Document


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): November 8, 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 November 8, 2016, LGI Homes, Inc. (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2016. 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 November 8, 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: November 8, 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 November 8, 2016



Exhibit


EXHIBIT 99.1
LGI Homes, Inc. Reports Third Quarter and YTD 2016 Results
THE WOODLANDS, Texas, November 8, 2016 (GLOBE NEWSWIRE) - LGI Homes, Inc. (Nasdaq:LGIH) today announced results for the third quarter 2016 and the nine months ended September 30, 2016.
Third Quarter 2016 Highlights and Comparisons to Third Quarter 2015
Net Income of $19.5 million, or $0.92 Basic EPS and $0.86 Diluted EPS
Net Income Before Income Taxes increased 27.0% to $29.5 million
Home Closings increased 12.6% to 1,052 homes
Home Sales Revenues increased 24.3% to $216.3 million
Average Home Sales Price increased 10.4% to $205,613
Gross Margin as a Percentage of Home Sales Revenues was 26.3% as compared to 26.4%
Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues was 27.7% as compared to 27.5%
Active Selling Communities at quarter-end increased to 59 from 50
Total Owned and Controlled Lots increased to 29,856 lots
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.
Nine Months Ended September 30, 2016 Highlights and Comparisons to Nine Months Ended September 30, 2015
Net Income of $51.8 million, or $2.51 Basic EPS and $2.39 Diluted EPS
Net Income Before Income Taxes increased 40.1% to $78.7 million
Home Closings increased 23.0% to 3,024 homes
Home Sales Revenues increased 32.6% to $601.5 million
Average Home Sales Price increased 7.8% to $198,905
Gross Margin as a Percentage of Home Sales Revenues was 26.1% as compared to 26.5%
Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues was 27.5% 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
“LGI Homes delivered another impressive quarter of results highlighted by strong year-over-year growth in home closings, revenues, average sales price, net income and earnings per share,” said Eric Lipar, the Company’s Chief Executive Officer and Chairman of the Board. “With a solid start to the fourth quarter, we maintain an optimistic outlook on the remainder of the year and believe we are well positioned to deliver strong results for the full year 2016.”








2016 Third Quarter Results
Home closings during the third quarter of 2016 increased 12.6% to 1,052 from 934 home closings during the third quarter of 2015. Active selling communities increased to 59 at the end of the third quarter of 2016, up from 50 communities at the end of the third quarter of 2015.
Home sales revenues for the third quarter of 2016 were $216.3 million, an increase of $42.3 million, or 24.3%, over the third quarter of 2015. 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 $205,613 for the third quarter of 2016, an increase of $19,365, or 10.4%, over the third quarter of 2015. This increase is primarily due 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 third quarter of 2016 was 26.3% as compared to 26.4% for the third quarter of 2015. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the third quarter of 2016 was 27.7% as compared to 27.5% for the third quarter of 2015. 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.
Net income of $19.5 million, or $0.92 per basic share and $0.86 per diluted share, for the third quarter of 2016 increased $4.0 million, or 26.2%, from $15.4 million for the third quarter of 2015. This increase is primarily attributable to the 12.6% 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.
Results for the Nine Months Ended September 30, 2016
Home closings for the nine months ended September 30, 2016 increased 23.0% to 3,024 from 2,458 during the nine months ended September 30, 2015.
Home sales revenues for the nine months ended September 30, 2016 increased 32.6% to $601.5 million compared to the nine months ended September 30, 2015. 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 $198,905 for the nine months ended September 30, 2016, an increase of $14,417, or 7.8%, over the nine months ended September 30, 2015. Consistent with our third quarter 2016 results, the increase is primarily due 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 nine months ended September 30, 2016 was 26.1% as compared to 26.5% for the nine months ended September 30, 2015. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the nine months ended September 30, 2016 was 27.5% as compared to 27.8% for nine months ended September 30, 2015. 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.
Net income of $51.8 million, or $2.51 per basic share and $2.39 per diluted share, for the nine months ended September 30, 2016 increased $14.7 million, or 39.7%, from $37.1 million for the nine months ended September 30, 2015. This increase is primarily attributable to the 23.0% 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.








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, November 8, 2016 (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 “10095800”. This replay will be available until November 15, 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, Washington and Tennessee. The Company has a notable legacy of more than 13 years of homebuilding operations, over which time it has closed over 15,000 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 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. Any discussion of outlook or guidance for full year 2016 discussed on the Earnings Call assumes that general economic conditions for the remainder of the year, including interest rates, and mortgage availability in the last three months of 2016 are similar to those in the first nine months of 2016, and that home sales price, construction costs, availability of land, land development costs and overall absorption rates for the last three months of 2016 are consistent with the first nine months of 2016. 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 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)
 
 
 
September 30,
 
December 31,
 
 
2016
 
2015
ASSETS
 
(Unaudited)
 
 
Cash and cash equivalents
 
$
45,915

 
$
37,568

Accounts receivable
 
15,641

 
17,325

Real estate inventory
 
676,917

 
531,228

Pre-acquisition costs and deposits
 
11,450

 
7,001

Property and equipment, net
 
2,037

 
2,108

Other assets
 
4,603

 
11,238

Goodwill and intangible assets, net
 
12,049

 
12,234

Total assets
 
$
768,612

 
$
618,702

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Accounts payable
 
$
18,572

 
$
24,020

Accrued expenses and other liabilities
 
62,779

 
40,006

Deferred tax liabilities, net
 
1,774

 
2,726

Notes payable
 
354,932

 
304,561

Total liabilities
 
438,057

 
371,313

 
 
 
 
 
COMMITMENTS AND CONTINGENCIES
 
 
 
 
EQUITY
 
 
 
 
Common stock, par value $0.01, 250,000,000 shares authorized, 22,282,514 shares issued and 21,282,514 shares outstanding as of September 30, 2016 and 21,270,389 shares issued and 20,270,389 shares outstanding as of December 31, 2015
 
223

 
213

Additional paid-in capital
 
206,905

 
175,575

Retained earnings
 
139,977

 
88,151

Treasury stock, at cost, 1,000,000 shares
 
(16,550
)
 
(16,550
)
Total equity
 
330,555

 
247,389

Total liabilities and equity
 
$
768,612

 
$
618,702







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,
 
 
2016
 
2015
 
2016
 
2015
Home sales revenues
 
$
216,304

 
$
173,956

 
$
601,490

 
$
453,472

 
 
 
 
 
 
 
 
 
Cost of sales
 
159,483

 
127,949

 
444,205

 
333,430

Selling expenses
 
17,007

 
14,057

 
48,965

 
39,032

General and administrative
 
10,715

 
8,902

 
31,155

 
25,050

Operating income
 
29,099

 
23,048

 
77,165

 
55,960

Other income, net
 
(389
)
 
(173
)
 
(1,560
)
 
(228
)
Net income before income taxes
 
29,488

 
23,221

 
78,725

 
56,188

Income tax provision
 
10,021

 
7,801

 
26,899

 
19,089

Net income
 
$
19,467

 
$
15,420

 
$
51,826

 
$
37,099

Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.92

 
$
0.77

 
$
2.51

 
$
1.86

Diluted
 
$
0.86

 
$
0.76

 
$
2.39

 
$
1.72

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
21,061,874

 
19,923,079

 
20,633,200

 
19,894,859

Diluted
 
22,674,021

 
20,318,537

 
21,654,284

 
21,665,289









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 September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Home sales revenues
 
$
216,304

 
$
173,956

 
$
601,490

 
$
453,472

Cost of sales
 
159,483

 
127,949

 
444,205

 
333,430

Gross margin
 
56,821

 
46,007

 
157,285

 
120,042

Capitalized interest charged to cost of sales
 
2,980

 
1,824

 
7,431

 
4,376

Purchase accounting adjustments (a)
 
73

 
39

 
454

 
1,859

Adjusted gross margin
 
$
59,874

 
$
47,870

 
$
165,170

 
$
126,277

Gross margin % (b)
 
26.3
%
 
26.4
%
 
26.1
%
 
26.5
%
Adjusted gross margin % (b)
 
27.7
%
 
27.5
%
 
27.5
%
 
27.8
%
 

(a)
Adjustments result from the application of purchase accounting related to prior acquisitions and represent the amount of the fair value step-up adjustments for real estate inventory included in cost of sales.

(b)
Calculated as a percentage of home sales revenues.























Home Sales Revenues and Home Closings by Division
(Dollars in thousands)

 
 
Three Months Ended September 30,
 
 
2016
 
2015
 
 
Revenues
 
Closings
 
Revenues
 
Closings
Texas
 
$
113,761

 
553

 
$
93,661

 
491

Southwest
 
41,489

 
187

 
30,333

 
158

Southeast
 
24,248

 
137

 
26,588

 
159

Florida
 
30,283

 
155

 
23,374

 
126

Northwest
 
6,523

 
20

 

 

Total home sales
 
$
216,304

 
1,052

 
$
173,956

 
934



 
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
 
Revenues
 
Closings
 
Revenues
 
Closings
Texas
 
$
309,325

 
1,548

 
$
256,146

 
1,361

Southwest
 
118,372

 
545

 
74,006

 
380

Southeast
 
83,309

 
478

 
68,731

 
423

Florida
 
80,912

 
422

 
54,589

 
294

Northwest
 
9,572

 
31

 

 

Total home sales
 
$
601,490

 
3,024

 
$
453,472

 
2,458



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

Source: LGI Homes