2015 third quarter results · 2020. 12. 10. · 2015 third quarter results maracay homes –pardee...

2015 Third Quarter ResultsMaracay Homes – Pardee Homes – Quadrant Homes – Trendmaker Homes – TRI Pointe Homes – Winchester Homes

Forward Looking Statement

Various statements contained in this presentation, including those that express a belief, expectation or intention, as well asthose that are not statements of historical fact, are forward-looking statements. These forward-looking statements may includeprojections and estimates concerning the timing and success of specific projects, our ability to achieve the anticipated benefitsof the Weyerhaeuser Real Estate Company (WRECO) transaction and our future production, operational and financial results,financial condition, prospects, and capital spending. Our forward-looking statements are generally accompanied by wordssuch 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 beyondour control. The following factors, among others, may cause our actual results, performance or achievements to differmaterially from any future results, performance or achievements expressed or implied by these forward-looking statements: theeffect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financingfor home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of thevarious U.S. business segments and U.S. and international economic conditions; levels of competition; the successfulexecution 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; theeffect of land use, environment and other governmental regulations; legal proceedings; risks relating to any unforeseenchanges to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness,financial condition, losses and future prospects; the risk that disruptions from the WRECO transaction will harm our business;our ability to achieve the benefits of the WRECO transaction in the estimated amount and the anticipated timeframe, if at all;our ability to integrate WRECO successfully and to achieve the anticipated synergies therefrom; changes in accountingprinciples; our relationship, and actual and potential conflicts of interest, with Starwood Capital Group or its affiliates; andadditional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed withthe Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to timeand it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on ourbusiness.

Management Team

3

Michael GrubbsChief Financial Officer

• 28 years of real estate and homebuilding experience

• Former SVP / CFO of William Lyon Homes

• Previously, real estate accountant at Kenneth Leventhal

Douglas BauerChief Executive Officer


• Former President and COO of William Lyon Homes and previously, managed Northern California Division

Thomas Mitchell President & COO


• Former EVP and Southern California Regional President at 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.

A Family of Regional Homebuilders

A Family of Regional Homebuilders

LTM Orders: 4,142 LTM Deliveries: 3,726

LTM Home Sales Revenue: $2,066,816 LTM Average Sales Price: $555

Lots Owned or Controlled: 28,240

Market: Greater Puget Sound AreaLTM Orders: 404 LTM Deliveries: 398LTM HB Revenue: $172,282 LTM ASP: $433Lots Owned or Controlled: 1,422

Markets: Los Angeles/Ventura, Inland Empire, San Diego, Las VegasLTM Orders: 1,131 LTM Deliveries: 1,098LTM HB Revenue: $536,604 LTM ASP: $489Lots Owned or Controlled: 17,075

Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, DenverLTM Orders: 1,142 LTM Deliveries: 857LTM HB Revenue: $662,417 LTM ASP:$773Lots Owned or Controlled: 3,393

Markets: Phoenix, TucsonLTM Orders: 567 LTM Deliveries: 417LTM HB Revenue: $159,669 LTM ASP: $383Lots Owned or Controlled: 1,798

Markets: Houston, AustinLTM Orders: 502 LTM Deliveries: 551LTM HB Revenue: $280,762LTM ASP: $510Lots Owned or Controlled: 1,976

Markets: Washington DC, RichmondLTM Orders: 396LTM Deliveries: 405LTM HB Revenue: $255,082 LTM ASP: $630Lots Owned or Controlled: 2,576

Data as of September 30, 2015

Third Quarter Highlights

2015 Third Quarter Highlights

6

(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 the full third quarter of 2014.

THIRD QUARTER HIGHLIGHTS AND COMPARISONS TO THIRD QUARTER 2014

• New home orders increased 24% to 996

• New home deliveries up 35% to 1,138 with increased average sales price to $564K

• Home sales revenue up 36% to $642.4M

• Homebuilding gross margin of 21.0%

• Adjusted homebuilding gross margin of 23.1%(1)

• SG&A expense improved to 8.8% of home sales revenue compared to 10.5%

• Net income $50.2M; $0.31 per diluted share vs. $11.0M; $0.07 per diluted share

THIRD QUARTER HIGHLIGHTS AND COMPARISONS TO THIRD QUARTER 2014

– “Adjusted”(1)(2)

• New home orders increased 23% to 996

• New home deliveries up 35% to 1,138 with an average sales price of $561K

• Home sales revenue up 36% to $642.4M

Arizona15%

California31%

Maryland5%

Nevada9%

Colorado5%

Texas20%

Virginia6%

Washington9%

Active Selling Communities and Absorption Rate

7

106

118

2.50

2.75

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140

2014 2015

Communities Absorption Rate

11%

Active Communities and Absorption RateAs of and for the quarters ended September 30, 2014 and 2015

Communities by StateAs of September 30, 2015

Arizona15%

California39%

Maryland7%

Nevada10%

Colorado3%

Texas13%

Virginia4%

Washington9%

New Home Orders – Third Quarter Results

8

803

996

811

996

0

200

400

600

800

1,000

1,200

2014 2015

GAAP

Adjusted

Third Quarter - New Home OrdersFor the quarters ended September 30, 2014 and 2015 – GAAP and on an adjusted basis(1)

(1) Includes legacy TRI Pointe operations for the full third quarter of 2014. See “Reconciliation of Non-GAAP Financial Measures” in the appendix of this presentation.

Orders by StateFor the quarter ended September 30, 2015

Incr

eas

e 2

4%

YO

Y

Incr

eas

e 2

3%

YO

Y

Arizona12%

California41%

Maryland5%

Nevada9%

Colorado4%

Texas14%

Virginia5%

Washington10%

New Home Deliveries – Third Quarter Results

9

Deliveries by StateFor the quarter ended September 30, 2015


Third Quarter – New Home DeliveriesFor the quarters ended September 30, 2014 and 2015- GAAP and on an adjusted basis(1)

842

1,138

844

1,138

0

200

400

600

800

1,000

1,200

2014 2015

GAAP

Adjusted

Incr

eas

e 3

5%

YO

Y

Incr

eas

e 3

5%

YO

Y

Arizona11%

California52%

Maryland5%

Nevada4%

Colorado6%

Texas10%

Virginia5%

Washington7%

Backlog – Units and Dollar Value (“GAAP”)

10

Backlog – Units and Dollar ValueAs of September 30, 2014 and 2015 (dollars in thousands)

Dollar Value by StateAs of September 30, 2015

1,440

1,856

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Units

$870,365

$1,109,867

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$1,100,000

$1,200,000

$ Value

2014

2015

$598K $604KBacklog Average

Sales Price

Incr

eas

e 2

9%

YO

Y

Incr

eas

e 2

8%

YO

Y

Arizona8%

California52%

Maryland4%

Nevada6%

Colorado4%

Texas13%

Virginia6%

Washington7%

Home Sales Revenue – Third Quarter Results

11

$471,801

$642,352

$473,760

$642,352

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2014 2015

GAAP

Adjusted

Third Quarter – Home Sales RevenueFor the quarter ended September 30, 2014 and 2015 (dollars in thousands)

Home Sales Revenue by StateFor the quarter ended September 30, 2015

$560K $561K $564K $564KAverage Sales Price

Incr

eas

e 3

6%

YO

Y

Incr

eas

e 3

6%

YO

Y

Orders, Deliveries and Absorption Rate year over year comparisons for the Third Quarter and YTD through September by Segment

(Includes breakout by state for Pardee Homes and TRI Pointe Homes brands)

88

150

94

131

1.7

2.9

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140

160

3Q14 3Q15Orders Deliveries Absorption

Orders, Deliveries and Absorption RateFor the third quarter ended September 30, 2014 and 2015

3Q14 3Q15$397K $386KAverage Sales Price of Deliveries

70%

13

Orders, Deliveries and Absorption RateFor the nine months ended September 30, 2014 and 2015

313

495

286 307

2.1

3.2

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

100

200

300

400

500

600

YTD14 YTD15Orders Deliveries Absorption

YTD14 YTD15$376K $380KAverage Sales Price of Deliveries

58%

9399

70

99

3.9

2.8

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

20

40

60

80

100

120



6%

Nevada

14



228

300

168

2383.5

3.3

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

50

100

150

200

250

300

350



32%

171

192

207 215

4.3

4.8

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

0

50

100

150

200

250



12%

15



565

654

490486

4.8

5.8

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

0

100

200

300

400

500

600

700



16%

California

8287

74

117

2.2

2.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140



6%

16



286

353

219

297

2.5

3.6

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

50

100

150

200

250

300

350

400



23%

127 125135

163

1.71.7

1.0

1.5

2.0

2.5

3.0

0

20

40

60

80

100

120

140

160

180

200



17


436

381404

394

2.1

1.6

1.0

1.5

2.0

2.5

3.0

0

50

100

150

200

250

300

350

400

450

500




(13%)

3134

15

51

3.4

1.9

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

10

20

30

40

50

60


Orders, Deliveries and Absorption RateFor the third quarter ended September 30, 2014 and 2015 on an adjusted basis(1)

10%

18



Orders, Deliveries and Absorption RateFor the nine months ended September 30, 2014 and 2015 on an adjusted basis(1)

71

168

35

128

4.6

2.9

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

20

40

60

80

100

120

140

160

180



137%

Colorado

129

200

145

247

3.3

3.0

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

50

100

150

200

250

300


Orders, Deliveries and Absorption RateFor the third quarter ended September 30, 2014 and 2015 on an adjusted basis(1)

55%

19



417

767

320

483

4.4

4.1

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

200

400

600

800

1,000


Orders, Deliveries and Absorption RateFor the nine months ended September 30, 2014 and 2015 on an adjusted basis(1)


84%

California

90

109104

115

2.0

2.7

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140



21%

20


253

310

253271

1.5

2.6

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

50

100

150

200

250

300

350




23%

2015 Outlook

Fourth Quarter and Full Year 2015 Update and Outlook

22

• New home orders up 28% for the month of October over the Company results for the comparable month a year ago

• Anticipate delivering approximately 75% to 80% of its 1,856 homes in backlog as of September 30, 2015

• Anticipate expanding homebuilding gross margin for the fourth quarter sequentially from the third quarter and ending with a full year homebuilding gross margin of approximately 21%

• Improve the SG&A as a percentage of home sales revenue to a range of 10.5% to 11.0%

• Earn $1.15 to $1.30 on a fully diluted per share basis

(1) Includes legacy TRI Pointe operations for the periods prior to July 7, 2014, the closing date of the WRECO transaction.

See Forward Looking Statement disclosure on page 2 of the presentation

Significant Land Supply

Orders by Month

Debt

Significant Land Supply to Fuel Growth

Combined Lot Position

Market Owned Controlled Total Lots % Owned Inventory Dollars LTM Deliveries Years of Supply

California 17,392 547 17,939 97% $1,442,787 1,453 12.3

Colorado 405 202 607 67% $70,873 150 4.0

Washington, D.C. (1) 2,178 398 2,576 85% $293,437 407 6.9

Arizona 1,582 216 1,798 88% $205,432 417 4.3

Nevada 1,682 240 1,922 88% $178,696 350 5.5

Texas 1,158 818 1,976 59% $191,803 551 3.6

Washington 1,087 335 1,422 76% $193,374 398 3.6

Total 25,484 2,756 28,240 90% $2,576,402 3,726 7.6

As of September 30, 2015

64%

2%

9%

6%

7%

7%5%

California

Colorado

Washington, D.C. (1)

Arizona

Nevada

Texas

Washington

Total Lots

(1) Includes lots in the greater Washington D.C. area.

56%

3%

11%

8%

7%

7%

8%

Inventory Dollars

24

New Home Orders – Oct 2014 to Oct 2015

25

249 252

213

324

415

455

410

457

371355

367

274

318

0

50

100

150

200

250

300

350

400

450

500

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

New Home Orders (October 2014 through October 2015)

2.38 2.42 2.00 2.96 3.67 3.91 3.47 3.82 3.05 2.91 2.97 2.29 2.76

Absorption Rate = Orders per Month per Community

20152014

Selected Balance Sheet Metrics

26

$450 $450

$0

$100

$200

$300

$400

$500

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

4.375% Senior Notes 5.875% Senior Notes

• In September 2015, the Company made a $50 million pay down on its unsecured revolving credit facility.

$ in thousands 9/30/2015 12/31/2014

Cash and cash equivalents $ 96,993 $ 170,629

Real estate inventories $ 2,576,402 $ 2,280,183

Debt $ 1,245,621 $ 1,162,179

Stockholders' equity $ 1,576,176 $ 1,454,180

Debt-to-capitalNet debt-to-capital(1)

44.1%42.2%

44.4%40.5%

Selected Balance Sheet Metrics

Debt Maturities (in millions)

(1) See “Reconciliation of Non-GAAP Measures” in the appendix of the presentation

Supplemental Data and Reconciliation

Reconciliation of Non-GAAP Financial Measures(unaudited)

28

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 inaccordance 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 September 30,

2015 % 2014 %

(dollars in thousands)

Home sales $ 642,352 100.0% $ 471,801 100.0%

Cost of home sales 507,543 79.0% 385,400 81.7%

Homebuilding gross margin 134,809 21.0% 86,401 18.3%

Add: interest in cost of home sales 13,188 2.1% 7,702 1.6%

Add: impairments and lot option abandonments 366 0.1% 490 0.1%

Adjusted homebuilding gross margin $ 148,363 23.1% $ 94,593 20.0%

Homebuilding gross margin percentage 21.0% 18.3%

Adjusted homebuilding gross margin percentage 23.1% 20.0%

Reconciliation of Non-GAAP Financial Measures (cont’d)(unaudited)

29

The merger with Weyerhaeuser Real Estate Company (“WRECO”) was accounted for as a "reverse acquisition" of TRI Pointe by WRECO inaccordance with ASC Topic 805, "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, 2014, 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 three month period ending September 30, 2104 as though the WRECO merger was completed on January 1, 2014.

Three Months Ended

September 30, 2015 September 30, 2014

Combined Legacy Combined Combined Legacy Combined

Reported Adjustments Adjusted Reported Adjustments Adjusted

Supplemental Operating Data: (dollars in thousands)

Home sales revenue $ 642,352 NA $ 642,352 $ 471,801 $ 1,959 $ 473,760

Net new home orders 996 NA 996 803 8 811

New homes delivered 1,138 NA 1,138 842 2 844

Average selling price of homes delivered $ 564 NA $ 564 $ 560 $ 979 $ 561

Average selling communities 120.8 NA 120.8 107.0 NA 107.0

Selling communities at end of period 118 NA 118 106 NA 106

Cancellation rate 16% NA 16% 18% NA 18%

Backlog (estimated dollar value) $ 1,109,867 NA $ 1,109,867 $ 870,365 NA $ 870,365

Backlog (homes) 1,856 NA 1,856 1,440 NA 1,440

Average selling price in backlog $ 598 NA $ 598 $ 604 NA $ 604


30

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 nine month period ending September 30, 2104 as though the WRECO merger was completed on January 1, 2014.

Nine Months Ended

September 30, 2015 September 30, 2014

Combined Legacy Combined Combined Legacy Combined

Reported Adjustments Adjusted Reported Adjustments Adjusted

Supplemental Operating Data: (dollars in thousands)

Home sales revenue $ 1,443,855 NA $ 1,443,855 $ 1,023,312 $ 162,107 $ 1,185,419

Net new home orders 3,428 NA 3,428 2,233 336 2,569

New homes delivered 2,604 NA 2,604 1,978 197 2,175

Average selling price of homes delivered $ 554 NA $ 554 $ 517 $ 823 $ 545

Average selling communities 117.4 NA 117.4 98.5 NA 98.5

Selling communities at end of period 118 NA 118 106 NA 106

Cancellation rate 14% NA 14% 16% NA 16%


31

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 debt-to-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.

September 30, December 31,

2015 2014

(dollars in thousands)

Unsecured revolving credit facility $ 349,392 $ 260,000

Seller financed loans 7,572 14,677

Senior Notes 888,657 887,502

Total debt 1,245,621 1,162,179

Stockholders' equity 1,576,176 1,454,180

Total capital $ 2,821,797 $ 2,616,359

Ratio of debt-to-capital(1) 44.1 % 44.4 %

Total debt $ 1,245,621 $ 1,162,179

Less: Cash and cash equivalents (96,993 ) (170,629 )

Net debt 1,148,628 991,550

Stockholders' equity 1,576,176 1,454,180

Total capital $ 2,724,804 $ 2,445,730

Ratio of net debt-to-capital(2) 42.2 % 40.5 %

(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.

2015 third quarter results · 2020. 12. 10. · 2015 third quarter results maracay homes –pardee...

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