{"id":6853,"date":"2022-09-05T13:14:54","date_gmt":"2022-09-05T18:14:54","guid":{"rendered":"https:\/\/1reason.com\/re\/landsea-homes-reports-second-quarter-2022-results\/6853\/"},"modified":"2022-09-06T08:14:55","modified_gmt":"2022-09-06T13:14:55","slug":"landsea-homes-reports-second-quarter-2022-results","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/landsea-homes-reports-second-quarter-2022-results\/6853\/","title":{"rendered":"Landsea Homes Reports Second Quarter 2022 Results"},"content":{"rendered":"
, Aug. 04, 2022 (GLOBE NEWSWIRE) — Landsea Homes Corporation (Nasdaq: LSEA) (\u201cLandsea Homes\u201d or the \u201cCompany\u201d), a publicly traded homebuilder, reported financial results for the second quarter ended June30, 2022. For the quarter, the Company reported pretax net income of $23.2 million, and net income of $14.9 million, or $0.34 per share. Prior year reported pretax net income was $14.9 million with net income of $10.7 million, or $0.23 per share. Reported adjusted net income was $30.8 million or $0.71 per share. For the prior year period adjusted net income was $17.1 million, or $0.38 per share. <\/p>\n

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

\u201cLandsea Homes continued to deliver on its goals of targeted market share expansion and profit growth in the second quarter of 2022,\u201d said John Ho, Chief Executive Officer of Landsea Homes. \u201cNew home deliveries increased 35% year-over-year and average selling prices rose 9%, resulting in top line growth of 46% for the quarter. Our home sales gross margin expanded 430 basis-points year-over-year to 21.3% on a GAAP basis, or 560 basis points to 29.1% on a fully adjusted basis, reflecting the strong price appreciation we\u2019ve experienced at our communities over the past several quarters.\u201d<\/p>\n

Mr. Ho continued, \u201cNet new orders for the quarter grew 63% compared to last year, largely driven by a significant increase in active selling communities. Sales absorptions averaged 3.3 homes per community per month for the quarter, though we did experience a slowdown in order activity as the quarter progressed, as the combination of higher mortgage rates and lower consumer confidence began to take a toll on affordability and buyer psychology. We have adjusted our sales efforts to reflect the change in buyer sentiment and believe we are well positioned to navigate this more challenging sales environment thanks to our market positioning and the appeal of our High Performance Homes.\u201d<\/p>\n

Mr. Ho concluded, \u201cLandsea Homes ended the second quarter with a backlog of over $900 million, which we believe puts us in a great position to continue to deliver strong operational profitability. Additionally, during the quarter we were able to return $36.2 million to our shareholders through purchasing 5.1 million shares of our stock. At quarter end, we had $10 million remaining on our share repurchase program authorization. Finally, our low leverage, ample liquidity and land light strategy give us the flexibility to operate from a position of strength during this period of uncertainty in the market.\u201d<\/p>\n

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

Total revenue increased 47.3% to $368.7 million compared to $250.3 million in the second quarter of 2021 primarily driven by increases in average sales price across our divisions and the addition of our Florida and New York operations.<\/p>\n

Total homes delivered increased 35% to 572 homes at an average sales price of $613,000 compared to 425 homes delivered at an average sales price of $564,000 in the second quarter of 2021. The increase in deliveries was primarily due to the acquisition of Hanover Family Builders (\u201cHanover\u201d) in the first quarter of 2022.<\/p>\n

Net new home orders were 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. This compares to 330 homes with a dollar value of $207.3 million, an average sales price of $628,000 and a monthly absorption rate of 3.5 sales per active community in the prior year period. The increase in new home orders was due to the Hanover acquisition in the first quarter of 2022.<\/p>\n

Total homes in backlog increased 31% to 1,571 homes with a dollar value of $902.1 million and an average sales price of $574,000 at June30, 2022. This compares to 1,197 homes with a dollar value of $630.2 million and an average sales price of $526,000 at June30, 2021. The increase in units and value is due to acquired inventory from our recent homebuilder acquisition. Average sales price of backlog increased, primarily because of continued strong demand across our divisions, coupled with the addition of the Hanover operations and the higher priced luxury units sold in the New York segment.<\/p>\n

Total lots owned or controlled at June30, 2022, increased 52% to 13,017 compared to 8,556 at June30, 2021, primarily due to the acquisition of Hanover and additional lots under control in Texas. Additionally, we have accelerated our asset-light strategy and now control 63% of our lots and own 37%.<\/p>\n

Home sales gross margin increased to 21.3% from 17.0% in the prior year period. Adjusted home sales gross margin (a non-GAAP measure) increased to 29.1% compared to 23.5% in the prior year period. The lift was primarily due to price appreciation and an increase in gross margins within our California and Arizona segments.<\/p>\n

Net income attributable to Landsea Homes increased to $14.9 million compared to $10.7 million in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) increased to $30.8 million compared to $17.1 million in the prior year period. Net income per share on a fully diluted basis increased to $0.34 compared to $0.23 in the second quarter of 2021. Adjusted net income per share (a non-GAAP measure) on a fully diluted basis increased to $0.71 compared to $0.38 in the second quarter of 2021.<\/p>\n

Adjusted EBITDA (a non-GAAP measure) increased to $56.6 million compared to $32.6 million in the prior year period.<\/p>\n

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

As of June30, 2022, the Company had total liquidity of $215.1 million consisting of cash and cash equivalents and cash held in escrow of $104.4 million and $110.7 million in availability under the Company\u2019s $655 million unsecured revolving credit facility. Total debt was $534.6 million compared to $461.1 million at December31, 2021.<\/p>\n

Landsea Homes\u2019 ratio of debt to capital was 44.6% at June30, 2022 and the Company\u2019s net debt to net book capitalization (a non-GAAP measure) was 39.3% at June30, 2022.<\/p>\n

2022 Outlook<\/strong><\/p>\n

Third quarter 2022<\/strong><\/p>\n