• Home Sales Revenue: $1.5 billion for 2024.
• New Home Deliveries: 2,831 homes in 2024.
• Fourth Quarter Revenue Growth: 22% year-over-year.
• Cash Flow from Operations: $47.8 million in the fourth quarter.
• Net New Orders: 636 in the fourth quarter, a 60% increase over Q4 2023.
• Fourth Quarter Home Closings: 937 homes.
• Pretax Income: $6.5 million for the fourth quarter.
• Net Income: $3 million or $0.08 per diluted share for the fourth quarter.
• Adjusted Net Income: $9.1 million or $0.25 per share for the fourth quarter.
• Gross Margin: 12.5% in the fourth quarter; 14.7% for the full year.
• Adjusted Gross Margin: 18.4% in the fourth quarter; over 20% for the year.
• SG&A as Percentage of Revenue: 12.5% in the fourth quarter; 13.5% for the full year.
• Debt to Total Capital: 51.8% at year-end.
• Net Debt to Total Capital: 47.7% at year-end.
• Liquidity: $241.8 million, including $57.2 million in cash and cash equivalents.
• Expected 2025 Deliveries: 3,000 to 3,400 units.
• Expected Average Sales Price for 2025: $500,000 to $525,000.

• Warning! GuruFocus has detected 5 Warning Sign with LTH.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Landsea Homes Corp (NASDAQ:LSEA) achieved record home sales revenue of $1.5 billion and new home deliveries of 2,831 in 2024.
• The company expanded its presence in Texas by acquiring Antares Homes, enhancing its market position.
• Landsea Homes Corp (NASDAQ:LSEA) reported a 22% year-over-year growth in top-line revenue for the fourth quarter.
• The High Performance Homes series continues to differentiate the company with a focus on innovation, energy efficiency, and sustainability.
• The company successfully executed a secondary offering, diversifying its shareholder base and reducing ownership concentration.

Negative Points

• Persistently high mortgage rates and buyer hesitancy have pressured profitability, necessitating increased incentives.
• Gross margins were below expectations due to rising incentives, with a 300 basis point increase in discounts and incentives compared to the previous year.
• The company anticipates elevated incentive levels through 2025, impacting margins.
• Land cost inflation has been a driver of margin pressure, and the company is negotiating with land partners to address future costs.
• The company faces challenges with affordability due to higher mortgage rates, property taxes, and insurance increases.

Q & A Highlights

Q: You mentioned expecting incentives to come down to 7% or 8% in the first quarter. Is this due to a shift towards build-to-order homes or market trends? A: John Ho, CEO: It's a combination of both. We're seeing incentives trend down in the market and shifting our portfolio towards build-to-order homes, which have higher margins and require fewer incentives.

Q: Can you discuss the impact of tariffs and building costs on margins? A: Michael Forsum, COO: We haven't seen significant impacts from tariffs as our suppliers have diversified their sourcing. Labor conditions are stable, and we're continuously looking for ways to reduce costs without sacrificing quality.

Q: What caused the delivery performance to be lighter than expected this quarter? A: Christopher Porter, CFO: The deliveries were back-end loaded, and some shifted into early January. We had a record quarter for closings, but some were pushed into the first quarter.

Q: How do you plan to achieve the goal of 3 to 3.5 sales per community per month? A: Michael Forsum, COO: This is an aspirational goal, and we aim to maintain a vibrant sales pace. We're focusing on affordability, incentives, and reducing spec inventory to achieve this.

Q: Can you provide more details on the land coming back to market and pricing trends? A: Michael Forsum, COO: We're seeing recalibrated pricing in master-planned communities, with leftover parcels coming back to market. This reflects a disciplined approach to product segmentation and value proposition.

Q: What factors contributed to the change in margins compared to expectations? A: John Ho, CEO: Elevated unsold spec inventory and increased incentives due to mortgage rate volatility impacted margins. However, the shift towards build-to-order homes should alleviate some competitive pressures.

Q: Will purchase accounting adjustments continue to affect financials in 2025? A: Christopher Porter, CFO: We expect around $20 million to $23 million in purchase price accounting to be amortized throughout 2025, primarily related to the Texas acquisition.

Q: How are you addressing the affordability challenges in Florida? A: Michael Forsum, COO: We're focusing on incentives to reduce monthly mortgage rates and addressing rising insurance premiums and property taxes. Demand remains strong, but affordability is a key challenge.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.