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William Lyon Homes (WLH)
Q2 2013 Earnings Conference Call
August 8, 2013; 12:00 p.m. ET
Bill Lyon - Chief Executive Officer
Matt Zaist - President & Chief Operating Officer
Colin Severn - Vice President & Chief Financial Officer
Larry Clark - Investor Relations
Ivy Zelman - Zelman & Associates
Michael Rehaut - JPMorgan
Dan Oppenheim - Credit Suisse
Will Randall - Citi
Alex Barron - Housing Research Center
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At this time all participants are in listen-only mode. This call is being recorded and will be available for replay through September 5, 2013, starting this afternoon approximately one hour after the completion of this call. (Operator Instructions)
Now, I’d like to turn the call over to Mr. Larry Clark, Investor Relations for the company. Please go ahead, Mr. Clark.
Thank you operator. Good morning and thank you for joining us today to discuss William Lyon Homes, financial results for the three months ended June 30, 2013.
By now you should have received a copy of today’s press release. If not, it is available on the company’s website at www.lyonhomes.com. In addition, we are including an accompanying slide presentation that you can refer to during the call. You can access these slides in the Investor Relations section of the website.
With us today from management are Bill Lyon, Chief Executive Officer; Matt Zaist, President and Chief Operating Officer; and Colin Severn, Vice President and Chief Financial Officer. Following their comments we will open the call for your questions.
Before I continue, I’d like to take a moment to read the company’s Safe Harbor statement. Certain statements contained in this conference call that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected or implied. 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, changes in general economic conditions in the markets in which the company competes; terrorism or hostilities involving the United States; change in mortgage or other interest rates; changes in prices of homebuilding materials; weather conditions; the occurrence of events such as landslides, soil subsidence and earthquakes that are uninsurable; not economically insurable or subject to effective indemnification agreements; the availability of labor and homebuilding materials; changes in governmental laws or regulations; the timing of receipt of regulatory approvals and the opening of projects; and the availability and cost of land for future development, as well as the other factors discussed in the company’s reports filed with the SEC.
Now I’d like to turn the call over to William Lyon Homes’ CEO, Bill Lyon.
Thank you Larry and welcome ladies and gentlemen. We have a number of important accomplishments to report on today’s call. I’ll lead off with an overview of recent developments and second quarter results. Matt Zaist, our President and Chief Operating Officer, will then discuss our operational highlights, followed by Colin Severn our Chief Financial Officer, who will review our financial results. After our prepared remarks we will open the call for your questions.
First, we are extremely pleased with the outcome of our IPO, and special thanks and welcome to all of our new investors and analysts who made this possible. We issued more than 10 million shares of common stock at $25 per share, including the full exercise of the over-allotment option, which consists of 7.1 million shares by the company and 2.8 million shares by a selling stockholder, for net proceeds to the company of approximately $164 million.
With the proceeds of our IPO, we have the resources to more fully capitalize on our strong position as a leading homebuilder in the highly attractive markets of California, Arizona, Nevada and Colorado.
In the second quarter of 2013, we reported net income of $6.9 million or $0.29 per diluted share generating positive net income in our initial quarter as a public company, compared to a net loss in the year ago quarter.
Home sales revenue was up 122% year-over-year, and we delivered our sixth consecutive quarter of year-over-year growth in deliveries, orders and unit backlog. Our results reflect strong overall housing demand, the solid foundation we have in place, as well as our focused strategy and execution.
For those of you who are new to our company, I’d like to spend a few minutes on what differentiates William Lyon Homes from the other homebuilders. First; we have a long and distinguished history dating back to 1956, and have successfully weathered many economic and real-estate cycles. Over the past 57 years, we have sold more than 75,000 homes in our core markets of Northern and Southern California, Arizona, Nevada and Colorado.
These Western states are characterized by attractive, long term fundamentals, with a favorable employment outlook and projected growth rates in single family permits above the U.S. average, and most have experienced double digit, year-over-year home price appreciation in the last 12 months.
Second; a critical hallmark of William Lyon Homes is our attractive land supply, with nearly 14,000 lots under control as we ended the second quarter. This supply gives us a distinct competitive advantage. It enables us to take a highly selective approach to future land acquisitions, as we don’t feel the pressure to compete in a frenzied environment for finished lots.