WCI Communities, Inc.

WCI Communities
Second Quarter 2016 Earnings Conference Call
July 27, 2016
Disclosure Statement
This presentation contains forward-looking statements. All statements that are not statements of historical fact, including
statements about the Company’s beliefs and expectations, are forward-looking statements within the meaning of the federal
securities laws and should be evaluated as such. Forward-looking statements include information concerning the Company’s
expectations about future goals, expected growth, market conditions and outlook (including the estimates, forecasts, statements
and projections relating to Florida or national markets prepared by John Burns Real Estate Consulting, LLC), expected liquidity,
income taxes and possible or assumed future results of operations, and descriptions of its business plans and strategies. These
forward-looking statements may be identified by the use of such forward-looking terminology, including the terms “believe,”
“estimate,” “project,” “anticipate,” “expect,” “seek,” “predict,” “contemplate,” “continue,” “possible,” “intend,” “may,” “might,” “will,”
“could,” “would,” “should,” “forecast,” or “assume” or, in each case, their negative, or other variations or comparable terminology.
For information concerning important factors that could cause actual results to differ materially from those contained in the
forward-looking statements, please refer to the Company’s “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K
for the year ended December 31, 2015 that was filed by the Company with the Securities and Exchange Commission on February
22, 2016 and elsewhere therein and subsequent filings by the Company. As you read and consider this presentation, you should
understand that the forward-looking statements are not guarantees of performance or results. The forward-looking statements and
projections are subject to and involve risks, uncertainties and assumptions and you should not place undue reliance on these
forward-looking statements or projections. Although the Company believes that these forward-looking statements and projections
are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect the
Company’s actual financial results or results of operations and could cause actual results to differ materially from those expressed
or implied in the forward-looking statements and projections. The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. If the Company does update one
or more forward-looking statement, there should be no inference that it will make additional updates with respect to those or its
other forward-looking statements.
In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this
presentation contains the non-GAAP financial measures EBITDA, Adjusted EBITDA, Adjusted gross margin from homes delivered
and net debt to net capitalization. The reasons for the use of these measures, a reconciliation of these measures to the most
directly comparable GAAP measures and other information relating to these measures are included in the appendix to this
presentation.
2
WCI Communities at a Glance

Lifestyle community developer
and luxury homebuilder
throughout Florida

Target move-up, second-home
and active adult customers
 High average selling prices $431,000 on YTD deliveries
 High proportion of cash buyers –
47% of YTD deliveries
 Low cancellation rate – 6.3% YTD

Approximately 14,200 home sites
owned or controlled

Conservative balance sheet with
$88 million of cash

Complementary Real Estate
Services (“RES”) and Amenities
businesses
Buyer Profile with Low Reliance on Financing
Loan to Value Percentage (“LTV”) – 1H16 Deliveries
LTV 1-64%
16.9%
Cash
46.9%
LTV 65-80%
26.6%
LTV >80%
9.6%
3
Compelling Florida Real Estate Market

Leading growth state (1)
U.S. Age 65+ Population by Decade of Birth
65+ Population by Decade of Birth
 Job growth rate of 3.0%; higher than
national average of 1.7%
70,000,000
66 million
65,000,000
60,000,000
55,000,000
 2Q16 closings even with 2Q15
 Single-family median price up 11%
over June 2015
 Multi-family median price up 9% over
June 2015
Pre-1930s
20,000,000
15,000,000
10,000,000
5,000,000
2024
2022
2020
2018
2016
2014
2012
2010
2008
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
0
Sources: U.S. Census Bureau; John Burns Real Estate Consulting, LLC
 55th consecutive month median sales
prices increased year-over-year
 4.3 months supply of inventory for
single-family homes as of June 2016
1930s
25,000,000
1966
Resale statistics (3)
1940s
30,000,000
Florida Annual Permit Activity
300,000
Single-Family
(2)
Multi-Family
250,000
200,000
150,000
20 Year Average
100,000
50,000
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
Florida Department of Economic Opportunity
U.S. Census Bureau; data as of May 2016
Florida Realtors ®
1998
(1)
(2)
(3)
1997
0
1996

1950s
35,000,000
1964
 4.4% higher than prior year
1960s
40,000,000
1962
 Second highest in the U.S.
48 million
45,000,000
1960
YTD 2016 Florida building permits
(2)
65+ Population

50,000,000
2006
 Unemployment rate of 4.7%
4
2Q16 Homebuilding Overview





Homebuilding revenues up 14.2% to $132.0 million
Deliveries up 26.3% to 307 homes
Gross margin of 24.8%(1); Adjusted gross margin of 27.5%(1)
Average selling price in backlog up 10.9% to $520,000
New orders


Average selling price per new order of $454,000, up 5.8%
Contract value of new orders down 5.3% to $121.8 million
Deliveries Trend
New Orders Trend
New Order Contract Value & ASP
$ in thousands
Contract Value
616
307
Q1
578
Q2
$160,000
ASP
$486
$446
$429
$496
$454
$450
$500
$140,000
$400
243
400
300
$120,000
268
$100,000
287
143
$80,000
195
242
$300
$200
$60,000
122
1H13
$121,800
1H12
$20,000
$153,770
140
$40,000
$107,992
114
310
$124,760
50
316
205
$128,610
128
$140,835
147
$-
2Q12
(1)
2Q13
2Q14
2Q15
2Q16
1H14
1H15
1H16
Gross margin measures are presented a percentage of revenues from homes delivered; See reconciliation to GAAP financial measure in the appendix
$100
$-
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Note: All comparisons are to 2Q15
5
2Q16 Real Estate Services Overview

Brokerage revenues increased 4.0%





Brokerage average home selling price up
6.9% to $342,000
Brokerage transactions decreased 1.4%
Title revenues increased 11.7%
Total revenues increased 4.5%
Total gross margin of $1.6 million
Brokerage Transactions
2,857
Brokerage ASP
RES Revenues
RES Gross Margin
($ in thousands)
($ in thousands)
($ in thousands)
$342
2,817
$30,379
$320
$2,116
$29,107
$1,637
2Q15
2Q16
Note: All comparisons are to 2Q15
2Q15
2Q16
2Q15
2Q16
2Q15
2Q16
6
Executing on the WCI Growth Strategy




Increasing total revenue; 31% CAGR from 1H13
Continued Homebuilding gross margin strength even as legacy land
deliveries decline
Sustained SG&A leverage improvement
Positioned to capitalize on the long-term growth across Florida
Adjusted GM % (1)
Revenues
SG&A % (2)
Adjusted EBITDA (3)
($ in millions)
($ in millions)
$35.4
$306
$12
$248
$52
22.2%
33.5%
1.9%
$30.7
29.4%
2.1%
2.4%
27.6%
$14
31.6%
$52
$13
$12
$45
19.3%
1.5%
2.6%
28.0%
$167
$137
2.4%
30.1%
16.0%
1.1%
27.0%
$19.3
15.1%
$15.3
1.1%
25.0%
$14.4
19.8%
$242
$40
$15.9
17.7%
14.9%
$183
13.9%
$5.6
$10.1
$15.5
$16.1
1H15
1H16
$109
$84
$8.8
1H13
1H14
HB
(1)
(2)
(3)
1H15
RES
AM
1H16
1H13
1H14
HB GM
1H15
Adjustments
1H16
1H13
1H14
1H15
1H16
Stock-based compensation expense
1H13
$5.8
1H14
Net Income
Adjustments
Gross margin measures are presented a percentage of revenues from homes delivered; See reconciliation to GAAP financial measure in the appendix
Measured as a percentage of Homebuilding revenues
Measured as a percentage of total revenues; See reconciliation to GAAP financial measure in the appendix
Note: Totals may not foot due to rounding
7
Land Portfolio Positioned for Growth




High quality land positions in landconstrained markets
Land portfolio totals approximately
14,200 owned or controlled home sites;
up 6% from 2Q15
58% owned / 42% optioned
Owned or Controlled Home Sites
Owned
Optioned
14,229
13,465
5,158
5,926
 Closed on 870 home sites in Viera, FL
 Added ~200 home site controlled
position in Bradenton, FL
8,307
8,303
Approximately 3,800 legacy (subject to
fresh start accounting) home sites
remain
2Q15
2Q16
8
Selected Operating Results
$ in thousands, except per share am ounts
Three Months Ended June 30,
2016
2015
Variance %
131,969 $
115,565
14.2%
30,379
29,107
4.5%
5,055
6,038
-15.0%
167,403 $
150,710
11.1%
Homebuilding revenues
Real estate services revenues
Amenities revenues
Total revenues
$
Total gross margin
$
33,332
$
32,216
3.4%
$
61,470
$
52,344
17.6%
Net income attributable to common shareholders
$
9,394
$
9,820
-4.1%
$
16,056
$
15,472
3.9%
Earnings per share - diluted
$
0.35
$
0.37
-5.4%
$
0.60
$
0.59
1.7%
$
$
Six Months Ended June 30,
2016
2015
Variance %
241,797 $
182,612
32.4%
52,106
51,873
0.4%
11,807
13,927
-15.1%
305,710 $
248,412
23.1%
$
SG&A expenses as a percent of Homebuilding revenues
14.3%
14.0%
+30 bps
15.1%
16.0%
-90 bps
Homebuilding gross margin percentage
Adjusted gross margin percentage from homes delivered
24.7%
27.5%
26.7%
29.1%
-200 bps
-160 bps
24.9%
27.6%
27.0%
29.4%
-210 bps
-180 bps
19,703
20,714
13.7%
-2.0%
-2.9%
-170 bps
28,864
30,746
12.4%
17.0%
15.3%
-80 bps
EBITDA
Adjusted EBITDA
Adjusted EBITDA percentage
Homes delivered
Average selling price per home delivered
New orders
Average selling price per new order
Backlog units
Average selling price in backlog
$
$
$
$
19,332 $
20,147 $
12.0%
307
430
268
454
$
$
243
476
300
429
26.3%
-9.7%
-10.7%
5.8%
$
$
$
$
$
33,817 $
35,377 $
11.6%
561
431
578
477
586
520
$
$
$
381
479
616
437
627
469
47.2%
-10.0%
-6.2%
9.2%
-6.5%
10.9%
9
Conservative Balance Sheet



Balance sheet positioned to
execute the growth strategy
Invested approximately $58 million
in 1H16 for land and land
development
Amended and extended secured
revolving credit facility in 2Q16
 Increased to $20 million
 Extended term to February 2019
 Currently undrawn
 Complements $115 million undrawn
unsecured revolving credit facility

Embedded value in the balance
sheet
June 30, 2016
88,344
645,733
December 31, 2015
$
135,308
554,191
Debt obligations, net
254,933
246,473
Total equity
490,552
473,767
Total capital
745,485
720,240
221,701
218,665
$ in t ho usand s
Cash and cash equivalents
Real estate inventories
$
Available liquidity (1)
Debt to capital
(2)
Net debt to net capitalization
(3)
(Cash + inventories) / total debt
1)
2)
3)
34.2%
34.2%
25.7%
19.5%
2.88
2.80
As of June 30, 2016, available liquidity includes $115.0 million of borrowing capacity under a four-year
unsecured revolving credit facility and $18.4 million of borrowing capacity under a secured revolving
credit facility.
Debt to capital is computed by dividing the net carrying value of our debt obligations, as reported on our
consolidated balance sheets, by total capital as calculated above.
Net debt represents the principal amount of our outstanding debt obligations, less cash and cash
equivalents; net capitalization represents net debt plus total equity.
10
Key Takeaways

Florida real estate market remains healthy
with strong long-term fundamentals

Continued focus on move-up, second-home
and active adult customer segments

Positioned for sustained growth

Actively pursuing land acquisition
opportunities

Conservative balance sheet with liquidity and
flexibility for growth

Embedded value in the balance sheet

Talented team with multi-cycle experience
11
Appendix
Reconciliation of Non-GAAP Financial Measures
In addition to the results reported in accordance with U.S. generally accepted accounting principles (“GAAP”), we have provided information in
this presentation relating to adjusted gross margin from homes delivered, EBITDA and Adjusted EBITDA (both such terms are defined below),
and net debt to net capitalization. Our GAAP-based measures can be found in our unaudited consolidated financial statements in Item 1 of Part I
of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 that we plan to file with the Securities and Exchange Commission on
or before August 3, 2016. The presentation of historical non-GAAP measures herein does not reflect or endorse any forecast of future financial
performance.
Adjusted Gross Margin from Homes Delivered
We subtract the gross margin from land and home sites sales, if any, from Homebuilding gross margin to arrive at gross margin from homes
delivered. We then add back asset impairments, if any, and capitalized interest in cost of sales to gross margin from homes delivered to arrive at
adjusted gross margin from homes delivered. Management uses adjusted gross margin from homes delivered to evaluate operating performance
in our Homebuilding segment and make strategic decisions regarding sales price, construction and development pace, product mix and other
operating decisions. We believe that adjusted gross margin from homes delivered is (i) meaningful because it eliminates the impact that our
indebtedness and asset impairments have on gross margin and (ii) relevant and useful to shareholders, investors and other interested parties for
evaluating our comparative operating performance from period to period and among companies within the homebuilding industry as it is reflective
of overall profitability during any given reporting period. However, this measure is considered a non-GAAP financial measure and should be
considered in addition to, rather than as a substitute for, the comparable GAAP financial measures when evaluating our operating performance.
Although other companies in the homebuilding industry report similar information, they may calculate this measure differently than we do and,
therefore, it may not be comparable. We urge shareholders, investors and other interested parties to understand the methods used by other
companies in the homebuilding industry to calculate gross margins and any adjustments to such amounts before comparing our measures to
those of such other companies.
The table below reconciles adjusted gross margin from homes delivered to the most directly comparable GAAP financial measure, Homebuilding
gross margin, for the periods presented herein.
Three Months Ended June 30,
2016
Six Months Ended June 30,
2015
2016
2015
2014
2013
($ in thousands)
Homebuilding gross margin
$
Less: gross margin from land and home sites
32,631 $
30,889
$
60,232 $
49,388 $
30,496 $
26,623
(131)
-
(131)
-
-
35
Gross margin from homes delivered
32,762
30,889
60,363
49,388
30,496
26,588
Add: capitalized interest in cost of sales
Adjusted gross margin from homes delivered
3,544
36,306 $
2,740
33,629
6,391
66,754 $
4,364
53,752 $
2,267
32,763 $
1,563
28,151
$
$
Gross margin from homes delivered as a
percent of revenues from homes delivered
24.8%
26.7%
25.0%
27.0%
28.0%
31.6%
Adjusted gross margin from homes delivered as a
percent of revenues from homes delivered
27.5%
29.1%
27.6%
29.4%
30.1%
33.5%
13
Reconciliation of Non-GAAP Financial Measures (continued)
EBITDA and Adjusted EBITDA
Adjusted EBITDA measures performance by adjusting net income (loss) attributable to common shareholders of WCI Communities, Inc. to
exclude, if any, interest expense, capitalized interest in cost of sales, income taxes, depreciation (‘‘EBITDA’’), income (loss) from discontinued
operations, other income, stock-based compensation expense, asset impairments and expenses related to early repayment of debt. We believe
that the presentation of Adjusted EBITDA provides useful information to shareholders, investors and other interested parties regarding our
results of operations because it assists those parties and us when analyzing and benchmarking the performance and value of our business. We
also believe that Adjusted EBITDA is useful as a measure of comparative operating performance from period to period and among companies in
the homebuilding industry as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance.
Furthermore, Adjusted EBITDA eliminates the effects of our capital structure (such as interest expense), asset base (primarily depreciation),
items outside of our control (primarily income taxes) and the volatility related to the timing and extent of non-operating activities (such as
discontinued operations and asset impairments). Accordingly, we believe that this measure is useful for comparing general operating
performance from period to period. Other companies in our industry may define Adjusted EBITDA differently and, as a result, our measure of
Adjusted EBITDA may not be directly comparable. Although we use EBITDA and Adjusted EBITDA as financial measures to assess the
performance of our business, the use of such EBITDA-based measures is limited because they do not include certain material costs, such as
interest and income taxes, necessary to operate our business. EBITDA and Adjusted EBITDA should be considered in addition to, and not as
substitutes for, net income (loss) in accordance with GAAP as a measure of our performance. Our presentation of EBITDA and Adjusted
EBITDA should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items.
Our EBITDA-based measures have limitations as analytical tools and, therefore, shareholders, investors and other interested parties should not
consider them in isolation or as substitutes for analyses of our results as reported under GAAP. Some such limitations are:

they do not reflect the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing
operations;

they are not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows;

they do not reflect the interest that is necessary to service our debt; and

other companies in our industry may calculate these measures differently than we do, thereby limiting their usefulness as comparative
measures.
Because of these limitations, our EBITDA-based measures are not intended to be alternatives to net income (loss), indicators of our operating
performance, alternatives to any other measure of performance under GAAP or alternatives to cash flow provided by (used in) operating
activities as measures of liquidity. Shareholders, investors and other interested parties should therefore not place undue reliance on our
EBITDA-based measures or ratios calculated using those measures.
14
Reconciliation of Non-GAAP Financial Measures (continued)
EBITDA and Adjusted EBITDA (continued)
The table below reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income attributable to
common shareholders of WCI Communities, Inc., for the periods presented herein.
Three Months Ended June 30,
2016
Six Months Ended June 30,
2015
2016
2015
2014
2013
($ in thousands)
Net income attributable to common
shareholders of WCI Communities, Inc.
$
Interest expense
9,394 $
9,820
$
16,056 $
15,472 $
5,818 $
8,792
210
198
612
458
685
1,614
Capitalized interest in cost of sales (1)
3,544
2,740
6,391
4,364
2,267
1,563
Income tax expense
5,574
6,187
9,531
7,103
4,634
(85)
610
758
1,227
1,467
1,232
1,008
19,332
19,703
33,817
28,864
14,636
12,892
Depreciation
EBITDA
Preferred stock dividend (2)
-
Other income, net
Stock-based compensation expense (3)
Adjusted EBITDA
Adjusted EBITDA margin
1)
2)
3)
(667)
$
1,482
20,147 $
12.0%
-
-
(99)
1,110
20,714
13.7%
(1,120)
$
2,680
35,377 $
11.6%
-
-
700
(195)
(428)
(1,220)
2,077
30,746 $
1,685
15,893 $
2,032
14,404
12.4%
9.5%
10.5%
Represents capitalized interest expensed in cost of sales on home deliveries and land and home site sales.
Represents a reduction in income available to common shareholders of WCI Communities, Inc. during the six months ended
June 30, 2013 pertaining to a payment of $0.7 million that we made in April 2013 to purchase the one outstanding share of
our Series B preferred stock. In accordance with Accounting Standards Codification 260, Earnings Per Share, paragraph 10S99-2, the difference between the consideration transferred to our preferred stock shareholder and the corresponding book
value has been characterized as a preferred stock dividend in the Company’s unaudited consolidated statements of
operations and deducted from net income to arrive at net income attributable to common shareholders of WCI Communities,
Inc.
Represents the expense recorded in the Company’s unaudited consolidated statements of operations related to its stockbased compensation plans.
15
Reconciliation of Non-GAAP Financial Measures (continued)
Net Debt to Net Capitalization
We believe that net debt to net capitalization provides us with useful information regarding our financial position and cash and debt
management. It is also a relevant financial measure to help us assess the leverage employed in our operations and it is indicator of our ability to
obtain future financing. However, this measure is considered a non-GAAP financial measure and should be considered in addition to, rather
than as a substitute for, the comparable GAAP financial measures when evaluating our leverage.
By deducting cash and cash equivalents from our outstanding debt, we provide a measure of our debt that considers our cash position. We
believe that this approach provides useful information because the ratio of debt to capital does not consider our cash and cash equivalents and
we believe that a debt ratio net of cash, such as net debt to net capitalization, provides supplemental information by which our financial position
may be considered. Shareholders, investors and other interested parties may also find this information helpful when comparing our leverage to
the leverage of other companies in our industry. Although other companies in the homebuilding industry report similar information, they may
calculate this measure differently than we do and, therefore, it may not be comparable. We urge shareholders, investors and other interested
parties to understand the methods used by other companies in the homebuilding industry to calculate leverage ratios such as net debt to net
capitalization, including any adjustments to such amounts, before comparing our measures to those of such other companies.
The table below presents the computations of our net debt to net capitalization and reconciles such amounts to the most directly comparable
GAAP financial measure, debt to capital.
June 30,
December 31,
2016
2015
($ in thousands)
Debt obligations, net
Total equity
Total capital
$
$
Debt to capital (1)
Debt obligations, net
Unamortized debt premium
Unamortized debt issuance costs
Principal amount of outstanding debt
Less: cash and cash equivalents
Net debt
Total equity
Net capitalization
Net debt to net capitalization (2)
254,933 $
490,552
745,485 $
34.2%
$
$
254,933 $
(952)
4,219
258,200
88,344
169,856
490,552
660,408 $
25.7%
246,473
473,767
720,240
34.2%
246,473
(1,031)
4,558
250,000
135,308
114,692
473,767
588,459
19.5%
1) Debt to capital is computed by dividing the net carrying value of our debt obligations, as reported on our consolidated balance sheets, by
total capital as calculated above.
2) Net debt to net capitalization is computed by dividing net debt by net capitalization.
16