William Lyon Says 2005 Earnings Will Take Hit

William Lyon Homes said Tuesday that the recent winter storms, combined with fewer new projects, would reduce 2005 earnings by 10% to 15%.

Lyon President Wade Cable said the recent series of storms in the West, where most of the company’s projects are located, had caused significant production delays. Lyon now is anticipating that revenue and earnings per share will fall below 2004, when the company’s profit more than doubled to $171.6 million, or $17.55 a share.

The forecast offset an otherwise upbeat earnings report, in which fourth-quarter profit more than doubled as higher home prices boosted margins.

The Newport Beach company said net income was $80.2 million, or $8.58 a share, compared with $38.6 million, or $3.89, a year earlier. Revenue rose 56% to $707.9 million.

Lyon builds houses, condominiums and townhomes in California, Nevada and Arizona -- three of the fastest-growing markets in the U.S.

During the quarter, the company’s average sales price was $570,000 per home, up 29% from a year earlier.

That helped widen gross margins to 25.7% from 18.7%.

The stellar results were damped by slowing orders. New-home orders for the quarter declined 35% overall, including a 39% drop in California and 56% plunge in Nevada.

Chairman and Chief Executive Gen. William Lyon said orders fell because the company was building fewer projects than a year earlier and because escalating prices kept buyers at bay in Southern California and Las Vegas.

This year, Lyon expects to open 41 new projects, for a total of 55 by the end of 2005. The company has 24 projects in Southern California.

For the quarter, deliveries fell 6% to 1,210 while backlog fell 8% to 1,166 from a year earlier.

Lyon shares rose 66 cents to $89.50 on the New York Stock Exchange.