LSEA - Earnings call 4 2023 | Landsea Homes Corporation

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Operator

Greetings. Welcome to the Landsea Homes Corporation Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Drew Mackintosh. Thank you.

begin. may You

Drew Mackintosh

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

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

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

John Ho

our the diluted strong Homes quarter per of get we the for by income today state as in our Landsea of share. results construction year discuss of a quarter, strong our homebuilding to XXXX, generating a our stated accomplishments delivered year-end. thank joining above provide $X.XX, current by $XX.X our full another profitability guidance million, fourth and or and outlook. fourth net go push you quarter, closed to for morning, of We recap for in homes our operations the teams Good came thanks deliveries, in fourth us over quarter

We most year-over-year activity into of performance future focused weeks compared has rather orders than are more the improvement our significant the also XXXX. X experienced this first of up to a this accomplishments. on momentum order year, for company's and in call you in realize same new that the past our carried I period XX% with on XXXX

some and think company. XXXX to foundation February, offer key to of crucial a home the is throughout era and up was uncertainty homebuyers for with it's of Landsea what's to offer getting mortgage our as the of controlling In they array and home. experience I services of buying this. component broad comprehensive suite by purchasing quality of when reviewing services a worth us financial Landsea Landsea Title, also come maximize their which buyers this running from our along process. launched our Mortgage, Having It allows we the to Title us of of and to achievements during efficiencies financial provide enables title rate a closing the timing

of actively expanding lots a intent signaled by which has earlier this almost of this a better A strong manage market. and selling of give in that agreement buy our X,XXX Texas. move homebuilding year March, Dallas. through entering and We to pipeline into will definitive Homes, Dallas-Fort XX footprint, our position In intention Worth-based grow to presence in company's on to followed Antares to the us us the communities we relocation logistically announced headquarters the a put Landsea's our state in

our for deal. transaction transformative the a be sourcing will closing as in credit an company our and and factor area this important to relocation Antares being expect We

capital reduced in of series our markets Both large the and summer, the by shareholder company. shareholders, received June various a a and aggregate investors, initiatives Gordon. institutional principal provided of concentration fluctuation one the private our capital in greatly secondary needed of we transactions July, offerings one that were provided limiting with float of interest we transaction that of amount placement and a base, August, increased of Angelo agreement share purchase entered completed investors. in stable In exposure benefited two traditional us in That much with the level notes including This for the our placed behalf million of rates. In base the our the offerings stock. into on note and growth XXXX. while pursue executed in to We market, BlackRock due successfully $XXX we well senior to with our shares

of shares Richfield top solid a Homes. our year, operations some All shares also of In real of million and better stock. value compared in the a targets took been to in our XXXX. we In profitable our allocated XXXX of has establishing Throughout actions creating rapidly goals aligned team acquisition shareholders. win homebuilding to repurchased back October, thereby a a by a the these total, an we in we to as to our new $X.XX, we a outstanding with path roughly scaling was returns established our were Colorado assets with manner, operation of Colorado average capital for at reducing of X% portion our end the X.X presence price management for time buying certain and of one a us. acquire for market successful for

to good our of future. over we value an value $XX.XX, to a are success increase ago. proud share operations was Our turn I the we path am in XX.X% will XXXX provide greater like today. call on a a who to to our share year-end on in are markets believe in we achieved believe the housing position $XX, take I'd tangible Mike, see year quarter. positive in per more detail that, book of what book this per advantage and and the was With of fundamentals we from our We

Michael Forsum

January Thanks, new in into made John. terms both year-over-year fourth per closing to at homes of our for X% and has peaked been X.X since, ever and through and new steadily Since carried month. orders the Net February. sales XXX% were X.X have during sales homes, accelerated quarter X.X XXXX. the of of and year, prices. first start to X selling October a in the strides in weeks of of the declining base great momentum Incentives of has month pace We up pace of per community the this X% on currently trending quarter XXXX, the fourth

historical do see our norms, lower than this While markets. is incentives in we trending higher

average full Also, the XXXX, to our we XX% orders organic increased our to value year-over-year XX% to the year in community to were Homes acquisition. increased adding expect XX% the Antares dollar $X.X before XX% existing see For up would of organically XX. billion. growth of count to XX% X,XXX selling similar the and We divisions

communities. lower appear driven some a form of rates supply and all and demand of increasing payments. a by a their economy. to to selection we for of to buyers home the to and Many seek industry though mortgage move-in Consumers financing lack see our looking and have demographics, exceeding the existing options, of our incentives inventory at normal buyers our across are that of supply markets monthly healthy that's new lack existing tailwind market responded remains adjusted have quality the home spec by our new still X%, The We offer affords. as majority in of quick these the of for our resilient continue amount available buyers

one in this the standing homes of are any selling community, very inventory to at production. and a have we in needed started time the actively we quarters into next any Although few close couple have

our turnover the terms This the cash shift supply building over to of and In lots coupled of a our with inventory markets boost our targeted We and line plagued our build breakdown improvement, inventory with conditions, scale should spec as believe committed that controlled, pre-COVID mix. times behind standards. XX% to remain owned in returned XX% and chain of We generation. remaining while size XX,XXX our flow issues underwriting in with ended help with levels. to growing industry year we disciplined are have with our us strategic of more each worst the

Texas. Our The Antares push goal recent California start this year. a on and in company's and to of Arizona, in in establish the our to existing market, build Worth is the closings momentum have Florida, beginning Dallas-Fort start continues in we acquisition making and a to in while our pipeline quarter should active Austin presence the our first further of running community us gives to efforts generated total grow Colorado, to sales contributing big penetrate to while

summary, quarter pleased fourth with we hit will John and company, we transformative I'm be that In concur in for XXXX guidance these and am with I will I of turn quarter, Chris, on and preliminary come. the team's for a this in who was our proud some year the execution the for XXXX. over to milestones I'd of our accomplishments benefits the performance give years call that, the reaping to With financial XXXX. like detail provide to more

Christopher Porter

Thank and good everyone. morning, you, Mike,

income million, per we income Mike are This diluted performance $X.XX with John in to our net or year. quarter, share. net diluted of per $XX.X very $X.XX million, share achieving mentioned, compares As pleased and $XX.X the of or last

of stated X,XXX share, income revenue X,XXX exceeded year, $X.XX our Fourth million, and or decrease of to quarter diluted X% price. revenue lower deliveries. guidance XXXX million, XXXX. generated New XX billion This quarter and a for the $XX selling For per we between home York X% $XXX Texas, which of was X,XXX added deliveries, sales and $XX.X on of was volume which in decline average million net $X.X partially of fourth in lack the and X% quarter fourth attributable over on homes from lower a contribution based

the for As sales or revenue quarter, million. of enter communities second few we $XX We for the other past closed and total been quarter, market division in a to closed XX first discussing calls, contributed homes million. million begin late this deliveries $X.X operations revenue Colorado and our quarter. should this quarter their new were also on in have In in excited the early we from Texas $XXX lot new

deliveries made of California revenue. the and of of Florida XX% up represented XX% of XX% the XX% During of home revenue our XX% and our the quarter, revenue. and and home represented sales sales home of difference our sales deliveries with XX% deliveries majority of the the Arizona

quarter the will second Antares segment a see our closing following contributing XX.X% the XX.X% gross from sales Colorado starting basis. anticipate and and acquisition. quarter, of full contribution have new the deliveries ramped-up our In margin having Home was as of for XXXX, a we adjusted year on DFW fully we in Home

to more December, the mortgage XX-year it cost Incentives of last the increased revenue, our the increase this saw treasury end As X% significantly. significantly stable X% and sizable spiked year. home has also of XXXX remained averaged levels. of fall, and We of from towards buydown X% the this in XXXX between first quarter a during sales decrease incentives

We depending cost level expect the the can on today's fluctuating X% rate. in be Buying underlying overall with X.XX% the spot environment sweet to a down mortgage to actual with and levels from X%, in incentive range remain environment. elevated XXXX seems to the rate to mortgage

XX% SG&A from for revenue up Our in points expense XXX home XXXX. basis at the sales year, of came

and see that confident see the As the both are existing an rate we put will company leverage we previous in this delivery in acquisition, have Antares on we as ratio. corporate to run leverage our can we from we overhead place Richfield the discussed staff, With grows. we and public will begin and improvement overall infrastructure calls,

For the basis realize the as and with overall year, loaded increased Colorado effects to our we XXX improvement SG&A this of being deliveries expect of points in volume more from an back-end efficiency XXX DFW. and we

XXL million, XX.X%. effective tax expense homes Our credits of the This qualify have qualified our fourth was of the that fewer in to more $XX.X new, tax to we an quarter tax for beyond. majority expect year, for the our total year $X.X bringing for rigorous, XXXX homes and to rate million for the

$XXX $XXX.X under million availability our to [ balance liquidity, cash equivalents million(Sic) in in and sheet. ] ended million(sic) $XXX.X Turning the $XXX.X [ $XXX million(sic) cash revolver. quarter and million [ We fourth ] our ] in million with $XXX

[ XX%(sic) ratios to in stated capital. remained leverage line XX.X% at XX.X% ending XX%(sic) our and with ] debt policies Our net [ quarter to total debt ] total the capital

at $XXX,XXX Now gross at looking to year, quarter, XX% XX% $XXX,XXX be our to and forward and the price the margins margins to anticipate Antares deliveries XXXX. for of including X,XXX And midpoint range which to home new to new represents XXX XXX in deliveries, an full the XX%. sale adjusted first of acquisition, over and growth XX% XX% X,XXX between of the we average gross we anticipate between with to be our home units, GAAP a

expect which in to $XXX,XXX We ASP as be we will to the the annual XXXs, of range portfolio. our ASPs ASP numbers Antares add these maintains to deliveries $XXX,XXX. low in our them the an impact of

acquisition. we adjusted margin GAAP our purchase in gross full These year. margin are in XX% be anticipate accounting gross and between price upon full to to and XX% Additionally, be to sales the with for Antares home the the assumptions margins gross XX% dependent year range XX% ranges the for

the until is the interest rates current open change overall of continue like remarks. inflation, now Also, the And change, questions. incentives call the final market as over not to best up more second it that in conditions on our to accordingly. for will and with We based could operator quarter. prepared estimate our to acquisition the I'd results to we And turn concludes as close guidance the this today know allocations

Operator

[Operator B. first line come the from of with Rygiel questions Securities. Instructions] Our Alex Riley

Alexander Rygiel

here. Mike, congratulations. strong Chris, very, A year, to quick finish couple John questions of and the very

new First, what look price back XXXX? would communities say growth. you organic coming Can be selling again of organic the growth What greatest could markets you what and see these did average community discuss like? your growth could the count to in

Michael Forsum

Sure.

some certainly online. numbers me take communities the we're just talked We expansion California. average sort we'll Mike. the organic Florida, in our sales we're our range remarks, That markets stab the communities say about of see the being Let you XX% Phoenix But grow as We on in in. recorded we in to continue from bolt-ons the be which then will growth. that, at Phoenix, and of to numerical It's Austin it, of market, Alex. that talked the of if bringing doing all in I then remarks. XX% put a And generally coming well. would still price in the around about balance

are up we So that deviation around it But upon big down and could running, around see mix don't that. where quarter-to-quarter, know, from you move depending as any of and things number. kind

specific around share a you that. has number John can think I that he with

John Ho

communities quarter guidance is Alex, the think, in organic Hey, coming our growth. of, from I I first primarily range think $XXX,XXX/$XXX,XXX through our actively selling

in They Our homes $XXX,XXX. expectation low the close is this in price we'll quarter lower second that a of have selling the Antares year. average

So price and expect year full $XXX,XXX our be selling to we average $XXX,XXX. between

Alexander Rygiel

And spec on you're like comment demand It sounds specs you could secondly, your And very now. like on right their definitely strategy, high are sounds that. focused it terms?

spec inventory and maybe could change? So what comment on it looks how like

Michael Forsum

that it's a and sure, for looking don't see Yes, soon buyer for just they of that options. ongoing move-in whole resale back the quick again. our as Mike is It's today profile an we business bouncing have don't lot market part component Sure. of because

a So we're us that to necessitating lot sales get our said, of then out starts it demand. selling That into production. and ahead picking up our being of with is

going So we currently, And roughly, we're call X/X, into starts, about to them cycle. X/X I we're sales starts. production then as spec X/X, builts, against running or be say, would XX% dirt the

XX in be the X/X, within the second days. move in words, that under our and X/X of looking be the the -- -- So would the middle are last would obviously, early in for the part other somewhere then middle within X/X being sales the those construction, quick house of part first last the

breaks it how generally that's down. So

Operator

Our Reichardt questions of the from with line BTIG. Carl come next

Carl Reichardt

I on quarter think guide on do And basis I you When will mean, that back-end how assuming GAAP. asking, margin XX%-XX% in two? XX% think? bit going Can you second that quarter/fourth between on close, those little to a said then, Antares you be out? will us Chris, purchase assuming accounting just -- for of third lay gross are help core, to and quarter What loaded, or -- a about the you I'm the, just I actual points it's think I'm loaded. 'XX XX%

John Ho

comment the then we when what our expect accounting best and closing on April/May, a address sometime But and is. Chris purchase it timing Yes, can is I'll our from to close. estimate expectation

to year talk I think accounting, on it anticipate is would that the sort we And our the receive everything track Homes. relates as purchase after And for Chris the for deliveries can that. accounting. full estimated closing purchase to on about Antares forecast our of include

Christopher Porter

Yes, Carl.

purchase million price Antares way. range what it full kind through total of I would we then in close $XX purchase we year anticipate do accounting We'll $XX first But know until bleed best Hanover. right, that And did being X. it be would kind of year accounting kind right, final and million and they're would with actually did million big percentages $XXX to of the that's We adjusted back you're of So And analysis. to adjusted year. price April/May, close why similar of it roughly the Yes. be towards you and changes one And with yes. there -- between -- loaded, really differences would basis, that's more the gross an see on the margin we gross in the what that right -- back-end and right the XX% but the of the year, is of in midyear another in because now, we kind through similar now this guide anticipate Hanover. XX% of as said, structure. We with John won't very use, we had closings. bled very similar would

Carl Reichardt

that On said. Okay.

be timing in of correct of timing, So our sort the into or build the terms of if that the you close? roughly the model would mid-May conservative

Christopher Porter

Yes, conservative said, frame. think a John what On basis? Yes. April/May had I time

Carl Reichardt

you but get might April. Yes, Yes.

right. Perfect. Okay. All

Okay, homebuilding stock, thank in shares. was my volatility you you your -- second year, so is bought question stocks of for X% that. there then your And some last back

you you or sense business, trying some of want would consider this share opportunity them capital an year? about As I'm deployment out Given look does sort to you the more thinking capital, market that you're year, core grow the do? how to grow or what more opportunistic strategically the Would to that you're this a to and more more to repurchases greenfield acquisition fit? you year of the John, in that thinking last levered way in for utilize make

John Ho

Sure. definitely about Carl, to had so shares, secondary last we last our completed an year, there shares. We offerings opportunity increased almost was repurchase average successful of outstanding X% $X.XX. profile them tenfold. price the our of And an repurchased two repurchase of year, stock very liquidity at

as So you and a we definitely fourth company of of our and was can as we've at priorities see overall announcement Homes for accretive rewarding Growth acquired Homes Denver, Richfield very us demonstrated Daris to we our the Colorado the pretty with in that then is acquisition, expanded and earnings know. and that price. quarter when the one into

the had to as areas that that's use call, for of at year, stock continue a last below is good repurchase of to. million not And that growth we price book program at that new a one $XX time, we this at we repurchases. year allocation use. our we use allocate that announced capital this -- the So we that certainly doing same -- capital the trading also our we're will But given of believe do value, a why earnings the

a the sacrificing Certainly, our one see as buyback help to grow is at continue and at is, but some we of -- and share consistent us balance, shared the we're price value. It is use for it our capital of our guidance to the shareholder drive share see same able price same value. we're we've the a consistent stock as grow we So at as be to of create as be to ability continue our time, we to the to not But growth. do tools and that still for do given in year, for time, do board discount book repurchases. which business do a that -- and

Operator

Jay, of your questions next Please proceed you Our from check Jay self come with line your the with McCanless Wedbush muted, if please? could questions. Securities.

James McCanless

go. Yes. There we

about Sorry that.

it what compelling taking deals we've year, Or there's to out you've make question So, valuations what given already sense of bought? a more M&A? seen there some to step do still develop with lot Carl's further, more a out this there does

Michael Forsum

it It's kind to always company as start profile. where the we it's our we organically. Jay, we've this I or a can John Mike. to growth we're size a once solution part that of there. grow is flags are me But our have at think not backfill and going I'll the and of scale achieve Chris market, this. that the we our have scale today makes I'll said on a of long-term and going get the established us forward, of But business that player we M&A into in markets, just -- maybe ambitions and a are, always we've can a

We have be members game join to our attract level the trades, and real of meaningful a team. our to some attractiveness operation have it people the way, to team best be in a in land to

is the going deliver to how and family that as secret bringing established those out We've it. Landsea go that can that choice think these expand there. to we're reputation we sauce are a and do feel good our going kind part successful we integration think, out acquisitions our continue something brand. in strong what nuggets I acquirer the teams a on which do for find of and marketplaces that an be to we're be know then we into in a entering. to company we're of, at forward. It's definitely that's those to we And continue So we think We of

see, once absolute, to at or I mean expect So will a but think from forward, a as we've and to acquisition, year us to to once see would do continue continue probably That standpoint, -- so. year so. I least John that's always an that continue grown we about that doesn't says

John Ho

to in our Jay, discipline. in I one buy through our land, financial I always add is growth acquisitions go also would when organic we a M&A very that and would -- growth thing maintain that we strict our

the XXs. we in the still ratios despite just low mid-XXs, growth that incredible maintain So leverage debt-to-cap had, we've ratios net

that to So think last that months. those growth maintain Builders M&A because will we Hanover look year as And within we state do, well. policies acquired in very with quickly Homes X prudent. we that's our expect always January, within in And the leverage XX we within financial we we're just the Family of when able to same Antares reduce to

James McCanless

Okay. Great.

that The second of SG&A 'XX. talking question lost you when were again? I had, outlook the you me I go track think might it for where Chris, Could give you about guidance

Christopher Porter

Yes.

kind down dirty overall about the point improvement end to on So of and just expect ratio XXX I that overall, year. of would by XXX basis the

where lot ratio being So to the amount. Richfield has depending in. we got that in it help improve compared full costs that of would the then by 'XX, acquisition of do if us with Antares additional add A you the well, volume costs look from there. that and I see to at able as because on you've those of to 'XX when close offset we'll And some on coming ramp-up

James McCanless

lack that the just Or for -- did see especially mortgage it incentivize I communities? with against had, people into January drive the have in Okay. February, that the from last is the nice of to into guess, existing you. you one And absorption That's is growth? rates pushing to I homes there out to great. acceleration moving

Michael Forsum

although this year. Jay, we're new Mike. the as is still decreasing in a we incentivizing Yes, go way into

out for getting pretty But So terms and coming of in the new been in way seen doing active it, buyer definitely have all same but in there's of resurgence we the and we're around it's into buy-downs, no excited year. industry, mortgage an result. the we've demand that there our

those are to start it mortgage a to solution see So there then parts a that short a of of sort mix and as the looking with a between providing our for those fact housing go. time spec to in continue that period we're continuation we'll component of buydowns incentives, through strategy in

really strong a selling that'll So feeling continue bit. it's start we're and confident to for season, a the

Operator

BTIG. next of come Instructions] [Operator line Reichardt Our Carl is with from the question

Carl Reichardt

Thanks again for fitting in guys. me

of one you but first-time my other In differentiate asked can first fourth you'd quarter versus between Jay your you entry-level So markets? questions, of sort product about product talk in other buyer what determine Mike, the if in quarter your kind been could into and than one, pretty as significant of improvement? in alteration far, have between they so year-over-year? of more ahs any rate you absorption the products, have Or improved seen two other relative those terms one their a consistent

Michael Forsum

Yes.

call profile, monthly strong down. incentives a that driven I It's that payment is There's fairly consistent. the to monthly being where payments in homebuyer get ways buyer different entry-level game their by of they're think I motivating sure, what really that -- pure for is who seeking area. housing is affordable

the bit is need sensitive, them. trending be value fairly to have They housing were that They in time are play usually them. of sort it's solved timing rate a you a important to up, for more of little first needs a mortgage quickly. If move less but

where spec that's comes And strategy so play. the into

really look at Orlando, and in us, interesting to for in dynamics [ from Florida have the we our So San industry terms everything this area of between. Francisco ]

local continuing that said, as absorptions. drive between, there, we find again, rate spot you're again, in sweet can of you is their of And if and I And deliverability momentum. out so the time. perfect a specific markets. buydowns themselves we've that you're incentives, period believe always a to mortgage of business this is all in part, But think And actual toggling in for they play kind most

activity have continue net month to strive per three at You be to We at to our communities. all around of your have all communities.

to forward, are that go But that, adjustment weekly kind to are pursuing it's continues absorption that make always Some we sure some lower, happen. we're and rate as higher. of a

Operator

Thank you.

have We now to to reached for of Ho over floor like our closing the the end turn question-and-answer remarks. back I session. John would

John Ho

quarter. forward call. you for everyone We look the you Thank to on next speaking with

Michael Forsum

you. Thank

Operator

conclude teleconference. does participation. We today's This you. appreciate Thank your

You the may time. at day. lines your your disconnect of Enjoy rest this

Landsea Homes (LSEA) 29 Feb 242023 Q4 Earnings call transcript