Landsea Homes Corporation

Good day, everyone, and welcome to today's Lancey Holmes Corporation second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. Please note that this call may be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's call over to Drew McIntosh, Investor Relations. Please go ahead.

Good morning, and welcome to Lancey Holmes' second quarter of 2024 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 the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements. Additionally, reconciliation of non-GAAP financial measures discussed on this call to the most comparable GAAP measure can be accessed through Lancey Holmes' website and in its SEC filings. Hosting the call today are John Ho, Lancey's Chief Executive Officer, Mike Borsum, President and Chief Operating Officer, and Chris Porter, Chief Financial Officer. With that, I'd like to turn the call over to John.

Thanks, Drew, and good morning to everyone. Lancy Homes delivered strong top-line growth in the second quarter of 2024, generating revenue of $431 million, which represented an increase of 47% over the second quarter of 2023. New home deliveries totaled 760 units, well ahead of our stated guidance. as our teams did an excellent job of accelerating build schedules and closing homes in a timely manner. This allowed us to achieve a fully adjusted home closing gross margin of 21.1%, producing adjusted net income of $13.3 million and adjusted earnings per share of 36 cents. We continue to see solid demand trends during the quarter, driven by positive housing fundamentals in our markets. Though we did experience an increase in home inventory from record low levels in some markets, we do not feel these are a competitive threat at this stage. We generated 760 net new orders for the quarter, 35% more than the second quarter of 2023, on a sales pace of three homes per community per month. Financing incentives remain an important selling tool at our communities, to help ease affordability concerns and drive monthly payments down. While these incentives spur demand in the quarter, they continue to weigh on our home sales gross margin, which came in a little below our expectations. The strong year-over-year growth we experienced in both sales and closings this quarter was a direct result of our strategic efforts to grow our company and achieve greater economies of scale. Average community count for the quarter was up 47% year over year, thanks to the investments we've made in our markets and the acquisitions we've done to grow our company. We are committed to growing the size and scale of our home building platform so that we realize better fixed cost leverage and receive better terms on the labor and materials that go into building our homes. Benefits of this strategy can be seen in our SG&A ratio in the second quarter. which came down 220 basis points on a year over year basis to 13%. We are a much bigger and more diversified company than we were a year ago. We expect to reap the benefits of our larger home building platform as our volume increases. While volume growth is an important part of our long-term strategy, we realize that doing so in a capital efficient and risk averse manner is equally important. That is why we have established relationships with land bankers and other capital partners to take some of the upfront cost and risk off our balance sheet. We want to continue to concentrate our efforts on the business of building and selling homes, not speculating on land. Sourcing lots from third parties on a just-in-time basis will allow us to do that, while also giving us some downside protection should the market conditions soften. Balancing out our growth objectives is our commitment to maintaining a strong financial position. We have made great progress over the last few quarters, improving our balance sheet by obtaining fixed rate debt and strengthening our relationships with the lenders in our revolving credit facility. We are now on much more solid footing with respect to our access to capital and feel that we have entered a new phase in our company's evolution as a result of these actions. We ended the second quarter with a net debt to cap ratio of 45.4%, which we expect to continue to go down as regions generate significant cash flow through the end of the year. As we look to the back half of 2024, I am pleased with how our company is positioned. Most of the heavy lifting associated with integration of our recent acquisitions has been completed, and we look forward to realizing the benefits of those efforts. We have a solid backlog in place that will help us achieve our delivery goals for the year and bring our leverage ratio down from where it is today. We also have a product profile in our high-performance homes that continues to resonate with our buyers. As a result, I remain confident that Lansi is on track to achieve its long-term goals. Now, I'd like to turn the call over to Mike, who will provide more color on our operational performance this quarter.