Financial Overview of Landsea Homes Corporation

Landsea Homes Corporation is a homebuilder that designs and constructs homes and communities in several states across the United States. The company reported its financial results for the first quarter of 2025, providing insights into its recent performance and outlook.

Revenue and Profitability

In the first quarter of 2025, Landsea Homes generated total revenues of $310.8 million, a 6% increase from the same period in the prior year. This was driven by a 2% increase in home sales revenue to $299.4 million and a significant jump in lot sales and other revenue to $11.4 million, up from $1.4 million in the first quarter of 2024.

However, the company’s profitability declined during the quarter. Gross margin from home sales decreased to 13.0% from 14.9% in the prior year period. This was primarily due to the need for increased sales discounts and incentives to drive sales in the current market environment, as well as higher interest costs and purchase price accounting adjustments related to recent acquisitions.

Overall, Landsea Homes reported a net loss of $7.1 million in the first quarter of 2025, compared to net income of $0.7 million in the same period of 2024. The loss was driven by the lower gross margins, as well as higher sales and marketing expenses.

Operational Highlights

The company’s home deliveries increased 27% year-over-year to 643 units, with growth across most of its operating segments. This was led by a significant increase in Texas, where the company integrated its acquisition of Antares Acquisition, LLC in April 2024.

However, Landsea Homes faced challenges in its California and Arizona markets, where net new home orders declined by 21% and 19% respectively, compared to the prior year period. The company attributed this to continued affordability concerns among buyers due to high mortgage interest rates, which required increased use of sales incentives.

In Florida, the company saw a more modest 8% decline in net new orders, while Colorado experienced growth, with a 43% increase in net new orders. The company continues to focus on expanding its presence in these markets.

Liquidity and Capital Resources

As of March 31, 2025, Landsea Homes had $52.3 million in cash, cash equivalents, and cash held in escrow, a decrease of $4.9 million from the end of 2024. The company’s principal sources of capital include cash generated from home and land sales, borrowings under its credit facility, and proceeds from the sale of senior notes.

Landsea Homes had $750.0 million in outstanding borrowings as of March 31, 2025, with an additional $204.0 million in available borrowing capacity under its credit facility. The company’s debt to capital ratio increased slightly to 52.1% from 51.8% at the end of 2024, while its net debt to total capital ratio (a non-GAAP measure) increased to 48.3% from 47.7%.

The company’s credit facility and senior note agreements contain certain financial covenants, including requirements to maintain minimum liquidity, tangible net worth, and leverage and interest coverage ratios. As of March 31, 2025, Landsea Homes was in compliance with all of these covenants.

Outlook and Strategy

Landsea Homes’ management team remains focused on executing its long-term growth strategy, which includes expanding its community count in current markets, maintaining an appropriate supply of lots, and continuing to focus on entry-level and first-time homebuyer products.

However, the company faces ongoing challenges from the current macroeconomic environment, particularly the sustained high mortgage interest rates that have impacted affordability and demand in many of its markets. Landsea Homes is working to address these challenges through increased sales incentives and its Landsea Elements financial services platform, which provides mortgage, title, and insurance services to its homebuyers.

Looking ahead, the company expects the homebuilding market to remain tied to local economic conditions and the broader macroeconomic environment. Factors such as employment, household formation, and supply of available homes will continue to influence net orders, deliveries, and pricing. Landsea Homes is closely monitoring these trends and adjusting its operations accordingly.

Despite the near-term headwinds, the company believes its financial condition and operating platform position it well to continue executing its growth strategy over the long term. Landsea Homes remains focused on reducing its leverage ratios and becoming a top-ten homebuilder in the United States.

Key Financial Metrics

The following tables present some of the key financial metrics from Landsea Homes’ first quarter 2025 results:

Home Sales Revenue and Deliveries:

Metric	Q1 2025	Q1 2024	% Change
Home Sales Revenue	$299.4 million	$292.6 million	+2%
Home Deliveries	643 units	505 units	+27%

Net New Home Orders and Monthly Absorption Rates:

Metric	Q1 2025	Q1 2024	% Change
Net New Home Orders	679	611	+11%
Monthly Absorption Rate	3.0	3.3	-9%

Gross Margins:

Metric	Q1 2025	Q1 2024
Home Sales Gross Margin	13.0%	14.9%
Adjusted Home Sales Gross Margin*	20.0%	19.4%

*Excludes interest, real estate impairments, and purchase price accounting adjustments

Leverage Ratios:

Metric	Q1 2025	Q4 2024
Debt to Capital Ratio	52.1%	51.8%
Net Debt to Total Capital Ratio	48.3%	47.7%

Conclusion

Landsea Homes’ first quarter 2025 results reflect the ongoing challenges facing the homebuilding industry, particularly the impact of high mortgage interest rates on affordability and demand. While the company achieved growth in home deliveries and revenues, its profitability declined due to the need for increased sales incentives.

Looking ahead, Landsea Homes remains focused on executing its long-term growth strategy, which includes expanding its presence in key markets and leveraging its Landsea Elements financial services platform. However, the company will need to continue navigating the uncertain macroeconomic environment, which may require further adjustments to its operations and financial management.

Overall, Landsea Homes appears to be taking a prudent approach to managing its business during this period of market volatility, while positioning itself for long-term success in the homebuilding industry.