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Tri Pointe Homes, Inc. (TPH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS of $0.70 beat S&P Global consensus by $0.21 (vs. $0.49)* on stronger mix and disciplined incentives; total revenue of $740.9M also exceeded consensus by ~$28.3M (actual $740.9M vs. $712.7M)* .
  • Home sales revenue fell 21.5% YoY to $720.8M on 25% lower deliveries, but homebuilding gross margin expanded 90 bps YoY to 23.9% on mix and operational discipline .
  • Management lowered FY25 delivery guidance to 5,000–5,500 (from 5,500–6,100) and raised FY ASP to $665k–$675k (from $660k–$670k); gross margin range maintained at 20.5%–22.0% .
  • Near-term caution: demand “choppy,” incentives trending ~7% on orders, and Q2 gross margin guide implies sequential pressure; medium-term confidence anchored by premium locations, backlog quality, and new-market expansion (Utah, Orlando, Coastal Carolinas) .

What Went Well and What Went Wrong

What Went Well

  • Margin resilience: Homebuilding gross margin rose to 23.9% (from 23.0% YoY), above internal expectations due to mix; SG&A ratio at 14.0% was better than guided range as G&A savings offset lower revenue .
  • Pricing power/mix: ASP of delivered homes increased to $693k (+5% YoY), helping offset volume headwinds; adjusted homebuilding GM reached 27.3% (ex interest/impairments) .
  • Balance sheet/capital returns: $1.5B liquidity with $812.9M cash; repurchased 2.27M shares for $75M; net homebuilding debt-to-net capital at 3.0% .

What Went Wrong

  • Orders and deliveries: Net new orders fell 32% YoY to 1,238; deliveries declined 25% YoY to 1,040 as buyers paused on macro/tariff headlines; cancellations edged up to 10% (from 7%) .
  • SG&A deleverage: SG&A rose to 14.0% (from 11.1% YoY) given lower revenue and investment in new divisions; management expects structural improvement over 3–5 years as expansions scale .
  • Guidance cut in units: FY25 deliveries reduced to 5,000–5,500 on slower spring start; Q2 gross margin guided to 21.5%–22.5% (down from Q1’s 23.9%) as incentives/mix weigh .

Financial Results

Headline P&L and Margins (chronological: Q3 2024 → Q4 2024 → Q1 2025 → Q1 2025 Cons.)

MetricQ3 2024Q4 2024Q1 2025Q1 2025 (Consensus)
Home Sales Revenue ($USD Millions)$1,113.7 $1,221.4 $720.8 —
Total Revenues ($USD Millions)$1,127.0 $1,231.5 $740.9*$712.7*
Diluted EPS ($)$1.18 $1.37 $0.70 $0.49*
Homebuilding Gross Margin %23.3% 23.3% 23.9% —
Adjusted Homebuilding GM %26.8% 26.8% 27.3% —
SG&A % of Home Sales Revenue10.8% 10.3% 14.0% —

Note: Total Revenues for Q1 2025 reflect S&P Global data (company presentation separates homebuilding and financial services). Values with asterisks retrieved from S&P Global.

Operating KPIs

KPIQ3 2024Q4 2024Q1 2025
Deliveries (Homes)1,619 1,748 1,040
ASP of Deliveries ($000s)688 699 693
Net New Orders (Homes)1,252 940 1,238
Avg Selling Communities (Units)150.0 146.8 145.5
Cancellation Rate10% 14% 10%
Backlog (Homes)2,325 1,517 1,715
Backlog ($USD Billions)$1.732 $1.165 $1.308
Backlog ASP ($000s)745 768 763

Geographic/Segment Snapshot (Q1 2025)

RegionNew Homes DeliveredASP ($000s)
West Total521 769
Central Total377 558
East Total142 773
Total1,040 693

Guidance Changes

MetricPeriodPrevious Guidance (as of Q4’24)Current Guidance (Q1’25)Change
Deliveries (Homes)FY 20255,500 – 6,100 5,000 – 5,500 Lowered
ASP ($000s)FY 2025660 – 670 665 – 675 Raised
Homebuilding GM %FY 202520.5% – 22.0% 20.5% – 22.0% Maintained
SG&A % (of Home Sales)FY 202511.0% – 12.0% 11.5% – 12.5% Raised
Effective Tax RateFY 2025~26.0% ~27.0% Raised
Deliveries (Homes)Q2 2025—1,100 – 1,200 New
ASP ($000s)Q2 2025—680 – 690 New
Homebuilding GM %Q2 2025—21.5% – 22.5% New
SG&A % (of Home Sales)Q2 2025—12.5% – 13.5% New
Effective Tax RateQ2 2025—~27.0% New

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Demand/Absorptions2.8 monthly; seasonally normal; hesitancy into Oct (election/geopolitics) Early-25 pickup vs Q4 (Jan 2.5, Feb 2.8); YoY tough comps Jan 2.5, Feb 2.9, Mar 3.1; April “choppy”; targeting 2.5–3 pace Slower start; stabilizing into Mar
Incentives~5.5% on Q3 orders Orders ~6% early-25; levers in design studio March orders 7.3%; Q1 orders ~6.5% with 2.3% in design studio; deliveries ~6.1% Higher on orders sequentially
Gross Margin~23.3% Q3; Q4 guide ~23–23.5% FY25 GM range 20.5–22%; Q1 guide 22–23% Q1 actual 23.9% (mix benefit); Q2 guide 21.5–22.5% Sequential pressure in Q2
SG&A10.8% in Q3 FY25 SG&A 11–12% Q1 at 14% on lower revenue; FY25 11.5–12.5%; expansion divisions elevate near-term Near-term elevated
Macro/TariffsElection/rates driving hesitancy Rates/inflation; insurance pockets; no labor impact Trade tensions/new tariffs dampen sentiment, minimal 2025 cost impact expected Headwind to confidence
Expansion MarketsUtah/Orlando/Coastal Carolinas progressing Start-ups scaling; lot bank supports growth Utah openings 3Q25; Orlando lots ~250; Carolinas initial 2026 deliveries On track

Management Commentary

  • “We either met or exceeded all of our guidance… Homebuilding gross margin remained strong in the first quarter at 23.9%… net income of $64 million and diluted earnings per share of $0.70.” — CEO Doug Bauer .
  • “Current trade tensions and evolving tariff dynamics have created uncertainty… However, we do not believe tariffs will have a material impact on our cost structure in 2025.” — CEO Doug Bauer .
  • “Gross margins were 23.9%… exceeded the high end of our guidance range due to the mix of deliveries… SG&A… was better than our guidance due to some savings in G&A.” — CFO Glenn Keeler .
  • “We are updating our guidance to a lower range of deliveries based on the slower market conditions we have experienced so far this year.” — CFO Glenn Keeler .
  • “Our balance sheet remains a key strength… $1.5 billion [liquidity]… net debt to net capital ratio of 3%.” — CEO Doug Bauer .

Q&A Highlights

  • Absorptions and pace/price: Targeting 2.5–3 per month; 2.5 is “somewhat of a floor”; will adjust incentives if needed, but believe incremental incentives don’t drive proportional volume at premium locations .
  • Incentives mechanics: March order incentives averaged 7.3%; Q1 orders ~6.5% with 2.3% channeled to design studio (gross margins >40% there), deliveries ~6.1% .
  • Q2 margin vs incentive math: The apparent gap reconciles via mix; incentives generally hit revenue dollar-for-dollar, but favorable divisional mix offsets part of the impact .
  • FY margin cadence: Midpoint implies ~20% GM in 2H25 driven by lot cost mix (old high-margin community closeouts) and incentives; assumes ~7% incentives carry through .
  • SG&A elevation: Driven by lower revenue leverage and investment in new-market expansions; long-term goal to return to ~10–10.5% as divisions scale (3–5 years) .
  • Market color: Strength in Raleigh, D.C. Metro, Vegas, Bay Area, OC/IE; more challenging in Colorado, Dallas-Fort Worth, Charlotte; Q1 delivery mix ~41% entry-level, 53% move-up .

Estimates Context

  • EPS: $0.70 vs. $0.49 consensus; beat by $0.21; 7 estimates*
  • Revenue (Total): $740.9M vs. $712.7M consensus; beat by ~$28.3M; 6 estimates*
  • Takeaway: Both top and bottom line exceeded expectations; estimate revisions likely to reflect stronger Q1 mix but tempered by Q2 margin guidance and lowered FY deliveries. Values retrieved from S&P Global.
    • EPS: 0.70 (actual) vs 0.49 (consensus mean); # of estimates: 7*
    • Revenue: $740.928M (actual) vs $712.667M (consensus mean); # of estimates: 6*

Key Takeaways for Investors

  • Quality beat: EPS and revenue beat consensus on favorable mix and disciplined incentives; however, management guides Q2 margin down sequentially and cut FY deliveries, suggesting near-term normalization .
  • Mix-driven resilience: Despite 25% lower deliveries, ASP increased and homebuilding GM expanded YoY, underscoring premium location strategy and design studio monetization .
  • Incentive framework: Orders running ~6.5%–7.3% incentives; roughly a third of incentives can be directed to design studio with >40% gross margin, softening P&L impact .
  • Guidance reset: Lower FY unit guide but higher ASP; FY GM range intact. Expect Street to trim unit assumptions and lift ASP, with modest gross margin caution embedded .
  • Liquidity/returns: $1.5B liquidity and only 3% net homebuilding leverage support ongoing buybacks ($175M authorization remaining at Q1 end) and organic expansion .
  • Expansion optionality: Utah (openings 3Q25), Orlando (lots progressing), and Coastal Carolinas (2026) provide medium-term growth levers as macro uncertainty fades .
  • Trading lens: Beat likely offsets unit guide cut near term; focus into Q2 on absorption trajectory, incentive discipline, and confirmation that back-half GM trough near ~20% materializes as guided .

References

  • Q1 2025 8-K/Press Release and data tables:
  • Q1 2025 Press Release (duplicate content of Exhibit 99.1):
  • Q1 2025 Earnings Call Transcript (prepared remarks and Q&A):
  • Q4 2024 Press Release and tables:
  • Q4 2024 Earnings Call Transcript:
  • Q3 2024 Press Release and tables:
  • S&P Global consensus and actuals (Q1 2025): EPS/Revenue, estimate counts; and Q4 2024 consensus context: Values retrieved from S&P Global.*