Landsea Homes Corporation

Good day and welcome to the Landsee Homes Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal Conference Specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Mr. Drew McIntosh. Please go ahead.

Good morning, and welcome to Lansby Homes' third 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 law. Lansby Homes 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 factors, 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, acceptance 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 Nancy Holmes' website and in its SEC filings. Hosting the call today are John Ho, Nancy'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 third quarter of 2023, share our outlook for the remainder of the year, and discuss some exciting new developments for our company. Fancy Homes generated $258 million in home sales revenue in the third quarter on new home deliveries of 448 and an average sales price of $576,000. Home sales gross margin came in at 18.7%, and net income was $8.6 million, or 22 cents per diluted share. We are pleased with these financial results and believe they are reflective of a resilient new home market and our company's strong execution. Net new orders for the quarter came in at 486, and a sales base of 2.7 homes per community per month. We saw active and engaged buyers at our communities throughout the quarter, though the upward movement in interest rates resulted in some selling softness as the quarter progressed. Fortunately, we had several sales tools at our disposal that offset the impact of higher rates and gave consumers a sense of confidence in buying their homes. In addition, our unique high-performance homes continue to set us apart from the competition and drive traffic to our communities. From a MACROS perspective, we believe the long-term fundamental outlook for new home construction remains positive. There continues to be a lack of existing home inventories at all price points, while the demand for housing remains strong. The economy continues to add jobs, and the U.S. consumer has shown a willingness and ability to move forward with life-changing purchase decisions, like buying a home despite the high interest rate environment. We have also seen broad-based home price stability in our markets, thanks in large part to the scarcity of existing home inventory. All these factors have and will continue to benefit home builders, particularly those with strong balance sheets and access to capital. Against this strong fundamental backdrop, Lansing has continued on its path of growing the size and scale of our operations. After the close of the quarter, we announced the acquisition of the assets and lot pipeline of Colorado-based Richfield Homes. With this acquisition, LNC enters its seventh home building market with an established presence in one of the best housing markets in the country. Similar to our previous acquisitions, we plan on growing our local market presence quickly so that we achieve better local economies of scale. We have retained Richfield's seasoned leadership team including industry veteran and new division president Lisa Weevilhouse, to lead these efforts and build on the success they've already achieved in the market. We expect the deal to yield a more than 20 plus percent IRR for our company and immediately be accretive to earnings and return our capital within 30 months of closing. Operationally, we expect to follow the same playbook in Colorado that we have been executing in our other markets. which is a focus on the more affordable segments of the market with a differentiated high-performance home series, employ a land-light strategy, and turn our inventory quickly. We believe this is the right recipe for success in today's market and will continue to look for acquisition targets that fit this model. With the continued rise in interest rates, we believe the opportunities to grow via acquisition will become more common. From a capital allocation standpoint, We feel that it is important to balance out our investments in the business with shareholder-friendly actions that signal our confidence in our company and our stock. To that end, our board has approved a $20 million share repurchase authorization, which we plan to deploy over the next 12 months. We believe our stock is undervalued at its current share price and look forward to buying our shares at a discount to book value and boosting our earnings per share throughout this repurchase program. Plan C is in a great position to finish the year on a strong note and carry that momentum into 2024. We have an established and growing presence in some of the best markets in the country and a product profile that caters to the largest buyer segment. Our balance sheet is in great shape and our senior leadership team has the necessary experience and industry knowledge to compete effectively in a high interest rate environment. Given these positives, we remain excited about the future of Lansing Homes. Now I'd like to turn the call over to Mike, who will provide some additional color on our operational performance this quarter.