Landsea Homes Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Lancee Homes Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to turn the conference over to your speaker for today, Drew McIntosh, Investor Relations. You may begin.

Good morning, and welcome to Lancey Holmes' fourth quarter earnings call. Before the call begins, I would like to note that this call will include forward-looking statements within the meaning of the federal securities law. Lancey Holmes cautions that forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. These risks and uncertainties include but are not limited to the risk factors described by Land, Sea, Homes and its filings with the Securities and Exchange Commission. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made. whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through Lansi Home's website in its SEC filings. Hosting the call today are John Ho, Lansi's Chief Executive Officer, Mike Horsam, Chief Operating Officer, and Chris Porter, Chief Financial Officer. With that, I'd like to turn the call over to John.

Good morning, and thank you for joining us today as we go over our results for the fourth quarter and full year 2021 and provide an update on the outlook for our company. I want to start by thanking the entire Lansi team for their exceptional effort this year and for achieving some major milestones as we completed our first year as a public company. Thanks to this total team effort, Lansi Homes finished 2021 on a strong note, as we met or exceeded our previously stated guidance by exceeding $1 billion total revenues, achieving adjusted home gross margin of 22.6 percent, and eclipsing adjusted net income of $67 million for the year. Additionally, we generated earnings of $1.14 per share on a GAAP basis for 2021, or $1.48 per share on a fully adjusted basis. For the fourth quarter, Lansley posted earnings of 83 cents per share, driven by a 40% year-over-year increase in total revenue and a 650 basis point improvement in gross margin to 21.5%, as our teams did an excellent job executing on our business plan in what continues to be a challenging operating environment. From a macro perspective, housing fundamentals continue to be extremely favorable for new home demand. The supply of existing homes available for sale remains exceptionally low, as evidenced by the most recent report from the National Association of Realtors, which indicated that total housing inventory amounted to 860,000 units at the end of January, a record low and down 16.5% from one year ago. This equates to a 1.6-month supply at the current sales pace, which is well below equilibrium in a normal housing market. On the demand front, we continue to see a deep pool of motivated buyers in our markets, thanks to the ongoing housing supply shortage, but also as a result of favorable demographics, rising incomes, in-migration from other high-cost areas, and a cultural shift in attitudes towards home ownership brought about by the pandemic. We believe these demand drivers will be in place for some time and will provide a tailwind for our industry for years to come. We also believe Lansi is well-positioned to deliver growth in excess of the overall industry's rate, thanks to the positive fundamentals in the markets in which we build, our entry-level focus, and appeal of our high-performance homes. Lansi has strategically established a presence in some of the fastest-growing homebuilding markets in the country, including select markets within California, Arizona, Florida, and Texas. Our goal is to focus on becoming one of the top builders in these markets, both through organic expansion and M&A activity, as we believe it is better to be a bigger player in a handful of markets rather than a small player in many markets. This was the rationale behind our acquisition of Garrett Walker Homes in January of 2020, our acquisition of Vintage Estate Homes in May of 2021, and most recently, our acquisition of Hanover Family Builders in January of this year. Each of these transactions either established or greatly enhanced our market positioning in key home building markets that we believe are primed for long-term growth. The acquisition of Hanover Family Builders was a big win for our company, as it not only vaulted Lansi into a leading position within the central Florida market, it also provided us with an excellent pipeline of lots at a favorable land basis. In addition, Hanover's land-light strategy and entry-level focus align strongly with our returns-focused business model and product positioning goals. We have already made excellent progress integrating Hanover into our existing home building platform and expect the acquisition to be extremely accretive to earnings this year and beyond. I want to personally welcome the Hanover team into the Lansi family and look forward to building on the great track record of success you've achieved in Florida. Our product focus continues to be on the more affordable segments of the market, as we believe this is the most supply-constrained and demand-heavy area of housing. First-time buyers looking for affordable housing options are being met with rapidly rising existing home prices and a lack of homes for sale that meet their budget. We believe this dynamic will persist for the foreseeable future and have positioned our company to cater to these buyers. Pro forma, our acquisition of Hanover is Seventy-seven percent of our own and controlled lots are targeted at the entry-level segment, giving us a great runway of lots to meet the demand for affordable housing that we see in our markets. Along with our affordable product focus, we continue to differentiate ourselves from the competition with our high-performance homes, which feature the latest in new home automation, sustainability, energy savings, and healthy lifestyle. We recognize that today's buyer is looking to get more out of their home than ever before, whether it's better connectivity for a home office, enhanced automation for ease of use, energy efficiency, or other smart home innovations that reduce the total cost of home ownership. Our high-performance home gave us a noticeable sales advantage over a similarly priced product from our competition in 2021, and we expect that to continue in 2022. Before I turn the call over to Mike, I would like to formally welcome Chris Porter to our executive team. Chris officially joined Lansi as our CFO in December of last year and has already made a meaningful impact on the financial aspects of our business. I'm confident Chris is going to be a great asset for our company as we pursue our growth initiatives. With that, I'd like to turn the call over to Mike, who will provide more detail on our operations this quarter.