Landsea Homes Reports Second Quarter 2023 Results

• Net income attributable to Landsea Homes of $4.9 million, or $0.12 per diluted share
• Total revenue of $293.2 million
• Pretax income of $7.5 million
• Adjusted EBITDA of $27.0 million
• Total homes delivered of 539
• Net new home orders increased 5% to 565 with an order value of $324.4 million
• Quarter-end homes in backlog of 722 for a total of $455.8 million
• Repurchased 969,000 shares of common stock for $7.5 million
• Book value per share of $16.77
  

DALLAS, Aug. 01, 2023 (GLOBE NEWSWIRE) -- Landsea Homes Corporation ( LSEA) (“Landsea Homes” or the “Company”), a publicly traded homebuilder, reported financial results for the second quarter ended June 30, 2023. For the quarter, the Company reported pretax net income of $7.5 million, and net income of $4.9 million, or $0.12 per share. Prior year reported pretax net income was $23.2 million with net income of $14.9 million, or $0.34 per share. Adjusted net income (a non-GAAP measure) was $13.0 million or $0.33 per share. For the prior year period adjusted net income was $30.8 million, or $0.71 per share.

Management Commentary

“Landsea Homes made solid progress on a number of fronts in the second quarter of 2023, generating healthy profits and strong order results while executing on its long-term strategy of continued market expansion”, said John Ho, Landsea Homes’ Chief Executive Officer. “We recorded net income of $4.9 million for the quarter, or $0.12 per diluted share, largely driven by a new home delivery total that came in well in excess of our stated guidance. We were able to sell and close homes in a more timely manner during the quarter thanks in large part to improvements we’ve seen with the supply chain and product availability. We are optimistic that we’ll see further improvement in the back half of the year.”

Mr. Ho continued, “We remain focused on scaling our operations in high-growth markets to achieve better economies of scale. To that end, we announced the closing of a $250.0 million private placement notes offering last month, which will provide us with the necessary capital to fuel the next phase of our company’s growth. We have made great strides in establishing a significant presence in our markets through both acquisitions and organic growth, and we look forward to building on that success in the near future.”

Mr. Ho concluded, “We believe that housing industry fundamentals continue to favor the new home market due to a lack of existing home inventory, and that Landsea is well positioned to capitalize on this dynamic. We have strategically expanded into some of the best and fastest growing MSAs in the country with great long-term demand outlooks. In addition, our High-Performance Home series is designed to stand out from the competition and appeal to today’s entry level and first move-up buyer. As a result, I remain confident in our company’s prospects for the remainder of the year and beyond.”

Operating Results

Total revenue was $293.2 million in the second quarter, down 20.5% compared to the second quarter of 2022, primarily driven by a 5.8% decrease in homes closed and a 11.7% decrease in average sales price.

New homes delivered totaled 539 homes at an average sales price of $541,000 compared to 572 homes delivered at an average sales price of $613,000 in the second quarter of 2022.

Net new home orders were 565 homes with a dollar value of $324.4 million, an average sales price of $574,000 and a monthly absorption rate of 3.3 sales per active community. This compares to 538 homes with a dollar value of $322.5 million, an average sales price of $599,000 and a monthly absorption rate of 3.3 sales per active community in the prior year period. Strong demand continued throughout the quarter and into July. As a percentage of gross orders, cancellations equaled 11.0% as compared to 15.9% in the prior quarter and 11.1% a year ago.

Total homes in backlog were 722 homes with a dollar value of $455.8 million and an average sales price of $631,000 at June 30, 2023. This compares to 1,571 homes with a dollar value of $902.1 million and an average sales price of $574,000 at June 30, 2022.

Total lots owned or controlled at June 30, 2023, was 11,008 compared to 13,017 at June 30, 2022. We continue to leverage our asset-light strategy, controlling 54.4% of our lots at the end of the second quarter of 2023.

Home sales gross margin was 17.4% compared to 21.3% in the prior year period. Excluding a $4.7 million inventory impairment, our home sales gross margin was 19.0%. Adjusted home sales gross margin (a non-GAAP measure) was 23.5% compared to 29.1% in the prior year period. The decrease was primarily attributed to the increase in sales discounts and incentives.

Net income attributable to Landsea Homes was $4.9 million compared to $14.9 million in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) was $13.0 million compared to $30.8 million in the prior year period. Net income per share on a fully diluted basis was $0.12 compared to $0.34 in the second quarter of 2022. Adjusted net income per share (a non-GAAP measure) on a fully diluted basis was $0.33 compared to $0.71 in the second quarter of 2022.

Adjusted EBITDA (a non-GAAP measure) was $27.0 million compared to $56.6 million in the prior year period.

Balance Sheet

As of June 30, 2023, the Company had total liquidity of $261.1 million consisting of cash and cash equivalents and cash held in escrow of $76.1 million and $185.0 million in availability under the Company’s $675.0 million unsecured revolving credit facility. Total debt was $482.7 million compared to $505.4 million at December 31, 2022.

Landsea Homes’ ratio of debt to capital was 40.4% at June 30, 2023 and the Company’s net debt to total capital (a non-GAAP measure) was 34.0% at June 30, 2023.

2023 Outlook

Third quarter 2023

• New home deliveries anticipated to be in the range of 400 to 475
• Delivery ASPs expected to be in the range of $535,000 to $545,000
• Home sales gross margin of approximately 19%
  

Full year 2023

• New home deliveries anticipated to be in the range of 1,900 to 2,100
• Delivery ASPs expected to be in the range of $550,000 to $560,000

Conference Call

The Company will hold a conference call today at 9:00 a.m. Central Time (10:00 a.m. Eastern time) to discuss its second quarter 2023 results.

• Toll-free dial-in number: 1-877-704-4453
• International dial-in number: 1-201-389-0920

The conference call will be broadcast live and available for replay here and via the Investors section of the Landsea Homes website at https://ir.landseahomes.com/.

A replay of the conference call will be available after 1:00 p.m. Eastern time on the same day through the same time on August 15, 2023.

Replay Details:

• Toll-free replay number: 1-844-512-2921
• International replay number: 1-412-317-6671
• Replay ID: 13740019
  

About Landsea Homes

Landsea Homes Corporation ( LSEA) is a publicly traded residential homebuilder based in Dallas, Texas that designs and builds best-in-class homes and sustainable master-planned communities in some of the nation's most desirable markets. The company has developed homes and communities in New York, Boston, New Jersey, Arizona, Florida, Texas and throughout California in Silicon Valley, Los Angeles and Orange County. Landsea Homes was named the 2022 winner of the prestigious Builder of the Year award, presented by BUILDER magazine, in recognition of a historical year of transformation.

An award-winning homebuilder that builds suburban, single-family detached and attached homes, mid-and high-rise properties, and master-planned communities, Landsea Homes is known for creating inspired places that reflect modern living and provides homebuyers the opportunity to "Live in Your Element." Our homes allow people to live where they want to live, how they want to live – in a home created especially for them.

Driven by a pioneering commitment to sustainability, Landsea Homes' High Performance Homes are responsibly designed to take advantage of the latest innovations with home automation technology supported by Apple®. Homes include features that make life easier and provide energy savings that allow for more comfortable living at a lower cost through sustainability features that contribute to healthier living for both homeowners and the planet.

Led by a veteran team of industry professionals who boast years of worldwide experience and deep local expertise, Landsea Homes is committed to positively enhancing the lives of our homebuyers, employees and stakeholders by creating an unparalleled lifestyle experience that is unmatched.

For more information on Landsea Homes, visit: www.landseahomes.com.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws, including, but not limited to, our expectations for future financial performance, business strategies or expectations for our business. These statements constitute projections, forecasts, and forward-looking statements, and are not guarantees of performance. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “look” or similar expressions may identify forward-looking statements. Specifically, forward-looking statements may include statements relating to the future financial performance of Landsea Homes; changes in the market for Landsea Homes’ products and services; and other expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this press release and our management’s current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, the risk factors described by Landsea Homes in its filings with the Securities and Exchange Commission (“SEC”). These risk factors and those identified elsewhere in this press release, among others, could cause actual results to differ materially from historical performance and include, but are not limited to:

• the cyclical nature of our industry and the possibility that adverse changes in general and local economic conditions could reduce the demand for homes;
• our ability to develop communities successfully and in a timely manner;
• changes in the terms and availability of mortgage financing, interest rates, federal lending programs, and tax laws, affecting the demand for and the ability of our homebuyers to complete the purchase of a home;
• our geographic concentration, which could materially and adversely affect us if the homebuilding industry in our current markets should experience a decline;
• the potential for adverse weather and geological conditions to increase costs, cause project delays or reduce consumer demand for housing;
• our ability to promptly sell one or more properties for reasonable prices in response to changing economic, financial and investment conditions, and the risk that we may be forced to hold non-income producing properties for extended periods of time;
• our reliance on third-party skilled labor, suppliers and long supply chains;
• the dependence of our long-term sustainability and growth upon our ability to acquire lots that are either developed or have the approvals necessary for us to develop them; and
• the other risks and uncertainties indicated in Landsea Homes’ SEC reports or documents filed or to be filed with the SEC by Landsea Homes.
  

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Investor Relations Contact:
Drew Mackintosh
Mackintosh Investor Relations, LLC
[email protected]
310-924-9036

Media Contact:
Annie Noebel
Cornerstone Communications
[email protected]
949-449-2527