Inv nves estor or Pr Prese sent ntation ation Ju June ne 20 2020 20 Build A Better Life
Dis isclaimer our business and investment strategy; current or future financing arrangements; and This presentation contains forward-looking availability of land to acquire and our ability to availability of qualified personnel and our statements within the meaning of the Private acquire such land on acceptable terms or at all; ability to retain our key personnel. You should Securities Litigation Reform Act of 1995 availability, terms and deployment of capital; not rely upon forward-looking statements as related to management’s expectations about continued or increased disruption in the predictions of future events. Although our future conditions. Actual business, market or availability of mortgage financing or the management believe that the expectations other conditions may differ materially from number of foreclosures in the market; shortages reflected in our forward-looking statements management’s expectations and, accordingly, of or increased prices for labor, land or raw are reasonable, we cannot guarantee that the may affect our sales and profitability or other materials used in housing construction; delays future results, levels of activity, performance results and liquidity. Actual results may differ in land development or home construction or events and circumstances described in the materially due to various other factors, resulting from adverse weather conditions or forward-looking statements will be achieved including: economic changes either other events outside our control; issues or occur. These forward-looking statements nationally or in the markets in which we concerning our joint venture partnerships; the speak only as of the date of this presentation. operate, including declines in employment, cost and availability of insurance and surety We assume no obligation to update any levels of volatility in mortgage interest rates bonds; changes in, or the failure or inability to forward-looking information contained in and inflation; continued or increased comply with, governmental laws and this presentation. Additional information downturn in the homebuilding industry; regulations; the timing of receipt of regulatory concerning these and other factors may be continued volatility and uncertainty in the approvals and the opening of projects; the found in our filings with the Securities and credit markets and broader financial markets; degree and nature of our competition; our Exchange Commission, including the “Risk our limited operating history; our future leverage and debt service obligations; restrictive Factors” in our most recent Annual Report operating results, financial condition and covenants relating to our operations in our on Form 10-K. liquidity; our business operations; changes in 2
The The New New Home Home Company Company Overv Overview iew New gener eration ion homebu omebuil ilder der Focus ocus on premi emier er loca cati tion ons s Strong relat St lation ionsh ships ips foun unded d in 2009 2009 in high-growth, land-constrained with land sellers/developers markets; California focus with and trade partners • Different by design expansion into Arizona • Initial capital from founders • IPO in 2014 Broa oad and nd flexible xible prod oduct uct Awar ward-wi winnin ing homes mes and nd capa pabil biliti ities s with an established comm mmunit nitie ies; s; expertise in high-end segment and a recent design and architecture emphasis on more affordable price segments 3
Recent Events Recent Events $150M 50M LTM ope perat ating ing Recent ecent sh shift to more ore Right ight si sized ed ov over erhe head d cash shflow low led d to $99 9 affor ordable dable pr price ce po point ints s cost stru truct cture ure through mil illi lion on de debt bt pay paydo down wn which have higher gross more efficient sales & and reduced Q1’20 debt - margins and absorption marketing spending to-capital ratio to 48.8% pace and lower personnel from 60.1% high costs watermark in Q1’19 (1,130 bps reduction) 4
The The New New Home Home Compa Company y Upda Update $529 29mm 582 582 $909k 09k Home Sales Revenue Deliveries ASP 21 21 2,46 463 $42m 2mm Average Selling Communities Lots Owned & Controlled Adj. EBITDA Note: All data for last twelve months as of 3/31/2020. 5
West West Coast Coast Focus Focused ed Home Sales Revenue 30% 30% 11% 11% Norther ern Arizona Calif lifornia ia $529M 59% 59% Souther ern Califo lifornia ia Wholly Owned Lots ts Owned & Controlled 27% 27% 38% Active vely ly Selling ng Communiti unities s in Southern hern Arizona Norther ern California nia, Northern n Calif ifor ornia nia, and Arizona ona Calif ifornia ia 2,463 Lots 35% 35% Souther ern Calif ifornia ia Note: All data as of 3/31/20. Home sales revenue for the last twelve months ended 3/31/20 6
In Inve vestment Hi Highlights 1 High Demand Submarkets 2 Recent Shift to More Affordable Price Points with Better Returns 3 Continued Focus on Cash Flow Generation 4 Land Management Strategy 5 Fee Business Adds Scale 7
High Dem High Demand and Submarkets Submarkets 1 Low level of resale homes and job creation are primary drivers of demand Mont onths of f Supply pply of Homes mes for or Res esale ale 4.5 U.S. 4.0 3.4 3.5 3.0 2.3 2.1 2.5 1.9 1.7 1.6 2.0 1.2 1.0 0.9 0.9 1.5 1.0 0.5 – San East Bay San Jose Sacramento Phoenix San Diego Orange Los Angeles Riverside Francisco County Emp mplo loymen ent-to to-Perm rmit it Rati atio 8.0 6.8 6.3 7.0 6.0 4.1 5.0 3.1 4.0 2.7 2.2 2.2 1.8 U.S. 3.0 1.2 1.6 2.0 1.0 – San San Jose San Diego Los Angeles Orange Riverside East Bay Phoenix Sacramento Francisco County Source: John Burns Real Estate Consulting. Note: Employment to permit ratio is defined as annual job growth divided by the number of building permits issued (both single-family and multi-family developments). Data is as of January 2020 Note: Months of supply of homes for resale is defined as the current supply of homes divided by the average number of homes sold per month. Data is as of March 2020 8
AS ASP P Migra Migratio tion to to Div Diversif sify y and and Meet Meet Deman Demand 2 • Addre ress sses a s affordabil ilit ity y and l leads t s to a de deeper r pool of of bu buyer yers • Improve oves s cycl ycle ti times s and ass sset t tu turn rns Nova, • Adds s dive versi sifica cati tion t n to Rancho Cucamonga, CA curr rrent p t product p t portf tfolio Wh Wholly lly Ow Owned ed Del eliv iver eries ies ASP SP 2016 2017 2018 2019 Q1’20 $2.0 2.0M $1.6M .6M $1.0M .0M $927k 7k $894k 94k 9
ASP Shifts ASP Shifts By By Submarket Submarket 2 OC/SD/LA Bay Area Sacramento Inland Empire AZ $3.0M $2.5 $2.5M $2.0M ASP in Millions $1.5M $1.2 $1.2 $1.1 $1.0M $0.9 $0.9 $0.8 $0.6 $0.6 $0.6 $0.5 $0.5 $0.5 $0.5M $0.0M 2017 2019 1 - 2 Year Estimate 10
Deliv Del iver ery y Concentrat Concentration ion by by Submarket Submarket 2 OC/SD/LA Bay Area Sacramento Inland Empire AZ 60% 51% 50% 42% % of Total Deliveries 40% 33% 30% 27% 24% 24% 22% 20% 20% 17% 13% 11% 9% 10% 5% 0% 2017 2019 1 - 2 Year Estimate 11
Success Success at at Lower Lower Pri Price ce Poi Points nts 2 Tidew ewat ater er (Lathr throp op, , CA) Pa Parson son (Corona ona, , CA) Avg. 2,700 Sq. ft. $460k ASP $560k ASP Avg. 1,700 Sq. ft. Pa Park k View ew (Ro Rockl klin, n, CA) Pres eston on (Vac acavi aville, e, CA) $515k ASP Avg. 1,850 Sq. ft. $560k ASP Avg. 1,900 Sq. ft. 12
Success Success at at Mov Move-up up Pri Price ce Poi Points nts 2 Silve ver r Crest t (Fol olsom som, , CA) $875k ASP Avg. 3,100 Sq. ft. St Sterl rling ng (Ranc ncho ho Missi ssion on Viej ejo, o, CA) $970k ASP Avg. 2,600 Sq. ft. 13
Contin Continue ued Focus Focus on on Cash Cash Flow Flow Gener Generat atio ion 3 • Com omplet pleted d $42M 2M of la land nd sa sales les in in 2019 • Gen ener erate ated d str trong g oper perat ating ing cash sh flow w and nd re reduce duced d lever verag age • Re Re-eva evalua uati ting g curr rren ent t de deals als and nd re reduc ducing ing land nd and d de devel velopm opment nt sp spend end in th the e near ear term rm • Focuse cused d on n sa sales les pa pace ce and d re reduc duced d sp specs cs • Right ight-si sized zed ov over erhead ad structure tructure 14
New New Commun Community ity Openi Openings s are are Focus Focused ed on on Entry Entry Lev Level 3 12 11 11 1 10 9 3 New Community Openings 8 6 6 7 2 4 7 4 2 2 0 2018 2019 2020E Entry Level 1st Move Up / Flat 2nd Move Up / Luxury 15
New New Commun Community ity Openi Openings s are are Focus Focused ed in in Arizona Arizona 3 12 11 11 2 10 9 New Community Openings 2 8 6 6 6 1 4 7 1 5 2 2 0 2018 2019 2020E Arizona Northern California Southern California 16
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