LGI Homes, Inc. Reports Second Quarter 2025 Results

Core Insights - LGI Homes, Inc. reported solid financial results for Q2 2025, achieving profitability metrics at the high end of prior guidance [1] - The company delivered 1,323 homes with an average sales price of $365,446, generating $483.5 million in revenue [2] - Despite resilient demand for homeownership, affordability challenges due to interest rates led to a decline in net orders [3] - The company has withdrawn its full-year 2025 guidance but provided a more cautious outlook for Q3 2025 [4] Financial Performance - Home sales revenues for Q2 2025 were $483.5 million, down from $602.5 million in Q2 2024 [20] - Gross margin increased to 22.9%, while adjusted gross margin rose to 25.5%, both reflecting a sequential increase of 190 basis points [2][20] - Net income for Q2 2025 was $31.5 million, translating to $1.36 basic and diluted EPS, compared to $58.6 million and $2.49 EPS in Q2 2024 [20] Market Conditions - The company experienced a sequential decline in net orders due to economic uncertainty and high interest rates, with net orders for the six months ending June 30, 2025, at 2,528, down from 3,541 in the previous year [30] - The cancellation rate increased to 24.2% in 2025 from 19.5% in 2024, indicating challenges in maintaining order volumes [30] - The ending backlog as of June 30, 2025, consisted of 808 homes valued at $322.5 million, significantly lower than the previous year's backlog of 1,393 homes valued at $553.6 million [30] Operational Highlights - The company repurchased 367,568 shares of common stock during Q2 2025 for a total of $20.6 million [2] - As of June 30, 2025, LGI Homes had 146 active selling communities and controlled a total of 64,756 lots [9] - The company aims to improve profit margins and earnings per share through cost-saving measures and operational efficiencies [2]