2017 third quarter results -...

2017 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 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,” “target,” “guidance,” “outlook,” “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; oil and other energy prices; the effect of weather, including the re-occurrence of drought conditions in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings or disputes and the adequacy of reserves; 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; risks related to unauthorized access to our computer systems, theft of our customers’ confidential information or other forms of cyber-attack; 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-net 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. Winchester is a registered trademark and is used with permission.

2

Management Team

3

Michael GrubbsChief Financial Officer

• Over 28 years of real estate and homebuilding experience

• Former SVP / CFO of William Lyon Homes

Douglas BauerChief Executive Officer


• Former President and COO of William Lyon Homes

Thomas Mitchell President & COO


• Former EVP and Southern California Regional President at William Lyon Homes

Working together for over 28 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: 4,921 LTM Deliveries: 4,367

LTM Home Sales (“HS”) Revenue: $2,380,161 LTM Average Sales Price (“ASP”): $545

Lots Owned or Controlled: 27,892

Market: Seattle Metro AreaLTM Orders: 378 LTM Deliveries: 302LTM HS Revenue: $192,869 LTM ASP: $639Lots Owned or Controlled: 1,685

Markets: Los Angeles, Inland Empire, San Diego, Las VegasLTM Orders: 1,552 LTM Deliveries: 1,288LTM HS Revenue: $611,776 LTM ASP: $475Lots Owned or Controlled: 15,655

Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, Sacramento, DenverLTM Orders: 1,358 LTM Deliveries: 1,194LTM HS Revenue: $794,791 LTM ASP: $666Lots Owned or Controlled: 3,784

Markets: Phoenix, TucsonLTM Orders: 648 LTM Deliveries: 672LTM HS Revenue: $298,916 LTM ASP: $445Lots Owned or Controlled: 2,606

Markets: Houston, AustinLTM Orders: 509 LTM Deliveries: 482LTM HS Revenue: $239,500LTM ASP: $497Lots Owned or Controlled: 1,856

Markets: Washington DC Metro AreaLTM Orders: 476LTM Deliveries: 429LTM HS Revenue: $242,310 LTM ASP: $565Lots Owned or Controlled: 2,306

Data as of September 30, 2017Note: Dollars in thousands

2017 Third Quarter Highlights

2017 Third Quarter Highlights

• Absorption rate of 3.3 new home orders per community per month

• New home deliveries up 9% to 1,111 with an average sales price of $584K

• Backlog units (1) up 32% to 2,265 homes and backlog dollar value (1) up 56% to $1.5 billion

• Home sales revenue up 12% to $649MM

• Homebuilding gross margin of 19.5%

• SG&A expense decreased 70 basis points to 10.2% of home sales revenue compared to 10.9%

• Net income available to common stockholders of $72.3MM, or $0.48 per diluted share vs. $34.8MM, or $0.22 per diluted share

• Repurchased 975,700 shares for $12.5MM at an average price of $12.83 per share in 3Q17.

6(1) Backlog units and dollar value figures are as of September 30, 2017 and 2016, respectively

Metric 3Q17 3Q16 % Change

Orders 1,268 932 36%

Deliveries 1,111 1,019 9%

ASP of Home Deliveries ($000s) $584 $568 3%

Backlog (units) (1) 2,265 1,711 32%

Backlog (dollar value) ($000s) (1) $1,482 $950 56%

Home Sales Revenue ($000s) $648,638 $578,653 12%

HB Gross Margin 19.5% 20.1% -60 bps

Land and Lot Sales Revenue ($mm) $68.2 $2.5 2628%

Land and Lot Sales Profit ($mm) $56.2 $0.8 6925%

SG&A Expense (% of sales) 10.2% 10.9% -70 bps

EPS (Diluted) $0.48 $0.22 118%

Arizona10%

California34%

Maryland8%

Nevada10%

Colorado6%

Texas22%

Virginia3%

Washington7%

Active Selling Communities and Absorption Rate Q3 2017 Results

7

123 127

2.6

3.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140

2016 2017

Communities Absorption Rate

Active Selling Communities and Absorption RateAs of and for the quarters ended September 30, 2016 and 2017

Active Selling Communities by StateAs of September 30, 2017

Opened 10 new communities and closed 14 in Q3 2017

Incr

eas

e 3

% Y

OY

Arizona12%

California50%

Maryland6%

Nevada10%

Colorado3%

Texas9%

Virginia3%

Washington7%

New Home Orders – Q3 2017 Results

8

932

1,268

0

200

400

600

800

1,000

1,200

1,400

1,600

2016 2017

Incr

eas

e 3

6%

YO

Y

New Home OrdersFor the quarters ended September 30, 2016 and 2017

New Home Orders by StateFor the quarter ended September 30, 2017

Arizona10%

California51%

Maryland7%

Nevada7%

Colorado4%

Texas7%

Virginia3%

Washington11%

Backlog – Units and Dollar Value – Q3 2017 Results

9

Backlog – Units and Dollar ValueAs of September 30, 2016 and 2017 (dollars in thousands)

Backlog Dollar Value by StateAs of September 30, 2017

1,711

2,265

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Units

$950,171

$1,482,265

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$ Value

2016

2017

$555K $654KAverage Sales Price

in Backlog

Incr

eas

e 3

2%

YO

Y

Incr

eas

e 5

6%

YO

Y

Arizona15%

California48%

Maryland7%

Nevada9%

Colorado3%

Texas9%

Virginia2%

Washington7%

New Home Deliveries – Q3 2017 Results

10

New Home Deliveries by StateFor the quarter ended September 30, 2017

New Home DeliveriesAs of and for the quarters ended September 30, 2016 and 2017

1,019

1,111

0

200

400

600

800

1,000

1,200

2016 2017

57% 53%Backlog Conversion Ratio

Incr

eas

e 9

% Y

OY

Arizona12%

California53%

Maryland7%

Nevada7%

Colorado3%

Texas8%

Virginia2%

Washington8%

Home Sales Revenue – Q3 2017 Results

11

$578,653

$648,638

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2016 2017

Home Sales RevenueFor the quarters ended September 30, 2016 and 2017 (dollars in thousands)

Home Sales Revenue by StateFor the quarter ended September 30, 2017

$568K $584KAverage Sales Price of Deliveries

Incr

eas

e 1

2%

YO

Y

SG&A Expenses, Income before Taxes and Net Income – Q3 2017 Results

12

$63,130$66,135

$31,852$33,179

$31,278$32,956

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2016 2017

SG&A

S&M

G&A

Selling General and Administrative ExpensesFor the quarters ended September 30, 2016 and 2017 (dollars in thousands)

10.9% 10.2%SG&A as a % of Home Sales Revenue

Incr

eas

e 5

% Y

OY

$55,443

$118,401

$34,834

$72,264

$0.22

$0.48

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

2016 2017

Inc Before Taxes Net Income EPS

Income before Taxes, Net Income available to Common Stockholders and EPS (Diluted)For the quarters ended September 30, 2016 and 2017 (dollars in thousands except EPS)

Incr

eas

e 1

14

% Y

OY

Incr

eas

e 1

07

% Y

OY

Orders, Deliveries and Absorption Rate year over year comparisons for the Third Quarter 2017 by Segment

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

134

158165 164

2.5

3.9

0.0

0.5

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

3Q16 3Q17Orders Deliveries Absorption

Orders, Deliveries and Absorption RateFor the quarters ended September 30, 2016 and 2017

3Q16 3Q17$412K $477KAverage Sales Price of Deliveries

14



De

cre

ase

1%

YO

Y

Incr

eas

e 1

8%

YO

Y

49

8490

79

2.3

3.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

10

20

30

40

50

60

70

80

90

100


Incr

eas

e 7

1%

YO

Y

De

cre

ase

12

% Y

OY

130

113121

1041.5

1.3

0.0

0.5

1.0

1.5

2.0

0

20

40

60

80

100

120

140

160



15




De

cre

ase

13

% Y

OY

De

cre

ase

14

% Y

OY

97

114

81

104

2.4

3.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140


Incr

eas

e 2

8%

YO

Y

Incr

eas

e 1

8%

YO

Y

172

294

182

2335.1

5.3

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

50

100

150

200

250

300



16



3Q16 3Q17$377K $458K

Average Sales Price of Deliveries

California

Incr

eas

e 7

1%

YO

Y

Incr

eas

e 2

8%

YO

Y111

127120

953.3

3.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140


Nevada

Incr

eas

e 1

4%

YO

Y

De

cre

ase

21

% Y

OY

208

338

230

302

2.9

4.2

0.0

0.5

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



17



3Q16 3Q17$526K $591K

Average Sales Price of Deliveries

California

Incr

eas

e 6

3%

YO

Y

Incr

eas

e 3

1%

YO

Y

Colorado

31

40

30 30

2.1

1.7

0.0

0.5

1.0

1.5

2.0

2.5

0

5

10

15

20

25

30

35

40

45

3Q16 3Q17

Orders Deliveries Absorption

Flat

YO

Y

Incr

eas

e 2

9%

YO

Y

2014 – 2016 Historical Results with 2017 Guidance Ranges

Arizona15%

California30%

Maryland6%

Nevada9%

Colorado4%

Texas24%

Virginia5%

Washington7%

Average Selling Communities and Absorption Rate

19

99

116 118

128

2.5

3.0 3.0

3.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

25

50

75

100

125

150

2014 2015 2016 2017P

Communities Absorption Rate

Incr

eas

e 2

% Y

OY

Incr

eas

e 8

% Y

OY

Average Selling Communities and Absorption RateAs of and for the years ended December 31, 2014 through 2016 and 2017 projections

Average Selling Communities by StateFor the year ended December 31, 2016

Opened 63 new communities and closed 43 in 2016Expect to open approximately 60 new communities in 2017

Incr

eas

e 1

7%

YO

Y

See Forward Looking Statement disclosure on page 2 of the presentation

Arizona15%

California40%

Maryland6%

Nevada11%

Colorado4%

Texas11%

Virginia4%

Washington9%

New Home Deliveries – FY 2014 through FY 2016

20

New Home Deliveries by StateFor the year ended December 31, 2016

New Home DeliveriesFor the years ended December 31, 2014 through 2016 and 2017 projections

3,100

4,0574,211

4,640

4,750

0

1,000

2,000

3,000

4,000

5,000

2014 2015 2016 2017P

Incr

eas

e 1

1%

YO

Y a

t m

idp

oin

t o

f th

e r

ange

Incr

eas

e 4

% Y

OY

Incr

eas

e 3

1%

YO

YUpdated Guidance Range of Deliveries


Arizona11%

California48%

Maryland6%

Nevada8%

Colorado4%

Texas10%

Virginia4%

Washington9%

Home Sales Revenue – FY 2014 through FY 2016

21

$1,646

$2,291 $2,329

$2,680

$2,768

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2014 2015 2016 2017P

Incr

eas

e 1

7%

YO

Y a

t m

idp

oin

t o

f th

e r

ange

Home Sales RevenueFor the years ended December 31, 2014 through 2016 and 2017 projections(dollars in millions)

Home Sales Revenue by StateFor the year ended December 31, 2016

$531K $565K $553K $580KAverage Sales Price of Deliveries

Incr

eas

e 2

% Y

OY

Incr

eas

e 3

9%

YO

Y

Updated Guidance Range of

Home Sales Revenue


Updated FY ASP based on 4Q17

ASP Range

22

$185,958

$233,713

$251,093

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2014 2015 2016 2017

Selling, General and Administrative ExpensesFor the years ended December 31, 2014 through 2016 (dollars in thousands)

11.3% 10.2% 10.8% 10.2%-10.4%SG&A as a % of Home Sales Revenue

Incr

eas

e 7

% Y

OY

Incr

eas

e 2

6%

YO

Y

2017 GuidanceProject SG&A Expense Ratio

of 10.2% to 10.4% of Home Sales Revenue

$127,964

$319,260$302,227

$84,197

$205,461$195,171

$0.58

$1.27$1.21

-$0.10

$0.10

$0.30

$0.50

$0.70

$0.90

$1.10

$1.30

$1.50

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2014 2015 2016

Inc Before Taxes Net Income EPS

Income before Taxes, Net Income available to Common Stockholders and EPS (Diluted)For the full years ended December 31, 2014 through 2016 (dollars in thousands except EPS)

SG&A Expenses, Income before Taxes and Net Income – FY 2014 through FY 2016

Incr

eas

e 1

44

% Y

OY

Incr

eas

e 1

49

% Y

OY

De

cre

ase

5%

YO

Y

De

cre

ase

5%

YO

Y


2017 Outlook

Fourth Quarter 2017 Outlook

24

Fourth Quarter

• Expect to open 14 new communities and close out of 10, resulting in 131 active selling communities as of December 31, 2017

• Anticipate delivering approximately 75% to 80% of the 2,265 homes in backlog as of September 30, 2017 at an average sales price range of $630,000 to $640,000

• Anticipate homebuilding gross margin for the fourth quarter in a range of 21.0% to 22.0%

• Anticipate SG&A expense ratio for the fourth quarter to be in a range of 7.6% to 7.8% of home sales revenue


Land Supply

Orders by Month

Debt

Significant Land Supply to Fuel Growth

Combined Lot Position

Market Owned Controlled Total Lots % Owned Inventory Dollars LTM DeliveriesImplied Years of Supply (1)

California 15,883 520 16,403 97% $1,808,048 1,868 8.8

Colorado 588 229 817 72% $125,993 139 5.9

Washington, D.C. (2) 1,772 534 2,306 77% $299,091 429 5.4

Arizona 1,855 751 2,606 71% $246,223 672 3.9

Nevada 1,994 225 2,219 90% $299,615 475 4.7

Texas 1,542 314 1,856 83% $213,179 482 3.9

Washington 1,169 516 1,685 69% $281,272 302 5.6

Total 24,803 3,089 27,892 89% $3,303,421 4,367 6.4

As of September 30, 2017

California59%

Colorado3%

Washington, D.C. (2)8%

Arizona9%

Nevada8%

Texas7%

Washington6%

Total Lots

(1) Based on last twelve months’ deliveries as of September 30, 2017(2) Includes lots in the greater Washington D.C. area.

California55%

Colorado4%

Washington, D.C. (2)10%

Arizona7%

Nevada9%

Texas6%

Washington9%

Inventory Dollars

26

. Note: Dollars in thousands

New Home Orders – Historical by Month

27

324

415

455

410

457

371355

367

274

318

227208

322

409418

477

425

356

280

306

346 345

297

267

377

477

445

524

477

444431

400

437

0

50

100

150

200

250

300

350

400

450

500

550

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

2015

2016

2017

2017 - 3.03 3.74 3.53 4.26 3.77 3.40 3.29 3.07 3.40

2016 - 2.98 3.57 3.45 3.89 3.60 3.06 2.41 2.59 2.84 2.83 2.43 2.16

2015 - 2.96 3.67 3.91 3.47 3.82 3.05 2.91 3.02 2.29 2.72 1.98 1.92

Absorption Rate = Orders per Month per Community

1Q17 Orders up 13% YOY



Selected Balance Sheet Metrics

28

$450

$300

$450

$300

$0

$100

$200

$300

$400

$500

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

4.375% Senior Notes 4.875% Senior Notes 5.875% Senior Notes 5.250% Senior Notes

• During the quarter, the Company borrowed $50 million from its unsecured revolving credit facility.

$ in thousands 9/30/2017 12/31/2016

Cash and cash equivalents $ 162,396 $ 208,657

Real estate inventories $ 3,303,421 $ 2,910,627

Total Debt $ 1,669,558 $ 1,382,033

Total Stockholders' equity $ 1,842,429 $ 1,829,447

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

47.5%45.0%

43.0%39.1%

Selected Balance Sheet Metrics

Senior Note Debt Maturities (in millions)

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

Supplemental Data and Reconciliation

Reconciliation of Non-GAAP Financial Measures(unaudited)

30

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,

2017 % 2016 %

(dollars in thousands)

Home sales revenue $ 648,638 100.0 % $ 578,653 100.0 %

Cost of home sales 521,918 80.5 % 462,323 79.9 %

Homebuilding gross margin 126,720 19.5 % 116,330 20.1 %

Add: interest in cost of home sales 15,623 2.4 % 14,385 2.5 %

Add: impairments and lot option abandonments 374 0.1 % 389 0.1 %

Adjusted homebuilding gross margin $ 142,717 22.0 % $ 131,104 22.7 %

Homebuilding gross margin percentage 19.5 % 20.1 %

Adjusted homebuilding gross margin percentage 22.0 % 22.7 %

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

31

The following table reconciles the Company’s ratio of debt-to-capital to the ratio of net debt-to-net capital. We believe that the ratio of net debt-to-net 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, 2017 December 31, 2016

Unsecured revolving credit facility $ 200,000 $ 200,000

Seller financed loans — 13,726

Senior notes 1,469,558 1,168,307

Total debt 1,669,558 1,382,033

Stockholders’ equity 1,842,429 1,829,447

Total capital $ 3,511,987 $ 3,211,480

Ratio of debt-to-capital(1) 47.5 % 43.0 %

Total debt $ 1,669,558 $ 1,382,033

Less: Cash and cash equivalents (162,396 ) (208,657 )

Net debt 1,507,162 1,173,376

Stockholders’ equity 1,842,429 1,829,447

Net capital $ 3,349,591 $ 3,002,823

Ratio of net debt-to-net capital(2) 45.0 % 39.1 %

__________ (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-net 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.

2017 third quarter results -...

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