Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the
“Company”), a publicly traded homebuilder, reported financial
results for the third quarter ended September 30, 2023. For
the quarter, the Company reported pretax income of $12.5 million,
and net income of $8.6 million, or $0.22 per share. Reported pretax
income for the prior year period was $25.3 million with net income
of $20.0 million, or $0.49 per share. Adjusted net income (a
non-GAAP measure) was $11.7 million or $0.30 per share. For the
prior year period adjusted net income was $27.6 million, or $0.69
per share.
Management Commentary
“The new home market continued to show
impressive resiliency in the face of rising mortgage rates in the
third quarter of 2023, thanks to a motivated buyer population and a
lack of existing home supply,” said John Ho, Landsea Homes’ Chief
Executive Officer. “We are pleased with this quarter’s results and
feel we are in a great position to end 2023 on a strong note. Net
new orders for the quarter increased 89% year-over-year on a sales
pace of 2.7 homes per community per month, as we saw an improvement
in both gross order activity and cancellations. We also saw a
significant improvement in building conditions in the third
quarter, which led to better cycle times and an easing of cost
pressures. We believe the gains we’ve made on this front are
sustainable and expect our cycle times to return to pre-Covid
levels in the new year.”
Mr. Ho continued, “We believe that it is
important to continue balancing our investments in the business
with shareholder-friendly actions that reflect the strength of our
business and our commitment to creating long-term shareholder
value. To that end, our board has approved a $20 million share
repurchase authorization, which we plan to deploy over the next
twelve months. We believe our stock is undervalued at its current
share price and look forward to buying our shares at a meaningful
discount to book value and boosting our earnings per share through
this repurchase program. This quarter we repurchased 1.4 million
shares for $13.7 million, bringing our year-to date repurchases to
2.4 million shares for $21.2 million.”
Mr. Ho concluded, “We believe that our
High-Performance Homes series gives us a distinct advantage over
the competition, particularly with the large and growing Millennial
buyer segment. We are also confident in our leadership team’s
ability to execute well and compete in a high interest rate
environment. As a result, we remain very optimistic about the
future of Landsea Homes.”
Operating Results
Total revenue was $277.3 million in the third
quarter, down 17.4% compared to the third quarter of 2022,
primarily driven by a 17.5% decrease in homes closed and a 4.2%
decrease in average sales price.
New homes delivered totaled 448 homes at an
average sales price of $576,000 compared to 543 homes delivered at
an average sales price of $601,000 in the third quarter of
2022.
Net new home orders were 486 homes with a dollar
value of $285.0 million, an average sales price of $587,000 and a
monthly absorption rate of 2.7 sales per active community. This
compares to 257 homes with a dollar value of $165.5 million, an
average sales price of $644,000 and a monthly absorption rate of
1.5 sales per active community in the prior year period. As a
percentage of gross orders, cancellations equaled 9.0% as compared
to 11.0% in the prior quarter and 37.8% a year ago.
Total homes in backlog were 760 homes with a
dollar value of $482.7 million and an average sales price of
$635,000 at September 30, 2023. This compares to 1,285 homes
with a dollar value of $741.1 million and an average sales price of
$577,000 at September 30, 2022.
Total lots owned or controlled at
September 30, 2023, were 11,203 compared to 12,410 at
September 30, 2022. We continue to pursue an asset-light
strategy, controlling 55% of our lots at the end of the third
quarter of 2023 versus 45% owned.
Home sales gross margin was 18.7% compared to
20.9% in the prior year period. Adjusted home sales gross margin (a
non-GAAP measure) was 24.0% compared to 27.2% 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
$8.6 million compared to $20.0 million in the prior year period.
Adjusted net income attributable to Landsea Homes (a non-GAAP
measure) was $11.7 million compared to $27.6 million in the prior
year period. Net income per share on a fully diluted basis was
$0.22 compared to $0.49 in the third quarter of 2022. Adjusted net
income per share (a non-GAAP measure) on a fully diluted basis was
$0.30 compared to $0.69 in the third quarter of 2022.
Adjusted EBITDA (a non-GAAP measure) was $28.7
million compared to $47.4 million in the prior year period.
Balance Sheet
As of September 30, 2023, the Company had
total liquidity of $389.4 million consisting of cash and cash
equivalents and cash held in escrow of $144.4 million and $245.0
million in availability under the Company’s $675.0 million
unsecured revolving credit facility. Total debt was $552.4 million
compared to $505.4 million at December 31, 2022.
Landsea Homes’ ratio of debt to capital was
44.1% at September 30, 2023, and the Company’s net debt to
total capital (a non-GAAP measure) was 32.5% at September 30,
2023.
2023 Outlook
- 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
- Home sales gross margin to be
approximately 18%
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
third quarter 2023 results.
- Toll-free dial-in number: 1-844-825-9789
- International dial-in number: 1-412-317-5180
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 November 16, 2023.
Replay Details:
- Toll-free replay number: 1-844-512-2921
- International replay number: 1-412-317-6671
- Replay ID: 10183593
About Landsea Homes
Corporation
Landsea Homes Corporation (Nasdaq: 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, Colorado, 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.
Stock Repurchase
Purchases of common stock pursuant to this
authority may be made in open market transactions effected through
a broker-dealer at prevailing market prices, in block trades, or by
other means in accordance with federal securities laws, including
pursuant to any trading plan that may be adopted in accordance with
Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The
Company is not obligated to repurchase any specific number or
amount of shares of common stock, and it may modify, suspend or
discontinue the program at any time. The Company will determine the
timing and amount of repurchase in its discretion based on a
variety of factors, such as the market price of the Company’s
common stock, corporate requirements, general market economic
conditions and legal requirements.
Investor Relations Contact:Drew
Mackintosh Mackintosh Investor Relations,
LLCdrew@mackintoshir.com(310) 924-9036
Media Contact:Annie
NoebelCornerstone Communicationsanoebel@cornerstonecomms.com(949)
449-2527
Landsea Homes Corporation |
Consolidated Balance Sheets - Unaudited |
|
|
September 30, 2023 |
|
December 31, 2022 |
|
(dollars in thousands) |
Assets |
|
|
|
Cash and cash equivalents |
$ |
133,491 |
|
$ |
123,634 |
Cash held in escrow |
|
10,956 |
|
|
17,101 |
Real estate inventories |
|
1,155,661 |
|
|
1,093,369 |
Due from affiliates |
|
4,232 |
|
|
3,744 |
Goodwill |
|
68,639 |
|
|
68,639 |
Other assets |
|
104,108 |
|
|
134,009 |
Total assets |
$ |
1,477,087 |
|
$ |
1,440,496 |
|
|
|
|
Liabilities |
|
|
|
Accounts payable |
$ |
72,287 |
|
$ |
74,445 |
Accrued expenses and other liabilities |
|
150,079 |
|
|
149,426 |
Due to affiliates |
|
881 |
|
|
884 |
Line of credit facility, net |
|
317,010 |
|
|
505,422 |
Senior notes, net |
|
235,383 |
|
|
— |
Total liabilities |
|
775,640 |
|
|
730,177 |
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Equity |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.0001 par value, 50,000,000 shares authorized,
none issued and outstanding as of September 30, 2023 and
December 31, 2022, respectively |
|
— |
|
|
— |
Common stock, $0.0001 par value, 500,000,000 shares authorized,
41,382,453 issued and 37,795,191 outstanding as of
September 30, 2023, 42,110,794 issued and 40,884,268
outstanding as of December 31, 2022 |
|
4 |
|
|
4 |
Additional paid-in capital |
|
477,837 |
|
|
497,598 |
Retained earnings |
|
175,109 |
|
|
158,348 |
Total stockholders’ equity |
|
652,950 |
|
|
655,950 |
Noncontrolling interests |
|
48,497 |
|
|
54,369 |
Total equity |
|
701,447 |
|
|
710,319 |
Total liabilities and equity |
$ |
1,477,087 |
|
$ |
1,440,496 |
Landsea Homes Corporation |
Consolidated Statements of Operations -
Unaudited |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands, except per share amounts) |
Revenue |
|
|
|
|
|
|
|
Home sales |
$ |
258,062 |
|
$ |
326,496 |
|
|
$ |
790,199 |
|
$ |
975,269 |
|
Lot sales and other |
|
19,286 |
|
|
9,089 |
|
|
|
22,133 |
|
|
45,222 |
|
Total revenues |
|
277,348 |
|
|
335,585 |
|
|
|
812,332 |
|
|
1,020,491 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
Home sales |
|
209,753 |
|
|
258,362 |
|
|
|
647,642 |
|
|
770,220 |
|
Lot sales and other |
|
13,309 |
|
|
10,737 |
|
|
|
15,770 |
|
|
40,546 |
|
Total cost of sales |
|
223,062 |
|
|
269,099 |
|
|
|
663,412 |
|
|
810,766 |
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
|
|
|
|
|
Home sales |
|
48,309 |
|
|
68,134 |
|
|
|
142,557 |
|
|
205,049 |
|
Lot sales and other |
|
5,977 |
|
|
(1,648 |
) |
|
|
6,363 |
|
|
4,676 |
|
Total gross margin |
|
54,286 |
|
|
66,486 |
|
|
|
148,920 |
|
|
209,725 |
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
16,930 |
|
|
21,063 |
|
|
|
51,672 |
|
|
64,366 |
|
General and administrative expenses |
|
25,463 |
|
|
21,111 |
|
|
|
74,223 |
|
|
70,734 |
|
Total operating expenses |
|
42,393 |
|
|
42,174 |
|
|
|
125,895 |
|
|
135,100 |
|
|
|
|
|
|
|
|
|
Income from operations |
|
11,893 |
|
|
24,312 |
|
|
|
23,025 |
|
|
74,625 |
|
|
|
|
|
|
|
|
|
Other income (loss), net |
|
656 |
|
|
990 |
|
|
|
2,770 |
|
|
(654 |
) |
Loss on remeasurement of warrant liability |
|
— |
|
|
— |
|
|
|
— |
|
|
(7,315 |
) |
Pretax income |
|
12,549 |
|
|
25,302 |
|
|
|
25,795 |
|
|
66,656 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
3,066 |
|
|
4,021 |
|
|
|
6,323 |
|
|
17,460 |
|
|
|
|
|
|
|
|
|
Net income |
|
9,483 |
|
|
21,281 |
|
|
|
19,472 |
|
|
49,196 |
|
Net
income attributable to noncontrolling interests |
|
887 |
|
|
1,311 |
|
|
|
2,711 |
|
|
1,226 |
|
Net
income attributable to Landsea Homes Corporation |
$ |
8,596 |
|
$ |
19,970 |
|
|
$ |
16,761 |
|
$ |
47,970 |
|
|
|
|
|
|
|
|
|
Income per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.22 |
|
$ |
0.49 |
|
|
$ |
0.43 |
|
$ |
1.10 |
|
Diluted |
$ |
0.22 |
|
$ |
0.49 |
|
|
$ |
0.42 |
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
38,336,100 |
|
|
39,935,152 |
|
|
|
39,402,507 |
|
|
42,768,269 |
|
Diluted |
|
38,440,392 |
|
|
40,097,269 |
|
|
|
39,549,035 |
|
|
42,943,871 |
|
Home Deliveries and Home Sales Revenue
|
Three Months Ended September 30, |
|
|
2023 |
|
2022 |
|
% Change |
|
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
|
Arizona |
115 |
|
$ |
50,314 |
|
$ |
438 |
|
154 |
|
$ |
69,690 |
|
$ |
453 |
|
(25 |
)% |
|
(28 |
)% |
|
(3 |
)% |
California |
115 |
|
|
103,982 |
|
|
904 |
|
128 |
|
|
118,978 |
|
|
930 |
|
(10 |
)% |
|
(13 |
)% |
|
(3 |
)% |
Florida |
218 |
|
|
103,766 |
|
|
476 |
|
243 |
|
|
103,086 |
|
|
424 |
|
(10 |
)% |
|
1 |
% |
|
12 |
% |
Metro New York |
— |
|
|
— |
|
N/A |
|
11 |
|
|
28,132 |
|
|
2,557 |
|
N/A |
|
|
N/A |
|
N/A |
Texas |
— |
|
|
— |
|
N/A |
|
7 |
|
|
6,610 |
|
|
944 |
|
N/A |
|
|
N/A |
|
N/A |
Total |
448 |
|
$ |
258,062 |
|
$ |
576 |
|
543 |
|
$ |
326,496 |
|
$ |
601 |
|
(17 |
)% |
|
(21 |
)% |
|
(4 |
)% |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
% Change |
|
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
|
Arizona |
445 |
|
$ |
193,438 |
|
$ |
435 |
|
451 |
|
$ |
200,881 |
|
$ |
445 |
|
(1 |
)% |
|
(4 |
)% |
|
(2 |
)% |
California |
315 |
|
|
270,756 |
|
|
860 |
|
389 |
|
|
342,217 |
|
|
880 |
|
(19 |
)% |
|
(21 |
)% |
|
(2 |
)% |
Florida |
694 |
|
|
320,162 |
|
|
461 |
|
766 |
|
|
318,711 |
|
|
416 |
|
(9 |
)% |
|
— |
% |
|
11 |
% |
Metro New York |
1 |
|
|
1,649 |
|
|
1,649 |
|
43 |
|
|
95,758 |
|
|
2,227 |
|
(98 |
)% |
|
(98 |
)% |
|
(26 |
)% |
Texas |
4 |
|
|
4,194 |
|
|
1,049 |
|
18 |
|
|
17,702 |
|
|
983 |
|
(78 |
)% |
|
(76 |
)% |
|
7 |
% |
Total |
1,459 |
|
$ |
790,199 |
|
$ |
542 |
|
1,667 |
|
$ |
975,269 |
|
$ |
585 |
|
(12 |
)% |
|
(19 |
)% |
|
(7 |
)% |
Net New Home Orders, Dollar Value of Orders, and Monthly
Absorption Rates
|
Three Months Ended September 30, |
|
2023 |
|
2022 |
|
% Change |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
(dollars in thousands) |
Arizona |
136 |
$ |
59,444 |
$ |
437 |
2.7 |
|
38 |
$ |
15,397 |
$ |
405 |
0.8 |
|
258 |
% |
286 |
% |
8 |
% |
238 |
% |
California |
140 |
|
128,352 |
|
917 |
4.1 |
|
68 |
|
56,460 |
|
830 |
1.8 |
|
106 |
% |
127 |
% |
10 |
% |
128 |
% |
Florida |
210 |
|
97,245 |
|
463 |
2.3 |
|
134 |
|
70,973 |
|
530 |
1.8 |
|
57 |
% |
37 |
% |
(13 |
%) |
28 |
% |
Metro New York |
— |
|
— |
N/A |
— |
|
7 |
|
13,472 |
|
1,925 |
2.3 |
|
N/A |
N/A |
N/A |
N/A |
Texas |
— |
|
— |
N/A |
— |
|
10 |
|
9,172 |
|
917 |
1.7 |
|
N/A |
N/A |
N/A |
N/A |
Total |
486 |
|
285,041 |
$ |
587 |
2.7 |
|
257 |
|
165,474 |
$ |
644 |
1.5 |
|
89 |
% |
72 |
% |
(9 |
)% |
80 |
% |
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
% Change |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
Homes |
Dollar Value |
ASP |
Monthly Absorption Rate |
|
(dollars in thousands) |
Arizona |
474 |
$ |
201,452 |
$ |
425 |
3.2 |
|
310 |
$ |
154,420 |
$ |
498 |
2.6 |
|
53 |
% |
30 |
% |
(15 |
)% |
23 |
% |
California |
520 |
|
446,045 |
|
858 |
4.9 |
|
357 |
|
330,705 |
|
926 |
3.4 |
|
46 |
% |
35 |
% |
(7 |
)% |
44 |
% |
Florida |
551 |
|
240,269 |
|
436 |
2.1 |
|
728 |
|
350,029 |
|
481 |
3.0 |
|
(24 |
)% |
(31 |
)% |
(9 |
)% |
(30 |
)% |
Metro New York |
— |
|
— |
N/A |
— |
|
20 |
|
50,662 |
|
2,533 |
2.2 |
|
N/A |
N/A |
N/A |
N/A |
Texas |
4 |
|
4,194 |
|
1,049 |
1.5 |
|
17 |
|
16,268 |
|
957 |
0.8 |
|
(76 |
)% |
(74 |
)% |
10 |
% |
88 |
% |
Total |
1,549 |
$ |
891,960 |
$ |
576 |
3.0 |
|
1,432 |
$ |
902,084 |
$ |
630 |
2.9 |
|
8 |
% |
(1 |
)% |
(9 |
)% |
3 |
% |
Average Selling Communities
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
2022 |
% Change |
|
2023 |
2022 |
% Change |
Arizona |
|
17.0 |
16.3 |
4 |
% |
|
16.7 |
13.1 |
27 |
% |
California |
|
11.3 |
12.3 |
(8 |
)% |
|
11.8 |
11.7 |
1 |
% |
Florida |
|
31.0 |
25.3 |
23 |
% |
|
29.5 |
26.9 |
10 |
% |
Metro New York |
|
— |
1.0 |
(100 |
)% |
|
— |
1.0 |
(100 |
)% |
Texas |
|
— |
2.0 |
(100 |
)% |
|
0.3 |
2.3 |
(87 |
)% |
Total |
|
59.3 |
57.0 |
4 |
% |
|
58.3 |
55.0 |
6 |
% |
Backlog
|
September 30, 2023 |
|
September 30, 2022 |
|
% Change |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
Arizona |
134 |
|
$ |
58,000 |
|
$ |
433 |
|
281 |
|
$ |
134,771 |
|
$ |
480 |
|
(52 |
)% |
|
(57 |
)% |
|
(10 |
)% |
California |
284 |
|
|
253,735 |
|
|
893 |
|
224 |
|
|
214,864 |
|
|
959 |
|
27 |
% |
|
18 |
% |
|
(7 |
)% |
Florida |
342 |
|
|
171,004 |
|
|
500 |
|
767 |
|
|
374,953 |
|
|
489 |
|
(55 |
)% |
|
(54 |
)% |
|
2 |
% |
Metro New York |
— |
|
|
— |
|
N/A |
|
2 |
|
|
5,591 |
|
|
2,796 |
|
N/A |
|
N/A |
|
N/A |
Texas |
— |
|
|
— |
|
N/A |
|
11 |
|
|
10,914 |
|
|
992 |
|
N/A |
|
N/A |
|
N/A |
Total |
760 |
|
$ |
482,739 |
|
$ |
635 |
|
1,285 |
|
$ |
741,093 |
|
$ |
577 |
|
(41 |
)% |
|
(35 |
)% |
|
10 |
% |
Lots Owned or Controlled
|
September 30, 2023 |
|
September 30, 2022 |
|
|
|
Lots Owned |
|
Lots Controlled |
|
Total |
|
Lots Owned |
|
Lots Controlled |
|
Total |
|
% Change |
Arizona |
1,833 |
|
1,534 |
|
3,367 |
|
2,302 |
|
2,191 |
|
4,493 |
|
(25 |
)% |
California |
718 |
|
1,415 |
|
2,133 |
|
628 |
|
1,948 |
|
2,576 |
|
(17 |
)% |
Florida |
2,388 |
|
1,606 |
|
3,994 |
|
2,420 |
|
1,978 |
|
4,398 |
|
(9 |
)% |
Metro New York |
2 |
|
— |
|
2 |
|
7 |
|
— |
|
7 |
|
(71 |
)% |
Texas |
130 |
|
1,577 |
|
1,707 |
|
18 |
|
918 |
|
936 |
|
82 |
% |
Total |
5,071 |
|
6,132 |
|
11,203 |
|
5,375 |
|
7,035 |
|
12,410 |
|
(10 |
)% |
Home Sales Gross Margins
Home sales gross margin measures the price
achieved on delivered homes compared to the costs needed to build
the home. In the following table, we calculate gross margins
adjusting for interest in cost of sales, inventory impairments, and
purchase price accounting for acquired work in process
inventory. This non-GAAP financial measure should not be used
as a substitute for the Company's operating results in accordance
with GAAP. An analysis of any non-GAAP financial measure should be
used in conjunction with results presented in accordance with GAAP.
We believe the below information is meaningful as it isolates the
impact that indebtedness, impairments, and acquisitions have on our
gross margins and allows for comparability to previous periods and
competitors.
|
Three Months Ended September 30, |
|
2023 |
|
% |
|
2022 |
|
% |
|
(dollars in thousands) |
Home sales revenue |
$ |
258,062 |
|
100.0 |
% |
|
$ |
326,496 |
|
100.0 |
% |
Cost of home sales |
|
209,753 |
|
81.3 |
% |
|
|
258,362 |
|
79.1 |
% |
Home sales gross margin |
|
48,309 |
|
18.7 |
% |
|
|
68,134 |
|
20.9 |
% |
Add: Interest in cost of home sales |
|
9,713 |
|
3.8 |
% |
|
|
10,138 |
|
3.1 |
% |
Add: Real estate inventories impairment |
|
— |
|
— |
% |
|
|
— |
|
— |
% |
Adjusted home sales gross margin excluding interest and real estate
inventories impairment |
|
58,022 |
|
22.5 |
% |
|
|
78,272 |
|
24.0 |
% |
Add: Purchase price accounting for acquired inventory |
|
3,865 |
|
1.5 |
% |
|
|
10,612 |
|
3.3 |
% |
Adjusted home sales gross margin excluding interest, real estate
inventories impairment, and purchase price accounting for acquired
inventory |
$ |
61,887 |
|
24.0 |
% |
|
$ |
88,884 |
|
27.2 |
% |
|
Nine Months Ended September 30, |
|
2023 |
|
% |
|
2022 |
|
% |
|
(dollars in thousands) |
Home sales revenue |
$ |
790,199 |
|
100.0 |
% |
|
$ |
975,269 |
|
100.0 |
% |
Cost of home sales |
|
647,642 |
|
82.0 |
% |
|
|
770,220 |
|
79.0 |
% |
Home sales gross margin |
|
142,557 |
|
18.0 |
% |
|
|
205,049 |
|
21.0 |
% |
Add: Interest in cost of home sales |
|
21,531 |
|
2.7 |
% |
|
|
31,224 |
|
3.2 |
% |
Add: Real estate inventories impairment |
|
4,700 |
|
0.6 |
% |
|
|
— |
|
— |
% |
Adjusted home sales gross margin excluding interest and real estate
inventories impairment |
|
168,788 |
|
21.4 |
% |
|
|
236,273 |
|
24.2 |
% |
Add: Purchase price accounting for acquired inventory |
|
14,060 |
|
1.8 |
% |
|
|
41,162 |
|
4.2 |
% |
Adjusted home sales gross margin excluding interest, real estate
inventories impairment, and purchase price accounting for acquired
inventory |
$ |
182,848 |
|
23.1 |
% |
|
$ |
277,435 |
|
28.4 |
% |
EBITDA and Adjusted EBITDA
The following table presents EBITDA and Adjusted
EBITDA for the three months ended September 30, 2023 and 2022.
Adjusted EBITDA is a non-GAAP financial measure used by management
in evaluating operating performance. We define Adjusted EBITDA as
net income before (i) income tax expense (benefit), (ii) interest
expenses, (iii) depreciation and amortization, (iv) inventory
impairments, (v) purchase accounting adjustments for acquired work
in process inventory related to business combinations, (vi) loss
(gain) on debt extinguishment or forgiveness, (vii) transaction
costs related to the Merger and business combinations, (viii)
write-off of deferred offering costs, (ix) abandoned projects
costs, (x) the impact of income or loss allocations from our
unconsolidated joint ventures, and (xi) loss on remeasurement of
warrant liability. We believe Adjusted EBITDA provides an indicator
of general economic performance that is not affected by
fluctuations in interest, effective tax rates, levels of
depreciation and amortization, and items considered to be
non-recurring. The economic activity related to our unconsolidated
joint ventures is not core to our operations and is the reason we
have excluded those amounts. Accordingly, we believe this measure
is useful for comparing our core operating performance from period
to period. Our presentation of Adjusted EBITDA should not be
considered as an indication that our future results will be
unaffected by unusual or non-recurring items.
|
Three Months Ended September 30, |
|
2023 |
|
2022 |
|
(dollars in thousands) |
Net income |
$ |
9,483 |
|
$ |
21,281 |
|
Provision for income taxes |
|
3,066 |
|
|
4,021 |
|
Interest in cost of sales |
|
10,006 |
|
|
10,150 |
|
Depreciation and amortization expense |
|
1,221 |
|
|
1,382 |
|
EBITDA |
|
23,776 |
|
|
36,834 |
|
Purchase price accounting in cost of home sales |
|
3,865 |
|
|
10,612 |
|
Transaction costs |
|
600 |
|
|
— |
|
Abandoned project costs |
|
433 |
|
|
— |
|
Equity in net income of unconsolidated joint ventures, excluding
interest relieved |
|
— |
|
|
(70 |
) |
Adjusted EBITDA |
$ |
28,674 |
|
$ |
47,376 |
|
|
Nine Months Ended September 30, |
|
2023 |
|
2022 |
|
(dollars in thousands) |
Net income |
$ |
19,472 |
|
$ |
49,196 |
|
Provision for income taxes |
|
6,323 |
|
|
17,460 |
|
Interest in cost of sales |
|
21,878 |
|
|
31,276 |
|
Interest relieved to equity in net income of unconsolidated joint
ventures |
|
— |
|
|
70 |
|
Depreciation and amortization expense |
|
3,778 |
|
|
4,445 |
|
EBITDA |
|
51,451 |
|
|
102,447 |
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Purchase price accounting in cost of home sales |
|
14,060 |
|
|
41,162 |
|
Transaction costs |
|
633 |
|
|
1,205 |
|
Write-off of offering costs |
|
436 |
|
|
— |
|
Abandoned project costs |
|
745 |
|
|
— |
|
Equity in net income of unconsolidated joint ventures, excluding
interest relieved |
|
— |
|
|
(209 |
) |
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,496 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
7,315 |
|
Adjusted EBITDA |
$ |
72,025 |
|
$ |
154,416 |
|
Adjusted Net Income
Adjusted Net Income attributable to Landsea
Homes is a non-GAAP financial measure that we believe is useful to
management, investors and other users of our financial information
in evaluating and understanding our operating results without the
effect of certain expenses that were historically pushed down by
our parent company and other non-recurring items. We believe
excluding these items provides a more comparable assessment of our
financial results from period to period. Adjusted Net Income
attributable to Landsea Homes is calculated by excluding the
effects of related party interest that was pushed down by our
parent company, purchase accounting adjustments for acquired work
in process inventory related to business combinations, the impact
from our unconsolidated joint ventures, Merger related transaction
costs, loss (gain) on debt extinguishment or forgiveness, inventory
impairment, and loss on remeasurement of warrant liability, and
tax-effected using a blended statutory tax rate. The economic
activity related to our unconsolidated joint ventures is not core
to our operations and is the reason we have excluded those amounts.
We also adjust for the expense of related party interest pushed
down from our parent company as we have no obligation to repay the
debt and related interest.
|
Three Months Ended September 30, |
|
2023 |
|
2022 |
|
(dollars in thousands, except share and per share amounts) |
Net income attributable to Landsea Homes Corporation |
$ |
8,596 |
|
$ |
19,970 |
|
|
|
|
|
Pre-Merger capitalized related party interest included in cost of
sales |
|
324 |
|
|
714 |
|
Equity in net income of unconsolidated joint ventures |
|
— |
|
|
(70 |
) |
Purchase price accounting for acquired inventory |
|
3,865 |
|
|
10,612 |
|
Total adjustments |
|
4,189 |
|
|
11,256 |
|
Tax-effected adjustments (1) |
|
3,088 |
|
|
8,270 |
|
|
|
|
|
Adjusted net income attributable to Landsea Homes Corporation |
$ |
11,684 |
|
$ |
28,240 |
|
|
|
|
|
|
|
|
|
Net
income attributable to Landsea Homes Corporation |
$ |
8,596 |
|
$ |
19,970 |
|
Less: undistributed earnings allocated to participating shares |
|
— |
|
|
(487 |
) |
Net
income attributable to common stockholders |
$ |
8,596 |
|
$ |
19,483 |
|
|
|
|
|
Adjusted net income attributable to Landsea Homes Corporation |
$ |
11,684 |
|
$ |
28,240 |
|
Less: adjusted undistributed earnings allocated to participating
shares |
|
— |
|
|
(689 |
) |
Adjusted net income attributable to common stockholders |
$ |
11,684 |
|
$ |
27,551 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.22 |
|
$ |
0.49 |
|
Diluted |
$ |
0.22 |
|
$ |
0.49 |
|
|
|
|
|
Adjusted earnings per share |
|
|
|
Basic |
$ |
0.30 |
|
$ |
0.69 |
|
Diluted |
$ |
0.30 |
|
$ |
0.69 |
|
|
|
|
|
Weighted average common shares outstanding used in EPS - basic |
|
38,336,100 |
|
|
39,935,152 |
|
Weighted average common shares outstanding used in EPS -
diluted |
|
38,440,392 |
|
|
40,097,269 |
|
(1) Our tax-effected adjustments are based on
our federal rate and a blended state rate adjusted for certain
discrete items.
|
Nine Months Ended September 30, |
|
2023 |
|
|
2022 |
|
|
(dollars in thousands, except share and per share amounts) |
Net income attributable to Landsea Homes Corporation |
$ |
16,761 |
|
$ |
47,970 |
|
|
|
|
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Pre-Merger capitalized related party interest included in cost of
sales |
|
1,587 |
|
|
3,831 |
|
Equity in net income of unconsolidated joint ventures |
|
— |
|
|
(139 |
) |
Purchase price accounting for acquired inventory |
|
14,060 |
|
|
41,162 |
|
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,496 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
7,315 |
|
Total adjustments |
|
20,347 |
|
|
54,665 |
|
Tax-effected adjustments (1) |
|
14,997 |
|
|
44,599 |
|
|
|
|
|
Adjusted net income attributable to Landsea Homes Corporation |
$ |
31,758 |
|
$ |
92,569 |
|
|
|
|
|
|
|
|
|
Net
income attributable to Landsea Homes Corporation |
$ |
16,761 |
|
$ |
47,970 |
|
Less: undistributed earnings allocated to participating shares |
|
— |
|
|
(1,094 |
) |
Net
income attributable to common stockholders |
$ |
16,761 |
|
$ |
46,876 |
|
|
|
|
|
Adjusted net income attributable to Landsea Homes Corporation |
$ |
31,758 |
|
$ |
92,569 |
|
Less: adjusted undistributed earnings allocated to participating
shares |
|
— |
|
|
(2,111 |
) |
Adjusted net income attributable to common stockholders |
$ |
31,758 |
|
$ |
90,458 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.43 |
|
$ |
1.10 |
|
Diluted |
$ |
0.42 |
|
$ |
1.09 |
|
|
|
|
|
Adjusted earnings per share |
|
|
|
Basic |
$ |
0.81 |
|
$ |
2.12 |
|
Diluted |
$ |
0.80 |
|
$ |
2.11 |
|
|
|
|
|
Weighted shares outstanding |
|
|
|
Weighted average common shares outstanding used in EPS - basic |
|
39,402,507 |
|
|
42,768,269 |
|
Weighted average common shares outstanding used in EPS -
diluted |
|
39,549,035 |
|
|
42,943,871 |
|
(1) Our tax-effected adjustments are based on
our federal rate and a blended state rate adjusted for certain
discrete items.
Net Debt to Total Capital
The following table presents the ratio of debt
to capital as well as the ratio of net debt to total capital which
is a non-GAAP financial measure. The ratio of debt to capital is
computed as the quotient obtained by dividing total debt, net of
issuance costs, by total capital (sum of total debt, net of
issuance costs, plus total equity).
The non-GAAP ratio of net debt to total capital
is computed as the quotient obtained by dividing net debt (which is
total debt, net of issuance costs, less cash, cash equivalents, and
restricted cash as well as cash held in escrow to the extent
necessary to reduce the debt balance to zero) by total capital. The
most comparable GAAP financial measure is the ratio of debt to
capital. We believe the ratio of net debt to total capital is a
relevant financial measure for investors to understand the leverage
employed in our operations and as an indicator of our ability to
obtain financing. We believe that by deducting our cash from our
debt, we provide a measure of our indebtedness that takes into
account our cash liquidity. We believe this provides useful
information as the ratio of debt to capital does not take into
account our liquidity and we believe that the ratio of net debt to
total capital provides supplemental information by which our
financial position may be considered.
See table below reconciling this non-GAAP
measure to the ratio of debt to capital.
|
September 30, 2023 |
|
December 31, 2022 |
|
(dollars in thousands) |
Total notes and other debts payable, net |
$ |
552,393 |
|
|
$ |
505,422 |
|
Total equity |
|
701,447 |
|
|
|
710,319 |
|
Total capital |
$ |
1,253,840 |
|
|
$ |
1,215,741 |
|
Ratio of debt to capital |
|
44.1 |
% |
|
|
41.6 |
% |
|
|
|
|
Total notes and other debts payable, net |
$ |
552,393 |
|
|
$ |
505,422 |
|
Less: cash, cash equivalents, and restricted cash |
|
133,491 |
|
|
|
123,634 |
|
Less: cash held in escrow |
|
10,956 |
|
|
|
17,101 |
|
Net
debt |
|
407,946 |
|
|
|
364,687 |
|
|
|
|
|
Total capital |
$ |
1,253,840 |
|
|
$ |
1,215,741 |
|
Ratio of net debt to total capital |
|
32.5 |
% |
|
|
30.0 |
% |
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