EX-99.1 2 tphex991q42020.htm EX-99.1 Document
Exhibit 99.1
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TRI POINTE HOMES, INC. REPORTS 2020 FOURTH QUARTER AND FULL YEAR RESULTS
Fourth Quarter Highlights
-Diluted Earnings Per Share of $0.92-
-Homebuilding Gross Margin Percentage of 23.2%-
-Net New Home Orders up 14% Year-Over-Year-
-Backlog Dollar Value of $1.9 Billion, up 69% Year-Over-Year-
 
INCLINE VILLAGE, Nev., February 18, 2021 / Business Wire / – Tri Pointe Homes, Inc. (the “Company”) (NYSE: TPH) today announced results for the fourth quarter ended December 31, 2020 and full year 2020.
“Tri Pointe Homes finished the year on a strong note in the fourth quarter of 2020, highlighted by year-over-year order growth of 14% on a 38% improvement in order pace, homebuilding gross margin expansion of 130 basis points to 23.2% and a unit backlog increase of 69% as compared to last year,” said Tri Pointe Homes Chief Executive Officer Doug Bauer. “These results are reflective of a housing market that continues to exhibit strong momentum and our operational focus that seeks to capitalize on these trends.”
Mr. Bauer continued, “Tri Pointe enters 2021 on a solid foundation, with $1.2 billion in total liquidity, $621 million in cash, a debt-to-capital ratio of 37.6% and a net-debt-to-net capital ratio of 24.4%*. We believe this financial strength puts us in an excellent position to continue expanding our operations with an eye towards generating strong stockholder returns. Our main focus remains on this as we move forward and anticipate continued headway in 2021.”
Mr. Bauer concluded, “Given the current market dynamics, it is clear that there is a critical long-term need for additional housing supply in this country. Existing home inventory remains at historically low levels while demand is being driven by, among other things, powerful demographic forces and changes to how we live as a result of the COVID-19 pandemic. We believe these positive tailwinds will remain in place for the foreseeable future, providing our industry and our company with a very bright outlook.”
Results and Operational Data for Fourth Quarter 2020 and Comparisons to Fourth Quarter 2019
•Net income was $115.1 million, or $0.92 per diluted share, compared to $118.0 million, or $0.85 per diluted share
•Home sales revenue for the quarter was $1.0 billion, a decrease of 8%
◦New home deliveries of 1,633 homes compared to 1,795 homes, a decrease of 9%
◦Average sales price of homes delivered of $640,000 compared to $634,000, an increase of 1%
•Homebuilding gross margin percentage was 23.2% compared to 21.9%, an increase of 130 basis points
◦Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 26.3%*
•Selling, general and administrative (“SG&A”) expense as a percentage of homes sales revenue of 9.9% compared to 9.2%, an increase of 70 basis points
•Net new home orders of 1,409 compared to 1,235, an increase of 14%
•Active selling communities averaged 117.5 compared to 142.8, a decrease of 18%
◦Net new home orders per average selling community increased by 38% to 12.0 orders (4.0 monthly) compared to 8.6 orders (2.9 monthly)
◦Cancellation rate of 10% compared to 14%
•Backlog units at quarter end of 2,964 homes compared to 1,752, an increase of 69%
◦Dollar value of backlog at quarter end of $1.9 billion compared to $1.1 billion, an increase of 69%
◦Average sales price in backlog at quarter end remained flat at $647,000 compared to $648,000
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•Ratios of debt-to-capital and net debt-to-net capital of 37.6% and 24.4%*, respectively, as of December 31, 2020
•Repurchased 4,962,823 shares of common stock at an average price of $17.53 for an aggregate dollar amount of $87.0 million in the three months ended December 31, 2020
•Ended fourth quarter of 2020 with total liquidity of $1.2 billion, including cash of $621.3 million and $535.9 million of availability under the Company’s unsecured revolving credit facility
*    See “Reconciliation of Non-GAAP Financial Measures”
Results and Operational Data for Full Year 2020 and Comparisons to Full Year 2019
•Net income available to was $282.2 million, or $2.17 per diluted share, compared to $207.2 million, or $1.47 per diluted share
•Home sales revenue of $3.2 billion compared to $3.1 billion, an increase of 5%
◦New home deliveries of 5,123 homes compared to 4,921 homes, an increase of 4%
◦Average sales price of homes delivered of $631,000 compared to $624,000, an increase of 1%
•Homebuilding gross margin percentage of 22.0% compared to 19.8%, an increase of 220 basis points
◦Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 25.0%*
•SG&A expense as a percentage of homes sales revenue of 10.8% compared to 11.5%, a decrease of 70 basis points
•Net new home orders of 6,335 compared to 5,338, an increase of 19%
•Active selling communities averaged 133.2 compared to 145.7, a decrease of 9%
◦Net new home orders per average selling community increased by 29% to 47.6 orders (4.0 monthly) compared to 36.6 orders (3.1 monthly)
◦Cancellation rate of 13% compared to 15%, a decrease of 200 basis points
•Repurchased 15,163,477 shares of common stock at an average price of $16.53 for an aggregate dollar amount of $250.7 million in the full year ended December 31, 2020
 
*    See “Reconciliation of Non-GAAP Financial Measures”
“2020 was a challenging year and I would like to thank the Tri Pointe Homes team for their commitment, tenacity, and ingenuity in making this a record year for our company,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “Our success was driven by a combination of positive industry factors, well-located communities and innovative new home designs. The accelerated demand allowed us to increase prices at a majority of our communities and stay ahead of the cost pressures we are experiencing as an industry. I am very excited about the successful implementation of our one unified brand – Tri Pointe Homes. With an increased emphasis on affordability and the growth of our early-stage divisions I am very optimistic that 2021 will be another strong year for our company.”
Outlook
There remains uncertainty regarding COVID-19 and future developments, including the duration and severity of the outbreak, as well as the related short-term and long-term impacts on the economy. The following outlook is based on the Company’s backlog as of December 31, 2020, current market dynamics and management’s estimates. Actual results could differ due to, among other things, the effects of the COVID-19 pandemic.
For the first quarter of 2021, the Company anticipates delivering between 1,100 and 1,200 homes at an average sales price between $625,000 and $635,000. The Company expects its homebuilding gross margin percentage to be in the range of 21.5% to 22.5% for the first quarter of 2021 and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 12.0% to 12.5%. Lastly, the Company expects its effective tax rate for the first quarter of 2021 to be approximately 25%.
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For the full year, the Company expects to open approximately 70 new communities and end the year with between 125 and 135 active selling communities. In addition, the Company anticipates delivering between 5,700 and 6,000 homes at an average sales price between $600,000 and $610,000. The Company expects homebuilding gross margin percentage to be in the range of 21.0% to 22.0% for the full year and anticipates its SG&A expense as a percentage of homes sales revenue will be in the range of 10.0% to 10.5%. Finally, the Company expects its effective tax rate for the full year to be approximately 25%.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at 7:00 a.m. Pacific Time (10:00 a.m. Eastern Time) on Thursday, February 18, 2021.  The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, President and Chief Operating Officer and Glenn Keeler, Chief Financial Officer.
Interested parties can listen to the call live and view the related presentation slides on the internet through 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 Fourth Quarter 2020 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 13714650. An archive of the webcast will also be available on the Company’s website for a limited time.
About Tri Pointe Homes, Inc.
One of the largest homebuilders in the U.S., Tri Pointe Homes® (NYSE: TPH) is a publicly traded company and a recognized leader in customer experience, innovative design, and environmentally responsible business practices. The company builds premium homes and communities in 10 states, with deep ties to the communities it serves—some for as long as a century. Tri Pointe Homes combines the financial resources, technology platforms and proven leadership of a national organization with the regional insights, longstanding community connections and agility of empowered local teams. Tri Pointe has won multiple Builder of the Year awards, most recently in 2019, and made Fortune magazine’s 2017 100 Fastest-Growing Companies list. The company was also named one of the Best Places to Work by the Orange County Business Journal for four consecutive years. For more information, please visit TriPointeHomes.com.
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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; raw material and labor prices and availability; 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 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; 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:
Media Contact:
Drew Mackintosh, Mackintosh Investor Relations
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
InvestorRelations@TriPointeHomes.com, 949-478-8696

 
 

 

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KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
Three Months Ended December 31,Year Ended December 31,
20202019Change% Change20202019Change% Change
Operating Data:
Home sales revenue
$1,045,020 $1,138,265 $(93,245)(8)%$3,232,836 $3,069,375 $163,461 5 %
Homebuilding gross margin
$242,002 $249,404 $(7,402)(3)%$712,046 $606,667 $105,379 17 %
Homebuilding gross margin %
23.2 %21.9 %1.3 %22.0 %19.8 %2.2 %
Adjusted homebuilding gross margin %*
26.3 %26.2 %0.1 %25.0 %23.2 %1.8 %
SG&A expense
$103,155 $104,219 $(1,064)(1)%$349,414 $352,309 $(2,895)(1)%
SG&A expense as a % of home sales revenue
9.9 %9.2 %0.7 %10.8 %11.5 %(0.7)%
Net income
$115,114 $117,993 $(2,879)(2)%$282,207 $207,187 $75,020 36 %
Adjusted EBITDA*
$203,396 $213,528 $(10,132)(5)%$532,915 $420,899 $112,016 27 %
Interest incurred
$20,450 $21,951 $(1,501)(7)%$83,120 $89,691 $(6,571)(7)%
Interest in cost of home sales
$31,013 $30,065 $948 3 %$93,131 $81,567 $11,564 14 %
Other Data:
Net new home orders
1,409 1,235 174 14 %6,335 5,338 997 19 %
New homes delivered
1,633 1,795 (162)(9)%5,123 4,921 202 4 %
Average selling price of homes delivered
$640 $634 $6 1 %$631 $624 $7 1 %
Cancellation rate
10 %14 %(4)%13 %15 %(2)%
Average selling communities
117.5 142.8 (25.3)(18)%133.2 145.7 (12.5)(9)%
Selling communities at end of period
112 137 (25)(18)%
Backlog (estimated dollar value)
$1,916,664 $1,136,163 $780,501 69 %
Backlog (homes)
2,964 1,752 1,212 69 %
Average selling price in backlog
$647 $648 $(1)0 %
December 31,
2020		December 31,
2019		Change
Balance Sheet Data:
Cash and cash equivalents
$621,295 $329,011 $292,284 
Real estate inventories
$2,910,142 $3,065,436 $(155,294)
Lots owned or controlled
35,641 30,029 5,612 
Homes under construction (1)
3,044 2,269 775 
Homes completed, unsold
68 343 (275)
Total debt, net
$1,343,001 $1,283,985 $59,016 
Stockholders' equity
$2,232,537 $2,186,530 $46,007 
Book capitalization
$3,575,538 $3,470,515 $105,023 
Ratio of debt-to-capital
37.6 %37.0 %0.6 %
Ratio of net debt-to-net-capital*
24.4 %30.4 %(6.0)%
_____________________________________
(1)     Homes under construction included 86 and 78 models at December 31, 2020 and December 31, 2019, respectively.
*    See “Reconciliation of Non-GAAP Financial Measures”

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CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
December 31,
2020		December 31,
2019
Assets(unaudited)
Cash and cash equivalents
$621,295 $329,011 
Receivables
63,551 69,276 
Real estate inventories
2,910,142 3,065,436 
Investments in unconsolidated entities
75,056 11,745 
Goodwill and other intangible assets, net
158,529 159,893 
Deferred tax assets, net
47,525 49,904 
Other assets
145,882 173,425 
Total assets
$4,021,980 $3,858,690 
Liabilities
Accounts payable
$79,690 $66,120 
Accrued expenses and other liabilities
366,740 322,043 
Loans payable
258,979 250,000 
Senior notes
1,084,022 1,033,985 
Total liabilities
1,789,431 1,672,148 
Commitments and contingencies
Equity
Stockholders' Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
   shares issued and outstanding as of December 31, 2020 and
   December 31, 2019, respectively
— — 
Common stock, $0.01 par value, 500,000,000 shares authorized;
   121,882,778 and 136,149,633 shares issued and outstanding at
   December 31, 2020 and December 31, 2019, respectively
1,219 1,361 
Additional paid-in capital
345,137 581,195 
Retained earnings
1,886,181 1,603,974 
Total stockholders' equity
2,232,537 2,186,530 
Noncontrolling interests
12 12 
Total equity
2,232,549 2,186,542 
Total liabilities and equity
$4,021,980 $3,858,690 

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CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
 
 Three Months Ended December 31,Year Ended December 31,
 2020201920202019
Homebuilding:  
Home sales revenue$1,045,020 $1,138,265 $3,232,836 $3,069,375 
Land and lot sales revenue12,470 357 15,932 7,176 
Other operations revenue642 617 2,542 2,470 
Total revenues1,058,132 1,139,239 3,251,310 3,079,021 
Cost of home sales803,018 888,861 2,520,790 2,462,708 
Cost of land and lot sales2,653 159 6,443 7,711 
Other operations expense624 608 2,496 2,434 
Sales and marketing50,565 61,260 183,110 195,148 
General and administrative52,590 42,959 166,304 157,161 
Restructuring charges58 — 5,661 — 
Homebuilding income from operations148,624 145,392 366,506 253,859 
Equity in income (loss) of unconsolidated entities95 (19)162 (52)
Other income (expense), net97 138 (8,978)6,857 
Homebuilding income before income taxes148,816 145,511 357,690 260,664 
Financial Services:
Revenues2,695 2,035 9,137 3,994 
Expenses1,417 1,122 5,115 2,887 
Equity in income of unconsolidated entities3,904 4,455 11,665 9,316 
Financial services income before income taxes5,182 5,368 15,687 10,423 
Income before income taxes153,998 150,879 373,377 271,087 
Provision for income taxes(38,884)(32,886)(91,170)(63,900)
Net income$115,114 $117,993 $282,207 $207,187 
Earnings per share  
Basic$0.93 $0.85 $2.18 $1.47 
Diluted$0.92 $0.85 $2.17 $1.47 
Weighted average shares outstanding    
Basic123,944,552 138,245,130 129,368,964 140,851,444 
Diluted124,815,177 139,219,179 129,951,161 141,394,227 
 
 

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MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
Three Months Ended December 31,Year Ended December 31,
 2020201920202019
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:
Maracay189 $601 212 $503 664 $553 530 $515 
Pardee Homes626 634 647 696 1,613 662 1,675 658 
Quadrant Homes116 973 90 853 286 928 257 933 
Trendmaker Homes212 441 254 459 910 459 882 461 
Tri Pointe Homes343 707 414 671 1,153 703 1,163 685 
Winchester Homes147 582 178 621 497 613 414 609 
Total1,633 $640 1,795 $634 5,123 $631 4,921 $624 
Three Months Ended December 31,Year Ended December 31,
2020201920202019
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:
Arizona189 $601 212 $503 664 $553 530 $515 
California700 687 821 725 2,010 721 2,051 713 
Colorado53 597 63 569 219 594 278 565 
Maryland108 523 117 489 336 553 289 491 
Nevada204 602 177 548 525 561 509 550 
North Carolina7 363 — — 7 363 — — 
South Carolina5 325 — — 5 325 — — 
Texas212 441 254 459 910 459 882 461 
Virginia39 747 61 875 161 739 125 880 
Washington116 973 90 853 286 928 257 933 
Total1,633 $640 1,795 $634 5,123 $631 4,921 $624 

 
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MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
Three Months Ended December 31,Year Ended December 31,
 2020201920202019
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:
Maracay167 15.8 138 14.0 813 16.9 709 13.8 
Pardee Homes391 36.5 354 41.8 1,985 40.1 1,733 43.5 
Quadrant Homes27 5.5 90 6.5 336 7.5 300 6.8 
Trendmaker Homes306 26.0 232 34.7 1,063 29.0 914 37.1 
Tri Pointe Homes364 23.7 292 31.3 1,527 28.1 1,174 30.0 
Winchester Homes154 10.0 129 14.5 611 11.6 508 14.5 
Total1,409 117.5 1,235 142.8 6,335 133.2 5,338 145.7 
Three Months Ended December 31,Year Ended December 31,
2020201920202019
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:
Arizona167 15.8 138 14.0 813 16.9 709 13.8 
California559 40.0 488 53.8 2,716 48.5 2,147 53.7 
Colorado64 4.8 47 5.8 245 4.3 234 6.2 
Maryland86 6.5 90 10.5 420 8.2 345 10.2 
Nevada111 13.7 111 13.5 524 14.8 526 13.5 
North Carolina19 0.7 — — 19 0.2 — — 
South Carolina2 1.0 — — 8 0.3 — — 
Texas306 26.0 232 34.7 1,063 29.0 914 37.1 
Virginia68 3.5 39 4.0 191 3.5 163 4.4 
Washington27 5.5 90 6.5 336 7.5 300 6.8 
Total1,409 117.5 1,235 142.8 6,335 133.2 5,338 145.7 

 
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MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
 
 As of December 31, 2020As of December 31, 2019
Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price		Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price
Backlog:
Maracay
479 $324,410 $677 330 $180,954 $548 
Pardee Homes
832 574,613 691 460 336,837 732 
Quadrant Homes
139 139,435 1,003 89 79,789 897 
Trendmaker Homes
498 232,323 467 345 169,946 493 
Tri Pointe Homes703 453,665 645 329 234,189 712 
Winchester Homes
313 192,218 614 199 134,448 676 
Total2,964 $1,916,664 $647 1,752 $1,136,163 $648 
As of December 31, 2020As of December 31, 2019
Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price		Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price
Backlog:
Arizona479 $324,410 $677 $330 $180,954 $548 
California1,258 855,261 680 552 437,926 793 
Colorado126 71,940 571 100 58,060 581 
Maryland201 113,828 566 117 68,954 589 
Nevada136 95,963 706 137 75,040 548 
North Carolina12 4,274 356 — — — 
South Carolina3 840 280 — — — 
Texas498 232,323 467 345 169,946 493 
Virginia112 78,390 700 82 65,494 799 
Washington139 139,435 1,003 89 79,789 897 
Total2,964 $1,916,664 $647 1,752 $1,136,163 $648 


 
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MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
December 31,
2020		December 31,
2019
Lots Owned or Controlled(1):
Maracay
4,128 3,730 
Pardee Homes
13,840 13,267 
Quadrant Homes
964 1,103 
Trendmaker Homes
6,985 4,034 
Tri Pointe Homes
7,833 6,170 
Winchester Homes
1,891 1,725 
Total35,641 30,029 
December 31,
2020		December 31,
2019
Lots Owned or Controlled(1):
Arizona
4,128 3,730 
California
15,040 14,677 
Colorado
1,080 1,033 
Maryland
892 1,140 
Nevada
2,639 2,026 
North Carolina
2,808 1,590 
South Carolina
106 111 
Texas
6,985 4,034 
Virginia
999 585 
Washington
964 1,103 
Total35,641 30,029 
December 31,
2020		December 31,
2019
Lots by Ownership Type:
Lots owned
22,620 22,845 
Lots controlled (1)
13,021 7,184 
Total35,641 30,029 
__________
(1)    As of December 31, 2020 and December 31, 2019, lots controlled included lots that were under land option contracts or purchase contracts.
 
 

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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 financial measure adjusted homebuilding gross margin percentage. We believe this information is meaningful as it isolates the impact that leverage and non-cash impairments and lot option abandonments have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who may adjust gross margins in a similar fashion.
 
Three Months Ended December 31,
2020%2019%
(dollars in thousands)
Home sales revenue$1,045,020 100.0 %$1,138,265 100.0 %
Cost of home sales803,018 76.8 %888,861 78.1 %
Homebuilding gross margin242,002 23.2 %249,404 21.9 %
Add:  interest in cost of home sales
31,013 3.0 %30,065 2.6 %
Add:  impairments and lot option abandonments
1,960 0.2 %18,356 1.6 %
Adjusted homebuilding gross margin$274,975 26.3 %$297,825 26.1 %
Homebuilding gross margin percentage23.2 % 21.9 % 
Adjusted homebuilding gross margin percentage26.3 % 26.2 % 


Year Ended December 31,
2020%2019%
(dollars in thousands)
Home sales revenue$3,232,836 100.0 %$3,069,375 100.0 %
Cost of home sales2,520,790 78.0 %2,462,708 80.2 %
Homebuilding gross margin712,046 22.0 %606,667 19.8 %
Add:  interest in cost of home sales
93,131 2.9 %81,567 2.7 %
Add:  impairments and lot option abandonments
4,004 0.1 %24,875 0.8 %
Adjusted homebuilding gross margin$809,181 25.0 %$713,109 23.2 %
Homebuilding gross margin percentage22.0 % 19.8 % 
Adjusted homebuilding gross margin percentage25.0 % 23.2 % 

 





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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.
 
December 31, 2020December 31, 2019
Loans payable$258,979 $250,000 
Senior notes1,084,022 1,033,985 
Total debt1,343,001 1,283,985 
Stockholders’ equity2,232,537 2,186,530 
Total capital$3,575,538 $3,470,515 
Ratio of debt-to-capital(1)
37.6 %37.0 %
Total debt$1,343,001 $1,283,985 
Less: Cash and cash equivalents(621,295)(329,011)
Net debt721,706 954,974 
Stockholders’ equity2,232,537 2,186,530 
Net capital$2,954,243 $3,141,504 
Ratio of net debt-to-net capital(2)
24.4 %30.4 %
__________
(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.

































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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
 
The following table calculates the non-GAAP financial measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income, as reported and prepared in accordance with GAAP. EBITDA means net income before (a) interest expense, (b) expensing of previously capitalized interest included in costs of home sales, (c) income taxes and (d) depreciation and amortization. Adjusted EBITDA means EBITDA before (e) amortization of stock-based compensation, (f) real estate inventory impairments and lot option abandonments, (g) early loan termination costs and (h) restructuring charges. Other companies may calculate EBITDA and Adjusted EBITDA (or similarly titled measures) differently. We believe EBITDA and Adjusted EBITDA are useful measures of the Company’s ability to service debt and obtain financing.

Three Months Ended December 31,Year Ended December 31,
2020201920202019
(in thousands)
Net income available to common stockholders$115,114 $117,993 $282,207 $207,187 
Interest expense:
Interest incurred
20,450 21,951 83,120 89,691 
Interest capitalized
(20,450)(21,951)(83,120)(89,691)
Amortization of interest in cost of sales
31,082 30,061 93,248 81,735 
Provision for income taxes
38,884 32,886 91,170 63,900 
Depreciation and amortization
10,301 10,040 29,497 28,396 
EBITDA195,381 190,980 496,122 381,218 
Amortization of stock-based compensation
5,997 4,192 16,885 14,806 
Real estate inventory impairments and lot option abandonments
1,960 18,356 4,004 24,875 
Early loan termination costs
— — 10,243 — 
Restructuring charges
58 — 5,661 — 
Adjusted EBITDA$203,396 $213,528 $532,915 $420,899 
 
 
 
 
 
 
 
 
 
 
 











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

 The following table contains information about our operating results reflecting certain adjustments to income before income taxes, provision for income taxes, net income, net income available to common stockholders and earnings per share (diluted). We believe reflecting these adjustments is useful to investors in understanding our recurring operations by eliminating the varying effects of certain non-routine events, and may be helpful in comparing the Company to other homebuilders to the extent they provide similar information.
 

Three Months Ended December 31, 2020Year Ended December 31, 2020
As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjusted
(in thousands, except per share amounts)
Income before income taxes$153,998 $58 

$154,056 $373,377 $15,904 

$389,281 
Provision for income taxes(38,884)(15)

(38,899)(91,170)(3,881)

(95,051)
Net income$115,114 $43 $115,157 $282,207 $12,023 $294,230 
Earnings per share
Diluted$0.92 $0.92 $2.17 $2.26 
Weighted average shares outstanding
Diluted124,815 124,815 129,951 129,951 
Effective tax rate25.2 %25.2 %24.4 %24.4 %
_________
(1)Includes (i) a $10.2 million charge for the year ended December 31, 2020 related to the early extinguishment of a portion of our 4.875% Senior Notes due 2021, which is included in other income (expense), net on our consolidated statements of operations, and (ii) $58,000 and $5.7 million charges for the three months and full year ended December 31, 2020, respectively, related to restructuring charges stemming from a workforce reduction plan.
(2)Includes a tax adjustment to reflect the higher pretax earnings associated with the aforementioned adjustments.
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