LSEA - Earnings call transcript Q4 2021 | Landsea Homes Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Landsea Homes Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I will now like to turn the conference over to your speaker for today, Drew Mackintosh, Investor Relations.

begin. may You

Drew Mackintosh

welcome and Homes, Quarter Fourth Good to Call. Earnings morning Landsea

as the Exchange like to We begins, place of any statements that undue do obligation of to Landsea numerous call are to not upon the invest and in forward-looking subsequent not to these cautions within securities our on to should that Homes I the statements statements applicable These filings undertake by meaning forward-looking laws. assumptions, described any Landsea not you relied update forward-looking Before result subject include in views reliance its as uncertainties time. uncertainties deciding but was representing securities. or factors date. otherwise, risks except which our be would change events as whether forward-looking whether note the statements laws. as And future or are circumstances in risk a made, were include will the this date the Commission. Securities events be Securities and with reflect may and should forward-looking over under risks, statements not they Accordingly, federal it limited call of information, to new after Homes required

call Chief filings. like financial SEC John. reconciliations over the With that, Officer, Hosting can most Michael comparable the Financial be Chris Officer. this today Additionally, GAAP Executive non-GAAP Porter, measures its Officer, call and call of John to measures website, to Forsum, Homes accessed on discussed to I'd Landsea's Ho and Chief the Chief through Operating are turn Landsea

John Ho

the Homes their update for joining total we over public provide company. and finished Quarter milestones effort Landsea for the Fourth want for by you year us today this and outlook to the team entire company. Thanks this some our thank XXXX for Landsea thanking results completed strong a and start go a And to for note. full-year I as on achieving our effort, as team year XXXX our morning. we Good first on exceptional major as an

previously million $X achieving or As $XX eclipsing of income our net the of margin adjusted we adjusted year. XX.X% exceeded guidance total met for billion and by home revenues, stated gross exceeding

we $X.XX a $X.XX XXXX fully per per Additionally, of earnings basis adjusted generated for on on GAAP share share or basis. a

For share, driven XX% year-over-year the of in per in gross XXX XX.X%. to fourth increase in total Landsea posted quarter, point basis $X.XX earnings a improvement revenue margin by

total to is excellent as equilibrium units Association a continue down new to one XX.X% teams market. housing extremely that pace, equates executing a in be our sales at which National the which macro X.X on From our recent existing current sale record of housing evidenced remains of in months job the the A perspective, January. indicated by exceptionally at from amounted a normal environment. did low, year supply This the Realtors, XXX,XXX challenging housing well to for operating homes supply demand. what most The favorable As an business fundamentals home report available for continues plan, be to of end from inventory a low below and ago.

migration ongoing favorable a will by demographics, of in we industry to believe of a some in pool incomes result shortage, from see brought be attitudes pandemic. for towards tailwind years about thanks will come. the On deep a high and to demand these provide in place areas time housing to in our for shift as cultural homeownership our demand cost for We motivated buyers other also markets, continue the a but the rising front, in supply drivers

and the which well-positioned fastest-growing markets some including in rate, fundamentals thanks appeal entry-level and in the industry's to high-performance the markets of the of is Landsea in focus our deliver Landsea in excess homebuilding and presence Florida, has believe strategically a country, positive established build Arizona, overall markets growth also of California, select We Texas. to the homes. our we within

focus to and expansion M&A these through in of the becoming builders goal both markets, on one Our top activity. is organic

to key of building Hanover January As enhanced our bigger are than Landsea company handful as land we growth. Florida with it positioning believe player Garrett at small the the leading it was it for January rather us also family in a pipeline recently, believe Homes we primed greatly is that Estates of be market XXXX, for only win our markets. of of home long-term a builders a most into Walker excellent were acquisition Vintage Builders Homes year. established, a in our of markets of and Family market, vaulted either markets acquisition This acquisition these in of Each Central was better transactions May The lots of a XXXX, favorable in in player behind of many acquisition of an in basis. within rationale not position our this Hanover a our big provided

focus positioning strategy aligns focused our business goals. In returns strongly model in entry-level with Hanover's addition, land-light and product

family beyond. on Florida. progress already homebuilding welcome building into the record extremely forward I team track our want existing great excellent into have be you've the of to integrating look platform, to to this accretive the acquisition and achieved the earnings Hanover year success Hanover to We and Landsea made expect and personally in

demand-heavy of market the continues focus believe on we is more segments this the to and product supply-constrained as Our of be housing. most affordable area the

of to cater a homes believe foreseeable the demand We for Hanover, buyers see are XX% lots that housing budget. will prices sale of are entry-level to great our rising lots meet a to of housing runway buyers. acquisition at us affordable Proforma the to their owned controlled rapidly giving segment, these beat and positioned dynamic persist our that company our First-time for and have the targeted with for continue of to are healthy we this which focus, recognize energy today's Along affordable markets. looking being homes, future competition options for with that our and in ourselves met home existing the lack from sustainability, high-performance We affordable home new in the our buyers lifestyle. latest with differentiate our feature savings, product we automation, and looking ever ease-of-use, for innovations total for than of better a the of efficiency, Whether ownership. automation smart before. out that home get reduce connectivity home or it's home cost their energy office, other homes enhanced more

to our us XXXX. in product Our a gave high-performance in expect competition home continue priced sales a and similarly over noticeable advantage XXXX, that we from

our I call has meaningful ready Before impact CFO on our a joined would last to to growth like I operations Chris executive Landsea Chris I'm December a like for business. of With financial confident formally as -- quarter. on our the asset more Chris made be the of turn is and detail to call our proceed I'd team. as welcome provide to our Mike, that, officially we the to initiatives. great Mike, this over our will Puerto going company who to aspects over turn in pursue

Michael Forsum

increase Chris mortgage each I detail get strong our John. the across him of like working forward as to will to look goals and more and a well. welcome too Thanks, been recent in John geographic with demand fold, rates. despite has I into the And a as and the operational our footprint but into achieve financial would little product with segments goals mentioned, to minute, in

alluded sales our new per January, accelerated fourth of the of actually XXX year, well of California a for of our the per highlight this as XX% homes successes as XXX,XXX This to appeal affordable and pace $XXX to price believe for our year-over-year two is deliveries over divisions, of robust strength months a the homes. New our and of sales quarter in finished at of XXX net throughout to evidenced started average remained the sales to carried XXXX, up year-over-year increase first the of XXX sales as earlier, the orders as product and was we We demand and sales X.X underlying focus into million in month. home strength XXXX with results by an community testament few recorded February. industry of that backlog. XX% high-performance XXXX year a To our John and

an revenues XXX and in ASP. exceptional million orders delivered was a California $XXX homes year growth delivery which last for revenue home XX% in not of we new had sales result maintaining waning Arizona, home translated In which in year. into attainable the and Our challenging chain XXXX, an year, decrease from This issues demand. supply a XX% experience the was while and division market the of

We growth, one for other for to country, the sales the given In levels markets both of solid in XXXX states. revenue construction to acquisition continues new of supply, especially these both in-migration Vintage home anticipate and are for markets Hanover of to be XXXX, and us the in Texas the for our Estates and Florida existing added impact to fact, in greater May, home nicely acquisition. consistent in the new states Family with Builders Arizona year. Florida low from and Thanks both job us make best

is one future know, strategies maintain of you for as As supply key land an of our key build-out. to company a appropriate and markets

over lot is some now approximately to our Arizona. becoming and our XXXX lots Arizona, at of across covers we key in with pace. of Arizona and All-in-all diverse presence owned in in over excited of our and California and California. we strategic more leading Arizona, deliveries in With our years XX,XXX X,XXX are our lots me operate, that forward initiatives, which our almost XX% me were growth projection sales growth strong of a the Family the outside This in Thanks pipeline future great start roughly of the At half of lots lots growth California, country in balance finished in balanced makes when and for Hanover the a acquisition enhances strategic and X.X controlled What position That X,XXX of XXXX, suppliers. makes a of us are the both local organic a national gives portfolio remain through We have dealing on M&A. highest excited. California. in located and states benefits player lots of the and in portfolio scale all select Florida, Builders, with strategically Florida Texas. our and now markets we of focused markets major communities and

and than I be anticipated shortages how of specs, the supply and much the means to particularly, terms gotten normal challenges. ordering smarter navigate process, the number the starting for account the continue with delays but to more This sooner In of industry, believe throughout lowering materials have various our to delays. company, we and faced build about chain, SKUs,

markets. within the availability is supply seeing and spot COVID While forecasting our are easing we're current guidance, any in our related of not some we of the chain improvement restrictions one in labor of bright conditions the

hopeful as favorable continue are subsides. these that trends Omicron We will Variant the

like our and and provide I some call turn to our Now, the who over full-year financial results Chris, for expected give fourth guidance would on XXXX, to will on detail more in performance XXXX. Chris. quarter the

Chris Porter

or same It's more through and our this On start the was diluted analysts of income to full as delivered Mike. per financial versus guidance team, basis, net first total our net the know share. per for for financial our the million XXX% in be growth $X.XX of year. well. an first income I of fourth by a XXXX, getting an period looking net $XX.X year or to great quarter results providing share. and quarter million and overview 'XX $XX.X adjusted Thanks, for forward to income diluted start great fourth full-year in and and walk we investors with, $X.XX To part quarter the I'm will then

a being a full results or income versus XXXX. for a the margin point acquisitions. XXXX. a quarter, fourth quarter fourth delivered the strong while million to year improvement company. our integrating our of that gross also pre on reflecting and and reflects from We share loss focused adjusting expanding This helped public net This $XX.X of $X.XX basis performance of full-year dedicated recent XX.X%, to delivering team margin drive acquisitions strong XXX -tax integration is The per a

Moving fourth deposit price Revenue million the in home deliveries $XXX.X quarter partially The average compared selling driven especially Mike by grew the division, million the Arizona decrease addition offset delays Texas earlier operations, by increases through deliveries benefited revenue Vintage California for the described to earlier, and Florida to homes. primarily $XXX.X a total the our in markets partially volume within in and was of on this XX in the to quarter offset of of home from XXXX fourth increase in $XXX,XXX, year. acquisition of construction XX% by our decrease in XXXX. in Homes of

of a the For revenue in price. for crossed $X.XX division. an Texas way total Arizona producing decrease increase XX% homes total average of the $XXX,XXX. nicely Deliveries California led billion of selling homes offset the total at for in the full X% the over both full a our our a a delivered in increased we XXXX. XX% average year, price year increase deliveries, billion added X,XXX partially mark remarkable $X revenue with strong in to a and number and again, of by XXX,XXX Florida selling

increase from community our drill that quarter in other higher revenue, expect revenue our master this in master homes, at $XX the acquired fourth deployed the we a generated Florida our we sale that total full-year plan to division lot we quarter from XXXX have The strategy a and of million Hanover much the year following in We Family a of enjoy Vintage of Builders part coupled lot portfolio our revenue the as million meaningful California. company. become communities from year. we primarily successfully addition more the end in and plan our $XX.X the with similar our came Within for LC sales of our

have well to the in a opportunistic shared to us combination the advantage and us skills be before, finish maximizing risk. allow provide as we lots homes, of our returns As deliver in reducing and competitive market as

of million year. produced with pass adjust compares our decision a generated company's production orders home strategic and X,XXX sales orders of X.X slow the was largely rate new a last This full-year cycle active lengthening total fourth reflected results value monthly XXX rate versus pace X,XXX in absorption community for times. The we a of was This XXXX. of homes price to result home demand value in enjoyed as year-over-year sales of growing $XXX,XXX markets. absorption of to our continued in the increase in with decline million XXX selling of from total dollar orders XXX in per During average dollar also But the and an reflecting a we a XXXX to to XXXX, X.X%. we quarter, $XXX,XXX appreciation new XXX of the these orders, on monthly in our in price temporarily

Michael Forsum

market average We and expanded a total last XXX represents sales compared year. quarter, homes a in ended dollar of of to fourth backlog year. $XXX,XXX. This GAAP strong XXXX at Again, reflecting in price compared XX% price the value appreciation. with home gross a in XX.X% total in to in with fourth margin dollars to million growth volume $XXX.X sales an great the demand XX% last quarter with of the XX%

to increased sales basis. prior points our points Home XX.X% full-year, to basis gross margin the sales XXX basis XXX GAAP for adjusted to increased the For home in on the year an XX.X% margin XX.X% compared gross year.

Hanover the with the an balance the acquisition we to year funding ended as of anticipated we sheet, unusually million, in $XXX.X early of cash Turning balance high January.

million, year. which to only existing New executed new us unsecured anticipated the the us This of off be with This $XXX.X is the net our all except revolver secured costs this debt York $XXX quarter, facility, and reduce year, of new million earlier us to flexibility of $XXX.X we our revolving During one retire for credit that helping of at allowed debt left million paid in greater the with giving and facilities on us key end total cash-generation. to

Chris Porter

Hanover Net on a a debt-to-capital to book fund quarter we approximately in XX.X% this the year, $XX the increase last was to post our million acquisition January Hanover to slight cash and funded with capitalization revolver the as to of million net we of revolver the hand $XXX year. In a at ratio on was year a acquisition. on debt compared raising end XX.X% ratio third compared drew XX.X%, acquisition. cash

the acquisition, XX%. approximately with capital at constant capital our to net was debt-to-total our remained net debt Following and year-end XX%

first full to provide of XXXX. like Now the I guidance quarter would for some year and

XXX $XXX,XXX the we in deliveries be new the quarter, XXX first the And ASPs of be to range in units. home delivery For units range to $XXX,XXX. anticipate to to of

we sales anticipate accounting are our and our XX% be to Landsea standalone Hanover price to the On acquisition. gross expand GAAP home purchase finalizing We Although basis. margin XX% to to approximately respect a on still continue basis. a

margins we an on basis, new to of or gross the home sales full-year the basis. a XX% $XXX,XXX of For on be to Delivery XX% in GAAP to XXXX, anticipate XX% the ASP be be deliveries to home range units in to of to $XXX,XXX the XXXX and adjusted XX% range of XXXX range units. is in

John will I to turn the remarks. Now over closing some call back for

John Ho

Chris. Thanks,

Major a performance building XXXX quarter company. part and benefits set proud of Builders, of top operations in be closed in have our projections. continue our Family fueled from be the and provides for home and we full-year year, the January as immediate will which stage by our generated our to to lot bottom profits for of and of growth our in of this Hanover growth acquisition We to terms that future line significant fourth

We have new in of we the in a capitalize we segments in and markets construction, product which what strategy long be great runway will in in on a particularly build growth operate. we which believe home to place

and Given compelling outlook, a Landsea the this positive trade significant strength sheet, discount our book a fundamental of opportunity. presents believe at, we our currently investment value of balance shares

use of which recently Our we million plan, Board a putting year. authorized share anticipate assessment agrees to course over and this with $XX repurchase this the

which to takes success. to efforts team coordinated to homebuilding our an the entirely your XXXX prepared look start operate a for to entire we'd This great now XXXX. I'm and of a Landsea in like the organization. to I'd questions. the that like That future remarks in excellent thank one and call up forward Finally, market our efforts concludes appreciative for challenging and and sharing of the very is open

Operator

Instructions]. while stand we by the [Operator you. Please compile Thank roster. Q&A

line Our first from Matthew comes of Bouley the with question [Indiscernible].

Your open. line is

Ashley Kim

Hey, the Matt any you done Kim move fall backlog how the if that recent in many [Indiscernible] tests guess of maybe today. rates, kind and of is light out get good could have for financing This potentially on actually backlog I Ashley question, first can't need? morning. stress they of buyers they in

John Ho

and that. and Ashley, address CEO, Hey President best have, we our Mike, I can I think think

Michael Forsum

actual Hey, Ashley, is a we're even do potential through absolutely. as we a off some We rate the it level offering. cancellation programs And forward, meaningful sustain that the highest monthly when on the backlog have of have qualifying answer we're it a that disruption actually our actually to we going basis. the them sales start a higher question -- increases qualifying confidence could those come yes, within without process, they any that to or prospect -- Currently, our at we rate today, backlog. than prospects

Ashley Kim

that that. forward. then share about authorization, that the land the future growth, for for are balancing on M&A just well, with And Thanks how repurchases strategy balance more then going and thinking between buyback as buying you

John Ho

This John, I'll is Sure. address that.

I certainly company, think and as as its significantly over a of matured a year one strategy, public year. good capital grown the past allocation our part we've after

stock some the markets activity. of for work. at opportunity to because and think we of certain values, that at price though as I which seek to of new is amount not capital that to capital our -- to and continue that it incredible we that do look away taking an of also using a allocate put better growth facility, us we land M&A right revolving our is from and to acquisitions generated flexibility and discounted appropriate We currently our control credit our now, think certainly in capital, current expand we are think such towards XXXX on we've some under

about from of of be forward, markets it's we allocation going the doesn't strategy in. So think how we continue that part our think to take in and continuing strategy be operate fast-growing a we homebuilder a part but will capital away it to that

Ashley Kim

leave Thanks there. I'm color. the for going to it

John Ho

pleasure. My

Operator

you. Thank

of line Rygiel next B. comes from the question Riley. with Alex Our

is open. line Your

Alexander Rygiel

congratulations year, Thank on here. questions A that. you. John couple of and quick Mike, fantastic

relates to First, important year. as an it this Hanover to is obviously Hanover, catalyst growth

attractable you seen also can so year-to-date, about So what talk Hanover prices. referenced lofts Hanover, you've little you inside a far maybe at at of a pipeline and bit more

So maybe by comment mean you could you what that? exactly on

John Ho

hand into XXXX us as Thanks, contribution organic of for of an markets, that Alex. the I'll quick when it's terms over address an we've Texas Florida. scale these about And year the calls, new to how that of for was important of year to over in I'll and important it Mike us, to approach acquisition. is some business. it And on expand and real But in of addition to similar getting we quickly the talked and to about part in very markets. M&A those markets previous land

to similar some top that to need entered s run that power need successful that the gives the we we business. market strategy where through M&A have that bolt-on scale to of home become purchasing builders us a to to organic Phoenix one and both we So that and the us propelled the quickly market

we're and strategy, just Central market play acquisitions. that with Family the Vintage Florida execute particularly Florida to think the and continuing in Hanover I strategy that

actually the supply let in overall, the that's that end not it the a and then the into most to top us of exciting terms all I look demographics, couple demand and of one So market you But it, which prospects, growth given the know to markets, Florida at for XXXX, of we the if share, how here market. helped meaningful as and going will just very us then going of Mike that. is be as the first is of support the for just months address as in imbalance relates us

Michael Forsum

that. We for Thanks compliment. the Alex. appreciate

As we say the the we that very to go absolutely thrilled all continue through be of attributes level. gates the strong. start relationship. and believe go, And underwriting year, market incredibly as It of seems high performing the Family are Builders coming with I that Hanover were they're during can far as showing we we our a will remains as hopeful out that our at that

great of your way As through the inherited the of Family this believe limb. company, the their of Hanover time through our getting just uniqueness manage well, entity that just in delivery we around through was Its some which that land control contracts. way sheet lot blobs through options acquisitions. to those controlling a I and that growth question by the that The acquisition the balance by in now market we options

again that testament its So that that acquired got we're the there. that made and we in great of before lucky builder the a that home great they to them organization now that a foundation high-performing market. super And we efficient capital Florida work recipients Central establishing did

say. I happy, to guess really want what we're that's So I

Alexander Rygiel

question time then, maybe And appears to better for sales and you help pulled us some FORENA. huge if also that now. upside benefit And to on the New comment exit my market, the sheet out be quantify on York been working cash you've But a I understand that. that timing positive Obviously, next balance to the York. overtime. will surprise is related wondering New then, was it going even is could of that pace that could flow at

John Ho

sold New XXth in I'll started When then the Coast, Jersey and sales Xth. New a in had Avora I'll market address how on Gold it turn we the we two it completely were flow portions year and the out. perspective cash in terms Mike really York, there. on and assets one called FORENA to Alex, from of XXXX, Avora then and

into I we've $XX I million. commitment and approximately have significant balance think is just only which that And this At our homebuilding And that FORENA, not actually be as our return out business. couple deliver, out, capital, look back about we time, already capital we we single-family and left capital we there amount New also a that of year to now sheet returned York. horizontal be we sheet. that redeploy And entire of the deliver back capital are so our able sell balance say what will to we will equity to a to this to all to units is would our have expected building year.

Michael Forsum

Alex, rental that a real Particularly, foot. a $X,XXX and both for New nutshell, In residential Great. York sale. is would say back, I pricing estate below

pricing Our $X,XXX power band foot. is a FORENA around at

taking are So that. and we that coming market the of really as well-positioned for tailwinds said, those FORENA is through advantage very this are of I really, resurgence

sold the units to as we're So underwriting we we're it that closings we been XX building first really up the started retail is downstairs. we have forward the sale, building, thing back. for of in What's today above couple building and relatively years and looking when project complete positive XX is great that the units have have shortly out numbers throughout our of that which as a coming our sold we this a about here

So the we are not through. way of getting absorption by way discounting and working our

and sticking Manhattan, to right pricing floor great in really for then now. the plans, testament great that's location a it's building, a So well-planned us

this how out. happy very we're turning So is

Alexander Rygiel

last one Mike, question. And

communities that get obviously on update And and the or also, mentioned, sort in us currently last year, that months pacing dynamics to of the you little bit more market color You X given you're you nature? on a of something many whatnot. sales your how a building X and were Can piecing us give materials specs. sales, to then ability

You mentioned that you more are specs. starting

does how that this plan into the So business work year?

Michael Forsum

more final with a process, more we're creating not releases degree our not California, as excellent the in our releases appreciation generalized releases, would by terms In alienating grab deploying industry. the we're our approach the allocating that home to is successful Landsea opportunity Being in the it. forward again the a we I've Florida, that's grown the Alex, competitive a going in a way that to all hugely come of process. around sales the particularly general In has each they Normally, It very community back coming three up and out is specific throughout as do through market we more of and with in the that back at if we through for out become same pretty still term everywhere, said, specific, communities maybe operating. of optimizing uniqueness. round that country. release but using frenzy that's to which are in frequent tighter our coming In more team way, they're that the its of long new way have are frankly going then has really family. become a strategically sales But at and still in executing areas are us of some giving and we pricing Inland that's an that without and in been in Empire, X-XX, much being XX-XX, best there re-pricing we have pricing buyers release healthy small-er Arizona, sales that's our to of four out

John Ho

on opportunity, a to the in we higher price trying area, building way shrinking really configuration the too. don't and going how grab building themselves, the and final opportunity that in density the units. in that best going out because They've up lot That's about Ellis. it. our a the with releases learned community that in quite doing remains bay it Northern were really Again, the a what Southern appreciation. And on in doing in the taken of they're market. little great we've Tracy we're do then units California but Market job California, strong We applying a have there, get a to the maximize hold of the

challenge. big as but spec which to really, of been talking that some from sale permits of we're through your a getting is done getting about a just is also cities, a the and the question, getting response bottleneck, better, as it's On to start, side

specs process result are houses, release But here we to cycle with we've idea and delays are been the front are But before. our deploying challenges elongated that through sold through starts definitely, permitting talked as of in spec time get more first out that's of about due to for of whole, that trying to ever, the to the the then production a anticipate talked So all the just our over are I government starts in agencies respects, just about. they you quickly then some trying process somewhat

Michael Forsum

around, this. the went we we to have ability analyze

it's today. less handful entire move-in that's think of, our know, for literally There's no a the that's don't unheard a communities standing of in any I handful have And inventory we than immediate of. throughout even I specs of almost less company. available that than

that really So quick standing of is ground, the them catch-up the there once to for quickly out we we are put spec cycle. out, not move-ins, production sell specs standing idea and on houses the the market on real because

Alexander Rygiel

Thank great. Sounds you.

Operator

over to Ho Instructions] would turn for [Operator closing now no I'm call in you. I the questions queue. like John back Thank showing remarks. to the further

John Ho

next everyone. you, that to you. you earnings up Thank here. look coming speaking with the call, Thank forward be We in will shortly

Operator

for today's your call. and Ladies this participation. Thank gentlemen, you concludes conference

now disconnect. may You

Ashely Kim	Barclays
Alexander Rygiel	B. Riley

Landsea Homes (LSEA) 10 Mar 222021 Q4 Earnings call transcript