Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide an update on the mix between quick move-in homes and build-to-order homes, and how this might affect your delivery guidance for the year? A: Michael Forsum, President and COO, explained that there is a gentle pivot towards build-to-order homes as buyers are less urgent due to moderating rates. Currently, about 20-30% of sales are build-to-order, with the rest being quick move-in homes. This shift is expected to continue into 2025, balancing demand for both types.
Q: What factors are influencing the fourth quarter gross margin guidance, and what would it take for incentives to decrease? A: John Ho, CEO, noted that the competitive environment and increased inventory of quick move-in homes are pressuring margins. Christopher Porter, CFO, added that the cost of rate buy-downs and market competition are significant factors. Incentives are expected to remain elevated unless market conditions change.
Q: How did the company achieve a gross margin that exceeded guidance in the third quarter? A: Christopher Porter, CFO, attributed the higher-than-expected gross margin to lower incentive costs and a favorable mix of deliveries, particularly in California. The cost difference between offering 4.99% and 3.99% mortgage rates also played a role.
Q: What is Landsea Homes' strategy for gaining market share in competitive markets? A: John Ho, CEO, stated that the company focuses on acquisitions to penetrate markets and then grows organically. Michael Forsum, COO, emphasized the importance of execution, product differentiation, and leveraging the company's High Performance Home strategies to compete effectively.
Q: What are the gross margin implications of shifting from quick move-in homes to build-to-order homes? A: Christopher Porter, CFO, explained that build-to-order homes typically yield higher margins due to options and reduced incentives, with a margin difference of 100-200 basis points compared to quick move-in homes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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