2020 First Quarter Results · Various statements contained in this presentation, including those that express a belief, expectation or intention, as well as those that are not statements

2020 First Quarter ResultsMaracayTM – Pardee Homes® – Quadrant Homes® – Trendmaker® Homes – TRI Pointe Homes® – Winchester® Homes

Forward Looking Statements

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 include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending. Forward‐looking statements in this presentation are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “intend,” “anticipate,” “potential,” “plan,” “goal,” “target,” “guidance,” “outlook,” “will,” “future,” “strategy,” or other words that convey future events or outcomes. 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 effects of the ongoing COVID‐19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of COVID‐19 and the duration of the outbreak, the duration of existing social distancing and shelter‐in‐place orders, further mitigation strategies taken by applicable government authorities, the availability of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID‐19; the impacts on our supply chain, the health of our employees, service providers and trade partners, and the reactions of U.S. and global markets and their effects on consumer confidence and spending; 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; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations, particularly within California; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; raw material and labor prices and availability; oil and other energy prices; the effect of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; 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; the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as COVID‐19; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental laws and 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 homebuyers’ 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

Glenn KeelerChief Financial Officer• Over 7 years of real estate and

homebuilding experience

• Former CAO for TRI Pointe Group

Douglas BauerChief Executive Officer• Over 30 years of real estate

and homebuilding experience

• Former President and COO of William Lyon Homes

Thomas Mitchell President & COO

• Over 30 years of real estate and homebuilding experience

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

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

LTM Orders: 5,678 LTM Deliveries: 5,065LTM Home Sales (“HS”) Revenue: $3,171,510 LTM Average Sales Price (“ASP”): $626 Lots Owned or Controlled: 32,007

LTM Orders: 5,678 LTM Deliveries: 5,065LTM Home Sales (“HS”) Revenue: $3,171,510 LTM Average Sales Price (“ASP”): $626 Lots Owned or Controlled: 32,007

Market: Seattle Metro AreaLTM Orders: 351 LTM Deliveries: 265LTM HS Revenue: $239,888 LTM ASP: $905Lots Owned or Controlled: 1,051

Markets: Los Angeles, Inland Empire, San Diego, Las VegasLTM Orders: 1,775 LTM Deliveries: 1,690LTM HS Revenue: $1,145,119 LTM ASP: $678Lots Owned or Controlled: 13,327

Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, Sacramento, Denver, Charlotte, RaleighLTM Orders: 1,293LTM Deliveries: 1,147LTM HS Revenue: $783,838 LTM ASP: $683Lots Owned or Controlled: 6,804

Markets: PhoenixLTM Orders: 788 LTM Deliveries: 596LTM HS Revenue: $304,914 LTM ASP: $512Lots Owned or Controlled: 3,727

Markets: Houston, Austin, Dallas‐Fort WorthLTM Orders: 905 LTM Deliveries: 937LTM HS Revenue: $432,471LTM ASP: $462Lots Owned or Controlled: 5,398

Markets: Washington DC Metro AreaLTM Orders: 566LTM Deliveries: 430LTM HS Revenue: $265,280 LTM ASP: $617Lots Owned or Controlled: 1,700

Data As of March 31, 2020Note: Dollars in thousands

2020 First Quarter Highlights

2020 First Quarter Highlights

• Net new home orders up 26% and absorption rate of 3.9 new home orders per community per month

• New home deliveries up 18% to 958 with an average sales price of $621,000

• Backlog units (1) up 33% to 2,455 homes and backlog dollar value (1) up 31% to $1.6 billion

• Home sales revenue up 21% to $595 million

• Homebuilding gross margin up 610 basis points to 20.5%. Adjusted homebuilding gross margin increased 500 basis points to 23.4%.

• SG&A expense decreased 180 basis points to 13.9% of home sales revenue

• Net income of $32 million, or $0.24 per diluted share, vs. $0 million, or $0.00 per diluted share

• Repurchased 6.6 million shares for an aggregate dollar amount of $102.0 million

6

(1) Backlog units and dollar value figures are as of March 31, 2020 and 2019, respectively(2) See “Reconciliation of Non‐GAAP Measures” in the appendix of this presentation

Metric 1Q20 1Q19 % Change

Orders 1,661 1,321 26%

Deliveries 958 814 18%

ASP of Home Deliveries ($mm) $621 $605 3%

Backlog (units) (1) 2,455 1,842 33%

Backlog (dollar value) ($mm) (1) $1,618 $1,238 31%

Home Sales Revenue ($mm) $595 $493 21%

HB Gross Margin 20.5% 14.4% +610 bps

Adjusted HB Gross Margin (2) 23.4% 18.4% +500 bps

SG&A Expense (% of Home Sales Revenue) 13.9% 15.7% ‐180 bps

Income Before Income Taxes ($mm) $42 $0 4200%

Net Income ($mm) $32 $0 3100%

EPS (Diluted) $0.24 $0.00 2300%

Arizona13%

California38%

Maryland7%

Nevada10%

Colorado3%

Texas20%

Virginia3%

Washington6%

Active Selling Communities and Absorption Rate Q1 2020 Results

7

146 143

3.0

3.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0

25

50

75

100

125

150

2019 2020

Communities Absorption Rate

Active Selling Communities and Absorption RateAs of and for the quarters ended March 31, 2019 and 2020

Active Selling Communities by StateAs of March 31, 2020

Opened 19 new communities and closed 13 communities in Q1 2020

Decrease 2%

YOY

Arizona14%

California40%

Maryland7%

Nevada10%

Colorado4%

Texas14%

Virginia3%

Washington8%

New Home Orders – Q1 2020 Results

8

1,321

1,661

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2019 2020

Increase 26%

YOY

New Home OrdersFor the quarters ended March 31, 2019 and 2020

New Home Orders by StateFor the quarter ended March 31, 2020

Arizona15%

California41%

Maryland7%

Nevada8%

Colorado4%

Texas11%

Virginia5%

Washington9%

Backlog – Units and Dollar Value – Q1 2020 Results

9

Backlog – Units and Dollar ValueAs of March 31, 2019 and 2020 (dollars in thousands)

Backlog Dollar Value by StateAs of March 31, 2020

1,842

2,455

0

500

1,000

1,500

2,000

2,500

3,000

Units

$1,237,838

$1,618,481

$‐

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$ Value

2019

2020

$672K $659KAverage Sales Price

in Backlog

Increase 33%

YOY

Increase 31%

YOY

Arizona15%

California35%Maryland

6%

Nevada8%

Colorado7%

Texas22%

Virginia2%

Washington5%

New Home Deliveries – Q1 2020 Results

10

New Home Deliveries by StateFor the quarter ended March 31, 2020

New Home DeliveriesAs of and for the quarters ended March 31, 2019 and 2020

814

958

0

200

400

600

800

1,000

1,200

2019 2020

61% 55%Backlog Conversion Ratio

Increase 18%

YOY

Arizona12%

California44%Maryland

5%

Nevada7%

Colorado6%

Texas16%

Virginia3%

Washington7%

Home Sales Revenue – Q1 2020 Results

11

$492,703

$594,838

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2019 2020

Home Sales RevenueFor the quarters ended March 31, 2019 and 2020 (dollars in thousands)

Home Sales Revenue by StateFor the quarter ended March 31, 2020

$605K $621KAverage Sales Price of Deliveries

Increase 21%

YOY

SG&A Expenses, Income before Taxes and Net Income – Q1 2020 Results

12

$77,586$82,474

$38,989$42,637

$38,597$39,837

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

2019 2020

SG&A

S&M

G&A

Selling, General and Administrative ExpensesFor the quarters ended March 31, 2019 and 2020 (dollars in thousands)

15.7% 13.9%SG&A as a % of Home Sales Revenue

Increase 6.3% YOY

$95

$41,704

$71

$31,883

$0.00

$0.24

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2019 2020Inc Before Taxes Net Income EPS

Income before Taxes, Net Income available to Common Stockholders and EPS (Diluted)For the quarters ended March 31, 2019 and 2020 (dollars in thousands except EPS)

Orders, Deliveries and Absorption Rate Year over Year Comparisons for the First Quarter 2020 by Segment

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

161

240

74

140

4.5

5.2

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

0

50

100

150

200

250

300

1Q19 1Q20Orders Deliveries Absorption

Orders, Deliveries and Absorption RateFor the quarters ended March 31, 2019 and 2020

1Q19 1Q20$535K $513KAverage Sales Price of Deliveries

14



Increase 89%

YOY

Increase 49%

YOY

75

126

4452

3.5

6.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0

20

40

60

80

100

120

140


Increase 68%

YOY

Increase 18%

YOY

243234

154

209

2.1

2.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

50

100

150

200

250

300



15




Decrease 4%

YOY

Increase 36%

YOY

114

172

58

742.7

4.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0

20

40

60

80

100

120

140

160

180

200


Increase 28%

YOY

Increase 51%

YOY

303 309

158177

3.3

3.8

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

0

50

100

150

200

250

300

350



16




California

Increase 2% YOY

Increase 12%

YOY

130

166

8480

3.2

3.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0

20

40

60

80

100

120

140

160

180


Nevada

Increase 28%

YOY

Decrease 5%

YOY

214

355

170162

3.0

4.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

0

50

100

150

200

250

300

350

400



17




California

Increase 66%

YOY

Decrease 5%

YOY

Colorado

81

59

72

64

3.9

4.4

3.6

3.7

3.8

3.9

4.0

4.1

4.2

4.3

4.4

4.5

0

10

20

30

40

50

60

70

80

90


Decrease 11

% YOY

Decrease 27

% YOY

Land Supply

Orders by Month

Debt

Significant Land Supply to Fuel Growth

Combined Lot PositionAs of March 31, 2020

California46%

Colorado4%

Wash, D.C. Area5%

Arizona12%

Nevada7%

Carolinas6%

Texas17%

Washington3%Total Lots

(1) Lots controlled include lots that are under land option contracts or purchase contracts(2) Based on last twelve months’ deliveries as of March 31, 2020

California50%

Colorado3%

Wash, D.C. Area8%

Arizona11%

Nevada9%

Carolinas1%

Texas9%

Washington8%Inventory Dollars

19

Note: Dollars in thousands

Market Owned Controlled (1) Total Lots % Owned Inventory Dollars LTM DeliveriesImplied Years of Supply (2)

California 12,903 1,899 14,802 87% 1,598,550 2,062 7.2 Colorado 751 382 1,133 66% 104,763 270 4.2 Washington D.C. Area 987 713 1,700 58% 262,520 430 4.0 Arizona 2,234 1,493 3,727 60% 359,299 596 6.3 Nevada 1,900 233 2,133 89% 301,275 505 4.2 Carolinas 181 1,882 2,063 9% 16,622 ‐ ‐Texas 2,891 2,507 5,398 54% 280,475 937 5.8 Washington 1,013 38 1,051 96% 265,644 265 4.0

Total 22,860 9,147 32,007 3,189,148 5,065 6.3

1Q20 Orders up 26% YOY

New Home Orders – Historical by Month

20

2020 ‐ 3.90 4.86 3.03

2019 ‐ 2.15 3.00 3.74 3.51 3.41 3.29 2.96 2.97 2.84 2.93 2.64 3.10

2018 ‐ 3.54 3.63 4.38 3.91 3.32 3.04 2.83 2.74 2.56 2.21 2.45 1.63

2017 ‐ 3.03 3.74 3.53 4.26 3.77 3.40 3.29 3.07 3.40 2.95 2.80 2.61

Absorption Rate = Orders per Month per Community

Full Year Absorption Rate:2019 – 3.05 per month2018 – 3.00 per month2017 – 3.32 per month

377

477445

524

477444 431

400

437

375354

334

459468

571

511

435397

364 348323

274312

226

316

449

556

507 498 485

434 436 421 430

375

430

541

687

433

0

100

200

300

400

500

600

700

800

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

2017

2018

2019

2020

Selected Balance Sheet Metrics

21

$300

$450

$300

$0

$100

$200

$300

$400

$500

2020 2021 2022 2023 2024 2025 2026 2027

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

• During the quarter, the Company drew down $500 million on its unsecured revolving credit facility

$ in thousands 3/31/2020 12/31/2019

Cash and cash equivalents $ 624,129 $ 329,011 Real estate inventories $ 3,194,148 $ 3,065,436 Total debt $ 1,784,925 $ 1,283,985 Total Stockholders' equity $ 2,115,281 $ 2,186,530

Ratio of debt‐to‐capitalRatio of net debt‐to‐net capital(1)

45.8%35.4%

37.0%30.4%

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)

23

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 31,2020 % 2019 %

(dollars in thousands)Home sales revenue $ 594,838 100.0% $ 492,703 100.0%Cost of home sales 472,882 79.5% 421,536 85.6%Homebuilding gross margin 121,956 20.5% 71,167 14.4%

Add: interest in cost of home sales 16,822 2.8% 14,191 2.9%Add: impairments and lot option abandonments 349 0.1% 5,202 1.1%

Adjusted homebuilding gross margin $ 139,127 23.4% $ 90,560 18.4%Homebuilding gross margin percentage 20.5% 14.4%Adjusted homebuilding gross margin percentage 23.4% 18.4%

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

24

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.

March 31, 2020 December 31, 2019Loans payable $ 750,000 $ 250,000Senior notes 1,034,925 1,033,985

Total debt 1,784,925 1,283,985Stockholders’ equity 2,115,281 2,186,530

Total capital $ 3,900,206 $ 3,470,515Ratio of debt-to-capital(1) 45.8% 37.0%

Total debt $ 1,784,925 $ 1,283,985Less: Cash and cash equivalents (624,129) (329,011)

Net debt 1,160,796 954,974Stockholders’ equity 2,115,281 2,186,530

Net capital $ 3,276,077 $ 3,141,504Ratio of net debt-to-net capital(2) 35.4% 30.4%

(1) The ratio of debt‐to‐capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.

(2) The ratio of net debt‐to‐capital is computed as the quotient obtained by dividing the net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders' equity.

Reconciliation of Non‐GAAP Financial Measures(unaudited)

25

The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP. EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation and (f) impairments and lot option abandonments. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

Three Months Ended March 31,

2020 2019

(in thousands) Net income $ 31,883 $ 71

Interest expense: Interest incurred 20,779 23,373

Interest capitalized (20,779) (23,373) Amortization of interest in cost of sales 16,822 14,333

Provision for income taxes 9,821 24

Depreciation and amortization 5,456 5,085

EBITDA 63,982 19,513 Amortization of stock-based compensation 3,625 3,435

Impairments and lot option abandonments 349 5,202

Adjusted EBITDA $ 67,956 $ 28,150

Documents

2020 First Quarter Results · Various statements contained in this presentation, including those that express a belief, expectation or intention, as well as those that are not statements