• Tri Pointe Homes, Inc. Reports 2021 Third Quarter Results

    Source: Nasdaq GlobeNewswire / 21 Oct 2021 06:00:01   America/New_York

    -Diluted Earnings Per Share of $1.17-
    -Homebuilding Gross Margin Percentage of 26.3%-
    -Monthly Absorption Rate of 4.1-
    -Backlog Units up 14% Year-Over-Year-
    -Backlog Dollar Value up 17% Year-Over-Year-

    INCLINE VILLAGE, Nev., Oct. 21, 2021 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the third quarter ended September 30, 2021.

    “Tri Pointe Homes generated a significant year-over-year increase in profitability in the third quarter of 2021, driven by strong revenue growth and margin expansion,” said Doug Bauer, Chief Executive Officer of Tri Pointe Homes. “Our teams did an excellent job navigating the supply chain issues that persist in our industry, enabling us to post a 25% year-over-year increase in deliveries. With the strong pricing power we have experienced this year, our homebuilding gross margin was 26.3% for the quarter, which is a record for our company. The combination of increased deliveries and greater margins resulted in net income of $133.2 million for the quarter, or $1.17 per diluted share, representing year-over-year growth of 69% and 92%, respectively.”

    Mr. Bauer continued, “Our return on average tangible equity was 20.8%* on a trailing twelve-month basis following our third quarter results, representing a 650-basis-point improvement over the same period last year. Our steadily improving return profile has been driven in large part by several strategic initiatives we have implemented, which include better asset turns, a more land-light strategy, consistent share repurchases, the maturation of our early-stage divisions and enhanced operational and process improvements. We have been extremely pleased with the way these initiatives have led to meaningful improvements to our return on average tangible equity and believe the strategic changes we have made will continue to benefit our stockholders.”

    Mr. Bauer concluded, “With a robust backlog, a healthy demand outlook and a strong balance sheet, Tri Pointe Homes is poised to finish 2021 on a high note and carry that momentum into 2022. We believe a number of the demand drivers that are currently in place should persist for the foreseeable future, creating an excellent operating environment for our company. As a result, we are extremely optimistic about the future of Tri Pointe Homes.”

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

    • Net income was $133.2 million, or $1.17 per diluted share, compared to $78.7 million, or $0.61 per diluted share.
    • Home sales revenue of $1.0 billion compared to $826.0 million, an increase of 25%
      • New home deliveries of 1,632 homes compared to 1,303 homes, an increase of 25%
      • Average sales price of homes delivered of $630,000 compared to $634,000, a decrease of 1%
    • Homebuilding gross margin percentage of 26.3% compared to 22.1%, an increase of 420 basis points
      • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 28.8%**
    • SG&A expense as a percentage of homes sales revenue of 9.6% compared to 9.8%, a decrease of 20 basis points
    • Net new home orders of 1,349 compared to 1,933, a decrease of 30%
    • Active selling communities averaged 109.0 compared to 134.0, a decrease of 19%
      • Net new home orders per average selling community were 12.4 orders (4.1 monthly) compared to 14.4 orders (4.8 monthly)
      • Cancellation rate of 9% in each period
    • Backlog units at quarter end of 3,619 homes compared to 3,188, an increase of 14%
      • Dollar value of backlog at quarter end of $2.4 billion compared to $2.1 billion, an increase of 17%
      • Average sales price of homes in backlog at quarter end of $671,000 compared to $648,000, an increase of 4%
    • Ratios of debt-to-capital and net debt-to-net capital of 36.3% and 24.3%**, respectively, as of September 30, 2021
    • Repurchased 2,974,328 shares of common stock at a weighted average price per share of $21.93 for an aggregate dollar amount of $65.2 million in the three months ended September 30, 2021
    • Ended the third quarter of 2021 with total liquidity of $1.2 billion, including cash and cash equivalents of $587.4 million and $589.9 million of availability under the Company’s unsecured revolving credit facility

    *Return on average tangible equity is calculated as net income for the trailing twelve months divided by average stockholders’ equity less goodwill and other intangible assets for the trailing five quarters
    **See “Reconciliation of Non-GAAP Financial Measures”

    “We continued to see excellent demand for our homes during the third quarter of 2021, as evidenced by our sales pace of 4.1 orders per community per month,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “The order activity was broad-based both in terms of geography and price point, a sign that there is wide-ranging appeal for our premium brand and innovative new home designs. We intend to capitalize on this continued demand by opening over 100 new communities through the next five quarters and expect to end 2022 with approximately 40% more active communities than the previous year. We are excited about our growth prospects in the coming quarters and believe we are in a great position to benefit from the strong housing fundamentals that continue to drive new home demand.”

    Outlook

    For the full year, the Company expects to open approximately 70 new communities and end the year with between 110 and 115 active selling communities. In addition, the Company anticipates delivering between 6,000 and 6,300 homes at an average sales price between $635,000 and $640,000. The Company expects homebuilding gross margin percentage to be in the range of 24.5% to 25.0% 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 10.2%. Finally, the Company expects its effective tax rate for the full year to be approximately 25%.

    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, October 21, 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 presentation slides on the internet through 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 Third 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 13723766. 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; the prices and availability of supply chain inputs, including raw materials, and labor; 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 September 30, Nine Months Ended September 30,
     2021 2020 Change % Change 2021 2020 Change % Change
    Operating Data:(unaudited)
    Home sales revenue$1,028,950  $826,036  $202,914   25 % $2,754,932  $2,187,816  $567,116   26 %
    Homebuilding gross margin$270,926  $182,580  $88,346   48 % $690,337  $470,044  $220,293   47 %
    Homebuilding gross margin %26.3% 22.1% 4.2 %   25.1% 21.5% 3.6 %  
    Adjusted homebuilding gross margin %*28.8% 25.0% 3.8 %   27.9% 24.4% 3.5 %  
    SG&A expense$98,365  $81,037  $17,328   21 % $276,926  $246,259  $30,667   12 %
    SG&A expense as a % of home sales
    revenue    		9.6% 9.8% (0.2)%   10.1% 11.3% (1.2)%  
    Net income$133,156  $78,682  $54,474   69 % $321,827  $167,093  $154,734   93 %
    Adjusted EBITDA*$215,880  $140,792  $75,088   53 % $543,945  $329,519  $214,426   65 %
    Interest incurred$24,280  $20,063  $4,217   21 % $68,017  $62,670  $5,347   9 %
    Interest in cost of home sales$25,656  $23,495  $2,161   9 % $77,185  $62,118  $15,067   24 %
                    
    Other Data:               
    Net new home orders1,349  1,933  (584)  (30)% 4,958  4,926  32   1 %
    New homes delivered1,632  1,303  329   25 % 4,303  3,490  813   23 %
    Average sales price of homes delivered$630  $634  $(4)  (1)% $640  $627  $13   2 %
    Cancellation rate9% 9% 0 %   7% 14% (7)%  
    Average selling communities109.0  134.0  (25.0)  (19)% 112.1  138.8  (26.7)  (19)%
    Selling communities at end of period109  126  (17)  (13)%        
    Backlog (estimated dollar value)$2,428,412  $2,067,366  $361,046   17 %        
    Backlog (homes)3,619  3,188  431   14 %        
    Average sales price in backlog$671  $648  $23   4 %        
                    
     September 30, December 31,            
     2021 2020 Change % Change        
    Balance Sheet Data:(unaudited)              
    Cash and cash equivalents$587,405  $621,295  $(33,890)  (5)%        
    Real estate inventories$3,136,477  $2,910,142  $226,335   8 %        
    Lots owned or controlled38,777  35,641  3,136   9 %        
    Homes under construction (1)4,097  3,044  1,053   35 %        
    Homes completed, unsold18  68  (50)  (74)%        
    Debt$1,343,782  $1,343,001  $781   0 %        
    Stockholders’ equity$2,354,136  $2,232,537  $121,599   5 %        
    Book capitalization$3,697,918  $3,575,538  $122,380   3 %        
    Ratio of debt-to-capital36.3% 37.6% (1.3)%          
    Ratio of net debt-to-net capital*24.3% 24.4% (0.1)%          


    (1)Homes under construction included 83 and 86 models at September 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)

     September 30, December 31,
     2021 2020
    Assets(unaudited)  
    Cash and cash equivalents$587,405  $621,295 
    Receivables86,926  63,551 
    Real estate inventories3,136,477  2,910,142 
    Investments in unconsolidated entities75,046  75,056 
    Goodwill and other intangible assets, net156,603  158,529 
    Deferred tax assets, net43,618  47,525 
    Other assets147,610  145,882 
    Total assets$4,233,685  $4,021,980 
        
    Liabilities   
    Accounts payable$119,699  $79,690 
    Accrued expenses and other liabilities416,056  366,740 
    Loans payable257,381  258,979 
    Senior notes1,086,401  1,084,022 
    Total liabilities1,879,537  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 September 30, 2021 and December 31, 2020, respectively—  — 
    Common stock, $0.01 par value, 500,000,000 shares authorized; 112,386,496 and 121,882,778 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively1,124  1,219 
    Additional paid-in capital145,004  345,137 
    Retained earnings2,208,008  1,886,181 
    Total stockholders’ equity2,354,136  2,232,537 
    Noncontrolling interests12  12 
    Total equity2,354,148  2,232,549 
    Total liabilities and equity$4,233,685  $4,021,980 



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

     Three Months Ended September 30, Nine Months Ended September 30,
     2021 2020 2021 2020
    Homebuilding:       
    Home sales revenue$1,028,950   $826,036   $2,754,932   $2,187,816  
    Land and lot sales revenue581   3,242   7,520   3,462  
    Other operations revenue646   634   1,969   1,900  
    Total revenues1,030,177   829,912   2,764,421   2,193,178  
    Cost of home sales758,024   643,456   2,064,595   1,717,772  
    Cost of land and lot sales891   3,214   5,918   3,790  
    Other operations expense801   624   2,111   1,872  
    Sales and marketing44,875   44,714   130,824   132,545  
    General and administrative53,490   36,323   146,102   113,714  
    Restructuring charges—   54   —   5,603  
    Homebuilding income from operations172,096   101,527   414,871   217,882  
    Equity in (loss) income of unconsolidated entities(43)  106   (72)  67  
    Other income (loss), net171   (3,120)  428   (9,075) 
    Homebuilding income before income taxes172,224   98,513   415,227   208,874  
    Financial Services:       
    Revenues3,016   2,552   7,802   6,442  
    Expenses1,618   1,334   4,510   3,698  
    Equity in income of unconsolidated entities3,946   3,273   10,586   7,761  
    Financial services income before income taxes5,344   4,491   13,878   10,505  
    Income before income taxes177,568   103,004   429,105   219,379  
    Provision for income taxes(44,412)  (24,322)  (107,278)  (52,286) 
    Net income$133,156   $78,682   $321,827   $167,093  
    Earnings per share       
    Basic$1.18   $0.61   $2.77   $1.27  
    Diluted$1.17   $0.61   $2.75   $1.27  
    Weighted average shares outstanding       
    Basic112,781,663   128,941,901   116,296,265   131,190,301  
    Diluted113,782,251   129,515,114   117,188,893   131,672,652  



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

     Three Months Ended September 30, Nine Months Ended September 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
    Arizona187  $685  170  $559  570  $667  475  $534 
    California708  646  481  729  1,863  674  1,310  740 
    Nevada180  611  132  563  381  607  321  534 
    Washington76  983  78  927  223  984  170  897 
    West total1,151  669  861  686  3,037  687  2,276  679 
    Colorado55  589  47  625  154  584  166  593 
    Texas274  492  235  454  721  483  698  628 
    Central total329  508  282  482  875  501  864  489 
    Maryland73  565  98  578  203  561  228  567 
    North Carolina18  395  —  —  53  393  —  — 
    South Carolina7  362  —  —  11  334  —  — 
    Virginia54  749  62  684  124  737  122  736 
    East total152  601  160  619  391  588  350  626 
    Total1,632  $630  1,303  $634  4,303  $640  3,490  $627 
                    
     Three Months Ended September 30, Nine Months Ended September 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
    Arizona182  13.2  244  18.7  676  14.4  646  17.4 
    California545  38.3  895  45.2  1,865  38.9  2,157  51.1 
    Nevada133  10.2  145  15.5  568  11.1  413  15.3 
    Washington68  6.5  78  8.5  229  5.7  309  8.2 
    West total928  68.2  1,362  87.9  3,338  70.1  3,525  92.0 
    Colorado55  6.5  72  4.3  218  5.7  181  4.2 
    Texas238  21.5  318  30.5  945  22.6  757  30.3 
    Central total293  28.0  390  34.8  1,163  28.3  938  34.5 
    Maryland40  4.3  131  8.0  149  5.3  334  8.8 
    North Carolina25  1.5  —  —  91  1.6  —  — 
    South Carolina16  1.5  6  0.3  38  1.5  6  0.1 
    Virginia47  5.5  44  3.0  179  5.3  123  3.4 
    East total128  12.8  181  11.3  457  13.7  463  12.3 
    Total1,349  109.0  1,933  134.0  4,958  112.1  4,926  138.8 



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

     As of September 30, 2021 As of September 30, 2020
     Backlog
    Units    		 Backlog
    Dollar
    Value    		 Average
    Sales
    Price    		 Backlog
    Units    		 Backlog
    Dollar
    Value    		 Average
    Sales
    Price
    Arizona585  $438,093  $749  501  $317,887  $635 
    California1,260  843,994  670  1,399  941,768  673 
    Nevada323  226,035  700  229  148,899  650 
    Washington145  155,172  1,070  228  222,394  975 
    West total2,313  1,663,294  719  2,357  1,630,948  692 
    Colorado190  135,851  715  115  65,576  570 
    Texas722  364,537  505  404  184,507  457 
    Central total912  500,388  549  519  250,083  482 
    Maryland147  92,836  632  223  122,133  548 
    North Carolina50  23,170  463  —  —  — 
    South Carolina30  11,188  373  6  1,851  309 
    Virginia167  137,536  824  83  62,351  751 
    East total394  264,730  672  312  186,335  597 
    Total3,619  $2,428,412  $671  3,188  $2,067,366  $648 
                
     September 30, December 31,        
     2021 2020        
    Lots Owned or Controlled:           
    Arizona3,750  4,128         
    California14,690  15,040         
    Nevada2,304  2,639         
    Washington857  964         
    West total21,601  22,771         
    Colorado1,451  1,080         
    Texas11,068  6,985         
    Central total12,519  8,065         
    Maryland693  892         
    North Carolina2,924  2,808         
    South Carolina163  106         
    Virginia877  999         
    East total4,657  4,805         
    Total38,777  35,641         
                
     September 30, December 31,        
     2021 2020        
    Lots by Ownership Type:           
    Lots owned22,333  22,620         
    Lots controlled (1)16,444  13,021         
    Total38,777  35,641         


    (1)As of September 30, 2021 and December 31, 2020, lots controlled included lots that were under land option contracts or purchase contracts. As of September 30, 2021, lots controlled for Central and East include 2,095 lots and 179 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 September 30,
     2021 % 2020 %
     (dollars in thousands)
    Home sales revenue$1,028,950  100.0% $826,036  100.0%
    Cost of home sales758,024  73.7% 643,456  77.9%
    Homebuilding gross margin270,926  26.3% 182,580  22.1%
    Add:  interest in cost of home sales25,656  2.5% 23,495  2.8%
    Add:  impairments and lot option abandonments268  0.0% 315  0.0%
    Adjusted homebuilding gross margin$296,850  28.8% $206,390  25.0%
    Homebuilding gross margin percentage26.3%   22.1%  
    Adjusted homebuilding gross margin percentage28.8%   25.0%  


     Nine Months Ended September 30,
     2021 % 2020 %
     (dollars in thousands)
    Home sales revenue$2,754,932  100.0% $2,187,816  100.0%
    Cost of home sales2,064,595  74.9% 1,717,772  78.5%
    Homebuilding gross margin690,337  25.1% 470,044  21.5%
    Add:  interest in cost of home sales77,185  2.8% 62,118  2.8%
    Add:  impairments and lot option abandonments713  0.0% 2,044  0.1%
    Adjusted homebuilding gross margin$768,235  27.9% $534,206  24.4%
    Homebuilding gross margin percentage25.1%   21.5%  
    Adjusted homebuilding gross margin percentage27.9%   24.4%  



    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.

     September 30, 2021 December 31, 2020
    Loans payable$257,381   $258,979  
    Senior notes1,086,401   1,084,022  
    Total debt1,343,782   1,343,001  
    Stockholders’ equity2,354,136   2,232,537  
    Total capital$3,697,918   $3,575,538  
    Ratio of debt-to-capital(1)36.3 % 37.6 %
        
    Total debt$1,343,782   $1,343,001  
    Less: Cash and cash equivalents(587,405)  (621,295) 
    Net debt756,377   721,706  
    Stockholders’ equity2,354,136   2,232,537  
    Net capital$3,110,513   $2,954,243  
    Ratio of net debt-to-net capital(2)24.3 % 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 September 30, Nine Months Ended September 30,
     2021 2020 2021 2020
     (in thousands)
    Net income$133,156   $78,682   $321,827   $167,093  
    Interest expense:       
    Interest incurred24,280   20,063   68,017   62,670  
    Interest capitalized(24,280)  (20,063)  (68,017)  (62,670) 
    Amortization of interest in cost of sales25,655   23,538   77,457   62,166  
    Provision for income taxes44,412   24,322   107,278   52,286  
    Depreciation and amortization7,979   7,020   24,098   19,196  
    EBITDA211,202   133,562   530,660   300,741  
    Amortization of stock-based compensation4,410   3,477   12,572   10,888  
    Impairments and lot option abandonments268   315   713   2,044  
    Early loan termination costs—   3,384   —   10,243  
    Restructuring charges—   54   —   5,603  
    Adjusted EBITDA$215,880   $140,792   $543,945   $329,519  

     


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