EX-99.1 2 e6181_ex99-1.htm EXHIBIT 99.1

 

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

On April 1, 2024, Landsea Homes Corporation (together with its subsidiaries, “Landsea Homes” or the “Company”) completed the previously announced acquisition of Antares (“Antares Acquisition”) for approximately $239.8 million (subject to certain customary post-closing adjustments) using a combination of cash on hand and borrowings under the Company’s existing credit facility, which included repayment of approximately $40.2 million of Antares debt. The following unaudited pro forma condensed combined financial information presents the combination of the financial information of the Company and Antares, adjusted to give effect to the completion of the Antares Acquisition. The unaudited pro forma condensed combined balance sheet as of September 30, 2024 is not presented as the Antares Acquisition is reflected in the Company’s historical unaudited consolidated balance sheet as of September 30, 2024.

 

The unaudited pro forma condensed combined financial information has been prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the Securities and Exchange Commission (“SEC”) on May 20, 2020. The unaudited pro forma condensed combined financial information is presented as follows:

 

·The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2024 was prepared based on (i) the historical unaudited consolidated statement of operations of Company for the nine months ended September 30, 2024 and (ii) the historical unaudited consolidated statement of operations of Antares for the three months ended March 31, 2024.

 

·The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 was prepared based on (i) the historical audited consolidated statement of operations of Company for the year ended December 31, 2023, (ii) the historical audited consolidated statement of operations of Antares for the year ended December 31, 2023.

 

The historical financial statements of the Company and Antares have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events which are necessary to account for the Antares Acquisition, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The historical combined financial information of the Company has been adjusted in the unaudited pro forma condensed financial information to give effect to pro forma events that are: (i) directly attributable to the Antares Acquisition, (ii) factually supportable, and (iii) with respect to the statements of operations, are expected to have a continuing effect on the combined operating results. In the opinion of management, all adjustments necessary to present fairly the pro forma financial information have been reflected. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed financial information.

 

The Antares Acquisition was accounted for as a business combination using the acquisition method, with Landsea Homes as the accounting acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under this method of accounting, the total consideration was allocated to Antares’ assets acquired and liabilities assumed based upon their estimated fair values at the consummation of the Antares Acquisition on April 1, 2024 (“closing date”). Any differences between the fair value of the consideration transferred and the fair value of the assets acquired, and liabilities assumed, were recorded as goodwill. The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is preliminary and thus subject to adjustment and may vary materially from the final purchase price allocation that will be completed within the measurement period, but in no event later than one year following the closing date.

 

The following unaudited pro forma condensed combined financial information have been prepared to give effect to the Antares Acquisition and related financing, which includes adjustments for the following:

 

·Certain reclassifications to conform Antares’ historical financial statement presentation to Landsea Homes’ presentation;

 

·Application of the acquisition method of accounting under the provisions of ASC 805 and to reflect estimated consideration of approximately $239.8 million; and

 

·Proceeds of Senior Notes offered and sold by Landsea Homes to finance the Antares Acquisition and the settlement of a portion of outstanding borrowings under Landsea Homes’ existing revolving credit facility.

 

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2024
(dollars in thousands, except share and per share data)

 

   For the Nine Months Ended September 30, 2024  For the Three Months Ended March 31, 2024               
   Landsea Homes  Antares Adjusted
(Note 2)		  Transaction Accounting Adjustments     Financing Adjustments     Pro Forma Combined
Revenue                                   
Home sales  $1,036,384   $42,656    —         —        $1,079,040 
Lot sales and other   27,272    —    —         —         27,272 
Total revenue   1,063,656    42,656    —         —         1,106,312 
Cost of sales                                   
Home sales   874,724    32,593    (6,381)   AA    7,145     EE     903,198 
              (1,098)   CC    (3,785)   FF      
Lot sales and other   22,478    —    —         —         22,478 
Total cost of sales   897,202    32,593    (7,479)        3,360         925,676 
Gross margin   166,454    10,063    7,479         (3,360)        180,636 
Operating expenses                                   
Sales and marketing expenses   66,596    2,515    —         —         69,111 
General and administrative expenses   77,569    2,237    (435)   BB    —         79,371 
Total Operating expenses   144,165    4,752    (435)        —         148,482 
Income from operations   22,289    5,311    7,914         (3,360)        32,154 
Other (expense) income, net   (2,091)   43    —         —         (2,048)
Pretax income   20,198    5,354    7,914         (3,360)        30,106 
(Benefit) Provision for income taxes   4,838    75    1,662    DD    (706)    GG    5,869 
Net income   15,360    5,279    6,252         (2,654)        24,237 
Net income attributable to non-controlling interests   1,175    —    —         —         1,175 
Net income attributable to Landsea Homes  $14,185   $5,279   $6,252        $(2,654)       $23,062 
                                    
Income per share:   —    —    —         —         — 
Basic  $0.39         —         —        $0.64 
Diluted  $0.39         —         —        $0.63 
Weighted average common shares outstanding:             —         —           
Basic   36,252,957         —         —         36,252,957 
Diluted   36,548,768         —         —         36,548,768 

 

See accompanying notes to unaudited pro forma condensed combined financial information.

 

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Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2023
(dollars in thousands, except share and per share data)
                      
   For the Year Ended December 31, 2023  For the Year Ended December 31, 2023               
   Landsea Homes  Antares Adjusted
(Note 2)		  Transaction Accounting Adjustments     Financing Accounting Adjustments     Pro Forma Combined
Revenue                                   
Home sales  $1,169,867   $171,142    —         —        $1,341,009 
Lot sales and other   40,080    —    —         —         40,080 
Total revenue   1,209,947    171,142    —         —         1,381,089 
Cost of sales                                   
Home sales   967,034    129,551    28,366    AA    28,581    EE    1,134,327 
              (4,729)   CC    (14,476)   FF      
Lot sales and other   27,939    —    —         —         27,939 
Total cost of sales   994,973    129,551    23,637         14,105         1,162,266 
Gross margin   214,974    41,591    (23,637)        (14,105)        218,823 
Operating expenses                                   
Sales and marketing expenses   73,248    11,539    —         —         84,787 
General and administrative expenses   101,442    10,082    1,590    BB    —         113,134 
Total Operating expenses   174,690    21,621    1,590         —         197,901 
Income from operations   40,284    19,970    (25,227)        (14,105)        20,922 
Other income, net   4,261    98    —         —         4,359 
Pretax income   44,545    20,068    (25,227)        (14,105)        25,281 
(Benefit) Provision for income taxes   11,895    372    (5,298)   DD    (2,962)    GG     4,007 
Net income   32,650    19,696    (19,929)        (11,143)        21,274 
Net income attributable to non-controlling interests   3,414    —    —         —         3,414 
Net (loss) income attributable to Landsea Homes  $29,236   $19,696   $(19,929)       $(11,143)       $17,860 
                                    
Income per share:   —    —    —         —         — 
Basic  $0.75         —         —        $0.46 
Diluted  $0.75         —         —        $0.46 
Weighted average common shares outstanding:             —         —           
Basic   38,885,003         —         —         38,885,003 
Diluted   39,076,322         —         —         39,076,322 

 

See accompanying notes to unaudited pro forma condensed combined financial information.

 

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Notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

1. Basis of Presentation

 

The unaudited pro forma condensed combined financial information has been prepared by Landsea Homes in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 20, 2020.

 

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Landsea Homes as the accounting acquirer and based on the historical consolidated financial statements of Landsea Homes and Antares. Under ASC 805, assets acquired, and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with a business combination are expensed as incurred. The excess of purchase consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

 

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2024 and year ended December 31, 2023, gives effect to the Antares Acquisition and related financing as if they occurred on January 1, 2023.

 

The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the Antares Acquisition and integration costs that may be incurred. The pro forma adjustments represent Landsea Homes’ best estimates and are based upon currently available information and certain assumptions that Landsea Homes believes are reasonable under the circumstances.

 

2. Accounting Policies and Reclassification Adjustments

 

The accounting policies used in the preparation of these unaudited pro forma condensed combined financial information are those set out in Landsea Homes’ audited consolidated financial statements as of and for the year ended December 31, 2023, and subsequent interim period. Landsea Homes performed a preliminary review of Antares’ accounting policies to determine whether any adjustments were necessary to ensure comparability in the unaudited pro forma condensed combined financial information. Certain FSLI reclassifications have been reflected in the pro forma adjustments to conform Antares’ presentation to Landsea Homes’ presentation in the unaudited pro forma condensed combined financial information.

 

Reclassification adjustments that have been made to the historical presentation of Antares to conform to the financial statement presentation of Landsea Homes are as follows:

 

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Unaudited Pro Forma Condensed Combined Statement of Operations – Three months ended March 31, 2024

 

Landsea Homes  Antares  Antares Historical  Reclassification Adjustments  Notes  Antares Historical Adjusted
      (dollars in thousands)      
 Revenue                     
 Home sales   Homebuilding Revenues, Net  $42,656           $42,656 
 Lot sales and other                   — 
 Total revenues      42,656    —       42,656 
                      
 Cost of sales                     
 Home sales           32,593    (a), (b), (e)   32,593 
    Direct house costs   23,446    (23,446)   (a)   — 
    Interest   807    (807)   (a)   — 
    Indirect house costs   299    (299)   (a)   — 
 Lot sales and other                   — 
    Lot costs   7,680    (7,680)   (b)   — 
    Closing costs   70    (70)   (b)   — 
 Total cost of sales      32,302    291       32,593 
 Gross margin      10,354    (291)      10,063 
                      
 Sales and marketing expenses           2,515   (c),(d)   2,515 
 General and administrative expenses           2,237    (d)   2,237 
    Selling, general and administrative expenses   5,043    (1,816)   (c)   — 
            (2,936)   (d)     
            (291)   (e)     
 Total operating expenses      5,043    (291)      4,752 
 Income from operations      5,311    —       5,311 
                      
 Other income, net   Other income   43            43 
 Pretax income      5,354    —       5,354 
                      
 Provision for income taxes           75    (f)   75 
    State income tax, current   75    (75)   (f)   — 
 Net income      5,279    —       5,279 
 Net income attributable to non-controlling interests                   — 
 Net income attributable to Landsea Homes     $5,279   $—      $5,279 

 

(a) Adjustment to reclassify Antares’ Direct house costs, Interest and Indirect house costs to Home sales (Cost of sales)
(b) Adjustment to reclassify Antares’ Lot costs, Closing costs to Home sales (Cost of sales)
(c) Adjustment to reclassify Antares’ Commission expense to Sales and marketing expenses
(d) Adjustment to reclassify Antares’ Selling, general and administrative expenses to Sales and marketing expenses and General and administrative expenses
(e) Adjustment to reclassify Antares’ Spec interest expense and Model interest expense to Home sales (Cost of sales)
(f) Adjustment to reclassify Antares’ State income tax, current to Provision for income taxes

 

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Unaudited Pro Forma Condensed Combined Statement of Operations – Year ended December 31, 2023

 

Landsea Homes  Antares  Antares Historical  Reclassification Adjustments  Notes  Antares Historical Adjusted
      (dollars in thousands)      
 Revenue                     
 Home sales   Homebuilding Revenues, Net  $171,142           $171,142 
 Lot sales and other                   — 
 Total revenues      171,142    —       171,142 
                      
 Cost of sales                     
 Home sales           129,551    (a), (b), (e)   129,551 
    Direct house costs   92,915    (92,915)   (a)   — 
    Interest   3,629    (3,629)   (a)   — 
    Indirect house costs   1,376    (1,376)   (a)   — 
 Lot sales and other                   — 
    Lot costs   30,251    (30,251)   (b)   — 
    Closing costs   281    (281)   (b)   — 
 Total cost of sales      128,452    1,099       129,551 
 Gross margin      42,690    (1,099)      41,591 
                      
 Sales and marketing expenses           11,539    (c),(d)   11,539 
 General and administrative expenses           10,082    (d)   10,082 
    Selling, general and administrative expenses   22,720    (7,442)   (c)   — 
            (14,179)   (d)     
            (1,099)   (e)     
 Total operating expenses      22,720    (1,099)      21,621 
 Income from operations      19,970    —       19,970 
                      
 Other income, net   Other income   98            98 
 Pretax income      20,068    —       20,068 
                      
 Provision for income taxes           372    (f)   372 
    State income tax, current   372    (372)   (f)   — 
 Net income      19,696    —       19,696 
 Net income attributable to non-controlling interests                   — 
 Net income attributable to Landsea Homes     $19,696   $—      $19,696 

 

(a) Adjustment to reclassify Antares’ Direct house costs, Interest and Indirect house costs to Home sales (Cost of sales)
(b) Adjustment to reclassify Antares’ Lot costs, Closing costs to Home sales (Cost of sales)
(c) Adjustment to reclassify Antares’ Commission expense to Sales and marketing expenses
(d) Adjustment to reclassify Antares’ Selling, general and administrative expenses to Sales and marketing expenses and General and administrative expenses
(e) Adjustment to reclassify Antares’ Spec interest expense and Model interest expense to Home sales (Cost of sales)
(f) Adjustment to reclassify Antares’ State income tax, current to Provision for income taxes

 

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3. Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations

 

Transaction Accounting Adjustments

 

(AA) To record an increase to cost of sales of $28.4 million related to the inventory fair value step up on Homes completed or under construction and Land held or under development for the year ended December 31, 2023 and reversal of $6.4 million representing the impact for inventory fair value step up sold post close of the Antares Acquisition that is already recognized in the historicals for the nine months ended September 30, 2024 by Landsea Homes. The Company will recognize the increased value of inventory in cost of sales as the acquired inventory is sold, which for purposes of these unaudited pro forma condensed combined financial information is expected to occur within the first year of Antares Acquisition. The Company does not expect the inventory step-up to affect its income statement beyond 12 months after the closing date.

 

(BB) To record the incremental amortization expense on a straight-line basis related to the fair value step up on the acquired intangible assets of $1.6 million for the year ended December 31, 2023 and $0.4 million for the nine months ended September 30, 2024, offset by $0.8 million already recognized in the historicals for the nine months ended September 30, 2024 by Landsea Homes.

 

(CC) To record the elimination of historical interest expense and amortization cost related to Antares’ debt that was paid off by Landsea Homes as part of the consideration for the Antares Acquisition.

 

(DD) To record the income tax effect of the pro forma transaction accounting adjustments using the statutory tax rate of 21%. This does not necessarily reflect the amount that would have resulted had Landsea Homes, following the consummation of the Antares Acquisition, filed consolidated income tax returns during the periods presented.

 

Financing Adjustments

 

(EE) To record an adjustment to interest expense resulting from the offering and sale of Senior Notes by Landsea Homes, as well as amortization of the associated debt issuance costs.

 

(FF) To record an adjustment to remove the interest expense on account of settlement of a portion of outstanding borrowings under the existing revolving credit facility included in Landsea Homes’ historical consolidated statements of operations.

 

(GG) To record the income tax effect of the pro forma financing adjustments using the statutory tax rate of 21%. This does not necessarily reflect the amount that would have resulted had Landsea Homes, following the consummation of the Antares Acquisition, filed consolidated income tax returns during the periods presented.

 

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4. Earnings Per Share

 

The following table sets forth the computation of pro forma basic and diluted earnings per share for the nine months ended September 30, 2024 and year ended December 31, 2023.

 

(in thousands, except share and per share data)  For the nine months ended September 30, 2024  For the year ended December 31, 2023
Numerator:          
Net income - basic and diluted  $23,062   $17,860 
           
Denominator:          
Weighted average shares outstanding          
Basic   36,252,957    38,885,003 
Diluted   36,548,768    39,076,322 
           
Pro forma net income per share:          
Basic  $0.64   $0.46 
Diluted  $0.63   $0.46 

 

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