Landsea Homes Reports Third Quarter 2022 Results

Third Quarter 2022 Highlights

• Home gross sales income elevated 56.3% to $326 million
• Third quarter web earnings of $20.0 million, or $0.49 per diluted share
• Total houses delivered elevated 43% to 543 houses
• Quarter-end houses in backlog elevated 18% to 1,285 for a complete of $741.1 million
• Home gross sales gross margin expanded 480 foundation factors to 20.9%

NEWPORT BEACH, Calif., Nov. 03, 2022 (GLOBE NEWSWIRE) — Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the “Company”), a publicly traded homebuilder, reported monetary outcomes for the third quarter ended September 30, 2022. For the quarter, the Company reported pretax web earnings of $25.3 million, and web earnings of $20.0 million, or $0.49 per share. Prior yr reported pretax web earnings was $13.8 million with web earnings of $10.8 million, or $0.23 per share. Adjusted web earnings (a non-GAAP measure) was $27.6 million or $0.69 per share. For the prior yr interval adjusted web earnings was $8.2 million, or $0.18 per share.

Management Commentary

“Landsea 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,” stated John Ho, Chief Executive Officer of Landsea Homes. “We 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.”

Mr. Ho continued, “As 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.”

Mr. Ho concluded, “Despite 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.”

Operating Results

Total income elevated 57% to $335.6 million in comparison with $214.1 million within the third quarter of 2021 primarily pushed by will increase in common gross sales worth throughout our divisions, elevated efficiency from our Florida division, and the supply of models from our New York operations.

Total houses delivered elevated 43% to 543 houses at a mean gross sales worth of $601,000 in comparison with 380 houses delivered at a mean gross sales worth of $550,000 within the third quarter of 2021. The improve in deliveries was attributable to the bigger contribution of our Florida operations, coupled with deliveries from New York.

Net new dwelling orders had been 257 houses with a greenback worth of $165.5 million, a mean gross sales worth of $644,000 and a month-to-month absorption fee of 1.5 gross sales per lively neighborhood. This compares to 275 houses with a greenback worth of $184.9 million, a mean gross sales worth of $673,000 and a month-to-month absorption fee of two.6 gross sales per lively neighborhood within the prior yr interval. The lower in new dwelling orders was because of slowing demand associated to the numerous improve in rates of interest which have created uncertainty with homebuyers and impacted affordability.

Total houses in backlog elevated 18% to 1,285 houses with a greenback worth of $741.1 million and a mean gross sales worth of $577,000 at September 30, 2022. This compares to 1,092 houses with a greenback worth of $606.2 million and a mean gross sales worth of $555,000 at September 30, 2021. The improve in models and worth is because of acquired stock from our homebuilder acquisition in January. Average gross sales costs in backlog elevated for all of our divisions, reflecting worth appreciation from earlier within the yr.

Total heaps owned or managed at September 30, 2022, elevated 27% to 12,410 in comparison with 9,756 at September 30, 2021, primarily as a result of acquisition of Hanover Family Builders and extra heaps below management in Texas. Additionally, we’ve got accelerated our asset-light technique and now management 57% of our heaps in comparison with 43% owned.

Home gross sales gross margin elevated to twenty.9% from 16.1% within the prior yr interval. Adjusted dwelling gross sales gross margin (a non-GAAP measure) elevated to 27.2% in comparison with 21.4% within the prior yr interval. The carry was primarily because of worth appreciation and a rise in gross margins inside our California and Florida segments.

Net earnings attributable to Landsea Homes elevated to $20.0 million in comparison with $10.8 million within the prior yr interval. Adjusted web earnings attributable to Landsea Homes (a non-GAAP measure) elevated to $27.6 million in comparison with $8.2 million within the prior yr interval. Net earnings per share on a totally diluted foundation elevated to $0.49 in comparison with $0.23 within the third quarter of 2021. Adjusted web earnings per share (a non-GAAP measure) on a totally diluted foundation elevated to $0.69 in comparison with $0.18 within the third quarter of 2021.

Adjusted EBITDA (a non-GAAP measure) elevated to $47.4 million in comparison with $19.3 million within the prior yr interval.

Balance Sheet

As of September 30, 2022, the Company had whole liquidity of $198.1 million consisting of money and money equivalents and money held in escrow of $117.4 million and $60.7 million in availability below the Company’s $675 million unsecured revolving credit score facility. Total debt was $585.1 million in comparison with $461.1 million at December 31, 2021.

Landsea Homes’ ratio of debt to capital was 46.1% at September 30, 2022 and the Company’s web debt to web ebook capitalization (a non-GAAP measure) was 40.6% at September 30, 2022.

2022 Outlook

Fourth quarter 2022

• New dwelling deliveries anticipated to be in a spread of 750 to 800
• Delivery ASPs anticipated to be in a spread of $560,000 to $580,000
• Home gross sales gross margin to be roughly 20% on a GAAP foundation, or 26% to 27% on an adjusted foundation.

Conference Call

The Company will maintain a convention name in the present day at 7:00 a.m. Pacific Time (10:00 a.m. Eastern time) to debate its third quarter 2022 outcomes.

• Toll-free dial-in quantity: 1-888-999-3182
• International dial-in quantity: 1-848-280-6330

The convention name might be broadcast reside and obtainable for replay right here and by way of the Investors part of the Landsea Homes web site at https://ir.landseahomes.com/.

A replay of the convention name might be obtainable after 1:00 p.m. Eastern time on the identical day by way of the identical time on November 17, 2022.

Replay Details:

• Toll-free replay quantity: 1-844-512-2921
• International replay quantity: 1-412-317-6671
• Replay ID: 11152571

About Landsea Homes

Landsea Homes Corporation (Nasdaq: LSEA) is a publicly traded residential homebuilder primarily based in Newport Beach, CA that designs and builds best-in-class houses and sustainable master-planned communities in a few of the nation’s most fascinating markets. The firm has developed houses and communities in New York, Boston, New Jersey, Arizona, Florida, Texas and all through California in Silicon Valley, Los Angeles and Orange County. Landsea Homes was named the 2022 winner of the celebrated Builder of the Year award, offered by BUILDER journal, in recognition of a historic yr of transformation.

An award-winning homebuilder that builds suburban, single-family indifferent and connected houses, mid-and high-rise properties, and master-planned communities, Landsea Homes is thought for creating impressed locations that replicate fashionable residing and supplies homebuyers the chance to “Live in Your Element.” Our houses enable individuals to reside the place they need to reside, how they need to reside – in a house created particularly for them.

Driven by a pioneering dedication to sustainability, Landsea Homes’ High Performance Homes are responsibly designed to reap the benefits of the most recent improvements with dwelling automation know-how supported by Apple®. Homes embody options that make life simpler and supply power financial savings that enable for extra comfy residing at a decrease value by way of sustainability options that contribute to more healthy residing for each owners and the planet.

Led by a veteran group of business professionals who boast years of worldwide expertise and deep native experience, Landsea Homes is dedicated to positively enhancing the lives of our homebuyers, workers and stakeholders by creating an unparalleled life-style expertise that’s unmatched.

For extra data on Landsea Homes, go to: www.landseahomes.com.

Forward-Looking Statements

Certain statements on this press launch could represent “forward-looking statements” throughout the that means of the federal securities legal guidelines, together with, however not restricted to, our expectations for future monetary efficiency, business methods or expectations for our business, together with as they relate to anticipated results of the business mixture with LF Capital Acquisition Corporation on January 7, 2021 (the “Business Combination”). These statements represent projections, forecasts, and forward-looking statements, and usually are not ensures of efficiency. Landsea Homes cautions that forward-looking statements are topic to quite a few assumptions, dangers and uncertainties, which change over time. Words reminiscent of “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “look” or comparable expressions could determine forward-looking statements. Specifically, forward-looking statements could embody statements referring to:

• the advantages of the Business Combination and the acquisitions of Vintage Estate and Hanover (the “Acquisitions”);
• the long run monetary efficiency of the Company;
• adjustments out there for Landsea Homes’ services and products; and
• different growth plans and alternatives.

These forward-looking statements are primarily based on data obtainable as of the date of this press launch and our administration’s present expectations, forecasts, and assumptions, and contain a lot of judgments, dangers and uncertainties which will trigger precise outcomes or efficiency to be materially completely different from these expressed or implied by these forward-looking statements.

These dangers and uncertainties embody, however not are restricted to, the danger components described by Landsea Homes in its filings with the Securities and Exchange Commission (“SEC”). These threat components and people recognized elsewhere on this press launch, amongst others, may trigger precise outcomes to vary materially from historic efficiency and embody, however usually are not restricted to:

• the flexibility to acknowledge the anticipated advantages of the Acquisitions, which can be affected by, amongst different issues, competitors, the flexibility to combine the mixed companies and the acquired business, and the flexibility of the mixed business and the acquired business to develop and handle development profitably;
• prices associated to persevering with as a public firm;
• the flexibility to keep up the itemizing of Landsea Homes’ securities on Nasdaq;
• the result of any authorized proceedings that could be instituted towards the Company;
• adjustments in relevant legal guidelines or laws;
• the shortcoming to launch new Landsea Homes services or products or to profitably broaden into new markets;
• the likelihood that the Company could also be adversely affected by different financial, business, and/or aggressive components;
• dangers and uncertainties referring to the fabric weaknesses in our inner controls over monetary reporting;
• the likelihood that further data could come up that might require us to make additional changes or revisions to our historic monetary statements, report further materials weaknesses or delay the submitting of our present monetary statements; and
• different dangers and uncertainties indicated in Landsea Homes’ SEC studies or paperwork filed or to be filed with the SEC by Landsea Homes.

Accordingly, forward-looking statements shouldn’t be relied upon as representing our views as of any subsequent date, and you shouldn’t place undue reliance on these forward-looking statements in deciding whether or not to spend money on our securities. We don’t undertake any obligation to replace forward-looking statements to replicate occasions or circumstances after the date they had been made, whether or not because of new data, future occasions or in any other case, besides as could also be required below relevant securities legal guidelines.

Investor Relations Contact:
Drew Mackintosh
Mackintosh Investor Relations, LLC
[email protected]
(310) 924-9036

Media Contact:
Annie Noebel
Cornerstone Communications
[email protected]
(949) 449-2527

Landsea Homes Corporation
Consolidated Balance Sheets – Unaudited

Landsea Homes Corporation
Consolidated Statements of Operations – Unaudited

Home Deliveries and Home Sales Revenue

Net New Home Orders, Dollar Value of Orders, and Monthly Absorption Rates

Average Selling Communities

Backlog

Lots Owned or Controlled

Home Sales Gross Margins

Home gross sales gross margin measures the worth achieved on delivered houses in comparison with the prices wanted to construct the house. In the next desk, we calculate gross margins adjusting for curiosity in value of gross sales, stock impairments (if relevant), and buy worth accounting for acquired work in course of stock (if relevant). This non-GAAP monetary measure shouldn’t be used as an alternative to the Company’s working ends in accordance with GAAP. An evaluation of any non-GAAP monetary measure must be used together with outcomes offered in accordance with GAAP. We imagine this non-GAAP measure is significant as a result of it supplies perception into the influence that financing preparations and acquisitions have on our homebuilding gross margin and permits for comparability of our gross margins to rivals that current comparable data.

EBITDA and Adjusted EBITDA

The following desk presents EBITDA and Adjusted EBITDA for the three and 9 months ended September 30, 2022 and 2021. Adjusted EBITDA is a non-GAAP monetary measure utilized by administration in evaluating working efficiency. We outline Adjusted EBITDA as web earnings earlier than (i) earnings tax expense (profit), (ii) curiosity bills, (iii) depreciation and amortization, (iv) stock impairments, (v) buy accounting changes for acquired work in course of stock associated to business mixtures, (vi) loss (achieve) on debt extinguishment or forgiveness, (vii) transaction prices associated to the Merger and business mixtures, (viii) the influence of earnings or loss allocations from our unconsolidated joint ventures, and (ix) loss on remeasurement of warrant legal responsibility. We imagine Adjusted EBITDA supplies an indicator of normal financial efficiency that’s not affected by fluctuations in curiosity, efficient tax charges, ranges of depreciation and amortization, and gadgets thought of to be non-recurring. The financial exercise associated to our unconsolidated joint ventures is just not core to our operations which explains we’ve got excluded these quantities. Accordingly, we imagine this measure is beneficial for evaluating our core working efficiency from interval to interval. Our presentation of Adjusted EBITDA shouldn’t be thought of as a sign that our future outcomes might be unaffected by uncommon or non-recurring gadgets.

Adjusted Net Income

Adjusted Net Income to Landsea Homes is a non-GAAP monetary measure that we imagine is beneficial to administration, buyers and different customers of our monetary data in evaluating our working outcomes and understanding our working outcomes with out the impact of sure bills that had been traditionally pushed down by our mother or father firm and different non-recurring gadgets. We imagine excluding this stuff supplies a extra comparable evaluation of our monetary outcomes from interval to interval. Adjusted Net Income to Landsea Homes is calculated by excluding the consequences of associated occasion curiosity that was pushed down by our mother or father firm, buy accounting changes for acquired work in course of stock associated to business mixtures, the influence from our unconsolidated joint ventures, loss (achieve) on debt extinguishment or forgiveness, and loss on remeasurement of warrant legal responsibility, merger associated transaction prices, and tax-effected utilizing a blended statutory tax fee. The financial exercise associated to our unconsolidated joint ventures is just not core to our operations which explains we’ve got excluded these quantities. We additionally regulate for the expense of associated occasion curiosity pushed down from our mother or father firm as we’ve got no obligation to repay the debt and associated curiosity.

Net Debt to Net Capital

The following desk presents the ratio of debt to capital in addition to the ratio of web debt to web capital which is a non-GAAP monetary measure. The ratio of debt to capital is computed because the quotient obtained by dividing whole debt, web of issuance prices, by whole capital (sum of whole debt, web of issuance prices, plus whole fairness).

The non-GAAP ratio of web debt to web capital is computed because the quotient obtained by dividing web debt (which is whole debt, web of issuance prices, much less money, money equivalents, and restricted money in addition to money held in escrow to the extent essential to cut back the debt steadiness to zero) by web capital (sum of web debt plus whole fairness). The most comparable GAAP monetary measure is the ratio of debt to capital. We imagine the ratio of web debt to web capital is a related monetary measure for buyers to grasp the leverage employed in our operations and as an indicator of our capability to acquire financing. We imagine that by deducting our money from our debt, we offer a measure of our indebtedness that takes under consideration our money liquidity. We imagine this supplies helpful data because the ratio of debt to capital doesn’t keep in mind our liquidity and we imagine that the ratio of web debt to web capital supplies supplemental data by which our monetary place could also be thought of.

See desk beneath reconciling this non-GAAP measure to the ratio of debt to capital.