Tri Pointe Homes, Inc. Reports 2021 Third Quarter Results

-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-Certified^TM 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 orders	1,349				1,933				(584		)			(30	)	%		4,958				4,926				32					1		%
New homes delivered	1,632				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 rate	9		%		9		%		0			%						7		%		14		%		(7		)	%
Average selling communities	109.0				134.0				(25.0		)			(19	)	%		112.1				138.8				(26.7		)			(19	)	%
Selling communities at end of period	109				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 controlled	38,777				35,641				3,136					9		%
Homes under construction (1)	4,097				3,044				1,053					35		%
Homes completed, unsold	18				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-capital	36.3		%		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
Receivables	86,926				63,551
Real estate inventories	3,136,477				2,910,142
Investments in unconsolidated entities	75,046				75,056
Goodwill and other intangible assets, net	156,603				158,529
Deferred tax assets, net	43,618				47,525
Other assets	147,610				145,882
Total assets	$	4,233,685			$	4,021,980
Liabilities
Accounts payable	$	119,699			$	79,690
Accrued expenses and other liabilities	416,056				366,740
Loans payable	257,381				258,979
Senior notes	1,086,401				1,084,022
Total liabilities	1,879,537				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, respectively	1,124				1,219
Additional paid-in capital	145,004				345,137
Retained earnings	2,208,008				1,886,181
Total stockholders’ equity	2,354,136				2,232,537
Noncontrolling interests	12				12
Total equity	2,354,148				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 revenue	581					3,242					7,520					3,462
Other operations revenue	646					634					1,969					1,900
Total revenues	1,030,177					829,912					2,764,421					2,193,178
Cost of home sales	758,024					643,456					2,064,595					1,717,772
Cost of land and lot sales	891					3,214					5,918					3,790
Other operations expense	801					624					2,111					1,872
Sales and marketing	44,875					44,714					130,824					132,545
General and administrative	53,490					36,323					146,102					113,714
Restructuring charges	—					54					—					5,603
Homebuilding income from operations	172,096					101,527					414,871					217,882
Equity in (loss) income of unconsolidated entities	(43		)			106					(72		)			67
Other income (loss), net	171					(3,120		)			428					(9,075		)
Homebuilding income before income taxes	172,224					98,513					415,227					208,874
Financial Services:
Revenues	3,016					2,552					7,802					6,442
Expenses	1,618					1,334					4,510					3,698
Equity in income of unconsolidated entities	3,946					3,273					10,586					7,761
Financial services income before income taxes	5,344					4,491					13,878					10,505
Income before income taxes	177,568					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
Basic	112,781,663					128,941,901					116,296,265					131,190,301
Diluted	113,782,251					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
Arizona	187			$	685			170			$	559			570			$	667			475			$	534
California	708			646				481			729				1,863			674				1,310			740
Nevada	180			611				132			563				381			607				321			534
Washington	76			983				78			927				223			984				170			897
West total	1,151			669				861			686				3,037			687				2,276			679
Colorado	55			589				47			625				154			584				166			593
Texas	274			492				235			454				721			483				698			628
Central total	329			508				282			482				875			501				864			489
Maryland	73			565				98			578				203			561				228			567
North Carolina	18			395				—			—				53			393				—			—
South Carolina	7			362				—			—				11			334				—			—
Virginia	54			749				62			684				124			737				122			736
East total	152			601				160			619				391			588				350			626
Total	1,632			$	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
Arizona	182			13.2				244			18.7				676			14.4				646			17.4
California	545			38.3				895			45.2				1,865			38.9				2,157			51.1
Nevada	133			10.2				145			15.5				568			11.1				413			15.3
Washington	68			6.5				78			8.5				229			5.7				309			8.2
West total	928			68.2				1,362			87.9				3,338			70.1				3,525			92.0
Colorado	55			6.5				72			4.3				218			5.7				181			4.2
Texas	238			21.5				318			30.5				945			22.6				757			30.3
Central total	293			28.0				390			34.8				1,163			28.3				938			34.5
Maryland	40			4.3				131			8.0				149			5.3				334			8.8
North Carolina	25			1.5				—			—				91			1.6				—			—
South Carolina	16			1.5				6			0.3				38			1.5				6			0.1
Virginia	47			5.5				44			3.0				179			5.3				123			3.4
East total	128			12.8				181			11.3				457			13.7				463			12.3
Total	1,349			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
Arizona	585			$	438,093			$	749			501			$	317,887			$	635
California	1,260			843,994				670				1,399			941,768				673
Nevada	323			226,035				700				229			148,899				650
Washington	145			155,172				1,070				228			222,394				975
West total	2,313			1,663,294				719				2,357			1,630,948				692
Colorado	190			135,851				715				115			65,576				570
Texas	722			364,537				505				404			184,507				457
Central total	912			500,388				549				519			250,083				482
Maryland	147			92,836				632				223			122,133				548
North Carolina	50			23,170				463				—			—				—
South Carolina	30			11,188				373				6			1,851				309
Virginia	167			137,536				824				83			62,351				751
East total	394			264,730				672				312			186,335				597
Total	3,619			$	2,428,412			$	671			3,188			$	2,067,366			$	648
	September 30,			December 31,
	2021			2020
Lots Owned or Controlled:
Arizona	3,750			4,128
California	14,690			15,040
Nevada	2,304			2,639
Washington	857			964
West total	21,601			22,771
Colorado	1,451			1,080
Texas	11,068			6,985
Central total	12,519			8,065
Maryland	693			892
North Carolina	2,924			2,808
South Carolina	163			106
Virginia	877			999
East total	4,657			4,805
Total	38,777			35,641
	September 30,			December 31,
	2021			2020
Lots by Ownership Type:
Lots owned	22,333			22,620
Lots controlled (1)	16,444			13,021
Total	38,777			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 sales	758,024				73.7	%		643,456				77.9	%
Homebuilding gross margin	270,926				26.3	%		182,580				22.1	%
Add:  interest in cost of home sales	25,656				2.5	%		23,495				2.8	%
Add:  impairments and lot option abandonments	268				0.0	%		315				0.0	%
Adjusted homebuilding gross margin	$	296,850			28.8	%		$	206,390			25.0	%
Homebuilding gross margin percentage	26.3		%					22.1		%
Adjusted homebuilding gross margin percentage	28.8		%					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 sales	2,064,595				74.9	%		1,717,772				78.5	%
Homebuilding gross margin	690,337				25.1	%		470,044				21.5	%
Add:  interest in cost of home sales	77,185				2.8	%		62,118				2.8	%
Add:  impairments and lot option abandonments	713				0.0	%		2,044				0.1	%
Adjusted homebuilding gross margin	$	768,235			27.9	%		$	534,206			24.4	%
Homebuilding gross margin percentage	25.1		%					21.5		%
Adjusted homebuilding gross margin percentage	27.9		%					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 notes	1,086,401					1,084,022
Total debt	1,343,782					1,343,001
Stockholders’ equity	2,354,136					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 debt	756,377					721,706
Stockholders’ equity	2,354,136					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 incurred	24,280					20,063					68,017					62,670
Interest capitalized	(24,280		)			(20,063		)			(68,017		)			(62,670		)
Amortization of interest in cost of sales	25,655					23,538					77,457					62,166
Provision for income taxes	44,412					24,322					107,278					52,286
Depreciation and amortization	7,979					7,020					24,098					19,196
EBITDA	211,202					133,562					530,660					300,741
Amortization of stock-based compensation	4,410					3,477					12,572					10,888
Impairments and lot option abandonments	268					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