Management Commentary
“Landsea Homes ended 2023 on a strong note, as the company posted healthy profits and a significant year-over-year increase in net new orders in the fourth quarter”, said John Ho, Landsea Homes’ Chief Executive Officer. “Net income for the quarter came in at $12.5 million, or $0.33 per diluted share on an adjusted gross margin of 20.8%, while orders increased by 352% as compared to the fourth quarter of 2022. We also grew our year-end book value per share to $17.88, representing an 11% increase over year-end 2022.”
Mr. Ho continued, “2023 was a pivotal year for Landsea Homes, as many of the actions we took during the year will have a lasting impact on our company. From entering new markets to executing several capital markets transactions, Landsea Homes laid the foundation for continued growth and increased stability for our shareholder base and capital structure. We believe these achievements make us better equipped to succeed as a public homebuilder and will bear fruit well into the future.”
Mr. Ho added, “Following the close of the quarter, we entered into a definitive agreement to buy DFW-based Antares Homes, which will give us approximately 19 actively selling communities and a strong pipeline of over 2,000 lots in the market. We believe Antares fits perfectly within our organization, both from a pricing and product standpoint, and gives us a great platform from which to grow our presence in this high-growth market. We look forward to the Antares team joining the Landsea family upon the closing of the deal.”
Fourth Quarter Operating Results
Net new home orders increased 352% to 398 homes with a dollar value of $218.9 million, an average sales price of $550,000 and a monthly absorption rate of 2.2 sales per active community. This compares to 88 homes with a dollar value of $57.5 million, an average sales price of $653,000 and a monthly absorption rate of 0.5 sales per active community in the prior year period. Cancellation rate was 13% compared to 72% in fourth quarter 2022.
The 7% decrease in total revenue to $397.6 million compared to $426.0 million in the fourth quarter of 2022 was primarily driven by increased financing incentives and geographic mix as the New York and Texas operations delivered $29.1 million in the fourth quarter of 2022.
The company ended the year with 11,176 lots owned and controlled, representing approximately 5 years of supply based on 2023 home closings. 41% of the lots were owned and 59% of the lots were controlled through contracts and option agreements.
Total homes delivered decreased 6% to 664 homes at an average sales price of $572,000 compared to 703 homes at an average sales price of $594,000 in the fourth quarter of 2022.
Home sales gross margin was 15.9% in the fourth quarter of 2023, compared to 19.0% in the prior year period. Adjusted home sales gross margin (a non-GAAP measure) decreased to 20.8% compared to 23.4% in the fourth quarter 2022. The decrease was primarily the result of additional sales incentives used to close homes during the quarter.
Net income attributable to Landsea Homes was $12.5 million or $0.33 per diluted share compared to $25.6 million or $0.62 per diluted share in the prior year period. Adjusted net income (a non-GAAP measure) attributable to Landsea Homes was $16.1 million compared to $33.3 million in the prior year period.
Adjusted EBITDA (a non-GAAP measure) was $40.3 million compared to $53.9 million in the prior year period.
Full Year 2023 Operating Results
Net new home orders were 1,947 homes with a dollar value of $1.1 billion, an average sales price of $571,000, and a monthly absorption rate of 2.8 sales per active community. This compares to 1,520 homes with a dollar value of $959.6 million, an average sales price of $631,000 and a monthly absorption rate of 2.4 sales per active community in the prior year. The increase in new home orders was primarily from a doubling of orders in the Arizona segment and a 51% increase in California, partially offset by a 5% decrease in the Florida segment.
Total revenue decreased 16% to $1.2 billion compared to $1.4 billion for the full year 2022, primarily driven by the decrease from New York and Texas along with increased incentives across the operating divisions related to higher mortgage rates, partially offset by the relatively steady performance of the Florida division.
Total homes delivered for the year totaled 2,123 homes at an average sales price of $551,000 compared to 2,370 homes delivered at an average sales price of $588,000 for the full year 2022.
Total homes in backlog at the end of 2023 was 517 homes with a dollar value of $335.6 million and an average sales price of $649,000 compared to 670 homes with a dollar value of $380.9 million and an average sales price of $569,000 at December31, 2022.
Home sales gross margin decreased to 17.3% from 20.4% in the prior year. Adjusted home sales gross margin (a non-GAAP measure) decreased to 22.4% compared to 26.9% in the prior year. The decrease was primarily due to increased closing incentives across the operating segments.
Net income attributable to Landsea Homes was $29.2 million or $0.75 per diluted share compared to $73.6 million and $1.70 per diluted share in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) was $47.9million or $1.22 per diluted share compared to $123.3 million and $2.85 in the prior year.
Adjusted EBITDA (a non-GAAP measure) was $112.3 million compared to $208.0 million in the prior year.
Balance Sheet
As of December31, 2023, the Company had total liquidity of $431.3 million consisting of cash and cash equivalents and cash held in escrow of $168.6 million as well as $262.6 million in availability under the Company’s $675.0 million unsecured revolving credit facility. Total debt, net of issuance costs, was $543.8 million at December31, 2023 compared to $505.4 million at December31, 2022.
Landsea Homes’ ratio of debt to capital was 44.1% at December31, 2023 and the Company’s net debt to total capital (a non-GAAP measure) was 30.4% at December31, 2023. This compares to a debt to capital ratio of 41.6% and a net debt to total capital ratio of 30.0% at December31, 2022.
During 2023, the Company repurchased 9% or 3.6 million of its outstanding shares for a total value of $34.4 million. The book value per share at December31, 2023 was $17.88, an 11.4% increase over December31, 2022.
Mr. Ho concluded, “Landsea Homes is well positioned to take advantage of the favorable homebuilding fundamentals, thanks to our strong market positioning and the appeal of our High Performance Homes. In addition, our asset light land portfolio, improving asset turns and entry-level focus have our company primed to generate improving returns on capital. As a result, I am very optimistic about the future of Landsea Homes.”
2024 Outlook
First quarter 2024
- New home deliveries anticipated to be in a range of 480 to 500
- Delivery ASPs expected to be in a range of $560,000 to $575,000
- Home sales gross margins between 15% and 16% on a GAAP basis and between 20% and 21% on an adjusted basis
Full Year 2024
- New home deliveries anticipated to be in a range of 2,500 to 2,900
- Delivery ASPs expected to be in a range of $500,000 to $525,000
- Home sales gross margins between 17% and 18% on a GAAP basis and between 21% and 23% on an adjusted basis
Conference Call
The Company will hold a conference call today at 10:00 a.m. Eastern Time to discuss its fourth quarter 2023 results.
- Toll-free dial-in number: 1-877-704-4453
- International dial-in number: 1-201-389-0920
The conference call will also be broadcast live and available for replay in the Investors section of the Landsea Homes website at https://ir.landseahomes.com/.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through March 14, 2024 at 11:59 PM.
Replay Details:
- Toll-free replay number: 1-844-512-2921
- International replay number: 1-412-317-6671
- Replay ID: 13744526
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 honored as the Green Home Builder 2023 Builder of the Year, after being 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, including as they relate to anticipated effects of the business combination with LF Capital Acquisition Corporation on January 7, 2021 (the “Business Combination”). 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 benefits of the Business Combination and the acquisitions of Vintage Estate and Hanover (the “Acquisitions”);
- the future financial performance of the Company;
- 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 not are 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 ability to recognize the anticipated benefits of the Acquisitions, which may be affected by, among other things, competition, the ability to integrate the combined businesses and the acquired business, and the ability of the combined business and the acquired business to grow and manage growth profitably;
- costs related to continuing as a public company;
- the ability to maintain the listing of Landsea Homes’ securities on Nasdaq;
- the outcome of any legal proceedings that may be instituted against the Company;
- changes in applicable laws or regulations;
- the inability to launch new Landsea Homes products or services or to profitably expand into new markets;
- the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors;
- risks and uncertainties relating to the material weaknesses in our internal controls over financial reporting;
- the possibility that additional information may arise that would require us to make further adjustments or revisions to our historical financial statements, report additional material weaknesses or delay the filing of our current financial statements; and
- 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.
Media Contact:
Annie Noebel
Cornerstone Communications
anoebel@cornerstonecomms.com
(949) 449-2527
Investor Relations Contact:
Drew Mackintosh, CFA
Mackintosh Investor Relations, LLC
drew@mackintoshir.com
(310) 924-9036
| Landsea Homes Corporation Consolidated Balance Sheets (in thousands, except share and per share amounts) | |||||||
| December 31, | |||||||
| 2023 | 2022 | ||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 119,555 | $ | 123,634 | |||
| Cash held in escrow | 49,091 | 17,101 | |||||
| Real estate inventories | 1,121,726 | 1,093,369 | |||||
| Due from affiliates | 4,348 | 3,744 | |||||
| Goodwill | 68,639 | 68,639 | |||||
| Other assets | 107,873 | 134,009 | |||||
| Total assets | $ | 1,471,232 | $ | 1,440,496 | |||
| Liabilities | |||||||
| Accounts payable | $ | 77,969 | $ | 74,445 | |||
| Accrued expenses and other liabilities | 160,256 | 149,426 | |||||
| Due to affiliates | 881 | 884 | |||||
| Line of credit facility, net | 307,631 | 505,422 | |||||
| Senior notes, net | 236,143 | — | |||||
| Total liabilities | 782,880 | 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 December31, 2023 and December31, 2022, respectively | — | — | |||||
| Common stock, $0.0001 par value, 500,000,000 shares authorized, 41,382,453 issued and 36,520,894 outstanding as of December31, 2023, 42,110,794 issued and 40,884,268 outstanding as of December31, 2022 | 4 | 4 | |||||
| Additional paid-in capital | 465,290 | 497,598 | |||||
| Retained earnings | 187,584 | 158,348 | |||||
| Total stockholders’ equity | 652,878 | 655,950 | |||||
| Noncontrolling interests | 35,474 | 54,369 | |||||
| Total equity | 688,352 | 710,319 | |||||
| Total liabilities and equity | $ | 1,471,232 | $ | 1,440,496 | |||
| Landsea Homes Corporation Consolidated Statements of Operations (in thousands, except share and per share amounts) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | |||||||||||||||
| Home sales | $ | 379,668 | $ | 417,481 | $ | 1,169,867 | $ | 1,392,750 | |||||||
| Lot sales and other | 17,947 | 8,477 | 40,080 | 53,699 | |||||||||||
| Total revenue | 397,615 | 425,958 | 1,209,947 | 1,446,449 | |||||||||||
| Cost of sales | |||||||||||||||
| Home sales | 319,392 | 337,984 | 967,034 | 1,108,204 | |||||||||||
| Lot sales and other | 12,169 | 10,775 | 27,939 | 51,321 | |||||||||||
| Total cost of sales | 331,561 | 348,759 | 994,973 | 1,159,525 | |||||||||||
| Gross margin | |||||||||||||||
| Home sales | 60,276 | 79,497 | 202,833 | 284,546 | |||||||||||
| Lot sales and other | 5,778 | (2,298 | ) | 12,141 | 2,378 | ||||||||||
| Total gross margin | 66,054 | 77,199 | 214,974 | 286,924 | |||||||||||
| Sales and marketing expenses | 21,576 | 24,939 | 73,248 | 89,305 | |||||||||||
| General and administrative expenses | 27,219 | 18,591 | 101,442 | 89,325 | |||||||||||
| Total operating expenses | 48,795 | 43,530 | 174,690 | 178,630 | |||||||||||
| Income from operations | 17,259 | 33,669 | 40,284 | 108,294 | |||||||||||
| Other income, net | 1,491 | 740 | 4,261 | 86 | |||||||||||
| Loss on remeasurement of warrant liability | — | — | — | (7,315 | ) | ||||||||||
| Pretax income | 18,750 | 34,409 | 44,545 | 101,065 | |||||||||||
| Provision for income taxes | 5,572 | 7,940 | 11,895 | 25,400 | |||||||||||
| Net income | 13,178 | 26,469 | 32,650 | 75,665 | |||||||||||
| Net income attributable to noncontrolling interests | 703 | 888 | 3,414 | 2,114 | |||||||||||
| Net income attributable to Landsea Homes Corporation | $ | 12,475 | $ | 25,581 | $ | 29,236 | $ | 73,551 | |||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.33 | $ | 0.63 | $ | 0.75 | $ | 1.71 | |||||||
| Diluted | $ | 0.33 | $ | 0.62 | $ | 0.75 | $ | 1.70 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 37,349,364 | 39,929,310 | 38,885,003 | 42,052,696 | |||||||||||
| Diluted | 37,537,270 | 40,065,480 | 39,076,322 | 42,199,462 | |||||||||||
Home Deliveries and Home Sales Revenue
| Three Months Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | % Change | ||||||||||||||||||||
| Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | ||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||
| Arizona | 162 | $ | 70,629 | $ | 436 | 162 | $ | 73,631 | $ | 455 | —% | (4)% | (4)% | |||||||||
| California | 199 | 169,183 | 850 | 183 | 160,366 | 876 | 9% | 5% | (3)% | |||||||||||||
| Colorado | 11 | 7,410 | 674 | — | — | N/A | N/A | N/A | N/A | |||||||||||||
| Florida | 292 | 132,446 | 454 | 340 | 154,348 | 454 | (14)% | (14)% | —% | |||||||||||||
| Metro New York | — | — | N/A | 4 | 15,666 | 3,917 | N/A | N/A | N/A | |||||||||||||
| Texas | — | — | N/A | 14 | 13,470 | 962 | N/A | N/A | N/A | |||||||||||||
| Total | 664 | $ | 379,668 | $ | 572 | 703 | $ | 417,481 | $ | 594 | (6)% | (9)% | (4)% | |||||||||
| Year Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | % Change | ||||||||||||||||||||
| Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | ||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||
| Arizona | 607 | $ | 264,067 | $ | 435 | 613 | $ | 274,512 | $ | 448 | (1)% | (4)% | (3)% | |||||||||
| California | 514 | 439,939 | 856 | 572 | 502,583 | 879 | (10)% | (12)% | (3)% | |||||||||||||
| Colorado | 11 | 7,410 | 674 | — | — | N/A | N/A | N/A | N/A | |||||||||||||
| Florida | 986 | 452,608 | 459 | 1,106 | 473,059 | 428 | (11)% | (4)% | 7% | |||||||||||||
| Metro New York | 1 | 1,649 | 1,649 | 47 | 111,424 | 2,371 | (98)% | (99)% | (30)% | |||||||||||||
| Texas | 4 | 4,194 | 1,049 | 32 | 31,172 | 974 | (88)% | (87)% | 8% | |||||||||||||
| Total | 2,123 | $ | 1,169,867 | $ | 551 | 2,370 | $ | 1,392,750 | $ | 588 | (10)% | (16)% | (6) % | |||||||||
Net New Home Orders, Dollar Value of Orders, and Monthly Absorption Rates
| Three Months Ended December 31, | |||||||||||||||||||||
| 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 | 124 | $ | 54,061 | $ | 436 | 2.2 | (14 | ) | $ | (11,049 | ) | $ | 789 | (0.3 | ) | 986% | 589% | (45)% | 833% | ||
| California | 76 | 73,619 | 969 | 2.5 | 38 | 23,951 | 630 | 1.2 | 100% | 207% | 54% | 108% | |||||||||
| Colorado | 2 | 1,286 | 643 | 0.7 | — | — | N/A | — | N/A | N/A | N/A | N/A | |||||||||
| Florida | 196 | 89,926 | 459 | 2.2 | 58 | 30,367 | 524 | 0.6 | 238% | 196% | (12)% | 267% | |||||||||
| Metro New York | — | — | N/A | — | 3 | 11,671 | 3,890 | 3.3 | N/A | N/A | N/A | N/A | |||||||||
| Texas | — | — | N/A | — | 3 | 2,556 | 852 | 1.0 | N/A | N/A | N/A | N/A | |||||||||
| Total | 398 | $ | 218,892 | $ | 550 | 2.2 | 88 | $ | 57,496 | $ | 653 | 0.5 | 352% | 281% | (16)% | 340% | |||||
| Year Ended December 31, | |||||||||||||||||||||
| 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 | 598 | $ | 255,513 | $ | 427 | 2.9 | 296 | $ | 143,371 | $ | 484 | 1.9 | 102% | 78% | (12)% | 53% | |||||
| California | 596 | 519,664 | 872 | 4.4 | 395 | 354,656 | 898 | 3.2 | 51% | 47% | (3)% | 38% | |||||||||
| Colorado(1) | 2 | 1,286 | 643 | 0.7 | — | — | N/A | — | N/A | N/A | N/A | N/A | |||||||||
| Florida | 747 | 330,195 | 442 | 2.1 | 786 | 380,396 | 484 | 2.5 | (5)% | (13)% | (9)% | (16)% | |||||||||
| Metro New York | — | — | N/A | — | 23 | 62,333 | 2,710 | 2.4 | N/A | N/A | N/A | N/A | |||||||||
| Texas | 4 | 4,194 | 1,049 | 1.1 | 20 | 18,824 | 941 | 0.8 | (80)% | (78)% | 11% | 38% | |||||||||
| Total | 1,947 | $ | 1,110,852 | $ | 571 | 2.8 | 1,520 | $ | 959,580 | $ | 631 | 2.4 | 28% | 16% | (10)% | 17% | |||||
(1)Monthly absorption rates for Colorado in 2023 are based on three months, for the time subsequent to the acquisition of Richfield in October 2023.
Average Selling Communities
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
| Arizona | 19.0 | 15.7 | 21% | 17.3 | 12.7 | 36% | |||||||||||||||||
| California | 10.0 | 10.7 | (7)% | 11.3 | 10.3 | 10% | |||||||||||||||||
| Colorado(1) | 1.0 | — | N/A | 1.0 | — | N/A | |||||||||||||||||
| Florida | 30.0 | 30.3 | (1)% | 29.7 | 26.7 | 11% | |||||||||||||||||
| Metro New York | — | 0.3 | N/A | — | 0.8 | N/A | |||||||||||||||||
| Texas | — | 1.0 | N/A | 0.3 | 2.2 | (86)% | |||||||||||||||||
| Total | 60.0 | 58.0 | 3% | 58.8 | 52.7 | 12% | |||||||||||||||||
(1) Average selling communities calculations for Colorado in 2023 are based on three months, for the time subsequent to the acquisition of Richfield in October 2023.
Backlog
| December 31, 2023 | December 31, 2022 | % Change | |||||||||||||||||||
| Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | |||||||||||||
| (dollars in thousands) | |||||||||||||||||||||
| Arizona | 96 | $ | 41,433 | $ | 432 | 105 | $ | 49,986 | $ | 476 | (9)% | (17)% | (9)% | ||||||||
| California | 161 | 158,170 | 982 | 79 | 78,446 | 993 | 104% | 102% | (1)% | ||||||||||||
| Colorado(1) | 14 | 7,540 | 539 | — | — | N/A | N/A | N/A | N/A | ||||||||||||
| Florida | 246 | 128,484 | 522 | 485 | 250,897 | 517 | (49)% | (49)% | 1% | ||||||||||||
| Metro New York | — | — | N/A | 1 | 1,597 | 1,597 | N/A | N/A | N/A | ||||||||||||
| Texas | — | — | N/A | — | — | N/A | N/A | N/A | N/A | ||||||||||||
| Total | 517 | $ | 335,627 | $ | 649 | 670 | $ | 380,926 | $ | 569 | (23)% | (12)% | 14% | ||||||||
(1) Backlog acquired in Colorado at the date of the Richfield acquisition was 23 homes with a value of $13,664 thousand.
Lots Owned or Controlled
| December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||
| Lots Owned | Lots Controlled | Total | Lots Owned | Lots Controlled | Total | % Change | |||||||||||||||||||||
| Arizona | 1,688 | 1,662 | 3,350 | 2,187 | 1,992 | 4,179 | (20)% | ||||||||||||||||||||
| California | 657 | 1,422 | 2,079 | 559 | 1,714 | 2,273 | (9)% | ||||||||||||||||||||
| Colorado | 127 | 155 | 282 | — | — | — | N/A | ||||||||||||||||||||
| Florida | 1,964 | 1,649 | 3,613 | 2,530 | 1,521 | 4,051 | (11)% | ||||||||||||||||||||
| Metro New York | 2 | — | 2 | 3 | — | 3 | (33)% | ||||||||||||||||||||
| Texas | 130 | 1,720 | 1,850 | 4 | 1,083 | 1,087 | 70% | ||||||||||||||||||||
| Total | 4,568 | 6,608 | 11,176 | 5,283 | 6,310 | 11,593 | (4)% | ||||||||||||||||||||
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 December 31, | |||||||||||||||
| 2023 | % | 2022 | % | ||||||||||||
| (dollars in thousands) | |||||||||||||||
| Home sales revenue | $ | 379,668 | 100.0 | % | $ | 417,481 | 100.0 | % | |||||||
| Cost of home sales | 319,392 | 84.1 | % | 337,984 | 81.0 | % | |||||||||
| Home sales gross margin | 60,276 | 15.9 | % | 79,497 | 19.0 | % | |||||||||
| Add: Interest in cost of home sales | 14,045 | 3.7 | % | 8,968 | 2.1 | % | |||||||||
| Add: Real estate inventories impairments | — | — | % | — | — | % | |||||||||
| Adjusted home sales gross margin excluding interest and inventory impairments | 74,321 | 19.6 | % | 88,465 | 21.2 | % | |||||||||
| Add: Purchase price accounting for acquired inventory | 4,760 | 1.3 | % | 9,250 | 2.2 | % | |||||||||
| Adjusted home sales gross margin excluding interest, inventory impairments, and purchase price accounting for acquired inventory | $ | 79,081 | 20.8 | % | $ | 97,715 | 23.4 | % | |||||||
| Year Ended December 31, | |||||||||||||||
| 2023 | % | 2022 | % | ||||||||||||
| (dollars in thousands) | |||||||||||||||
| Home sales revenue | $ | 1,169,867 | 100.0 | % | $ | 1,392,750 | 100.0 | % | |||||||
| Cost of home sales | 967,034 | 82.7 | % | 1,108,204 | 79.6 | % | |||||||||
| Home sales gross margin | 202,833 | 17.3 | % | 284,546 | 20.4 | % | |||||||||
| Add: Interest in cost of home sales | 35,576 | 3.0 | % | 40,192 | 2.9 | % | |||||||||
| Add: Real estate inventories impairments | 4,700 | 0.4 | % | — | — | % | |||||||||
| Adjusted home sales gross margin excluding interest and inventory impairments | 243,109 | 20.8 | % | 324,738 | 23.3 | % | |||||||||
| Add: Purchase price accounting for acquired inventory | 18,820 | 1.6 | % | 50,412 | 3.6 | % | |||||||||
| Adjusted home sales gross margin excluding interest, inventory impairments, and purchase price accounting for acquired inventory | $ | 261,929 | 22.4 | % | $ | 375,150 | 26.9 | % | |||||||
EBITDA and Adjusted EBITDA
The following tables present EBITDA and Adjusted EBITDA for the three months and years ended December31, 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, (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) the impact of income or loss allocations from our unconsolidated joint ventures, and (ix) 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 December 31, | |||||||
| 2023 | 2022 | ||||||
| (dollars in thousands) | |||||||
| Net income | $ | 13,178 | $ | 26,469 | |||
| Provision for income taxes | 5,572 | 7,940 | |||||
| Interest in cost of sales | 14,452 | 9,152 | |||||
| Depreciation and amortization expense | 1,326 | 1,104 | |||||
| EBITDA | 34,528 | 44,665 | |||||
| Purchase price accounting for acquired inventory | 4,760 | 9,250 | |||||
| Transaction costs | 757 | — | |||||
| Abandoned project costs | 253 | — | |||||
| Equity in net income of unconsolidated joint ventures, excluding interest relieved | — | (10 | ) | ||||
| Adjusted EBITDA | $ | 40,298 | $ | 53,905 | |||
| Year Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| (dollars in thousands) | |||||||
| Net income | $ | 32,650 | $ | 75,665 | |||
| Provision for income taxes | 11,895 | 25,400 | |||||
| Interest in cost of sales | 36,330 | 40,428 | |||||
| Interest relieved to equity in net income of unconsolidated joint ventures | — | 70 | |||||
| Depreciation and amortization expense | 5,104 | 5,549 | |||||
| EBITDA | 85,979 | 147,112 | |||||
| Real estate inventories impairments | 4,700 | — | |||||
| Purchase price accounting for acquired inventory | 18,820 | 50,412 | |||||
| Transaction costs | 1,390 | 883 | |||||
| Write-off of offering costs | 436 | — | |||||
| Abandoned project costs | 998 | — | |||||
| Equity in net income of unconsolidated joint ventures, excluding interest relieved | — | (219 | ) | ||||
| Loss on debt extinguishment or forgiveness | — | 2,496 | |||||
| Loss on remeasurement of warrant liability | — | 7,315 | |||||
| Adjusted EBITDA | $ | 112,323 | $ | 207,999 | |||
Adjusted Net Income
Adjusted Net Income 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 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, 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 December 31, | |||||||
| 2023 | 2022 | ||||||
| (dollars in thousands, except share and per share amounts) | |||||||
| Net income attributable to Landsea Homes Corporation | $ | 12,475 | $ | 25,581 | |||
| Pre-Merger capitalized related party interest included in cost of sales | 131 | 1,299 | |||||
| Equity in net income of unconsolidated joint ventures | — | (10 | ) | ||||
| Purchase price accounting for acquired inventory | 4,760 | 9,250 | |||||
| Total adjustments | 4,891 | 10,539 | |||||
| Tax-effected adjustments(1) | 3,609 | 7,726 | |||||
| Adjusted net income attributable to Landsea Homes Corporation | $ | 16,084 | $ | 33,307 | |||
| Net income attributable to Landsea Homes Corporation | $ | 12,475 | $ | 25,581 | |||
| Less: undistributed earnings allocated to participating shares | — | (624 | ) | ||||
| Net income attributable to common stockholders | $ | 12,475 | $ | 24,957 | |||
| Adjusted net income attributable to Landsea Homes Corporation | $ | 16,084 | $ | 33,307 | |||
| Less: adjusted undistributed earnings allocated to participating shares | — | (813 | ) | ||||
| Adjusted net income attributable to common stockholders | $ | 16,084 | $ | 32,494 | |||
| Earnings per share | |||||||
| Basic | $ | 0.33 | $ | 0.63 | |||
| Diluted | $ | 0.33 | $ | 0.62 | |||
| Adjusted earnings per share | |||||||
| Basic | $ | 0.43 | $ | 0.81 | |||
| Diluted | $ | 0.43 | $ | 0.81 | |||
| Weighted shares outstanding | |||||||
| Weighted average common shares outstanding used in EPS – basic | 37,349,364 | 39,929,310 | |||||
| Weighted average common shares outstanding used in EPS – diluted | 37,537,270 | 40,065,480 | |||||
(1)Our tax-effected adjustments are based on our federal rate and a blended state rate adjusted for certain discrete items.
| Year Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| (dollars in thousands, except share and per share amounts) | |||||||
| Net income attributable to Landsea Homes Corporation | $ | 29,236 | $ | 73,551 | |||
| Real estate inventories impairment | 4,700 | — | |||||
| Pre-Merger capitalized related party interest included in cost of sales | 1,718 | 5,130 | |||||
| Equity in net income of unconsolidated joint ventures | — | (149 | ) | ||||
| Purchase price accounting for acquired inventory | 18,820 | 50,412 | |||||
| Loss on debt extinguishment or forgiveness | — | 2,496 | |||||
| Loss on remeasurement of warrant liability | — | 7,315 | |||||
| Total adjustments | 25,238 | 65,204 | |||||
| Tax-effected adjustments(1) | 18,622 | 49,755 | |||||
| Adjusted net income attributable to Landsea Homes Corporation | $ | 47,858 | $ | 123,306 | |||
| Net income attributable to Landsea Homes Corporation | $ | 29,236 | $ | 73,551 | |||
| Less: undistributed earnings allocated to participating shares | — | (1,706 | ) | ||||
| Net income attributable to common stockholders | $ | 29,236 | $ | 71,845 | |||
| Adjusted net income attributable to Landsea Homes Corporation | $ | 47,858 | $ | 123,306 | |||
| Less: adjusted undistributed earnings allocated to participating shares | — | (2,861 | ) | ||||
| Adjusted net income attributable to common stockholders | $ | 47,858 | $ | 120,445 | |||
| Earnings per share | |||||||
| Basic | $ | 0.75 | $ | 1.71 | |||
| Diluted | $ | 0.75 | $ | 1.70 | |||
| Adjusted earnings per share | |||||||
| Basic | $ | 1.23 | $ | 2.86 | |||
| Diluted | $ | 1.22 | $ | 2.85 | |||
| Weighted shares outstanding | |||||||
| Weighted average common shares outstanding used in EPS – basic | 38,885,003 | 42,052,696 | |||||
| Weighted average common shares outstanding used in EPS – diluted | 39,076,322 | 42,199,462 | |||||
(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. Prior to the fourth quarter of 2023, we presented the non-GAAP ratio of net debt to net capital computed as the quotient obtained by dividing net debt by net capital (sum of net debt plus total equity). During the fourth quarter of 2023, we began presenting the non-GAAP ratio of net debt to total capital, which is consistent with the ratio presented by our peers. 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.
| December 31, | |||||||
| 2023 | 2022 | ||||||
| (dollars in thousands) | |||||||
| Total notes and other debts payable, net | $ | 543,774 | $ | 505,422 | |||
| Total equity | 688,352 | 710,319 | |||||
| Total capital | $ | 1,232,126 | $ | 1,215,741 | |||
| Ratio of debt to capital | 44.1 | % | 41.6 | % | |||
| Total notes and other debts payable, net | $ | 543,774 | $ | 505,422 | |||
| Less: cash, cash equivalents and restricted cash | 119,555 | 123,634 | |||||
| Less: cash held in escrow | 49,091 | 17,101 | |||||
| Net debt | $ | 375,128 | $ | 364,687 | |||
| Total capital | $ | 1,232,126 | $ | 1,215,741 | |||
| Ratio of net debt to total capital | 30.4 | % | 30.0 | % | |||
