Executive Summary

Q1 2025 revenue rose to $310.8M (+5.7% YoY) on 643 deliveries (+27% YoY), but diluted EPS was -$0.20 vs $0.01 a year ago as heavy incentives and mix shift compressed GAAP gross margins to 13.0% (adjusted gross margin 20.0%) .
Results vs prior quarter: deliveries fell from 937 (Q4) to 643 and revenue from $486.7M to $310.8M, while GAAP gross margin improved slightly vs Q4 (13.0% vs 12.5%) and adjusted gross margin rose to 20.0% from 18.4% .
Mix shifted from higher-priced California toward Texas/Florida/Colorado, driving a 20% YoY ASP decline to $466K; incentives ran ~9.6% of home sales revenue and interest in cost of sales was ~4.6%, pressuring reported margins (inventory impairment $1.5M) .
Strategic actions: pivoting toward a 50/50 spec vs build‑to‑order mix to improve margins and reduce standing inventory; Q1 saw 67% of deliveries sold in-quarter as the team leaned toward pace to drive absorption (3.0/month) .
Corporate catalyst overshadowing earnings: on May 12, New Home Co. agreed to acquire Landsea for $11.30/share in cash (≈61% premium to the May 12 close); the Q1 earnings call had no Q&A due to the transaction .

What Went Well and What Went Wrong

What Went Well
- Volume and demand resilience: Deliveries +27% YoY to 643; net new orders +11% to 679 with 3.0/month absorption; cancellations improved to 9% (vs 10%) .
- Adjusted profitability resiliency: Adjusted home sales gross margin expanded 60 bps YoY to 20.0% despite mix and incentives; adjusted EBITDA was $13.5M (vs $17.0M) and adjusted net loss improved to -$1.7M from GAAP -$7.3M .
- Execution in Texas/Florida: Texas delivered 126 homes ($48M revenue); Florida deliveries +52% and revenue +53% YoY, supporting portfolio diversification .
- Management focus on pivot: “We continue to balance pace versus price… We also made the strategic decision to sell through some of our spec home inventory… Our goal is to return to a 50‑50 split between specs and build‑to‑order closings over time.” – CEO John Ho .
What Went Wrong
- Margin compression from incentives and financing costs: Incentives were ~9.6% of gross home sales revenue; interest capitalized in cost of sales was ~4.6%, and purchase accounting amortization impacted gross margin by ~1.9% .
- ASP and mix: ASP fell 20% YoY to $466K on mix away from California; GAAP home sales gross margin fell to 13.0% vs 14.9% last year (ex-impairment 13.5%) .
- Backlog and earnings: Backlog declined to 426 homes (-32% YoY) and $231M (-39% YoY); EBITDA fell to $6.2M (from $12.6M), and GAAP net loss was -$7.3M .

Financial Results

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($USD Millions)	$294.0	$338.5	$486.7	$310.8
Diluted EPS ($)	$0.01	$0.30	$0.08	$(0.20)
Home Sales Gross Margin % (GAAP)	14.9%	17.1%	12.5%	13.0%
Adjusted Home Sales Gross Margin %	19.4%	22.8%	18.4%	20.0%
New Homes Delivered (units)	505	629	937	643
Average Selling Price (ASP, $USD Thousands)	$579	$518	$481	$466

Segment (Q1 2025 vs Q1 2024) – Home deliveries, revenue, ASP

Region	Homes 2025	Homes 2024	Revenue 2025 ($000s)	Revenue 2024 ($000s)	ASP 2025 ($000s)	ASP 2024 ($000s)
Arizona	185	183	78,895	78,741	426	430
California	65	146	49,010	131,894	754	903
Colorado	29	17	12,735	8,854	439	521
Florida	238	157	110,591	72,355	465	461
Texas	126	2	48,142	748	382	374
Total	643	505	299,373	292,592	466	579

Key KPIs and Balance Sheet

KPI	Q1 2024	Q4 2024	Q1 2025
Net New Orders (homes)	611	636	679
Net New Orders ($M)	$336.9	$289.8	$317.8
Monthly Absorption (per community)	3.3	2.7	3.0
Backlog (homes)	623	390	426
Backlog ($M)	$380.0	$212.4	$230.8
Backlog ASP ($000s)	$610	$545	$542
Cancellations (% of gross orders)	10%	14%	9%
Lots Owned/Controlled (total)	10,349	10,944	10,516
Liquidity ($M)	—	$241.8	$256.3
Total Debt ($M)	—	$725.4	$727.5
Debt/Capital (%)	—	51.8%	52.1%
Net Debt/Capital (%)	—	47.7%	48.3%
EBITDA ($M)	$12.6	$27.3	$6.2
Adjusted EBITDA ($M)	$17.0	$38.6	$13.5

Guidance Changes

Metric	Period	Previous Guidance	Current/Actual	Change
New home deliveries	Q1 2025	600–700 homes	643 (actual)	Met/in line
Delivery ASP	Q1 2025	$475K–$500K	$466K (actual)	Below (mix)
Home sales gross margin (GAAP)	Q1 2025	13%–14%	13.0% (actual)	In line (low end)
Adjusted home sales gross margin	Q1 2025	18%–19%	20.0% (actual)	Raised/above
New home deliveries	FY 2025	3,000–3,400	No update provided in Q1 materials	Maintained (no update)
Delivery ASP	FY 2025	$500K–$525K	No update provided in Q1 materials	Maintained (no update)
Home sales gross margin (GAAP)	FY 2025	~15%	No update provided in Q1 materials	Maintained (no update)
Adjusted home sales gross margin	FY 2025	~20%	No update provided in Q1 materials	Maintained (no update)
Tax rate	FY 2025	25%–26% (Q4 call)	No update in Q1; Q1 call did not reiterate a rate	Maintained (implied)
Incentives level	Q2 2025	—	7%–9% expected (color)	New color (operating)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Incentives and mortgage rate buydowns	Q3: incentives just below 6%; competitors advertising 3.99% rates; watching 10‑yr treasury . Q4: incentives “just over 8%,” ~+280 bps QoQ as 10‑yr rose; GAAP GM slightly below plan .	Incentives ~9.6% of gross home sales; 10‑yr volatility; Q2 incentives expected 7%–9% .	Elevated but stabilizing QoQ
Shift toward build‑to‑order	Q3: gentle pivot back to dirt sales, ~20–30% presales . Q4: targeting 50/50 spec vs build‑to‑order; spec reduction to improve margins/cash .	67% of Q1 deliveries sold in‑quarter; strategy to return to 50/50 over time .	Ongoing pivot
Supply chain, tariffs, labor	Q4: no material impact from tariffs; labor availability strong .	No tariff or labor impact to date; build times at/near pre‑COVID .	Benign
Land‑light strategy & lots	Q4: ~44% owned/56% controlled; goal ~25/75 by end 2026 .	10,516 total lots; 45% owned/55% controlled at Q1 end .	Progressing
Purchase accounting amortization	Q4: ~$21–22M expected through 2025; $7.9M in Q4 .	~$5.6M amortized in Q1 (~1.9% GM impact) .	Continuing headwind
Regional mix and ASP	Q3/Q4: mix toward TX/CO lowered ASP; CA volume down .	ASP down 20% YoY to $466K on mix shift to TX/FL/CO .	Mix‑driven ASP pressure

Management Commentary

“We continue to balance pace versus price at each of our communities with a slight lean towards pace… We also made the strategic decision to sell through some of our spec home inventory… Our goal is to return to a 50‑50 split between specs and build‑to‑order closings over time.” – John Ho, CEO .
“Discounts and incentives… represented 9.6% of our gross home sales revenue… drove our home sales gross margin before inventory impairments to 13.5%… purchase price accounting in the quarter represented another 1.9% impact.” – Chris Porter, CFO .
“Build conditions continue to be favorable… We have not seen any impact from the announced tariffs or the increased scrutiny on migrant labor so far.” – Mike Forsum, President & COO .
“We expect incentive levels to remain elevated through 2025 with the actual costs fluctuating with the overall mortgage rate environment… anticipate [Q2] incentive levels to be in the 7% to 9% range.” – Chris Porter, CFO .

Q&A Highlights

The Q1 2025 call did not include a Q&A session due to the pending acquisition by New Home Co.; management delivered prepared remarks only .
For context from prior quarter (Q4 2024): themes included incentive trajectory and mix (expected 7–8% incentives in Q1; later stated at ~9.6%), land cost and tariffs (no notable tariff impact; disciplined land market), backlog conversion cadence, and purchase accounting amortization outlook ($20–23M in 2025) .

Estimates Context

Wall Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable via our SPGI connection at this time; therefore, results are not compared to S&P consensus in this report. Coverage may be impacted by the announced acquisition and subsequent tender/merger process .
Where relevant, we benchmarked actuals to company guidance (see Guidance Changes). Values retrieved from S&P Global were unavailable for LSEA due to missing mapping; no S&P estimates are shown.

Key Takeaways for Investors

Mixed quarter: Strong volume (+27% deliveries) and order momentum (+11%) but GAAP profitability under pressure from incentives, interest in cost of sales, and purchase accounting; adjusted gross margins remained solid at 20.0% .
Mix and ASP: The portfolio is rapidly diversifying toward Texas and Florida, supporting volume but lowering ASP and reported gross margins; the build‑to‑order pivot should help recapture margin over time .
Execution vs guidance: Q1 deliveries met guidance, GAAP gross margin landed inside range, and adjusted gross margin exceeded—offset by ASP below the guided range on mix .
Balance sheet/liquidity: Liquidity improved to $256.3M; leverage stable (Debt/Cap ~52.1%, Net Debt/Cap ~48.3%), providing flexibility to manage incentives and land spend .
Forward margin bridge: Expect incentives to remain elevated (7%–9% in Q2), but higher presales share, steady build times, and cost actions support margin stabilization; purchase accounting amortization persists through 2025 .
Strategic overhang/catalyst: The $11.30/share all‑cash sale to New Home Co. (≈61% premium) is the near‑term stock driver; operating updates may be secondary as the deal moves toward expected Q3 2025 close .
Watch items: Incentive intensity vs 10‑yr rate moves, pace/price trade‑offs to protect margins, Texas integration tailwinds, and backlog rebuild given lower YoY backlog dollars .

Additional Relevant Press Releases (Q1 timeframe)

May 12, 2025: New Home Co. to acquire Landsea Homes for $11.30/share, ~61% premium; combined top‑25 national builder .
May 13, 2025: Tender offer/consent solicitation launched for 8.875% Senior Notes due 2029, conditioned on merger close .

Notes: All company metrics above are sourced from Landsea’s Q1 2025 press release and 8‑K, Q1 2025 earnings call transcript, and prior quarter materials as cited. Estimates from S&P Global were unavailable for LSEA at the time of this analysis; no S&P consensus comparisons are presented.

Landsea Homes Corp (LSEA)·Q1 2025 Earnings Summary