{"id":7453,"date":"2022-12-06T15:07:26","date_gmt":"2022-12-06T21:07:26","guid":{"rendered":"https:\/\/1reason.com\/re\/landsea-homes-reports-third-quarter-2022-results\/7453\/"},"modified":"2022-12-07T09:07:26","modified_gmt":"2022-12-07T15:07:26","slug":"landsea-homes-reports-third-quarter-2022-results","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/landsea-homes-reports-third-quarter-2022-results\/7453\/","title":{"rendered":"Landsea Homes Reports Third Quarter 2022 Results"},"content":{"rendered":"
, Nov. 03, 2022 (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, 2022. For the quarter, the Company reported pretax net income of $25.3 million, and net income of $20.0 million, or $0.49 per share. Prior year reported pretax net income was $13.8 million with net income of $10.8 million, or $0.23 per share. Adjusted net income (a non-GAAP measure) was $27.6 million or $0.69 per share. For the prior year period adjusted net income was $8.2 million, or $0.18 per share. <\/p>\n

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

\u201cLandsea Homes posted strong year-over-year top and bottom-line growth in the third quarter of 2022, as home sales revenue increased 56% to $326 million and earnings grew 130% to $0.49 per diluted share,\u201d said John Ho, Chief Executive Officer of Landsea Homes. \u201cWe also continued to make progress on the margin front generating a 480 basis-point improvement to our home sales gross margin, which came in at 20.9%. Our teams did an excellent job overcoming operational obstacles and supply chain issues in the quarter, particularly our Florida division, where we experienced closing delays but no major property damage due to Hurricane Ian.\u201d<\/p>\n

Mr. Ho continued, \u201cAs has been widely reported, new home sales activity slowed in the third quarter, as the combination of higher interest rates and negative buyer psychology weighed on demand. These factors also led to an increase in cancellation activity in our backlog, resulting in a cancellation rate of 9% of beginning backlog for the quarter. We are proactively adjusting our sales efforts to spur demand but expect the landscape to remain uncertain until there is more clarity on the interest rate outlook.\u201d<\/p>\n

Mr. Ho concluded, \u201cDespite these near-term headwinds, we remain optimistic about the long-term outlook for our industry and our company. Existing home inventory remains scarce in our markets, and we believe that we have positioned our company in markets with great long-term housing fundamentals that are expected to experience outsized job and population growth. These factors, combined with our attractive product profile, solid balance sheet and operational discipline, give us confidence in the future of Landsea Homes.\u201d<\/p>\n

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

Total revenue increased 57% to $335.6 million compared to $214.1 million in the third quarter of 2021 primarily driven by increases in average sales price across our divisions, increased performance from our Florida division, and the delivery of units from our New York operations.<\/p>\n

Total homes delivered increased 43% to 543 homes at an average sales price of $601,000 compared to 380 homes delivered at an average sales price of $550,000 in the third quarter of 2021. The increase in deliveries was attributable to the larger contribution of our Florida operations, coupled with deliveries from New York.<\/p>\n

Net new home orders were 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. This compares to 275 homes with a dollar value of $184.9 million, an average sales price of $673,000 and a monthly absorption rate of 2.6 sales per active community in the prior year period. The decrease in new home orders was due to slowing demand related to the significant increase in interest rates which have created uncertainty with homebuyers and impacted affordability.<\/p>\n

Total homes in backlog increased 18% to 1,285 homes with a dollar value of $741.1 million and an average sales price of $577,000 at September30, 2022. This compares to 1,092 homes with a dollar value of $606.2 million and an average sales price of $555,000 at September30, 2021. The increase in units and value is due to acquired inventory from our homebuilder acquisition in January. Average sales prices in backlog increased for all of our divisions, reflecting price appreciation from earlier in the year.<\/p>\n

Total lots owned or controlled at September30, 2022, increased 27% to 12,410 compared to 9,756 at September30, 2021, primarily due to the acquisition of Hanover Family Builders and additional lots under control in Texas. Additionally, we have accelerated our asset-light strategy and now control 57% of our lots compared to 43% owned.<\/p>\n

Home sales gross margin increased to 20.9% from 16.1% in the prior year period. Adjusted home sales gross margin (a non-GAAP measure) increased to 27.2% compared to 21.4% in the prior year period. The lift was primarily due to price appreciation and an increase in gross margins within our California and Florida segments.<\/p>\n

Net income attributable to Landsea Homes increased to $20.0 million compared to $10.8 million in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) increased to $27.6 million compared to $8.2 million in the prior year period. Net income per share on a fully diluted basis increased to $0.49 compared to $0.23 in the third quarter of 2021. Adjusted net income per share (a non-GAAP measure) on a fully diluted basis increased to $0.69 compared to $0.18 in the third quarter of 2021.<\/p>\n

Adjusted EBITDA (a non-GAAP measure) increased to $47.4 million compared to $19.3 million in the prior year period.<\/p>\n

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

As of September30, 2022, the Company had total liquidity of $198.1 million consisting of cash and cash equivalents and cash held in escrow of $117.4 million and $60.7 million in availability under the Company\u2019s $675 million unsecured revolving credit facility. Total debt was $585.1 million compared to $461.1 million at December31, 2021.<\/p>\n

Landsea Homes\u2019 ratio of debt to capital was 46.1% at September30, 2022 and the Company\u2019s net debt to net book capitalization (a non-GAAP measure) was 40.6% at September30, 2022.<\/p>\n

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

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