TRI Pointe Group Inc TPH

NYS: TPH | ISIN: US87265H1095   28/03/2024
38,66 USD (+1,92%)
(+1,92%)   28/03/2024

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., Feb. 18, 2021 (GLOBE NEWSWIRE) -- 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
  • 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%.

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 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.

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 RelationsCarol Ruiz, cruiz@newgroundco.com, 310-437-0045
InvestorRelations@TriPointeHomes.com, 949-478-8696 
  

KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 Change % Change 2020 2019 Change % 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 revenue9.9% 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 orders1,409  1,235  174  14% 6,335  5,338  997  19%
New homes delivered1,633  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 rate10% 14% (4)%   13% 15% (2)%  
Average selling communities117.5  142.8  (25.3) (18)% 133.2  145.7  (12.5) (9)%
Selling communities at end of period112  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 controlled35,641  30,029  5,612           
Homes under construction (1)3,044  2,269  775           
Homes completed, unsold68  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-capital37.6% 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”


CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

 December 31,
2020
 December 31,
2019
Assets(unaudited)  
Cash and cash equivalents$621,295  $329,011 
Receivables63,551  69,276 
Real estate inventories2,910,142  3,065,436 
Investments in unconsolidated entities75,056  11,745 
Goodwill and other intangible assets, net158,529  159,893 
Deferred tax assets, net47,525  49,904 
Other assets145,882  173,425 
Total assets$4,021,980  $3,858,690 
    
Liabilities   
Accounts payable$79,690  $66,120 
Accrued expenses and other liabilities366,740  322,043 
Loans payable258,979  250,000 
Senior notes1,084,022  1,033,985 
Total liabilities1,789,431  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, respectively1,219  1,361 
Additional paid-in capital345,137  581,195 
Retained earnings1,886,181  1,603,974 
Total stockholders' equity2,232,537  2,186,530 
Noncontrolling interests12  12 
Total equity2,232,549  2,186,542 
Total liabilities and equity$4,021,980  $3,858,690 
 

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

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
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 
 

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

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
 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,
 2020 2019 2020 2019
 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 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)

 Three Months Ended December 31, Year Ended December 31,
 2020 2019 2020 2019
 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,
 2020 2019 2020 2019
 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 
 

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

 As of December 31, 2020 As of December 31, 2019
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
 Backlog
Units
 Backlog
Dollar
Value
 Average
Sales
Price
Backlog:           
Maracay479  $324,410  $677  330  $180,954  $548 
Pardee Homes832  574,613  691  460  336,837  732 
Quadrant Homes139  139,435  1,003  89  79,789  897 
Trendmaker Homes498  232,323  467  345  169,946  493 
Tri Pointe Homes703  453,665  645  329  234,189  712 
Winchester Homes313  192,218  614  199  134,448  676 
Total2,964  $1,916,664  $647  1,752  $1,136,163  $648 
            
            
 As of December 31, 2020 As 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 
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)

 December 31,
2020
 December 31,
2019
Lots Owned or Controlled(1):   
Maracay4,128  3,730 
Pardee Homes13,840  13,267 
Quadrant Homes964  1,103 
Trendmaker Homes6,985  4,034 
Tri Pointe Homes7,833  6,170 
Winchester Homes1,891  1,725 
Total35,641  30,029 
    
    
 December 31,
2020
 December 31,
2019
Lots Owned or Controlled(1):   
Arizona4,128  3,730 
California15,040  14,677 
Colorado1,080  1,033 
Maryland892  1,140 
Nevada2,639  2,026 
North Carolina2,808  1,590 
South Carolina106  111 
Texas6,985  4,034 
Virginia999  585 
Washington964  1,103 
Total35,641  30,029 
    
    
 December 31,
2020
 December 31,
2019
Lots by Ownership Type:   
Lots owned22,620  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.


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 sales31,013  3.0% 30,065  2.6%
Add:  impairments and lot option abandonments1,960  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 sales93,131  2.9% 81,567  2.7%
Add:  impairments and lot option abandonments4,004  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%  
 

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, 2020 December 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.


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,
 2020 2019 2020 2019
  
 (in thousands)
Net income available to common stockholders$115,114  $117,993  $282,207  $207,187 
Interest expense:       
Interest incurred20,450  21,951  83,120  89,691 
Interest capitalized(20,450) (21,951) (83,120) (89,691)
Amortization of interest in cost of sales31,082  30,061  93,248  81,735 
Provision for income taxes38,884  32,886  91,170  63,900 
Depreciation and amortization10,301  10,040  29,497  28,396 
EBITDA195,381  190,980  496,122  381,218 
Amortization of stock-based compensation5,997  4,192  16,885  14,806 
Real estate inventory impairments and lot option abandonments1,960  18,356  4,004  24,875 
Early loan termination costs    10,243   
Restructuring charges58    5,661   
Adjusted EBITDA$203,396  $213,528  $532,915  $420,899 
 

 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, 2020 Year Ended December 31, 2020
 As Reported Adjustments Adjusted As Reported Adjustments Adjusted
  
 (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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