Slide 1: Fourth Quarter 2022 Analyst Conference Call
FOURTH QUARTER 2022 ANALYST CONFERENCE CALL FEBRUARY 2, 2023
Slide 2: Safe Harbor
SAFE HARBOR The information included in this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expectations about the housing market in general; expectations about our future results; the level of our
Slide 3: Speakers
SPEAKERS Steven J. Hilton – Executive Chairman Phillippe Lord – Chief Executive Officer Hilla Sferruzza – EVP & Chief Financial Officer Emily Tadano – VP of Investor Relations and ESG 3
Slide 4: Recent Events
RECENT EVENTS Delivered three new Recognized by the mortgage-free homes to Phoenix Business deserving veterans and Journal for: their families in Houston, Nashville and Tucson • One of the Best Places to Work • One of the Healthiest Employers Start with Heart, donated Recognized by Newsweek to vario
Slide 5: Decline in Order Volume Due to Elevated Cancellations
DECLINE IN ORDER VOLUME DUE TO ELEVATED CANCELLATIONS Gross Sales Orders Cancellation Rate Sales Order Volume 5000 45% 4500 4500 4,287 4,326 39% 3,874 40% 4000 3,767 4000 3,833 3,367 35% 3500 3500 3,291 30% 30% 3000 2,979 3000 25% 2500 2,310 2500 20% 2000 1,808 2000 15% 12% 13% 1500 1500 10% 10% 100
Slide 6: Gross Absorptions Still Steady, Net Absorptions Impacted by Higher Cancellations
GROSS ABSORPTIONS STILL STEADY, NET ABSORPTIONS IMPACTED BY HIGHER CANCELLATIONS STATES & REGIONS Y/Y (%) changes 4Q22 vs 4Q21 Central AZ CA CO West FL GA NC SC TN East (TX) 49.0 31.5 17.5 98.0 77.5 29.5 18.5 28.0 11.0 10.5 97.5 Average Active Communities 27% 58% 6% 31% 10% -25% 37% 8% -12% 0% -4% E
Slide 7: Grew Specs Per Community and Completed More of Our Spec Supply
GREW SPECS PER COMMUNITY AND COMPLETED MORE OF OUR SPEC SUPPLY AHEAD OF SPRING SELLING SEASON Spec Starts Ending Backlog Units 7,241 6000 7500 6,695 5,019 6500 6,064 5,679 5000 4,020 5500 4000 3,718 4500 3,332 2,722 3500 3000 2,086 2500 2000 1500 500 1000 4Q21 1Q22 2Q22 3Q22 4Q22 -500 4Q21 1Q22 2Q22
Slide 8: 4Q22 Financial Performance
4Q22 FINANCIAL PERFORMANCE ($ Millions QUARTERLY 4Q22 HIGHLIGHTS: 4Q22 4Q21 %Chg FY2022 FY2021 %Chg except EPS & ASP) • 29% greater home closing volume by overcoming Home closings 4,540 3,526 29% 14,106 12,801 10% supply chain challenges to close a substantial portion of our backlog ASP (closings) $
Slide 9: Strong Balance Sheet Provides Flexibility
STRONG BALANCE SHEET PROVIDES FLEXIBILITY Net Debt-to-Capital Reconciliation ($ Millions) Ample liquidity at December 31, 2022: (non-GAAP reconciliation) Dec 31, 2022 Dec 31, 2021 • $862M of cash Notes payable & other borrowings $1,151 $1,160 • Nothing drawn on $780M credit facility Stockholders’ eq
Slide 10: Land & Development Investment
LAND & DEVELOPMENT INVESTMENT Active Ending Community Count As of period ended Dec-31: 4Q22 4Q21 303 305 295 285 275 271 268 275 259 Total lots controlled 63,182 75,049 265 255 245 236 235 225 215 205 195 185 175 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Supply of lots (years) 4.5 5.9 Ending Active Communities
Slide 11: Guidance
GUIDANCE • 2,200-2,600 home closings • $940 million to $1.1 billion home closing revenue 1Q • Home closing gross margin of 21-22% 2023 • Effective tax rate of approximately 22-23% 11
Slide 12: Positioned for Growing Market Share
POSITIONED FOR GROWING MARKET SHARE Focus on entry-level & first move-up Resilient business model that is dynamic based on changing market conditions Prioritizing pace over price to achieve a 3-4 net sales per month target Rationalization of our land portfolio and pull back on new land deals Strong