Landsea Homes Corporation LSEA reported lackluster first-quarter 2025 results, wherein adjusted earnings and total revenues missed the Zacks Consensus Estimate. On a year-over-year basis, the bottom line tumbled while the top line grew.
During the quarter, the company witnessed growth in home closing volume, which was partially offset by lower home closing average selling price (ASP), especially across Texas, Florida and Colorado markets. Reduced cancellation rates, accompanied by order growth on lower ASPs, are strategically benefiting the company amid the ongoing housing market uncertainties.
During yesterday’s after-hours, LSEA stock surged 59.5%, reflecting investors’ optimism. The stock surge is likely to have been stimulated by the company’s recent announcement of its acquisition by New Home Co.
LSEA’s Q1 Earnings & Revenue Discussion
The company reported a loss per share of five cents, broader than the Zacks Consensus Estimate of a loss per share of three cents. In the year-ago quarter, the company reported adjusted earnings per share (EPS) of 10 cents.
Landsea Homes Corporation Price, Consensus and EPS Surprise
Landsea Homes Corporation Price, Consensus and EPS Surprise
Landsea Homes Corporation price-consensus-eps-surprise-chart | Landsea Homes Corporation Quote
Total revenues of $310.8 million missed the consensus mark of $320 million by 2.9%, but grew 6% year over year from $294 million.
Landsea Homes’ Segment Details
Home Sales: This segment’s revenues were $299.4 million, which grew 2.3% from the prior-year quarter’s level.
The company reported 643 new home deliveries, which were up 27.3% year over year, with a closing ASP of $466,000 (down 19.5% year over year).
Net new home orders during the quarter rose 11.1% to 679 homes, having a value of $317.8 million. The average absorption pace was 3.3 per month in the quarter. As a percentage of gross orders, cancellations were 9%, down from 10% a year ago.
Backlog as of March 31, 2025, was 426 homes, down from 623 homes as of March 31, 2024. The backlog value was also down 39.3% to $230.8 million from the prior year.
Home closing gross margin contracted 190 basis points (bps) year over year to 13% (including $1.5 million inventory impairment on one of its DFW assets). The margin contraction was mainly due to higher discounts and incentives offerings, accompanied by higher interest costs and costs of purchase accounting adjustments for inventory acquired in recent business combinations.
Lot Sales & Other: This segment’s revenues surged year over year by 689.4% to $11.4 million. As of March 31, total lots owned or controlled by LSEA were 10,516, up from 10,349 at the end of March 31, 2024.
LSEA’s Financial Glimpse
At the end of March 31, 2025, cash and cash equivalents totaled $36.7 million, down from $53.3 million reported as of Dec. 31, 2024. At the end of the first quarter, it had total debt of $727.5 million, up from $725.4 million at 2024-end.
During the first quarter, Landsea Homes’ debt to capital was 52.1% compared with 51.8% at Dec. 31, 2024, with net debt to total capital of 48.3%, up from 47.7% at 2024-end.
Landsea Homes’ Recent Update
On May 12, 2025, Landsea Homes announced a definitive agreement with New Home Co., under which the latter will be acquiring the former for $11.30 per share in an all-cash transaction. The transaction value represents an enterprise value of approximately $1.2 billion for LSEA.
The purchase price underscores about a 61% premium to Landsea Homes’ closing share price on May 12, 2025. Upon the completion of this strategic transaction, LSEA will be considered a privately held company.
Upon the satisfaction of the customary closing conditions, the acquisition is expected to be complete by the early third quarter of 2025.
LSEA’s Zacks Rank & Key Picks
Landsea Homes currently carries a Zacks Rank #3 (Hold).
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