LGI Homes, Inc. (NASDAQ:LGIH) Q3 2022 Earnings Conference Call November 1, 2022 12:30 PM ET Company Participants Josh Fattor - Vice President, Investor Relations Eric Lipar - Chief Executive Officer and Chairman Charles Merdian - Chief Financial Officer and Treasurer Conference Call Participants Truman Patterson - Wolfe Research Kenneth Zener - KeyBanc Carl Reichardt - BTIG Jay McCanless - Wedbush Alex Barron - Housing Research Center Operator Welcome to LGI Homes Third Quarter 2022 Conference Call. Today’s ...

Financial Data and Key Metrics Changes - The company closed 2027 homes in Q2 2022, with an average selling price of over $356,000, resulting in revenue of over $723 million, a decline of only 8.6% from the previous year [9][15] - Gross margin reached a record 32%, a 500-basis-point improvement year-over-year, while adjusted gross margin was also a record at 33.1%, a 460-basis-point improvement [11][17] - EBITDA for the quarter was $169.1 million, representing 23.4% of revenue, a 320-basis-point improvement from the same period last year [20] - Reported net income was $123.4 million, or 17.1% of revenue, also a new company record, with earnings per share increasing by 10.3% year-over-year [23] Business Line Data and Key Metrics Changes - Wholesale business accounted for 7.2% of total closings, down from 15.1% in the same quarter last year, due to a strategic shift towards retail sales [14] - Gross orders for the quarter were 1,244, with net orders at 864, reflecting a 57.3% decrease in net orders compared to the previous year [23] Market Data and Key Metrics Changes - Houston was the top market with 13.6 closings per community per month, followed by Charlotte (12), Dallas Fort Worth (11.8), San Antonio (10.7), and Tucson (10.3) [10] - The company operates in 35 markets across 20 states, having recently closed its first home in Maryland [10] Company Strategy and Development Direction - The company is adjusting its full-year guidance to reflect a closing range of 7,500 to 8,300 homes, down from previous expectations, while maintaining a focus on community count growth of 20% to 30% next year [32][33] - The company is optimistic about long-term growth due to supportive demographic trends, strong labor markets, and low inventory levels [36][41] - The company plans to normalize pricing in new communities, targeting gross margins in the 25% to 28% range moving forward [41][96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite uncertainties in the housing market, citing a solid balance sheet and an attractive land pipeline [12] - The company is increasing marketing spend to drive sales, with nearly 20,000 inquiries about homeownership in July, a 54% increase year-over-year [37][122] - Management acknowledged challenges in the supply chain and development processes but expects improvements in the near future [89] Other Important Information - The company ended the quarter with a backlog of 1,266 homes valued at over $445 million and a land portfolio of 9,984 owned and controlled lots, an 18.5% increase year-over-year [25] - The company repurchased 417,861 shares for $37.4 million during the quarter, with $211.5 million remaining on its stock repurchase program [30] Q&A Session Summary Question: What are the main drivers of gross margin outlook in the back half of the year? - Management indicated that new communities coming online at lower margins, increased wholesale closings, and decreasing costs will influence gross margin [47][49] Question: Have sellers become more willing to negotiate on terms or pricing? - Management noted that while there haven't been significant price decreases in land, they are seeing opportunities for finished lots [50][52] Question: How is demand assessed given selective order acceptance? - Management highlighted that demand remains strong, with orders increasing for four consecutive months, and they are ramping up marketing efforts [118][122] Question: What is the expected community growth for fiscal 2023? - Management is confident in a community count growth of 20% to 30% for 2023, despite delays in development [87] Question: What is the outlook on cancellations? - Cancellations are primarily affordability-related, with some customers unable to qualify due to rising rates [105][108]

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20LGI%20Homes%2C%20Inc.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Presents LGI Homes' unaudited consolidated financial statements, detailing increased inventory, notes payable, mixed revenue and net income, and negative operating cash flow [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20and%20December%2031%2C%202021) Total assets increased to **$2.87 billion** driven by real estate inventory, while liabilities grew to **$1.36 billion** due to notes payable, and equity rose to **$1.51 billion** Consolidated Balance Sheet Highlights | Account | June 30, 2022 | December 31, 2021 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $42.0M | $50.5M | ($8.5M) | | Real estate inventory | $2,633.7M | $2,085.9M | $547.8M | | **Total Assets** | **$2,873.4M** | **$2,351.9M** | **$521.5M** | | **Liabilities & Equity** | | | | | Notes payable | $1,155.5M | $805.2M | $350.2M | | **Total Liabilities** | **$1,359.4M** | **$956.0M** | **$403.4M** | | **Total Equity** | **$1,513.9M** | **$1,395.8M** | **$118.1M** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021) Q2 2022 home sales revenues decreased **8.6%** while net income increased **4.4%**, contrasting with a **15.2%** revenue decline and **7.2%** net income decrease for the six-month period Quarterly Performance (Three Months Ended June 30) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Home sales revenues | $723.1M | $791.5M | -8.6% | | Operating income | $159.0M | $146.0M | +8.9% | | Net income | $123.4M | $118.1M | +4.4% | | Diluted EPS | $5.20 | $4.71 | +10.4% | Year-to-Date Performance (Six Months Ended June 30) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Home sales revenues | $1,269.1M | $1,497.5M | -15.2% | | Operating income | $254.7M | $268.5M | -5.1% | | Net income | $202.1M | $217.8M | -7.2% | | Diluted EPS | $8.43 | $8.66 | -2.7% | [Consolidated Statements of Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%202021) Total equity increased to **$1.51 billion** by June 30, 2022, driven by **$202.1 million** in net income, partially offset by **$95.1 million** in stock repurchases - For the six months ended June 30, 2022, total equity increased by **$118.1 million**, reflecting net income of **$202.1 million**, offset by stock repurchases totaling **$95.1 million** ($57.7M in Q1 and $37.4M in Q2)[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202022%20and%202021) Net cash used in operating activities was **$263.3 million** for H1 2022 due to inventory investment, offset by **$257.2 million** from financing activities, resulting in cash and cash equivalents of **$42.0 million** Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | ($263.3M) | $139.9M | | Net cash used in investing activities | ($2.5M) | ($29.8M) | | Net cash from (used in) financing activities | $257.2M | ($34.3M) | | **Net (decrease) increase in cash** | **($8.5M)** | **$75.8M** | | **Cash at end of period** | **$42.0M** | **$111.7M** | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, **$2.63 billion** in real estate inventory, a **$1.1 billion** credit facility amendment, increased stock repurchase program to **$550 million**, and segment-level data - Real estate inventory increased to **$2.63 billion** as of June 30, 2022, up from **$2.09 billion** at the end of 2021, with homes in progress seeing a significant jump from **$449.7 million** to **$684.4 million**[31](index=31&type=chunk) - On April 29, 2022, the company amended its credit agreement, increasing commitments by **$250.0 million** to a total of **$1.1 billion** and replacing LIBOR with SOFR as the benchmark interest rate[39](index=39&type=chunk) - In February 2022, the Board of Directors increased the stock repurchase program authorization by **$200.0 million**, bringing the total to **$550.0 million** As of June 30, 2022, **$211.5 million** remained available for repurchases[52](index=52&type=chunk) Segment Revenues | Segment | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Central | $316.7M | $348.0M | $579.0M | $636.7M | | Southeast | $117.6M | $159.7M | $190.0M | $296.3M | | Northwest | $70.8M | $106.2M | $173.7M | $224.4M | | West | $124.0M | $80.8M | $179.5M | $162.0M | | Florida | $94.1M | $96.8M | $146.9M | $178.1M | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2022 market headwinds from rising mortgage rates, impacting demand and cancellations, while highlighting increased ASP and gross margins, and outlining strategic responses and liquidity position [Business Overview and Key Results](index=20&type=section&id=Business%20Overview%20and%20Key%20Results) The housing market faced Q2 2022 headwinds from rising mortgage rates, leading to decreased home closings but increased average sales prices and expanded gross margins, prompting strategic adjustments - In Q2 2022, a rapid increase in mortgage interest rates led to decreased demand and a higher than normal cancellation rate as potential homebuyers paused or reconsidered purchases[85](index=85&type=chunk) - The company's strategy to combat market headwinds includes increasing targeted advertising and slowing the pace of new home starts to match current absorption levels[86](index=86&type=chunk) Key Results - Q2 2022 vs Q2 2021 | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Home Sales Revenues | $723.1M | $791.5M | -8.6% | | Homes Closed | 2,027 | 2,856 | -29.0% | | Average Sales Price | $356,719 | $277,140 | +28.7% | | Gross Margin % | 32.0% | 27.0% | +500 bps | | Net Income | $123.4M | $118.1M | +4.4% | Key Results - H1 2022 vs H1 2021 | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Home Sales Revenues | $1.3B | $1.5B | -15.2% | | Homes Closed | 3,626 | 5,417 | -33.1% | | Average Sales Price | $350,005 | $276,438 | +26.6% | | Gross Margin % | 30.7% | 27.0% | +370 bps | | Net Income | $202.1M | $217.8M | -7.2% | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q2 2022 saw an **8.6%** revenue decline due to fewer closings, offset by a **28.7%** ASP increase and improved gross margin to **32.0%**, while H1 2022 revenue fell **15.2%** with G&A expenses rising - The increase in gross margin percentage for both Q2 and H1 2022 was primarily due to raising home prices higher than the increases in input costs[101](index=101&type=chunk)[116](index=116&type=chunk) - General and administrative expenses increased **25.0%** in Q2 and **19.5%** in H1 2022 compared to the prior year, mainly due to increased personnel costs and professional fees[103](index=103&type=chunk)[118](index=118&type=chunk) - Wholesale home sales revenues decreased significantly, from **$94.7 million** (430 homes) in Q2 2021 to **$36.9 million** (146 homes) in Q2 2022, due to a strategic prioritization of retail sales and cost volatility[99](index=99&type=chunk) [Non-GAAP Measures](index=29&type=section&id=Non-GAAP%20Measures) The company presents non-GAAP Adjusted Gross Margin and EBITDA, with Adjusted Gross Margin reaching **33.1%** in Q2 2022 and **31.9%** in H1 2022, reflecting core operating performance Adjusted Gross Margin Reconciliation | | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Gross margin | $231.4M | $214.1M | $389.8M | $404.0M | | Capitalized interest | $5.7M | $10.4M | $10.2M | $21.1M | | Purchase accounting | $2.0M | $1.4M | $4.3M | $2.3M | | **Adjusted gross margin** | **$239.1M** | **$226.0M** | **$404.3M** | **$427.4M** | | **Adjusted gross margin %** | **33.1%** | **28.5%** | **31.9%** | **28.5%** | [Backlog](index=31&type=section&id=Backlog) As of June 30, 2022, backlog decreased **73.6%** to **1,266 homes** valued at **$445.1 million**, with the cancellation rate rising to **20.8%** due to market shifts and strategic changes Backlog and Cancellation Data | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net orders | 2,837 | 7,254 | -61.0% | | Cancellation rate | 20.8% | 14.8% | +600 bps | | Ending backlog – homes | 1,266 | 4,801 | -73.6% | | Ending backlog – value | $445.1M | $1,434.4M | -68.9% | - The company modified its timing for entering sales contracts to later in the construction cycle to mitigate cost volatility, which contributed to the lower backlog[134](index=134&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company had **$42.0 million** in cash, relying on operating cash flow and its **$1.1 billion** credit facility, with **$203.7 million** available, and repurchased **$95.1 million** in stock - The company's credit facility was increased to **$1.1 billion** in April 2022 As of June 30, 2022, borrowings (including Senior Notes) were **$1.2 billion** against a borrowing base of **$1.4 billion**, with **$203.7 million** available[153](index=153&type=chunk)[155](index=155&type=chunk) - Net cash used in operating activities was **$263.3 million** for H1 2022, primarily due to a **$547.6 million** increase in real estate inventory[161](index=161&type=chunk) - Net cash provided by financing activities was **$257.2 million** for H1 2022, driven by **$371.2 million** in borrowings, which offset **$95.1 million** in stock repurchases[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity, impacting mortgage affordability and variable-rate debt costs, with a **100 bps** rate increase potentially raising annual interest costs by **$8.7 million** - The company's main market risk is from interest rate fluctuations, which can impact both housing demand and its own financing costs[176](index=176&type=chunk) - As of June 30, 2022, a hypothetical **100 basis point** increase in interest rates on the **$868.6 million** of variable rate debt would increase annual interest cost by approximately **$8.7 million**[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[181](index=181&type=chunk) - There were no material changes to the company's internal control over financial reporting during the second quarter of 2022[185](index=185&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors from the company's 2021 Form 10-K[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased **417,861 shares** for **$37.4 million** under its **$550 million** stock repurchase program, with **$211.5 million** remaining available Share Repurchases for Q2 2022 | Period | Shares Purchased | Average Price Paid | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | April 2022 | 0 | $0.00 | $0 | | May 2022 | 177,761 | $95.63 | $17.0M | | June 2022 | 240,100 | $85.15 | $20.4M | | **Total Q2** | **417,861** | **$89.61** | **$37.4M** | - As of June 30, 2022, approximately **$211.5 million** remained available for purchase under the company's stock repurchase program[188](index=188&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL data, and incorporates previously filed documents by reference - Exhibits filed include Sarbanes-Oxley certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[191](index=191&type=chunk)

LGI Homes, Inc. (NASDAQ:LGIH) Q1 2022 Earnings Conference Call May 3, 2022 12:30 PM ET Company Participants Josh Fattor – Vice President, Investor Relations Eric Lipar – Chief Executive Officer and Chairman Charles Merdian – Chief Financial Officer and Treasurer Conference Call Participants Deepa Raghavan – Wells Fargo Doug Wardlaw – J.P. Morgan Jay McCanless – Wedbush Securities Truman Patterson – Wolfe Research Carl Reichardt – BTIG Alex Barron – Housing Research Ken Zener – KeyBanc Operator Welcome to LG ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number 001-36126 LGI HOMES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or ...

LGI Homes, Inc. (NASDAQ:LGIH) Q4 2021 Earnings Conference Call February 15, 2022 12:30 PM ET Company Participants Joshua Fattor - Vice President, Investor Relations Eric Lipar - Chairman and Chief Executive Officer Charles Merdian - Chief Financial Officer and Treasurer Conference Call Participants Deepa Raghavan - Wells Fargo Securities Carl Reichardt - BTIG Jay McCanless - Wedbush Securities Mike Rehaut - JPMorgan Truman Patterson - Wolfe Research Disclaimer*: This transcript is designed to be used alongs ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2021 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number 001-36126 LGI HOMES, INC. (Exact name of registrant as specified in its charter) Delaware 46-3088013 (State or other jurisdiction of in ...

LGI Homes, Inc. (NASDAQ:LGIH) Q3 2021 Earnings Conference Call November 2, 2021 12:30 PM ET Company Participants Josh Fattor - Vice President, Investor Relations Eric Lipar - Chairman and Chief Executive Officer Charles Merdian - Chief Financial Officer and Treasurer Conference Call Participants Jay McCanless - Wedbush Carl Reichardt - BTIG Truman Patterson - Wolfe Research Ken Zener - KeyBanc Deepa Raghavan - Wells Fargo Securities Alex Barron - Housing Research Center Operator Welcome to LGI Homes Third Q ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2021 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number 001-36126 LGI HOMES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

LGI Homes, Inc. (NASDAQ:LGIH) Q2 2021 Earnings Conference Call August 3, 2021 12:30 PM ET Company Participants Joshua Fattor - VP, IR Eric Lipar - Chairman & CEO Charles Merdian - CFO & Treasurer Conference Call Participants Deepa Raghavan - Wells Fargo Securities Truman Patterson - Wolfe Research Margaret Wellborn - JPMorgan Chase & Co. Jay McCanless - Wedbush Securities Alex Barrón - Housing Research Center Operator Welcome to LGI Homes Second Quarter 2021 Conference Call. Today's call is being recorded, ...