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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| William Lyon Homes | NYSE:WLH | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 24.37 | 0 | 01:00:00 |
From Jul 2019 to Jul 2024
30% Increase in Homebuilding Revenue; 30% Increase in Net Income Available to Common Stockholders; Dollar Value of Orders up 31%; and 22% Increase in Average Community Count
William Lyon Homes (NYSE: WLH), a leading homebuilder in the Western U.S., announced results for its second quarter ended June 30, 2017.
2017 Second Quarter Highlights (Comparison to 2016 Second Quarter)
“We are pleased with our financial results for the second quarter, with several key metrics up over the prior year, including homebuilding revenues of $422.6 million, up 30%, deliveries of 831, up 25%, pre-tax income of $29.5 million, up 30%, net income of $19.0 million, up 30%, and earnings per share on a diluted basis of $0.49, up 29%,” said Matthew R. Zaist, President and Chief Executive Officer. “During the quarter, our GAAP homebuilding gross margins were up 90 basis points sequentially, and we are extremely pleased with the momentum of our gross margins in backlog growing to 18.3%, which represents a 180 basis point improvement over the second quarter. We expect to see our gross margin improvement drive meaningful profitability growth in the balance of the year.”
Mr. Zaist continued, “Second quarter net new home orders were 1,017, up 17%, and dollar value of orders was up 31% to $554.0 million. Our monthly absorption rate for the second quarter was 3.9 sales per community. We are pleased to see the sales momentum continue into the third quarter with July up 18% over the prior year and a monthly absorption rate of 3.0 sales per community compared to 2.8 in the prior year.
“The strong performance in the first half of 2017 positions us well to achieve our goals for the year and our revised expectations for the full year include new home deliveries of approximately 3,150 to 3,350, homebuilding revenue of approximately $1.725 billion to $1.8 billion, and pre-tax income before non-controlling interest of approximately $140 million to $150 million.”
Operating Results
Home sales revenue for the second quarter of 2017 was $422.6 million, as compared to $325.1 million in the year-ago period, an increase of 30%. The increase was driven by a 25% increase in deliveries to 831 homes, compared to 663 in the second quarter of 2016, combined with an increase in the average sales price of homes delivered to $508,600, up 4% from the prior year.
The dollar value of orders for the second quarter of 2017 was $554.0 million, an increase of 31%, from $423.6 million in the year-ago period. Net new home orders for the quarter were 1,017, up 17% from 871 in the second quarter of 2016. The overall increase in net new home orders was primarily driven by an increase in community count to 88 average sales locations, from 72 in the year-ago period.
The dollar value of homes in backlog was $755.3 million as of June 30, 2017, an increase of 31%, compared to $575.5 million as of June 30, 2016. The increase was driven by an 18% increase in units in backlog to 1,285 from 1,093 in the year-ago period and a 12% increase in ASP in backlog to $587,800 from $526,500 in the second quarter of 2016. In addition, our ASP in backlog as of June 30, 2017 was 16% higher than the ASP of homes closed in the second quarter.
Homebuilding gross margin percentage for homes closed during the second quarter of 2017 was 16.5%, up from 15.6% gross margins in the first quarter of 2017. Adjusted homebuilding gross margin percentage for the quarter was 22.1%.
Sales and marketing expense during the second quarter of 2017 was 5.0% of homebuilding revenue, compared to 5.6% in the year-ago quarter, driven primarily by higher homebuilding revenue and leverage on our advertising and marketing costs, compared to the second quarter of 2016. General and administrative expenses decreased to 4.6% of homebuilding revenue, compared to 5.1% in the year-ago quarter, as we continue to benefit from a lower relative cost structure due to the higher revenue and positive operating leverage.
Balance Sheet Update
At quarter end, cash and cash equivalents totaled $32.6 million, real estate inventories totaled $1.9 billion, total assets were $2.1 billion and total equity was $813.9 million. Total debt to book capitalization was 57.9%, and net debt to total capital (net of cash) was 57.2% at June 30, 2017, compared to 61.6% and 60.8% at June 30, 2016, and 58.6% and 57.6% at December 31, 2016, respectively.
Conference Call
The Company will host a conference call to discuss these results today, Monday, August 7, 2017 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 #59688752, 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 14, 2017 by dialing (855) 859-2056 or (404) 537-3406, conference ID #59688752. 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 and Oregon. Its core markets include Orange County, Los Angeles, the Inland Empire, the San Francisco Bay Area, Phoenix, Las Vegas, Denver, Portland and Seattle. The Company has a distinguished legacy of more than 60 years of homebuilding operations, over which time it has sold in excess of 100,000 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 new home deliveries, revenue and pre-tax income, gross margin performance, backlog conversion rates, operating and financial results for the third quarter of 2017 and full year 2017, 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, leverage ratios and reduction strategies and land acquisition spending. 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: 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 outside broker costs; increased costs of homebuilding materials; changes in governmental laws and regulations and compliance, increased costs, fees and delays associated therewith; potential changes to the tax code; 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; terrorism or other hostilities involving the United States; 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, 2017 2016 Operating revenue Home sales $ 422,633 $ 325,059 Construction services 59 594 422,692 325,653 Operating costs Cost of sales — homes (353,057 ) (268,638 ) Construction services (6 ) (548 ) Sales and marketing (21,284 ) (18,112 ) General and administrative (19,550 ) (16,685 ) Other (560 ) (487 ) (394,457 ) (304,470 ) Operating income 28,235 21,183 Equity in income of unconsolidated joint ventures 1,213 1,194 Other income, net 8 228 Income before provision for income taxes 29,456 22,605 Provision for income taxes (9,205 ) (7,519 ) Net income 20,251 15,086 Less: Net income attributable to noncontrolling interests (1,297 ) (525 ) Net income available to common stockholders $ 18,954 $ 14,561 Income per common share: Basic $ 0.51 $ 0.40 Diluted $ 0.49 $ 0.38 Weighted average common shares outstanding: Basic 37,051,967 36,786,268 Diluted 38,298,624 38,356,722WILLIAM 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, 2017 2016 Operating revenue Home sales $ 681,487 $ 586,354 Construction services 59 3,724 681,546 590,078 Operating costs Cost of sales — homes (571,512 ) (483,809 )Construction services
(6 ) (3,372 ) Sales and marketing (35,989 ) (33,105 )General and administrative
(38,496 ) (34,519 ) Other (1,000 ) (810 ) (647,003 ) (555,615 ) Operating income 34,543 34,463 Equity in income of unconsolidated joint ventures 1,462 2,375 Other income, net 353 753 Income before extinguishment of debt 36,358 37,591 Loss on extinguishment of debt (21,828 ) - Income before provision for income taxes 14,530 37,591 Provision for income taxes (3,575 ) (12,564 ) Net income 10,955 25,027 Less: Net income attributable to noncontrolling interests (2,001 ) (1,452 ) Net income available to common stockholders $ 8,954 $ 23,575 Income per common share: Basic $ 0.24 $ 0.64 Diluted $ 0.23 $ 0.62 Weighted average common shares outstanding: Basic 36,980,540 36,719,057 Diluted 38,231,201 38,302,047WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value per share)
June 30, December 31, 2017 2016 (unaudited) ASSETS Cash and cash equivalents $ 32,573 $ 42,612 Receivables 8,332 9,538 Escrow proceeds receivable 39 85 Real estate inventories 1,863,092 1,771,998 Investment in unconsolidated joint ventures 8,206 7,282 Goodwill 66,902 66,902 Intangibles, net of accumulated amortization of $4,640 as of June 30, 2017 and December 31, 2016 6,700 6,700 Deferred income taxes 75,280 75,751 Lease right-of-use assets 15,632 12,605 Other assets, net 18,865 17,283 Total assets $ 2,095,621 $ 2,010,756 LIABILITIES AND EQUITY Accounts payable $ 78,792 $ 74,282 Accrued expenses 81,657 92,395 Revolving credit facility 65,000 29,000 Joint venture notes payable 98,411 102,077 Land notes payable 20,055 24,691 Subordinated amortizing note 3,488 7,225 53/4% Senior Notes due April 15, 2019 149,089 148,826 8 1/2% Senior Notes due November 15, 2020 - 422,817 7% Senior Notes due August 15, 2022 346,385 346,014 57/8% Senior Notes due January 31, 2025 438,893 - 1,281,770 1,247,327 Commitments and contingencies Equity: William Lyon Homes stockholders’ equityPreferred stock, par value $0.01 per share; 10,000,000 shares authorized and no shares issued and outstanding at June 30, 2017 and December 31, 2016
- - Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 29,290,550 and 28,909,781 shares issued, 28,132,743 and 27,907,724 shares outstanding at June 30, 2017 and December 31, 2016, respectively 290 290 Common stock, Class B, par value $0.01 per share; 30,000,000 shares authorized; 3,813,884 shares issued and outstanding at June 30, 2017 and December 31, 2016 38 38 Additional paid-in capital 420,934 419,099 Retained earnings 286,613 277,659 Total William Lyon Homes stockholders' equity 707,875 697,086 Noncontrolling interests 105,976 66,343 Total equity 813,851 763,429 Total liabilities and equity $ 2,095,621 $ 2,010,756WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
Three Months Ended June 30, 2017 2016 Consolidated Consolidated Percentage % Total Total Change Selected Financial Information (1) (dollars in thousands) Homes closed 831 663 25 % Home sales revenue $ 422,633 $ 325,059 30 % Cost of sales (excluding interest and purchase accounting adjustments) (329,058 ) (246,960 ) 33 % Adjusted homebuilding gross margin (2) $ 93,575 $ 78,099 20 % Adjusted homebuilding gross margin percentage (2) 22.1 % 24.0 % (8 %) Interest in cost of sales (20,689 ) (14,020 ) 48 % Purchase accounting adjustments (3,310 ) (7,658 ) (57 %) Gross margin $ 69,576 $ 56,421 23 % Gross margin percentage 16.5 % 17.4 % (5 %) Number of homes closed California 216 147 47 % Arizona 181 134 35 % Nevada 53 73 (27 %) Colorado 58 47 23 % Washington 106 83 28 % Oregon 217 179 21 % Total 831 663 25 % Average sales price of homes closed California $ 691,200 $ 688,400 0 % Arizona 289,300 265,600 9 % Nevada 564,800 666,500 (15 %) Colorado 534,600 514,400 4 % Washington 662,800 450,200 47 % Oregon 413,700 436,100 (5 %) Total $ 508,600 $ 490,300 4 % Number of net new home orders California 280 238 18 % Arizona 149 142 5 % Nevada 93 97 (4 %) Colorado 86 72 19 % Washington 164 88 86 % Oregon 245 234 5 % Total 1,017 871 17 % Average number of sales locations during period California 23 18 28 % Arizona 8 8 0 % Nevada 14 12 17 % Colorado 15 11 36 % Washington 10 6 67 % Oregon 18 17 6 %Total
88 72 22 % (1) For the periods presented, the Company is reporting 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, 2017 2016 Consolidated Consolidated Percentage % Total Total Change Selected Financial Information (1) (dollars in thousands) Homes closed 1,330 1,206 10 % Home sales revenue $ 681,487 $ 586,354 16 % Cost of sales (excluding interest and purchase accounting adjustments) (533,404 ) (443,791 ) 20 % Adjusted homebuilding gross margin (2) $ 148,083 $ 142,563 4 % Adjusted homebuilding gross margin percentage (2) 21.7 % 24.3 % (11 %) Interest in cost of sales (32,297 ) (25,767 ) 25 % Purchase accounting adjustments (5,811 ) (14,251 ) (59 %) Gross margin $ 109,975 $ 102,545 7 % Gross margin percentage 16.1 % 17.5 % (8 %) Number of homes closed California 337 289 17 % Arizona 275 216 27 % Nevada 101 135 (25 %) Colorado 96 100 (4 %) Washington 176 151 17 % Oregon 345 315 10 % Total 1,330 1,206 10 % Average sales price of homes closed California $ 686,200 $ 671,100 2 % Arizona 287,600 262,200 10 % Nevada 598,800 588,100 2 % Colorado 545,200 505,700 8 % Washington 646,200 465,300 39 % Oregon 419,100 430,200 (3 %) Total $ 512,400 $ 486,200 5 % Number of net new home orders California 545 400 36 % Arizona 277 250 11 % Nevada 170 163 4 % Colorado 147 150 (2 %) Washington 316 172 84 % Oregon 427 425 0 % Total 1,882 1,560 21 % Average number of sales locations during period California 24 18 33 % Arizona 8 8 0 % Nevada 12 12 0 % Colorado 13 10 30 % Washington 9 6 50 % Oregon 19 16 19 % Total 85 70 21 % (1) For the periods presented, the Company is reporting 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, 2017 2016 Consolidated Consolidated Percentage % Total Total Change Backlog of homes sold but not closed at end of period California 432 305 42 % Arizona 206 243 (15 %) Nevada 128 143 (10 %) Colorado 126 128 (2 %) Washington 192 65 195 % Oregon 201 209 (4 %) Total 1,285 1,093 18 % Dollar amount of homes sold but not closed at end of period (in thousands) California $ 345,604 $ 223,080 55 % Arizona 63,435 66,816 (5 %) Nevada 84,348 82,993 2 % Colorado 59,266 66,122 (10 %) Washington 115,018 42,851 168 % Oregon 87,652 93,617 (6 %) Total $ 755,323 $ 575,479 31 % Lots owned and controlled at end of period Lots owned California 1,653 1,652 0 % Arizona 4,660 4,985 (7 %) Nevada 2,941 3,251 (10 %) Colorado 1,415 698 103 % Washington 1,303 1,449 (10 %) Oregon 1,449 1,133 28 % Total 13,421 13,168 2 % Lots controlled California 1,141 1,288 (11 %) Arizona - - 0 % Nevada 420 55 664 % Colorado 192 1,148 (83 %) Washington 973 1,093 (11 %) Oregon 2,386 2,083 15 % Total 5,112 5,667 (10 %) Total lots owned and controlled California 2,794 2,940 (5 %) Arizona 4,660 4,985 (7 %) Nevada 3,361 3,306 2 % Colorado 1,607 1,846 (13 %) Washington 2,276 2,542 (10 %) Oregon 3,835 3,216 19 % Total 18,533 18,835 (2 %)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, 2017 2016 2017 2016 Net income available to common stockholders $ 18,954 $ 14,561 $ 8,954 $ 23,575 Net income, adjusted for loss on extinguishment of debt, net of tax benefit (3) $ 18,954 $ 14,561 $ 23,030 $ 23,575 Net cash used in operating activities $ (25,431 ) $ (15,369 ) $ (66,812 ) $ (74,905 ) Interest incurred $ 18,822 $ 20,558 $ 38,246 $ 40,819 Adjusted EBITDA (1) $ 53,269 $ 48,458 $ 75,811 $ 81,990 Adjusted EBITDA Margin (2) 12.6 % 14.9 % 11.1 % 13.9 % Ratio of adjusted EBITDA to interest incurred 2.8 2.4 2.0 2.0 Balance Sheet Data June 30, December 31, 2017 2016 Cash and cash equivalents $ 32,573 $ 42,612 Total William Lyon Homes stockholders’ equity 707,875 697,086 Noncontrolling interest 105,976 66,343 Total debt 1,121,321 1,080,650 Total capital $ 1,935,172 $ 1,844,079 Ratio of debt to total capital 57.9 % 58.6 % Ratio of net debt to total capital (net of cash) 57.2 % 57.6 % (1) 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, and (ix) 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, 2017 2016 2017 2016 Net income available to common stockholders $ 18,954 $ 14,561 $ 8,954 $ 23,575 Provision for income taxes 9,205 7,519 3,575 12,564 Interest expense Interest incurred 18,822 20,558 38,246 40,819 Interest capitalized (18,822 ) (20,558 ) (38,246 ) (40,819 )Amortization of capitalized interest included in cost of sales
20,689 15,014 32,297 26,761 Stock based compensation 1,539 1,069 3,215 2,561 Depreciation and amortization 442 507 891 1,005 Non-cash purchase accounting adjustments 3,310 10,689 5,811 17,282 Cash distributions of income from unconsolidated joint ventures 343 293 702 617 Equity in income of unconsolidated joint ventures (1,213 ) (1,194 ) (1,462 ) (2,375 ) Loss on extinguishment of debt - - 21,828 - Adjusted EBITDA $ 53,269 $ 48,458 $ 75,811 $ 81,990 (2) Calculated as Adjusted EBITDA as a percentage of operating revenue. (3) Adjusted net income means net income available to common stockholders plus the 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 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 Six Months Months Ended Ended June 30, June 30, 2017 2017 Net income available to common stockholders $ 18,954 $ 8,954 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 loss on extinguishment of debt, net of tax benefit
$ 18,954 $ 23,030 Diluted weighted average common shares outstanding 38,298,624 38,231,201 Adjusted net income excluding noncontrolling interest per diluted share $ 0.49 $ 0.60
View source version on businesswire.com: http://www.businesswire.com/news/home/20170807005334/en/
Investor/Media Contacts:Financial Profiles, Inc.Larry Clark, (310) 622-8223WLH@finprofiles.com
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