Market Overview

William Lyon Homes Reports Second Quarter 2018 Results

Share:

30% Increase in New Home Deliveries; 25% Increase in Net New Home
Orders;

140 Basis Point Increase in GAAP Gross Margins; 22% Increase in
Adjusted Net Income

William Lyon Homes (NYSE:WLH), a leading homebuilder in the Western
U.S., announced results for its second quarter ended June 30, 2018.

2018 Second Quarter Highlights (Comparison to 2017 Second Quarter)

  • Net income available to common stockholders of $22.5 million, or $0.57
    per diluted share
  • Adjusted net income available to common stockholders of $23.1 million,
    or $0.58 per diluted share, compared to $19.0 million, or $0.49 per
    diluted share in the prior period, up 22% and 18%, respectively
  • Pre-tax income of $35.0 million, up 19%
  • Adjusted pre-tax income of $35.8 million, up 21%, which excludes
    transaction expenses of $0.8 million, before tax
  • New home deliveries of 1,082 homes, up 30%
  • Net new home orders of 1,270, up 25%
  • Dollar value of orders of $623.1 million, up 12%
  • Units in backlog of 1,648, up 28%
  • Dollar value of homes in backlog of $867.7 million, up 15%
  • Average sales locations of 107, up 22%
  • Average sales price (ASP) of new homes delivered of $479,100, down 6%
  • Home sales revenue of $518.4 million, up 23%
  • Homebuilding gross margin percentage of 17.9%
  • Adjusted homebuilding gross margin percentage of 23.3%
  • SG&A percentage of 11.1%, compared to 9.7%
  • Adjusted EBITDA of $62.4 million, up 25%

"We are pleased with our financial results for the second quarter, with
several key metrics up over the prior year, including homebuilding
revenues of $518.4 million, up 23%, new home deliveries of 1,082, up
30%, adjusted pre-tax income of $35.8 million, up 21%, adjusted net
income of $23.1 million, up 22%, and adjusted earnings per share on a
diluted basis of $0.58, up 18%," said Matthew R. Zaist, President and
Chief Executive Officer. "During the quarter, our GAAP homebuilding
gross margins were 17.9%, including purchase accounting adjustments from
the RSI acquisition, up 140 basis points compared to the second quarter
of 2017, and up 40 basis points sequentially from the first quarter of
this year."

Mr. Zaist continued, "We also delivered another quarter of
year-over-year improvement in net new home orders, which increased 25%
to 1,270, and represents a monthly absorption rate of 4.0 net new home
orders per community compared to 3.9 in the year-ago period. The
increase in monthly absorption rate year-over-year was driven by an
improvement in both May and June absorption rates."

Mr. Zaist added, "The strong performance in the first half of 2018
positions us well to achieve our goals for the year, and our updated
expectations for the full year include new home deliveries of
approximately 4,400 to 4,700 units, home sales revenue of approximately
$2.25 billion to $2.35 billion, and pre-tax income before
non-controlling interest of approximately $175 million to $185 million."

Operating Results

Home sales revenue for the second quarter of 2018 was $518.4 million, as
compared to $422.6 million in the year-ago period, an increase of 23%.
The increase was driven by a 30% increase in deliveries to 1,082 homes,
compared to 831 in the second quarter of 2017.

The dollar value of orders for the second quarter of 2018 was $623.1
million, an increase of 12%, from $554.0 million in the year-ago period.
Net new home orders for the quarter were 1,270, up 25% from 1,017 in the
second quarter of 2017, which represents monthly absorption of 4.5 per
community in April, 3.3 in May, compared to 3.2 in the prior year, and
4.0 in June, compared to 3.5 in the prior year.

The dollar value of homes in backlog was $867.7 million as of June 30,
2018, an increase of 15%, compared to $755.3 million as of June 30,
2017. The increase was driven by a 28% increase in units in backlog to
1,648 from 1,285 in the year-ago period. The average sales price of
homes in backlog decreased to $526,500 from $587,800 in the prior year,
due to a higher number of homes in backlog from entry level buyers,
which represent 48% of homes in backlog. In addition, our ASP in backlog
as of June 30, 2018 was 10% higher than the ASP of homes closed in the
second quarter.

Homebuilding gross margin percentage for homes closed during the second
quarter of 2018 was 17.9%, up 140 basis points from 16.5% in the second
quarter of 2017, and up 40 basis points from 17.5% in the first quarter
of 2018.

Sales and marketing expense during the second quarter of 2018 was 5.6%
of homebuilding revenue, compared to 5.0% in the year-ago quarter, which
is primarily driven by the impact of the adoption of ASC 606, which was
adopted on January 1, 2018, requiring the Company to record certain
selling costs that were previously recorded as cost of sales to sales
and marketing expense. General and administrative expenses increased to
5.5% of homebuilding revenue, compared to 4.6% in the year-ago quarter
due to an increased headcount as a result of the RSI acquisition.

Balance Sheet Update

At quarter end, cash and cash equivalents totaled $49.2 million, owned
real estate inventories totaled $2.3 billion, total assets were $2.9
billion and total equity was $981.0 million. Total debt to book
capitalization was 59.5%, and net debt to net book capitalization was
58.6% at June 30, 2018, compared to 57.9% and 57.2% at June 30, 2017,
and 54.5% and 49.6% at December 31, 2017, respectively.

During the second quarter the Company closed on a new credit agreement
providing for an unsecured revolving credit facility of up to $325
million, which replaces the Company's previous $170 million revolving
credit facility.

Conference Call

The Company will host a conference call to discuss these results today,
Tuesday, July 31, 2018 at 9:00 a.m. Pacific Time. The call will be
available via both the telephone at (855) 851-4524 or (720) 634-2900,
conference ID # 5673637, or through the Company's website at www.lyonhomes.com
in the Investor Relations section of the site.

A replay of the call will be available through August 7, 2018 by dialing
(855) 859-2056 or (404) 537-3406, conference ID #5673637. A webcast
replay of the call will also be available on the Company's website
approximately two hours after the broadcast.

About William Lyon Homes

William Lyon Homes is one of the largest Western U.S. regional
homebuilders. Headquartered in Newport Beach, California, the Company is
primarily engaged in the design, construction, marketing and sale of
single-family detached and attached homes in California, Arizona,
Nevada, Colorado, Washington, Oregon, and Texas. Its core markets
include Orange County, Los Angeles, the Inland Empire, the San Francisco
Bay Area, Phoenix, Las Vegas, Denver, Portland, Seattle, Austin and San
Antonio. The Company has a distinguished legacy of more than 60 years of
homebuilding operations, over which time it has sold in excess of
104,000 homes. The Company markets and sells its homes under the William
Lyon Homes brand in all of its markets except for Washington and Oregon,
where the Company operates under the Polygon Northwest brand.

Forward-Looking Statements

Certain statements contained in this release and the accompanying
comments during our conference call that are not historical information
may constitute "forward-looking statements" as defined by the Private
Securities Litigation Reform Act of 1995, including, but not limited to,
forward-looking statements related to: anticipated pre-tax income, gross
margin performance, backlog conversion rates, operating and financial
results for the third quarter of 2018 and full year 2018 and beyond,
community count growth and project performance, market and industry
trends, the continued housing market recovery, average sale price of
homes to be closed in various periods, SG&A percentage, future cash
needs and liquidity, minority interest from our homebuilding joint
ventures, leverage ratios and reduction strategies, land acquisition
spending, financial services and ancillary business performance and
strategies; the anticipated benefits to be realized from the RSI
acquisition; the anticipated financial or operational performance
resulting from the RSI Communities transaction, and estimated new home
deliveries, home sales revenue and community count on a combined Company
basis. The forward-looking statements involve risks and uncertainties
and actual results may differ materially from those projected or implied.

The Company makes no commitment, and disclaims any duty, to update or
revise any forward-looking statements to reflect future events or
changes in these expectations. Further, certain forward-looking
statements are based on assumptions of future events which may not prove
to be accurate.
Factors that may impact such forward-looking
statements include, among others: the Company's ability to successfully
integrate RSI Communities' homebuilding operations with its existing
operations; any adverse effect on the Company's, or RSI Communities',
business operations following the acquisition; adverse weather
conditions; the availability of labor and homebuilding materials and
increased construction cycle times; the availability and timing of
mortgage financing; our financial leverage and level of indebtedness and
any inability to comply with financial and other covenants under our
debt instruments; continued volatility and worsening in general economic
conditions either internationally, nationally or in regions in which we
operate; increased housing supply in our markets; affordability
pressures; increased outside broker costs; increased costs of
homebuilding materials; changes in governmental laws and regulations and
compliance, increased costs, fees and delays associated therewith;
government actions, policies, programs and regulations directed at or
affecting the housing market (including the Tax Cuts and Jobs Act
("TCJA"), the Dodd-Frank Act, tax benefits associated with purchasing
and owning a home, and the standards, fees and size limits applicable to
the purchase or insuring of mortgage loans by government-sponsored
enterprises and government agencies), the homebuilding industry, or
construction activities; changes in existing tax laws or enacted
corporate income tax rates, including pursuant to the TCJA; worsening in
markets for residential housing; the impact of construction defect,
product liability and home warranty claims, including the adequacy of
self-insurance accruals, and the applicability and sufficiency of our
insurance coverage; defects in manufactured products or other
homebuilding materials; decline in real estate values resulting in
impairment of our real estate assets; volatility in the banking
industry, credit and capital markets; restraints on foreign investment;
terrorism or other hostilities involving the United States and other
geopolitical risk as well as restrictive policies such as tariffs or
capital investment restrictions; building moratorium or "slow-growth" or
"no-growth" initiatives that could be implemented in states in which we
operate; changes in mortgage and other interest rates; conditions in the
capital, credit and financial markets, including mortgage lending
standards and the availability of mortgage financing; changes in
generally accepted accounting principles or interpretations of those
principles; competition for home sales from other sellers of new and
resale homes; cancellations and our ability to realize our backlog; the
occurrence of events such as landslides, soil subsidence and earthquakes
that are uninsurable, not economically insurable or not subject to
effective indemnification agreements; limitations on our ability to
utilize our tax attributes; whether an ownership change occurred that
could, under certain circumstances, have resulted in the limitation of
our ability to offset prior years' taxable income with net operating
losses; the timing of receipt of regulatory approvals and the opening of
projects; the availability and cost of land for future development; 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.

 
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except number of shares and per share data)
(unaudited)
 
      Three       Three
Months Months
Ended Ended
June 30, June 30,
2018 2017
Operating revenue
Home sales $ 518,432 $ 422,633
Construction services   1,020     59  
  519,452     422,692  
Operating costs
Cost of sales — homes (425,572 ) (353,057 )
Construction services (959 ) (6 )
Sales and marketing (28,848 ) (21,284 )
General and administrative (28,507 ) (19,550 )
Transaction expenses (777 ) -
Other   (621 )   (560 )
  (485,284 )   (394,457 )
Operating income 34,168 28,235
Equity in income of unconsolidated joint ventures 533 1,213
Other income, net   311     8  
Income before provision for income taxes 35,012 29,456
Provision for income taxes   (7,776 )   (9,205 )
Net income 27,236 20,251
Less: Net income attributable to noncontrolling interests   (4,781 )   (1,297 )
Net income available to common stockholders $ 22,455   $ 18,954  
 
Income per common share:
Basic $ 0.59 $ 0.51
Diluted $ 0.57 $ 0.49
Weighted average common shares outstanding:
Basic 38,017,211 37,051,967
Diluted 39,688,271 38,298,624
 
 
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except number of shares and per share data)
(unaudited)
 
      Six       Six
Months Months
Ended Ended
June 30, June 30,
2018 2017
Operating revenue
Home sales $ 890,817 $ 681,487
Construction services   2,003     59  
  892,820     681,546  
Operating costs
Cost of sales — homes (732,880 ) (571,512 )
Construction services (1,942 ) (6 )
Sales and marketing (51,541 ) (35,989 )
General and administrative (53,028 ) (38,496 )
Transaction expenses (3,907 ) -
Other   (919 )   (1,000 )
  (844,217 )   (647,003 )
Operating income 48,603 34,543
Equity in income of unconsolidated joint ventures 1,465 1,462
Other income, net   346     353  
Income before extinguishment of debt 50,414 36,358
Loss on extinguishment of debt   -     (21,828 )
Income before provision for income taxes 50,414 14,530
Provision for income taxes   (10,590 )   (3,575 )
Net income 39,824 10,955
Less: Net income attributable to noncontrolling interests   (9,041 )   (2,001 )
Net income available to common stockholders $ 30,783   $ 8,954  
 
Income per common share:
Basic $ 0.81 $ 0.24
Diluted $ 0.77 $ 0.23
Weighted average common shares outstanding:
Basic 37,974,471 36,980,540
Diluted 39,772,437 38,231,201
 
 
WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value per share)
 
      June 30,       December 31,
2018 2017
(unaudited)
ASSETS
Cash and cash equivalents $ 49,171 $ 182,710
Receivables 14,237 10,223
Escrow proceeds receivable 3,797 3,319
Real estate inventories
Owned 2,331,568 1,699,850
Not owned 247,049 -
Investment in unconsolidated joint ventures 5,695 7,867
Goodwill 118,877 66,902
Intangibles, net of accumulated amortization of $4,640 as of June
30, 2018 and December 31, 2017
6,700 6,700
Deferred income taxes 46,445 47,915
Lease right-of-use assets 16,818 14,454
Other assets, net   37,890   21,164
Total assets $ 2,878,247 $ 2,061,104
LIABILITIES AND EQUITY
Accounts payable $ 89,049 $ 58,799
Accrued expenses 122,410 111,491
Liabilities from inventories not owned 247,049 -
Revolving credit facility 145,000 -
Land notes payable - 589
Construction notes payable 1,510 -
Joint venture notes payable 161,562 93,926
53/4% Senior Notes due April 15, 2019 - 149,362
7% Senior Notes due August 15, 2022 347,107 346,740
6% Senior Notes due September 1, 2023 343,354 -
57/8% Senior Notes due January 31, 2025   440,251   439,567
  1,897,292   1,200,474
Commitments and contingencies
Equity:
William Lyon Homes stockholders' equity
Preferred stock, par value $0.01 per share; 10,000,000 shares
authorized and no shares issued and outstanding at June 30, 2018 and
December 31, 2017
- -
Common stock, Class A, par value $0.01 per share; 150,000,000 shares
authorized; 34,407,540 and 34,267,510 shares issued, 33,159,509 and
33,135,650 shares outstanding at June 30, 2018 and December 31,
2017, respectively
344 344
Common stock, Class B, par value $0.01 per share; 30,000,000 shares
authorized; 4,817,394 shares issued and outstanding at June 30, 2018
and December 31, 2017
48 48
Additional paid-in capital 448,656 454,286
Retained earnings   356,577   325,794
Total William Lyon Homes stockholders' equity 805,625 780,472
Noncontrolling interests   175,330   80,158
Total equity   980,955   860,630
Total liabilities and equity $ 2,878,247 $ 2,061,104
 
 
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
 
      Three Months Ended June 30,
2018       2017      
Consolidated Consolidated Percentage %
Total Total Change
Selected Financial Information (1)
(dollars in thousands)
Homes closed   1,082     831   30 %
Home sales revenue $ 518,432 $ 422,633 23 %
Cost of sales (excluding interest and purchase accounting
adjustments)
  (397,858 )   (332,368 ) 20 %
Adjusted homebuilding gross margin (2) $ 120,574   $ 90,265   34 %
Adjusted homebuilding gross margin percentage (2)   23.3 %   21.4 % 9 %
Interest in cost of sales (22,329 ) (20,689 ) 8 %
Purchase accounting adjustments   (5,385 )   -   N/M  
Gross margin $ 92,860   $ 69,576   33 %
Gross margin percentage   17.9 %   16.5 % 8 %
 
Number of homes closed
California 268 216 24 %
Arizona 123 181 (32 %)
Nevada 91 53 72 %
Colorado 145 58 150 %
Washington 138 106 30 %
Oregon 140 217 (35 %)
Texas   177     -   N/M  
Total   1,082     831   30 %
 
Average sales price of homes closed
California $ 650,900 $ 691,200 (6 %)
Arizona 315,200 289,300 9 %
Nevada 507,800 564,800 (10 %)
Colorado 430,600 534,600 (19 %)
Washington 612,100 662,800 (8 %)
Oregon 473,000 413,700 14 %
Texas   259,200     -   N/M  
Company Average $ 479,100 $ 508,600 (6 %)
 
Number of net new home orders
California 337 280 20 %
Arizona 118 149 (21 %)
Nevada 115 93 24 %
Colorado 160 86 86 %
Washington 136 164 (17 %)
Oregon 199 245 (19 %)
Texas   205     -   N/M  
Total   1,270     1,017   25 %
 
Average number of sales locations during period
California 28 23 22 %
Arizona 6 8 (25 %)
Nevada 14 14 0 %
Colorado 15 15 0 %
Washington 10 10 0 %
Oregon 14 18 (22 %)
Texas   20     -   N/M  
Total   107     88   22 %
 

(1)

 

For the 2018 period presented, the Company is reporting in seven
segments: California, Arizona, Nevada, Colorado, Washington,
Oregon, and Texas. Texas is a new reporting segment resulting from
the RSI Acquisition completed in 2018. For the 2017 period
presented, the Company reported in six segments: California,
Arizona, Nevada, Colorado, Washington, and Oregon.

(2)

Adjusted homebuilding gross margin is a financial measure that is
not prepared in accordance with U.S. generally accepted accounting
principles, or U.S. GAAP. It is used by management in evaluating
operating performance and in making strategic decisions regarding
sales pricing, construction and development pace, product mix and
other operating decisions. We believe this information is
meaningful as it isolates the impact that interest and purchase
accounting adjustments have on homebuilding gross margin and
allows investors to make better comparisons with our competitors.

 
 
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
 
      Six Months Ended June 30,
2018       2017      
Consolidated Consolidated Percentage %
Total Total Change
Selected Financial Information (1)
(dollars in thousands)
Homes closed   1,822     1,330   37 %
Home sales revenue $ 890,817 $ 681,487 31 %
Cost of sales (excluding interest and purchase accounting
adjustments)
  (685,627 )   (539,215 ) 27 %
Adjusted homebuilding gross margin (2) $ 205,190   $ 142,272   44 %
Adjusted homebuilding gross margin percentage (2)   23.0 %   20.9 % 10 %
Interest in cost of sales (41,133 ) (32,297 ) 27 %
Purchase accounting adjustments   (6,120 )   -   N/M  
Gross margin $ 157,937   $ 109,975   44 %
Gross margin percentage   17.7 %   16.1 % 10 %
 
Number of homes closed
California 478 337 42 %
Arizona 228 275 (17 %)
Nevada 165 101 63 %
Colorado 238 96 148 %
Washington 232 176 32 %
Oregon 244 345 (29 %)
Texas   237     -   N/M  
Total   1,822     1,330   37 %
 
Average sales price of homes closed
California $ 647,000 $ 686,200 (6 %)
Arizona 310,500 287,600 8 %
Nevada 578,100 598,800 (3 %)
Colorado 430,700 545,200 (21 %)
Washington 599,700 646,200 (7 %)
Oregon 463,400 419,100 11 %
Texas   255,900     -   N/M  
Company Average $ 488,900 $ 512,400 (5 %)
 
Number of net new home orders
California 620 545 14 %
Arizona 226 277 (18 %)
Nevada 224 170 32 %
Colorado 304 147 107 %
Washington 315 316 0 %
Oregon 408 427 (4 %)
Texas   279     -   N/M  
Total   2,376     1,882   26 %
 
Average number of sales locations during period
California 24 24 0 %
Arizona 6 8 (25 %)
Nevada 13 12 8 %
Colorado 15 13 15 %
Washington 9 9 0 %
Oregon 14 19 (26 %)
Texas   13     -   N/M  
Total   94     85   11 %
 
(1)   For the 2018 period presented, the Company is reporting in seven
segments: California, Arizona, Nevada, Colorado, Washington, Oregon,
and Texas. Texas is a new reporting segment resulting from the RSI
Acquisition completed in 2018. For the 2017 period presented, the
Company reported in six segments: California, Arizona, Nevada,
Colorado, Washington, and Oregon.
(2) Adjusted homebuilding gross margin is a financial measure that is
not prepared in accordance with U.S. generally accepted accounting
principles, or U.S. GAAP. It is used by management in evaluating
operating performance and in making strategic decisions regarding
sales pricing, construction and development pace, product mix and
other operating decisions. We believe this information is meaningful
as it isolates the impact that interest and purchase accounting
adjustments have on homebuilding gross margin and allows investors
to make better comparisons with our competitors.
 
 
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
 
      As of June 30,
2018       2017      
Consolidated Consolidated Percentage %
Total Total Change
Backlog of homes sold but not closed at end of period
California 457 432 6 %
Arizona 159 206 (23 %)
Nevada 145 128 13 %
Colorado 238 126 89 %
Washington 174 192 (9 %)
Oregon 236 201 17 %
Texas   239   - N/M  
Total   1,648   1,285 28 %
 
Dollar amount of homes sold but not closed at end of period (in
thousands)
California $ 346,687 $ 345,604 0 %
Arizona 50,048 63,435 (21 %)
Nevada 95,759 84,348 14 %
Colorado 99,531 59,266 68 %
Washington 118,863 115,018 3 %
Oregon 92,270 87,652 5 %
Texas   64,503   - N/M  
Total $ 867,661 $ 755,323 15 %
 
Lots owned and controlled at end of period
Lots owned (1)
California 3,921 1,653 137 %
Arizona 3,993 4,660 (14 %)
Nevada 2,822 2,941 (4 %)
Colorado 1,130 1,415 (20 %)
Washington 1,327 1,303 2 %
Oregon 2,623 1,449 81 %
Texas   3,398   - N/M  
Total   19,214   13,421 43 %
 
Lots controlled
California 2,022 1,141 77 %
Arizona 651 - N/M
Nevada 3 420 (99 %)
Colorado 1,197 192 523 %
Washington 1,334 973 37 %
Oregon 1,456 2,386 (39 %)
Texas   3,629   - N/M  
Total   10,292   5,112 101 %
 
Total lots owned and controlled
California 5,943 2,794 113 %
Arizona 4,644 4,660 0 %
Nevada 2,825 3,361 (16 %)
Colorado 2,327 1,607 45 %
Washington 2,661 2,276 17 %
Oregon 4,079 3,835 6 %
Texas   7,027   - N/M  
Total   29,506   18,533 59 %
 
(1)   Certain lots in California and Texas are consolidated on the
Company's accompanying balance sheet in accordance with FASB ASC
Topic 470, Debt ("ASC 470"). Included in lots owned are 1,079 lots
in California and 1,785 lots in Texas that are associated with a
land banking transaction that is consolidated on the Company's
accompanying balance sheet in accordance with ASC 470.
 
 
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
      Three       Three       Six       Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
 
Net income available to common stockholders $ 22,455 $ 18,954 $ 30,783 $ 8,954
Net income, adjusted for transaction expenses and loss on
extinguishment of debt, net of tax benefit (1)
$ 23,060 $ 18,954 $ 33,870 $ 23,030
Net cash used in operating activities $ (227,978 ) $ (25,431 ) $ (129,950 ) $ (66,812 )
Interest incurred $ 22,808 $ 18,822 $ 42,066 $ 38,246
Adjusted EBITDA (2) $ 62,415 $ 49,959 $ 104,127 $ 70,000
Adjusted EBITDA Margin (3) 12.0 % 11.8 % 11.7 % 10.3 %
Ratio of adjusted EBITDA to interest incurred 2.7 2.7 2.5 1.8
 
 
Balance Sheet Data
               
June 30, December 31,
2018 2017
 
Cash and cash equivalents $ 49,171 $ 182,710
 
Total William Lyon Homes stockholders' equity 805,625 780,472
Noncontrolling interests 175,330 80,158
Total debt   1,438,784     1,030,184  
Total capital $ 2,419,739   $ 1,890,814  
 
Ratio of debt to total capital 59.5 % 54.5 %
Ratio of net debt to total capital (net of cash) 58.6 % 49.6 %
 
 
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
(1)   Adjusted net income means net income available to common
stockholders plus transaction expenses and loss for the
extinguishment of the 8.5% Senior Notes. Adjusted net income is not
a financial measure prepared in accordance with U.S. GAAP. Adjusted
net income is presented herein because management believes the
presentation of adjusted net income provides useful information to
the Company's investors regarding the Company's results of
operations because adjusted net income isolates the impact of the
one-time, non-recurring transaction expenses and infrequent
extinguishment fees. Adjusted net income should not be considered as
an alternative for net income, cash flows from operating activities
and other consolidated income or cash flow statement data prepared
in accordance with accounting principles generally accepted in the
United States or as a measure of profitability or liquidity. A
reconciliation of net income available to common stockholders to
adjusted net income is provided in the following table:
 
      Three       Three       Six       Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
Net income available to common stockholders $ 22,455 $ 18,954 $ 30,783 $ 8,954
Add: Transaction expenses 777 - 3,907 -
Less: Income tax benefit applicable to transaction expenses (172 ) - (820 ) -
Add: Loss on extinguishment of debt - - - 21,828
Less: Income tax benefit applicable to loss on extinguishment of debt   -     -   -     (7,752 )
Net income, adjusted for transaction expenses and loss on
extinguishment of debt, net of tax benefits
$ 23,060   $ 18,954 $ 33,870   $ 23,030  
Diluted weighted average common shares outstanding 39,688,271 38,298,624 39,772,437 38,231,201
Adjusted net income excluding noncontrolling interest per diluted
share
$ 0.58 $ 0.49 $ 0.85 $ 0.60
 
 
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
(2)   Adjusted EBITDA means net income available to common stockholders
plus (i) provision for income taxes, (ii) interest expense, (iii)
amortization of capitalized interest included in cost of sales, (iv)
stock based compensation, (v) depreciation and amortization, (vi)
non-cash purchase accounting adjustments, (vii) cash distributions
of income from unconsolidated joint ventures, (viii) equity in
income of unconsolidated joint ventures, (ix) transaction expenses,
and (x) loss on extinguishment of debt. Other companies may
calculate adjusted EBITDA differently. Adjusted EBITDA is not a
financial measure prepared in accordance with U.S. GAAP. Adjusted
EBITDA is presented herein because management believes the
presentation of adjusted EBITDA provides useful information to the
Company's investors regarding the Company's financial condition and
results of operations because adjusted EBITDA is a widely utilized
indicator of a company's operating performance. Adjusted EBITDA
should not be considered as an alternative for net income, cash
flows from operating activities and other consolidated income or
cash flow statement data prepared in accordance with accounting
principles generally accepted in the United States or as a measure
of profitability or liquidity. A reconciliation of net income
available to common stockholders to adjusted EBITDA is provided in
the following table:
 
      Three       Three       Six       Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
 
 
Net income available to common stockholders $ 22,455 $ 18,954 $ 30,783 $ 8,954
Provision for income taxes 7,776 9,205 10,590 3,575
Interest expense
Interest incurred 22,808 18,822 42,066 38,246
Interest capitalized (22,808 ) (18,822 ) (42,066 ) (38,246 )
Amortization of capitalized interest
included in cost of sales 22,393 20,689 41,218 32,297
Stock based compensation 2,006 1,539 5,187 3,215
Depreciation and amortization 1,916 442 3,972 891
Non-cash purchase accounting adjustments 5,385 - 6,120 -
Cash distributions of income from unconsolidated joint ventures 240 343 3,815 702
Equity in income of unconsolidated joint ventures (533 ) (1,213 ) (1,465 ) (1,462 )
Transaction expenses 777 - 3,907 -
Loss on extinguishment of debt   -     -     -     21,828  
Adjusted EBITDA $ 62,415   $ 49,959   $ 104,127   $ 70,000  
 
 

WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

(dollars in thousands)

(unaudited)

 

(3) Calculated as Adjusted EBITDA as a percentage of operating
revenue.

 
Adjusted pre-tax income means income before provision for income
taxes plus transaction expenses and loss for the extinguishment of
the 8.5% Senior Notes. Adjusted pre-tax income is not a financial
measure prepared in accordance with U.S. GAAP. Adjusted pre-tax
income is presented herein because management believes the
presentation of adjusted pre-tax income provides useful information
to the Company's investors regarding the Company's results of
operations because adjusted pre-tax income isolates the impact of
the one-time, non-recurring transaction expenses and infrequent
extinguishment fees. Adjusted pre-tax income should not be
considered as an alternative for net income, cash flows from
operating activities and other consolidated income or cash flow
statement data prepared in accordance with accounting principles
generally accepted in the United States or as a measure of
profitability or liquidity. A reconciliation of income before
provision for income taxes to adjusted pre-tax income is provided in
the following table:
 
      Three       Three       Six       Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2018 2017 2018 2017
Income before provision for income taxes $ 35,012 $ 29,456 $ 50,414 $ 14,530
Add: Transaction expenses 777 - 3,907 -
Loss on extinguishment of debt   -   -   -   21,828
Pre-tax income, adjusted for transaction expenses and loss on
extinguishment of debt
$ 35,789 $ 29,456 $ 54,321 $ 36,358
 

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