StockNews.AI
LGIH
StockNews.AI
175 days

LGI Homes, Inc. Reports Fourth Quarter and Full Year 2024 Results and Issues Guidance for 2025

1. Q4 strong amid mixed macro backdrop. Strategic goals met. 2. 6,131 home closings achieved in 2024. Record 151 active communities reached. 3. Gross and adjusted margins improved. Profitability edged to pre-pandemic levels. 4. Guidance for 2025 is cautious. Home closings projected between 6,200 and 7,000.

Earnings
+0.8%Current Return
VS
-0.75%S&P 500
$75.9902/25 07:09 AM EDTEvent Start
$76.602/26 02:01 PM EDTLatest Updated
25m saved
Insight
Article

FAQ

Why Neutral?

The report shows improved margins and operational discipline amid lower sales volumes. Historically, strong earnings mixed with cautious outlooks have led to muted immediate price moves.

How important is it?

This detailed earnings report provides key operational metrics and forward guidance that are critical for investor decisions and price reactions.

Why Short Term?

Earnings releases typically affect near-term trading as investors digest quarterly performance and future guidance. Recent examples in the homebuilding sector have shown short-term volatility.

Related Companies

DHIPHMLEN
THE WOODLANDS, Texas, Feb. 25, 2025 (GLOBE NEWSWIRE) -- LGI Homes, Inc. (NASDAQ: LGIH) today announced financial results for the fourth quarter and year ended December 31, 2024. “In the face of a mixed macroeconomic backdrop, our strong finish in the fourth quarter enabled us to meet, and in many cases exceed, our strategic goals for 2024,” said Eric Lipar, Chairman and Chief Executive Officer of LGI Homes. “Our strong execution in the fourth quarter resulted in full year closings of 6,131 homes, including the bulk sale of 103 leased, single-family homes. We successfully ended the year with a record high 151 active communities, an impressive increase of 29.1%. We made significant progress improving profitability. Our full year gross margin was 24.2% and adjusted gross margin was 26.3%. These results represented increases of 120 and 160 basis points over 2023, respectively, and were aligned with our pre-pandemic, historical levels. Our pre-tax net income margin was 11.8%, up 70 basis points from the prior year. Finally, we continued making strategic investments to drive our growth in the years ahead. “Our near-term outlook for 2025 is tempered by our belief that the affordability challenges encountered in 2024 will continue into this year. Our current guidance reflects our conservatism in the face of this uncertainty and is based on what we believe is attainable if conditions this year are similar to our experience in 2024 and year-to-date. With this in mind, we are projecting full year closings between 6,200 and 7,000 homes, at an average sales price between $360,000 and $370,000. We will continue to lean into incentives while maintaining profitability metrics in-line with our historical averages, supported by a self-developed land pipeline that enables us to deliver margins at or near the top of our peer group. With this in mind, we are projecting full year gross margin between 23.2% and 24.2% and adjusted gross margin between 25.5% and 26.5%.” Mr. Lipar concluded, “As we look out to 2025, we are staying the course and remain committed to driving profitability through operational discipline and positioning LGI Homes for sustainable success. I thank our team members for their dedication and congratulate them all on the successful results they delivered in 2024. I'm confident in the talent and experience we’ve built here at LGI Homes and believe we are well-positioned to navigate whatever comes our way in 2025.” Fourth Quarter 2024 Highlights (comparisons to fourth quarter 2023) Home sales revenues decreased 8.4% to $557.4 millionHome closings decreased 12.8% to 1,533 homesAverage sales price per home closed increased 5.1% to $363,598Gross margin as a percentage of home sales revenues decreased 50 basis points to 22.9%Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased 10 basis points to 25.2%Net income before income taxes decreased 2.1% to $67.1 millionNet income decreased 2.3% to $50.9 million, or $2.16 basic EPS and $2.15 diluted EPS Full Year 2024 Highlights (comparisons to full year 2023) Home sales revenues decreased 6.6% to $2.2 billionHome closings decreased 10.4% to 6,028 homes. Including the bulk sale of 103 leased, single-family homes, home closings decreased 8.9% to 6,131 homesAverage sales price per home closed increased 4.2% to $365,394Gross margin as a percentage of home sales revenues increased 120 basis points to 24.2%Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased 160 basis points to 26.3%Net income before income taxes decreased 1.1% to $258.9 millionNet income decreased 1.6% to $196.1 million, or $8.33 basic EPS and $8.30 diluted EPSActive selling communities at December 31, 2024 increased 29.1% to 151Total owned and controlled lots at December 31, 2024 of 70,899Ending backlog at December 31, 2024 of 599 homesEnding backlog value at December 31, 2024 of $236.5 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 Net debt to capitalization of 41.2% at December 31, 2024Total liquidity of $323.7 million at December 31, 2024, including cash and cash equivalents of $53.2 million and $270.5 million of availability under the Company’s revolving credit facility Full Year 2025 Outlook Subject to the caveats in the Forward-Looking Statements section of this press release and the assumptions noted below, the Company is providing the following guidance for the full year 2025. The Company expects: Home closings between 6,200 and 7,000Active selling communities at the end of 2025 between 160 and 170Average sales price per home closed between $360,000 and $370,000Gross margin as a percentage of home sales revenues between 23.2% and 24.2%Adjusted gross margin (non-GAAP) as a percentage of home sales revenues between 25.5% and 26.5% with capitalized interest accounting for substantially all of the difference between gross margin and adjusted gross marginSG&A as a percentage of home sales revenues between 14.0% and 15.0%Effective tax rate of approximately 24.5% This outlook assumes that general economic conditions, including input costs, materials, product and labor availability, interest rates and mortgage availability, in the remainder of 2025 are similar to those experienced to date in 2025 and that the average sales price per home closed, construction costs, availability of land and land development costs in the remainder of 2025 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 and does not take into account any changes to U.S. trade policies, including the imposition of tariffs and duties on homebuilding products. 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, 2025 (the “Earnings Call”). Participants may access the live webcast by visiting the Investor Relations section of the Company’s website at  https://investor.lgihomes.com. An archive of the Earnings Call webcast 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 75,000 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 projected 2025 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 Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024 and September 30, 2024 and subsequent filings by the Company with the Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 when it is filed with the SEC. 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 and per share data)     December 31,   2024   2023 ASSETS    Cash and cash equivalents $        53,197  $                  48,978 Accounts receivable    28,717                       41,319 Real estate inventory                 3,387,853                  3,107,648 Pre-acquisition costs and deposits                      36,049                       30,354 Property and equipment, net                      57,038                       45,522 Other assets                    174,391                     113,849 Deferred tax assets, net                         9,271                          8,163 Goodwill                      12,018                       12,018 Total assets $             3,758,534  $             3,407,851      LIABILITIES AND EQUITY    Accounts payable $                33,271  $                  31,616 Accrued expenses and other liabilities                    207,317                     271,872 Notes payable                 1,480,718                  1,248,332 Total liabilities                 1,721,306                  1,551,820      COMMITMENTS AND CONTINGENCIES    EQUITY    Common stock, par value $0.01, 250,000,000 shares authorized, 27,644,413 shares issued and 23,397,074 shares outstanding as of December 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                    337,161                     321,062 Retained earnings                 2,085,787                  1,889,716 Treasury stock, at cost, 4,247,339 shares and 3,939,472 shares, respectively                  (385,996)                  (355,022)Total equity                 2,037,228                  1,856,031 Total liabilities and equity $             3,758,534  $             3,407,851  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,   2024   2023   2024   2023          Home sales revenues $               557,396  $                608,414  $             2,202,598  $             2,358,580          Cost of sales                    429,885                     465,785                  1,669,310                  1,816,393 Selling expenses                      50,754                       49,771                     199,950                     191,582 General and administrative                      31,170                       33,016                     121,192                     117,350    Operating income                      45,587                       59,842                     212,146                     233,255 Other income, net                    (21,497)                       (8,706)                     (46,767)                     (28,499)   Net income before income taxes                      67,084                       68,548                     258,913                     261,754 Income tax provision                      16,214                       16,459                       62,842                       62,527    Net income $                 50,870  $                  52,089  $                196,071  $                199,227 Earnings per share:        Basic $                      2.16  $                       2.21  $                       8.33  $                       8.48 Diluted $                      2.15  $                       2.19  $                       8.30  $                       8.42          Weighted average shares outstanding:        Basic              23,497,275                23,565,640                23,529,724                23,507,136 Diluted              23,620,777                23,737,448                23,610,457                23,648,548                   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 December 31, Year Ended December 31,   2024   2023   2024   2023 Home sales revenues $            557,396  $            608,414  $       2,202,598  $       2,358,580 Cost of sales                 429,885                  465,785            1,669,310            1,816,393 Gross margin                 127,511                  142,629                533,288                542,187 Capitalized interest charged to cost of sales                   11,884                      8,893                  42,071                  33,368 Purchase accounting adjustments (1)                        900                         981                    4,034                    6,492 Adjusted gross margin $            140,295  $            152,503  $          579,393  $          582,047 Gross margin % (2)  22.9%  23.4%  24.2%  23.0%Adjusted gross margin % (2)  25.2%  25.1%  26.3%  24.7% (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 December 31, 2024Reportable Segment Revenues Home Closings ASP Average Community Count AverageMonthlyAbsorption RateCentral $         122,999                    394 $         312,180                   48.0                     2.7Southeast             131,102                    404             324,510                   30.0                     4.5Northwest               71,154                    139             511,899                   16.7                     2.8West             120,775                    292             413,613                   24.7                     3.9Florida             111,366                    304             366,336                   24.3                     4.2Total $         557,396                1,533 $         363,598                143.7                     3.6   Three Months Ended December 31, 2023Reportable Segment Revenues Home Closings ASP Average Community Count AverageMonthlyAbsorption RateCentral $         166,108                    517 $         321,292                   36.7                     4.7Southeast             159,190                    500             318,380                   27.0                     6.2Northwest               38,286                      78             490,846                   10.3                     2.5West             124,527                    320             389,147                   16.0                     6.7Florida             120,303                    343             350,738                   22.3                     5.1Total $         608,414                1,758 $         346,083                112.3                     5.2   Year Ended December 31, 2024 As of December 31, 2024Reportable Segment Revenues Home Closings ASP Average Community Count AverageMonthlyAbsorption Rate Community Count at End of PeriodCentral $        564,608                1,757 $         321,348                   44.8                     3.3 50Southeast             538,170                1,635             329,156                   27.2                     5.0 31Northwest             258,407                    483             535,004                   14.3                     2.8 18West             472,655                1,140             414,610                   21.7                     4.4 26Florida             368,758                1,013             364,026                   22.5                     3.8 26Total $     2,202,598                6,028 $         365,394                130.5                     3.8 151   Year Ended December 31, 2023 As of December 31, 2023Reportable Segment Revenues Home Closings ASP Average Community Count Average MonthlyAbsorption Rate Community Count at End of PeriodCentral $         730,688                2,241 $         326,054                   35.7                    5.2 40Southeast             556,808                1,716             324,480                   24.8                    5.8 28Northwest             251,171                   511             491,528                   10.2                    4.2 11West             381,102                   992             384,175                   14.0                    5.9 16Florida             438,811                1,269             345,793                   19.2                    5.5 22Total $     2,358,580                6,729 $         350,510                103.9                    5.4 117                Owned and Controlled Lots The table below shows (i) home closings by reportable segment for the year ended December 31, 2024 and (ii) the Company’s owned or controlled lots by reportable segment as of December 31, 2024.   Year Ended December 31, 2024 As of December 31, 2024Reportable Segment Home Closings Owned (1) Controlled TotalCentral                     1,757                   20,099                     3,542                   23,641Southeast                     1,635                   13,870                     4,434                   18,304Northwest                         483                     5,161                     3,000                     8,161West                     1,140                     8,829                     4,119                   12,948Florida                     1,013                     5,358                     2,487                     7,845Total                     6,028                   53,317                   17,582                   70,899 (1)  Of the 53,317 owned lots as of December 31, 2024, 37,432 were raw/under development lots and 15,885 were finished lots. 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):      Year Ended December 31,2024 (4) 2023 (5) 2022 (6)Net orders (1)                     6,037                      6,617                      5,268 Cancellation rate (2)  22.8%  25.4%  24.4%Ending backlog - homes (3)                         599                          590                          702 Ending backlog - value (3) $             236,511  $             224,851  $             252,002  (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 December 31, 2024, the Company had 146 units related to bulk sales agreements associated with its wholesale business.(5)  As of December 31, 2023, the Company had 60 units related to bulk sales agreements associated with its wholesale business.(6)  As of December 31, 2022, the Company had 157 units related to bulk sales agreements associated with its wholesale business. CONTACT:      Joshua D. FattorExecutive Vice President, Investor Relations and Capital Markets(281) 210-2586investorrelations@lgihomes.com

Related News