Landsea Homes (LSEA)2025-02-27 21:42Financial Performance - Home sales revenue increased by 27% from $1,169.9 million in 2023 to $1,486.9 million in 2024, with home deliveries rising by 33% from 2,123 units to 2,831 units[243]. - Net income for 2024 was $18.5 million, a decrease from $32.7 million in the previous year, reflecting challenges in affordability and elevated mortgage interest rates[244]. - Total revenues for 2024 reached $1,550.3 million, up from $1,209.9 million in 2023, indicating strong growth in overall sales[232]. - The gross margin for home sales was $217.97 million in 2024, compared to $202.83 million in 2023, reflecting improved operational efficiency[232]. - Total home sales revenue for 2024 reached $1.49 billion, a 33% increase from $1.17 billion in 2023[268]. - Home sales gross margin decreased to 14.7% in 2024 from 17.3% in 2023, primarily due to increased sales discounts and higher land acquisition costs[269]. - Adjusted home sales gross margin, excluding interest and impairments, decreased to 20.3% in 2024 from 22.4% in 2023[270]. - Adjusted Net Income attributable to Landsea Homes Corporation for 2024 is $41,679,000, a decrease from $48,594,000 in 2023, reflecting a decline of approximately 14%[344]. - Net income attributable to Landsea Homes Corporation for 2024 is $17,231,000, down from $29,236,000 in 2023, representing a decrease of about 41%[344]. - Total adjustments for 2024 amount to $32,818,000, compared to $26,236,000 in 2023, indicating an increase of approximately 25%[344]. Market Expansion - The acquisition of Antares Acquisition, LLC for approximately $239.8 million added about 2,100 lots in Texas, enhancing market presence[234]. - The company expanded into Colorado by acquiring assets from Richfield Homes for $22.5 million, adding approximately 290 lots[235]. - The company is focused on expanding community count and maintaining an appropriate supply of lots to enhance operating returns and profitability[243]. - Average selling communities increased to 77.2 in 2024, a 31% increase from 58.8 in 2023[258]. Segment Performance - Arizona segment delivered 838 homes with a sales price of $0.4 million, generating $369.6 million in revenue, a 38% increase in dollar value compared to 2023[260]. - California segment delivered 518 homes with an average selling price (ASP) of $0.9 million, resulting in $456.6 million in revenue, showing a 1% increase in homes delivered[262]. - Colorado segment, operational since October 2023, delivered 118 homes with an ASP of $0.5 million, generating $54.3 million in revenue[263]. - Florida segment delivered 942 homes with an ASP of $0.5 million, resulting in $433.1 million in revenue, a 4% decrease in homes delivered compared to the prior year[264]. - Texas segment delivered 414 homes with an ASP of $0.4 million, generating $168.9 million in revenue, a significant increase due to the integration of Antares[266]. Financial Position and Debt - The debt to capital ratio increased to 51.8% as of December 31, 2024, compared to 44.1% in 2023, indicating a rise in leverage due to acquisitions[245]. - The company had outstanding borrowings of $749.0 million as of December 31, 2024, with an additional borrowing capacity of $184.5 million under its credit facility[310]. - The company entered into a line of credit agreement with a borrowing limit of up to $455.0 million, of which $199.0 million was outstanding as of December 31, 2024[314]. - The company maintains a maximum leverage ratio of 60% and a minimum liquidity balance of $50.0 million as per its financial covenants[318]. - The ratio of debt to capital increased to 51.8% in 2024 from 44.1% in 2023, indicating a rise in leverage[338]. - The ratio of net debt to total capital rose to 47.7% in 2024, up from 30.4% in 2023, reflecting increased indebtedness[338]. Cash Flow and Investments - Net cash provided by operating activities increased to $29.6 million in 2024, up from $27.2 million in 2023, primarily due to an increase in cash received from escrow related to home closings of $77.2 million[323]. - Net cash used in investing activities was $240.9 million in 2024, significantly higher than $7.5 million in 2023, mainly due to a $235.0 million payment for the acquisition of Antares in April 2024[323]. - Net cash provided by financing activities was $145.1 million in 2024, compared to a net cash used of $23.8 million in 2023, driven by the issuance of $300.0 million in senior notes[323]. Operational Challenges - Interest rates continue to pose challenges across all segments, impacting net orders and requiring elevated incentives to maintain sales pace[249]. - The company is exposed to interest rate risk primarily from variable rate debt, which may lead to downward demand and pricing pressure in home sales[347]. - Higher inflation impacts operations through increased costs in land, financing, labor, materials, and construction, affecting the affordability of mortgage financing for homebuyers[348]. - The company aims to pass on cost increases to customers through higher prices, but may struggle to do so in weak housing market conditions[348]. Tax and Other Expenses - The effective tax rate for 2024 was 30.5%, compared to 26.7% in 2023, influenced by state income taxes and limitations on executive compensation deductions[293]. - Other expense, net for 2024 was $0.8 million, a decline from other income of $4.3 million in 2023, primarily due to a $5.2 million write-off of deferred financing costs[292]. - Real estate inventories impairment and abandoned project costs for 2024 are $2,916,000, down from $5,698,000 in 2023, showing a reduction of about 49%[344]. - The company began adjusting for abandoned project costs in 2024, aligning them with real estate inventories impairment for better comparability[343].