{"id":10124,"date":"2023-12-06T00:28:52","date_gmt":"2023-12-06T06:28:52","guid":{"rendered":"https:\/\/1reason.com\/re\/landsea-homes-reports-third-quarter-2023-results\/10124\/"},"modified":"2023-12-06T18:28:52","modified_gmt":"2023-12-07T00:28:52","slug":"landsea-homes-reports-third-quarter-2023-results","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/landsea-homes-reports-third-quarter-2023-results\/10124\/","title":{"rendered":"Landsea Homes Reports Third Quarter 2023 Results"},"content":{"rendered":"
02, 2023 (GLOBE NEWSWIRE) — Landsea Homes Corporation (Nasdaq: LSEA) (\u201cLandsea Homes\u201d or the \u201cCompany\u201d), a publicly traded homebuilder, reported financial results for the third quarter ended September30, 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. <\/p>\n

Management Commentary<\/strong><\/p>\n

\u201cThe 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,\u201d said John Ho, Landsea Homes\u2019 Chief Executive Officer. \u201cWe are pleased with this quarter\u2019s 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\u2019ve made on this front are sustainable and expect our cycle times to return to pre-Covid levels in the new year.\u201d<\/p>\n

Mr. Ho continued, \u201cWe 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.\u201d<\/p>\n

Mr. Ho concluded, \u201cWe 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\u2019s 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.\u201d<\/p>\n

Operating Results<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Total homes in backlog were 760 homes with a dollar value of $482.7 million and an average sales price of $635,000 at September30, 2023. This compares to 1,285 homes with a dollar value of $741.1 million and an average sales price of $577,000 at September30, 2022.<\/p>\n

Total lots owned or controlled at September30, 2023, were 11,203 compared to 12,410 at September30, 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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Adjusted EBITDA (a non-GAAP measure) was $28.7 million compared to $47.4 million in the prior year period.<\/p>\n

Balance Sheet<\/strong><\/p>\n

As of September30, 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\u2019s $675.0 million unsecured revolving credit facility. Total debt was $552.4 million compared to $505.4 million at December31, 2022.<\/p>\n

Landsea Homes\u2019 ratio of debt to capital was 44.1% at September30, 2023, and the Company\u2019s net debt to total capital (a non-GAAP measure) was 32.5% at September30, 2023.<\/p>\n

2023 Outlook<\/strong><\/p>\n