LGI Homes, Inc. (Nasdaq:LGIH) today announced results for the
fourth quarter and the twelve months ended December 31, 2017.
Fourth Quarter 2017 Results and
Comparisons to Fourth Quarter 2016
- Net Income increased 53.6% to $35.6 million, or $1.65 Basic EPS
and $1.43 Diluted EPS
- Net Income Before Income Taxes increased 57.5% to $55.0
million
- Home Sales Revenues increased 71.0% to $405.0 million
- Home Closings increased 61.9% to 1,844 homes
- Average Home Sales Price increased 5.6% to $219,618
- Gross Margin as a Percentage of Homes Sales Revenues was 24.4%
as compared to 27.2%
- Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales
Revenues was 25.8% as compared to 28.5%
- Active Selling Communities at December 31, 2017 increased
to 78 from 63
- 39,709 Total Owned and Controlled Lots at December 31,
2017
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.
Full Year 2017 Results and Comparisons
to Full Year 2016
- Net Income increased 51.0% to $113.3 million, or $5.24 Basic
EPS and $4.73 Diluted EPS
- Net Income Before Income Taxes increased 50.8% to $171.4
million
- Home Sales Revenues increased 50.1% to $1.3 billion
- Home Closings increased 40.4% to 5,845 homes
- Average Home Sales Price increased 6.9% to $215,220
- Gross Margin as a Percentage of Homes Sales Revenues was 25.5%
as compared to 26.4%
- Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales
Revenues was 26.9% as compared to 27.8%
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.
Management Comments
“2017 was another year of outstanding performance for LGI
Homes,” said Eric Lipar, the Company's Chief Executive Officer
and Chairman of the Board. “Our fourth quarter provided a solid
finish with a record-breaking 5,845 homes closed for the year,
achieving significant growth in revenues and active community
count, and increasing basic earnings per share more than 45% over
the prior year.”
“As we turn our attention to 2018, we remain focused on
delivering strong results. Ending January 2018 with home closings
up 61% year-over-year, we believe we are poised to see continued
growth in 2018 and believe we are well positioned to increase our
revenues, community count and earnings per share, allowing LGI
Homes to achieve our long-term goals and objectives of market
leading returns for our stockholders. For the year, we expect to
close between 6,000 and 7,000 homes and believe basic EPS will be
in the range of $6.00 to $7.00 per share,” Lipar concluded.
2017 Fourth Quarter Results
Home closings during the fourth quarter of 2017
increased 61.9% to 1,844 from 1,139 during the fourth quarter of
2016. Active selling communities increased to 78 at the end of the
fourth quarter of 2017, up from 63 communities at the end of the
fourth quarter of 2016.
Home sales revenues for the fourth quarter of
2017 were $405.0 million, an increase of $168.1 million, or 71.0%
over the fourth quarter of 2016. The increase in home sales
revenues is due to both the increase in the number of homes closed
and an increase in the average home sales price.
The average home sales price was $219,618 for
the fourth quarter of 2017, an increase of 5.6% over the fourth
quarter of 2016. This increase is largely attributable to changes
in product mix, price points in new markets, and a favorable
pricing environment.
Gross margin as a percentage of home sales
revenues for the fourth quarter of 2017 was 24.4% as compared to
27.2% for the fourth quarter of 2016. Adjusted gross margin
(non-GAAP) as a percentage of home sales revenues for the fourth
quarter of 2017 was 25.8% as compared to 28.5% for the fourth
quarter of 2016. This decrease is primarily due to a combination of
increased home production and higher construction and lot costs
partially offset by higher average home sales prices. Please see
“Non-GAAP Measures” for a reconciliation of adjusted gross margin
(non-GAAP) to gross margin, the most comparable GAAP measure.
Net income of $35.6 million, or $1.65 per basic
share and $1.43 per diluted share, for the fourth quarter of 2017
increased $12.4 million, or 53.6%, from $23.2 million for the
fourth quarter of 2016. This increase is primarily attributable to
the 61.9% increase in homes closed, the 5.6% increase in average
home sales price, and operating leverage realized related to
selling, general, and administrative expenses.
2017 Full Year Results
Home closings for the twelve months ended
December 31, 2017 increased 40.4% to 5,845 from 4,163 during
the twelve months ended December 31, 2016.
Home sales revenues for the twelve months ended
December 31, 2017 increased 50.1% to $1.3 billion compared to
the twelve months ended December 31, 2016. The increase in
home sales revenues is primarily due to the increase in the number
of homes closed and an increase in the average home sales
price.
The average home sales price was $215,220 for
the twelve months ended December 31, 2017, an increase of
$13,846, or 6.9%, over the twelve months ended December 31,
2016. This increase is largely attributable to changes in product
mix, higher price points in certain new markets, and a favorable
pricing environment.
Gross margin as a percentage of home sales
revenues for the twelve months ended December 31, 2017 was
25.5% as compared to 26.4% for the twelve months ended
December 31, 2016. Adjusted gross margin (non-GAAP) as a
percentage of home sales revenues for the twelve months ended
December 31, 2017 was 26.9% as compared to 27.8% for the
twelve months ended December 31, 2016. This decrease is
primarily due to a combination of higher construction costs and lot
costs partially offset by higher average home sales price, and to a
lesser extent due to 201 wholesale home closings during the twelve
months ended December 31, 2017. Please see “Non-GAAP
Measures” for a reconciliation of adjusted gross margin (non-GAAP)
to gross margin, the most comparable GAAP measure.
Net income of $113.3 million, or $5.24 per basic
share and $4.73 per diluted share, for the twelve months ended
December 31, 2017 increased $38.3 million, or 51.0%, from
$75.0 million for the twelve months ended December 31, 2016.
This increase is primarily attributable to the 40.4% increase in
homes closed, a higher average sales price and improved operating
leverage realized in 2017 related to selling, general, and
administrative expenses.
Outlook
Subject to the caveats in the Forward-Looking
Statements section of this press release, the Company offers the
following guidance for 2018. The Company believes it will have
between 85 and 90 active selling communities at the end of 2018,
close between 6,000 and 7,000 homes in 2018, and generate basic EPS
between $6.00 and $7.00 per share during 2018. In addition, the
Company believes 2018 gross margin as a percentage of home sales
revenues will be in the range of 24.0% and 26.0% and 2018 adjusted
gross margin (non-GAAP) as a percentage of home sales revenues will
be in the range of 25.5% and 27.5% with capitalized interest
accounting for substantially all of the difference between gross
margin and adjusted gross margin. The Company also believes that
the average home sales price in 2018 will be between $220,000 and
$230,000. This outlook assumes that general economic conditions,
including interest rates and mortgage availability, in the
remainder of 2018 are similar to those in the first quarter of 2018
and that average home sales price, construction costs, availability
of land, land development costs and overall absorption rates for
2018 are consistent with the Company’s recent experience.
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, February 27, 2018 (the
“Earnings Call”). The Earnings Call will be hosted by Eric Lipar,
Chief Executive Officer and Chairman of the Board, and Charles
Merdian, Chief Financial Officer.
Participants may access the live webcast by
visiting the Investor Relations section of the Company’s website at
www.LGIHomes.com. The Earnings Call can also be accessed by dialing
(855) 433-0929, or (970) 315-0256 for international
participants.
An archive of the webcast will be available on
the Company’s website for approximately 12 months. A replay of the
Earnings Call will also be available later that day by calling
(855) 859-2056, or (404) 537-3406, using conference id “8099895”.
This replay will be available until March 6, 2018.
About LGI Homes, Inc.
Headquartered in The Woodlands, Texas, LGI
Homes, Inc. engages in the design, construction and sale of homes
in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North
Carolina, South Carolina, Washington, Tennessee and Minnesota. The
Company has a notable legacy of more than 14 years of homebuilding
operations, over which time it has closed over 22,000 homes. For
more information about the Company and its new home developments
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 projected 2018 home
closings, year-end selling communities, basic earnings per share,
gross margins as a percentage of home sales revenues, adjusted
gross margins as a percentage of home sales revenue and average
home sales price, 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, 2017,
including the “Cautionary Statement about Forward-Looking
Statements” subsection within the “Risk Factors” section, 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 |
(In thousands, except share data) |
|
|
|
December 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
ASSETS |
|
|
|
|
Cash and
cash equivalents |
|
$ |
67,571 |
|
|
$ |
49,518 |
|
Accounts
receivable |
|
44,706 |
|
|
17,055 |
|
Real
estate inventory |
|
918,933 |
|
|
717,681 |
|
Pre-acquisition costs and deposits |
|
18,866 |
|
|
10,651 |
|
Property
and equipment, net |
|
1,674 |
|
|
1,960 |
|
Other
assets |
|
14,196 |
|
|
5,631 |
|
Deferred
tax assets, net |
|
1,928 |
|
|
— |
|
Goodwill |
|
12,018 |
|
|
12,018 |
|
Total
assets |
|
$ |
1,079,892 |
|
|
$ |
814,514 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Accounts
payable |
|
$ |
12,020 |
|
|
$ |
12,277 |
|
Accrued
expenses and other liabilities |
|
102,831 |
|
|
46,389 |
|
Deferred
tax liabilities, net |
|
— |
|
|
164 |
|
Notes
payable |
|
475,195 |
|
|
400,483 |
|
Total
liabilities |
|
590,046 |
|
|
459,313 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
EQUITY |
|
|
|
|
Common
stock, par value $0.01, 250,000,000 shares authorized, 22,845,580
shares issued and 21,845,580 shares outstanding as of December 31,
2017 and 22,311,310 shares issued and 21,311,310 shares outstanding
as of December 31, 2016 |
|
228 |
|
|
223 |
|
Additional paid-in capital |
|
229,680 |
|
|
208,346 |
|
Retained
earnings |
|
276,488 |
|
|
163,182 |
|
Treasury
stock, at cost, 1,000,000 shares |
|
(16,550 |
) |
|
(16,550 |
) |
Total
equity |
|
489,846 |
|
|
355,201 |
|
Total
liabilities and equity |
|
$ |
1,079,892 |
|
|
$ |
814,514 |
|
LGI HOMES, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except share and per share
data) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(unaudited) |
|
|
|
|
Home sales
revenues |
|
$ |
404,975 |
|
|
$ |
236,830 |
|
|
$ |
1,257,960 |
|
|
$ |
838,320 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
306,298 |
|
|
172,502 |
|
|
937,540 |
|
|
616,707 |
|
Selling expenses |
|
28,639 |
|
|
18,019 |
|
|
94,957 |
|
|
66,984 |
|
General and
administrative |
|
15,286 |
|
|
12,003 |
|
|
55,662 |
|
|
43,158 |
|
Operating
income |
|
54,752 |
|
|
34,306 |
|
|
169,801 |
|
|
111,471 |
|
Other income, net |
|
(289 |
) |
|
(641 |
) |
|
(1,601 |
) |
|
(2,201 |
) |
Net
income before income taxes |
|
55,041 |
|
|
34,947 |
|
|
171,402 |
|
|
113,672 |
|
Income tax
provision |
|
19,401 |
|
|
11,742 |
|
|
58,096 |
|
|
38,641 |
|
Net
income |
|
$ |
35,640 |
|
|
$ |
23,205 |
|
|
$ |
113,306 |
|
|
$ |
75,031 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.65 |
|
|
$ |
1.09 |
|
|
$ |
5.24 |
|
|
$ |
3.61 |
|
Diluted |
|
$ |
1.43 |
|
|
$ |
1.01 |
|
|
$ |
4.73 |
|
|
$ |
3.41 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
21,783,604 |
|
|
21,290,257 |
|
|
21,604,932 |
|
|
20,798,333 |
|
Diluted |
|
24,992,512 |
|
|
22,878,789 |
|
|
23,933,122 |
|
|
22,024,091 |
|
Non-GAAP Measures
In addition to the results reported in
accordance with U.S. GAAP, the Company has provided information in
this press release relating to 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 the Company’s 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):
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Home sales
revenues |
|
$ |
404,975 |
|
|
$ |
236,830 |
|
|
$ |
1,257,960 |
|
|
$ |
838,320 |
|
Cost of sales |
|
306,298 |
|
|
172,502 |
|
|
937,540 |
|
|
616,707 |
|
Gross margin |
|
98,677 |
|
|
64,328 |
|
|
320,420 |
|
|
221,613 |
|
Capitalized interest charged to cost of sales |
|
5,852 |
|
|
3,249 |
|
|
17,400 |
|
|
10,680 |
|
Purchase
accounting adjustments (a) |
|
20 |
|
|
31 |
|
|
246 |
|
|
485 |
|
Adjusted gross
margin |
|
$ |
104,549 |
|
|
$ |
67,608 |
|
|
$ |
338,066 |
|
|
$ |
232,778 |
|
Gross margin % (b) |
|
24.4 |
% |
|
27.2 |
% |
|
25.5 |
% |
|
26.4 |
% |
Adjusted gross margin %
(b) |
|
25.8 |
% |
|
28.5 |
% |
|
26.9 |
% |
|
27.8 |
% |
(a) 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.
(b) Calculated as a percentage of home sales revenues.
Home Sales Revenues and Closings by Division |
|
(Revenues in thousands) |
|
|
|
Three Months Ended December 31, |
|
|
2017 |
|
2016 |
|
|
Revenues |
|
Closings |
|
ASP |
|
Revenues |
|
Closings |
|
ASP |
Central |
|
$ |
161,897 |
|
|
789 |
|
|
$ |
205,193 |
|
|
$ |
120,180 |
|
|
595 |
|
|
$ |
201,983 |
|
Southwest |
|
80,651 |
|
|
307 |
|
|
262,707 |
|
|
46,645 |
|
|
192 |
|
|
242,943 |
|
Southeast |
|
49,757 |
|
|
263 |
|
|
189,190 |
|
|
28,342 |
|
|
157 |
|
|
180,522 |
|
Florida |
|
70,388 |
|
|
358 |
|
|
196,615 |
|
|
34,364 |
|
|
173 |
|
|
198,636 |
|
Northwest |
|
41,475 |
|
|
124 |
|
|
334,476 |
|
|
7,299 |
|
|
22 |
|
|
331,773 |
|
Midwest |
|
807 |
|
|
3 |
|
|
269,000 |
|
|
— |
|
|
— |
|
|
— |
|
Total home sales
revenue |
|
$ |
404,975 |
|
|
1,844 |
|
|
$ |
219,618 |
|
|
$ |
236,830 |
|
|
1,139 |
|
|
$ |
207,928 |
|
|
|
Year Ended December 31, |
|
|
2017 |
|
2016 |
|
|
Revenues |
|
Closings |
|
ASP |
|
Revenues |
|
Closings |
|
ASP |
Central |
|
$ |
532,447 |
|
|
2,613 |
|
|
$ |
203,768 |
|
|
$ |
429,505 |
|
|
2,143 |
|
|
$ |
200,422 |
|
Southwest |
|
243,037 |
|
|
942 |
|
|
258,001 |
|
|
165,017 |
|
|
737 |
|
|
223,904 |
|
Southeast |
|
183,422 |
|
|
973 |
|
|
188,512 |
|
|
111,651 |
|
|
635 |
|
|
175,828 |
|
Florida |
|
199,733 |
|
|
1,014 |
|
|
196,975 |
|
|
115,276 |
|
|
595 |
|
|
193,741 |
|
Northwest |
|
98,514 |
|
|
300 |
|
|
328,380 |
|
|
16,871 |
|
|
53 |
|
|
318,321 |
|
Midwest |
|
807 |
|
|
3 |
|
|
269,000 |
|
|
— |
|
|
— |
|
|
— |
|
Total home sales
revenue |
|
$ |
1,257,960 |
|
|
5,845 |
|
|
$ |
215,220 |
|
|
$ |
838,320 |
|
|
4,163 |
|
|
$ |
201,374 |
|
CONTACT:
Investor Relations:Caitlin Stiles, (281)
210-2619InvestorRelations@LGIHomes.com
Source: LGI Homes
LGI Homes (NASDAQ:LGIH)
Historical Stock Chart
From Jul 2024 to Aug 2024
LGI Homes (NASDAQ:LGIH)
Historical Stock Chart
From Aug 2023 to Aug 2024