Tri Pointe Homes, Inc. Reports 2023 Second Quarter Results
*-Net New Home Orders of 1,912 on a Monthly Absorption Rate of 4.5-
**-New Home Deliveries of 1,173-
**-Home Sales Revenue of $819 Million-
**-Diluted Earnings Per Share of $0.60-
**-Debt-to-Capital Ratio of 32.3% and Total Liquidity of $1.7 Billion-*
INCLINE VILLAGE, Nev., July 27, 2023 (GLOBE NEWSWIRE) -- Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the second quarter ended June 30, 2023.
“Tri Pointe delivered strong results for the second quarter, surpassing our delivery guidance and leading to home sales revenue of $819 million while generating $61 million in net income available to common stockholders, or $0.60 per diluted share,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer. “The healthy buyer demand we saw in the first part of the year continued a strong seasonal trend through the second quarter, resulting in a 41% increase in net new home orders compared to the same prior-year period, and an 18% increase sequentially from the first quarter of 2023. We attribute these outstanding results to several underlying factors fueling today’s housing market, the foremost of which is the persistent limited supply of overall housing that falls short of current demand. This demand is largely being powered by a combination of new household formations, the entry of Gen Z into the home-buying market, and Millennials reaching their prime home-buying age. Additionally, with stabilized mortgage rates, consumers have adjusted to mid-six to low-seven percent interest rates, setting a new normal in the market.”
Mr. Bauer continued, “An important component to the supply/demand equation is the scarcity of resale home supply, with reports indicating that new listings are down nationwide by 27% due to the significant number of existing homebuyers who are not selling as a result of their locked-in rates which are well below current levels. This scarcity of resale homes has significantly boosted the homebuilding industry’s market share, with newly constructed homes making up 33% of inventory compared to the typical 13% average, as reported by the National Association of Home Builders.”
“Demand for the quarter was broad-based across our geographic footprint with an absorption rate of 4.5 homes per community per month. In addition, we raised net pricing at 73% of our selling communities during the quarter, while expanding our ending community count by 18%,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “As the homebuilding industry gains momentum, driven by favorable market dynamics and demographic factors, we remain committed to enhancing operational efficiencies, fostering our company culture, and continuously innovating our product offerings to cater to the evolving lifestyles of today’s discerning consumers.”
Mr. Bauer concluded, “As we enter the second half of 2023, we believe that our industry’s share of the housing market will continue to increase and that the current supply/demand imbalance will continue into the foreseeable future. Through the rest of the year, we will continue to prioritize operational efficiency and cost management as supply chains continue to normalize. Furthermore, our balance sheet and liquidity reached record levels, allowing us flexibility in our efforts to balance growth and shareholder returns.”
*Results and Operational Data for Second Quarter 2023 and Comparisons to Second Quarter 2022 *
· Net income available to common stockholders was $60.7 million, or $0.60 per diluted share, compared to $136.4 million, or $1.33 per diluted share
· Home sales revenue of $819.1 million compared to $1.0 billion, a decrease of 18%
· New home deliveries of 1,173 homes compared to 1,485 homes, a decrease of 21%
· Average sales price of homes delivered of $698,000 compared to $677,000, an increase of 3%
· Homebuilding gross margin percentage of 20.4% compared to 27.2%, a decrease of 680 basis points. The current year period includes an $11.5 million impairment related to a single community in the Bay Area of California.
· Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.9%*
· SG&A expense as a percentage of homes sales revenue of 11.9% compared to 9.5%, an increase of 240 basis points
· Net new home orders of 1,912 compared to 1,356, an increase of 41%
· Active selling communities averaged 140.3 compared to 121.8, an increase of 15%
· Net new home orders per average selling community were 13.6 orders (4.5 monthly) compared to 11.1 orders (3.7 monthly)
· Cancellation rate of 8% compared to 16%
· Backlog units at quarter end of 2,765 homes compared to 3,826, a decrease of 28%
· Dollar value of backlog at quarter end of $1.9 billion compared to $3.0 billion, a decrease of 36%
· Average sales price of homes in backlog at quarter end of $695,000 compared to $779,000, a decrease of 11%
· Ratios of debt-to-capital and net debt-to-net capital of 32.3% and 12.1%*, respectively, as of June 30, 2023
· Repurchased 1,137,478 shares of common stock at a weighted average price per share of $28.43 for an aggregate dollar amount of $32.3 million in the three months ended June 30, 2023
· Ended the second quarter of 2023 with total liquidity of $1.7 billion, including cash and cash equivalents of $981.6 million and $695.0 million of availability under our revolving credit facility* See “Reconciliation of Non-GAAP Financial Measures”
*Outlook*
For the third quarter, the Company anticipates delivering between 1,000 and 1,100 homes at an average sales price between $690,000 and $700,000. The Company expects homebuilding gross margin percentage to be in the range of 21.0% to 22.0% for the third quarter and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 12.0% to 13.0%. Finally, the Company expects its effective tax rate for the third quarter to be in the range of 26.0% to 27.0%.
For the full year, the Company anticipates delivering between 5,000 and 5,300 homes at an average sales price between $690,000 and $700,000. The Company expects homebuilding gross margin percentage to be in the range of 21.5% to 22.5% for the full year and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 10.5% to 11.5%. Finally, the Company expects its effective tax rate for the full year to be in the range of 26.0% to 27.0%.
*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, July 27, 2023. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer, Glenn Keeler, Chief Financial Officer, and Linda Mamet, Chief Marketing 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 Second Quarter 2023 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 13739744. 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, was named one of the 2023 Fortune 100 Best Companies to Work For®, and made Fortune magazine’s 2017 100 Fastest-Growing Companies list. The company was also named as a Great Place to Work-Certified™ company for three years in a row 2021–2023, and was named on several Great Place to Work® Best Workplaces lists in 2022 and 2023. For more information, please visit TriPointeHomes.com.
*Forward-Looking Stateme**nts*
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 general economic conditions, including employment rates, housing starts, interest rate levels, home affordability, inflation, consumer sentiment, 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; 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, labor and home components; 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 public health emergencies, including outbreaks of contagious disease, 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:*
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 June 30,* *Six Months Ended June 30,* *2023* *2022* *Change* *% Change* *2023* *2022* *Change* *% Change*
Operating Data: (unaudited)
Home sales revenue $ 819,077 $ 1,004,644 $ (185,567 ) (18 )% $ 1,587,482 $ 1,729,895 $ (142,413 ) (8 )%
Homebuilding gross margin $ 167,078 $ 273,292 $ (106,214 ) (39 )% $ 347,365 $ 467,883 $ (120,518 ) (26 )%
Homebuilding gross margin % 20.4 % 27.2 % (6.8 )% 21.9 % 27.0 % (5.1 )%
Adjusted homebuilding gross margin %* 24.9 % 29.8 % (4.9 )% 25.5 % 29.6 % (4.1 )%
SG&A expense $ 97,465 $ 95,352 $ 2,113 2 % $ 185,693 $ 176,047 $ 9,646 5 %
SG&A expense as a % of home sales revenue 11.9 % 9.5 % 2.4 % 11.7 % 10.2 % 1.5 %
Net income available to common stockholders $ 60,724 $ 136,383 $ (75,659 ) (55 )% $ 135,466 $ 223,861 $ (88,395 ) (39 )%
Adjusted EBITDA* $ 129,928 $ 220,905 $ (90,977 ) (41 )% $ 263,903 $ 366,996 $ (103,093 ) (28 )%
Interest incurred $ 37,394 $ 28,789 $ 8,605 30 % $ 74,873 $ 57,342 $ 17,531 31 %
Interest in cost of home sales $ 25,366 $ 24,963 $ 403 2 % $ 45,592 $ 42,028 $ 3,564 8 %
Other Data:
Net new home orders 1,912 1,356 556 41 % 3,531 3,252 279 9 %
New homes delivered 1,173 1,485 (312 ) (21 )% 2,238 2,584 (346 ) (13 )%
Average sales price of homes delivered $ 698 $ 677 $ 21 3 % $ 709 $ 669 $ 40 6 %
Cancellation rate 8 % 16 % (8 )% 9 % 11 % (2 )%
Average selling communities 140.3 121.8 18.5 15 % 138.4 116.7 21.7 19 %
Selling communities at end of period 145 123 22 18 %
Backlog (estimated dollar value) $ 1,922,895 $ 2,981,255 $ (1,058,360 ) (36 )%
Backlog (homes) 2,765 3,826 (1,061 ) (28 )%
Average sales price in backlog $ 695 $ 779 $ (84 ) (11 )% *June 30,* *December 31,* *2023* *2022* *Change* *% Change*
Balance Sheet Data: (unaudited)
Cash and cash equivalents $ 981,567 $ 889,664 $ 91,903 10 %
Real estate inventories $ 3,193,328 $ 3,173,849 $ 19,479 1 %
Lots owned or controlled 32,834 33,794 (960 ) (3 )%
Homes under construction ^(1) 3,131 2,373 758 32 %
Homes completed, unsold 168 288 (120 ) (42 )%
Debt $ 1,379,835 $ 1,378,051 $ 1,784 %
Stockholders’ equity $ 2,896,111 $ 2,832,389 $ 63,722 2 %
Book capitalization $ 4,275,946 $ 4,210,440 $ 65,506 2 %
Ratio of debt-to-capital 32.3 % 32.7 % (0.4 )%
Ratio of net debt-to-net capital* 12.1 % 14.7 % (2.6 )%
__________
^(1) Homes under construction included 66 and 78 models as of June 30, 2023 and December 31, 2022, respectively.
* See “Reconciliation of Non-GAAP Financial Measures”
*
*
*CONSOLIDATED BALANCE SHEETS *
(in thousands, except share and per share amounts)
*June 30,* *December 31,* *2023* *2022*
*Assets* (unaudited)
Cash and cash equivalents $ 981,567 $ 889,664
Receivables 117,134 169,449
Real estate inventories 3,193,328 3,173,849
Investments in unconsolidated entities 139,959 129,837
Goodwill and other intangible assets, net 156,603 156,603
Deferred tax assets, net 34,850 34,851
Other assets 157,118 165,687
Total assets $ 4,780,559 $ 4,719,940
*Liabilities*
Accounts payable $ 78,386 $ 62,324
Accrued expenses and other liabilities 425,518 443,034
Loans payable 287,427 287,427
Senior notes 1,092,408 1,090,624
Total liabilities 1,883,739 1,883,409
Commitments and contingencies
*Equity*
Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively — —
Common stock, $0.01 par value, 500,000,000 shares authorized; 99,094,458 and 101,017,708 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively 991 1,010
Additional paid-in capital — 3,685
Retained earnings 2,895,120 2,827,694
Total stockholders’ equity 2,896,111 2,832,389
Noncontrolling interests 709 4,142
Total equity 2,896,820 2,836,531
Total liabilities and equity $ 4,780,559 $ 4,719,940
*
*
*CONSOLIDATED STATEMENT OF OPERATIONS *
(in thousands, except share and per share amounts)
(unaudited)
*Three Months Ended June 30,* *Six Months Ended June 30,* *2023* *2022* *2023* *2022*
*Homebuilding:*
Home sales revenue $ 819,077 $ 1,004,644 $ 1,587,482 $ 1,729,895
Land and lot sales revenue 7,086 114 8,792 1,711
Other operations revenue 796 703 1,470 1,347
Total revenues 826,959 1,005,461 1,597,744 1,732,953
Cost of home sales 651,999 731,352 1,240,117 1,262,012
Cost of land and lot sales 7,370 344 8,813 819
Other operations expense 782 704 1,447 1,350
Sales and marketing 43,241 38,523 85,103 70,762
General and administrative 54,224 56,829 100,590 105,285
Homebuilding income from operations 69,343 177,709 161,674 292,725
Equity in income of unconsolidated entities 42 143 269 88
Other income, net 11,093 116 18,697 389
Homebuilding income before income taxes 80,478 177,968 180,640 293,202
*Financial Services:*
Revenues 10,370 12,228 19,246 20,980
Expenses 7,405 6,322 13,236 11,630
Equity in income of unconsolidated entities — — — 46
Financial services income before income taxes 2,965 5,906 6,010 9,396
*Income before income taxes* 83,443 183,874 186,650 302,598
Provision for income taxes (21,472 ) (45,936 ) (48,822 ) (76,161 )
Net income 61,971 137,938 137,828 226,437
Net income attributable to noncontrolling interests (1,247 ) (1,555 ) (2,362 ) (2,576 )
Net income available to common stockholders $ 60,724 $ 136,383 $ 135,466 $ 223,861
Earnings per share
Basic $ 0.61 $ 1.33 $ 1.35 $ 2.14
Diluted $ 0.60 $ 1.33 $ 1.34 $ 2.12
Weighted average shares outstanding
Basic 99,598,933 102,164,377 100,305,168 104,731,388
Diluted 100,634,964 102,787,919 101,184,993 105,478,446
*
*
*MARKET DATA BY REPORTING SEGMENT & GEOGRAPHY*
(dollars in thousands)
(unaudited)
*Three Months Ended June 30,* *Six Months Ended June 30,* *2023* *2022* *2023* *2022* *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 195 $ 765 127 $ 732 330 $ 773 197 $ 733
California 352 798 579 698 691 813 1,093 690
Nevada 88 743 157 724 186 753 241 711
Washington 40 733 54 1,092 58 802 126 1,023
West total 675 778 917 731 1,265 793 1,657 723
Colorado 49 732 76 682 93 758 119 662
Texas 278 560 318 511 488 588 538 507
Central total 327 586 394 544 581 615 657 535
Carolinas(1) 142 483 44 462 317 458 72 458
Washington D.C. Area(2) 29 1,176 130 770 75 1,082 198 744
East total 171 600 174 692 392 577 270 668
Total 1,173 $ 698 1,485 $ 677 2,238 $ 709 2,584 $ 669 *Three Months Ended June 30,* *Six Months Ended June 30,* *2023* *2022* *2023* *2022* *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 189 13.7 195 14.2 306 13.4 410 13.6
California 787 49.2 601 49.2 1,488 51.6 1,302 44.7
Nevada 105 8.0 116 7.3 189 7.6 261 8.0
Washington 70 5.8 21 1.8 122 5.4 69 2.4
West total 1,151 76.7 933 72.5 2,105 78.0 2,042 68.7
Colorado 38 6.8 34 8.0 79 6.4 165 8.0
Texas 494 39.0 153 22.0 808 36.1 568 22.1
Central total 532 45.8 187 30.0 887 42.5 733 30.1
Carolinas(1) 188 14.3 170 11.5 439 14.5 296 10.0
Washington D.C. Area(2) 41 3.5 66 7.8 100 3.4 181 7.9
East total 229 17.8 236 19.3 539 17.9 477 17.9
Total 1,912 140.3 1,356 121.8 3,531 138.4 3,252 116.7
^(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 June 30, 2023* *As of June 30, 2022* *Backlog*
*Units* *Backlog*
*Dollar*
*Value* *Average*
*Sales*
*Price* *Backlog*
*Units* *Backlog*
*Dollar*
*Value* *Average*
*Sales*
*Price*
Arizona 354 $ 276,167 $ 780 733 $ 586,871 $ 801
California 1,095 797,480 728 1,245 1,128,517 906
Nevada 128 94,278 737 346 279,679 808
Washington 99 91,266 922 72 60,188 836
West total 1,676 1,259,191 751 2,396 2,055,255 858
Colorado 36 24,889 691 230 178,845 778
Texas 602 340,938 566 666 408,415 613
Central total 638 365,827 573 896 587,260 655
Carolinas(1) 342 156,759 458 345 162,317 470
Washington D.C. Area(2) 109 141,118 1,295 189 176,423 933
East total 451 297,877 660 534 338,740 634
Total 2,765 $ 1,922,895 $ 695 3,826 $ 2,981,255 $ 779 *June 30,* *December 31,* *2023* *2022*
*Lots Owned or Controlled:*
Arizona 2,520 2,901
California 11,123 11,399
Nevada 1,914 1,634
Washington 827 827
West total 16,384 16,761
Colorado 1,749 1,600
Texas 9,951 10,361
Central total 11,700 11,961
Carolinas(1) 3,525 3,857
Washington D.C. Area(2) 1,225 1,215
East total 4,750 5,072
Total 32,834 33,794 *June 30,* *December 31,* *2023* *2022*
*Lots by Ownership Type:*
Lots owned 18,378 18,762
Lots controlled (3) 14,456 15,032
Total 32,834 33,794
^(1) Carolinas comprises North Carolina and South Carolina.
^(2) Washington D.C. Area comprises Maryland, Virginia and the District of Columbia.
^(3) As of June 30, 2023 and December 31, 2022, lots controlled included lots that were under land option contracts or purchase contracts. As of June 30, 2023 and December 31, 2022, lots controlled for Central include 3,685 and 3,325 lots, respectively, and lots controlled for East include 93 and 141 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 the 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 June 30,* *2023* *%* *2022* *%* (dollars in thousands)
Home sales revenue $ 819,077 100.0 % $ 1,004,644 100.0 %
Cost of home sales 651,999 79.6 % 731,352 72.8 %
Homebuilding gross margin 167,078 20.4 % 273,292 27.2 %
Add: interest in cost of home sales 25,366 3.1 % 24,963 2.5 %
Add: impairments and lot option abandonments 11,761 1.4 % 972 0.1 %
Adjusted homebuilding gross margin $ 204,205 24.9 % $ 299,227 29.8 %
Homebuilding gross margin percentage 20.4 % 27.2 %
Adjusted homebuilding gross margin percentage 24.9 % 29.8 %
*Six Months Ended June 30,* *2023* *%* *2022* *%* (dollars in thousands)
Home sales revenue $ 1,587,482 100.0 % $ 1,729,895 100.0 %
Cost of home sales 1,240,117 78.1 % 1,262,012 73.0 %
Homebuilding gross margin 347,365 21.9 % 467,883 27.0 %
Add: interest in cost of home sales 45,592 2.9 % 42,028 2.4 %
Add: impairments and lot option abandonments 12,478 0.8 % 1,461 0.1 %
Adjusted homebuilding gross margin $ 405,435 25.5 % $ 511,372 29.6 %
Homebuilding gross margin percentage 21.9 % 27.0 %
Adjusted homebuilding gross margin percentage 25.5 % 29.6 %
*
*
*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.
*June 30, 2023* *December 31, 2022*
Loans payable $ 287,427 $ 287,427
Senior notes 1,092,408 1,090,624
Total debt 1,379,835 1,378,051
Stockholders’ equity 2,896,111 2,832,389
Total capital $ 4,275,946 $ 4,210,440
Ratio of debt-to-capital^(1) 32.3 % 32.7 %
Total debt $ 1,379,835 $ 1,378,051
Less: Cash and cash equivalents (981,567 ) (889,664 )
Net debt 398,268 488,387
Stockholders’ equity 2,896,111 2,832,389
Net capital $ 3,294,379 $ 3,320,776
Ratio of net debt-to-net capital^(2) 12.1 % 14.7 %
__________
^(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 June 30,* *Six Months Ended June 30,* *2023* *2022* *2023* *2022* (in thousands)
Net income available to common stockholders $ 60,724 $ 136,383 $ 135,466 $ 223,861
Interest expense:
Interest incurred 37,394 28,789 74,873 57,342
Interest capitalized (37,394 ) (28,789 ) (74,873 ) (57,342 )
Amortization of interest in cost of sales 25,681 24,963 45,932 42,028
Provision for income taxes 21,472 45,936 48,822 76,161
Depreciation and amortization 6,128 6,741 13,182 12,026
EBITDA 114,005 214,023 243,402 354,076
Amortization of stock-based compensation 4,162 5,751 8,023 11,023
Impairments and lot option abandonments 11,761 1,131 12,478 1,897
Adjusted EBITDA $ 129,928 $ 220,905 $ 263,903 $ 366,996