TRI Pointe Group, Inc. (NYSE: TPH) today announced results for the third quarter ended September 30, 2015.

On July 7, 2014, TRI Pointe consummated the merger with Weyerhaeuser Real Estate Company ("WRECO"). The merger was accounted for as a "reverse acquisition" of TRI Pointe by WRECO. As a result, legacy TRI Pointe's financial results are only included in the combined company's financial statements from the closing date forward and are not reflected in the combined company's historical financial statements. Accordingly, legacy TRI Pointe's financial results are not included in the Generally Accepted Accounting Principles ("GAAP") results for the periods prior to July 7, 2014 included in this press release.

Results and Operational Data for Third Quarter 2015 and Comparisons to Third Quarter 2014
  • Net income available to common shareholders was $50.2 million, or $0.31 per diluted share compared to $11.0 million, or $0.07 per diluted share
  • New home orders increased to 996 compared to 803, an increase of 24%
  • Active selling communities averaged 120.8 compared to 107.0
    • New home orders per average selling community were 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly), an increase of 10%
    • Cancellation rate decreased to 16% compared to 18%
  • Backlog units of 1,856 homes with a dollar value increase of 28%, to approximately $1.1 billion
    • Average sales price in backlog of $598,000
  • Home sales revenue of $642.4 million, an increase of 36%
    • New homes deliveries of 1,138, up 35%
    • Average sales price of homes delivered of $564,000
  • Homebuilding gross margin percentage of 21.0%
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.1%*
  • SG&A expense as a percentage of homes sales revenue improved to 8.8% compared to 10.5%
  • Ratios of debt and net debt to capital of 44.1% and 42.2%*, respectively, as of September 30 2015
  • Cash of $97.0 million and availability under unsecured revolving credit facility of $192.4 million

* See "Reconciliation of Non-GAAP Financial Measures"

"TRI Pointe Group delivered another strong quarter marked by year-over-year growth in revenues, net income and orders," commented Chief Executive Officer Doug Bauer. "In addition, the Company's third quarter results met or exceeded our guidance for new home deliveries, homebuilding gross margins and community openings. These achievements are a reflection of TRI Pointe Group's success in combining and integrating the six homebuilding brands, and the strength of the deeply experienced operating teams in each of their local markets."

GAAP Third quarter 2015 operating results

Net income available to common shareholders was $50.2 million, or $0.31 per diluted share in the third quarter of 2015, compared to net income of $11.0 million, or $0.07 per diluted share for the third quarter of 2014. The improvement in net income available to common shareholders was primarily driven by an increase of $48.4 million in home sales gross margin due to higher home sales revenue resulting from a 35% increase in new home deliveries in addition to a savings of $21.7 million related to restructuring and transaction related expenses incurred in the prior year. This was offset by current year increases in the Company's provision for income taxes of $22.0 million and higher SG&A costs of $7.5 million.

Home sales revenue increased $170.6 million to $642.4 million for the third quarter of 2015, as compared to $471.8 million for the same period in 2014. The increase was attributable to a 35% increase in new home deliveries to 1,138 and a 1% increase in the Company's average sales price of homes delivered to $564,000. New home deliveries increased at all six of our reporting segments with the highest increase at TRI Pointe Homes, which was up 140 units, or 89% compared to the prior year, while delivering at an average sales price of $752,000.

New home orders increased 24% to 996 homes for the third quarter of 2015, as compared to 803 homes for the same period in 2014. Average active selling communities increased to 120.8 as compared to 107.0 for the same period in the prior year, mainly due to TRI Pointe Homes which increased average active selling communities by 12.3 in the current year. The Company's overall quarterly absorption rate per average selling community for the three months ended September 30 2015 increased 10% to 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly) during the same period in 2014.

The Company ended the quarter with 1,856 homes in backlog, representing approximately $1.1 billion in future home sales revenue. The average sales price of homes in backlog as of September 30, 2015 decreased $6,000, or 1%, to $598,000 compared to $604,000 at September 30 2014.

Homebuilding gross margin percentage for the third quarter of 2015 increased to 21.0% compared to 18.3% for the same period in 2014 and increased sequentially from 20.0% during the second quarter of 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 23.1%* for the third quarter of 2015 versus 20.0%* for the same period in 2014.

Selling, general and administrative expense for the third quarter of 2015 improved to 8.8% of home sales revenue as compared to 10.5% for the same period in 2014. The decrease in the selling, general and administrative expense ratio was primarily attributable to increased home sales revenue.

"While California continues to be the main driver of earnings for our Company, each of the TRI Pointe brands continues to make solid contributions to the bottom line," said Tom Mitchell, TRI Pointe Group's President and Chief Operating Officer. "We are extremely pleased with the level of execution demonstrated by each of our brands."

* See "Reconciliation of Non-GAAP Financial Measures"

Outlook

For the fourth quarter of 2015, the Company anticipates delivering approximately 75% - 80% of its 1,856 units in backlog as of September 30, 2015. The Company anticipates expanding homebuilding gross margin for the fourth quarter sequentially from the third quarter and ending with a full year 2015 homebuilding gross margin of approximately 21%. Finally, the Company is reiterating its full year 2015 outlook for earnings per diluted share to a range of $1.15 to $1.30.

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 Friday, November 6, 2015. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, Chief Operating Officer and Mike Grubbs, Chief Financial Officer.

Interested parties can listen to the call live on the internet through the Investor Relations section of the Company's website at www.TRIPointeGroup.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the TRI Pointe Group Third Quarter 2015 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start. The replay of the call will be available for two weeks following the call. To access the replay, the domestic dial-in number is 1-877-870-5176, the international dial-in number is 1-858-384-5517, and the pass code is 13614256. An archive of the webcast will be available on the Company's website for a limited time.

About TRI Pointe Group, Inc.

Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is one of the top ten largest public homebuilders by equity market capitalization in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, included Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia. Additional information is available at www.tripointegroup.com.

Forward-Looking Statements

Various statements contained in this presentation, 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 projections and estimates concerning the timing and success of specific projects, our ability to achieve the anticipated benefits of the Weyerhaeuser Real Estate Company (WRECO) transaction and our future production, operational and financial results, financial condition, prospects, and capital spending. Our forward-looking statements are generally accompanied by words such as "anticipate," "believe," "estimate," "goal," "expect," "intend," "project," "potential," "plan," "predict," "will," or other words that convey future events or outcomes. The forward-looking statements in this presentation speak only as of the date of this presentation, 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 effect 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; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; global economic conditions; raw material prices; oil and other energy prices; the effect of weather, including the continuing drought in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings; 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; the risk that disruptions from the WRECO transaction will harm our business; our ability to achieve the benefits of the WRECO transaction in the estimated amount and the anticipated timeframe, if at all; our ability to integrate WRECO successfully and to achieve the anticipated synergies therefrom; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our customers' confidential information or other forms of cyber-attack; our relationship, and actual and potential conflicts of interest, with Starwood Capital Group or its affiliates; and additional factors discussed under the sections captioned "Risk Factors" included in our annual and quarterly reports filed with the Securities and Exchange Commission ("SEC"). 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.
 
KEY OPERATIONS AND FINANCIAL DATA

(dollars in thousands)

(unaudited)
       
Three Months Ended Nine Months Ended
September 30, September 30,
2015     2014     Change 2015     2014     Change
Operating Data:
Home sales $ 642,352 $ 471,801 $ 170,551 $ 1,443,855 $ 1,023,312 $ 420,543
Homebuilding gross margin $ 134,809 $ 86,401 $ 48,408 $ 294,664 $ 203,935 $ 90,729
Homebuilding gross margin % 21.0 % 18.3 % 2.7 % 20.4 % 19.9 % 0.5 %
Adjusted homebuilding gross margin %* 23.1 % 20.0 % 3.0 % 22.4 % 21.6 % 0.8 %
Land and lot gross margin $ 1,425 $ 3,233 $ (1,808 ) $ 57,042 $ 6,204 $ 50,838
Land and lot gross margin % 29.2 % 58.3 % (29.0 )% 76.7 % 17.0 % 59.7 %
SG&A expense $ 56,821 $ 49,344 $ 7,477 $ 162,219 $ 130,236 $ 31,983
SG&A expense as a % of home sales 8.8 % 10.5 % (1.7 )% 11.2 % 12.7 % (1.5 )%

Net income available to common shareholders
$ 50,162 $ 10,965 $ 39,197 $ 120,389 $ 42,771 $ 77,618
Adjusted EBITDA* $ 99,135 $ 57,433 $ 41,702 $ 233,079 $ 146,816 $ 86,263
Interest incurred $ 15,454 $ 15,129 $ 325 $ 45,779 $ 25,718 $ 20,061

Interest expense, net of interest capitalized
$ $ 290 $ (290 ) $ $ 2,731 $ (2,731 )
Interest in cost of home sales $ 13,189 $ 7,702 $ 5,487 $ 27,540 $ 16,342 $ 11,198
 
Other Data:
Net new home orders 996 803 193 3,428 2,233 1,195
New homes delivered 1,138 842 296 2,604 1,978 626
Average selling price of homes delivered $ 564 $ 560 $ 4 $ 554 $ 517 $ 37
Average selling communities (QTD) 120.8 107.0 13.8 N/A N/A N/A
Average selling communities (YTD) N/A N/A N/A 117.4 98.5 18.9
Selling communities at end of period 118 106 12 N/A N/A N/A
Cancellation rate 16 % 18 % (2 )% 14 % 16 % (2 )%
Backlog (estimated dollar value) $ 1,109,867 $ 870,365 $ 239,502
Backlog (homes) 1,856 1,440 416
Average selling price in backlog $ 598 $ 604 $ (6 )
 
September 30, December 31,
2015 2014 Change
Balance Sheet Data:
Cash and cash equivalents $ 96,993 $ 170,629 $ (73,636 )
Real estate inventories $ 2,576,402 $ 2,280,183 $ 296,219
Lots owned or controlled 28,240 29,718 (1,478 )
Homes under construction (1) 2,789 1,887 902
Debt $ 1,245,621 $ 1,162,179 $ 83,442
Stockholder equity $ 1,576,176 $ 1,454,180 $ 121,996
Book capitalization $ 2,821,797 $ 2,616,359 $ 205,438
Ratio of debt-to-capital 44.1 % 44.4 % (0.3 )%
Ratio of net debt-to-capital* 42.2 % 40.5 % 1.6 %
 

(1)
 

Homes under construction includes completed homes

*

See "Reconciliation of Non-GAAP Financial Measures"
 
CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)
       
September 30, December 31,
2015 2014
Assets (unaudited)
Cash and cash equivalents $ 96,993 $ 170,629
Receivables 32,921 20,118
Real estate inventories 2,576,402 2,280,183
Investments in unconsolidated entities 17,340 16,805
Goodwill and other intangible assets, net 162,162 162,563
Deferred tax assets 141,479 157,821
Other assets   84,516   105,405
Total assets $ 3,111,813 $ 2,913,524
 
Liabilities
Accounts payable $ 67,747 $ 68,860
Accrued expenses and other liabilities 210,707 210,009
Unsecured revolving credit facility 349,392 260,000
Seller financed loans 7,572 14,677
Senior notes   888,657   887,502
Total liabilities   1,524,075   1,441,048
Commitments and contingencies
 
Equity
Stockholders' Equity:

Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively

Common stock, $0.01 par value, 500,000,000 shares authorized; 161,813,750 and 161,355,490 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
1,618 1,614
Additional paid-in capital 907,762 906,159
Retained earnings   666,796   546,407
Total stockholders' equity 1,576,176 1,454,180
Noncontrolling interests   11,562   18,296
Total equity   1,587,738   1,472,476
Total liabilities and equity $ 3,111,813 $ 2,913,524
 
 
CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)
       
Three Months Ended September 30, Nine Months Ended September 30,
2015     2014 2015     2014
Revenues:
Home sales $ 642,352 $ 471,801 $ 1,443,855 $ 1,023,312
Land and lot sales 4,876 5,550 74,366 36,449
Other operations   913   569   2,695   8,854
Total revenues   648,141   477,920   1,520,916   1,068,615
 
Expenses:
Cost of home sales 507,543 385,400 1,149,191 819,377
Cost of land and lot sales 3,451 2,317 17,324 30,245
Other operations 570 556 1,724 2,755
Sales and marketing 30,038 28,393 78,958 73,096
General and administrative 26,783 20,951 83,261 57,140
Restructuring charges   2,010   7,024   2,730   9,202
Total expenses   570,395   444,641   1,333,188   991,815
Income from operations 77,746 33,279 187,728 76,800
Equity in loss of unconsolidated entities (3 ) (82 ) (84 ) (219 )
Transaction expenses (16,710 ) (17,216 )
Other income (loss), net   47   499   272   (242 )
Income before income taxes 77,790 16,986 187,916 59,123
Provision for income taxes   (28,021 )   (6,021 )   (66,088 )   (16,352 )
Net income 49,769 10,965 121,828 42,771
Net (income) loss attributable to noncontrolling interests   393     (1,439 )  
Net income available to common shareholders $ 50,162 $ 10,965 $ 120,389 $ 42,771
 
Earnings per share
Basic $ 0.31 $ 0.07 $ 0.74 $ 0.31
Diluted $ 0.31 $ 0.07 $ 0.74 $ 0.31
Weighted average shares outstanding
Basic 161,772,893 158,931,450 161,651,177 139,550,891
Diluted 162,366,744 159,158,706 162,299,282 140,213,655
 
 
MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
       
Three Months Ended September 30, Nine Months Ended September 30,
2015     2014 2015     2014
Homes     Avg. Selling Homes     Avg. Selling Homes     Avg. Selling Homes     Avg. Selling
Delivered Price Delivered Price Delivered Price Delivered Price
New Homes Delivered:        
Maracay Homes 131 $ 386 94 $ 397 307 $ 380 286 $ 376
Pardee Homes 314 543 277 468 724 506 658 480
Quadrant Homes 117 406 74 437 297 426 219 405
Trendmaker Homes 163 495 135 516 394 512 404 492
TRI Pointe Homes 298 752 158 781 611 756 158 781
Winchester Homes   115   599   104   763   271   631   253   747
Total   1,138 $ 564   842 $ 560   2,604 $ 554   1,978 $ 517
 
 
Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
Homes Avg. Selling Homes Avg. Selling Homes Avg. Selling Homes Avg. Selling
Delivered Price Delivered Price Delivered Price Delivered Price
New Homes Delivered:
California 462 $ 720 350 $ 635 969 $ 700 633 $ 590
Colorado 51 512 15 429 128 488 15 429
Maryland 58 483 42 556 120 528 114 624
Virginia 57 716 62 904 151 714 139 847
Arizona 131 386 94 397 307 380 286 376
Nevada 99 361 70 348 238 368 168 354
Texas 163 495 135 516 394 512 404 492
Washington   117   406   74   437   297   426   219   405
Total   1,138 $ 564   842 $ 560   2,604 $ 554   1,978 $ 517
 
 
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
       
Three Months Ended September 30, Nine Months Ended September 30,
2015     2014 2015     2014
New     Average New     Average New     Average New     Average
Home Selling Home Selling Home Selling Home Selling
Orders Communities Orders Communities Orders Communities Orders Communities
Net New Home Orders:                
Maracay Homes 150 17.2 88 17.3 495 17.3 313 16.4
Pardee Homes 291 25.0 264 21.3 954 22.8 793 20.3
Quadrant Homes 87 11.8 82 12.3 353 10.8 286 12.8
Trendmaker Homes 125 25.0 127 24.8 381 26.0 436 23.5
TRI Pointe Homes 234 28.3 152 16.0 935 27.0 152 6.4
Winchester Homes   109   13.5   90   15.3   310   13.5   253   19.1
Total   996   120.8   803   107.0   3,428   117.4   2,233   98.5
 
 
Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
New Average New Average New Average New Average
Home Selling Home Selling Home Selling Home Selling
Orders Communities Orders Communities Orders Communities Orders Communities
Net New Home Orders:
California 392 35.5 292 26.3 1,421 33.2 686 18.3
Colorado 34 6.0 31 3.0 168 6.4 31 1.2
Maryland 71 6.0 48 6.3 165 5.8 117 8.2
Virginia 38 7.5 42 9.0 145 7.7 136 10.9
Arizona 150 17.2 88 17.3 495 17.3 313 16.4
Nevada 99 11.8 93 8.0 300 10.2 228 7.2
Texas 125 25.0 127 24.8 381 26.0 436 23.5
Washington   87   11.8   82   12.3   353   10.8   286   12.8
Total   996   120.8   803   107.0   3,428   117.4   2,233   98.5
 
 
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
       
As of September 30, 2015 As of September 30, 2014
      Backlog     Average       Backlog     Average
Backlog Dollar Selling Backlog Dollar Selling
Units Value Price Units Value Price
Backlog:
Maracay Homes 293 $ 118,164 $ 403 143 $ 57,202 $ 400
Pardee Homes 448 296,477 662 415 222,929 537
Quadrant Homes 169 79,955 473 163 78,317 480
Trendmaker Homes 205 108,250 528 254 131,611 518
TRI Pointe Homes 567 388,336 685 282 240,872 854
Winchester Homes   174   118,685   682   183   139,434   762
Total   1,856 $ 1,109,867 $ 598   1,440 $ 870,365 $ 604
 
 
As of September 30, 2015 As of September 30, 2014
Backlog Average Backlog Average
Backlog Dollar Selling Backlog Dollar Selling
Units Value Price Units Value Price
Backlog:
California 770 $ 577,053 $ 749 523 $ 393,876 $ 753
Colorado 124 62,445 504 51 22,657 444
Maryland 98 59,200 604 72 46,001 639
Virginia 76 59,485 783 111 93,433 842
Arizona 293 118,164 403 143 57,202 400
Nevada 121 45,315 375 123 47,269 384
Texas 205 108,250 528 254 131,611 518
Washington   169   79,955   473   163   78,316   480
Total   1,856 $ 1,109,867 $ 598   1,440 $ 870,365 $ 604
 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
       
September 30, December 31,
2015 2014
Lots Owned or Controlled: (unaudited)
Maracay Homes 1,798 1,985
Pardee Homes 17,075 17,639
Quadrant Homes 1,422 1,544
Trendmaker Homes 1,976 2,073
TRI Pointe Homes 3,393 3,726
Winchester Homes 2,576 2,751
Total 28,240 29,718
 
 
September 30, December 31,
2015 2014
Lots Owned or Controlled: (unaudited)
California 17,939 18,842
Colorado 607 639
Maryland 1,883 2,048
Virginia 693 703
Arizona 1,798 1,985
Nevada 1,922 1,884
Texas 1,976 2,073
Washington 1,422 1,544
Total 28,240 29,718
 
 
September 30, December 31,
2015 2014
Lots by Ownership Type: (unaudited)
Lots owned 25,484 25,535
Lots controlled (1) 2,756 4,183
Total 28,240 29,718
 

(1)
  As of September 30, 2015 and December 31, 2014, lots controlled included lots that were under land option contracts or purchase contracts.
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(unaudited)

In this earnings 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 table reconciles 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,
2015     %     2014     %
(dollars in thousands)
Home sales $ 642,352   100.0 % $ 471,801   100.0 %
Cost of home sales   507,543   79.0 %   385,400   81.7 %
Homebuilding gross margin 134,809 21.0 % 86,401 18.3 %
Add: interest in cost of home sales 13,189 2.1 % 7,702 1.6 %
Add: impairments and lot option abandonments   366   0.1 %   490   0.1 %
Adjusted homebuilding gross margin $ 148,364   23.1 % $ 94,593   20.0 %
Homebuilding gross margin percentage   21.0 %   18.3 %
Adjusted homebuilding gross margin percentage   23.1 %   20.0 %
 
 
Nine Months Ended September 30,
2015 % 2014 %
(dollars in thousands)
Home sales $ 1,443,855 100.0 % $ 1,023,312 100.0 %
Cost of home sales   1,149,191   79.6 %   819,377   80.1 %
Homebuilding gross margin 294,664 20.4 % 203,935 19.9 %
Add: interest in cost of home sales 27,540 1.9 % 16,342 1.6 %
Add: impairments and lot option abandonments   1,593   0.1 %   897   0.1 %
Adjusted homebuilding gross margin $ 323,797   22.4 % $ 221,174   21.6 %
Homebuilding gross margin percentage   20.4 %   19.9 %
Adjusted homebuilding gross margin percentage   22.4 %   21.6 %
 

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

The following table reconciles the Company's ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debt-to-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, December 31,
2015 2014
(dollars in thousands)
Unsecured revolving credit facility $ 349,392 $ 260,000
Seller financed loans 7,572 14,677
Senior Notes   888,657   887,502
Total debt 1,245,621 1,162,179
Stockholders' equity   1,576,176   1,454,180
Total capital $ 2,821,797 $ 2,616,359
Ratio of debt-to-capital (1)   44.1 %   44.4 %
 
Total debt $ 1,245,621 $ 1,162,179
Less: Cash and cash equivalents   (96,993 )   (170,629 )
Net debt 1,148,628 991,550
Stockholders' equity   1,576,176   1,454,180
Total capital $ 2,724,804 $ 2,445,730
Ratio of net debt-to-capital (2)   42.2 %   40.5 %
 
(1)   The ratio of debt-to-capital is computed as the quotient obtained by dividing debt by the sum of debt plus equity.
(2) The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital.
 

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

The following table calculates the non-GAAP measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income (loss), as reported and prepared in accordance with GAAP. EBITDA means net income (loss) before (a) interest expense, (b) income taxes, (c) depreciation and amortization, (d) expensing of previously capitalized interest included in costs of home sales and (e) amortization of stock-based compensation. Adjusted EBITDA means EBITDA before (f) restructuring expenses (g) impairment and lot option abandonments and (h) transaction related expenses. 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 Nine Months Ended
September 30, September 30,
2015     2014 2015     2014
(in thousands)
Net income available to common shareholders $ 50,162 $ 10,965 $ 120,389 $ 42,771
Interest expense:
Interest incurred 15,454 15,129 45,779 25,718
Interest capitalized (15,454 ) (14,839 ) (45,779 ) (22,987 )
Amortization of interest in cost of sales 13,339 7,835 28,019 40,451
Provision for income taxes 28,021 6,021 66,088 16,352
Depreciation and amortization 2,244 4,489 5,414 10,719
Amortization of stock-based compensation   2,994   3,547   8,536   6,250
EBITDA 96,760 33,147 228,446 119,274
Restructuring charges 2,010 7,024 2,730 9,202
Impairments and lot abandonments 365 552 1,903 1,124
Transaction expenses     16,710     17,216
Adjusted EBITDA $ 99,135 $ 57,433 $ 233,079 $ 146,816
 

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