UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): April 30, 2024
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
(281 ) 362-8998
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On April 30, 2024, LGI Homes, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
None of the information furnished in this Item 2.02 and the accompanying exhibit will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor will it be deemed incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended.
| Item 7.01 | Regulation FD Disclosure. | ||||
The information set forth in Item 2.02 above and in Exhibit 99.1 to this Current Report on Form 8-K is incorporated herein by reference.
None of the information furnished in this Item 7.01 and the accompanying exhibit will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor will it be deemed incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended.
| Item 9.01 | Financial Statements and Exhibits. | ||||
| (d) | Exhibits. | ||||
| 99.1 | |||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 30, 2024 | ||||||||
| LGI HOMES, INC. | ||||||||
| By: | /s/ Eric Lipar | |||||||
| Eric Lipar | ||||||||
| Chief Executive Officer and Chairman of the Board | ||||||||
EXHIBIT 99.1
LGI Homes Reports First Quarter 2024 Results
THE WOODLANDS, Texas, April 30, 2024 (GLOBE NEWSWIRE) - 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 | Average Monthly Absorption 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 Monthly Absorption 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. Fattor
Executive Vice President of Investor Relations and Capital Markets
(281) 210-2586
investorrelations@lgihomes.com