-New Home Orders up 36% Year-Over-Year on a 9% Increase in Average Selling Communities- -Backlog Dollar Value up 56% on a 32% increase in Backlog Units- -Reports Net Income Available to Common Stockholders of $72.3 Million, or $0.48 per Diluted Share- -Reports $68.2 Million of Land and Lot Revenue and $56.2 Million in Land and Lot Gross Margin-

IRVINE, Calif., Oct. 25, 2017 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the "Company") (NYSE:TPH) today announced results for the third quarter ended September 30, 2017.

Results and Operational Data for Third Quarter 2017 and Comparisons to Third Quarter 2016
  • Net income available to common stockholders was $72.3 million, or $0.48 per diluted share, compared to $34.8 million, or $0.22 per diluted share
  • New home orders of 1,268 compared to 932, an increase of 36%
  • Active selling communities averaged 129.8 compared to 119.0, an increase of 9%
    • New home orders per average selling community were 9.8 orders (3.3 monthly) compared to 7.8 orders (2.6 monthly)
    • Cancellation rate of 15% compared to 17%, a decrease of 200 basis points
  • Backlog units at quarter end of 2,265 homes compared to 1,711, an increase of 32%
    • Dollar value of backlog at quarter end of $1.5 billion compared to $950.2 million, an increase of 56%
    • Average sales price in backlog at quarter end of $654,000 compared to $555,000, an increase of 18%
  • Home sales revenue of $648.6 million compared to $578.7 million, an increase of 12%
    • New home deliveries of 1,111 homes compared to 1,019 homes, an increase of 9%
    • Average sales price of homes delivered of $584,000 compared to $568,000, an increase of 3%
  • Homebuilding gross margin percentage of 19.5% compared to 20.1%, a decrease of 60 basis points
    • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 22.0%*
  • Land and lot sales revenue of $68.2 million compared to $2.5 million
    • Land and lot sales gross margin percentage of 82.4% compared to 31.6%
    • Third quarter 2017 results include the sale of a parcel consisting of 69 homebuilding lots located in the Pacific Highlands Ranch community in San Diego, California, representing $66.8 million in land and lot sales revenue and $56.1 million in land and lot gross margin
  • SG&A expense as a percentage of homes sales revenue of 10.2% compared to 10.9%, a decrease of 70 basis points
  • Ratios of debt-to-capital and net debt-to-net capital of 47.5% and 45.0%*, respectively, as of September 30, 2017
  • Repurchased 975,700 shares of common stock at a weighted average price per share of $12.83 for an aggregate dollar amount of $12,519,904 in the three months ended September 30, 2017
  • Ended third quarter of 2017 with total liquidity of $554.6 million, including cash of $162.4 million and $392.2 million of availability under the Company's unsecured revolving credit facility

* See "Reconciliation of Non-GAAP Financial Measures"

"I am very pleased with our results this quarter," said TRI Pointe Group Chief Executive Officer Doug Bauer.  "We had a 36% increase in new home orders on a year-over-year basis, driven primarily by a 9% increase in average selling communities and a 27% increase in our monthly absorption rate.  We believe this order growth is a strong indicator of the strength in the housing market and the quality of our home offerings.  The positive trends we saw for the quarter were broad-based, with our operations in California continuing to produce excellent results and operations in our other markets making improvements with respect to order growth and/or profitability.  These trends, coupled with the significant increase to our quarter-ending backlog, put us in a great position to end the year on a high note and carry that momentum into 2018."

Third Quarter 2017 Operating Results

Net income available to common stockholders was $72.3 million, or $0.48 per diluted share in the third quarter of 2017, compared to net income available to common stockholders of $34.8 million, or $0.22 per diluted share for the third quarter of 2016.  The increase in net income available to common stockholders was primarily due to an increase in land and lot sales gross margin of $55.4 million due primarily to the sale of a parcel consisting of 69 homebuilding lots located in the Pacific Highlands Ranch community in San Diego, California.

Home sales revenue increased $70.0 million, or 12%, to $648.6 million for the third quarter of 2017, as compared to $578.7 million for the third quarter of 2016.  The increase was primarily attributable to a 9% increase in new home deliveries to 1,111, and a 3% increase in the average sales price of homes delivered to $584,000, compared to $568,000 in the third quarter of 2016.

New home orders increased 36% to 1,268 homes for the third quarter of 2017, as compared to 932 homes for the same period in 2016.  Average selling communities increased 9% to 129.8 for the third quarter of 2017 compared to 119.0 for the third quarter of 2016.  The Company's overall absorption rate per average selling community increased 27% for the third quarter of 2017 to 9.8 orders (3.3 monthly) compared to 7.8 orders (2.6 monthly) during the third quarter of 2016.  

The Company ended the quarter with 2,265 homes in backlog, representing approximately $1.5 billion. The average sales price of homes in backlog as of September 30, 2017 increased $99,000, or 18%, to $654,000, compared to $555,000 as of September 30, 2016.  

Homebuilding gross margin percentage for the third quarter of 2017 decreased to 19.5%, compared to 20.1% for the third quarter of 2016.  Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 22.0%* for the third quarter of 2017, compared to 22.7%* for the third quarter of 2016.  The decrease in homebuilding gross margin percentage was largely due to the mix of homes delivered and increased labor and material cost.

Selling, general and administrative ("SG&A") expense for the third quarter of 2017 decreased to 10.2% of home sales revenue as compared to 10.9% for the third quarter of 2016 primarily due to increased leverage as a result of a 12% increase in home sales revenue. 

"Our homebuilding teams did an excellent job of executing this quarter, as we once again met or exceeded our quarterly guidance for deliveries, average sales prices and homebuilding gross margin," said TRI Pointe Group President and Chief Operating Officer Tom Mitchell.  "In addition, we continue to be encouraged by the quality of our land pipeline and the improvement in both our operations and product.  I would especially like to thank and applaud our team in Houston for displaying such dedication, perseverance and compassion for the community in the wake of Hurricane Harvey and its aftermath.  Our team members really came together to help one another and to make sure our communities were safe and back open for business."

* See "Reconciliation of Non-GAAP Financial Measures"

Outlook

For the fourth quarter of 2017, the Company expects to open 14 new communities, and close out of 10, resulting in 131 active selling communities as of December 31, 2017.  In addition, the Company anticipates delivering approximately 75% to 80% of its 2,265 units in backlog as of September 30, 2017 at an average sales price of $630,000 to $640,000.  The Company anticipates its homebuilding gross margin percentage to be in a range of 21.0% to 22.0% for the fourth quarter resulting in a range of 20.0% to 21.0% for the full year.  Finally, the Company expects its SG&A expense as a percentage of home sales revenue to be in the range of 7.6% to 7.8% for the fourth quarter and 10.2% to 10.4% for the full year.

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 Wednesday, October 25, 2017.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Mike Grubbs, Chief Financial Officer.

Interested parties can listen to the call live and view the related presentation slides 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 fifteen 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 2017 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 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13671772.  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, including 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. Winchester is a registered trademark and is used with permission.

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 projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, 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," "guidance," "expect," "intend," "outlook," "project," "potential," "plan," "predict," "target," "will," 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 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 re-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; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental 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 customers' 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:

Chris Martin, TRI Pointe GroupDrew Mackintosh, Mackintosh Investor Relations InvestorRelations@TRIPointeGroup.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,
  2017   2016   Change   2017   2016   Change
Operating Data:                      
Home sales revenue $ 648,638     $      578,653     $ 69,985     $    1,609,458     $    1,558,633     $ 50,825  
Homebuilding gross margin $ 126,720     $ 116,330     $ 10,390     $ 314,895     $ 339,073     $      (24,178 )
Homebuilding gross margin % 19.5 %   20.1 %   (0.6 )%   19.6 %   21.8 %   (2.2 )%
Adjusted homebuilding gross margin %* 22.0 %   22.7 %   (0.7 )%   22.0 %   24.0 %   (2.0 )%
Land and lot sales revenue $ 68,218     $ 2,535     $ 65,683     $ 69,661     $ 70,204     $ (543 )
Land and lot gross margin $ 56,217     $ 801     $ 55,416     $ 56,362     $ 53,231     $ 3,131  
Land and lot gross margin % 82.4 %   31.6 %   50.8 %   80.9 %   75.8 %   5.1 %
SG&A expense $ 66,135     $ 63,130     $ 3,005     $ 193,502     $ 180,914     $ 12,588  
SG&A expense as a % of home sales revenue    10.2 %   10.9 %   (0.7 )%   12.0 %   11.6 %   0.4 %
Net income available to common stockholders $ 72,264     $ 34,834     $ 37,430     $ 113,171     $ 137,310     $ (24,139 )
Adjusted EBITDA* $ 139,550     $ 74,215     $ 65,335     $ 237,755     $ 262,945     $ (25,190 )
Interest incurred $ 22,865     $ 18,601     $ 4,264     $ 61,669     $ 50,030     $ 11,639  
Interest in cost of home sales $ 15,623     $ 14,385     $ 1,238     $ 38,448     $ 34,653     $ 3,795  
                       
Other Data:                      
Net new home orders 1,268     932     336     4,012     3,339     673  
New homes delivered 1,111     1,019     92     2,940     2,784     156  
Average selling price of homes delivered $ 584     $ 568     $ 16     $ 547     $ 560     $ (13 )
Average selling communities 129.8     119.0     10.8     127.4     117.0     10.4  
Selling communities at end of period 127     123     4       N/A       N/A       N/A  
Cancellation rate 15 %   17 %   (2 )%   15 %   14 %   1 %
Backlog (estimated dollar value) $    1,482,265     $ 950,171     $       532,094              
Backlog (homes) 2,265     1,711     554              
Average selling price in backlog $ 654     $ 555     $ 99              
                       
              September 30,   December 31,    
              2017   2016   Change
Balance Sheet Data:                      
Cash and cash equivalents             $ 162,396     $ 208,657     $ (46,261 )
Real estate inventories             $ 3,303,421     $ 2,910,627     $ 392,794  
Lots owned or controlled             27,892     28,309     (417 )
Homes under construction (1)             2,599     1,605     994  
Homes completed, unsold             243     405     (162 )
Debt             $ 1,669,558     $ 1,382,033     $ 287,525  
Stockholders' equity             $ 1,842,429     $ 1,829,447     $ 12,982  
Book capitalization             $ 3,511,987     $ 3,211,480     $ 300,507  
Ratio of debt-to-capital             47.5 %   43.0 %   4.5 %
Ratio of net debt-to-net capital*             45.0 %   39.1 %   5.9 %
                             

__________ (1) Homes under construction included 64 and 65 models at September 30, 2017 and December 31, 2016, respectively.* See "Reconciliation of Non-GAAP Financial Measures"

CONSOLIDATED BALANCE SHEETS(in thousands, except share amounts)
 
  September 30,   December 31,
  2017   2016
Assets (unaudited)    
Cash and cash equivalents $ 162,396     $ 208,657  
Receivables 84,583     82,500  
Real estate inventories 3,303,421     2,910,627  
Investments in unconsolidated entities 17,616     17,546  
Goodwill and other intangible assets, net 161,094     161,495  
Deferred tax assets, net 108,664     123,223  
Other assets 58,292     60,592  
Total assets $ 3,896,066     $ 3,564,640  
       
Liabilities      
Accounts payable $ 64,038     $ 70,252  
Accrued expenses and other liabilities 316,487     263,845  
Unsecured revolving credit facility 200,000     200,000  
Seller financed loans     13,726  
Senior notes 1,469,558     1,168,307  
Total liabilities 2,050,083     1,716,130  
       
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, 2017 and    December 31, 2016, respectively      
Common stock, $0.01 par value, 500,000,000 shares authorized;   150,429,021 and 158,626,229 shares issued and outstanding at   September 30, 2017 and December 31, 2016, respectively 1,504     1,586  
Additional paid-in capital 780,715     880,822  
Retained earnings 1,060,210     947,039  
Total stockholders' equity 1,842,429     1,829,447  
Noncontrolling interests 3,554     19,063  
Total equity 1,845,983     1,848,510  
Total liabilities and equity $ 3,896,066     $ 3,564,640  
               

CONSOLIDATED STATEMENT OF OPERATIONS(in thousands, except share and per share amounts)(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
Homebuilding:              
Home sales revenue $ 648,638     $ 578,653     $ 1,609,458     $ 1,558,633  
Land and lot sales revenue 68,218     2,535     69,661     70,204  
Other operations revenue 584     606     1,752     1,790  
Total revenues 717,440     581,794     1,680,871     1,630,627  
Cost of home sales 521,918     462,323     1,294,563     1,219,560  
Cost of land and lot sales 12,001     1,734     13,299     16,973  
Other operations expense 575     575     1,726     1,724  
Sales and marketing 33,179     31,852     92,209     90,621  
General and administrative 32,956     31,278     101,293     90,293  
Homebuilding income from operations 116,811     54,032     177,781     211,456  
Equity in (loss) income of unconsolidated entities     (20 )   1,646     181  
Other income, net 26     21     147     287  
Homebuilding income before income taxes 116,837     54,033     179,574     211,924  
Financial Services:              
Revenues 295     235     881     762  
Expenses 82     72     233     183  
Equity in income of unconsolidated entities 1,351     1,247     2,911     3,246  
Financial services income before income taxes 1,564     1,410     3,559     3,825  
Income before income taxes 118,401     55,443     183,133     215,749  
Provision for income taxes (46,112 )   (20,298 )   (69,824 )   (77,701 )
Net income 72,289     35,145     113,309     138,048  
Net income attributable to noncontrolling interests (25 )   (311 )   (138 )   (738 )
Net income available to common stockholders $ 72,264     $ 34,834     $ 113,171     $ 137,310  
Earnings per share              
Basic $ 0.48     $ 0.22     $ 0.73     $ 0.85  
Diluted $ 0.48     $ 0.22     $ 0.73     $ 0.85  
Weighted average shares outstanding              
Basic 151,214,744     160,614,055     155,238,206     161,456,520  
Diluted 152,129,825     161,267,509     155,936,076     161,916,352  
                       

MARKET DATA BY REPORTING SEGMENT & STATE(dollars in thousands)(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
  New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price
New Homes Delivered:                              
Maracay Homes 164     $ 477     165     $ 412     447     $ 459     400     $ 403  
Pardee Homes 328     502     302     623     896     478     828     587  
Quadrant Homes 79     686     90     531     206     649     287     515  
Trendmaker Homes 104     504     121     516     343     493     335     506  
TRI Pointe Homes 332     720     260     645     783     669     678     667  
Winchester Homes 104     579     81     550     265     561     256     554  
Total 1,111     $ 584     1,019     $ 568     2,940     $ 547     2,784     $ 560  
                               
                               
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
  New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price   New Homes Delivered   Average Sales Price
New Homes Delivered:                              
California 535     $ 640     412     $ 716     1,272     $ 603     1,093     $ 707  
Colorado 30     591     30     526     97     593     118     505  
Maryland 77     562     55     510     192     534     169     504  
Virginia 27     625     26     634     73     633     87     650  
Arizona 164     477     165     412     447     459     400     403  
Nevada 95     458     120     377     310     414     295     360  
Texas 104     504     121     516     343     493     335     506  
Washington 79     686     90     531     206     649     287     515  
Total 1,111     $ 584     1,019     $ 568     2,940     $ 547     2,784     $ 560  
                                                       

MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
  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
Net New Home Orders:                              
Maracay Homes 158     13.5     134     17.8     504     15.3     526     18.1  
Pardee Homes 421     30.8     283     22.5     1,282     29.3     936     22.8  
Quadrant Homes 84     8.3     49     7.3     311     7.6     274     8.5  
Trendmaker Homes 113     29.3     130     29.0     393     30.9     385     26.8  
TRI Pointe Homes 378     34.7     239     28.7     1,144     31.9     883     27.3  
Winchester Homes 114     13.2     97     13.7     378     12.4     335     13.5  
Total 1,268     129.8     932     119.0     4,012     127.4     3,339     117.0  
                               
                               
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
  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
Net New Home Orders:                              
California 632     45.2     380     35.0     1,885     43.1     1,333     34.3  
Colorado 40     8.0     31     5.0     144     6.5     107     4.8  
Maryland 81     10.0     72     7.2     265     9.0     214     6.7  
Virginia 33     3.2     25     6.5     113     3.4     121     6.8  
Arizona 158     13.5     134     17.8     504     15.3     526     18.1  
Nevada 127     12.3     111     11.2     397     11.6     379     11.0  
Texas 113     29.3     130     29.0     393     30.9     385     26.8  
Washington 84     8.3     49     7.3     311     7.6     274     8.5  
Total 1,268     129.8     932     119.0     4,012     127.4     3,339     117.0  
                                               

MARKET DATA BY REPORTING SEGMENT & STATE, continued(dollars in thousands)(unaudited)
 
  As of September 30, 2017   As of September 30, 2016
  Backlog Units   Backlog Dollar Value   Average Sales Price   Backlog Units   Backlog Dollar Value   Average Sales Price
Backlog:                      
Maracay Homes 305     $ 154,324     $ 506     329     $ 144,127     $ 438  
Pardee Homes 646     436,376     676     382     182,263     477  
Quadrant Homes 206     160,202     778     130     83,467     642  
Trendmaker Homes 213     107,968     507     186     98,874     532  
TRI Pointe Homes 659     481,537     731     495     319,823     646  
Winchester Homes 236     141,858     601     189     121,617     643  
Total 2,265     $ 1,482,265     $ 654     1,711     $ 950,171     $ 555  
                       
                       
  As of September 30, 2017   As of September 30, 2016
  Backlog Units   Backlog Dollar Value   Average Sales Price   Backlog Units   Backlog Dollar Value   Average Sales Price
Backlog:                      
California 1,015     $ 750,947     $ 740     641     $ 387,125     $ 604  
Colorado 106     65,563     619     73     42,809     586  
Maryland 175     98,920     565     122     75,444     618  
Virginia 61     42,937     704     67     46,172     689  
Arizona 305     154,324     506     329     144,127     438  
Nevada 184     101,404     551     163     72,153     443  
Texas 213     107,968     507     186     98,874     532  
Washington 206     160,202     778     130     83,467     642  
Total 2,265     $ 1,482,265     $ 654     1,711     $ 950,171     $ 555  
                                           

MARKET DATA BY REPORTING SEGMENT & STATE, continued(unaudited)
 
  September 30,   December 31,
  2017   2016
Lots Owned or Controlled:      
Maracay Homes 2,606     2,053  
Pardee Homes 15,655     16,912  
Quadrant Homes 1,685     1,582  
Trendmaker Homes 1,856     1,999  
TRI Pointe Homes 3,784     3,479  
Winchester Homes 2,306     2,284  
Total 27,892     28,309  
       
       
  September 30,   December 31,
  2017   2016
Lots Owned or Controlled:      
California 16,403     17,245  
Colorado 817     918  
Maryland 1,661     1,779  
Virginia 645     505  
Arizona 2,606     2,053  
Nevada 2,219     2,228  
Texas 1,856     1,999  
Washington 1,685     1,582  
Total 27,892     28,309  
       
       
  September 30,   December 31,
  2017   2016
Lots by Ownership Type:      
Lots owned 24,803     25,283  
Lots controlled (1) 3,089     3,026  
Total 27,892     28,309  
           

__________ (1) As of September 30, 2017 and December 31, 2016, lots controlled included lots that were under land option contracts or purchase contracts.

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,
  2017   %   2016   %
  (dollars in thousands)
Home sales revenue $ 648,638     100.0 %   $ 578,653     100.0 %
Cost of home sales 521,918     80.5 %   462,323     79.9 %
Homebuilding gross margin 126,720     19.5 %   116,330     20.1 %
Add: interest in cost of home sales 15,623     2.4 %   14,385     2.5 %
Add: impairments and lot option abandonments 374     0.1 %   389     0.1 %
Adjusted homebuilding gross margin $ 142,717     22.0 %   $ 131,104     22.7 %
Homebuilding gross margin percentage 19.5 %       20.1 %    
Adjusted homebuilding gross margin percentage 22.0 %       22.7 %    
                   

  Nine Months Ended September 30,
  2017   %   2016   %
  (dollars in thousands)
Home sales revenue $ 1,609,458     100.0 %   $ 1,558,633     100.0 %
Cost of home sales 1,294,563     80.4 %   1,219,560     78.2 %
Homebuilding gross margin 314,895     19.6 %   339,073     21.8 %
Add: interest in cost of home sales 38,448     2.4 %   34,653     2.2 %
Add: impairments and lot option abandonments 1,169     0.1 %   678     0.0 %
Adjusted homebuilding gross margin $ 354,512     22.0 %   $ 374,404     24.0 %
Homebuilding gross margin percentage 19.6 %       21.8 %    
Adjusted homebuilding gross margin percentage 22.0 %       24.0 %    
                   

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, 2017   December 31, 2016
Unsecured revolving credit facility $ 200,000     $ 200,000  
Seller financed loans     13,726  
Senior notes 1,469,558     1,168,307  
Total debt 1,669,558     1,382,033  
Stockholders' equity 1,842,429     1,829,447  
Total capital $ 3,511,987     $ 3,211,480  
Ratio of debt-to-capital (1) 47.5 %   43.0 %
       
Total debt $ 1,669,558     $ 1,382,033  
Less: Cash and cash equivalents (162,396 )   (208,657 )
Net debt 1,507,162     1,173,376  
Stockholders' equity 1,842,429     1,829,447  
Net capital $ 3,349,591     $ 3,002,823  
Ratio of net debt-to-net capital (2) 45.0 %   39.1 %
           

__________ (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-net 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.

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, as reported and prepared in accordance with GAAP.  EBITDA means net income 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) impairment and lot option abandonments and (g) 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,   
  2017   2016   2017   2016
  (in thousands)
Net income available to common stockholders $ 72,264     $ 34,834     $ 113,171     $ 137,310  
Interest expense:              
Interest incurred 22,865     18,601     61,669     50,030  
Interest capitalized (22,865 )   (18,601 )   (61,669 )   (50,030 )
Amortization of interest in cost of sales 15,899     14,415     38,771     34,808  
Provision for income taxes 46,112     20,298     69,824     77,701  
Depreciation and amortization 867     866     2,567     2,322  
Amortization of stock-based compensation        3,887     3,285     11,631     9,648  
EBITDA 139,029     73,698     235,964     261,789  
Impairments and lot abandonments 374     389     1,203     678  
Restructuring charges 147     128     588     478  
Adjusted EBITDA $ 139,550     $ 74,215     $ 237,755     $ 262,945  
                               

Primary Logo