EX-99.1 2 tphex991q32021.htm EX-99.1 Document
Exhibit 99.1
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TRI POINTE HOMES, INC. REPORTS 2021 THIRD QUARTER RESULTS

-Diluted Earnings Per Share of $1.17-
-Homebuilding Gross Margin Percentage of 26.3%-
-Monthly Absorption Rate of 4.1-
-Backlog Units up 14% Year-Over-Year-
-Backlog Dollar Value up 17% Year-Over-Year-

INCLINE VILLAGE, Nev., October 21, 2021 / Tri Pointe Homes, Inc. (the “Company”) (NYSE:TPH) today announced results for the third quarter ended September 30, 2021.
“Tri Pointe Homes generated a significant year-over-year increase in profitability in the third quarter of 2021, driven by strong revenue growth and margin expansion,” said Doug Bauer, Chief Executive Officer of Tri Pointe Homes. “Our teams did an excellent job navigating the supply chain issues that persist in our industry, enabling us to post a 25% year-over-year increase in deliveries. With the strong pricing power we have experienced this year, our homebuilding gross margin was 26.3% for the quarter, which is a record for our company. The combination of increased deliveries and greater margins resulted in net income of $133.2 million for the quarter, or $1.17 per diluted share, representing year-over-year growth of 69% and 92%, respectively.”
Mr. Bauer continued, “Our return on average tangible equity was 20.8%* on a trailing twelve-month basis following our third quarter results, representing a 650-basis-point improvement over the same period last year. Our steadily improving return profile has been driven in large part by several strategic initiatives we have implemented, which include better asset turns, a more land-light strategy, consistent share repurchases, the maturation of our early-stage divisions and enhanced operational and process improvements. We have been extremely pleased with the way these initiatives have led to meaningful improvements to our return on average tangible equity and believe the strategic changes we have made will continue to benefit our stockholders.”
Mr. Bauer concluded, “With a robust backlog, a healthy demand outlook and a strong balance sheet, Tri Pointe Homes is poised to finish 2021 on a high note and carry that momentum into 2022. We believe a number of the demand drivers that are currently in place should persist for the foreseeable future, creating an excellent operating environment for our company. As a result, we are extremely optimistic about the future of Tri Pointe Homes.”
Results and Operational Data for Third Quarter 2021 and Comparisons to Third Quarter 2020
•Net income was $133.2 million, or $1.17 per diluted share, compared to $78.7 million, or $0.61 per diluted share.
•Home sales revenue of $1.0 billion compared to $826.0 million, an increase of 25%
◦New home deliveries of 1,632 homes compared to 1,303 homes, an increase of 25%
◦Average sales price of homes delivered of $630,000 compared to $634,000, a decrease of 1%
•Homebuilding gross margin percentage of 26.3% compared to 22.1%, an increase of 420 basis points
◦Excluding interest and impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 28.8%**
•SG&A expense as a percentage of homes sales revenue of 9.6% compared to 9.8%, a decrease of 20 basis points
•Net new home orders of 1,349 compared to 1,933, a decrease of 30%
•Active selling communities averaged 109.0 compared to 134.0, a decrease of 19%
◦Net new home orders per average selling community were 12.4 orders (4.1 monthly) compared to 14.4 orders (4.8 monthly)
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◦Cancellation rate of 9% in each period
•Backlog units at quarter end of 3,619 homes compared to 3,188, an increase of 14%
◦Dollar value of backlog at quarter end of $2.4 billion compared to $2.1 billion, an increase of 17%
◦Average sales price of homes in backlog at quarter end of $671,000 compared to $648,000, an increase of 4%
•Ratios of debt-to-capital and net debt-to-net capital of 36.3% and 24.3%**, respectively, as of September 30, 2021
•Repurchased 2,974,328 shares of common stock at a weighted average price per share of $21.93 for an aggregate dollar amount of $65.2 million in the three months ended September 30, 2021
•Ended the third quarter of 2021 with total liquidity of $1.2 billion, including cash and cash equivalents of $587.4 million and $589.9 million of availability under the Company’s unsecured revolving credit facility
 
*
Return on average tangible equity is calculated as net income for the trailing twelve months divided by average stockholders’ equity less goodwill and other intangible assets for the trailing five quarters
**See “Reconciliation of Non-GAAP Financial Measures”

“We continued to see excellent demand for our homes during the third quarter of 2021, as evidenced by our sales pace of 4.1 orders per community per month,” said Tri Pointe Homes President and Chief Operating Officer Tom Mitchell. “The order activity was broad-based both in terms of geography and price point, a sign that there is wide-ranging appeal for our premium brand and innovative new home designs. We intend to capitalize on this continued demand by opening over 100 new communities through the next five quarters and expect to end 2022 with approximately 40% more active communities than the previous year. We are excited about our growth prospects in the coming quarters and believe we are in a great position to benefit from the strong housing fundamentals that continue to drive new home demand.”
Outlook

For the full year, the Company expects to open approximately 70 new communities and end the year with between 110 and 115 active selling communities. In addition, the Company anticipates delivering between 6,000 and 6,300 homes at an average sales price between $635,000 and $640,000. The Company expects homebuilding gross margin percentage to be in the range of 24.5% to 25.0% for the full year and anticipates its SG&A expense as a percentage of home sales revenue will be in the range of 9.8% to 10.2%. 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 10:00 a.m. Eastern Time on Thursday, October 21, 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 slides on the Internet under the Events & Presentations heading in the Investors section of the Company’s website at presentation slides on the internet through 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 2021 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 13723766. An archive of the webcast will also be available on the Company’s website for a limited time.
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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. Named one of the Best Places to Work by the Orange County Business Journal for four consecutive years, Tri Pointe Homes also became a Great Place to Work-CertifiedTM company in 2021. 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 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.

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Investor Relations Contact:
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TriPointeHomes.com, 949-478-8696
Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045
  

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KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
20212020Change% Change20212020Change% Change
Operating Data:(unaudited)
Home sales revenue$1,028,950 $826,036 $202,914 25 %$2,754,932 $2,187,816 $567,116 26 %
Homebuilding gross margin$270,926 $182,580 $88,346 48 %$690,337 $470,044 $220,293 47 %
Homebuilding gross margin %26.3 %22.1 %4.2 %25.1 %21.5 %3.6 %
Adjusted homebuilding gross margin %*28.8 %25.0 %3.8 %27.9 %24.4 %3.5 %
SG&A expense$98,365 $81,037 $17,328 21 %$276,926 $246,259 $30,667 12 %
SG&A expense as a % of home sales
   revenue		9.6 %9.8 %(0.2)%10.1 %11.3 %(1.2)%
Net income$133,156 $78,682 $54,474 69 %$321,827 $167,093 $154,734 93 %
Adjusted EBITDA*$215,880 $140,792 $75,088 53 %$543,945 $329,519 $214,426 65 %
Interest incurred$24,280 $20,063 $4,217 21 %$68,017 $62,670 $5,347 9 %
Interest in cost of home sales$25,656 $23,495 $2,161 9 %$77,185 $62,118 $15,067 24 %
Other Data:
Net new home orders1,349 1,933 (584)(30)%4,958 4,926 32 1 %
New homes delivered1,632 1,303 329 25 %4,303 3,490 813 23 %
Average sales price of homes delivered$630 $634 $(4)(1)%$640 $627 $13 2 %
Cancellation rate9 %9 %0 %7 %14 %(7)%
Average selling communities109.0 134.0 (25.0)(19)%112.1 138.8 (26.7)(19)%
Selling communities at end of period109 126 (17)(13)%
Backlog (estimated dollar value)$2,428,412 $2,067,366 $361,046 17 %
Backlog (homes)3,619 3,188 431 14 %
Average sales price in backlog$671 $648 $23 4 %
September 30,December 31,
20212020Change% Change
Balance Sheet Data:(unaudited)
Cash and cash equivalents$587,405 $621,295 $(33,890)(5)%
Real estate inventories$3,136,477 $2,910,142 $226,335 8 %
Lots owned or controlled38,777 35,641 3,136 9 %
Homes under construction (1)
4,097 3,044 1,053 35 %
Homes completed, unsold18 68 (50)(74)%
Debt$1,343,782 $1,343,001 $781 0 %
Stockholders’ equity$2,354,136 $2,232,537 $121,599 5 %
Book capitalization$3,697,918 $3,575,538 $122,380 3 %
Ratio of debt-to-capital36.3 %37.6 %(1.3)%
Ratio of net debt-to-net capital*24.3 %24.4 %(0.1)%
__________
(1)     Homes under construction included 83 and 86 models at September 30, 2021 and December 31, 2020, respectively.
*    See “Reconciliation of Non-GAAP Financial Measures”
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CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
September 30,December 31,
20212020
Assets(unaudited)
Cash and cash equivalents$587,405 $621,295 
Receivables86,926 63,551 
Real estate inventories3,136,477 2,910,142 
Investments in unconsolidated entities75,046 75,056 
Goodwill and other intangible assets, net156,603 158,529 
Deferred tax assets, net43,618 47,525 
Other assets147,610 145,882 
Total assets$4,233,685 $4,021,980 
Liabilities
Accounts payable$119,699 $79,690 
Accrued expenses and other liabilities416,056 366,740 
Loans payable257,381 258,979 
Senior notes1,086,401 1,084,022 
Total liabilities1,879,537 1,789,431 
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, 2021 and December 31, 2020, respectively— — 
Common stock, $0.01 par value, 500,000,000 shares authorized; 112,386,496 and 121,882,778 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively1,124 1,219 
Additional paid-in capital145,004 345,137 
Retained earnings2,208,008 1,886,181 
Total stockholders’ equity
2,354,136 2,232,537 
Noncontrolling interests12 12 
Total equity2,354,148 2,232,549 
Total liabilities and equity$4,233,685 $4,021,980 


 
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CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Homebuilding:  
Home sales revenue$1,028,950 $826,036 $2,754,932 $2,187,816 
Land and lot sales revenue581 3,242 7,520 3,462 
Other operations revenue646 634 1,969 1,900 
Total revenues1,030,177 829,912 2,764,421 2,193,178 
Cost of home sales758,024 643,456 2,064,595 1,717,772 
Cost of land and lot sales891 3,214 5,918 3,790 
Other operations expense801 624 2,111 1,872 
Sales and marketing44,875 44,714 130,824 132,545 
General and administrative53,490 36,323 146,102 113,714 
Restructuring charges— 54 — 5,603 
Homebuilding income from operations172,096 101,527 414,871 217,882 
Equity in (loss) income of unconsolidated entities(43)106 (72)67 
Other income (loss), net171 (3,120)428 (9,075)
Homebuilding income before income taxes172,224 98,513 415,227 208,874 
Financial Services:
Revenues3,016 2,552 7,802 6,442 
Expenses1,618 1,334 4,510 3,698 
Equity in income of unconsolidated entities3,946 3,273 10,586 7,761 
Financial services income before income taxes5,344 4,491 13,878 10,505 
Income before income taxes177,568 103,004 429,105 219,379 
Provision for income taxes(44,412)(24,322)(107,278)(52,286)
Net income$133,156 $78,682 $321,827 $167,093 
Earnings per share  
Basic$1.18 $0.61 $2.77 $1.27 
Diluted$1.17 $0.61 $2.75 $1.27 
Weighted average shares outstanding 
Basic112,781,663 128,941,901 116,296,265 131,190,301 
Diluted113,782,251 129,515,114 117,188,893 131,672,652 
 
 
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MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
New
Homes
Delivered		Average
Sales
Price		New
Homes
Delivered		Average
Sales
Price		New
Homes
Delivered		Average
Sales
Price		New
Homes
Delivered		Average
Sales
Price
Arizona187 $685 170 $559 570 $667 475 $534 
California708 646 481 729 1,863 674 1,310 740 
Nevada180 611 132 563 381 607 321 534 
Washington76 983 78 927 223 984 170 897 
West total1,151 669 861 686 3,037 687 2,276 679 
Colorado55 589 47 625 154 584 166 593 
Texas274 492 235 454 721 483 698 628 
Central total329 508 282 482 875 501 864 489 
Maryland73 565 98 578 203 561 228 567 
North Carolina18 395 — — 53 393 — — 
South Carolina7 362 — — 11 334 — — 
Virginia54 749 62 684 124 737 122 736 
East total152 601 160 619 391 588 350 626 
Total1,632 $630 1,303 $634 4,303 $640 3,490 $627 
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
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
Arizona182 13.2 244 18.7 676 14.4 646 17.4 
California545 38.3 895 45.2 1,865 38.9 2,157 51.1 
Nevada133 10.2 145 15.5 568 11.1 413 15.3 
Washington68 6.5 78 8.5 229 5.7 309 8.2 
West total928 68.2 1,362 87.9 3,338 70.1 3,525 92.0 
Colorado55 6.5 72 4.3 218 5.7 181 4.2 
Texas238 21.5 318 30.5 945 22.6 757 30.3 
Central total293 28.0 390 34.8 1,163 28.3 938 34.5 
Maryland40 4.3 131 8.0 149 5.3 334 8.8 
North Carolina25 1.5 — — 91 1.6 — — 
South Carolina16 1.5 6 0.3 38 1.5 6 0.1 
Virginia47 5.5 44 3.0 179 5.3 123 3.4 
East total128 12.8 181 11.3 457 13.7 463 12.3 
Total1,349 109.0 1,933 134.0 4,958 112.1 4,926 138.8 

 


 
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MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
 
As of September 30, 2021As of September 30, 2020
Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price		Backlog
Units		Backlog
Dollar
Value		Average
Sales
Price
Arizona585 $438,093 $749 501 $317,887 $635 
California1,260 843,994 670 1,399 941,768 673 
Nevada323 226,035 700 229 148,899 650 
Washington145 155,172 1,070 228 222,394 975 
West total2,313 1,663,294 719 2,357 1,630,948 692 
Colorado190 135,851 715 115 65,576 570 
Texas722 364,537 505 404 184,507 457 
Central total912 500,388 549 519 250,083 482 
Maryland147 92,836 632 223 122,133 548 
North Carolina50 23,170 463 — — — 
South Carolina30 11,188 373 6 1,851 309 
Virginia167 137,536 824 83 62,351 751 
East total394 264,730 672 312 186,335 597 
Total3,619 $2,428,412 $671 3,188 $2,067,366 $648 
September 30,December 31,
20212020
Lots Owned or Controlled:
Arizona3,750 4,128 
California14,690 15,040 
Nevada2,304 2,639 
Washington857 964 
West total21,601 22,771 
Colorado1,451 1,080 
Texas11,068 6,985 
Central total12,519 8,065 
Maryland693 892 
North Carolina2,924 2,808 
South Carolina163 106 
Virginia877 999 
East total4,657 4,805 
Total38,777 35,641 
September 30,December 31,
20212020
Lots by Ownership Type:
Lots owned22,333 22,620 
Lots controlled (1)16,444 13,021 
Total38,777 35,641 

(1)    As of September 30, 2021 and December 31, 2020, lots controlled included lots that were under land option contracts or purchase contracts. As of September 30, 2021, lots controlled for Central and East include 2,095 lots and 179 lots, respectively, which represent our expected share of lots owned by our unconsolidated land development joint ventures.
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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 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,
2021%2020%
(dollars in thousands)
Home sales revenue$1,028,950 100.0 %$826,036 100.0 %
Cost of home sales758,024 73.7 %643,456 77.9 %
Homebuilding gross margin270,926 26.3 %182,580 22.1 %
Add:  interest in cost of home sales25,656 2.5 %23,495 2.8 %
Add:  impairments and lot option abandonments268 0.0 %315 0.0 %
Adjusted homebuilding gross margin$296,850 28.8 %$206,390 25.0 %
Homebuilding gross margin percentage26.3 % 22.1 % 
Adjusted homebuilding gross margin percentage28.8 % 25.0 % 


Nine Months Ended September 30,
2021%2020%
(dollars in thousands)
Home sales revenue$2,754,932 100.0 %$2,187,816 100.0 %
Cost of home sales2,064,595 74.9 %1,717,772 78.5 %
Homebuilding gross margin690,337 25.1 %470,044 21.5 %
Add:  interest in cost of home sales77,185 2.8 %62,118 2.8 %
Add:  impairments and lot option abandonments713 0.0 %2,044 0.1 %
Adjusted homebuilding gross margin$768,235 27.9 %$534,206 24.4 %
Homebuilding gross margin percentage25.1 %21.5 %
Adjusted homebuilding gross margin percentage27.9 %24.4 %






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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.
 
September 30, 2021December 31, 2020
Loans payable$257,381 $258,979 
Senior notes1,086,401 1,084,022 
Total debt1,343,782 1,343,001 
Stockholders’ equity2,354,136 2,232,537 
Total capital$3,697,918 $3,575,538 
Ratio of debt-to-capital(1)
36.3 %37.6 %
Total debt$1,343,782 $1,343,001 
Less: Cash and cash equivalents(587,405)(621,295)
Net debt756,377 721,706 
Stockholders’ equity2,354,136 2,232,537 
Net capital$3,110,513 $2,954,243 
Ratio of net debt-to-net capital(2)
24.3 %24.4 %
__________
(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.


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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) 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 September 30,Nine Months Ended September 30,
2021202020212020
(in thousands)
Net income$133,156 $78,682 $321,827 $167,093 
Interest expense:
Interest incurred24,280 20,063 68,017 62,670 
Interest capitalized(24,280)(20,063)(68,017)(62,670)
Amortization of interest in cost of sales25,655 23,538 77,457 62,166 
Provision for income taxes44,412 24,322 107,278 52,286 
Depreciation and amortization7,979 7,020 24,098 19,196 
EBITDA211,202 133,562 530,660 300,741 
Amortization of stock-based compensation4,410 3,477 12,572 10,888 
Impairments and lot option abandonments268 315 713 2,044 
Early loan termination costs— 3,384 — 10,243 
Restructuring charges— 54 — 5,603 
Adjusted EBITDA$215,880 $140,792 $543,945 $329,519 
 
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