• Tri Pointe Homes, Inc. Reports 2021 Second Quarter Results and Announces $250 Million Increase to Its Stock Repurchase Program

    Source: Nasdaq GlobeNewswire / 22 Jul 2021 06:00:00   America/New_York

    -Net New Home Orders up 22% Year-Over-Year-
    -Backlog Units up 53% Year-Over-Year-
    -Backlog Dollar Value up 50% Year-Over-Year-
    -Homebuilding Gross Margin Percentage of 24.6%-
    -Diluted Earnings Per Share of $1.00-

    INCLINE VILLAGE, Nev., July 22, 2021 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the second quarter ended June 30, 2021. The Company also announced that its Board of Directors has authorized the repurchase of up to an additional $250 million of common stock under its existing stock repurchase program (“Repurchase Program”) and extended the term of the Repurchase Program through December 31, 2022, increasing the aggregate authorization under the Repurchase Program from $250 million to $500 million.

    “Tri Pointe Homes delivered another strong quarter of profitability in the second quarter of 2021, generating fully diluted earnings per share of $1.00, representing a 133% increase as compared to the second quarter of 2020,” said Tri Pointe Homes Chief Executive Officer Doug Bauer. “Our average sales price and homebuilding gross margin percentage came in above the high end of our stated guidance, as our teams did an excellent job executing on our business plan while navigating the supply chain issues that persist in our industry. In addition, we posted company records in a number of key metrics for a second quarter, including home sales revenue, pre-tax profit, and quarter-ending backlog value.”

    Mr. Bauer continued, “Order activity during the second quarter was robust as we averaged 4.7 sales per community per month, a 53% improvement over the second quarter of 2020. Demand trends remained elevated in all of our markets and at all of our price points, a sign that buyers remain motivated in a number of demographic segments in conjunction with the ongoing and widespread shortage of available housing supply. Similar to the first quarter, we intentionally constrained our sales releases to implement price increases and manage our backlog, a decision that proved to be a profitable one for our company, as homebuilding gross margin expanded 300 basis points year-over-year to 24.6% for the quarter.”

    Mr. Bauer concluded, “With a favorable industry outlook, a sizable backlog and a rapidly improving return profile, Tri Pointe Homes is poised to continue the strong operating momentum into the back half of 2021. Longer term, we believe we have an excellent opportunity to build on our recent success, thanks to the increasing scale we are realizing in many of our markets and the land investments we have made, which will lead to significant community count growth in 2022. Given these positives, we are extremely optimistic about the future of our company.”

    Results and Operational Data for Second Quarter 2021 and Comparisons to Second Quarter 2020

    • Net income was $117.9 million, or $1.00 per diluted share, compared to $56.5 million, or $0.43 per diluted share.
    • Home sales revenue of $1.0 billion compared to $766.9 million, an increase of 32%
      • New home deliveries of 1,545 homes compared to 1,229 homes, an increase of 26%
      • Average sales price of homes delivered of $653,000 compared to $624,000, an increase of 5%
    • Homebuilding gross margin percentage of 24.6% compared to 21.6%, an increase of 300 basis points
      • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 27.7%*
    • SG&A expense as a percentage of homes sales revenue of 9.6% compared to 10.8%, a decrease of 120 basis points
    • Net new home orders of 1,622 compared to 1,332, an increase of 22%
    • Active selling communities averaged 114.5 compared to 144.3, a decrease of 21%
      • Net new home orders per average selling community were 14.2 orders (4.7 monthly) compared to 9.2 orders (3.1 monthly)
      • Cancellation rate of 7% compared to 21%
    • Backlog units at quarter end of 3,902 homes compared to 2,558, an increase of 53%
      • Dollar value of backlog at quarter end of $2.5 billion compared to $1.7 billion, an increase of 50%
      • Average sales price of homes in backlog at quarter end of $647,000 compared to $656,000, a decrease of 1%
    • Ratios of debt-to-capital and net debt-to-net capital of 37.1% and 25.7%*, respectively, as of June 30, 2021
    • Repurchased 3,666,676 shares of common stock at a weighted average price per share of $22.60 for an aggregate dollar amount of $82.9 million in the three months ended June 30, 2021
    • Extended maximum amount of revolving credit facility from $600 million to $650 million and extended the maturity date of both the revolving credit facility and term loan facility to June 2026†
    • Ended the second quarter of 2021 with total liquidity of $1.2 billion, including cash and cash equivalents of $556.5 million and $593.1 million of availability under the Company’s unsecured revolving credit facility

    * See “Reconciliation of Non-GAAP Financial Measures”

    † The maturity date for $30 million of loans under the Company’s term facility and $45 million of commitments under its revolving facility, respectively, were not extended and remain scheduled to mature on March 29, 2023.

    “At Tri Pointe, we understand that the housing market is constantly changing, and that in order to be successful, we must change along with it,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “That is why we invest heavily in market research to keep our new home offerings fresh and maintain our premium lifestyle brand advantage. The same is true with how we leverage technology to improve our processes and reduce costs. Our results in the second quarter of 2021 are a testament to our ability to adapt and change in a market that has become increasingly difficult to navigate as a result of supply chain issues and labor and material shortages. We believe this is a competitive strength for our company, and one that will allow us to be successful as the housing market continues to evolve.”

    Outlook

    For the third quarter of 2021, the Company anticipates delivering between 1,450 and 1,550 homes at an average sales price between $620,000 and $630,000. The Company expects its homebuilding gross margin percentage will be in the range of 23.5% to 24.5% for the third quarter of 2021 and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 9.5% to 10.0%. Lastly, the Company expects its effective tax rate for the third quarter of 2021 will be approximately 25.0%.

    For the full year, the Company expects to open approximately 70 new communities and end the year with between 120 and 130 active selling communities. In addition, the Company anticipates delivering between 6,000 and 6,300 homes at an average sales price between $625,000 and $635,000. The Company expects homebuilding gross margin percentage to be in the range of 23.5% to 24.5% for the full year and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 9.8% to 10.3%. Finally, the Company expects its effective tax rate for the full year to be approximately 25%.

    Stock Repurchase Program

    On July 21, 2021, the Company’s Board of Directors approved the repurchase of up to an additional $250 million of Company common stock pursuant to its Repurchase Program and extended the term of the Repurchase Program through December 31, 2022. As of July 21, 2021, the Company had purchased an aggregate of 12,175,129 shares of common stock for approximately $243 million pursuant to the Repurchase Program. Under the Repurchase Program as amended, the Company may repurchase shares of its outstanding common stock with an aggregate value of up to $500 million through December 31, 2022. Purchases of common stock pursuant to the Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Company is not obligated under the Repurchase Program to repurchase any specific number or amount of shares of common stock, and it may modify, suspend or discontinue the program at any time. Company management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of the Company’s common stock, corporate requirements, general market economic conditions and legal requirements.

    Earnings Conference Call

    The Company will host a conference call via live webcast for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Thursday, July 22, 2021.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, and Glenn Keeler, Chief Financial Officer. Interested parties can listen to the call live and view the related slides on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at www.TriPointeHomes.com. Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at (877) 407-3982, or (201) 493-6780 for international participants. Participants should ask for the Tri Pointe Homes Second Quarter 2021 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start of the call. A replay of the call will be available for two weeks following the call toll free at (844) 512-2921, or (412) 317-6671 for international participants, using the reference number 13721036. An archive of the webcast will also be available on the Company’s website for a limited time.

    About Tri Pointe Homes, Inc.

    One of the largest homebuilders in the U.S., Tri Pointe Homes® (NYSE: TPH) is a publicly traded company and a recognized leader in customer experience, innovative design, and environmentally responsible business practices. The company builds premium homes and communities in 10 states, with deep ties to the communities it serves—some for as long as a century. Tri Pointe Homes combines the financial resources, technology platforms and proven leadership of a national organization with the regional insights, longstanding community connections and agility of empowered local teams. Tri Pointe has won multiple Builder of the Year awards, most recently in 2019, and made Fortune magazine’s 2017 100 Fastest-Growing Companies list. Named one of the Best Places to Work by the Orange County Business Journal for four consecutive years, Tri Pointe Homes also became a Great Place to Work-CertifiedTM company in 2021. For more information, please visit TriPointeHomes.com.

    Forward-Looking Statements

    Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects, and capital spending. Forward-looking statements that are included in this press release are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or other words that convey future events or outcomes. The forward-looking statements in this press release speak only as of the date of this press release, and we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. These forward-looking statements are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements: the effects of the ongoing COVID-19 pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the emergence and spread of new strains or variants of COVID-19, the severity and the duration of the outbreak, the duration of existing and future social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and acceptance of effective vaccines, adequate testing and treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain, the health of our employees, service providers and trade partners, and the reactions of U.S. and global markets and their effects on consumer confidence and spending; the effects of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; access to adequate capital on acceptable terms; geographic concentration of our operations, particularly within California; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; raw material and labor prices and availability; oil and other energy prices; the effects of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries; the effects of weather, including the occurrence of drought conditions in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; the risk of loss from acts of war, terrorism, civil unrest or outbreaks of contagious diseases, such as COVID-19; transportation costs; federal and state tax policies; the effects of land use, environment and other governmental laws and regulations; legal proceedings or disputes and the adequacy of reserves; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission. The foregoing list is not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business.

    Investor Relations Contact:

    Drew Mackintosh, Mackintosh Investor Relations
    InvestorRelations@TriPointeHomes.com, 949-478-8696

    Media Contact:

    Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
      

    KEY OPERATIONS AND FINANCIAL DATA
    (dollars in thousands)
    (unaudited)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 Change % Change 2021 2020 Change % Change
    Operating Data:(unaudited)
    Home sales revenue$1,009,307  $766,942  $242,365  32% $1,725,982  $1,361,780  $364,202  27%
    Homebuilding gross margin$248,092  $165,508  $82,584  50% $419,411  $287,464  $131,947  46%
    Homebuilding gross margin %24.6% 21.6% 3.0%   24.3% 21.1% 3.2%  
    Adjusted homebuilding gross margin %*27.7% 24.6% 3.1%   27.3% 24.1% 3.2%  
    SG&A expense$96,752  $82,748  $14,004  17% $178,561  $165,222  $13,339  8%
    SG&A expense as a % of home sales
    revenue    		9.6% 10.8% (1.2)%   10.3% 12.1% (1.8)%  
    Net income$117,869  $56,528  $61,341  109% $188,671  $88,411  $100,260  113%
    Adjusted EBITDA*$201,986  $120,771  $81,215  67% $328,066  $188,727  $139,339  74%
    Interest incurred$22,558  $21,828  $730  3% $43,737  $42,607  $1,130  3%
    Interest in cost of home sales$30,851  $21,801  $9,050  42% $51,529  $38,623  $12,906  33%
                    
    Other Data:               
    Net new home orders1,622  1,332  290  22% 3,609  2,993  616  21%
    New homes delivered1,545  1,229  316  26% 2,671  2,187  484  22%
    Average sales price of homes delivered$653  $624  $29  5% $646  $623  $23  4%
    Cancellation rate7% 21% (14)%   7% 17% (10)%  
    Average selling communities114.5  144.3  (29.8) (21)% 113.4  142.4  (29.0) (20)%
    Selling communities at end of period109  145  (36) (25)%        
    Backlog (estimated dollar value)$2,524,442  $1,679,068  $845,374  50%        
    Backlog (homes)3,902  2,558  1,344  53%        
    Average sales price in backlog$647  $656  $(9) (1)%        
                    
     June 30, December 31,            
     2021 2020 Change % Change        
    Balance Sheet Data:(unaudited)              
    Cash and cash equivalents$556,483  $621,295  $(64,812) (10)%        
    Real estate inventories$3,085,582  $2,910,142  $175,440  6%        
    Lots owned or controlled37,112  35,641  1,471  4%        
    Homes under construction (1)4,336  3,044  1,292  42%        
    Homes completed, unsold19  68  (49) (72)%        
    Debt$1,344,574  $1,343,001  $1,573  0%        
    Stockholders’ equity$2,279,290  $2,232,537  $46,753  2.1%        
    Book capitalization$3,623,864  $3,575,538  $48,326  1%        
    Ratio of debt-to-capital37.1% 37.6% (0.5)%          
    Ratio of net debt-to-net capital*25.7% 24.4% 1.3%          

    __________
    (1) Homes under construction included 91 and 86 models at June 30, 2021 and December 31, 2020, respectively.
    * See “Reconciliation of Non-GAAP Financial Measures”

    CONSOLIDATED BALANCE SHEETS
    (in thousands, except share and per share amounts)

     June 30, December 31,
     2021 2020
    Assets(unaudited)  
    Cash and cash equivalents$556,483  $621,295 
    Receivables91,348  63,551 
    Real estate inventories3,085,582  2,910,142 
    Investments in unconsolidated entities74,051  75,056 
    Goodwill and other intangible assets, net156,604  158,529 
    Deferred tax assets, net44,388  47,525 
    Other assets151,701  145,882 
    Total assets$4,160,157  $4,021,980 
        
    Liabilities   
    Accounts payable$141,143  $79,690 
    Accrued expenses and other liabilities395,138  366,740 
    Loans payable258,979  258,979 
    Senior notes1,085,595  1,084,022 
    Total liabilities1,880,855  1,789,431 
        
    Commitments and contingencies   
        
    Equity   
    Stockholders’ equity:   
    Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively—  — 
    Common stock, $0.01 par value, 500,000,000 shares authorized; 115,211,206 and 121,882,778 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively1,150  1,219 
    Additional paid-in capital203,288  345,137 
    Retained earnings2,074,852  1,886,181 
    Total stockholders’ equity2,279,290  2,232,537 
    Noncontrolling interests12  12 
    Total equity2,279,302  2,232,549 
    Total liabilities and equity$4,160,157  $4,021,980 


    CONSOLIDATED STATEMENT OF OPERATIONS
    (in thousands, except share and per share amounts)
    (unaudited)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
    Homebuilding:       
    Home sales revenue$1,009,307  $766,942  $1,725,982  $1,361,780 
    Land and lot sales revenue5,416  220  6,939  220 
    Other operations revenue660  648  1,323  1,266 
    Total revenues1,015,383  767,810  1,734,244  1,363,266 
    Cost of home sales761,215  601,434  1,306,571  1,074,316 
    Cost of land and lot sales4,874  374  5,027  576 
    Other operations expense686  624  1,310  1,248 
    Sales and marketing45,489  45,194  85,949  87,831 
    General and administrative51,263  37,554  92,612  77,391 
    Restructuring charges—  5,549  —  5,549 
    Homebuilding income from operations151,856  77,081  242,775  116,355 
    Equity in loss of unconsolidated entities(16) (25) (29) (39)
    Other income (loss), net149  (6,328) 257  (5,955)
    Homebuilding income before income taxes151,989  70,728  243,003  110,361 
    Financial Services:       
    Revenues2,681  2,296  4,786  3,890 
    Expenses1,485  1,285  2,892  2,364 
    Equity in income of unconsolidated entities3,949  2,932  6,640  4,488 
    Financial services income before income taxes5,145  3,943  8,534  6,014 
    Income before income taxes157,134  74,671  251,537  116,375 
    Provision for income taxes(39,265) (18,143) (62,866) (27,964)
    Net income$117,869  $56,528  $188,671  $88,411 
    Earnings per share       
    Basic$1.01  $0.43  $1.60  $0.67 
    Diluted$1.00  $0.43  $1.59  $0.67 
    Weighted average shares outstanding       
    Basic116,824,108  130,292,563  118,082,691  132,326,856 
    Diluted117,770,084  130,506,567  118,921,340  132,763,775 


    MARKET DATA BY REPORTING SEGMENT & STATE
    (dollars in thousands)
    (unaudited)

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
     New
    Homes
    Delivered    		 Average
    Sales
    Price    		 New
    Homes
    Delivered    		 Average
    Sales
    Price    		 New
    Homes
    Delivered    		 Average
    Sales
    Price    		 New
    Homes
    Delivered    		 Average
    Sales
    Price
    Arizona223  $652  165  $525  383  $658  305  $519 
    California698  705  490  737  1,155  692  829  747 
    Nevada127  589  109  505  201  602  189  515 
    Washington69  968  40  916  147  985  92  871 
    West total1,117  697  804  671  1,886  698  1,415  675 
    Colorado59  568  55  595  99  582  119  580 
    Texas233  498  254  477  447  477  463  469 
    Central total292  512  309  498  546  496  582  492 
    Maryland72  570  75  556  130  559  130  558 
    North Carolina21  407  —  —  35  392  —  — 
    South Carolina—  —  —  —  4  285  —  — 
    Virginia43  725  41  777  70  727  60  791 
    East total136  594  116  635  239  579  190  632 
    Total1,545  $653  1,229  $624  2,671  $646  2,187  $623 
                    
     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
     Net New
    Home
    Orders    		 Average
    Selling
    Communities    		 Net New
    Home
    Orders    		 Average
    Selling
    Communities    		 Net New
    Home
    Orders    		 Average
    Selling
    Communities    		 Net New
    Home
    Orders    		 Average
    Selling
    Communities
    Arizona233  15.2  162  19.0  494  15.1  402  16.9 
    California630  39.0  598  54.0  1,320  38.6  1,262  54.9 
    Nevada180  11.3  102  16.5  435  11.6  268  15.4 
    Washington90  6.2  105  9.5  161  5.6  231  8.3 
    West total1,133  71.7  967  99.0  2,410  70.9  2,163  95.5 
    Colorado58  5.8  50  3.8  163  5.3  109  4.1 
    Texas278  22.0  205  29.7  707  23.0  439  30.1 
    Central total336  27.8  255  33.5  870  28.3  548  34.2 
    Maryland46  5.7  80  8.5  109  5.8  203  9.1 
    North Carolina24  1.8  —  —  66  1.6  —  — 
    South Carolina16  2.0  —  —  22  1.5  —  — 
    Virginia67  5.5  30  3.3  132  5.3  79  3.6 
    East total153  15.0  110  11.8  329  14.2  282  12.7 
    Total1,622  114.5  1,332  144.3  3,609  113.4  2,993  142.4 


    MARKET DATA BY REPORTING SEGMENT & STATE, continued
    (dollars in thousands)
    (unaudited)

     As of June 30, 2021 As of June 30, 2020
     Backlog
    Units    		 Backlog
    Dollar
    Value    		 Average
    Sales
    Price    		 Backlog
    Units    		 Backlog
    Dollar
    Value    		 Average
    Sales
    Price
    Arizona590  $424,048  $719  427  $255,916  $599 
    California1,423  921,602  648  985  689,789  700 
    Nevada370  245,895  665  216  134,652  623 
    Washington153  165,314  1,080  228  213,093  935 
    West total2,536  1,756,859  693  1,856  1,293,450  697 
    Colorado190  126,913  668  90  54,170  602 
    Texas758  372,381  491  321  146,650  457 
    Central total948  499,294  527  411  200,820  489 
    Maryland180  107,524  597  190  108,856  573 
    North Carolina43  18,509  430  —  —  — 
    South Carolina21  7,662  365  —  —  — 
    Virginia174  134,594  774  101  75,942  752 
    East total418  268,289  642  291  184,798  635 
    Total3,902  $2,524,442  $647  2,558  $1,679,068  $656 
                
             June 30, December 31,
             2021 2020
    Lots Owned or Controlled:           
    Arizona        3,865  4,128 
    California        14,749  15,040 
    Nevada        2,191  2,639 
    Washington        933  964 
    West total        21,738  22,771 
    Colorado        1,506  1,080 
    Texas        8,900  6,985 
    Central total        10,406  8,065 
    Maryland        766  892 
    North Carolina        3,169  2,808 
    South Carolina        102  106 
    Virginia        931  999 
    East total        4,968  4,805 
    Total        37,112  35,641 
                
             June 30, December 31,
             2021 2020
    Lots by Ownership Type:           
    Lots owned        22,706  22,620 
    Lots controlled (1)        14,406  13,021 
    Total        37,112  35,641 

    (1) As of June 30, 2021 and December 31, 2020, lots controlled included lots that were under land option contracts or purchase contracts. As of June 30, 2021, lots controlled for Central and East include 2,060 lots and 184 lots, respectively, which represent our expected share of lots owned by our unconsolidated land development joint ventures.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
    (unaudited)

    In this press release, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors in evaluating the Company’s operating performance and financing structure. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

    The following tables reconcile homebuilding gross margin percentage, as reported and prepared in accordance with GAAP, to the non-GAAP measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage has on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion.

     Three Months Ended June 30,
     2021 % 2020 %
     (dollars in thousands)
    Home sales revenue$1,009,307  100.0% $766,942  100.0%
    Cost of home sales761,215  75.4% 601,434  78.4%
    Homebuilding gross margin248,092  24.6% 165,508  21.6%
    Add:  interest in cost of home sales30,851  3.1% 21,801  2.8%
    Add:  impairments and lot option abandonments232  0.0% 1,380  0.2%
    Adjusted homebuilding gross margin$279,175  27.7% $188,689  24.6%
    Homebuilding gross margin percentage24.6%   21.6%  
    Adjusted homebuilding gross margin percentage27.7%   24.6%  


     Six Months Ended June 30,
     2021 % 2020 %
     (dollars in thousands)
    Home sales revenue$1,725,982  100.0% $1,361,780  100.0%
    Cost of home sales1,306,571  75.7% 1,074,316  78.9%
    Homebuilding gross margin419,411  24.3% 287,464  21.1%
    Add:  interest in cost of home sales51,529  3.0% 38,623  2.8%
    Add:  impairments and lot option abandonments445  0.0% 1,729  0.1%
    Adjusted homebuilding gross margin$471,385  27.3% $327,816  24.1%
    Homebuilding gross margin percentage24.3%   21.1%  
    Adjusted homebuilding gross margin percentage27.3%   24.1%  


    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
    (unaudited)

    The following table reconciles the Company’s ratio of debt-to-capital to the non-GAAP ratio of net debt-to-net capital. We believe that the ratio of net debt-to-net 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.

     June 30, 2021 December 31, 2020
    Loans payable$258,979  $258,979 
    Senior notes1,085,595  1,084,022 
    Total debt1,344,574  1,343,001 
    Stockholders’ equity2,279,290  2,232,537 
    Total capital$3,623,864  $3,575,538 
    Ratio of debt-to-capital(1)37.1% 37.6%
        
    Total debt$1,344,574  $1,343,001 
    Less: Cash and cash equivalents(556,483) (621,295)
    Net debt788,091  721,706 
    Stockholders’ equity2,279,290  2,232,537 
    Net capital$3,067,381  $2,954,243 
    Ratio of net debt-to-net capital(2)25.7% 24.4%

    __________
    (1) The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.
    (2) The ratio of net debt-to-net capital is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
    (unaudited)

    The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP. EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation, (f) impairments and lot option abandonments, (g) early loan termination costs and (h) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

     Three Months Ended June 30, Six Months Ended June 30,
     2021 2020 2021 2020
     (in thousands)
    Net income$117,869  $56,528  $188,671  $88,411 
    Interest expense:       
    Interest incurred22,558  21,828  43,737  42,607 
    Interest capitalized(22,558) (21,828) (43,737) (42,607)
    Amortization of interest in cost of sales31,124  21,806  51,802  38,628 
    Provision for income taxes39,265  18,143  62,866  27,964 
    Depreciation and amortization8,990  6,720  16,120  12,176 
    EBITDA197,248  103,197  319,459  167,179 
    Amortization of stock-based compensation4,506  3,786  8,162  7,411 
    Impairments and lot option abandonments232  1,380  445  1,729 
    Early loan termination costs—  6,859  —  6,859 
    Restructuring charges—  5,549  —  5,549 
    Adjusted EBITDA$201,986  $120,771  $328,066  $188,727 

     


    Primary Logo

Share on,