Q4 2020 Landsea Homes Corp Earnings Call
Okay.
Good afternoon, everyone and thank you for participating in today's conference call to discuss Landsea homes financial results for the fourth quarter and full year ended December 31 2020, joining.
Joining us today are Lindsay homes.
Oh, and interim CFO, John Hall, Chief Accounting officer trends and trainer, President and CEO, Michael Boston and the company's external Investor Relations Representative Cody Cree.
Following their remarks, we'll open the call up for your questions and before we go any further I would like to turn the call over to Mr. Craig as he reads the Companys Safe Harbor statement with you.
And the meaning of the private Securities Litigation Reform Act of 1990 per device.
Provides important cautions regarding forward looking statements Cody. Please go ahead.
Thanks, Joseph This call will include forward looking statements within the meaning of the federal securities laws, including but not limited to our expectations for future financial performance business strategies or expectations for our business, including as they relate to anticipated effects of the business combination. These statements constitute project.
<unk> forecast and forward looking statements and are not guarantees of performance Landsea homes caution that forward looking statements are subject to numerous assumptions risks and uncertainties, which change overtime words, such as May can should will estimate plan project forecast and <unk> X.
Specced anticipate believe seek target look or similar expressions may identify forward looking statements. Specifically forward looking statements may include statements relating to the benefits of the business combination the future financial performance of the company following the business combination changes and the market for land and sea.
And I'm, just products or and surfaces and expansion plans and opportunities. These forward looking statements are based on information available as of the date of this call and our management's current expectations forecasts and assumptions and involve a number of judgments risks and uncertainties that may cause actual results or performance to be materially different from that.
As expressed or implied by these forward looking statements. These risks and uncertainties include but are not limited to the risk factors described by land and sea homes and its filings with the Securities and Exchange Commission.
These risk factors and those identified elsewhere and the press release, among others could cause actual results to differ materially from historical performance and include but are not limited to the ability to recognize the anticipated benefits of the business combination, which may be affected by among other things competition the ability to integrate the combined businesses and the.
Ability of the combined business to grow and manage growth profitably costs related to the business combination and the ability to maintain the listing of land and sea home security on NASDAQ and the outcome of any legal proceedings that may be instituted against the company. Following consummation of the business combination changes and applicable laws or regulations.
And the ability to launch new land and sea homes products or services or to profitably expand into new markets. The possibility that the company and may be adversely affected by other economic business and or competitive factors and other risks and uncertainties indicated and Lance <unk> homes, and SEC reports and documents filed or to be filed with the SEC filing.
And C homes Accordingly forward looking statements should not be relied upon as representing our views as any subsequent day and you should not place undue reliance on these forward looking statements and deciding whether to invest and our securities. We do not undertake any obligation to update forward looking statements to reflect events or circumstances. After the day.
And they were made whether as a result of new information future events or otherwise, except as may be required under applicable securities laws.
I would also like to remind everyone that this call will be available for replay through March 18th 2021, starting at eight P. M Eastern time Tonight.
A webcast replay will also be available via the link provided in today's press release as well as on the company's website at Www Dot Lansky homes Dot Com. In addition, a supplemental earnings presentation has been posted on the Investor relations portion of the site that we encourage you to view.
Now I'd like to turn the call over to the CEO of land and sea homes John Hill John.
Thank you Cody and good afternoon, everyone.
Happy that you can join US today on our first earnings call as a public company.
Many of our listeners may be new to our company to kick things off I wanted to introduce Clancy and our unique growth story and provide a high level overview of our 2020 results from there I'll hand, it off to try and Schreiner, our chief accounting officer to discuss our financials in more detail and then Mike force them, our president and CFO will provide an operational up.
And share our strategic vision.
Let's see homes with a California based homebuilder and highly focused on growth led by a team of industry professionals with decades of experience and deep expertise across the homebuilding industry.
And we build masterplan communities at all from a variety of homes types and reflect modern living and fit the evolving needs and desires and.
Today's homebuyers.
When an organization that is committed to offering customers, the best and home automation and sustainability and energy savings.
We're doing this through our innovative and unique high performance homes and Lyft flex offerings. This truly sets us apart from others and the homebuilding industry. We have designed all of our homes and community needs to provide a superior living environment by enhancing our homes comfort and durability and proving indoor air quality delivering cutting edge home automation.
And solutions through strategic partnerships, reducing energy costs, and lessening and consumption.
Precious resources.
Our company has grown tremendously since our homebuilding operations first began in 2014 and we are excited to bring these unique offerings to even more markets as we look to exponentially expand our footprint to prudently manage growth and the coming years.
We started in California and have since expanded into Arizona, the acquisition of Pinnacle, West and 2019 and that's true.
Further grew our Arizona footprint, when we acquired Garo Walker homes at the beginning of 2022.
And the successful and and rapid integration of both of these businesses and see.
He is now a top five homebuilder and Arizona.
We're excited to implement our strategy and to similar markets like Texas, and Florida through both acquisitions and organic growth supported by our strong balance sheet.
We are now able to pursue a more rapid expansion strategy and <unk>.
Digital markets with a $107 million of net proceeds we received from going public via us back earlier this year.
Since the inception of Landsea homes and it's.
He's been on go to become a public listed company.
And the U S and access the public markets to fuel our continued growth while maintaining strong financial discipline.
After much deliberation over several auctions over a year ago and with the full support from our majority shareholder which held us back transaction with a strong partner and ally of capital.
Marcia was completed on January 7th.
Significant infusion of cash and a red.
And strong balance sheet, we're confident we have the firepower and resources to continue supporting our long term growth strategy.
And then kind of pump upon the one year anniversary of the COVID-19 pandemic. Our business has benefited from our strategy that we initiated several several years ago to focus on selling entry level and move up level homes and larger volumes and lower average sales prices.
To note that our organization was able to execute this transition and rapidly and very successfully all while dealing with the effects of a global pandemic.
During the onset of COVID-19 reacted swiftly and.
And necessary measures to protect our customers trade partners and employees and we.
Continue to do so.
Macroeconomic environment was changing on a daily basis.
Mike will go into details regarding these measures later on.
Couldn't have done this without our employees exceeding our expectations and implementing this strategy despite the uncertainties surrounding them.
And 2020, we were able to increase our total homes delivered by 156% to 1527 from 597, while decreasing our average sales price from 953000 last year to 481000.
This helped drive our total revenue per the year, increasing 16% to nearly $735 million compared to $631 million and 2019 with total home sales increasing 29% on the year.
Additionally, we ended the year by substantially strengthening our backlog to 750 total homes with a dollar value of $389 3 million and and average sales price of 519000 net.
Our strong backlog positions us extremely well as we move further into 2021.
At the same time, we continue to see robust demand and interest but on by new work from home business environment and the millennial cohort. So true searching for entry book and move up level homes underpinned by low interest rates.
If you combine these favorable macroeconomic conditions with an exceptionally strong balance sheet, our innovative and unique offerings and our strategic footprint and high growth affordable housing markets.
And well positioned to increase shareholder value.
Given this we are reiterating the strong outlook, we set for 2021 and August of last year trend will walk you through these metrics shortly but we have utmost confidence and our ability to deliver on the expectations we set.
Yeah.
Overall, I'm incredibly proud of our dedicated and hard working team here Atlanta homes.
Each and every one of the employees was instrumental and swiftly executing our business at all levels and significantly driving higher sales volume with lower ASP homes that delivered strong operating results for the year. Despite operating amid the ongoing challenges of a global pandemic I can't thank them enough for their efforts.
We truly believe that we are just getting started on maximizing this company's growth potential and we'll look forward to expanding on our success in the years ahead.
I'll now turn the call over to try and Schreiner, our Chief Accounting Officer will provide commentary on our financial and operational results for the fourth quarter.
Thank you John and good afternoon, everyone.
Before we get started I wanted to remind everyone that due to the business combination and closing happen first and the year our financial results will be filed by 8-K and the <unk>.
10-K will be associated with Atlas capital acquisition Corp results prior to the merger.
While we are reporting on <unk> fourth quarter, and the full year and both sets of results were quite strong.
Focusing on our quarterly results due to the similar narrative driving year over year changes for both periods.
So let's jump into our financials for the quarter.
Total revenue was $284 7 million compared to $286 1 million and the fourth quarter of 2019.
Slight decline was primarily due to not having any lot sales in 2020 compared to $11 million and the fourth quarter of 2019.
When we exclude lot sales from total revenue total home sales increased 3% compared to the fourth quarter of last year.
Addressing lot sales were homebuilder first and foremost so we consider lot sales opportunistically.
And 2020, we did not find any favorable prospects.
And to evaluate opportunities at the right terms going forward.
Total home deliveries during the quarter increased to hire 111% to 587 homes and and average sales price.
485000, compared to 278 homes delivered at an average sales price of 990000 90000 and in the fourth quarter of 2019.
Our average sales price decline is mainly attributed to the fact that the volumes of homes sold and Arizona, where the average sales price is 301000, which was over two times lower than our California market, where the average sales price was 943000.
Net new home orders increased 182% to 415 homes with a dollar value of $235 4 million and average sales price of 567000, and a monthly absorption rate of $4 five compared to 147.
And homes with a dollar value of $136 million.
And average sales price of 880000 and of <unk>.
Monthly absorption rate of two four and the prior year period.
The decline in average sales price remains consistent with our strategic shift to selling a higher volume of entry and move up level homes, along with having a higher percentage of orders and Arizona.
Adjusted home sales growth margin and the fourth quarter was $22, one compared to $23 five and the prior year period.
The decline was primarily primarily driven by lower interest costs are lower interest and cost per home sales and higher purchase price accounting for acquired inventory.
For this metric we adjust out the following warehouse applicable interest and cost of sales inventory impairments and purchase price accounting for acquired inventory.
We believe this is useful to show as it provides insight into the impact that financing arrangements and acquisitions.
And our home sales gross margin and allows for close closer comparability to our competitors that present similar information.
Net income attributed attributable to Landsea homes, and the fourth quarter was $10 7 million compared to $12 9 million and the prior year period, which was a result of our total operating expenses, increasing 19% as we invested in sales and marketing and efforts.
Throughout the year.
Adjusted net income attributable to Landsea homes was $19 4 million.
<unk> to 'twenty 1.2 million and the prior year period.
The decline was primarily a result of the aforementioned increase and sales and marketing expenses linked to advertising, our new housing developments offerings.
Adjusted EBITDA.
Was $36 1 million compared to 40 million and the prior year quarter.
With the decline primarily driven by the aforementioned <unk>.
Increase in operating expenses, along with this quarter and not having any lot sales compared to the fourth quarter of 'twenty.
Last year.
Looking at our liquidity.
We ended the year with $105 8 million and cash cash equivalents.
Compared to $154 million at December 31, and 2019.
Total debt was $264 8 million compared to $190 million at the end of last year.
Our ratio of debt to capital was 33, 3% at December 31, and 2020 compared to $24 six at the end of last year and our net debt to net book capitalization ratio was $22 six at the end of this year compared to $5 four at the end of 2019.
As a reminder, the company's balance sheet at December 31, and 2020 does not reflect the influx of approximately $107 million and net proceeds from the closing of the business combination with <unk> Capital acquisition Corporation on January seven 2021.
Lastly, I would like to reaffirm our financial guidance for 2021, and we expect to report approximately $883 million and total revenue with 1979 total home deliveries and an average sales price of 446000.
Additionally, we continue to expect to report adjusted net income attributable to Landsea homes, approximately 44.002 million 21. These expectations for 2021 are being driven by organic growth along with benefits from potential near term acquisition targets.
With our strong financial position and dedicated team and industry tailwind.
We are well positioned to drive growth, while seeking M&A opportunities and 2021 and beyond.
Now I'll pass it to our president and COO, Mike Force them to provide more color around our operational successes and strategic vision moving forward Mike.
Thanks, Trent and it's great to be joining all of you on this call today and I look forward to sharing why are a great team and I are so energized about landsea homes growth potential and the opportunities in front of us So let's jump right into it.
The year 2020, certainly was a share of unanticipated challenges, primarily driven by the global pandemic, along with wildfires across our markets and California, and social unrest across the country.
Despite these setbacks and as the economy rapidly recovered and the back half of the year. Our team did a great job consistently adapting to the unpredictable and ever changing environment, while ensuring our homeowners and homebuyers were completely satisfied with every step of the sales process and theyre living accommodations.
To accomplish this we built a wide array of tools to give customers a vibrant virtual experience that included community community videos photo galleries 360 degree virtual tours and interactive floor plans and maps of our sites and our local areas. In addition, our team or inside sales countless counselor support.
And it all division and commodity web leads phone calls and onsite appointment and seven days, a week driving traffic and orders throughout the year.
Not only did we do a great job, ensuring all of our customers remain safe during the sales process. We also implemented multiple mitigation measures stringently following CDC guidelines to ensure the safety of all of our employees and fact, we established a medical directorship with Hoak, a regional health care delivery network and Orange County.
And California, and their corporate health solutions team to provide all our offices and employees with consulting and clinical services, including testing and vaccination support.
We also designed and implemented new office layouts for when our employees returned from the initial work from order for work from home orders to ensure we continue to operate safely and maintain six feet and social distancing requirements.
As a result of these measures and I'm proud to report within our Northern California Division. There were no. There were zero work hours lost due to COVID-19, and we had over 25000.
<unk> check and since the pandemic started and this was similar and this was a similar outcome per our other divisions and southern California and Arizona.
The combination of the reworked sales process and the preventative measures, we introduced allowed us to complete virtual closings and.
New virtual community Grand openings, and private onsite tours, all of which ultimately helped drive our strong results for the year I am incredibly proud of organizations adaptability and while I'm certain we certainly hope we returned to normal sooner rather than later I'm confident we will be able to continue executing executing our growth strategy and.
And this current environment.
Now moving to our strategic division visit.
As John mentioned, we have significant tailwind that we believe will allow us to continue our strong momentum throughout 2021.
One of the benefits of having so many people moved to a work from home business model is they finally started paying attention to their living spaces and realizing they need their home to be more than just a place to sleep at night homebuyer.
Homebuyers are now demanding that their home be much more flexible and adaptable to their specific lifestyles, whether that means having a home office education space for at home learning.
<unk> bedroom or a dedicated room for exercise our live flex offerings meet these very needs and has gained significant traction due to this shift in consumer preferences select floor plans within several committees and also provide an option for our new flow Gen suites, which provide separate living spaces within the home to accommodate multi.
Additional families and other special living situations.
Consumers are incredibly attractive to these offerings and I'm proud to report that approximately 15% of our home sales in Q4 included Lyft Flex options. We believe that number will continue to increase as we introduce this option and more communities across our existing and future footprints.
As mentioned earlier, California, and Arizona are our cornerstone markets, we started homebuilding and California, specifically, creating masterplan communities in San Francisco, and Los Angeles regions, which have both seen medium home prices grow double digits. Since 2015 as a result of the continued increase and home prices within there.
These two markets. We believe there is a growing opportunity to service outside metro areas as demand increases for lower priced homes.
A great example of this is our new community and Ontario, California called shade tree, we openness and their early days of the pandemic before we entered the Ontario market. There. The aerie consisted of one type and style of homes traditional.
So, we envision, bringing something new fresh and modern to the area. Our goal was to create a different community for <unk>.
<unk> Ranch, one that included a mix of mid century, modern Spanish ranch style, and and farmhouse architecture to create unique neighborhoods filled with modern elevations, but also touches a warm tradition.
Our research also told US that homebuyers were looking for a community that met their amenity needs, especially since neighboring communities featured smaller facilities.
And we decided and dedicated to dedicate 84 acres to provide resort style amenities, including a community pool.
Children's pool, Cabanas and a party pavilion, a dog park fire pits, a children's play area and a private club house. We also create a green space and Walkability through Parkways, which allows for families to enjoy the outdoors without having to drive anywhere.
Interior architecture lay out innovative features are some of the our main differentiators all of which combine to make a living and shade tree more comfortable.
Each home includes and open floor plan that provides utility space for any number of users.
Optionality of our flex program and all of our all of our homes are part of our high performance collection with so many different floor plans and square Footages shade tree. It appeals to homebuyers, who want to customize their space to meet their lifestyle.
Now I'd like to provide some color to how we implemented the sales process. During the initial days of a global pandemic to highlight the.
And the adaptability of our business and.
And how we were able to succeed despite having so many factors against us.
On March 28, 2020, we were prepared for a grand opening celebration of the long awaited shade tree community that I, just spoke of but had to pivot when the shelter and place orders were announced initially we started with private in person appointments, which were booked out almost two and a half weeks in advance but.
But as the market slowed at the end of March through April our sales strategy shifted again.
We then launched the matter Port <unk> technology utilized resolution images loaded on our website and went completely virtual what their homes selling efforts.
This was crucial because as homebuilders, it's imperative that we're able to provide an opportunity where prospects can experience and accurate and realized the essence of what life and their new home will be like in May as expected a highly and a highly competitive new home market, we saw an uptick and activity with shelter and place orders still active.
And historically low mortgage interest rates people began to see the high value of owning a home, especially at a more affordable commodity like shade tree.
Sales increased significantly and Jan with 34 homes sold there then in July and strong sales continue with 32 more homes sold and people began to camp out several days in advance price.
Near to home releases to ensure that they could secure their desired lot and floor plan.
As the demand and <unk> continue to grow we instituted a best offer sales process, which we're still currently utilizing this means that one week prior to sales pricing is released to potential buyers buyers are able to make offers on up to two lots as long as they are pre qualified from a preferred lender and those off.
Or received on a Saturday, we do not accept offers below are released pricing the following Monday or Tuesday management selects the strongest buyer based on their net offer price whether or not the buyer.
Also has a broker or whether or not the buyer plans to go with one of our preferred lenders or not.
This approach has allowed us to manage the.
And the high demand for homes that phase III and ensure that we are interacting with only the most serious and strongest buyers all of which increases our profitability over.
Over the five months that we've adopted the best offer strategy. We have released 87 homes and earned nearly $557000 over asking price with an average offer being 65000 over our listed price to give you a and more context to this demand a total of 174 offers have been made and Lance He has accepted <unk> 50.
Eight of those offers on average we have released 16, new homes, a month and and outstanding 76% of those homes receive same day offers and fact to date, we have sold 241 homes and shade tree, which is more than half the total amount of homes within the community.
And I'm sure. This example to provide you with a concrete real life example of how were able to successfully launch a community and sell better than we could have imagined in this environment.
And with demand and seemingly only getting stronger we believe we have plenty of runway to go.
Lastly, I wanted to walk you through our M&A strategy.
Now that our one year anniversary of acquiring gear at Walker's passed us and we feel confident and our foundation and growth trajectory and Arizona, we were looking at expansion opportunities and other desirable markets like Texas and Florida.
As we explore these opportunities we are utilizing the same discipline that we developed and California and successfully implemented and Arizona. This includes a three step approach first we acquire land and new markets.
Second, we develop relationships and subcontractor and less while pursuing accretive acquisitions.
And third we acquire a builder and retain the employees to further develop relationships and scale.
And we take a strategic role up approach to all acquisitions targeting under capitalized players who have built up their businesses as far as they can with local capital.
As a result of this playbook, we have become an acquirer of choice.
For smaller homebuilders given that the owners of these businesses are looking to sell to the REIT homebuilder, who will take care of their employees, which is a commitment that we are dedicated to upholding.
We anticipate having more to share and progress with our acquisition strategy soon and it remains a top priority and we are approaching the process with precision and <unk>.
And significant due diligence.
No matter, where we end up expanding we remain focused on providing homes to our customers that stay true to our defining principle of live and your element. This is the idea that we build homes, where our customers want to live and allow them to live how they want to live in a home created especially for that it is incredibly important to us to provide a superior.
Moving environment for our homebuyers and we will continue to ensure that that expectation is met.
Overall, we are incredibly proud of and the continued success, we've had and we remain optimistic about capitalizing on the growth opportunities ahead of us as we move forward and our year, our first year of being a publicly traded company. Thank you for joining us and we look forward to speaking with you all regularly throughout this new journey operator, we're now ready for Q&A.
Thank you presenters.
This time and further participants to ask a question you may 1st Star one on your telephone keypad and Christa bounty to withdraw your question.
We'll pause for just a moment to compile the Q&A roster.
Okay.
We now have our first question from Matthew Bouley from Barclays. Your line is open share.
Good afternoon, everyone. Thanks for taking the questions and congrats on the first results out of the gate here.
So maybe first one on the M&A side, which Mike you just touched on there at the and.
And just looking through the original projection, but all of that I think there was an assumption of a transaction closing towards the first quarter of 2021 and I realize some of these things have some moving pieces, but if you could just kind of outline a little bit more detail on the M&A side and just what the expectations should be and as we model out 2000.
21, thank you.
Sure and take that first and Andrew can talk about the share.
Sure Yeah, absolutely thanks Pat.
Without being able to go into too specific a detail, but I think that we're still tracking generally is what we had described to you earlier and our calls.
We're very excited about some opportunities that we're tracking hard and those conversations are advanced.
And we look forward God willing as I hit on this table that we can continue to.
Moving those conversations to pure execution and and get those acquisitions done.
And Matt.
Go ahead John.
2021 forecast and guidance there was $85 million of revenue.
I assume through a business combination.
And I believe and $8 million of adjusted net income.
We still are very confident and and projections for the year.
Yeah.
Okay perfect.
Second one.
That was a lot of interesting and helpful detail there on shade tree.
I'm curious if you could go into a little more detail around.
And this best off our sales process and maybe not necessarily on shade tree itself. Since you just gave that detail, but I guess my question is are you doing that and other places.
Number one and then number two just.
What.
What should we think about.
Yeah.
Just the impacts of all of that in terms of slowing sales pace and the margin.
And Mike you've you've been in this business a long time, John as well as you think about this type of best offer sales process. Maybe if you can kind of educate us on what tends to happen. When you do that how long can it keep going.
Throwing a lot of questions at you, but just any kind of more details around this very interesting process you're doing thank you for sure.
And thank.
Thank you for listening to that long winded explanation and say Trey and how we're pricing.
And I'm glad you caught some of it but we.
We found that we and.
Times like this and you're right I've been doing this a long time and as we've kind of cycle up and cycle down year theres different methods, but certainly in a very active and robust market and we find ourselves and now particularly in communities that are getting a lot of attention.
We don't particularly like people camping out and I don't think that it's a really ultimately are healthy.
Way to start a relationship with our homebuyers, we don't want to put them through that but at the same time, we always look for what is the best and fair process and we have found that over the years. This type of offer process is the best way of essentially setting a market and it's very transparent.
And so from that standpoint, a buyer.
Buying public and those that are in the queue get a chance that they really got a real fair shot.
At getting a home and.
And that there isn't any games being played and that the market really clears itself and so therefore, you get the transparency that makes everybody kind of settled out and so it's a good fair way to do it.
And.
We have again found that it continues to add incremental dollars.
It was sort of guessing where the market is going and maybe possibly leaving some money on the table. The market tells us what they are really willing to pay and we want to grab those dollars and of course, that's all incremental to where we are.
So from that standpoint.
That's a fairly unique situation, though we are seeing elements of that starting to arise and Arizona and a couple of our communities and we will be taking that out here very shortly there as well.
Arizona is really strong.
And it has a lot of the flavors and what we're feeling and some of our other markets and what other from.
And the analysts and our competitors are seeing as well. So we'll see it. There. This was something that I deployed way back and days of your and the Bay area in particular during a very robust times and it seems that it works and so.
And we like it.
At our prospects like it and then we have a much better relationship with our home buyers and homeowners as we go forward after close because they felt that they were fairly treated.
And it's just it's just better for the process as it goes back to.
How we're moderating sales.
We're definitely doing that as well, although I don't think that this necessarily clips back demand.
And really what clips it back is just the frequency of your releases and the size of your releases and so and cases in Arizona.
We talk about it as what we released three and then come see me is kind of what we're talking about now and our sales teams on the floors and were getting them on a weekly basis, a release of three and.
And there were increasing pricing.
Thoughtfully, but aggressively and then as those cell, we're going right back and then repricing and the next three or and the release so we have different.
Methods and different ways of trying to.
Right this market to its fullest, but not.
Alienate our customers and then not turn off our communities because turning them back on is a very difficult thing.
Sure.
Perfect. That's very helpful and thank you for catching my all the pieces of my multi part question there.
Last one from me.
On Lyft Flex I think you said it was up to 15% of sales and in Q4, I guess, it's kind of a similar question, but if you could just sort of speak through what that's telling you about what the consumer is looking for today I heard year round that you know a lot of the sort of post COVID-19 demands, but what that's actually doing to your business realm.
As to what you would've thought.
12 months ago, so, adding lyft flex, what's the implication to the home prices to options and upgrades and and ultimately to margins for landscape. Thank you sure.
So with our <unk> and Lyft flex plus options that we've created and response to <unk>.
How the consumer has been shifting we really what I defined as early during this was really a flight towards safety and space.
And Lyft Flex really does try to address that today, our consumer is looking for.
Higher levels of utility coming from the home that they are buying they are looking for greater safety in terms of their ability to live and a healthier environment and I think we've tried to address that and many aspects of our HPA strategy that John Ho create.
Created for us.
But also the utility side of of really taking what I used to say sort of the token nod to our home office that it average sales complex you would walk into the as you came through the front door there'll be a debt with a little desk and a chair and something that kind of sort of displayed that maybe possibly something could happen there.
Elevated that.
Such that there's real utility coming from it because today, our buyers are telling us that they want to educate their children and their they want to work and and privacy they want to.
Exercise, there's all kinds of elements that they're looking for that we are addressing through our.
Lyft flex.
Option program, interestingly that room doesn't necessarily need to be downstairs to the front to the right at the front door, we're actually seeing it really desired and the upstairs. So therefore in our flex program, we provide extra installation to buy six walls as opposed to two by four walls. There's other elements.
We put in there that kind of help from sound attenuation and also strength of a floor. If they want to put some gym equipment and some things that could exports from deflection and to that floor. So we're thinking a lot about how really to to use that space and a robust way that makes a lot of sense for the buyer today.
And in so doing we're getting really great responses and so the consumers paying for it I believe that theyre getting that by virtue of the fact that.
We have a mortgage environment today, that's allowing.
The buyer to load up a little bit more on the house and on the options, but with Lyft flex.
We do have a much bigger margin and that offering that we would be.
And some of our other room adjustment margins that we would normally be offering out there. So.
It's really good for us, it's just a matter of timing, though Matt. This is really about where we have cutoff dates when you're in the <unk>.
Construction process so.
You've got a time that right and get the buyer and there. So they can choose that option or if we're doing spec starts will probably more than likely include that lyft flex option room within that spec start on our own and then price that into the house going forward.
Great well thanks for all the details congrats again and good luck and 21. Thank you.
Yeah.
We have our next question from Alex <unk> from B Riley Your line is open.
Hey, guys congratulations on a great year.
Couple of quick questions here.
<unk>.
You mentioned net M&A was tracking to plan, but your guidance suggests that there could be and acquisition and the first quarter of this year in and acquisition and the second quarter of this year, which would be and acceleration to your previous plan for just a second acquisition and 2022. So my question to you is are you seeing your pay.
Line improved a lot here now that you're public and being public is it making your conversations with sellers.
A lot better.
Alex.
This is John I'll address the question in terms of the forecast that we presented when we took the company and public and then I'll hand, it over to Mike to talk about some of the opportunity set we have in front of us.
We had planned and acquisition and the first quarter of 2021 and.
Training, a new market for us either Texas, and Florida, and then we had planned a second one and.
Our first of the year for 2022.
That was the forecast.
And we had outlined so we're still.
Confident and.
And remained consistent with our projections for 2021 is that debt.
And we'll include and M&A that will bring I think as I mentioned 85 million and our revenue and $8 million of adjusted net income in 2021.
And with regards to the opportunities and I'll, let Mike answer that.
Sure.
That a doubt being public now certainly makes us a much more attractive sooner and the marketplaces, and which we're out talking to potential targets. So.
It's just adding to the narrative, although we did have very strong narrative prior.
To us going public but is definitely helped and.
We're having lots of conversations I'll be honest with you we've done a really good job of speaking to targets off market, probably becoming <unk>.
Public we're bringing more attention from bankers, who have targets looking to talk to us. So from that standpoint, we're probably adding another layer of opportunity on top of where we were before.
And it sounds great.
And a lot of inbound questions with regards to your New York City investments.
And you could just give us the update there on the timeline for liquidation.
And maybe quantify or project.
Sort of the expectation for changes to your balance sheet associated with those assets.
Sure.
I'll address it from I think.
Where we are with those assets and then I'll, let Mike talk about and the market as well.
As it relates to and I think we put out a press release, maybe a day ago regarding our asset that sits under new Jersey Gold coast.
At the end of.
2020.
We had 35 unsold units.
And.
We just put out a press release yesterday that and we are now 90% sold out out of that community out of 184 units.
So you can see how rapidly.
The sales have.
Really picked up pace, there and we really only have just under 20 units remaining there so were faster than we had thought for 2021 in terms of.
Selling out there.
And then redeploying that capital and.
Our core homebuilding business.
And as it relates to.
Our remaining asset and Manhattan on 14th and six.
And we plan to begin selling that and.
Really spring summer.
And again, that's our average selling price of two and a half million.
And the unit so it's really on the lower I would say spectrum of the pricing and we feel.
I'm very confident about the pace of sales.
Of that project over the next two years.
Yes. This is Mike so the film that would add is that with their pre marketing activities. So far is we seem to be getting some nice traction around 14th and six as well as what 12 West Ninety-third both of those have their own unique attributes to it that.
And that respond and we think generally to the pandemic and some of the elements and west 93rd.
<unk> hundred 12090, <unk> those units are fairly sizeable they have many bedrooms and they've got beautiful extended terraces out and the front of the units and some cases and the back so it's providing a great family environment with lots of space.
And it's a smaller building so we're not.
Having a lot of people go into a unit, which is necessitates a lot of elevator rides up and down and and those kinds of things that have been somewhat of a struggle here recently as it goes back to 14th and six and John was talking about.
And the location is unique its pricing is very attractive and.
And as well it has some really.
Beautiful architectural articulation as what we have extended terraces and patios off of those units as well and we do have.
Two bedrooms, and three bedrooms that are providing some great utility space and those units at both.
And those buildings, we do have sales centers now that are completed and open and being man.
And we are getting traffic and we're getting good interest and then generally.
The information, we're getting from the market.
And I'm, sorry, I can't recite the source right now.
And I'm forgetting exactly what it is but we are seeing some.
I would say <unk> balance.
Bouncy bottom if you will come.
Coming out of the and New York Manhattan Marketplaces today and.
Across all price points. So we're hopeful that as things are starting to settle down and and people are getting more comfortable and we're getting vaccinated.
Debt I don't know exactly what normal will mean, and New York City, but certainly there is a desire is still to live and work and New York City as far as we can see.
That is helpful. And then if we use your yearend balance sheet and we adjust for the merger and the subsequent a warrant exchange I calculate our book value per share to be around $13 does that math makes sense.
Oh.
Yeah, I would say.
I think it will be a slightly below that because I think you're referring to be.
Spak proceeds right and.
It's a combination.
I think it would be lower than that.
Probably I think.
And to get back to you on that Alex what the exact number is but.
The spec proceeds also have to deduct.
The.
Transaction expenses also we had used about 28 million and reduced our warrants.
From essentially from 10 to one so some of that was used so the actual additional equity.
It would be less than 107 million net proceeds.
And it should be and our S. One.
Filing.
And to get back to you on that and a specific number Alex.
And one last question any comments on sort of January February activity for new home orders and or a lot purchases.
The market remains very strong we are saying.
Activity outstanding activity and all of our communities at all price points I can take you from Miranda and Northern California, where relevant day one.
And our fifth sales release price points with a $1 7 million to our Arizona, where we're in surprise at the high twos and it seems like across the spectrum, we're seeing great activity and our markets.
Excellent. Thank you very much.
We have our next question from Josh Berman from West point capital.
Your line is open.
Thank you. Thanks for taking my call can you walk through a little bit.
And I thought it was really helpful. How you describe your M&A process.
Can you walk through sort of the timing of those sort of three stages on a typical basis and when you guys are guiding for planned acquisitions in.
The first quarter of 'twenty, one and the first quarter of 'twenty two is that outright builder acquisitions or is this going to be.
But from land and in new markets.
Yes. This is Mike.
So generally the way that it goes is that we like to dip our toe and the water with a couple of smaller or organic acquisitions. If you will I mean and that we're in the market we're out there trafficking amongst the.
Development community as well as the brokers and looking for what we would sort of say sort of.
Shakedown and I won't call it shake down crews, but opportunities there.
That makes some sense for us and then to build a small skeleton crew around those acquisitions and then <unk>.
Seek out targets for M&A to build up quickly.
To do this generally within a year's time, and if we can be and need to be I would say at least breakeven or profitable within that first year with that acquisition. That's what we're shooting for.
The size of that so.
I would say that from getting particularly markets like Arizona, Texas and Florida.
Timeline can range anywhere from 12 to 16 months, where you really have sort of entered into a market.
And again established herself planted a flag identified a target which by the way a lot of this is parallel processing. So it's not totally linear and.
The approach.
And then bringing in that target and then scaling up and being something relevant and within that marketplace.
And what's sort of and that 12 to 18 month range.
Okay, Thanks, and so if we're thinking.
And about.
Your sort of guidance on acquisition do you guys have any sort of.
<unk> planted in Texas, and Florida at this stage.
We are very close I mean, we're holding the flag, where we're running to the ground and stick it in and we're very very close to that so yes, we've been and that that market, Texas, Florida and again working at market now for well over two years as we've been preparing to go public and to take.
Our next levels in terms of our expansion across the country.
All the while of course tending to business and the markets and which we're operating right now so.
We're really excited I think we've got some really exciting things in front of us and.
I wish I wish I could say more but that's about as far as I can go.
And that's fine that's really helpful.
And we'll await future news and congrats on a great quarter. Thank you.
At this time. This concludes our question and answer session I would now like to turn the call over back to Mr. Holmes for closing remarks.
Thank you I'd like to thank everyone for listening to today's call and we look forward to speaking with you when we report our first quarter results.
And thank you again for joining us.
Ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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