Greetings, and welcome to the TRI Pointe Group Second Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Doug Bauer, Chief Executive Officer. Thank you, sir. You may begin.

Good morning, and welcome to TRI Pointe Group's earnings conference call. Earlier today, the company released its financial results for the second quarter of 2020. Documents detailing these results, including a slide deck under the Presentations tab, are available on the company's Investor Relations website. 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. A discussion of risks and uncertainties and other important 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 GAAP measures can be accessed through TRI Pointe's website and its SEC filings. Hosting the call today along with myself is 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. Again, I want to thank all of you for joining us today, as we go over our results for the second quarter of 2020, discuss our ongoing strategic initiatives and provide some color on our company's outlook. I hope all of you and your families are well and safe. Our thoughts and gratitude continue to go out to those across the country who are on the frontlines risking their own safety to care for others. While COVID-19 continues to impact many areas of the country, there is positive news coming from the homebuilding industry, and within TRI Pointe. TRI Pointe Group generated net income of $56.5 million in the second quarter or $0.43 per diluted share, representing a 139% improvement over the year-ago period. Excluding the impact of costs related to the early extinguishment of debt and a workforce reduction plan, net income was $65.9 million or $0.51 per diluted share. This significant year-over-year jump in earnings came as a result of double-digit revenue growth and considerable margin expansion, as our teams did an excellent job of delivering homes and maintaining price discipline. Following the initial shock to the economy brought about by the COVID-19 pandemic, order activity steadily improved, and then gained momentum as the quarter progressed, culminating in a 28% year-over-year improvement in orders for the month of June, including a 36% increase in California. This momentum has continued into July with net orders up over 40% year-over-year for the first three weeks of the month, with California orders up over 70%. We believe there are several demand factors driving this improvement. First, it is evident that the pandemic has created a heightened interest in single-family home ownership. According to the America at Home study conducted by Housing Experts in April, 46% of respondents who are renters said COVID-19 has made them more inclined to buy a home. This means potential increased housing demand as households switch from being renters to owners. And according to this study, 72% of respondents desire a single-family detached home over any multifamily housing type. Whether this interest stems from an exodus from high-density urban locations, the rise in the number of people working from home or a desire for more living space, home ownership has become more of a priority for many Americans. We believe this change in consumer behavior is not a short-term phenomenon but rather a secular shift that will have a long-lasting impact on our industry, and will specifically benefit TRI Pointe both short and long-term. Second, it is important to remember that housing industry fundamentals were very strong prior to the pandemic. These fundamentals included strong job growth, demand from all age cohorts, low inventory for both new and resale homes, and very favorable interest rates. These dynamics, other than job growth, are still here today, but have additionally been supported by historic fiscal and monetary response to the pandemic by the federal government. These dynamics and demographic shifts have contributed to the industry's results and resiliency. Third, TRI Pointe Group’s continued emphasis on homebuilding design and innovation has been another key factor in our recent sales success. Due to the pandemic, Americans are spending more time at home than they ever have, and as a result, are willing to pay a premium for features and amenities that cater to their family’s needs and lifestyles. We believe this trend plays to our strengths as TRI Pointe has always been at the forefront of new home design, driven by extensive consumer research and a consistent focus on product differentiation. The pandemic has led consumers to look more critically at the livability of their home in terms of safety, technology, flexibility, and comfort, and we feel our home offerings are ideally suited to take advantage of this trend. We continue to pursue a balanced strategy with respect to our product offerings, with a growing emphasis on the more affordable segments of the market. In fact, an increasing number of our communities feature homes that cater to entry-level and first-move-up buyers. These communities are designed to address the affordability issues that exist in many markets, through smaller lot sizes and efficient floor plans while still providing premium home design. As an example, in California, where the cost of land is high and supply is constrained, we have repositioned our product offerings to better address the affordability challenges in the state. Year-to-date, 45% of our orders in California had a base price of $500,000 or less, and another 31% had a base price between $500,000 and $750,000. This strategy has served us well as California has generated to-date absorption pace of 3.8 homes per community per month. This shift is part of a larger strategy, which aims to diversify our operations from both a product and geographic standpoint, through the introduction of more affordably priced communities from our longer dated assets in California, and the continued expansion into early-stage markets such as Sacramento, Austin, Dallas, and the Carolinas. Deliveries from these markets will make up an increasingly higher percentage of our company's total, which will lower our overall ASP profile and increase our inventory terms. We believe this gradual transition to increasing deliveries in new markets and more affordable price points will give us more opportunities for growth in a less capital-intensive manner, and will lead to a better and more consistent return profile over time. Another way we're looking to improve our returns is through a more streamlined operating model. In May, we made the difficult decision to implement a reduction of workforce stemming from the existing and future impacts of the pandemic on our business. These cuts are expected to reduce our overhead expenses by $21 million this year and by $33 million on an annualized basis. And while our businesses rebounded sharply since the implementation of this headcount reduction, we do not anticipate a commensurate return to prior staffing levels. The pandemic has also given us a chance to advance how we conduct our sales efforts. In an era of shelter-in-place orders and social distancing, consumers are becoming increasingly comfortable shopping from home. We had anticipated that future sales would shift to an online model and had already invested significantly in this technology. This has enabled us to quickly pivot to conducting more of our sales efforts virtually and setting up in-person one-on-one appointments at our communities, which convert into sales at a higher rate than walk-in traffic. Our online new lease grew by 8% in the second quarter compared to the first quarter, despite a 51% reduction in digital advertising spend during that same time. 48% of our net orders in the second quarter were driven through virtual and one-on-one appointments, resulting from engagement with our online sales team, a 21% increase compared to the first quarter. We have found this new sales model to be a much more efficient way to sell homes and believe that this shift in consumer behavior will be long-lasting. In summary, the COVID-19 pandemic has created a number of challenges for our industry, but also a number of opportunities, and TRI Pointe Group is well-positioned to make the most of these opportunities thanks to our unique home offerings, our enhanced online sales capabilities, and our very strong balance sheet. Now, I'd like to turn it over to Glenn, who will provide more detail about the quarter and our financial results.

Thanks, Doug, and good morning, everyone. I'm going to highlight some of our results and key financial metrics for the second quarter and then finish my remarks with our expectations and outlook for the third quarter and full year 2020. At times, I'll be referring to certain information from our slide deck that is posted on our website, as mentioned earlier. Slide 6 of the earnings call deck provides some of the financial and operational highlights from our second quarter. The impacts of COVID-19 on orders were significant to start the quarter, with the month of April orders down 54% year-over-year. We began to see demand increase in late April and early May and finished the quarter strong, resulting in an overall order decline of only 11%. Specifically, for the month of June, we achieved our second-highest order month in the company's history, recording 624 net new home orders, which was a 28% increase year-over-year and was driven by an absorption rate of 4.3 homes per community per month, compared to 3.3 a year ago. The increase in absorption rates for the month of June was broad-based across all reporting segments. The cancellation rate for the second quarter was 21% and went from a high point in April of 36%, down to only 13% for the month of June. Turning to deliveries, we delivered 1,229 homes during the quarter, which was a 9% increase year-over-year. This resulted in home sales revenue of $767 million, which was an 11% increase year-over-year on an average selling price of $624,000 per home. Our homebuilding gross margin percentage for the quarter was 21.6%, representing a 460 basis point improvement year-over-year. The increase in gross margin percentage was across all reporting segments and reflective of strong market dynamics. In addition, there was a higher percentage of revenue from our long-term California assets compared to the prior year. SG&A expense as a percentage of home sales revenue was 10.8%, which was a 130 basis point improvement year-over-year, as a result of the leverage gains from the increase in revenue and the savings from the reduction in force that Doug mentioned earlier. Net income for the quarter was $57 million or $0.43 per diluted share, which was an increase of 139% compared to the prior year. The reduction in force that occurred during the quarter resulted in $5.5 million of severance-related charges. In addition, during the quarter, the company refinanced a portion of the $300 million senior notes that were due in 2021, which resulted in $6.9 million of early debt extinguishment costs. Excluding these items, earnings per diluted share was $0.51 for the quarter. Moving on to our active selling communities, during the second quarter, the company opened 12 new communities and closed 10 to end the quarter with 145 active selling communities. For the remainder of the year, we anticipate opening approximately 15 new communities, and depending on order demand, potentially closing between 25 and 35 communities. This would result in an ending active community count in the range of 125 to 135. At the outset of COVID and the related stay-at-home orders, our focus prudently shifted to managing our balance sheet and preserving cash. As a result, we paused development spending for certain new communities and land acquisition for future communities. We have since restarted those efforts, but due to the pause, the opening of approximately 15 new communities moved from the back half of 2020 to the beginning of 2021. We expect to see more meaningful community count growth in 2021 and 2022, as we grow communities in our existing markets and continue to ramp up our early start divisions of Sacramento, Austin, Dallas, and the Carolinas. At quarter-end, we owned or controlled approximately 30,000 lots, of which 27% were under option versus 20% a year ago. We have made solid strides on our goal of reducing our own lots by continuing to deliver homes from our long-term California assets and increasing option lots by acquiring more lots in capital-efficient markets like Texas and the Carolinas. A detailed breakdown of our lots owned will be reflected in our Form 10-Q, which will be filed later today. In addition, there was a summary of lots owned or controlled by state on Page 22 in the slide deck. Looking at the balance sheet, at quarter-end we had approximately $3 billion of real estate inventory. Our total outstanding debt was $1.4 billion, resulting in a ratio of debt to capital of 39.4%, and a ratio of net debt to net capital of 30.2%. During the quarter, the company issued $350 million of senior notes due in 2028. The proceeds were used to pay down through a tender offer $216 million of our $300 million in senior notes that were due in 2021. The remaining $84 million of senior notes were redeemed in July. As a result of this redemption, we incurred an additional $3.4 million of debt extinguishment costs in July. During the second quarter, the company generated $250 million in positive cash flow from operations, and ended the quarter with over $1 billion of liquidity, consisting of $475 million of cash on hand, and $559 million available under our unsecured revolving credit facility. Now I'd like to summarize our outlook for the third quarter and full year. While there's still significant uncertainty related to COVID-19, and its potential impacts both short and long-term on the economy, we want to provide some guidance on our expected results. For the third quarter of 2020, the company anticipates delivering between 1,100 and 1,200 homes at an average sales price of $620,000 to $630,000. Homebuilding gross margins are expected to be in the range of 20% to 21%, and SG&A as a percentage of home sales revenue is expected to be in the range of 10.2% to 10.7% for the third quarter. Lastly, the company expects an effective tax rate for the third quarter of 2020 to be approximately in the range of 25% to 26%. For the full year, we anticipate delivering between 4,400 and 4,700 homes at an average sales price of $620,000 to $630,000. Homebuilding gross margin is expected to be in the range of 20% to 21%, and for the full year while our SG&A expense as a percentage of home sales revenue is expected to be in the range of 11% to 11.5%. Finally, the company is forecasting its effective tax rate for the full year to be in the range of 24% to 25%. I will now turn the call back over to Doug for some closing remarks.

Well, thanks Glenn. In conclusion, I'm very pleased with our performance this quarter, particularly in light of what our expectations were three months ago, when we took precautionary measures to preserve capital and prepare for the possibility of a protracted slowdown. However, market dynamics during the pandemic have benefited the new home market. Our strategic positioning, diversified product offering, and experienced management team has us well-positioned for both short- and long-term success. We continue to be vigilant and disciplined with our capital, as there are still many uncertainties relative to the pandemic and its impact on the economy. But based on our team's experience and how we were able to adapt to the changing environment in the second quarter, I am confident that TRI Pointe Group has the right people, strategy, and operating discipline in place to succeed and overcome any challenges we may encounter in the future. That concludes my prepared remarks, and now we'd be happy to take your questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Alan Ratner with Zelman and Associates. Please proceed with your question.

Hey, guys, good morning. Nice job navigating through this crazy time here, but glad to hear you're all doing well. My first question, if I could just dig in a little bit on the closing guidance for the back half of the year. It seems a little conservative just on the surface based on where your backlog is right now. And I know there's a lot of moving parts here. Obviously, your orders have picked up quite a bit towards the end of the quarter. So, I'm guessing a lot of those deliveries slipped into 2021. But I guess what I'm really trying to get an understanding of is, is the guidance assuming any, as far as spec supply, like where are your current spec inventories? Is it assuming just lower than normal availability of spec products heading into the back half of the year compared to what you normally have? Or is there something else that would drive your conversion rate to be so much lower than it's been in the past?

Hey, Alan, good question. This is Glenn. We started the quarter with around 300 specs and ended with 198, averaging 1.4 per community. We don't have many specs to utilize this year. You're correct that the backlog conversion appears lower than usual, mainly due to a strong June in orders; however, most of those will be delivered in 2021. That's the reason for the lower percentages.

Got it. Okay. That's helpful. And then just as far as the strategy on specs, have you accelerated the pace of new speculative starts? Or are you still taking somewhat of a wait-and-see approach to see if the strength in demand here persists for another few months?

Yes, Alan, this is Doug. To follow up on the last question, the pandemic impacted companies in various ways. We took a pause of about 45 days and adopted a more conservative approach to starting new speculative builds. Since then, we have resumed normal operations and are aiming to run three to five spec homes per community. In summary, we are increasing our number of spec homes, which is influenced by demand at the community level. There is significant demand in the entry-level market. For example, in Banning Beaumont, we have sold approximately 115 homes year-to-date, with 79 sold in the last 65 to 85 days. Therefore, we are seeing strong demand for increasing spec levels in those markets.

That's really helpful, thank you for that. And then if I could just add one more on the pricing side, obviously very strong order activity here in June and July. Curious what steps, if any, you've taken on pricing? And just as far as the impact on margin, is there any mixed impact that we should be aware of just given the timing of the deliveries in the back half of the year? It seems like you're expecting fairly stable margins, but I wasn't sure if there's any mixed nuances you would want to point out from that?

Good morning, Alan. This is Tom. Obviously, we continue to try to manage and balance pace in price, but we are really encouraged by our demand profile overall. And so, for the most part, the majority of our product offerings, we have been able to increase price or either reduce incentives and/or increase price. So we're encouraged by that trend. As always, we do have some of our higher price long-dated legacy assets that have an impact on mix as we deliver those, so you should be aware of that, but nothing out of the normal.

Alan, it's Doug. Just to clarify my last comment on Banning. And our Atwell master plan, it's pretty amazing statistics out of two communities, we sold 114 homes net in 95 days. This is no different than what you're hearing from the other builders. There is tremendous demand in our Lake Elsinore, and all these communities start at $295,000. We sold 42 net sales in 52 days. So there's obviously a tremendous demand. The pandemic has definitely created a sense of urgency for especially that entry-level first move-up buyer.

It's great to hear. Good luck, guys.

Thank you.

Thank you. Our next question comes from the line of Mike Dahl with RBC Capital Markets. Please proceed with your question.

Good morning. I appreciate your responses, and it's encouraging to see the improvement over the past few months. Referring back to Alan's inquiry about pricing power, it seems beneficial to strengthen our position a bit to recover some of the backlog that may have been lost in April and somewhat in May. However, with the changes in your mix, I believe your business hasn't operated strictly as a monthly sales absorption model. As you plan for the latter half of the year, how do you anticipate managing any potential increase in pricing power? Will you focus on throttling that pace back, or are you inclined to let it continue at an elevated rate for the time being? I'm looking for some additional insights on that.

Well, it's a balanced approach. Mike, this is Doug. It's a balanced approach. We're constantly analyzing and adjusting all the communities. For example, we were just talking about Banning, we've got a lot of lots out there, and we've got a lot of product to offer. So we're definitely pushing pace over price. I also feel that there's just an incremental view towards a little bit of pace of a price building into a nice backlog going into 2021. And the reason I say that is because there's just tremendous uncertainty running into this continued wave of test scores going up, pandemic issues, political election year issues, fiscal stimulus issue. So, there's enough unknowns out there that we're going to continue a balanced approach. And where there's communities that have less inventory and less runaway will definitely push and be pushing on price more so. For example, down in San Diego, there’ll be more push on price down there. So it's all project by project, but I am encouraged to build a strong backlog, because there's a lot unknowns, as I said. We'll see where 2021 could shape up after this year-end election.

Okay. Thanks. Yes, and I guess that makes sense given the uncertainty at the same time, you are running down your community count a bit into year-end, and you do have a lot of land behind it. So that's why I'm just curious to get the take there. I guess second question, just sticking with Banning and maybe just taking your Inland portfolio in California, in total as an example. Do you have any data or anecdotes on how many of your recent buyers have been effectively in-market buyers versus in-migration from more coastal areas?

Yes. Mike, this is Tom. Nothing specifically, but we are seeing a trend that’s happening throughout the country relative to the pandemic. With people working remotely, it does provide people the opportunity to go a little further out, to get more attainable pricing. So certainly, there has been some of that, but nothing extremely out of the normal.

Okay. And last one if I could sneak one in. I mean, Doug, you mentioned the urgency buyer were a handful of months into the pandemic. So obviously, it continues to roll along and unfortunately but from a buyer standpoint, buyers had some time to adjust and think about what they want or need at this point. So when you're hearing about or looking at kind of urgency in the market, any shift in the dynamic in terms of buyers coming in the door, and whether there's actually a more patience now and a willingness to take a delivery that's maybe six, nine months out versus needing to be in the next couple of months?

Hi Mike, this is Linda. There’s definitely an understanding with buyers now that there is high demand in the new home market, especially as they see such low supply levels on the resale market. So yes, we do see buyers willing to be patient, waiting to purchase a home, but they also want to personalize their home. They want what they want, and they can attain more with historically low rates. So they're prioritizing things like home offices, private outdoor living space, adult children returning to home, renewed interest in things like cooking, home technology, so that's definitely a motivating factor for our to-be-built sales.

Okay. Thank you.

Thanks Mike.

Our next question comes from the line of Stephen Kim with Evercore ISI. Please proceed with your question.

Thank you very much. I believe the lower rates are beneficial, allowing people to pursue things on their wish lists since they now have the means to afford them. That's encouraging. I'm curious about when you started increasing prices. Doug, when you spoke in April, the situation was quite concerning, and you mentioned a 45-day pause in business. However, things have rebounded quickly. Like Meritage mentioned yesterday, would you agree that you began to significantly raise prices around mid to late June? Is that an accurate assessment?

Hey, Stephen. This is Tom. I think everyone needs to remember that the year started off strong. So, we started raising prices very early in the year and then we took a pause, obviously, as the pandemic really had a significant impact and slowdown. And then obviously, as order demand began to pick back up, we've been constantly looking at our pricing models and where we've had the ability to raise prices we have. And I'd say that probably started back in earlier June, would be a better guess as the resurgence in price activity.

We believe that's accurate. It's Doug speaking. What Tom mentioned makes a lot of sense. The industry was performing well through February and early March. Then, as the pandemic hit, there was uncertainty about whether we were heading into a deep recession and if housing would become a struggling sector. However, we realized that with people staying at home, the importance of their homes increased significantly. With travel and outings reduced, people began saving money. Consequently, we started to see an increase in sales, which helped us raise prices even during the pandemic as we aimed to build momentum. In certain communities, we began increasing prices around early June, but it was more noticeable later in June. This response is a logical approach when managing a business in such unpredictable times. Everything falls into place.

Certainly. In light of a backlog turnover ratio expected to be below 50% in the third quarter according to your guidance, it seems that despite a reacceleration in pricing around June and potentially in July, we won't see the significant impact of that price increase reflected in your gross margins until late this year and into 2021. I just wanted to clarify that point.

Yes. I think you're thinking about that correctly.

Yes. When you provide your guidance, that's what we should consider. Regarding SG&A, I found your comment about the new approach to merchandising homes and engaging with customers quite interesting, Doug, as it has led to increased efficiency. This situation, driven by COVID, has created a unique opportunity to test this new business method. Your SG&A guidance, paired with your revenue outlook, indicates that the strong SG&A performance we observed this quarter is expected to continue or improve in the third quarter and beyond. I would like to know if you could detail some specific aspects of this more digital marketing strategy for homes that are resulting in tangible savings we can observe right now.

Stephen, this is Linda. I think there are several factors at play. Certainly, over the longer term, we do believe that a more virtual online sales platform will have cost efficiencies. With the high demand we're currently seeing in the market, we have been able to pull back on advertising spend and focus on middle and lower funnel customers that are already showing high home buying intent. We do see a short-term lift in brokers, because resale supply is so low right now. But over time, we still believe that the online model will result in savings in that sales cost area as well.

And Stephen, this is Glenn. Just to add to that, I think the other part that you're seeing flow through that SG&A line is the reduction in force that we took. And we're just really focusing on operating at a little bit more of a streamlined basis and being more efficient. We've invested in technology over the last couple of years, including our back-office systems. And we're starting to see some of the benefits of that.

Additionally, Steve, I mean, as we look to the future and when we think about the virtual experience and our ability to do maybe some unattended access, some self-guided touring, and more things will be able to be done virtually versus having to have the amount of capital invested in a fully merchandised model complex. We will have models out and available, but we think we'll be able to do it more efficiently.

All those makes sense. Thanks a lot, guys. It'll be interesting to see how things progress, but it's looking good. Thanks.

Thanks, Stephen.

Thank you. Our next question comes from the line of Truman Patterson with Wells Fargo. Please proceed with your question.

Hi, good morning, guys. Thanks for taking my question and nice quarter. So first, your July order growth accelerated versus June, which is a little atypical relative to some of your peers. But I was just hoping, could you just dissect this for us? How the trends are playing out geographically? Are you seeing the relatively underperforming areas in April and May, which might have been hit a little bit harder from the COVID shutdowns? Are those areas starting to rebound more quickly and kind of catch up on a relative basis in June and July? I'm just trying to understand some of the current trends, as to how your July order trends outperformed June.

Yes. That's a good question. Truman, it's Doug. We're seeing a lot of tremendous growth in California in the entry-level first move-up segments. I mentioned out in Banning on Beaumont. It is very, very strong. But we're also feeling a lot of strength in the Phoenix market, and that's really a move-up buyer. We've opened a master plan in the Gilbert Chandler area and we've had sales pace of about 4.9 per week, price in the five to seven. So, it's a very broad-based sales effort, order effort. It's across all segments. But I think the strongest I'd say Tom, is we've seen in the last four weeks has been in California and in Phoenix.

Yes, without a doubt. Truman, the other thing where it may not be so much geographically driven, I think there's a correlation to our new product offerings. I mean, specifically, we have introduced, as Doug just talked about, some new master plans in the Gilbert Chandler area and Arizona, as well as those new products we've offered in the Inland Empire. But across the board, our new product offerings seem to have more receptivity and a higher absorption pace, which is giving you that strong July order trend.

Okay, thanks. I take it those new designs probably have some form of study or something to really target the needs of kind of like COVID buyer today.

Yes, this is Linda. We’ve always focused on flexibility within our flow plan designs, so easily being able to adapt those spaces to people's needs at the time.

Okay. Thanks for that. And just a follow-up on Alan's question on your closings guidance. We were expecting a little bit more and I understand there's some spec issues, but want to come at it from a little bit of a different angle. But is there anything else that's capping your back-half closings? Is it from the state closures early on in COVID and muni closures, construction delays from labor shortages, any other muni issues or on top of some of the spec items? Is it somewhat out of just caution that you don't necessarily know how the COVID situation is going to play out in the back half of the year?

Truman, it's Doug. I mean, just remember, from March 15 through the end of April, there were pretty heavy shelter-in-place orders. Yes, there were parts of that. I mean, housing was deemed essential, but there were a lot of issues in working around that. And in particular, we don't generate huge volume in the Bay area right now compared to the other areas. But in Seattle, we're very constrained. Although, Seattle was selling homes under the most constrained environment I've ever seen in my life. But we couldn't build them or could only build them so quickly. So, I mean, let's face it. And then, as we mentioned, Tom and I put a very tight firm grip on the number of specs starting. So when you factor that in, that was all very prudent management at a time. And then you gradually let your foot off the brake and you start pushing on the gas pedal. Maybe some people pushed harder earlier or later. That's just how we viewed it, as we were working our way through the pandemic and managing our business and our cash flow on our balance sheet.

Yes. Truman, relative to supply chain constraints or labor constraints, as well as efficiencies within various jurisdictions, we're not seeing any significant global impact relative to that. We still are operating. So, I wouldn't say that is a hindrance or an obstacle to our deliveries. Although our cycle times and construction schedules have extended anywhere from about 3% to 10%. So, there is some timing delays there, different municipalities certainly are shorthanded. The ability to obtain approvals, permits, and inspections are probably seeing some delays. But overall, I think you have to factor in like Doug said, relative to that initial pause, that pushed back the opening and production starts on several new communities that Glenn spoke to in his prepared remarks, that also is probably putting the biggest factor on our limited ability to ramp up more production for year-end completions.

Okay. Thank you. I appreciate it.

Thank you. Our next question comes from the line of Jay McCanless with Wedbush. Please proceed with your question.

Good morning. Thanks for taking my question. I guess first on Vegas. It looks like the absorption there was pretty rough during the quarter. What are y'all seeing now as you move into the third quarter on that market?

Yes. Jay, this is Tom. We're encouraged in Vegas. I mean, surprisingly, so you can imagine what that market and economy looks like with its dependence on entertainment and gaming. But we have seen kind of a broad-based return at all price segments from that consumer. So, positive trends going through June and continuing into July, and so we look to continue to have a bright optimistic outlook for the Vegas market.

To provide some numbers, absorptions in April were 1.3, 2.2 in May, and 2.6 in June. We continue to see an increase, drawing many consumers from higher cost states, particularly California. If you visit the casinos as they begin to open partially, you will definitely notice a significant presence of Californians.

That's great to hear. And then Doug, your commentary about trying to go to lower price points more entry level, I guess more affordable first move up. Could you maybe remind us where TRI Pointe's entry level exposure is now? And where you expect it to be over the next two to three years?

We discussed that the entry level varies by market. In California, we have a very strong entry level for first move up. In the Inland Empire and LA, many of our long-term assets are priced at or below $750,000, which is quite appealing. In the Inland Empire, we are starting at $295,000, offering a robust lineup. Additionally, we plan to introduce a community called Meadowood in San Diego within the next 18 months, which will maintain a strong price point for first move ups. However, growth for the company will primarily occur in the eastern regions, particularly in Texas, the Carolinas, and Colorado, where we anticipate increased demand for entry level premium first move ups. We successfully secured all the land deals we targeted earlier this year, and they will gradually be integrated back into our system. This is where we expect significant growth over the next few years, particularly east of California. While we will continue to be a major player in California, with about 2,000 deliveries annually, our main growth will be outside the state, focusing on entry level premium first move ups.

Yes. Jay, relative to overall percentages right now, for the second quarter, about 33% of our orders came from entry level, about 49% from move up. So, we have seen just even over this last year, a slight improvement in those numbers, and a little bit of a reduction in our overall luxury category.

I would add, Jay, that that move to more affordable price points while still providing that premium brand experience. And when we started that back in 2018, as you recall, there's been a pretty strong affordability issue when rates kind of spiked a little bit. But overall pricing has made a lot of markets less affordable, whether you're in Colorado, Phoenix, wherever. So, we intentionally drove our business towards that product offering, smaller lots, both attached, detached, and more affordable price points, because before you know when interest rates go up another 100 basis points, everybody is going to say, oh my God, the sky is falling, because we're all spoiled right now. The consumer gets very acclimated very quickly. So, being in affordable price points can be important for the future.

It sounds great. Thanks again.

Thank you. Our next question comes from the line of Jack Micenko with SIG. Please proceed with your question.

Good morning. I wanted to begin by discussing the potential community count for 2021. You're anticipating 15 communities to be pushed into next year, and there are new markets expected to open up in 2021. Historically, your growth has been in the mid-single digits for the past five or six years, not counting acquisitions. Given the delays and the new markets, can we reasonably expect community count growth to exceed historical averages in 2021 based on what we know now, despite the uncertainty? Or is there something we might be overlooking that could cause it to fall back below those levels?

No, I believe that, as I mentioned in my prepared remarks, there will be more significant growth in community count than what you have seen in the past couple of years. We will provide more specific guidance as we approach 2021 regarding community count. However, you can expect it to be at a higher percentage than it has been in recent years.

How much of that can you say at this point is from some of the new markets?

A good bit of it. We're obviously growing in the Carolinas. We're going to end this year with three communities in the Carolinas, and that's only going to grow from there. Sacramento is another area where we've just really got going. That's another area that's going to grow. Austin, Dallas, Colorado, and then there's some organic growth in our existing markets as well.

Okay. And then historically and even in the earlier part of the quarter, you've been fairly strategic about buying back stock and in the context of this forward growth. How do you think about share repurchases maybe through the balance of the year? What would it take you to, if not now, what would it take you to see in the business maybe to restart that? Just curious on capital.

Yes. As we mentioned in our remarks, we are very focused on returns, whether it's about building more entry-level premium homes or improving our inventory turnover. Better returns on equity are clearly driven by increased earnings, and we are a growth company dedicated to scaling and leveraging that growth. At the same time, we are concentrating on the financial strategies that can influence and manage our balance sheet and growth, along with those returns. We are examining all of this. Our balance sheet is very strong, offering significant liquidity to support growth, and we plan to utilize the appropriate financial strategies to enhance those returns, whether through acquisitions, stock buybacks, or other means. All these options are available to us.

Okay. All right. Thanks.

Thanks.

Thank you. Our next question comes from the line of Carl Reichardt with BTIG. Please proceed with your question.

Thanks. Hi, guys. Actually, Jay got my questions. But I wanted to ask, just to go back to over the long time Doug, you've talked about the multiple brand strategy. It's still here. It's important to you guys. Can you walk through if your thinking has changed on that at all? The idea that maybe as a national builder, a single brand might be more cost-effective, more efficient? Or are there things about the multiple brand strategy that continue to be enhancements or advancements for you all?

Well, I think the multiple brand strategy as it sits today is still bodes well for us. When you go into Texas and especially with the consumer, the trend maker brand resonates very, very well. I mean, I've always argued brand is earned over time. And so, we continue to see some strong acceptance by the consumer. Obviously, when it comes to any sort of brand strategy, it really comes down to the culture and people that you can have in place to execute, whether it's buying, having the relationships by land, subcontractors, attract people. So it can be done in either format. But we're still happy and focused on the best of big and small.

Look Carl, I would add, as we continue to look at ways to become more efficient and effective in our business, we do look at overall strategies to streamline it. And there may be opportunities for us to improve as we look at maybe some regionalization and some economies relative to some of our home office shared services.

Thanks, Glenn. Thanks, guys.

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Bauer for any closing remarks.

Well, I want to thank everyone, and I hope everyone stays safe and healthy. And we look forward to talking to all of you next quarter. Thank you very much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.