LGI Homes, Inc. (NASDAQ: LGIH) today announced financial results
for the three months ended March 31, 2024.
First Quarter
2024 Highlights
- Home sales revenues of $390.9 million
- Home closings of 1,083
- Average sales price per home closed of $360,897
- Gross margin as a percentage of home sales revenues of
23.4%
- Adjusted gross margin (non-GAAP) as a percentage of home sales
revenues of 25.3%
- Net income before income taxes of $23.1 million
- Net income of $17.1 million, or $0.72 basic EPS and $0.72
diluted EPS
- Active selling communities at March 31, 2024 of 120
- Total owned and controlled lots of 70,145
- Ending backlog of 1,335 homes valued at $519.5 million
Please see “Non-GAAP Measures” for a
reconciliation of Adjusted Gross Margin (a non-GAAP measure) to
Gross Margin, the most directly comparable GAAP measure.
Balance Sheet Highlights
- 89,227 shares of common stock repurchased during the first
quarter of 2024 for an aggregate amount of $10.0 million
- Total liquidity of $491.5 million at March 31, 2024,
including cash and cash equivalents of $49.0 million and $442.5
million of availability under the Company’s revolving credit
facility
- Net debt to capitalization of 41.6% at March 31, 2024
Management Comments
“Although closings were down during the first
quarter, the positive lead and sales trends we experienced, along
with our success at expanding community count and maintaining
margins, give us confidence that demand remains healthy, supported
by positive, long-term fundamentals including strong demographic
trends and a limited supply of affordable homes,” said Eric Lipar,
Chairman and Chief Executive Officer of LGI Homes.
“Demand improved materially each month during
the quarter. The appointments and sales generated from those leads
enabled us to end the quarter with 1,335 homes in backlog.
“Along with increasing demand and sales, another
highlight was our success at managing costs and maintaining our
margins. We delivered a gross margin of 23.4%, up 310 basis points
compared to last year and in line with the fourth quarter of 2023,
and our adjusted gross margin was 25.3%, up 320 basis points over
last year and up 20 basis points sequentially.
“Finally, we ended the quarter with a record 120
active communities, an increase of 21.2% over the prior year. Our
teams around the country are doing an outstanding job getting new
communities online and actively selling, and in March, we opened 13
new communities that will be added to community count as they
deliver closings.”
Mr. Lipar concluded, “I am pleased to report
that the positive demand trends we experienced in the first quarter
carried over into April. As a result, we have generated over 800
net sales in each of the last two months, representing an
absorption pace of six homes, per community, per month. With this
significant momentum in leads and sales, supported by our growing
community count, well capitalized balance sheet, and inventory of
move-in ready homes, we are well-positioned to deliver on all of
the guidance expectations we set out for 2024.”
Full Year 2024 Outlook
Subject to the caveats in the Forward-Looking
Statements section of this press release and the assumptions noted
below, the Company is maintaining its prior guidance for the full
year 2024. The Company continues to expect:
- Home closings between 7,000 and 8,000
- Active selling communities at the end of 2024 of approximately
150
- Average sales price per home closed between $350,000 and
$360,000
- Gross margin as a percentage of home sales revenues between
23.1% and 24.1%
- Adjusted gross margin (non-GAAP) as a percentage of home sales
revenues between 25.0% and 26.0% with capitalized interest
accounting for substantially all of the difference between gross
margin and adjusted gross margin
- SG&A as a percentage of home sales revenues between 12.5%
and 13.5%
- Effective tax rate between 24.0% and 25.0%
This outlook assumes that general economic
conditions, including input costs, materials, product and labor
availability, interest rates and mortgage availability, in the
remainder of 2024 are similar to those experienced to date in 2024
and that construction costs, availability of land and land
development costs in the remainder of 2024 are consistent with the
Company’s recent experience. In addition, this outlook assumes that
governmental regulations relating to land development and home
construction are similar to those currently in place.
Earnings Conference Call
The Company will host a conference call via live
webcast for investors and other interested parties beginning at
12:30 p.m. Eastern Time on Tuesday, April 30, 2024 (the
“Earnings Call”).
Participants may access the live webcast by
visiting the Investor Relations section of the Company’s website at
www.investor.lgihomes.com.
An archive of the Earnings Call will be
available for replay on the Company’s website for one year from the
date of the Earnings Call.
About LGI Homes, Inc.
Headquartered in The Woodlands, Texas, LGI
Homes, Inc. is a pioneer in the homebuilding industry, successfully
applying an innovative and systematic approach to the design,
construction and sale of homes across 36 markets in 21 states. As
one of America’s fastest growing companies, LGI Homes has closed
over 70,000 homes since its founding in 2003 and has delivered
profitable financial results every year. Nationally recognized for
its quality construction and exceptional customer service, LGI
Homes was named to Newsweek’s list of the World’s Most Trustworthy
Companies. LGI Homes’ commitment to excellence extends to its more
than 1,000 employees, earning the Company numerous workplace awards
at the local, state and national level, including the Top
Workplaces USA 2024 Award. For more information about LGI Homes and
its unique operating model focused on making the dream of
homeownership a reality for families across the nation, please
visit the Company’s website at www.lgihomes.com.
Forward-Looking Statements
Any statements made in this press release or on
the Earnings Call that are not statements of historical fact,
including statements about the Company’s beliefs and expectations,
are forward-looking statements within the meaning of the federal
securities laws, and should be evaluated as such. Forward-looking
statements include information concerning recent net sales
experience, projected 2024 home closings, active selling
communities, average sales price per home closed, gross margin as a
percentage of home sales revenues, adjusted gross margin as a
percentage of homes sales revenues, SG&A as a percentage of
home sales revenues and effective tax rate, as well as market
conditions and possible or assumed future results of operations,
including descriptions of the Company’s business plan and
strategies. These forward-looking statements can be identified by
the use of forward-looking terminology, including the terms
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“forecast,” “goal,” “intend,” “may,” “objective,” “plan,”
“potential,” “predict,” “projection,” “should,” “will” or, in each
case, their negative, or other variations or comparable
terminology. For more information concerning factors that could
cause actual results to differ materially from those contained in
the forward-looking statements please refer to the “Risk Factors”
section in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2023, including the “Cautionary Statement
about Forward-Looking Statements” subsection within the “Risk
Factors” section, the “Risk Factors” and “Cautionary Statement
about Forward-Looking Statements” sections in the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2024
and subsequent filings by the Company with the Securities and
Exchange Commission. The Company bases these forward-looking
statements or projections on its current expectations, plans and
assumptions that it has made in light of its experience in the
industry, as well as its perceptions of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate under the circumstances and at such time.
As you read and consider this press release or listen to the
Earnings Call, you should understand that these statements are not
guarantees of future performance or results. The forward-looking
statements and projections are subject to and involve risks,
uncertainties and assumptions and you should not place undue
reliance on these forward-looking statements or projections.
Although the Company believes that these forward-looking statements
and projections are based on reasonable assumptions at the time
they are made, you should be aware that many factors could affect
the Company’s actual results to differ materially from those
expressed in the forward-looking statements and projections. The
Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. If the Company does update one or more
forward-looking statements, there should be no inference that it
will make additional updates with respect to those or other
forward-looking statements.
LGI HOMES, INC.CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands,
except share data) |
|
|
|
March 31, |
|
December 31, |
|
|
|
2024 |
|
|
|
2023 |
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
48,996 |
|
|
$ |
48,978 |
|
Accounts receivable |
|
|
27,151 |
|
|
|
41,319 |
|
Real estate inventory |
|
|
3,229,100 |
|
|
|
3,107,648 |
|
Pre-acquisition costs and deposits |
|
|
31,764 |
|
|
|
30,354 |
|
Property and equipment, net |
|
|
49,775 |
|
|
|
45,522 |
|
Other assets |
|
|
116,813 |
|
|
|
113,849 |
|
Deferred tax assets, net |
|
|
7,269 |
|
|
|
8,163 |
|
Goodwill |
|
|
12,018 |
|
|
|
12,018 |
|
Total assets |
|
$ |
3,522,886 |
|
|
$ |
3,407,851 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Accounts payable |
|
$ |
46,156 |
|
|
$ |
31,616 |
|
Accrued expenses and other liabilities |
|
|
224,307 |
|
|
|
271,872 |
|
Notes payable |
|
|
1,383,220 |
|
|
|
1,248,332 |
|
Total liabilities |
|
|
1,653,683 |
|
|
|
1,551,820 |
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
EQUITY |
|
|
|
|
Common stock, par value $0.01,
250,000,000 shares authorized, 27,596,140 shares issued and
23,567,441 shares outstanding as of March 31, 2024 and 27,521,120
shares issued and 23,581,648 shares outstanding as of December 31,
2023 |
|
|
276 |
|
|
|
275 |
|
Additional paid-in capital |
|
|
327,182 |
|
|
|
321,062 |
|
Retained earnings |
|
|
1,906,769 |
|
|
|
1,889,716 |
|
Treasury stock, at cost,
4,028,699 shares as of March 31, 2024 and 3,939,472 shares as
of December 31, 2023 |
|
|
(365,024 |
) |
|
|
(355,022 |
) |
Total equity |
|
|
1,869,203 |
|
|
|
1,856,031 |
|
Total liabilities and equity |
|
$ |
3,522,886 |
|
|
$ |
3,407,851 |
|
LGI HOMES, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except share and per share data) |
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Home sales revenues |
|
$ |
390,851 |
|
|
$ |
487,357 |
|
|
|
|
|
|
Cost of sales |
|
|
299,450 |
|
|
|
388,541 |
|
Selling expenses |
|
|
41,128 |
|
|
|
42,805 |
|
General and
administrative |
|
|
31,540 |
|
|
|
29,960 |
|
Operating income |
|
|
18,733 |
|
|
|
26,051 |
|
Other income, net |
|
|
(4,361 |
) |
|
|
(6,297 |
) |
Net income before income
taxes |
|
|
23,094 |
|
|
|
32,348 |
|
Income tax provision |
|
|
6,041 |
|
|
|
5,386 |
|
Net income |
|
$ |
17,053 |
|
|
$ |
26,962 |
|
Earnings per share: |
|
|
|
|
Basic |
|
$ |
0.72 |
|
|
$ |
1.15 |
|
Diluted |
|
$ |
0.72 |
|
|
$ |
1.14 |
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
Basic |
|
|
23,578,576 |
|
|
|
23,381,294 |
|
Diluted |
|
|
23,675,353 |
|
|
|
23,629,779 |
|
|
Non-GAAP Measures
In addition to the results reported in
accordance with accounting principles generally accepted in the
United States (“GAAP”), the Company has provided information in
this press release relating to adjusted gross margin.
Adjusted Gross Margin
Adjusted gross margin is a non-GAAP financial
measure used by management as a supplemental measure in evaluating
operating performance. The Company defines adjusted gross margin as
gross margin less capitalized interest and adjustments resulting
from the application of purchase accounting included in the cost of
sales. Management believes this information is useful because it
isolates the impact that capitalized interest and purchase
accounting adjustments have on gross margin. However, because
adjusted gross margin information excludes capitalized interest and
purchase accounting adjustments, which have real economic effects
and could impact results, the utility of adjusted gross margin
information as a measure of the Company’s operating performance may
be limited. In addition, other companies may not calculate adjusted
gross margin information in the same manner that the Company does.
Accordingly, adjusted gross margin information should be considered
only as a supplement to gross margin information as a measure of
the Company’s performance.
The following table reconciles adjusted gross
margin to gross margin, which is the GAAP financial measure that
management believes to be most directly comparable (dollars in
thousands, unaudited):
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Home sales revenues |
|
$ |
390,851 |
|
|
$ |
487,357 |
|
Cost of sales |
|
|
299,450 |
|
|
|
388,541 |
|
Gross margin |
|
|
91,401 |
|
|
|
98,816 |
|
Capitalized interest charged to cost of sales |
|
|
6,601 |
|
|
|
6,757 |
|
Purchase accounting adjustments (1) |
|
|
803 |
|
|
|
2,036 |
|
Adjusted gross margin |
|
$ |
98,805 |
|
|
$ |
107,609 |
|
Gross margin % (2) |
|
|
23.4 |
% |
|
|
20.3 |
% |
Adjusted gross margin %
(2) |
|
|
25.3 |
% |
|
|
22.1 |
% |
(1) |
Adjustments result from the application of purchase accounting for
acquisitions and represent the amount of the fair value step-up
adjustments included in cost of sales for real estate inventory
sold after the acquisition dates. |
(2) |
Calculated as a percentage of
home sales revenues. |
|
|
Home Sales Revenues, Home Closings, Average Sales Price
Per Home Closed (ASP), Average Community Count, Average Monthly
Absorption Rate and Closing Community Count by Reportable
Segment
(Revenues in thousands,
unaudited)
|
|
Three Months Ended March 31, 2024 |
|
As of March 31, 2024 |
Reportable Segment |
|
Revenues |
|
Home Closings |
|
ASP |
|
Average Community Count |
|
AverageMonthlyAbsorption
Rate |
|
Community Count at End of Period |
Central |
|
$ |
103,736 |
|
319 |
|
$ |
325,191 |
|
41.7 |
|
2.5 |
|
43 |
Southeast |
|
|
116,445 |
|
355 |
|
|
328,014 |
|
26.7 |
|
4.4 |
|
27 |
Northwest |
|
|
36,067 |
|
62 |
|
|
581,726 |
|
12.0 |
|
1.7 |
|
14 |
West |
|
|
73,079 |
|
179 |
|
|
408,263 |
|
17.0 |
|
3.5 |
|
17 |
Florida |
|
|
61,524 |
|
168 |
|
|
366,214 |
|
19.3 |
|
2.9 |
|
19 |
Total |
|
$ |
390,851 |
|
1,083 |
|
$ |
360,897 |
|
116.7 |
|
3.1 |
|
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
As of March 31, 2023 |
Reportable Segment |
|
Revenues |
|
Home Closings |
|
ASP |
|
Average Community Count |
|
Average MonthlyAbsorption
Rate |
|
Community Count at End of Period |
Central |
|
$ |
150,380 |
|
453 |
|
$ |
331,965 |
|
35.0 |
|
4.3 |
|
35 |
Southeast |
|
|
104,376 |
|
316 |
|
|
330,304 |
|
24.0 |
|
4.4 |
|
24 |
Northwest |
|
|
74,815 |
|
159 |
|
|
470,535 |
|
9.3 |
|
5.7 |
|
10 |
West |
|
|
78,886 |
|
209 |
|
|
377,445 |
|
13.4 |
|
5.2 |
|
14 |
Florida |
|
|
78,900 |
|
229 |
|
|
344,541 |
|
16.0 |
|
4.8 |
|
16 |
Total |
|
$ |
487,357 |
|
1,366 |
|
$ |
356,777 |
|
97.7 |
|
4.7 |
|
99 |
|
Owned and Controlled Lots
The table below shows (i) home closings by
reportable segment for the three months ended March 31, 2024
and (ii) the Company’s owned or controlled lots by reportable
segment as of March 31, 2024.
|
|
Three Months Ended March 31, 2024 |
|
As of March 31, 2024 |
Reportable Segment |
|
Home Closings |
|
Owned (1) |
|
Controlled |
|
Total |
Central |
|
319 |
|
20,840 |
|
2,279 |
|
23,119 |
Southeast |
|
355 |
|
14,191 |
|
4,720 |
|
18,911 |
Northwest |
|
62 |
|
5,500 |
|
2,141 |
|
7,641 |
West |
|
179 |
|
9,068 |
|
3,031 |
|
12,099 |
Florida |
|
168 |
|
5,164 |
|
3,211 |
|
8,375 |
Total |
|
1,083 |
|
54,763 |
|
15,382 |
|
70,145 |
(1) |
Of the 54,763 owned lots as of March 31, 2024, 39,601
were raw/under development lots and 15,162 were finished lots.
Finished lots included 2,154 completed homes, including information
centers, and 2,000 homes in progress. |
|
Backlog Data
As of the dates set forth below, the Company’s
net orders, cancellation rate and ending backlog homes and value
were as follows (dollars in thousands, unaudited):
Backlog
Data |
|
Three Months Ended March 31, |
2024 (4) |
|
2023 (5) |
Net orders (1) |
|
|
1,828 |
|
|
|
2,219 |
|
Cancellation rate (2) |
|
|
16.8 |
% |
|
|
15.9 |
% |
Ending backlog – homes (3) |
|
|
1,335 |
|
|
|
1,555 |
|
Ending backlog – value (3) |
|
$ |
519,507 |
|
|
$ |
561,422 |
|
(1) |
Net orders are new (gross) orders for the purchase of homes during
the period, less cancellations of existing purchase contracts
during the period. |
(2) |
Cancellation rate for a period is
the total number of purchase contracts cancelled during the period
divided by the total new (gross) orders for the purchase of homes
during the period. |
(3) |
Ending backlog consists of retail
homes at the end of the period that are under a purchase contract
that has been signed by homebuyers who have met preliminary
financing criteria but have not yet closed and wholesale contracts
with varying terms. Ending backlog is valued at the contract
amount. |
(4) |
As of March 31, 2024, the
Company had 178 units related to bulk sales agreements associated
with its wholesale business. |
(5) |
As of March 31, 2023, the
Company had 130 units related to bulk sales agreements associated
with its wholesale business. |
CONTACT: |
Joshua D. FattorExecutive Vice President of Investor Relations and
Capital Markets(281) 210-2586investorrelations@lgihomes.com |
Grafico Azioni LGI Homes (NASDAQ:LGIH)
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