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Feb 22, 2018

AV Homes Reports Results for Fourth Quarter and Full Year 2017

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Fourth Quarter 2017 Highlights - as compared to the prior year fourth quarter (unless otherwise noted)

  • Net new order value increased 22% to $177.8 million on a 25% increase in units
  • Homes delivered increased by 2% to 826 units
  • Average selling price for homes delivered increased 5% to $332,000 per home
  • Total revenue increased 7% to $280.8 million
  • Homebuilding revenue increased 7% to $274.3 million
  • Net loss of $23.5 million, or $1.05 per share, includes $32.5 million, or $1.44 per share, one-time charge related to the re-measurement of net deferred tax assets due to the enactment of the Tax Cuts and Jobs Act
  • Adjusted earnings per share, excluding the net deferred tax asset re-measurement charge was $0.40  
  • Adjusted EBITDA increased 3% to $27.1 million
  • Communities with deliveries increased to 69 from 61 and selling communities increased to 61 from 58

SCOTTSDALE, Ariz., Feb. 22, 2018 (GLOBE NEWSWIRE) -- AV Homes, Inc. (Nasdaq:AVHI), a developer and builder of residential communities in Florida, the Carolinas, Arizona and Texas, today announced results for its fourth quarter and year ended December 31, 2017.  Total revenue for the fourth quarter of 2017 increased 7% to $280.8 million from $261.7 million in the fourth quarter of 2016.  The net loss of $23.5 million, or $1.05 per share, in the fourth quarter of 2017 includes a one-time charge of $32.5 million, or $1.44 per share related to the re-measurement of the net deferred tax assets due to the enactment of the Tax Cuts and Jobs Act. Excluding this one-time charge, adjusted net income for the fourth quarter was $8.9 million, or $0.40 per share.  Net income and diluted income per share for the fourth quarter of 2016 was $17.1 million and $0.68 per share, respectively, and included only a nominal income tax provision due to the reversal of the valuation allowance of the deferred tax assets in 2016.  Adjusted EBITDA in the fourth quarter of 2017 increased to $27.1 million from $26.4 million in the fourth quarter of 2016.

"We are pleased with our strong fourth quarter results and the completion of another solid year of operating performance," said Roger A. Cregg, President and Chief Executive Officer.   "With net new orders up 25%, homes delivered up 2%, homebuilding revenue up 7%, and improved operating leverage, we generated over $15 million of pre-tax income for the fourth quarter."  Cregg continued, "The full year of 2017 was highlighted with increased market exposure to Raleigh, North Carolina, positioning AV Homes as one of the largest homebuilders in the Raleigh market, and entering the Dallas-Fort Worth, Texas market, further expanding our geographic footprint."

The increase in total revenue was driven by volume increases due to a greater number of communities with deliveries and higher average selling prices due to price increases and improvements in the mix of homes sold.  During the fourth quarter of 2017, the Company delivered 826 homes, a 2% increase from the 808 homes delivered during the fourth quarter of 2016, and the average unit price per closing improved 5% to approximately $332,000 from approximately $317,000 in the fourth quarter of 2016. 

Homebuilding gross margin was 16.7% in the fourth quarter of 2017 compared to 17.6% in the fourth quarter of 2016 with margin improvements in Arizona being more than offset by margin reductions in Florida and the Carolinas.  Homebuilding gross margin is inclusive of the impact associated with the expensing of previously capitalized interest of 2.6% in both 2017 and 2016. 

Total SG&A expense as a percent of homebuilding revenue improved to 10.9% in the fourth quarter of 2017 from 11.1% in the fourth quarter of 2016.  Homebuilding SG&A expense as a percentage of homebuilding revenue was 9.5% in the fourth quarter of 2017, comparable to the fourth quarter of 2016.  Corporate general and administrative expenses as a percentage of homebuilding revenue improved to 1.4% in the fourth quarter of 2017 from 1.7% in the same period a year ago and includes a favorable $1.2 million reversal of an earn out accrual related to performance targets of a prior acquisition not being achieved.

The number of new housing contracts signed, net of cancellations, during the three months ended December 31, 2017 increased 24.9% to 537, compared to 430 units during the same period in 2016.  The increase in housing contracts was primarily attributable to the increase in selling communities to 61 from 58 and better absorption rates in Florida and Arizona.  The average sales price on contracts signed in the fourth quarter of 2017 decreased 2.1% to approximately $331,000 from approximately $338,000 in the fourth quarter of 2016 driven by the 2017 acquisition of Savvy Homes in the Carolinas, which targets the first time buyer segment in Raleigh.  The aggregate dollar value of the contracts signed during the fourth quarter increased 22.4% to $177.8 million, compared to $145.3 million during the same period one year ago.  The backlog value of homes under contract but not yet closed as of December 31, 2017 increased to $236.8 million on 724 units, compared to $236.2 million on 703 units as of December 31, 2016.

Results for the Year Ended December 31, 2017

Total revenue for the year ended December 31, 2017 increased 8.2% to $843.3 million from $779.3 million for the year ended December 31, 2016.  The net loss of $21.9 million, or $0.98 per share, in 2017 includes (i) a one-time charge of $32.5 million, or $1.44 per share related to the re-measurement of the net deferred tax assets due to the enactment of the Tax Cuts and Jobs Act and (ii) a $9.8 million, or $0.27 per share, charge from the extinguishment of debt related to the 2017 refinancing transaction. Excluding the one-time charges, adjusted net income was $16.6 million, or $0.74 per share. Net income and diluted earnings per share for the year ended December 31, 2016 was $147.1 million and $5.66 per share, respectively, and includes the favorable impact of the reversal of the valuation allowance on our deferred tax asset in the amount of $124.5 million, or $4.70 per share.  Excluding that one-time charge, adjusted net income was $25.6 million, or $0.96 per share. Adjusted EBITDA for the full year 2017 increased to $68.2 million from $67.9 million in 2016.

The increase in total revenue was driven by volume increases due to a greater number of communities with deliveries due to organic and acquisition-related growth, and higher average selling prices due to price increases and improvements in the mix of homes sold.  During the year ended December 31, 2017, the Company delivered 2,491 homes, a 1.1% increase from the 2,465 homes delivered during the year ended December 31, 2016, and the average unit price per closing improved 6.5% to approximately $330,000 from approximately $310,000 for the year ended December 31, 2016

Homebuilding gross margin was 16.9% in 2017 compared to 18.1% in 2016.  Homebuilding gross margin is inclusive of the impact associated with the expensing of previously capitalized interest of 2.7% in both 2017 and 2016. 

Total SG&A expense as a percent of homebuilding revenue improved to 12.9% for the year ended December 31, 2017 from 13.1% in 2016.  Homebuilding SG&A expense as a percentage of homebuilding revenue improved to 10.7% for the year ended December 31, 2017 compared to 11.0% in 2016.  The improvement was primarily due to the increased scale of the business in each of our divisions, which allows us to leverage the cost base.  Corporate general and administrative expenses as a percentage of homebuilding revenue was 2.2% for the year ended December 31, 2017, comparable to 2.1% in the same period a year ago.

The number of new housing contracts signed, net of cancellations, during the year ended December 31, 2017 increased 3.1% to 2,443, compared to 2,369 units during the same period in 2016.  The increase in housing contracts was across all geographic segments, but the largest increase was attributable to the Carolinas.  The average sales price on contracts signed during the year ended December 31, 2017 increased 2.8% to approximately $327,000 from approximately $318,000 in 2016.  The aggregate dollar value of the contracts signed during 2017 increased 5.9% to $798.3 million, compared to $753.9 million during the same period one year ago.

2018 Outlook

The Company issued the following expectations for its financial performance in 2018:

  • Communities with closings are expected to be approximately 75;
  • Closings are expected to increase 20% to approximately 3,000 units;
  • Average Selling Price (ASP) on homes closed is expected to increase 3% to approximately $340,000;
  • Homebuilding gross margin is expected to increase 100 bps to approximately 18%, inclusive of approximately 2.8% of previously capitalized interest cost;
  • SG&A is expected to improve 10 bps to approximately 12.8% of homebuilding revenue;
  • Interest expense is expected to be approximately $8 million;
  • Income from mortgage company joint venture is expected to be approximately $1 million;
  • Pre-tax income of approximately $48 million;
  • Effective tax rate is expected to be approximately 25%, with minimal cash taxes paid due to the NOL position;
  • Net income is expected to improve to approximately $36 million;
  • Adjusted EBITDA is expected to increase 30% to approximately $90 million.

"We begin 2018 with significant liquidity, positioning the company to take advantage of new community investments and potential acquisition opportunities to continue our long-term profitable growth strategy," said Cregg.

The Company will hold a conference call and webcast on Friday, February 23, 2018 to discuss its fourth quarter and full year financial results.  The conference call will begin at 8:30 a.m. EST.  The conference call can be accessed live over the telephone by dialing (877) 643-7158 or for international callers by dialing (914) 495-8565; please dial-in 10 minutes before the start of the call. A replay will be available on February 23, 2018 beginning at 11:30 a.m. EST and can be accessed by dialing (855) 859-2056 or for international callers by dialing (404) 537-3406; the conference ID is 7778388. The telephonic replay will be available until March 2, 2018. The webcast, which can be accessed by going to the Investor Relations section of AV Homes' website at www.avhomesinc.com, is accompanied by an Investor Presentation.  A replay of the original webcast will be available shortly after the call.

AV Homes, Inc. is engaged in homebuilding and community development in Florida, the Carolinas, Arizona and Texas. Its principal operations are conducted in the greater Orlando, Jacksonville, Charlotte, Raleigh, Phoenix and Dallas-Fort Worth markets. The Company builds communities that serve both active adults (55 years and older) as well as people of all ages. AV Homes common shares trade on NASDAQ under the symbol AVHI. For more information, visit www.avhomesinc.com.

This news release, the conference call, webcast and other related items contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward looking statements, involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: the cyclical nature of the homebuilding industry and its dependence on broader economic conditions; availability and suitability of undeveloped land, partially developed land and improved lots; ability to develop communities within expected timeframes; fluctuations in interest rates; the availability of mortgage financing for homebuyers; changes in federal lending programs and other regulations; the potential impact of the Tax Cuts and Jobs Act on homebuyer demand; elimination or reduction of tax benefits associated with home ownership; the prices and supply of building materials and skilled labor; the availability and skill of subcontractors; effect of our expansion efforts on our cash flows and profitability; our ability to successfully integrate acquired businesses; competition for homebuyers, properties, financing, raw materials and skilled labor; our ability to access sufficient capital; our ability to generate sufficient cash to service our indebtedness and potential need for additional financing; terms of our financing documents that may restrict our operations and corporate actions; incurrence of additional debt; our ability to purchase outstanding notes upon certain fundamental changes; our ability to obtain additional letters of credit and surety bonds; cancellations of home sale orders; declines in home prices in our primary regions; inflation or deflation affecting homebuilding costs; warranty and construction defect claims; health and safety incidents in homebuilding activities; the seasonal nature of our business; impacts of weather conditions and natural disasters; resource shortages and rate fluctuations; value and costs related to our land and lot inventory; overall market supply and demand for new homes; our ability to recover our costs in the event of reduced home sales; conflicts of interest involving our largest stockholder; contractual restrictions under a stockholders agreement with our largest stockholder; dependence on our senior management; effects of government regulation of development and homebuilding projects; costs of environmental compliance; increased regulation of the mortgage industry; the lack of sole decision-making authority and reliance on our co-venturer; development liabilities that may impose payment obligations on us; contingent liabilities that may affect our liquidity; our ability to utilize our deferred income tax asset; impact of environmental changes; dependence on digital technologies and potential interruptions; potential dilution related to future financing activities; and potential impairment of intangible assets; and other factors described in our most recent Annual Report on Form 10-K for and our other filings with the Securities and Exchange Commission, which filings are available on www.sec.gov.  Forward-looking statements are based on the expectations, estimates, or projections of management as of the date of this news release, the conference call, the Investor Presentation and the webcast. AV Homes disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events and circumstances, except to the extent required by applicable law.

Investor Contact:       

Mike Burnett
EVP, Chief Financial Officer
480-214-7408
m.burnett@avhomesinc.com


 

AV HOMES, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(in thousands, except per share amounts)
 
               
  Three Months Ended Twelve Months Ended 
  December 31,  December 31, 
  2017  2016  2017  2016  
Revenues             
Homebuilding $ 274,348  $ 256,382  $ 821,616   $ 764,041  
Amenity and other   4,424    2,864    17,061    11,698  
Land sales    2,000    2,446    4,576    3,566  
Total revenues   280,772    261,692    843,253    779,305  
              
Expenses             
Homebuilding cost of revenue   228,484    211,181    682,504    625,471  
Amenity and other   3,775    3,091    14,838    11,148  
Land sales   499    545    1,785    1,230  
Total real estate expenses   232,758    214,817     699,127    637,849  
Selling, general and administrative expenses   29,921    28,580    106,391    100,219  
Interest income and other   (398)   (15)   (1,063)   (16) 
Interest expense   3,471    814    10,618    3,667  
Loss on extinguishment of debt   (24)   —    9,848    —  
Total expenses   265,728     244,196    824,921    741,719  
              
Income before income taxes   15,044    17,496    18,332    37,586  
Income tax expense (benefit)    38,589    438    40,268    (109,521) 
Net income (loss) $ (23,545) $ 17,058  $ (21,936) $  147,107  
              
Basic earnings (loss) per share $ (1.05) $ 0.77  $ (0.98) $ 6.58  
Basic weighted average shares outstanding   22,509    22,175     22,493    22,346  
              
Diluted earnings (loss) per share $ (1.05) $ 0.68  $ (0.98) $ 5.66  
Diluted weighted average shares outstanding   22,509    26,356    22,493    26,509  



 

AV HOMES, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
        
  December 31,  December 31,  
  2017  2016  
Assets       
Cash and cash equivalents $ 240,990  $ 67,792  
Restricted cash   1,165    1,231  
Receivables   13,702    10,827  
Land and other inventories   603,851    584,408  
Property and equipment, net   32,664    33,680  
Prepaid expenses and other assets   17,117    12,753  
Deferred tax assets, net   70,365    110,257  
Goodwill   30,290    19,285  
Total assets $ 1,010,144  $ 840,233  
         
Liabilities and Stockholders' Equity       
        
Liabilities       
Accounts payable $ 35,810  $ 37,387  
Accrued and other liabilities   29,193    34,298  
Customer deposits   9,507    9,979  
Estimated development liability   31,556    32,102  
Senior debt, net   472,108    275,660  
Total liabilities   578,174    389,426  
        
Stockholders' equity       
Common stock, par value $1 per share   22,475    22,624  
Authorized: 50,000,000 shares       
Issued: 22,474,821 shares as of December 31, 2017       
22,623,506 shares as of December 31, 2016       
Additional paid-in capital   404,859    401,558  
Retained earnings   7,655    29,644  
    434,989    453,826  
Treasury stock, at cost, 110,874 shares as of December 31, 2017 and 2016, respectively   (3,019)   (3,019) 
Total stockholders' equity   431,970    450,807  
Total liabilities and stockholders' equity $ 1,010,144  $ 840,233  

 

AV HOMES, INC. AND SUBSIDIARIES
Unaudited Supplemental Information
(in thousands, except per share amounts)

The following table represents a reconciliation of the net income (loss) and weighted average shares outstanding for the calculation of basic and diluted earnings (loss) per share for the three and twelve months ended December 31, 2017 and 2016:

              
  Three Months Ended Twelve Months Ended 
  December 31,  December 31, 
  2017  2016 2017  2016 
Numerator:             
Basic net income (loss) $ (23,545) $ 17,058 $ (21,936) $ 147,107 
Effect of dilutive securities   —    742   —    2,969 
Diluted net income (loss) $ (23,545) $ 17,800 $ (21,936)  $ 150,076 
              
Denominator:             
Basic weighted average shares outstanding   22,509    22,175   22,493    22,346 
Effect of dilutive securities   —    4,181   —    4,163 
Diluted weighted average shares outstanding   22,509    26,356   22,493    26,509  
              
Basic earnings (loss) per share $ (1.05) $ 0.77 $ (0.98) $ 6.58 
Diluted earnings (loss) per share $ (1.05) $ 0.68 $ (0.98) $ 5.66 


The following table provides a comparison of certain financial data related to our operations for the three and twelve months ended December 31, 2017 and 2016 (in thousands):

              
  Three Months Ended Twelve Months Ended 
  December 31, December 31, 
  2017  2016  2017  2016   
Operating income:             
Florida             
Revenues:             
Homebuilding $ 132,082  $ 121,796  $ 363,477  $  373,383  
Amenity and other   4,424    2,864     17,061    11,698  
Land sales   1,850    2,446    3,349    3,116  
Total revenues   138,356    127,106    383,887    388,197  
Expenses:             
Homebuilding cost of revenue   104,042    95,327    287,415    291,372  
Homebuilding selling, general and administrative   12,237    12,739    40,478    46,113  
Amenity and other   3,749    3,084    14,749    11,062   
Land sales   369    545    579    770  
Segment operating income $ 17,959  $ 15,411  $ 40,666   $ 38,880  
              
Carolinas              
Revenues:             
Homebuilding $ 91,813  $ 86,732  $ 306,068  $ 238,549  
Land sales   150    —    1,042    265  
Total revenues   91,963    86,732    307,110    238,814  
Expenses:              
Homebuilding cost of revenue   82,085    74,775    266,642    205,348  
Homebuilding selling, general and administrative   9,490    7,282    32,444    22,807  
Land sales   130    —    1,026    289  
Segment operating income $ 258  $ 4,675  $ 6,998  $ 10,370  
              
Arizona             
Revenues:             
Homebuilding $ 50,453  $ 47,854  $ 152,071  $ 152,109   
Land sales   —    —     185    185  
Total revenues    50,453    47,854    152,256    152,294  
Expenses:             
Homebuilding cost of revenue   42,357    41,079    128,447    128,751  
Homebuilding selling, general and administrative   4,248    4,221    15,198    14,994  
Amenity and other   26    7    89    86  
Land sales   —    —    180    171  
Segment operating income $ 3,822  $ 2,547  $ 8,342  $ 8,292  
              
Operating income $ 22,039  $ 22,633  $ 56,006  $ 57,542  
              
Unallocated income (expenses):             
Interest income and other   398    15    1,063    16  
Corporate general and administrative expenses   (3,946)   (4,338)   (18,271)   (16,305 ) 
Loss on extinguishment of debt   24    —    (9,848)   —  
Interest expense   (3,471)   (814)   (10,618)   (3,667) 
Income before income taxes   15,044    17,496    18,332    37,586  
Income tax expense (benefit)   38,589    438    40,268    (109,521) 
Net income (loss) $ (23,545)  $ 17,058  $ (21,936) $ 147,107  


Data from closings for the Florida, Carolinas and Arizona segments for the three and twelve months ended December 31, 2017 and 2016 is summarized as follows (dollars in thousands): 

          
       Average 
  Number    Price 
Three Months Ended December 31, of Units Revenues Per Unit 
2017         
Florida  438 $ 132,082 $ 302 
Carolinas  246   91,813   373 
Arizona  142   50,453   355 
Total  826 $ 274,348   332 
          
2016         
Florida   428 $ 121,796 $ 285 
Carolinas  233   86,732   372 
Arizona  147   47,854   326 
Total  808 $ 256,382   317 

 

          
        Average 
  Number    Price 
Twelve Months Ended December 31,  of Units  Revenues Per Unit 
2017         
Florida  1,232 $ 363,477 $ 295 
Carolinas  815    306,068   376 
Arizona  444   152,071   343 
Total  2,491 $ 821,616   330 
          
2016         
Florida  1,332 $ 373,383 $ 280 
Carolinas  646   238,549   369 
Arizona  487   152,109   312 
Total  2,465 $ 764,041   310 

Data from contracts signed for the Florida, Carolinas and Arizona segments for the three and twelve months ended December 31, 2017 and 2016 is summarized as follows (dollars in thousands):

              
  Gross           
  Number   Contracts    Average 
  of Contracts   Signed, Net of  Dollar Price Per 
Three Months Ended December 31, Signed Cancellations Cancellations Value Unit 
2017             
Florida  319   (35)  284 $ 86,008 $ 303 
Carolinas  194  (23)  171   62,810   367 
Arizona  103  (21)  82   29,002   354 
Total  616  (79)  537 $ 177,820   331 
              
2016             
Florida  266  (52)  214 $ 61,834  $ 289 
Carolinas  171  (21)  150   60,712   405 
Arizona  94  (28)  66   22,730   344 
Total  531  (101)  430 $ 145,276   338 


              
  Gross           
  Number   Contracts    Average 
  of Contracts   Signed, Net of  Dollar Price Per 
Twelve Months Ended December 31, Signed Cancellations Cancellations Value Unit 
2017             
Florida  1,397  (135)  1,262 $ 372,912 $ 295 
Carolinas  860  (104)  756   279,250   369 
Arizona  517  (92)  425   146,175   344 
Total  2,774  (331)  2,443 $ 798,337   327 
              
2016             
Florida  1,511   (253)  1,258 $ 356,247 $ 283 
Carolinas  762  (74)  688   261,539   380 
Arizona  559  (136)  423   136,157   322 
Total  2,832  (463)  2,369 $ 753,943   318 

Backlog for the Florida, Carolinas and Arizona segments as of December 31, 2017 and 2016 is summarized as follows (dollars in thousands):

          
       Average 
   Number Dollar  Price 
As of December 31,  of Units Volume Per Unit 
2017         
Florida  372 $ 111,059 $ 299 
Carolinas  202   74,139   367 
Arizona  150   51,561   344 
Total  724 $ 236,759   327 
          
2016          
Florida  342 $ 100,184 $ 293 
Carolinas  192   79,325   413 
Arizona  169   56,731   336 
Total  703 $ 236,240   336 

Reconciliation of Non-GAAP Measures

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

The following table represents a reconciliation of adjusted EBITDA for the three and twelve months ended December 31, 2017 and 2016, which is not a measure determined in accordance with U.S. generally accepted accounting principles ("GAAP") (in thousands):

             
   Three Months Ended Twelve Months Ended
  December 31, December 31,
  2017  2016 2017   2016 
Net income (loss) $ (23,545) $ 17,058 $ (21,936) $ 147,107 
Interest expense   3,471    814   10,618    3,667 
Amortization of capitalized interest   6,997    6,753   22,271    20,766 
Loss on extinguishment of debt   (24)   —   9,848    — 
Income tax expense   38,589    438   40,268    (109,521)
Depreciation and amortization   878    907   3,849    3,499 
Amortization of share-based compensation   778    466   3,312    2,377 
Adjusted EBITDA $  27,144  $ 26,436 $ 68,230  $ 67,895 

The following table represents a reconciliation of the outlook for adjusted EBITDA for the full year ending December 31, 2018, which is not a measure determined in accordance with U.S. GAAP (in millions):

    
  Full Year
  Outlook
  2018
Net income $ 36
Interest expense   8
Amortization of capitalized interest   28
Income tax expense   12
Depreciation and amortization   3
Amortization of share-based compensation   3
Adjusted EBITDA $ 90

Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation and amortization and certain other adjustments including non-cash share-based compensation and loss on extinguishment of debt. This financial measure has been presented because the Company finds it important and useful in evaluating its performance and believes that it helps readers of the Company's financial statements compare its operations with those of its competitors. Although management finds adjusted EBITDA to be an important measure in conducting and evaluating the Company's operations, this measure has limitations as an analytical tool as it is not reflective of the actual profitability generated by the Company during the period. Management compensates for the limitations of using adjusted EBITDA by using this non-GAAP measure only to supplement the Company's GAAP results and outlook. Due to the limitations discussed, adjusted EBITDA should not be viewed in isolation, as it is not a substitute for GAAP measures.

Adjusted Earnings

Reported diluted earnings (loss) per share were $(1.05) and $0.68 for the three months ended December 31, 2017 and 2016, respectively, and were $(0.98) and $5.66 for the twelve months ended December 31, 2017 and 2016, respectively. During each period presented, we recorded certain adjustments that impacted our net income (loss) and diluted earnings (loss) per share. These items primarily consist of the following (in thousands, except per share amounts):

             
  Three Months Ended Three Months Ended
  December 31, 2017 December 31, 2016
  Net income
(loss)
 Diluted Earnings (Loss)
Per Share
 Net income Diluted Earnings
Per Share
As reported $ (23,545)     $ 17,058    
Effect of dilutive securities   —       742    
Diluted net income (loss)   (23,545) $ (1.05)   17,800   $ 0.68 
Remeasurement of deferred tax assets (lower federal tax rate)   32,484    1.44    —    — 
Change in valuation allowance on deferred tax assets    —    —    (6,475)   (0.25)
Loss on extinguishment of debt, net of tax   (15)   —    —    — 
As adjusted $ 8,924  $ 0.40  $ 11,325  $ 0.43 

 

             
  Twelve Months Ended Twelve Months Ended
  December 31, 2017 December 31, 2016
  Net income
(loss)
 Diluted Earnings (Loss)
Per Share
 Net income Diluted Earnings
Per Share
As reported $ (21,936)    $ 147,107    
Effect of dilutive securities   —       2,969    
Diluted net income (loss)   (21,936) $ (0.98)   150,076  $ 5.66 
Remeasurement of deferred tax assets (lower federal tax rate)   32,484    1.44    —    — 
Change in valuation allowance on deferred tax assets   —    —    (124,525)   (4.70)
Loss on extinguishment of debt, net of tax   6,037    0.27    —    — 
As adjusted $ 16,585  $ 0.74  $ 25,551  $ 0.96 

Note: Amounts in tables above may not foot due to rounding.

We believe that presenting adjusted net income and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provides an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. Our definition of adjusted net income and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.

 

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Source: AV Homes, Inc.

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