Landsea Homes Corp (LSEA) 2021 Q1 法說會逐字稿

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Landsea Homes' financial results for the first quarter ended March 31, 2021. Joining us today are Landsea Homes CEO and Interim CFO, John Ho; Chief Accounting Officer, Trenton Schreiner; President and COO, Michael Forsum; and the company's external Director of Investor Relations, Cody Slach. Following their remarks, we'll open the call for your questions.

Before we go further, I would like to turn the call over to Mr. Slach as he reads the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. That provides important cautions regarding forward-looking statements.

Cody, please go ahead.

Thank you. This call will include 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, including as they relate to anticipated effects of the business combination. These statements can 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 benefits of the business combination and the Vintage Estate Homes acquisition, the future financial performance of the company, 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 call 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 SEC.

These risk factors and those identified elsewhere in the press release, among others, could cause actual results to differ materially from historical performance and include, but are not limited to the ability to recognize the anticipated benefits of the business combination and Vintage Estate Homes acquisition, which may be affected by, among other things, competition, the ability to integrate the combined business and the acquired business, and the ability of the combined business and the acquired business to grow and manage growth profitably, cost related to the business combination, the ability to maintain the listing of Landsea Homes securities on NASDAQ, the outcome of any legal proceedings that may be instituted against the company, changes in applicable laws or regulations, the inability to launch new Landsea Homes products or services or to profitably expand into new markets, the possibility that the company may be adversely affected by other economic, business, and/or competitive factors, and 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.

I'd also like to remind everyone this call will be available for replay through May 13, starting at 8:00 PM Eastern tonight. A webcast replay will also be available via the link provided in today's press release as well as on the company's website at landseahomes.com. In addition, a supplemental earnings presentation has been posted on the Investor Relations portion of the Company's site, and we encourage you to view it.

Now I'd like to turn the call over to the CEO of Landsea Homes, John Ho. John?

Thank you, Cody, and good afternoon, everyone. We're very happy that you can join us today.

To kick things off, I will provide a high-level overview of our first-quarter 2021 results and our business highlights, including our recent acquisition of Vintage Estate Homes. From there, I will hand it off to Trent Schreiner, our Chief Accounting Officer, to discuss our financials in more detail. And then Mike Forsum, our President and COO, will provide operational and market updates along with what we hope to accomplish in our recently entered markets in Florida and Texas.

But first, I'd like to start off by saying how pleased we are with our financial results for the quarter. Housing market dynamics continue to remain strong, and we've certainly seen that reflected in our financial results with revenue from total home sales growing 14% and our very strong backlog expanding to 874 homes. We also continue to see our ASP rise as we capitalize on the pricing power that comes with such strong housing demand. Our team has been incredibly busy executing on our strategy. I'd like to share some of the notable highlights from the past few months.

First, we are pleased to have recently announced two new projects in Southern California. The first project, which we announced a few weeks ago, is the acquisition of 132 home sites in San Juan Capistrano, a city in Orange County. We plan to build 40 three-story detached homes and 89 three-story townhomes, all within walking distance from San Juan Capistrano's lively and historic downtown. The homes will be equipped with our high-performance home features, including smart home automation technology through the Apple HomeKit along with REME HALO air purifier, a state-of-the-art, whole-home purification system that mitigates indoor contaminants to keep residents safe and support healthy centric living.

We will also be building 65 homes in Orange County's largest city, Anaheim. Community will consist of three-story townhomes, which we are quite optimistic about this type of housing given the success we've seen in our Iron Ridge master-planned community. We know buyers will appreciate that contemporary, stylish, and sustainable living in the heart of Orange County. And we are excited for that community to open this fall. These two projects join the list of our other successful Southern California projects including Iron Ridge in Lake Forest, Shady Tree and Neuhouse in Ontario, and The Westerly in Simi Valley.

Moving to the East Coast, we are nearly sold out of our Avora Community, a contemporary waterfront condominium community located in New Jersey's Gold Coast. In Manhattan, sales are now underway at Forena on 14th and 6th, and we're seeing great interest there with increased sales activity in the New York City metropolitan region.

Now to share our most recent announcement, we are excited that we will be entering Florida and Texas with our acquisition of Vintage of Estate Homes. We purchased Vintage Estate Homes for $54.6 million in cash, and they had $30 million of debt outstanding at March 31 that we assumed. By way of background, Vintage Estate Homes has been constructing best-in-class homes over the past several decades in high-growth real estate markets such as Orlando, Palm Bay, and Melbourne in Florida, and San Antonio and Austin in Texas, with about 80% of their current selling communities in the Central Florida market.

Vintage Estate Homes has earned a reputation for their attention to detail, premium building materials, and for cultivating lasting relationships with their customers. This aligns perfectly with our distinct differentiation factors in the industry. Through this acquisition, we are thrilled to not only gain over 1,800 new lots across these high-growth markets, but also to gain the knowledge of the Vintage Estate Homes team which will be joining us at Landsea.

Additional context on the scale of this acquisition. In 2020, Vintage Estate Homes generated $157 million in revenue, $12 million of EBITDA, and $9 million in pretax income, delivering 405 homes with an average sales price of $387,000, which falls directly in line with our targeted ASP for these markets. Additionally, the acquisition increases Landsea Homes backlog as of March 31, 2021 by 509 homes. Similar to our previous acquisitions in Arizona, this follows the strict financial criteria that we have outlined within our prior earnings presentations when underwriting acquisitions.

We mentioned Florida and Texas as high-growth markets we plan to enter on our last earnings call. Well, Vintage Estate Homes provides us the opportunity to enter both markets at once. Florida and especially the Central Florida markets that Vintage Estate Homes has a presence in are experiencing extremely high growth. In February, the National Association of Realtors reported that local home sales in the Orlando market grew year over year for the eighth consecutive month, with sales up near 20% from a year earlier. And the median sales price up 12% from the prior year.

In Texas, Vintage Estates Homes presence in Austin and San Antonio is a great opportunity as both metro areas are listed in the top 10 of new home markets. These markets have seen more and more entry and move up-level buyers, which is the buyer we have been targeting since our shift in 2018. Mike will discuss some of the growth opportunities within these markets later on.

I just wanted to reiterate how pleased we are with the acquisition in a strategic fit in our growth plan. This is another step forward in our expansion plans to create communities in highly desirable locations across the United States, providing high-quality homes where residents can enjoy living in their element. With the positive momentum we've experienced in our current business, which we expect to continue, along with the added benefit of this acquisition, we're pleased to be raising our 2021 outlook, which Trent will address shortly.

Overall, the housing market shows no signs of slowing down, and we believe we have significant runway for growth across our markets. We look forward to sharing the success we believe we can achieve in the coming quarters and these results ultimately in driving shareholder value.

With that, I'll now turn the call over to Trent Schreiner, our Chief Accounting Officer. Trent over to you.

Thanks, John, and good afternoon, everyone.

Jumping right into our financials for the quarter, total revenue increased 18% to $160.4 million compared to $136.3 million in the first quarter of 2020. Within our total revenue, we generated $5.7 million from lot sales compared to no lot sales in the first quarter of 2020. Our total home sales increased 14% to $154.8 million compared to $136.3 million in the prior year period.

Before we move further down to P&L, I want to briefly discuss lot sales and clarify how seasonality affects our revenue throughout the year. On lot sales, we are homebuilder first and foremost, but we view lot sales as an opportunistic way to capitalize on a small portion of our footprint if the right variables are in place. I'll have more to say on lot sales when I address our outlook.

Next, as a growth-oriented homebuilder, we inherently experience seasonality within our business. We typically see a higher percentage of our revenue generated in the back half of the year. In fact, we have historically seen sales slowdown between Super Bowl Sunday and Memorial Day weekend. Then, home-buying patterns typically pick up throughout summer and in the fall.

While we are able to produce homes year-round given the mild climates in the markets we serve, the seasonality of sales for 2020 was roughly 19% of revenue in the first quarter, 13% of revenue in the second quarter, 30% of revenue in the third quarter and 39% of revenue in the fourth quarter. We would expect these seasonality patterns to remain even when factoring in our acquisition of Vintage Estates Homes.

With that, let's get back to our results for the quarter.

Total homes delivered during the quarter increased 11% to 301 homes at an average sales price of $514,000 compared to 270 homes delivered at an average sales price of $505,000 in the first quarter of 2020. Our average selling price increased slightly largely due to the 21% increase in average selling price in Arizona, where we have continued to capitalize our pricing power dynamics.

During the first quarter, there were 426 net new home orders with a dollar value of $258.7 million, an average sales price of $606,000, and a monthly absorption rate of 5.3 sales per active community. This compares to 513 homes with a dollar value of $247 million, an average sales price of $481,000, and a monthly absorption rate of 5.8 sales per active community in the prior year periods. Adjusted home sales gross margin in the first quarter was 17.9% compared to 19.7% in the prior-year period. The decline in gross margin was primarily driven by the continued increase in raw material costs.

Net loss attributable to Landsea Homes in the first quarter was $7 million compared to $2.5 million in the prior-year period. The decline was primarily due to the $4.9 million adjustment related to the accounting treatment for our private warrants. Adjusted net income attributable to Landsea Homes was $1.4 million compared to $2.4 million in the prior-year period. Adjusted EBITDA was $8 million compared to $8.8 million in the prior-year quarter, with the slight decline primarily driven by increases in operating expenses and the aforementioned higher raw material costs.

Looking at our liquidity. We ended the first quarter with $190.7 million in cash and cash equivalents compared to $105.8 million at December 31, 2020. The increase in cash is primarily attributed to the net proceeds from the closing of the business combination with LF Capital Acquisition Corporation on January 7, 2021.

Total debt was $319.5 million compared to $264.8 million at the end of 2020. Our ratio of debt to capital was 35.7% at March 31, 2021 compared to 33.3% at December 31, 2020. And our net debt to net book capitalization ratio was 18.8% compared to 22.6% at December 31, 2020.

Now, as John mentioned earlier, we are increasing our full-year 2021 outlook as a result of the strong organic growth we are expecting and to reflect the anticipated results of Vintage Estate Homes from our May 4 closing date through the end of the year. For 2021, we now expect to report between $925 million to $980 million in total revenue with 1,930 to 2,030 total homes now expected to be delivered at an average sales price of $450,000 to $480,000. Out of this total, we expect between $10 million to $15 million in revenues to be generated from lot sales.

Our 2021 revenue assumption reflects an approximate 15.1% organic growth rate within our business. With the top-line increases, we now expect to report adjusted net income attributable to Landsea Homes between $46 million to $56 million in 2021. These updated numbers make it clear that we are leveraging our strong financial position, dedicated team, and industry tailwinds to drive growth in 2021 and beyond.

Now I'll pass it to our President and CEO, Mike Forsum, to provide more color around our operational successes and strategic vision moving forward. Mike?

Thanks, Trent. Today I would like to first discuss the current dynamics in the real estate market. Next, I will provide a quick case study of our success in Arizona, and then I'll finish with our strategic plan for Vintage Estates Homes going forward. So let's jump right into it.

We continue to see robust demand and interest in our homes coming from a broad spectrum of buying groups, including millennials searching for their very first home to families seeking more space and greater functionality in their living environment. Due to the overall lack of both resale and new home inventory, homebuyers at all home price segments remain extremely willing to pay ever-increasing prices to secure a home. Given the favorable secular tailwinds we are experiencing at this time, we don't anticipate buyer demand correcting anytime soon.

In the meantime, we are working feverishly in keeping up with this demand in all of our markets while remaining extremely disciplined in not overextending our production capabilities or potentially creating conditions whereby we could be negatively impacted by cost increases that can't be captured in timely sales price adjustments. While we do not expect oversupply to meet market -- overall supply to meet market demand for at least a couple of more years, we believe our strategy is prudent as it stands now.

In addition to the supply and demand dynamics, we are still seeing low interest rates, making it an opportune time for people to buy homes across the nation. While rates have ticked up some as of late, they are still incredibly favorable compared to historic norms. And we do not see this current rate environment stalling demand anytime soon. We also have a large population of people realizing that they will continue to work from home long after the pandemic passes, whether daily or just on certain days of the week. And understandably, they're paying more attention to the way that they're living in their living spaces.

For Landsea, this is where some of our offerings such as LiveFlex really shine. As a reminder, LiveFlex encompasses a variety of features that make living and working in the home better from enhanced wall to floor installations to smart home technology. Offering LiveFlex options as an add-on is just one way that our team guides our home buyers through their journey of purchasing a home. It is our commitment to enhance the lives of our homebuyers through providing them an industry-leading purchasing experience as well as an exceptional move-in and after move-in homeowner care.

As we have grown tremendously this past year especially in the Phoenix metro area, I wanted to share that our Arizona team has done an outstanding job producing a best-in-class environment for buyers with 90% of move-ins reporting a positive sales experience. This is a score that is measured by Alliant and is one of the three surveys that homeowners complete upon movement through the first year of their ownership.

There's one specific community, however, that I want to talk about. Our 90-home Farmstead at Harvest community in Queen Creek, Arizona located in Phoenix, Southeast Valley. Our Landsea Homes team members there have done a phenomenal job on everything from laying out the foundation of the home to handing over the keys to our new Landsea Homeowner in a timely fashion.

To start with some key stats, we launched sales of the performance collection at Harvest in July 2020 and since then have seen a remarkable pace of 10 net homes sold per month. What's even more remarkable is that we've seen base price increases of $115,000 on average since the launch. And our gross margin has grown from 22% for the first 12 closings to our current gross margin of 25% for homes and backlog. We are currently in the final close out with just 10 homes left to sell.

Operationally, despite the overwhelming demand for our homes at Harvest, our sales team has thoughtfully managed a sales release process that promotes an enjoyable homeowner experience by staying within a single phase and allowing the construction team to move down the line in sequence. This is atypical in our industry as our competitors usually scatter releases and implement a lottery sales system which leaves potential buyers very disappointed.

At Harvest, sales have been strategically limited and follow a check with me after three sales program. This means that the sales team releases three lots at a time. And once they have sold three, they reevaluate timing, available lots, and pricing for the next three sales. During each release, the team determines price increases while also being able to effectively double premium value from phase to phase.

This streamline process has dramatically lessened stress among buyers on a waiting list, which is incredibly important in the Phoenix metro area where there's a high volatility when it comes to inventory and prices. Not only has this sales program alleviated stress and angst from our homebuyers, but it has also allowed us to sell at a premium. We are seeing a premium of upwards to $9,000 compared to our national competitors for the same square footage within harvest.

Now that I have discussed how unique our selling process benefits our customers, I'd like to share more about the community and the features that will enhance the lives of our buyers for years to come there.

In addition to LiveFlex options which have been chosen as an add-on for over 30% of the homes in backlog, our homes at Harvest also include REME HALO, a whole-home purification system. This state-of-the-art purification system ensures the cleanest air in your home, killing up to 99% of bacteria, mold, and viruses even on surfaces while removing lingering odors. Beyond these options, our homes in this community are perfect for families as they have large backyards and spacious floor plans.

Overall, we're extremely proud of the homes that we continue to build across Arizona and California. And now, as we gain foothold in Florida and Texas, we look forward to producing best-in-class homes in those regions as well.

The case study I just shared is a great example of how we've made acquisitions in Arizona work with experienced teams that came from those companies and then executed our strategy to produce strong financial results, and then making Landsea Homes one of the largest homebuilders in that very important Arizona new home market.

With the Vintage Estates Homes acquisition, our team is motivated to expand into the strong housing markets of Florida and Texas, and we are excited to work with the knowledgeable team that is joining us to help propel our efforts. Overall, we plan to utilize our availability of capital to expand Vintage Estates Homes' operations in Central Florida and the Austin and San Antonio markets to increase scale and be able to manage further growth.

And as the great American move continues to accelerate with a significant number of large corporations such as Tesla, Oracle, Blackstone, and many others, along with their employees relocating to Texas and Florida, we believe these markets will continue to experience robust demand from homebuyers for years to come. Florida is becoming a top choice for living, especially attracting young families that are seeking affordability, a better lifestyle, and tax benefits. In fact, the average age in Orlando is 34 years old according to Data USA.

With this, we are going to leverage Vintage Estates Homes' current presence to push expansion in the Greater Orlando region which is centrally located to seamlessly expand into other hot markets, including Tampa, Palm Bay, Daytona, and the southeast portion of the state. This market also offer substantial runway for growth with a significant amount of land available for development through nearly 20,000 vacant developed lots and almost 220,000 future lot positions and vacant land.

Looking at the Central Texas market, the Austin and San Antonio areas are among the 10 most active new home markets in the country. In fact, the Austin area added an average of nearly 23,300 new households per year over the past five years, which has created substantial demand for new housing. This has been fueled by strong employment, affordability, and a favorable tax environment as these markets have experienced steady in-migration from less-affordable states across the country.

Similar to Central Florida, there is a significant expansion potential in Austin and San Antonio regions with over 350,000 of future lot positions and vacant land. We expect Vintage Estates to be another successful acquisition, and our team is eager to get started in these new markets. As we move forward, we have proven to be and remain an acquirer of choice for smaller homebuilders that are looking to sell to the right company who will take care of their employees and expand upon their legacy.

Just as we did in Arizona and now in Florida and Texas, we will look to additional acquisition opportunities to supplement our organic growth efforts approaching the process with precision and significant due diligence. Overall, our team is incredibly proud of the success we have had in becoming one of the fastest-growing homebuilders in the country. We remain highly optimistic about the growth and opportunities ahead, and we look forward to providing more updates along the way.

Thank you for joining us today. Operator, we are now ready for Q&A.

Thank you, sir. (Operator Instructions) Matthew Bouley, Barclays.

Afternoon, everyone. Thanks for taking the questions. Congrats on the quarter and in closing the acquisition there.

My first one is on the organic business in Arizona specifically. Really great color there around what you're doing there in Farmstead. But just looking at the ASPs overall, clearly a lot of pricing power. My question is how much further are you willing to push pricing specifically in light of affordability?

Because obviously it's a heavy entry-level or first-time buyer, I guess, position you have there. And just looking at the absolute levels of price, presumably you're living close to FHA loan limits in certain cases. And I'm curious if that has any impact on pricing or demand as you come near that. Thank you.

Matt, I'll answer that. This is Mike Forsum.

For us, we want to be as aggressive as prudently possible in our attempts to increase pricing throughout all of our communities out in Arizona. As long as the market remains active and that the buyers that are coming to our office are seeking houses, we're going to continue to do what we can, but also at the same time, try to do everything we can to enhance our margin along the way. But we do recognize that there are some limits. You identified them with the FHA limits and such.

But one thing that has been very interesting for us is we've had this ability through our escrow tracking process that we have here internally to essentially look at all of our homes as they're going through the escrow process and the buying process. And in that, we can see through the appraisals that are coming through because I think this is a very important thing is to understand also how homes are appraising.

And as we are looking at our go-forward backlog and as appraisals are coming through in the earlier releases, we're still seeing a lot of headroom between the actual sales price and what they're now coming in and being appraised as. So we see a lot of lift still available for us going forward, if not a lot of opportunity to build upon our margins by encouraging the buyer to take more options because they have more room to finance them.

Got it. No, that's a really helpful color there.

And then secondly, I wanted to ask on Vintage, just thinking about the process going forward and the lot position that they had. I think you put in the slides there they're about 50% move up. Obviously, you guys have been kind of moving towards both entry-level and move up within your own strategy. Can you speak a little bit about kind of their own or what you're going to do with those lots going forward?

Is that going to stick with the similar kind of mix that Vintage already had? And then just kind of -- I guess, the broader question is then how you then use that as a broader platform for the additional lot acquisitions in those two states. Thank you.

So Vintage Estates Homes are great operators, and they have a fantastic business. And we're very excited for the opportunity to join up with them. They have done a great job building a brand and understanding their customer, but they've done it in a way that has allowed them to best compete based upon where their capital is and how they go about financing their business, which usually pushes them to a little bit higher price point because that's sort of how it works.

However, with us, we believe that there's some great upside potential in pivoting the company towards a more approachable, affordable product and pushing up a little bit more north into the Orlando market where it has been a little more competitive with some national homebuilders in which they probably felt that they couldn't compete. We know we can. We do it every day in Phoenix. We do it in California. We know we can compete with the biggest in the business.

And so for us, we're going to take that platform and then apply some of our operating disciplines into their business and then also use what we call our library of product that we have built up over time and have brought along with us to best optimize their existing lots going forward. That may mean that in some cases, we are going to downsize some houses, square footages, but make those houses a look more efficient, a little more approachable, and then get our volume up along the way.

So it's very similar to, again, what we've done in some spots in California when we first got here, and John and I were building the business and pivoting it towards a more affordable, attainable product point. So we've already done this before, and we know we can do it again in Florida and then also in the Texas market.

Yes, understood. So it's sort of replicating what you guys have already had success doing.

Real quick, if I could a third one. Just knowing the deal closed just a couple of days ago, is there any sense on the purchase accounting in terms of the backlog homes that you acquired? How we should think about modeling that?

As of right now, we're -- we do not. We're looking at it. We've got in mind what we think that number would be, but we're sending it out for valuation to get looked at.

Okay, no problem. We'll look out for that. Well, thank you and congrats again and good luck in the next quarter.

Alex Rygiel, B. Riley.

Thank you, gentlemen. Very attractive results. Congratulations on getting out your first full quarter here.

Can you talk a little bit more in bigger perspective sort of your strategy of spec builds versus build to order and how that might change during a period of somewhat uncertain building material costs?

Yes, that's a very good question and something that we're wrestling with fairly continuously in our markets as each one of them has its own individual dynamic to it. So in some cases particularly in California and what we're doing and what I talked about in Arizona, we are now doing more of a sequence line type of building as opposed to a scattered buildings or pick your lot, lot pick your house.

In so doing, it allows us to lock in our costs earlier as we build forward into that sequence as opposed to waiting for a buyer to come and then identifying the house and then having to go out and price it. So we're moving a little bit more into the vertical risk profile of the business. But given times like this, and this is my fourth cycle through and when things get active like this, this is a limited risk given the fact that there's so much demand out there.

And so most part, most homebuyers are just looking for a home that's being provided as opposed to looking for a lot and then I'll go get my home on top of that. So we're very comfortable forward speccing, if you will, to lock in our cost to make sure that when we sell, we price our home for sale that we know what it is and where our margins are.

Sure. And then your ASPs and backlog were up significantly higher than your guidance for the full year. So it would appear that you're being somewhat conservative there on your guidance, but I also suspect Vintage is layering in lower-priced ASPs. Can you talk a little bit about that ASP guidance relative to backlog?

Sure. So yes, what we're seeing is is our guidance is lower on the ASP with the Vintage acquisition. We talked about a little bit earlier how the average sales prices in that mid-3s range there. And as we go through some of our legacy projects we have, we'll start seeing some of these average sales prices dropping down. So that's what our guidance is based on.

That's helpful. And then turning to the property in Manhattan, can you give us a little bit more color and detail on your expectations for the pace of sales that you are anticipating now that that properties had just started to be marketed?

Yes. Alex, this is John. I'll take that question.

We -- obviously not coming into this year and being, let's say, prudent in terms of our underwriting about the sales and absorption of how quickly people would return to work and return to Manhattan in particular, quite conservative in how we would deliver those units or sell those units over the next 2, 2.5 years at approximately one to two units an absorption rate per month.

We recently just soft opened at the end of April, and we've seen some very strong interest come through along with a lot of activity now in the New York metro market. So I think as the country is moving towards the reopening as the vaccinations are being delivered and rolled out, we're seeing a lot of activity come back at the Manhattan market, where we feel very confident in how we modeled and underwritten that project and how it's modeled through in terms of our projections and guidance as we speak.

That's great. And one last question. Any chance you could ballpark a pro forma book value per share post the Vintage acquisition?

Yes, we would have to -- not yet, but we will. So we'll get back to you on that.

Great. Thank you very much.

(Operator Instructions) Richard Shuster, Boston Partners.

Hey, guys. Great quarter. Great projections. I don't have a lot of questions. Just a really quick one. The question about pro forma book value per share, does Vintage make it go down or up meaningfully from your last quarter?

No, it should not.

Okay. So it's somewhere in the whatever, $0.12, $0.50 range or something like that within $0.50, right?

Yes.

Okay. And then on your projection, I guess your projection -- I apologize, I just got on late. Your projection is $46 million to $52 million in net income?

That's correct. Adjusted net income.

Yes. And the share count is still 46 roughly?

Yes.

Million shares?

Correct.

So you're now projecting basically $1 to $1.20 up from a projection before of $0.96?

Yes, with increase.

What -- I know I've asked you this before, but I'm just kind of curious with everything going on, do you have any speculation as to why with the $12.50 book and $1 to $1.20 of earnings or whatever it is, with a $9.50 stock, any idea -- and I know this is the first or second quarter out -- any idea why you think the stock is held back or just it will take time for people to find the stock and just the discovery process is more involved?

Good question, Richard. You and I have spoken a few times about that. I think there's a couple of factors. I think first factor is we're a young company. We're not as, I think, well known. I mean, we are -- this is, like you said, our second quarter of being a public company in the market seeing us.

It's also a lot of wait and see, see how Landsea Homes as being a new company, certainly not new in terms of management team. We're stock full of veteran experienced people operating in homebuilding, but essentially as a new name, and seeing if we can deliver on what we said we're going to deliver as part of our process in going public. And that's delivering on the year and delivering on the organic and inorganic acquisitions.

I think we've shown through this first four, five months here of the year that we were very confident and that we were able to expand into new markets like Texas and Florida and being able to identify the right builder at the right price. That was going to be a great acceleration of our business, which is -- and has -- will result in the increase in both revenue, net income, and ROE at the end of the day, which will drive that shareholder value and hopefully, at the end of the day, drive that stock price.

We're also shaking off some of the SPAC, I would say, hanging over as part of this going public process for us. Obviously, you know that there has been a lot news about this, particularly with SEC, and the guidance that was given on warrants. There has been a lot of, I think, impact on that against SPACs or companies that de-SPACCED.

We've held up our own. I would say we've been pretty consistent. We also did something that certainly, I think, helps us as it relates to the public warrants that were previously outstanding of about 15 million. When we closed the transaction in the first quarter of January 7, we reduced the public warrants 10 to 1 and amended those warrants. So that reduces a lot of that hangover.

And as we continue to move away and run this as a regular public company and really shake off any of the SPAC, I think that we'll see in the -- hopefully see in the next sequential quarters here this improvement and hopefully improvement in stock price as our returns come through, and we deliver on our guidance.

And just a couple of more numbers questions. How many total warrants with management and from the original deal are outstanding at this point?

On the private warrants, we have roughly around 5.5 million.

Okay. So as you say, there are 46 million shares outstanding and 5.5 million warrants. And the debt and cash right now, that debt is what, $320 million and the cash is $190 million?

Correct.

And when does Vintage close?

It closed May 4.

And so those numbers don't include the Vintage transaction, I'm guessing.

Correct.

And that cost, what, 55 million?

It's $55 million plus we assumed $30 million in debt now.

Okay. So just pro forma for the Vintage transaction, we would have $350 million of debt and roughly $135 million of cash. Is that kind of in the ballpark of where we are right now?

In the ballpark.

Okay, great. Guys, great quarter and congratulations and good work. Thanks a lot.

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Ho for closing remark.

Thank you. I'd like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our second-quarter 2020 results in August. Thanks again for joining us.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.