LGI Homes(US:LGIH)2025-04-29 22:58Financial Performance - Home sales revenues decreased by 10.1% to $351.4 million from $390.9 million year-over-year[86] - Homes closed decreased by 8.0% to 996 homes from 1,083 homes year-over-year[86] - Average sales price per home closed decreased by 2.2% to $352,831 from $360,897 year-over-year[86] - Net income decreased by 76.6% to $4.0 million from $17.1 million year-over-year[86] - EBITDA for the three months ended March 31, 2025, was $14.9 million, a decrease of $15.5 million, or 51.1%, from $30.4 million for the same period in 2024, with an EBITDA margin of 4.2% compared to 7.8% in 2024[106] - Operating income for the three months ended March 31, 2025, was $0.2 million, a decrease of $18.6 million, or 99.1%, from $18.7 million for the same period in 2024[97] Margins and Expenses - Gross margin as a percentage of home sales revenues decreased to 21.0% from 23.4%[86] - Gross margin for the three months ended March 31, 2025, was $73.7 million, a decrease of $17.7 million, or 19.4%, from $91.4 million for the same period in 2024, with a gross margin percentage of 21.0% compared to 23.4% in 2024[92] - Selling expenses for the three months ended March 31, 2025, were $42.3 million, an increase of $1.2 million, or 3.0%, from $41.1 million for the same period in 2024[93] - General and administrative expenses for the three months ended March 31, 2025, were $31.2 million, a decrease of $0.3 million, or 1.1%, from $31.5 million for the same period in 2024[94] Orders and Backlog - The company ended the quarter with a backlog of 1,040 homes[80] - Net orders decreased by 21.4% to 1,437 homes for the three months ended March 31, 2025, compared to 1,828 homes for the same period in 2024[110] - Ending backlog decreased by 22.1% to 1,040 homes as of March 31, 2025, compared to 1,335 homes as of March 31, 2024[109] - The value of the ending backlog was $406.2 million as of March 31, 2025, down from $519.5 million as of March 31, 2024[110] Community and Lot Inventory - The average community count increased to 148.0 from 116.7 year-over-year[87] - The company had 146 active communities as of March 31, 2025, compared to 120 active communities a year earlier[82] - The company had 146 active communities as of March 31, 2025, compared to 151 as of December 31, 2024[111] - The company owned and controlled 67,792 lots as of March 31, 2025, down from 70,899 lots at December 31, 2024[85] - Lot inventory decreased to 67,792 lots as of March 31, 2025, from 70,899 lots as of December 31, 2024[112] Cash and Debt Management - As of March 31, 2025, the company had $57.6 million in cash and cash equivalents[121] - The company entered into a $1.1825 billion revolving credit facility, maturing on April 28, 2029, with 82.2% of the commitments due at that time[127] - As of March 31, 2025, borrowings under the credit agreement totaled approximately $1.6 billion, with $302.4 million available to borrow[129] - The company issued $400.0 million of 2032 Senior Notes with a 7.000% interest rate, maturing on November 15, 2032[132] - The company issued $400.0 million of 2028 Senior Notes with an 8.750% interest rate, maturing on December 15, 2028[134] - As of March 31, 2025, outstanding letters of credit, surety bonds, and financial guarantees totaled $427.2 million[137] Cash Flow - Net cash used in operating activities was $127.1 million for the three months ended March 31, 2025, primarily due to a $186.6 million decrease in real estate inventory[139] - Net cash provided by financing activities was $131.8 million during the three months ended March 31, 2025, driven by $172.5 million of borrowings under the 2024 Credit Agreement[143] - The company reported a net cash used in investing activities of $0.2 million for the three months ended March 31, 2025[142] Market Conditions and Risks - Inflation may adversely impact the company due to higher costs in land, financing, labor, materials, and construction[145] - The company operates with interest rate sensitivity, which may affect homebuyer financing and overall housing demand[153] - As of March 31, 2025, the company had $544.4 million of variable rate indebtedness outstanding under the 2024 Credit Agreement[156] - The interest rate for the variable rate indebtedness was SOFR plus 1.85%, with SOFR at 4.32% as of March 31, 2025[156] - A hypothetical 100 basis point increase in the average interest rate above the SOFR floor would increase the company's annual interest cost by approximately $5.4 million[156] - The company believes that future interest rate risks related to existing indebtedness will not have a material adverse impact on its financial position, results of operations, or liquidity[157]