Landsea Homes Corporation (Nasdaq: 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 (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, 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,
LLCdrew@mackintoshir.com310-924-9036
Media Contact:Annie
NoebelCornerstone
Communicationsanoebel@cornerstonecomms.com949-449-2527
|
June 30, 2023 |
|
December 31, 2022 |
|
(dollars in thousands) |
Assets |
|
|
|
Cash and cash equivalents |
$ |
74,186 |
|
$ |
123,634 |
Cash held in escrow |
|
1,904 |
|
|
17,101 |
Real estate inventories |
|
1,125,109 |
|
|
1,093,369 |
Due from affiliates |
|
4,110 |
|
|
3,744 |
Goodwill |
|
68,639 |
|
|
68,639 |
Other assets |
|
132,623 |
|
|
134,009 |
Total assets |
$ |
1,406,571 |
|
$ |
1,440,496 |
|
|
|
|
Liabilities |
|
|
|
Accounts payable |
$ |
72,899 |
|
$ |
74,445 |
Accrued expenses and other liabilities |
|
138,446 |
|
|
149,426 |
Due to affiliates |
|
884 |
|
|
884 |
Notes and other debts payable, net |
|
482,736 |
|
|
505,422 |
Total liabilities |
|
694,965 |
|
|
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 June 30, 2023 and
December 31, 2022, respectively |
|
— |
|
|
— |
Common stock, $0.0001 par value, 500,000,000 shares authorized,
41,378,576 issued and 39,183,181 outstanding as of June 30,
2023, 42,110,794 issued and 40,884,268 outstanding as of
December 31, 2022 |
|
4 |
|
|
4 |
Additional paid-in capital |
|
490,741 |
|
|
497,598 |
Retained earnings |
|
166,513 |
|
|
158,348 |
Total stockholders’
equity |
|
657,258 |
|
|
655,950 |
Noncontrolling interests |
|
54,348 |
|
|
54,369 |
Total equity |
|
711,606 |
|
|
710,319 |
Total liabilities and
equity |
$ |
1,406,571 |
|
$ |
1,440,496 |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands, except per share amounts) |
Revenue |
|
|
|
|
|
|
|
Home sales |
$ |
291,512 |
|
|
$ |
350,807 |
|
|
$ |
532,137 |
|
$ |
648,773 |
|
Lot sales and other |
|
1,732 |
|
|
|
17,872 |
|
|
|
2,847 |
|
|
36,133 |
|
Total
revenues |
|
293,244 |
|
|
|
368,679 |
|
|
|
534,984 |
|
|
684,906 |
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
|
|
|
|
|
|
Home sales |
|
240,835 |
|
|
|
276,156 |
|
|
|
437,889 |
|
|
511,858 |
|
Lot sales and other |
|
1,748 |
|
|
|
14,438 |
|
|
|
2,461 |
|
|
29,809 |
|
Total cost of sales |
|
242,583 |
|
|
|
290,594 |
|
|
|
440,350 |
|
|
541,667 |
|
|
|
|
|
|
|
|
|
Gross
margin |
|
|
|
|
|
|
|
Home sales |
|
50,677 |
|
|
|
74,651 |
|
|
|
94,248 |
|
|
136,915 |
|
Lot sales and other |
|
(16 |
) |
|
|
3,434 |
|
|
|
386 |
|
|
6,324 |
|
Total gross margin |
|
50,661 |
|
|
|
78,085 |
|
|
|
94,634 |
|
|
143,239 |
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses |
|
18,334 |
|
|
|
24,155 |
|
|
|
34,742 |
|
|
43,303 |
|
General and administrative
expenses |
|
25,980 |
|
|
|
27,037 |
|
|
|
48,760 |
|
|
49,623 |
|
Total operating expenses |
|
44,314 |
|
|
|
51,192 |
|
|
|
83,502 |
|
|
92,926 |
|
|
|
|
|
|
|
|
|
Income from
operations |
|
6,347 |
|
|
|
26,893 |
|
|
|
11,132 |
|
|
50,313 |
|
|
|
|
|
|
|
|
|
Other income (loss), net |
|
1,159 |
|
|
|
(1,907 |
) |
|
|
2,114 |
|
|
(1,644 |
) |
Loss on remeasurement of
warrant liability |
|
— |
|
|
|
(1,760 |
) |
|
|
— |
|
|
(7,315 |
) |
Pretax
income |
|
7,506 |
|
|
|
23,226 |
|
|
|
13,246 |
|
|
41,354 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
1,640 |
|
|
|
8,372 |
|
|
|
3,257 |
|
|
13,439 |
|
|
|
|
|
|
|
|
|
Net
income |
|
5,866 |
|
|
|
14,854 |
|
|
|
9,989 |
|
|
27,915 |
|
Net income (loss) attributable
to noncontrolling interests |
|
919 |
|
|
|
(81 |
) |
|
|
1,824 |
|
|
(85 |
) |
Net income attributable to
Landsea Homes Corporation |
$ |
4,947 |
|
|
$ |
14,935 |
|
|
$ |
8,165 |
|
$ |
28,000 |
|
|
|
|
|
|
|
|
|
Income per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
$ |
0.34 |
|
|
$ |
0.20 |
|
$ |
0.62 |
|
Diluted |
$ |
0.12 |
|
|
$ |
0.34 |
|
|
$ |
0.20 |
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
39,891,982 |
|
|
|
43,081,762 |
|
|
|
39,944,549 |
|
|
44,208,307 |
|
Diluted |
|
39,971,731 |
|
|
|
43,200,467 |
|
|
|
40,059,731 |
|
|
44,383,407 |
|
Home Deliveries and Home Sales Revenue
|
Three Months Ended June 30, |
|
2023 |
|
2022 |
|
% Change |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
Arizona |
160 |
|
$ |
70,590 |
|
$ |
441 |
|
154 |
|
$ |
69,176 |
|
$ |
449 |
|
4 |
% |
|
2 |
% |
|
(2 |
)% |
California |
115 |
|
|
99,516 |
|
|
865 |
|
133 |
|
|
107,687 |
|
|
810 |
|
(14)% |
|
(8 |
)% |
|
7 |
% |
Florida |
264 |
|
|
121,406 |
|
|
460 |
|
252 |
|
|
109,084 |
|
|
433 |
|
5 |
% |
|
11 |
% |
|
6 |
% |
Metro New York |
— |
|
|
— |
|
N/A |
|
28 |
|
|
59,926 |
|
|
2,140 |
|
N/A |
|
|
N/A |
|
|
N/A |
|
Texas |
— |
|
|
— |
|
N/A |
|
5 |
|
|
4,934 |
|
|
987 |
|
N/A |
|
|
N/A |
|
|
N/A |
|
Total |
539 |
|
$ |
291,512 |
|
$ |
541 |
|
572 |
|
$ |
350,807 |
|
$ |
613 |
|
(6)% |
|
(17 |
)% |
|
(12 |
)% |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
% Change |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
Arizona |
330 |
|
$ |
143,124 |
|
$ |
434 |
|
297 |
|
$ |
131,191 |
|
$ |
442 |
|
11 |
% |
|
9 |
% |
|
(2 |
)% |
California |
200 |
|
|
166,774 |
|
|
834 |
|
261 |
|
|
223,239 |
|
|
855 |
|
(23 |
)% |
|
(25 |
)% |
|
(2 |
)% |
Florida |
476 |
|
|
216,396 |
|
|
455 |
|
523 |
|
|
215,625 |
|
|
412 |
|
(9 |
)% |
|
— |
% |
|
10 |
% |
Metro New York |
1 |
|
|
1,649 |
|
|
1,649 |
|
32 |
|
|
67,626 |
|
|
2,113 |
|
(97 |
)% |
|
(98 |
)% |
|
(22 |
)% |
Texas |
4 |
|
|
4,194 |
|
|
1,049 |
|
11 |
|
|
11,092 |
|
|
1,008 |
|
(64 |
)% |
|
(62 |
)% |
|
4 |
% |
Total |
1,011 |
|
$ |
532,137 |
|
$ |
526 |
|
1,124 |
|
$ |
648,773 |
|
$ |
577 |
|
(10 |
)% |
|
(18 |
)% |
|
(9 |
)% |
Net New Home Orders, Dollar Value of Orders, and Monthly
Absorption Rates
|
Three Months Ended June 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 |
186 |
$ |
79,263 |
$ |
426 |
3.6 |
|
133 |
$ |
64,962 |
$ |
488 |
3.4 |
|
40 |
% |
22 |
% |
(13 |
%) |
6 |
% |
California |
216 |
|
181,466 |
|
840 |
5.9 |
|
115 |
|
112,070 |
|
975 |
3.5 |
|
88 |
% |
62 |
% |
(14 |
%) |
69 |
% |
Florida |
163 |
|
63,686 |
|
391 |
1.9 |
|
287 |
|
139,692 |
|
487 |
3.6 |
|
(43 |
)% |
(54 |
)% |
(20 |
%) |
(47 |
)% |
Metro New York(1) |
— |
|
— |
N/A |
— |
|
— |
|
2,874 |
N/A |
— |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Texas |
— |
|
— |
N/A |
— |
|
3 |
|
2,914 |
|
971 |
0.5 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Total |
565 |
|
324,415 |
$ |
574 |
3.3 |
|
538 |
|
322,512 |
$ |
599 |
3.3 |
|
5 |
% |
1 |
% |
(4 |
)% |
— |
% |
(1) During the three months ended June 30, 2022,
the Metro New York segment had one cancellation and one sale.
|
Six Months Ended June 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 |
338 |
$ |
142,008 |
$ |
420 |
3.4 |
|
272 |
$ |
139,023 |
$ |
511 |
3.9 |
|
24 |
% |
2 |
% |
(18 |
)% |
(13 |
)% |
California |
380 |
|
317,693 |
|
836 |
5.3 |
|
289 |
|
274,245 |
|
949 |
4.3 |
|
31 |
% |
16 |
% |
(12 |
)% |
23 |
% |
Florida |
341 |
|
143,024 |
|
419 |
2.0 |
|
594 |
|
279,056 |
|
470 |
3.6 |
|
(43 |
)% |
(49 |
)% |
(11 |
)% |
(44 |
)% |
Metro New York |
— |
|
— |
N/A |
— |
|
13 |
|
37,190 |
|
2,861 |
2.2 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Texas |
4 |
|
4,194 |
|
1,049 |
1.3 |
|
7 |
|
7,096 |
|
1,014 |
0.5 |
|
(43 |
)% |
(41 |
)% |
3 |
% |
160 |
% |
Total |
1,063 |
$ |
606,919 |
$ |
571 |
3.1 |
|
1,175 |
$ |
736,610 |
$ |
627 |
3.6 |
|
(10 |
)% |
(18 |
)% |
(9 |
)% |
(14 |
)% |
Average Selling Communities
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
2022 |
% Change |
|
2023 |
2022 |
% Change |
Arizona |
17.0 |
13.0 |
31 |
% |
|
16.5 |
11.5 |
43 |
% |
California |
12.3 |
11.0 |
12 |
% |
|
12.0 |
11.3 |
6 |
% |
Florida |
28.0 |
26.7 |
5 |
% |
|
28.8 |
27.7 |
4 |
% |
Metro New York |
— |
1.0 |
(100 |
)% |
|
— |
1.0 |
(100 |
)% |
Texas |
— |
2.0 |
(100 |
)% |
|
0.5 |
2.5 |
(80 |
)% |
Total |
57.3 |
53.7 |
7 |
% |
|
57.8 |
54.0 |
7 |
% |
Backlog
|
June 30, 2023 |
|
June 30, 2022 |
|
% Change |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
Homes |
|
Dollar Value |
|
ASP |
|
(dollars in thousands) |
Arizona |
113 |
|
$ |
48,871 |
|
$ |
432 |
|
397 |
|
$ |
189,064 |
|
$ |
476 |
|
(72 |
)% |
|
(74 |
)% |
|
(9 |
)% |
California |
259 |
|
|
229,365 |
|
|
886 |
|
284 |
|
|
277,382 |
|
|
977 |
|
(9 |
)% |
|
(17 |
)% |
|
(9 |
)% |
Florida |
350 |
|
|
177,525 |
|
|
507 |
|
876 |
|
|
407,066 |
|
|
465 |
|
(60 |
)% |
|
(56 |
)% |
|
9 |
% |
Metro New York |
— |
|
|
— |
|
N/A |
|
6 |
|
|
20,251 |
|
|
3,375 |
|
N/A |
|
|
N/A |
|
|
N/A |
|
Texas |
— |
|
|
— |
|
N/A |
|
8 |
|
|
8,352 |
|
|
1,044 |
|
N/A |
|
|
N/A |
|
|
N/A |
|
Total |
722 |
|
$ |
455,761 |
|
$ |
631 |
|
1,571 |
|
$ |
902,115 |
|
$ |
574 |
|
(54 |
)% |
|
(49 |
)% |
|
10 |
% |
Lots Owned or Controlled
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
Lots Owned |
|
Lots Controlled |
|
Total |
|
Lots Owned |
|
Lots Controlled |
|
Total |
|
% Change |
Arizona |
2,040 |
|
1,389 |
|
3,429 |
|
2,362 |
|
2,285 |
|
4,647 |
|
(26 |
)% |
California |
574 |
|
1,708 |
|
2,282 |
|
684 |
|
2,078 |
|
2,762 |
|
(17 |
)% |
Florida |
2,366 |
|
1,687 |
|
4,053 |
|
1,690 |
|
2,954 |
|
4,644 |
|
(13 |
)% |
Metro New York |
2 |
|
— |
|
2 |
|
18 |
|
— |
|
18 |
|
(89 |
)% |
Texas |
38 |
|
1,204 |
|
1,242 |
|
28 |
|
918 |
|
946 |
|
31 |
% |
Total |
5,020 |
|
5,988 |
|
11,008 |
|
4,782 |
|
8,235 |
|
13,017 |
|
(15 |
)% |
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 June 30, |
|
|
2023 |
|
% |
|
|
2022 |
|
% |
|
(dollars in thousands) |
Home sales revenue |
$ |
291,512 |
|
100.0 |
% |
|
$ |
350,807 |
|
100.0 |
% |
Cost of home sales |
|
240,835 |
|
82.6 |
% |
|
|
276,156 |
|
78.7 |
% |
Home sales gross margin |
|
50,677 |
|
17.4 |
% |
|
|
74,651 |
|
21.3 |
% |
Add: Interest in cost of home sales |
|
7,276 |
|
2.5 |
% |
|
|
14,704 |
|
4.2 |
% |
Add: Real estate inventories impairment |
|
4,700 |
|
1.6 |
% |
|
|
— |
|
— |
% |
Adjusted home sales gross
margin excluding interest and real estate inventories
impairment |
|
62,653 |
|
21.5 |
% |
|
|
89,355 |
|
25.5 |
% |
Add: Purchase price accounting for acquired inventory |
|
5,710 |
|
2.0 |
% |
|
|
12,812 |
|
3.7 |
% |
Adjusted home sales gross
margin excluding interest, real estate inventories impairment, and
purchase price accounting for acquired inventory |
$ |
68,363 |
|
23.5 |
% |
|
$ |
102,167 |
|
29.1 |
% |
|
Six Months Ended June 30, |
|
|
2023 |
|
% |
|
|
2022 |
|
% |
|
(dollars in thousands) |
Home sales revenue |
$ |
532,137 |
|
100.0 |
% |
|
$ |
648,773 |
|
100.0 |
% |
Cost of home sales |
|
437,889 |
|
82.3 |
% |
|
|
511,858 |
|
78.9 |
% |
Home sales gross margin |
|
94,248 |
|
17.7 |
% |
|
|
136,915 |
|
21.1 |
% |
Add: Interest in cost of home sales |
|
11,818 |
|
2.2 |
% |
|
|
21,086 |
|
3.3 |
% |
Add: Real estate inventories impairment |
|
4,700 |
|
0.9 |
% |
|
|
— |
|
— |
% |
Adjusted home sales gross
margin excluding interest and real estate inventories
impairment |
|
110,766 |
|
20.8 |
% |
|
|
158,001 |
|
24.4 |
% |
Add: Purchase price accounting for acquired inventory |
|
10,195 |
|
1.9 |
% |
|
|
30,550 |
|
4.7 |
% |
Adjusted home sales gross
margin excluding interest, real estate inventories impairment, and
purchase price accounting for acquired inventory |
$ |
120,961 |
|
22.7 |
% |
|
$ |
188,551 |
|
29.1 |
% |
EBITDA and Adjusted EBITDA
The following table presents EBITDA and Adjusted
EBITDA for the three months ended June 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 June 30, |
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands) |
Net income |
$ |
5,866 |
|
$ |
14,854 |
|
Provision for income taxes |
|
1,640 |
|
|
8,372 |
|
Interest in cost of sales |
|
7,319 |
|
|
14,737 |
|
Interest relieved to equity in net income of unconsolidated joint
ventures |
|
— |
|
|
35 |
|
Depreciation and amortization expense |
|
1,139 |
|
|
1,440 |
|
EBITDA |
|
15,964 |
|
|
39,438 |
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Purchase price accounting in cost of home sales |
|
5,710 |
|
|
12,812 |
|
Transaction costs |
|
18 |
|
|
257 |
|
Write-off of offering costs |
|
436 |
|
|
— |
|
Abandoned project costs |
|
197 |
|
|
— |
|
Equity in net income of unconsolidated joint ventures, excluding
interest relieved |
|
— |
|
|
(105 |
) |
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,476 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
1,760 |
|
Adjusted EBITDA |
$ |
27,025 |
|
$ |
56,638 |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands) |
Net income |
$ |
9,989 |
|
$ |
27,915 |
|
Provision for income taxes |
|
3,257 |
|
|
13,439 |
|
Interest in cost of sales |
|
11,872 |
|
|
21,126 |
|
Interest relieved to equity in net income of unconsolidated joint
ventures |
|
— |
|
|
70 |
|
Depreciation and amortization expense |
|
2,557 |
|
|
3,063 |
|
EBITDA |
|
27,675 |
|
|
65,613 |
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Purchase price accounting in cost of home sales |
|
10,195 |
|
|
30,550 |
|
Transaction costs |
|
33 |
|
|
1,205 |
|
Write-off of offering costs |
|
436 |
|
|
— |
|
Abandoned project costs |
|
312 |
|
|
— |
|
Equity in net income of unconsolidated joint ventures, excluding
interest relieved |
|
— |
|
|
(139 |
) |
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,496 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
7,315 |
|
Adjusted EBITDA |
$ |
43,351 |
|
$ |
107,040 |
|
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 June 30, |
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands, except share and per share amounts) |
Net income attributable to
Landsea Homes Corporation |
$ |
4,947 |
|
$ |
14,935 |
|
|
|
|
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Pre-Merger capitalized related party interest included in cost of
sales |
|
545 |
|
|
1,600 |
|
Equity in net income of unconsolidated joint ventures |
|
— |
|
|
(70 |
) |
Purchase price accounting for acquired inventory |
|
5,710 |
|
|
12,812 |
|
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,476 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
1,760 |
|
Total adjustments |
|
10,955 |
|
|
18,578 |
|
Tax-effected adjustments (1) |
|
8,075 |
|
|
16,566 |
|
|
|
|
|
Adjusted net income
attributable to Landsea Homes Corporation |
$ |
13,022 |
|
$ |
31,501 |
|
|
|
|
|
|
|
|
|
Net income attributable to
Landsea Homes Corporation |
$ |
4,947 |
|
$ |
14,935 |
|
Less: undistributed earnings
allocated to participating shares |
|
— |
|
|
(339 |
) |
Net income
attributable to common stockholders |
$ |
4,947 |
|
$ |
14,596 |
|
|
|
|
|
Adjusted net income
attributable to Landsea Homes Corporation |
$ |
13,022 |
|
$ |
31,501 |
|
Less: adjusted undistributed
earnings allocated to participating shares |
|
— |
|
|
(715 |
) |
Adjusted net income
attributable to common stockholders |
$ |
13,022 |
|
$ |
30,786 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.12 |
|
$ |
0.34 |
|
Diluted |
$ |
0.12 |
|
$ |
0.34 |
|
|
|
|
|
Adjusted earnings per
share |
|
|
|
Basic |
$ |
0.33 |
|
$ |
0.71 |
|
Diluted |
$ |
0.33 |
|
$ |
0.71 |
|
|
|
|
|
Weighted average common shares
outstanding used in EPS - basic |
|
39,891,982 |
|
|
43,081,762 |
|
Weighted average common shares
outstanding used in EPS - diluted |
|
39,971,731 |
|
|
43,200,467 |
|
(1) Our tax-effected adjustments are based on
our federal rate and a blended state rate adjusted for certain
discrete items.
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
(dollars in thousands, except share and per share amounts) |
Net income attributable to
Landsea Homes Corporation |
$ |
8,165 |
|
$ |
28,000 |
|
|
|
|
|
Real estate inventories impairment |
|
4,700 |
|
|
— |
|
Pre-Merger capitalized related party interest included in cost of
sales |
|
1,263 |
|
|
3,117 |
|
Equity in net income of unconsolidated joint ventures |
|
— |
|
|
(69 |
) |
Purchase price accounting for acquired inventory |
|
10,195 |
|
|
30,550 |
|
Loss on debt extinguishment or forgiveness |
|
— |
|
|
2,496 |
|
Loss on remeasurement of warrant liability |
|
— |
|
|
7,315 |
|
Total adjustments |
|
16,158 |
|
|
43,409 |
|
Tax-effected adjustments (1) |
|
11,910 |
|
|
36,272 |
|
|
|
|
|
Adjusted net income
attributable to Landsea Homes Corporation |
$ |
20,075 |
|
$ |
64,272 |
|
|
|
|
|
|
|
|
|
Net income attributable to
Landsea Homes Corporation |
$ |
8,165 |
|
$ |
28,000 |
|
Less: undistributed earnings
allocated to participating shares |
|
— |
|
|
(619 |
) |
Net income attributable to
common stockholders |
$ |
8,165 |
|
$ |
27,381 |
|
|
|
|
|
Adjusted net income
attributable to Landsea Homes Corporation |
$ |
20,075 |
|
$ |
64,272 |
|
Less: adjusted undistributed
earnings allocated to participating shares |
|
— |
|
|
(1,420 |
) |
Adjusted net income
attributable to common stockholders |
$ |
20,075 |
|
$ |
62,852 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.20 |
|
$ |
0.62 |
|
Diluted |
$ |
0.20 |
|
$ |
0.62 |
|
|
|
|
|
Adjusted earnings per
share |
|
|
|
Basic |
$ |
0.50 |
|
$ |
1.42 |
|
Diluted |
$ |
0.50 |
|
$ |
1.42 |
|
|
|
|
|
Weighted shares
outstanding |
|
|
|
Weighted average common shares
outstanding used in EPS - basic |
|
39,944,549 |
|
|
44,208,307 |
|
Weighted average common shares
outstanding used in EPS - diluted |
|
40,059,731 |
|
|
44,383,407 |
|
(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.
|
June 30, 2023 |
|
December 31, 2022 |
|
(dollars in thousands) |
Total notes and other debts payable, net |
$ |
482,736 |
|
|
$ |
505,422 |
|
Total equity |
|
711,606 |
|
|
|
710,319 |
|
Total capital |
$ |
1,194,342 |
|
|
$ |
1,215,741 |
|
Ratio of debt to capital |
|
40.4 |
% |
|
|
41.6 |
% |
|
|
|
|
Total notes and other debts
payable, net |
$ |
482,736 |
|
|
$ |
505,422 |
|
Less: cash, cash equivalents,
and restricted cash |
|
74,186 |
|
|
|
123,634 |
|
Less: cash held in escrow |
|
1,904 |
|
|
|
17,101 |
|
Net debt |
|
406,646 |
|
|
|
364,687 |
|
|
|
|
|
Total capital |
$ |
1,194,342 |
|
|
$ |
1,215,741 |
|
Ratio of net debt to total
capital |
|
34.0 |
% |
|
|
30.0 |
% |
Landsea Homes (NASDAQ:LSEA)
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