Moving the California homebuilder’s headquarters to Dallas will cut costs and increase its presence in Texas, the CEO said.

Landsea Homes (Nasdaq: LSEA) announced on Monday that it will be moving its headquarters to a residential area of ​​Dallas from its current headquarters in Newport Beach, California.

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The public nationwide housing development, which moved its headquarters from Southern California to Dallas, had a record year in 2022 but is adjusting to a slowdown in the housing market with lower prices, ditching mortgage rates and cutting headcount, Landsea Homes Corp. executives say. said Tuesday.

Landsea Homes (Nasdaq: LSEA) announced on Monday that it will be moving its headquarters to a residential area of ​​Dallas from its current headquarters in Newport Beach, California.

The Dallas headquarters will help Landsea cut costs and boost the company’s goal of building more homes in Texas, which will be a key market for the company, Landsea founder and CEO John Ho said in a statement. to profit on Tuesday.

“We are moving our corporate headquarters to Dallas, Texas from Southern California, which should provide cost savings over time,” Ho said. “This will allow us to work more effectively as a national housing construction company. This move should also be a sign of our commitment to expanding our presence in the construction industry in this state.

According to Ho, Landsea Homes total revenue in 2022 was more than $1.4 billion, with pre-tax earnings of $101 million and earnings of $1.70 per diluted share, all records for the company. The company closed 2,370 homes during the year, up 45% from 2021, she said.

But there were major challenges in the second half of 2022, Ho said.

“While 2022 was a record year in terms of profitability, it was also a year in which the demand environment became more challenging due to rapidly rising mortgage rates and the resulting fall in homebuyer confidence,” he said. stated I. “This shift in market dynamics has caused buyers who were looking for a new home to become more cautious and prompted buyers in our backlog to cancel their purchase contracts. As a result, our net new order activity in the third and fourth quarters was significantly down year-on-year.”

Market conditions began to improve in December and have continued this year, but demand remains volatile and dependent on changes in mortgage rates, Ho added.

In response to uncertain demand, Landsea is actively negotiating with suppliers, vendors and contractors to ensure the prices the company pays reflect new market realities and the increase in Landsea’s size and scale, the CEO said. The company is ready to scrap land option deals if they no longer meet its needs, Ho said, and the developer has cut headcount by about 8%.

Landsea currently builds homes and neighborhoods in Arizona, Florida, Texas and California.

Its new headquarters will be at 1717 McKinney in Dallas, where Landsea has signed a 7,716-square-foot lease on the tenth floor of the building.

In terms of housing, Landsea’s land area in Texas is relatively small, accounting for just 3 percent of the company’s revenue in 2022. The company currently owns or controls 1,087 lots, primarily in the Austin and San Antonio markets.

California accounted for 35% of the company’s 2022 housing revenue, Florida for 33%, and Arizona for 22%.

The company wants to solidify its presence in the Lone Star state, but changing the geographic percentage will take time, Ho said.

“Texas will come later this year, but overall it will be about the same division (at the end of the year),” he said.

Landsey Results of 2022:

• Home sales revenue increased 49% to $1.4 billion.
• The total number of houses commissioned increased by 45% to 2370 houses.
• Net income of $73.6 million, or $1.70 per diluted share.

Landsea Financial Summary for Q4 2022:

• Total revenue was $426 million in Q4 2022 compared to $398.5 million in Q4 2021.

• In the fourth quarter of 2022, 703 new homes were delivered with a value of $417.5 million and an average selling price of $594,000. fourth quarter of 2021.

• Net new home orders were 88 homes valued at $57.5 million for an average sale price of $653,000 in the fourth quarter of 2022. This compares to 440 homes valued at $313.1 million for an average sale price of $712,000 in the fourth quarter of 2022. fourth quarter of 2021.

• The number of trading communities increased to 58 in Q4 2022 from 35 in Q4 2021.

• The total number of homes in progress decreased by 33% to 670 homes worth $380.9 million and an average sale price of $569,000 in the fourth quarter of 2022 compared to 998 homes worth $586.2 million and an average sale price of $587,000 US dollars. in the fourth quarter of 2021.

• The total number of parcels owned and controlled by Landsea increased by 33% to 11,593 in Q4 2022 from 8,740 in Q4 2021. Of these plots, 54% are controlled and 46% are owned.

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