TRI POINTE HOMES, INC., 10-K filed on 2/27/2014
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2013
Feb. 21, 2014
Jun. 28, 2013
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
TPH 
 
 
Entity Registrant Name
TRI Pointe Homes, Inc. 
 
 
Entity Central Index Key
0001561680 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
31,613,163 
 
Entity Public Float
 
 
$ 259,997,000 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Assets
 
 
Cash and cash equivalents
$ 35,261 
$ 19,824 
Real estate inventories
455,642 
194,083 
Contracts and accounts receivable
1,697 
548 
Deferred tax assets
4,611 
 
Other assets
8,824 
3,061 
Total Assets
506,035 
217,516 
Liabilities and Equity
 
 
Accounts payable
23,397 
7,823 
Accrued liabilities
22,220 
3,172 
Notes payable
138,112 
57,368 
Total Liabilities
183,729 
68,363 
Commitments and contingencies (Note 6)
   
   
Equity:
 
 
Members equity
 
149,153 
Stockholders' equity:
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding as of December 31, 2013
   
   
Common stock, $0.01 par value, 500,000,000 shares authorized, 31,597,907 shares issued and outstanding as of December 31, 2013
316 
 
Additional paid-in capital
310,878 
 
Retained earnings
11,112 
 
Total Stockholders' equity
322,306 
 
Total Equity
322,306 
149,153 
Total Liabilities and Equity
$ 506,035 
$ 217,516 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Statement Of Financial Position [Abstract]
 
Preferred stock, par value
$ 0.01 
Preferred stock, shares authorized
50,000,000 
Preferred stock, shares outstanding
   
Common stock, par value
$ 0.01 
Common stock, shares authorized
500,000,000 
Common stock, shares issued
31,597,907 
Common stock, shares outstanding
31,597,907 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenues:
 
 
 
Home sales
$ 247,091 
$ 77,477 
$ 13,525 
Fee building
10,864 
1,073 
5,804 
Total revenues
257,955 
78,550 
19,329 
Expenses:
 
 
 
Cost of home sales
193,092 
63,688 
12,075 
Fee building
9,782 
924 
5,654 
Sales and marketing
8,486 
4,636 
1,553 
General and administrative
17,057 
6,772 
4,620 
Total expenses
228,417 
76,020 
23,902 
Income (loss) from operations
29,538 
2,530 
(4,573)
Transaction expense (Note 1)
(4,087)
 
 
Other income (expense), net
302 
(24)
(20)
Income (loss) before income taxes
25,753 
2,506 
(4,593)
Provision for income taxes
(10,379)
 
 
Net income (loss)
$ 15,374 
$ 2,506 
$ (4,593)
Earnings (loss) per share (Note 9)
 
 
 
Basic
$ 0.50 
$ 0.12 
$ (0.36)
Diluted
$ 0.50 
$ 0.12 
$ (0.36)
Weighted average number of shares (Note 9)
 
 
 
Basic
30,775,989 
21,597,907 
12,681,352 
Diluted
30,797,602 
21,597,907 
12,681,352 
Consolidated Statements of Equity (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total Stockholders' Equity [Member]
Members' Equity [Member]
Beginning Balance at Dec. 31, 2010
$ 24,858 
 
 
 
 
$ 24,858 
Beginning Balance, Number of Common Shares at Dec. 31, 2010
 
   
 
 
 
 
Net income (loss)
(4,593)
 
 
 
 
(4,593)
Contributions
64,000 
 
 
 
 
64,000 
Financial Advisory fee paid on capital raised
(2,240)
 
 
 
 
(2,240)
Stock-based compensation expense
466 
 
 
 
 
466 
Ending Balance at Dec. 31, 2011
82,491 
 
 
 
 
82,491 
Ending Balance, Number of Common Shares at Dec. 31, 2011
 
   
 
 
 
 
Net income (loss)
2,506 
 
 
 
 
2,506 
Contributions
66,000 
 
 
 
 
66,000 
Financial Advisory fee paid on capital raised
(2,310)
 
 
 
 
(2,310)
Stock-based compensation expense
466 
 
 
 
 
466 
Ending Balance at Dec. 31, 2012
149,153 
 
 
 
 
149,153 
Beginning Balance, Number of Common Shares at Dec. 31, 2012
 
   
 
 
 
 
Net income (loss)
15,374 
 
 
15,374 
15,374 
 
Conversion of members' equity into common stock
 
216 
153,199 
(4,262)
149,153 
(149,153)
Conversion of members' equity into common stock, Number of Common Shares
 
21,597,907 
 
 
 
 
Issuance of common stock, net of issuance costs
155,408 
100 
155,308 
 
155,408 
 
Issuance of common stock, net of issuance costs, Number of Common Shares
 
10,000,000 
 
 
 
 
Stock-based compensation expense
2,371 
 
2,371 
 
2,371 
 
Ending Balance at Dec. 31, 2013
$ 322,306 
$ 316 
$ 310,878 
$ 11,112 
$ 322,306 
 
Ending Balance, Number of Common Shares at Dec. 31, 2013
 
31,597,907 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities
 
 
 
Net income (loss)
$ 15,374 
$ 2,506 
$ (4,593)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
 
Depreciation and amortization
866 
431 
758 
Amortization of stock-based compensation
2,371 
466 
466 
Deferred income taxes
(4,611)
 
 
Changes in operating assets and liabilities:
 
 
 
Real estate inventories
(261,559)
(112,060)
(67,915)
Contracts and accounts receivable
(1,149)
(477)
2,035 
Other assets
(6,123)
(1,686)
170 
Accounts payable
15,574 
5,708 
1,662 
Accrued liabilities
19,048 
875 
974 
Net cash used in operating activities
(220,209)
(104,237)
(66,443)
Cash flows from investing activities
 
 
 
Purchases of furniture and equipment
(506)
(288)
(308)
Purchases of marketable securities
(125,000)
 
 
Sales of marketable securities
125,000 
 
 
Net cash used in investing activities
(506)
(288)
(308)
Cash flows from financing activities
 
 
 
Net proceeds from issuance of common stock
155,408 
 
 
Cash contributions from member
 
66,000 
64,000 
Financial advisory fee paid on capital raised
 
(2,310)
(2,240)
Borrowings from notes payable
258,624 
115,888 
6,981 
Repayments of notes payable
(177,880)
(65,393)
(3,570)
Net cash provided by financing activities
236,152 
114,185 
65,171 
Net increase in cash and cash equivalents
15,437 
9,660 
(1,580)
Cash and cash equivalents - beginning of period
19,824 
10,164 
11,744 
Cash and cash equivalents - end of period
35,261 
19,824 
10,164 
Supplemental disclosure of cash flow information
 
 
 
Interest paid, net of amounts capitalized
   
 
 
Income taxes paid
$ 7,226 
 
 
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization

TRI Pointe Homes, Inc. is engaged in the design, construction and sale of innovative single-family homes in major metropolitan areas located throughout California and Colorado. We generate a significant amount of our revenues and profits in California.

Initial Public Offering

In January 2013, the Company completed its initial public offering (“IPO”) in which it issued and sold 10 million shares of common stock at the public offering price of $17.00 per share. The Company received proceeds of approximately $155.4 million, net of the underwriting discount and estimated offering expenses. In preparation of the IPO, the Company reorganized from a Delaware limited liability company into a Delaware corporation and was renamed TRI Pointe Homes, Inc. Upon the close of the IPO and as of December 31, 2013, the Company had 31,597,907 common shares outstanding.

WRECO Transactions

On November 4, 2013, the Company announced that its board of directors approved a Transaction Agreement with Weyerhaeuser Company, a Washington corporation (“Weyerhaeuser”), pursuant to which Weyerhaeuser Real Estate Company, a Washington corporation and an indirect wholly owned subsidiary of Weyerhaeuser (“WRECO”), will combine with Topaz Acquisition, Inc., a Washington corporation and a wholly owned subsidiary of TRI Pointe (“Merger Sub”) in a transaction valued at approximately $2.7 billion as of that date. Pursuant to the Transaction Agreement, Weyerhaeuser will distribute all the shares of common stock of WRECO (the “WRECO Common Shares”) to its shareholders (i) on a pro rata basis, (ii) in an exchange offer, or (iii) in a combination thereof (the “Distribution”). Weyerhaeuser will determine which approach it will take to consummate the Distribution prior to closing the transaction and no decision has been made at this time. Immediately following the Distribution, Merger Sub will merge with and into WRECO (the “Merger”), with WRECO surviving the Merger and becoming a wholly owned subsidiary of the Company. We expect to issue 129,700,000 shares of our common stock in the Merger, excluding shares to be issued for equity awards held by WRECO employees that are being assumed by us. As a result of the WRECO Transactions, the Company has incurred due diligence and other related transaction expenses during the year of $4.1 million.

In order to complete the Merger and the related transactions, (i) WRECO will incur new indebtedness of approximately $800 million or more in the form of (a) debt securities, (b) senior unsecured bridge loans, or (c) a combination thereof; (ii) WRECO will make a cash payment of approximately $739 million, subject to adjustment, to Weyerhaeuser NR Company, the current direct parent of WRECO and a subsidiary of Weyerhaeuser, which cash will be retained by Weyerhaeuser and its subsidiaries (other than WRECO and its subsidiaries); and (iii) Weyerhaeuser will cause certain assets relating to Weyerhaeuser’s real estate business to be transferred to, and certain liabilities relating to Weyerhaeuser’s real estate business to be assumed by, WRECO and its subsidiaries and cause certain assets of WRECO that will be excluded from the transaction to be transferred to, and certain liabilities that will be excluded from the transaction to be assumed by, Weyerhaeuser and its subsidiaries (other than WRECO and its subsidiaries).

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation. Certain prior period amounts have been reclassified to conform to current period presentation. Subsequent events have been evaluated through the date the financial statements were issued.

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”).

Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to TRI Pointe Homes, Inc. (and its consolidated subsidiaries).

 

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies. Accordingly, actual results could differ materially from these estimates.

Cash and Cash Equivalents and Concentration of Credit Risk

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions, and short term liquid investments with an initial maturity date of less than three months. The Company’s cash balances exceed federally insurable limits. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Real Estate Inventories and Cost of Sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to selling, general and administrative, and other expenses as appropriate. Pre-acquisition costs, including non-refundable land deposits, are expensed to other income (expense) when we determine continuation of the respective project is not probable. In accordance with ASC Topic 835, Interest (“ASC 835”), homebuilding interest capitalized as a cost of inventories owned is included in costs of sales as related units or lots are sold. To the extent our debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified assets represent projects that are actively under development. For the years ended December 31, 2013, 2012, and 2011, we did not expense any interest costs as the qualified assets were in excess of debt.

Land, development and other common costs are typically allocated to inventory using a methodology that approximates the relative-sales-value method. Home construction costs per production phase are recorded using the specific identification method. Cost of sales for homes closed includes the allocation of construction costs of each home and all applicable land acquisition, land development and related common costs (both incurred and estimated to be incurred) based upon the relative-sales-value of the home within each community. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated on a relative-sales-value method to remaining homes in the community. Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to fair value. We review our real estate assets at each community for indicators of impairment. Real estate assets include projects actively selling and projects under development or held for future development. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses.

If there are indications of impairment, we perform a detailed budget and cash flow review of our real estate assets to determine whether the estimated remaining undiscounted future cash flows of the community are more or less than the asset’s carrying value. If the undiscounted cash flows are more than the asset’s carrying value, no impairment adjustment is required. However, if the undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and is written down to fair value. These impairment evaluations require us to make estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine if expected future undiscounted cash flows will be sufficient to recover the asset’s carrying value.

When estimating undiscounted cash flows of a community, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available, pricing and incentives being offered by us or other builders in other communities, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property.

 

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact on the estimated per unit sales price of a home, the level of time sensitive costs (such as indirect construction, overhead and carrying costs), and selling and marketing costs (such as model maintenance costs and advertising costs). Depending on the underlying objective of the community, assumptions could have a significant impact on the projected cash flow analysis. For example, if our objective is to preserve operating margins, our cash flow analysis will be different than if the objective is to increase sales. These objectives may vary significantly from community to community and over time. If assets are considered impaired, impairment is determined by the amount the asset’s carrying value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when assessment is made. These factors are specific to each community and may vary among communities. For the years ended December 31, 2013, 2012 and 2011, no impairment adjustments relating to real estate inventories were recorded.

Revenue Recognition

Home Sales and Profit Recognition

In accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment, revenues from home sales and other real estate sales are recorded and a profit is recognized when the respective units are closed. Home sales and other real estate sales are closed when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured. Sales incentives are a reduction of revenues when the respective unit is closed. When it is determined that the earnings process is not complete, the sale and the related profit are deferred for recognition in future periods. The profit we record is based on the calculation of cost of sales, which is dependent on our allocation of costs, as described in more detail above in the section entitled “—Real Estate Inventories and Cost of Sales.”

Fee Building

The Company enters into construction management agreements to provide fee building services whereby it will build, market and sell homes on behalf of independent third-party property owners. The independent third-party property owner funds all project costs incurred by the Company to build and sell the homes. The Company primarily enters into cost plus fee contracts where it charges independent third-party property owners for all direct and indirect costs plus a negotiated management fee. For these types of contracts, the Company recognizes revenue based on the actual total costs it has expended and the applicable management fee. The management fee is typically a fixed fee based on a percentage of the cost or home sales revenue of the project depending on the terms of the agreement with the independent third-party property owner. In accordance with ASC 605, Revenue Recognition, revenues from construction management services are recognized over a cost-to-cost approach in applying the percentage-of-completion method. Under this approach, revenue is earned in proportion to total costs incurred, divided by total costs expected to be incurred. The total estimated cost plus the management fee represents the total contract value. The Company recognizes revenue based on the actual labor and other direct costs incurred, plus the portion of the management fee it has earned to date. In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients. These costs are passed through to clients and, in accordance with industry practice and GAAP, are included in the Company’s revenue and cost of revenue. Under certain agreements, the Company is eligible to receive additional incentive compensation, as certain financial thresholds defined in the agreement are achieved. The Company recognizes revenue for any incentive compensation when such financial thresholds are probable of being met and such compensation is deemed to be collectible, generally at the date the amount is communicated to us by the independent third-party property owner.

The Company also enters into fee building contracts where it does not bear risks for any services outside of its own. For these types of contracts, the Company recognizes revenue as services are performed. The Company does not recognize any revenue or costs related to subcontractors’ cost since it does not bear any risk related to them.

Warranty Reserves

Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts accrued are based upon historical experience rates. We also consider historical experience of our peers due to our limited history related to home sales. Indirect warranty overhead salaries and related costs are charged to the reserve in the period incurred. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary. Our warranty accrual is included in accrued liabilities in the accompanying consolidated balance sheets.

 

Variable Interest Entities

The Company accounts for variable interest entities in accordance with ASC 810, Consolidation (“ASC 810”). Under ASC 810, a variable interest entity (“VIE”) is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, or (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights. If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE. In accordance with ASC 810, we perform ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. As of December 31, 2013, 2012 and 2011, the Company did not have any investment that was deemed to be a VIE.

Under ASC 810, a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as inventories owned, which we would have to write off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a VIE may have been created. As of December 31, 2013, 2012 and 2011, the Company was not required to consolidate any VIEs nor did the Company write off any costs that had been capitalized under lot option contracts. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Stock-Based Compensation

We account for share-based awards in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. ASC 718 requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees.

Sales and Marketing Expense

Sales and marketing costs incurred to sell real estate projects are capitalized if they are reasonably expected to be recovered from the sale of the project or from incidental operations and are incurred for tangible assets that are used directly through the selling period to aid in the sale of the project or services that have been performed to obtain regulatory approval of sales. All other selling expenses and other marketing costs are expensed in the period incurred.

Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes (“ASC 740”). The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are evaluated on a quarterly basis to determine if adjustments to the valuation allowance are required. In accordance with ASC 740, we assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income during the periods in which the differences become deductible. The value of our deferred tax assets will depend on applicable income tax rates. Judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards

On February 5, 2013, the FASB issued Accounting Standards Update 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which adds additional disclosure requirements for items reclassified out of accumulated other comprehensive income (loss). We adopted ASU 2013-02 during the year ended December 31, 2013.

Real Estate Inventories
Real Estate Inventories

2. Real Estate Inventories

Real estate inventories consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Inventories owned:

     

Deposits and pre-acquisition costs

   $ 19,714       $ 12,285   

Land held and land under development

     326,209         129,621   

Homes completed or under construction

     92,901         40,955   

Model homes

     16,818         11,222   
  

 

 

    

 

 

 
   $ 455,642       $ 194,083   
  

 

 

    

 

 

 

Model homes, homes completed, and homes under construction include all costs associated with home construction, including land, development, indirects, permits, and vertical construction. Land under development includes costs incurred during site development such as land, development, indirects, and permits. Land is classified as held for future development if no significant development has occurred.

Interest Capitalization

Interest is capitalized on inventory during development and other qualifying activities. Interest capitalized as cost of inventory is included in cost of sales as related units are closed. For each of the three years ended December 31, 2013, interest incurred, capitalized, and expensed were as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Interest incurred

   $ 3,058      $ 2,077      $ 171   
  

 

 

   

 

 

   

 

 

 

Interest capitalized

     (3,058     (2,077     (171
  

 

 

   

 

 

   

 

 

 

Interest expensed

   $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

 

Capitalized interest in beginning inventory

   $ 1,364      $ 159      $ 257   

Interest capitalized as a cost of inventory

     3,058        2,077        171   

Interest previously capitalized as a cost of inventory, included in cost of sales

     (2,158     (872     (269
  

 

 

   

 

 

   

 

 

 

Capitalized interest in ending inventory

   $ 2,264      $ 1,364      $ 159   
  

 

 

   

 

 

   

 

 

 
Accrued Liabilities
Accrued Liabilities

3. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Accrued expenses

   $ 7,605       $ 457   

Accrued income tax payable

     7,764         —     

Accrued payroll liabilities

     3,513         1,122   

Warranty reserves (Note 6)

     3,338         1,593   
  

 

 

    

 

 

 
   $ 22,220       $ 3,172   
  

 

 

    

 

 

 
Notes Payable
Notes Payable

4. Notes Payable

Notes payable consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Revolving credit facilities

   $ 90,689       $ 6,855   

Acquisition and development loans

     31,591         37,996   

Construction loans

     15,832         12,517   
  

 

 

    

 

 

 
   $ 138,112       $ 57,368   
  

 

 

    

 

 

 

The Company has a secured revolving credit facility which has a maximum loan commitment of $30 million, an initial maturity date of April 19, 2014 and a final maturity date of April 19, 2015. The Company may borrow under the facility in the ordinary course of business to fund its operations, including its land development and homebuilding activities. The amount the Company may borrow is subject to applicable borrowing base provisions and concentration limitations, which may also limit the amount available or outstanding under the facility. The facility is secured by deeds of trust on the real property and improvements thereon, and borrowings are repaid with the net sales proceeds from the sales of homes, subject to a minimum release price. Interest rates charged under the facility include applicable LIBOR and prime rate pricing options, subject to a minimum interest rate floor. As of December 31, 2013, the outstanding balance was $9.1 million with an interest rate of 3.75% per annum, and $20.2 million of availability under the facility after considering the borrowing base provisions and outstanding letters of credit.

In July 2013, the Company entered into an additional secured, three-year revolving credit facility with the potential for a one-year extension of the term of the loan, subject to specified conditions and payment of an extension fee. The facility provides for a maximum loan commitment of $125 million. On December 26, 2013, we entered into a modification agreement to increase the commitment amount under our secured, three-year revolving credit facility from $125 million to $175 million, subject to specified conditions and the payment of a loan fee. Borrowings under the facility are secured by a first priority lien on borrowing base properties and will be subject to, among other things, a borrowing base formula. Subject to the satisfaction of the conditions to advances set forth in the facility, the Company may borrow solely for the payment or reimbursement of costs or return of capital related to: (a) land acquisition, development and construction of single-family residential lots and homes on and with respect to borrowing base properties (as defined in the facility), or (b) paying off any existing financing secured by the initial borrowing base properties. The interest rate on borrowings will be at a rate based on applicable LIBOR plus a margin, ranging from 250 to 370 basis points depending on our leverage ratio. As of December 31, 2013, the outstanding balance was $81.5 million with an interest rate of 2.92% per annum, and $42.2 million of availability under the facility after considering the borrowing base provisions and outstanding letters of credit.

The Company enters into secured acquisition and development loan agreements to purchase and develop land parcels. In addition, the Company enters into secured construction loan agreements for the construction of its model and production homes. The acquisition and development loans will be repaid as lots are released from the loans based upon a specific release price, as defined in each respective loan agreement. The construction loans will be repaid with proceeds from home closings based upon a specific release price, as defined in each respective loan agreement.

As of December 31, 2013, the Company had $43.2 million of aggregate acquisition and development loan commitments and $22.4 million of aggregate construction loan commitments, of which $31.6 million and $15.8 million was outstanding, respectively. The loans have maturity dates ranging from March 2014 and January 2016, including the six month extensions which are at our election (subject to certain conditions) and bear interest at a rate based on applicable LIBOR or Prime Rate pricing options plus an applicable margin, with certain loans containing a minimum interest rate floor of 4.0%. As of December 31, 2013, the weighted average interest rate was 3.5% per annum.

As of December 31, 2012, the Company’s secured revolving credit facility with a maximum loan commitment of $30.0 million, of which $6.9 million was outstanding, had $21.4 million of availability and an interest rate of 5.5% per annum. In addition, the Company had $68.1 million of aggregate acquisition and development loan commitments and $25.4 million of aggregate construction loan commitments, of which $38.0 million and $12.5 million were outstanding, respectively. The loans had maturity dates ranging from August 2013 to February 2015, including the six month extensions which are at our election (subject to certain conditions) and bear interest at a rate based on applicable LIBOR or Prime Rate pricing options, with interest rate floors ranging from 4.0% to 6.0%. As of December 31, 2012, the weighted average interest rate was 5.2% per annum.

 

During the years ended December 31, 2013 and 2012, the Company incurred interest of $3.1 million and $2.1 million, respectively, related to its notes payable. Included in interest incurred was amortization of deferred financing costs of $99,000 and $0 for the years ended December 31, 2013 and 2012, respectfully. Accrued interest payable at December 31, 2013 and 2012 amounted to $347,000 and $273,000, respectfully. All interest incurred during the years ended December 31, 2013 and 2012 was capitalized to real estate inventories.

Under the revolving credit facilities and construction notes payable, the Company is required to comply with certain financial covenants, including but not limited to (i) a minimum tangible net worth; (ii) a maximum total liabilities to tangible net worth ratio; (iii) a minimum liquidity amount; (iv) maximum fixed charge coverage ratio; and (v) maximum land assets to tangible net worth ratio. The Company was in compliance with all financial covenants as of December 31, 2013 and 2012.

Fair Value Disclosures
Fair Value Disclosures

5. Fair Value Disclosures

ASC 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

 

    Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date

Nonfinancial assets and liabilities include items such as inventory and long lived assets that are measured at fair value when acquired and resulting from impairment, if deemed necessary. During the years ended December 31, 2013 and 2012, the Company did not record any fair value adjustments to those financial and nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

Financial instrument as of December 31, 2013 were comprised of secured revolving credit facilities, which provide financing for several real estate projects; secured acquisition and development loan agreements to purchase and develop land parcels, and; secured construction loan agreements for the construction of our model and production homes

At December 31, 2013 and 2012, as required by ASC 820, Financial Instruments, the following presents net book values and estimated fair values of notes payable (in thousands):

 

          December 31, 2013      December 31, 2012  
     Hierarchy    Cost      Fair Value      Cost      Fair Value  

Notes payable

              

Revolving credit facilities

   Level 3    $ 90,689       $ 90,689       $ 6,855       $ 6,855   

Acquisition and development loans

   Level 3      31,591         31,591         37,996         37,996   

Construction loans

   Level 3      15,832         15,832         12,517         12,517   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total notes payable

      $ 138,112       $ 138,112       $ 57,368       $ 57,368   
     

 

 

    

 

 

    

 

 

    

 

 

 

Estimated fair values of the outstanding revolving credit facilities, acquisition and development loans, and construction loans at December 31, 2013 and 2012 were based on cash flow models discounted at market interest rates that considered underlying risks of the debt. Due to the short term nature of the revolving credit facilities, acquisition and development loans and construction loans, book value approximated fair value at December 31, 2013 and 2012.

Commitments and Contingencies
Commitments and Contingencies

6. Commitments and Contingencies

Legal Matters

Lawsuits, claims and proceedings have been or 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 and environmental protection. 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. If our evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, we will disclose their nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable. At December 31, 2013 and 2012, the Company did not have any accruals for asserted or unasserted matters.

Warranty

The Company currently provides a limited one year warranty covering workmanship and materials. In addition, our limited warranty (generally ranging from a minimum of two years up to the period covered by the applicable statute of repose) covers certain defined construction defects. The limited warranty covering construction defects is transferable to subsequent buyers not under direct contract with us and requires that homebuyers agree to the definitions and procedures set forth in the warranty, including the submission of unresolved construction-related disputes to binding arbitration. We reserve up to 1.0% of the sales price of each home we sell to provide the customer service to our homebuyers. We believe that our reserves are adequate to cover the ultimate resolution of our potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation.

We subcontract our homebuilding work to subcontractors who generally provide us with an indemnity and a certificate of insurance prior to receiving payments for their work and, therefore, claims relating to workmanship and materials are generally the primary responsibility of our subcontractors.

There can be no assurance, however, 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, the 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 our subcontractors.

Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts accrued are based upon historical experience rates. We also consider historical experience of our peers due to our limited history related to home sales. Indirect warranty overhead salaries and related costs are charged to the reserve in the period incurred. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary.

Warranty reserves consisted of the following (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Warranty reserves, beginning of period

   $ 1,593      $ 985      $ 731   

Warranty reserves accrued

     2,898        854        470   

Warranty expenditures

     (1,153     (246     (216
  

 

 

   

 

 

   

 

 

 

Warranty reserves, end of period

   $ 3,338      $ 1,593      $ 985   
  

 

 

   

 

 

   

 

 

 

Performance Bonds

We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. As of December 31, 2013 and 2012, the Company had outstanding surety bonds totaling $41.4 million and $11.9 million, respectively. The beneficiaries of the bonds are various municipalities. In the unlikely event that any such surety bond issued by a third party is called because the required improvements are not completed, the Company could be obligated to reimburse the issuer of the bond.

Leases

We lease certain property and equipment under non-cancelable operating leases. Office leases are for terms up to six years and generally provide renewal options for terms up to an additional five years. 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.

 

We lease our corporate headquarters located in Irvine, California. The lease on this facility consists of approximately 17,000 square feet and expires in October 2016. During the year we signed a letter of intent to lease an additional 20,000 square feet at our corporate headquarters. We expect to occupy the additional 20,000 square feet during the third quarter of 2014 and the additional lease will expire in 2020. In addition, we lease divisional offices in Northern California and Colorado. The lease on the facility in Northern California consists of approximately 6,200 square feet and expires in September 2017. The lease on the facility in Colorado consists of approximately 5,000 square feet and expires in June 2018. As of December 31, 2013, future minimum lease payments under non-cancelable operating lease agreements are as follows (in thousands):

 

2014

   $ 905   

2015

     1,346   

2016

     1,386   

2017

     1,081   

2018

     921   

Thereafter

     1,411   
  

 

 

 
   $ 7,050   
  

 

 

 

For the years ended December 31, 2013, 2012 and 2011, rental expense was $531,000, $373,000 and $167,000, respectively.

Purchase Obligations

In the ordinary course of business, we enter into land option 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 as a method of acquiring land in 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. Option contracts generally require a non-refundable deposit for the right to acquire 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. As of December 31, 2013, we had $19.7 million of non-refundable cash deposits pertaining to land option contracts and purchase contracts for 1,184 lots with an aggregate remaining purchase price of approximately $262.1 million (net of deposits).

Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned 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.

Stock-Based Compensation
Stock-Based Compensation

7. Stock-Based Compensation

The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (“2013 Incentive Plan”), was adopted by our board of directors in January 2013. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, common stock, restricted stock, restricted stock units 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.

The number of shares of our common stock that may be issued under the 2013 Incentive Plan is 2,527,833 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 or any predecessor 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 our the 2013 Incentive Plan. As of December 31, 2013 there were 2,096,416 shares available for future grant in the 2013 Incentive Plan.

 

The Company has issued stock option awards and restricted stock unit awards against the 2013 Incentive Plan. The exercise price of our stock-based awards may not be less than the market value of our common stock on the date of grant. The fair value for stock options is established at the date of grant using the Black-Scholes model for time based vesting awards. Our stock option awards typically vest over a one to three year period and expire ten years from the date of grant. Our restricted stock awards are valued based on the closing price of our common stock on the date of grant and typically vest over a one to three year period.

The following table presents compensation expense recognized related to all stock-based awards (in thousands):

 

                                                        
     Year Ended December 31,  
     2013      2012      2011  

Total stock-based compensation

   $ 2,371       $ 466       $ 466   
  

 

 

    

 

 

    

 

 

 

As of December 31, 2013, total compensation cost related to all non-vested awards not yet recognized was $4.3 million and the weighted average term over which the expense was expected to be recognized was 1.7 years.

Summary of Stock Option Activity

The following table presents a summary of stock option awards relating to our 2013 Incentive Plan for the year ended December 31, 2013 (dollars in thousands, except per share amounts):

 

     2013  
     Options      Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Life
     Aggregate
Intrinsic
Value
 

Options outstanding at beginning of year

     —         $ —           —         $ —     

Granted

     285,900         17.04         9.1         827   

Exercised

     —           —           —           —     

Forefeited

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Options outstanding at end of year

     285,900       $ 17.04         9.1       $ 827   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2013, there were no stock options vested or exercisable. As of December 31, 2013, 285,900 stock options were expected to vest in the future with a weighted average exercise price of $17.04 and a weighted average remaining contractual life of 9.1 years. There were no stock option grants in 2012 or 2011.

The fair value for stock option awards granted during the year was established at the date of grant using an option based mode. The fair value of the stock option awards was determined using the following assumptions:

 

     2013  

Dividend yield

     0.00

Expected volatility

     44.00

Risk-free interest rate

     1.89

Expected life

     5.00   

 

Summary of Restricted Stock Unit Activity

The following table presents a summary of restricted stock units (“RSUs”) relating to our 2013 Incentive Plan for the year ended December 31, 2013 (dollars in thousands, except per share amounts):

 

     2013  
     Restricted Share
Units
    Weighted
Average
Grant Date
Fair Value
     Aggregate
Intrinsic
Value
 

RSUs outstanding at beginning of year

     —        $ —         $ —     

Granted

     150,667        17.70         —     

Vested

     —          —           —     

Forefeited

     (5,150     18.30         —     
  

 

 

   

 

 

    

 

 

 

RSUs outstanding at end of year

     145,517      $ 17.68       $ 2,900   
  

 

 

   

 

 

    

 

 

 

The fair value of restricted stock awards is measured as of the closing price on the date of grant and is expensed on a straight-line basis over the vesting period of the award. There were no restricted stock awards grants in 2012 or 2011.

Summary of Equity Based Incentive Units

On September 24, 2010, the Company granted equity based incentive units to management. In connection with our initial public offering in January 2013, the incentive units converted into shares of common stock. The recipients of the equity based incentive units have all the rights of a stockholder, including the rights to vote those shares and receive any dividends or distributions made with respect to those shares and any shares or other property received in respect of those shares; provided, however, any non-cash dividend or distribution with respect to the common stock shall be subject to the same vesting provisions as the incentive units. The vesting terms of the equity based incentive units are as follows: (1)18.75% of such units vested, subject to limitation in (3) below on the date following the first-year anniversary of the date of such officer’s employment; (2) 56.25% of such units vest, subject to limitation in (3) below in equal quarterly installments between the first and fourth-year anniversary of the date of such officer’s employment; (3) 25% of the awards granted in (1) and (2) will vest upon a liquidity event as defined; and (4) 25% of such units will be converted into a number of shares of restricted stock prior to a liquidity event, as defined. The grant-date fair value of the equity based incentive units granted during the period ended December 31, 2010 was $3.3 million. The Company did not grant any equity based incentive units during the year ended December 31, 2013, 2012 and 2011. No equity based incentive units were forfeited during the years ended December 31, 2013, 2012 and 2011.

Segment Information
Segment Information

8. Segment Information

The Company’s operations are organized into two reportable segments: homebuilding and fee building (construction services). In accordance with ASC 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.

 

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 1. 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. Financial information relating to reportable segments was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Revenues

        

Homebuilding

   $ 247,091       $ 77,477       $ 13,525   

Fee building

     10,864         1,073         5,804   
  

 

 

    

 

 

    

 

 

 
   $ 257,955       $ 78,550       $ 19,329   
  

 

 

    

 

 

    

 

 

 

Gross profit

        

Homebuilding

   $ 53,999       $ 13,789       $ 1,450   

Fee building

     1,082         149         150   
  

 

 

    

 

 

    

 

 

 
   $ 55,081       $ 13,938       $ 1,600   
  

 

 

    

 

 

    

 

 

 

 

     December 31,  
     2013      2012  

Assets

     

Homebuilding

   $ 505,174       $ 216,667   

Fee building

     861         849   
  

 

 

    

 

 

 
   $ 506,035       $ 217,516   
  

 

 

    

 

 

 
Earnings (Loss) Per Share
Earnings (Loss) Per Share

9. Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share for the three years ended December 31, 2013 give effect to the conversion of the Company’s members’ equity into common stock on January 30, 2013 as though the conversion had occurred as of the beginning of the reporting period or the original date of issuance, if later. The number of shares converted was based on the actual initial public offering price of $17.00 per share.

The following table sets forth the components used in the computation of basic and diluted earnings (loss) per share (dollars in thousands, except share and per share amounts):

 

     Year Ended December 31,  
     2013      2012      2011  

Numerator:

        

Net income (loss)

   $ 15,374       $ 2,506       $ (4,593
  

 

 

    

 

 

    

 

 

 

Denominator:

        

Basic weighted-average shares outstanding

     30,775,989         21,597,907         12,681,352   

Effect of dilutive shares:

        

Unvested restricted stock units(1)

     21,613         —           —     
  

 

 

    

 

 

    

 

 

 

Diluted weighted-average shares outstanding

     30,797,602         21,597,907         12,681,352   
  

 

 

    

 

 

    

 

 

 

Basic earnings (loss) per share

   $ 0.50       $ 0.12       $ (0.36
  

 

 

    

 

 

    

 

 

 

Diluted earnings (loss) per share(1)

   $ 0.50       $ 0.12       $ (0.36
  

 

 

    

 

 

    

 

 

 

 

(1) For the year ended December 31, 2013, no stock options were included in the diluted earnings per share calculation as the effect of their inclusion would be antidilutive. There were no outstanding options or non-vested shares in 2012 or 2011.
Income Taxes
Income Taxes

10. Income Taxes

As discussed in Note 1, in prior years and for the first 30 calendar days of 2013, the Company was a Delaware limited liability company which was treated as partnership for income tax purposes and was subject to certain minimal taxes and fees; however, income taxes on taxable income or losses realized by the Company were the obligation of the members.

 

The (provision) benefit for income taxes includes the following (in thousands):

 

     Year Ended
December 31,
2013
 

Current (provision) benefit for income taxes:

  

Federal

   $ (11,967

State

     (3,023
  

 

 

 

Total

     (14,990
  

 

 

 

Deferred (provision) benefit for income taxes:

  

Federal

     3,840   

State

     771   
  

 

 

 

Total

     4,611   
  

 

 

 

Provision for income taxes

   $ (10,379
  

 

 

 

The effective tax rate differs from the federal statutory rate of 35% due to the following items (in thousands):

 

     Year Ended
December 31,
2013
 

Income before income taxes

   $ 25,753   
  

 

 

 

Provision for income taxes at federal statutory rate

   $ (9,014

(Increases) decreases in tax resulting from:

  

State income taxes, net of federal benefit

     (1,464

Permanent differences

     (552

Deferred tax assets upon conversion to a corporation

     590   

Other

     61   
  

 

 

 

Provision for income taxes

   $ (10,379
  

 

 

 

Effective tax rate

     (40 )% 
  

 

 

 

The Company accounts for income taxes in accordance with ASC 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 existing at each balance sheet date using enacted tax rates for the years in which taxes are expected to be paid or recovered. The components of our deferred income tax asset are as follows (in thousands):

 

     December 31,
2013
 

State tax

   $ 1,058   

Warranty reserves

     1,360   

Transaction expenses

     1,466   

Share based compensation

     571   

Other

     156   
  

 

 

 

Total deferred tax asset

   $ 4,611   
  

 

 

 

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.

As of December 31, 2013, we had $4.6 million in deferred tax assets with no valuation allowance. 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.

 

The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions related to the first 30 calendar days of 2013 or prior years. As of December 31, 2013, the earliest tax year still subject to examination by the Internal Revenue Service is 2010. The earliest year still subject to examination by a significant state or local taxing jurisdiction is 2010.

Related Party Transactions
Related Party Transactions

11. Related Party Transactions

In March 2011 and December 2012, TRI Pointe (through its predecessor in interest, TPH LLC) acquired 62 lots and 25 lots, respectively, in the Rosedale master planned community located in Azusa, California, for a purchase price of approximately $6.5 million and $3.5 million (plus a potential profit participation should a specific net margin be exceeded), respectively, from an entity in which an affiliate of the Starwood Capital Group owns a minority interest.

In December 2012, TRI Pointe (through its predecessor in interest, TPH LLC) acquired 57 lots out of a total commitment of 149 lots located in Castle Rock, Colorado, for a purchase price of approximately $3.2 million from an entity managed by an affiliate of the Starwood Capital Group. TRI Pointe has the right to acquire the remaining 92 entitled lots for a purchase price of approximately $5.4 million.

In March 2013, TRI Pointe acquired an additional 66 lots in the Rosedale master planned community located in Azusa, California, for a purchase price of approximately $15.7 million (plus a potential profit participation should a specific net margin be exceeded) from an entity in which an affiliate of the Starwood Capital Group owns a minority interest. This acquisition was approved by TRI Pointe independent directors.

In September 2013, TRI Pointe acquired 87 lots located in the master planned community of Sycamore Creek in Riverside, CA, for a purchase price of approximately $11.8 million, and 49 lots located in the community of Topazridge, also located in Riverside, CA, for a purchase price of approximately $6 million. These lots were purchased from entities managed by an affiliate of the Starwood Capital Group. This acquisition was approved by TRI Pointe independent directors.

In December 2013, TRI Pointe acquired 67 lots located in Castle Rock, Colorado, for a purchase price of approximately $3.8 million from an entity managed by an affiliate of the Starwood Capital Group. This acquisition was approved by TRI Pointe independent directors.

The Starwood Capital Group (through its affiliate the Starwood Fund) owns 11,985,905 shares of our common stock, which represents 37.9% of our common stock as of February 21, 2014. Additionally, Barry Sternlicht, the Chairman and Chief Executive Officer of Starwood Capital Group, is also chairman of our board.

Results of Quarterly Operations
Results of Quarterly Operations

12. Results of Quarterly Operations (Unaudited)

The following table presents our unaudited quarterly financial data. In our opinion, this information has been prepared on a basis consistent with that of our audited consolidated financial statements and all necessary material adjustments, consisting of normal recurring accruals and adjustments, have been included to present fairly the unaudited quarterly financial data. Our quarterly results of operations for these periods are not necessarily indicative of future results of operations (in thousands, except per share amounts):

 

     First
Quarter
    Second
Quarter
    Third
Quarter
    Fourth
Quarter
 

2013

        

Total revenues

   $ 27,888      $ 51,087      $ 58,539      $ 120,441   

Cost of homes sales and fee building

     (23,074     (41,713     (45,340     (92,747
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 4,814      $ 9,374      $ 13,199      $ 27,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 270      $ 2,075      $ 4,686      $ 8,343   

Basic earnings per share (1)

   $ 0.01      $ 0.07      $ 0.15      $ 0.26   

Diluted earnings per share (1)

   $ 0.01      $ 0.07      $ 0.15      $ 0.26   

2012

        

Total revenues

   $ 4,653      $ 7,808      $ 10,060      $ 56,029   

Cost of homes sales and fee building

     (4,137     (6,853     (8,879     (44,743
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 516      $ 955      $ 1,181      $ 11,286   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (1,143   $ (1,317   $ (1,480   $ 6,446   

Basic earnings per share (1)

   $ (0.09   $ (0.09   $ (0.10   $ 0.30   

Diluted earnings per share (1)

   $ (0.09   $ (0.09   $ (0.10   $ 0.30   

 

  (1) Some amounts do not add to our full year results presented on our consolidated statement of operations due to rounding differences in quarterly and annual weighted average share calculations.
Organization and Summary of Significant Accounting Policies (Policies)

Organization

TRI Pointe Homes, Inc. is engaged in the design, construction and sale of innovative single-family homes in major metropolitan areas located throughout California and Colorado. We generate a significant amount of our revenues and profits in California.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation. Certain prior period amounts have been reclassified to conform to current period presentation. Subsequent events have been evaluated through the date the financial statements were issued.

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”).

Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to TRI Pointe Homes, Inc. (and its consolidated subsidiaries)

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies. Accordingly, actual results could differ materially from these estimates.

Cash and Cash Equivalents and Concentration of Credit Risk

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions, and short term liquid investments with an initial maturity date of less than three months. The Company’s cash balances exceed federally insurable limits. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Real Estate Inventories and Cost of Sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, during development and home construction. Applicable costs incurred after development or construction is substantially complete are charged to selling, general and administrative, and other expenses as appropriate. Pre-acquisition costs, including non-refundable land deposits, are expensed to other income (expense) when we determine continuation of the respective project is not probable. In accordance with ASC Topic 835, Interest (“ASC 835”), homebuilding interest capitalized as a cost of inventories owned is included in costs of sales as related units or lots are sold. To the extent our debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified assets represent projects that are actively under development. For the years ended December 31, 2013, 2012, and 2011, we did not expense any interest costs as the qualified assets were in excess of debt.

Land, development and other common costs are typically allocated to inventory using a methodology that approximates the relative-sales-value method. Home construction costs per production phase are recorded using the specific identification method. Cost of sales for homes closed includes the allocation of construction costs of each home and all applicable land acquisition, land development and related common costs (both incurred and estimated to be incurred) based upon the relative-sales-value of the home within each community. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated on a relative-sales-value method to remaining homes in the community. Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to fair value. We review our real estate assets at each community for indicators of impairment. Real estate assets include projects actively selling and projects under development or held for future development. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses.

If there are indications of impairment, we perform a detailed budget and cash flow review of our real estate assets to determine whether the estimated remaining undiscounted future cash flows of the community are more or less than the asset’s carrying value. If the undiscounted cash flows are more than the asset’s carrying value, no impairment adjustment is required. However, if the undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and is written down to fair value. These impairment evaluations require us to make estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine if expected future undiscounted cash flows will be sufficient to recover the asset’s carrying value.

When estimating undiscounted cash flows of a community, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available, pricing and incentives being offered by us or other builders in other communities, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property.

 

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact on the estimated per unit sales price of a home, the level of time sensitive costs (such as indirect construction, overhead and carrying costs), and selling and marketing costs (such as model maintenance costs and advertising costs). Depending on the underlying objective of the community, assumptions could have a significant impact on the projected cash flow analysis. For example, if our objective is to preserve operating margins, our cash flow analysis will be different than if the objective is to increase sales. These objectives may vary significantly from community to community and over time. If assets are considered impaired, impairment is determined by the amount the asset’s carrying value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when assessment is made. These factors are specific to each community and may vary among communities.

Revenue Recognition

Home Sales and Profit Recognition

In accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment, revenues from home sales and other real estate sales are recorded and a profit is recognized when the respective units are closed. Home sales and other real estate sales are closed when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received and collection of associated receivables, if any, is reasonably assured. Sales incentives are a reduction of revenues when the respective unit is closed. When it is determined that the earnings process is not complete, the sale and the related profit are deferred for recognition in future periods. The profit we record is based on the calculation of cost of sales, which is dependent on our allocation of costs, as described in more detail above in the section entitled “—Real Estate Inventories and Cost of Sales.”

Fee Building

The Company enters into construction management agreements to provide fee building services whereby it will build, market and sell homes on behalf of independent third-party property owners. The independent third-party property owner funds all project costs incurred by the Company to build and sell the homes. The Company primarily enters into cost plus fee contracts where it charges independent third-party property owners for all direct and indirect costs plus a negotiated management fee. For these types of contracts, the Company recognizes revenue based on the actual total costs it has expended and the applicable management fee. The management fee is typically a fixed fee based on a percentage of the cost or home sales revenue of the project depending on the terms of the agreement with the independent third-party property owner. In accordance with ASC 605, Revenue Recognition, revenues from construction management services are recognized over a cost-to-cost approach in applying the percentage-of-completion method. Under this approach, revenue is earned in proportion to total costs incurred, divided by total costs expected to be incurred. The total estimated cost plus the management fee represents the total contract value. The Company recognizes revenue based on the actual labor and other direct costs incurred, plus the portion of the management fee it has earned to date. In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients. These costs are passed through to clients and, in accordance with industry practice and GAAP, are included in the Company’s revenue and cost of revenue. Under certain agreements, the Company is eligible to receive additional incentive compensation, as certain financial thresholds defined in the agreement are achieved. The Company recognizes revenue for any incentive compensation when such financial thresholds are probable of being met and such compensation is deemed to be collectible, generally at the date the amount is communicated to us by the independent third-party property owner.

The Company also enters into fee building contracts where it does not bear risks for any services outside of its own. For these types of contracts, the Company recognizes revenue as services are performed. The Company does not recognize any revenue or costs related to subcontractors’ cost since it does not bear any risk related to them.

Warranty Reserves

Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts accrued are based upon historical experience rates. We also consider historical experience of our peers due to our limited history related to home sales. Indirect warranty overhead salaries and related costs are charged to the reserve in the period incurred. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary. Our warranty accrual is included in accrued liabilities in the accompanying consolidated balance sheets.

Variable Interest Entities

The Company accounts for variable interest entities in accordance with ASC 810, Consolidation (“ASC 810”). Under ASC 810, a variable interest entity (“VIE”) is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, or (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights. If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE. In accordance with ASC 810, we perform ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE.

Under ASC 810, a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as inventories owned, which we would have to write off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a VIE may have been created. As of December 31, 2013, 2012 and 2011, the Company was not required to consolidate any VIEs nor did the Company write off any costs that had been capitalized under lot option contracts. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Stock-Based Compensation

We account for share-based awards in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. ASC 718 requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees.

Sales and Marketing Expense

Sales and marketing costs incurred to sell real estate projects are capitalized if they are reasonably expected to be recovered from the sale of the project or from incidental operations and are incurred for tangible assets that are used directly through the selling period to aid in the sale of the project or services that have been performed to obtain regulatory approval of sales. All other selling expenses and other marketing costs are expensed in the period incurred.

Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes (“ASC 740”). The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are evaluated on a quarterly basis to determine if adjustments to the valuation allowance are required. In accordance with ASC 740, we assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income during the periods in which the differences become deductible. The value of our deferred tax assets will depend on applicable income tax rates. Judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards

On February 5, 2013, the FASB issued Accounting Standards Update 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which adds additional disclosure requirements for items reclassified out of accumulated other comprehensive income (loss). We adopted ASU 2013-02 during the year ended December 31, 2013.

ASC 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

 

    Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date

In accordance with ASC 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.

Real Estate Inventories (Tables)

Real estate inventories consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Inventories owned:

     

Deposits and pre-acquisition costs

   $ 19,714       $ 12,285   

Land held and land under development

     326,209         129,621   

Homes completed or under construction

     92,901         40,955   

Model homes

     16,818         11,222   
  

 

 

    

 

 

 
   $ 455,642       $ 194,083   
  

 

 

    

 

 

 

For each of the three years ended December 31, 2013, interest incurred, capitalized, and expensed were as follows (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Interest incurred

   $ 3,058      $ 2,077      $ 171   
  

 

 

   

 

 

   

 

 

 

Interest capitalized

     (3,058     (2,077     (171
  

 

 

   

 

 

   

 

 

 

Interest expensed

   $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

 

Capitalized interest in beginning inventory

   $ 1,364      $ 159      $ 257   

Interest capitalized as a cost of inventory

     3,058        2,077        171   

Interest previously capitalized as a cost of inventory, included in cost of sales

     (2,158     (872     (269
  

 

 

   

 

 

   

 

 

 

Capitalized interest in ending inventory

   $ 2,264      $ 1,364      $ 159   
  

 

 

   

 

 

   

 

 

 
Accrued Liabilities (Tables)
Components of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Accrued expenses

   $ 7,605       $ 457   

Accrued income tax payable

     7,764         —     

Accrued payroll liabilities

     3,513         1,122   

Warranty reserves (Note 6)

     3,338         1,593   
  

 

 

    

 

 

 
   $ 22,220       $ 3,172   
  

 

 

    

 

 

 
Notes Payable (Tables)
Components of Notes Payable

Notes payable consisted of the following (in thousands):

 

     December 31,  
     2013      2012  

Revolving credit facilities

   $ 90,689       $ 6,855   

Acquisition and development loans

     31,591         37,996   

Construction loans

     15,832         12,517   
  

 

 

    

 

 

 
   $ 138,112       $ 57,368   
  

 

 

    

 

 

 
Fair Value Disclosures (Tables)
Net Book Values and Estimated Fair Values of Notes Payable

At December 31, 2013 and 2012, as required by ASC 820, Financial Instruments, the following presents net book values and estimated fair values of notes payable (in thousands):

 

          December 31, 2013      December 31, 2012  
     Hierarchy    Cost      Fair Value      Cost      Fair Value  

Notes payable

              

Revolving credit facilities

   Level 3    $ 90,689       $ 90,689       $ 6,855       $ 6,855   

Acquisition and development loans

   Level 3      31,591         31,591         37,996         37,996   

Construction loans

   Level 3      15,832         15,832         12,517         12,517   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total notes payable

      $ 138,112       $ 138,112       $ 57,368       $ 57,368   
     

 

 

    

 

 

    

 

 

    

 

 

 
Commitments and Contingencies (Tables)

Warranty reserves consisted of the following (in thousands):

 

     Year Ended December 31,  
     2013     2012     2011  

Warranty reserves, beginning of period

   $ 1,593      $ 985      $ 731   

Warranty reserves accrued

     2,898        854        470   

Warranty expenditures

     (1,153     (246     (216
  

 

 

   

 

 

   

 

 

 

Warranty reserves, end of period

   $ 3,338      $ 1,593      $ 985   
  

 

 

   

 

 

   

 

 

 

As of December 31, 2013, future minimum lease payments under non-cancelable operating lease agreements are as follows (in thousands):

 

2014

   $ 905   

2015

     1,346   

2016

     1,386   

2017

     1,081   

2018

     921   

Thereafter

     1,411   
  

 

 

 
   $ 7,050   
  

 

 

 
Stock-Based Compensation (Tables)

The following table presents compensation expense recognized related to all stock-based awards (in thousands):

 

                                                        
     Year Ended December 31,  
     2013      2012      2011  

Total stock-based compensation

   $ 2,371       $ 466       $ 466   
  

 

 

    

 

 

    

 

 

 

The following table presents a summary of stock option awards relating to our 2013 Incentive Plan for the year ended December 31, 2013 (dollars in thousands, except per share amounts):

 

     2013  
     Options      Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Life
     Aggregate
Intrinsic
Value
 

Options outstanding at beginning of year

     —         $ —           —         $ —     

Granted

     285,900         17.04         9.1         827   

Exercised

     —           —           —           —     

Forefeited

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Options outstanding at end of year

     285,900       $ 17.04         9.1       $ 827   
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value for stock option awards granted during the year was established at the date of grant using an option based mode. The fair value of the stock option awards was determined using the following assumptions:

 

     2013  

Dividend yield

     0.00

Expected volatility

     44.00

Risk-free interest rate

     1.89

Expected life

     5.00   

The following table presents a summary of restricted stock units (“RSUs”) relating to our 2013 Incentive Plan for the year ended December 31, 2013 (dollars in thousands, except per share amounts):

 

     2013  
     Restricted Share
Units
    Weighted
Average
Grant Date
Fair Value
     Aggregate
Intrinsic
Value
 

RSUs outstanding at beginning of year

     —        $ —         $ —     

Granted

     150,667        17.70         —     

Vested

     —          —           —     

Forefeited

     (5,150     18.30         —     
  

 

 

   

 

 

    

 

 

 

RSUs outstanding at end of year

     145,517      $ 17.68       $ 2,900   
  

 

 

   

 

 

    

 

 

 
Segment Information (Tables)
Summary of Financial Information Relating to Reportable Segments

Financial information relating to reportable segments was as follows (in thousands):

 

     Year Ended December 31,  
     2013      2012      2011  

Revenues

        

Homebuilding

   $ 247,091       $ 77,477       $ 13,525   

Fee building

     10,864         1,073         5,804   
  

 

 

    

 

 

    

 

 

 
   $ 257,955       $ 78,550       $ 19,329   
  

 

 

    

 

 

    

 

 

 

Gross profit

        

Homebuilding

   $ 53,999       $ 13,789       $ 1,450   

Fee building

     1,082         149         150   
  

 

 

    

 

 

    

 

 

 
   $ 55,081       $ 13,938       $ 1,600   
  

 

 

    

 

 

    

 

 

 

 

     December 31,  
     2013      2012  

Assets

     

Homebuilding

   $ 505,174       $ 216,667   

Fee building

     861         849   
  

 

 

    

 

 

 
   $ 506,035       $ 217,516   
  

 

 

    

 

 

 
Earnings (Loss) Per Share (Tables)
Computation of Basic and Diluted Earnings (Loss) Per Share

The following table sets forth the components used in the computation of basic and diluted earnings (loss) per share (dollars in thousands, except share and per share amounts):

 

     Year Ended December 31,  
     2013      2012      2011  

Numerator:

        

Net income (loss)

   $ 15,374       $ 2,506       $ (4,593
  

 

 

    

 

 

    

 

 

 

Denominator:

        

Basic weighted-average shares outstanding

     30,775,989         21,597,907         12,681,352   

Effect of dilutive shares:

        

Unvested restricted stock units(1)

     21,613         —           —     
  

 

 

    

 

 

    

 

 

 

Diluted weighted-average shares outstanding

     30,797,602         21,597,907         12,681,352   
  

 

 

    

 

 

    

 

 

 

Basic earnings (loss) per share

   $ 0.50       $ 0.12       $ (0.36
  

 

 

    

 

 

    

 

 

 

Diluted earnings (loss) per share(1)

   $ 0.50       $ 0.12       $ (0.36
  

 

 

    

 

 

    

 

 

 

 

(1) For the year ended December 31, 2013, no stock options were included in the diluted earnings per share calculation as the effect of their inclusion would be antidilutive. There were no outstanding options or non-vested shares in 2012 or 2011.
Income Taxes (Tables)

The (provision) benefit for income taxes includes the following (in thousands):

 

     Year Ended
December 31,
2013
 

Current (provision) benefit for income taxes:

  

Federal

   $ (11,967

State

     (3,023
  

 

 

 

Total

     (14,990
  

 

 

 

Deferred (provision) benefit for income taxes:

  

Federal

     3,840   

State

     771   
  

 

 

 

Total

     4,611   
  

 

 

 

Provision for income taxes

   $ (10,379
  

 

 

 

The effective tax rate differs from the federal statutory rate of 35% due to the following items (in thousands):

 

     Year Ended
December 31,
2013
 

Income before income taxes

   $ 25,753   
  

 

 

 

Provision for income taxes at federal statutory rate

   $ (9,014

(Increases) decreases in tax resulting from:

  

State income taxes, net of federal benefit

     (1,464

Permanent differences

     (552

Deferred tax assets upon conversion to a corporation

     590   

Other

     61   
  

 

 

 

Provision for income taxes

   $ (10,379
  

 

 

 

Effective tax rate

     (40 )% 
  

 

 

 

The components of our deferred income tax asset are as follows (in thousands):

 

     December 31,
2013
 

State tax

   $ 1,058   

Warranty reserves

     1,360   

Transaction expenses

     1,466   

Share based compensation

     571   

Other

     156   
  

 

 

 

Total deferred tax asset

   $ 4,611   
  

 

 

 
Results of Quarterly Operations (Tables)
Schedule of Quarterly Results of Operations

Our quarterly results of operations for these periods are not necessarily indicative of future results of operations (in thousands, except per share amounts):

 

     First
Quarter
    Second
Quarter
    Third
Quarter
    Fourth
Quarter
 

2013

        

Total revenues

   $ 27,888      $ 51,087      $ 58,539      $ 120,441   

Cost of homes sales and fee building

     (23,074     (41,713     (45,340     (92,747
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 4,814      $ 9,374      $ 13,199      $ 27,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 270      $ 2,075      $ 4,686      $ 8,343   

Basic earnings per share (1)

   $ 0.01      $ 0.07      $ 0.15      $ 0.26   

Diluted earnings per share (1)

   $ 0.01      $ 0.07      $ 0.15      $ 0.26   

2012

        

Total revenues

   $ 4,653      $ 7,808      $ 10,060      $ 56,029   

Cost of homes sales and fee building

     (4,137     (6,853     (8,879     (44,743
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 516      $ 955      $ 1,181      $ 11,286   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (1,143   $ (1,317   $ (1,480   $ 6,446   

Basic earnings per share (1)

   $ (0.09   $ (0.09   $ (0.10   $ 0.30   

Diluted earnings per share (1)

   $ (0.09   $ (0.09   $ (0.10   $ 0.30   

 

  (1) Some amounts do not add to our full year results presented on our consolidated statement of operations due to rounding differences in quarterly and annual weighted average share calculations.
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Nov. 4, 2013
WRECO Transaction [Member]
Dec. 31, 2013
WRECO Transaction [Member]
Jan. 31, 2013
Initial public offering [Member]
Dec. 31, 2013
Variable Interest Entity, Primary Beneficiary [Member]
Dec. 31, 2012
Variable Interest Entity, Primary Beneficiary [Member]
Dec. 31, 2011
Variable Interest Entity, Primary Beneficiary [Member]
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Common stock shares issued and sold
31,597,907 
 
 
 
 
10,000,000 
 
 
 
Common stock public offering price
 
 
 
 
 
$ 17.00 
 
 
 
Net proceeds from common stock sold
 
 
 
 
 
$ 155,400,000 
 
 
 
Common stock, outstanding shares
31,597,907 
 
 
 
 
31,597,907 
 
 
 
Business acquisition, agreement date
 
 
 
 
Nov. 04, 2013 
 
 
 
 
Business acquisition, transaction cost
 
 
 
2,700,000,000 
 
 
 
 
 
Common stock shares expected to issue
 
 
 
129,700,000 
 
 
 
 
 
Due diligence and other related transaction expenses incurred
 
 
 
4,100,000 
 
 
 
 
 
New indebtedness incurred by the merger company
 
 
 
800,000,000 
 
 
 
 
 
Cash payment to be made subject to adjustment
 
 
 
739,000,000 
 
 
 
 
 
Interest on qualified assets in excess of debt
2,158,000 
872,000 
269,000 
 
 
 
 
 
 
Impairment adjustments relating to real estate inventories
 
 
 
 
 
 
Investments
 
 
 
 
 
 
No 
No 
No 
Costs written off, capitalized under lot option contracts
$ 0 
$ 0 
$ 0 
 
 
 
 
 
 
Real Estate Inventories - Summary of Real Estate Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Inventories owned:
 
 
Deposits and pre-acquisition costs
$ 19,714 
$ 12,285 
Land held and land under development
326,209 
129,621 
Homes completed or under construction
92,901 
40,955 
Model homes
16,818 
11,222 
Total real estate inventories
$ 455,642 
$ 194,083 
Real Estate Inventories - Summary of Interest Incurred, Capitalized and Expensed (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Real Estate Inventory, Capitalized Interest Costs [Roll Forward]
 
 
 
Interest incurred
$ 3,058 
$ 2,077 
$ 171 
Interest capitalized
(3,058)
(2,077)
(171)
Interest expensed
   
   
   
Capitalized interest in beginning inventory
1,364 
159 
257 
Interest capitalized as a cost of inventory
3,058 
2,077 
171 
Interest previously capitalized as a cost of inventory, included in cost of sales
(2,158)
(872)
(269)
Capitalized interest in ending inventory
$ 2,264 
$ 1,364 
$ 159 
Accrued Liabilities - Components of Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Payables And Accruals [Abstract]
 
 
 
 
Accrued expenses
$ 7,605 
$ 457 
 
 
Accrued income tax payable
7,764 
 
 
 
Accrued payroll liabilities
3,513 
1,122 
 
 
Warranty reserves (Note 6)
3,338 
1,593 
985 
731 
Total liabilities
$ 22,220 
$ 3,172 
 
 
Notes Payable - Components of Notes Payable (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Debt Instrument [Line Items]
 
 
Notes payable
$ 138,112 
$ 57,368 
Acquisition and development loans [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
31,591 
37,996 
Construction loans [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
15,832 
12,517 
Revolving credit facilities [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
$ 90,689 
$ 6,855 
Notes Payable - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 26, 2013
Jul. 31, 2013
Jul. 31, 2013
Minimum [Member]
Dec. 31, 2012
Minimum [Member]
Dec. 31, 2013
Minimum [Member]
Jul. 31, 2013
Maximum [Member]
Dec. 31, 2012
Maximum [Member]
Dec. 31, 2013
Notes payable [Member]
Dec. 31, 2012
Notes payable [Member]
Dec. 31, 2013
Acquisition and development loans [Member]
Dec. 31, 2012
Acquisition and development loans [Member]
Dec. 31, 2013
Construction loans [Member]
Dec. 31, 2012
Construction loans [Member]
Dec. 26, 2013
Revolving credit facilities [Member]
Jul. 31, 2013
Revolving credit facilities [Member]
Dec. 31, 2013
Revolving credit facilities [Member]
Dec. 31, 2012
Revolving credit facilities [Member]
Dec. 31, 2013
Three-year revolving credit facility [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan commitments
$ 30,000,000 
$ 30,000,000 
$ 30,000,000 
 
$ 175,000,000 
$ 125,000,000 
 
 
 
 
 
 
 
$ 43,200,000 
$ 68,100,000 
$ 22,400,000 
$ 25,400,000 
 
 
 
 
 
Initial maturity date
Aug. 01, 2013 
Mar. 01, 2014 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apr. 19, 2014 
 
 
Final maturity date
Feb. 28, 2015 
Jan. 31, 2016 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apr. 19, 2015 
 
 
Outstanding balance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,100,000 
 
81,500,000 
Interest rate on revolving credit facility
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.75% 
 
2.92% 
Available secured revolving credit facility
21,400,000 
 
21,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,200,000 
 
42,200,000 
Maturity term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
3 years 
 
 
 
Extension period of loan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
 
 
 
LIBOR interest rate
 
 
 
 
 
 
2.50% 
4.00% 
4.00% 
3.70% 
6.00% 
 
 
 
 
 
 
 
 
 
 
 
Loan commitments outstanding
57,368,000 
138,112,000 
57,368,000 
 
 
 
 
 
 
 
 
 
 
31,591,000 
37,996,000 
15,832,000 
12,517,000 
 
 
90,689,000 
6,855,000 
 
Weighted average interest rate
5.20% 
3.50% 
5.20% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate on credit facility
5.50% 
 
5.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest capitalized to real estate inventories
 
3,058,000 
2,077,000 
171,000 
 
 
 
 
 
 
 
3,100,000 
2,100,000 
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs
 
 
 
 
 
 
 
 
 
 
 
99,000 
 
 
 
 
 
 
 
 
 
Accrued interest payable
$ 273,000 
$ 347,000 
$ 273,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value Disclosures - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Fair Value Disclosures [Abstract]
 
 
Fair value adjustments to financial and nonfinancial assets
$ 0 
$ 0 
Fair value adjustments to financial and nonfinancial liabilities
$ 0 
$ 0 
Fair Value Disclosures - Net Book Values and Estimated Fair Values of Notes Payable (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Notes payable
 
 
Notes payable, Cost
$ 138,112 
$ 57,368 
Notes payable, Fair Value
138,112 
57,368 
Revolving credit facilities [Member] |
Level 3 [Member]
 
 
Notes payable
 
 
Notes payable, Cost
90,689 
6,855 
Notes payable, Fair Value
90,689 
6,855 
Acquisition and development loans [Member]
 
 
Notes payable
 
 
Notes payable, Cost
31,591 
37,996 
Acquisition and development loans [Member] |
Level 3 [Member]
 
 
Notes payable
 
 
Notes payable, Cost
31,591 
37,996 
Notes payable, Fair Value
31,591 
37,996 
Construction loans [Member]
 
 
Notes payable
 
 
Notes payable, Cost
15,832 
12,517 
Construction loans [Member] |
Level 3 [Member]
 
 
Notes payable
 
 
Notes payable, Cost
15,832 
12,517 
Notes payable, Fair Value
$ 15,832 
$ 12,517 
Commitments and Contingencies - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended
Dec. 31, 2013
Lot
Dec. 31, 2013
Lot
Dec. 31, 2012
Dec. 31, 2011
Commitment And Contingencies [Line Items]
 
 
 
 
Accruals for asserted or unasserted matters
$ 0 
$ 0 
$ 0 
 
Reserve percentage to customer service to homebuyers
1.00% 
1.00% 
 
 
Renewal options
 
5 years 
 
 
Rental expense
 
531,000 
373,000 
167,000 
Non-refundable cash deposits pertaining to land option contracts
19,700,000 
19,700,000 
 
 
Purchase contracts for lots
1,184 
1,184 
 
 
Aggregate purchase price
262,100,000 
 
 
 
Irvine, California [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease agreements, area
17,000 
17,000 
 
 
Expiration of lease agreements, month and year
 
2016-10 
 
 
Northern, CA [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease agreements, area
6,200 
6,200 
 
 
Expiration of lease agreements, month and year
 
2017-09 
 
 
Colorado [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease agreements, area
5,000 
5,000 
 
 
Expiration of lease agreements, month and year
 
2018-06 
 
 
Surety bonds [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Outstanding surety bonds
$ 41,400,000 
$ 41,400,000 
$ 11,900,000 
 
Office Leases [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease term
 
6 years 
 
 
Additional Lease [Member] |
Irvine, California [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease agreements, description
 
During the year we signed a letter of intent to lease an additional 20,000 square feet at our corporate headquarters. We expect to occupy the additional 20,000 square feet during the third quarter of 2014 and the additional lease will expire in 2020. 
 
 
Expiration of lease agreements, year
 
2020 
 
 
Additional Lease [Member] |
Irvine, California [Member] |
Scenario, Forecast [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease agreements, area
20,000 
20,000 
 
 
Minimum [Member] |
Equipment Leases [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease term
 
3 years 
 
 
Maximum [Member] |
Equipment Leases [Member]
 
 
 
 
Commitment And Contingencies [Line Items]
 
 
 
 
Lease term
 
4 years 
 
 
Commitments and Contingencies - Schedule of Warranty Reserves (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Movement in Standard Product Warranty Accrual [Roll Forward]
 
 
 
Warranty reserves, beginning of period
$ 1,593 
$ 985 
$ 731 
Warranty reserves accrued
2,898 
854 
470 
Warranty expenditures
(1,153)
(246)
(216)
Warranty reserves, end of period
$ 3,338 
$ 1,593 
$ 985 
Commitments and Contingencies - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Lease Agreements (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Commitments And Contingencies Disclosure [Abstract]
 
2014
$ 905 
2015
1,346 
2016
1,386 
2017
1,081 
2018
921 
Thereafter
1,411 
Future minimum lease payments under non-cancelable operating lease agreements
$ 7,050 
Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 12 Months Ended
Sep. 24, 2010
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Compensation cost related to all non-vested awards not yet recognized
 
$ 4.3 
 
 
 
Weighted average period, expense to recognize
 
1 year 8 months 12 days 
 
 
 
Stock options vested or exercisable
 
 
 
 
Stock options, granted
 
285,900 
 
Stock options expected to vest
 
285,900 
 
 
 
Stock options expected to vest, weighted average exercise price
 
$ 17.04 
 
 
 
Stock options expected to vest, weighted average remaining contractual life
 
9 years 1 month 6 days 
 
 
 
Restricted stock awards, granted
 
150,667 
 
Stock options [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Expiration from the date of grant
 
10 years 
 
 
 
Equity based incentive units [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Vesting terms description
The vesting terms of the equity based incentive units are as follows (1)18.75% of such units vested, subject to limitation in (3) below on the date following the first-year anniversary of the date of such officer's employment; (2) 56.25% of such units vest, subject to limitation in (3) below in equal quarterly installments between the first and fourth-year anniversary of the date of such officer's employment; (3) 25% of the awards granted in (1) and (2) will vest upon a liquidity event as defined 
 
 
 
 
Equity based incentive granted
 
 
 
 
$ 3.3 
Equity based incentive units, granted
 
 
Equity based incentive units, forfeited
 
 
Minimum [Member] |
Stock options [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Vesting period
 
1 year 
 
 
 
Minimum [Member] |
Restricted stock units [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Vesting period
 
1 year 
 
 
 
Maximum [Member] |
Stock options [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Vesting period
 
3 years 
 
 
 
Maximum [Member] |
Restricted stock units [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Vesting period
 
3 years 
 
 
 
2013 Incentive Plan [Member]
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Common stock
 
2,527,833 
 
 
 
Shares available for future grant
 
2,096,416 
 
 
 
Stock-Based Compensation - Summary of Stock Option Awards (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Options, Outstanding, Balance
   
 
 
Options, Granted
285,900 
Options, Exercised
   
 
 
Options, Forfeited
   
 
 
Options, Outstanding, Balance
285,900 
   
 
Weighted Average Exercise Price, Outstanding, Balance
   
 
 
Weighted Average Exercise Price, Granted
$ 17.04 
 
 
Weighted Average Exercise Price, Exercised
   
 
 
Weighted Average Exercise Price, Forfeited
   
 
 
Weighted Average Exercise Price, Outstanding, Balance
$ 17.04 
   
 
Weighted Average Remaining Contractual Life, Granted
9 years 1 month 6 days 
 
 
Weighted Average Remaining Contractual Life, Outstanding
9 years 1 month 6 days 
 
 
Aggregate Intrinsic Value, Outstanding, Balance
   
 
 
Aggregate Intrinsic Value, Granted
827 
 
 
Aggregate Intrinsic Value, Exercised
   
 
 
Aggregate Intrinsic Value, Forfeited
   
 
 
Aggregate Intrinsic Value, Outstanding, Balance
$ 827 
    
 
Stock-Based Compensation - Summary of Fair Value of Stock Option Awards Granted (Detail)
12 Months Ended
Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
Dividend yield
0.00% 
Expected volatility
44.00% 
Risk-free interest rate
1.89% 
Expected life
5 years 
Stock-Based Compensation - Summary of Restricted Stock Units Relating to 2013 Incentive Plan (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Restricted Share Units, Outstanding Beginning Balance
   
 
 
Restricted Share Units, Granted
150,667 
Restricted Share Units, Vested
   
 
 
Restricted Share Units, Forfeited
(5,150)
 
 
Restricted Share Units, Outstanding Ending Balance
145,517 
   
 
Weighted Average Grant Date Fair Value, Outstanding Beginning Balance
   
 
 
Weighted Average Grant Date Fair Value, Granted
$ 17.70 
 
 
Weighted Average Grant Date Fair Value, Vested
   
 
 
Weighted Average Grant Date Fair Value, Forefeited
$ 18.30 
 
 
Weighted Average Grant Date Fair Value, Outstanding Ending Balance
$ 17.68 
   
 
Aggregate Intrinsic Value, Outstanding Beginning balance
   
 
 
Aggregate Intrinsic Value, Granted
   
 
 
Aggregate Intrinsic Value, Vested
   
 
 
Aggregate Intrinsic Value, Forefeited
   
 
 
Aggregate Intrinsic Value, Outstanding Ending balance
$ 2,900 
    
 
Segment Information - Additional Information (Detail)
12 Months Ended
Dec. 31, 2013
Segment
Segment Reporting [Abstract]
 
Number of reportable segments
Segment Information - Summary of Financial Information Relating to Reportable Segments (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenues
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
$ 247,091 
$ 77,477 
$ 13,525 
Total revenues
 
 
 
 
 
 
 
 
10,864 
1,073 
5,804 
Total revenues
120,441 
58,539 
51,087 
27,888 
56,029 
10,060 
7,808 
4,653 
257,955 
78,550 
19,329 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
27,694 
13,199 
9,374 
4,814 
11,286 
1,181 
955 
516 
55,081 
13,938 
1,600 
Assets
 
 
 
 
 
 
 
 
 
 
 
Assets
506,035 
 
 
 
217,516 
 
 
 
506,035 
217,516 
 
Homebuilding [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
247,091 
77,477 
13,525 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
 
53,999 
13,789 
1,450 
Assets
 
 
 
 
 
 
 
 
 
 
 
Assets
505,174 
 
 
 
216,667 
 
 
 
505,174 
216,667 
 
Fee building [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
 
10,864 
1,073 
5,804 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
 
1,082 
149 
150 
Assets
 
 
 
 
 
 
 
 
 
 
 
Assets
$ 861 
 
 
 
$ 849 
 
 
 
$ 861 
$ 849 
 
Earnings (Loss) Per Share - Additional Information (Detail) (Initial public offering [Member], USD $)
Jan. 31, 2013
Initial public offering [Member]
 
Class of Stock [Line Items]
 
Common stock public offering price
$ 17.00 
Earnings (Loss) Per Share - Computation of Basic and Diluted Earnings (Loss) Per Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Numerator:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ 8,343 
$ 4,686 
$ 2,075 
$ 270 
$ 6,446 
$ (1,480)
$ (1,317)
$ (1,143)
$ 15,374 
$ 2,506 
$ (4,593)
Denominator:
 
 
 
 
 
 
 
 
 
 
 
Basic weighted-average shares outstanding
 
 
 
 
 
 
 
 
30,775,989 
21,597,907 
12,681,352 
Effect of dilutive shares:
 
 
 
 
 
 
 
 
 
 
 
Unvested restricted stock units
 
 
 
 
 
 
 
 
 
Diluted weighted-average shares outstanding
 
 
 
 
 
 
 
 
30,797,602 
21,597,907 
12,681,352 
Basic earnings (loss) per share
$ 0.26 
$ 0.15 
$ 0.07 
$ 0.01 
$ 0.30 
$ (0.10)
$ (0.09)
$ (0.09)
$ 0.50 
$ 0.12 
$ (0.36)
Diluted earnings (loss) per share
$ 0.26 
$ 0.15 
$ 0.07 
$ 0.01 
$ 0.30 
$ (0.10)
$ (0.09)
$ (0.09)
$ 0.50 
$ 0.12 
$ (0.36)
Restricted Stock [Member]
 
 
 
 
 
 
 
 
 
 
 
Effect of dilutive shares:
 
 
 
 
 
 
 
 
 
 
 
Unvested restricted stock units
 
 
 
 
 
 
 
 
21,613 
 
 
Earnings (Loss) Per Share - Computation of Basic and Diluted Earnings (Loss) Per Share (Parenthetical) (Detail)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Stock options [Member]
Class of Stock [Line Items]
 
 
 
Options outstanding
Non-vested shares outstanding
Income Taxes - (Provision) Benefit for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Current (provision) benefit for income taxes:
 
Federal
$ (11,967)
State
(3,023)
Current, Total
(14,990)
Deferred (provision) benefit for income taxes:
 
Federal
3,840 
State
771 
Deferred, Total
4,611 
Provision for income taxes
$ (10,379)
Income Taxes - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
Effective tax rate differs from federal statutory rate
35.00% 
Deferred tax assets
$ 4,611,000 
Deferred tax assets, valuation allowance
$ 0