Stock Quote: NYSE

-Reports Net Income Available to Common Stockholders of $34.8 Million, or $0.22 per Diluted Share-
-Home Sales Revenue of $578.7 Million for the Quarter-
-Homebuilding Gross Margin of 20.1% for the Quarter-

IRVINE, Calif.--(BUSINESS WIRE)-- TRI Pointe Group, Inc. (the "Company") (NYSE: TPH) today announced results for the third quarter ended September 30, 2016.

Results and Operational Data for Third Quarter 2016 and Comparisons to Third Quarter 2015

• Net income available to common stockholders was $34.8 million, or $0.22 per diluted share, compared to $50.2 million, or $0.31 per diluted share
• New home orders of 932 compared to 996, a decrease of 6%
• Active selling communities averaged 119.0 compared to 120.8, a decrease of 1%
  • New home orders per average selling community were 7.8 orders (2.6 monthly) compared to 8.2 orders (2.7 monthly)
  • Cancellation rate of 17% compared to 16%, an increase of 100 basis points
• Backlog units at quarter end of 1,711 homes compared to 1,856, a decrease of 8%
  • Dollar value of backlog at quarter end of $950.2 million compared to $1.110 billion, a decrease of 14%
  • Average sales price in backlog at quarter end of $555,000 compared to $598,000, a decrease of 7%
• Home sales revenue of $578.7 million compared to $642.4 million, a decrease of 10%
  • New home deliveries of 1,019 homes compared to 1,138 homes, a decrease of 10%
  • Average sales price of homes delivered of $568,000 compared to $564,000, an increase of 1%
• Homebuilding gross margin percentage of 20.1% compared to 21.0%, a decrease of 90 basis points
  • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 22.7%*
• SG&A expense as a percentage of homes sales revenue of 10.9% compared to 8.8%, an increase of 210 basis points
• Ratios of debt-to-capital and net debt-to-capital of 43.7% and 41.3%*, respectively, as of September 30, 2016
• Repurchased 852,500 shares of common stock at an average price of $12.22 for an aggregate dollar amount of $10.4 million in the three months ended September 30, 2016
• Ended third quarter of 2016 with cash of $128.7 million and $420.7 million of availability under the Company's unsecured revolving credit facility

* See "Reconciliation of Non-GAAP Financial Measures"

“We are pleased with the progress we made this quarter,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “TRI Pointe delivered on its stated guidance for our ending community count, deliveries, home sales revenue and homebuilding gross margin percentage. While the absorption pace in the quarter was slightly lower than it was last year, I am encouraged by the 26% year-over-year increase in new home orders we experienced in the month of September. We expect to continue this momentum into the fourth quarter due to the success of our new community openings.”

Third Quarter 2016 Operating Results

Net income available to common stockholders was $34.8 million, or $0.22 per diluted share in the third quarter of 2016, compared to net income available to common stockholders of $50.2 million, or $0.31 per diluted share for the third quarter of 2015. The decrease in net income available to common stockholders was primarily driven by an $18.5 million decrease in homebuilding gross margin due to a 90 basis point decrease in homebuilding gross margin percentage and lower home sales revenue, which resulted from a 10% decrease in new home deliveries.

Home sales revenue decreased $63.7 million, or 10%, to $578.7 million for the third quarter of 2016, as compared to $642.4 million for the third quarter of 2015. The decrease was primarily attributable to a 10% decrease in new home deliveries to 1,019, offset by an increase in average selling price of homes delivered to $568,000 compared to $564,000 in the third quarter of 2015. The decrease in deliveries was primarily related to the timing of deliveries for the year, as we delivered a large number of our backlog units in the second quarter of 2016, which resulted in a lower number of backlog units going into the quarter compared to the prior year period. For the nine months ended September 30, 2016, deliveries were up 7% compared to the same period in the prior year.

New home orders decreased 6% to 932 homes for the third quarter of 2016, as compared to 996 homes for the same period in 2015, which was up 24% from 803 orders for the same period in 2014. Average selling communities was 119.0 for the third quarter of 2016 compared to 120.8 for the third quarter of 2015. The Company’s overall absorption rate per average selling community for the third quarter of 2016 was 7.8 orders (2.6 monthly) compared to 8.2 orders (2.7 monthly) during the third quarter of 2015.

The Company ended the quarter with 1,711 homes in backlog, representing approximately $950.2 million. The average sales price of homes in backlog as of September 30, 2016 decreased $43,000, or 7%, to $555,000 compared to $598,000 at September 30, 2015.

Homebuilding gross margin percentage for the third quarter of 2016 decreased to 20.1% compared to 21.0% for the third quarter of 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 22.7%* for the third quarter of 2016 compared to 23.1%* for the third quarter of 2015. The decrease in homebuilding gross margin percentage was largely due to the mix of homes delivered, with 50 less homes delivered from California which have gross margins above the Company average.

Selling, general and administrative ("SG&A") expense for the third quarter of 2016 increased to 10.9% of home sales revenue as compared to 8.8% for the third quarter of 2015 due to decreased leverage as a result of the 10% decrease in home sales revenue.

“Overall, we continue to see encouraging trends in all of our markets,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “Due to lower new home orders for the quarter, full year deliveries will likely be on the lower end of our previously stated range of 4,200 to 4,400 homes. That said, we expect to end the year with 125 active selling communities compared to 104 at the end of the prior year. We think this community count growth and the progress we have made in accelerating the development of our longer dated assets in California will enable us to continue to create shareholder value through our homebuilding operations and reach our goal of delivering 5,100 to 5,400 homes in 2018.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the fourth quarter of 2016, the Company expects to open nine new communities, and close out of seven, resulting in 125 active selling communities as of December 31, 2016. In addition, the Company anticipates delivering approximately 85% of its 1,711 units in backlog as of September 30, 2016. The Company anticipates its homebuilding gross margin percentage to be approximately 20% for the fourth quarter, resulting in a full year homebuilding gross margin percentage in a range of 20.5% to 21.5%. Finally, the Company expects its SG&A expense ratio to be approximately 9% for the fourth quarter, resulting in a full year SG&A expense ratio in a range of 10.5% to 10.7%.

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 27, 2016. The call will be hosted by Doug Bauer, Chief Executive Officer; Tom Mitchell, President and 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 fifteen 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 2016 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 1-844-512-2921, the international dial-in number is 1-412-317-6671, and the reference code is #13646378. 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, including 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 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 projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, 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 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 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 and disputes; 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 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. 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 September 30,															Nine Months Ended September 30,
				2016					2015					Change					2016					2015					Change
Operating Data:
Home sales revenue				$	578,653				$	642,352				$	(63,699	)			$	1,558,633				$	1,443,855				$	114,778
Homebuilding gross margin				$	116,330				$	134,809				$	(18,479	)			$	339,073				$	294,664				$	44,409
Homebuilding gross margin %				20.1		%			21.0		%			(0.9		)%			21.8		%			20.4		%			1.4		%
Adjusted homebuilding gross margin %*				22.7		%			23.1		%			(0.4		)%			24.0		%			22.4		%			1.6		%
Land and lot sales revenue				$	2,535				$	4,876				$	(2,341	)			$	70,204				$	74,366				$	(4,162	)
Land and lot gross margin				$	801				$	1,425				$	(624	)			$	53,231				$	57,042				$	(3,811	)
Land and lot gross margin %				31.6		%			29.2		%			2.4		%			75.8		%			76.7		%			(0.9		)%
SG&A expense				$	63,002				$	56,774				$	6,228				$	180,436				$	162,108				$	18,328
SG&A expense as a % of home sales revenue				10.9		%			8.8		%			2.1		%			11.6		%			11.2		%			0.4		%
Net income available to common stockholders				$	34,834				$	50,162				$	(15,328	)			$	137,310				$	120,389				$	16,921
Adjusted EBITDA*				$	74,215				$	99,135				$	(24,920	)			$	262,945				$	233,079				$	29,866
Interest incurred				$	18,601				$	15,454				$	3,147				$	50,030				$	45,779				$	4,251
Interest in cost of home sales				$	14,385				$	13,189				$	1,196				$	34,653				$	27,540				$	7,113
Other Data:
Net new home orders				932					996					(64		)			3,339					3,428					(89		)
New homes delivered				1,019					1,138					(119		)			2,784					2,604					180
Average selling price of homes delivered				$	568				$	564				$	4				$	560				$	554				$	6
Average selling communities				119.0					120.8					(1.8		)			117.0					117.4					(0.4		)
Selling communities at end of period				123					118					5					N/A					N/A					N/A
Cancellation rate				17		%			16		%			1		%			14		%			14		%			0		%
Backlog (estimated dollar value)				$	950,171				$	1,109,867				$	(159,696	)
Backlog (homes)				1,711					1,856					(145		)
Average selling price in backlog				$	555				$	598				$	(43	)
				September 30,					December 31,
				2016					2015					Change
Balance Sheet Data:
Cash and cash equivalents				$	128,715				$	214,485				$	(85,770	)
Real estate inventories				$	2,969,148				$	2,519,273				$	449,875
Lots owned or controlled				29,713					27,602					2,111
Homes under construction (1)				1,973					1,531					442
Homes completed, unsold				291					351					(60		)
Debt				$	1,384,482				$	1,170,505				$	213,977
Stockholders' equity				$	1,785,460				$	1,664,683				$	120,777
Book capitalization				$	3,169,942				$	2,835,188				$	334,754
Ratio of debt-to-capital				43.7		%			41.3		%			2.4		%
Ratio of net debt-to-capital*				41.3		%			36.5		%			4.8		%

(1)			Homes under construction included 52 and 69 models at September 30, 2016 and December 31, 2015, respectively.
*			See “Reconciliation of Non-GAAP Financial Measures”

CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
								September 30,								December 31,
								2016								2015
Assets								(unaudited)
Cash and cash equivalents								$	128,715							$	214,485
Receivables								35,321								43,710
Real estate inventories								2,969,148								2,519,273
Investments in unconsolidated entities								17,205								18,999
Goodwill and other intangible assets, net								161,629								162,029
Deferred tax assets, net								111,887								130,657
Other assets								65,998								48,918
Total assets								$	3,489,903							$	3,138,071
Liabilities
Accounts payable								$	77,667							$	64,840
Accrued expenses and other liabilities								219,396								216,263
Unsecured revolving credit facility								200,000								299,392
Seller financed loans								17,758								2,434
Senior notes								1,166,724								868,679
Total liabilities								1,681,545								1,451,608
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, 2016 and December 31, 2015, respectively								—								—
Common stock, $0.01 par value, 500,000,000 shares authorized; 160,064,678 and 161,813,750 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively								1,601								1,618
Additional paid-in capital								894,681								911,197
Retained earnings								889,178								751,868
Total stockholders' equity								1,785,460								1,664,683
Noncontrolling interests								22,898								21,780
Total equity								1,808,358								1,686,463
Total liabilities and equity								$	3,489,903							$	3,138,071

CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except share and per share amounts) (unaudited)
				Three Months Ended September 30,												Nine Months Ended September 30,
				2016						2015						2016						2015
Homebuilding:
Home sales revenue				$	578,653					$	642,352					$	1,558,633					$	1,443,855
Land and lot sales revenue				2,535						4,876						70,204						74,366
Other operations revenue				606						613						1,790						2,213
Total revenues				581,794						647,841						1,630,627						1,520,434
Cost of home sales				462,323						507,543						1,219,560						1,149,191
Cost of land and lot sales				1,734						3,451						16,973						17,324
Other operations expense				575						570						1,724						1,704
Sales and marketing				31,852						30,038						90,621						78,958
General and administrative				31,150						26,736						89,815						83,150
Restructuring charges				128						2,010						478						2,730
Homebuilding income from operations				54,032						77,493						211,456						187,377
Equity in (loss) income of unconsolidated entities				(20		)				(150		)				181						(82		)
Other income, net				21						47						287						272
Homebuilding income before income taxes				54,033						77,390						211,924						187,567
Financial Services:
Revenues				235						300						762						482
Expenses				72						47						183						131
Equity in income (loss) of unconsolidated entities				1,247						147						3,246						(2		)
Financial services income before income taxes				1,410						400						3,825						349
Income before income taxes				55,443						77,790						215,749						187,916
Provision for income taxes				(20,298		)				(28,021		)				(77,701		)				(66,088		)
Net income				35,145						49,769						138,048						121,828
Net (income) loss attributable to noncontrolling interests				(311		)				393						(738		)				(1,439		)
Net income available to common stockholders				$	34,834					$	50,162					$	137,310					$	120,389
Earnings per share
Basic				$	0.22					$	0.31					$	0.85					$	0.74
Diluted				$	0.22					$	0.31					$	0.85					$	0.74
Weighted average shares outstanding
Basic				160,614,055						161,772,893						161,456,520						161,651,177
Diluted				161,267,509						162,366,744						161,916,352						162,299,282

MARKET DATA BY REPORTING SEGMENT & STATE (dollars in thousands) (unaudited)
				Three Months Ended September 30,																		Nine Months Ended September 30,
				2016									2015									2016									2015
				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:
Maracay Homes				165				$	412				131				$	386				400				$	403				307				$	380
Pardee Homes				302				623					314				543					828				587					724				506
Quadrant Homes				90				531					117				406					287				515					297				426
Trendmaker Homes				121				516					163				495					335				506					394				512
TRI Pointe Homes				260				645					298				752					678				667					611				756
Winchester Homes				81				550					115				599					256				554					271				631
Total				1,019				$	568				1,138				$	564				2,784				$	560				2,604				$	554
				Three Months Ended September 30,																		Nine Months Ended September 30,
				2016									2015									2016									2015
				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:
California				412				$	716				462				$	720				1,093				$	707				969				$	700
Colorado				30				526					51				512					118				505					128				488
Maryland				55				510					58				483					169				504					120				528
Virginia				26				634					57				716					87				650					151				714
Arizona				165				412					131				386					400				403					307				380
Nevada				120				377					99				361					295				360					238				368
Texas				121				516					163				495					335				506					394				512
Washington				90				531					117				406					287				515					297				426
Total				1,019				$	568				1,138				$	564				2,784				$	560				2,604				$	554

MARKET DATA BY REPORTING SEGMENT & STATE, continued (unaudited)
				Three Months Ended September 30,																Nine Months Ended September 30,
				2016								2015								2016								2015
				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:
Maracay Homes				134				17.8				150				17.2				526				18.1				495				17.3
Pardee Homes				283				22.5				291				25.0				936				22.8				954				22.8
Quadrant Homes				49				7.3				87				11.8				274				8.5				353				10.8
Trendmaker Homes				130				29.0				125				25.0				385				26.8				381				26.0
TRI Pointe Homes				239				28.7				234				28.3				883				27.3				935				27.0
Winchester Homes				97				13.7				109				13.5				335				13.5				310				13.5
Total				932				119.0				996				120.8				3,339				117.0				3,428				117.4
				Three Months Ended September 30,																Nine Months Ended September 30,
				2016								2015								2016								2015
				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:
California				380				35.0				392				35.5				1,333				34.3				1,421				33.2
Colorado				31				5.0				34				6.0				107				4.8				168				6.4
Maryland				72				7.2				71				6.0				214				6.7				165				5.8
Virginia				25				6.5				38				7.5				121				6.8				145				7.7
Arizona				134				17.8				150				17.2				526				18.1				495				17.3
Nevada				111				11.2				99				11.8				379				11.0				300				10.2
Texas				130				29.0				125				25.0				385				26.8				381				26.0
Washington				49				7.3				87				11.8				274				8.5				353				10.8
Total				932				119.0				996				120.8				3,339				117.0				3,428				117.4

MARKET DATA BY REPORTING SEGMENT & STATE, continued (dollars in thousands) (unaudited)
				As of September 30, 2016														As of September 30, 2015
				Backlog Units				Backlog Dollar Value					Average Sales Price					Backlog Units				Backlog Dollar Value					Average Sales Price
Backlog:
Maracay Homes				329				$	144,127				$	438				293				$	118,164				$	403
Pardee Homes				382				182,263					477					448				296,477					662
Quadrant Homes				130				83,467					642					169				79,955					473
Trendmaker Homes				186				98,874					532					205				108,250					528
TRI Pointe Homes				495				319,823					646					567				388,336					685
Winchester Homes				189				121,617					643					174				118,685					682
Total				1,711				$	950,171				$	555				1,856				$	1,109,867				$	598
				As of September 30, 2016														As of September 30, 2015
				Backlog Units				Backlog Dollar Value					Average Sales Price					Backlog Units				Backlog Dollar Value					Average Sales Price
Backlog:
California				641				$	387,125				$	604				770				$	577,053				$	749
Colorado				73				42,809					586					124				62,445					504
Maryland				122				75,444					618					98				59,200					604
Virginia				67				46,172					689					76				59,485					783
Arizona				329				144,127					438					293				118,164					403
Nevada				163				72,153					443					121				45,315					375
Texas				186				98,874					532					205				108,250					528
Washington				130				83,467					642					169				79,955					473
Total				1,711				$	950,171				$	555				1,856				$	1,109,867				$	598

MARKET DATA BY REPORTING SEGMENT & STATE, continued (unaudited)
									September 30,							December 31,
									2016							2015
Lots Owned or Controlled:
Maracay Homes									2,258							1,811
Pardee Homes									16,987							16,679
Quadrant Homes									1,895							1,274
Trendmaker Homes									2,130							1,858
TRI Pointe Homes									3,960							3,628
Winchester Homes									2,483							2,352
Total									29,713							27,602
									September 30,							December 31,
									2016							2015
Lots Owned or Controlled:
California									17,452							17,527
Colorado									1,159							876
Maryland									1,875							1,716
Virginia									608							636
Arizona									2,258							1,811
Nevada									2,336							1,904
Texas									2,130							1,858
Washington									1,895							1,274
Total									29,713							27,602
									September 30,							December 31,
									2016							2015
Lots by Ownership Type:
Lots owned									25,228							24,733
Lots controlled (1)									4,485							2,869
Total									29,713							27,602

(1)			As of September 30, 2016 and December 31, 2015, 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 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,
				2016						%					2015						%
				(dollars in thousands)
Home sales revenue				$	578,653					100.0	%				$	642,352					100.0	%
Cost of home sales				462,323						79.9	%				507,543						79.0	%
Homebuilding gross margin				116,330						20.1	%				134,809						21.0	%
Add: interest in cost of home sales				14,385						2.5	%				13,189						2.1	%
Add: impairments and lot option abandonments				389						0.1	%				366						0.1	%
Adjusted homebuilding gross margin				$	131,104					22.7	%				$	148,364					23.1	%
Homebuilding gross margin percentage				20.1		%									21.0		%
Adjusted homebuilding gross margin percentage				22.7		%									23.1		%
				Nine Months Ended September 30,
				2016						%					2015						%
				(dollars in thousands)
Home sales revenue				$	1,558,633					100.0	%				$	1,443,855					100.0	%
Cost of home sales				1,219,560						78.2	%				1,149,191						79.6	%
Homebuilding gross margin				339,073						21.8	%				294,664						20.4	%
Add: interest in cost of home sales				34,653						2.2	%				27,540						1.9	%
Add: impairments and lot option abandonments				678						0.0	%				1,593						0.1	%
Adjusted homebuilding gross margin				$	374,404					24.0	%				$	323,797					22.4	%
Homebuilding gross margin percentage				21.8		%									20.4		%
Adjusted homebuilding gross margin percentage				24.0		%									22.4		%

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-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, 2016								December 31, 2015
Unsecured revolving credit facility								$	200,000							$	299,392
Seller financed loans								17,758								2,434
Senior notes								1,166,724								868,679
Total debt								1,384,482								1,170,505
Stockholders’ equity								1,785,460								1,664,683
Total capital								$	3,169,942							$	2,835,188
Ratio of debt-to-capital(1)								43.7		%						41.3		%
Total debt								$	1,384,482							$	1,170,505
Less: Cash and cash equivalents								(128,715		)						(214,485		)
Net debt								1,255,767								956,020
Stockholders’ equity								1,785,460								1,664,683
Total capital								$	3,041,227							$	2,620,703
Ratio of net debt-to-capital(2)								41.3		%						36.5		%

(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.

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, as reported and prepared in accordance with GAAP. EBITDA means net income 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) impairment and lot option abandonments and (g) 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,
				2016						2015						2016						2015
				(in thousands)
Net income available to common stockholders				$	34,834					$	50,162					$	137,310					$	120,389
Interest expense:
Interest incurred				18,601						15,454						50,030						45,779
Interest capitalized				(18,601		)				(15,454		)				(50,030		)				(45,779		)
Amortization of interest in cost of sales				14,415						13,339						34,808						28,019
Provision for income taxes				20,298						28,021						77,701						66,088
Depreciation and amortization				866						2,244						2,322						5,414
Amortization of stock-based compensation				3,285						2,994						9,648						8,536
EBITDA				73,698						96,760						261,789						228,446
Impairments and lot abandonments				389						365						678						1,903
Restructuring charges				128						2,010						478						2,730
Adjusted EBITDA				$	74,215					$	99,135					$	262,945					$	233,079

View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005513/en/

Source: TRI Pointe Group, Inc.