LGI Homes reported revenue of $390.9 million in the first quarter, reflecting a year-over-year decline of 19.8%.
The company closed 1,083 homes at an average sales price of $360,897.
The first quarter gross margin was 23.4%, with an adjusted gross margin of 25.3%.
Selling expenses were reported at $41.1 million or 10.5% of revenue.
General and Administrative Expenses totaled $31.5 million or 8.1% of revenue.
Pretax net income for the quarter was $23.1 million, or 5.9% of revenue.
Net income was $17.1 million or $0.72 per basic and diluted share.
Future Guidance
LGI Homes forecasts closing between 7,000 and 8,000 homes for the full year, with an average selling price between $350,000 and $360,000.
Full year gross margin guidance is between 23.1% and 24.1%, and adjusted gross margin between 25% and 26%.
Selling, General, and Administrative (SG&A) expense as a percentage of revenue is expected to range between 12.5% and 13.5% for the full year.
The company plans to be active in approximately 150 communities at year-end.
Additional capital is anticipated to be allocated to share repurchases in the coming quarters.
Trends, Market Conditions, Sentiment
The first quarter started slower in closings but showed improved lead and sales trends towards the end, with net orders significantly increasing from February to March.
The sales improvements were achieved through marketing and training efforts, without resorting to price discounting or increasing incentives.
Strong demand persists, supported by demographic trends and a limited supply of affordable homes.
Cost control efforts were successful, contributing to an increase in profit margins.
A high level of land acquisition and development activity is ongoing to support future growth.
The company reported a strong backlog of homes, positioning it favorably for future closings.
Continued confidence in demand despite recent upticks in interest rates, with lead creation and sales momentum maintaining strength into the current period.
Notable Quotes
”Despite the slower start in closings, the improved lead and sales trends we saw in February accelerated further in March."
"These improvements were accomplished solely through marketing and training not through price discounting or increasing incentives."
"As more of these land deals come online, we expect revenue to grow at a faster pace than inventory."
"For the fourth consecutive year, LGI Homes has received the Top Workplace USA Award… We value our people immensely and it’s satisfying to know that they value LGI Homes just as much."
"Despite the recent uptick in interest rates, the positive trends we witnessed in March continued into April.”
