“We delivered a strong performance in the fourth quarter and successfully achieved all of our guidance targets for 2023,” said
“Our strong execution in the fourth quarter resulted in full year closings of 6,729 homes and revenue of
“Our priorities this year are reflected in our full year 2024 guidance and include increasing community count, growing closings and revenue, and further improving profitability. While inflation has moderated, current levels may prove to be more stubborn than previously expected, making the outlook for interest rates and the broader economy impossible to determine with certainty. Therefore, our focus remains on increasing leads through targeted marketing, controlling costs, efficiently building affordable, move-in ready homes at a disciplined pace, maintaining our strong balance sheet, and identifying opportunities to enhance our long-term growth and profitability.”
Fourth Quarter 2023 Highlights (comparisons to fourth quarter 2022)
- Home sales revenues increased 24.6% to
$608.4 million - Homes closed increased 21.4% to 1,758 homes
- Average sales price per home closed increased 2.6% to
$346,083 - Gross margin as a percentage of home sales revenues increased 270 basis points to 23.4%
- Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased 300 basis points to 25.1%
- Net income before income taxes increased 46.3% to
$68.5 million - Net income increased 52.7% to
$52.1 million , or$2.21 basic EPS and$2.19 diluted EPS
Full Year 2023 Highlights (comparisons to full year 2022)
- Home sales revenues increased 2.3% to
$2.4 billion - Homes closed increased 1.6% to 6,729 homes
- Average sales price per home closed increased 0.7% to
$350,510 - Gross margin as a percentage of home sales revenues decreased 510 basis points to 23.0%
- Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased 450 basis points to 24.7%
- Net income before income taxes decreased 37.4% to
$261.8 million - Net income decreased 39.0% to
$199.2 million , or$8.48 basic EPS and$8.42 diluted EPS - Active selling communities at
December 31, 2023 increased 18.2% to 117 - Owned lots of 55,331 and controlled lots of 15,750, resulting in total owned and controlled lots of 71,081 at
December 31, 2023 - Ending backlog at
December 31, 2023 of 590 homes - Ending backlog value at
December 31, 2023 of$224.9 million
Please see “Non-GAAP Measures” for a reconciliation of Adjusted Gross Margin (a non-GAAP measure) to Gross Margin, the most directly comparable GAAP measure.
Balance Sheet
- Net debt to capitalization of 39.3% at
December 31, 2023 - Total liquidity of
$403.8 million atDecember 31, 2023 , including cash and cash equivalents of$49.0 million and$354 .8 million of availability under the Company’s revolving credit facility
Full Year 2024 Outlook
Subject to the caveats in the Forward-Looking Statements section of this press release and the assumptions noted below, the Company is providing the following guidance for the full year 2024. The Company expects:
- Home closings between 7,000 and 8,000
- Active selling communities at the end of 2024 of approximately 150
- Average sales price per home closed between
$350,000 and$360,000 - Gross margin as a percentage of home sales revenues between 23.1% and 24.1%
- Adjusted gross margin (non-GAAP) as a percentage of home sales revenues between 25.0% and 26.0% with capitalized interest accounting for substantially all the difference between gross margin and adjusted gross margin
- SG&A as a percentage of home sales revenues between 12.5% and 13.5%
- Effective tax rate between 24.0% and 25.0%
This outlook assumes that general economic conditions, including input costs, materials, product and labor availability, interest rates and mortgage availability, in the remainder of 2024 are similar to those experienced to date in 2024 and that the average sales price per home closed, construction costs, availability of land and land development costs in the remainder of 2024 are consistent with the Company’s recent experience. In addition, this outlook assumes that governmental regulations relating to land development and home construction are similar to those currently in place.
Earnings Conference Call
The Company will host a conference call via live webcast for investors and other interested parties beginning at
Participants may access the live webcast by visiting the Investor Relations section of the Company’s website at www.lgihomes.com.
An archive of the Earnings Call webcast will be available for replay on the Company’s website for one year from the date of the Earnings Call.
About
Headquartered in
Forward-Looking Statements
Any statements made in this press release or on the Earnings Call that are not statements of historical fact, including statements about the Company’s beliefs and expectations, are forward-looking statements within the meaning of the federal securities laws, and should be evaluated as such. Forward-looking statements include information concerning projected 2024 home closings, active selling communities, average sales price per home closed, gross margin as a percentage of home sales revenues, adjusted gross margin as a percentage of homes sales revenues, SG&A as a percentage of home sales revenues and effective tax rate, as well as market conditions and possible or assumed future results of operations, including descriptions of the Company’s business plan and strategies. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will” or, in each case, their negative, or other variations or comparable terminology. For more information concerning factors that could cause actual results to differ materially from those contained in the forward-looking statements please refer to the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
2023 | 2022 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 48,978 | $ | 31,998 | ||||
Accounts receivable | 41,319 | 25,143 | ||||||
Real estate inventory | 3,107,648 | 2,898,296 | ||||||
Pre-acquisition costs and deposits | 30,354 | 25,031 | ||||||
Property and equipment, net | 45,522 | 32,997 | ||||||
Other assets | 113,849 | 93,159 | ||||||
Deferred tax assets, net | 8,163 | 6,186 | ||||||
12,018 | 12,018 | |||||||
Total assets | $ | 3,407,851 | $ | 3,124,828 | ||||
LIABILITIES AND EQUITY | ||||||||
Accounts payable | $ | 31,616 | $ | 25,287 | ||||
Accrued expenses and other liabilities | 271,872 | 340,128 | ||||||
Notes payable | 1,248,332 | 1,117,001 | ||||||
Total liabilities | 1,551,820 | 1,482,416 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY | ||||||||
Common stock, par value shares issued and 23,581,648 shares outstanding as of 27,245,278 shares issued and 23,305,806 shares outstanding as of | 275 | 272 | ||||||
Additional paid-in capital | 321,062 | 306,673 | ||||||
Retained earnings | 1,889,716 | 1,690,489 | ||||||
(355,022 | ) | (355,022 | ) | |||||
Total equity | 1,856,031 | 1,642,412 | ||||||
Total liabilities and equity | $ | 3,407,851 | $ | 3,124,828 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended | Year Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Home sales revenues | $ | 608,414 | $ | 488,262 | $ | 2,358,580 | $ | 2,304,455 | ||||||||
Cost of sales | 465,785 | 387,227 | 1,816,393 | 1,657,855 | ||||||||||||
Selling expenses | 49,771 | 33,323 | 191,582 | 144,928 | ||||||||||||
General and administrative | 33,016 | 26,908 | 117,350 | 111,565 | ||||||||||||
Operating income | 59,842 | 40,804 | 233,255 | 390,107 | ||||||||||||
Other income, net | (8,706 | ) | (6,049 | ) | (28,499 | ) | (28,009 | ) | ||||||||
Net income before income taxes | 68,548 | 46,853 | 261,754 | 418,116 | ||||||||||||
Income tax provision | 16,459 | 12,738 | 62,527 | 91,549 | ||||||||||||
Net income | $ | 52,089 | $ | 34,115 | $ | 199,227 | $ | 326,567 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 2.21 | $ | 1.46 | $ | 8.48 | $ | 13.90 | ||||||||
Diluted | $ | 2.19 | $ | 1.45 | $ | 8.42 | $ | 13.76 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 23,565,640 | 23,291,372 | 23,507,136 | 23,486,465 | ||||||||||||
Diluted | 23,737,448 | 23,513,303 | 23,648,548 | 23,730,770 |
Non-GAAP Measures
In addition to the results reported in accordance with accounting principles generally accepted in
Adjusted Gross Margin
Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. The Company defines adjusted gross margin as gross margin less capitalized interest and adjustments resulting from the application of purchase accounting included in the cost of sales. Management believes this information is useful because it isolates the impact that capitalized interest and purchase accounting adjustments have on gross margin. However, because adjusted gross margin information excludes capitalized interest and purchase accounting adjustments, which have real economic effects and could impact results, the utility of adjusted gross margin information as a measure of the Company’s operating performance may be limited. In addition, other companies may not calculate adjusted gross margin information in the same manner that the Company does. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of the Company’s performance.
The following table reconciles adjusted gross margin to gross margin, which is the GAAP financial measure that management believes to be most directly comparable (dollars in thousands, unaudited):
Three Months Ended | Year Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Home sales revenues | $ | 608,414 | $ | 488,262 | $ | 2,358,580 | $ | 2,304,455 | ||||||||
Cost of sales | 465,785 | 387,227 | 1,816,393 | 1,657,855 | ||||||||||||
Gross margin | 142,629 | 101,035 | 542,187 | 646,600 | ||||||||||||
Capitalized interest charged to cost of sales | 8,893 | 5,411 | 33,368 | 20,276 | ||||||||||||
Purchase accounting adjustments (1) | 981 | 1,399 | 6,492 | 6,869 | ||||||||||||
Adjusted gross margin | $ | 152,503 | $ | 107,845 | $ | 582,047 | $ | 673,745 | ||||||||
Gross margin % (2) | 23.4 | % | 20.7 | % | 23.0 | % | 28.1 | % | ||||||||
Adjusted gross margin % (2) | 25.1 | % | 22.1 | % | 24.7 | % | 29.2 | % | ||||||||
(1) | Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates. |
(2) | Calculated as a percentage of home sales revenues. |
Home Sales Revenues, Home Closings, Average Sales Price Per Home Closed (ASP), Average Community Count and Average Monthly Absorption Rates by Reportable Segment
(Revenues in thousands, unaudited)
Three Months Ended | ||||||||||||
Reportable Segment | Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||
Central | $ | 166,108 | 517 | $ | 321,292 | 36.7 | 4.7 | |||||
Southeast | 159,190 | 500 | 318,380 | 27.0 | 6.2 | |||||||
Northwest | 38,286 | 78 | 490,846 | 10.3 | 2.5 | |||||||
West | 124,527 | 320 | 389,147 | 16.0 | 6.7 | |||||||
120,303 | 343 | 350,738 | 22.3 | 5.1 | ||||||||
Total | $ | 608,414 | 1,758 | $ | 346,083 | 112.3 | 5.2 |
Three Months Ended | ||||||||||||
Reportable Segment | Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||
Central | $ | 204,444 | 634 | $ | 322,467 | 33.7 | 6.3 | |||||
Southeast | 126,830 | 386 | 328,575 | 23.0 | 5.6 | |||||||
Northwest | 32,976 | 73 | 451,726 | 8.3 | 2.9 | |||||||
West | 56,365 | 153 | 368,399 | 12.3 | 4.1 | |||||||
67,647 | 202 | 334,886 | 17.0 | 4.0 | ||||||||
Total | $ | 488,262 | 1,448 | $ | 337,198 | 94.3 | 5.1 |
Year Ended | ||||||||||||
Reportable Segment | Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||
Central | $ | 730,688 | 2,241 | $ | 326,054 | 35.7 | 5.2 | |||||
Southeast | 556,808 | 1,716 | 324,480 | 24.8 | 5.8 | |||||||
Northwest | 251,171 | 511 | 491,528 | 10.2 | 4.2 | |||||||
West | 381,102 | 992 | 384,175 | 14.0 | 5.9 | |||||||
438,811 | 1,269 | 345,793 | 19.2 | 5.5 | ||||||||
Total | $ | 2,358,580 | 6,729 | $ | 350,510 | 103.9 | 5.4 |
Year Ended | ||||||||||||
Reportable Segment | Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||
Central | $ | 1,011,844 | 3,094 | $ | 327,034 | 31.9 | 8.1 | |||||
Southeast | 455,340 | 1,404 | 324,316 | 21.5 | 5.4 | |||||||
Northwest | 253,416 | 502 | 504,813 | 8.5 | 4.9 | |||||||
West | 300,968 | 751 | 400,756 | 11.5 | 5.4 | |||||||
282,887 | 870 | 325,157 | 18.5 | 3.9 | ||||||||
Total | $ | 2,304,455 | 6,621 | $ | 348,052 | 91.9 | 6.0 |
Owned and Controlled Lots
The table below shows (i) home closings by reportable segment for the year ended
Year Ended 2023 | As of | |||||||
Reportable Segment | Home Closings | Owned (1) | Controlled | Total | ||||
Central | 2,241 | 20,606 | 3,093 | 23,699 | ||||
Southeast | 1,716 | 14,563 | 5,429 | 19,992 | ||||
Northwest | 511 | 5,934 | 1,652 | 7,586 | ||||
West | 992 | 9,049 | 2,747 | 11,796 | ||||
1,269 | 5,179 | 2,829 | 8,008 | |||||
Total | 6,729 | 55,331 | 15,750 | 71,081 |
(1) | Of the 55,331 owned lots as of |
Backlog Data
As of the dates set forth below, the Company’s net orders, cancellation rate, and ending backlog homes and value were as follows (dollars in thousands, unaudited):
Year Ended | ||||||||||||
2023(4) | 2022(5) | 2021 (6) | ||||||||||
Net orders (1) | 6,617 | 5,268 | 9,533 | |||||||||
Cancellation rate (2) | 25.4 | % | 24.4 | % | 19.3 | % | ||||||
Ending backlog - homes (3) | 590 | 702 | 2,055 | |||||||||
Ending backlog - value (3) | $ | 224,851 | $ | 252,002 | $ | 659,234 |
(1) | Net orders are new (gross) orders for the purchase of homes during the period, less cancellations of existing purchase contracts during the period. |
(2) | Cancellation rate for a period is the total number of purchase contracts cancelled during the period divided by the total new (gross) orders for the purchase of homes during the period. |
(3) | Ending backlog consists of retail homes at the end of the period that are under a purchase contract that has been signed by homebuyers who have met preliminary financing criteria but have not yet closed and wholesale contracts with varying terms. Ending backlog is valued at the contract amount. |
(4) | As of |
(5) | As of |
(6) | As of |
CONTACT:
Vice President of Investor Relations
(281) 210-2586
investorrelations@lgihomes.com
Source:
2024 GlobeNewswire, Inc., source