TRI Pointe Group, Inc. (the "Company") (NYSE: TPH) today announced results for the second quarter ended June 30, 2016.

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

  • Net income available to common stockholders was $73.9 million, or $0.46 per diluted share compared to $54.9 million, or $0.34 per diluted share
  • New home orders of 1,258 compared to 1,238
  • Active selling communities averaged 119.5 for both periods
    • New home orders per average selling community were 10.5 orders (3.5 monthly) compared to 10.4 orders (3.5 monthly)
    • Cancellation rate decreased to 13% compared to 16%
  • Backlog units of 1,798 homes compared to 1,998, a decline of 10%
    • Dollar value of backlog of $1.0 billion compared to $1.2 billion, a decrease of 14%
    • Average sales price in backlog of $571,000 compared to $601,000, a decline of 5%
  • Home sales revenue of $556.9 million compared to $427.2 million, an increase of 30%
    • New homes deliveries of 994 homes compared to 798 homes, an increase of 25%
    • Average sales price of homes delivered of $560,000 compared to $535,000, an increase of 5%
  • Homebuilding gross margin percentage of 22.3% compared to 20.0%, an increase of 230 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 24.4%*
  • Land and lot sales revenue of $67.3 million compared to $67.5 million
    • Land and lot sales gross margin percentage of 78.5% compared to 82.9%
    • Closed two land transactions representing 102 lots located in the Pacific Highlands Ranch community in San Diego, California, generating $61.6 million in land and lot sales revenue and $52.7 million in land and lot gross margin
  • SG&A expense as a percentage of homes sales revenue improved to 11.3% compared to 12.6%
  • Ratios of debt-to-capital and net debt-to-capital of 42.2% and 39.9%*, respectively, as of June 30, 2016
  • Repurchased 1,253,021 shares of common stock at an average price of $11.73 for an aggregate dollar amount of $14.7 million in the three months ended June 30, 2016
  • Successfully issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 at 99.44% of their aggregate principal amount
  • Increased total commitments under existing unsecured revolving credit facility from $550 million to $625 million
  • Ended second quarter of 2016 with cash of $117.5 million and $520.0 million of availability under the Company's unsecured revolving credit facility

* See "Reconciliation of Non-GAAP Financial Measures"

“We posted strong results in the second quarter and continued to demonstrate our commitment to operational excellence,” said TRI Pointe Group Chief Executive Officer Doug Bauer. “We achieved significant year-over-year increases in home sales revenue, homebuilding gross margin percentage and net income, while maintaining a sales pace of 3.5 orders per average selling community per month. Each of our homebuilding brands contributed to the bottom line, with notable contributions from Pardee Homes, which continues to deliver healthy profits from both homebuilding operations and land sales. I am extremely pleased with our performance in the first half of 2016 and our market positioning as we head into the back half of the year.”

Second Quarter 2016 Operating Results

Net income available to common stockholders was $73.9 million, or $0.46 per diluted share in the second quarter of 2016, compared to net income available to common stockholders of $54.9 million, or $0.34 per diluted share for the second quarter of 2015. The improvement in net income available to common stockholders was primarily driven by an increase of $38.7 million in homebuilding gross margin due to higher home sales revenue resulting from a 25% increase in new home deliveries and a 230 basis point improvement in homebuilding gross margin percentage, offset by an increase in selling, general and administrative expenses and the provision for income taxes.

Home sales revenue increased $129.7 million, or 30%, to $556.9 million for the second quarter of 2016, as compared to $427.2 million for the same period in 2015. The increase was primarily attributable to a 25% increase in new home deliveries to 994.

New home orders increased 2% to 1,258 homes for the second quarter of 2016, as compared to 1,238 homes for the same period in 2015, which was up 62 % from 763 orders for the same period in 2014. Average active selling communities was 119.5 for each three month period ended June 30, 2016 and 2015. The Company’s overall quarterly absorption rate per average selling community for the second quarter ended June 30, 2016 remained strong at 10.5 orders (3.5 monthly) compared to 10.4 orders (3.5 monthly) during the same period in 2015.

The Company ended the quarter with 1,798 homes in backlog, representing approximately $1.0 billion in future home sales revenue. The average sales price of homes in backlog as of June 30, 2016 decreased $30,000, or 5%, to $571,000 compared to $601,000 at June 30, 2015.

Homebuilding gross margin percentage for the second quarter of 2016 increased to 22.3% compared to 20.0% for the same period in 2015. Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.4%* for the second quarter of 2016 versus 22.0%* for the same period in 2015.

Land and lot sales revenue of $67.3 million for the second quarter of 2016, as compared to $67.5 million for the same period in 2015. Land and lot sales gross margin percentage for the second quarter of 2016 decreased to 78.5% compared to 82.9% for the same period in 2015. During the quarter ended June 30, 2016, our Pardee Homes reporting segment sold two parcels, totaling 102 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. Pardee Homes received $61.6 million in cash proceeds from the sale. During the quarter ended June 30, 2015, our Pardee Homes reporting segment sold a commercial site in the Pacific Highlands Ranch community for $53.0 million in cash proceeds. Both transactions involving the Pacific Highlands Ranch community included significant gross margins due to the low land basis of the community which was acquired in 1981.

Selling, general and administrative expense for the second quarter of 2016 improved to 11.3% of home sales revenue as compared to 12.6% for the same period in 2015 due to greater leverage as a result of the 30% increase in home sales revenue.

“During the second quarter of 2016 we again proved our ability to sell homes with high average selling prices at an elevated pace and strong margins,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell. “Our results this quarter are a testament to our customer driven culture as well as to the quality of our land holdings. We are in a great position to build on the successes from this quarter as we continue to execute on our strategic vision, open new communities and find ways to continue to monetize our sizeable California land position, which we feel holds significant value.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the third quarter of 2016, the Company anticipates delivering approximately 55% of its 1,798 units in backlog as of June 30, 2016. In addition, the Company expects to open 16 new communities, and close out of 12, resulting in 121 active selling communities as of September 30, 2016.

For the full year 2016, the Company is reiterating its original guidance of growing communities by 20%, delivering between 4,200 and 4,400 homes at an average sales price of $550,000, a SG&A expense ratio in the range of 10.3% to 10.5% and homebuilding gross margin in a range of 20.5% to 21.5%.

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 Wednesday, July 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 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 Second 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 1-877-870-5176, the international dial-in number is 1-858-384-5517, and the reference code is #13640844. 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 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; 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 June 30, Six Months Ended June 30,  
2016   2015   Change 2016   2015   Change  
Operating Data:
Home sales revenue $ 556,925 $ 427,238 $ 129,687 $ 979,980 $ 801,503 $ 178,477
Homebuilding gross margin $ 124,187 $ 85,496 $ 38,691 $ 222,743 $ 159,855 $ 62,888
Homebuilding gross margin % 22.3 % 20.0 % 2.3 % 22.7 % 19.9 % 2.8 %
Adjusted homebuilding gross margin %* 24.4 % 22.0 % 2.4 % 24.8 % 21.9 % 2.9 %
Land and lot sales revenue $ 67,314 $ 67,490 $ (176 ) $ 67,669 $ 69,490 $ (1,821 )
Land and lot gross margin $ 52,854 $ 55,926 $ (3,072 ) $ 52,430 $ 55,617 $ (3,187 )
Land and lot gross margin % 78.5 % 82.9 % (4.4 )% 77.5 % 80.0 % (2.5 )%
SG&A expense $ 62,717 $ 53,895 $ 8,822 $ 117,434 $ 105,334 $ 12,100
SG&A expense as a % of home sales

revenue

11.3 % 12.6 % (1.3 )% 12.0 % 13.1 % (1.1 )%
Net income available to common

stockholders

$ 73,926 $ 54,930 $ 18,996 $ 102,476 $ 70,227 $ 32,249
Adjusted EBITDA* $ 132,214 $ 99,611 $ 32,603 $ 188,731 $ 133,944 $ 54,787
Interest incurred $ 16,280 $ 15,149 $ 1,131 $ 31,429 $ 30,325 $ 1,104
Interest in cost of home sales $ 11,438 $ 7,640 $ 3,798 $ 20,268 $ 14,351 $ 5,917
 
Other Data:
Net new home orders 1,258 1,238 20 2,407 2,432 (25 )
New homes delivered 994 798 196 1,765 1,466 299
Average selling price of homes delivered $ 560 $ 535 $ 25 $ 555 $ 547 $ 8
Average selling communities 119.5 119.5 0.0 115.9 116.1 (0.2 )
Selling communities at end of period 117 122 (5 ) N/A N/A N/A
Cancellation rate 13 % 16 % (3 )% 13 % 14 % (1 )%
Backlog (estimated dollar value) $ 1,026,219 $ 1,199,847 $ (173,628 )
Backlog (homes) 1,798 1,998 (200 )
Average selling price in backlog $ 571 $ 601 $ (30 )
 
June 30, December 31,
2016 2015 Change
Balance Sheet Data:
Cash and cash equivalents $ 117,509 $ 214,485 $ (96,976 )
Real estate inventories $ 2,840,213 $ 2,519,273 $ 320,940
Lots owned or controlled 27,680 27,602 78
Homes under construction (1) 2,779 2,280 499
Debt $ 1,282,872 $ 1,170,505 $ 112,367
Stockholders' equity $ 1,757,301 $ 1,664,683 $ 92,618
Book capitalization $ 3,040,173 $ 2,835,188 $ 204,985
Ratio of debt-to-capital 42.2 % 41.3 % 0.9 %
Ratio of net debt-to-capital* 39.9 % 36.5 % 3.4 %

__________

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

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

   

 

June 30, December 31,
2016 2015
Assets (unaudited)
Cash and cash equivalents $ 117,509 $ 214,485
Receivables 34,671 43,710
Real estate inventories 2,840,213 2,519,273
Investments in unconsolidated entities 17,549 18,999
Goodwill and other intangible assets, net 161,762 162,029
Deferred tax assets, net 116,700 130,657
Other assets 47,860   48,918
Total assets $ 3,336,264   $ 3,138,071
 
Liabilities
Accounts payable $ 79,818 $ 64,840
Accrued expenses and other liabilities 198,793 216,263
Unsecured revolving credit facility 100,000 299,392
Seller financed loans 17,758 2,434
Senior notes 1,165,114   868,679
Total liabilities 1,561,483   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 June 30, 2016 and December 31, 2015, respectively

— —

Common stock, $0.01 par value, 500,000,000 shares authorized; 160,865,251 and 161,813,750 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively

1,609 1,618
Additional paid-in capital 901,348 911,197
Retained earnings 854,344   751,868
Total stockholders' equity 1,757,301 1,664,683
Noncontrolling interests 17,480   21,780
Total equity 1,774,781   1,686,463
Total liabilities and equity $ 3,336,264   $ 3,138,071
 

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2016   2015 2016   2015
Homebuilding:
Home sales revenue $ 556,925 $ 427,238 $ 979,980 $ 801,503
Land and lot sales revenue 67,314 67,490 67,669 69,490
Other operations revenue 604   607   1,184   1,600  
Total revenues 624,843 495,335 1,048,833 872,593
Cost of home sales 432,738 341,742 757,237 641,648
Cost of land and lot sales 14,460 11,564 15,239 13,873
Other operations expense 583 572 1,149 1,134
Sales and marketing 32,448 25,634 58,769 48,920
General and administrative 30,269 28,261 58,665 56,414
Restructuring charges 215   498   350   720  
Homebuilding income from operations 114,130 87,064 157,424 109,884
Equity in income (loss) of unconsolidated entities 215 (39 ) 201 68
Other income (loss), net 151   (31 ) 266   225  
Homebuilding income before income taxes 114,496   86,994   157,891   110,177  
Financial Services:
Revenues 379 182 527 182
Expenses 53 58 111 84
Equity in income (loss) of unconsolidated entities 1,284   (116 ) 1,999   (149 )
Financial services income (loss) before income taxes 1,610   8   2,415   (51 )
Income before income taxes 116,106 87,002 160,306 110,126
Provision for income taxes (41,913 ) (30,240 ) (57,403 ) (38,067 )
Net income 74,193 56,762 102,903 72,059
Net income attributable to noncontrolling interests (267 ) (1,832 ) (427 ) (1,832 )
Net income available to common stockholders $ 73,926   $ 54,930   $ 102,476   $ 70,227  
Earnings per share
Basic $ 0.46 $ 0.34 $ 0.63 $ 0.43
Diluted $ 0.46 $ 0.34 $ 0.63 $ 0.43
Weighted average shares outstanding
Basic 161,826,275 161,686,570 161,882,378 161,589,310
Diluted 162,259,283 162,308,099 162,245,399 162,265,155
 

MARKET DATA BY REPORTING SEGMENT & STATE

(dollars in thousands)

(unaudited)

   
Three Months Ended June 30, Six Months Ended June 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 120 $ 399 91 $ 369 235 $ 397 176 $ 375
Pardee Homes 318 562 242 456 526 566 410 478
Quadrant Homes 105 521 87 410 197 509 180 439
Trendmaker Homes 126 502 123 526 214 500 231 523
TRI Pointe Homes 217 704 174 750 418 681 313 759
Winchester Homes 108   553   81   649   175   555   156   656
Total 994   $ 560   798   $ 535   1,765   $ 555   1,466   $ 547
 
 
Three Months Ended June 30, Six Months Ended June 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 367 $ 718 287 $ 650 681 $ 701 507 $ 681
Colorado 50 509 44 472 88 497 77 473
Maryland 66 499 31 559 114 501 62 569
Virginia 42 638 50 704 61 657 94 712
Arizona 120 399 91 369 235 397 176 375
Nevada 118 359 85 394 175 349 139 373
Texas 126 502 123 526 214 500 231 523
Washington 105   521   87   410   197   509   180   439
Total 994   $ 560   798   $ 535   1,765   $ 555   1,466   $ 547
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued

(unaudited)

   
Three Months Ended June 30, Six Months Ended June 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 191 18.5 184 18.0 392 18.3 345 17.4
Pardee Homes 340 22.3 355 23.5 653 22.7 663 22.0
Quadrant Homes 92 9.0 116 10.8 225 9.0 266 10.4
Trendmaker Homes 133 28.0 124 26.5 255 25.7 256 26.4
TRI Pointe Homes 379 28.2 365 26.5 644 26.8 701 26.3
Winchester Homes 123   13.5   94   14.3   238   13.4   201   13.6
Total 1,258   119.5   1,238   119.5   2,407   115.9   2,432   116.1
 
 
Three Months Ended June 30, Six Months Ended June 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 547 34.4 559 33.8 953 33.7 1,029 32.1
Colorado 33 4.8 60 6.2 76 4.9 134 6.6
Maryland 78 6.5 45 6.3 142 6.4 94 5.7
Virginia 45 7.0 49 8.0 96 7.0 107 7.9
Arizona 191 18.5 184 18.0 392 18.3 345 17.4
Nevada 139 11.3 101 10.0 268 10.9 201 9.6
Texas 133 28.0 124 26.5 255 25.7 256 26.4
Washington 92   9.0   116   10.8   225   9.0   266   10.4
Total 1,258   119.5   1,238   119.5   2,407   115.9   2,432   116.1
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued

(dollars in thousands)

(unaudited)

   
As of June 30, 2016 As of June 30, 2015
Backlog
Units		   Backlog
Dollar
Value		   Average
Sales
Price		 Backlog
Units		   Backlog
Dollar
Value		   Average
Sales
Price
Backlog:
Maracay Homes 360 $ 153,107 $ 425 274 $ 106,347 $ 388
Pardee Homes 401 236,903 591 471 296,298 629
Quadrant Homes 171 99,366 581 199 87,233 438
Trendmaker Homes 177 94,850 536 243 128,645 529
TRI Pointe Homes 516 330,262 640 631 449,080 712
Winchester Homes 173   111,731   646   180   132,244   735
Total 1,798   $ 1,026,219   $ 571   1,998   $ 1,199,847   $ 601
 
 
As of June 30, 2016 As of June 30, 2015
Backlog
Units		 Backlog
Dollar
Value		 Average
Sales
Price		 Backlog
Units		 Backlog
Dollar
Value		 Average
Sales
Price
Backlog:
California 673 $ 454,935 $ 676 840 $ 628,598 $ 748
Colorado 72 39,928 555 141 71,966 510
Maryland 105 64,884 618 85 57,629 678
Virginia 68 46,846 689 95 74,615 785
Arizona 360 153,107 425 274 106,347 388
Nevada 172 72,302 420 121 44,814 370
Texas 177 94,850 536 243 128,645 529
Washington 171   99,367   581   199   87,233   438
Total 1,798   $ 1,026,219   $ 571   1,998   $ 1,199,847   $ 601
 

MARKET DATA BY REPORTING SEGMENT & STATE, continued

(unaudited)

   
June 30, December 31,
2016 2015
Lots Owned or Controlled:
Maracay Homes 2,229 1,811
Pardee Homes 16,326 16,679
Quadrant Homes 1,416 1,274
Trendmaker Homes 1,783 1,858
TRI Pointe Homes 3,730 3,628
Winchester Homes 2,196   2,352
Total 27,680   27,602
 
 
June 30, December 31,
2016 2015
Lots Owned or Controlled:
California 17,280 17,527
Colorado 836 876
Maryland 1,597 1,716
Virginia 599 636
Arizona 2,229 1,811
Nevada 1,940 1,904
Texas 1,783 1,858
Washington 1,416   1,274
Total 27,680   27,602
 
 
June 30, December 31,
2016 2015
Lots by Ownership Type:
Lots owned 24,897 24,733
Lots controlled (1) 2,783   2,869
Total 27,680   27,602

__________

(1) As of June 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 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 June 30,
2016   %   2015   %
(dollars in thousands)
Home sales revenue $ 556,925 100.0 % $ 427,238 100.0 %
Cost of home sales 432,738   77.7 % 341,742   80.0 %
Homebuilding gross margin 124,187 22.3 % 85,496 20.0 %
Add: interest in cost of home sales 11,438 2.1 % 7,640 1.8 %
Add: impairments and lot option abandonments 107   0.0 % 882   0.2 %
Adjusted homebuilding gross margin $ 135,732   24.4 % $ 94,018   22.0 %
Homebuilding gross margin percentage 22.3 % 20.0 %
Adjusted homebuilding gross margin percentage 24.4 % 22.0 %
  Six Months Ended June 30,
2016   %   2015   %
(dollars in thousands)
Home sales revenue $ 979,980 100.0 % $ 801,503 100.0 %
Cost of home sales 757,237   77.3 % 641,648   80.1 %
Homebuilding gross margin 222,743 22.7 % 159,855 19.9 %
Add: interest in cost of home sales 20,268 2.1 % 14,351 1.8 %
Add: impairments and lot option abandonments 289   0.0 % 1,227   0.2 %
Adjusted homebuilding gross margin $ 243,300   24.8 % $ 175,433   21.9 %
Homebuilding gross margin percentage 22.7 % 19.9 %
Adjusted homebuilding gross margin percentage 24.8 % 21.9 %

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.

  June 30, 2016   December 31, 2015
Unsecured revolving credit facility $ 100,000 $ 299,392
Seller financed loans 17,758 2,434
Senior notes 1,165,114   868,679  
Total debt 1,282,872   1,170,505  
Stockholders’ equity 1,757,301   1,664,683  
Total capital $ 3,040,173   $ 2,835,188  
Ratio of debt-to-capital(1) 42.2 % 41.3 %
 
Total debt $ 1,282,872 $ 1,170,505
Less: Cash and cash equivalents (117,509 ) (214,485 )
Net debt 1,165,363 956,020
Stockholders’ equity 1,757,301   1,664,683  
Total capital $ 2,922,664   $ 2,620,703  
Ratio of net debt-to-capital(2) 39.9 % 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. 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, 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 June 30,   Six Months Ended June 30,
2016   2015 2016   2015
(in thousands)
Net income available to common stockholders $ 73,926 $ 54,930 $ 102,476 $ 70,227
Interest expense:
Interest incurred 16,280 15,149 31,429 30,325
Interest capitalized (16,280 ) (15,149 ) (31,429 ) (30,325 )
Amortization of interest in cost of sales 11,563 7,915 20,393 14,680
Provision for income taxes 41,913 30,240 57,403 38,067
Depreciation and amortization 732 1,689 1,457 3,170
Amortization of stock-based compensation 3,758   3,161   6,363   5,542  
EBITDA 131,892 97,935 188,092 131,686
Impairments and lot abandonments 107 1,178 289 1,538
Restructuring charges 215   498   350   720  
Adjusted EBITDA $ 132,214   $ 99,611   $ 188,731   $ 133,944