2016 First Quarter Resultss2.q4cdn.com/.../2016/TPG-1Q16-Earnings-Slide-Deck.pdfVirginia 6%...

2016 First 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,” “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 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; 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.

Management Team

3

Michael GrubbsChief 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

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: 4,136 LTM Deliveries: 4,160

LTM Home Sales (“HS”) Revenue: $2,340,054 LTM Average Sales Price (“ASP”): $563

Lots Owned or Controlled: 27,929 2018 Goal: 5,100 – 5,400 Annual Deliveries

Market: Greater Puget Sound AreaLTM Orders: 424 LTM Deliveries: 410LTM HS Revenue: $182,914 LTM ASP: $446Lots Owned or Controlled: 1,5102018 Goal: 400 Annual Deliveries

Markets: Los Angeles/Ventura, Inland Empire, San Diego, Las VegasLTM Orders: 1,191 LTM Deliveries: 1,170LTM HS Revenue: $639,435 LTM ASP: $547Lots Owned or Controlled: 16,4572018 Goal: 1,400 – 1,500 Annual Deliveries

Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, DenverLTM Orders: 1,036 LTM Deliveries: 1,122LTM HS Revenue: $799,104 LTM ASP:$712Lots Owned or Controlled: 3,6252018 Goal: 1,400 – 1,550 Annual Deliveries

Markets: Phoenix, TucsonLTM Orders: 618 LTM Deliveries: 510LTM HS Revenue: $198,605 LTM ASP: $389Lots Owned or Controlled: 2,2802018 Goal: 700 Annual Deliveries

Markets: Houston, AustinLTM Orders: 447 LTM Deliveries: 519LTM HS Revenue: $263,235LTM ASP: $507Lots Owned or Controlled: 1,7772018 Goal: 700 – 750 Annual Deliveries

Markets: Washington DC, RichmondLTM Orders: 420LTM Deliveries: 429LTM HS Revenue: $256,761 LTM ASP: $599Lots Owned or Controlled: 2,2802018 Goal: 500 Annual Deliveries

Data as of March 31, 2016Note: Dollars in thousands

2016 First Quarter Highlights

2016 First Quarter Highlights

• Strong absorption rate of over 3.3 new home orders per community per month

• New home deliveries up 15% to 771 with an average sales price of $549K

• Home sales revenue up 13% to $423MM

• Homebuilding gross margin of 23.3%

• Adj. homebuilding gross margin of 25.4% (1)

• SG&A expense improved to 12.9% of home sales revenue compared to 13.7% last year

• Net income available to stockholders of $28.6M, or $0.18 per diluted share vs. $15.3M or $0.09 per diluted share Q1 2015

6(1) See “Reconciliation of Non-GAAP Measures” in the appendix of this presentaion

Metric 1Q 2016 1Q 2015 % Change

Orders 1,149 1,194 -4%

Deliveries 771 668 15%

ASP ($000s) $549K $560K -2%

Backlog (units) 1,534 1,558 -2%

Home Sales

Revenue ($mm)$423 $374 13%

HB Gross Margin 23.3% 19.9% +340 bps

SG&A Expense

(% of sales)12.9% 13.7% -80 bps

EPS (Diluted) $0.18 $0.09 100.0%

Arizona16%

California28%

Maryland5%

Nevada9%

Colorado4%

Texas23%

Virginia6%

Washington9%

Active Selling Communities and Absorption Rate

7

117

1253.5

3.3

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

2015 2016

Communities Absorption Rate

Active Selling Communities and Absorption RateAs of and for the quarters ended March 31, 2015 and 2016

Communities by StateAs of March 31, 2016

Opened 27 new communities and closed 6 in 1Q16

Incr

eas

e 7

% Y

OY

Arizona17%

California35%

Maryland6%

Nevada11%

Colorado4%

Texas11%

Virginia4%

Washington12%

New Home Orders – Q1 2016 Results

8

1,1941,149

0

200

400

600

800

1,000

1,200

1,400

2015 2016

De

cre

ase

4%

YO

Y

First Quarter - New Home OrdersFor the quarters ended March 31, 2015 and 2016

Orders by StateFor the quarter ended March 31, 2016

Arizona14%

California42%

Maryland6%

Nevada7%

Colorado5%

Texas10%

Virginia5%

Washington11%

Backlog – Units and Dollar Value

9

Backlog – Units and Dollar ValueAs of March 31, 2015 and 2016 (dollars in thousands)

Dollar Value by StateAs of March 31, 2016

1,558 1,534

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Units

$943,352 $891,532

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$ Value

2015

2016

$605K $581KAverage Sales Price

in Backlog

De

cre

ase

2%

YO

Y

De

cre

ase

6%

YO

Y

Arizona15%

California41%

Maryland6%

Nevada7%

Colorado5%

Texas11%

Virginia3%

Washington12%

New Home Deliveries – Q1 2016 Results

10

Deliveries by StateFor the quarter ended March 31, 2016

New Home DeliveriesAs of and for the quarters ended March 31, 2015 and 2016

668

771

0

100

200

300

400

500

600

700

800

900

2015 2016

65% 67%Backlog Conversion Ratio

Incr

eas

e 1

5%

YO

Y

Arizona11%

California51%

Maryland6%

Nevada4%

Colorado4%

Texas10%

Virginia3%

Washington11%

Home Sales Revenue – Q1 2016 Results

11

$374,265

$423,055

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2015 2016

Home Sales RevenueFor the quarters ended March 31, 2015 and 2016 (dollars in thousands)

Home Sales Revenue by StateFor the quarter ended March 31, 2016

$560K $549KAverage Sales Price of Deliveries

Incr

eas

e 1

3%

YO

Y

Homebuilding Gross Margins – Post WRECO transaction

12

18.3%

19.9% 19.9% 20.0%21.0%

22.2%23.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Homebuilding Gross Margins (3Q14 through 1Q16)

Expanding homebuilding gross margins since the closing of the WRECO transaction

SG&A Expenses– Q1 2016 Results

13

$51,439$54,717

$23,286

$26,321$28,153 $28,396

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

2015 2016

SG&A

S&M

G&A

Selling General and Administrative ExpensesFor the quarters ended March 31, 2015 and 2016

13.7% 12.9%SG&A as a % of Home Sales Revenue

Incr

eas

e 6

% Y

OY

$23,124

$44,200

$15,297

$28,550

$0.09

$0.18

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

$0.20

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

2015 2016

Inc Before Taxes Net Income EPS

Income before Taxes, Net Income available to Common Stockholders and EPS (Diluted)For the quarters ended March 31, 2015 and 2016

Incr

eas

e 8

7%

YO

Y

Incr

eas

e 9

1%

YO

Y

Orders, Deliveries and Absorption Rate year over year comparisons for the First Quarter 2016 by Segment

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

161

201

85

115

3.2

3.6

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

1Q15 1Q16Orders Deliveries Absorption

Orders, Deliveries and Absorption RateFor the quarters ended March 31, 2015 and 2016

1Q15 1Q16$382K $395KAverage Sales Price of Deliveries

15



Incr

eas

e 3

5%

YO

Y

Incr

eas

e 2

5%

YO

Y150

133

93 92

4.94.7

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


De

cre

ase

11

% Y

OY

De

cre

ase

1%

YO

Y

132122

108

88

1.71.7

0.0

0.5

1.0

1.5

2.0

0

20

40

60

80

100

120

140

160

180

200



16




De

cre

ase

8%

YO

Y

De

cre

ase

19

% Y

OY

107115

75

67

2.8 2.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

20

40

60

80

100

120

140


De

cre

ase

11

% Y

OY

Incr

eas

e 7

% Y

OY

208

184

114

151

6.1

4.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0

50

100

150

200

250



17



1Q15 1Q16$340K $328K

Average Sales Price of Deliveries

California

De

cre

ase

12

% Y

OY

Incr

eas

e 3

2%

YO

Y100

129

54 57

3.7

4.0

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


Nevada

Incr

eas

e 2

9%

YO

Y

Incr

eas

e 6

% Y

OY

262

222

106

163

4.5

3.6

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



18




California

De

cre

ase

15

% Y

OY

Incr

eas

e 5

4%

YO

Y

Colorado

74

43

3338

3.5

2.9

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

1Q15 1Q16

Orders Deliveries Absorption

Incr

eas

e 1

5%

YO

Y

De

cre

ase

42

% Y

OY

2016 Outlook

Second Quarter 2016 Update and Outlook

20

• New home orders through April 24, 2016 are up 3% as compared to the Company results for the comparable month a year ago; absorption per month per average community increased to 3.9 sequentially from 3.5 in March and 3.5 for the comparable period a year ago

• Anticipate opening 10 new communities and closing out of 15, resulting in 120 active selling communities as of June 30, 2016

• Anticipate delivering approximately 60% of the 1,534 homes in backlog as of March 31, 2016

• Anticipate homebuilding gross margins on deliveries in 2Q16 in a range of 21.0% to 22.0%

See Forward Looking Statement disclosure on page 2 of the presentation

Full Year 2016 Update and Outlook

21

• 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

• Anticipate generating between $45 and $50 million of gross profit from land and lot sales, most of which are expected to close in the second and third quarter of 2016

• Increasing anticipated homebuilding gross margins for the full year to a range of 20.5% to 21.5%, from previously guided 20.0% to 21.0%

• 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

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 17,055 568 17,623 97% $1,531,917 1,717 10.3

Colorado 434 192 626 69% $71,813 198 3.2

Washington, D.C. (1) 1,920 360 2,280 84% $261,053 429 5.3

Arizona 1,476 804 2,280 65% $211,362 510 4.5

Nevada 1,672 161 1,833 91% $205,109 377 4.9

Texas 1,388 389 1,777 78% $214,290 519 3.4

Washington 1,082 428 1,510 72% $209,707 410 3.7

Total 25,027 2,902 27,929 90% $2,705,251 4,160 6.7

As of March 31, 2016

63%

2%

8%

8%

7%

6%6%

California

Colorado

Washington, D.C. (1)

Arizona

Nevada

Texas

Washington

Total Lots

(1) Includes lots in the greater Washington D.C. area. Note: Dollars in thousands

57%

3%

10%

8%

8%

8%

8%

Inventory Dollars

23

New Home Orders – Jan 2015 through Current

24

324

415

455

410

457

371355

367

274

318

227208

322

409 418

385

0

50

100

150

200

250

300

350

400

450

500

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

New Home Orders (January 2015 through April 24, 2016)

2.96 3.67 3.91 3.47 3.82 3.05 2.91 2.97 2.29 2.76 1.98 1.92 2.98 3.57 3.45 3.90

Absorption Rate = Orders per Month per Community

2015 2016

(1) See Forward Looking Statement disclosure on page 2 of the presentation

(1)

Selected Balance Sheet Metrics

25

$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

• During the first quarter, the Company made draws of $75 million under its unsecured revolving credit facility.

$ in thousands 3/31/2016 12/31/2015

Cash and cash equivalents $ 144,019 $ 214,485

Real estate inventories $ 2,759,251 $ 2,519,273

Total Debt $ 1,244,331 $ 1,170,505

Total Stockholders' equity $ 1,694,757 $ 1,664,683

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

42.3%39.4%

41.3%36.5%

Selected Balance Sheet Metrics

Debt Maturities (in millions)

(1) See “Reconciliation of Non-GAAP Measures” in the Company’s press release

Supplemental Data and Reconciliation

Reconciliation of Non-GAAP Financial Measures(unaudited)

27

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 March 31,

2016 % 2015 %

(dollars in thousands)

Home sales revenue $ 423,055 100.0 % $ 374,265 100.0 %

Cost of home sales 324,499 76.7 % 299,907 80.1 %

Homebuilding gross margin 98,556 23.3 % 74,358 19.9 %

Add: interest in cost of home sales 8,830 2.1 % 6,711 1.8 %

Add: impairments and lot option abandonments 182 0.0 % 345 0.1 %

Adjusted homebuilding gross margin $ 107,568 25.4 % $ 81,414 21.8 %

Homebuilding gross margin percentage 23.3 % 19.9 %

Adjusted homebuilding gross margin percentage 25.4 % 21.8 %

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

28

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.

(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.

March 31, December 31,

2016 2015

(dollars in thousands)

Unsecured revolving credit facility $ 374,392 $ 299,392

Seller financed loans — 2,434

Senior Notes 869,939 868,679

Total debt 1,244,331 1,170,505

Stockholders' equity 1,694,757 1,664,683

Total capital $ 2,939,088 $ 2,835,188

Ratio of debt-to-capital(1) 42.3 % 41.3 %

Total debt $ 1,244,331 $ 1,170,505

Less: Cash and cash equivalents (144,019 ) (214,485 )

Net debt 1,100,312 956,020

Stockholders' equity 1,694,757 1,664,683

Total capital $ 2,795,069 $ 2,620,703

Ratio of net debt-to-capital(2) 39.4 % 36.5 %

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