Tri Pointe Homes, Inc. Q1 FY2024 earnings call

• Strong first quarter results: Met or exceeded high end of guidance across key metrics, with 1,393 homes delivered, average sales price $659,000, net income $99 million, diluted EPS $1.03 (41% improvement y-o-y). • Strategic shift: Higher percentage of spec starts to address supply-demand gap, reducing cycle times to pre-pandemic levels. • Demand: Favorable market conditions with strong economy, low unemployment, housing supply shortage. Net new orders up 12% y-o-y, absorption pace 3.9 homes per community per month. • Pricing: Raised net pricing in most communities, incentives on orders improved to 3.8%. • Backlog: Substantial backlog of 2,741 homes. • Cash flow: Generated $145 million of positive cash flow from operations, ended quarter with $944 million cash on hand. • Share repurchase: Repurchased ~1.4 million shares. • New markets: Entered Greater Salt Lake City, coastal Carolinas, and Orlando markets, with first deliveries expected in 2026.

Tri Pointe Homes had a strong first quarter. Home sales revenue was $918 million, a 20% increase compared to the previous year. Home sales gross margins were 23%, at the high end of guidance. SG&A as a percentage of home sales revenue decreased to 11.1%, a 40 basis point improvement year-over-year. Net new orders were 1,814, an improvement of 12% compared to the prior year. Backlog was 2,741 homes. Revenue contribution was from home sales, with key metrics like average sales price, gross margins, and SG&A ratios being significant factors.

• Second quarter: Anticipates delivering between 1,500 and 1,600 homes, average sales price between $670,000 and $680,000, homebuilding gross margin percentage in range of 22.5% to 23.5%, SG&A expense ratio in range of 11% to 11.5%, effective tax rate ~26%. • Full year: Anticipates delivering between 6,200 and 6,400 homes, average sales price between $660,000 and $670,000, homebuilding gross margin percentage in range of 22.5% to 23.5%, SG&A expense ratio in range of 10.5% to 11%.

• Forward-looking statements involve risks and uncertainties detailed in SEC filings. • Market conditions, interest rate changes, land cost fluctuations could impact performance.

Q: Stephen Kim asked about average selling price and why ASP isn't closer to order price.

A: Glenn Keeler responded it's due to mix of deliveries from different communities.

Q: Alan Ratner asked about buyer credit quality and affordability.

A: Douglas Bauer said buyer profile is strong with average household income $195,000.

Q: Alan Ratner asked about SG&A leverage.

A: Glenn Keeler said no one-time items, savings from top-line drive.

Q: Michael Dahl asked about cadence of absorption and ASP guide.

A: Douglas Bauer said strong demand continued, Glenn Keeler said increase in guide was from pricing power.

Q: Carl Reichardt asked about mix of deliveries and orders.

A: Glenn Keeler said consistent between entry level and move-up.

Q: James McCanless asked about mortgage rate buydown and land costs.

A: Linda Mamet and Thomas Mitchell responded on buydown usage and land cost impact on margin.

Q: James McCanless asked about markets where price wasn't raised.

A: Linda Mamet said it was community-by-community.