Tri Pointe Homes, Inc.

Greetings and welcome to TriPoint Homes second quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Lee, General Counsel for TriPoint Homes. Thank you. You may begin.

Morning and welcome to TriPoint Homes earnings conference call. Earlier this morning, the company released its financial results for the second 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 gap 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.

Thanks, David, and good morning to everyone joining us on the call today. TriPoint Homes delivered strong operating results in the second quarter of 2021, posting significant year-over-year increases to revenues, profits, and new home orders. We exceeded our stated guidance of ASPs, home building gross margin, and SG&A leverage as our teams did an excellent job executing our business plan, and navigating the operational challenges that persist in our industry. Earnings came in at a dollar per share for the quarter, representing a 133% increase as compared to the second quarter of last year. We are extremely pleased with these results and believe we're in an excellent position to continue this operational momentum into the second half of 2021. Given our sizable backlog, our premium lifestyle brand positioning, and the strategic growth initiatives we have in place. We experienced robust order activity during the second quarter, as housing demand continued to far outstrip supply in our markets. We averaged 4.7 orders per community per month for the quarter, and similar to the first quarter of 2021, This figure was constrained by our own internal efforts to match sales with construction starts and implement price increases to offset rising costs. These efforts have proved successful as we were able to generate home sales gross margins of 24.6% in the second quarter, a 300 basis point improvement over the second quarter of 2020, and an all-time record for our company. The demand that we saw during the quarter was broad-based in terms of price point and geography, a sign that there is a diverse range of motivated buyers in the marketplace today, along with a widespread lack of available housing supply to satisfy this demand. And while we acknowledge that there is price sensitivity in some of our markets, we believe the pricing environment will remain firm given the favorable supply, demand, and balance we expect to persist for the foreseeable future. In addition, TriPoint is a much more diverse home builder than in the past, with more new home communities positioned in affordable segments of the market than ever before. We have highlighted our focus on improving our return profile on several quarterly calls now, and this focus has continued to bear fruit. our trailing 12-month return on average tangible equity stood at 18.5% at the end of the quarter, representing a 490 basis point improvement over the second quarter of 2020. The communities within our long-dated California asset base continue to generate strong absorption paces and profits for our company, while our divisions outside of California continue to grow as a percentage of our company's total profits. Our early stage markets have grown their operations significantly, and many are achieving profitability levels at or above the company average. We continue to make investments in these markets and elsewhere, doing so in the most capital efficient manner possible, with an emphasis on lot option agreements, land banking, and joint ventures. Our returns are also being enhanced by our continued focus on operational efficiencies. Thanks to our investments in technology and process improvements, we were able to generate more revenue with less overhead expense, as evidenced by our SG&E expense ratio of 9.6% in the quarter, the best performance in the second quarter in our company's history. Our ample liquidity and low leverage ratios have allowed us to continue our share buyback program and improve our return on equity. In the second quarter, we deployed $83 million in capital to repurchase just under 3.7 million shares, bringing our total for 2021 to 7.3 million shares repurchased. We plan to continue to be active with our share repurchase program, and earlier today, we announced our board has approved an additional $250 million for share repurchases through the next year. The second quarter of 2021 was an excellent quarter for home building in general, and especially for TriPoint Homes. Border activity remains extremely healthy from a historical standpoint due to an ever increasing demand from millennials, job growth in the post pandemic recovery, and low home supply. As a result, TriPoint Homes is experiencing record levels of profitability. Moving forward, We expect the market and our sales space to trend towards a more normalized and healthy level of three to four homes per community per month, which is a great cadence for our business. This pace optimizes our operations and creates efficiencies in the sales, construction, and delivery process. With this healthy demand backdrop and a significantly growing community count, TriPoint is set up for a strong 2022. Our goal at TriPoint remains the same, grow our operations in a profitable manner, achieve top 10 market share in each of our geographic segments, and generate strong returns while maintaining a healthy capital position. We made positive strides in each of these fronts in the second quarter and believe we can make further progress through the remainder of the year and beyond. With that, I'd like to turn it over to Glenn for more details on our results for this quarter.