2015 Fourth Quarter and Full Year Results. Maracay Homes Pardee Homes Quadrant Homes Trendmaker Homes TRI Pointe Homes Winchester Homes

Transcription

1 215 Fourth Quarter and Full Year Results Maracay Homes Pardee Homes Quadrant Homes Trendmaker Homes TRI Pointe Homes Winchester Homes

2 Forward Looking Statement Various statements contained in this presentation, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, operational and financial results, financial condition, prospects, and capital spending. Our forward-looking statements are generally accompanied by words such as estimate, project, predict, believe, expect, intend, anticipate, potential, plan, goal, will, or other words that convey future events or outcomes. The forward-looking statements in this presentation speak only as of the date of this presentation, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; global economic conditions; raw material prices; energy prices; the effect of weather; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; our relationship, and actual and potential conflicts of interest, with Starwood Capital Group or its affiliates; and additional factors discussed under the sections captioned Risk Factors included in our annual and quarterly reports filed with the Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.

3 Management Team Thomas Mitchell President & COO Over 25 years of real estate and homebuilding experience Former EVP and Southern California Regional President at William Lyon Homes Douglas Bauer Chief Executive Officer Over 25 years of real estate and homebuilding experience Former President and COO of William Lyon Homes, and previously, managed Northern California Division Michael Grubbs Chief Financial Officer Over 25 years of real estate and homebuilding experience Former SVP / CFO of William Lyon Homes Previously, real estate accountant at Kenneth Leventhal Working together for over 2 years, TRI Pointe senior management has significant experience running a large, geographically diverse, growth-oriented public homebuilder. Deep managerial talent at each operating division with key local relationships supports dynamic tailored growth strategies. 3

4 A Family of Regional Homebuilders Market: Greater Puget Sound Area 215 Orders: Deliveries: HS Revenue: $18, ASP: $44 Lots Owned or Controlled: 1,274 3-Year Goal: 4 Deliveries A Family of Regional Homebuilders Markets: Los Angeles/Ventura, Inland Empire, San Diego, Las Vegas 215 Orders: 1, Deliveries: 1, HS Revenue: $66, ASP: $536 Lots Owned or Controlled: 16,679 3-Year Goal: 1,4 1,5 Deliveries Markets: Washington DC, Richmond 215 Orders: Deliveries: HS Revenue: $269, ASP: $616 Lots Owned or Controlled: 2,352 3-Year Goal: 5 Deliveries Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, Denver 215 Orders: 1, Deliveries: 1,6 215 HS Revenue: $774,5 215 ASP:$73 Lots Owned or Controlled: 3,628 3-Year Goal: 1,4 1,55 Deliveries Markets: Phoenix, Tucson 215 Orders: Deliveries: HS Revenue: $185, ASP: $387 Lots Owned or Controlled: 1,811 3-Year Goal: 7 Deliveries Markets: Houston, Austin 215 Orders: Deliveries: HS Revenue: $275, ASP: $511 Lots Owned or Controlled: 1, Year Goal: 7 75 Deliveries Data as of December 31, 215 Note: Dollars in thousands LTM Orders: 4,181 LTM Deliveries: 4,57 LTM Home Sales ( HS ) Revenue: $2,291,264 LTM Average Sales Price ( ASP ): $565 Lots Owned or Controlled: 27,62 3-Year Goal: 5,1 5,4 Deliveries

5 215 Fourth Quarter Highlights

6 215 Fourth Quarter Highlights FOURTH QUARTER HIGHLIGHTS AND COMPARISONS TO FOURTH QUARTER 214 New home orders increased 5% to 753 New home deliveries up 3% to 1,453 with increased average sales price to $583K Home sales revenue up 36% to $847.4M Homebuilding gross margin of 22.2% Adjusted homebuilding gross margin of 24.2% (1) SG&A expense improved to 8.4% of home sales revenue compared to 8.9% Net income $85.1M; $.52 per diluted share vs. $41.4M; $.26 per diluted share (1) See Reconciliation of Non-GAAP Financial Measures in the appendix of the presentation. 6

7 Decrease 4% YOY Active Selling Communities and Absorption Rate Active Selling Communities and Absorption Rate As of and for the quarters ended December 31, 214 and 215 Communities by State As of December 31, Virginia 7% Washington 1% Arizona 13% Texas 2% California 29% Colorado 5% Nevada 9% Maryland 7% Communities Absorption Rate Opened 44 new communities and closed 48 in 215 7

8 Increase 5% YOY New Home Orders Fourth Quarter Results Fourth Quarter - New Home Orders For the quarters ended December 31, 214 and 215 Orders by State For the quarter ended December 31, 215 1, 9 Washington 12% Arizona 11% Virginia 5% 6 Texas 1% Colorado 3% California 38% 2 Nevada 12% Maryland 9% 8

9 Increase 3% YOY New Home Deliveries Fourth Quarter Results Fourth Quarter New Home Deliveries As of and for the quarters ended December 31, 214 and 215 Deliveries by State For the quarter ended December 31, 215 1,6 1,4 1,2 1, 1,122 1,453 Texas 1% Virginia 5% Washington 8% Arizona 12% 8 6 Colorado 5% Nevada 9% Maryland 6% California 45% $555K $583K Average Sales Price of Deliveries 9

10 Increase 12% YOY Increase 7% YOY Backlog Units and Dollar Value ( GAAP ) Backlog Units and Dollar Value As of December 31, 214 and 215 (dollars in thousands) Dollar Value by State As of December 31, 215 1,4 1,2 1, 8 1,32 1,156 $653,96 $697, $1,2, $1,, $8, Texas 11% Washington 1% Virginia 4% Arizona 12% Units $ Value $6, $4, $2, $- Colorado 6% Nevada 4% Maryland 7% California 46% $633K $63K Average Sales Price in Backlog 1

11 Increase 36% YOY Home Sales Revenue Fourth Quarter Results Fourth Quarter Home Sales Revenue For the quarters ended December 31, 214 and 215 (dollars in thousands) Home Sales Revenue by State For the quarter ended December 31, 215 $1,, $9, $8, $847,49 Virginia 7% Washington 6% Arizona 8% $7, $6, $622,962 Texas 9% $5, $4, $3, $2, $1, Colorado 4% Nevada 6% Maryland 5% California 55% $ $555K $583K Average Sales Price of Deliveries 11

12 215 Full Year Highlights

13 215 Full Year Highlights FULL YEAR HIGHLIGHTS AND COMPARISONS TO FULL YEAR 214 New home orders increased 42% to 4,181 New home deliveries up 31% to 4,57 with increased average sales price to $565K Home sales revenue up 39% to $2.3 billion Homebuilding gross margin of 21.1% Adjusted homebuilding gross margin of 23.1% (1) SG&A expense improved to 1.2% of home sales revenue compared to 11.3% Net income $25.5M; $1.27 per diluted share vs. $84.2M; $.58 per diluted share FULL YEAR HIGHLIGHTS AND COMPARISONS TO FULL YEAR 214 Adjusted (1)(2) New home orders increased 27% to 4,181 New home deliveries up 23% to 4,57 Home sales revenue up 27% to $2.3 billion (1) See Reconciliation of Non-GAAP Financial Measures in the appendix of the presentation. (2) The term Adjusted includes GAAP results plus legacy TRI Pointe operations for periods prior to July 7, 214, the closing date of the WRECO transaction. 13

14 Increase 42% YOY Increase 27% YOY New Home Orders Full Year Results Full Year - New Home Orders For the years ended December 31, 214 and 215 on an adjusted basis (1) Orders by State For the year ended December 31, 215 4,5 4, 3,5 3, 2,5 2,947 3,283 4,181 4,181 GAAP Washington 1% Virginia 4% Texas 11% Arizona 14% 2, 1,5 1, Adjusted Colorado 5% Nevada 9% California 41% Maryland 6% (1) Includes legacy TRI Pointe operations for the periods prior to July 7, 214, the closing date of the WRECO transaction. See Reconciliation of Non-GAAP Financial Measures in the appendix of this presentation. 14

15 Increase 31% YOY Increase 23% YOY New Home Deliveries Full Year Results Full Year New Home Deliveries For the years ended December 31, 214 and 215 on an adjusted basis (1) Deliveries by State For the year ended December 31, 215 4,5 4, 3,5 3,1 3,297 4,57 4,57 Virginia 6% Washington 1% Arizona 12% 3, 2,5 2, GAAP Texas 13% 1,5 1, Adjusted Colorado 5% Nevada 9% Maryland 5% California 4% (1) Includes legacy TRI Pointe operations for the periods prior to July 7, 214, the closing date of the WRECO transaction. See Reconciliation of Non-GAAP Financial Measures in the appendix of this presentation. 15

16 Increase 39% YOY Increase 27% YOY Home Sales Revenue Full Year Results Full Year Home Sales Revenue For the years ended December 31, 214 and 215 on an adjusted basis (1) (dollars in thousands) $2,5, $2,, $1,646,274 $1,88,381 $2,291,264 $2,291,264 Home Sales Revenue by State For the year ended December 31, 215 Virginia 7% Washington 8% Arizona 8% $1,5, GAAP Adjusted Texas 12% $1,, $5, $ Colorado 4% Nevada 6% Maryland 5% California 5% $531K $548K $565K $565K Average Sales Price of Deliveries (1) Includes legacy TRI Pointe operations for the periods prior to July 7, 214, the closing date of the WRECO transaction. See Reconciliation of Non-GAAP Financial Measures in the appendix of this presentation 16

17 Increase 113% YOY Increase 579% YOY Land and Lot Sales Revenue Full Year Results Land and Lot Sales Revenue and Gross Profit For the years ended December 31, 214 and 215 (dollars in thousands) Land and Lot Sales Revenue by State For the year ended December 31, 215 $125, $1, $11,284 Maryland 32% $75, $66,196 Revenue Gross Profit $5, $47,66 Texas 3% California 59% $25, $9,754 Washington 6% $

18 Orders, Deliveries and Absorption Rate year over year comparisons for the Fourth Quarter and Full Year 215 by Segment (Includes breakout by state for Pardee Homes and TRI Pointe Homes brands)

19 Increase 14% YOY Increase 57% YOY Increase 5% YOY Increase 21% YOY Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $392K $399K Average Sales Price of Deliveries FY14 FY15 $381K $387K Average Sales Price of Deliveries 19

20 Increase 96% YOY Increase 21% YOY Increase 43% YOY Increase 34% YOY Nevada Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $37K $368K Average Sales Price of Deliveries FY14 FY15 $36K $368K Average Sales Price of Deliveries 2

21 Increase 7% YOY Increase 3% YOY Increase 14% YOY Increase 1% YOY California Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. 64 FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $492K $73K Average Sales Price of Deliveries FY14 FY15 $512K $62K Average Sales Price of Deliveries 21

22 Increase 73% YOY Increase 13% YOY Increase 31% YOY Increase 28% YOY Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $452K $475K Average Sales Price of Deliveries FY14 FY15 $42K $44K Average Sales Price of Deliveries 22

23 Dec 37% YOY Dec 8% YOY Decrease 18% YOY Decrease 4% YOY Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $54K $511K Average Sales Price of Deliveries FY14 FY15 $496K $511K Average Sales Price of Deliveries 23

24 Dec 55% YOY Inc 195% YOY Increase 53% YOY Increase 239% YOY Colorado Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 on an adjusted basis (1) Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and 215 on an adjusted basis (1) Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $416K $512K Average Sales Price of Deliveries FY14 FY15 $46K $496K Average Sales Price of Deliveries (1) Includes legacy TRI Pointe operations for the periods prior to July 7, 214, the closing date of the WRECO transaction. See Reconciliation of Non-GAAP Financial Measures in the appendix of this presentation. 24

25 Dec 3% YOY Inc 71% YOY Increase 61% YOY Increase 59% YOY California Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 on an adjusted basis (1) Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and 215 on an adjusted basis (1) , Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $855K $727K Average Sales Price of Deliveries FY14 FY15 $851K $782K Average Sales Price of Deliveries (1) Includes legacy TRI Pointe operations for the periods prior to July 7, 214, the closing date of the WRECO transaction. See Reconciliation of Non-GAAP Financial Measures in the appendix of this presentation 25

26 Increase 19% YOY Increase 24% YOY Increase 22% YOY Increase 13% YOY Orders, Deliveries and Absorption Rate For the quarters ended December 31, 214 and 215 Orders, Deliveries and Absorption Rate For the years ended December 31, 214 and Q14 4Q15 Orders Deliveries Absorption. FY14 FY15 Orders Deliveries Absorption. 4Q14 4Q15 $627K $59K Average Sales Price of Deliveries FY14 FY15 $75K $616K Average Sales Price of Deliveries 26

27 216 Outlook

28 First Quarter 216 Update and Outlook New home orders were flat for the month of January as compared to the Company results for the comparable month a year ago; however, absorption per month per average community increased slightly to 2.98 from 2.96 for the comparable month a year ago Anticipate opening 25 new communities and closing out of 11, resulting in 118 active selling communities as of March 31, 216 Anticipate delivering approximately 6% of the 1,156 homes in backlog as of December 31, 215 Anticipate homebuilding gross margins on deliveries in 1Q16 in a range of 21% to 22% See Forward Looking Statement disclosure on page 2 of the presentation 28

29 Full Year 216 Update and Outlook Expect to grow active selling communities by 2% for the full year Anticipate delivering between 4,2 and 4,4 homes at an average sales price of $55, Anticipate generating between $45 and $5 million of gross profit from land and lot sales, most of which are expected to close in the second and third quarter of 216 Anticipate homebuilding gross margins for the full year in a range of 2% to 21% Anticipate SG&A expenses as a percentage of home sales revenue to a range of 1.3% to 1.5% See Forward Looking Statement disclosure on page 2 of the presentation 29

30 Significant Land Supply Orders by Month Debt

31 Significant Land Supply to Fuel Growth Combined Lot Position As of December 31, 215 Market Owned Controlled Total Lots % Owned Inventory Dollars LTM Deliveries Years of Supply California 16, ,527 96% $1,418,123 1, Colorado % $71, Washington, D.C. (1) 1, ,352 83% $251, Arizona 1, ,811 87% $26, Nevada 1, ,94 81% $181, Texas 1, ,858 74% $199, Washington 1, ,274 81% $19, Total 24,733 2,869 27,62 9% $2,519,273 4, Total Lots 5% 7% California 7% Colorado Washington, D.C. (1) 7% Arizona Nevada 8% Texas 63% 3% Washington (1) Includes lots in the greater Washington D.C. area. Note: Dollars in thousands Inventory Dollars 8% 8% 7% 8% 1% 3% 56% 31

32 New Home Orders Oct 214 to Jan 216 New Home Orders (October 214 through January 216) Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Absorption Rate = Orders per Month per Community 32

33 Selected Balance Sheet Metrics Selected Balance Sheet Metrics $ in thousands 12/31/215 12/31/214 Cash and cash equivalents $ 214,485 $ 17,629 Real estate inventories $ 2,519,273 $ 2,28,183 Debt $ 1,17,55 $ 1,138,493 Stockholders' equity $ 1,664,683 $ 1,454,18 In December 215, the Company made a $5 million pay down on its unsecured revolving credit facility. Debt-to-capital 41.3% Net debt-to-capital (1) 36.5% 43.9% 4.% Debt Maturities (in millions) $5 $4 $45 $45 $3 $2 $1 $ % Senior Notes 5.875% Senior Notes (1) See Reconciliation of Non-GAAP Measures in the Company s press release 33

34 Supplemental Data and Reconciliation

35 Reconciliation of Non-GAAP Financial Measures (unaudited) In this presentation, we utilize certain financial measures that are non-gaap financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating the Company s operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally Accepted Accounting Principles ( GAAP ), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. The following table reconciles homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non- GAAP measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Three Months Ended December 31, 215 % 214 % (dollars in thousands) Home sales revenue $ 847,49 1.% $ 622,962 1.% Cost of home sales 659, % 497, % Homebuilding impairments and lot option abandonments 93.% 1,25.2% Homebuilding gross margin 187, % 123, % Add: interest in cost of home sales 16,759 2.% 12,12 1.9% Add: impairments and lot option abandonments 93.% 1,25.2% Adjusted homebuilding gross margin $ 24, % $ 136, % Homebuilding gross margin percentage 22.2% 19.9% Adjusted homebuilding gross margin percentage 24.2% 22.% 35

36 Reconciliation of Non-GAAP Financial Measures (unaudited) The following table reconciles homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non- GAAP measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Year Ended December 31, 215 % 214 % (dollars in thousands) Home sales revenue $ 2,291,264 1.% $ 1,646,274 1.% Cost of home sales 1,87, % 1,316,47 8.% Homebuilding impairments and lot option abandonments 1,685.1% 2,147.1% Homebuilding gross margin 482, % 327, % Add: interest in cost of home sales 44, % 28, % Add: impairments and lot option abandonments 1,685.1% 2,147.1% Adjusted homebuilding gross margin $ 528, % $ 358, % Homebuilding gross margin percentage 21.1% 19.9% Adjusted homebuilding gross margin percentage 23.1% 21.8% 36

37 Reconciliation of Non-GAAP Financial Measures (cont d)(unaudited) The merger with Weyerhaeuser Real Estate Company ( WRECO ) was accounted for as a "reverse acquisition" of TRI Pointe by WRECO in accordance with ASC Topic 85, "Business Combinations." As a result, legacy TRI Pointe's financial results are not included in the combined company s GAAP results for any period prior to July 7, 214, the closing date of the merger. This schedule provides certain supplemental financial and operations information of the combined company that is Adjusted" to include legacy TRI Pointe stand-alone operations. No other adjustments have been made to the supplemental combined company information provided and this information is summary only and may not necessarily be indicative of the results had the merger occurred at the beginning of the periods presented or the financial condition to be expected for the remainder of the year or any future date or period. The following schedule provides certain supplemental financial and operations information of the combined company that is Adjusted" to include legacy TRI Pointe stand-alone operations for the year ending December 31, 214 as though the WRECO merger was completed on January 1, 214. Year Ended December 31, 215 December 31, 214 Combined Legacy Combined Combined Legacy Combined Reported Adjustments Adjusted Reported Adjustments Adjusted Supplemental Operating Data: (dollars in thousands) Home sales revenue $ 2,291,264 NA $ 2,291,264 $ 1,646,274 $ 162,17 $ 1,88,381 Net new home orders 4,181 NA 4,181 2, ,283 New homes delivered 4,57 NA 4,57 3, ,297 Average selling price of homes delivered $ 565 NA $ 565 $ 531 $ 823 $

38 Reconciliation of Non-GAAP Financial Measures (cont d)(unaudited) The following table reconciles the Company s ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debtto-capital is a relevant financial measure for management and investors to understand the leverage employed in our operations and as an indicator of the Company s ability to obtain financing. December 31, December 31, (dollars in thousands) Unsecured revolving credit facility $ 299,392 $ 26, Seller financed loans 2,434 14,677 Senior Notes 868, ,816 Total debt 1,17,55 1,138,493 Stockholders' equity 1,664,683 1,454,18 Total capital $ 2,835,188 $ 2,592,673 Ratio of debt-to-capital (1) 41.3% 43.9% Total debt $ 1,17,55 $ 1,138,493 Less: Cash and cash equivalents (214,485) (17,629) Net debt 956,2 967,864 Stockholders' equity 1,664,683 1,454,18 Total capital $ 2,62,73 $ 2,422,44 Ratio of net debt-to-capital (2) 36.5% 4.% (1) The ratio of debt-to-capital is computed as the quotient obtained by dividing debt by the sum of debt plus equity. (2) The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus equity. The most directly comparable GAAP financial measure is the ratio of debt-tocapital. 38