(State or Other Jurisdiction of | (I.R.S. Employer | |||||||
Incorporation or Organization) | Identification Number) | |||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
The | ||||||||||||||
The |
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Landsea Homes Corporation | ||||||||
Form 10-Q Index | ||||||||
For the Three and Nine Months Ended September 30, 2023 |
PART I - FINANCIAL INFORMATION | Page | ||||
Item 1. Unaudited Financial Statements | |||||
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 | |||||
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 | |||||
Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2023 and 2022 | |||||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 | |||||
Notes to the Consolidated Financial Statements | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations | |||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||||
Item 4. Controls and Procedures | |||||
PART II - OTHER INFORMATION | |||||
Item 1. Legal Proceedings | |||||
Item 1A. Risk Factors | |||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
Item 3. Defaults Upon Senior Securities | |||||
Item 4. Mine Safety Disclosures | |||||
Item 5. Other Information | |||||
Item 6. Exhibits | |||||
Signatures |
Landsea Homes Corporation | ||
Consolidated Balance Sheets - (Unaudited) | ||
(in thousands, except share and per share amounts) |
September 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Cash held in escrow | |||||||||||
Real estate inventories | |||||||||||
Due from affiliates | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other liabilities | |||||||||||
Line of credit facility, net | |||||||||||
Senior notes, net | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
Equity | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Total stockholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Landsea Homes Corporation | ||||||||
Consolidated Statements of Operations - (Unaudited) | ||||||||
(in thousands, except share and per share amounts) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Home sales | $ | $ | $ | $ | |||||||||||||||||||
Lot sales and other | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Home sales | |||||||||||||||||||||||
Lot sales and other | |||||||||||||||||||||||
Total cost of sales | |||||||||||||||||||||||
Gross margin | |||||||||||||||||||||||
Home sales | |||||||||||||||||||||||
Lot sales and other | ( | ||||||||||||||||||||||
Total gross margin | |||||||||||||||||||||||
Sales and marketing expenses | |||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other income (loss), net | ( | ||||||||||||||||||||||
Loss on remeasurement of warrant liability | ( | ||||||||||||||||||||||
Pretax income | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | |||||||||||||||||||||||
Net income attributable to Landsea Homes Corporation | $ | $ | $ | $ | |||||||||||||||||||
Income per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Landsea Homes Corporation | ||
Consolidated Statements of Equity - (Unaudited) | ||
(in thousands, except shares) |
Common Stock | ||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Retained earnings | Noncontrolling interests | Total stockholders' equity | |||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
Stock options exercised | — | — | — | |||||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||
Repurchase of common stock and associated tax | ( | — | ( | — | — | ( | ||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | ||||||||||||||
Net income | — | — | — | |||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
Common Stock | ||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Retained earnings | Noncontrolling interests | Total stockholders’ equity | |||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
Shares issued under share-based awards | — | — | — | — | — | |||||||||||||||
Stock options exercised | — | — | — | |||||||||||||||||
Cash paid for shares withheld for taxes | — | — | ( | — | — | ( | ||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||
Repurchase of common stock and associated tax | ( | — | ( | — | — | ( | ||||||||||||||
Forfeiture and cancellation of Earnout Shares | ( | — | — | — | — | — | ||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | ||||||||||||||
Net income | — | — | — | |||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
Landsea Homes Corporation | ||
Consolidated Statements of Equity - (Unaudited) | ||
(in thousands, except shares) |
Common Stock | ||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Retained earnings | Noncontrolling interests | Total stockholders' equity | |||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
Shares issued under share-based awards | — | — | — | — | — | |||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | ||||||||||||||
Net income (loss) | — | — | — | |||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
Common Stock | ||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Retained earnings | Noncontrolling interests | Total stockholders’ equity | |||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||
Shares issued under share-based awards | — | — | — | — | — | |||||||||||||||
Cash paid for shares withheld for taxes | — | — | ( | — | — | ( | ||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||
Repurchase of common stock | ( | ( | ( | — | — | ( | ||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | ( | ( | ||||||||||||||
Net income (loss) | — | — | — | |||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ |
Landsea Homes Corporation | ||||||||
Consolidated Statements of Cash Flows - (Unaudited) | ||||||||
(in thousands) |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
(dollars in thousands) | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Loss on remeasurement of warrant liability | ||||||||||||||
Real estate inventories impairment | ||||||||||||||
Stock-based compensation | ||||||||||||||
Loss on extinguishment or forgiveness of debt | ||||||||||||||
Abandoned project costs | ||||||||||||||
Write-off of offering costs | ||||||||||||||
Deferred taxes | ( | ( | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Cash held in escrow | ( | |||||||||||||
Real estate inventories | ( | ( | ||||||||||||
Due from affiliates | ( | ( | ||||||||||||
Other assets | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Net cash provided by (used in) operating activities | ( | |||||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Distributions of capital from unconsolidated joint ventures | ||||||||||||||
Payments for business acquisition, net of cash acquired | ( | |||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Borrowings from notes and other debts payable | ||||||||||||||
Repayments of notes and other debts payable | ( | ( | ||||||||||||
Cash paid for shares withheld for taxes | ( | ( | ||||||||||||
Payment for buyback of warrants | ( | |||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Repurchases of common stock | ( | ( | ||||||||||||
Contributions from noncontrolling interests | ||||||||||||||
Distributions to noncontrolling interests | ( | ( | ||||||||||||
Deferred offering costs paid | ( | |||||||||||||
Debt issuance and extinguishment costs paid | ( | ( | ||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net decrease in cash, cash equivalents, and restricted cash | ( | |||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Assets Acquired | |||||
Cash | $ | ||||
Real estate inventories | |||||
Goodwill | |||||
Trade name | |||||
Other assets | |||||
Total assets | $ | ||||
Liabilities Assumed | |||||
Accounts payable | $ | ||||
Accrued expenses | |||||
Total liabilities | |||||
Net assets acquired | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2022 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Revenue | $ | $ | |||||||||
Pretax income | |||||||||||
Provision for income taxes | |||||||||||
Net income | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Cash | $ | $ | |||||||||
Real estate inventories | |||||||||||
Due from affiliates | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other liabilities | |||||||||||
Total liabilities | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Deposits and pre-acquisition costs | $ | $ | |||||||||
Land held and land under development | |||||||||||
Homes completed or under construction | |||||||||||
Model homes | |||||||||||
Total real estate inventories | $ | $ | |||||||||
Impairment Data | Quantitative Data | ||||||||||||||||||||||
Three Months Ended | Number of Projects Impaired | Real Estate Inventories Impairment | Fair Value of Inventory After Impairment | Discount Rate | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
June 30, 2023 | $ | $ | % | ||||||||||||||||||||
Total | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Line of credit facility | $ | $ | |||||||||
Deferred loan costs | ( | ( | |||||||||
Line of credit facility, net | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Senior notes | $ | $ | |||||||||
Discount and deferred loan costs | ( | ||||||||||
Senior notes, net | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Beginning warranty accrual | $ | $ | $ | $ | |||||||||||||||||||
Warranty provision | |||||||||||||||||||||||
Warranty payments | ( | ( | ( | ( | |||||||||||||||||||
Ending warranty accrual | $ | $ | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: Discount | ( | ||||
Present value of lease liabilities | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Arizona | $ | $ | $ | $ | |||||||||||||||||||
California | |||||||||||||||||||||||
Florida | |||||||||||||||||||||||
Metro New York | |||||||||||||||||||||||
Texas | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Pretax income (loss) | |||||||||||||||||||||||
Arizona | $ | $ | $ | $ | |||||||||||||||||||
California | |||||||||||||||||||||||
Florida | |||||||||||||||||||||||
Metro New York | ( | ( | ( | ||||||||||||||||||||
Texas | ( | ( | ( | ( | |||||||||||||||||||
Corporate | ( | ( | ( | ( | |||||||||||||||||||
Total pretax income | $ | $ | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Assets | |||||||||||
Arizona | $ | $ | |||||||||
California | |||||||||||
Florida | |||||||||||
Metro New York | |||||||||||
Texas | |||||||||||
Corporate | |||||||||||
Total assets | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Line of credit facility (1) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Senior notes (2) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Warrant liability | (dollars in thousands) | |||||||||||||
Beginning balance | $ | $ | ||||||||||||
Changes in fair value | ||||||||||||||
Repurchases of warrants | ( | |||||||||||||
Ending balance | $ | $ |
Awards | Weighted Average Grant Date Fair Value | |||||||||||||
(in thousands) | ||||||||||||||
Nonvested, at December 31, 2022 | $ | |||||||||||||
Granted | ||||||||||||||
Vested | ( | |||||||||||||
Forfeited | ||||||||||||||
Nonvested, at September 30, 2023 | $ |
Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||||||||||||
(in thousands) | (in years) | (in thousands) | ||||||||||||||||||||||||
Options outstanding at December 31, 2022 | $ | |||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Exercised | ( | |||||||||||||||||||||||||
Forfeited | ( | |||||||||||||||||||||||||
Options outstanding at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Options exercisable at September 30, 2023 | $ | $ |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
September 30, 2023 | ||||||||
(in thousands, except period) | ||||||||
Unvested units | ||||||||
Remaining cost on unvested units | $ | |||||||
Remaining vesting period |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Landsea Homes Corporation | ||
Notes to the Consolidated Financial Statements - (unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||
Numerator | |||||||||||||||||||||||
Net income attributable to Landsea Homes Corporation | $ | $ | $ | $ | |||||||||||||||||||
Less: undistributed earnings allocated to participating shares | ( | ( | |||||||||||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
Denominator | |||||||||||||||||||||||
Weighted average common shares outstanding - basic | |||||||||||||||||||||||
Adjustment for weighted average participating shares outstanding | ( | ( | |||||||||||||||||||||
Adjusted weighted average common shares outstanding under two class method - basic | |||||||||||||||||||||||
Dilutive effect of warrants | |||||||||||||||||||||||
Dilutive effect of share-based awards | |||||||||||||||||||||||
Adjusted weighted average common shares outstanding under two class method - diluted | |||||||||||||||||||||||
Earnings per share | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Supplemental disclosures of cash flow information | |||||||||||
Interest paid, net of amounts capitalized | $ | $ | |||||||||
Income taxes paid | $ | $ | |||||||||
Supplemental disclosures of non-cash investing and financing activities | |||||||||||
Change in right-of-use assets for new, modified, or terminated operating leases | $ | $ | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | (dollars in thousands, except per share amounts) | ||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Home sales | $ | 258,062 | $ | 326,496 | $ | 790,199 | $ | 975,269 | |||||||||||||||
Lot sales and other | 19,286 | 9,089 | 22,133 | 45,222 | |||||||||||||||||||
Total revenues | 277,348 | 335,585 | 812,332 | 1,020,491 | |||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Home sales | 209,753 | 258,362 | 647,642 | 770,220 | |||||||||||||||||||
Lot sales and other | 13,309 | 10,737 | 15,770 | 40,546 | |||||||||||||||||||
Total cost of sales | 223,062 | 269,099 | 663,412 | 810,766 | |||||||||||||||||||
Gross margin | |||||||||||||||||||||||
Home sales | 48,309 | 68,134 | 142,557 | 205,049 | |||||||||||||||||||
Lot sales and other | 5,977 | (1,648) | 6,363 | 4,676 | |||||||||||||||||||
Total gross margin | 54,286 | 66,486 | 148,920 | 209,725 | |||||||||||||||||||
Sales and marketing expenses | 16,930 | 21,063 | 51,672 | 64,366 | |||||||||||||||||||
General and administrative expenses | 25,463 | 21,111 | 74,223 | 70,734 | |||||||||||||||||||
Total operating expenses | 42,393 | 42,174 | 125,895 | 135,100 | |||||||||||||||||||
Income from operations | 11,893 | 24,312 | 23,025 | 74,625 | |||||||||||||||||||
Other income (loss), net | 656 | 990 | 2,770 | (654) | |||||||||||||||||||
Loss on remeasurement of warrant liability | — | — | — | (7,315) | |||||||||||||||||||
Pretax income | 12,549 | 25,302 | 25,795 | 66,656 | |||||||||||||||||||
Provision for income taxes | 3,066 | 4,021 | 6,323 | 17,460 | |||||||||||||||||||
Net income | 9,483 | 21,281 | 19,472 | 49,196 | |||||||||||||||||||
Net income attributable to noncontrolling interests | 887 | 1,311 | 2,711 | 1,226 | |||||||||||||||||||
Net income attributable to Landsea Homes Corporation | $ | 8,596 | $ | 19,970 | $ | 16,761 | $ | 47,970 | |||||||||||||||
Income per share: | |||||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.49 | $ | 0.43 | $ | 1.10 | |||||||||||||||
Diluted | $ | 0.22 | $ | 0.49 | $ | 0.42 | $ | 1.09 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 38,336,100 | 39,935,152 | 39,402,507 | 42,768,269 | |||||||||||||||||||
Diluted | 38,440,392 | 40,097,269 | 39,549,035 | 42,943,871 |
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
Homes | Dollar Value | ASP | Monthly Absorption Rate | Homes | Dollar Value | ASP | Monthly Absorption Rate | Homes | Dollar Value | ASP | Monthly Absorption Rate | |||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 136 | $ | 59,444 | $ | 437 | 2.7 | 38 | $ | 15,397 | $ | 405 | 0.8 | 258 | % | 286 | % | 8 | % | 238 | % | ||||||||||||||||||||||||||||||
California | 140 | 128,352 | 917 | 4.1 | 68 | 56,460 | 830 | 1.8 | 106 | % | 127 | % | 10 | % | 128 | % | ||||||||||||||||||||||||||||||||||
Florida | 210 | 97,245 | 463 | 2.3 | 134 | 70,973 | 530 | 1.8 | 57 | % | 37 | % | (13) | % | 28 | % | ||||||||||||||||||||||||||||||||||
Metro New York | — | — | N/A | — | 7 | 13,472 | 1,925 | 2.3 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Texas | — | — | N/A | — | 10 | 9,172 | 917 | 1.7 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Total | 486 | $ | 285,041 | $ | 587 | 2.7 | 257 | $ | 165,474 | $ | 644 | 1.5 | 89 | % | 72 | % | (9) | % | 80 | % |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
Homes | Dollar Value | ASP | Monthly Absorption Rate | Homes | Dollar Value | ASP | Monthly Absorption Rate | Homes | Dollar Value | ASP | Monthly Absorption Rate | |||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 474 | $ | 201,452 | $ | 425 | 3.2 | 310 | $ | 154,420 | $ | 498 | 2.6 | 53 | % | 30 | % | (15) | % | 23 | % | ||||||||||||||||||||||||||||||
California | 520 | 446,045 | 858 | 4.9 | 357 | 330,705 | 926 | 3.4 | 46 | % | 35 | % | (7) | % | 44 | % | ||||||||||||||||||||||||||||||||||
Florida | 551 | 240,269 | 436 | 2.1 | 728 | 350,029 | 481 | 3.0 | (24 | %) | (31 | %) | (9) | % | (30 | %) | ||||||||||||||||||||||||||||||||||
Metro New York | — | — | N/A | — | 20 | 50,662 | 2,533 | 2.2 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
Texas | 4 | 4,194 | 1,049 | 1.5 | 17 | 16,268 | 957 | 0.8 | (76) | % | (74) | % | 10 | % | 88 | % | ||||||||||||||||||||||||||||||||||
Total | 1,549 | $ | 891,960 | $ | 576 | 3.0 | 1,432 | $ | 902,084 | $ | 630 | 2.9 | 8 | % | (1 | %) | (9) | % | 3 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
Arizona | 17.0 | 16.3 | 4 | % | 16.7 | 13.1 | 27 | % | |||||||||||||||
California | 11.3 | 12.3 | (8 | %) | 11.8 | 11.7 | 1 | % | |||||||||||||||
Florida | 31.0 | 25.3 | 23 | % | 29.5 | 26.9 | 10 | % | |||||||||||||||
Metro New York | — | 1.0 | (100 | %) | — | 1.0 | (100 | %) | |||||||||||||||
Texas | — | 2.0 | (100 | %) | 0.3 | 2.3 | (87 | %) | |||||||||||||||
Total | 59.3 | 57.0 | 4 | % | 58.3 | 55.0 | 6 | % |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | |||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 115 | $ | 50,314 | $ | 438 | 154 | $ | 69,690 | $ | 453 | (25 | %) | (28 | %) | (3) | % | |||||||||||||||||||||||||||||||||||||
California | 115 | 103,982 | 904 | 128 | 118,978 | 930 | (10) | % | (13) | % | (3) | % | |||||||||||||||||||||||||||||||||||||||||
Florida | 218 | 103,766 | 476 | 243 | 103,086 | 424 | (10) | % | 1 | % | 12 | % | |||||||||||||||||||||||||||||||||||||||||
Metro New York | — | — | N/A | 11 | 28,132 | 2,557 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||
Texas | — | — | N/A | 7 | 6,610 | 944 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||
Total | 448 | $ | 258,062 | $ | 576 | 543 | $ | 326,496 | $ | 601 | (17 | %) | (21 | %) | (4) | % |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | |||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 445 | $ | 193,438 | $ | 435 | 451 | $ | 200,881 | $ | 445 | (1 | %) | (4 | %) | (2) | % | |||||||||||||||||||||||||||||||||||||
California | 315 | 270,756 | 860 | 389 | 342,217 | 880 | (19) | % | (21) | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||
Florida | 694 | 320,162 | 461 | 766 | 318,711 | 416 | (9) | % | — | % | 11 | % | |||||||||||||||||||||||||||||||||||||||||
Metro New York | 1 | 1,649 | 1,649 | 43 | 95,758 | 2,227 | (98) | % | (98) | % | (26) | % | |||||||||||||||||||||||||||||||||||||||||
Texas | 4 | 4,194 | 1,049 | 18 | 17,702 | 983 | (78) | % | (76) | % | 7 | % | |||||||||||||||||||||||||||||||||||||||||
Total | 1,459 | $ | 790,199 | $ | 542 | 1,667 | $ | 975,269 | $ | 585 | (12 | %) | (19 | %) | (7) | % |
Three Months Ended September 30, | |||||||||||||||||||||||
2023 | % | 2022 | % | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Home sales revenue | $ | 258,062 | 100.0 | % | $ | 326,496 | 100.0 | % | |||||||||||||||
Cost of home sales | 209,753 | 81.3 | % | 258,362 | 79.1 | % | |||||||||||||||||
Home sales gross margin | 48,309 | 18.7 | % | 68,134 | 20.9 | % | |||||||||||||||||
Add: Interest in cost of home sales | 9,713 | 3.8 | % | 10,138 | 3.1 | % | |||||||||||||||||
Add: Real estate inventories impairment | — | — | % | — | — | % | |||||||||||||||||
Adjusted home sales gross margin excluding interest and real estate inventories impairment (1) | 58,022 | 22.5 | % | 78,272 | 24.0 | % | |||||||||||||||||
Add: Purchase price accounting for acquired inventory | 3,865 | 1.5 | % | 10,612 | 3.3 | % | |||||||||||||||||
Adjusted home sales gross margin excluding interest, real estate inventories impairment, and purchase price accounting for acquired inventory (1) | $ | 61,887 | 24.0 | % | $ | 88,884 | 27.2 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
2023 | % | 2022 | % | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Home sales revenue | $ | 790,199 | 100.0 | % | $ | 975,269 | 100.0 | % | |||||||||||||||
Cost of home sales | 647,642 | 82.0 | % | 770,220 | 79.0 | % | |||||||||||||||||
Home sales gross margin | 142,557 | 18.0 | % | 205,049 | 21.0 | % | |||||||||||||||||
Add: Interest in cost of home sales | 21,531 | 2.7 | % | 31,224 | 3.2 | % | |||||||||||||||||
Add: Real estate inventories impairment | 4,700 | 0.6 | % | — | — | % | |||||||||||||||||
Adjusted home sales gross margin excluding interest and real estate inventories impairment (1) | 168,788 | 21.4 | % | 236,273 | 24.2 | % | |||||||||||||||||
Add: Purchase price accounting for acquired inventory | 14,060 | 1.8 | % | 41,162 | 4.2 | % | |||||||||||||||||
Adjusted home sales gross margin excluding interest, real estate inventories impairment, and purchase price accounting for acquired inventory (1) | $ | 182,848 | 23.1 | % | $ | 277,435 | 28.4 | % |
September 30, 2023 | September 30, 2022 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | Homes | Dollar Value | ASP | |||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 134 | $ | 58,000 | $ | 433 | 281 | $ | 134,771 | $ | 480 | (52) | % | (57) | % | (10) | % | |||||||||||||||||||||||||||||||||||||
California | 284 | 253,735 | 893 | 224 | 214,864 | 959 | 27 | % | 18 | % | (7) | % | |||||||||||||||||||||||||||||||||||||||||
Florida | 342 | 171,004 | 500 | 767 | 374,953 | 489 | (55) | % | (54) | % | 2 | % | |||||||||||||||||||||||||||||||||||||||||
Metro New York | — | — | N/A | 2 | 5,591 | 2,796 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||
Texas | — | — | N/A | 11 | 10,914 | 992 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||
Total | 760 | $ | 482,739 | $ | 635 | 1,285 | $ | 741,093 | $ | 577 | (41) | % | (35) | % | 10 | % |
September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
Lots Owned | Lots Controlled | Total | Lots Owned | Lots Controlled | Total | % Change | |||||||||||||||||||||||||||||||||||
Arizona | 1,833 | 1,534 | 3,367 | 2,302 | 2,191 | 4,493 | (25 | %) | |||||||||||||||||||||||||||||||||
California | 718 | 1,415 | 2,133 | 628 | 1,948 | 2,576 | (17 | %) | |||||||||||||||||||||||||||||||||
Florida | 2,388 | 1,606 | 3,994 | 2,420 | 1,978 | 4,398 | (9 | %) | |||||||||||||||||||||||||||||||||
Metro New York | 2 | — | 2 | 7 | — | 7 | (71 | %) | |||||||||||||||||||||||||||||||||
Texas | 130 | 1,577 | 1,707 | 18 | 918 | 936 | 82 | % | |||||||||||||||||||||||||||||||||
Total | 5,071 | 6,132 | 11,203 | 5,375 | 7,035 | 12,410 | (10 | %) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Pretax income (loss) | (dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||
Arizona | $ | 5,253 | $ | 6,046 | $ | 4,826 | $ | 17,653 | |||||||||||||||
California | 9,795 | 20,059 | 17,184 | 68,085 | |||||||||||||||||||
Florida | 4,378 | 4,172 | 23,993 | 8,028 | |||||||||||||||||||
Metro New York | (917) | (810) | (1,818) | 646 | |||||||||||||||||||
Texas | (1,383) | (215) | (4,144) | (93) | |||||||||||||||||||
Corporate | (4,577) | (3,950) | (14,246) | (27,663) | |||||||||||||||||||
Total | $ | 12,549 | $ | 25,302 | $ | 25,795 | $ | 66,656 |
Three Months Ended September 30, | As a Percentage of Home Sales | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Sales and marketing expenses | $ | 16,930 | $ | 21,063 | 6.6 | % | 6.5 | % | ||||||||||||||||||
General and administrative expenses | 25,463 | 21,111 | 9.9 | % | 6.5 | % | ||||||||||||||||||||
Total sales, marketing, and G&A expenses | $ | 42,393 | $ | 42,174 | 16.5 | % | 13.0 | % |
Nine Months Ended September 30, | As a Percentage of Home Sales | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Sales and marketing expenses | $ | 51,672 | $ | 64,366 | 6.5 | % | 6.6 | % | ||||||||||||||||||
General and administrative expenses | 74,223 | 70,734 | 9.4 | % | 7.3 | % | ||||||||||||||||||||
Total sales, marketing, and G&A expenses | $ | 125,895 | $ | 135,100 | 15.9 | % | 13.9 | % |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
Financial Covenants | Actual | Covenant Requirement | Actual | Covenant Requirement | ||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||
Minimum Liquidity Covenant | $ | 494,447 | $ | 50,000 | $ | 301,435 | $ | 50,000 | ||||||||||||||||||
Interest Coverage Ratio - Adjusted EBITDA to Interest Incurred | 2.88 | 2.00 | 4.76 | 1.75 | ||||||||||||||||||||||
Tangible Net Worth | $ | 632,807 | $ | 394,253 | $ | 641,636 | $ | 394,253 | ||||||||||||||||||
Maximum Leverage Ratio (1) | 40.7 | % | <60% | 37.8 | % | <60% |
September 30, 2023 | December 31, 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Total notes and other debts payable, net | $ | 552,393 | $ | 505,422 | |||||||
Total equity | 701,447 | 710,319 | |||||||||
Total capital | $ | 1,253,840 | $ | 1,215,741 | |||||||
Ratio of debt to capital | 44.1 | % | 41.6 | % | |||||||
Total notes and other debts payable, net | $ | 552,393 | $ | 505,422 | |||||||
Less: cash, cash equivalents, and restricted cash | 133,491 | 123,634 | |||||||||
Less: cash held in escrow | 10,956 | 17,101 | |||||||||
Net debt | 407,946 | 364,687 | |||||||||
Total capital | $ | 1,253,840 | $ | 1,215,741 | |||||||
Ratio of net debt to total capital | 32.5 | % | 30.0 | % |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Net income | $ | 9,483 | $ | 21,281 | |||||||
Provision for income taxes | 3,066 | 4,021 | |||||||||
Interest in cost of sales | 10,006 | 10,150 | |||||||||
Depreciation and amortization expense | 1,221 | 1,382 | |||||||||
EBITDA | 23,776 | 36,834 | |||||||||
Purchase price accounting in cost of home sales | 3,865 | 10,612 | |||||||||
Transaction costs | 600 | — | |||||||||
Abandoned project costs | 433 | — | |||||||||
Equity in net income of unconsolidated joint ventures, excluding interest relieved | — | (70) | |||||||||
Adjusted EBITDA | $ | 28,674 | $ | 47,376 |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Net income | $ | 19,472 | $ | 49,196 | |||||||
Provision for income taxes | 6,323 | 17,460 | |||||||||
Interest in cost of sales | 21,878 | 31,276 | |||||||||
Interest relieved to equity in net income of unconsolidated joint ventures | — | 70 | |||||||||
Depreciation and amortization expense | 3,778 | 4,445 | |||||||||
EBITDA | 51,451 | 102,447 | |||||||||
Real estate inventories impairment | 4,700 | — | |||||||||
Purchase price accounting in cost of home sales | 14,060 | 41,162 | |||||||||
Transaction costs | 633 | 1,205 | |||||||||
Write-off of offering costs | 436 | — | |||||||||
Abandoned project costs | 745 | — | |||||||||
Equity in net income of unconsolidated joint ventures, excluding interest relieved | — | (209) | |||||||||
Loss on debt extinguishment or forgiveness | — | 2,496 | |||||||||
Loss on remeasurement of warrant liability | — | 7,315 | |||||||||
Adjusted EBITDA | $ | 72,025 | $ | 154,416 |
Three Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Net income attributable to Landsea Homes Corporation | $ | 8,596 | $ | 19,970 | |||||||
Pre-Merger capitalized related party interest included in cost of sales | 324 | 714 | |||||||||
Equity in net income of unconsolidated joint ventures | — | (70) | |||||||||
Purchase price accounting for acquired inventory | 3,865 | 10,612 | |||||||||
Total adjustments | 4,189 | 11,256 | |||||||||
Tax-effected adjustments (1) | 3,088 | 8,270 | |||||||||
Adjusted net income attributable to Landsea Homes Corporation | $ | 11,684 | $ | 28,240 |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
(dollars in thousands) | |||||||||||
Net income attributable to Landsea Homes Corporation | $ | 16,761 | $ | 47,970 | |||||||
Real estate inventories impairment | 4,700 | — | |||||||||
Pre-Merger capitalized related party interest included in cost of sales | 1,587 | 3,831 | |||||||||
Equity in net income of unconsolidated joint ventures | — | (139) | |||||||||
Purchase price accounting for acquired inventory | 14,060 | 41,162 | |||||||||
Loss on debt extinguishment or forgiveness | — | 2,496 | |||||||||
Loss on remeasurement of warrant liability | — | 7,315 | |||||||||
Total adjustments | 20,347 | 54,665 | |||||||||
Tax-effected adjustments (1) | 14,997 | 44,599 | |||||||||
Adjusted net income attributable to Landsea Homes Corporation | $ | 31,758 | $ | 92,569 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)(2) | Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (in millions)(1)(2) | |||||||||||||||||||||||
July 1, 2023 - July 31, 2023 | 591,867 | $ | 9.94 | 591,867 | $ | 10.0 | ||||||||||||||||||||
August 1, 2023 - August 31, 2023 | 800,000 | $ | 9.75 | 800,000 | $ | 2.1 | ||||||||||||||||||||
September 1, 2023 - September 30, 2023 | — | $ | — | — | $ | 2.1 |
Exhibit Number | Exhibit Description | |||||||
Seventh Amendment Agreement, dated July 31, 2023, by and among Landsea Homes Corporation, as borrower, the other loan parties party thereto, Western Alliance Bank as administrative agent, and the lender parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 1, 2023) | ||||||||
101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022; (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, (iii) Consolidated Statements of Equity for the three and nine months ended September 30, 2023 and 2022; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL (included as Exhibit 101). |
Landsea Homes Corporation | ||||||||||||||
Date: November 2, 2023 | By: | /s/ John Ho | ||||||||||||
John Ho | ||||||||||||||
Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) | ||||||||||||||
Date: November 2, 2023 | By: | /s/ Chris Porter | ||||||||||||
Chris Porter | ||||||||||||||
Chief Financial Officer | ||||||||||||||
(Principal Financial Officer) |
Date: | November 2, 2023 | ||||||||||
By: | /s/ John Ho | ||||||||||
Name: | John Ho | ||||||||||
Title: | Chief Executive Officer | ||||||||||
(Principal Executive Officer) |
Date: | November 2, 2023 | ||||||||||
By: | /s/ Chris Porter | ||||||||||
Name: | Chris Porter | ||||||||||
Title: | Chief Financial Officer | ||||||||||
(Principal Financial Officer) |
Date: | November 2, 2023 | ||||||||||
By: | /s/ John Ho | ||||||||||
Name: | John Ho | ||||||||||
Title: | Chief Executive Officer | ||||||||||
(Principal Executive Officer) |
Date: | November 2, 2023 | ||||||||||
By: | /s/ Chris Porter | ||||||||||
Name: | Chris Porter | ||||||||||
Title: | Chief Financial Officer | ||||||||||
(Principal Financial Officer) |
Consolidated Balance Sheets - (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 41,382,453 | 42,110,794 |
Common stock, shares outstanding (in shares) | 37,795,191 | 40,884,268 |
Consolidated Statements of Operations - (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Revenue | $ 277,348 | $ 335,585 | $ 812,332 | $ 1,020,491 |
Total cost of sales | 223,062 | 269,099 | 663,412 | 810,766 |
Gross margin | 54,286 | 66,486 | 148,920 | 209,725 |
Sales and marketing expenses | 16,930 | 21,063 | 51,672 | 64,366 |
General and administrative expenses | 25,463 | 21,111 | 74,223 | 70,734 |
Total operating expenses | 42,393 | 42,174 | 125,895 | 135,100 |
Income from operations | 11,893 | 24,312 | 23,025 | 74,625 |
Other income (loss), net | 656 | 990 | 2,770 | (654) |
Loss on remeasurement of warrant liability | 0 | 0 | 0 | (7,315) |
Pretax income | 12,549 | 25,302 | 25,795 | 66,656 |
Provision for income taxes | 3,066 | 4,021 | 6,323 | 17,460 |
Net income | 9,483 | 21,281 | 19,472 | 49,196 |
Net income attributable to noncontrolling interests | 887 | 1,311 | 2,711 | 1,226 |
Net income attributable to Landsea Homes Corporation | $ 8,596 | $ 19,970 | $ 16,761 | $ 47,970 |
Income per share: | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.49 | $ 0.43 | $ 1.10 |
Diluted (in dollars per share) | $ 0.22 | $ 0.49 | $ 0.42 | $ 1.09 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 38,336,100 | 39,935,152 | 39,402,507 | 42,768,269 |
Diluted (in shares) | 38,440,392 | 40,097,269 | 39,549,035 | 42,943,871 |
Home sales | ||||
Revenue | $ 258,062 | $ 326,496 | $ 790,199 | $ 975,269 |
Cost of sales | 209,753 | 258,362 | 647,642 | 770,220 |
Gross margin | 48,309 | 68,134 | 142,557 | 205,049 |
Lot sales and other | ||||
Revenue | 19,286 | 9,089 | 22,133 | 45,222 |
Cost of sales | 13,309 | 10,737 | 15,770 | 40,546 |
Gross margin | $ 5,977 | $ (1,648) | $ 6,363 | $ 4,676 |
Company and Summary of Significant Account Policies |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Company and Summary of Significant Account Policies | Company and Summary of Significant Account Policies Landsea Homes Corporation (together with its subsidiaries, “Landsea Homes” or the “Company”), a majority owned subsidiary of Landsea Holdings Corporation (“Landsea Holdings”), is engaged in the acquisition, development, and sale of homes and lots in Arizona, California, Florida, New York, and Texas. The Company’s operations are organized into the following five reportable segments: Arizona, California, Florida, Metro New York, and Texas. Basis of Presentation and Consolidation—The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and all subsidiaries, partnerships, and other entities in which the Company has a controlling interest as well as variable interest entities (“VIEs”) in which the Company is deemed the primary beneficiary. The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary are accounted for under the equity method. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 9, 2023. The accompanying unaudited consolidated financial statements include all adjustments, consisting of normal recurring entries, necessary for a fair presentation of the Company’s results for the interim periods presented. Results for the interim periods are not necessarily indicative of the results to be expected for the full year due to seasonal variations and other factors. Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting. These changes are intended to simplify the market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified the scope and application of ASU 2020-04. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of the reference rate reform guidance to December 31, 2024. The guidance in ASU 2020-04 may be elected over time, through December 31, 2024, as reference rate reform activities occur. Once ASU 2020-04 is elected, the guidance must be applied prospectively for all eligible contract modifications. In June 2022, the Company modified its credit facility to use the Secured Overnight Financing Rate (“SOFR”) as a reference rate rather than LIBOR. The Company elected to apply this guidance which preserves the presentation of the loan consistent with the presentation prior to the modification. In October 2021, the FASB issued ASU 2021-08, which requires application of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, to recognize and measure contract assets and liabilities from contracts with customers acquired in a business combination. ASU 2021-08 creates an exception to the general recognition and measurement principle in ASC 805, Business Combinations, and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date. The standard is effective for fiscal years beginning after December 15, 2022, early adoption was permitted. The adoption did not have a material impact on the Company’s consolidated financial statements. In March 2023, the FASB issued ASU 2023-01, which amends the application of ASU 2016-02, Leases (Topic 842), related to leases with entities under common control, also referred to as common control leases. The amendments to this update require an entity to consider the useful life of leasehold improvements associated with common control leases from the perspective of the common control group and amortize the leasehold improvements over the useful life of the assets to the common control group, instead of the term of the lease. Any remaining value for the leasehold improvement at the end of the lease would be adjusted through equity. The standard is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.
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Business Combinations |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations On January 18, 2022, the Company acquired 100% of Hanover Family Builders, LLC (“Hanover”), a Florida-based homebuilder, for an aggregate cash purchase price, net of working capital adjustments, of $262.6 million. The aggregate purchase price included a pay-off of $69.3 million related to debt held by Hanover and a payment of $15.6 million for land-related deposits. The total assets of Hanover included approximately 20 development projects and 3,800 lots owned or controlled in various stages of development. In accordance with ASC 805, the assets acquired and liabilities assumed from the acquisition of Hanover were measured and recognized at fair value as of the date of the acquisition to reflect the purchase price paid. Acquired inventories consist of land, land deposits, and work in process inventories. For acquired land and land options, the Company typically utilizes, with the assistance of a third-party valuation specialist, a sales comparison approach. For work in process inventories, the Company estimates the fair value based upon the stage of production of each unit and a gross margin that management believes a market participant would require to complete the remaining development and requisite selling efforts. On the acquisition date, the stage of production for each lot ranged from recently started lots to fully completed homes. The intangible asset acquired related to the Hanover trade name, which was estimated to have a fair value of $1.6 million and was amortized over one year. Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed and relates primarily to the assembled workforce and business synergies. Goodwill of $44.2 million was recorded on the consolidated balance sheets as a result of this transaction and is expected to be deductible for tax purposes over 15 years. The acquired goodwill is included in the Florida reporting segment in Note 11 – Segment Reporting. The Company incurred transaction related costs of $0.1 million and $0.7 million related to the Hanover acquisition during the three and nine months ended September 30, 2022, respectively. The following is a summary of the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed (dollars in thousands).
Unaudited Pro Forma Financial Information Unaudited pro forma revenue and net income for the following periods presented give effect to the results of the acquisition of Hanover as though the acquisition date was as of January 1, 2021, the beginning of the year preceding the acquisition. Unaudited pro forma net income adjusts the operating result of Hanover to reflect the additional costs that would have been recorded assuming the fair value adjustments had been applied as of the beginning of the year preceding the year of acquisition including the tax-effected amortization of the acquired trade name and transaction related costs.
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Variable Interest Entities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities The Company consolidates two joint venture (“JV”) VIEs. The consolidated VIEs include one active project in the Metro New York area (“14th Ave JV”) and one JV with the purpose of acquiring undeveloped land (the “LCF JV”). The Company has determined that it is the primary beneficiary of these VIEs as it has the power to direct activities of the operations that most significantly affect their economic performance. Both consolidated VIEs are financed by equity contributions from the Company and the JV partner. The 14th Ave JV was also funded by third-party debt which was paid off in April 2022 with proceeds from a loan provided by the Company. The intercompany loan is eliminated upon consolidation. The following table summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated balance sheets as of September 30, 2023 and December 31, 2022.
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Real Estate Inventories |
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Real Estate Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Inventories | Real Estate Inventories Real estate inventories are summarized as follows:
Deposits and pre-acquisition costs include land deposits and other due diligence costs related to potential land acquisitions. Land held and land under development includes costs incurred during site development such as development, indirect costs, and permits. Homes completed or under construction and model homes include all costs associated with home construction, including land, development, indirect costs, permits, materials, and labor. In accordance with ASC 360, Property, Plant, and Equipment, real estate inventories are stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. The Company reviews each real estate asset at the community-level, on a quarterly basis or whenever indicators of impairment exist. The Company generally determines the estimated fair value of each community by using a discounted cash flow approach based on the estimated future cash flows at discount rates that reflect the risk of the community being evaluated. The discounted cash flow approach can be impacted significantly by the Company’s estimates of future home sales revenue, home construction costs, pace of homes sales, and the applicable discount rate. During the nine months ended September 30, 2023 the Company recorded $4.7 million of real estate inventories impairment charges related to one community in its California segment. In this instance, the Company determined that additional incentives and persistent discounts were required to sell the remaining homes and was the primary cause of driving the estimated future cash flows for the community below its previous carrying values. No additional impairments were recorded during the three months ended September 30, 2023. The Company did not recognize any impairments on real estate inventories during the three and nine months ended September 30, 2022. Real estate inventories impairment charges are recorded to cost of home sales in the consolidated statements of operations. The table below provides quantitative data for Level 3 inputs, for the periods presented, where applicable, used in determining the fair value of the impaired inventory.
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Capitalized Interest |
9 Months Ended |
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Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Capitalized Interest | Capitalized Interest Interest is capitalized to real estate inventories during development and as a result of other qualifying activities. Interest capitalized as a cost of real estate inventories is included in cost of sales as related inventories are delivered. For the three and nine months ended September 30, 2023, the Company incurred and capitalized interest of $14.4 million and $37.6 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred and capitalized interest of $13.8 million and $28.6 million, respectively. Previously capitalized interest included in cost of sales during the three and nine months ended September 30, 2023 was $10.0 million and $21.9 million, respectively. Previously capitalized interest included in cost of sales during the three and nine months ended September 30, 2022 was $10.2 million and $31.3 million, respectively. These amounts included interest from certain related party transactions, refer to Note 9 – Related Party Transactions for additional information.
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Other Assets |
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Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other AssetsAs of September 30, 2023 and December 31, 2022, the Company had contract assets of $6.3 million and $7.2 million, respectively, related to lot sales and other revenue. The contract asset balance is included in other assets on the Company’s consolidated balance sheets and represents cash to be received for work already performed on lot sales and other contracts. The amount of the transaction price for lot sales and other contracts remaining to be recognized as revenue for performance obligations that were not fully satisfied as of September 30, 2023 and December 31, 2022 was $3.7 million and $11.6 million, respectively. As of September 30, 2023, the Company had $1.0 million of deferred revenue related to lot sales and other revenue included in accrued expenses and other liabilities in the Company’s consolidated balance sheets. As of December 31, 2022, the Company had no deferred revenue related to lot sales and other revenue. The Company reduces these liabilities and recognizes revenue as development progresses and the related performance obligations are completed. |
Notes and Other Debts Payable, net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and Other Debts Payable, net | Notes and Other Debts Payable, net Amounts outstanding under notes and other debts payable, net consist of the following:
In October 2021, the Company entered into a line of credit agreement (the “Credit Agreement”). The Credit Agreement provides for a senior unsecured borrowing of up to $675.0 million of which there was $325.0 million outstanding as of September 30, 2023. The Company may increase the borrowing capacity up to $850.0 million, under certain conditions. Funds available under the Credit Agreement are subject to a borrowing base requirement which is calculated on specified percentages of our real estate inventories. Borrowings under the Credit Agreement bear interest at SOFR plus 3.35% or Prime Rate (as defined in the Credit Agreement) plus 2.75%. The interest rate includes a floor of 3.85%. The Credit Agreement was modified three times in 2022, which resulted in an increase in the borrowing commitment from $585.0 million to $675.0 million, the replacement of LIBOR with SOFR as an index rate, and an extension of the maturity date to October 2025. As of September 30, 2023, the interest rate on the loan was 8.68%. In July 2023, the Credit Agreement was modified to extend the maturity date and now matures in October 2026. In July 2023, the Company entered into a new senior unsecured note (the “Note Purchase Agreement”). The Note Purchase Agreement provided for the private placement of $250.0 million aggregate principal amount of 11% senior notes (the “Senior Notes”). The Company received the proceeds, net of discount and fees, in July 2023. The Senior Notes matures in July 2028. In addition, the Company previously had one project-specific construction loan. In April 2022, the construction loan was repaid in full with proceeds from borrowings under the Credit Agreement. In connection with this payoff, the Company incurred $2.5 million of debt extinguishment fees, which were included in other income, net, in the consolidated statements of operations during the year ended December 31, 2022. The Credit Agreement and Note Purchase Agreement contain certain restrictive financial covenants, such as requirements for the Company to maintain a minimum liquidity balance, minimum tangible net worth, and leverage and interest coverage ratios. As of September 30, 2023, the Company was in compliance with all financial covenants.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on the Company’s results of operations, financial position, or liquidity. In the fourth quarter of 2021, certain insurers paid $14.9 million on behalf of the Company and others to settle a wrongful death suit. The insurers contend they are entitled to seek reimbursement from the Company for some or all of such amounts, which the Company disputes. During October 2023, one of the insurers filed a lawsuit seeking reimbursement, however, at this time the Company is unable to estimate the amount or outcome of the insurers’ claims against the Company. In addition, the Company is unable to estimate the amount or outcome of its recovery actions against relevant third parties. Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $101.2 million and $114.9 million of performance bonds outstanding as of September 30, 2023 and December 31, 2022, respectively. Warranty—Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Changes in the Company’s warranty accrual are detailed in the table below:
Operating Leases—The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 8 years and often include one or more options to renew. During December 2021, the Company sold model homes and immediately leased back these models. Certain of these model homes were not complete at the time of sale. All of the leases from the sale-leasebacks are accounted for as operating leases and are reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party; refer to Note 9 – Related Party Transactions for further detail. The weighted average remaining lease term as of September 30, 2023 and December 31, 2022 was 5.8 and 5.7 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised. The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease, or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company’s incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of September 30, 2023 and December 31, 2022 was 5.4% and 4.6%, respectively. Lease components and non-lease components are accounted for as a single lease component. As of September 30, 2023, the Company had $12.9 million and $14.1 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2022, the Company had $15.6 million and $16.4 million recognized as a right-of-use asset and lease liability, respectively. Operating lease expense for the three and nine months ended September 30, 2023 was $0.9 million and $2.8 million, respectively, and is included in general and administrative expenses on the consolidated statements of operations. For the three and nine months ended September 30, 2022 operating lease expense was $0.5 million and $1.6 million, respectively. Future minimum payments under the noncancelable operating leases in effect at September 30, 2023 were as follows (dollars in thousands):
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Commitments and Contingencies | Commitments and Contingencies Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on the Company’s results of operations, financial position, or liquidity. In the fourth quarter of 2021, certain insurers paid $14.9 million on behalf of the Company and others to settle a wrongful death suit. The insurers contend they are entitled to seek reimbursement from the Company for some or all of such amounts, which the Company disputes. During October 2023, one of the insurers filed a lawsuit seeking reimbursement, however, at this time the Company is unable to estimate the amount or outcome of the insurers’ claims against the Company. In addition, the Company is unable to estimate the amount or outcome of its recovery actions against relevant third parties. Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $101.2 million and $114.9 million of performance bonds outstanding as of September 30, 2023 and December 31, 2022, respectively. Warranty—Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Changes in the Company’s warranty accrual are detailed in the table below:
Operating Leases—The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 8 years and often include one or more options to renew. During December 2021, the Company sold model homes and immediately leased back these models. Certain of these model homes were not complete at the time of sale. All of the leases from the sale-leasebacks are accounted for as operating leases and are reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party; refer to Note 9 – Related Party Transactions for further detail. The weighted average remaining lease term as of September 30, 2023 and December 31, 2022 was 5.8 and 5.7 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised. The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease, or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company’s incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of September 30, 2023 and December 31, 2022 was 5.4% and 4.6%, respectively. Lease components and non-lease components are accounted for as a single lease component. As of September 30, 2023, the Company had $12.9 million and $14.1 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2022, the Company had $15.6 million and $16.4 million recognized as a right-of-use asset and lease liability, respectively. Operating lease expense for the three and nine months ended September 30, 2023 was $0.9 million and $2.8 million, respectively, and is included in general and administrative expenses on the consolidated statements of operations. For the three and nine months ended September 30, 2022 operating lease expense was $0.5 million and $1.6 million, respectively. Future minimum payments under the noncancelable operating leases in effect at September 30, 2023 were as follows (dollars in thousands):
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company continues to pay for certain costs on behalf of Landsea Holdings. The Company records a due from affiliate balance for all such payments. As of September 30, 2023 and December 31, 2022, the Company had a net receivable due from affiliates balance of $3.4 million and $2.9 million, respectively. In August 2023, the Company repurchased from the underwriters, at the public offering price of $9.75 per share, 800,000 shares of common stock that were sold by Green Investment Alpha Limited, a beneficial owner of the Company, in a registered secondary offering, for a total purchase price of $7.8 million. Green Investment Alpha Limited no longer qualifies as a related party upon the completion of the sale. In June 2023, the Company repurchased from the underwriters, at the public offering price of $7.50 per share, 443,478 shares of common stock that were sold by Landsea Holdings, the Company’s majority stockholder, in a registered secondary offering, for a total purchase price of $3.3 million. In June 2022, the Company entered into two transactions with Landsea Holdings. On June 1, 2022, the Board of Directors authorized the Company to repurchase 4.4 million shares of common stock held by Landsea Holdings. The Company paid $30.0 million at a price of $6.82 per share, a discount of 5% compared to the closing price on May 31, 2022 of $7.18. Additionally, the Company repurchased all 5.5 million outstanding Private Placement Warrants, of which Landsea Holdings held 2.2 million. The Company paid Landsea Holdings $6.6 million at $3.00 per Private Placement Warrant. In addition, 2.8 million of the repurchased Private Placement Warrants were held by Level Field Capital, LLC, a related party that is controlled by a member of the Company’s Board of Directors. The Company paid Level Field Capital, LLC $8.4 million at $3.00 per Private Placement Warrant. The Company’s common stock and Warrants are discussed further in Note 14 – Stockholders’ Equity. In June 2022, Landsea Capital Fund, who is under common control with the Company, contributed $55.0 million to the LCF JV. The LCF JV, which is consolidated by the Company, used these proceeds to purchase undeveloped land from the Company. The Company distributed $6.7 million and $8.6 million to Landsea Capital Fund during the three and nine months ended September 30, 2023, respectively. All intercompany transactions between the Company and the LCF JV have been eliminated upon consolidation. In December 2021, the Company sold model homes to a related party for total consideration of $15.2 million. Construction of certain of these model homes was not complete at the time of sale. The Company recognized lot sales and other revenue of $1.2 million during the nine months ended September 30, 2022 related to the model homes still under construction on the sale date. Corresponding lot and other cost of sales of $1.3 million was also recognized during the same period. No additional revenue or cost of sales related to this transaction were recognized during the three months ended September 30, 2022. The Company did not recognize any revenue or other cost of sales related to these model homes during the three and nine months ended September 30, 2023. As part of this transaction, the Company leased back these models. The total amount of rent payments made during the three and nine months ended September 30, 2023 is $0.2 million and $0.6 million, respectively. The total amount of rent payments made during the three and nine months ended September 30, 2022 is $0.2 million and $0.6 million, respectively. The right-of-use asset and lease liability balances associated with these leases is $0.7 million and $0.7 million, respectively, as of September 30, 2023 and $1.3 million and $1.3 million, respectively, as of December 31, 2022. In July 2021, the Company entered into a landbank agreement for a project in its California segment with a related party. The Company will make regular payments to the related party based on an annualized rate of 7% of the undeveloped land costs while the land is developed and may purchase, at the Company’s discretion, the lots at a predetermined price of $28.9 million. The total amount of interest payments made during the three and nine months ended September 30, 2023 is $0.1 million and $0.5 million, respectively. The total amount of interest payments made during the three and nine months ended September 30, 2022 is $0.2 million and $0.8 million, respectively. During the three and nine months ended September 30, 2023, payments of $3.0 million and $7.0 million, including fees, have been made to purchase developed lots from the related party, respectively. During the three and nine months ended September 30, 2022, payments of $1.7 million and $7.9 million, including fees, were made to purchase developed lots from the related party, respectively. Capitalized interest included in real estate inventories on the consolidated balance sheets associated with this transaction was $0.9 million and $0.8 million as of September 30, 2023 and December 31, 2022, respectively. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2023 was $0.4 million and $0.8 million, respectively. There was no previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2022. Landsea Holdings holds a series of notes payable to affiliated entities of its parent. The cash Landsea Holdings received from this debt was previously utilized to partially fund operations of the Company. Related party interest incurred by Landsea Holdings was historically pushed down to the Company and reflected on the consolidated balance sheets of the Company, primarily in real estate inventories, and on the consolidated statements of operations in cost of sales. Refer to Note 5 – Capitalized Interest for further detail. As the Company did not guarantee the notes payable nor have any obligations to repay the notes payable, and as the notes payable were not assigned to the Company, the notes payable do not represent a liability of the Company and accordingly have not been reflected in the consolidated balance sheets. Additionally, in connection with the Merger (as defined below), the Company is precluded from repaying Landsea Holdings’ notes payable to the affiliated entities of its parent. Therefore, beginning January 7, 2021, additional interest from these notes payable is no longer pushed down to the Company. Capitalized interest included in real estate inventories on the consolidated balance sheets associated with this transaction was $0.6 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2023 was $0.3 million and $1.6 million, respectively. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2022 was $0.7 million and $3.8 million, respectively.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate of the Company was 24.4% and 24.5% for the three and nine months ended September 30, 2023, respectively, and 15.9% and 26.2% for the three and nine months ended September 30, 2022, respectively. The difference between the statutory tax rate and the effective tax rate for the nine months ended September 30, 2023 is primarily related to state income taxes net of federal income tax benefits, estimated deduction limitations for executive compensation under Section 162(m), and tax credits for energy-efficient homes. The difference between the statutory tax rate and the effective tax rate for the nine months ended September 30, 2022 is primarily related to state income taxes net of federal income tax benefits, estimated deduction limitations for executive compensation, warrant fair market value adjustments, and tax credits for energy-efficient homes. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation of the Company’s deferred tax assets. The Inflation Reduction Act (“IRA”) of 2022 was enacted into law on August 16, 2022. The IRA introduced a 15% corporate alternative minimum tax on average annual adjusted financial statement income for applicable corporations, and a 1% excise tax on stock repurchases made by publicly traded US corporations after December 31, 2022. The IRA also retroactively extended the federal tax credit for building new energy-efficient homes for homes delivered from January 1, 2022 through December 31, 2032.
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The Company is engaged in the acquisition, development, and sale of homes and lots in multiple states across the country. The Company is managed by geographic location and each of the five geographic regions targets a wide range of buyer profiles including: first time, move-up, and luxury homebuyers. Management of the five geographic regions report to the Company’s chief operating decision makers (“CODMs”), the Chief Executive Officer and Chief Operating Officer of the Company. The CODMs review the results of operations, including total revenue and pretax income to assess profitability and to allocate resources. Accordingly, the Company has presented its operations as the following five reportable segments: •Arizona •California •Florida •Metro New York •Texas The Company has also identified its Corporate operations as a non-operating segment, as it serves to support the homebuilding operations through functional departments such as executive, finance, treasury, human resources, accounting, and legal. The majority of Corporate personnel and resources are primarily dedicated to activities relating to operations and are allocated based on each segment’s respective percentage of assets, revenue, and dedicated personnel. The following table summarizes total revenue and pretax income by segment:
The following table summarizes total assets by segment:
Included in the Corporate segment assets is cash and cash equivalents of $21.3 million and $40.3 million as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023 and December 31, 2022, goodwill of $47.9 million and $20.7 million was allocated to the Florida and Arizona segments, respectively.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value ASC 820, Fair Value Measurement, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date. Level 3 — Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date. The following table presents carrying values and estimated fair values of financial instruments:
(1) Carrying amount approximates fair value due to the variable interest rate terms of these loans. Carrying value excludes any associated discounts or deferred loan costs. (2) Carrying amount, net of discount, approximates fair value due to the recency of the debt issuance. Carrying value excludes any associated discounts or deferred loan costs. The carrying values of receivables, deposits, and other assets as well as accounts payable and accrued liabilities approximate the fair value for these financial instruments based upon an evaluation of the underlying characteristics, market data, and because of the short period of time between origination of the instruments and their expected realization. The fair value of cash and cash equivalents is classified in Level 1 of the fair value hierarchy. Non-financial assets such as real estate inventories and goodwill are measured at fair value on a non-recurring basis using a discounted cash flow approach with Level 3 inputs within the fair value hierarchy. This measurement is performed when events and circumstances indicate the asset’s carrying value is not fully recoverable. During the nine months ended September 30, 2023, we determined that real estate inventories with a carrying value of $24.1 million within one community in our California segment was not expected to be fully recoverable. Accordingly, we recognized real estate inventories impairment charges of an aggregate $4.7 million to reflect the estimated fair value of the community of $19.4 million. No additional impairments were recorded during the three months ended September 30, 2023. The Company determined that none of the real estate inventories or goodwill required impairment during the three and nine months ended September 30, 2022. Refer to Note 4 – Real Estate Inventories for additional information. Prior to being purchased by the Company in June 2022, the Private Placement Warrants were historically measured at fair value on a recurring basis using a Black-Scholes option pricing model. The following table reconciles the beginning and ending balances for the Level 3 recurring fair value measurements during the periods presented:
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Stock-Based Compensation |
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Stock-Based Compensation | Stock-Based Compensation The following table presents a summary of the Company’s nonvested performance share units (“PSUs”) and restricted stock units (“RSUs”) for the nine months ended September 30, 2023:
The following table presents a summary of the Company’s stock options activity for the nine months ended September 30, 2023:
Stock-based compensation expense totaled $0.9 million and $2.2 million during the three and nine months ended September 30, 2023, respectively, and is included in general and administrative expenses on the consolidated statements of operations. For the three and nine months ended September 30, 2022, stock-based compensation expense was $0.9 million and $2.8 million, respectively. The following table presents a summary of the Company’s outstanding RSUs and PSUs, assuming the current estimated level of performance achievement (in thousands, except years):
Stock-based compensation expense associated with the outstanding RSUs and PSUs is measured using the grant date fair value. The expense associated with the PSUs also incorporates the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends.
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Stockholders' Equity |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity The Company’s authorized capital stock consists of 500.0 million shares of common stock with a par value of $0.0001 per share, and 50.0 million shares of preferred stock with a par value of $0.0001 per share. As of September 30, 2023, there were 41.4 million shares of common stock issued and 37.8 million outstanding, and no shares of preferred stock issued or outstanding. All outstanding shares of common stock are validly issued, fully paid and nonassessable. Stock Repurchases In January 2022, the Board of Directors authorized a stock repurchase program. The program allowed for the repurchase of up to $10.0 million worth of common stock, inclusive of associated fees. The authorization to effect stock repurchases expired on June 30, 2022, with no remaining capacity to repurchase common stock. In April 2022, the Board of Directors authorized an extension of the stock repurchase program for the repurchase of an additional $10.0 million of capacity to repurchase common stock, with an expiration of December 31, 2022. In June 2022, the Board of Directors authorized a repurchase of 4,398,826 shares of our common stock directly from the Company’s majority shareholder for $30.0 million, or a per-share price of $6.82 per share. During the nine months ended September 30, 2022, the Company repurchased 5,559,577 shares of common stock for a total of $40.0 million, which was recorded as a reduction to additional paid-in capital. A portion of these shares were repurchased directly from the Company’s majority shareholder. Refer to Note 9 – Related Party Transactions for additional information. No shares were repurchased during the three months ended September 30, 2022. As of September 30, 2022, the Company had approximately $10.0 million in remaining authorized capacity. In March 2023, the Board of Directors authorized a stock repurchase program allowing for the repurchase of up to $10.0 million worth of common stock, with an expiration of December 31, 2023. In July 2023, the Board of Directors authorized additional capacity of approximately $3.3 million, with an expiration date of December 31, 2023, and an additional $10.0 million with no stated expiration date. During the three and nine months ended September 30, 2023, the Company repurchased 1,391,867 and 2,360,736 shares of common stock for a total of $13.7 million and $21.2 million, respectively, which was recorded as a reduction to additional paid-in capital. A portion of these shares were repurchased directly from the Company’s majority shareholder. Refer to Note 9 – Related Party Transactions for additional information. As of September 30, 2023, the Company had approximately $2.1 million in remaining authorized capacity. In October 2023, subsequent to the period covered by this report, the Board of Directors authorized additional capacity of $20.0 million with no stated expiration date. The timing and amount of repurchases are based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, market and economic conditions, and legal requirements. The Inflation Reduction Act of 2022 included a 1% excise tax on stock repurchases, net of new stock issuances, beginning in 2023. The tax is expected to be paid annually and the Company accrues the tax during interim periods with the offset to additional paid-in capital on the consolidated balance sheet. Merger Transaction On August 31, 2020, Landsea Homes and Landsea Holdings entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LF Capital Acquisition Corp. (“LF Capital”) and LFCA Merger Sub, Inc. (the “Merger Sub”), a direct, wholly-owned subsidiary of LF Capital. The Merger Agreement provided for, among other things, the merger of Merger Sub with and into Landsea Homes Incorporated (“LHI”), previously a wholly-owned subsidiary of Landsea Holdings, with LHI continuing as the surviving corporation (the “Merger”). On January 7, 2021 (the “Closing Date”), the Merger was consummated pursuant to the Merger Agreement (the “Closing”). The name of LF Capital was changed at that time to Landsea Homes Corporation. Upon closing of the Merger, Level Field Capital, LLC (the “Sponsor”) held 1.0 million shares that were subject to surrender and forfeiture for no consideration in the event the common stock did not reach certain thresholds during the 24-month period following the closing of the Merger (the “Earnout Shares”). The Sponsor transferred 0.5 million Earnout Shares to Landsea Holdings. In January 2023, the Company concluded that the threshold for the Earnout Shares was not met and therefore those shares were forfeited and cancelled. Additionally, the Sponsor transferred 2.2 million private placement warrants to Landsea Holdings (such private placement warrants, each exercisable to purchase one share of Common Stock at an exercise price of $11.50 per share, are referred to as the “Private Placement Warrants”, and together with the Company’s public warrants, are referred to as the “Warrants”). During the year ended December 31, 2022, the private placement warrants were repurchased by the Company and are no longer outstanding. Refer below for additional information. Warrants As of September 30, 2023, there were 15,525,000 outstanding Warrants consisting entirely of public warrants. At the time of the Merger, the Warrant Agreement was amended so that each public warrant is exercisable at $1.15 for one tenth of a share of common stock. As part of the amendment, each holder of the public warrants received $1.85 per warrant for a total of $28.7 million paid by the Company upon closing of the Merger. The Warrants will expire five years after the completion of the Merger or earlier upon redemption or liquidation. The Company may call the public warrants for redemption: •in whole and not in part; •at a price of $0.01 per warrant; •upon a minimum of 30 days’ prior written notice of redemption; and •if, and only if, the last reported closing price of the shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. If the Company calls the public warrants for redemption, management will have the option to require all holders that wish to exercise the public warrants to do so on a “cashless basis,” as described in the Warrant Agreement. The exercise price and number of common shares issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuance of common shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Warrants shares. Accordingly, the Warrants may expire worthless. In June 2022, the Company repurchased all 5.5 million outstanding Private Placement Warrants, which were exercisable at $11.50 into one share of common stock. The Company paid $16.5 million, or $3.00 per warrant, to repurchase all of the outstanding Private Placement Warrants. This amount included $6.6 million for the repurchase of 2.2 million of the Private Placement Warrants that were held by the Company’s majority shareholder, Landsea Holdings, and $8.4 million to Level Field Capital, LLC, a related party, for the repurchase of 2.8 million Private Placement Warrants. Refer to Note 9 – Related Party Transactions for additional information. The loss recognized on the repurchase of the Private Placement Warrants is recorded as loss on remeasurement of warrant liability on the Company’s consolidated statements of operations.
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Earnings Per Share |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the three and nine months ended September 30, 2023 and 2022:
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Supplemental Disclosures of Cash Flow Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information | Supplemental Disclosures of Cash Flow Information The following table presents certain supplemental cash flow information:
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Subsequent Event |
9 Months Ended |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn October 10, 2023, the Company expanded into the Colorado market by acquiring certain assets of Richfield Homes, LLC. The Company paid an aggregate cash purchase price of $22.5 million to acquire approximately 290 owned or controlled lots in the greater Denver, Colorado area, including any construction in progress on those lots. |
Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net income attributable to Landsea Homes Corporation | $ 8,596 | $ 19,970 | $ 16,761 | $ 47,970 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Company and Summary of Significant Account Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation and Consolidation—The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and all subsidiaries, partnerships, and other entities in which the Company has a controlling interest as well as variable interest entities (“VIEs”) in which the Company is deemed the primary beneficiary. The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary are accounted for under the equity method. All intercompany transactions and balances have been eliminated in consolidation. |
Principles of Consolidation | The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 9, 2023. The accompanying unaudited consolidated financial statements include all adjustments, consisting of normal recurring entries, necessary for a fair presentation of the Company’s results for the interim periods presented. Results for the interim periods are not necessarily indicative of the results to be expected for the full year due to seasonal variations and other factors. |
Use of Estimates | Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting. These changes are intended to simplify the market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified the scope and application of ASU 2020-04. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of the reference rate reform guidance to December 31, 2024. The guidance in ASU 2020-04 may be elected over time, through December 31, 2024, as reference rate reform activities occur. Once ASU 2020-04 is elected, the guidance must be applied prospectively for all eligible contract modifications. In June 2022, the Company modified its credit facility to use the Secured Overnight Financing Rate (“SOFR”) as a reference rate rather than LIBOR. The Company elected to apply this guidance which preserves the presentation of the loan consistent with the presentation prior to the modification. In October 2021, the FASB issued ASU 2021-08, which requires application of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, to recognize and measure contract assets and liabilities from contracts with customers acquired in a business combination. ASU 2021-08 creates an exception to the general recognition and measurement principle in ASC 805, Business Combinations, and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date. The standard is effective for fiscal years beginning after December 15, 2022, early adoption was permitted. The adoption did not have a material impact on the Company’s consolidated financial statements. In March 2023, the FASB issued ASU 2023-01, which amends the application of ASU 2016-02, Leases (Topic 842), related to leases with entities under common control, also referred to as common control leases. The amendments to this update require an entity to consider the useful life of leasehold improvements associated with common control leases from the perspective of the common control group and amortize the leasehold improvements over the useful life of the assets to the common control group, instead of the term of the lease. Any remaining value for the leasehold improvement at the end of the lease would be adjusted through equity. The standard is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.
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Business Combinations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following is a summary of the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed (dollars in thousands).
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Schedule of Business Acquisition, Pro Forma Information | Unaudited pro forma net income adjusts the operating result of Hanover to reflect the additional costs that would have been recorded assuming the fair value adjustments had been applied as of the beginning of the year preceding the year of acquisition including the tax-effected amortization of the acquired trade name and transaction related costs.
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Variable Interest Entities (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following table summarizes the carrying amount and classification of the VIEs’ assets and liabilities in the consolidated balance sheets as of September 30, 2023 and December 31, 2022.
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Real Estate Inventories (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Inventories | Real estate inventories are summarized as follows:
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Schedule of Fair Value of Impaired Inventory | The table below provides quantitative data for Level 3 inputs, for the periods presented, where applicable, used in determining the fair value of the impaired inventory.
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Notes and Other Debts Payable, net (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Amounts outstanding under notes and other debts payable, net consist of the following:
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Commitment and Contingencies (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Changes in the Company’s warranty accrual are detailed in the table below:
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Schedule of Operating Lease Maturity | Future minimum payments under the noncancelable operating leases in effect at September 30, 2023 were as follows (dollars in thousands):
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Segment Reporting (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table summarizes total revenue and pretax income by segment:
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Schedule of Reconciliation of Assets from Segment to Consolidated | The following table summarizes total assets by segment:
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents carrying values and estimated fair values of financial instruments:
(1) Carrying amount approximates fair value due to the variable interest rate terms of these loans. Carrying value excludes any associated discounts or deferred loan costs. (2) Carrying amount, net of discount, approximates fair value due to the recency of the debt issuance. Carrying value excludes any associated discounts or deferred loan costs.
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Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table reconciles the beginning and ending balances for the Level 3 recurring fair value measurements during the periods presented:
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Stock-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Compensation Expense | The following table presents a summary of the Company’s nonvested performance share units (“PSUs”) and restricted stock units (“RSUs”) for the nine months ended September 30, 2023:
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Schedule of Stock Option Activity | The following table presents a summary of the Company’s stock options activity for the nine months ended September 30, 2023:
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Schedule of Outstanding RSUs and PSUs | The following table presents a summary of the Company’s outstanding RSUs and PSUs, assuming the current estimated level of performance achievement (in thousands, except years):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the three and nine months ended September 30, 2023 and 2022:
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Supplemental Disclosures of Cash Flow Information (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The following table presents certain supplemental cash flow information:
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Company and Summary of Significant Account Policies (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 5 |
Business Combinations - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jan. 18, 2022
USD ($)
numberOfLot
realEstate_Community
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
Business Acquisition [Line Items] | |||||
Goodwill | $ 68,639 | $ 68,639 | |||
Goodwill | |||||
Business Acquisition [Line Items] | |||||
Goodwill amortization period | 15 years | ||||
Hanover | |||||
Business Acquisition [Line Items] | |||||
Percentage interests acquired | 100.00% | ||||
Cash consideration | $ 262,600 | ||||
Repayments of debt | 69,300 | ||||
Payment of land related deposits | $ 15,600 | ||||
Number of communities | realEstate_Community | 20 | ||||
Number of lots | numberOfLot | 3,800 | ||||
Goodwill | $ 44,182 | ||||
Transaction related costs | $ 100 | $ 700 | |||
Hanover | Trade Names | |||||
Business Acquisition [Line Items] | |||||
Intangible assets acquired | $ 1,590 | ||||
Useful life (in years) | 1 year |
Business Combinations - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Jan. 18, 2022 |
---|---|---|---|
Assets Acquired | |||
Goodwill | $ 68,639 | $ 68,639 | |
Hanover | |||
Assets Acquired | |||
Cash | $ 3,857 | ||
Real estate inventories | 232,071 | ||
Goodwill | 44,182 | ||
Other assets | 378 | ||
Total assets | 282,078 | ||
Liabilities Assumed | |||
Accounts payable | 6,329 | ||
Accrued expenses | 13,165 | ||
Total liabilities | 19,494 | ||
Net assets acquired | 262,584 | ||
Hanover | Trade Names | |||
Assets Acquired | |||
Trade name | $ 1,590 |
Business Combinations - Schedule of Business Acquisition, Pro Forma Information (Details) - Hanover and Vintage - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2022 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 335,585 | $ 1,025,600 |
Pretax income | 34,994 | 103,890 |
Provision for income taxes | 4,823 | 27,213 |
Net income | $ 30,171 | $ 76,677 |
Real Estate Inventories - Schedule of Real Estate Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Real Estate Inventories [Abstract] | ||
Deposits and pre-acquisition costs | $ 101,429 | $ 101,395 |
Land held and land under development | 280,755 | 191,047 |
Homes completed or under construction | 720,265 | 779,352 |
Model homes | 53,212 | 21,575 |
Total real estate inventories | $ 1,155,661 | $ 1,093,369 |
Real Estate Inventories - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Real Estate Inventories [Line Items] | ||||
Real estate inventories impairment | $ 0 | $ 0 | $ 4,700,000 | $ 0 |
Real Estate Inventories - Schedule of Fair Value of Impaired Inventory (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
numberOfProjectImpaired
|
Jun. 30, 2023
USD ($)
numberOfProjectImpaired
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
numberOfProjectImpaired
|
Sep. 30, 2022
USD ($)
|
|
Real Estate Inventories [Line Items] | |||||
Real Estate Inventories Impairment | $ 0 | $ 0 | $ 4,700,000 | $ 0 | |
Level 3 | Real Estate | |||||
Real Estate Inventories [Line Items] | |||||
Number of Projects Impaired | numberOfProjectImpaired | 1 | 1 | 1 | ||
Real Estate Inventories Impairment | $ 4,700,000 | $ 4,700,000 | |||
Fair Value of Inventory After Impairment | $ 19,400,000 | $ 19,363,000 | $ 19,400,000 | ||
Measurement Input, Default Rate | Valuation Technique, Discounted Cash Flow | Level 3 | Real Estate | |||||
Real Estate Inventories [Line Items] | |||||
Discount Rate | 0.11 |
Capitalized Interest (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Interest costs capitalized adjustment | $ 14.4 | $ 13.8 | $ 37.6 | $ 28.6 |
Interest expense, related party | $ 10.0 | $ 10.2 | $ 21.9 | $ 31.3 |
Other Assets (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Contract assets | $ 6.3 | $ 7.2 |
Remaining performance obligation, amount | 3.7 | 11.6 |
Deferred revenue | $ 1.0 | $ 0.0 |
Notes and Other Debts Payable, net - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Line of credit facility | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 325,000 | $ 514,300 |
Deferred loan costs | (7,990) | (8,878) |
Long-term debt, total | 317,010 | 505,422 |
Senior notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 250,000 | 0 |
Discount and deferred loan costs | (14,617) | 0 |
Long-term debt, total | $ 235,383 | $ 0 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Loss Contingencies [Line Items] | ||||||
Weighted average remaining lease term (in years) | 5 years 9 months 18 days | 5 years 9 months 18 days | 5 years 8 months 12 days | |||
Weighted average rate (percent) | 5.40% | 5.40% | 4.60% | |||
Right-of-use asset | $ 12,900 | $ 12,900 | $ 15,600 | |||
Lease liabilities | 14,058 | 14,058 | 16,400 | |||
Operating lease expense | $ 900 | $ 500 | $ 2,800 | $ 1,600 | ||
Minimum | ||||||
Loss Contingencies [Line Items] | ||||||
Lease term (in years) | 1 year | 1 year | ||||
Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Lease term (in years) | 8 years | 8 years | ||||
Performance Guarantee | ||||||
Loss Contingencies [Line Items] | ||||||
Performance bonds outstanding | $ 101,200 | $ 101,200 | $ 114,900 | |||
Paycheck Protection Program Notes | ||||||
Loss Contingencies [Line Items] | ||||||
Proceeds from PPP loan | $ 14,900 |
Commitments and Contingencies - Schedule of Product Warranty Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Beginning warranty accrual | $ 46,227 | $ 18,010 | $ 46,657 | $ 15,692 |
Warranty provision | 2,988 | 1,359 | 5,162 | 4,602 |
Warranty payments | (3,547) | (1,118) | (6,151) | (2,043) |
Ending warranty accrual | $ 45,668 | $ 18,251 | $ 45,668 | $ 18,251 |
Commitments and Contingencies - Schedule of Operating Lease Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
2023 | $ 1,042 | |
2024 | 3,481 | |
2025 | 2,582 | |
2026 | 2,332 | |
2027 | 2,101 | |
Thereafter | 4,737 | |
Total lease payments | 16,275 | |
Less: Discount | (2,217) | |
Present value of lease liabilities | $ 14,058 | $ 16,400 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.40% | 15.90% | 24.50% | 26.20% |
Segment Reporting - Narrative (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
segment
|
Dec. 31, 2022
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of geographic regions | segment | 5 | |
Number of reportable segments | segment | 5 | |
Total assets | $ 1,477,087 | $ 1,440,496 |
Goodwill | 68,639 | 68,639 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 55,523 | 74,914 |
Corporate | Cash and Cash Equivalents | ||
Segment Reporting Information [Line Items] | ||
Total assets | 21,300 | 40,300 |
Florida | ||
Segment Reporting Information [Line Items] | ||
Goodwill | $ 47,900 | |
Arizona | ||
Segment Reporting Information [Line Items] | ||
Goodwill | $ 20,700 |
Segment Reporting - Schedule of Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,477,087 | $ 1,440,496 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | 55,523 | 74,914 |
Arizona | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 346,411 | 357,788 |
California | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 545,670 | 513,549 |
Florida | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 432,565 | 422,045 |
Metro New York | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 42,249 | 45,277 |
Texas | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 54,669 | $ 26,923 |
Fair Value - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Value | Line of credit facility | ||
Liabilities: | ||
Long-term debt | $ 325,000 | $ 514,300 |
Carrying Value | Senior notes | ||
Liabilities: | ||
Long-term debt | 250,000 | 0 |
Fair Value | Level 2 | Line of credit facility | ||
Liabilities: | ||
Long-term debt | 325,000 | 514,300 |
Fair Value | Level 2 | Senior notes | ||
Liabilities: | ||
Long-term debt | $ 242,500 | $ 0 |
Fair Value - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Real estate inventories, carrying value | $ 24,100,000 | ||||
Real estate inventories impairment | $ 0 | $ 0 | 4,700,000 | $ 0 | |
Level 3 | Real Estate | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Real estate inventories impairment | $ 4,700,000 | 4,700,000 | |||
Fair Value of Inventory After Impairment | $ 19,400,000 | $ 19,363,000 | $ 19,400,000 |
Fair Value - Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - Level 3 - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Repurchases of warrants | $ 0 | $ (16,500) |
Fair Value, Recurring | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Beginning balance | 0 | 9,185 |
Changes in fair value | 0 | 7,315 |
Ending balance | $ 0 | $ 0 |
Stock-Based Compensation - Schedule of Stock Compensation Expense (Details) - Restricted Stock Units and Performance Stock Units shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
$ / shares
shares
| |
Awards | |
Nonvested, beginning of the year (in shares) | shares | 1,625 |
Grants in period (in shares) | shares | 298 |
Vested (in shares) | shares | (375) |
Forfeited (in shares) | shares | 0 |
Nonvested, End of the year (in shares) | shares | 1,548 |
Weighted Average Grant Date Fair Value | |
Weighted average grand date fair value outstanding, beginning of the year (in dollars per share) | $ / shares | $ 8.82 |
Grant date fair value (in dollars per share) | $ / shares | 8.28 |
Vested (in dollars per share) | $ / shares | 8.68 |
Forfeited (in dollars per share) | $ / shares | 0 |
Weighted average grand date fair value outstanding, End of the year (in dollars per share) | $ / shares | $ 8.75 |
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Restricted Stock Units and Performance Stock Units | General and Administrative Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 0.9 | $ 0.9 | $ 2.2 | $ 2.8 |
Stock-Based Compensation - Schedule of Outstanding RSUs and PSUs (Details) - Restricted Stock Units and Performance Stock Units shares in Thousands, $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested units (in shares) | shares | 1,548 |
Remaining cost on unvested units | $ | $ 2,995 |
Remaining vesting period (in years) | 3 years 3 months |
Supplemental Disclosures of Cash Flow Information - Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Supplemental disclosures of cash flow information | ||
Interest paid, net of amounts capitalized | $ 0 | $ 0 |
Income taxes paid | 8,736 | 32,454 |
Supplemental disclosures of non-cash investing and financing activities | ||
Change in right-of-use assets for new, modified, or terminated operating leases | $ 338 | $ 3,660 |
Subsequent Event (Details) - Richfield Homes Lots - Subsequent Event $ in Millions |
Oct. 10, 2023
USD ($)
lot
|
---|---|
Subsequent Event [Line Items] | |
Payments to acquire productive assets | $ | $ 22.5 |
Number of lots acquired | lot | 290 |
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