8-K


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): March 9, 2016

 
 
 
LGI HOMES, INC.
(Exact name of registrant as specified in its charter)
 
 
 
  
Delaware
 
001-36126
 
46-3088013
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
 
1450 Lake Robbins Drive, Suite 430,
The Woodlands, Texas
 
77380
(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):
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 








Item 2.02
Results of Operations and Financial Condition.
On March 9, 2016, LGI Homes, Inc. (the “Company”) issued a press release announcing its financial results for the year ended December 31, 2015. 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 the purpose 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 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 will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor will it be 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

Press Release of LGI Homes, Inc. issued on March 9, 2016.
 
 






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: March 9, 2016
 
 
LGI HOMES, INC.
 
 
 
 
By:
/s/ Eric T. Lipar
 
 
Eric T. Lipar
 
 
Chief Executive Officer and Chairman of the Board







INDEX TO EXHIBITS

Exhibit Number
Description
99.1
Press Release of LGI Homes,Inc. issued on March 9, 2016



Exhibit


EXHIBIT 99.1
LGI Homes, Inc. Reports Fourth Quarter and Full Year 2015 Results and Releases 2016 Guidance
THE WOODLANDS, Texas, March 9, 2016 (GLOBE NEWSWIRE) - LGI Homes, Inc. (Nasdaq:LGIH) today announced results for the fourth quarter and full year ended December 31, 2015.
Fourth Quarter 2015 Highlights and Comparisons to Fourth Quarter 2014
Net Income of $15.7 million, or $0.79 Basic EPS and $0.75 Diluted EPS
Net Income Before Income Taxes increased 108.2% to $24.1 million
Home Sales Revenues increased 63.0% to $176.8 million
Home Closings increased 45.1% to 946 homes
Average Home Sales Price increased 12.4% to $186,855
Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues was 27.6% as compared to 28.9%
Active Selling Communities at quarter-end increased to 52 from 39
Total Owned and Controlled Lots increased to 23,915 lots

Full Year 2015 Highlights and Comparisons to Full Year 2014
Net Income of $52.8 million, or $2.65 Basic EPS and $2.44 Diluted EPS
Net Income Before Income Taxes increased 86.4% to $80.3 million
Home Sales Revenues increased 64.4% to $630.2 million
Home Closings increased 44.5% to 3,404 homes
Average Home Sales Price increased 13.8% to $185,146
Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues was 27.8% as compared to 28.2%

Please see “Non-GAAP Measures” for a reconciliation of adjusted gross margin to gross margin.
Management Comments

"This has been another year of amazing growth for LGI Homes," said Eric Lipar, the Company's Chief Executive Officer and Chairman of the Board. "At LGI Homes, we are focused on achieving results and our fourth quarter provided a solid finish to 2015 with a record-breaking 3,404 homes closed. This 45% year-over-year increase marks the fifth consecutive year we have grown home closings by more than 40%. In addition to delivering record home closings we achieved significant growth in revenues and active community count, and nearly doubled basic earnings per share over the prior year."

"As we turn our attention to 2016, we remain focused on continuing our trend of strong results. Through February 2016, we have closed 477 homes, an increase of 28% over the first two months of 2015. We hold a positive outlook on 2016 and believe the demand for homeownership in all of our markets is alive and well."

"We are poised to see continued growth and to meet our goals and objectives for 2016 through adding community count in our current markets and by improving community absorption in our newer markets. We expect all of our start-up operations in new geographic markets, including Colorado Springs, Seattle, Nashville and Raleigh, will





generate home closings in 2016. Overall, we expect to close between 4,000 and 4,400 homes for the year and believe basic EPS for the full year 2016 will be in the range of $3.00 and $3.50 per share,” Lipar concluded.
2015 Fourth Quarter Results

Home closings during the fourth quarter of 2015 increased 45.1% to 946 from 652 during the fourth quarter of 2014. Active selling communities increased to 52 at the end of the fourth quarter of 2015, up from 50 communities at the end of the third quarter of 2015.
Home sales revenues for the fourth quarter of 2015 were $176.8 million, an increase of $68.3 million, or 63.0% over the fourth quarter of 2014. 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 $186,855 for the fourth quarter of 2015, an increase of 12.4% over the fourth quarter of 2014. This increase is largely attributable to changes in product mix, price points in new markets, and a favorable pricing environment.
Adjusted gross margin as a percentage of home sales revenues for the fourth quarter of 2015 was 27.6% as compared to 28.9% for the fourth quarter of 2014. This decrease primarily reflects a combination of increased construction costs and increased lot costs partially offset by higher average home sales price. Please see "Non-GAAP Measures" for a reconciliation of adjusted gross margin to gross margin.
Net income of $15.7 million, or $0.79 per basic share and $0.75 per diluted share, for the fourth quarter of 2015 increased $8.2 million, or 108.8%, from $7.5 million for the fourth quarter of 2014. This increase is primarily attributable to the 45.1% increase in homes closed, the increase in average home sales price, and operating leverage realized related to selling, general and administrative expenses, net of increased expenses associated with new communities.
2015 Full Year Results

Home closings reached an all-time high for 2015, increasing 44.5% to 3,404, far surpassing the previous record of 2,356 from 2014. Active selling communities increased by 13 communities during 2015 and totaled 52 active selling communities at the end of 2015. Reflected in this increase are an additional five active communities in the Texas division, an additional four in the Southwest division, another three in the Southeast division, and one in the Florida division.
Home sales revenues for 2015 increased 64.4% to $630.2 million compared to 2014.
The average home sales price during 2015 was $185,146, an increase of 13.8% over 2014. Consistent with the Company's fourth quarter 2015 results, this increase is primarily due to changes in product mix, price points in new markets, and a favorable pricing environment.
Net income of $52.8 million, or $2.65 per basic share and $2.44 per diluted share, for the year ended December 31, 2015, increased $24.6 million, or 87.3%, from $28.2 million for the year ended December 31, 2014. This increase is primarily attributable to the 44.5% increase in homes closed, the increase in average home sales price, and operating leverage realized related to selling, general and administrative expenses, net of increased expenses associated with new communities.
Outlook

Subject to the caveats in the Forward-Looking Statements section of this press release, the Company offers the following guidance for 2016. The Company believes it will have between 62 and 67 active selling communities at the end of 2016, close between 4,000 and 4,400 homes in 2016, and generate basic EPS between $3.00 and $3.50 per share during 2016. In addition, the Company believes 2016 gross margin will be in the range of 26.5% and 28.5% and that the average home sales price in 2016 will be between $190,000 and $200,000. This outlook assumes that general economic conditions, including interest rates, and mortgage availability in 2016 are similar to those in





2015, and that home sales price, construction costs, availability of land, land development costs and overall absorption rates for 2016 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 p.m. Eastern Time on Wednesday, March 9, 2016. The call will be hosted by Eric Lipar, Chief Executive Officer and Chairman of the Board, and Charles Merdian, Chief Financial Officer, Secretary and Treasurer.
Participants may access the live webcast by visiting the Investor Relations section of the Company's website at www.LGIHomes.com. The 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 call will also be available later that day by calling (855) 859-2056, or (404) 537-3406, using conference id "21675721". This replay will be available until March 16, 2016.

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 and Washington. LGI's core markets include Houston, San Antonio, Dallas/Fort Worth, Austin, Phoenix, Tucson, Tampa, Orlando, Atlanta, Albuquerque, Charlotte and Denver. The Company has a notable legacy of more than 13 years of homebuilding operations, over which time it has closed over 12,000 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 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 2016 home closings, basic earnings per share, gross margins and average home sales price, 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 "believe," "estimate," "project," "anticipate," "expect," "seek," "predict," "contemplate," "continue," "possible," "intent," "may," "might," "will," "could," "would," "should," "forecast," or "assume" 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, 2015, 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, 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 financial results or results of operations and could cause 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,
 
 
2015
 
2014
 
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
37,568

 
$
31,370

Accounts receivable
 
17,325

 
7,365

Real estate inventory
 
531,228

 
367,908

Pre-acquisition costs and deposits
 
7,001

 
9,878

Property and equipment, net
 
2,108

 
1,610

Other assets
 
14,869

 
7,515

Goodwill and intangible assets, net
 
12,234

 
12,481

Total assets
 
$
622,333

 
$
438,127

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Accounts payable
 
$
24,020

 
$
15,479

Accrued expenses and other liabilities
 
40,006

 
21,365

Deferred tax liabilities, net
 
2,726

 
2,685

Notes payable
 
308,192

 
216,099

Total liabilities
 
374,944

 
255,628

COMMITMENTS AND CONTINGENCIES
 
 
 
 
EQUITY
 
 
 
 
Common stock, par value $0.01, 250,000,000 shares authorized, 21,270,389 shares issued and 20,270,389 shares outstanding as of December 31, 2015 and 20,849,044 shares issued and 19,849,044 shares outstanding as of December 31, 2014
 
213

 
208

Additional paid-in capital
 
175,575

 
163,520

Retained earnings
 
88,151

 
35,321

Treasury stock, at cost, 1,000,000 shares
 
(16,550
)
 
(16,550
)
Total equity
 
247,389

 
182,499

Total liabilities and equity
 
$
622,333

 
$
438,127









LGI HOMES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

 
 
Three Months Ended December 31,
 
For the Year Ended December 31,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
Home sales
 
$
176,764

 
$
108,420

 
$
630,236

 
$
383,268

 
Cost of sales
 
129,874

 
78,820

 
463,304

 
280,481

 
Selling expenses
 
13,966

 
10,884

 
52,998

 
36,672

 
General and administrative
 
9,210

 
7,187

 
34,260

 
23,744

 
Operating income
 
23,714

 
11,529

 
79,674

 
42,371

 
Other income, net
 
(378
)
 
(45
)
 
(606
)
 
(708
)
 
Net income before income taxes
 
24,092

 
11,574

 
80,280

 
43,079

 
Income tax provision
 
8,361

 
4,040

 
27,450

 
14,868

 
Net income
 
15,731

 
7,534

 
52,830

 
28,211

 
Basic and diluted earnings per share data:
 
 
 
 
 
 
 
 
 
Basic
 
$
0.79

 
$
0.37

 
$
2.65

 
$
1.37

 
Diluted
 
$
0.75

 
$
0.34

 
$
2.44

 
$
1.33

 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares of common stock:
 
 
 
 
 
 
 
 
 
Basic
 
20,088,010

 
20,379,837

 
19,939,761

 
20,666,758

 
Diluted
 
21,174,417

 
22,136,497

 
21,740,719

 
21,202,967

 

.
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

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,
 
  
 
2015
 
2014
 
Home sales
 
$
176,764

 
$
108,420

 
Cost of sales
 
129,874

 
78,820

 
Gross margin
 
46,890

 
29,600

 
Purchase accounting adjustments (a)
 
272

 
1,172

 
Capitalized interest charged to cost of sales
 
1,681

 
557

 
Adjusted gross margin
 
$
48,843

 
$
31,329

 
Gross margin % (b)
 
26.5
%
 
27.3
%
 
Adjusted gross margin % (b)
 
27.6
%
 
28.9
%
 
   
 
 
Year Ended December 31,
 
  
 
2015
 
2014
 
Home sales
 
$
630,236

 
$
383,268

 
Cost of sales
 
463,304

 
280,481

 
Gross margin
 
166,932

 
102,787

 
Purchase accounting adjustments (a)
 
2,131

 
3,620

 
Capitalized interest charged to cost of sales
 
6,057

 
1,704

 
Adjusted gross margin
 
$
175,120

 
$
108,111

 
Gross margin % (b)
 
26.5
%
 
26.8
%
 
Adjusted gross margin % (b)
 
27.8
%
 
28.2
%
 
 

(a)
Adjustments result from the application of purchase accounting for the GTIS Acquisitions and the acquisition of Oakmont 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
(Dollars in thousands)

 
 
Three Months Ended December 31,
 
 
2015
 
2014
  
 
Revenues
 
Closings
 
Revenues
 
Closings
Texas
 
$
94,528

 
495

 
$
63,244

 
376

Southwest
 
35,872

 
185

 
14,514

 
85

Florida
 
19,146

 
102

 
12,414

 
70

Southeast
 
27,218

 
164

 
18,248

 
121

Total home sales
 
$
176,764

 
946

 
$
108,420

 
652






 
 
Year Ended December 31,
 
 
2015
 
2014
  
 
Revenues
 
Closings
 
Revenues
 
Closings
Texas
 
$
350,674

 
1,856

 
$
255,355

 
1,575

Southwest
 
109,878

 
565

 
45,725

 
273

Florida
 
73,735

 
396

 
43,374

 
255

Southeast
 
95,949

 
587

 
38,814

 
253

Total home sales
 
$
630,236

 
3,404

 
$
383,268

 
2,356




CONTACT:     Investor Relations:
        Caitlin Stiles, (281) 210-2619
        InvestorRelations@LGIHomes.com

Source: LGI Homes