Tri Pointe Homes, Inc.

Greetings, and welcome to TriPoint Homes' second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the 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.

Good morning and welcome to TriPoint Homes earnings conference call. Earlier this morning, the company released its financial results for the second quarter of 2022. 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. Posting 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.

Good morning and thank you for joining us today as we go over our results for the second quarter of 2022, provide some color on current market conditions, and update you on our company's strategy and market positioning. TriPoint Homes delivered another quarter of strong profitability, generating earnings of $1.33 per diluted share, representing a 33% increase over the second quarter of 2021. We met or exceeded our previously stated guidance for all relevant operational metrics of the quarter, including new home deliveries of 1,485, average sales price of $677,000, home building gross margin of 27.2%, and SG&A of 9.5%. I want to thank our teams for these outstanding results, as they once again did a fantastic job of managing backlog, overcoming labor and supply issues, and delivering homes in a timely manner. We also ended the second quarter with a record backlog of nearly 3 billion, which puts us in an excellent position to continue to deliver strong top and bottom line results as we head into the back half of the year. We generated 1,356 net new orders during the quarter on a sales pace of 3.7 orders per community per month. This pace is consistent with our company's pre-pandemic order performance for a second quarter. However, we experienced a noticeable decline in order activity as the quarter progressed, with April's order pace coming in at 4.7, May at 3.6, and June at 2.8. While we typically see a seasonal slowdown in demand as we approach the summer months, It's clear the combination of higher rates and lower consumer confidence, two of the most important drivers in our industry, has resulted in a slower buying pace in most markets. With the uncertainty around the economy, we believe it may take some time for consumers and the market to find their footing again. Fortunately, TriPoint is led by seasoned home building professionals, both at the local and national level. who have successfully navigated prior housing cycles and are skilled at operating through such times. We have maintained a strong balance sheet throughout this cycle, which will allow us to make smart, rational decisions from a position of financial strength going forward. And while there is uncertainty surrounding today's new home market, we are confident that our company and our teams are well prepared for what comes next. Despite changing market conditions, our operational playbook remains similar to the one we outlined during our investor day in May. First, we are taking steps to ensure that the buyers we have in backlog feel confident about their purchases and close on their homes. We're working closely with buyers at every stage of the home buying process, particularly as it relates to their ability to secure attainable financing. We are leveraging our financial services arm, TriPoint Connect, to provide incentives such as forward rate commitments, rate buy downs, and rate locks to offset some of the impact of higher mortgage rates. While these steps should help us maintain a steady pace of activity at each of our communities, we are prepared to pull additional incentive levers to maintain that pace if necessary. We believe that our outstanding lot position in prime locations, combined with our innovative premium homes, gives us a distinct selling advantage in a challenging market. And as we highlighted at our recent investor day, we are in a fortunate land position with a good portion of our lots at a favorable cost basis relative to today's lot prices. This will give us flexibility with pricing homes as we open new communities over the next few years. In addition, we have adjusted our hurdle rates for new land deals to reflect the uncertainty we are seeing in the market. For land deals in the pipeline that have been approved but not yet closed on, we are stress testing project assumptions and reevaluating where appropriate. By focusing on converting our existing backlog maintaining a steady flow of new orders, opening new communities, and reducing future land spend, we believe TriPoint is in an excellent position to generate positive cash flow from operations while adapting to the changing landscape. In addition, we enter this period of uncertainty with a record backlog and healthy operating margins, giving us great confidence in our ability to generate profits and increase book value for the foreseeable future. With that, I'd like to turn the call over to Glenn, who will provide more detail on our results this quarter and give an update on our guidance. Glenn?