LGI Homes, Inc. (NASDAQ: LGIH) today announced financial results
for the third quarter and nine months ended September 30,
2023.
Third Quarter
2023 Highlights
- Net Income of $67.0
million, or $2.85 Basic EPS and $2.84 Diluted EPS
- Net Income Before
Income Taxes of $89.4 million
- Home Sales Revenues
of $617.5 million
- Home Closings of
1,751
- Average Sales Price
per Home Closed of $352,678
- Gross Margin as a
Percentage of Homes Sales Revenues of 25.7%
- Adjusted Gross
Margin* as a Percentage of Home Sales Revenues of 27.2%
Nine Months Ended September 30, 2023
Highlights
- Net Income of
$147.1 million, or $6.24 Basic EPS and $6.21 Diluted EPS
- Net Income Before
Income Taxes of $193.2 million
- Home Sales Revenues
of $1.8 billion
- Home Closings of
4,971
- Average Sales Price
per Home Closed of $352,075
- Gross Margin as a
Percentage of Homes Sales Revenues of 22.8%
- Adjusted Gross
Margin* as a Percentage of Home Sales Revenues of
24.5%
- Active Selling
Communities at September 30, 2023 of 106
- Net Orders of
5,646
- Ending Backlog at
September 30, 2023 of 1,377 homes valued at $509.9 million
- Total Owned and
Controlled Lots at September 30, 2023 of 72,109
*Non-GAAP
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
- Total liquidity of
$243.2 million at September 30, 2023, including cash and cash
equivalents of $47.0 million and $196.2 million of availability
under the Company’s revolving credit facility
- Net debt to
capitalization of 38.8% at September 30, 2023
Management Comments
“Our outstanding results in the third quarter,
including the significant progress we made on increasing our
profitability metrics, demonstrate the success of our operational
initiatives and the resilience of our business model in the face of
challenging market conditions,” said Eric Lipar, Chairman and Chief
Executive Officer of LGI Homes.
“Along with double-digit, year-over-year growth
in closings, revenue and community count, we made significant
progress on our profitability objectives. I am pleased to report
that our gross margins are back in-line with their pre-pandemic,
historical levels. In the third quarter, we delivered gross margins
of 25.7% and adjusted gross margins of 27.2%. The 340 basis point
sequential improvement in our adjusted gross margins outperformed
the 150 basis point guidance we provided last quarter.
Additionally, we delivered a pre-tax profit margin of 14.5%, also
representing a 340 basis point sequential improvement and higher
than any other third quarter result delivered prior to the
pandemic. These outstanding results are a testament to the focused
execution of our teams around the country. Undeterred by volatile
rate movements and market uncertainty, our dedicated employees
continue to construct, sell and close homes while delivering the
best service in the industry.”
Mr. Lipar concluded, “Despite the current
headwinds, the fundamentals underlying the housing market remain
strong and our long-term outlook for the industry is positive.
Based on our performance year to date and a strong start to the
fourth quarter, we are well-positioned to achieve all of our goals
and objectives for 2023 and beyond.”
Full Year 2023 Outlook
Subject to the caveats in the Forward-Looking
Statements section of this press release, the Company is providing
the following updates to its guidance for the full year 2023. The
Company now expects:
- Home closings
between 6,700 and 7,000
- Active selling
communities at the end of 2023 between 115 and 125
- Average sales price
per home closed between $350,000 and $355,000
- Gross margin as a
percentage of home sales revenues between 23.0% and 23.5%
- Adjusted gross
margin (non-GAAP) as a percentage of home sales revenues between
24.5% and 25.0% with capitalized interest accounting for the
majority of the difference between gross margin and adjusted gross
margin
- SG&A as a
percentage of home sales revenues of approximately 13.0%
- Effective tax rate
of approximately 24.0%
This outlook assumes that general economic
conditions, including input costs, materials, product and labor
availability, interest rates and mortgage availability, in the
remainder of 2023 are similar to those experienced so far in the
fourth quarter of 2023 and that construction costs, availability of
land and land development costs in the remainder of 2023 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, October 31, 2023 (the
“Earnings Call”).
Participants may access the live webcast by
visiting the Investor Relations section of the Company’s website at
www.lgihomes.com.
An archive of the webcast will be available for
replay on the Company’s website for one year from the date of the
conference 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 65,000 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 Worlds’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 2023 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 projected 2023 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, 2022, 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 Reports on Form 10-Q for the quarters ended March 31,
2023, June 30, 2023 and September 30, 2023 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) |
|
|
|
September 30, |
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
46,981 |
|
|
$ |
31,998 |
|
Accounts receivable |
|
|
35,651 |
|
|
|
25,143 |
|
Real estate inventory |
|
|
3,056,966 |
|
|
|
2,898,296 |
|
Pre-acquisition costs and deposits |
|
|
34,661 |
|
|
|
25,031 |
|
Property and equipment, net |
|
|
41,872 |
|
|
|
32,997 |
|
Other assets |
|
|
97,238 |
|
|
|
93,159 |
|
Deferred tax assets, net |
|
|
9,624 |
|
|
|
6,186 |
|
Goodwill |
|
|
12,018 |
|
|
|
12,018 |
|
Total assets |
|
$ |
3,335,011 |
|
|
$ |
3,124,828 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Accounts payable |
|
$ |
67,289 |
|
|
$ |
25,287 |
|
Accrued expenses and other liabilities |
|
|
274,681 |
|
|
|
340,128 |
|
Notes payable |
|
|
1,190,366 |
|
|
|
1,117,001 |
|
Total liabilities |
|
|
1,532,336 |
|
|
|
1,482,416 |
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
EQUITY |
|
|
|
|
Common stock, par value $0.01, 250,000,000 shares authorized,
27,503,340 shares issued and 23,563,868 shares outstanding as of
September 30, 2023 and 27,245,278 shares issued and 23,305,806
shares outstanding as of December 31, 2022 |
|
|
275 |
|
|
|
272 |
|
Additional paid-in capital |
|
|
319,795 |
|
|
|
306,673 |
|
Retained earnings |
|
|
1,837,627 |
|
|
|
1,690,489 |
|
Treasury stock, at cost, 3,939,472 shares as of September 30, 2023
and December 31, 2022 |
|
|
(355,022 |
) |
|
|
(355,022 |
) |
Total equity |
|
|
1,802,675 |
|
|
|
1,642,412 |
|
Total liabilities and equity |
|
$ |
3,335,011 |
|
|
$ |
3,124,828 |
|
|
|
LGI HOMES, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except share and per share data) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Home
sales revenues |
|
$ |
617,539 |
|
|
$ |
547,074 |
|
|
$ |
1,750,166 |
|
|
$ |
1,816,193 |
|
|
|
|
|
|
|
|
|
|
Cost
of sales |
|
|
458,734 |
|
|
|
391,275 |
|
|
|
1,350,608 |
|
|
|
1,270,628 |
|
Selling expenses |
|
|
49,781 |
|
|
|
33,938 |
|
|
|
141,811 |
|
|
|
111,605 |
|
General and administrative |
|
|
26,748 |
|
|
|
27,284 |
|
|
|
84,334 |
|
|
|
84,657 |
|
Operating income |
|
|
82,276 |
|
|
|
94,577 |
|
|
|
173,413 |
|
|
|
349,303 |
|
Other
income, net |
|
|
(7,173 |
) |
|
|
(14,124 |
) |
|
|
(19,793 |
) |
|
|
(21,960 |
) |
Net
income before income taxes |
|
|
89,449 |
|
|
|
108,701 |
|
|
|
193,206 |
|
|
|
371,263 |
|
Income tax provision |
|
|
22,407 |
|
|
|
18,311 |
|
|
|
46,068 |
|
|
|
78,811 |
|
Net
income |
|
$ |
67,042 |
|
|
$ |
90,390 |
|
|
$ |
147,138 |
|
|
$ |
292,452 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.85 |
|
|
$ |
3.88 |
|
|
$ |
6.24 |
|
|
$ |
12.42 |
|
Diluted |
|
$ |
2.84 |
|
|
$ |
3.85 |
|
|
$ |
6.21 |
|
|
$ |
12.29 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
23,546,061 |
|
|
|
23,272,811 |
|
|
|
23,562,374 |
|
|
|
23,552,211 |
|
Diluted |
|
|
23,640,686 |
|
|
|
23,488,325 |
|
|
|
23,696,095 |
|
|
|
23,805,086 |
|
|
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 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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Home sales revenues |
|
$ |
617,539 |
|
|
$ |
547,074 |
|
|
$ |
1,750,166 |
|
|
$ |
1,816,193 |
|
Cost of sales |
|
|
458,734 |
|
|
|
391,275 |
|
|
|
1,350,608 |
|
|
|
1,270,628 |
|
Gross margin |
|
|
158,805 |
|
|
|
155,799 |
|
|
|
399,558 |
|
|
|
545,565 |
|
Capitalized interest charged to cost of sales |
|
|
8,580 |
|
|
|
4,617 |
|
|
|
24,475 |
|
|
|
14,865 |
|
Purchase accounting adjustments (1) |
|
|
767 |
|
|
|
1,162 |
|
|
|
5,511 |
|
|
|
5,470 |
|
Adjusted gross margin |
|
$ |
168,152 |
|
|
$ |
161,578 |
|
|
$ |
429,544 |
|
|
$ |
565,900 |
|
Gross margin % (2) |
|
|
25.7 |
% |
|
|
28.5 |
% |
|
|
22.8 |
% |
|
|
30.0 |
% |
Adjusted gross margin %
(2) |
|
|
27.2 |
% |
|
|
29.5 |
% |
|
|
24.5 |
% |
|
|
31.2 |
% |
|
(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 Rates and Closing Community Count by Reportable
Segment
(Revenues in thousands,
unaudited)
|
|
Three Months Ended September 30, 2023 |
|
As of September 30,
2023 |
Reportable Segment |
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
|
CommunityCount at End ofPeriod |
Central |
|
$ |
183,615 |
|
561 |
|
$ |
327,299 |
|
34.7 |
|
5.4 |
|
34 |
Southeast |
|
|
149,593 |
|
452 |
|
|
330,958 |
|
23.7 |
|
6.4 |
|
24 |
Northwest |
|
|
67,666 |
|
131 |
|
|
516,534 |
|
11.0 |
|
4.0 |
|
11 |
West |
|
|
94,950 |
|
249 |
|
|
381,325 |
|
14.3 |
|
5.8 |
|
15 |
Florida |
|
|
121,715 |
|
358 |
|
|
339,986 |
|
20.0 |
|
6.0 |
|
22 |
Total |
|
$ |
617,539 |
|
1,751 |
|
$ |
352,678 |
|
103.7 |
|
5.6 |
|
106 |
|
|
|
Three Months Ended September 30, 2022 |
|
As of September 30,
2022 |
Reportable Segment |
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
|
CommunityCount at End ofPeriod |
Central |
|
$ |
228,448 |
|
681 |
|
$ |
335,460 |
|
33.0 |
|
6.9 |
|
34 |
Southeast |
|
|
138,478 |
|
419 |
|
|
330,496 |
|
23.3 |
|
6.0 |
|
24 |
Northwest |
|
|
46,774 |
|
95 |
|
|
492,358 |
|
7.0 |
|
4.5 |
|
7 |
West |
|
|
65,064 |
|
155 |
|
|
419,768 |
|
11.0 |
|
4.7 |
|
11 |
Florida |
|
|
68,310 |
|
197 |
|
|
346,751 |
|
18.7 |
|
3.5 |
|
17 |
Total |
|
$ |
547,074 |
|
1,547 |
|
$ |
353,635 |
|
93.0 |
|
5.5 |
|
93 |
|
|
|
Nine Months Ended September 30, 2023 |
Reportable Segment |
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
Central |
|
$ |
564,580 |
|
1,724 |
|
$ |
327,483 |
|
35.3 |
|
5.4 |
Southeast |
|
|
397,618 |
|
1,216 |
|
|
326,988 |
|
24.1 |
|
5.6 |
Northwest |
|
|
212,885 |
|
433 |
|
|
491,651 |
|
10.1 |
|
4.8 |
West |
|
|
256,575 |
|
672 |
|
|
381,808 |
|
13.3 |
|
5.6 |
Florida |
|
|
318,508 |
|
926 |
|
|
343,961 |
|
18.3 |
|
5.6 |
Total |
|
$ |
1,750,166 |
|
4,971 |
|
$ |
352,075 |
|
101.1 |
|
5.5 |
|
|
|
Nine Months Ended September 30, 2022 |
Reportable Segment |
|
Revenues |
|
HomeClosings |
|
ASP |
|
AverageCommunityCount |
|
AverageMonthlyAbsorptionRate |
Central |
|
$ |
807,400 |
|
2,460 |
|
$ |
328,211 |
|
31.3 |
|
8.7 |
Southeast |
|
|
328,510 |
|
1,018 |
|
|
322,701 |
|
21.0 |
|
5.4 |
Northwest |
|
|
220,440 |
|
429 |
|
|
513,846 |
|
8.6 |
|
5.5 |
West |
|
|
244,603 |
|
598 |
|
|
409,035 |
|
11.2 |
|
5.9 |
Florida |
|
|
215,240 |
|
668 |
|
|
322,216 |
|
19.0 |
|
3.9 |
Total |
|
$ |
1,816,193 |
|
5,173 |
|
$ |
351,091 |
|
91.1 |
|
6.3 |
|
Owned and Controlled Lots
The table below shows (i) home closings by
reportable segment for the nine months ended September 30,
2023 and (ii) owned or controlled lots by reportable segment as of
September 30, 2023.
|
|
Nine Months EndedSeptember 30, 2023 |
|
As of September 30, 2023 |
Reportable Segment |
|
Home Closings |
|
Owned (1) |
|
Controlled |
|
Total |
Central |
|
1,724 |
|
21,048 |
|
3,624 |
|
24,672 |
Southeast |
|
1,216 |
|
14,756 |
|
4,907 |
|
19,663 |
Northwest |
|
433 |
|
5,981 |
|
2,138 |
|
8,119 |
West |
|
672 |
|
9,176 |
|
2,195 |
|
11,371 |
Florida |
|
926 |
|
5,340 |
|
2,944 |
|
8,284 |
Total |
|
4,971 |
|
56,301 |
|
15,808 |
|
72,109 |
|
(1) |
|
Of
the 56,301 owned lots as of September 30, 2023, 42,618 were
raw/under development lots and 13,683 were finished lots. Finished
lots included 1,471 completed homes, including information centers,
and 3,009 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 |
|
Nine Months Ended September 30, |
2023 (4) |
|
2022 (5) |
Net orders (1) |
|
|
5,646 |
|
|
|
4,373 |
|
Cancellation rate (2) |
|
|
22.8 |
% |
|
|
21.0 |
% |
Ending backlog – homes (3) |
|
|
1,377 |
|
|
|
1,255 |
|
Ending backlog – value (3) |
|
$ |
509,932 |
|
|
$ |
428,293 |
|
|
(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 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 September 30, 2023,
the Company had 273 units related to bulk sales agreements
associated with its wholesale business. |
|
(5) |
|
As of September 30, 2022,
the Company had 591 units related to bulk sales agreements
associated with its wholesale business. |
CONTACT: |
|
Joshua D.
Fattor |
|
|
Vice President of Investor Relations and Capital Markets |
|
|
(281) 210-2586 |
|
|
investorrelations@lgihomes.com |
LGI Homes (NASDAQ:LGIH)
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From Jun 2024 to Jul 2024
LGI Homes (NASDAQ:LGIH)
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From Jul 2023 to Jul 2024