Loading...
01/09 22:53
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative factors: a year-over-year revenue decline, decreased gross margins, and increased expenses. The Q&A highlights uncertainties around tariffs and unclear guidance on future margins. Despite a share buyback, the overall sentiment is negative due to economic uncertainties, increased incentives impacting margins, and management's lack of clarity in addressing concerns. With a market cap of approximately $2.1 billion, the stock is likely to experience a negative reaction, falling between -2% and -8% over the next two weeks.
Revenue $351,400,000 (10.1% decrease year-over-year); driven by an 8% decline in home closings and a 2.2% decline in average sales price.
Gross Margin 21% (decrease from 23.4% year-over-year); primarily due to a one-time expense related to the forward commitment incentive program, an increase in wholesale closings, and higher construction overhead.
Adjusted Gross Margin 23.6% (decrease from 25.3% year-over-year); excluded $8,300,000 of capitalized interest and $809,000 related to purchase accounting.
Selling, General and Administrative Expenses $73,500,000 (20.9% of revenue); increased due to higher advertising and personnel costs, partially offset by lower commissions.
Pre-tax Net Income $5,700,000 (1.6% of revenue); effective tax rate increased to 30.2% from 26.2% year-over-year due to timing of compensation costs.
Net Income $4,000,000 ($0.17 per share); cancellation rate improved to 16.3% from 16.8% year-over-year.
Backlog 10,040 homes valued at $406,200,000; strong backlog due to improved lead and order trends.
Debt Outstanding $1,600,000,000; debt to cap ratio of 44.3% and net debt to cap ratio of 43.4%.
Total Liquidity $360,000,000; includes $57,600,000 of cash and $302,400,000 of availability under credit facility.
Stock Buyback $3,100,000 spent on repurchasing 41,685 shares; $177,700,000 remaining on buyback authorization.
Book Value per Share $87.27; stockholders’ equity at over $2,000,000,000.
Land Position 67,792 owned and controlled lots (3.4% decrease year-over-year); 79.3% owned and 20.7% controlled.
Homes in Progress 1,522 homes; started 1,176 homes during the quarter.
Communities: LGI Homes ended the first quarter with 146 communities, a 22% increase over the prior year.
Top Markets: Top markets on a closings per community basis included Richmond (5.3), Charlotte (4.6), Raleigh (4.3), Atlanta (3.8), and Nashville (3.6).
Backlog: The company ended March with 1,040 homes in backlog, representing over $406,200,000.
Sales Training: Sales leaders were welcomed for intensive training to enhance performance and align with core values.
Home Closings: In Q1, LGI Homes delivered 996 homes at an average sales price of $352,831, resulting in revenue of $351,400,000.
Gross Margin: First quarter gross margin was 21%, down from 23.4% year-over-year, primarily due to a one-time expense and increased wholesale closings.
Market Positioning: The company is adjusting gross margin expectations due to anticipated tariff impacts and market conditions, lowering guidance by 100-150 basis points.
Incentives: Incentives for buyers are averaging 5-6% of average sales price to remain competitive in the market.
Affordability Challenges: Affordability remains the biggest challenge for buyers, affecting their ability to purchase homes and their confidence in moving forward with decisions.
Mortgage Rate Volatility: Higher mortgage rates have weighed on year-end backlog and contributed to a slow start in the first quarter, impacting sales and overall market confidence.
Tariff Impacts: Notices of price increases from suppliers due to tariffs are expected to affect margins, leading to a proactive adjustment of gross margin expectations.
Incentive Costs: Increased incentives averaging 5% to 6% of average sales price are impacting gross margins, as the company aims to remain competitive in a challenging market.
Supply Chain Challenges: The company is experiencing higher construction overhead, lot costs, and capitalized interest as a percentage of revenue, which are contributing to reduced operating leverage.
Economic Uncertainty: General economic uncertainty and concerns about job stability are affecting buyer confidence, particularly among higher credit score buyers.
Inventory Management: The company is managing a higher percentage of wholesale closings, which may impact gross margins and reflects a strategic response to current market conditions.
Sales Training Initiative: LGI Homes is focusing on intensive sales training for new sales leaders to enhance performance and align with core values.
Community Growth: The company ended the first quarter with 146 communities, a 22% increase year-over-year, and plans to grow to 160-170 active communities by year-end.
Incentive Programs: The company is leaning into incentives for buyers, averaging 5-6% of the average sales price to remain competitive in the market.
Wholesale Channel: Wholesale closings represented 18% of total closings, indicating a strategic focus on this channel.
Full Year Closing Target: LGI Homes maintains a closing target of 2,130 to 2,160 homes for the full year.
Average Selling Price Guidance: The average selling price is expected to be between $360,000 and $370,000.
Gross Margin Guidance: The company has adjusted its gross margin expectations to between 21.7% and 23.2% for the full year, down from previous estimates.
Adjusted Gross Margin Guidance: Adjusted gross margin is now expected to be between 24% and 25.5%.
Tax Rate Guidance: The effective tax rate is expected to be approximately 24.5% for the full year.
Share Repurchase: During the quarter, LGI Homes repurchased 41,685 shares of common stock for $3,100,000. The company has $177,700,000 remaining on its current stock buyback authorization.
The earnings call presents mixed signals. While there's an increase in net orders and backlog, margins have declined, and SG&A expenses remain high. The company is managing land inventory and has a positive outlook on ASP. The Q&A reveals cautious optimism, with no major strategy shifts. Market cap suggests moderate volatility, so the stock price is likely to remain stable in the short term.
The earnings call presents mixed signals: while community growth and sales initiatives are promising, there are concerns about high cancellation rates and lower gross margin guidance. The Q&A highlighted management's focus on incentives and debt reduction but avoided specifics on improving trends. The market cap indicates moderate volatility, leading to a neutral prediction. Without clear positive catalysts or strong negative trends, the stock price is likely to remain stable.
The earnings call indicates several negative factors: declining revenue, reduced gross margins, higher expenses, and missed EPS expectations. The slight improvement in cancellation rate and share repurchase plan are positive but insufficient to offset concerns. The Q&A revealed management's vague responses on gross margins and tariffs, suggesting uncertainty. The market may react negatively, especially with a 10.1% revenue decline and increased costs. Given the company's small market cap, these factors are likely to result in a stock price decline of -2% to -8% over the next two weeks.
The earnings call revealed several negative factors: a 10.1% revenue decline, increased SG&A expenses, and a reduction in gross margins. Despite the share repurchase plan, the Q&A section highlighted concerns about tariffs, price competition, and lack of clear guidance on gross margin recovery. The market cap suggests moderate sensitivity to these results. Overall, the combination of declining financial metrics, cautious management responses, and market uncertainties points to a negative stock price movement.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
