Landsea Homes Corporation

Good morning ladies and gentlemen and welcome to the Land See Homes Corporation first quarter 2023 earnings conference call. At this time all lines are in listen only mode. Following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance please press star zero for the operator. This call is being recorded today Wednesday, May the 3rd, 2023. I would now like to turn the conference over to Drew McIntosh from McIntosh Investor Relations. Please go ahead.

Good morning and welcome to Lance C. Holmes' first quarter of 2023 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 laws. 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 Lancey Holmes and its filings with its 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 it was 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 Land, Sea, Home's website and in its SEC filings. Posting the call today are John Ho, Lansi's Chief Executive Officer, Mike Forsum, President and 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 first quarter of 2023 and provide an overview of our operations. Lansi Homes delivered strong results in the first quarter. culminating in net income of 3.2 million or earnings of 0.08 cents per diluted share on home sales revenue of 241 million. Both the number of homes we delivered and the average home sales gross margin came in higher than our previously stated guidance as our teams did an excellent job of closing homes in a timely manner while holding the line on profitability. We also generated cash from operations during what is typically a time when we use more cash than we bring in, which we believe is a testament to our ability to respond quickly to the changing market conditions and the flexibility of our operating models. Selling conditions improved considerably in the first quarter relative to the fourth quarter of 2022. As a combination of limited existing home inventory, buyer acceptance of the higher mortgage rates, and more aggressive pricing at our communities led to better traffic and sales. Both order activity and cancellation rates got better as the quarter progressed, resulting in net new orders of 498 on a sales pace of 2.8 orders per community per month. Selling conditions remained stable into April as we generated 219 net orders on a sales pace of 3.8 for the month. From a macro perspective, we believe the new home market is in good shape, thanks to a resilient job market, favorable demographics, and the aforementioned limited supply of existing home inventory. We continue to see motivated buyers in our markets and our ability to offer an array of homes with attractive financing incentives makes for a compelling sales pitch. We demonstrated our ability to find the market in the first quarter with pricing adjustments, quick move-in inventory and incentives, and believe we can continue to do so as long as the overall housing fundamentals remain fairly consistent. Our focus remains on growing our operations in select high-growth markets by attracting buyers with quality, affordable new home options. We believe this is the best path to achieving better economies of scale at the local level and generating higher returns for our shareholders. Our high-performance home series continues to be a great differentiator for our company, giving buyers the latest in smart home technology at an affordable price. This is especially true for millennial and Gen Z buyers who appreciate the functionality of our home offerings and view the home as more than just a place to live. We have centered our sales efforts around these buyers, understanding that they will be the primary drivers of the new home market for years to come. With respect to our balance sheet, Lansi ended the first quarter in great financial shape. We grew our quarter-ending cash position to approximately $140 million and maintain a conservative leverage profile with a net debt to total capital ratio of 30.7%. We have an additional $150 million available to us under our unsecured revolving credit facility, giving us the financial flexibility to run our business from a position of strength and pursue unique investment opportunities should they arise. We believe that maintaining a conservative balance sheet is prudent for the foreseeable future, given the uncertainties surrounding the future of mortgage rates and the economy at large. A company and the new home industry as a whole demonstrated great resiliency in the first quarter by adjusting to changing market conditions and finding ways to bring buyers back into the market. We believe the momentum we generated in the first quarter can carry into the remainder of 2023, and as a result, see a bright future ahead for Lansing Homes. With that, I'd like to turn the call over to Mike, who will provide more detail on our home building operations this quarter.