Inv nves estor or Pr Prese sent ntation ation Ju June ne 20 - - PowerPoint PPT Presentation

SLIDE 1

Build A Better Life

Inv nves estor

• r Pr

Prese sent ntation ation Ju June ne 20 2020 20

SLIDE 2

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management’s expectations about future conditions. Actual business, market or

• ther conditions may differ materially from

management’s expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ materially due to various other factors, including: economic changes either nationally or in the markets in which we

• perate, including

declines in employment, levels of volatility in mortgage interest rates and inflation; continued

• r

increased downturn in the homebuilding industry; continued volatility and uncertainty in the credit markets and broader financial markets;

• ur limited operating history; our future
• perating results, financial condition and

liquidity; our business operations; changes in

• ur

business and investment strategy; availability of land to acquire and our ability to acquire such land on acceptable terms or at all; availability, terms and deployment of capital; continued

• r

increased disruption in the availability of mortgage financing or the number of foreclosures in the market; shortages

• f or increased prices for labor,

land or raw materials used in housing construction; delays in land development or home construction resulting from adverse weather conditions or

• ther

events

• utside
• ur

control; issues concerning our joint venture partnerships; the cost and availability of insurance and surety bonds; changes in, or the failure or inability to comply with, governmental laws and regulations; the timing of receipt of regulatory approvals and the opening of projects; the degree and nature of our competition; our leverage and debt service obligations; restrictive covenants relating to our operations in our current or future financing arrangements; and availability of qualified personnel and our ability to retain our key personnel. You should not rely upon forward-looking statements as predictions of future events. Although our management believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance

• r events and circumstances described in the

forward-looking statements will be achieved

• r occur. These forward-looking statements

speak only as of the date of this presentation. We assume no obligation to update any forward-looking information contained in this presentation. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” in our most recent Annual Report

• n Form 10-K.

Dis isclaimer

2

SLIDE 3

The The New New Home Home Company Company Overv Overview iew

New gener eration ion homebu

• mebuil

ilder der foun unded d in 2009 2009

• Different by design
• Initial capital from founders
• IPO in 2014

Focus

• cus on premi

emier er loca cati tion

• ns

s

in high-growth, land-constrained markets; California focus with expansion into Arizona

Broa

• ad and

nd flexible xible prod

• duct

uct capa pabil biliti ities s with an established

high-end segment and a recent emphasis on more affordable price segments

St Strong relat lation ionsh ships ips

with land sellers/developers and trade partners

Awar ward-wi winnin ing homes mes and nd comm mmunit nitie ies; s; expertise in

design and architecture

3

SLIDE 4

Recent Recent Events Events

$150M 50M LTM ope perat ating ing cash shflow low led d to $99 9 mil illi lion

• n de

debt bt pay paydo down wn

and reduced Q1’20 debt- to-capital ratio to 48.8% from 60.1% high watermark in Q1’19 (1,130 bps reduction)

Recent ecent sh shift to more

• re

affor

• rdable

dable pr price ce po point ints s

which have higher gross margins and absorption pace

Right ight si sized ed ov

• ver

erhe head d cost stru truct cture ure through

more efficient sales & marketing spending and lower personnel costs

4

SLIDE 5

The The New New Home Home Compa Company y Upda Update

21 21

Average Selling Communities

582 582

Deliveries

$529 29mm

Home Sales Revenue

$42m 2mm

• Adj. EBITDA

5

$909k 09k

ASP

2,46 463

Lots Owned & Controlled

Note: All data for last twelve months as of 3/31/2020.

SLIDE 6

Arizona Souther ern Califo lifornia ia Norther ern Calif lifornia ia

11% 11% 59% 59%

$529M

30% 30%

Home Sales Revenue Wholly Owned Lots ts Owned & Controlled

Note: All data as of 3/31/20. Home sales revenue for the last twelve months ended 3/31/20

West West Coast Coast Focus Focused ed

Arizona Souther ern Calif ifornia ia Norther ern Calif ifornia ia

35% 35% 38% 27% 27%

2,463 Lots

6

Active vely ly Selling ng Communiti unities s in Southern hern California nia, Northern n Calif ifor

• rnia

nia, and Arizona

• na

SLIDE 7

In Inve vestment Hi Highlights

High Demand Submarkets Recent Shift to More Affordable Price Points with Better Returns Continued Focus on Cash Flow Generation Land Management Strategy Fee Business Adds Scale 1 2 3 4 5

7

SLIDE 8

U.S. 3.4 U.S. 1.6

0.9 0.9 1.0 1.2 1.6 1.7 1.9 2.1 2.3

– 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

San Francisco East Bay San Jose Sacramento Phoenix San Diego Orange County Los Angeles Riverside

High High Dem Demand and Submarkets Submarkets

1

Mont

• nths of

f Supply pply of Homes mes for

• r Res

esale ale Emp mplo loymen ent-to to-Perm rmit it Rati atio

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

• f 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

Low level of resale homes and job creation are primary drivers of demand 6.8 6.3 4.1 3.1 2.7 2.2 2.2 1.8 1.2

– 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

San Francisco San Jose San Diego Los Angeles Orange County Riverside East Bay Phoenix Sacramento 8

SLIDE 9

AS ASP P Migra Migratio tion to to Div Diversif sify y and and Meet Meet Deman Demand

• Addre

ress sses a s affordabil ilit ity y and l leads t s to a de deeper r pool of

• f bu

buyer yers

• Improve
• ves

s cycl ycle ti times s and ass sset t tu turn rns

• Adds

s dive versi sifica cati tion t n to curr rrent p t product p t portf tfolio

2

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

Nova, Rancho Cucamonga, CA

SLIDE 10

$2.5 $1.2 $1.1

$0.9 $0.9 $0.8 $0.6 $0.6 $0.6 $0.5 $0.5 $1.2 $0.5

$0.0M $0.5M $1.0M $1.5M $2.0M $2.5M $3.0M

2017 2019 1 - 2 Year Estimate

OC/SD/LA Bay Area Sacramento Inland Empire AZ

ASP in Millions

ASP ASP Shifts Shifts By By Submarket Submarket

2

10

SLIDE 11

51% 42% 20%

27% 13% 5% 22% 24% 33% 11% 17% 9% 24%

0% 10% 20% 30% 40% 50% 60%

2017 2019 1 - 2 Year Estimate

OC/SD/LA Bay Area Sacramento Inland Empire AZ

% of Total Deliveries

Del Deliv iver ery y Concentrat Concentration ion by by Submarket Submarket

2

11

SLIDE 12

Tidew ewat ater er (Lathr throp

• p,

, CA) $560k ASP

Success Success at at Lower Lower Pri Price ce Poi Points nts

2

Pa Parson son (Corona

• na,

, CA) $460k ASP

• Avg. 1,700 Sq. ft.
• Avg. 2,700 Sq. ft.

12

$560k ASP Pa Park k View ew (Ro Rockl klin, n, CA) Pres eston

• n (Vac

acavi aville, e, CA) $515k ASP

• Avg. 1,900 Sq. ft.
• Avg. 1,850 Sq. ft.

SLIDE 13

St Sterl rling ng (Ranc ncho ho Missi ssion

• n Viej

ejo,

• , CA)

$970k ASP

Success Success at at Mov Move-up up Pri Price ce Poi Points nts

2

• Avg. 2,600 Sq. ft.

13

Silve ver r Crest t (Fol

• lsom

som, , CA) $875k ASP

• Avg. 3,100 Sq. ft.

SLIDE 14

Contin Continue ued Focus Focus on

• n Cash

Cash Flow Flow Gener Generat atio ion

• Com
• mplet

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

• pment

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

• ver

erhead ad structure tructure

3

14

SLIDE 15

15

New New Commun Community ity Openi Openings s are are Focus Focused ed on

• n Entry

Entry Lev Level

3

4 7 2 2 3 7 1 9 6 11 11

2 4 6 8 10 12

2018 2019 2020E

Entry Level 1st Move Up / Flat 2nd Move Up / Luxury

New Community Openings

SLIDE 16

16

New New Commun Community ity Openi Openings s are are Focus Focused ed in in Arizona Arizona

3

2 7 1 5 2 6 1 2 9 6 11 11

2 4 6 8 10 12

2018 2019 2020E

Arizona Northern California Southern California

New Community Openings

SLIDE 17

Land Land Ma Mana nagem emen ent Str trateg ategy y

4

• 2,46

463 3 lots ts owne ned d and nd contr

• ntroll

lled ed as s

• f Mar

arch 2020 20

• Per

Percen centage e cont

• ntroll

lled ed via ia opt ptio ion n is is at t high gher r end nd of pe peer er group

• up
• $14M

4M of de depos posit its s cont ntrols ls $100M 00M

• f land

nd or r 1,053 053 lots ts as s of Mar arch 2020 20

57% 7%

Source: Company filings. (1) Data in the above graphs is as of respective 2019 fiscal years.

1.0x 0x

1.4x

Lo Lots Optio Optioned d as as a a % % of

• f Tot
• tal Whol

Wholly Own Owned ed Lo Lots (1)

(1)

– 20% 40% 60% HOV DHI MHO CCS NWHM PHM WLH TOL MTH MDC KBH LEN BZH TPH TMHC

42% 2% 37% 7%

17

SLIDE 18

$2.7 2.7 $5. 5.1 $7 $7.5 .5 $7 $7.4 .4 $6.7 6.7 $4.0 4.0

2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019

Fee Fee Build Buildin ing Cont Contributio tion n Mar Margin gin1

➢ Com

• mplem

plement nts s wholl

• lly

y owne ned d homebuilding

• mebuilding
• Increases market scale
• Strengthens purchasing power
• Leverages existing overhead

➢ Supp

pple lemen ental income come strea tream m utilizing nominal capital

➢ Evaluat

aluating ing new ew fee ee de deals als with th oth ther r land nd owne ners

5

($ in Millions)

(1) Excludes joint venture management fees.

206 537 644 820 600 309 Deliveries

Fee Fee Build Buildin ing Add Adds s Sca Scale le to to Operat Operatio ions ns

18

SLIDE 19

Total l Comb mbined ined Del eliveri iveries es (1)

(1)

Fee Fee Build Buildin ing Add Adds s Sca Scale le to to Operat Operatio ions ns

(1) Includes wholly owned, fee building and homebuilding unconsolidated joint ventures for the last twelve months as of 3/31/2020. Excludes land development unconsolidated joint ventures.

5

Fee Building Joint Venture Wholly Owned

62% 62% 13% 13% 25% 25% 936 936 Deliveries

19

SLIDE 20

Recent Fi t Financi cial P l Perfo form rmance

20

SLIDE 21

Q1’20 Financials

(1) For reconciliation of this non-GAAP financial measure, see appendix.

21

Q1 2020 Q1 2019 YoY Growth % Operating Statistics

Monthly Absorption

2.0 1.7 18%

Net Orders

132 112 18%

Deliveries

107 99 8%

Deliveries ASP

$894k $1,002k (11%)

(Dollars in millions)

Financial Statistics

Home Sales Revenue

$95.7 $99.2 (4%)

Land Sales Revenue

$0.1

• 100%

Fee Revenue

$36.2 $19.7 84%

Total Revenue

$132.0 $118.8 11%

LTM Operating Cashflow

$150.8 ($122.5) +$273.3

LTM Debt Reduction / (Increase)

$99.1 ($80.6) +$179.7

SLIDE 22

LTM LTM Finan Financial ials s

(1) For reconciliation of this non-GAAP financial measure, see appendix. (2) Adjusted homebuilding GM% excludes interest in COS and impairments, if any. For reconciliation of this non-GAAP financial measure, see appendix..

22

LTM Q1 2020 LTM Q1 2019 YoY Growth % Operating Statistics

Monthly Absorption

2.2 2.1 5%

Net Orders

552 507 9%

Ending Community Count

22 22 0%

Backlog

174 204 (15%)

Backlog ASP

$748k $1,042k (28%)

Deliveries

582 513 13%

Deliveries ASP

$909k $1,021k (11%)

(Dollars in millions)

Financial Statistics

Home Sales Revenue

$528.8 $523.8 1%

Land Sales Revenue

$41.8

• 100%

Fee Revenue

$111.9 $139.4 (20%)

Total Revenue

$682.5 $663.2 3%

Homebuilding GM% (excl. imp.) 1

11.6% 13.4% (180 bps)

• Adj. Homebuilding GM% 2

16.8% 17.4% (60 bps)

SG&A% (excl. restructuring)

11.3% 12.1% (80 bps)

Adjusted EBITDA 1

$41.5 $42.0 (1%)

SLIDE 23

(Dollars in millions)

Mar 31, 2020 Dec 31, 2019

Assets Cash

$88.3 $79.4

Inventory

$399.0 $433.9

JV Investment

$29.2 $30.2

Total Assets

$579.9 $603.2

Liabilities & Equity Revolver

• Senior Notes, net

$300.5 $304.8

Total Debt

$300.5 $304.8

Total Liabilities

$357.6 $370.4

Total Equity

$222.2 $232.6

➢ $303M senior notes due Mar ’22

• Repurchased $22M starting in

Q1’19

➢ $130M unsecured revolving

credit facility

• Matures in Mar ’21

(1) For reconciliation of this non-GAAP financial measure, see appendix. (2) Excludes Joint Venture investment

Balan Balance ce Sheet Sheet

23

Mar 31, 2020 Dec 31, 2019 Change

Metrics Debt-to-Capital

57.5% 56.7%

80 bps Net Debt-to-Capital (1)

48.8% 49.2%

(40 bps) Debt-to-LTM Adj. EBITDA(1)

7.2x 7.4x (0.1x)

Net Debt-to-LTM Adj. EBITDA(1)

5.1x 5.4x (0.3x)

LTM Interest Coverage

1.5x 1.4x 0.1x

Cash & Inventory to Debt(2)

1.6x 1.7x (0.1x)

SLIDE 24

Conclu Conclusion ion

Focus cus on Cash Flow Gener erat atio ion Shif ift t to

• Lower

er Price ice Points ints with th Bett etter er Returns eturns Unique que Land Managem agement ent St Strat rategy egy High gh Demand and Subm ubmar arkets Fee Busines siness s Ad Adds ds Sca cale le

24

SLIDE 25

Appendix ix

25

SLIDE 26

Ac Active tive Whol Wholly ly Owne wned Comm mmun uniti ities es

Southern thern Califor lifornia nia

(1) Homes not closed as of March 31, 2020 (2) Actual revenue may vary

26

ASP Remaining Future Revenue(2)

($ in 000's)

Homes(1)

($ in millions)

Agave Brea $690 80 25 $17 Cobalt Rancho Mission Viejo $610 72 17 $10 Marywood Orange $1,960 40 14 $27 Parson Corona $460 88 50 $23 Promontory Bluffs San Diego $1,180 40 11 $13 Promontory Heights San Diego $830 93 42 $35 Nova Rancho Cucamonga $400 135 135 $54 Seabluff Playa Vista $1,240 75 10 $12 Seville Ontario $600 75 21 $13 Sky Ranch Ladera Ranch $3,020 28 4 $12 Sterling Rancho Mission Viejo $970 60 60 $58 Whitney Corona $630 41 20 $13 $700 $700 827 827 4 409 $288 $288

Homes Southern California Location Project

SLIDE 27

Ac Active tive Whol Wholly ly Owne wned Comm mmun uniti ities es

Nort rther hern n Califor lifornia nia and Ari rizo zona na

ASP Remaining Future Revenue(2)

($ in 000's)

Homes(1)

($ in millions)

Bristol Vacaville $590 64 48 $29 Gala Davis $620 120 67 $42 Canyon View Rocklin $810 92 41 $33 Ellison Park Milpitas $1,230 114 17 $21 Oxford Vacaville $620 80 63 $39 Park View Rocklin $560 60 36 $20 Preston Vacaville $520 87 76 $40 Sheffield Vacaville $560 120 110 $62 Silver Crest Folsom $880 108 108 $95 Tidewater Lathrop $600 131 28 $17 $670 $670 976 976 5 594 $397 $397 Belmont Gilbert $1,140 53 4 $5 Icon Scottsdale $1,880 24 12 $23 $1,690 77 77 16 16 $27 $27

Arizona Northern California Location Homes Project

27

(1) Homes not closed as of March 31, 2020 (2) Actual revenue may vary

SLIDE 28

Fu Future ture Whol Wholly ly Owned wned Comm mmun uniti ities

(1) Actual base pricing may vary.

• Est. Average

Base Price(1)

($ in 000's)

Nuvo at Piemonte Attached Ontario Q3'21 $420 72 Nuvo at Parkside Paseo Detached Ontario Q3'21 $400 90 Nuvo at Parkside 2 Story Sm Detached Ontario Q3'21 $360 51 Nuvo at Parkside 2 Story Lrg Detached Ontario Q3'21 $410 111 Nuvo at Parkside 8 Pack Detached Ontario Q3'21 $450 52 $410 $410 376 376 Artisan Square Attached Natomas Q2'20 $320 74 Gold Hill Detached Folsom Q3'21 $790 77 $560 $560 151 151 Mosaic Row Towns Attached Gilbert Q2'20 $280 87 Mosaic Backyard Towns Attached Gilbert Q2'20 $330 69 Mosaic Flats Attached Gilbert Q2'20 $310 66 Mariposa Cottages Detached Chandler Q3'20 $430 57 Mariposa Courts Detached Chandler Q3'20 $360 36 Mariposa Towns Attached Chandler Q3'20 $310 106 Centella at Estrella Detached Goodyear Q3'20 $300 80 Element at Eastmark Detached Mesa Q1'21 $310 135 $320 $320 636 636 $380 $380 1163 1163

Homes Estimated Opening Arizona Northern California Project Location Product

28

SLIDE 29

Remaining Homes(1)

Como Single-Family 85 16 Como Ext Single-Family 127 121 Lago Courtyard 123 58 Terra Single-Family 135 56 Verdi Courtyard 95 34 Vivo Courtyard 149 52 Ravello Single-Family 152 118 866 866 455 455 Marin Courtyard 157 9 Marin Ext. Courtyard 167

• 324

324 9

Los Olivos

Barcelona Courtyard 169 111 Highland Single-Family 168 155 Hillside Single-Family 152 137 Bluffs Single-Family 153 132 473 473 424 424 Ebb Tide Courtyard 61 33 Great Park Single-Family 38 38 99 99 71 71

Total

1,070

Other Eastwood Homes Project Product Type Orchard Hills Portola Springs

Active Active Fee Fee Build Buildin ing Commun Communiti ities

29

(1) Homes not closed as of March 31, 2020

SLIDE 30

His Histo toric rical l Fina Financ ncia ial l Su Summ mmar ary

($ in Millions, except Delivery ASP and Homebuilding GM per Delivery)

(1) For reconciliation of these non-GAAP financial measures, reference the appendix. (2) Includes homebuilding, land sales and JV investment impairments

2014 2015 2016 2017 2018 2019

Net New Orders

79 174 253 412 536 532

Active Community Count

4 10 15 17 20 21

Deliveries (Homebuilding)

53 148 250 341 498 574

Delivery ASP (000s)

$1,058 $1,893 $2,032 $1,645 $1,012 $927

Home Sales Revenue

$56.1 $280.2 $507.9 $560.8 $504.0 $532.4

Growth %

57% 400% 81% 10%

• 10%

6%

Land Sales Revenue

• $41.7

Fee Building Revenue

$93.6 $149.9 $186.5 $190.3 $163.5 $95.3

Total Revenue

$149.7 $430.1 $694.5 $751.2 $667.6 $669.3

Growth %

80% 187% 61% 8%

• 11%

0%

Homebuilding GM

$9.3 $45.0 $72.0 $85.4 $57.5 $54.5

Homebuilding GM %

16.5% 16.1% 14.2% 15.2% 11.4% 10.2%

Adjusted Homebuilidng GM (1)

$9.8 $47.5 $79.7 $98.7 $86.2 $89.1

Adjusted Homebuilidng GM % (1)

17.4% 16.9% 15.7% 17.6% 17.1% 16.7%

Homebuilding GM per Delivery (000s)

$174.5 $303.9 $288.2 $250.5 $115.5 $94.9

Adjusted Homebuilding GM per Delivery (000s) (1)

$184.6 $320.9 $318.9 $289.4 $173.0 $155.2

Impairments (2)

• $3.5

$2.2 $30.0 $13.7

Fee Building GM

$4.5 $10.2 $8.4 $5.5 $4.4 $2.1

Fee Building GM %

4.8% 6.8% 4.5% 2.9% 2.7% 2.2%

JV Income

$8.4 $13.8 $7.7 $0.9

• $19.7
• $3.5

SG&A

$16.4 $34.0 $52.6 $59.0 $62.0 $62.1

SG&A as a % of Home Sales Revenue

29.2% 12.1% 10.4% 10.5% 12.3% 11.7%

Adjusted EBITDA (1)

$6.6 $46,209.0 $43.1 $50.1 $39.9 $41.4

Pretax Income

$5.0 $33.9 $33.9 $32.5

• $20.3
• $11.8

Net Income

$4.8 $21.7 $21.0 $17.2

• $14.2
• $8.0

30

SLIDE 31

Reconc Reconcil ilia iatio tion of

• f Non

Non-GA GAAP AP Finan Financi cial l Measu Measures

The following table reconciles the Company’s ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debt-to-capital is a relevant financial measure for management and investors to understand the leverage employed in our operations and as an indicator of the Company’s ability to obtain financing.

(1)The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total notes payable plus equity, exclusive of noncontrolling interest. (2)The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is notes payable less cash to the extent necessary to reduce the debt balance to zero) by net total capital, exclusive of noncontrolling interest. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-net capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain

• financing. We believe that by deducting our cash from our notes payable, we provide a measure of our indebtedness that takes into account our cash liquidity. We believe this

provides useful information as the ratio of debt-to net capital does not take into account our liquidity and we believe that the ratio net of cash provides supplemental information by which our financial position may be considered. Investors may also find this to be helpful when comparing our leverage to the leverage of our competitors that present similar information.

March 31, December 31, 2020 2019 Total Debt 300,479 $ 304,832 $ Equity, exclusive of non-controlling interest 222,224 232,647 Total capital 522,703 $ 537,479 $ Ratio of debt-to-capital (1) 57.5% 56.7% Total Debt 300,479 $ 304,832 $ Less: cash. cash equivalents and restricted cash 88,287 79,431 Net debt 212,192 225,401 Equity, exclusive of non-controlling interest 222,224 232,647 Total capital 434,416 $ 458,048 $ Ratio of net debt-to-capital (2) 48.8% 49.2% (Dollars in thousands)

31

SLIDE 32

Reconc Reconcil ilia iatio tion of

• f Non

Non-GAAP GAAP Finan Financi cial al Measur Measures es

See the table below reconciling this non-GAAP financial measure to homebuilding gross margin, the nearest GAAP equivalent.

(1)Homebuilding gross margin before impairments and adjusted homebuilding gross margin are non-GAAP financial measures. We believe this information is meaningful as it isolates the impact that home sales impairments and leverage have on homebuilding gross margin and permits investors to make better comparisons with our competitors who also break out and adjust gross margins in a similar fashion.

32

Quarter Ended December 31, 2020 % 2019 % Home sales revenue 95,659 $ 100.0% 99,186 $ 100.0% Cost of home sales 84,722 88.6% 86,569 87.3% Homebuilding gross margin 10,937 11.4% 12,617 12.7% Add: Home sales impairment

• 0.0%
• 0.0%

Homebuilding gross margin before impairments (1) 10,937 11.4% 12,617 12.7% Add: interest in cost of home sales 6,146 6.4% 4,852 4.9% Adjusted homebuilding gross margin 17,083 $ 17.9% 17,469 $ 17.6%

Year Ended December 31, 2019 % 2018 % 2017 % 2016 % 2015 % 2014 % Home sales revenue 532,352 $ 100% 504,029 $ 100% 560,842 $ 100% 507,949 $ 100% 280,208 $ 100% 56,094 $ 100% Cost of home sales 477,857 89.8% 446,530 88.6% 475,413 84.8% 435,909 85.8% 235,231 83.9% 46,843 83.5% Homebuilding gross margin 54,495 10.2% 57,499 11.4% 85,429 15.2% 72,040 14.2% 44,977 16.1% 9,251 16.5% Add: Home sales impairment 8,300 1.6% 10,000 2.0% 2,200 0.4% 2,350 0.5%

• 0.0%
• 0.0%

Homebuilding gross margin before impairments (1 62,795 11.8% 67,499 13.4% 87,629 15.6% 74,390 14.6% 44,977 16.1% 9,251 16.5% Add: interest in cost of home sales 26,311 4.9% 18,678 3.7% 11,052 2.0% 5,331 1.0% 2,511 0.9% 532 0.9% Adjusted homebuilding gross margin 89,106 $ 16.7% 86,177 $ 17.1% 98,681 $ 17.6% 79,721 $ 15.7% 47,488 $ 16.9% 9,783 $ 17.4%

SLIDE 33

Reconc Reconcil ilia iatio tion of

• f Non

Non-GAAP GAAP Finan Financi cial al Measur Measures es

A reconciliation of net income attributable to us to adjusted EBITDA, adjusted EBITDA margin percentage and the ratio of adjusted EBITDA to total interest incurred is provided in the following table: 33

LTM March 31, Quarter Ended March 31, 2020 2019 2020 2019

($ in Thousands) ($ in Thousands)

Net income (14,490) $ (15,566) $ (8,476) $ (1,987) $ Add: Interest amortized to cost of sales and other expense 29,246 $ 20,766 6,864 4,852 Provision for income taxes (13,088) $ (5,879) (9,937) (664) Depreciation and amortization 8,146 $ 8,265 1,845 2,656 Amortization of equity-based compensation 2,283 $ 2,814 589 566 Cash distributions of income from unconsolidated joint ventures 114 $ 260

• 260

Severance charges

• $

1,788

• 1,788

Non-cash impairments & adandonments 24,325 $ 10,176 14,036 5 Less: Gain from early extinguishment of debt (624) $ (417) 123 (417) Gain from notes payable principal reduction

• $
• Income from unconsolidated joint ventures

5,624 $ 19,804 1,937 (184) Adjusted EBITDA 41,537 $ 42,011 $ 6,981 $ 6,875 $ Total Revenue 682,534 $ 663,183 $ 132,033 $ 118,848 $ Adjusted EBITDA margin percentage 6.1% 6.3% 5.3% 5.8% Interest Incurred 27,438 $ 29,422 $ 6,380 $ 7,761 $ Ratio of adjusted EBITDA to total interest incurred 1.5x 1.4x 1.1x 0.9x

SLIDE 34

Reconc Reconcil ilia iatio tion of

• f Non

Non-GAAP GAAP Finan Financi cial al Measur Measures es

A reconciliation of net income attributable to us to adjusted EBITDA, adjusted EBITDA margin percentage and the ratio of adjusted EBITDA to total interest incurred is provided in the following table: 34

Year Ended December 31, 2019 2018 2017 2016 2015 2014

($ in Thousands) ($ in Thousands)

Net income (8,001) $ (14,230) $ 17,141 $ 20,926 $ 21,378 $ 4,757 $ Add: Interest amortized to cost of sales and other expense 27,234 19,908 11,057 5,331 2,511 532 Provision for income taxes (3,815) (6,075) 15,390 13,024 12,533 246 Depreciation and amortization 8,957 6,631 449 511 473 381 Amortization of equity-based compensation 2,260 3,090 2,803 3,471 3,884 2,322 Cash distributions of income from unconsolidated joint ventures 374 715 1,588 3,742 18,477 6,040 Severance charges 1,788

• Non-cash impairments & adandonments

10,294 10,206 2,583 4,080 635 754 Less: Gain from early extinguishment of debt (1,164)

• Gain from notes payable principal reduction
• (250)
• Income from unconsolidated joint ventures

3,503 19,653 (866) (7,691) (13,767) (8,443) Adjusted EBITDA 41,430 $ 39,898 $ 50,145 $ 43,144 $ 46,125 $ 6,589 $ Total Revenue 669,349 $ 667,566 $ 751,166 $ 694,456 $ 430,099 $ 149,657 $ Adjusted EBITDA margin percentage 6.2% 6.0% 6.7% 6.2% 10.7% 4.4% Interest Incurred 28,819 $ 28,377 $ 21,978 $ 7,484 $ 4,722 $ 1,857 $ Ratio of adjusted EBITDA to total interest incurred 1.5x 1.4x 2.3x 5.8x 9.8x 3.5x

SLIDE 35

Build A Better Life

35