Yahoo Finance

• Fourth Quarter Revenue: $557.4 million, a decrease of 8.4% year over year.

• Fourth Quarter Home Closings: 1,533 homes, a decrease of 12.8% year over year.

• Average Selling Price: $363,598, a 5.1% increase year over year.

• Gross Margin: 22.9% in the fourth quarter.

• Adjusted Gross Margin: 25.2% in the fourth quarter.

• SG&A Expenses: 14.7% of revenue in the fourth quarter.

• Fourth Quarter Net Income: $50.9 million or $2.16 per basic share.

• Full Year Revenue: $2.2 billion, a decrease of 6.6% year over year.

• Full Year Gross Margin: 24.2%.

• Full Year Adjusted Gross Margin: 26.3%.

• Full Year Net Income: $196.1 million or $8.33 per basic share.

• Community Count: 151 active communities, a 29% increase year over year.

• Debt to Capital Ratio: 42.1% at year end.

• Book Value Per Share: $87.07.

• Warning! GuruFocus has detected 7 Warning Signs with LGIH.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LGI Homes Inc (NASDAQ:LGIH) exceeded many of its key strategic goals for 2024, including expanding gross margins and increasing community count.

• The company delivered full-year closings, community count, ASP, margins, and SG&A in line with its latest guidance.

• LGI Homes Inc (NASDAQ:LGIH) opened 80 new communities in 2024, bringing the total to a record-breaking 151 active communities, representing a 29% year-over-year increase.

• The company achieved a full-year gross margin and adjusted gross margin increase of 120 and 160 basis points, respectively.

• LGI Homes Inc (NASDAQ:LGIH) continues to make strategic investments in land, inventory, and operating platforms to support future growth and affordability.

Negative Points

• Revenue in the fourth quarter decreased by 8.4% year over year, driven by a 12.8% decrease in closings.

• The average selling price decreased sequentially by 2%, reflecting higher levels of incentives on homes delivered in the fourth quarter.

• The company experienced a lower pace of closings compared to the prior year, reflecting current challenges around affordability.

• Selling, general, and administrative expenses increased as a percentage of revenue due to higher advertising spending and personnel expenses.

• The cancellation rate during the fourth quarter was 28%, indicating a challenging demand environment.

Q & A Highlights

Q: Eric, regarding gross margins, the midpoint of your 2025 guidance suggests only a modest decline despite starting the year lower than 2024. Are there any offsets, such as pricing or reduced incentives, that could counteract cost inflations? A: Eric Lipar, CEO: We expect gross margins to remain similar year over year despite rising costs in labor, materials, and land development. We plan to offset these through pricing adjustments and customer incentives, currently averaging $20,000 per home. Our historical range around 25% adjusted gross margin captures developer profit, even with incentives.