LGI Homes (LGIH) Q3 2024 earnings summary

Executive summary

• Q3 2024 home closings totaled 1,757, with home sales revenue rising 5.6% year-over-year to $652 million and average sales price up 5.2% to $371,004, the highest since Q2 2022.

• Net income for Q3 2024 increased 3.8% year-over-year to $69.6 million, with diluted EPS at $2.95 and basic EPS at $2.96.

• Active communities reached 138 at quarter-end, up 30% year-over-year, supporting future growth and marking the sixth consecutive quarter of expansion.

• Year-to-date 2024 home closings declined 9.6% to 4,495 units, but average sales price increased 4.0% to $366,007.

• Focus remains on maximizing profitability per home and expanding community count.

Financial highlights

• Q3 2024 gross margin was 25.1%, down 60 bps year-over-year; adjusted gross margin held steady at 27.2%.

• Pre-tax net income margin was 14.1%, up 130 bps sequentially and above pre-pandemic averages.

• Net income was $69.6 million, or $2.96 per basic share and $2.95 per diluted share, up 3.8% year-over-year.

• SG&A expenses were $83.2 million (12.8% of revenue); selling expenses rose due to higher advertising and new community openings.

• Total liquidity at quarter-end was $375.4 million, including $60.9 million in cash and $314.5 million available credit.

Outlook and guidance

• Full-year 2024 guidance: home closings expected between 6,100 and 6,400; ASP between $360,000 and $370,000.

• Gross margin guidance raised to 24.0%-25.0%; adjusted gross margin to 26.0%-27.0%.

• Community count projected to end 2024 at approximately 150, with 10%-20% growth expected in 2025.

• Management expects continued healthy housing demand but notes affordability constraints as a key challenge.

• Guidance assumes stable economic conditions, input costs, labor, interest rates, and regulatory environment.