• Landsea Homes Reports Second Quarter 2024 Results

    Source: Nasdaq GlobeNewswire / 01 Aug 2024 06:00:46   America/New_York

    • Home sales revenue increased 43.5% to $418.2 million
    • Net new home orders of 760 increased 34.5%
    • Net income of $2.9 million or $0.08 per share
    • Adjusted net income of $13.3 million or $0.36 per share, a 9% increase
    • Home sales gross margin of 14.9%, 21.1% on an adjusted basis
    • Book value per share of $17.94

    DALLAS, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the “Company”) announced today financial results for the second quarter ended June 30, 2024. For the quarter, the Company reported pretax income of $4.6 million, and net income of $2.9 million, or $0.08 per share. Reported income for the quarter includes a $5.2 million or $0.10 per diluted share impact related to a non-cash deferred financing cost write-off associated with the re-cast of the Company’s unsecured revolving credit facility. Excluding the loss from the deferred financing cost write-off, net income was $6.5 million or $0.18 per share. Adjusted net income (a non-GAAP measure) was $13.3 million or $0.36 per share and adjusted gross margin was 21.1%. Reported pretax income for the prior year period was $7.5 million with net income of $4.9 million, or $0.12 per share. For the prior year period, adjusted net income was $13.0 million, or $0.33 per share and adjusted gross margin was 23.5%.

    Management Commentary

    “Landsea Homes posted another quarter of strong top-line growth in the second quarter of 2024, generating home sales revenue of $418.2 million, which represented an increase of 43.5% over the second quarter of 2023”, said John Ho, Landsea Homes’ Chief Executive Officer. “New home deliveries totaled 760 units for the quarter, well in excess of our stated guidance, as our teams did an excellent job of accelerating build schedules and closing homes in a timely manner. We also generated 760 net new orders for the quarter, 34.5% more than second quarter of 2023, on a sales pace of 3.0 homes per community per month.”

    Mr. Ho continued, “The strong year-over-year growth we experienced in both sales and closings this quarter was the direct result of our strategic efforts to grow our company and achieve better economies of scale. Average community count for the quarter was up 47% year-over-year, thanks to the investments we’ve made in our markets and the acquisitions we’ve completed to grow our company. We are a much bigger and more diversified company than we were a year ago, and we expect to reap the benefits of our larger homebuilding platform as our volumes increase.”

    Mr. Ho concluded, “As we turn our attention to the latter half of 2024, we remain focused on achieving our delivery goals for the year and generating cash to bring our leverage ratios down from current levels. Given the improvements we’ve seen in build times and the number of homes we currently have in backlog, I believe we are on track to achieve those goals. I am proud of the way our teams executed in the second quarter and continue to believe that Landsea Homes has a bright future ahead.”

    Operating Results

    Total revenue was $431.1 million in the second quarter, up 47.0% compared to the second quarter of 2023, primarily driven by a 41% increase in homes closed and a 2% increase in average sales price.

    New homes delivered increased 41.0% to 760 homes at an average sales price of $550,000, a 2% increase, compared to 539 homes delivered at an average sales price of $541,000 in the second quarter of 2023.

    Net new home orders were up 34.5% to 760 homes with a dollar value of $389.8 million, an average sales price of $513,000 and a monthly absorption rate of 3.0 sales per active community. This compares to 565 homes with a dollar value of $324.4 million, an average sales price of $574,000 and a monthly absorption rate of 3.3 sales per active community in the prior year period. As a percentage of gross orders, cancellations equaled 11% as compared to 11% a year ago.

    Total homes in backlog were 694 homes with a dollar value of $391.1 million and an average sales price of $564,000 at June 30, 2024. This compares to 722 homes with a dollar value of $455.8 million and an average sales price of $631,000 at June 30, 2023.

    Total lots owned or controlled at June 30, 2024, were 12,357 compared to 11,008 at June 30, 2023. We continue to pursue an asset-light strategy, controlling 57% of our lots at the end of the second quarter of 2024 and 43% owned.

    Home sales gross margin was 14.9% compared to 17.4% in the prior year period. Adjusted home sales gross margin (a non-GAAP measure) was 21.1% compared to 23.5% in the prior year period. The decrease was primarily attributed to the increase in sales discounts and incentives.

    Net income attributable to Landsea Homes was $2.9 million compared to $4.9 million in the prior year period. Adjusted net income attributable to Landsea Homes (a non-GAAP measure) was $13.3 million compared to $13.0 million in the prior year period. Net income per share on a fully diluted basis was $0.08 compared to $0.12 in the second quarter of 2023. Adjusted net income per share (a non-GAAP measure) on a fully diluted basis was $0.36 compared to $0.33 in the second quarter of 2023.

    Adjusted EBITDA (a non-GAAP measure) was $42.8 million compared to $27.0 million in the prior year period.

    Balance Sheet

    As of June 30, 2024, the Company had total liquidity of $330.2 million consisting of cash and cash equivalents as well as cash held in escrow of $106.2 million and $224.0 million in availability under the Company’s $455.0 million unsecured revolving credit facility. Total debt was $754.1 million compared to $543.8 million at December 31, 2023.

    Landsea Homes’ ratio of debt to capital was 52.8% at June 30, 2024, and the Company’s net debt to total capital (a non-GAAP measure) was 45.4% at June 30, 2024.

    Third Quarter 2024 Outlook

    • New home deliveries anticipated to be in the range of 625 to 700
    • Delivery ASPs expected to be in the range of $495,000 to $510,000
    • Adjusted home sales gross margin to be between 20% and 21%
    • Home sales gross margin to be approximately 15%

    Fourth Quarter 2024 Outlook

    • New home deliveries anticipated to be in the range of 1,000 to 1,100
    • Delivery ASPs expected to be in the range of $495,000 to $510,000
    • Adjusted home sales gross margin to be between 23% and 24%
    • Home sales gross margin to be between 18% and 19%

    Conference Call

    The Company will hold a conference call today at 9:00 a.m. Central Time (10:00 a.m. Eastern time) to discuss its second quarter 2024 results.

    • Toll-free dial-in number: 1-800-274-8461
    • International dial-in number: 1-203-518-9814

    The conference call will be broadcast live and available for replay here and via the Investors section of the Landsea Homes website at https://ir.landseahomes.com/.

    A replay of the conference call will be available approximately three hours after conference end time through August 15, 2024.

    Replay Details:

    • Toll-free replay number: 1-844-512-2921
    • International replay number: 1-412-317-6671
    • Replay ID: 11156580

    About Landsea Homes Corporation

    Landsea Homes Corporation (Nasdaq: LSEA) is a publicly traded residential homebuilder based in Dallas, Texas that designs and builds best-in-class homes and sustainable master-planned communities in some of the nation's most desirable markets. The company has developed homes and communities in New York, Boston, New Jersey, Arizona, Colorado, Florida, Texas and throughout California in Silicon Valley, Los Angeles, and Orange County. Landsea Homes was honored as the Green Home Builder 2023 Builder of the Year, after being named the 2022 winner of the prestigious Builder of the Year award, presented by BUILDER magazine, in recognition of a historical year of transformation.

    An award-winning homebuilder that builds suburban, single-family detached and attached homes, mid-and high-rise properties, and master-planned communities, Landsea Homes is known for creating inspired places that reflect modern living and provides homebuyers the opportunity to “Live in Your Element.” Our homes allow people to live where they want to live, how they want to live – in a home created especially for them.

    Driven by a pioneering commitment to sustainability, Landsea Homes’ High Performance Homes are responsibly designed to take advantage of the latest innovations with home automation technology supported by Apple®. Homes include features that make life easier and provide energy savings that allow for more comfortable living at a lower cost through sustainability features that contribute to healthier living for both homeowners and the planet.

    Led by a veteran team of industry professionals who boast years of worldwide experience and deep local expertise, Landsea Homes is committed to positively enhancing the lives of our homebuyers, employees, and stakeholders by creating an unparalleled lifestyle experience that is unmatched.

    For more information on Landsea Homes, visit: www.landseahomes.com.

    Forward-Looking Statements

    Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws, including, but not limited to, our expectations for future financial performance, business strategies or expectations for our business. These statements constitute projections, forecasts, and forward-looking statements, and are not guarantees of performance. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “look” or similar expressions may identify forward-looking statements. Specifically, forward-looking statements may include statements relating to the future financial performance of Landsea Homes; changes in the market for Landsea Homes’ products and services; and other expansion plans and opportunities.

    These forward-looking statements are based on information available as of the date of this press release and our management’s current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

    These risks and uncertainties include, but are not limited to, the risk factors described by Landsea Homes in its filings with the Securities and Exchange Commission (“SEC”). These risk factors and those identified elsewhere in this press release, among others, could cause actual results to differ materially from historical performance and include, but are not limited to:

    • the cyclical nature of our industry and the possibility that adverse changes in general and local economic conditions could reduce the demand for homes;
    • our ability to develop communities successfully and in a timely manner;
    • changes in the terms and availability of mortgage financing, interest rates, federal lending programs, and tax laws, affecting the demand for and the ability of our homebuyers to complete the purchase of a home;
    • our geographic concentration, which could materially and adversely affect us if the homebuilding industry in our current markets should experience a decline;
    • the potential for adverse weather and geological conditions to increase costs, cause project delays or reduce consumer demand for housing;
    • our ability to promptly sell one or more properties for reasonable prices in response to changing economic, financial and investment conditions, and the risk that we may be forced to hold non-income producing properties for extended periods of time;
    • our reliance on third-party skilled labor, suppliers and long supply chains;
    • the dependence of our long-term sustainability and growth upon our ability to acquire lots that are either developed or have the approvals necessary for us to develop them; and
    • the other risks and uncertainties indicated in Landsea Homes’ SEC reports or documents filed or to be filed with the SEC by Landsea Homes.

    Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

    Stock Repurchase

    Under its stock repurchase program, Landsea Homes may purchase its common stock in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Company is not obligated to repurchase any specific number or amount of shares of common stock, and it may modify, suspend or discontinue the program at any time. The Company will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of the Company’s common stock, corporate requirements, general market economic conditions and legal requirements.

    Investor Relations Contact:
    Drew Mackintosh, CFA
    Mackintosh Investor Relations, LLC
    drew@mackintoshir.com
    (310) 924-9036

    Media Contact:
    Annie Noebel
    Cornerstone Communications
    anoebel@cornerstonecomms.com
    (949) 449-2527


     
    Landsea Homes Corporation
    Consolidated Balance Sheets - Unaudited
     
     June 30, 2024 December 31, 2023
     (dollars in thousands)
    Assets   
    Cash and cash equivalents$82,150  $119,555 
    Cash held in escrow 24,071   49,091 
    Real estate inventories 1,350,165   1,121,726 
    Due from affiliates 4,569   4,348 
    Goodwill 152,322   68,639 
    Other assets 129,633   107,873 
    Total assets$1,742,910  $1,471,232 
        
    Liabilities   
    Accounts payable$95,471  $77,969 
    Accrued expenses and other liabilities 219,569   160,256 
    Due to affiliates 881   881 
    Line of credit facility, net 225,655   307,631 
    Senior notes, net 528,452   236,143 
    Total liabilities 1,070,028   782,880 
        
    Commitments and contingencies   
        
    Equity   
    Stockholders’ equity:   
    Preferred stock, $0.0001 par value, 50,000,000 shares authorized, none issued and outstanding as of June 30, 2024 and December 31, 2023, respectively     
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 41,671,387 issued and 36,275,392 outstanding as of June 30, 2024, 41,382,453 issued and 36,520,894 outstanding as of December 31, 2023 4   4 
    Additional paid-in capital 460,001   465,290 
    Retained earnings 190,659   187,584 
    Total stockholders’ equity 650,664   652,878 
    Noncontrolling interests 22,218   35,474 
    Total equity 672,882   688,352 
    Total liabilities and equity$1,742,910  $1,471,232 


     
    Landsea Homes Corporation
    Consolidated Statements of Operations - Unaudited
     
     Three Months Ended June 30, Six Months Ended June 30,
      2024   2023   2024   2023 
     (dollars in thousands, except per share amounts)
    Revenue       
    Home sales$418,182  $291,512  $710,774  $532,137 
    Lot sales and other 12,961   1,732   14,410   2,847 
    Total revenues 431,143   293,244   725,184   534,984 
            
    Cost of sales       
    Home sales 355,736   240,835   604,633   437,889 
    Lot sales and other 11,231   1,748   12,914   2,461 
    Total cost of sales 366,967   242,583   617,547   440,350 
            
    Gross margin       
    Home sales 62,446   50,677   106,141   94,248 
    Lot sales and other 1,730   (16)  1,496   386 
    Total gross margin 64,176   50,661   107,637   94,634 
            
    Sales and marketing expenses 24,663   18,334   43,151   34,742 
    General and administrative expenses 29,555   25,980   55,637   48,760 
    Total operating expenses 54,218   44,314   98,788   83,502 
            
    Income from operations 9,958   6,347   8,849   11,132 
            
    Other (expense) income, net (5,353)  1,159   (3,540)  2,114 
    Pretax income 4,605   7,506   5,309   13,246 
            
    Provision for income taxes 1,370   1,640   1,340   3,257 
            
    Net income 3,235   5,866   3,969   9,989 
    Net income attributable to noncontrolling interests 350   919   894   1,824 
    Net income attributable to Landsea Homes Corporation$2,885  $4,947  $3,075  $8,165 
            
    Income per share:       
    Basic$0.08  $0.12  $0.08  $0.20 
    Diluted$0.08  $0.12  $0.08  $0.20 
            
    Weighted average common shares outstanding:       
    Basic 36,199,850   39,891,982   36,239,765   39,944,549 
    Diluted 36,369,827   39,971,731   36,558,862   40,059,731 


    Home Deliveries and Home Sales Revenue

     Three Months Ended June 30,
     2024 2023 % Change
     Homes Dollar
    Value
     ASP Homes Dollar
    Value
     ASP Homes Dollar
    Value
     ASP
     (dollars in thousands)
    Arizona213  $96,251  $452  160  $70,590  $441  33% 36% 2%
    California139   134,211   966  115   99,516   865  21% 35% 12%
    Colorado24   10,201   425       N/A N/A N/A N/A
    Florida285   130,010   456  264   121,406   460  8% 7% (1)%
    Metro New York1   4,475   4,475       N/A N/A N/A N/A
    Texas98   43,034   439       N/A N/A N/A N/A
    Total760  $418,182  $550  539  $291,512  $541  41% 43% 2%


     Six Months Ended June 30,
     2024 2023 % Change
     Homes
     Dollar
    Value
     ASP Homes
     Dollar
    Value
     ASP Homes Dollar
    Value
     ASP
     (dollars in thousands)
    Arizona396  $174,992  $442  330  $143,124  $434  20% 22% 2%
    California285   266,105   934  200   166,774   834  43% 60% 12%
    Colorado41   19,055   465       N/A N/A N/A N/A
    Florida442   202,365   458  476   216,396   455  (7)% (6)% 1%
    Metro New York1   4,475   4,475  1   1,649   1,649  % 171% 171%
    Texas100   43,782   438  4   4,194   1,049  2,400% 944% (58)%
    Total1,265  $710,774  $562  1,011  $532,137  $526  25% 34% 7%


    Net New Home Orders, Dollar Value of Orders, and Monthly Absorption Rates

     Three Months Ended June 30,
     2024 2023 % Change
     HomesDollar
    Value
    ASPMonthly Absorption Rate HomesDollar
    Value
    ASPMonthly Absorption Rate HomesDollar
    Value
    ASPMonthly Absorption Rate
     (dollars in thousands)
    Arizona219$100,448$4593.5 186$79,263$4263.6 18%27%8%(3)%
    California128 102,158 7984.4 216 181,466 8405.9 (41)%(44)%(5)%(25)%
    Colorado34 14,920 4393.8  N/AN/A N/AN/AN/AN/A
    Florida286 133,078 4653.2 163 63,686 3911.9 75%109%19%68%
    Metro New York N/AN/A  N/AN/A N/AN/AN/AN/A
    Texas93 39,146 4211.5  N/AN/A N/AN/AN/AN/A
    Total760 389,750$5133.0 565 324,415$5743.3 35%20%(11)%(9)%


     Six Months Ended June 30,
     2024 2023 % Change
     HomesDollar ValueASPMonthly Absorption Rate HomesDollar ValueASPMonthly Absorption Rate HomesDollar ValueASPMonthly Absorption Rate
     (dollars in thousands)
    Arizona452$203,963$4513.6 338$142,008$4203.4 34%44%7%6%
    California235 210,483 8964.0 380 317,693 8365.3 (38)%(34)%7%(25)%
    Colorado57 25,791 4523.8  N/AN/A N/AN/AN/AN/A
    Florida522 242,611 4653.0 341 143,024 4192.0 53%70%11%50%
    Metro New York1 4,475 4,475N/A  N/AN/A N/AN/AN/AN/A
    Texas105 43,841 4181.6 4 4,194 1,0491.3 2,525%945%(60)%23%
    Total1,372$731,164$5333.1 1,063$606,919$5713.1 29%20%(7)%%


    Average Selling Communities

      Three Months Ended June 30, Six Months Ended June 30,
      20242023% Change 20242023% Change
    Arizona 20.717.022% 21.016.527%
    California 9.712.3(21)% 9.712.0(19)%
    Colorado 3.0N/A 2.5N/A
    Florida 29.628.06% 29.428.82%
    Metro New York N/A N/A
    Texas 21.0N/A 10.70.52,040%
    Total 84.057.347% 73.357.827%


    Backlog

     June 30, 2024 June 30, 2023 % Change
     Homes
     Dollar
    Value
     ASP Homes
     Dollar
    Value
     ASP Homes Dollar
    Value
     ASP
     (dollars in thousands)
    Arizona152  $70,404  $463  113  $48,871  $432  35% 44% 7%
    California111   102,548   924  259   229,365   886  (57)% (55)% 4%
    Colorado30   14,276   476       N/A N/A N/A N/A
    Florida326   168,730   518  350   177,525   507  (7)% (5)% 2%
    Metro New York     N/A      N/A N/A N/A N/A
    Texas75   35,177   469       N/A N/A N/A N/A
    Total694  $391,135  $564  722  $455,761  $631  (4)% (14)% (11)%

    (1)   Backlog acquired in Texas at the date of the Antares acquisition was 70 homes with a value of $35,118 thousand.


    Lots Owned or Controlled

     June 30, 2024 June 30, 2023  
     Lots
    Owned

     Lots
    Controlled

     Total
     Lots
    Owned

     Lots
    Controlled

     Total
     % Change
    Arizona1,767  1,249  3,016  2,040  1,389  3,429  (12)%
    California586  1,128  1,714  574  1,708  2,282  (25)%
    Colorado175  573  748        N/A
    Florida1,680  1,507  3,187  2,366  1,687  4,053  (21)%
    Metro New York1    1  2    2  (50)%
    Texas1,138  2,553  3,691  38  1,204  1,242  197%
    Total5,347  7,010  12,357  5,020  5,988  11,008  12%


    Home Sales Gross Margins

    Home sales gross margin measures the price achieved on delivered homes compared to the costs needed to build the home. In the following table, we calculate gross margins adjusting for interest in cost of sales, inventory impairments, and purchase price accounting for acquired work in process inventory. This non-GAAP financial measure should not be used as a substitute for the Company's operating results in accordance with GAAP. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. We believe the below information is meaningful as it isolates the impact that indebtedness, impairments, and acquisitions have on our gross margins and allows for comparability to previous periods and competitors.

     Three Months Ended June 30,
      2024  %  2023  %
     (dollars in thousands)
    Home sales revenue$418,182  100.0% $291,512  100.0%
    Cost of home sales 355,736  85.1%  240,835  82.6%
    Home sales gross margin 62,446  14.9%  50,677  17.4%
    Add: Interest in cost of home sales 17,074  4.1%  7,276  2.5%
    Add: Real estate inventories impairment   %  4,700  1.6%
    Adjusted home sales gross margin excluding interest and real estate inventories impairment 79,520  19.0%  62,653  21.5%
    Add: Purchase price accounting for acquired inventory 8,619  2.1%  5,710  2.0%
    Adjusted home sales gross margin excluding interest, real estate inventories impairment, and purchase price accounting for acquired inventory$88,139  21.1% $68,363  23.5%


     Six Months Ended June 30,
      2024  %  2023  %
     (dollars in thousands)
    Home sales revenue$710,774  100.0% $532,137  100.0%
    Cost of home sales 604,633  85.1%  437,889  82.3%
    Home sales gross margin 106,141  14.9%  94,248  17.7%
    Add: Interest in cost of home sales 27,631  3.9%  11,818  2.2%
    Add: Real estate inventories impairment   %  4,700  0.9%
    Adjusted home sales gross margin excluding interest and real estate inventories impairment 133,772  18.8%  110,766  20.8%
    Add: Purchase price accounting for acquired inventory 11,075  1.6%  10,195  1.9%
    Adjusted home sales gross margin excluding interest, real estate inventories impairment, and purchase price accounting for acquired inventory$144,847  20.4% $120,961  22.7%


    EBITDA and Adjusted EBITDA

    The following table presents EBITDA and Adjusted EBITDA for the three months ended June 30, 2024 and 2023. Adjusted EBITDA is a non-GAAP financial measure used by management in evaluating operating performance. We define Adjusted EBITDA as net income before (i) income tax expense (benefit), (ii) interest expenses, (iii) depreciation and amortization, (iv) inventory impairments, (v) purchase accounting adjustments for acquired work in process inventory related to business combinations, (vi) loss on debt modification, (vii) transaction costs related to the Merger and business combinations, (viii) write-off of deferred offering costs, and (ix) abandoned projects costs. We believe Adjusted EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest, effective tax rates, levels of depreciation and amortization, and items considered to be non-recurring. Accordingly, we believe this measure is useful for comparing our core operating performance from period to period. Our presentation of Adjusted EBITDA should not be considered as an indication that our future results will be unaffected by unusual or non-recurring items.

     Three Months Ended June 30,
      2024   2023 
     (dollars in thousands)
    Net income$3,235  $5,866 
    Provision for income taxes 1,370   1,640 
    Interest in cost of sales 18,011   7,319 
    Depreciation and amortization expense 1,850   1,139 
    EBITDA 24,466   15,964 
    Real estate inventories impairment    4,700 
    Purchase price accounting in cost of home sales 8,619   5,710 
    Transaction costs 2,861   18 
    Write-off of offering costs    436 
    Abandoned project costs 1,698   197 
    Loss on debt modification 5,180    
    Adjusted EBITDA$42,824  $27,025 


     Six Months Ended June 30,
      2024   2023 
     (dollars in thousands)
    Net income$3,969  $9,989 
    Provision for income taxes 1,340   3,257 
    Interest in cost of sales 28,581   11,872 
    Depreciation and amortization expense 3,170   2,557 
    EBITDA 37,060   27,675 
    Real estate inventories impairment    4,700 
    Purchase price accounting in cost of home sales 11,075   10,195 
    Transaction costs 4,589   33 
    Write-off of offering costs    436 
    Abandoned project costs 1,954   312 
    Loss on debt modification 5,180    
    Adjusted EBITDA$59,858  $43,351 


    Adjusted Net Income

    Adjusted Net Income attributable to Landsea Homes is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating and understanding our operating results without the effect of certain expenses that were historically pushed down by our parent company and other non-recurring items. We believe excluding these items provides a more comparable assessment of our financial results from period to period. Adjusted Net Income attributable to Landsea Homes is calculated by excluding the effects of related party interest that was pushed down by our parent company, purchase accounting adjustments for acquired work in process inventory related to business combinations, loss on debt modification, and inventory impairment, and tax-effected using a blended statutory tax rate. We also adjust for the expense of related party interest pushed down from our parent company as we have no obligation to repay the debt and related interest.

     Three Months Ended June 30,
      2024   2023 
     (dollars in thousands, except share and per share amounts)
    Net income attributable to Landsea Homes Corporation$2,885  $4,947 
        
    Real estate inventories impairment    4,700 
    Pre-Merger capitalized related party interest included in cost of sales 90   545 
    Purchase price accounting for acquired inventory 8,619   5,710 
    Loss on debt modification 5,180    
    Total adjustments 13,889   10,955 
    Tax-effected adjustments (1) 10,380   8,075 
        
    Adjusted net income attributable to Landsea Homes Corporation$13,265  $13,022 
        
    Earnings per share   
    Basic$0.08  $0.12 
    Diluted$0.08  $0.12 
        
    Adjusted earnings per share   
    Basic$0.37  $0.33 
    Diluted$0.36  $0.33 
        
    Weighted average common shares outstanding used in EPS - basic 36,199,850   39,891,982 
    Weighted average common shares outstanding used in EPS - diluted 36,369,827   39,971,731 

    (1)   Our tax-effected adjustments are based on our federal rate and a blended state rate adjusted for certain discrete items.


     Six Months Ended June 30,
      2024   2023 
     (dollars in thousands, except share and per share amounts)
    Net income attributable to Landsea Homes Corporation$3,075  $8,165 
        
    Real estate inventories impairment    4,700 
    Pre-Merger capitalized related party interest included in cost of sales 119   1,263 
    Purchase price accounting for acquired inventory 11,075   10,195 
    Loss on debt modification 5,180    
    Total adjustments 16,374   16,158 
    Tax-effected adjustments (1) 12,237   11,910 
        
    Adjusted net income attributable to Landsea Homes Corporation$15,312  $20,075 
        
    Earnings per share   
    Basic$0.08  $0.20 
    Diluted$0.08  $0.20 
        
    Adjusted earnings per share   
    Basic$0.42  $0.50 
    Diluted$0.42  $0.50 
        
    Weighted shares outstanding   
    Weighted average common shares outstanding used in EPS - basic 36,239,765   39,944,549 
    Weighted average common shares outstanding used in EPS - diluted 36,558,862   40,059,731 

    (1)   Our tax-effected adjustments are based on our federal rate and a blended state rate adjusted for certain discrete items.


    Net Debt to Total Capital

    The following table presents the ratio of debt to capital as well as the ratio of net debt to total capital which is a non-GAAP financial measure. The ratio of debt to capital is computed as the quotient obtained by dividing total debt, net of issuance costs, by total capital (sum of total debt, net of issuance costs, plus total equity).

    The non-GAAP ratio of net debt to total capital is computed as the quotient obtained by dividing net debt (which is total debt, net of issuance costs, less cash and cash equivalents as well as cash held in escrow to the extent necessary to reduce the debt balance to zero) by total capital. The most comparable GAAP financial measure is the ratio of debt to capital. We believe the ratio of net debt to total capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We believe that by deducting our cash from our debt, we provide a measure of our indebtedness that takes into account our cash liquidity. We believe this provides useful information as the ratio of debt to capital does not take into account our liquidity and we believe that the ratio of net debt to total capital provides supplemental information by which our financial position may be considered.

    See table below reconciling this non-GAAP measure to the ratio of debt to capital.

     June 30, 2024 December 31, 2023
     (dollars in thousands)
    Total notes and other debts payable, net$754,107  $543,774 
    Total equity 672,882   688,352 
    Total capital$1,426,989  $1,232,126 
    Ratio of debt to capital 52.8%  44.1%
        
    Total notes and other debts payable, net$754,107  $543,774 
    Less: cash and cash equivalents 82,150   119,555 
    Less: cash held in escrow 24,071   49,091 
    Net debt 647,886   375,128 
        
    Total capital$1,426,989  $1,232,126 
    Ratio of net debt to total capital 45.4%  30.4%

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