LGI Homes(US:LGIH)2024-11-05 22:00Home Sales Performance - Home sales revenues increased by 5.6% to $651.9 million for the three months ended September 30, 2024, compared to $617.5 million for the same period in 2023[66]. - Homes closed increased by 0.3% to 1,757 homes for the three months ended September 30, 2024, compared to 1,751 homes for the same period in 2023[66]. - Average sales price per home closed rose by 5.2% to $371,004 for the three months ended September 30, 2024, from $352,678 in the same period of 2023[66]. - For the nine months ended September 30, 2024, home sales revenues decreased by 6.0% to $1.6 billion from $1.8 billion in the same period in 2023[69]. - Homes closed decreased by 9.6% to 4,495 homes for the nine months ended September 30, 2024, compared to 4,971 homes for the same period in 2023[69]. - Home sales revenues for the three months ended September 30, 2024 were $651.9 million, an increase of $34.3 million, or 5.6%, from $617.5 million for the same period in 2023[78]. - Home sales revenues in the West reportable segment increased by $55.7 million, or 58.7%, during the three months ended September 30, 2024, due to a 45.0% increase in the number of homes closed[80]. - Home sales revenues in the Florida reportable segment decreased by $23.2 million, or 19.1%, during the three months ended September 30, 2024, primarily due to a 24.3% decrease in the number of homes closed[80]. - Total home sales revenues for the nine months ended September 30, 2024 were $1,645.2 million, with an average sales price per home closed of $366,007[84]. - Home sales revenues in the Central segment decreased by $123.0 million, or 21.8%, primarily due to a 20.9% decrease in the number of homes closed[87]. - Home sales revenues in the Southeast segment increased by $9.5 million, or 2.4%, due to a 1.2% increase in the number of homes closed[87]. - Home sales revenues in the West segment increased by $95.3 million, or 37.1%, due to a 26.2% increase in the number of homes closed[87]. Financial Metrics - Gross margin as a percentage of home sales revenues increased to 24.7% for the nine months ended September 30, 2024, from 22.8% in the same period in 2023[69]. - Adjusted gross margin (non-GAAP) as a percentage of home sales revenues was 26.7% for the nine months ended September 30, 2024, compared to 24.5% for the same period in 2023[69]. - Net income increased by 3.8% to $69.6 million for the three months ended September 30, 2024, compared to $67.0 million for the same period in 2023[68]. - Gross margin for the three months ended September 30, 2024 was $163.5 million, an increase of $4.7 million, or 3.0%, from $158.8 million for the same period in 2023[80]. - Net income for the three months ended September 30, 2024 was $69.6 million, an increase of $2.5 million, or 3.8%, from $67.0 million for the same period in 2023[82]. - Operating income for the nine months ended September 30, 2024 was $166.6 million, a decrease of $6.9 million, or 4.0%, from $173.4 million for the same period in 2023[89]. - Net income for the nine months ended September 30, 2024 was $145.2 million, a decrease of $1.9 million, or 1.3%, from $147.1 million for the same period in 2023[89]. - EBITDA for the three months ended September 30, 2024, was $105.636 million, representing a 6.8% increase from $98.822 million in the same period of 2023[96]. - The EBITDA margin for the nine months ended September 30, 2024, was 13.6%, up from 12.5% in the same period of 2023[96]. Inventory and Backlog - The ending backlog of homes as of September 30, 2024, decreased by 21.0% to 1,088 homes compared to 1,377 homes as of September 30, 2023[97]. - The value of the ending backlog as of September 30, 2024, was $417.798 million, down from $509.932 million in the same period of 2023[99]. - The total number of owned or controlled lots decreased to 68,564 as of September 30, 2024, from 71,081 as of December 31, 2023[101]. - The company had 138 active communities as of September 30, 2024, compared to 117 as of December 31, 2023[101]. Cash Flow and Financing - As of September 30, 2024, the company had $60.9 million in cash and cash equivalents[107]. - The company has a $1.205 billion revolving credit facility, with a maximum available to borrow of $1.9 billion as of September 30, 2024[110]. - As of September 30, 2024, the company reported net cash used in operating activities of $200.7 million, primarily driven by a $390.9 million decrease in real estate inventory[115]. - The company experienced net cash provided by financing activities of $219.3 million during the nine months ended September 30, 2024, primarily from $507.7 million of borrowings under the 2023 Credit Agreement[117]. - The company issued $400.0 million aggregate principal amount of 2028 Senior Notes, maturing on December 15, 2028, with an interest rate of 8.750% per annum[111]. - The company has a stock repurchase program with $193.5 million remaining for future purchases as of September 30, 2024[114]. - The company repurchased 172,990 shares of common stock for $18.0 million during the nine months ended September 30, 2024, with a total of 3,112,462 shares repurchased since the program's inception[114]. Debt and Interest Rate Exposure - As of September 30, 2024, the company had $863.3 million of variable rate indebtedness outstanding under the 2023 Credit Agreement[126]. - The interest rate for the variable rate indebtedness was SOFR plus 1.85%, with SOFR at 4.85% as of September 30, 2024[126]. - A hypothetical 100 basis point increase in the average interest rate above the SOFR floor would increase annual interest costs by approximately $8.6 million[126]. - The company utilizes both fixed-rate debt ($300 million of 2029 Senior Notes and $400 million of 2028 Senior Notes) and variable-rate debt as part of its financing strategy[125]. - The company does not believe that future interest rate risks related to existing indebtedness will materially impact its financial position or liquidity[126]. - The company is exposed to market risks related to fluctuations in interest rates, which may adversely affect revenues, gross margin, and net income[124]. - The company has no obligation to prepay its fixed-rate debt prior to maturity, mitigating interest rate risk on that portion[125]. - The company’s operations are sensitive to interest rate changes, which can affect homebuyer financing capabilities[124]. Strategic Focus and Risks - The company is focused on expanding its business model to include higher price point homes and larger communities[122]. - The company faces various risks including economic changes, supply chain disruptions, and competition that could impact future operations[122]. - The company expects seasonal fluctuations in revenues and capital requirements, with higher activity typically in the second, third, and fourth quarters[106]. - The company is in compliance with all covenants contained in the 2023 Credit Agreement as of September 30, 2024[110]. - The borrowing base under the 2023 Credit Agreement was $2.0 billion as of September 30, 2024[110].