Q1 2021 Landsea Homes Corp Earnings Call

May 6, 2021

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Okay.

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Good afternoon, everyone and thank you for participating and today's conference call to discuss Lansing homes and.

Financial results for the first quarter and said March 31st 2021.

Joining us today are Lansing homes C E O and interim C. F O John how Chief Accounting Officer, Trenton, Shriner, President and C O O Michael Force on and the company's external director of Investor Relations Cody slot.

Following their remarks will open the call for your questions.

Before we go further I would like to turn the call over to Mister as far as he reached the companies Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements Cody. Please go ahead.

Thank you.

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 busy.

Business strategies or expectations for our business, including as they relate to anticipated effects as the visit culmination vs.

These statements cause constitute projections forecasts and forward looking statements and are not guarantees of performance lanzi homes cautions that forward looking statements are subject to numerous numerous assumptions risks and uncertainties, which changed over time.

Words, such as May can should will estimate plan.

Project forecast and 10.

And 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 and the vintage stay at homes acquisition, the future financial performance of the company changes and the market for Lindsay homes products and services and other expansion plans and opportunities.

These forward looking statements are based on information available as of the day to this call and our management current expectations forecasts and assumptions and involve a number of judgments risks and uncertainties that may cause the actual results or performance to be materially different from those expressed or implied by these for the key statements.

These risks and uncertainties include but are not limited to the risk factors described violent and see homes and it's filings with the SEC.

These risk factors and those identified elsewhere in 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 and if it is a business combination and the vintage and state's homes acquisition, which may be effected by among other things.

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Ability to integrate the combined business and the acquired business and the ability of the combined business and they acquired business to grow and manage growth profitably.

Cost related to the business combination the ability to maintain the listing of Lindsay homes and securities on NASDAQ Y'all come of any legal proceedings that may be instituted against the company changes and applicable laws or regulations. The inability to launch new lanzi homes products or services or to profitably explained expand into new markets.

The possibility that the company may be adversely affected by other economic business and or competitive factors.

And other risks and uncertainties indicated and Lindsey homes, and SEC reports or documents filed or to be filed with the SEC by Lindsay homes and.

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 and deciding whether it and invest in our securities. We do not undertake any obligation to update for the statements to reflect events or circumstances. After the date that were made whether as a result of new information.

Future events or otherwise, except as may be required under applicable securities laws. I'd also like to remind everyone. This call will be available for replay through may 13th starting at eight PM Eastern Tonight and webcast replay will also be available via the link provided and today's press release as well.

As on the company's website at Lanzi homes Dot Com and addition of supplemental earnings presentation has been posted on the Investor Relations portion of the company's site and we encourage you to view it now I'd like to turn the call over to the CEO of Clancy homes, John Hello, John.

Thank you Cody and good afternoon, everyone.

We're very happy that you can join us to day to kick things off I will provide a high level overview of our first quarter of 2021 of results and our business highlights, including a recent acquisition of vintage and stay at home.

From there I will hand, it off to try and trying to our chief accounting officer to discuss our financials and more detail and then Mike for some our president and C. O L will provide operational and market updates along with what we hope to accomplish and Ah recently entered markets and Florida and Texas.

At first I'd like to start off by saying how pleased we are with our financial results for the quarter.

Housing market dynamics to remain strong and we've certainly seen that reflected on financial results with revenue from total home sales growing 14% and are ready strong backlog expanding to 874 homes.

We also continue to see our ISP rise as would capitalize on the pricing power that comes with such strong housing demand.

Our team has been incredibly busy executing on our strategy and like to share some of the notable highlights from the past few months.

First we're pleased to have recently announced two new projects and southern California.

Project, which we announced a few weeks ago as acquisition of 132, Homesites and San Juan Capistrano, Ah City, and Orange County Plain of Bill 43 story and detached homes and 89 three story town homes, all within walking distance from San and walk Capistrano slightly and historic downtown.

The homes will be equipped with our high performance home features including Smart home automation technology to the Apple home kit, along with the revenue Halo Air Purifier, the state and the state of the art whole home verification system that mitigate indoor contaminants to keep residents safe and support healthy centric living.

And you'll also be building 65 homes, and Orange county's largest city and.

Community will consist of three storytelling homes, which were quite optimistic about this type of housing given the success. We've seen on on Iron Ridge Master plan and community. We know buyers will appreciate that contemporary style and sustainable living and the heart of Orange County, and we are excited for that community to open. This fall is.

Is two projects drawing a list of our other successful southern California projects, including Iron Ridge, and Lake Forest shade tree, and New House, and Ontario, and the westerly and Simi Valley.

Moving to the East coast, where nearly sold out of our <unk> community contemporary waterfront condominium coming and you're located on a new Jersey's Gulf Coast and then.

Had and sales are now underway out for right now on.

14th and six and we're seeing great interest there with increased sales activity and the New York City Metropolitan region.

Now to share and most recent announcement, we are excited that we will be entering Florida, and Texas with our acquisition of vintage and stayed homes.

We purchase of interest and state homes for 54, 6 million and cash and they had $30 million of debt outstanding and March 31st that we assumed bye.

By way of background vintage and stay at homes has been constructing best and class homes over the past several decades and high growth real estate markets, such as Orlando Palm Bay, and low born and Florida, and San Antonio and Austin and Texas.

About 80% of their current selling communities and the central Florida market and.

And did you stay at home so they are and a reputation for their attention to detail premium building materials and for cultivating lasting relationships with their customers.

Since the lines perfectly with our distinct differentiation factors and the industry to.

And this acquisition, we are thrilled to not only gained over 1800, new lots across these high growth markets, but also the game and knowledge of the vintage estate homes team, which will be joining us at Lansing.

Additional context on a scale this acquisition and 2020 and it just stayed homes generated 157 million and revenue $12 million and EBITDA and 9 million and pretax income delivering 500, and 405 homes with an average sales price of 387000, and which falls directly on line with our targeted.

<unk> for these markets.

Additionally, the acquisition increases Lansing homes backlog as of March 31, 2021 by 509 homes similar to our previous acquisitions and Arizona. This followed district financial criteria that we have outlined within our prior earnings presentations went underwriting acquisitions.

We mentioned, Florida, and Texas is high growth markets, we plan to enter on our last earnings call, while vintage and state homes provides us the opportunity to and to both markets once Florida, and especially the central Florida markets and have and it just stayed homes has a presence and are experiencing extremely high growth and February the National Association of Realtors reported the local homes.

Sales and the Orlando market group year over year for the eighth consecutive months with sales up near 20% from a year earlier and the media and sales price up 12% from the prior year and Texas vintage of states homes presence in Austin and San Antonio is a great opportunity as both metro areas are listed on the top 10, a new home markets. These mark.

<unk> have seen more and more entry and move up level bars, which is the buyer we've been targeting since our shift and 2018 Mike.

Michael discuss some of the growth opportunities within these markets later on.

Want to reiterate how pleased with our with the acquisition and a strategic fit and our growth plan and and.

Other step forward and our expansion plans to create communities and highly desirable locations across the United States provide high quality homes, where residents can enjoy living and their element.

With the positive momentum, we've experienced and our current business, which we expect to continue along with the added benefit of this acquisition. We're pleased to be raising our 2021 outlook with Trent with the address shortly overall the housing market shows no signs of slowing down and we believe we have significant runway for growth across our markets.

And we look forward to sharing the success, we believe we can achieve and the coming quarters and these results ultimately and driving shareholder value.

I will now turn the call over to try and try and our Chief accounting Officer.

Over to you thanks, John and good afternoon, everyone.

Jumping right into our financials for the quarter total revenue increased 18% to 164 million compared to 136 $3 million and the first quarter of 2020.

Within our total revenue, we generated five $7 million and lot sales compared to know lot sales and the first quarter of 2020.

A total home sales increased 14% to 154 $8 million compared to $136 $3 million and the prior year period.

Before we moved further down the P&L I want to briefly discuss lot sales and clarify I'll seasonality affects our revenue throughout the year.

On lot sales were homebuilder first and foremost.

But we do lot sales and as an opportunistic way to capitalize on a small portion of our footprint. If the right variables are in place.

I'll have more to say on lot sales when they address our outlook.

Next as.

As a growth oriented homebuilder, we inherently experienced seasonality within our business, we typically see a higher percentage of our revenue generated and the back half of the year.

In fact, we have historically seen sales slowdown between the Superbowl Sunday and Memorial day weekend.

And then home buying patterns typically pick up throughout the summer and and the fall.

While we were able to produce homes year round, given the mild climate and the market's we serve the seasonality of sales for 2020 was roughly 19% of revenue and the first quarter, 13% of revenue and the second quarter, 30% of revenue and the third quarter and 39% of revenue and the fourth quarter.

We would expect these seasonality patterns to remain even when factoring and our acquisition of bent you just stays home with that let's get back to where results for the corner.

Total home delivered.

During the quarter increased 11% to 301 homes and and average sales price 514000, compared to 270 homes delivered and an average sales price of 505000 and the first quarter of 2020.

And the aforementioned higher raw material costs.

Looking at our liquidity, we ended the first quarter with $197 million and cash and cash equivalents compared to $105 8 million at December 31, 2020.

The increase and cash is primarily attributed to the net proceeds from the closing of the business combination with <unk> Capital acquisition Corporation on January seven 2021.

Total debt was $319 5 million compared to $264 8 million at the end of 2020.

Our ratio of debt to capital was 35, 7% at March 31 2021.

Compared to 33, 3% at December 31, and 2020.

And our net debt to net book capitalization rate ratio was 18, 8% compared to $22 six.

At December 31, and 2020.

Now as John mentioned earlier, we are increasing our full year 2021 outlook as a result of the strong organic growth, we are expecting and to reflect the anticipated result of vintage a state homes from our may 4th closing date through the end of the year.

For 2021, we now expect to report between 925 million to $980 million.

And total revenue with 1930 to 2030 total homes now expected to be delivered.

And at an average sales price of 450 to 480000.

Out of this total we expect between 10 million to $15 million and revenues to be generated from lot sales.

Our 2021 revenue assumption reflects.

And approximately 15, 1% organic growth rate within our business.

With the top line increases we now expect to reported adjusted net income attributable to land and sea homes between 46 million to $56 million and 2021.

These updated numbers make it clear that we are leveraging our strong financial position.

Dedicated team and industry tailwind to drive growth 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, Brett.

Today, I would like to first discuss the current dynamics and the real estate market next I will provide a quick case study of our success and Arizona and then I'll finish with our strategic plan for vintage the state's homes going forward.

So let's jump right into it.

We continue to see robust demand and interest and our homes coming from a broad spectrum of buying groups, including millennials searching for their very first home to families seeking more space and greater functionality and theyre living environment.

Due to the overall lack of both resale and new home inventory homebuyers at all home price segments remain extremely willing to.

Pay and ever increasing prices to secure at home given the favorable secular tailwind we are experiencing at this time, we don't anticipate fire demand correcting anytime soon.

And the meantime, we are working feverishly and keeping up with this demand and all of our markets, while remaining extremely disciplined and not overextending, our production capabilities or potentially creating conditions, whereby we could be negatively impacted by cost increases that can't be captured and timely sales price adjustments.

While we do not expect oversupply domain market overall supply to meet market demand for at least a couple of more years. We believe our strategy is prudent as it stands now.

In addition to the supply and demand dynamics, we are still seeing low interest rates, making it an opportune time for people to buy homes across the nation.

While rates have ticked up some as of late they are still incredibly favorable compared to historic norms and we do not see this current rate environment stalling demand anytime soon.

We also have a large population of people realizing that they will continue to work from home long after the pandemic passes whether daily or just on certain days of the week and understandably. They are paying more attention to the way that they are living and their living spaces.

For <unk> this is where some of our offerings such as <unk> flex really shine as.

As a reminder, lyft flex encompasses a variety of features that make living and working on the homes better from enhanced Walter for installations to smart home technology.

Operating live flex options as an add on it's just one way that our team guidance our home buyers through their journey of purchasing at home.

It is our commitment to enhance the lives of our homebuyers through providing them and industry, leading purchasing experience as well as an exceptional move in and after moving homeowner care.

As we have grown tremendously this past year, especially on the Phoenix Metro area I wanted to share that our Arizona team has done an outstanding job producing a best in class environment for buyers with 90% of move and reporting a positive sales experience. This is a score that is measured by alliance.

One of the three surveys that homeowners complete upon moving through the first share of their ownership.

There is one specific community however that I want to talk about our 90 homes farmstead at harvest community and Twin Creek, Arizona, located and Phoenix Southeast Valley.

Our land and sea homes team members there have done a phenomenal job on everything from laying out the foundation of the homes to handing over the keys to our new land and sea homeowner and a timely fashion to.

To start with some key stats, we launch sales of the performance collection and harvest in July 2020, and since then have seen a remarkable pace of 10 net homes sold per month.

What's even more remarkable is that we've seen base price increases of $115000 on average central launch and our gross margin has grown from 22% for the first 12 closings to our current gross margin of 25% for homes and backlog.

We are currently and the final closeout with just 10 homes left to sell.

Operationally, despite the overwhelming demand for our homes at harvest.

Our sales team has thoughtfully manage the sales release process that promotes and enjoyable homeowner experience by staying within a single phase and allowing the construction team to move down the line and sequence. This is atypical and our industry as our competitors, usually scatter releases and implement a lottery sales system, which leaves potential buyers very disappointed at.

Hardware sales have been strategically limited limited and follow a check with me. After three sales program. This means that the sales team release of three lots at a time and once they have sold three they reevaluate timing available lots and pricing for the next three sales.

During each released the team determined price increases, while also being able to effectively double premium value from phase to phase.

This streamline process has dramatically lessen stress among buyers on the waiting list, which is incredibly important and the Phoenix Metro area, where theres a high volatility when it comes to inventory and prices.

Not only has the sales program alleviates stress and angst from our homebuyers, but it has also allowed us to sell at a premium we are seeing a premium of upwards to $9000 compared to our national competitors for the same square footage within harvest.

Now that I've discussed how unique our selling process benefits our customers I'd like to share more about the community and the features that will enhance the lives of our buyers for years to come there.

In addition to Lyft flex options, which have been chosen as an add on for over 30% of the homes in backlog and our homes at harvest also include Remy Halo.

Home purification system. This state of the art purification system ensures the cleanest air and your home, killing up to 99% of bacteria mold and viruses, even on surfaces, while removing lingering odors.

Beyond these options our homes and this community are perfect for families. As they are large as they have large backyards and spacious floor plans.

Overall, we are extremely proud of the homes that we continue to build across Arizona, and California, and now as we gained foothold and Florida and Texas, We look forward to producing best in class homes and those regions as well.

The case study I just share is a great example of how we've made acquisitions and Arizona worked with experienced teams.

Debt that came from those companies and and executed our strategy to produce strong financial results and and making land sea homes, one of the largest homebuilders and that very important, Arizona and new home market.

With the vintage of state's homes acquisition and our team is motivated to expand into the strong housing markets are Florida, and Texas and we're excited to work with a knowledgeable team that is joining us to help propel our efforts overall, we plan to utilize our availability of capital to expand vintages states homes operations in Central Florida and.

And the Austin, San Antonio markets to increase scale and be able to manage further growth.

That's a great American move continues to accelerate with a significant number of large corporations, such as Tesla Oracle Blackstone and many others along with their employees relocating to Texas and Florida. We believe these markets will continue to experience robust demand from homebuyers for years to come.

Florida is becoming a top choice for living especially attracting young families that are seeking affordability, a better lifestyle and tax benefits and fact, the average age and Orlando's 34 years old According to data USA.

With this we're going to leverage vintage and states homes current presence to push expansion and the greater Orlando region, which is centrally located to seamlessly expand into other hot markets, including Tampa Palm Bay, Daytona and the southeast portion of the state.

This market also offers substantial runway for growth with a significant amount of land available for development through nearly 20000 vacant developed lots and almost 220000 and future lot positions and vacant land.

Looking at the Central Texas market, the Austin and San Antonio San Antonio areas are among the 10, most active new home markets and the country and.

In fact, the odds and aerie added an average of nearly 23300 new households per year over the past five years, which has created substantial demand for new housing.

This has been fueled by strong employment affordability and a favorable tax environment as these markets have experienced steady and migration from less of affordable states across the country.

Similar to the Central Florida, there is a significant expansion potential and Austin and San Antonio regions with over 350000 of future lot positions and vacant land.

We expect vintages states to be another successful acquisition and our team is eager to get started and these new markets.

Just as we did and Arizona and now in Florida, and Texas, We will look to additional acquisition opportunities to supplement our organic growth efforts approaching the process with precision and significant due diligence.

Overall, our team is incredibly proud of the success, we've had and becoming one of the fastest growing homebuilders and the country. We remain highly optimistic that are highly optimistic about the growth and opportunities ahead, and we look forward to providing more updates along the way. Thank you for joining us today operator, we are now ready for Q&A.

Thank you Sir we will now begin the question and answer session.

Have a question. Please press Star then one on your Touchtone phone.

You wish to be removed from the queue. Please press the pound sign or the hash key if youre using a speakerphone you may need to pick up the handset first before pressing the numbers. So once again if you have a question. Please press Star then one on your Touchtone phone.

Our first question is from Matthew Bouley with Barclays.

Good afternoon, everyone.

Thanks for taking my questions congrats on the quarter and and closing the acquisition there.

My first one is on the organic business and Arizona specifically.

Really great color there around.

And what Youre doing there farmstead, but just looking at the Asps overall.

Clearly a lot of pricing power.

My question is how much further are you willing to push pricing specifically in light of affordability, because obviously its so heavy entry level.

Our first time buyer I guess position you have there and just looking at the absolute levels of price.

Presumably youre living close to FHA loan limits in certain cases, and I'm curious if that has any impact on pricing or demand is you come near that thank you.

Sure.

Matt I'll answer that this is Mike <unk>.

For us we.

Want to be as aggressive as prudently possible and and our attempts to increase pricing throughout all of our communities out in Arizona.

As long as the market remains active and that the the buyers and are coming to our office seeking houses we're going to continue to do what we can but also at the same time try to do everything we can to enhance our margin along the way, but we do recognize there are some limits you identified and with the FHA limits and such but one thing.

And that's been very interesting for US is we've had this ability.

Through our escrow tracking process that we have here internally to essentially look at all of our homes as they're going through the escrow process and the buying process and in that we can see through the appraisals that are coming through because I think this is a very important thing is to understand also how homes are appraising and as we are.

And looking at our go forward backlog and as appraisals are coming through and the earlier.

Releases, we're still seeing a lot of headroom between the actual sales price and what they are now coming in and being appraised ads. So we see a lot of lift.

Still available for us.

Going forward if not.

A lot of opportunity to build upon our margins by encouraging the buyer to take more options because they have more room to finance them.

Got it and that's.

Really helpful color there.

And then secondly, I wanted to ask on vintage.

Yes.

And just thinking about the process going forward and the lot positions that they had.

I think you put on the slides there there are about 50% move up.

And obviously you guys have been kind of moving towards both entry level and move up within your own strategy can you speak a little bit about kind of their own or what youre going to do with those lots going forward.

Is it going to stick with the similar kind of mix that vintage you already had.

And then just kind of I guess the broader question is and how you then use that as a broader platform for the additional lot acquisitions and those two states for sure. So.

Vintage and the state's homes are great operators and they have a fantastic business and we're very excited for the opportunity to join up with them.

They have done a great job building, a brand and understanding their customer, but they have done and in a way that has allowed them to best compete based upon where their capital is and how they go about financing their business, which usually pushes them to a little bit higher price point, because that's sort of how it works. However, with US we believe that there is some great upside potential and pivoting the company.

And towards a more approachable affordable product and pushing up a little bit more north into the Orlando market, where it's been a little more competitive.

And with some national homebuilders, and which they felt that they couldn't compete we know we can we do it every day and Phoenix, we're doing and California, and we know we can compete with.

The biggest and the business and so for US we're going to take that platform and then apply some of our operating disciplines.

And to their business and then also use what we call our library of product that we have built up over time, and then and have brought along with us.

To best optimize their existing lots going forward.

That may mean that in some cases, we're going to downsize on houses and square Footages, but make those household bought more efficient a little more approachable.

And then get our volume up along the way so it's very similar to what again, what we've done some spots and California. When we first got here and John and I were building the business and pivoting towards a more affordable attainable product point. So we've already done this before and we know we can do it again and Florida and then also on the Texas market.

Yeah understood. So it's sort of replicating what you guys have already had success doing.

Real quick if I could a third one just knowing the deal closed just a couple of days ago any sense on the purchase accounting and <unk>.

The backlog homes that you acquired how we should think about modeling that.

As of right now, we're we do not.

We're looking at it we've got and mind, what we think that number would be but we've got we're sending out for valuation to get looked at.

Okay, No problem, we'll look out for that and well. Thank you and congrats again and good luck and the next quarter. Thank you.

The next question comes from Alex <unk> with B Riley. Please proceed.

Thank you gentlemen, very attractive results congratulations on getting that your first full quarter here.

Thanks, Josh.

Can you talk a little bit more and bigger perspective sort of your strategy of spec versus build to order and how that might change.

And during a period of somewhat uncertain building material costs.

Yes.

That's the.

And.

Very good question and something that we're wrestling with fairly continuously.

Our markets as each one of them has its own individual dynamic to it so and some cases.

Particularly in California, and and what we're doing and what I talked about and Arizona. We are now doing more of a sequence line type of building as opposed to a scattered buildings or pick your lot pick your house.

And so doing and allows us to.

Lock and our cost earlier.

We build forward into that sequence as opposed to waiting for a buyer to come and then identifying the house and then having to go out and price it.

So we're moving a little bit more and to the vertical risk profile of the business, but given times like this and this is my fourth cycle through and when things get active like this.

This is a limited risk given the fact that there's so much demand out there and so most part most homebuyers are just looking for homes, that's being provided as opposed to looking for a lot and then I'll go get my home on top of that so we're very comparable.

Forward stacking, if you will to lock in our cost.

To make sure that and when we sell we price our homes for sale that we know what it is and where our margins are.

That's helpful.

Sure and then your Asp's and backlog were significantly higher than your guidance for the full year. So.

It would appear that you're being somewhat conservative there on your guidance, but I also suspect vintages layering in a lower price Asp's can you talk a little bit about net ASP.

Guidance relative to backlog.

Sure.

So yes, what we're seeing is as our guidance is lower on the ASP.

With the vintage acquisition, we talked about a little bit earlier, how the average sales prices and.

Net mid threes and.

Range, there and as we go through some of our legacy.

Projects, we have we'll start seeing some of these <unk>.

Average sales prices dropping down so that's what our guidance is based on.

Yes.

And it's helpful and then turning to the.

The property in Manhattan can you give us a little bit more color and detail on your expectations for the pace of sales that you are anticipating.

And now that that properties and just started to be marketed.

Yeah.

Alex This is John I'll take that question.

We.

Obviously not.

Coming into this year and being let's say prudent in terms of our underwriting about the sales and absorption of how quickly people would return to work and return to Manhattan, and particular quite conservative and how we would deliver those.

Units or sell those units over the next two two and a half years and approximately one to two units and absorption rate per month.

Recently just opened.

Soft open at the end of April and we've seen some very strong interest come through along with a lot of.

Activity now and the New York Metro market, So I think as.

The country is moving towards the reopening vaccinations are being delivered and rolled out.

A lot of activity come back and and Manhattan market.

We feel very confident and how we model it and underwriting debt underwriting that project and how its model through in terms of our projections and guidance as we speak.

That's great and one last question any chance you could ballpark a pro forma book value per share post the vintage acquisition.

Yeah, we would have to now.

On that yet, but we will do so.

Get back to you on that.

Great. Thank you very much.

Okay.

As a reminder for any questions Press Star then one.

Our next question is from Richard Shuster with Boston Partners. Please proceed.

Guys.

Great quarter, great projections, I don't have a lot of questions just a really quick one.

Question about pro forma book value per share does vintage make it go down or up meaningfully.

Last quarter.

No it should not.

Okay. So it's somewhere in the whatever 12, 60 range or something like that.

Within 50 right.

Yes.

Okay, and then on your part.

Jackson I guess your projection and I apologize I just got on late.

Your projection is 46% to $52 million and net income.

That's correct and on adjusted net income free and the share count is still 46 roughly.

Million shares correct.

So you are now projecting basically are back to about 20.

From a projection before of 96 on.

Yeah, we increased segment.

What.

I know I've asked you this before him and I'm just kind of curious.

Everything going on do you have any do you have any speculation as to why with the 12 50 booked.

Mark too.

<unk> 20 of earnings or whatever it is.

With the $9 $5 stock any idea and I know this is the.

First and second quarter out and the idea of why you think the stock is held back or just it will take time for people to.

To find the stock and just.

Discovery processes more involved.

Good question Richard.

You and I have spoken a few times about that.

I think I think there's a couple of factors.

The first factor is we're a young company.

We're not as I think.

And well known and we are this is like you said on our second quarter of being a public company.

And the market seeing us.

It's also.

A lot of.

Wait and see see how landsea homes as being a new company a new.

And certainly not new in terms of and management team.

Full of better and experienced people operating and homebuilding by essentially is a new name and seeing if we can deliver on what we said we're going to deliver as part of our.

Processing going public and that's delivering on the year and delivering on the organic and.

Again net acquisitions I think we've shown through.

It is.

First four five months here of the year debt, we were very confident and that we were able to get them to expand into new markets, like Texas, and Florida and be able to identify the right builder at the right price that was going to be a great acceleration of our business which is.

And it has and will result in the increase in both revenue net income and ROE at the end of the day, which will drive that shareholder value and hopefully advantage day drive that stock price.

And also shaking off some of the spec I would say hangover as part of this going public process for us on.

Obviously, you know that there's been a lot of news about this.

Particularly with SEC and.

And the guidance that was given on warrants.

There has been a lot of I think impact on that.

Against.

Baxter companies at <unk>.

We've held up our own I would say, we've been pretty consistent and we also did something that certainly I think helps us as it relates to the public warrants that were previously outstanding of about.

$15 million when we closed the transaction and the first quarter January 7th.

<unk> reduced our public warrants tend to one and.

And amended those warrants.

So that.

Reduces a lot of that hangover and as we continue to move away and run.

On this.

And as a regular public company and it really shake off any of this back I think that's we'll see and the.

Hopefully see and the next sequential quarters here this improvement and hopefully improve and our stock price is our returns come through and we deliver on our.

Guidance.

Yeah and then.

And more numbers questions.

How many total warrants with management and from the original deal on our outstanding at this point.

On them on the private warrants, we have roughly around $5 5 million.

Okay. So so there okay. So as you said there were 46 million shares outstanding and $5 5 million warrants and.

And the debt and cash right now, but that is what $3 20, and the cash was 190 correct correct.

And when does when does and Thats close.

Closed on May 4th.

And so.

Those numbers don't include the vintage transaction and I'm guessing that's correct.

And that cost what $55 million.

$55 million, plus we assume 30 million and debt from them.

Okay. So just pro forma for the vintage transaction, we would have 350 of debt and.

And roughly $1 35 of cash flow kind of the.

Ballpark of where we are right now.

And the ballpark.

Okay, great guys, great quarter, and congratulations and good luck. Thanks, a lot and thank you Richard.

At this time. This concludes our question and answer session I would now like to turn the call back over to Mr Hall for closing remarks.

Yeah.

Thank you.

And thank everyone for listening to today's call and we look forward to speaking with you and reported second quarter 2020 results and August Thanks, again for joining us.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

[music].

Good afternoon, everyone and thank you for participating on today's conference call to discuss Lansing homes financial results for the first quarter ended March 31st 'twenty, 'twenty, one and joining us today, our Atlanta homes, CEO and interim CFO, John Hall, Chief Accounting Officer Trenton share.

Reiner, President and C O O Michael for Sun, and the company's external director of Investor Relations Cody slot.

Following their remarks, we'll open the call for your questions before we go further I would like to turn the call over to Mr. As far as he reads the Companys Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements Cody. Please go ahead.

Thank you.

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 vs.

These statements can constitute projections forecasts and forward looking statements and are not guarantees of performance Landsea homes caution that forward looking statements are subject to numerous numerous assumptions risks and uncertainties, which change over time.

Words, such as May can and should will estimate plan.

Project forecast intend expect 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 and the vintage of state homes acquisition and future financial performance of the company changes and the market for Lindsay homes and products and services and other 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 those expressed or implied by these forward looking statements.

These risks and uncertainties include but are not limited to the risk factors described by Landsea homes and its filings with the SEC.

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 and the vintage and states homes acquisition, which may be affected by among other things.

And the ability to integrate the combined business and the acquired business and the ability of the combined business and the acquired business to grow and manage growth profitably.

Costs related to the business combination and the ability to maintain the listing of Lindsay homes and securities on NASDAQ <unk>.

Some of any legal proceedings that maybe instituted against the company changes and applicable laws or regulations and the inability to launch new Atlanta homes products or services are to profitably expand and expand into new markets.

The possibility that the company may be adversely affected by other economic business and our competitive factors.

And other risks and uncertainties indicated and Lindsay homes, and SEC reports or documents filed or to be filed with the SEC by Lindsay homes.

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 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 date. They were made whether as a result of new information.

Future events or otherwise, except as may be required under applicable securities laws and I'd also like to remind everyone. On this call will be available for replay through may 13th starting at eight P. M. Eastern 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 land and sea homes Dot Com and addition of supplemental earnings presentation has been posted on the Investor Relations portion of the company's site and we encourage you to view it now I'd like to turn the call over to the CEO of plant and see homes John Ho John.

Thank you Cody and good afternoon, everyone.

We're very happy that you could join us today to kick things off I'll provide a high level overview of our first quarter 2021 and results and our business highlights, including our recent acquisition of vintage and stay at homes from there I will hand, it off to try and Schreiner, our chief accounting officer to discuss our financials in more detail and then Mike for some our president and COO.

<unk> will provide operational and market updates along with what we hope to accomplish and our recently entered markets and Florida and Texas.

But first I'd like to start off by saying how pleased we are with our financial results for the quarter.

Housing market dynamics continue to remain strong and we've certainly seen that reflected on our financial results with revenue from total home sales growing 14% and our already strong backlog expand to 874 homes.

We also continue to see our Asps rise as we capitalize on the pricing power that comes with such strong housing demand.

Our team has been incredibly busy executing on our strategy I'd like to share some of the notable highlights from the past few months.

First we are pleased to have recently announced two new projects and southern California and <unk>.

This project, which we announced a few weeks ago as the acquisition of a 332 homes sites in San Juan Capistrano, a city and Orange County play and a bill of 43 story and detached homes and 89 three story town homes, all within walking distance from San Juan Capistrano, lively and historic downtown.

The homes will be equipped with our high performance home features including Smart home automation technology to the Apple home kit, along with the revenue Halo Air Purifier State and state of the art whole home verification system that mitigate indoor contaminants to keep resident and safe and support healthy centric living.

We will also be building 65 homes and Orange County, its largest city and community will consist of three storytelling homes.

We are quite optimistic about this type of housing given the success, we've seen and on Iron Ridge Master plan community.

Buyers will appreciate that contemporary stylish and sustainable living and the heart of Orange County, and we are excited for that community to open this fall.

Two projects join a list of our other successful southern California projects, including Iron Ridge, and Lake Forest shade tree, and New House, and Ontario, and the West early and Simi Valley.

Moving to the East Coast, we are nearly sold out of our <unk> community contemporary waterfront condominium community located on in New Jersey, and Gulf Coast and then.

<unk> sales are now underway on for right now on 14th and says and we're seeing great interest there with increased sales activity and the New York City Metropolitan region.

Now to share our most recent announcement we are excited that we will be entering Florida, and Texas with our acquisition of vintage and stay at homes.

Purchase benches and state homes for $54 6 million and cash and they had $30 million of debt outstanding at March 31st debt we assumed.

By way of background vintage and state homes has been constructing best in class homes over the past several decades and high growth real estate markets, such as Orlando Palm Bay, and Melbourne, and Florida, and San Antonio and Austin in Texas, and about 80% of their current selling communities and the central Florida market.

Vintage and stay at homes has earned a reputation for their attention to detail premium building materials, and if we're cultivating and lasting relationships with their customers and.

And this aligns perfectly with our distinct differentiation factors and the industry to this acquisition, we are thrilled to not only gain over 800, new lots across these high growth markets, but also the game and knowledge of the vintage and stay at homes team, which will be joining us at Lansing.

For additional context on the scale of this acquisition and 2020 vintage and stay at homes generated 157 million and revenue.

<unk> million dollars of EBITDA and $9 million and pre tax income delivering 500, 405 homes with an average sales price of 387000, which falls directly in line with our targeted Asps for these markets. Additionally.

Additionally, the acquisition increases Landsea homes backlog as of March 31, 2021 by 509 homes similar to our previous acquisitions and Arizona. This followed the strict financial criteria that we have outlined on our prior earnings presentations when underwriting acquisitions.

We mentioned, Florida, and Texas as high growth markets, we plan to enter on our last earnings call, while vintage and stay at homes and provides us the opportunity to enter both markets I'd, once Florida, and especially the central Florida market and it should stay at homes has a presence and experiencing extremely high growth and February the National Association of Realtors reported a local homes.

Sales and the Orlando market grew year over year for the eighth consecutive month with sales up near 20% from a year earlier and the median sales price up 12% from the prior year and Texas vintage of states homes presence and Austin and San Antonio is a great opportunity as both metro areas are listed on the top 10 of new home markets. These mark.

<unk> seen more and more entry and move up level buyers, which is the buyer we've been targeting since our shift into 2018.

Mike will discuss some of the growth opportunities within these markets later on.

Just wanted to reiterate how pleased we are with acquisition and a strategic fit and our growth plan.

Another step forward and our expansion plans to create communities and highly desirable locations across the United States provide high quality homes for our residents can enjoy living and they're element.

With the positive momentum, we experienced and our current business, which we expect to continue along with the added benefit of this acquisition. We are pleased to be raising our 2021 outlook, which trend would address shortly overall the housing market shows no signs of slowing down and we believe we have significant runway for growth across our markets.

And we look forward to sharing the success. We believe we can achieve in the coming quarters and these results ultimately and driving shareholder value with that I'll now turn the call over to trend Schreiner, our chief accounting officer.

And over to you thanks, John and good afternoon, everyone.

Jumping right into our financials for the quarter total revenue increased 18% to $160 4 million compared to $136 3 million and the first quarter of 2020.

Within our total revenue, we generated $5 7 million from lot sales compared to no lot sales in the first quarter of 2020.

Our total home sales increased 14% to $154 8 million compared to $136 3 million and the prior year period.

Before we move further down the P&L I want to briefly discuss lot sales and clarify how seasonality affects our revenue throughout the year.

On lot sales were homebuilder first and foremost.

But we view lot sales and has an opportunistic way to capitalize on a small portion of our footprint. If the right variables are in place on that.

More to say on lot sales when I address our outlook.

Next as.

And as a growth oriented homebuilder, we inherently experienced seasonality within our business, we typically see a higher percentage of our revenue generated in the back half of the year.

In fact, we have historically seen sales slow down between Super Bowl Sunday and Memorial Day weekend.

And then home buying patterns typically pick up throughout the summer and into the fall.

While we are able to produce homes year round and given the mild climates and the markets. We serve the seasonality of sales for 2020 was roughly 19% of revenue in the first quarter, 13% of revenue and the second quarter, 30% of revenue and the third quarter and 39% of revenue and the fourth quarter.

We would expect the seasonality patterns to remain even when factoring in our acquisition of vintage of states on with that let's get back to our results for the quarter.

Total homes delivered.

During the quarter increased 11% to 301 homes at an average sales price of 514000 compared to 270 homes delivered at an average sales price of 505000, and the first quarter of 2020.

Our average selling price increased slightly largely due to the 21% increase and average selling price and Arizona, where we have continued to capitalize our pricing power dynamics.

During the first quarter, there were 426, new net new home orders with a dollar value of $258 7 million and.

And average sales price of 606000 and on a monthly absorption rate of five three sales per active community.

And this compares to 513 homes with a dollar value of 247 million.

And average sales price of 481000, and a monthly absorption rate of five eight sales per active community and the prior year periods and.

Adjusted home sales gross margin and the first quarter was $17 nine compared to $19 seven and the prior year period.

Decline in gross margin was primarily driven.

By the continued increase in raw material costs.

Net loss attributable to Lindsay homes, and the first quarter was $7 million compared to $2 5 million and the prior year period.

The decline was primarily due to the $4 $9 million adjustment related to the accounting treatment for our private warrants and.

The net income attributable to Lindsay homes was $1 4 million compared to $2 4 million and the prior year period.

Adjusted EBITDA was <unk> 8 million compared to $8 8 million and the prior year quarter.

And with a slight decline primarily driven by increased increases and operating expenses and the aforementioned higher raw material costs.

Looking at our liquidity, we ended the first quarter with $197 million and cash and cash equivalents compared to $105 8 million at December 31, and 2020.

The increase and cash is primarily attributed to the net proceeds from the closing of the business combination with <unk> Capital acquisition Corporation on January seven 2021.

Total debt was $319 5 million compared to $264 8 million at the end of 2020.

Our ratio of debt to capital was 35, 7% at March 31, 2021 <unk>.

Compared to 33, 3% at December 31, and 2020.

And our net debt to net book capitalization rate ratio was 18, 8% compared to $22 six at.

At December 31, and 2020.

Now as John mentioned earlier, we are increasing our full year 2021 outlook as a result of the strong organic growth, we are expecting and to reflect the anticipated result of vintage and stay at homes from our may 4th closing date through the end of the year.

For 2021.

We now expect to report between 925 million to $980 million.

In total revenue with 1930 to 2030 total homes now expected to be delivered.

And average sales price of 450 to 480000.

Out of this total we expect between 10 million to $15 million and revenues to be generated from lot sales.

Our 2021 revenue assumption reflects.

And approximately 15, 1% organic growth rate within our business.

With the top line increases we now expect to reported adjusted net income attributable to Lindsay homes between 46 million $2 $56 million and 2021.

These updated numbers make it clear that we are leveraging our strong financial position.

Dedicated team and industry tailwind to drive growth and 2021 and beyond.

Now I'll pass it to our president and COO, Mike <unk> to provide more color around our operational successes and strategic vision moving forward Mike. Thanks, Brett.

So let's jump right into it.

Due to the overall lack of both resale and new home inventory homebuyers at all and home price segments remain extremely willing to.

Pay and ever increasing prices to secure at home given the favorable secular tailwind we are experiencing at this time, we don't anticipate buyer demand and correcting anytime soon.

While we do not expect oversupplied market overall supply to meet market demand for at least a couple of more years. We believe our strategy is prudent as it stands now.

In addition to the supply and demand dynamics, we are still seeing low interest rates, making it an opportune time for people to buy homes across the nation.

While rates have ticked up some as of late and they are still incredibly favorable compared to historic norms and we do not see this current rate environment stalling demand anytime soon.

We also have a large population of people realizing that they will continue to work from home long after the pandemic passes whether daily or just on certain days of the week and understandably they are paying more attention to the way that they're living and their living spaces.

Freelancing this is where some of our offerings such as live flex really shine as.

As a reminder, a live flex encompasses a variety of features that make living and working on the homes better from enhanced Walter for installations to smart home technology.

Operating live flex options as an add on it's just one way that our team guidance our home buyers through their journey of purchasing at home.

And as our commitment to enhance the lives of our homebuyers through providing them and industry, leading purchasing experience as well as an exceptional move in and after moving and homeowner care.

As we have grown tremendously this past year, especially on the Phoenix Metro area I wanted to share that our Arizona team has done an outstanding job producing a best in class environment for buyers with 90% of move on to reporting a positive sales experience. This is a score that is measured by alliance.

One of the three surveys at homeowners complete upon moving through their first year of their ownership.

There is one specific community however that I want to talk about our 90 homes farmstead at harvest community and Twin Creek, Arizona, located and Phoenix, South East Valley.

Our land and sea homes team members there have done a phenomenal job on everything from laying out the foundation of the homes to handing over the keys to our new Landsea homeowner and a timely fashion.

To start with some key stats, we launched sales of the performance collection and harvest in July 2020, and since then have seen a remarkable pace of 10 net homes sold per month whats.

What's even more remarkable is that we've seen base price increases of $115000 on average since the launch and our gross margin has grown from 22% for the first 12 closings to our current gross margin of 25% for homes and backlog.

We are currently and the final closeout with just 10 homes left to sell.

Operationally, despite the overwhelming demand for our homes at harvest.

Our sales team has thoughtfully manage day sales release process that promotes and enjoyable homeowner experience by staying within a single phase and allowing the construction team to move down the line and sequence. This is atypical and our industry as our competitors, usually scatter releases and implement a lottery sales system, which leaves potential buyers very disappointed at.

Harvest sales have been strategically limited limited and follow a check with me. After three sales program. This means that the sales team releases three lots at a time and once they have sold three they reevaluate timing available lots and pricing for the next three sales.

During each release the team determined and price increases, while also being able to effectively double premium value from phase to phase.

This streamline process has dramatically less and stress among buyers on a weighted unless which is incredibly important and the Phoenix Metro area, where theres a high volatility when it comes to inventory and prices.

Not only has our sales program alleviated stress and angst from our homebuyers, but it has also allowed us to sell at a premium we are seeing a premium of upwards to $9000 compared to our national competitors for the same square footage within harvest.

Now that I have discussed how unique our selling process benefits our customers I'd like to share more about the community and the features that will enhance the lives of our buyers for years to come there.

In addition to Lyft flex options, which have been chosen as an add on for over 30% of the homes and backlog our homes. At harvest also include Remy Halo a whole homes purification system. This state of the art purification system ensures the cleanest air and your home, killing up to 99% of bacteria mold and <unk>.

Irises, even on surfaces, while removing lingering odors.

And these options are homes and this commodity are perfect for families. As they are large as they have large backyards and spacious floor plans.

The case study I just share it is a great example of how we've made acquisitions and Arizona worked with experienced teams.

Net debt came from those companies and and executed our strategy to produce strong financial results, and then making landsea homes and one of the largest homebuilders and that very important, Arizona and new home market.

With the vintage and states homes acquisition and our team is motivated to expand into the strong housing markets are Florida, and Texas and we're excited to work with a knowledgeable team that is joining us to help propel our efforts overall, we plan to utilize our availability of capital to expand vintages states homes operations in Central Florida and.

The Austin, San Antonio markets to increase scale and be able to manage further growth.

That's a great American move continues to accelerate with a significant number of large corporations, such as Tesla Oracle Blackstone and many others along with their employees relocated to Texas and Florida. We believe these markets will continue to experience robust demand from homebuyers for years to come.

Florida is becoming a top choice for living especially attracting young families that are seeking affordability better lifestyle and tax benefits and in fact, the average age and Orlando is 34 years old According to data USA.

With this we're going to leverage vintage and state's homes current presence to push expansion and the greater Orlando region, which is centrally located to seamlessly expand into other hot markets, including Tampa Palm Bay, Daytona and the southeast portion of the state.

This market also offers substantial runway for growth with a significant amount of land available for development through nearly 20000 and vacant developed lots and almost 220000 and future lot positions and vacant land.

Looking at the Central Texas market, the Austin, and San Antonio San Antonio areas are among the 10, most active new home markets and the country.

In fact, the odds and Aerie added an average of nearly 23003 hundred new households per year over the past five years, which has created substantial demand for new housing.

This has been fueled by strong employment affordability and a favorable tax environment as these markets have experienced steady and migration from less of or affordable states across the country.

Similar to Central Florida, There is a significant expansion potential and Austin and San Antonio regions with over 350000 of future lot positions and vacant land.

We expect vintages states to be another successful acquisition and our team is eager to get started and these new markets as.

As we move forward, we have proven to be and remain and acquirer of choice for smaller homebuilders that are looking to sell to the right company, who will take care of their employees and expand upon their legacy just as we did and Arizona and now in Florida, and Texas, We will look to additional acquisition opportunities to supplement our organic growth efforts approaching the process with <unk>.

<unk> and significant due diligence.

Overall, our team is incredibly proud of the success, we've had and becoming one of the fastest growing homebuilders and the country. We remain highly optimistic that highly optimistic about the growth and opportunities ahead, and we look forward to providing more updates along the way.

And for joining us today, operator, we are now ready for Q&A.

Thank you Sir we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the queue. Please press the pound sign or the hash key if youre using a speakerphone you may need to pick up the handset first before pressing the numbers. So once again if you have a question. Please press star.

And then one on your Touchtone phone.

Our first question is from Matthew Bouley with Barclays.

Good afternoon, everyone.

Thanks for taking my questions congrats on the quarter and and closing the acquisition there.

My first one is on the organic business and Arizona specifically.

Really great color there around that.

And what you're doing there a farmstead, but just looking at the the Asps overall.

Clearly a lot of pricing power.

Question on how much further or are you willing to push pricing specifically in light of affordability, because obviously, it's a it's a heavy entry level.

Or a first time buyer I guess position you have there and just looking at the absolute levels of price.

Presumably you're living close to the FHA loan limits in certain cases, and I'm curious if that has any impact on pricing or demand is you come near that thank you.

Matt I'll answer that this is Mike <unk>.

For us we want to be as aggressive as prudently possible and and our attempts to increase pricing throughout all of our communities out in Arizona.

As long as the market remains active and that the the buyers that are coming to our office or seeking houses we're going to continue to do what we can but also at the same time try to do everything we can to enhance our margin along the way, but we do recognize that there are some limits you identify them with the FHA limits and such but one thing thats.

Very interesting for US is we've had this ability.

Looking at our go forward backlog and as appraisals are coming through and the earlier.

Leases, we're still seeing a lot of headroom between the actual sales price and what they are now coming in and being appraised ads. So we see a lot of lift still.

Still available for us.

And going forward, if not a lot of opportunity to build upon our margins by encouraging the buyer and take more options because they have more room to finance them.

Got it and now that that's a really helpful color there.

And then secondly, I wanted to ask on vintage.

Yes.

Just thinking about the process going forward and and the lot positions that they had.

Yeah.

And thank you you're putting the slides there they're about 50% move up.

Obviously, you guys have been kind of moving towards both entry level and move up within your own strategy can you speak a little bit about kind of their own or what are you going to do with those lots going forward.

Is it going to stick with the similar kind of mix that vintage you already had.

And then just.

And I guess the broader question is and how you then use that as a broader platform for the additional lot acquisition with those two states I guess for sure. So.

Vintage and the state's homes are great operators and they have a fantastic business and we're very excited for the opportunity to join up with them.

They have done a great job building, a brand and understanding their customer, but they have done and in a way that has allowed them and the best compete based upon where their capital is and how they go about financing their business, which usually pushes them to a little bit higher price point, because that's sort of how it works. However, with US we believe that there is some great upside potential and pivoting the company.

Towards a more approachable affordable product and pushing up a little bit more north into the Orlando market, where it's been a little more competitive.

With some national homebuilders, and which they problems and felt that they couldn't compete we know we can we do it every day and Phoenix were do it and California, and we know we can compete with.

The biggest and the business and so for US we're going to take that platform and then apply some of our operating disciplines into their business and then also use.

We call our library of product that we have built up over time, and then have brought along with us.

And to best optimize their existing lots going forward.

That may mean that in some cases, we are going to downsize some houses and square footages, but make those household lot more efficient a little more approachable and then get our volume up along the way. So it's very similar to what again, what we've done some spots and California. When we first got here and John and I were building the business and pivoting towards a.

More affordable attainable product point, so we've already done this before and we know we can do it again and Florida and then also on the Texas market.

Yeah understood. So it's sort of replicating what you guys are already.

And I was doing.

Real quick if I could a third one just knowing the deal closed just a couple of days ago is there any sense on the on the purchase accounting in terms of the backlog homes that you acquired how we should think about modeling that.

As of right now we're.

We do not.

We're looking at it we've got and mind, what we've synced that number would be but we've got a we're sending out for valuation to get looked at.

Okay, No problem, we'll look out for that and well. Thank you and congrats again and good luck and the next quarter. Thank you. Thank you.

The next question comes from Alex of Rigel with B Riley. Please proceed.

Thank you gentlemen, very attractive.

Results congratulations on getting that your first full quarter here.

Thank you Alex.

Can you talk a little bit more and bigger perspective sort of your strategy of spec versus build to order and how that might change.

During a period of somewhat uncertain building material costs.

Yes.

That's the.

That's very good question and <unk>.

Something that we're wrestling with fairly continuously in our markets as each one of them has its own individual dynamic to it so and some cases.

Lock and our cost earlier.

And we build forward into that sequence as opposed to waiting for a buyer to come and then identifying the house and then having to go out and price. It. So we're moving a little bit more and to the vertical risk profile of the business, but given times like this and this is my fourth cycle through and when things get.

Active like this.

And for expecting if you will to lock in our cost to.

And to make sure that and when we sell we price our homes for sale that we know what it is and where our margins are.

At some time and it really.

Sure and then your Asps and backlog were significantly higher than your guidance for the full year. So.

It would appear that you're being somewhat conservative there on your guidance, but I also suspect vintages layering and a lower price Asp's can you talk a little bit about that ESP.

Guidance relative to backlog.

Sure.

So yes, what we're seeing is because our guidance is lower on the asps.

With the vintage acquisition, you know, we talked about a little bit earlier, how the average sales prices and.

Net mid threes and it.

A range there and as we go through some of our legacy.

Projects, we have we'll start seeing some of these average sales prices dropping down so that's what our guidance is based on.

And it's helpful and then turning to the.

The property in Manhattan can you give us a little bit more color and detail on your expectations for the pace of sales that you are anticipating.

And now that that properties and just started to be marketed.

Yeah, Alex This is John I'll take that question.

We.

Obviously not.

Coming into this year and being let's say prudent in terms of our underwriting about the sales and absorption of how quickly people would return to work and return to Manhattan in particular.

On a conservative and how we would deliver those.

Units or sell those units over the next two two and a half years and approximately one to two units and absorption rate per month.

And recently just opened.

Soft open at the end of April and we've seen some very strong interest come through along with a lot of activity now and the New York Metro market. So I think as.

The country is moving towards the reopening as the vaccinations are being deliberate and rolled out.

Seeing a lot of activity come back and in Manhattan and market.

We're we feel very confident and how we model it and underwrite underwritten and that project and how its model through in terms of our projections and guidance as we speak.

David.

Okay, that's great and one last question any chance you could ballpark a pro forma book value per share plus the vintage acquisition.

Yeah, we would have to not yet, but we will do so.

Get back to you on that.

Great. Thank you very much.

Thank you.

As a reminder for any questions Press Star then one.

Our next question is from Richard Shuster with Boston Partners. Please proceed hey, guys.

Great quarter, great projections, I don't have a lot of the questions just a really quick one question.

Question about pro forma book value per share does it make it go down or up meaningfully.

And your last quarter.

No it should not.

Okay. So it's somewhere in the whatever 12, 60 range or something like that.

Within <unk> right.

Yes.

Okay, and then on Europe.

Rejection I guess your projection and I apologize I just got on late.

And your projection is $46 million to $52 million and net income.

That's correct and adjusted net income free.

And the share count is still 46 Rockwood, yes.

And shares correct.

So you're now projecting basically about two about 'twenty.

From a projection before might be fixed.

Yes.

Good.

What.

I know I've asked you. This performed I'm just kind of curious with everything going on do you have any do you have any speculation as to why with the 12 50 booked and.

Talk to a buck 20 of earnings or whatever it is.

With the nine and a half dollar stock any idea and I know this is.

The first or second quarter out and why you think the stock is held back or just it will take time for people to.

And to find the stock and just the discovery processes more volume.

Yep.

Good question Richard.

You and I have spoken a few times about that.

I think I think there's a couple of factors I think the first factor is where young company.

We're not as I think.

Well no and I mean, we are this is like you said on our second quarter of being a public company.

And the market seeing us.

It's also.

A lot of wait and see see how lantzy homes as being a new company a new <unk>.

And certainly not new in terms of the management team.

Stock pool of better and experienced people operating in our homebuilding by essentially is a new name and seeing if we can deliver on what we said we're going to deliver as part of our.

Processing going public and that's delivering on the year and delivering on the organic and.

Inorganic acquisitions I think we've shown through this.

First four five months here on the year debt, we were very confident and that we were able to get to expand into new markets, like Texas, and Florida and be able to identify the right builder at the right price that was going to be a great acceleration of our business which is.

And has and will result in the increase and both revenue net income and ROE at the end of the day, which will drive that shareholder value and hopefully advantage they drive that stock price.

We're also shaking off some of the spec I would say hangover as part of this.

And public process for US obviously, you know that there's been a lot of news about this particularly with SEC and.

And the guidance that was given on warrants.

There has been a lot of I think impact on that.

Against.

Baxter companies have day spat.

On a $15 million when we closed the transaction and the first quarter January 7th we reduced our public warrants tend to one.

And and amended those warrants.

And so that we.

Reduces a lot of that hangover and as we continue to move away and run this.

You know as a regular public company and it really shake off any of this back I think that's we'll see and the.

I'm.

Hopefully see and the next sequential quarters here, that's improving and hopefully improve and our stock price is our returns come through and we deliver on our guidance.

Guidance.

And then just a couple of more numbers questions.

And how many total warrants with management and from the original deal are outstanding at this point.

On the on the private warrants, we have roughly around $5 5 million.

Okay. So so there okay. So as you say there are 46 billion shares outstanding and five and 5 million warrants and.

The debt and cash right now, but that is what $3 20, and the cash was 190 correct correct.

And when does when does and Thats close.

Close may 4th.

And so.

Those numbers don't include the <unk> transaction and I'm guessing that's correct.

And that cost what $55 million.

$55 million, plus we assume $30 million and debt from them.

Okay. So just pro forma for the vintage transaction, we would have 350 of debt and.

And roughly $1 35 of cash back on.

And the ballpark of where we are right now and.

And the ballpark.

Okay, great guys, great quarter, and congratulations on the grid.

Thank you Richard Thanks.

At this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Ho for closing remarks.

Yeah.

Thank you.

And thank everyone for listening to today's call and we look forward to speaking with you. When we report our second quarter 2020 results and August Thanks, again for joining us.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Q1 2021 Landsea Homes Corp Earnings Call

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