respectively. As of June 30, 2020 and December 31, 2019, our estimated cost to complete obligations related to these surety bonds was $390.8 million and $382.3 million, respectively.
Lease Obligations
Under ASC 842 we recognize a right-of-use lease asset and a lease liability for contracts deemed to contain a lease at the inception of the contract. Our lease population is fully comprised of operating leases, which are now recorded at the net present value of future lease obligations existing at each balance sheet date. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Key estimates involved with ASC 842 include the discount rate used to measure our future lease obligations and the lease term, where considerations include renewal options and intent to renew. Lease right-of-use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities on our consolidated balance sheet.
Operating Leases
We lease certain property and equipment under non-cancelable operating leases. Office leases are for terms of up to ten years and generally provide renewal options. In most cases, we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases. Equipment leases are typically for terms of three to four years.
Ground Leases
In 1987, we obtained 2 55-year ground leases of commercial property that provided for 3 renewal options of ten years each and 1 45-year renewal option.  We exercised the 3 ten-year extensions on 1 of these ground leases to extend
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the lease through 2071.  The commercial buildings on these properties have been sold and the ground leases have been sublet to the buyers.
For one of these leases, we are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease has been subleased through 2041 to the buyers of the commercial buildings. For the second lease, the buyers of the buildings are responsible for making lease payments directly to the landowner, however, we have guaranteed the performance of the buyers/lessees. See below for additional information on leases (dollars in thousands):
Three Months Ended June 30, 2020Three Months Ended June 30, 2019Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Lease Cost
Operating lease cost (included in SG&A expense)$2,456  $2,166  $4,794  $4,210  
Ground lease cost (included in other operations expense)624  627  1,248  1,217  
Sublease income, operating leases—  —  —  —  
Sublease income, ground leases (included in other operations revenue)(648) (637) (1,266) (1,235) 
Net lease cost$2,432  $2,156  $4,776  $4,192  
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease cash flows (included in operating cash flows)$2,220  $1,641  $4,234  $3,250  
Ground lease cash flows (included in operating cash flows)$624  $609  $1,248  $1,217  
Right-of-use assets obtained in exchange for new operating lease liabilities$1,135  $346  $1,155  $2,053  
June 30, 2020December 31, 2019
Weighted-average discount rate:
Operating leases5.9 %5.9 %
Ground leases10.2 %10.2 %
Weighted-average remaining lease term (in years):
Operating leases5.86.1
Ground leases47.548.1
The future minimum lease payments under our operating leases are as follows (in thousands):
Property, Equipment and Other Leases
Ground Leases (1)
Remaining in 2020$4,460  $1,535  
20217,855  3,070  
20225,610  3,070  
20234,503  3,070  
20242,779  3,070  
Thereafter6,410  83,515  
Total lease payments$31,617  $97,330  
Less: Interest4,762  69,790  
Present value of operating lease liabilities$26,855  $27,540  
 __________
(1)  Ground leases are fully subleased through 2041, representing $65.5 million of the $97.3 million future ground lease obligations.
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14. Stock-Based Compensation
2013 Long-Term Incentive Plan
The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by TRI Pointe in January 2013 and amended, with the approval of our stockholders, in 2014 and 2015. In addition, our board of directors amended the 2013 Incentive Plan in 2014 to prohibit repricing (other than in connection with any equity restructuring or any change in capitalization) of outstanding options or stock appreciation rights without stockholder approval. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, bonus stock, restricted stock, restricted stock units (“RSUs”) and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.
As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive Plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of our common stock generally shall again be available under the 2013 Incentive Plan. As of June 30, 2020, there were 5,468,092 shares available for future grant under the 2013 Incentive Plan.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Total stock-based compensation$3,786  $3,351  $7,411  $6,786  
 
Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations.  As of June 30, 2020, total unrecognized stock-based compensation related to all stock-based awards was $24.7 million and the weighted average term over which the expense was expected to be recognized was 2.1 years.
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the six months ended June 30, 2020:
OptionsWeighted
Average
Exercise
Price
Per Share
Weighted
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
(in thousands)
Options outstanding at December 31, 2019891,343  $15.03  3.4$994  
Granted—  —  —  —  
Exercised(78,506) $11.94  —  —  
Forfeited(8,257) $14.37  —  —  
Options outstanding at June 30, 2020804,580  $15.34  3$247  
Options exercisable at June 30, 2020804,580  $15.34  3$247  
 
The intrinsic value of each stock option award outstanding or exercisable is the difference between the fair market value of the Company’s common stock at the end of the period and the exercise price of each stock option award to the extent it is considered “in-the-money”. A stock option award is considered to be “in-the-money” if the fair market value of the Company’s stock is greater than the exercise price of the stock option award. The aggregate intrinsic value of options outstanding and options exercisable represents the value that would have been received by the holders of stock option awards had they exercised their stock option award on the last trading day of the period and sold the underlying shares at the closing price on that day.

Summary of Restricted Stock Unit Activity
The following table presents a summary of RSUs for the six months ended June 30, 2020:
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Restricted
Stock
Units
Weighted
Average
Grant Date
Fair Value
Per Share
Aggregate
Intrinsic
Value
(in thousands)
Nonvested RSUs at December 31, 20193,384,351  $12.39  $52,694  
Granted1,458,633  $18.45  —  
Vested(990,929) $13.36  —  
Forfeited(744,904) $10.81  —  
Nonvested RSUs at June 30, 20203,107,151  $15.30  $43,997  

RSUs that vested, as reflected in the table above, during the six months ended June 30, 2020 include previously granted time-based RSUs. RSUs that were forfeited, as reflected in the table above, during the six months ended June 30, 2020 include performance-based RSUs and time-based RSUs that were forfeited for no consideration.

On April 27, 2020, the Company granted an aggregate of 47,080 time-based RSUs to the non-employee members of its board of directors. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2021 annual meeting of stockholders. The fair value of each RSU granted on April 27, 2020 was measured using a price of $10.62 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On March 9, 2020 and February 20, 2020, the Company granted an aggregate of 17,692 and 639,395, respectively, time-based RSUs to certain employees and officers. The RSUs granted vest in equal installment annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 9, 2020 and February 20, 2020 was measured using a price of $14.13 and $18.39 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 20, 2020, the Company granted an aggregate of 547,166 performance-based RSUs to the Company’s Chief Executive Officer, Chief Operating Officer and President, Chief Financial Officer, General Counsel, Chief Marketing Officer and Chief Human Resources Officer. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue, and (ii) 50% to pre-tax earnings. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. Any award earned based on performance achieved may be increased or decreased by 25% based on the Company’s total stockholder return (“TSR'”) relative to its peer-group homebuilders. The performance period for these performance-based RSUs is January 1, 2020 to December 31, 2022. The fair value of these performance-based RSUs was determined to be $19.36 per share based on a Monte Carlo simulation. Each award will be expensed over the requisite service period.

On February 20, 2020, the Company granted an aggregate of 207,300 performance-based RSUs to the Company’s division presidents. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue of the applicable Company division, and (ii) 50% to pre-tax earnings of the applicable Company division. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the applicable Company division’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2020 to December 31, 2022. The fair value of these performance-based RSUs was measured using a price of $18.39, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.

On May 6, 2019, the Company granted an aggregate of 61,488 time-based RSUs to the non-employee members of its board of directors and 1,098 time-based RSUs to certain employees. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2020 annual meeting of stockholders and the RSUs granted to employees vest in equal installments annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on May 6, 2019 was measured using a price of $13.66 per share which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.
On March 11, 2019 and February 28, 2019, the Company granted an aggregate of 3,025 and 990,723, respectively, of time-based RSUs to certain employees and officers. The RSUs granted vest in equal installments annually on the anniversary of the grant date over a three-year period.  The fair value of each RSU granted on March 11, 2019 and February 28, 2019 was measured using a price of $13.22 and $12.60 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.
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On February 28, 2019, the Company granted 247,619, 238,095 and 114,285 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 30% to TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) 70% to earnings per share. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2019 to December 31, 2021. The fair value of the performance-based RSUs related to the TSR metric was determined to be $8.16 per share based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of $12.60 per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.
As RSUs vest for employees, a portion of the shares awarded is generally withheld to cover employee tax withholdings. As a result, the number of RSUs vested and the number of shares of TRI Pointe common stock issued will differ.

15. Income Taxes
We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered.  Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740.  We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable.  Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.
We had net deferred tax assets of $39.7 million and $49.9 million as of June 30, 2020 and December 31, 2019.  We had a valuation allowance related to those net deferred tax assets of $3.5 million as of June 30, 2020 and December 31, 2019.  The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the Company’s future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the Company’s estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the Company’s deferred tax assets.
TRI Pointe has certain liabilities to Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement.  As of both June 30, 2020 and December 31, 2019, we had an income tax liability to Weyerhaeuser of $346,000. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets. During the six months ended June 30, 2019, we amended our existing tax sharing agreement with Weyerhaeuser, pursuant to which the parties agreed, among other things, that we had no further obligation to remit payment to Weyerhaeuser in connection with any potential utilization of certain deductions or losses associated with certain Weyerhaeuser entities with respect to federal and state taxes. As a result of the amendment, during the three months ended March 31, 2019, we decreased our income tax liability to Weyerhaeuser and recorded other income of $6.0 million, which is included in other income, net in the accompanying consolidated statements of operations.
Our provision for income taxes totaled $18.1 million and $9.1 million for the three months ended June 30, 2020 and 2019, respectively and $28.0 million and $9.2 million for the six months ended June 30, 2020 and 2019, respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense.  The Company had $486,000 of uncertain tax positions recorded as of June 30, 2020 and December 31, 2019.  The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years. 
  
16. Related Party Transactions
We had 0 related party transactions for the six months ended June 30, 2020 and 2019.

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17. Supplemental Disclosure to Consolidated Statements of Cash Flows
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):
Six Months Ended June 30,
20202019
Supplemental disclosure of cash flow information:
Interest paid (capitalized), net$1,191  $(3,104) 
Income taxes paid (refunded), net$(12) $10,601  
Supplemental disclosures of noncash activities:
Amortization of senior note discount capitalized to real estate inventory$579  $981  
Amortization of deferred loan costs capitalized to real estate inventory$1,844  $2,826  
  
18. Supplemental Guarantor Information
2021 Notes, 2027 Notes and 2028 Notes
On May 26, 2016, TRI Pointe Group issued the 2021 Notes, on June 5, 2017, TRI Pointe Group issued the 2027 Notes and on June 10, 2020, TRI Pointe Group issued the 2028 Notes. All of TRI Pointe Group’s 100% owned subsidiaries that are guarantors (each a “Guarantor” and, collectively, the “Guarantors”) of the Credit Facility, including TRI Pointe Homes, are party to supplemental indentures pursuant to which they jointly and severally guarantee TRI Pointe Group’s obligations with respect to these Notes. Each Guarantor of the 2021 Notes, the 2027 Notes and the 2028 Notes is 100% owned by TRI Pointe Group, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2021 Notes, the 2027 Notes and the 2028 Notes, as described in the following paragraph. All of our non-Guarantor subsidiaries have nominal assets and operations and are considered minor, as defined in Rule 3-10(h) of Regulation S-X. In addition, TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X. There are no significant restrictions upon the ability of TRI Pointe Group or any Guarantor to obtain funds from any of their respective wholly owned subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X.
A Guarantor of the 2021 Notes, the 2027 Notes and the 2028 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe Group or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe Group or another Guarantor, with TRI Pointe Group or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe Group or any other Guarantor which gave rise to such Guarantor guaranteeing the 2021 Notes, the 2027 Notes or the 2028 Notes; (vi) TRI Pointe Group exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable supplemental indenture are discharged.
2024 Notes
TRI Pointe Group and TRI Pointe Homes are co-issuers of the 2024 Notes. All of the Guarantors (other than TRI Pointe Homes) have entered into supplemental indentures pursuant to which they jointly and severally guarantee the obligations of TRI Pointe Group and TRI Pointe Homes with respect to the 2024 Notes. Each Guarantor of the 2024 Notes is 100% owned by TRI Pointe Group and TRI Pointe Homes, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2024 Notes, as described below.
A Guarantor of the 2024 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe or another Guarantor, with TRI Pointe or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe or any other Guarantor which gave rise to such Guarantor guaranteeing the 2024 Notes; (vi) TRI Pointe exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable indenture are discharged.
Presented below are the condensed consolidating balance sheets at June 30, 2020 and December 31, 2019, condensed consolidating statements of operations for the three and six months ended June 30, 2020 and 2019 and condensed consolidating statement of cash flows for the six months ended June 30, 2020 and 2019. Because TRI Pointe’s non-Guarantor subsidiaries are considered minor, as defined in Rule 3-10(h) of Regulation S-X, the non-Guarantor subsidiaries’ information is not
- 25 -


separately presented in the tables below, but is included with the Guarantors. Additionally, because TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X, the condensed consolidated financial information of TRI Pointe Group and TRI Pointe Homes, the co-issuers of the 2024 Notes, is presented together in the column titled “Issuer”.
Condensed Consolidating Balance Sheet (in thousands):
 
June 30, 2020
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Assets
Cash and cash equivalents$393,481  $81,064  $—  $474,545  
Receivables27,555  60,025  —  87,580  
Intercompany receivables421,075  —  (421,075) —  
Real estate inventories699,708  2,312,914  —  3,012,622  
Investments in unconsolidated entities—  36,040  —  36,040  
Goodwill and other intangible assets, net156,604  3,022  —  159,626  
Investments in subsidiaries1,968,697  —  (1,968,697) —  
Deferred tax assets, net9,021  30,723  —  39,744  
Other assets5,192  162,555  —  167,747  
Total assets$3,681,333  $2,686,343  $(2,389,772) $3,977,904  
Liabilities
Accounts payable$16,911  $54,175  $—  $71,086  
Intercompany payables—  421,075  (421,075) —  
Accrued expenses and other liabilities72,434  242,384  —  314,818  
Loans payable250,000  —  —  250,000  
Senior notes1,166,189  —  —  1,166,189  
Total liabilities1,505,534  717,634  (421,075) 1,802,093  
Equity
Total stockholders’ equity2,175,799  1,968,697  (1,968,697) 2,175,799  
Noncontrolling interests—  12  —  12  
Total equity2,175,799  1,968,709  (1,968,697) 2,175,811  
Total liabilities and equity$3,681,333  $2,686,343  $(2,389,772) $3,977,904  


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Condensed Consolidating Balance Sheet (in thousands):
 
 December 31, 2019
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Assets    
Cash and cash equivalents$186,200  $142,811  $—  $329,011  
Receivables26,016  43,260  —  69,276  
Intercompany receivables576,846  —  (576,846) —  
Real estate inventories737,662  2,327,774  —  3,065,436  
Investments in unconsolidated entities—  11,745  —  11,745  
Goodwill and other intangible assets, net156,604  3,289  —  159,893  
Investments in subsidiaries1,870,885  —  (1,870,885) —  
Deferred tax assets, net9,020  40,884  —  49,904  
Other assets14,676  158,749  —  173,425  
Total assets$3,577,909  $2,728,512  $(2,447,731) $3,858,690  
Liabilities    
Accounts payable$14,915  $51,205  $—  $66,120  
Intercompany payables—  576,846  (576,846) —  
Accrued expenses and other liabilities92,479  229,564  —  322,043  
Loans payable250,000  —  —  250,000  
Senior notes1,033,985  —  —  1,033,985  
Total liabilities1,391,379  857,615  (576,846) 1,672,148  
Equity    
Total stockholders’ equity2,186,530  1,870,885  (1,870,885) 2,186,530  
Noncontrolling interests—  12  —  12  
Total equity2,186,530  1,870,897  (1,870,885) 2,186,542  
Total liabilities and equity$3,577,909  $2,728,512  $(2,447,731) $3,858,690  





- 27 -


Condensed Consolidating Statement of Operations (in thousands):
 
 Three Months Ended June 30, 2020
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Homebuilding:    
Home sales revenue$206,473  $560,469  $—  $766,942  
Land and lot sales revenue—  220  —  220  
Other operations revenue—  648  —  648  
Total revenues206,473  561,337  —  767,810  
Cost of home sales172,086  429,348  —  601,434  
Cost of land and lot sales—  374  —  374  
Other operations expense—  624  —  624  
Sales and marketing10,667  34,527  —  45,194  
General and administrative19,875  17,679  —  37,554  
Restructuring charges1,111  4,438  —  5,549  
Homebuilding income from operations2,734  74,347  —  77,081  
Equity in loss of unconsolidated entities—  (25) —  (25) 
Other loss, net(6,320) (8) —  (6,328) 
Homebuilding (loss) income before income taxes(3,586) 74,314  —  70,728  
Financial Services:    
Revenues—  2,296  —  2,296  
Expenses—  1,285  —  1,285  
Equity in income of unconsolidated entities—  2,932  —  2,932  
Financial services income before income taxes—  3,943  —  3,943  
(Loss) income before income taxes(3,586) 78,257  —  74,671  
Equity of net income of subsidiaries60,114  —  (60,114) —  
Provision for income taxes—  (18,143) —  (18,143) 
Net income$56,528  $60,114  $(60,114) $56,528  



- 28 -


Condensed Consolidating Statement of Operations (in thousands):
 
 Three Months Ended June 30, 2019
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Homebuilding:    
Home sales revenue$192,752  $499,386  $—  $692,138  
Land and lot sales revenue—  5,183  —  5,183  
Other operations revenue—  637  —  637  
Total revenues192,752  505,206  —  697,958  
Cost of home sales163,356  411,328  —  574,684  
Cost of land and lot sales—  5,562  —  5,562  
Other operations expense—  627  —  627  
Sales and marketing9,961  37,104  —  47,065  
General and administrative18,391  18,463  —  36,854  
Homebuilding income from operations1,044  32,122  —  33,166  
Equity in loss of unconsolidated entities—  (26) —  (26) 
Other income, net 145  —  153  
Homebuilding income before income taxes1,052  32,241  —  33,293  
Financial Services:    
Revenues—  756  —  756  
Expenses—  627  —  627  
Equity in income of unconsolidated entities—  1,972  —  1,972  
Financial services income before income taxes—  2,101  —  2,101  
Income before income taxes1,052  34,342  —  35,394  
Equity of net income of subsidiaries25,215  —  (25,215) —  
Provision for income taxes(5) (9,127) —  (9,132) 
Net income$26,262  $25,215  $(25,215) $26,262  







- 29 -


Condensed Consolidating Statement of Operations (in thousands):

Six Months Ended June 30, 2020
Issuer (1)Guarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Homebuilding:
Home sales revenue$365,143  $996,637  $—  $1,361,780  
Land and lot sales revenue—  220  —  220  
Other operations revenue—  1,266  —  1,266  
Total revenues365,143  998,123  —  1,363,266  
Cost of home sales307,986  766,330  —  1,074,316  
Cost of land and lot sales—  576  —  576  
Other operations expense—  1,248  —  1,248  
Sales and marketing21,102  66,729  —  87,831  
General and administrative39,218  38,173  —  77,391  
Restructuring charges1,111  4,438  —  5,549  
Homebuilding (loss) income from operations(4,274) 120,629  —  116,355  
Equity in loss of unconsolidated entities—  (39) —  (39) 
Other (loss) income, net(6,128) 173  —  (5,955) 
Homebuilding (loss) income before income taxes(10,402) 120,763  —  110,361  
Financial Services:
Revenues—  3,890  —  3,890  
Expenses—  2,364  —  2,364  
Equity in income of unconsolidated entities—  4,488  —  4,488  
Financial services income before income taxes—  6,014  —  6,014  
(Loss) income before income taxes(10,402) 126,777  —  116,375  
Equity of net income of subsidiaries98,813  —  (98,813) —  
Provision for income taxes—  (27,964) —  (27,964) 
Net income$88,411  $98,813  $(98,813) $88,411  
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Condensed Consolidating Statement of Operations (in thousands):

Six Months Ended June 30, 2019
Issuer (1)Guarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Homebuilding:
Home sales revenue$364,543  $820,298  $—  $1,184,841  
Land and lot sales revenue—  6,212  —  6,212  
Other operations revenue—  1,235  —  1,235  
Total revenues364,543  827,745  —  1,192,288  
Cost of home sales308,431  687,789  —  996,220  
Cost of land and lot sales—  7,057  —  7,057  
Other operations expense—  1,217  —  1,217  
Sales and marketing19,260  66,794  —  86,054  
General and administrative37,870  37,581  —  75,451  
Homebuilding (loss) income from operations(1,018) 27,307  —  26,289  
Equity in loss of unconsolidated entities—  (51) —  (51) 
Other income, net6,148  246  —  6,394  
Homebuilding income before taxes5,130  27,502  —  32,632  
Financial Services:
Revenues—  1,058  —  1,058  
Expenses—  948  —  948  
Equity in loss of unconsolidated entities—  2,747  —  2,747  
Financial services income from operations before taxes—  2,857  —  2,857  
Income before taxes5,130  30,359  —  35,489  
Equity of net income of subsidiaries21,208  —  (21,208) —  
Provision for income taxes(5) (9,151) —  (9,156) 
Net income$26,333  $21,208  $(21,208) $26,333  
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Condensed Consolidating Statement of Cash Flows (in thousands):
 
 Six Months Ended June 30, 2020
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Cash flows from operating activities:    
Net cash provided by operating activities$36,321  $129,907  $—  $166,228  
Cash flows from investing activities:    
Purchases of property and equipment(4,162) (7,840) —  (12,002) 
Proceeds from sale of property and equipment—  17  —  17  
Investments in unconsolidated entities—  (25,715) —  (25,715) 
Intercompany158,116  —  (158,116) —  
Net cash used in (provided by) investing activities153,954  (33,538) (158,116) (37,700) 
Cash flows from financing activities:    
Borrowings from debt850,000  —  —  850,000  
Repayment of debt(721,673) —  —  (721,673) 
Debt issuance costs(4,768) —  —  (4,768) 
Proceeds from issuance of common stock under
   share-based awards
921  —  —  921  
Minimum tax withholding paid on behalf of employees for
   restricted stock units
(5,473) —  —  (5,473) 
Share repurchases(102,001) —  —  (102,001) 
Intercompany—  (158,116) 158,116  —  
Net cash provided by (used in) financing activities17,006  (158,116) 158,116  17,006  
Net increase (decrease) in cash and cash equivalents207,281  (61,747) —  145,534  
Cash and cash equivalents–beginning of period186,200  142,811  —  329,011  
Cash and cash equivalents–end of period$393,481  $81,064  $—  $474,545  



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Condensed Consolidating Statement of Cash Flows (in thousands):
 
 Six Months Ended June 30, 2019
IssuerGuarantor
Subsidiaries
Consolidating
Adjustments
Consolidated
TRI Pointe
Group, Inc.
Cash flows from operating activities:    
Net cash provided by (used in) operating activities$32,114  $(136,053) $—  $(103,939) 
Cash flows from investing activities:   
Purchases of property and equipment(4,532) (8,610) —  (13,142) 
Proceeds from sale of property and equipment—  46  —  46  
Investments in unconsolidated entities—  (712) —  (712) 
Intercompany(133,658) —  133,658  —  
Net cash used in investing activities(138,190) (9,276) 133,658  (13,808) 
Cash flows from financing activities:   
Borrowings from notes payable400,000  —  —  400,000  
Repayment of notes payable(381,895) —  —  (381,895) 
Debt issuance costs(3,125) —  —  (3,125) 
Proceeds from issuance of common stock under
   share-based awards
199  —  —  199  
Minimum tax withholding paid on behalf of employees for restricted stock units(3,612) —  —  (3,612) 
Intercompany—  133,658  (133,658) —  
Net cash provided by (used in) financing activities11,567  133,658  (133,658) 11,567  
Net decrease in cash and cash equivalents(94,509) (11,671) —  (106,180) 
Cash and cash equivalents–beginning of period148,129  129,567  —  277,696  
Cash and cash equivalents–end of period$53,620  $117,896  $—  $171,516  




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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on our current intentions, beliefs, expectations and predictions for the future, and you should not place undue reliance on these statements. These statements use forward-looking terminology, are based on various assumptions made by us, and may not be accurate because of risks and uncertainties surrounding the assumptions that are made.
Factors listed in this section—as well as other factors not included—may cause actual results to differ significantly from the forward-looking statements included in this Quarterly Report on Form 10-Q. There is no guarantee that any of the events anticipated by the forward-looking statements in this Quarterly Report on Form 10-Q will occur, or if any of the events occurs, there is no guarantee what effect it will have on our operations, financial condition, or share price.
We undertake no, and hereby disclaim any, obligation to update or revise any forward-looking statements, unless required by law. However, we reserve the right to make such updates or revisions from time to time by press release, periodic report, or other method of public disclosure without the need for specific reference to this Quarterly Report on Form 10-Q. No such update or revision shall be deemed to indicate that other statements not addressed by such update or revision remain correct or create an obligation to provide any other updates or revisions.
Forward-Looking Statements
Forward-looking statements that are included in this Quarterly Report on Form 10-Q are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or other words that convey the uncertainty of future events or outcomes. 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, the outcome of legal proceedings, the anticipated impact of natural disasters or contagious diseases on our operations, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects and capital spending.
Risks, Uncertainties and Assumptions
The major risks and uncertainties—and assumptions that are made—that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
the effects of the ongoing novel coronavirus (“COVID-19”) pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the severity and duration of the outbreak, the duration of existing and future social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and efficacy of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19;
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;
raw material and labor prices and availability;
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 re-occurrence of drought conditions in California;  
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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 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
other factors described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in other filings we make with the Securities and Exchange Commission (“SEC”).
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related condensed notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our securities. We urge investors to review and consider carefully the various disclosures made by us in this report and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent reports on Form 8-K, which discuss our business in greater detail. The section entitled “Risk Factors” set forth in Item 1A of our Annual Report on Form 10-K, and similar disclosures in our other SEC filings, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Investors should carefully consider those risks, in addition to the information in this report and in our other filings with the SEC, before deciding to invest in, or maintain an investment in, our common stock.
Overview
Our second quarter 2020 results reflect a sharp rebound from the COVID-19-related economic uncertainty and reduced demand environment we experienced towards the end of the first quarter and through the beginning of the second quarter. In May, as state and local governments began relaxing restrictions related to COVID-19 and economic conditions in our local markets regained strength, new home demand began to steadily improve. This demand continued to increase in June, which resulted in particularly strong new home orders for the month, which increased approximately 28% as compared to June 2019. We believe this demand environment was aided by favorable housing market fundamentals, including low interest rates and a relatively constrained supply of homes in many of our markets. Additionally, we believe our results for the most recent quarter reflect the effects of fiscal and monetary stimulus programs, a degree of pent-up demand among consumers, as well as evolving consumer preferences as it relates to new home characteristics in light of the COVID-19 pandemic and the degree to which many individuals are working from home. Notwithstanding our positive results during the second quarter 2020 and the strong demand we continue to experience in July, the COVID-19 pandemic has impacted, and we expect that it will continue to impact, our business and operations due to the high level of uncertainty that still exists as to future developments, including the duration of the outbreak. With several states (and local authorities within those states) re-imposing restrictions as a result of recent increases in new COVID-19 cases and an historically high unemployment rate, we remain cautious as we enter the back half of 2020.
Highlights of the quarter include an increase in homebuilding gross margin percentage to 21.6% and a reduction in selling, general and administrative expense as a percentage of home sales revenue to 10.8%. These improvements, along with a slight increase in average sales price of homes delivered to $624,000, helped us achieve net income of $56.5 million, representing a 115% increase compared to the prior-year period. Despite a substantially reduced sales pace in April due to COVID-19, we ended the quarter with a monthly absorption rate of 3.1, resulting in 1,332 net new home orders, down 11% from the prior-year period. As of the end of the quarter, we had 2,558 units in backlog, representing $1.7 billion in backlog dollar value, up 16% and 17% from the prior-year period, respectively. In addition, we ended the quarter with total liquidity of $1.0 billion, including cash and cash equivalents of $474.5 million and $559.4 million of availability under our Credit Facility.
Our results for the three months ended June 30, 2020 are not indicative of trends that we expect to persist as uncertainty caused by COVID-19 and government responses to the pandemic have impacted, and will continue to impact, our business and operations.

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Impact of COVID-19 and Business Outlook
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, and on March 13, 2020, the United States issued a proclamation declaring a national emergency concerning COVID-19. As a result of the pandemic, a number of states and local governments issued shelter-in-place orders or guidance for individuals not engaged in essential activities to remain at home other than for essential needs. While our TRI Pointe Homes—Bay Area and Quadrant Homes divisions were prohibited from engaging in residential construction activities in the Bay Area in California and Seattle, Washington, respectively, for several weeks beginning in late March 2020, residential homebuilding operations are currently designated as an essential business activity and remain exempt from the application of “stay-at-home” orders in all of our markets. However, there can be no assurance that our homebuilding operations will continue to remain exempt in all of our markets.
In response to the COVID-19 pandemic and measures taken by applicable governmental authorities, in mid-March 2020, we implemented new operating measures relating to our sales, construction and other operations, including protocols relating to social distancing, enhanced sanitation, monitoring of symptoms related to COVID-19 and other processes. Under these measures, we encouraged employees at our corporate and division offices whose duties could be performed from home to work remotely; our new home galleries and design studios transitioned to virtual appointments or appointment-only with pre-screened individuals, as permitted by law; we instituted social distancing, hygiene and sanitation guidelines in accordance with recommended protocols throughout the organization (including in our new home sales galleries and design studios, and with respect to trade partners and their employees on our jobsites); and we postponed non-essential customer care service and warranty requests. As of the date of this report, as permitted by applicable government orders or guidelines, we have transitioned substantially all of our employees back to our corporate and division offices (in many cases, using staggered or flexible schedules to limit the number of individuals in our offices on a given day), have resumed non-essential customer care service and warranty requests in substantially all of our markets, and are no longer appointment-only in many of our new home galleries. Our field-based team members continue to report to their assigned communities in all jurisdictions where homebuilding has been deemed an essential activity or is otherwise permitted by applicable government authorities. We have also encouraged our employees to use our virtual working and communication platforms in lieu of holding in-person meetings whenever possible.
The COVID-19 outbreak and the measures taken by governmental authorities to delay and contain its spread have resulted in substantial adverse effects on the United States economy and could result in a severe and/or prolonged economic recession. The ongoing impact of COVID-19 on the United States economy and our business and operations is unknown, as the velocity of this economic slowdown and the subsequent job losses are unprecedented. While demand for new homes has rebounded substantially over the last couple months, given the dynamic nature of the situation, recent increases in new COVID-19 cases in many states and the re-imposition by local and state governments throughout the U.S. of restrictive measures, we cannot estimate the duration and severity of the impact of COVID-19 on the homebuilding industry or whether the current demand environment will persist. To the extent we experience further negative impacts, however, we anticipate that such impacts may include reduced consumer confidence, difficulties in obtaining financing for potential homebuyers, shortages of or increased costs associated with obtaining building materials, increased unemployment levels, declining wage growth and fluctuating interest rates. The uncertainty surrounding the containment of this virus, in the form of testing, vaccination and/or treatments, is a key unknown, and the ultimate strategy adopted to address the pandemic, if any, will substantially impact the form of any resulting economic recovery. Similarly, the extent of the impact of COVID-19 on our liquidity and operational and financial performance will depend on, among other things, existing and future federal, state and local restrictions regarding virus containment, as we believe these factors are highly correlated with consumer strength as it relates to employment and economic well-being.
As of the date of this report, we continue to build and sell homes in all of our markets, and net new orders and traffic in our sales offices have increased significantly as compared to the beginning of the second quarter. Notwithstanding, the new protocols we implemented in response to the COVID-19 outbreak and the measures taken by governmental authorities to contain its spread continue to affect our business and operations as of the date of this report, in many regards, including by requiring a substantial investment of time and resources by our management and organization and causing other material disruptions to our normal operations.
As noted above, as of June 30, 2020, we had total liquidity of $1.0 billion. We have implemented a strategy to maximize operating cash flows and maintain our existing liquidity by reducing or deferring cash expenditures as much as possible,
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including negotiating with land sellers and developers to extend the closing date of land acquisitions and lot take-downs, as well as postponing land development activities for certain communities.
Consolidated Financial Data (in thousands, except per share amounts):
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Homebuilding:  
Home sales revenue$766,942  $692,138  $1,361,780  $1,184,841  
Land and lot sales revenue220  5,183  220  6,212  
Other operations revenue648  637  1,266  1,235  
Total revenues767,810  697,958  1,363,266  1,192,288  
Cost of home sales601,434  574,684  1,074,316  996,220  
Cost of land and lot sales374  5,562  576  7,057  
Other operations expense624  627  1,248  1,217  
Sales and marketing45,194  47,065  87,831  86,054  
General and administrative37,554  36,854  77,391  75,451  
Restructuring charges5,549  —  5,549  —  
Homebuilding income from operations77,081  33,166  116,355  26,289  
Equity in loss of unconsolidated entities(25) (26) (39) (51) 
Other (expense) income, net(6,328) 153  (5,955) 6,394  
Homebuilding income before income taxes70,728  33,293  110,361  32,632  
Financial Services:
Revenues2,296  756  3,890  1,058  
Expenses1,285  627  2,364  948  
Equity in income of unconsolidated entities2,932  1,972  4,488  2,747  
Financial services income before income taxes3,943  2,101  6,014  2,857  
Income before income taxes74,671  35,394  116,375  35,489  
Provision for income taxes(18,143) (9,132) (27,964) (9,156) 
Net income$56,528  $26,262  $88,411  $26,333  
Earnings per share  
Basic$0.43  $0.18  $0.67  $0.19  
Diluted$0.43  $0.18  $0.67  $0.18  
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
 
 Three Months Ended June 30, 2020Three Months Ended June 30, 2019Percentage Change
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Maracay162  19.0  2.8  253  15.0  5.6  (36)%27 %(49)%
Pardee Homes423  44.0  3.2  522  44.5  3.9  (19)%(1)%(18)%
Quadrant Homes105  9.5  3.7  67  6.5  3.4  57 %46 %%
Trendmaker Homes205  29.8  2.3  247  37.5  2.2  (17)%(21)%%
TRI Pointe Homes327  30.3  3.6  294  28.5  3.4  11 %%%
Winchester Homes110  11.7  3.1  108  14.0  2.6  %(16)%22 %
Total1,332  144.3  3.1  1,491  146.0  3.4  (11)%(1)%(10)%
 
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Net new home orders for the three months ended June 30, 2020 decreased by 159 orders, or 11%, to 1,332, compared to 1,491 during the prior-year period.  The decrease in net new home orders was due primarily to a 10% decrease in monthly absorption rates. New home order demand was severely impacted during the month of April, though began to slowly and steadily improve in May, followed by exceptionally strong demand in June. We believe this order demand volatility during the quarter can be attributed to the impacts of COVID-19 pandemic. As our results for the three months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.
Maracay reported a 36% decrease in net new home orders driven by a 49% decrease in monthly absorption rate offset by a 27% increase in average selling communities. While the monthly absorption rate was 2.8 for the quarter, Maracay experienced extreme demand volatility during the quarter, with a substantially slow pace in April before increasing to a more robust pace in June, during which we achieved a monthly absorption rate of 4.7. Pardee Homes reported a 19% decrease in net new home orders driven by an 18% decrease in monthly absorption rates and a 1% decrease in average selling communities. The decrease in monthly absorption rate was due to the extreme market slowdown we experienced during April as a result of COVID-19. The absorption rates in the Inland Empire, Los Angeles, San Diego and Las Vegas all improved significantly during May and June as restrictions related to COVID-19 were reduced. Net new home orders increased 57% at Quadrant Homes due to a 46% increase in average selling communities and a 7% increase in monthly absorption rate as compared to the prior-year period. Despite experiencing slow demand in the month of April due to COVID-19, market conditions improved significantly during the second half of the current-year period, as evidenced by a monthly absorption rate of 3.7 for the quarter. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 17% due to a 21% decrease in average selling communities offset by a 4% increase in monthly absorption rate. Despite being impacted by COVID-19 and the volatility in the oil market, our Houston division achieved a monthly absorption rate of 2.1 for the current quarter, which represents a decrease of 0.2 as compared to the prior-year period. Our sales pace in both our Austin and Dallas–Fort Worth markets improved on a year-over-year basis, despite noticeable slowdown in both markets during April resulting from COVID-19. TRI Pointe Homes’ net new home orders increased 11% due to a 6% increase in average selling communities and a 5% increase in the monthly absorption rate. The increase in TRI Pointe Homes’ monthly absorption rate was driven by stronger market conditions in both our Bay Area and Colorado markets compared to the prior-year period. Winchester Homes reported a 2% increase in net new home orders as a result of a 22% increase in monthly absorption rate offset by a 16% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong order demand and more favorable overall market conditions compared to the prior-year period.
Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands)
 As of June 30, 2020As of June 30, 2019Percentage Change
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Backlog
Units
Backlog
Dollar
Value
Average
Sales
Price
Maracay427  $255,916  $599  385  $211,935  $550  11 %21 %%
Pardee Homes739  494,785  670  790  602,054  762  (6)%(18)%(12)%
Quadrant Homes228  213,093  935  77  65,968  857  196 %223 %%
Trendmaker Homes321  146,650  457  399  195,871  491  (20)%(25)%(7)%
TRI Pointe Homes552  383,826  695  384  252,708  658  44 %52 %%
Winchester Homes291  184,798  635  173  110,012  636  68 %68 %— %
Total2,558  $1,679,068  $656  2,208  $1,438,548  $652  16 %17 %%
 
Backlog units reflect the number of homes, net of actual cancellations experienced during the period, for which we have entered into a sales contract with a homebuyer but for which we have not yet delivered the home. Homes in backlog are generally delivered within three to nine months, although we may experience cancellations of sales contracts prior to delivery. Our cancellation rate of homebuyers who contracted to buy a home but cancelled prior to delivery of the home (as a percentage of overall orders) was 21% and 16% during the three-month periods ended June 30, 2020 and 2019, respectively. The dollar value of backlog was $1.7 billion as of June 30, 2020, an increase of $240.5 million, or 17%, compared to $1.4 billion as of June 30, 2019.  This increase was due to an increase in backlog units of 350, or 16%, to 2,558 as of June 30, 2020, compared to 2,208 as of June 30, 2019, and a 1% increase in the average sales price of homes in backlog to $656,000 as of June 30, 2020, compared to $652,000 as of June 30, 2019.
Maracay’s backlog dollar value increased 21% compared to the prior-year period due to an 11% increase in backlog units and a 9% increase in average sales price. The increase in backlog units is due to the strong market conditions in Arizona
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for most of the current-year period and the success of recently opened communities. In addition, we opened the current-year period with a higher number of backlog units, which resulted in higher carryforward of opening backlog units in the current-year period compared to the prior-year period, which had been impacted by the housing slowdown in late 2018. Pardee Homes’ backlog dollar value decreased 18% due to a decrease in backlog average sales price of 12% and a decrease in backlog units of 6%. The decrease in backlog units is largely due to the decrease in net new home orders we experienced during the quarter, particularly in the month of April due to uncertainty surrounding COVID-19. Quadrant Homes’ backlog dollar value increased 223% as a result of a 196% increase in backlog units and a 9% increase in average sales price. The increase in backlog units was a result of starting the current-year period with an increase in backlog units, which further increased due to the 57% increase in net new home orders during the period, as market conditions in Seattle remained strong for most of the quarter despite COVID-19. Trendmaker Homes’ backlog dollar value decreased 25% due primarily to a 20% decrease in backlog units. The decrease in backlog units resulted primarily from a 21% decrease in average selling communities for the quarter. TRI Pointe Homes’ backlog dollar value increased 52% mainly due to a 44% increase in backlog units. The increase in backlog units resulted primarily from a strong demand environment in both California and Colorado during the quarter. Winchester Homes’ backlog dollar value increased 68% due to a 68% increase in backlog units. The increase in backlog units is a result of a 27% increase in net new home orders for the six months ended June 30, 2020, in addition to a significantly higher unit backlog to start the current-year period compared to the prior-year period.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
 Three Months Ended June 30, 2020Three Months Ended June 30, 2019Percentage Change
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
Maracay165  $86,674  $525  106  $55,653  $525  56 %56 %— %
Pardee Homes362  242,282  669  325  194,700  599  11 %24 %12 %
Quadrant Homes40  36,649  916  67  70,429  1,051  (40)%(48)%(13)%
Trendmaker Homes254  121,257  477  250  117,010  468  %%%
TRI Pointe Homes292  206,474  707  281  192,752  686  %%%
Winchester Homes116  73,606  635  96  61,594  642  21 %20 %(1)%
Total1,229  $766,942  $624  1,125  $692,138  $615  %11 %%
 
Home sales revenue increased $74.8 million, or 11%, to $766.9 million for the three months ended June 30, 2020. The increase was comprised of (i) $64.0 million related to an increase of 104 new homes delivered in the three months ended June 30, 2020 compared to the prior-year period, and (ii) $10.8 million related to an increase of $9,000 in average sales price of homes delivered in the three months ended June 30, 2020 compared to the prior-year period.
Maracay home sales revenue increased 56% due to a 56% increase in new homes delivered during the current-year period. The increase in new homes delivered is due to a 119% increase in backlog units to start the current-year period compared to the prior-year period. Pardee Homes’ home sales revenue increased 24% due to a 12% increase in average sales price and an 11% increase in new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of deliveries from our higher-priced California assets in the current-year period, particularly from our San Diego market. Quadrant Homes’ home sales revenue decreased 48% due to a 40% decrease in new homes delivered and a 13% decrease in average sales price. The decrease in new homes delivered was due to timing and the impact of COVID-19-related construction delays. Trendmaker Homes’ home sales revenue increased 4% due to a 2% increase in new homes delivered and a 2% increase in average sales price. TRI Pointe Homes’ home sales revenue increased 7% due primarily to a 4% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was driven by the timing of deliveries. Home sales revenue increased at Winchester Homes by 20% due to a 21% increase in new homes delivered. The increase in new homes delivered was due to a higher number of backlog units at the start of the current-year period compared to the prior-year period.
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Homebuilding Gross Margins (dollars in thousands)
 Three Months Ended June 30,
 2020%2019%
Home sales revenue$766,942  100.0 %$692,138  100.0 %
Cost of home sales601,434  78.4 %574,684  83.0 %
Homebuilding gross margin165,508  21.6 %117,454  17.0 %
Add:  interest in cost of home sales21,801  2.8 %18,071  2.6 %
Add:  impairments and lot option abandonments1,380  0.2 %288  0.0 %
Adjusted homebuilding gross margin(1)
$188,689  24.6 %$135,813  19.6 %
Homebuilding gross margin percentage21.6 % 17.0 % 
Adjusted homebuilding gross margin percentage(1)
24.6 % 19.6 % 
__________
(1)Non-GAAP financial measure (as discussed below).
Our homebuilding gross margin percentage increased to 21.6% for the three months ended June 30, 2020 as compared to 17.0% for the prior-year period.  The increase in gross margin percentage was due to a decrease in incentives as compared to the prior-year period, during which we experienced weaker pricing trends, in addition to higher current-year period revenue from some of our long-dated California assets, which produce gross margins above the Company average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.6% for the three months ended June 30, 2020, compared to 19.6% for the prior-year period.
Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the most directly comparable GAAP measure.
Sales and Marketing, General and Administrative Expense (dollars in thousands)
Three Months Ended June 30,As a Percentage of
Home Sales Revenue
 2020201920202019
Sales and marketing$45,194  $47,065  5.9 %6.8 %
General and administrative (G&A)37,554  36,854  4.9 %5.3 %
Total sales and marketing and G&A$82,748  $83,919  10.8 %12.1 %
 
Total sales and marketing and general and administrative (“SG&A”) as a percentage of home sales revenue decreased to 10.8% for the three months ended June 30, 2020, compared to 12.1% in the prior-year period. Total SG&A expense decreased $1.2 million to $82.7 million for the three months ended June 30, 2020 from $83.9 million in the prior-year period.  
Sales and marketing expense as a percentage of home sales revenue decreased to 5.9% for the three months ended June 30, 2020, compared to 6.8% for the prior-year period. The decrease was due primarily to lower advertising expense and higher leverage on the fixed components of sales and marketing expense as a result of the 11% increase in homebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense decreased to $45.2 million for the three months ended June 30, 2020 compared to $47.1 million in the prior-year period due primarily to the decrease in advertising expense.
General and administrative (“G&A”) expense as a percentage of home sales revenue decreased to 4.9% of home sales revenue for the three months ended June 30, 2020 compared to 5.3% for the prior-year period largely due to higher leverage on our G&A expense as a result of the 11% increase in homebuilding revenue compared to the prior-year period. In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in May
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2020.  G&A expense increased to $37.6 million for the three months ended June 30, 2020 compared to $36.9 million for the prior-year period.
Restructuring Charges
In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, substantially all of which had been paid as of June 30, 2020. We believe that our restructuring activities are substantially complete as of June 30, 2020. However, until market conditions stabilize, we may incur additional restructuring charges. We expect that this workforce reduction will decrease our overhead expenses by approximately $33 million on an annualized basis.
Other Income (Expense), Net
Other income (expense), net for the three months ended June 30, 2020 included a $6.9 million loss in connection with the early extinguishment of a portion of our 4.875% Senior Notes due 2021 (the “2021 Notes”). In June 2020, we commenced and settled a cash tender offer for any and all of our then outstanding $300 million principal amount of 2021 Notes as part of a plan to refinance our long-term debt due in 2021 with longer maturity financing. Upon expiration of the tender offer in June 2020, $216.3 million, or 72% of the outstanding principal amount, of the 2021 Notes were validly tendered and accepted for purchase.
Interest
Interest, which we incurred principally to finance land acquisitions, land development and home construction, totaled $21.8 million and $22.0 million for the three months ended June 30, 2020 and 2019, respectively.  All interest incurred in both periods was capitalized.  
Income Tax
For the three months ended June 30, 2020, we recorded a tax provision of $18.1 million based on an effective tax rate of 24.3%.  For the three months ended June 30, 2019, we recorded a tax provision of $9.1 million based on an effective tax rate of 25.8%. The increase in provision for income taxes is due to a $39.3 million increase in income before income taxes to $74.7 million for the three months ended June 30, 2020, compared to $35.4 million for the prior-year period.
During the three months ended June 30, 2020, California enacted tax legislation that approved the suspension of California net operating loss deductions for tax years 2020, 2021 and 2022. The suspension of California net operating loss deductions did not have an impact on our tax provision for the three months ended June 30, 2020.
Financial Services Segment
Income before income taxes from our financial services operations increased to $3.9 million for the three months ended June 30, 2020 compared to $2.1 million for the prior-year period.  This increase is due to higher home sales volume in the three months ended June 30, 2020 compared to the prior-year period, resulting in a corresponding increase in financial services captured in the current year. We experienced higher financial services profit in all three areas of our financial services segment, represented by mortgage financing, title and escrow services, and property and casualty insurance operations.
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Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
 
 Six Months Ended June 30, 2020Six Months Ended June 30, 2019Percentage Change
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Net New
Home
Orders
Average
Selling
Communities
Monthly
Absorption
Rates
Maracay402  16.9  4.0  414  13.4  5.1  (3)%26 %(22)%
Pardee Homes898  43.0  3.5  955  44.4  3.6  (6)%(3)%(3)%
Quadrant Homes231  8.3  4.6  142  6.9  3.4  63 %20 %35 %
Trendmaker Homes439  30.1  2.4  490  38.6  2.1  (10)%(22)%14 %
TRI Pointe Homes741  31.4  3.9  589  29.6  3.3  26 %%18 %
Winchester Homes282  12.7  3.7  222  14.1  2.6  27 %(10)%42 %
Total2,993  142.4  3.5  2,812  147.0  3.2  %(3)%%
 
Net new home orders for the six months ended June 30, 2020 increased by 181 orders, or 6%, to 2,993, compared to 2,812 during the prior-year period.  The increase in net new home orders was due to a 9% increase in monthly absorption rates, offset by a 3% decrease in average selling communities. New home order demand was exceptionally strong through January and February of 2020, followed by a significant decline in March and April, a slow and steady improvement in May and exceptionally strong demand in June. This unusual volatility was due to the COVID-19 pandemic and the measures taken to contain its spread, as well as the impacts on consumers and the overall economy. As our results for the six months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.
Maracay reported a 3% decrease in net new home orders driven by a 22% decrease in monthly absorption rates, offset by a 26% increase in average selling communities. The decrease in Maracay’s monthly absorption rate to 4.0 for the six months ended June 30, 2020 was due to the impact of COVID-19 and the slower market conditions experienced through March and April. Despite this impact, our monthly absorption rate of 4.0 for the current year demonstrates strong demand for Maracay’s new community openings during the current-year period as well as strong market fundamentals in Arizona throughout most of the quarter. Pardee Homes reported a 6% decrease in net new home orders driven by a 3% decrease in monthly absorption rates and a 3% decrease in average selling communities. The decrease in monthly absorption rate was due to the impact of COVID-19, as net new home order activity slowed considerably during parts of March, April and May. Net new home orders increased 63% at Quadrant Homes due to a 35% increase in monthly absorption rate and a 20% increase in average selling communities during the current-year period as compared to the prior-year period. The increase in monthly absorption rate to 4.6 was due to an exceptionally strong demand environment in January and February of the current-year period, as well as a significant improvement in market conditions during the latter half of May and into June, notwithstanding reduced demand in the month of April due to COVID-19. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 10% due to a 22% decrease in average selling communities offset by a 14% increase in monthly absorption rate. Though we experienced stronger monthly absorption rates at each of our Houston, Austin and Dallas–Fort Worth markets in the current-year period, COVID-19 and the volatility in the oil market negatively impacted our sales pace in the current-year period, particularly in March and April. TRI Pointe Homes’ net new home orders increased 26% due to an 18% increase in the monthly absorption rate and a 6% increase in average selling communities. The increase in TRI Pointe Homes’ monthly absorption rate was driven by stronger market conditions in both our Bay Area and Colorado markets compared to the prior-year period. Winchester Homes reported a 27% increase in net new home orders as a result of a 42% increase in monthly absorption rate offset by a 10% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong order demand and more favorable overall market conditions compared to the prior-year period.
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New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
 Six Months Ended June 30, 2020Six Months Ended June 30, 2019Percentage Change
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
New
Homes
Delivered
Home
Sales
Revenue
Average
Sales
Price
Maracay305  $158,426  $519  180  $95,214  $529  69 %66 %(2)%
Pardee Homes619  420,684  680  567  329,562  581  %28 %17 %
Quadrant Homes92  80,106  871  111  113,702  1,024  (17)%(30)%(15)%
Trendmaker Homes463  217,377  469  404  187,130  463  15 %16 %%
TRI Pointe Homes518  365,143  705  523  364,543  697  (1)%— %%
Winchester Homes190  120,044  632  154  94,690  615  23 %27 %%
Total2,187  $1,361,780  $623  1,939  $1,184,841  $611  13 %15 %%
 
Home sales revenue increased $176.9 million, or 15%, to $1.4 billion for the six months ended June 30, 2020. The increase was comprised of (i) $151.5 million related to an increase of 248 new homes delivered in the six months ended June 30, 2020 compared to the prior-year period, and (ii) $25.4 million related to an increase of $12,000 in average sales price of homes delivered in the six months ended June 30, 2020 compared to the prior-year period.
Maracay home sales revenue increased 66% due to an 69% increase in new homes delivered during the current-year period. The increase in new homes delivered is due to a 119% increase in backlog units to start the current-year period compared to the prior-year period. Pardee Homes’ home sales revenue increased 28% due to a 17% increase in average sales price and a 9% increase in new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of deliveries from our higher-priced California assets in the current-year period, particularly from our San Diego market. Quadrant Homes’ home sales revenue decreased 30% due to a 17% decrease in new homes delivered and a 15% decrease in average sales price. The decrease in new homes delivered was due to timing and the impact of COVID-19-related construction delays. Trendmaker Homes’ home sales revenue increased 16% due to a 15% increase in new homes delivered. The increase in new homes delivered was due to the timing of deliveries. TRI Pointe Homes’ home sales revenue was flat, as we achieved consistent new homes delivered and average sales price. Home sales revenue increased at Winchester Homes by 27% due to a 23% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was due to a higher number of backlog units at the start of the current-year period compared to the prior-year period.
Homebuilding Gross Margins (dollars in thousands)
 Six Months Ended June 30,
 2020%2019%
Home sales revenue$1,361,780  100.0 %$1,184,841  100.0 %
Cost of home sales1,074,316  78.9 %996,220  84.1 %
Homebuilding gross margin287,464  21.1 %188,621  15.9 %
Add:  interest in cost of home sales38,623  2.8 %32,262  2.7 %
Add:  impairments and lot option abandonments1,729  0.1 %5,490  0.5 %
Adjusted homebuilding gross margin(1)
$327,816  24.1 %$226,373  19.1 %
Homebuilding gross margin percentage21.1 %15.9 %
Adjusted homebuilding gross margin percentage(1)
24.1 %19.1 %
__________
(1)Non-GAAP financial measure (as discussed below).
Our homebuilding gross margin percentage increased to 21.1% for the six months ended June 30, 2020 as compared to 15.9% for the prior-year period.  The increase in gross margin percentage was due to a decrease in incentives as compared to the prior-year period, during which we delivered homes impacted by the weaker pricing trends experienced in the second half of 2018. In addition, we benefited from the favorable impact of higher current-year period revenue from some of our long-dated California assets, which produce gross margins above the Company average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.1% for the six months ended June 30, 2020, compared to 19.1% for the prior-year period.
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Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the most directly comparable GAAP measure.
Sales and Marketing, General and Administrative Expense (dollars in thousands)
Six Months Ended June 30,As a Percentage of
Home Sales Revenue
 2020201920202019
Sales and marketing$87,831  $86,054  6.4 %7.3 %
General and administrative (G&A)77,391  75,451  5.7 %6.4 %
Total sales and marketing and G&A$165,222  $161,505  12.1 %13.6 %
 
Total SG&A as a percentage of home sales revenue decreased to 12.1% for the six months ended June 30, 2020, compared to 13.6% in the prior-year period. Total SG&A expense increased $3.7 million to $165.2 million for the six months ended June 30, 2020 from $161.5 million in the prior-year period.  
Sales and marketing expense as a percentage of home sales revenue decreased to 6.4% for the six months ended June 30, 2020, compared to 7.3% for the prior-year period. The decrease was due primarily to higher leverage on the fixed components of sales and marketing expense as a result of the 15% increase in homebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense increased to $87.8 million for the six months ended June 30, 2020 compared to $86.1 million in the prior-year period due primarily to higher variable commission costs associated with higher home sales revenue.
G&A expense as a percentage of home sales revenue decreased to 5.7% of home sales revenue for the six months ended June 30, 2020 compared to 6.4% for the prior-year period largely due to higher leverage on our G&A expense as a result of the 15% increase in homebuilding revenue compared to the prior-year period.  In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in May 2020. G&A expense increased to $77.4 million for the six months ended June 30, 2020 compared to $75.5 million for the prior-year period.
Interest
Interest, which we incurred principally to finance land acquisitions, land development and home construction, totaled $42.6 million and $45.3 million for the six months ended June 30, 2020 and 2019, respectively.  All interest incurred in both periods was capitalized.  
Income Tax
For the six months ended June 30, 2020, we recorded a tax provision of $28.0 million based on an effective tax rate of 24.0%.  For the six months ended June 30, 2019, we recorded a tax provision of $9.2 million based on an effective tax rate of 25.8%. The increase in provision for income taxes is due to a $80.9 million increase in income before income taxes to $116.4 million for the six months ended June 30, 2020, compared to $35.5 million for the prior-year period.
Financial Services Segment
Income before income taxes from our financial services operations increased to $6.0 million for the six months ended June 30, 2020 compared to $2.9 million for the prior-year period.  This increase is due to higher home sales volume in the six months ended June 30, 2020 compared to the prior-year period, resulting in a corresponding increase in financial services captured in the current year. We experienced higher financial services profit in all three areas of our financial services segment, represented by mortgage financing, title and escrow services, and property and casualty insurance operations.
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Lots Owned or Controlled by Segment
Excluded from owned and controlled lots are those related to Note 6, Investments in Unconsolidated Entities, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. The table below summarizes our lots owned or controlled by segment as of the dates presented:
 June 30,Increase
(Decrease)
 20202019Amount%
Lots Owned    
Maracay2,070  2,234  (164) (7)%
Pardee Homes12,622  13,649  (1,027) (8)%
Quadrant Homes1,010  853  157  18 %
Trendmaker Homes2,672  1,924  748  39 %
TRI Pointe Homes2,497  2,759  (262) (9)%
Winchester Homes878  1,211  (333) (27)%
Total21,749  22,630  (881) (4)%
Lots Controlled(1)
    
Maracay1,420  1,377  43  %
Pardee Homes328  755  (427) (57)%
Quadrant Homes—  589  (589) (100)%
Trendmaker Homes1,541  778  763  98 %
TRI Pointe Homes3,872  1,646  2,226  135 %
Winchester Homes890  342  548  160 %
Total8,051  5,487  2,564  47 %
Total Lots Owned or Controlled(1)
29,800  28,117  1,683  %
__________
(1)As of June 30, 2020 and 2019, lots controlled represented lots that were under land or lot option contracts or purchase contracts.

Liquidity and Capital Resources
Overview
Our principal uses of capital for the six months ended June 30, 2020 were operating expenses, land purchases, land development and home construction. We used funds generated by our operations to meet our short-term working capital requirements. We monitor financing requirements to evaluate potential financing sources, including bank credit facilities and note offerings. In March 2020, we borrowed a total of $500 million under our revolving credit facility to, in part, safeguard our balance sheet as the credit and banking market showed signs of distress in the wake of the COVID-19 outbreak. In June 2020, we determined that any concerns regarding near term access to liquidity had sufficiently receded and, as a result, we repaid all outstanding amounts under our revolving credit facility. While the current economic environment resulting from the COVID-19 pandemic is unprecedented, and the ultimate effects of COVID-19 and the related restrictions imposed on businesses and individuals across the world remain unknown, we continue to monitor the credit markets as we remain focused on generating positive margins in our homebuilding operations. While acquiring desirable land positions is critical to our long-term growth initiatives, under the current conditions we are focused on maintaining a strong balance sheet while maximizing flexibility as to future land spend. As of June 30, 2020, we had total liquidity of $1.0 billion, including cash and cash equivalents of $474.5 million and $559.4 million of availability under our Credit Facility, as described below, after considering the borrowing base provisions and outstanding letters of credit.
Our board of directors will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the availability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service.
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Senior Notes
In June 2020, TRI Pointe Group issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15.
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 2021 Notes at 99.44% of their aggregate principal amount. Net proceeds of this issuance were $293.9 million, after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.
TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the $450 million aggregate principal amount 5.875% Senior Notes due 2024 (the “2024 Notes”). The 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The 2024 Notes mature on June 15, 2024, with interest payable semiannually in arrears on June 15 and December 15.
Our outstanding senior notes (the “Senior Notes”) contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions. As of June 30, 2020, we were in compliance with the covenants required by our Senior Notes.
Loans Payable
On March 29, 2019, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated our Amended and Restated Credit Agreement, dated as of July 7, 2015. The Credit Facility (as defined below), which matures on March 29, 2023, consists of a $600 million revolving credit facility (the “Revolving Facility”) and a $250 million term loan facility (the “Term Facility” and together with the Revolving Facility, the “Credit Facility”). The Term Facility includes a 90-day delayed draw provision, which allowed us to draw the full $250 million from the Term Facility in June 2019 in connection with the maturity of the 4.375% Senior Notes that matured on June 15, 2019. We may increase the Credit Facility to not more than $1 billion in the aggregate, at our request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of $75 million for letters of credit. We may borrow under the Revolving Facility in the ordinary course of business to repay senior notes and fund our operations, including our land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00%, depending on our leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company’s leverage ratio.
As of June 30, 2020, we had no outstanding debt under the Revolving Facility and there was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of credit. As of June 30, 2020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there were $3.7 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the remaining term of the Credit Facility.  Accrued interest, including loan commitment fees, related to the Credit Facility was $488,000 and $1.2 million as of June 30, 2020 and December 31, 2019, respectively.
At June 30, 2020 and December 31, 2019, we had outstanding letters of credit of $40.6 million and $32.6 million, respectively.  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
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Under the Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands):
Actual at
June 30,
Covenant
Requirement at
June 30,
Financial Covenants20202020
Consolidated Tangible Net Worth$2,016,173  $1,497,799  
(Not less than $1.35 billion plus 50% of net income and
   50% of the net proceeds from equity offerings after
   December 31, 2018)
  
Leverage Test32.4 %≤55%
(Not to exceed 55%)  
Interest Coverage Test6.0  ≥1.5
(Not less than 1.5:1.0)  
 
In addition, the Credit Facility limits the aggregate number of single family dwellings (where construction has commenced) owned by the Company or any guarantor that are not presold or model units to no more than the greater of (i) 50% of the number of housing unit closings (as defined) during the preceding 12 months; or (ii) 100% of the number of housing unit closings during the preceding 6 months. However, a failure to comply with this “Spec Unit Inventory Test” will not be an event of default or default, but will be excluded from the borrowing base as of the last day of the quarter in which the non-compliance occurs. The Credit Facility further requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods.
As of June 30, 2020, we were in compliance with all of these financial covenants.
Stock Repurchase Program
On February 13, 2020, our board of directors discontinued and cancelled our 2019 Repurchase Program and approved our 2020 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $200 million through March 31, 2021. Purchases of common stock pursuant to the 2020 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Exchange Act. We are not obligated under the 2020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the 2020 Repurchase Program at any time. Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. During the three months ended June 30, 2020, we did not repurchase any shares under the 2020 Repurchase Program. For the six months ended June 30, 2020, we repurchased and retired an aggregate of 6,558,323 shares of our common stock at an average price of $15.55 under the 2019 Repurchase Program and 2020 Repurchase Program for a total of $102.0 million.
Leverage Ratios
We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-net capital are calculated as follows (dollars in thousands):  
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June 30, 2020December 31, 2019
Loans Payable$250,000  $250,000  
Senior Notes1,166,189  1,033,985  
Total debt1,416,189  1,283,985  
Stockholders’ equity2,175,799  2,186,530  
Total capital$3,591,988  $3,470,515  
Ratio of debt-to-capital(1)
39.4 %37.0 %
Total debt$1,416,189  $1,283,985  
Less: Cash and cash equivalents(474,545) (329,011) 
Net debt941,644  954,974  
Stockholders’ equity2,175,799  2,186,530  
Net capital$3,117,443  $3,141,504  
Ratio of net debt-to-net capital(2)
30.2 %30.4 %
__________
(1)The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.
(2)The ratio of net debt-to-net capital is a non-GAAP financial measure and is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-net capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. See the table above reconciling this non-GAAP financial measure to the ratio of debt-to-capital.  Because the ratio of net debt-to-net capital is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Cash Flows—Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019
For the six months ended June 30, 2020 as compared to the six months ended June 30, 2019:
Net cash provided by operating activities increased by $270.2 million to $166.2 million for the six months ended June 30, 2020, from net cash used of $103.9 million for the six months ended June 30, 2019. The change was comprised of offsetting activity, including (i) a decrease in cash used for real estate inventory purchases of $104.6 million, (ii) an increase in net income to $88.4 million for the six months ended June 30, 2020 compared to $26.3 million in the prior-year period, (iii) a decrease in cash used for accrued expenses and other liabilities of $75.2 million to $5.8 million in the six months ended June 30, 2020 compared to $81.0 million in the prior-year period, (iv) offset by changes in other assets, receivables, accounts payable, deferred income taxes and returns on investments in unconsolidated entities. 
Net cash used in investing activities was $37.7 million for the six months ended June 30, 2020, compared to $13.8 million for the prior-year period.  The increase in cash used in investing activities was due mainly to an increase in investments in unconsolidated entities.
Net cash provided by financing activities was $17.0 million for the six months ended June 30, 2020, compared to net cash provided by financing activities of $11.6 million for the prior-year period. Net cash provided by financing activities in the current-year period was comprised of the issuance of $350 million principal amount of 2028 Notes, of which we used approximately $216 million to purchase a portion of our 2021 Notes pursuant to a tender offer, resulting in a net borrowing of approximately $134 million. This activity was offset by $102.0 million of cash used for share repurchases for the current-year period, compared to no similar cash transactions for the prior-year period.
Off-Balance Sheet Arrangements and Contractual Obligations
In the ordinary course of business, we enter into purchase contracts in order to procure lots for the construction of our homes.  We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots.  These purchase contracts typically require a cash deposit and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements.  We also utilize option contracts with land sellers and land banking arrangements as a method of acquiring land in
- 48 -


staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources.  These option contracts and land banking arrangements generally require a non-refundable deposit for the right to acquire land and lots over a specified period of time at pre-determined prices.  We generally have the right, at our discretion, to terminate our obligations under both purchase contracts and option contracts by forfeiting our cash deposit with no further financial responsibility to the land seller.  In some cases, however, we may be contractually obligated to complete development work even if we terminate the option to procure land or lots. As of June 30, 2020, we had $81.7 million of cash deposits, the majority of which are non-refundable, pertaining to land and lot option contracts and purchase contracts with an aggregate remaining purchase price of $816.2 million (net of deposits). See Note 7, Variable Interest Entities, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
Our utilization of land and lot option contracts and land banking arrangements is dependent on, among other things, the availability of land sellers or land banking firms willing to enter into such arrangements, the availability of capital to finance the development of optioned land and lots, general housing market conditions, and local market dynamics.  Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.
Inflation
Our operations can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs.  In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers.  While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we are often unable to offset cost increases with higher selling prices. 
Seasonality
Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements.  We typically experience the highest new home order activity during the first and second quarters of our fiscal year, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors.  Since it typically takes three to nine months to construct a new home, the number of homes delivered and associated home sales revenue typically increases in the third and fourth quarters of our fiscal year as new home orders sold earlier in the year convert to home deliveries.  Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters of our fiscal year, and the majority of cash receipts from home deliveries occur during the second half of the year.  We expect this seasonal pattern to continue over the long-term, although it may be affected by volatility in the homebuilding industry and the impacts of the COVID-19 pandemic.

Description of Projects and Communities Under Development
The following table presents project information relating to each of our markets as of June 30, 2020 and includes information on current projects under development where we are building and selling homes.
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Maracay
County, Project, City
Year of
First
Delivery(1)
Total
Number of
Lots(2)
Cumulative
Homes
Delivered
as of
June 30, 2020
Lots
Owned as of
June 30, 2020(3)
Backlog as of June 30, 2020(4)(5)
Homes
Delivered
for the Six
Months Ended
June 30, 2020
Sales Price
Range
(in thousands)(6)
Phoenix, Arizona
City of Buckeye:
Arroyo Seco202044  —  44  20  —   $414 - $478
City of Chandler:
Mission Estates201926  21      $537 - $598
Windermere Ranch201991  39  52  34  19   $532 - $572
Canopy North2020129  —  12  —  —   $471 - $540
Canopy South2020112  —  11  —  —   $556 - $578
City of Gilbert:
Lakes At Annecy2019216  66  150  47  30  $289 - $363
Annecy P32021251  —  251  —  —  $259 - $331
Lakeview Trails201992  64  28  20  23  $570 - $655
Lakeview Trails II202168  —  68   —  $570 - $655
Copper Bend202038   29  21   $492 - $511
Avocet at Waterston2020115  —  115  24  —  $526 - $611
Brighton at Waterston202088  —  88  24  —  $632 - $676
Domaine at Waterston2020128  —  128  18  —  $774 - $819
City of Goodyear:
Villages at Rio Paseo2018117  101  16   40   $204 - $234
Cottages at Rio Paseo201893  84      $243 - $264
Sedella202175  —  75  —  —   $441 - $521
City of Mesa:
Cadence2021127  —  127  —  —   $312 - $345
City of Peoria:
Legacy at The Meadows201774  68   —  —   $425 - $451
Estates at The Meadows2017272  191  81  22  29   $530 - $616
Enclave at The Meadows2018126  98  28  21  28   $417 - $512
Deseo201994  23  71  34  17   $528 - $622
City of Phoenix:
Loma @ Avance2019124  47  77  17  25   $400 - $459
Ranger @ Avance2019145  28  117  33  26   $439 - $511
Piedmont @ Avance201999  21  78  16  19   $515 - $530
Alta @ Avance202026   21     $630 - $659
Town of Queen Creek
Madera 50's2022105  —  105  —  —   $330 - $410
Madera 60's202270  —  70  —  —   $391 - $453
Madera 75's202291  —  91  —  —   $463 - $510
Pathfinder South At Spur Cross202053  —  53  29  —   $494 - $514
Pathfinder North At Spur Cross202065   64  16    $575 - $589
Closed CommunitiesN/A—  —  —  —  20  
Phoenix, Arizona Total3,154  866  2,070  427  303  
Tucson, Arizona
Closed CommunitiesN/A—  —  —  —   
Tucson, Arizona Total—  —  —  —   
Maracay Total3,154  866  2,070  427  305  

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Pardee Homes
County, Project, City
Year of
First
Delivery(1)
Total
Number of
Lots(2)
Cumulative
Homes
Delivered
as of
June 30, 2020
Lots
Owned as of
June 30, 2020(3)
Backlog as of June 30, 2020(4)(5)
Homes
Delivered
for the Six
Months Ended
June 30, 2020
Sales Price
Range
(in thousands)(6)
California
San Diego County:
Sendero2019112  80  32  20  19  $1,470 - $1,600
Vista Santa Fe201944  30  14  13  12  $1,910 - $2,010
Terraza201981  70  11  11  24  $1,360 - $1,430
Carmel2019105  62  43  12  15  $1,530 - $1,640
Vista Del Mar201979  46  33  12  13  $1,670 - $1,800
Highlands202152  —  52  —  —  $1,640 - $1,930
Sendero Collection202176  —  76  —  —  $1,350 - $1,400
Pacific Highlands Ranch Future202142  —  42  —  —  TBD
Lake Ridge2018129  95  34  12  18  $790 - $865
Veraz2018111  74  37  13  28  $425 - $500
Solmar201974  37  37   28  $390 - $485
Solmar Sur2021108  —  108  —  —  $390 - $485
Marea2020143  —  143  —  —  $365 - $435
PA61 Townhomes2021170  —  170  —  —  TBD
MeadowoodTBD844  —  844  —  —  $390 - $630
South Otay MesaTBD893  —  893  —  —  TBD
Los Angeles County:
Cresta201867  42  25  11   $830 - $890
Verano201795  65  30  10  10  $550 - $650
Arista2017143  101  42  10  10  $740 - $800
Lyra2019141  53  88  27  20   $650 - $720
Sola2019189  79  110  39  18   $560 - $610
Luna2020114  —  114  19  —   $615 - $660
Strata2021292  —  292  —  —   $550 - $670
Skyline Ranch FutureTBD334  —  334  —  —   TBD
Riverside County:
Canyon Hills Future 70 x 115TBD125  —  125  —  —  TBD
Westlake2020163  —  163  26  —  $310 - $325
Daybreak2017159  140  19  16  17  $360 - $385
Abrio2018113  89  24  16  19  $415 - $450
Cascade2017194  169  25  21  11  $335 - $360
Beacon2018106  83  23  17  12  $510 - $560
Alisio201984  69  15  14  18  $300 - $335
Elan201996  18  78  17   $390 - $425
Mira201995  13  82    $365 - $395
Avid201968  21  47    $340 - $365
Vita2019115  32  83  11   $315 - $340
Sundance Future Active AdultTBD330  —  330  —  —  TBD
Avena201884  66  18  10  14  $455 - $485
Braeburn201882  65  17  13  20  $415 - $450
Overland at Spencer's Crossing202185  —  85  —  —  $485 - $515
Canvas201889  85    27  $405 - $430
Kadence201885  64  21  15  15  $420 - $435
Newpark201893  56  37  17  14  $445 - $490
Easton201892  46  46  16  12  $480 - $530
Compass at Audie Murphy Ranch202152  —  52  —  —  $450 - $510
Tournament Hills FutureTBD268  —  268  —  —  TBD
Terramor202275  —  75  —  —  TBD
Arroyo2020110  —  110  38  —  $305 - $350
Cienega2020106  —  106  41  —  $310 - $345
- 51 -


Centerstone2021120  —  120  —  —  $320 - $335
Landmark2021130  —  130  —  —  $340 - $365
Horizon2021130  —  130  —  —  $395 - $420
Atwell FutureTBD3,742  —  3,742  —  —  TBD
San Joaquin County:
Bear CreekTBD1,252  —  1,252  —  —  TBD
Closed CommunitiesN/A—  —  —  —  11  
California Total12,681  1,850  10,831  523  430  
Nevada
Clark County:
Tera Luna2018116  39  77   10   $560 - $670
Linea2018123  121    13   $370 - $410
Strada 2.0201962  17  45  29  12   $460 - $550
Strada III202130  —  30  —  —  
Arden202079  —  79   —  $390 - $430
Capri2020114  —  114  13  —   $302 - $328
Arden 2.02022154  —  154  —  —   $370 - $400
Capri 2.02022214  —  214  —  —   $300 - $325
Pebble Estate FutureTBD —   —  —  TBD
Evolve201974  48  26  12  23   $305 - $335
Midnight Ridge2020104   95  26   $525 - $645
Axis201752  53  —  —    $860 - $1,125
Axis at the Canyons201926  15  10     $800 - $920
Cobalt2017107  86  21   12   $380 - $460
Onyx201888  65  23  19  13   $470 - $510
Pivot201788  87   —    $405 - $470
Nova Ridge201778  74   —    $670 - $850
Nova Ridge at the Cliffs201930   23     $670 - $850
Corterra201853  44    10   $455 - $545
Highline202059   58     $470 - $570
Indogo2018202  101  101  15  24   $300 - $370
Larimar2018106  49  57   18  $355 - $420
Blackstone2018105  60  45  10  11  $410 - $510
35 x 90 ProductTBD140  —  140  —  —  TBD
Cirrus201954  20  34  15  13  $370 - $410
Sandalwood2020116  —  116  28  —  $740 - $910
Silverado Entry-Level202196  —  96  —  —  $400 - $450
Silverado Move-Up202193  —  93  —  —  $440 - $485
Silverado Courtyard Townhome2021116  —  116  —  —  $300 - $320
Closed CommunitiesN/A—  —  —  —   
Nevada Total2,687  896  1,791  216  189  
Pardee Total15,368  2,746  12,622  739  619  

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Quadrant Homes 
County, Project, City
Year of
First
Delivery(1)
Total
Number of
Lots(2)
Cumulative
Homes
Delivered
as of
June 30, 2020
Lots
Owned as of
June 30, 2020(3)
Backlog as of June 30, 2020(4)(5)
Homes
Delivered
for the Six
Months Ended
June 30, 2020
Sales Price
Range
(in thousands)(6)
Washington
Snohomish County:
Grove North, Bothell201943  21  22  22  10  $780 - $910
Trailside at Meadowdale Beach, Edmonds202138  —  38  —  —  $735 - $785
Cypress, Lynnwood202142  —  42  —  —  $535 - $655
King County:
Vareze, Kirkland202082  14  68  28  14  $720 - $895
Cedar Landing, North Bend2019138  35  103  47  11  $780 - $920
Monarch Ridge, Sammamish201959  20  39  34   $1,000 - $1,285
Overlook at Summit Park, Maple Valley2019126  43  83  30  14  $595 - $765
Aurea, Sammamish201941  21  20  15  12  $675 - $821
Aldea, Newcastle2019129  52  77  18  14  $685 - $838
Lario, Bellevue202046   39  25   $905 - $1,197
Lakeview Crest, Renton202017  —  17   —   $1,400 - $1,875
Eagles Glen, Sammamish202010  —  10   —   $1,150 - $1,525
Willows 124, Redmond2023173  —  173  —  —  $745 - $930
Finn Meadows, Kirkland202010      $1,050 - $1,245
Woodlands Reserve, Kirkland202237  —  37  —  —  $945 - $1,350
Hazelwood Gardens, Newcastle202115  —  15  —  —  $1,180 - $1,340
Kitsap County:
Blue Heron, Poulsbo202285  —  85  —  —  $536 - $706
McCormick Villages, Port Orchard202188  —  88  —  —  $470 - $525
Poulsbo Meadows, Poulsbo202146  —  46  —  —  $515 - $551
Closed CommunitiesN/A—  —  —  —   N/A
Washington Total1,225  215  1,010  228  92  
Quadrant Total1,225  215  1,010  228  92  





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Trendmaker Homes
County, Project, City
Year of
First
Delivery(1)
Total
Number of
Lots(2)
Cumulative
Homes
Delivered
as of
June 30, 2020
Lots
Owned as of
June 30, 2020(3)
Backlog as of June 30, 2020(4)(5)
Homes
Delivered
for the Six
Months Ended
June 30, 2020
Sales Price
Range
(in thousands)(6)
Texas
Brazoria County:
Rise Meridiana201647  46   —   $348 - $369
Fort Bend County:
Cross Creek Ranch 60', Fulshear201348  26  22   14  $431 - $567
Cross Creek Ranch 65', Fulshear201389  66  23    $463 - $677
Cross Creek Ranch 70', Fulshear2013107  87  20   16  $525 - $663
Cross Creek Ranch 80', Fulshear201371  67    18  $664 - $785
Cross Creek Ranch 90', Fulshear201349  36  13    $700 - $816
Fulshear Run 1/2 Acre, Richmond2016145  54  91  —   $646
Harvest Green 75', Richmond201563  52  11    $454 - $581
Sienna Plantation 80', Missouri CityTBD25  —  25   —  $573 - $640
Sienna Plantation 85', Missouri City201554  45     $589 - $636
Grayson Woods 60'201937   29  10   $434 - $438
Grayson Woods 70'201926  10  16  10   $502 - $577
Katy GastonTBD129  —  129  —  —  TBD
Harris County:
The Groves, Humble2015117  99  18   10  $315 - $371
Lakes of Creekside 80'201617  15   —   $475 - $611
Lakes of Creekside 65'TBD18  —  18  —  —  $400 - $450
Balmoral 50'201946  11  35    $255 - $337
Bridgeland '80, Cypress2015141  120  21   12  $621 - $705
Bridgeland 70'201841  32    15  $498 - $583
Villas at Bridgeland 50'201848  20  28    $350 - $405
Falls at Dry Creek201920   11    $530 - $685
Grant-Cyp-RosehillTBD428  —  428  —  —  TBD
Hidden Arbor, Cypress (Land)TBD156  129  27   —  $365 - $465
Clear Lake, Houston (Land)2015772  661  111  28  65  $439 - $707
Northgrove, TomballTBD25   18  —  —  TBD
The Woodlands, Creekside Park2015131  128    11  $450 - $459
Montgomery County:
Grand Central ParkTBD17  —  17  —  —  $299 - $340
RodriguezTBD342  —  342  —  —  TBD
Royal Brook, Porter201926   19    $349 - $450
Waller County:
LakeHouse2019351  68  283  27  37  $269 - $619
Williamson County:
Crystal Falls - Lots for Sale201629  25   —  —  TBD
Rancho Sienna 60'201651  41  10    $380 - $500
Highlands at Mayfield Ranch 50'201963  42  21  23  12  $303 - $420
Highlands at Mayfield Ranch 60'201946  24  22  18  10  $351 - $485
Meyer RanchTBD10  —  10   —  $300 - $485
Rancho Sienna 50'201954  15  39    $300 - $439
Palmera Ridge201949  30  19  15  14  $291 - $360
Hays County:
6 Creeks 50' Section 1 & 2202035  12  23  10  12  $269 - $352
6 Creeks 60' Section 1 & 2202015   11    $309 - $375
Travis County:
Lakes Edge 80'201814  13     $797
Turner's Crossing (Land)TBD324  —  324  —  —  TBD
Williamson County:
Cressman Tract (Land)TBD85  —  85  —  —  TBD
- 54 -


<
Collin County:
Creeks of Legacy, Celina202024  —  24  —  —  $349 - $379
Miramonte, Frisco201662  60     $475 - $560
Retreat at Craig Ranch, McKinney2012165  159     $375 - $415
Dallas County:
Vineyards, Rowlett201740  36     $368 - $480
Denton County:
Glenview, Frisco201750  42    10  $345 - $485
Paloma Creek, Little Elm2015267  187  80  19  10  $275 - $390
Parks at Legacy, Prosper201755  39  16    $384 - $495
Valencia, Little Elm201682  63  19    $350 - $444
Villages of Carmel, Denton201796  92    12  $290 - $360
Kaufman County: