William Lyon Homes (NYSE: WLH), a leading homebuilder in the
Western U.S., announced results for its 2014 third quarter ended
September 30, 2014. On August 12, 2014, the Company completed
its acquisition of the residential homebuilding business of Polygon
Northwest Homes (“Polygon Northwest”), the largest private
homebuilder in the Pacific Northwest Region. The Company’s
consolidated results for the third quarter ended September 30, 2014
include the financial results of Polygon Northwest from the date of
acquisition, as Washington and Oregon divisions.
2014 Third Quarter Highlights (Comparison to 2013
Third Quarter)
- Net income available to common
stockholders of $5.6 million, or $0.17 per diluted share
- Net income available to common
stockholders of $10.2 million, or $0.31 per diluted share,
excluding the net effect of one-time transaction expenses
- Consolidated revenue of $206.9 million,
up 37%
- Home sales revenue of $196.1 million,
up 39%
- Average sales price (ASP) of new homes
delivered of $462,500, up 16%
- Homebuilding gross margin of $38.5
million
- Homebuilding gross margin percentage of
19.6%
- Adjusted homebuilding gross margin
percentage of 24.6%
- Dollar value of orders of $199.2
million, up 40%
- Net new home orders of 422, up 35%
- Average sales locations of 49, up
88%
- Dollar value of homes in backlog of
$382.9 million, up 84%
- New home deliveries of 424 homes, up
19%
- SG&A percentage of 12.9%, excluding
one-time transaction expenses
- Adjusted EBITDA of $26.7 million
Select pro forma results including Polygon Northwest for the
full Third Quarter ended September 30, 2014, assuming the
acquisition had closed as of July 1, 2014:
- Homebuilding revenue of $230.0 million,
up 63%
- New Home deliveries of 518, up 46%
- Net New Home orders of 495, up 59%
- Dollar Value of new home orders of
$225.9 million, up 59%
“This was an important quarter for the Company. Not only did we
continue to improve our year-over-year performance across a number
of operating and financial metrics, we also completed our
acquisition of Polygon Northwest Homes, the largest private
homebuilder in the Pacific Northwest,” said William H. Lyon, Chief
Executive Officer. “We realized significant increases in home sales
revenue, the dollar value of orders and backlog, and the number of
active selling communities. Our net income was $5.6 million, or
$0.17 per diluted share for the quarter ended September 30, 2014,
or $10.2 million and $0.31 per diluted share as adjusted to exclude
one-time transaction expenses. We are excited to welcome the
Polygon team into the William Lyon Homes family as we expand our
geographic footprint and increase the scale of our existing
operations within the Western region of the U.S. by adding
Portland, Oregon and Seattle, Washington to our operating platform.
While the sales environment in some of our markets has been less
robust than desired, we believe that our operating strategy of
focusing on the best residential markets in the western United
States will allow us to continue to drive outsized growth and
shareholder value.”
Matthew R. Zaist, President and Chief Operating Officer, stated,
“We are extremely proud of the continued progress of our operating
teams as evident in our third quarter results. On a fully combined
pro forma basis for the quarter, homebuilding revenues topped $230
million, new home deliveries of 518 were up 46% and new home orders
of 495 were up almost 60%. We believe that the scale of the
combined company will allow us to meaningfully drive top line
growth, while the cost synergies of the transaction will allow us
to continue to drive efficiencies on the SG&A side of our
business.” Mr. Zaist continued, “The fourth quarter is off to a
strong start, as we have seen strong growth in October, with
year-over-year increases in new home orders of 103%, new home
deliveries of 47%, and homebuilding revenue of 51% as compared to
October 2013. In the fourth quarter of 2014, we anticipate 650 to
700 new home deliveries and homebuilding revenue between $300
million and $330 million.”
Operating Results
Home sales revenue for the third quarter of 2014 was $196.1
million, as compared to $141.4 million in the year-ago period, an
increase of 39%. Our performance was driven by a 19% increase in
the number of deliveries to 424 homes and a 16% increase in the
average sales price of homes delivered to $462,500 in the quarter,
compared to 356 homes delivered and a $397,100 average sales price,
respectively, in the year-ago period. Average sales price of homes
delivered increased in most of our divisions, driven by price
appreciation in certain communities and a 105% increase in
deliveries in Southern California with ASPs of $574,500. Included
in this quarter’s results, since August 12, 2014, were revenues
from the newly acquired Washington and Oregon divisions of $38.9
million combined, consisting of 104 homes delivered at an average
sales price of $374,100.
The dollar value of our orders for the third quarter of 2014 was
$199.2 million, an increase of 40%, from $142.4 million in the
year-ago period. Net new home orders for the quarter were 422, up
35% from 312 in the third quarter of 2013. The overall increase in
net new home orders was driven by an increase in community count to
49 average sales locations, from 26 in the year-ago period, offset
by a decrease in absorption from 4.0 sales per project per month in
the year-ago period to 2.9 sales per month in the current period.
Absorption was strong in the Pacific Northwest at 1.3 sales per
project per week, as well as in Southern California at 0.9 sales
per project per week. We ended the quarter with 55 active selling
communities, a 90% increase as compared to 29 active selling
communities at the end of the year-ago period.
Including the newly acquired Washington and Oregon divisions,
the dollar value of homes in backlog was $382.9 million as of
September 30, 2014, an increase of 84% compared to $208.1
million as of September 30, 2013. The increase was driven by a
56% increase in units in backlog to 728 from 467 in the year-ago
period and an increase in the average sales price of homes in
backlog to $525,900, up 18% from $445,600 in the year-ago period,
and up 14% from the averages sales price of homes closed during the
third quarter of 2014 of $462,500.
Homebuilding gross margins for the third quarter of 2014 were
19.6%, as compared to gross margins of 23.6% in the year-ago
period. The decrease in gross margin is attributable to a lower
number of homes closed during the quarter that benefit from fresh
start accounting, primarily in Southern California and Nevada. In
addition, with the adoption of purchase accounting related to the
Polygon acquisition, GAAP margins were impacted by 200 basis
points. Adjusted homebuilding gross margin percentage was 24.6%
during the third quarter of 2014, as compared to 30.2% in the
year-ago period.
Breaking down the components of SG&A, sales and marketing
expense was 6.4% of homebuilding revenue during the third quarter
of 2014, compared to 4.7% in the year-ago quarter, driven by higher
advertising and model operations costs associated with the startup
of new models and an increase in total selling communities.
Excluding one-time transaction expenses, general administrative
expenses decreased to 6.5% of homebuilding revenue, compared to
7.2% in the year-ago quarter, as we continued to leverage higher
revenues with a lower relative cost structure.
Balance Sheet Update
At quarter end, cash, cash equivalents and restricted cash
totaled $35.6 million, escrow proceeds receivable totaled $14.6
million, real estate inventories totaled $1,378.4 million and total
debt was $1,041.7 million. Net debt to net book capitalization was
68.1%, and total debt to total book capitalization was 68.9% at
September 30, 2014.
Conference Call
The Company will host a conference call to discuss these results
today, Friday, November 7, 2014 at 9:00 a.m. Pacific Time. The call
will be available via both the telephone at (877) 280-4957 or (857)
244-7314, passcode #67683693, 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 November 21, 2014 by
dialing (888) 286-8010 or (617) 801-6888, passcode #12442501. 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, San Diego, the San
Francisco Bay Area, Phoenix, Las Vegas, Denver, Seattle and
Portland. The Company has a distinguished legacy of more than 58
years of homebuilding operations, over which time it has sold in
excess of 93,000 homes. The Company markets and sells its homes
under the William Lyon Homes brand in all of its markets except for
Colorado, where the Company operates under the Village Homes brand,
and Washington and Oregon, where the Company operates under the
Polygon Northwest brand.
Certain statements contained in this release and the
accompanying comments during our conference call that are not
historical information contain forward-looking statements,
including, but not limited to, statements related to: anticipated
fourth quarter home closing revenue and deliveries, market and
industry trends, the anticipated financial and operating results
from execution of the Company’s growth strategy and focus on
markets in the Western United States, and the anticipated benefits
to be realized from the consummation of the Polygon Northwest
acquisition. 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: our ability to realize the anticipated benefits from
the acquisition of Polygon Northwest; our ability to integrate
successfully the Polygon Northwest operation with our existing
operations; any adverse effect on our business operations, or those
of Polygon Northwest, following consummation of the acquisition;
worsening in general economic conditions either nationally or in
regions in which we operate; conditions in our newly entered
markets and newly acquired operations; worsening in markets for
residential housing; decline in real estate values resulting in
impairment of our real estate assets; volatility in the banking
industry and credit markets; uncertainties in the capital and
securities markets; terrorism or other hostilities involving the
United States; 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; 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; changes in prices of
homebuilding materials; the availability of labor and homebuilding
materials; adverse weather conditions; 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; changes in governmental laws and
regulations; our financial leverage and level of indebtedness and
any inability to comply with financial and other covenants under
our debt instruments; whether we are able to refinance the
outstanding balances of our debt obligations at their maturity;
anticipated tax refunds; limitations on our ability to utilize our
tax attributes; limitations on our ability to reverse any remaining
portion of our valuation allowance with respect to our deferred tax
assets; the timing of receipt of regulatory approvals and the
opening of projects; 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; 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 September 30, September 30,
2014 2013 Operating revenue Home sales $ 196,090 $
141,352 Lots, land and other sales 215 - Construction services
10,593 9,478 206,898
150,830 Operating costs Cost of sales — homes
(157,565 ) (107,957 ) Cost of sales — lots, land and other (209 ) -
Construction services (8,262 ) (8,135 ) Sales and marketing (12,476
) (6,679 ) General and administrative (12,726 ) (10,200 )
Transaction expenses (5,768 ) - Amortization of intangible assets
(174 ) (191 ) Other (454 ) (695 ) (197,634 )
(133,857 ) Operating income 9,264 16,973 Interest expense,
net of amounts capitalized - (51 ) Other income, net 357
114 Income before provision for income taxes
9,621 17,036 Provision for income taxes (1,999 )
(6,356 ) Net income 7,622 10,680
Less: Net income attributable to
noncontrolling interest
(1,984 ) (3,118 ) Net income available to common
stockholders $ 5,638 $ 7,562 Income per common
share: Basic $ 0.18 $ 0.24 Diluted $ 0.17 $ 0.24 Weighted average
common shares outstanding: Basic 31,232,655 30,975,160 Diluted
32,760,746 31,895,814
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands except number of shares
and per share data)
(unaudited)
Nine
Nine Months Months Ended
Ended September 30, September 30, 2014
2013 Operating revenue Home sales $ 504,546 $ 338,434 Lots,
land and other sales 1,926 3,248 Construction services
30,186 21,439 536,658
363,121 Operating costs Cost of sales — homes (392,083 )
(267,932 ) Cost of sales — lots, land and other (1,529 ) (2,838 )
Construction services (24,735 ) (17,472 ) Sales and marketing
(27,958 ) (17,482 ) General and administrative (35,881 ) (28,016 )
Transaction expenses (5,768 ) - Amortization of intangible assets
(1,294 ) (1,173 ) Other (1,745 ) (1,746 )
(490,993 ) (336,659 ) Operating income 45,665 26,462
Interest expense, net of amounts capitalized - (2,602 ) Other
income, net 830 257 Income before
reorganization items 46,495 24,117 Reorganization items, net
- (464 ) Income before provision for income taxes
46,495 23,653 Provision for income taxes (12,779 )
(6,366 ) Net income 33,716 17,287
Less: Net income attributable to
noncontrolling interest
(7,096 ) (4,879 ) Net income attributable to William
Lyon Homes 26,620 12,408 Preferred stock dividends -
(1,528 ) Net income available to common stockholders $
26,620 $ 10,880 Income per common share: Basic
$ 0.85 $ 0.48 Diluted $ 0.81 $ 0.46 Weighted average common shares
outstanding: Basic 31,184,101 22,569,810 Diluted 32,725,164
23,446,954
WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares
and par value per share)
(unaudited)
September 30, December 31, 2014
2013 (unaudited) ASSETS Cash and cash
equivalents $ 35,119 $ 171,672 Restricted cash 504 854 Receivables
19,840 16,459 Escrow proceeds receivable 14,606 4,380 Real estate
inventories Owned 1,378,432 671,790 Not owned - 12,960 Deferred
loan costs, net 25,975 9,575 Goodwill 63,128 14,209 Intangibles,
net of accumulated amortization of $8,900 as of September 30, 2014
and $7,611 as of December 31, 2013 7,377 2,766 Deferred income
taxes, net valuation allowance of $3,211 as of September 30, 2014
and $3,959 as of December 31, 2013. 91,055 95,580 Other assets, net
17,613 10,166 Total assets $ 1,653,649 $ 1,010,411
LIABILITIES AND EQUITY Accounts payable $ 47,898 $
17,099 Accrued expenses 93,642 60,203 Liabilities from inventories
not owned - 12,960 Notes payable 41,264 38,060 Senior unsecured
facility 120,000 -
5 3/4% Senior Notes due April 15, 2019
150,000 -
8 1/2% Senior Notes due November 15,
2020
430,443 431,295 7% Senior Notes due August 15, 2022 300,000
- 1,183,247 559,617 Commitments and
contingencies Equity: William Lyon Homes stockholders’ equity
Preferred Stock, par value $0.01 per share; 10,000,000 and no
shares authorized; no shares issued and outstanding at September
30, 2014 and December 31, 2013, respectively - - Common stock,
Class A, par value $0.01 per share; 150,000,000 shares authorized;
28,078,301 and 27,622,283 shares issued, 27,430,927 and 27,216,813
outstanding at September 30, 2014 and December 31, 2013,
respectively 281 276 Common stock, Class B, par value $0.01 per
share; 30,000,000 shares authorized; 3,813,884 shares issued and
outstanding at September 30, 2014 and December 31, 2013 38 38
Additional paid-in capital 313,356 311,863 Retained earnings
142,622 116,002 Total William Lyon Homes stockholders'
equity 456,297 428,179 Noncontrolling interest 14,105
22,615 Total equity 470,402 450,794 Total liabilities
and equity $ 1,653,649 $ 1,010,411
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING
INFORMATION
(unaudited)
Three Months Ended September 30, 2014
2013
Consolidated Consolidated Percentage %
Total Total Change Selected Financial
Information (dollars in thousands) Homes closed
424 356 19 % Home sales revenue $ 196,090 $
141,352 39 %
Cost of sales (excluding interest and
purchase accounting adjustments)
(147,793 ) (98,653 ) 50 % Adjusted homebuilding gross
margin (1) $ 48,297 $ 42,699 13 % Adjusted
homebuilding gross margin percentage (1) 24.6 % 30.2
% (18 %) Interest in cost of sales (5,970 ) (7,569 ) (21 %)
Purchase accounting adjustments (3,802 ) (1,735 ) 119
% Gross margin $ 38,525 $ 33,395 15 % Gross margin
percentage 19.6 % 23.6 % (17 %)
Number of
homes closed Southern California 133 65 105 % Northern
California 44 46 (4 %) Arizona 62 122 (49 %) Nevada 63 79 (20 %)
Colorado 18 44 (59 %) Washington 43 - NM Oregon 61
- NM Total 424 356
19 %
Average sales price of homes closed Southern
California $ 574,500 $ 764,300 (25 %) Northern California 420,000
398,100 6 % Arizona 270,200 256,200 5 % Nevada 580,000 302,800 92 %
Colorado 500,300 413,300 21 % Washington 465,000 - NM Oregon
310,000 - NM Total $ 462,500 $
397,100 16 %
Number of net new home orders
Southern California 122 138 (12 %) Northern California 60 28 114 %
Arizona 45 72 (38 %) Nevada 49 62 (21 %) Colorado 45 12 275 %
Washington 42 - NM Oregon 59 - NM
Total 422 312 35 %
Average number of sales locations during period Southern
California 11 9 22 % Northern California 7 2 250 % Arizona 5 6 (17
%) Nevada 9 6 50 % Colorado 11 3 267 % Washington 3 - NM Oregon
3 - NM Total 49
26 88 % (1) Adjusted
homebuilding gross margin is a financial measure that is not
prepared in accordance with U.S. generally accepted accounting
principles ("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 has on homebuilding gross margin and allows investors to
make better comparisons with our competitors. For comparative
purposes, purchase accounting is the net adjustment in basis
related to the acquisition of our Colorado, Washington and Oregon
operating divisions.
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING
INFORMATION
(unaudited)
Nine Months Ended September 30, 2014
2013
Consolidated Consolidated Percentage %
Total Total Change Selected Financial
Information (dollars in thousands) Homes closed
1,036 969 7 % Home sales revenue $ 504,546 $
338,434 49 %
Cost of sales (excluding interest and
purchase accounting adjustments)
(371,499 ) (241,345 ) 54 % Adjusted homebuilding
gross margin (1) $ 133,047 $ 97,089 37 % Adjusted
homebuilding gross margin percentage (1) 26.4 % 28.7
% (8 %) Interest in cost of sales (16,496 ) (20,729 ) (20 %)
Purchase accounting adjustments (4,088 ) (5,858 ) (30
%) Gross margin $ 112,463 $ 70,502 60 % Gross margin
percentage 22.3 % 20.8 % 7 %
Number of
homes closed Southern California 438 164 167 % Northern
California 115 99 16 % Arizona 167 346 (52 %) Nevada 163 217 (25 %)
Colorado 49 143 (66 %) Washington 43 - NM Oregon 61
- NM Total 1,036 969
7 %
Average sales price Southern California $
631,700 $ 633,800 (0 %) Northern California 423,300 363,200 17 %
Arizona 268,000 240,400 11 % Nevada 442,200 260,000 70 % Colorado
478,400 412,000 16 % Washington 465,000 - NM Oregon 310,000
- NM Total $ 487,000 $ 349,300
39 %
Number of net new home orders Southern
California 475 310 53 % Northern California 162 105 54 % Arizona
160 301 (47 %) Nevada 200 222 (10 %) Colorado 112 92 22 %
Washington 42 - NM Oregon 59 - NM
Total 1,210 1,030 17 %
Average number of sales locations during period Southern
California 11 6 83 % Northern California 5 2 150 % Arizona 6 6 0 %
Nevada 9 5 80 % Colorado 7 4 75 % Washington 1 - NM Oregon 1
- NM Total 40 23
74 % (1) Adjusted homebuilding gross
margin is a financial measure that is not prepared in accordance
with U.S. generally accepted accounting principles ("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 has on homebuilding gross
margin and allows investors to make better comparisons with our
competitors. For comparative purposes, purchase accounting is the
net adjustment in basis related to the acquisition of our Colorado,
Washington and Oregon operating divisions.
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING
INFORMATION
(unaudited)
As of September 30, 2014
2013
Consolidated Consolidated Percentage %
Total Total Change Backlog of homes sold
but not closed at end of period Southern California 206 178 16
% Northern California 84 34 147 % Arizona 56 127 (56 %) Nevada 109
97 12 % Colorado 90 31 190 % Washington 81 - NM Oregon 102
- NM Total 728 467 56 %
Dollar amount of homes sold but not closed at end of period (in
thousands) Southern California $ 135,020 $ 113,769 19 %
Northern California 37,554 14,007 168 % Arizona 14,817 33,776 (56
%) Nevada 88,825 32,828 171 % Colorado 42,350 13,701 209 %
Washington 32,301 - NM Oregon 32,000 - NM
Total $ 382,867 $ 208,081 84 %
Lots owned and controlled
at end of period Lots owned Southern California 1,124
1,186 (5 %) Northern California 1,060 869 22 % Arizona 5,471 5,653
(3 %) Nevada 2,909 2,864 2 % Colorado 1,025 546 88 % Washington
1,538 - NM Oregon 1,340 - NM
Total
14,467 11,118 30 %
Lots controlled
Southern California 1,038 577 80 % Northern California 544 684 (20
%) Arizona - 220 (100 %) Nevada 215 215 0 % Colorado 186 342 (46 %)
Washington 786 - NM Oregon 839 - NM Total
3,608 2,038 77 %
Total lots owned and
controlled Southern California 2,162 1,763 23 % Northern
California 1,604 1,553 3 % Arizona 5,471 5,873 (7 %) Nevada 3,124
3,079 1 % Colorado 1,211 888 36 % Washington 2,324 - NM Oregon
2,179 - NM Total 18,075 13,156
37 %
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL
INFORMATION
(unaudited)
SELECTED
FINANCIAL DATA (dollars in thousands):
Three
Months Ended
September 30,
2014
Three
Months Ended
September 30,
2013
Nine
Months Ended
September 30,
2014
Nine
Months Ended
September 30,
2013
Net income attributable to William Lyon Homes $ 5,638 $
7,562 $ 26,620 $ 12,408
Net cash provided by/(used in) operating
activities
$ 21,352 $ (98,224 ) $ (181,189 ) $ (164,919 ) Interest incurred $
17,504 $ 7,511 $ 38,818 $ 22,511 Adjusted EBITDA (1) $ 26,652 $
24,710 $ 73,763 $ 52,358 Adjusted EBITDA Margin (2) 12.9 % 16.4 %
13.7 % 14.4 % Ratio of adjusted EBITDA to interest incurred 1.52
3.29 1.90 2.33
Balance Sheet Data
September 30,
2014
December 31,
2013
Cash, cash equivalents and restricted cash $ 35,623 $ 172,526
Total William Lyon Homes stockholders’ equity 456,297
428,179 Noncontrolling interest 14,105 22,615 Total debt 1,041,707
469,355 Total book capitalization $ 1,512,109 $
920,149 Ratio of debt to total book capitalization 68.9 %
51.0 % Ratio of debt to total book capitalization (net of cash)
68.1 % 39.7 % (1)
Adjusted EBITDA means net income (loss)
attributable to William Lyon Homes 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) one-time cash transaction
expenses related to the acquisition of Polygon Northwest Homes, and
(vii) non-cash purchase accounting adjustments. 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 (loss) 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
attributable to William Lyon Homes to adjusted EBITDA is provided
as follows:
(2) Calculated as Adjusted EBITDA as a percentage of
operating revenue.
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL
INFORMATION
(unaudited)
Three Three
Nine Nine Months
Months Months Months Ended Ended
Ended Ended September 30, September 30,
September 30, September 30, 2014 2013
2014 2013 Net income attributable to William
Lyon Homes $ 5,638 $ 7,562 $ 26,620 $ 12,408 Provision for income
taxes 1,999 6,356 12,779 6,366 Interest expense Interest incurred
17,504 7,511 38,818 22,511 Interest capitalized (17,504 ) (7,460 )
(38,818 ) (19,909 )
Amortization of capitalized interest
included in cost of sales
5,970 7,569 16,496 20,729 Stock based compensation 918 880 2,772
2,207 Loss on sale of fixed asset - - - 4 Depreciation and
amortization 2,557 557 5,240 2,184 Transaction expenses 5,768 -
5,768 - Non-cash purchase accounting adjustments 3,802
1,735 4,088 5,858
Adjusted EBITDA $ 26,652 $ 24,710 $ 73,763 $
52,358
The following table reconciles earnings per share as reported on
a GAAP basis to non-GAAP earnings per share. We believe that this
non-GAAP measure provides useful information to investors regarding
the ongoing performance of the Company excluding expenses that do
no relate to our homebuilding operations:
Three Months Ended
September 30, 2014
Nine Months Ended
September 30, 2014
Net Income Diluted EPS Net
Income Diluted EPS As
reported $ 5,638 $ 0.17 $ 26,620 $ 0.81 Transaction expenses 5,768
0.18 5,768 0.18 Tax impact of transaction expenses (1,198 )
(0.04 ) (1,585 ) (0.05 ) Non-GAAP Measure $
10,208 $ 0.31 $ 30,803 $ 0.94
The following table reconciles our select operating results as
presented to pro forma results including Polygon Northwest Homes
for the full third quarter ended September 30, 2014, assuming the
acquisition had closed as of July 1, 2014:
As reported
Activity from
July 1, 2014
through
acquisition
Pro Forma Homebuilding revenue
$
196,090
$ 33,924
$
230,014
New home deliveries 424 94 518 Net new home orders 422 73 495
Dollar Value of home orders $ 199,243 $ 26,625 $ 225,868
Investor/Media Contacts:Financial Profiles, Inc.Larry
Clark, (310) 622-8223WLH@finprofiles.comorLisa Mueller, (310)
622-8231WLH@finprofiles.com
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