It was good to be a public home builder in 2013, and good, too, to go public. After a nine-year hiatus, six private companies raised more than $1.4 billion in growth capital by selling equity shares in their operations to join the ranks of their public peers. Investors bought into housing’s recovery in a big way, which gave big public builders easy, cheap access to capital. Our report cards this year reflect what the group as a whole and individual organizations did with that capital, and how they managed opportunity and positioned themselves for 2014’s further challenges.

Our key take away is this: One year a housing recovery does not make. If we look only at year-over-year comparisons and contrasts as benchmarks of strategic and tactical skill, we’d absolutely miss what stronger companies do to build resilience, prepare for shocks, and prosper no matter what.

Two caveats here: One, our grades are editors’ choices, not to be taken as qualified evaluations of company financial management. That’s the ratings agencies’ business, not ours. Two, to arrive at an “apples to apples” comparison, we map all disclosed company data to a calendar year, so numbers may differ from those reported in fiscal-year earnings reports. The research presented here is the best we’ve done in the seven years we’ve been grading the publics, and that’s thanks to the leadership of Jamie Pirrello, president of American New Homes Group, and his team, Kylie Berrena, Derek Heath, and Robert Yemola, students in the accounting, business, and economics department at Juniata College in Huntingdon, Pa.

AV HOMES

2013 Performance Final Grade 52/100
2012 Final Grade: —/100
C
FINANCIAL 19/40 Change
YOY
OPERATIONS 6/20 Change
YOY
Debt-to-capital 35.4% -1140 bps Home building gross margins 8.0% 6330bps
Pretax home building income (in millions) -$7.5 90.9% Sales per community per month to break even
Home building SG&A/Total HB revenue 12.8% -760 bps Revenue per employee (in millions) $1.1
Home building SG&A (in millions) $16.0 -1.1%
Cash & marketable securities (in millions) $144.7 385.4% SALES & MARKETING 9/20
Total shareholder return 23.9% Closings 481 57.2%
EPS -$1.34 81.4% Sales velocity (per community per month)
LAND 18/20 Unit backlog 167 -9.7%
Community count
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$144 $125 $0.01 $0.01 -5.3% $40 $6 N/A


In its debut on our report card, AV Homes came in at the bottom. But the builder has taken steps to improve its performance. After traditionally focusing on the active adult segment, AV began producing homes for all ages, according to its March earnings call. It also began tweaking both its internal operations and product designs to achieve greater efficiencies. With an eye on future growth, it raised $135 million in equity, corralled 1,300 lots, and bought Royal Oak Homes in Orlando, Fla.

BEAZER HOMES USA

2013 Performance Final Grade 64/100
2012 Final Grade: 65.5/100
B-
FINANCIAL 20/40 Change
YOY
OPERATIONS 16/20 Change
YOY
Debt-to-capital 87.8% 400 bps Home building gross margins 17.4% 620 bps
Pretax home building income (in millions) $55.4 257.6% Sales per community per month to break even 1.89
Home building SG&A/Total HB revenue 13.4% -120 bps Revenue per employee (in millions) $1.5 14.8%
Home building SG&A (in millions) $ 177.3 15.1%
Cash & marketable securities (in millions) $ 382.6 -3.6% SALES & MARKETING 16/20
Total shareholder return 36.3% Closings 5,026 9.3%
EPS -$ 0.74 89.1% Sales velocity (per community per month) 2.8 21.7%
LAND 12/20 Unit backlog 1,750 -3.7%
Community count 150 -19.8%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,334 $1,325 $67.86 $9.42 4.2% $500 $1,383 5.6


In 2012, Beazer was one of three companies to lose money and it held one of the highest debt ratios in the group. In 2013, it continued to dig out with solid growth in pretax home building income, but still scored near the bottom of the sector with low numbers in unit backlog, community count, and closings. Beazer expects its average 2014 community count to increase 5 percent sequentially, and its sales pace to improve to 3.1 in 2014.

D.R. HORTON

2013 Performance Final Grade 68/100
2012 Final Grade: 87.5/100
B
FINANCIAL 28.5/40 Change
YOY
OPERATIONS 17/20 Change
YOY
Debt-to-capital 43.8% 360 bps Home building gross margins 21% 300 bps
Pretax home building income (in millions) $ 684.0 154.4% Sales per community per month to break even 1.07
Home building SG&A/Total HB revenue 10.8% 130 bps Revenue per employee (in millions) $1.8 11.2%
Home building SG&A (in millions) $ 692.5 25.8%
Cash & marketable securities (in millions) $ 820.1 23.6% SALES & MARKETING 15/20
Total shareholder return 10.3% Closings 25,161 26.1%
EPS $1.61 -48.3% Sales velocity (per community per month) 2.1 6.4%
LAND 7.5/20 Unit backlog 7,684 5.0%
Community count 1024 9.0%
Land-related charges (in millions) $32.4 -431.1%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$6,655 $6,432 $10.14 $13.00 10.5% $2,114 $6,496 6.9


With the exception of earnings per share (EPS), D.R. Horton scored well in the financial category, but the company’s land-related charges pulled its overall score down. In its January earnings call, D.R. Horton said its spring sales season started off strong. A strategic adjustment: the company traditionally has been an entry-level builder but has produced homes at higher average selling price points to capture demand in that slice of the market.

HOVNANIAN ENTERPRISES

2013 Performance Final Grade 68/100
2012 Final Grade: 73/100
B
FINANCIAL 21.5/40 Change
YOY
OPERATIONS 14/20 Change
YOY
Debt-to-capital 137.3% -220 bps Home building gross margins 20.1% 290 bps
Pretax home building income (in millions) $191.4 65.1% Sales per community per month to break even 1.13
Home building SG&A/Total HB revenue 9.6% -20 bps Revenue per employee (in millions) $1.1 5.6%
Home building SG&A (in millions) $ 173 18.8%
Cash & marketable securities (in millions) $ 282.5 21.3% SALES & MARKETING 18/20
Total shareholder return -9.7% Closings 5,240 8.1%
EPS $ 0.12 128.1% Sales velocity (per community per month) 2.4 -8.5%
LAND 14.5/20 Unit backlog 2,223 9.9%
Community count 193 10.3%
Land-related charges (in millions) $5.0 49.7%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,857 $1,805 $11.49 $-3.13 10.6% $815 $1,210 6.2


A weak debt-to-capital ratio hurt Hovnanian’s score, even though its pre-tax home building income improved. The firm’s 2014 fiscal first quarter results illustrated its shaky performance. While it posted slightly higher revenues during the first quarter of 2014 than the first quarter of 2013, a shortfall in deliveries muted potential growth. An increase in backlog and growth in revenues in the first quarter gives Hovnanian hope for improvement in 2014, per its March earnings call.

KB HOME

2013 Performance Final Grade 64.5/100
2012 Final Grade: 64.5/100
B-
FINANCIAL 23/40 Change
YOY
OPERATIONS 12/20 Change
YOY
Debt-to-capital 83.2% -210 bps Home building gross margins 16.7% 270 bps
Pretax home building income (in millions) $28.2 131.3% Sales per community per month to break even 2.41
Home building SG&A/Total HB revenue 12.3% -300 bps Revenue per employee (in millions) $ 1.5 12.8%
Home building SG&A (in millions) $ 255.8 8.1%
Cash & marketable securities (in millions) $ 532.5 1.3% SALES & MARKETING 13/20
Total shareholder return 13.0% Closings 7,145 13.7%
EPS $0. 48 163.3% Sales velocity (per community per month) 3.1 -4.3%
LAND 16.5/20 Unit backlog 2,557 -0.8%
Community count 191 11.0%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$2,097 $2,084 $32.13 $6.49 1.4% $682 $2,299 8.6


KB Home made its first profit since 2006, and its community count went up after falling the year before, but weakness in its debt-to-capital ratio still weighed the company down. On its March earnings call, CEO Jeffrey T. Mezger attributed KB Home’s improved unit volume and average selling price performance to buying land and developing communities in desirable, land-constrained areas. With this shift in strategy, KB’s average sales price has risen for six straight quarters.

LENNAR CORP.

2013 Performance Final Grade 76.5/100
2012 Final Grade: 91/100
A
FINANCIAL 27/40 Change
YOY
OPERATIONS 14/20 Change
YOY
Debt-to-capital 59.2% -340 bps Home building gross margins 24.9% 250 bps
Pretax home building income (in millions) $733.1 183.1% Sales per community per month to break even 1.28
Home building SG&A/Total HB revenue 10.6% -200 bps Revenue per employee (in millions) $1.0 18.3%
Home building SG&A (in millions) $ 559.5 27.5%
Cash & marketable securities (in millions) $ 695.4 -39.3% SALES & MARKETING 18/20
Total shareholder return 2.7% Closings 18,290 32.5%
EPS $ 2.47 -28.0% Sales velocity (per community per month) 3.0 3.8%
LAND 17.5/20 Unit backlog 4,806 19.1%
Community count 537 17.0%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$5,935 $5,292 $29.65 $20.39 13.7% $1,620 $6,601 8.4


In 2013, Lennar earned an A+, drawing kudos for lowering debt, cutting costs, raising its cash, and selling 2.9 homes per month, per store. In 2013, the company improved many of these metrics and things should continue to improve in 2014. In its March earnings call, CEO Stuart Miller reported that Lennar is seeing volume return to the market. Lennar will focus on average sales price, which jumped 18 percent from the first quarter of 2013 to 2014.

M.D.C. HOLDINGS

2013 Performance Final Grade 60/100
2012 Final Grade: 77/100
C
FINANCIAL 27/40 Change
YOY
OPERATIONS 13/20 Change
YOY
Debt-to-capital 51.0% -50 bps Home building gross margins 17.8% 250 bps
Pretax home building income (in millions) $100.3 207.6% Sales per community per month to break even 1.97
Home building SG&A/Total HB revenue 13.1% -140 bps Revenue per employee (in millions) $1.5 15.7%
Home building SG&A (in millions) $213.3 27.5%
Cash & marketable securities (in millions) $ 787.4 10.6% SALES & MARKETING 10/20
Total shareholder return -15.0% Closings 4,710 25.9%
EPS $6.49% 393.2% Sales velocity (per community per month) 2.5 1.0%
LAND 10/20 Unit backlog 1,262 -23.3%
Community count 146 -1.4%
Land-related charges (in millions) $ 0.9 16.8%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,680 $1,627 $26.08 $25.04 6.2% $506 $1,412 3.4


Compared with its peers, M.D.C. had a rough 2013. Low rankings in home building selling, general, and administrative expenses (SG&A) as a percentage of total home building revenue and the land and sales and marketing categories held it back. In its February earnings call, M.D.C. indicated that its January traffic was “pretty solid” and that it will continue to increase its community count in 2014. In the fourth quarter of 2013 , M.D.C.’s orders fell 14 percent.

MERITAGE HOMES CORP.

2013 Performance Final Grade 70/100
2012 Final Grade: 81.5/100
B+
FINANCIAL 25/40 Change
YOY
OPERATIONS 16/20 Change
YOY
Debt-to-capital 58.0% 210 bps Home building gross margins 21.8% 350 bps
Pretax home building income (in millions) $163.1 427.2% Sales per community per month to break even 1.39
Home building SG&A/Total HB revenue 12.2% -160 bps Revenue per employee (in millions) $1.7 20.3%
Home building SG&A (in millions) $218.2 33.9%
Cash & marketable securities (in millions) $274.1 60.8% SALES & MARKETING 15/20
Total shareholder return 25.8% Closings 5,259 24.1%
EPS $3.45 11.6% Sales velocity (per community per month) 2.5 -1.6%
LAND 14/20 Unit backlog 1,853 25.9%
Community count 188 19.0%
Land-related charges (in millions) $0.9 50.9%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,834 $1,783 $32.18 $23.30 9.0% $687 $1,405 4.9


In a year with big jumps in pretax home building income, Meritage posted the biggest number—427.2 percent. J.P. Morgan said its fourth quarter 23.2 percent improvement in gross margins was “mostly driven by price increases exceeding land and construction cost inflation, as the company has focused on maximizing price over volume.” Higher land prices, input costs, and more moderate price increases, could slow this trend.

M/I HOMES

2013 Performance Final Grade 63/100
2012 Final Grade: 76/100
B-
FINANCIAL 24/40 Change
YOY
OPERATIONS 12/20 Change
YOY
Debt-to-capital 55.6% -410 bps Home building gross margins 17.6% 70 bps
Pretax home building income (in millions) $12.8 221.9% Sales per community per month to break even 1.67
Home building SG&A/Total HB revenue 14.7% -140 bps Revenue per employee (in millions) $1.3 7.1%
Home building SG&A (in millions) $147.8 24.1%
Cash & marketable securities (in millions) $128.7 -11.5% SALES & MARKETING 14/20
Total shareholder return -7.5% Closings 3,472 25.6%
EPS $6.36 835.9% Sales velocity (per community per month) 2.0 4.6%
LAND 13/20 Unit backlog 1,280 32.6%
Community count 157 19.8%
Land-related charges (in millions) $5.8 65.8%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,037 $1,008 $25.92 $20.69 1.3% $408 $677 5.7


For the second straight year, M/I Homes made money. Still, it rated near the bottom of the public universe in metrics like home building SGA&A as a percentage of total revenue. And it still claimed $3.5 million in land write downs. In the fourth quarter, the company’s earnings per share came in below consensus. J.P. Morgan attributed this to lower financial services income, higher taxes, and higher interest expense driving earnings downward.

NVR

2013 Performance Final Grade 69/100
2012 Final Grade: 84/100
B
FINANCIAL 27.5/40 Change
YOY
OPERATIONS 11/20 Change
YOY
Debt-to-capital 49.3% 610 bps Home building gross margins 17.2% -30 bps
Pretax home building income (in millions) $397.4 57.5% Sales per community per month to break even 1.02
Home building SG&A/Total HB revenue 7.6% -200 bps Revenue per employee (in millions) $1.1 10.3%
Home building SG&A (in millions) $313.0 3.9%
Cash & marketable securities (in millions) $865.6 -24.9% SALES & MARKETING 14/20
Total shareholder return 10.3% Closings 11,834 20.2%
EPS $56.25 56.1% Sales velocity (per community per month) 2.2 -3.5%
LAND 16.5/20 Unit backlog 4,945 -0.7%
Community count 451 11.6%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$4,211 $4,134 $258.56 $266.28 9.2% $1,846 $739 5.5


NVR scored at the top of the public universe in home building SG&A as a percentage of total home building revenue and closings. In the fourth quarter, the company posted better-than-expected gross margins of 19.5 percent. That performance was largely due to advantages in pricing and buying (particularly with lumber) that NVR enjoyed earlier in the year. Because of that, J.P. Morgan projects modest gross margin increases as home buyer incentives and lumber prices rise.

PULTEGROUP

2013 Performance Final Grade 73.5/100
2012 Final Grade: 81/100
A
FINANCIAL 34.5/40 Change
YOY
OPERATIONS 16/20 Change
YOY
Debt-to-capital 46.1% -2000 bps Home building gross margins 20.3% 460 bps
Pretax home building income (in millions) $554.5 157.3% Sales per community per month to break even 1.2
Home building SG&A/Total HB revenue 10.5% -80 bps Revenue per employee (in millions) $1.5 11.4%
Home building SG&A (in millions) $568.5 10.5%
Cash & marketable securities (in millions) $1,580.3 12.5% SALES & MARKETING 10/20
Total shareholder return -6.6% Closings 17,766 7.6%
EPS $6.84 1166.0% Sales velocity (per community per month) 2.5 4.2%
LAND 13/20 Unit backlog 5,772 -10.6%
Community count 577 -13.9%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$5,680 $5,424 $10.39 $12.14 10.0% $1,902 $3,979 7.0


PulteGroup posted one of the highest overall scores in the public builder sphere, driven by high scores in pretax home building income and cash and marketable securities. Although its fourth quarter orders missed Wells Fargo Securities’ expectations, its margins were well above expectations. Wells Fargo likes PulteGroup’s balanced capital allocation, favorable buyer mix, and potential to generate higher gross margins going forward.

THE RYLAND GROUP

2013 Performance Final Grade 78/100
2012 Final Grade: 88.5/100
A+
FINANCIAL 29/40 Change
YOY
OPERATIONS 15/20 Change
YOY
Debt-to-capital 65.9% -690 bps Home building gross margins 20.8% 160 bps
Pretax home building income (in millions) $203.5 218.6% Sales per community per month to break even 1.14
Home building SG&A/Total HB revenue 10.7% -220 bps Revenue per employee (in millions) $1.5 29.0%
Home building SG&A (in millions) $223.3 36.7%
Cash & marketable securities (in millions) $541.1 -0.5% SALES & MARKETING 15/20
Total shareholder return 15.6% Closings 7,027 46.1%
EPS $8.25 814.4% Sales velocity (per community per month) 2.1 4.2%
LAND 19/20 Unit backlog 2,626 9.8%
Community count 290 21.8%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$2,141 $2,083 $38.80 $19.75 9.7% $855 $1,650 5.4


The Ryland Group posted strong numbers in 2013, scoring at or near the top in EPS, cash and marketable securities, and pre-tax home building income. Wells Fargo Securities liked the company’s fourth quarter home sales gross margin. In the future, a major story to watch will be Ryland’s community count, which grew 21.8 percent in 2013. Wells Fargo expects that number to continue to grow in 2014, which should drive above-average order growth.

STANDARD PACIFIC HOMES

2013 Performance Final Grade 72.5/100
2012 Final Grade: 88/100
A
FINANCIAL 24/40 Change
YOY
OPERATIONS 17/20 Change
YOY
Debt-to-capital 58.7% 30 bps Home building gross margins 24.5% 480 bps
Pretax home building income (in millions) $ 246.3% 264.1% Sales per community per month to break even 1.17
Home building SG&A/Total HB revenue 12.1% -240 bps Revenue per employee (in millions) $1.7 13.4%
Home building SG&A (in millions) $230.7 34.0%
Cash & marketable securities (in millions) $363.3 4.8% SALES & MARKETING 16/20
Total shareholder return 19.9% Closings 4,602 39.8%
EPS $ 0.52 -65.9% Sales velocity (per community per month) 2.5 13.9%
LAND 15.5/20 Unit backlog 1,700 21.1%
Community count 166 7.1%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$1,940 $1,899 $8.26 $5.80 12.9% $800 $2,536 7.6


Standard Pacific’s finish in the top-third of public builders owes to a strong performance in pretax home building income and solid operations with high scores in sales per community per month to break even and revenue per employee. Wells Fargo Securities said Standard Pacific had the highest gross and operating margins among the home builders in its coverage universe, attributing this success to its prescience in aggressively scooping up lots during the downturn.

TAYLOR MORRISON HOMES

2013 Performance Final Grade 56.5/100
2012 Final Grade: —/100
B
FINANCIAL 20.5/40 Change
YOY
OPERATIONS 14/20 Change
YOY
Debt-to-capital 86.7% 800 bps Home building gross margins 21.4% 80 bps
Pretax home building income (in millions) $257.8 62.0% Sales per community per month to break even 1.63
Home building SG&A/Total HB revenue 10.3% 0 bps Revenue per employee (in millions) $1.8 0.0%
Home building SG&A (in millions) $233.6 65.3%
Cash & marketable securities (in millions) $389.2 29.5% SALES & MARKETING 13/20
Total shareholder return -3.9% Closings 6,270 56.2%
EPS $ 1.38 0.0% Sales velocity (per community per month) 2.7 -14.5%
LAND 19/20 Unit backlog 3,526 -14.0%
Community count 177 37.6%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$2,323 $2,265 $40.81 $47.04 11.2% $1,443 $2,262 7.7


Taylor Morrison’s rookie year on our report card brought a below-average finish as low scores in pretax home building income, debt-to-capital, and EPS held its performance down. But in a post-earnings call note, J.P. Morgan painted a brighter picture for 2014, noting the builder’s strong momentum in orders, average gross margins and operating margins, and attractive land inventory position. In 2014, Taylor Morrison plans to spend more than $1 billion on land.

TOLL BROTHERS

2013 Performance Final Grade 71.5/100
2012 Final Grade: 62/100
B+
FINANCIAL 26.5/40 Change
YOY
OPERATIONS 13/20 Change
YOY
Debt-to-capital 44.60% 360 bps Home building gross margins 20.5% 140 bps
Pretax home building income (in millions) $232.2 178.7% Sales per community per month to break even 0.96
Home building SG&A/Total HB revenue 12.4% -250 bps Revenue per employee (in millions) $1.0 15.7%
Home building SG&A (in millions) $359.8 21.7%
Cash & marketable securities (in millions) $1,203.5 45.8% SALES & MARKETING 17/20
Total shareholder return -3.2% Closings 4,366 25.9%
EPS $1.20 -59.0% Sales velocity (per community per month) 1.8 10.5%
LAND 15/20 Unit backlog 3,667 31.2%
Community count 238 5.8%
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$2,893 $2,893 $16.56 $20.52 8.0% $2,690 $5,236 11.7


In a year when its high-end strategy played well in the overall market, Toll Brothers continued to post strong numbers, placing Toll in the top tier of builders. However, lower scores in EPS, revenue per employee, and home building gross margins dragged on some of our benchmarks. Toll’s backlog grew by $105.3 million in February, when it added 126 units from closing on the purchase of Shapell Homes, which boosted the company’s land position in California.

TRI POINTE HOMES

2013 Performance Final Grade 79/100
2012 Final Grade: —/100
A+
FINANCIAL 30/40 Change
YOY
OPERATIONS 17/20 Change
YOY
Debt-to-capital 36.30% 490 bps Home building gross margins 21.4% 370 bps
Pretax home building income (in millions) $38.0 430.6% Sales per community per month to break even 1.20
Home building SG&A/Total HB revenue 6.6% -200 bps Revenue per employee (in millions) $1.8 0.0%
Home building SG&A (in millions) $17.1 151.9%
Cash & marketable securities (in millions) $35.3 77.9% SALES & MARKETING 16/20
Total shareholder return 1.9% Closings 396 175%
EPS $0.0 330.5% Sales velocity (per community per month) 4.0 63.7%
LAND 16/20 Unit backlog 149 119.1%
Community count 10 42.9
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$258 $258 $0.01 $0.01 14.7% $112 $456 8.8


Tri Pointe’s initial public offering in January 2013 made it the first home builder since 2004 to enter the public markets. In its first year on the report card, the company scored well in almost all financial metrics, though it was building off a low basis. It was held back by home building gross margins, closings, and active selling communities. A new partnership between Weyerhaeuser Real Estate Co. and Tri Pointe will spur future growth.

WILLIAM LYON HOMES

2013 Performance Final Grade 69/100
2012 Final Grade: —/100
B
FINANCIAL 22/40 Change
YOY
OPERATIONS 18/20 Change
YOY
Debt-to-capital 51.0% 3140 bps Home building gross margins 22.2%% 770 bps
Pretax home building income (in millions) $52.9 378.3% Sales per community per month to break even
Home building SG&A/Total HB revenue 12.8% -330 bps Revenue per employee (in millions) $1.6 0.0%
Home building SG&A (in millions) $66.9 59.3%
Cash & marketable securities (in millions) $171.7 141.5% SALES & MARKETING 11/20
Total shareholder return -18.3% Closings 1,360 54.0%
EPS $0.01 -69.7% Sales velocity (per community per month)
LAND 18/20 Unit backlog 368 -9.4%
Community count
Land-related charges (in millions) $0 00.0%


Total Revenue
(in millions)
HB Revenue
(in millions)
Debt Per Share Equity Per Basic Share HB Pretax Margin Backlog Value
(in millions)
Inventory
(in millions)
Years Supply of Lots
$573 $521 $0.02 $0.02 9.8% $120 $672 7.8


William Lyon makes its freshman report card appearance, scoring high in pretax home building income and the land and operating categories. Other financial metrics ended up dragging the company’s totals lower. For 2014, J.P. Morgan liked the company’s position in the California market and its longer land positions, which should lead to orders accelerating. The analyst predicted that strong price appreciation will push gross margins in 2014.