LGI Homes, Inc. (Nasdaq:LGIH) today announced results for the
fourth quarter 2019 and the twelve months ended December 31, 2019.
Fourth Quarter 2019 Results and
Comparisons to Fourth Quarter 2018
- Net Income increased 52.1% to $64.9
million, or $2.69 Basic EPS and $2.52 Diluted EPS
- Net Income Before Income Taxes
increased 51.0% to $84.9 million
- Home Sales Revenues increased 42.5%
to $605.6 million
- Home Closings increased 35.8% to
2,515
- Average Home Sales Price increased
4.9% to $240,815
- Gross Margin as a Percentage of
Homes Sales Revenues was 23.5%
- Adjusted Gross Margin (non-GAAP) as
a Percentage of Home Sales Revenues was 25.5%
- Active Selling Communities at
December 31, 2019 increased 20.5% to 106
- 48,062 Total Owned and Controlled
Lots at December 31, 2019
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 2019 Results and Comparisons
to Full Year 2018
- Net Income increased 15% to $178.6
million, or $7.70 Basic EPS and $7.02 Diluted EPS
- Net Income Before Income Taxes
increased 16.4% to $231.8 million
- Home Sales Revenues increased 22.2%
to $1.8 billion
- Home Closings increased 18.1% to
7,690
- Average Home Sales Price increased
3.5% to $239,032
- Gross Margin as a Percentage of
Homes Sales Revenues was 23.7%
- Adjusted Gross Margin (non-GAAP) as
a Percentage of Home Sales Revenues was 25.8%
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“The fourth
quarter completes another outstanding year at LGI Homes,” said Eric
Lipar, the Company’s Chief Executive Officer and Chairman of the
Board. “We finished the year with a record-breaking 7,690 home
closings, achieved significant growth in home sales revenues
generating $1.8 billion, increased community count by 20%, and
delivered industry leading absorptions and strong operating margins
resulting in $178.6 million in net income.”
“As we turn our attention to 2020, we remain
disciplined in our approach and focused on delivering strong
results. Building off the momentum of 2019 and the sustained
strength in housing demand, we believe we are poised for continued
growth and believe we are well positioned to increase closings,
revenues, and community count, allowing LGI Homes to achieve our
long-term goal of generating market leading returns for our
stockholders. Assuming that general economic conditions, including
interest rates and mortgage availability, in 2020 are similar to
those experienced so far in the first quarter of 2020, we believe
we will close between 8,400 and 9,400 homes and end the year
between 120 and 130 active selling communities,” Lipar
concluded.
2019 Fourth Quarter Results
Home closings during the fourth quarter of 2019
totaled 2,515, an increase of 35.8%, from 1,852 home closings
during the fourth quarter of 2018. At the end of the fourth
quarter, active selling communities increased to 106, up from 88
communities at the end of the fourth quarter of 2018.
Home sales revenues for the fourth quarter of
2019 were $605.6 million, an increase of $180.5 million, or 42.5%,
over the fourth quarter of 2018. The increase in home sales
revenues is primarily due to the increase in home closings and an
increase in the average home sales price during the fourth quarter
of 2019.
The average home sales price for the fourth
quarter of 2019 was $240,815, an increase of $11,247, or 4.9%, over
the fourth quarter of 2018. The increase in average home sales
price was primarily due 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 fourth quarter of 2019 was 23.5% as compared to
24.4% for the fourth quarter of 2018. Adjusted gross margin
(non-GAAP) as a percentage of home sales revenues for the fourth
quarter of 2019 was 25.5% as compared to 26.2% for the fourth
quarter of 2018. The decreases in gross margin and adjusted gross
margin as a percentage of home sales revenues are primarily due to
higher lot costs and higher capitalized interest costs recognized
for the fourth quarter of 2019 as compared to the fourth quarter of
2018. Please see “Non-GAAP Measures” for a reconciliation of
adjusted gross margin (non-GAAP) to gross margin, the most
comparable GAAP measure.
Net income for the fourth quarter of 2019 was
$64.9 million, or $2.69 per basic share and $2.52 per diluted
share, an increase of $22.2 million, or 52.1%, from $42.7 million,
or $1.89 per basic share and $1.72 per diluted share, for the
fourth quarter of 2018. The increase in net income is primarily
attributed to operating leverage realized from the increase in home
sales revenues and higher average home sales price, partially
offset by lower gross margin percentage and higher capitalized
interest costs recognized during the fourth quarter of 2019 as
compared to the fourth quarter of 2018.
Full Year 2019 Results
Home closings for the twelve months ended
December 31, 2019 increased 18.1% to 7,690 from 6,512 during
the twelve months ended December 31, 2018. The increase in
homes closed was largely due to the increase in the number of
active selling communities in 2019.
Home sales revenues for the twelve months ended
December 31, 2019 increased 22.2% to $1.8 billion compared to
the twelve months ended December 31, 2018. 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 $239,032 for
the twelve months ended December 31, 2019, an increase of
$8,012, or 3.5%, over the twelve months ended December 31,
2018. The increase in the average home sales price was primarily
due 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, 2019 was
23.7% as compared to 25.3% for the twelve months ended
December 31, 2018. Adjusted gross margin (non-GAAP) as a
percentage of home sales revenues for the twelve months ended
December 31, 2019 was 25.8% as compared to 27.0% for the
twelve months ended December 31, 2018. The decreases in gross
margin and adjusted gross margin as a percentage of home sales
revenues are primarily due to higher lot costs and higher
capitalized interest costs for the twelve months ended
December 31, 2019 as compared to the twelve months ended
December 31, 2018 and, to a lesser extent, to 583 wholesale
home closings during 2019, compared to 466 wholesale home closings
during 2018. 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 $178.6 million, or $7.70 per basic
share and $7.02 per diluted share, for the twelve months ended
December 31, 2019 increased $23.3 million, or 15.0%, from
$155.3 million for the twelve months ended December 31, 2018.
This increase is primarily attributed to operating leverage
realized from the increase in home sales revenues and higher
average sales price, offset by lower gross margin percentage during
2019 as compared to 2018.
Outlook
Subject to the caveats in the Forward-Looking
Statements section of this press release, the Company offers the
following guidance for 2020. The Company believes it will have
between 120 and 130 active selling communities at the end of 2020
and close between 8,400 and 9,400 homes in 2020. In addition, the
Company believes 2020 gross margin as a percentage of home sales
revenues will be in the range of 22.5% and 24.5% and 2020 adjusted
gross margin (non-GAAP) as a percentage of home sales revenues will
be in the range of 24.5% and 26.5% 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 2020 will be between $235,000 and
$245,000. This outlook assumes that general economic conditions,
including interest rates and mortgage availability, in the
remainder of 2020 are similar to those experienced so far in the
first quarter of 2020 and that average home sales price,
construction costs, availability of land, land development costs
and overall absorption rates in the remainder of 2020 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 25, 2020 (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 “5670736”.
This replay will be available until March 3, 2020.
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, Minnesota,
Oklahoma, Alabama, California, Oregon, Nevada, West Virginia and
Virginia. Recently recognized as the 10th largest residential
builder in America, based on units closed, the Company has a
notable legacy of more than 16 years of homebuilding operations,
over which time it has closed more than 35,000 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 2020 home
closings, year-end active selling communities, gross margin as a
percentage of home sales revenues, adjusted gross margin 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, 2019, 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, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
38,345 |
|
|
$ |
46,624 |
|
Accounts receivable |
|
56,390 |
|
|
42,836 |
|
Real estate inventory |
|
1,499,624 |
|
|
1,228,256 |
|
Pre-acquisition costs and deposits |
|
37,244 |
|
|
45,752 |
|
Property and equipment, net |
|
1,632 |
|
|
1,432 |
|
Other assets |
|
16,241 |
|
|
15,765 |
|
Deferred tax assets, net |
|
4,621 |
|
|
2,790 |
|
Goodwill |
|
12,018 |
|
|
12,018 |
|
Total assets |
|
$ |
1,666,115 |
|
|
$ |
1,395,473 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Accounts payable |
|
$ |
12,495 |
|
|
$ |
9,241 |
|
Accrued expenses and other liabilities |
|
117,868 |
|
|
76,555 |
|
Notes payable |
|
690,559 |
|
|
653,734 |
|
Total liabilities |
|
|
820,922 |
|
|
|
739,530 |
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
EQUITY |
|
|
|
|
Common stock, par value $0.01, 250,000,000 shares authorized,
26,398,409 shares issued and 25,359,409 shares outstanding as of
December 31, 2019 and 23,746,385 shares issued and 22,707,385
shares outstanding as of December 31, 2018 |
|
264 |
|
|
237 |
|
Additional paid-in capital |
|
252,603 |
|
|
241,988 |
|
Retained earnings |
|
610,382 |
|
|
431,774 |
|
Treasury stock, at cost 1,039,000 shares |
|
(18,056 |
) |
|
(18,056 |
) |
Total equity |
|
845,193 |
|
|
655,943 |
|
Total liabilities and equity |
|
$ |
1,666,115 |
|
|
$ |
1,395,473 |
|
LGI HOMES, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands, except share and per share
data) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Home sales revenues |
|
$ |
605,649 |
|
|
$ |
425,160 |
|
|
$ |
1,838,154 |
|
|
$ |
1,504,400 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
463,435 |
|
|
321,602 |
|
|
1,401,675 |
|
|
1,124,484 |
|
Selling expenses |
|
37,395 |
|
|
29,320 |
|
|
131,561 |
|
|
109,460 |
|
General and
administrative |
|
20,822 |
|
|
18,809 |
|
|
77,380 |
|
|
70,345 |
|
Operating income |
|
83,997 |
|
|
55,429 |
|
|
227,538 |
|
|
200,111 |
|
Loss on extinguishment of
debt |
|
— |
|
|
— |
|
|
169 |
|
|
3,599 |
|
Other income, net |
|
(874 |
) |
|
(780 |
) |
|
(4,463 |
) |
|
(2,586 |
) |
Net income before income
taxes |
|
84,871 |
|
|
56,209 |
|
|
231,832 |
|
|
199,098 |
|
Income tax provision |
|
20,001 |
|
|
13,556 |
|
|
53,224 |
|
|
43,812 |
|
Net income |
|
$ |
64,870 |
|
|
$ |
42,653 |
|
|
$ |
178,608 |
|
|
$ |
155,286 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.69 |
|
|
$ |
1.89 |
|
|
$ |
7.70 |
|
|
$ |
6.89 |
|
Diluted |
|
$ |
2.52 |
|
|
$ |
1.72 |
|
|
$ |
7.02 |
|
|
$ |
6.24 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
24,143,124 |
|
|
22,737,294 |
|
|
23,191,595 |
|
|
22,551,762 |
|
Diluted |
|
25,718,111 |
|
|
24,743,108 |
|
|
25,430,841 |
|
|
24,892,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 results, the utility of adjusted gross margin
information as a measure of 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 December 31, |
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Home sales revenues |
|
$ |
605,649 |
|
|
$ |
425,160 |
|
|
$ |
1,838,154 |
|
|
$ |
1,504,400 |
|
Cost of sales |
|
463,435 |
|
|
321,602 |
|
|
1,401,675 |
|
|
1,124,484 |
|
Gross margin |
|
142,214 |
|
|
103,558 |
|
|
436,479 |
|
|
379,916 |
|
Capitalized interest charged to cost of sales |
|
11,336 |
|
|
7,226 |
|
|
35,230 |
|
|
24,311 |
|
Purchase accounting adjustments (1) |
|
1,067 |
|
|
561 |
|
|
3,324 |
|
|
1,408 |
|
Adjusted gross margin |
|
$ |
154,617 |
|
|
$ |
111,345 |
|
|
$ |
475,033 |
|
|
$ |
405,635 |
|
Gross margin % (2) |
|
23.5 |
% |
|
24.4 |
% |
|
23.7 |
% |
|
25.3 |
% |
Adjusted gross margin %
(2) |
|
25.5 |
% |
|
26.2 |
% |
|
25.8 |
% |
|
27.0 |
% |
(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 Home Sales Price (ASP), Average Community Count and Average
Monthly Absorption Rates by Reportable
Segment(Revenues in thousands,
unaudited)
|
|
Three Months Ended December 31, 2019 |
|
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
Average MonthlyAbsorptionRate |
Central |
|
$ |
217,030 |
|
|
962 |
|
|
$ |
225,603 |
|
|
32.7 |
|
|
9.8 |
|
Southeast |
|
126,131 |
|
|
582 |
|
|
216,720 |
|
|
28.7 |
|
|
6.8 |
|
Northwest |
|
96,802 |
|
|
260 |
|
|
372,315 |
|
|
13.7 |
|
|
6.3 |
|
West |
|
96,993 |
|
|
389 |
|
|
249,339 |
|
|
13.7 |
|
|
9.5 |
|
Florida |
|
68,693 |
|
|
322 |
|
|
213,332 |
|
|
15.7 |
|
|
6.9 |
|
Total |
|
$ |
605,649 |
|
|
2,515 |
|
|
$ |
240,815 |
|
|
104.3 |
|
|
8.0 |
|
|
|
Three Months Ended December 31, 2018 |
|
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
Central |
|
$ |
182,613 |
|
|
865 |
|
|
$ |
211,113 |
|
|
31.3 |
|
|
9.2 |
|
Southeast |
|
92,089 |
|
|
445 |
|
|
206,942 |
|
|
21.0 |
|
|
7.1 |
|
Northwest |
|
62,676 |
|
|
171 |
|
|
366,526 |
|
|
11.3 |
|
|
5.0 |
|
West |
|
43,043 |
|
|
156 |
|
|
275,917 |
|
|
9.0 |
|
|
5.8 |
|
Florida |
|
44,739 |
|
|
215 |
|
|
208,088 |
|
|
12.7 |
|
|
5.7 |
|
Total |
|
$ |
425,160 |
|
|
1,852 |
|
|
$ |
229,568 |
|
|
85.3 |
|
|
7.2 |
|
|
|
Year Ended December 31, 2019 |
|
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
Central |
|
$ |
724,981 |
|
|
3,304 |
|
|
$ |
219,425 |
|
|
33.0 |
|
|
8.3 |
|
Southeast |
|
347,817 |
|
|
1,592 |
|
|
218,478 |
|
|
24.5 |
|
|
5.4 |
|
Northwest |
|
304,294 |
|
|
827 |
|
|
367,949 |
|
|
12.4 |
|
|
5.6 |
|
West |
|
271,186 |
|
|
1,056 |
|
|
256,805 |
|
|
12.8 |
|
|
6.9 |
|
Florida |
|
189,876 |
|
|
911 |
|
|
208,426 |
|
|
13.1 |
|
|
5.8 |
|
Total |
|
$ |
1,838,154 |
|
|
7,690 |
|
|
$ |
239,032 |
|
|
95.7 |
|
|
6.7 |
|
|
|
Year Ended December 31, 2018 |
|
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
Central |
|
$ |
623,751 |
|
|
2,937 |
|
|
$ |
212,377 |
|
|
30.7 |
|
|
8.0 |
|
Southeast |
|
271,073 |
|
|
1,324 |
|
|
204,738 |
|
|
18.7 |
|
|
5.9 |
|
Northwest |
|
277,567 |
|
|
760 |
|
|
365,220 |
|
|
10.3 |
|
|
6.1 |
|
West |
|
151,059 |
|
|
627 |
|
|
240,923 |
|
|
9.3 |
|
|
5.6 |
|
Florida |
|
180,950 |
|
|
864 |
|
|
209,433 |
|
|
11.6 |
|
|
6.2 |
|
Total |
|
$ |
1,504,400 |
|
|
6,512 |
|
|
$ |
231,020 |
|
|
80.6 |
|
|
6.7 |
|
CONTACT: |
Investor Relations: |
|
Caitlin Stiles, (281)
210-2619 |
|
InvestorRelations@LGIHomes.com |
|
|
LGI Homes (NASDAQ:LGIH)
Historical Stock Chart
From Jun 2024 to Jul 2024
LGI Homes (NASDAQ:LGIH)
Historical Stock Chart
From Jul 2023 to Jul 2024