Sekisui House : U.S. Homebuilding Business Strategy

Sekisui House Group

U.S. Homebuilding Business Strategy

June 6, 2024

1. Operating Results Forecast: Revisions to the Full-Year Plan for FY2024

With an upward revision to the FY2024 plan due to the acquisition of MDC, we plan to increase dividends following an increase in income.

M.D.C. Holdings, Inc. (MDC) consolidation period: April 20, 2024 - December 31, 2024

Note: We took into consideration temporary expenses related to the acquisition, amortization of goodwill and an increase in non-operating expenses, such as interest expenses, in addition to the operating results forecast of MDC.

US exchange rate forecast revised from 135 yen/US dollar to 140 yen/US dollar. There is no change in our plan for domestic businesses.

				(¥ billion)
	FY2024 Initial plan	FY2024 Revised plan	Amount changed	Change
Net sales	3,342.0	3,875.0	533.0	15.9%
Gross profit	661.0	750.0	89.0	13.5%
Operating profit	280.0	300.0	20.0	7.1%
Ordinary profit	262.0	273.0	11.0	4.2%
Profit attributable to owners of parent	203.0	209.0	6.0	3.0%
EPS (yen)	313.30	322.56	9.26	3.0%
ROA	8.2%	7.7%	-	-
ROE	11.3%	11.7%	-	-
Annual dividends per share (yen)	125	129	4	3.2%
Dividends payout ratio	39.9%	40.0%	-	-

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1. Operating Results Forecast: Impact of MDC consolidation on revised plan for FY2024

■ MDC's Operating Results and Plan (Full-Year)

Although operating results fell in FY2023 due in part to rising mortgage rates, we expect results to recover from FY2024 thanks to improved construction periods and a strategic shift to spec homes from built-to-order homes as high inflation eases.

							(million USD)
		FY2021 (result)	FY2022 (result)	FY2023 (result)	FY2024 (plan)
	Net Sales	5,254	5,717	4,642	5,493		(¥769.0 billion)
	Operating profit	770	774	435	560		(¥78.5 billion)
	Operating profit margin	14.7%	13.5%	9.4%	10.2%
	Profit attributable to owners of parent	573	562	401	446		(¥62.5 billion)
	Number of House Closings	9,982 homes	9,710 homes	8,228 homes	9,400 homes
			Notes: Results (FY2021 to FY2023) created by Sekisui House using MDC's publicly disclosed materials
				Plan (FY2024) calculated using ¥140/US dollar
■ Impact of the MDC acquisition on revised plan FY2024 (consolidation period: April 20, 2024 - December 31, 2024)	(¥ billion)
			FY2024 (consolidation period)
			Amortization of	Cost of inventory	Temporary expenses		Impact amount
			goodwill and	related to the
			assets
			trademark rights	acquisition
	Net Sales	512.6	-	-	-		512.6
	Operating profit	52.3	(11.7)	(16.2)	(7.4)		17.0
	Operating profit margin	10.2%	-	-	-		3.3%

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1. Operating Results Forecast: Revisions to the Full-Year Plan for FY2024

FY2024 Operating Profit (Revised Plan)

(¥ billion)

Initial plan

Operating profit

MDC's

operating profit

Before

amortization of

goodwill

Amortization of

goodwill and

trademark rights

Cost of inventory

assets

Temporary expenses

related to

the acquisition

Exchange rate

revision

135yen➝140yen

Eliminations and

back office

Plan revisions

52.3	(11.7)										Increase ¥20.0 billion
		(16.2)								from initial plan
	(7.4)	2.0		1.0		300.0

280.0

The allocation of the investment difference amount (PPA) has not yet been finalized,

the above represents the current forecast

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1. Operating Results Forecast: Forecast for FY2025 U.S. Homebuilding Business

■ MDC's Operating Results and Forecasts (Full-Year)

	FY2021 (result)	FY2022 (result)	FY2023 (result)	FY2024 (plan)
Net Sales	5,254	5,717	4,642	5,493
Operating profit	770	774	435	560
Operating profit margin	14.7%	13.5%	9.4%	10.2%
Profit attributable to owners of parent	573	562	401	446
Number of House Closings	9,982 homes	9,710 homes	8,228 homes	9,400 homes

(million USD)

Reference

FY2025 (forecast)

6,122

729

11.9%

561

About 10,000 homes

Notes: Results (FY2021 to FY2023) created by Sekisui House using MDC's publicly disclosed materials

■ Impact of the MDC acquisition on FY2025

					(¥ billion)
			FY2025
		Amortization of	Cost of inventory	Temporary expenses	Impact amount
		goodwill and	related to the
		assets	(Forecast)
		trademark rights	acquisition
Net Sales	795.8	-	-	-	795.8
Operating profit	94.7	(16.2)	(22.6)	(3.0)	52.9
Operating profit margin	11.9%	-	-	-	6.6%
		Notes: Forecast (FY2025) calculated using ¥130/US dollar, the same as in the Sixth Mid-Term Management Plan

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1. Operating Results Forecast: Full-Year Forecast for FY2025

FY2025 Operating Profit (Forecast)

(¥ billion)

Sixth Mid-Term ManagementPlan Operating profit

MDC's

operating profit

(forecast)

Before

amortization of

goodwill

Amortization of

goodwill and

trademark rights

Cost of inventory

assets

Temporary expenses

related to

the acquisition

Multifamily

business

Operating profit

fluctuation

Forecast

Increase ¥32.9 billion

94.7(16.2)(22.6)from Sixth Mid-Term Management Plan

(3.0)(20.0)

350.9

318.0

The allocation of the investment difference amount (PPA) has not yet been finalized,

the above represents the current forecast

Notes: Forecast (FY2025) calculated using ¥130/US dollar, the same as in the Sixth Mid-Term Management Plan

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2. U.S. Homebuilding Business Strategy

Sixth Mid-Term Management Plan : Fundamental Policy

The Sekisui House Global Vision

M a k e h o m e t h e h a p p i e s t p l a c e i n t h e w o r l d

Propose happiness through the integration of	Become a leading company	Make Sekisui House technologies
technologies, lifestyle design and services	in ESG management	the global de facto standard
✓ Introducing the "life knit design" concept that	✓ Helping solve environmental issues through	✓ Entering the southeastern United States
interweaves lifestyles	residences	✓
		Expanding the sale of our SHAWOOD products,
✓ Creating value through data-driven DX	✓ Making employee autonomy a growth driver	which leverages safety, comfort, and design
✓ Offering PLATFORM HOUSE, health services, and	✓ Innovation and communication	✓ Engraining such lifestyle design as our lifestyle proposal
lifestyle services		capabilities, customer engagement, and brands

Stable Growth in Japan and Proactive Growth Overseas

Utilizing Management Resources and Enhancing Value

Human capitalDX and data Products and services Growth investments

Our core competencies

Technical capabilities	Construction capabilities	Customer base	6

2. U.S. Homebuilding Business Strategy: Global Product Portfolio

Aim to achieve 20,000 homes in the United States by the final fiscal year of the Eighth Mid-Term Management Plan

	Detached houses
Operating Markets			Rental Housing	Condominium
1st Range	2nd Range	3rd Range
NOIE		8,000 buildings
		ShaMaison	Grand Maison
(wooden-frame)
1,000 buildings	IS (steel-frame)
Japan
SI			Prime Maison
(wooden-frame)	SHAWOOD (wooden-flame)
2,000 buildings
New 2×4 by Sekisui House (wooden-frame)	20,000 homes
	multi family
17,000 homes
USA
	SHAWOOD (wooden-frame)
	3,000 homes
Australia	SHAWOOD(wooden-frame)		condominium
Singapore				condominium

Note: New 2×4 builds that extend Sekisui House technologies to conventional 2×4 construction common in the United States

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2. U.S. Homebuilding Business Strategy: Fundamental Policy

Vision in the U.S. homebuilding business

We will roll out Sekisui House technologies accumulated over 60 years in Japan to the United States and become a game changer in the U.S. homebuilding industry

Rolling out two products

Making Sekisui House technologies the de facto standard

New 2×4

by Sekisui House

＋

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2. U.S. Homebuilding Business Strategy: Future Concept- Transferring Sekisui House Technologies to 2×4s

Aim to transfer Sekisui House technologies to conventionally built homes of four Group builders; convert to "New 2×4 by Sekisui House."

Final fiscal year of the Eighth Mid-Term Management Plan (FY2031): U.S. detached houses: 20,000 homes (including 3,000 homes SHAWOOD)

Number of homes supplied

20,000

15,000

２×４

US standard

New２×４

by Sekisui House

3,000

2024

Two years later

Four years later

2031

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