Landsea Homes achieved second quarter new-home deliveries well in excess of its stated guidance, in large part due to improvements in the supply chain and product availability.
Landsea Homes CEO John Ho said the supply-side improvements also allowed the home builder to sell and close homes “in a more timely manner” during the second quarter, ended June 30.
“Landsea Homes made solid progress on a number of fronts in the second quarter, generating healthy profits and strong order results while executing on its long-term strategy of continued market expansion,” Ho said.
Landsea Homes delivered 539 homes in the second quarter at an average sales price of $541,000, which contributed to a quarterly net income of $4.9 million, or $0.12 per diluted share. Adjusted net income was $13 million, or $0.33 per share during the quarter. Total revenue decreased 20.5% year over year in the quarter to $293.2 million, driven by a 5.8% decrease in homes closed and an 11.7% decrease in average sales price, according to Landsea.
Net new-home orders in the quarter was 565 homes, with an average sales price of $574,000 and a monthly absorption rate of 3.3 sales per active community. In the prior-year period, Landsea received 538 new-home orders with an average sales price of $599,000.
Strong demand trends contributed to a sequential decrease in cancellations to 11% as compared with 15.9% in the first quarter. Total homes in backlog were 722 homes with a dollar value of $455.8 million, compared with 1,571 homes with a dollar value of $902.1 million in the second quarter of 2022.
“We remain focused on scaling our operations in high-growth markets to achieve better economies of scale,” Ho said. “To that end, we announced the closing of $250 million private placement notes offering last month, which will provide us with the necessary capital to fuel the next phase of our company’s growth.”
During the home builder’s earnings call, Ho said Landsea Homes has made “great strides” toward expanding its presence in Phoenix and Central Florida, and the company is committed to continuing to grow in additional markets.
Ho said Landsea Homes views Texas as a region with large growth potential. Landsea relocated its corporate headquarters to Dallas from Newport Beach, California, in March, signaling its commitment to growth in the state. Ho said the company will look to expand its presence in the Austin, Dallas, and Houston metro areas.
At the end of the second quarter, Landsea Homes owned or controlled 11,008 lots, compared with 13,017 lots at the end of the second quarter of 2022. The builder remains committed to its asset-light strategy, controlling 54.4% of its lots at the end of the second quarter.
“We believe that housing industry fundamentals continue to favor the new-home market due to a lack of existing-home inventory, and that Landsea is well-positioned to capitalize on this dynamic,” Ho said. “Our High-Performance Home series is designed to stand out from the competition and appeal to today’s entry-level and first move-up buyer. As a result, I remain confident in our company’s prospects for the remainder of the year and beyond.”
