LSEA Q1 Loss Wider Than Expectations, Revenues Up Y/Y, Stock Soars 60%

Core Insights - Landsea Homes Corporation (LSEA) reported disappointing first-quarter 2025 results, with adjusted earnings and total revenues falling short of the Zacks Consensus Estimate [1][4] - The company experienced a year-over-year decline in bottom line while total revenues increased [1] Financial Performance - LSEA reported a loss per share of $0.05, which was worse than the consensus estimate of a loss of $0.03 per share; in the same quarter last year, the company had adjusted earnings per share of $0.10 [4] - Total revenues reached $310.8 million, missing the consensus mark of $320 million by 2.9%, but grew 6% year-over-year from $294 million [4] Segment Performance - Home Sales segment revenues were $299.4 million, reflecting a 2.3% increase from the prior-year quarter; the company delivered 643 new homes, up 27.3% year-over-year, with an average selling price (ASP) of $466,000, down 19.5% year-over-year [5] - Net new home orders rose 11.1% to 679 homes, valued at $317.8 million, with a cancellation rate of 9%, down from 10% a year ago [6] - Lot Sales & Other segment revenues surged 689.4% year-over-year to $11.4 million, with total lots owned or controlled by LSEA increasing to 10,516 from 10,349 a year ago [8] Margin and Cost Analysis - Home closing gross margin contracted by 190 basis points year-over-year to 13%, primarily due to higher discounts, incentives, and increased interest costs [7] Debt and Cash Position - As of March 31, 2025, cash and cash equivalents totaled $36.7 million, down from $53.3 million at the end of 2024; total debt increased to $727.5 million from $725.4 million [9] - The debt to capital ratio was 52.1%, up from 51.8% at the end of 2024, with net debt to total capital at 48.3%, an increase from 47.7% [9] Acquisition Announcement - On May 12, 2025, Landsea Homes announced a definitive agreement for acquisition by New Home Co. at $11.30 per share, representing an enterprise value of approximately $1.2 billion and a 61% premium to LSEA's closing share price on that date [11] - The acquisition is expected to be completed by early third quarter of 2025, pending customary closing conditions [12]