Stock Quote: NYSE

-Reports Net Income of $50.2 Million, or $0.31 per Diluted Share for the Quarter-

-New Home Orders up 24% and New Home Deliveries up 35% for the Quarter-

-Homebuilding Gross Margin increase to 21.0% for the Quarter-

-Selling, General and Administrative Expenses decrease to 8.8% of Home Sales Revenue for the Quarter-

IRVINE, Calif.--(BUSINESS WIRE)-- TRI Pointe Group, Inc. (NYSE: TPH) today announced results for the third quarter ended September 30, 2015.

On July 7, 2014, TRI Pointe consummated the merger with Weyerhaeuser Real Estate Company (“WRECO”). The merger was accounted for as a “reverse acquisition” of TRI Pointe by WRECO. As a result, legacy TRI Pointe’s financial results are only included in the combined company’s financial statements from the closing date forward and are not reflected in the combined company’s historical financial statements. Accordingly, legacy TRI Pointe’s financial results are not included in the Generally Accepted Accounting Principles (“GAAP”) results for the periods prior to July 7, 2014 included in this press release.

Results and Operational Data for Third Quarter 2015 and Comparisons to Third Quarter 2014

• Net income available to common shareholders was $50.2 million, or $0.31 per diluted share compared to $11.0 million, or $0.07 per diluted share
• New home orders increased to 996 compared to 803, an increase of 24%
• Active selling communities averaged 120.8 compared to 107.0
  • New home orders per average selling community were 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly), an increase of 10%
  • Cancellation rate decreased to 16% compared to 18%
• Backlog units of 1,856 homes with a dollar value increase of 28%, to approximately $1.1 billion
  • Average sales price in backlog of $598,000
• Home sales revenue of $642.4 million, an increase of 36%
  • New homes deliveries of 1,138, up 35%
  • Average sales price of homes delivered of $564,000
• Homebuilding gross margin percentage of 21.0%
  • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 23.1%*
• SG&A expense as a percentage of homes sales revenue improved to 8.8% compared to 10.5%
• Ratios of debt and net debt to capital of 44.1% and 42.2%*, respectively, as of September 30 2015
• Cash of $97.0 million and availability under unsecured revolving credit facility of $192.4 million

* See “Reconciliation of Non-GAAP Financial Measures”

“TRI Pointe Group delivered another strong quarter marked by year-over-year growth in revenues, net income and orders,” commented Chief Executive Officer Doug Bauer. “In addition, the Company’s third quarter results met or exceeded our guidance for new home deliveries, homebuilding gross margins and community openings. These achievements are a reflection of TRI Pointe Group’s success in combining and integrating the six homebuilding brands, and the strength of the deeply experienced operating teams in each of their local markets.”

GAAP Third quarter 2015 operating results

Net income available to common shareholders was $50.2 million, or $0.31 per diluted share in the third quarter of 2015, compared to net income of $11.0 million, or $0.07 per diluted share for the third quarter of 2014. The improvement in net income available to common shareholders was primarily driven by an increase of $48.4 million in home sales gross margin due to higher home sales revenue resulting from a 35% increase in new home deliveries in addition to a savings of $21.7 million related to restructuring and transaction related expenses incurred in the prior year. This was offset by current year increases in the Company’s provision for income taxes of $22.0 million and higher SG&A costs of $7.5 million.

Home sales revenue increased $170.6 million to $642.4 million for the third quarter of 2015, as compared to $471.8 million for the same period in 2014. The increase was attributable to a 35% increase in new home deliveries to 1,138 and a 1% increase in the Company's average sales price of homes delivered to $564,000. New home deliveries increased at all six of our reporting segments with the highest increase at TRI Pointe Homes, which was up 140 units, or 89% compared to the prior year, while delivering at an average sales price of $752,000.

New home orders increased 24% to 996 homes for the third quarter of 2015, as compared to 803 homes for the same period in 2014. Average active selling communities increased to 120.8 as compared to 107.0 for the same period in the prior year, mainly due to TRI Pointe Homes which increased average active selling communities by 12.3 in the current year. The Company’s overall quarterly absorption rate per average selling community for the three months ended September 30 2015 increased 10% to 8.2 orders (2.7 monthly) compared to 7.5 orders (2.5 monthly) during the same period in 2014.

The Company ended the quarter with 1,856 homes in backlog, representing approximately $1.1 billion in future home sales revenue. The average sales price of homes in backlog as of September 30, 2015 decreased $6,000, or 1%, to $598,000 compared to $604,000 at September 30 2014.

Homebuilding gross margin percentage for the third quarter of 2015 increased to 21.0% compared to 18.3% for the same period in 2014 and increased sequentially from 20.0% during the second quarter of 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 23.1%* for the third quarter of 2015 versus 20.0%* for the same period in 2014.

Selling, general and administrative expense for the third quarter of 2015 improved to 8.8% of home sales revenue as compared to 10.5% for the same period in 2014. The decrease in the selling, general and administrative expense ratio was primarily attributable to increased home sales revenue.

“While California continues to be the main driver of earnings for our Company, each of the TRI Pointe brands continues to make solid contributions to the bottom line,” said Tom Mitchell, TRI Pointe Group’s President and Chief Operating Officer. “We are extremely pleased with the level of execution demonstrated by each of our brands.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the fourth quarter of 2015, the Company anticipates delivering approximately 75% - 80% of its 1,856 units in backlog as of September 30, 2015. The Company anticipates expanding homebuilding gross margin for the fourth quarter sequentially from the third quarter and ending with a full year 2015 homebuilding gross margin of approximately 21%. Finally, the Company is reiterating its full year 2015 outlook for earnings per diluted share to a range of $1.15 to $1.30.

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 Friday, November 6, 2015. The call will be hosted by Doug Bauer, Chief Executive Officer, Tom Mitchell, Chief Operating Officer and Mike Grubbs, Chief Financial Officer.

Interested parties can listen to the call live on the internet through the Investor Relations section of the Company’s website at www.TRIPointeGroup.com. Listeners should go to the website at least 15 minutes prior to the call to download and install any necessary audio software. The call can also be accessed by dialing 1-877-407-3982 for domestic participants or 1-201-493-6780 for international participants. Participants should ask for the TRI Pointe Group Third Quarter 2015 Earnings Conference Call. Those dialing in should do so at least ten minutes prior to the start. The replay of the call will be available for two weeks following the call. To access the replay, the domestic dial-in number is 1-877-870-5176, the international dial-in number is 1-858-384-5517, and the pass code is 13614256. An archive of the webcast will be available on the Company’s website for a limited time.

About TRI Pointe Group, Inc.

Headquartered in Irvine, California, TRI Pointe Group, Inc. (NYSE: TPH) is one of the top ten largest public homebuilders by equity market capitalization in the United States. The company designs, constructs and sells premium single-family homes through its portfolio of six quality brands across eight states, included Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia. Additional information is available at www.tripointegroup.com.

Forward-Looking Statements

Various statements contained in this presentation, 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 projections and estimates concerning the timing and success of specific projects, our ability to achieve the anticipated benefits of the Weyerhaeuser Real Estate Company (WRECO) transaction and our future production, operational and financial results, financial condition, prospects, and capital spending. Our forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “goal,” “expect,” “intend,” “project,” “potential,” “plan,” “predict,” “will,” or other words that convey future events or outcomes. The forward-looking statements in this presentation speak only as of the date of this presentation, 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 effect 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; levels of competition; the successful execution of our internal performance plans, including restructuring and cost reduction initiatives; global economic conditions; raw material prices; oil and other energy prices; the effect of weather, including the continuing drought in California; the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental regulations; legal proceedings; 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; the risk that disruptions from the WRECO transaction will harm our business; our ability to achieve the benefits of the WRECO transaction in the estimated amount and the anticipated timeframe, if at all; our ability to integrate WRECO successfully and to achieve the anticipated synergies therefrom; changes in accounting principles; risks related to unauthorized access to our computer systems, theft of our customers’ confidential information or other forms of cyber-attack; our relationship, and actual and potential conflicts of interest, with Starwood Capital Group or its affiliates; and additional factors discussed under the sections captioned “Risk Factors” included in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”). 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.

KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
			Three Months Ended															Nine Months Ended
			September 30,															September 30,
			2015					2014					Change					2015					2014					Change
Operating Data:
Home sales			$	642,352				$	471,801				$	170,551				$	1,443,855				$	1,023,312				$	420,543
Homebuilding gross margin			$	134,809				$	86,401				$	48,408				$	294,664				$	203,935				$	90,729
Homebuilding gross margin %				21.0	%				18.3	%				2.7	%				20.4	%				19.9	%				0.5	%
Adjusted homebuilding gross margin %*				23.1	%				20.0	%				3.0	%				22.4	%				21.6	%				0.8	%
Land and lot gross margin			$	1,425				$	3,233				$	(1,808	)			$	57,042				$	6,204				$	50,838
Land and lot gross margin %				29.2	%				58.3	%				(29.0	)%				76.7	%				17.0	%				59.7	%
SG&A expense			$	56,821				$	49,344				$	7,477				$	162,219				$	130,236				$	31,983
SG&A expense as a % of home sales				8.8	%				10.5	%				(1.7	)%				11.2	%				12.7	%				(1.5	)%
Net income available to common shareholders			$	50,162				$	10,965				$	39,197				$	120,389				$	42,771				$	77,618
Adjusted EBITDA*			$	99,135				$	57,433				$	41,702				$	233,079				$	146,816				$	86,263
Interest incurred			$	15,454				$	15,129				$	325				$	45,779				$	25,718				$	20,061
Interest expense, net of interest capitalized			$	—				$	290				$	(290	)			$	—				$	2,731				$	(2,731	)
Interest in cost of home sales			$	13,189				$	7,702				$	5,487				$	27,540				$	16,342				$	11,198
Other Data:
Net new home orders				996					803					193					3,428					2,233					1,195
New homes delivered				1,138					842					296					2,604					1,978					626
Average selling price of homes delivered			$	564				$	560				$	4				$	554				$	517				$	37
Average selling communities (QTD)				120.8					107.0					13.8				N/A					N/A					N/A
Average selling communities (YTD)			N/A					N/A					N/A						117.4					98.5					18.9
Selling communities at end of period				118					106					12				N/A					N/A					N/A
Cancellation rate				16	%				18	%				(2	)%				14	%				16	%				(2	)%
Backlog (estimated dollar value)			$	1,109,867				$	870,365				$	239,502
Backlog (homes)				1,856					1,440					416
Average selling price in backlog			$	598				$	604				$	(6	)
																		September 30,					December 31,
																		2015					2014					Change
Balance Sheet Data:
Cash and cash equivalents																		$	96,993				$	170,629				$	(73,636	)
Real estate inventories																		$	2,576,402				$	2,280,183				$	296,219
Lots owned or controlled																			28,240					29,718					(1,478	)
Homes under construction (1)																			2,789					1,887					902
Debt																		$	1,245,621				$	1,162,179				$	83,442
Stockholder equity																		$	1,576,176				$	1,454,180				$	121,996
Book capitalization																		$	2,821,797				$	2,616,359				$	205,438
Ratio of debt-to-capital																			44.1	%				44.4	%				(0.3	)%
Ratio of net debt-to-capital*																			42.2	%				40.5	%				1.6	%

(1)		Homes under construction includes completed homes
*		See “Reconciliation of Non-GAAP Financial Measures”

CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
			September 30,				December 31,
			2015				2014
Assets			(unaudited)
Cash and cash equivalents			$	96,993			$	170,629
Receivables				32,921				20,118
Real estate inventories				2,576,402				2,280,183
Investments in unconsolidated entities				17,340				16,805
Goodwill and other intangible assets, net				162,162				162,563
Deferred tax assets				141,479				157,821
Other assets				84,516				105,405
Total assets			$	3,111,813			$	2,913,524
Liabilities
Accounts payable			$	67,747			$	68,860
Accrued expenses and other liabilities				210,707				210,009
Unsecured revolving credit facility				349,392				260,000
Seller financed loans				7,572				14,677
Senior notes				888,657				887,502
Total liabilities				1,524,075				1,441,048
Commitments and contingencies
Equity
Stockholders' Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively				—				—
Common stock, $0.01 par value, 500,000,000 shares authorized; 161,813,750 and 161,355,490 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively				1,618				1,614
Additional paid-in capital				907,762				906,159
Retained earnings				666,796				546,407
Total stockholders' equity				1,576,176				1,454,180
Noncontrolling interests				11,562				18,296
Total equity				1,587,738				1,472,476
Total liabilities and equity			$	3,111,813			$	2,913,524

CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
			Three Months Ended September 30,										Nine Months Ended September 30,
			2015					2014					2015					2014
Revenues:
Home sales			$	642,352				$	471,801				$	1,443,855				$	1,023,312
Land and lot sales				4,876					5,550					74,366					36,449
Other operations				913					569					2,695					8,854
Total revenues				648,141					477,920					1,520,916					1,068,615
Expenses:
Cost of home sales				507,543					385,400					1,149,191					819,377
Cost of land and lot sales				3,451					2,317					17,324					30,245
Other operations				570					556					1,724					2,755
Sales and marketing				30,038					28,393					78,958					73,096
General and administrative				26,783					20,951					83,261					57,140
Restructuring charges				2,010					7,024					2,730					9,202
Total expenses				570,395					444,641					1,333,188					991,815
Income from operations				77,746					33,279					187,728					76,800
Equity in loss of unconsolidated entities				(3	)				(82	)				(84	)				(219	)
Transaction expenses				—					(16,710	)				—					(17,216	)
Other income (loss), net				47					499					272					(242	)
Income before income taxes				77,790					16,986					187,916					59,123
Provision for income taxes				(28,021	)				(6,021	)				(66,088	)				(16,352	)
Net income				49,769					10,965					121,828					42,771
Net (income) loss attributable to noncontrolling interests				393					—					(1,439	)				—
Net income available to common shareholders			$	50,162				$	10,965				$	120,389				$	42,771
Earnings per share
Basic			$	0.31				$	0.07				$	0.74				$	0.31
Diluted			$	0.31				$	0.07				$	0.74				$	0.31
Weighted average shares outstanding
Basic				161,772,893					158,931,450					161,651,177					139,550,891
Diluted				162,366,744					159,158,706					162,299,282					140,213,655

MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
			Three Months Ended September 30,																Nine Months Ended September 30,
			2015								2014								2015								2014
			Homes				Avg. Selling				Homes				Avg. Selling				Homes				Avg. Selling				Homes				Avg. Selling
			Delivered				Price				Delivered				Price				Delivered				Price				Delivered				Price
New Homes Delivered:
Maracay Homes				131			$	386				94			$	397				307			$	380				286			$	376
Pardee Homes				314				543				277				468				724				506				658				480
Quadrant Homes				117				406				74				437				297				426				219				405
Trendmaker Homes				163				495				135				516				394				512				404				492
TRI Pointe Homes				298				752				158				781				611				756				158				781
Winchester Homes				115				599				104				763				271				631				253				747
Total				1,138			$	564				842			$	560				2,604			$	554				1,978			$	517
			Three Months Ended September 30,																Nine Months Ended September 30,
			2015								2014								2015								2014
			Homes				Avg. Selling				Homes				Avg. Selling				Homes				Avg. Selling				Homes				Avg. Selling
			Delivered				Price				Delivered				Price				Delivered				Price				Delivered				Price
New Homes Delivered:
California				462			$	720				350			$	635				969			$	700				633			$	590
Colorado				51				512				15				429				128				488				15				429
Maryland				58				483				42				556				120				528				114				624
Virginia				57				716				62				904				151				714				139				847
Arizona				131				386				94				397				307				380				286				376
Nevada				99				361				70				348				238				368				168				354
Texas				163				495				135				516				394				512				404				492
Washington				117				406				74				437				297				426				219				405
Total				1,138			$	564				842			$	560				2,604			$	554				1,978			$	517

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
			Three Months Ended September 30,																Nine Months Ended September 30,
			2015								2014								2015								2014
			New				Average				New				Average				New				Average				New				Average
			Home				Selling				Home				Selling				Home				Selling				Home				Selling
			Orders				Communities				Orders				Communities				Orders				Communities				Orders				Communities
Net New Home Orders:
Maracay Homes				150				17.2				88				17.3				495				17.3				313				16.4
Pardee Homes				291				25.0				264				21.3				954				22.8				793				20.3
Quadrant Homes				87				11.8				82				12.3				353				10.8				286				12.8
Trendmaker Homes				125				25.0				127				24.8				381				26.0				436				23.5
TRI Pointe Homes				234				28.3				152				16.0				935				27.0				152				6.4
Winchester Homes				109				13.5				90				15.3				310				13.5				253				19.1
Total				996				120.8				803				107.0				3,428				117.4				2,233				98.5
			Three Months Ended September 30,																Nine Months Ended September 30,
			2015								2014								2015								2014
			New				Average				New				Average				New				Average				New				Average
			Home				Selling				Home				Selling				Home				Selling				Home				Selling
			Orders				Communities				Orders				Communities				Orders				Communities				Orders				Communities
Net New Home Orders:
California				392				35.5				292				26.3				1,421				33.2				686				18.3
Colorado				34				6.0				31				3.0				168				6.4				31				1.2
Maryland				71				6.0				48				6.3				165				5.8				117				8.2
Virginia				38				7.5				42				9.0				145				7.7				136				10.9
Arizona				150				17.2				88				17.3				495				17.3				313				16.4
Nevada				99				11.8				93				8.0				300				10.2				228				7.2
Texas				125				25.0				127				24.8				381				26.0				436				23.5
Washington				87				11.8				82				12.3				353				10.8				286				12.8
Total				996				120.8				803				107.0				3,428				117.4				2,233				98.5

MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
			As of September 30, 2015												As of September 30, 2014
							Backlog				Average								Backlog				Average
			Backlog				Dollar				Selling				Backlog				Dollar				Selling
			Units				Value				Price				Units				Value				Price
Backlog:
Maracay Homes				293			$	118,164			$	403				143			$	57,202			$	400
Pardee Homes				448				296,477				662				415				222,929				537
Quadrant Homes				169				79,955				473				163				78,317				480
Trendmaker Homes				205				108,250				528				254				131,611				518
TRI Pointe Homes				567				388,336				685				282				240,872				854
Winchester Homes				174				118,685				682				183				139,434				762
Total				1,856			$	1,109,867			$	598				1,440			$	870,365			$	604
			As of September 30, 2015												As of September 30, 2014
							Backlog				Average								Backlog				Average
			Backlog				Dollar				Selling				Backlog				Dollar				Selling
			Units				Value				Price				Units				Value				Price
Backlog:
California				770			$	577,053			$	749				523			$	393,876			$	753
Colorado				124				62,445				504				51				22,657				444
Maryland				98				59,200				604				72				46,001				639
Virginia				76				59,485				783				111				93,433				842
Arizona				293				118,164				403				143				57,202				400
Nevada				121				45,315				375				123				47,269				384
Texas				205				108,250				528				254				131,611				518
Washington				169				79,955				473				163				78,316				480
Total				1,856			$	1,109,867			$	598				1,440			$	870,365			$	604

MARKET DATA BY REPORTING SEGMENT & STATE, continued
			September 30,			December 31,
			2015			2014
Lots Owned or Controlled:			(unaudited)
Maracay Homes			1,798			1,985
Pardee Homes			17,075			17,639
Quadrant Homes			1,422			1,544
Trendmaker Homes			1,976			2,073
TRI Pointe Homes			3,393			3,726
Winchester Homes			2,576			2,751
Total			28,240			29,718
			September 30,			December 31,
			2015			2014
Lots Owned or Controlled:			(unaudited)
California			17,939			18,842
Colorado			607			639
Maryland			1,883			2,048
Virginia			693			703
Arizona			1,798			1,985
Nevada			1,922			1,884
Texas			1,976			2,073
Washington			1,422			1,544
Total			28,240			29,718
			September 30,			December 31,
			2015			2014
Lots by Ownership Type:			(unaudited)
Lots owned			25,484			25,535
Lots controlled (1)			2,756			4,183
Total			28,240			29,718

(1)		As of September 30, 2015 and December 31, 2014, lots controlled included lots that were under land option contracts or purchase contracts.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)

In this earnings 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 table reconciles 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,
			2015					%					2014					%
			(dollars in thousands)
Home sales			$	642,352					100.0	%			$	471,801					100.0	%
Cost of home sales				507,543					79.0	%				385,400					81.7	%
Homebuilding gross margin				134,809					21.0	%				86,401					18.3	%
Add: interest in cost of home sales				13,189					2.1	%				7,702					1.6	%
Add: impairments and lot option abandonments				366					0.1	%				490					0.1	%
Adjusted homebuilding gross margin			$	148,364					23.1	%			$	94,593					20.0	%
Homebuilding gross margin percentage				21.0	%									18.3	%
Adjusted homebuilding gross margin percentage				23.1	%									20.0	%
			Nine Months Ended September 30,
			2015					%					2014					%
			(dollars in thousands)
Home sales			$	1,443,855					100.0	%			$	1,023,312					100.0	%
Cost of home sales				1,149,191					79.6	%				819,377					80.1	%
Homebuilding gross margin				294,664					20.4	%				203,935					19.9	%
Add: interest in cost of home sales				27,540					1.9	%				16,342					1.6	%
Add: impairments and lot option abandonments				1,593					0.1	%				897					0.1	%
Adjusted homebuilding gross margin			$	323,797					22.4	%			$	221,174					21.6	%
Homebuilding gross margin percentage				20.4	%									19.9	%
Adjusted homebuilding gross margin percentage				22.4	%									21.6	%

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

The following table reconciles the Company’s ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debt-to-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,					December 31,
			2015					2014
			(dollars in thousands)
Unsecured revolving credit facility			$	349,392				$	260,000
Seller financed loans				7,572					14,677
Senior Notes				888,657					887,502
Total debt				1,245,621					1,162,179
Stockholders' equity				1,576,176					1,454,180
Total capital			$	2,821,797				$	2,616,359
Ratio of debt-to-capital(1)				44.1	%				44.4	%
Total debt			$	1,245,621				$	1,162,179
Less: Cash and cash equivalents				(96,993	)				(170,629	)
Net debt				1,148,628					991,550
Stockholders' equity				1,576,176					1,454,180
Total capital			$	2,724,804				$	2,445,730
Ratio of net debt-to-capital(2)				42.2	%				40.5	%

(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-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. The most directly comparable GAAP financial measure is the ratio of debt-to-capital.

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

The following table calculates the non-GAAP measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income (loss), as reported and prepared in accordance with GAAP. EBITDA means net income (loss) before (a) interest expense, (b) income taxes, (c) depreciation and amortization, (d) expensing of previously capitalized interest included in costs of home sales and (e) amortization of stock-based compensation. Adjusted EBITDA means EBITDA before (f) restructuring expenses (g) impairment and lot option abandonments and (h) transaction related expenses. 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										Nine Months Ended
			September 30,										September 30,
			2015					2014					2015					2014
			(in thousands)
Net income available to common shareholders			$	50,162				$	10,965				$	120,389				$	42,771
Interest expense:
Interest incurred				15,454					15,129					45,779					25,718
Interest capitalized				(15,454	)				(14,839	)				(45,779	)				(22,987	)
Amortization of interest in cost of sales				13,339					7,835					28,019					40,451
Provision for income taxes				28,021					6,021					66,088					16,352
Depreciation and amortization				2,244					4,489					5,414					10,719
Amortization of stock-based compensation				2,994					3,547					8,536					6,250
EBITDA				96,760					33,147					228,446					119,274
Restructuring charges				2,010					7,024					2,730					9,202
Impairments and lot abandonments				365					552					1,903					1,124
Transaction expenses				—					16,710					—					17,216
Adjusted EBITDA			$	99,135				$	57,433				$	233,079				$	146,816

View source version on businesswire.com: http://www.businesswire.com/news/home/20151106005128/en/

Source: TRI Pointe Group, Inc.