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William Lyon Homes Reports Third Quarter 2017 Results

110% Increase in Net Income Available to Common Stockholders; 77% Increase in Pre-Tax Income; 260 Basis Point Improvement in Operating Margin

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- William Lyon Homes (NYSE: WLH), a leading homebuilder in the Western U.S., announced results for its third quarter ended September 30, 2017.

2017 Third Quarter Highlights (Comparison to 2016 Third Quarter)

  • Net income available to common stockholders of $27.4 million, up 110%, or $0.71 per diluted share, up 109%
  • Home sales revenue of $490.3 million, up 43%
  • New home deliveries of 851 homes, up 26%
  • Net new home orders of 774, up 19%
  • Dollar value of orders of $425.5 million, up 22%
  • Average sales locations of 86, up 10%
  • Average sales price (ASP) of new homes delivered of $576,200, up 13%
  • Dollar value of homes in backlog of $699.3 million, up 18%
  • Units in backlog of 1,208, up 13%
  • Homebuilding gross margin percentage of 18.1%
  • Homebuilding gross margin of $88.6 million, up 56%
  • Adjusted homebuilding gross margin percentage of 23.6%, up 140 basis points
  • SG&A percentage of 9.2%, compared to 10.4%
  • Operating income of $43.2 million, up 102%
  • Pre-Tax Income of $44.0 million, up 77%
  • Adjusted EBITDA of $72.1 million, up 68%

“We are extremely pleased with our results for the third quarter, with significant improvements in homebuilding revenues to $490.3 million, up 43%, pre-tax income of $44.0 million, up 77%, net income of $27.4 million, up 110%, and earnings per share on a diluted basis of $0.71, up 109%,” said Matthew R. Zaist, President and Chief Executive Officer. “As we expected, the third quarter represented an inflection point for our GAAP homebuilding gross margins, which were 18.1%, an increase of 160 basis points above the second quarter of 2017 and 150 basis points year-over-year. Our third quarter results included operating margin improvement of 260 basis points year-over-year, which is a testament to improving our operating discipline around land acquisition and cost control, as well as the strength of our Western markets.”

Mr. Zaist continued, “Our third quarter net new home orders were up 19% year-over-year, to 774, and our monthly absorption rate for the third quarter was 3.0 sales per community, up from 2.8 sales per community in the third quarter of 2016. The strong performance year-to-date, as well as our strong backlog, positions us well to achieve our goals for the full year. The Company expects fourth quarter results to include backlog conversion of 85% to 92%, sequential gross margin improvement of 50 to 70 basis points, sequential SG&A improvement of 20 to 30 basis points and pre-tax income of $60.0 million to $65.0 million.”

Operating Results

Home sales revenue for the third quarter of 2017 was $490.3 million, as compared to $342.6 million in the year-ago period, an increase of 43%. The increase was driven by a 26% increase in deliveries to 851 homes, compared to 673 in the third quarter of 2016, combined with an increase in the average sales price of homes delivered to $576,200, up 13% from the prior year.

The dollar value of orders for the third quarter of 2017 was $425.5 million, an increase of 22%, from $348.7 million in the year-ago period. Net new home orders for the quarter were 774, up 19% from 651 in the third quarter of 2016. The overall increase in net new home orders was driven by an increase in community count to 86 average sales locations, from 78 in the year-ago period, combined with a 7% increase in the monthly absorption rate from 2.8 sales per community in the year-ago period to 3.0 sales per community in the current period.

The dollar value of homes in backlog was $699.3 million as of September 30, 2017, an increase of 18%, compared to $591.0 million as of September 30, 2016. The increase was driven by a 13% increase in units in backlog to 1,208 from 1,071 in the year-ago period and a 5% increase in ASP in backlog to $578,900 from $551,900 in the third quarter of 2016.

Homebuilding gross margin percentage for homes closed during the third quarter of 2017 was 18.1%, up from 16.6% gross margin percentage in the year-ago period and 16.5% in the second quarter of 2017. Adjusted homebuilding gross margin percentage for the quarter was 23.6%, up from 22.2% adjusted gross margin percentage in the prior year period and 22.1% in the second quarter of 2017.

Sales and marketing expense during the third quarter of 2017 was 4.5% of homebuilding revenue, compared to 5.3% in the second quarter of 2016, driven by lower advertising costs, compared to the year-ago quarter of 5.3% of revenue. The Company has focused on more efficient advertising spending using social media and mobile applications to offset higher outside broker costs. General and administrative expenses decreased to 4.7% 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 $43.6 million, real estate inventories totaled $1.9 billion, total assets were $2.1 billion and total equity was $826.0 million. Total debt to book capitalization was 57.1%, and net debt to total capital (net of cash) was 56.1% at September 30, 2017, compared to 61.6% and 60.8% at September 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, Tuesday, October 31, 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 #99544612, 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 7, 2017 by dialing (855) 859-2056 or (404) 537-3406, conference ID #99544612. 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 101,000 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 fourth 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, minority interest from our homebuilding joint ventures, 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 and impact from natural disasters such as the recent fire activity in Northern California; 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 and other geopolitical risks; 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
September 30, September 30,
2017 2016
Operating revenue
Home sales $ 490,304 $ 342,628
Construction services 35 86
490,339 342,714
Operating costs
Cost of sales — homes (401,700 ) (285,896 )
Construction services (35 ) (86 )
Sales and marketing (21,935 ) (18,246 )
General and administrative (22,951 ) (17,360 )
Other (548 ) 198
(447,169 ) (321,390 )
Operating income 43,170 21,324
Equity in income of unconsolidated joint ventures 1,160 1,435
Other (loss) income, net (365 ) 2,050
Income before provision for income taxes 43,965 24,809
Provision for income taxes (13,905 ) (8,295 )
Net income 30,060 16,514
Less: Net income attributable to noncontrolling interests (2,642 ) (3,445 )
Net income available to common stockholders $ 27,418 $ 13,069
Income per common share:
Basic $ 0.74 $ 0.36
Diluted $ 0.71 $ 0.34
Weighted average common shares outstanding:
Basic 37,059,483 36,801,464
Diluted 38,583,341 38,333,027

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,
2017 2016
Operating revenue
Home sales $ 1,171,791 $ 928,982
Construction services 94 3,810
1,171,885 932,792
Operating costs
Cost of sales — homes (973,212 ) (769,705 )
Construction services (41 ) (3,458 )
Sales and marketing (57,924 ) (51,351 )
General and administrative (61,447 ) (51,879 )
Other (1,548 ) (612 )
(1,094,172 ) (877,005 )
Operating income 77,713 55,787
Equity in income of unconsolidated joint ventures 2,622 3,810
Other (loss) income, net (12 ) 2,803
Income before extinguishment of debt 80,323 62,400
Loss on extinguishment of debt (21,828 ) -
Income before provision for income taxes 58,495 62,400
Provision for income taxes (17,480 ) (20,859 )
Net income 41,015 41,541
Less: Net income attributable to noncontrolling interests (4,643 ) (4,897 )
Net income available to common stockholders $ 36,372 $ 36,644
Income per common share:
Basic $ 0.98 $ 1.00
Diluted $ 0.95 $ 0.96
Weighted average common shares outstanding:
Basic 37,007,144 36,746,727
Diluted 38,381,292 38,314,021

WILLIAM LYON HOMES

CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares and par value per share)

September 30, December 31,
2017 2016
(unaudited)
ASSETS
Cash and cash equivalents $ 43,604 $ 42,612
Receivables 9,719 9,538
Escrow proceeds receivable 228 85
Real estate inventories 1,855,658 1,771,998
Investment in unconsolidated joint ventures 8,225 7,282
Goodwill 66,902 66,902
Intangibles, net of accumulated amortization of $4,640 as of September 30, 2017 and December 31, 2016 6,700 6,700
Deferred income taxes 73,597 75,751
Lease right-of-use assets 15,074 13,129
Other assets, net 21,152 17,283
Total assets $ 2,100,859 $ 2,011,280
LIABILITIES AND EQUITY
Accounts payable $ 84,116 $ 74,282
Accrued expenses 93,140 92,919
Revolving credit facility 50,000 29,000
Land notes payable 5,226 24,692
Joint venture notes payable 105,785 102,076
Subordinated amortizing note 1,619 7,225
53/4% Senior Notes due April 15, 2019 149,226 148,826
8 1/2% Senior Notes due November 15, 2020 - 422,817
7% Senior Notes due August 15, 2022 346,556 346,014
57/8% Senior Notes due January 31, 2025 439,221 -
1,274,889 1,247,851
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 September 30, 2017 and December 31, 2016

- -
Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 29,193,050 and 28,909,781 shares issued, 28,043,563 and 27,907,724 shares outstanding at September 30, 2017 and December 31, 2016, respectively 289 290
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, 2017 and December 31, 2016 38 38
Additional paid-in capital 421,626 419,099
Retained earnings 314,031 277,659
Total William Lyon Homes stockholders' equity 735,984 697,086
Noncontrolling interests 89,986 66,343
Total equity 825,970 763,429
Total liabilities and equity $ 2,100,859 $ 2,011,280

WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION

(unaudited)

Three Months Ended September 30,
2017 2016
Consolidated Consolidated Percentage %
Total Total Change
Selected Financial Information (1)
(dollars in thousands)
Homes closed 851 673 26 %
Home sales revenue $ 490,304 $ 342,628 43 %
Cost of sales (excluding interest and purchase accounting adjustments) (374,525 ) (266,666 ) 40 %
Adjusted homebuilding gross margin (2) $ 115,779 $ 75,962 52 %
Adjusted homebuilding gross margin percentage (2) 23.6 % 22.2 % 7 %
Interest in cost of sales (22,923 ) (13,543 ) 69 %
Purchase accounting adjustments (4,252 ) (5,687 ) (25 %)
Gross margin $ 88,604 $ 56,732 56 %
Gross margin percentage 18.1 % 16.6 % 9 %
Number of homes closed
California 300 169 78 %
Arizona 133 108 23 %
Nevada 74 85 (13 %)
Colorado 44 70 (37 %)
Washington 116 74 57 %
Oregon 184 167 10 %
Total 851 673 26 %
Average sales price of homes closed
California $ 769,800 $ 659,400 17 %
Arizona 297,800 266,300 12 %
Nevada 580,600 583,500 0 %
Colorado 563,900 504,500 12 %
Washington 618,900 570,900 8 %
Oregon 435,900 450,700 (3 %)
Company Average $ 576,200 $ 509,100 13 %
Number of net new home orders
California 238 191 25 %
Arizona 124 117 6 %
Nevada 66 66 0 %
Colorado 82 54 52 %
Washington 116 66 76 %
Oregon 148 157 (6 %)
Total 774 651 19 %
Average number of sales locations during period
California 23 23 0 %
Arizona 7 9 (22 %)
Nevada 13 12 8 %
Colorado 16 10 60 %
Washington 11 6 83 %
Oregon 16 18 (11 %)
Total 86 78 10 %

(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)

Nine Months Ended September 30,
2017 2016
Consolidated Consolidated Percentage %
Total Total Change
Selected Financial Information (1)
(dollars in thousands)
Homes closed 2,181 1,879 16 %
Home sales revenue $ 1,171,791 $ 928,982 26 %
Cost of sales (excluding interest and purchase accounting adjustments) (907,929 ) (710,457 ) 28 %
Adjusted homebuilding gross margin (2) $ 263,862 $ 218,525 21 %
Adjusted homebuilding gross margin percentage (2) 22.5 % 23.5 % (4 %)
Interest in cost of sales (55,220 ) (39,310 ) 40 %
Purchase accounting adjustments (10,063 ) (19,938 ) (50 %)
Gross margin $ 198,579 $ 159,277 25 %
Gross margin percentage 16.9 % 17.1 % (1 %)
Number of homes closed
California 637 458 39 %
Arizona 408 324 26 %
Nevada 175 220 (20 %)
Colorado 140 170 (18 %)
Washington 292 225 30 %
Oregon 529 482 10 %
Total 2,181 1,879 16 %
Average sales price of homes closed
California $ 725,600 $ 666,800 9 %
Arizona 290,900 263,600 10 %
Nevada 591,100 586,300 1 %
Colorado 551,100 505,200 9 %
Washington 635,400 500,100 27 %
Oregon 424,900 437,300 (3 %)
Company Average $ 537,300 $ 494,400 9 %
Number of net new home orders
California 783 591 32 %
Arizona 401 367 9 %
Nevada 236 229 3 %
Colorado 229 204 12 %
Washington 432 238 82 %
Oregon 575 582 (1 %)
Total 2,656 2,211 20 %
Average number of sales locations during period
California 23 20 15 %
Arizona 8 8 0 %
Nevada 13 12 8 %
Colorado 14 10 40 %
Washington 9 6 50 %
Oregon 18 17 6 %
Total 85 73 16 %

(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 September 30,
2017 2016
Consolidated Consolidated Percentage %
Total Total Change
Backlog of homes sold but not closed at end of period
California 370 327 13 %
Arizona 197 252 (22 %)
Nevada 120 124 (3 %)
Colorado 164 112 46 %
Washington 192 57 237 %
Oregon 165 199 (17 %)
Total 1,208 1,071 13 %
Dollar amount of homes sold but not closed at end of period (in thousands)
California $ 294,861 $ 260,082 13 %
Arizona 60,467 71,609 (16 %)
Nevada 81,192 78,285 4 %
Colorado 69,085 59,451 16 %
Washington 119,299 36,518 227 %
Oregon 74,424 85,093 (13 %)
Total $ 699,328 $ 591,038 18 %
Lots owned and controlled at end of period
Lots owned
California 1,616 1,625 (1 %)
Arizona 4,541 4,877 (7 %)
Nevada 2,871 3,131 (8 %)
Colorado 1,376 1,544 (11 %)
Washington 1,363 1,387 (2 %)
Oregon 1,806 1,303 39 %
Total 13,573 13,867 (2 %)
Lots controlled
California 915 1,069 (14 %)
Arizona 157 - N/M
Nevada 410 51 704 %
Colorado 292 232 26 %
Washington 797 1,081 (26 %)
Oregon 1,800 1,849 (3 %)
Total 4,371 4,282 2 %
Total lots owned and controlled
California 2,531 2,694 (6 %)
Arizona 4,698 4,877 (4 %)
Nevada 3,281 3,182 3 %
Colorado 1,668 1,776 (6 %)
Washington 2,160 2,468 (12 %)
Oregon 3,606 3,152 14 %
Total 17,944 18,149 (1 %)

WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

(dollars in thousands)

(unaudited)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2017 2016 2017 2016
Net income available to common stockholders $ 27,418 $ 13,069 $ 36,372 $ 36,644
Net income, adjusted for loss on extinguishment of debt, net of tax benefit (3) $ 27,418 $ 13,069 $ 50,448 $ 36,644
Net cash provided by (used in) operating activities $ 43,822 $ (8,073 ) $ (22,990 ) $ (82,978 )
Interest incurred $ 18,112 $ 21,293 $ 56,358 $ 62,112
Adjusted EBITDA (1) $ 72,073 $ 42,905 $ 147,884 $ 124,895
Adjusted EBITDA Margin (2) 14.7 % 12.5 % 12.6 % 13.4 %
Ratio of adjusted EBITDA to interest incurred 4.0 2.0 2.6 2.0

Balance Sheet Data

September 30, December 31,
2017 2016
Cash and cash equivalents $ 43,604 $ 42,612
Total William Lyon Homes stockholders’ equity 735,984 697,086
Noncontrolling interest 89,986 66,343
Total debt 1,097,633 1,080,650
Total capital $ 1,923,603 $ 1,844,079
Ratio of debt to total capital 57.1 % 58.6 %
Ratio of net debt to total capital (net of cash) 56.1 % 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:

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

WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

(dollars in thousands)

(unaudited)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2017 2016 2017 2016
Net income available to common stockholders $ 27,418 $ 13,069 $ 36,372 $ 36,644
Provision for income taxes 13,905 8,295 17,480 20,859
Interest expense
Interest incurred 18,112 21,293 56,358 62,112
Interest capitalized (18,112 ) (21,293 ) (56,358 ) (62,112 )
Amortization of capitalized interest
included in cost of sales 22,940 14,981 55,237 41,742
Stock based compensation 3,045 1,526 6,260 4,087
Depreciation and amortization 535 503 1,426 1,508
Non-cash purchase accounting adjustments 4,252 5,687 10,063 22,969
Cash distributions of income from unconsolidated joint ventures 1,138 279 1,840 896
Equity in income of unconsolidated joint ventures (1,160 ) (1,435 ) (2,622 ) (3,810 )
Loss on extinguishment of debt - - 21,828 -
Adjusted EBITDA $ 72,073 $ 42,905 $ 147,884 $ 124,895

WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

(dollars in thousands)

(unaudited)

(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 Nine
Months Months
Ended Ended
September 30, September 30,
2017 2017
Net income available to common stockholders $ 27,418 $ 36,372
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

$ 27,418 $ 50,448
Diluted weighted average common shares outstanding 38,583,341 38,381,292
Adjusted net income excluding noncontrolling interest per diluted share $ 0.71 $ 1.31

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Investor/Media Contacts:
Financial Profiles, Inc.
Larry Clark, (310) 622-8223
WLH@finprofiles.com

Source: William Lyon Homes