2016 Second Quarter Results. Maracay Homes Pardee Homes Quadrant Homes Trendmaker Homes TRI Pointe Homes Winchester Homes

Transcription

1 2016 Second Quarter 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, land and lot sales, 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. This presentation includes certain non-gaap financial metrics, including adjusted homebuilding gross margin and net debt-to-capital. These non-gaap financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Please refer to the Supplemental Data and Reconciliation section of this presentation for a reconciliation of the non-gaap financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP.

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 Michael Grubbs Chief Financial Officer Over 25 years of real estate and homebuilding experience Former SVP / CFO of William Lyon Homes Working together for over 20 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 LTM Orders: 400 LTM Deliveries: 428 LTM HS Revenue: $201,933 LTM ASP: $472 Lots Owned or Controlled: 1, Goal: 400 Annual Deliveries A Family of Regional Homebuilders Markets: Los Angeles/Ventura, Inland Empire, San Diego, Las Vegas LTM Orders: 1,176 LTM Deliveries: 1,246 LTM HS Revenue: $707,806 LTM ASP: $568 Lots Owned or Controlled: 16, Goal: 1,400 1,500 Annual Deliveries Markets: Washington DC LTM Orders: 449 LTM Deliveries: 456 LTM HS Revenue: $263,923 LTM ASP: $579 Lots Owned or Controlled: 2, Goal: 500 Annual Deliveries Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, Denver LTM Orders: 1,050 LTM Deliveries: 1,165 LTM HS Revenue: $821,378 LTM ASP: $705 Lots Owned or Controlled: 3, Goal: 1,400 1,550 Annual Deliveries Markets: Phoenix, Tucson LTM Orders: 625 LTM Deliveries: 539 LTM HS Revenue: $212,888 LTM ASP: $395 Lots Owned or Controlled: 2, Goal: 700 Annual Deliveries Markets: Houston, Austin LTM Orders: 456 LTM Deliveries: 522 LTM HS Revenue: $261,813 LTM ASP: $502 Lots Owned or Controlled: 1, Goal: Annual Deliveries Data as of June 30, 2016 Note: Dollars in thousands LTM Orders: 4,156 LTM Deliveries: 4,356 LTM Home Sales ( HS ) Revenue: $2,469,741 LTM Average Sales Price ( ASP ): $567 Lots Owned or Controlled: 27, Goal: 5,100 5,400 Annual Deliveries

5 2016 Second Quarter Highlights

6 2016 Second Quarter Highlights Strong absorption rate of over 3.5 new home orders per community per month New home deliveries up 25% to 994 with an average sales price of $560K Home sales revenue up 30% to $557MM Homebuilding gross margin of 22.3% Adj. homebuilding gross margin of 24.4% (1) Land and lot sales revenue of $67MM generating $53MM in profit SG&A expense improved to 11.3% of home sales revenue compared to 12.6% last year Net income available to common stockholders of $73.9M, or $0.46 per diluted share vs. $54.9M or $0.34 per diluted share Q Repurchased 1,253,021 shares for $14.7MM at an average price of $11.73 per share (1) See Reconciliation of Non-GAAP Measures in the appendix of this presentation Metric 2Q Q 2015 % Change Orders 1,258 1,238 2% Deliveries % ASP ($000s) $560K $535K 5% Backlog (units) 1,798 1,998-10% Home Sales Revenue ($mm) $557 $427 30% HB Gross Margin 22.3% 20.0% +230 bps Land and Lot Sales Revenue ($mm) Land and Lot Sales Profit ($mm) SG&A Expense (% of sales) $67 $67 0% $53 $56-5% 11.3% 12.6% -130 bps EPS (Diluted) $0.46 $ % 6

7 Decrease 4% YOY Active Selling Communities and Absorption Rate Active Selling Communities and Absorption Rate As of and for the quarters ended June 30, 2015 and 2016 Communities by State As of June 30, Virginia 6% Washington 6% Arizona 15% Texas 24% California 28% Colorado 5% Nevada 10% Maryland 6% Communities Absorption Rate Opened 10 new communities and closed 18 in 7

8 Increase 2% YOY New Home Orders Q Results Second Quarter - New Home Orders For the quarters ended June 30, 2015 and 2016 Orders by State For the quarter ended June 30, ,400 1,200 1,000 1,238 1,258 Texas 11% Washington 7% Virginia 4% Arizona 15% 800 Colorado 3% Nevada 11% Maryland 6% California 43%

9 Decrease 10% YOY Decrease 14% YOY Backlog Units and Dollar Value Backlog Units and Dollar Value As of June 30, 2015 and 2016 (dollars in thousands) Dollar Value by State As of June 30, ,500 2,000 1,500 1,000 1,998 1,798 $1,199,847 $1,026, $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 Texas 9% Colorado 4% Washington 10% Virginia 5% Arizona 15% Units $ Value $400,000 $200,000 $- Nevada 7% Maryland 6% California 44% $601K $571K Average Sales Price in Backlog 9

10 Increase 25% YOY New Home Deliveries Q Results New Home Deliveries As of and for the quarters ended June30, 2015 and 2016 Deliveries by State For the quarter ended June 30, ,200 1, Washington 10% Virginia 4% Arizona 12% Texas 13% Colorado 5% Nevada 12% Maryland 7% California 37% 51% 65% Backlog Conversion Ratio 10

11 Increase 30% YOY Home Sales Revenue Q Results Home Sales Revenue For the quarters ended June 30, 2015 and 2016 (dollars in thousands) Home Sales Revenue by State For the quarter ended June 30, 2016 $600,000 $400,000 $427,238 $556,925 Washington 10% Virginia 5% Arizona 9% Texas 11% $200,000 Colorado 4% Nevada 8% California 47% $ Maryland 6% $535K $560K Average Sales Price of Deliveries 11

12 Increase 16% YOY Increase 33% YOY Increase 37% YOY SG&A Expenses Q Results Selling General and Administrative Expenses For the quarters ended June 30, 2015 and 2016 Income before Taxes, Net Income available to Common Stockholders and EPS (Diluted) For the quarters ended June 30, 2015 and 2016 $70,000 $60,000 $53,895 $62,717 $140,000 $120,000 $116,106 $0.46 $0.50 $0.45 $0.40 $50,000 $100,000 $87,002 $0.34 $0.35 $40,000 $30,000 $28,261 $25,634 $32,448 $30,269 SG&A S&M G&A $80,000 $60,000 $54,930 $75,339 $0.30 $0.25 $0.20 $20,000 $40,000 $0.15 $10,000 $20,000 $0.10 $0.05 $ % 11.3% SG&A as a % of Home Sales Revenue $ Inc Before Taxes Net Income EPS $

13 Orders, Deliveries and Absorption Rate year over year comparisons for the Second Quarter 2016 by Segment (Includes breakout by state for Pardee Homes and TRI Pointe Homes brands)

14 Increase 4% YOY Increase 32% YOY Decrease 21% YOY Increase 21% YOY Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and 2016 Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and Orders Deliveries Absorption Orders Deliveries Absorption 0.0 $369K $399K Average Sales Price of Deliveries $410K $521K Average Sales Price of Deliveries 14

15 Increase 7% YOY Increase 2% YOY Increase 31% YOY Increase 33% YOY Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and 2016 Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and Orders Deliveries Absorption Orders Deliveries Absorption 0.0 $526K $502K Average Sales Price of Deliveries $649K $553K Average Sales Price of Deliveries 15

16 Decrease 21% YOY Increase 27% YOY Increase 38% YOY Increase 39% YOY California Nevada Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and 2016 Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and Orders Deliveries Absorption Orders Deliveries Absorption 0.0 $489K $681K Average Sales Price of Deliveries $394K $359K Average Sales Price of Deliveries 16

17 Increase 13% YOY Increase 28% YOY Decrease 45% YOY Increase 14% YOY California Colorado Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and 2016 Orders, Deliveries and Absorption Rate For the quarters ended June 30, 2015 and Orders Deliveries Absorption Orders Deliveries Absorption 0.0 $844K $763K Average Sales Price of Deliveries $472K $509K Average Sales Price of Deliveries 17

18 2016 Outlook

19 Third Quarter and Full Year 2016 Outlook Third Quarter Anticipate opening 16 new communities and closing out of 12, resulting in 121 active selling communities as of September 30, 2016 Anticipate delivering approximately 55% of the 1,798 homes in backlog as of June 30, 2016 Anticipate homebuilding gross margins on deliveries in 3Q16 to be approximately 20.0% Full Year 2016 Expect to grow active selling communities by 20% for the full year Anticipate delivering between 4,200 and 4,400 homes at an average sales price of $550,000 Anticipated homebuilding gross margins for the full year to a range of 20.5% to 21.5% Anticipate SG&A expenses as a percentage of home sales revenue to a range of 10.3% to 10.5% See Forward Looking Statement disclosure on page 2 of the presentation 19

20 Land Supply Orders by Month Debt

21 Significant Land Supply to Fuel Growth Combined Lot Position As of June 30, 2016 Market Owned Controlled Total Lots % Owned Inventory Dollars LTM Deliveries Implied Years of Supply (1) California 16, ,280 98% $1,624,349 1, Colorado % $73, Washington, D.C. (2) 1, ,196 87% $261, Arizona 1, ,229 67% $225, Nevada 1, ,940 91% $233, Texas 1, ,783 74% $215, Washington 1, ,416 71% $205, Total 24,897 2,783 27,680 90% $2,840,213 4, Total Lots Arizona 8% Nevada 7% Washington, D.C. (2) 8% Colorado 3% Texas 7% Washington 5% California 62% (1) Based on last twelve months deliveries as of June 30, 2016 (2) Includes lots in the greater Washington D.C. area. Note: Dollars in thousands Inventory Dollars Nevada 8% Arizona 8% Texas 8% Washington, D.C. (1) 9% Colorado 3% Washington 7% California 57% 21

22 New Home Orders 2015 vs 2016 (through June) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Absorption Rate = Orders per Month per Community 22

23 Selected Balance Sheet Metrics Selected Balance Sheet Metrics $ in thousands 6/30/ /31/2015 Cash and cash equivalents $ 117,509 $ 214,485 Real estate inventories $ 2,840,213 $ 2,519,273 Total Debt $ 1,282,872 $ 1,170,505 Total Stockholders' equity $ 1,757,301 $ 1,664,683 Debt-to-capital 42.2% Net debt-to-capital (1) 39.9% Debt Maturities (in millions) 41.3% 36.5% During the second quarter, the Company increased its total commitments under our unsecured revolving credit facility to $625 million from $550 million. In addition, the Company issued $300 million aggregate principal amount of 4.875% Senior Notes due $500 $450 $450 $400 $300 $300 $200 $100 $ % Senior Notes 4.875% Senior Notes 5.875% Senior Notes (1) See Reconciliation of Non-GAAP Measures in the Company s press release 23

24 Supplemental Data and Reconciliation

25 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 June 30, 2016 % 2015 % (dollars in thousands) Home sales revenue $ 556, % $ 427, % Cost of home sales 432, % 341, % Homebuilding gross margin 124, % 85, % Add: interest in cost of home sales 11, % 7, % Add: impairments and lot option abandonments % % Adjusted homebuilding gross margin $ 135, % $ 94, % Homebuilding gross margin percentage 22.3% 20.0 % Adjusted homebuilding gross margin percentage 24.4% 22.0 % 25

26 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. June 30, 2016 December 31, 2015 Unsecured revolving credit facility $ 100,000 $ 299,392 Seller financed loans 17,758 2,434 Senior notes 1,165, ,679 Total debt 1,282,872 1,170,505 Stockholders equity 1,757,301 1,664,683 Total capital $ 3,040,173 $ 2,835,188 Ratio of debt-to-capital(1) 42.2 % 41.3 % Total debt $ 1,282,872 $ 1,170,505 Less: Cash and cash equivalents (117,509) (214,485) Net debt 1,165, ,020 Stockholders equity 1,757,301 1,664,683 Total capital $ 2,922,664 $ 2,620,703 Ratio of net debt-to-capital(2) 39.9 % 36.5 % (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-to-capital. 26