Tri Pointe Homes, Inc. Reports 2022 Third Quarter Results

-Diluted Earnings Per Share of $1.45-
-Home Sales Revenue of $1.1 Billion-
-Homebuilding Gross Margin Percentage of 27.1%-
-Backlog Dollar Value of $2.4 Billion-

INCLINE VILLAGE, Nev., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the third quarter ended September 30, 2022.

“Tri Pointe Homes delivered strong profitability in the third quarter of 2022 with net income available to common stockholders of $149 million, or $1.45 in diluted earnings per share, representing a 24% increase in diluted earnings per share over the third quarter of 2021,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer. “We achieved these outstanding results through year-over-year improvements to home sales revenue, homebuilding gross margin and SG&A leverage. We also ended the quarter in a great position for a strong fourth quarter performance, thanks to a healthy backlog valued at over $2.4 billion.”

Mr. Bauer continued, “As the housing market continued to weaken due to the rapid rise in interest rates, our order demand slowed during the quarter. To navigate today’s reality, we have implemented several tactics designed to help our customers purchase and close their homes. Our main goals for the remainder of the year will be to close homes in backlog and generate cash from operations, while staying price competitive at our communities by utilizing incentives and targeted pricing. We will also continue to streamline our cost structure and adjust our land pipeline to reflect the current demand environment. With this comprehensive plan in place, coupled with our strong balance sheet and experienced leadership team, we are confident that Tri Pointe is well positioned for success over the long term.”

Results and Operational Data for Third Quarter 2022 and Comparisons to Third Quarter 2021

• Net income available to common stockholders was $149.2 million, or $1.45 per diluted share, compared to $133.2 million, or $1.17 per diluted share
• Home sales revenue of $1.1 billion compared to $1.0 billion, an increase of 3%
  • New home deliveries of 1,463 homes compared to 1,632 homes, a decrease of 10%
  • Average sales price of homes delivered of $723,000 compared to $630,000, an increase of 15%
• Homebuilding gross margin percentage of 27.1% compared to 26.3%, an increase of 80 basis points
  • Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 29.9%*
• SG&A expense as a percentage of homes sales revenue of 9.1% compared to 9.6%, a decrease of 50 basis points
• Net new home orders of 681 compared to 1,349, a decrease of 50%
• Active selling communities averaged 128.3 compared to 109.0, an increase of 18%
  • Net new home orders per average selling community were 5.3 orders (1.8 monthly) compared to 12.4 orders (4.1 monthly)
  • Cancellation rate of 27% compared to 9%
• Backlog units at quarter end of 3,044 homes compared to 3,619, a decrease of 16%
  • Dollar value of backlog at quarter end flat at $2.4 billion
  • Average sales price of homes in backlog at quarter end of $797,000 compared to $671,000, an increase of 19%
• Ratios of debt-to-capital and net debt-to-net capital of 33.8% and 29.7%*, respectively, as of September 30, 2022
• Repurchased 948,911 shares of common stock at a weighted average price per share of $17.66 for an aggregate dollar amount of $16.8 million in the three months ended September 30, 2022
• Ended the third quarter of 2022 with total liquidity of $914.3 million, including cash and cash equivalents of $228.1 million and $686.2 million of availability under our revolving credit facility
  

*	See “Reconciliation of Non-GAAP Financial Measures”

“Our team members once again demonstrated their ability to execute in a difficult operating environment in the third quarter, as we met or exceeded our stated guidance for new home deliveries, home sales gross margin and SG&A leverage,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “While we expect the demand environment to remain choppy in the near term, we remain confident that the long-term macro environment for the housing industry continues to be very bright due to the lack of supply and the housing deficit that has resulted from new home construction failing to meet the pace of household formations since 2009, coupled with the high cost of rental alternatives. We are positioning our company to take advantage of these long-term opportunities and feel that we have the right people, resources and strategies in place to be successful.”

Outlook

For the fourth quarter, the Company anticipates delivering between 1,700 and 1,900 homes at an average sales price between $700,000 and $715,000. The Company expects homebuilding gross margin percentage to be in the range of 25.0% to 26.0% for the fourth quarter and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 8.0% to 9.0%. Finally, the Company expects its effective tax rate for the fourth quarter to be in the range of 24.0% to 25.0%.

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 27, 2022.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, and Glenn Keeler, Chief Financial Officer. Interested parties can listen to the call live and view the related slides on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at www.TriPointeHomes.com. Listeners should go to the website at least fifteen minutes prior to the call to download and install any necessary audio software. The call can also be accessed toll free at (877) 407-3982, or (201) 493-6780 for international participants. Participants should ask for the Tri Pointe Homes Third Quarter 2022 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 13733444. 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, Inc. (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. The company made Fortune magazine’s 2017 100 Fastest-Growing Companies list, was named as a Great Place to Work-Certified™ company in both 2021 and 2022 and was selected by Great Place to Work® as one of the Best Workplaces for Millennials™ in 2022, Best Workplaces in Construction™ in 2022 and Best Workplaces for Women™ in 2022. 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 parts of the western United States; 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,
		2022				2021				Change			% Change				2022				2021				Change			% Change
Operating Data:	(unaudited)
Home sales revenue	$	1,057,491			$	1,028,950			$	28,541			3	%		$	2,787,386			$	2,754,932			$	32,454			1	%
Homebuilding gross margin	$	286,343			$	270,926			$	15,417			6	%		$	754,226			$	690,337			$	63,889			9	%
Homebuilding gross margin %		27.1	%			26.3	%			0.8	%						27.1	%			25.1	%			2.0	%
Adjusted homebuilding gross margin %*		29.9	%			28.8	%			1.1	%						29.7	%			27.9	%			1.8	%
SG&A expense	$	96,736			$	98,365			$	(1,629	)		(2	)%		$	272,783			$	276,926			$	(4,143	)		(1	)%
SG&A expense as a % of home sales revenue		9.1	%			9.6	%			(0.5	)%						9.8	%			10.1	%			(0.3	)%
Net income available to common stockholders	$	149,226			$	133,156			$	16,070			12	%		$	373,087			$	321,827			$	51,260			16	%
Adjusted EBITDA*	$	237,369			$	215,880			$	21,489			10	%		$	604,365			$	543,945			$	60,420			11	%
Interest incurred	$	31,893			$	24,280			$	7,613			31	%		$	89,235			$	68,017			$	21,218			31	%
Interest in cost of home sales	$	26,531			$	25,656			$	875			3	%		$	68,559			$	77,185			$	(8,626	)		(11	)%
Other Data:
Net new home orders		681				1,349				(668	)		(50	)%			3,933				4,958				(1,025	)		(21	)%
New homes delivered		1,463				1,632				(169	)		(10	)%			4,047				4,303				(256	)		(6	)%
Average sales price of homes delivered	$	723			$	630			$	93			15	%		$	689			$	640			$	49			8	%
Cancellation rate		27	%			9	%			18	%						15	%			7	%			8	%
Average selling communities		128.3				109.0				19.3			18	%			120.7				112.1				8.6			8	%
Selling communities at end of period		133				109				24			22	%
Backlog (estimated dollar value)	$	2,427,301			$	2,428,412			$	(1,111	)		0	%
Backlog (homes)		3,044				3,619				(575	)		(16	)%
Average sales price in backlog	$	797			$	671			$	126			19	%
		September 30,				December 31,
		2022				2021				Change			% Change
Balance Sheet Data:	(unaudited)
Cash and cash equivalents	$	228,137			$	681,528			$	(453,391	)		(67	)%
Real estate inventories	$	3,608,305			$	3,054,743			$	553,562			18	%
Lots owned or controlled		37,269				41,675				(4,406	)		(11	)%
Homes under construction (1)		4,120				3,632				488			13	%
Homes completed, unsold		102				27				75			278	%
Debt	$	1,339,752			$	1,337,723			$	2,029			0	%
Stockholders’ equity	$	2,625,730			$	2,447,621			$	178,109			7	%
Book capitalization	$	3,965,482			$	3,785,344			$	180,138			5	%
Ratio of debt-to-capital		33.8	%			35.3	%			(1.5	)%
Ratio of net debt-to-net capital*		29.7	%			21.1	%			8.6	%

__________
⁽¹⁾    Homes under construction included 85 models at both September 30, 2022 and December 31, 2021, respectively.
*      See “Reconciliation of Non-GAAP Financial Measures”

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

	September 30,			December 31,
		2022			2021
Assets	(unaudited)
Cash and cash equivalents	$	228,137		$	681,528
Receivables		169,496			116,996
Real estate inventories		3,608,305			3,054,743
Investments in unconsolidated entities		132,998			118,095
Goodwill and other intangible assets, net		156,603			156,603
Deferred tax assets, net		57,095			57,096
Other assets		173,404			151,162
Total assets	$	4,526,038		$	4,336,223
Liabilities
Accounts payable	$	64,109		$	84,854
Accrued expenses and other liabilities		494,727			466,013
Loans payable		250,000			250,504
Senior notes		1,089,752			1,087,219
Total liabilities		1,898,588			1,888,590
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, 2022 and December 31, 2021, respectively		—			—
Common stock, $0.01 par value, 500,000,000 shares authorized; 100,913,958 and 109,644,474 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		1,009			1,096
Additional paid-in capital		—			91,077
Retained earnings		2,624,721			2,355,448
Total stockholders’ equity		2,625,730			2,447,621
Noncontrolling interests		1,720			12
Total equity		2,627,450			2,447,633
Total liabilities and equity	$	4,526,038		$	4,336,223

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

	Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Homebuilding:
Home sales revenue	$	1,057,491			$	1,028,950			$	2,787,386			$	2,754,932
Land and lot sales revenue		2,626				581				4,337				7,520
Other operations revenue		674				646				2,021				1,969
Total revenues		1,060,791				1,030,177				2,793,744				2,764,421
Cost of home sales		771,148				758,024				2,033,160				2,064,595
Cost of land and lot sales		1,256				891				2,075				5,918
Other operations expense		670				801				2,020				2,111
Sales and marketing		41,950				44,875				112,712				130,824
General and administrative		54,786				53,490				160,071				146,102
Homebuilding income from operations		190,981				172,096				483,706				414,871
Equity in loss of unconsolidated entities		(122	)			(43	)			(34	)			(72	)
Other income, net		463				171				852				428
Homebuilding income before income taxes		191,322				172,224				484,524				415,227
Financial Services:
Revenues		11,005				3,016				31,985				7,802
Expenses		5,827				1,618				17,457				4,510
Equity in income of unconsolidated entities		—				3,946				46				10,586
Financial services income before income taxes		5,178				5,344				14,574				13,878
Income before income taxes		196,500				177,568				499,098				429,105
Provision for income taxes		(45,923	)			(44,412	)			(122,084	)			(107,278	)
Net income		150,577				133,156				377,014				321,827
Net income attributable to noncontrolling interests		(1,351	)			—				(3,927	)			—
Net income available to common stockholders	$	149,226			$	133,156			$	373,087			$	321,827
Earnings per share
Basic	$	1.47			$	1.18			$	3.60			$	2.77
Diluted	$	1.45			$	1.17			$	3.57			$	2.75
Weighted average shares outstanding
Basic		101,242,708				112,781,663				103,555,717				116,296,265
Diluted		102,661,222				113,782,251				104,526,594				117,188,893

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

	Three Months Ended September 30,										Nine Months Ended September 30,
	2022					2021					2022					2021
	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	166		$	773		187		$	685		363		$	751		570		$	667
California	636			768		708			646		1,729			718		1,863			674
Nevada	122			771		180			611		363			731		381			607
Washington	46			853		76			983		172			978		223			984
West total	970			773		1,151			669		2,627			742		3,037			687
Colorado	82			753		55			589		201			699		154			584
Texas	250			571		274			492		788			527		721			483
Central total	332			616		329			508		989			562		875			501
Carolinas(1)	80			469		25			386		152			464		64			383
Washington D.C. Area(2)	81			805		127			643		279			762		327			628
East total	161			638		152			601		431			657		391			588
Total	1,463		$	723		1,632		$	630		4,047		$	689		4,303		$	640
	Three Months Ended September 30,										Nine Months Ended September 30,
	2022					2021					2022					2021
	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	74			13.5		182			13.2		484			13.5		676			14.4
California	275			53.7		545			38.3		1,577			47.5		1,865			38.9
Nevada	56			6.8		133			10.2		317			7.6		568			11.1
Washington	34			3.0		68			6.5		103			2.8		229			5.7
West total	439			77.0		928			68.2		2,481			71.4		3,338			70.1
Colorado	15			7.3		55			6.5		180			7.7		218			5.7
Texas	123			23.5		238			21.5		691			22.8		945			22.6
Central total	138			30.8		293			28.0		871			30.5		1,163			28.3
Carolinas(1)	76			13.7		41			3.0		372			11.3		129			3.1
Washington D.C. Area(2)	28			6.8		87			9.8		209			7.5		328			10.6
East total	104			20.5		128			12.8		581			18.8		457			13.7
Total	681			128.3		1,349			109.0		3,933			120.7		4,958			112.1

⁽¹⁾         Carolinas comprises North Carolina and South Carolina.
⁽²⁾         Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.

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

	As of September 30, 2022								As of September 30, 2021
	Backlog Units		Backlog Dollar Value			Average Sales Price			Backlog Units		Backlog Dollar Value			Average Sales Price
Arizona	641		$	531,135		$	829		585		$	438,093		$	749
California	884			836,320			946		1,260			843,994			670
Nevada	280			232,850			832		323			226,035			700
Washington	60			48,387			806		145			155,172			1,070
West total	1,865			1,648,692			884		2,313			1,663,294			719
Colorado	163			128,733			790		190			135,851			715
Texas	539			346,530			643		722			364,537			505
Central total	702			475,263			677		912			500,388			549
Carolinas(1)	341			161,675			474		80			34,358			429
Washington D.C. Area(2)	136			141,671			1,042		314			230,372			734
East total	477			303,346			636		394			264,730			672
Total	3,044		$	2,427,301		$	797		3,619		$	2,428,412		$	671
	September 30,		December 31,
	2022			2021
Lots Owned or Controlled:
Arizona	3,355			4,607
California	12,863			15,091
Nevada	1,815			2,161
Washington	891			1,010
West total	18,924			22,869
Colorado	1,973			1,683
Texas	10,994			12,297
Central total	12,967			13,980
Carolinas(1)	3,929			3,458
Washington D.C. Area(2)	1,449			1,368
East total	5,378			4,826
Total	37,269			41,675
	September 30,		December 31,
	2022			2021
Lots by Ownership Type:
Lots owned	20,698			22,136
Lots controlled (3)	16,571			19,539
Total	37,269			41,675

⁽¹⁾         Carolinas comprises North Carolina and South Carolina.
⁽²⁾         Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.
⁽³⁾         As of September 30, 2022 and December 31, 2021, lots controlled included lots that were under land option contracts or purchase contracts. As of September 30, 2022 and December 31, 2021, lots controlled for Central include 3,388 and 2,950 lots, respectively, and lots controlled for East include 154 and 179 lots, respectively, which represent our expected share of lots owned by our investments in 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,
		2022			%				2021			%
	(dollars in thousands)
Home sales revenue	$	1,057,491			100.0	%		$	1,028,950			100.0	%
Cost of home sales		771,148			72.9	%			758,024			73.7	%
Homebuilding gross margin		286,343			27.1	%			270,926			26.3	%
Add:  interest in cost of home sales		26,531			2.5	%			25,656			2.5	%
Add:  impairments and lot option abandonments		3,034			0.3	%			268			0.0	%
Adjusted homebuilding gross margin	$	315,908			29.9	%		$	296,850			28.8	%
Homebuilding gross margin percentage		27.1	%						26.3	%
Adjusted homebuilding gross margin percentage		29.9	%						28.8	%

	Nine Months Ended September 30,
		2022			%				2021			%
Home sales revenue	$	2,787,386			100.0	%		$	2,754,932			100.0	%
Cost of home sales		2,033,160			72.9	%			2,064,595			74.9	%
Homebuilding gross margin		754,226			27.1	%			690,337			25.1	%
Add:  interest in cost of home sales		68,559			2.5	%			77,185			2.8	%
Add:  impairments and lot option abandonments		4,495			0.2	%			713			0.0	%
Adjusted homebuilding gross margin	$	827,280			29.7	%		$	768,235			27.9	%
Homebuilding gross margin percentage		27.1	%						25.1	%
Adjusted homebuilding gross margin percentage		29.7	%						27.9	%

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, 2022				December 31, 2021
Loans payable	$	250,000			$	250,504
Senior notes		1,089,752				1,087,219
Total debt		1,339,752				1,337,723
Stockholders’ equity		2,625,730				2,447,621
Total capital	$	3,965,482			$	3,785,344
Ratio of debt-to-capital(1)		33.8	%			35.3	%
Total debt	$	1,339,752			$	1,337,723
Less: Cash and cash equivalents		(228,137	)			(681,528	)
Net debt		1,111,615				656,195
Stockholders’ equity		2,625,730				2,447,621
Net capital	$	3,737,345			$	3,103,816
Ratio of net debt-to-net capital(2)		29.7	%			21.1	%

__________
⁽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 available to common stockholders, as reported and prepared in accordance with GAAP. EBITDA means net income available to common stockholders 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 and (f) impairments and lot option abandonments. 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,
		2022				2021				2022				2021
	(in thousands)
Net income available to common stockholders	$	149,226			$	133,156			$	373,087			$	321,827
Interest expense:
Interest incurred		31,893				24,280				89,235				68,017
Interest capitalized		(31,893	)			(24,280	)			(89,235	)			(68,017	)
Amortization of interest in cost of sales		26,611				25,655				68,639				77,457
Provision for income taxes		45,923				44,412				122,084				107,278
Depreciation and amortization		6,615				7,979				18,641				24,098
EBITDA		228,375				211,202				582,451				530,660
Amortization of stock-based compensation		5,717				4,410				16,740				12,572
Impairments and lot option abandonments		3,277				268				5,174				713
Adjusted EBITDA	$	237,369			$	215,880			$	604,365			$	543,945