Tri Pointe Homes, Inc.

David Lee, General Counsel. Thank you. You may begin.

Good morning and welcome to TriPoint Homes earnings conference call. Earlier this morning, the company released its financial results for the first quarter of 2021. Documents detailing these results, including a slide deck, are available at www.tripointhomes.com through the investors link and under the events and presentations tab. Before the call begins, I would like to remind everyone that certain statements made on this call which are not historical facts, including statements concerning future financial and operating performance, are forward-looking statements that involve risks and uncertainties. The discussion of risks and uncertainties and other factors that could cause actual results to differ materially are detailed in the company's SEC filings. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through TriPoint's website and in its SEC filings. Hosting the call today are Doug Bauer, the company's Chief Executive Officer, Glenn Keeler, the company's Chief Financial Officer, Tom Mitchell, the company's Chief Operating Officer and President, and Linda Mamet, the company's Chief Marketing Officer. With that, I will now turn the call over to Doug.

Well, thanks, David, and good morning to everyone joining us on the call today. This day is a celebratory one for TriPoint as we commemorate Earth Day, like we do every year through our proprietary Living Smart program. Living Smart is our company-wide, walk-to-walk commitment to our customers' well-being and the well-being of our planet. We've been a leader in green building since 2001, and our commitment is always expanding, incorporating the latest innovative design, materials, and technologies into living smart for our homes and communities. More of TriPoint's ESG highlights are available on our website, and we will be publishing our 2020 ESG report in May as we strive to improve everyday life for all of our stakeholders. With that, 2021 is off to a great start for TriPoint Homes, with the record-breaking sales momentum we experienced last year tearing into the new year. Net new orders for the first quarter increased 20% year over year, thanks to a 49% improvement in our absorption pace. The order activity we experienced was broad-based, both from a geographic and product standpoint, which is a testament to the appeal of our homes at a number of different price points, as well as to the strength of the housing market across the country. The combination of powerful millennial demographic forces, low existing inventory levels, favorable mortgage rates, and years of underbuilding has led to a real supply-demand imbalance that has taken the nation's need for new housing supply to new heights. The intensified demand for new homes brought about by the pandemic continues unabated as we see life beginning to normalize. Simply put, we're in the midst of one of the strongest housing markets of my career. We continue to take advantage of the robust demand with ongoing price increases and reduced incentives, allowing us to stay ahead of the cost inflation we're experiencing on a number of fronts. Gross margin from home deliveries for the first quarter came in at 23.9%, a 340 basis point expansion over last year. We have also been successful in improving our operating leverage by keeping our costs in check while growing revenues, lowering our SG&A as a percent of revenue by 250 basis points year over year to 11.4% for the quarter. On another positive note for industry at large, mortgage interest rates have stabilized in recent weeks after the upward trend in the latter half of the quarter. Rising rates have not impacted demand, and based on the sensitivity analysis we perform, we are confident in the quality of our backlog should mortgage rates continue to rise. As a premium lifestyle builder, TriPoint Homes attracts a very well-qualified buyer, TriPoint Connect, our affiliated mortgage company, is a significant asset to our operations and captures over 80% of our deliveries. The average home buyer financing with TriPoint Connect has a FICO score of 748, debt to income of 36%, and loan-to-value ratio of 82%. While we continue to see new home demand far outstripping supply, today's environment is not without its operational challenges. Cycle times are being extended in all of our markets due to material shortages, labor availability, and municipality delays. Suppliers are pushing for price increases of their own in an effort to offset raw material cost inflation, as well as labor cost increases. New phase releases at communities are being weighed against existing backlog constraints. To be sure, these are good problems to have and are indicative of a strong housing market. Fortunately, our leadership teams throughout our organization are made up of seasoned industry veterans who know how to navigate this landscape and keep TriPoint in a position to be successful. At TriPoint, our goal is to grow our operations in a profitable manner, achieving top 10 market share in each of our geographic segments and improving returns while maintaining a strong capital position. We made progress on all these fronts during the first quarter of 2021, including a return on average tangible equity of 15.8% for the trailing 12-month period. We posted an 18% increase in new home deliveries in the quarter and are poised to record a significant year-over-year increase in deliveries for the full year based on our existing backlog. As we got it on the last call, we opened 22 new communities during the first quarter, and remain confident in our ability to open roughly 70 new communities for the full year. In California, we continue to reap the rewards from our long-dated California assets, thanks to their low land basis and excellent market positioning, as we experience robust order activity at both our coastal and inland communities. For instance, four of our five top-selling communities in the first quarter are in California, and range from premium entry-level attached homes in San Diego to detached homes in Southern California's Inland Empire, as well as Northern California's East Bay. The investments we have made in our early stage markets of Austin, Dallas, the Carolinas, and Sacramento are generating excellent results. In the first quarter, these markets contributed 157 deliveries on a combined basis, with an average sales price of 445,000 and gross margins of 21%. While these markets are contributing to the bottom line now, they still have a considerable runway for growth. Combined, these early stage divisions currently own or control approximately 8,300 lots and are anticipated to deliver over 2,000 homes annually by 2023. We also made further strides in our efforts to acquire land in a more capital-efficient manner. We increased our lots control via option agreement to 38% at the end of the quarter, representing the highest option lot percentage in our company's history. We believe partnering with intermediaries to help facilitate the purchase and development of some of our lots is a prudent, risk-averse way to acquire land, but will also lead to better returns on our capital in the long run. Overall, we are in a fortunate land position, considering the demand environment we're in. Page 14 of the earnings call slide deck shows the detail of our lot position. With nearly 37,000 lots owned or controlled, we do not need to be aggressive in the current land market. We continue to be disciplined in our underwriting approach, knowing that we own or control 100% of our forecasted deliveries in 2021, 22, and over 95% in 2023. In addition, most of these lots were controlled one to three years ago or even longer in the case of the long-term California assets. This should prove favorable to the company considering the rate at which both home prices and input costs have increased over the past 12 months. Fry Point Homes remains in an excellent position from a capital standpoint with over $1 billion and total liquidity, including cash and cash equivalents of $585 million. We put some of our cash to work during the first quarter in the form of share repurchases, buying back 3.7 million shares at a weighted average price of $17.88. The number of shares outstanding was 9% lower on a year-over-year basis, and we plan on reducing our outstanding shares even further as the year progresses. With an increasing diverse and growing home building operation, a rapidly improving return profile, and a strong balance sheet, TriPoint Homes is poised to take advantage of the strong housing fundamentals in the market today and create value for our shareholders over the long term. We think that the current housing cycle will have long-term momentum given the powerful demographic forces at play and the supply issues facing most of our markets. We believe TriPoint Homes has the right team, strategy, and leadership in place to achieve our goals. With that, I'd like to turn it over to Glenn for more detail on the first quarter and our outlook for the rest of the year. Glenn?