HCDI - Earnings call transcript Q1 2022 | Harbor Custom Development, Inc.

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Operator

Thank you for standing by and welcome to the Harbor Custom Development Incorporated First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session from previously submitted questions and live questions will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to introduce today’s presenters, Sterling Griffin, CEO, President and Chairman of the Board and Lance Brown, Chief Financial Officer. the to turn now will conference Mr. over I Brown.

Lance Brown

you joining Development’s us you, quarter operator Welcome for thank and call. Custom Thank today. all to earnings conference XXXX first Harbor

referring at our Investor of to presentation During Relations were prior and section The available www.harborcustomhomes.com. the the made we found presentation today, will can that our press be release discussion earnings and call. release website to Harbor be in the

materially of a forward-looking these to includes Any Litigation Before or everyone Harbor number Reform factors I that forward-looking contained Securities the we uncertainties risks, the of forward-looking differ and provisions would remind other Private actual in XXXX. from involve call begin, of statements cause to that discussed statements. like today’s today the Such statements statements. could Act earnings release are to results subject Safe

risks recent affect obligation see Specifically any which identify regarding XXXX. included are forward-looking to statements principal Please uncertainties, industry and for assume SEC statements. no filings, performance. outlook We and our which our update our the future could

be for or these measures we see call will measure. GAAP EBITDA like with turn appendix to most now Please to measures earnings EBITDA and discussing EBITDA, the of over addition, providing adjusted margin. financial certain the our direct comparable of today, a In reconciliation including presentation non-GAAP adjusted our non-GAAP I would Sterling.

Sterling Griffin

the appreciate And call Thank interest We everyone Harbor joining today. you, Lance. Custom thanks for to in your Development.

XXXX. remain historic to continued to revenue the the with stable expect in year, throughout business levels benefit over model of near XXXX. continued of quarter pricing XXX% Our the deliver we from quarter first unique lows, first increase Inventory

nation's plan of of XX a growing buying stream serving with consistent fastest as within the regions revenue. of commute the business a home some to continues us segments of distinct provide Our to XX-minute market multiple

adapt of a market quickly better Our for that enables to optimize us performance. range strategy allows wide conditions expertise and product buyers serve to a diversified changing

family customers. homes, allows target the equipped to of to are flexibility and We a condominiums, build diverse to townhomes, needs single wide range and apartments. including This surrounding communities us

of housing residential geographic and an to options, our historic finishing areas, home multifamily opportunity of overall and low the increase land portfolio inventory in for market Our provides coupled and lot, revenue share. plans us with

sell In listing construction single for Washington and Those and projects $XXX middles addition the projects, to and continuation our are and residential or Fairview plan townhomes, apartment announced recently apartments and Tangle build of we million. western Bell, We in to Bridgy commencement condominiums land family Pacific the of Wild trails. Ridge properties six anticipate development projects. Winstone, crossing,

of our our QX portfolio, Austin, and Texas product MSA. Texas, operations California. to continue market, In Western closed but family geographically, in our first have to we largest addition two single diverse Washington Florida expand In we in remains homes we XXXX, the

hybrid executed also Texas expected approximately Prices to a several other to close We months. to new space with pandemic. XX the mind office new Washington. new in designed square office two foot. We Tacoma, Homes within in following for contracts XXX space after COVID workforce per which are employment recently XX-minute XX considers is the a averaging the Austin, arose that located The are commute home trends and in

year consistent operation. of continue each We delivering revenues strong to and demonstrate increased growth

XX compared as of contracts XX are our March XXXX. December family of Our XXXX to XXXX XXXX million through growth was XX March XXX.X%. XXXX compound of homes XXXX annual for quarters ended for the rate for single annual rate ended backlogs March compound was of the And March through growth XX.X% fully residential lots As was XX million developed XX sale first the years executed and XX.X XX.X

did not feeble We as of backlog XX backlog build of March as fee Our have XX XXXX. X.X a million. March was XXXX

financial condition QX previous of balance finished XX.X year last sheet Our unrestricted strengthen million our progress to We and the significant X with year. million to made cash improve. continues up from

business quarter a in growth revolving value. we on United. invest liquidity strong In drive to closing to to further with of flexibility of initiatives. first and The provides the the us our announced shareholder credit million already financial $XX foundation facility and our with continue pursue the We Bank facility build

As of XX on business interest positioned to single and and I strength XXXX credit confident our markets had remain back Lance the Despite million rising multifamily of and availability the XX of Financial liquidity facility for Chief unique our our XXXX, to balance our rates us well on I inflationary $XX.X and our in turn details. the of housing we conditions, revolving March beyond. the will million. that stability call Brown conference plan Officer model makes discuss financial further sheet total to deliver now

Lance Brown

$XX.X to months Thank the a Sterling. three basis you XXXX. increased XX March million by revenues On ended approximately for XXX% quarterly

to months revenue revenue compared As ended landfills. in X.X an in Fee million from $X.X of sales XX and primarily by XXXX. home increase and for The million, lots. million three March increase of million X.X build $XX.X developed X.X driven entitled the million sales was from

the three primarily for overall was to XXXX. XX compared XX.X% XX months ended gross Our X.X% earned driven entitled profit March margin March significant months profit the the gross three land was sales. margins increase ended on by This for XXXX

sales is three compared months public operating Our X the right company the to XX compensation three in for new increased well XX as stock advertising, associated expense for continued increase of XXXX corporate to due to in office, the XXXX. as quarter income March as related for have the of expense. ended year, attributable over to as to and increased XX.X% year scale favorable expenses depreciation rate XXXX. to first million March operating the first is the in sales operating This as abuse incurred. to operating marketing XX operating payroll improvement of business primarily The us XXXX, sales anticipated X.X the increased percentage a to improved expenses ended at In XXXX. three expenses which fees, a March months the Net with compared ended infrastructure costs, million quarter expenses of months that including professional our million plans, a X.X expenses primarily is and to percentage growth and future XX.X% for investment allowed total

XXXX. revenue increase improve As and quarter net in attributable primarily net improvement million loss income million new a compared months in record the company. for of X.X margins net XX to income The X.X XXXX. was March ended gross was first a three the The for in to the of

ended EBITDA XXXX months we was $X.XX, and quarter three of XXXX the the the quarter million, of share and per to For $X.XX XXXX. respectively. of per first had share March of compared $X.X in first for loss XX $X.X XXXX basic million loss a

$X.X to EBITDA compared XXXX. assets activities used cash million totaling real The of to first for was acquisition the in EBITDA a March $X.X adjusted used and ended for the $XX.X X.X% million quarter was Adjusted $X.X issuance by XXst was million. XX the quarter While of as notes activities first quarter of March related net XXXX, XX.X% of quarter ended quarter the of million million for operating and the in XXXX percentage XXXX. cash XXXX. development cash estate operating $X.X $XX.X the the compared was for sales of to of during receivable primary to uses of million compared Net

December as XX real of of from as estate assets have March to to XXXX $XXX.X increase Our continued XX million $XXX.X million XXXX.

turn As of our estate XXXX, delivered Sterling. call will to March now were assets XX%. XX the I real back approximately

Sterling Griffin

Thank you, Lance.

be approximately our guidance $XXX For XXXX believe rental million. the XXXX of stability we housing continued multifamily single there in and and for markets will reiterate revenue family

a Our guidance XXX%. year-over-year revenue implies of increase

anticipate on which a to continue EBITDA We approximately million of during $XX a increase year-over-year adjusted XX% implies XXXX, basis.

Operator

[Operator Instructions]

Unidentified Company Representative

operator. you Thank

do how common convert warrants is, I question or stock. first into my stock preferred Our

Sterling Griffin

can for transfer you warrants. can need our your assistance You with if exercising you further And the contact stock agent. converting assistance, preferred your contact or broker

custom of information to at the under investor homes.com on agent You investor tab at Transfer. more transfer find how contact can section visit Share relations website www resources our our harbor Mountain the to

Unidentified Company Representative

Lance. you, Thank

And supply challenges so have Have question. you to far? expect you second XXXX? Our experienced do in chain disruptions

Lance Brown

we supply some disruptions. chain Like all experienced have builders,

we impacted can and by not than because diversification have including the disruptions. sell, we are we develop timely. chain less subcontractor that However, we products which we in others are our Title supply to are of supplier ensure demand meet lot impacted evaluating Furthermore, land and always base

Unidentified Company Representative

converted you outstanding in common total to securities on the the of you question price, preferred did fully all that equity were your any of be recent stock exercises would of Our stock voluntary with the shares also comment or if Can HDDIZ conversions see warrants? common common increase stock? diluted next the

Lance Brown

as shares And we table approximately of XXX,XXXx were of can over our $XX.X a fully earnings we've and IZ the of the in as end capitalization on there to part at is the you included to warrants. second million ACD had common stock Yes, recently converted presentation, address shares. website. question, XXXX, see, appendix preferred XXX,XXX And your March diluted which of XX our the over

Unidentified Company Representative

option HCDI Okay, share convertible preferred X.XXX is at common ratio at stock one preferred holder confirm into you stock shares question, of of our a can common for the HCDI stock? each that next of the

Lance Brown

X.XXX option the of correct. of is that's and at Yes, is to the The conversion one the accurate. holder ratio

Unidentified Company Representative

MSAs other you looking what expand The next we to are question have, into?

Lance Brown

want Currently, plan. migration These tax us growth on is in our of at course, Tennessee, the income that of a execute these no state. to that we're areas states, states such fastest and significant and in in Texas, people are Florida, of there We some Washington business to have moving the to be growing looking as them. businesses the country where allow significant

Unidentified Company Representative

you. Thank

question next totaling the of million announced Our listings XXX under many contract we or in, gotten previously apartment how sold? that are have

Lance Brown

under in contract. time, are and projects next XX The varying sell the this to over are construction are none At of months. expected stages various

Unidentified Company Representative

have $XXX is that recent million in we sales. So question the next in what expect totaled do listings to gross you with Washington the received multifamily achieve margins

Lance Brown

So the remained gross if would margins market range. expect conditions in consistent, we mid-XX%

Unidentified Company Representative

you. Thank

to company Okay. another the stock plan buyback? Does do

Lance Brown

to announced it's date. But distinct haven't possibility. another a We buyback

We end of a shareholder purchasing to capital our to securities. utilize value are constantly considering increase outstanding some could our could that ways and include

Unidentified Company Representative

you. Thank

million unexplained? have. that There the Our explain be where came around to revenue we XX question this you from quarter? next seems all Can

Lance Brown

Sure.

revenues from think reporting how X.X X if a the X.X roughly about million and lots, million approximately home materials. from So million the $XX.X from land, from break down, construction million and came entitle belt you VBelt sales. from will segment, XX,XXX

Unidentified Company Representative

Thank you, Lance.

did converted? question have that understand next preferred we received, XXX,XXX I that shares Our got

Lance Brown

correct. that's Yes,

Unidentified Company Representative

Thanks. Thank you.

valuations next Has interest rates comment gotten we've on valuations. apartment projects. the please in Our on question impacted

Sterling Griffin

cap obviously as rise. will valuations rates impact rates interest Yes,

on in impact the apartment in at been rates Sterling, escalated listed place. where next prices change Washington such the significant rising prices have currently. However, a have cap No western the that significant date. Thank rents we’ve to marketplace. the located, gotten rate the significant to question to you that changes our are negligible the market Confident that

Unidentified Company Representative

Thank not XXX. you, Grandis, we The appears question XXXX for you now look that at Sterling. gotten next in locks have it

Lance Brown

question. I approximately plan understand I'm that was Okay, that Grandis know Lots, don't it see that trying XXX. master the ever was XXXX. I Pond to

you're of again, what to in lots, So XXXX future. like close if the to very in will number be that the you use look the going

Sterling Griffin

the to XXX of Grandis the control it's units. and that directly Pond differential West couple the Campus, think I may East led properties a And be to Village speak other

Lance Brown

Correct.

added of projects I that. might someone have think our some other to

Unidentified Company Representative

you. Thank

completed that question next you share the Okay, we've gotten first in. Have our buyback?

Sterling Griffin

share have in happened we XXXX. first that the of QX Yes, completed buyback

Unidentified Company Representative

your next $XX have to million XXXX I your of from guidance million. a How million guidance adjusted revenue $XXX is, trust million? of current range in can given question to Okay, we $XX the $XX

Lance Brown

up approximately market current Okay, efforts estimate our pipeline million as uses developing when last $XXX information information course year of time in well was we to to revenues. the company to became The revenue. employs so its accurate the when and communicate new guidance reaffirm we at case guidance, timing guidance as available company adjusted current conditions date product best this

Unidentified Company Representative

recent rise and Okay. seen mortgage slowdown sales rates? any given in Have or traffic cadence you

Sterling Griffin

one. that take I'll take I'll

another So, on family the first have now market really Texas impact Austin thus which are in an Austin contract most of red nine haven't sales we doing We closed homes we is under Texas far our that the two in those seen Homes. hot. quarter, home and our single and

Unidentified Company Representative

questions. That's the Alright, thank all you.

Lance Brown

everyone, you, call. updates providing We today's participating do Thank forward additional to look for soon. in

about the information our page, harborcustomhomes.com. our You can on more -- events find on events the and on under Relations future Investor our presentation tab Wester website,

our notifications you For the updates tab for news, most website. investor sign email of up resources company we recent on on encourage the to

Operator

Thank you. conclude This does our conference.

You may you at thank time this participation. and lines your disconnect your for

Harbor Custom Development (HCDPQ) 12 May 222022 Q1 Earnings call transcript