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TRI Pointe Group, Inc. Reports 2017 First Quarter Results

-New Home Orders up 13% Year-Over-Year on a 10% Increase in Average Selling Communities- 
-Reports Net Income Available to Common Stockholders of $8.2 Million, or $0.05 per Diluted Share- 
-Home Sales Revenue of $392.0 Million and Homebuilding Gross Margin Percentage of 18.8%-

/EIN News/ -- IRVINE, Calif., April 26, 2017 (GLOBE NEWSWIRE) -- TRI Pointe Group, Inc. (the "Company") (NYSE:TPH) today announced results for the first quarter ended March 31, 2017.

Results and Operational Data for First Quarter 2017 and Comparisons to First Quarter 2016

  • Net income available to common stockholders was $8.2 million, or $0.05 per diluted share, compared to $28.6 million, or $0.18 per diluted share
  • New home orders of 1,299 compared to 1,149, an increase of 13%
  • Active selling communities averaged 125.5 compared to 114.5, an increase of 10%
    • New home orders per average selling community were 10.4 orders (3.5 monthly) compared to 10.0 orders (3.3 monthly)
    • Cancellation rate of 14% compared to 13%, an increase of 100 basis points
  • Backlog units at quarter end of 1,734 homes compared to 1,534, an increase of 13%
    • Dollar value of backlog at quarter end of $1.0 billion compared to $891.5 million, an increase of 14%
    • Average sales price in backlog at quarter end of $585,000 compared to $581,000, an increase of 1%
  • Home sales revenue of $392.0 million compared to $423.1 million, a decrease of 7%
    • New home deliveries of 758 homes compared to 771 homes, a decrease of 2%
    • Average sales price of homes delivered of $517,000 compared to $549,000, a decrease of 6%
  • Homebuilding gross margin percentage of 18.8% compared to 23.3%, a decrease of 450 basis points
    • Excluding interest, impairments and lot option abandonments, adjusted homebuilding gross margin percentage was 21.3%*
  • SG&A expense as a percentage of homes sales revenue of 15.7% compared to 13.0%, an increase of 270 basis points
  • Ratios of debt-to-capital and net debt-to-capital of 43.6% and 41.3%*, respectively, as of March 31, 2017
  • Repurchased 39,387 shares of common stock at an average price of $12.49 for an aggregate dollar amount of $492,118 in the three months ended March 31, 2017.  Subsequent to March 31, 2017 and through April 25, 2017, the Company repurchased an additional 1,166,557 shares of common stock at an average price of $12.35 per share for a total cost of $14.4 million
  • Ended first quarter of 2017 with cash of $128.5 million and $370.5 million of availability under the Company's unsecured revolving credit facility

* See "Reconciliation of Non-GAAP Financial Measures"

“I am pleased to announce that 2017 is off to a strong start,” said TRI Pointe Group Chief Executive Officer Doug Bauer.  “Orders grew 13% in the first quarter on a year-over-year basis thanks to a 10% increase in average selling community count and a strong absorption rate of 3.5 orders per community per month.  Deliveries and homebuilding gross margins came in ahead of our projections due to solid execution by our teams in the field.  These results, combined with the continued progress we made in bringing our long dated California land assets to market, put us in an excellent position to achieve our goals for this year and beyond.”

First Quarter 2017 Operating Results

Net income available to common stockholders was $8.2 million, or $0.05 per diluted share in the first quarter of 2017, compared to net income available to common stockholders of $28.6 million, or $0.18 per diluted share for the first quarter of 2016.  The decrease in net income available to common stockholders was primarily driven by lower home sales revenue and a $25.0 million decrease in homebuilding gross margin, resulting in a 450 basis point decrease in homebuilding gross margin percentage.

Home sales revenue decreased $31.1 million, or 7%, to $392.0 million for the first quarter of 2017, as compared to $423.1 million for the first quarter of 2016.  The decrease was primarily attributable to a 2% decrease in new home deliveries to 758, and a 6% decrease in average selling price of homes delivered to $517,000 compared to $549,000 in the first quarter of 2016.

New home orders increased 13% to 1,299 homes for the first quarter of 2017, as compared to 1,149 homes for the same period in 2016.  Average selling communities increased 10% to 125.5 for the first quarter of 2017 compared to 114.5 for the first quarter of 2016.  The Company’s overall absorption rate per average selling community for the first quarter of 2017 was 10.4 orders (3.5 monthly) compared to 10.0 orders (3.3 monthly) during the first quarter of 2016.  

The Company ended the quarter with 1,734 homes in backlog, representing approximately $1.0 billion. The average sales price of homes in backlog as of March 31, 2017 increased $4,000, or 1%, to $585,000 compared to $581,000 at March 31, 2016.  

Homebuilding gross margin percentage for the first quarter of 2017 decreased to 18.8% compared to 23.3% for the first quarter of 2016.  Excluding interest and impairments and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 21.3%* for the first quarter of 2017 compared to 25.4%* for the first quarter of 2016.  The decrease in homebuilding gross margin percentage was largely due to the mix of homes delivered. 

Selling, general and administrative ("SG&A") expense for the first quarter of 2017 increased to 15.7% of home sales revenue as compared to 13.0% for the first quarter of 2016 due to the incremental general and administrative costs associated with growing our Company and the decreased leverage as a result of the 7% decrease in home sales revenue.  

“The fact that the majority of our brands achieved a sales pace of at least three homes per community per month in the quarter is a strong indication that the housing fundamentals in our markets are strong and potentially supportive of future price increases,” said TRI Pointe Group President and Chief Operating Officer Tom Mitchell.  “We are even more encouraged by the fact that the communities we have opened in 2017 and 2016 are selling at a faster pace than the communities we opened prior to 2016.  These trends are great indicators for both sales and pricing momentum going forward.”

* See “Reconciliation of Non-GAAP Financial Measures”

Outlook

For the second quarter of 2017, the Company expects to open 18 new communities, and close out of 14, resulting in 127 active selling communities as of June 30, 2017.  In addition, the Company anticipates delivering approximately 58% of its 1,734 units in backlog as of March 31, 2017 at an average sales price of approximately $550,000. The Company anticipates its homebuilding gross margin percentage to be in a range of 19.5% to 20.5% for the second quarter.

For the full year 2017, the Company is reiterating its original guidance of growing average selling communities by 10%, delivering between 4,500 and 4,800 homes at an average sales price of $570,000, a homebuilding gross margin percentage in a range of 20.0% to 21.0% and a SG&A expense ratio in the range of 10.2% to 10.4% of home sales revenue.  In addition, the Company anticipates gross profit from land and lot sales of approximately $45 million, most of which is expected to be realized in the third quarter of 2017.

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, April 26, 2017.  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 First Quarter 2017 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 #13658645.  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. Winchester is a registered trademark and is used with permission.

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,” “guidance,” “expect,” “intend,” “outlook,” “project,” “potential,” “plan,” “predict,” “target,” “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 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; transportation costs; federal and state tax policies; the effect of land use, environment and other governmental 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 customers’ 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:

Chris Martin, TRI Pointe Group
Drew Mackintosh, Mackintosh Investor Relations
InvestorRelations@TRIPointeGroup.com, 949-478-8696

Media Contact:
Carol Ruiz, cruiz@newgroundco.com, 310-437-0045

 
KEY OPERATIONS AND FINANCIAL DATA
(dollars in thousands)
(unaudited)
 
  Three Months Ended March 31,
  2017   2016   Change
Operating Data:          
Home sales revenue $ 392,004     $ 423,055     $ (31,051 )
Homebuilding gross margin $ 73,600     $ 98,556     $ (24,956 )
Homebuilding gross margin % 18.8 %   23.3 %   (4.5 )%
Adjusted homebuilding gross margin %* 21.3 %   25.4 %   (4.1 )%
Land and lot sales revenue $ 578     $ 355     $ 223  
Land and lot gross margin $ (76 )   $ (424 )   $ 348  
Land and lot gross margin % (13.1 )%   (119.4 )%   106.3 %
SG&A expense $ 61,349     $ 54,852     $ 6,497  
SG&A expense as a % of home sales revenue           15.7 %   13.0 %   2.7 %
Net income available to common stockholders $ 8,193     $ 28,550     $ (20,357 )
Adjusted EBITDA* $ 27,681     $ 57,584     $ (29,903 )
Interest incurred $ 18,873     $ 15,149     $ 3,724  
Interest in cost of home sales $ 9,680     $ 8,830     $ 850  
           
Other Data:          
Net new home orders 1,299     1,149     150  
New homes delivered 758     771     (13 )
Average selling price of homes delivered $ 517     $ 549     $ (32 )
Average selling communities 125.5     114.5     11.0  
Selling communities at end of period 123     125     (2 )
Cancellation rate 14 %   13 %   1 %
Backlog (estimated dollar value) $ 1,014,163     $ 891,532     $ 122,631  
Backlog (homes) 1,734     1,534     200  
Average selling price in backlog $ 585     $ 581     $ 4  
           
  March 31,   December 31,    
  2017   2016   Change
Balance Sheet Data:          
Cash and cash equivalents $ 128,519     $ 208,657     $ (80,138 )
Real estate inventories $ 3,046,092     $ 2,910,627     $ 135,465  
Lots owned or controlled 28,760     28,309     451  
Homes under construction (1) 1,745     1,605     140  
Homes completed, unsold 365     405     (40 )
Debt $ 1,419,914     $ 1,382,033     $ 37,881  
Stockholders' equity $ 1,839,174     $ 1,829,447     $ 9,727  
Book capitalization $ 3,259,088     $ 3,211,480     $ 47,608  
Ratio of debt-to-capital 43.6 %   43.0 %   0.6 %
Ratio of net debt-to-capital* 41.3 %   39.1 %   2.2 %

__________
(1) Homes under construction included 69 and 65 models at March 31, 2017 and December 31, 2016, respectively.
* See “Reconciliation of Non-GAAP Financial Measures”

 
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
  March 31,   December 31,
  2017   2016
Assets (unaudited)    
Cash and cash equivalents $ 128,519     $ 208,657  
Receivables 65,999     82,500  
Real estate inventories 3,046,092     2,910,627  
Investments in unconsolidated entities 17,113     17,546  
Goodwill and other intangible assets, net 161,361     161,495  
Deferred tax assets, net 122,105     123,223  
Other assets 58,527     60,592  
Total assets $ 3,599,716     $ 3,564,640  
       
Liabilities      
Accounts payable $ 74,115     $ 70,252  
Accrued expenses and other liabilities 251,891     263,845  
Unsecured revolving credit facility 250,000     200,000  
Seller financed loans     13,726  
Senior notes 1,169,914     1,168,307  
Total liabilities 1,745,920     1,716,130  
       
Commitments and contingencies      
       
Equity      
Stockholders' Equity:      
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no          
  shares issued and outstanding as of March 31, 2017 and 
  December 31, 2016, respectively
     
Common stock, $0.01 par value, 500,000,000 shares authorized;
  159,047,862 and 158,626,229 shares issued and outstanding at
  March 31, 2017 and December 31, 2016, respectively        
1,590     1,586  
Additional paid-in capital 882,352     880,822  
Retained earnings 955,232     947,039  
Total stockholders' equity 1,839,174     1,829,447  
Noncontrolling interests 14,622     19,063  
Total equity 1,853,796     1,848,510  
Total liabilities and equity $ 3,599,716     $ 3,564,640  


 
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
 
  Three Months Ended March 31,
  2017   2016
Homebuilding:      
Home sales revenue $ 392,004     $ 423,055  
Land and lot sales revenue 578     355  
Other operations revenue 568     580  
Total revenues 393,150     423,990  
Cost of home sales 318,404     324,499  
Cost of land and lot sales 654     779  
Other operations expense 560     566  
Sales and marketing 26,700     26,321  
General and administrative 34,649     28,531  
Homebuilding income from operations 12,183     43,294  
Equity in income (loss) of unconsolidated entities           138     (14 )
Other income, net 77     115  
Homebuilding income before income taxes 12,398     43,395  
Financial Services:      
Revenues 241     148  
Expenses 74     58  
Equity in income of unconsolidated entities 266     715  
Financial services income before income taxes 433     805  
Income before income taxes 12,831     44,200  
Provision for income taxes (4,614 )   (15,490 )
Net income 8,217     28,710  
Net income attributable to noncontrolling interests (24 )   (160 )
Net income available to common stockholders $ 8,193     $ 28,550  
Earnings per share      
Basic $ 0.05     $ 0.18  
Diluted $ 0.05     $ 0.18  
Weighted average shares outstanding      
Basic 158,769,478     161,895,640  
Diluted 159,390,586     162,192,610  


 
MARKET DATA BY REPORTING SEGMENT & STATE
(dollars in thousands)
(unaudited)
 
  Three Months Ended March 31,
  2017   2016
  New
Homes
Delivered
  Average
Sales
Price
  New
Homes
Delivered
  Average
Sales
Price
New Homes Delivered:                                  
Maracay Homes 119     $ 429     115     $ 395  
Pardee Homes 196     427     208     572  
Quadrant Homes 63     633     92     494  
Trendmaker Homes 106     490     88     498  
TRI Pointe Homes 208     629     201     657  
Winchester Homes 66     524     67     559  
Total 758     $ 517     771     $ 549  
               
               
  Three Months Ended March 31,
  2017   2016
  New
Homes
Delivered
  Average
Sales
Price
  New
Homes
Delivered
  Average
Sales
Price
New Homes Delivered:              
California 299     $ 570     314     $ 681  
Colorado 30     564     38     482  
Maryland 46     499     48     504  
Virginia 20     582     19     699  
Arizona 119     429     115     395  
Nevada 75     364     57     328  
Texas 106     490     88     498  
Washington 63     633     92     494  
Total 758     $ 517     771     $ 549  


 
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
  Three Months Ended March 31,
  2017   2016
  Net New
Home
Orders
  Average
Selling
Communities
  Net New
Home
Orders
  Average
Selling
Communities
Net New Home Orders:                                  
Maracay Homes 184     16.5     201     18.5  
Pardee Homes 378     28.5     313     23.5  
Quadrant Homes 120     7.5     133     9.5  
Trendmaker Homes 151     32.0     122     24.3  
TRI Pointe Homes 353     29.3     265     25.5  
Winchester Homes 113     11.7     115     13.2  
Total 1,299     125.5     1,149     114.5  
               
               
  Three Months Ended March 31,
  2017   2016
  Net New
Home
Orders
  Average
Selling
Communities
  Net New
Home
Orders
  Average
Selling
Communities
Net New Home Orders:              
California 564     41.5     406     33.2  
Colorado 53     5.0     43     5.0  
Maryland 67     8.0     64     6.2  
Virginia 46     3.7     51     7.0  
Arizona 184     16.5     201     18.5  
Nevada 114     11.3     129     10.8  
Texas 151     32.0     122     24.3  
Washington 120     7.5     133     9.5  
Total 1,299     125.5     1,149     114.5  


 
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(dollars in thousands)
(unaudited)
 
  As of March 31, 2017   As of March 31, 2016
  Backlog
Units
  Backlog
Dollar
Value
  Average
Sales
Price
  Backlog
Units
  Backlog
Dollar
Value
  Average
Sales
Price
Backlog:                      
Maracay Homes 313     $ 153,389     $ 490     289     $ 121,130     $ 419  
Pardee Homes 442     248,621     562     379     242,278     639  
Quadrant Homes 158     111,551     706     184     99,170     539  
Trendmaker Homes           208     107,860     519     170     90,870     535  
TRI Pointe Homes 443     283,986     641     354     238,669     674  
Winchester Homes 170     108,756     640     158     99,415     629  
Total 1,734     $ 1,014,163     $ 585     1,534     $ 891,532     $ 581  
                       
                       
  As of March 31, 2017   As of March 31, 2016
  Backlog
Units
  Backlog
Dollar
Value
  Average
Sales
Price
  Backlog
Units
  Backlog
Dollar
Value
  Average
Sales
Price
Backlog:                      
California 667     $ 421,381     $ 632     493     $ 376,645     $ 764  
Colorado 82     50,100     611     89     45,694     513  
Maryland 123     73,226     595     93     55,444     596  
Virginia 47     35,530     756     65     43,971     676  
Arizona 313     153,389     490     289     121,130     419  
Nevada 136     61,126     449     151     58,608     388  
Texas 208     107,860     519     170     90,870     535  
Washington 158     111,551     706     184     99,170     539  
Total 1,734     $ 1,014,163     $ 585     1,534     $ 891,532     $ 581  


 
MARKET DATA BY REPORTING SEGMENT & STATE, continued
(unaudited)
 
  March 31,   December 31,
  2017   2016
Lots Owned or Controlled:      
Maracay Homes 2,611     2,053  
Pardee Homes 16,482     16,912  
Quadrant Homes 1,800     1,582  
Trendmaker Homes 1,902     1,999  
TRI Pointe Homes 3,555     3,479  
Winchester Homes 2,410     2,284  
Total 28,760     28,309  
       
       
  March 31,   December 31,
  2017   2016
Lots Owned or Controlled:      
California 16,933     17,245  
Colorado 884     918  
Maryland 1,811     1,779  
Virginia 599     505  
Arizona 2,611     2,053  
Nevada 2,220     2,228  
Texas 1,902     1,999  
Washington 1,800     1,582  
Total 28,760     28,309  
       
       
  March 31,   December 31,
  2017   2016
Lots by Ownership Type:      
Lots owned 25,134     25,283  
Lots controlled (1) 3,626     3,026  
Total 28,760     28,309  

__________
(1) As of March 31, 2017 and December 31, 2016, 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 March 31,
  2017   %   2016   %
  (dollars in thousands)
Home sales revenue $ 392,004     100.0 %   $ 423,055     100.0 %
Cost of home sales 318,404     81.2 %   324,499     76.7 %
Homebuilding gross margin 73,600     18.8 %   98,556     23.3 %
Add: interest in cost of home sales 9,680     2.5 %   8,830     2.1 %
Add: impairments and lot option abandonments     288     0.1 %   182     0.0 %
Adjusted homebuilding gross margin $ 83,568     21.3 %   $ 107,568     25.4 %
Homebuilding gross margin percentage 18.8 %       23.3 %    
Adjusted homebuilding gross margin percentage 21.3 %       25.4 %    
 

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.

  March 31, 2017   December 31, 2016
Unsecured revolving credit facility     $ 250,000     $ 200,000  
Seller financed loans     13,726  
Senior notes 1,169,914     1,168,307  
Total debt 1,419,914     1,382,033  
Stockholders’ equity 1,839,174     1,829,447  
Total capital $ 3,259,088     $ 3,211,480  
Ratio of debt-to-capital(1) 43.6 %   43.0 %
       
Total debt $ 1,419,914     $ 1,382,033  
Less: Cash and cash equivalents (128,519 )   (208,657 )
Net debt 1,291,395     1,173,376  
Stockholders’ equity 1,839,174     1,829,447  
Total capital $ 3,130,569     $ 3,002,823  
Ratio of net debt-to-capital(2) 41.3 %   39.1 %

__________
(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 March 31,
  2017   2016
  (in thousands)
Net income available to common stockholders $ 8,193     $ 28,550  
Interest expense:      
 Interest incurred 18,873     15,149  
 Interest capitalized (18,873 )   (15,149 )
Amortization of interest in cost of sales 9,687     8,830  
Provision for income taxes 4,614     15,490  
Depreciation and amortization 822     1,792  
Amortization of stock-based compensation     3,841     2,605  
EBITDA 27,157     57,267  
Impairments and lot abandonments 321     182  
Restructuring charges 203     135  
Adjusted EBITDA $ 27,681     $ 57,584  

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