Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
(Address of principal executive offices) | (Zip code) | ||||||||||||||||
(Registrant’s Telephone Number, Including Area Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company | ||||||||||||||
Page | ||||||||
March 31, | December 31, | |||||||||||||
2024 | 2023 | |||||||||||||
ASSETS | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable | ||||||||||||||
Real estate inventory | ||||||||||||||
Pre-acquisition costs and deposits | ||||||||||||||
Property and equipment, net | ||||||||||||||
Other assets | ||||||||||||||
Deferred tax assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Notes payable | ||||||||||||||
Total liabilities | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
EQUITY | ||||||||||||||
Common stock, par value $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Total equity | ||||||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Home sales revenues | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||
Selling expenses | ||||||||||||||
General and administrative | ||||||||||||||
Operating income | ||||||||||||||
Other income, net | ( | ( | ||||||||||||
Net income before income taxes | ||||||||||||||
Income tax provision | ||||||||||||||
Net income | $ | $ | ||||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Equity | ||||||||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||||||
BALANCE—December 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Restricted stock units granted for accrued annual bonuses | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock repurchase | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock issued under employee incentive plans | — | — | ||||||||||||||||||||||||||||||||||||
BALANCE— March 31, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Equity | ||||||||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||||||
BALANCE—December 31, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Restricted stock units granted for accrued annual bonuses | — | — | — | — | ||||||||||||||||||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock issued under employee incentive plans | — | — | ||||||||||||||||||||||||||||||||||||
BALANCE— March 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Equity in income of unconsolidated entities | ( | ( | ||||||||||||
Distributions of earnings from unconsolidated entities | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Compensation expense for equity awards | ||||||||||||||
Deferred income taxes | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Accounts receivable | ||||||||||||||
Real estate inventory | ( | |||||||||||||
Pre-acquisition costs and deposits | ( | ( | ||||||||||||
Other assets | ||||||||||||||
Accounts payable | ||||||||||||||
Accrued expenses and other liabilities | ( | ( | ||||||||||||
Net cash provided by (used in) operating activities | ( | |||||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Proceeds from sale of assets | ||||||||||||||
Investment in unconsolidated entities | ( | |||||||||||||
Return of capital from unconsolidated entities | ||||||||||||||
Net cash provided by (used in) investing activities | ( | |||||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from notes payable | ||||||||||||||
Payments on notes payable | ( | ( | ||||||||||||
Proceeds from financing arrangements | ||||||||||||||
Payments on financing arrangements | ( | ( | ||||||||||||
Loan issuance costs | ( | ( | ||||||||||||
Proceeds from sale of stock, net of offering expenses | ||||||||||||||
Stock repurchase | ( | |||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Net increase in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ |
March 31, | December 31, | |||||||||||||
2024 | 2023 | |||||||||||||
Land, land under development and finished lots | $ | $ | ||||||||||||
Information centers | ||||||||||||||
Homes in progress | ||||||||||||||
Completed homes | ||||||||||||||
Total owned inventory | ||||||||||||||
Real estate not owned | ||||||||||||||
Total real estate inventory | $ | $ |
March 31, | December 31, | |||||||||||||
2024 | 2023 | |||||||||||||
Land banking financing arrangements | $ | $ | ||||||||||||
Real estate inventory development and construction payable | ||||||||||||||
Accrued compensation, bonuses and benefits | ||||||||||||||
Taxes payable | ||||||||||||||
Warranty reserve | ||||||||||||||
Accrued interest | ||||||||||||||
Inventory related obligations | ||||||||||||||
Lease liability | ||||||||||||||
Contract deposits | ||||||||||||||
Other | ||||||||||||||
Total accrued expenses and other liabilities | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Warranty reserves, beginning of period | $ | $ | ||||||||||||
Warranty provision | ||||||||||||||
Warranty expenditures | ( | ( | ||||||||||||
Warranty reserves, end of period | $ | $ |
March 31, 2024 | December 31, 2023 | |||||||||||||
Notes payable under the Credit Agreement ($ | $ | $ | ||||||||||||
Net debt issuance costs | ( | ( | ||||||||||||
Total notes payable | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Interest incurred | $ | $ | ||||||||||||
Less: Amounts capitalized | ( | ( | ||||||||||||
Interest expense | $ | $ | ||||||||||||
Cash paid for interest | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Numerator (in thousands): | ||||||||||||||
Net income (Numerator for basic and dilutive earnings per share) | $ | $ | ||||||||||||
Denominator: | ||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||
Stock-based compensation units | ||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||
Basic earnings per share | $ | $ | ||||||||||||
Diluted earnings per share | $ | $ | ||||||||||||
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share |
Three Months Ended March 31, | ||||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
Beginning balance | $ | $ | ||||||||||||||||||||||||
Granted | $ | $ | ||||||||||||||||||||||||
Vested | ( | $ | ( | $ | ||||||||||||||||||||||
Forfeited | ( | $ | ( | $ | ||||||||||||||||||||||
Ending balance | $ | $ |
Period Granted | Performance Period | Target PSUs Outstanding at December 31, 2023 | Target PSUs Granted | Target PSUs Forfeited | Target PSUs Vested | Target PSUs Outstanding at March 31, 2024 | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||||||||||||||
2021 | 2021 - 2023 | — | — | ( | — | $ | ||||||||||||||||||||||||||||||||||||||
2022 | 2022 - 2024 | — | — | $ | ||||||||||||||||||||||||||||||||||||||||
2023 | 2023 - 2025 | — | — | $ | ||||||||||||||||||||||||||||||||||||||||
2024 | 2024 - 2026 | — | — | — | $ | |||||||||||||||||||||||||||||||||||||||
Total | ( |
March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||
Fair Value Hierarchy | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||||||||||||||
2029 Senior Notes (1) | Level 2 | $ | $ | $ | $ | |||||||||||||||||||||||||||
2028 Senior Notes (1) | Level 2 | $ | $ | $ | $ |
March 31, 2024 | December 31, 2023 | |||||||||||||
Land deposits and option payments (1) | $ | $ | ||||||||||||
Commitments under the land purchase contracts if the purchases are consummated (1) | $ | $ | ||||||||||||
Lots under land purchase contracts (1) |
Year Ending December 31, | Operating leases | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total | ||||||||
Lease amount representing interest | ( | |||||||
Present value of lease liabilities | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Retail home sales revenues | $ | $ | ||||||||||||
Wholesale home sales revenues | ||||||||||||||
Total home sales revenues | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Revenues: | ||||||||||||||
Central | $ | $ | ||||||||||||
Southeast | ||||||||||||||
Northwest | ||||||||||||||
West | ||||||||||||||
Florida | ||||||||||||||
Total home sales revenues | $ | $ | ||||||||||||
Net income (loss) before income taxes: | ||||||||||||||
Central | $ | $ | ||||||||||||
Southeast | ||||||||||||||
Northwest | ( | |||||||||||||
West | ||||||||||||||
Florida | ||||||||||||||
Corporate (1) | ( | ( | ||||||||||||
Total net income before income taxes | $ | $ |
March 31, 2024 | December 31, 2023 | |||||||||||||
Assets: | ||||||||||||||
Central | $ | $ | ||||||||||||
Southeast | ||||||||||||||
Northwest | ||||||||||||||
West | ||||||||||||||
Florida | ||||||||||||||
Corporate (1) | ||||||||||||||
Total assets | $ | $ |
West | Northwest | Central | Midwest | Florida | Southeast | Mid-Atlantic | ||||||||||||||||||||||||||||||||
Phoenix, AZ | Seattle, WA | Houston, TX | Minneapolis, MN | Tampa, FL | Atlanta, GA | Washington, D.C. | ||||||||||||||||||||||||||||||||
Tucson, AZ | Portland, OR | Dallas Ft. Worth, TX | Orlando, FL | Charlotte, NC | Norfolk, VA | |||||||||||||||||||||||||||||||||
Albuquerque, NM | Denver, CO | San Antonio, TX | Fort Myers, FL | Raleigh, NC | Richmond, VA | |||||||||||||||||||||||||||||||||
Las Vegas, NV | Austin, TX | Jacksonville, FL | Wilmington, NC | Baltimore, MD | ||||||||||||||||||||||||||||||||||
Northern CA | Oklahoma City, OK | Fort Pierce, FL | Winston-Salem, NC | |||||||||||||||||||||||||||||||||||
Southern CA | Daytona Beach, FL | Columbia, SC | ||||||||||||||||||||||||||||||||||||
Salt Lake City, UT | Sarasota, FL | Greenville, SC | ||||||||||||||||||||||||||||||||||||
Birmingham, AL | ||||||||||||||||||||||||||||||||||||||
Nashville, TN |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
(dollars in thousands, except per share data and average home sales price) | ||||||||||||||
Statement of Income Data: | ||||||||||||||
Home sales revenues | $ | 390,851 | $ | 487,357 | ||||||||||
Expenses: | ||||||||||||||
Cost of sales | 299,450 | 388,541 | ||||||||||||
Selling expenses | 41,128 | 42,805 | ||||||||||||
General and administrative | 31,540 | 29,960 | ||||||||||||
Operating income | 18,733 | 26,051 | ||||||||||||
Other income, net | (4,361) | (6,297) | ||||||||||||
Net income before income taxes | 23,094 | 32,348 | ||||||||||||
Income tax provision | 6,041 | 5,386 | ||||||||||||
Net income | $ | 17,053 | $ | 26,962 | ||||||||||
Basic earnings per share | $ | 0.72 | $ | 1.15 | ||||||||||
Diluted earnings per share | $ | 0.72 | $ | 1.14 | ||||||||||
Other Financial and Operating Data: | ||||||||||||||
Average community count | 116.7 | 97.7 | ||||||||||||
Community count at end of period | 120 | 99 | ||||||||||||
Home closings | 1,083 | 1,366 | ||||||||||||
Average sales price per home closed | $ | 360,897 | $ | 356,777 | ||||||||||
Gross margin (1) | $ | 91,401 | $ | 98,816 | ||||||||||
Gross margin % (2) | 23.4 | % | 20.3 | % | ||||||||||
Adjusted gross margin (3) | $ | 98,805 | $ | 107,609 | ||||||||||
Adjusted gross margin % (2)(3) | 25.3 | % | 22.1 | % | ||||||||||
EBITDA (4) | $ | 30,368 | $ | 39,587 | ||||||||||
EBITDA margin % (2)(4) | 7.8 | % | 8.1 | % |
Three Months Ended March 31, 2024 | As of March 31, 2024 | |||||||||||||||||||||||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | Community Count at End of Period | |||||||||||||||||||||||||||||||||
Central | $ | 103,736 | 319 | $ | 325,191 | 41.7 | 2.5 | 43 | ||||||||||||||||||||||||||||||
Southeast | 116,445 | 355 | 328,014 | 26.7 | 4.4 | 27 | ||||||||||||||||||||||||||||||||
Northwest | 36,067 | 62 | 581,726 | 12.0 | 1.7 | 14 | ||||||||||||||||||||||||||||||||
West | 73,079 | 179 | 408,263 | 17.0 | 3.5 | 17 | ||||||||||||||||||||||||||||||||
Florida | 61,524 | 168 | 366,214 | 19.3 | 2.9 | 19 | ||||||||||||||||||||||||||||||||
Total | $ | 390,851 | 1,083 | $ | 360,897 | 116.7 | 3.1 | 120 | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | As of March 31, 2023 | |||||||||||||||||||||||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | Community Count at End of Period | |||||||||||||||||||||||||||||||||
Central | $ | 150,380 | 453 | $ | 331,965 | 35.0 | 4.3 | 35 | ||||||||||||||||||||||||||||||
Southeast | 104,376 | 316 | 330,304 | 24.0 | 4.4 | 24 | ||||||||||||||||||||||||||||||||
Northwest | 74,815 | 159 | 470,535 | 9.3 | 5.7 | 10 | ||||||||||||||||||||||||||||||||
West | 78,886 | 209 | 377,445 | 13.4 | 5.2 | 14 | ||||||||||||||||||||||||||||||||
Florida | 78,900 | 229 | 344,541 | 16.0 | 4.8 | 16 | ||||||||||||||||||||||||||||||||
Total | $ | 487,357 | 1,366 | $ | 356,777 | 97.7 | 4.7 | 99 |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Home sales revenues | $ | 390,851 | $ | 487,357 | ||||||||||
Cost of sales | 299,450 | 388,541 | ||||||||||||
Gross margin | 91,401 | 98,816 | ||||||||||||
Capitalized interest charged to cost of sales | 6,601 | 6,757 | ||||||||||||
Purchase accounting adjustments (1) | 803 | 2,036 | ||||||||||||
Adjusted gross margin | $ | 98,805 | $ | 107,609 | ||||||||||
Gross margin % (2) | 23.4 | % | 20.3 | % | ||||||||||
Adjusted gross margin % (2) | 25.3 | % | 22.1 | % |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Net income | $ | 17,053 | $ | 26,962 | ||||||||||
Income tax provision (benefit) | 6,041 | 5,386 | ||||||||||||
Depreciation and amortization | 673 | 482 | ||||||||||||
Capitalized interest charged to cost of sales | 6,601 | 6,757 | ||||||||||||
EBITDA | 30,368 | 39,587 | ||||||||||||
EBITDA margin %(1) | 7.8 | % | 8.1 | % |
Backlog Data | Three Months Ended March 31, | |||||||||||||
2024 (4) | 2023 (5) | |||||||||||||
Net orders (1) | 1,828 | 2,219 | ||||||||||||
Cancellation rate (2) | 16.8 | % | 15.9 | % | ||||||||||
Ending backlog – homes (3) | 1,335 | 1,555 | ||||||||||||
Ending backlog – value (3) | $ | 519,507 | $ | 561,422 |
Three Months Ended March 31, 2024 | As of March 31, 2024 | |||||||||||||||||||||||||
Reportable Segment | Home Closings | Owned (1) | Controlled | Total | ||||||||||||||||||||||
Central | 319 | 20,840 | 2,279 | 23,119 | ||||||||||||||||||||||
Southeast | 355 | 14,191 | 4,720 | 18,911 | ||||||||||||||||||||||
Northwest | 62 | 5,500 | 2,141 | 7,641 | ||||||||||||||||||||||
West | 179 | 9,068 | 3,031 | 12,099 | ||||||||||||||||||||||
Florida | 168 | 5,164 | 3,211 | 8,375 | ||||||||||||||||||||||
Total | 1,083 | 54,763 | 15,382 | 70,145 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) (in thousands) | ||||||||||||||||||||||
January 1-31, 2024 | — | $ | — | — | $ | 211,527 | ||||||||||||||||||||
February 1-29, 2024 | 17,693 | $ | 113.06 | 17,693 | $ | 209,527 | ||||||||||||||||||||
March 1-31, 2024 | 71,534 | $ | 111.85 | 71,534 | $ | 201,526 | ||||||||||||||||||||
89,227 | $ | 112.09 | 89,227 |
Exhibit No. | Description | |||||||
3.1** | ||||||||
3.2** | ||||||||
3.3** | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS† | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH† | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104† | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith. | ||||
** | Previously filed. |
† | XBRL information is deemed not filed or a part of a registration statement or Annual Report for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under such sections. |
LGI Homes, Inc. | ||||||||
Date: | April 30, 2024 | /s/ Eric Lipar | ||||||
Eric Lipar | ||||||||
Chief Executive Officer and Chairman of the Board | ||||||||
April 30, 2024 | /s/ Charles Merdian | |||||||
Charles Merdian | ||||||||
Chief Financial Officer and Treasurer |
Date: April 30, 2024 | |||||
By: | /s/ Eric Lipar | ||||
Eric Lipar | |||||
Chief Executive Officer and Chairman of the Board | |||||
LGI Homes, Inc. |
Date: April 30, 2024 | |||||
By: | /s/ Charles Merdian | ||||
Charles Merdian | |||||
Chief Financial Officer and Treasurer | |||||
LGI Homes, Inc. |
April 30, 2024 | /s/ Eric Lipar | ||||
Eric Lipar | |||||
Chief Executive Officer and Chairman of the Board | |||||
LGI Homes, Inc. |
April 30, 2024 | /s/ Charles Merdian | ||||
Charles Merdian | |||||
Chief Financial Officer and Treasurer | |||||
LGI Homes, Inc. |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock, Shares, Issued | 27,596,140 | 27,521,120 |
Common Stock, Shares, Outstanding | 23,567,441 | 23,581,648 |
Treasury Stock, Common, Shares | 4,028,699 | 3,939,472 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||
Home sales revenues | $ 390,851 | $ 487,357 |
Cost of sales | 299,450 | 388,541 |
Selling expenses | 41,128 | 42,805 |
General and administrative | 31,540 | 29,960 |
Operating income | 18,733 | 26,051 |
Other income, net | (4,361) | (6,297) |
Net income before income taxes | 23,094 | 32,348 |
Income tax provision | 6,041 | 5,386 |
Net income | $ 17,053 | $ 26,962 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.72 | $ 1.15 |
Diluted (in dollars per share) | $ 0.72 | $ 1.14 |
Weighted average shares outstanding: | ||
Basic (in shares) | 23,578,576 | 23,381,294 |
Diluted (in shares) | 23,675,353 | 23,629,779 |
Organization and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation Disclosures | ORGANIZATION AND BASIS OF PRESENTATION Organization and Description of the Business LGI Homes, Inc., a Delaware corporation (the “Company”, “we,” “us,” or “our”), is headquartered in The Woodlands, Texas. We engage in the development of communities and the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah. Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. The accompanying unaudited financial statements as of March 31, 2024, and for the three months ended March 31, 2024 and 2023, include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. We are currently evaluating the impact that this standard will have on our financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the impact that this standard will have on our financial statements.
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Real Estate Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Inventory Disclosures | REAL ESTATE INVENTORY Our real estate inventory consists of the following (in thousands):
We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources. In consideration for this repurchase option, we paid a non-refundable commitment fee. Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory and a corresponding obligation was established within our accrued liabilities as discussed in Note 3 to recognize this relationship. While we are not legally obligated to repurchase the balance of the lots, we will be subject to certain performance obligations, financial and other penalties if the lots are not purchased. We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities. We build and lease a number of single-family homes in select, existing communities. During the three months ended March 31, 2024, we transferred $3.9 million of home assets from real estate inventory to rental properties within property and equipment, net. We are lessors of the homes representing these home assets. Our leasing contracts are typically for terms of one year.
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Accrued Expenses and Other Liabilities |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities Disclosures | ACCRUED EXPENSES AND OTHER LIABILITIES Accrued and other liabilities consist of the following (in thousands):
Land Banking Financing Arrangements We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns. Principal payments on these financing arrangements will generally coincide with the repurchase of lot takedowns from the land banker. We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of approximately to three years. Inventory Related Obligations We own lots in certain communities in Florida and Texas that have Community Development Districts or similar utility and infrastructure development special assessment programs that allocate a fixed amount of debt service associated with development activities to each lot. This obligation for infrastructure development is attached to the land, which is typically payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed. The obligations assumed by the homebuyer represent a non-cash cost of the lots. Estimated Warranty Reserve We generally provide homebuyers with a one-year warranty on the house and a limited warranty for major defects in structural elements, such as framing components and foundation systems, typically ranging from to ten years depending on the applicable state. Changes to our warranty accrual are as follows (in thousands):
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Notes Payable |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable Disclosures | NOTES PAYABLE Revolving Credit Agreement On December 5, 2023, we entered into a Fourth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Fourth Amendment”), which amended the Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (as amended to date, including the Fourth Amendment, the “Credit Agreement”). The Credit Agreement provides for a $1.205 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement. The Credit Agreement matures on April 28, 2028 with respect to $960.0 million, or 79.7%, of the $1.205 billion of commitments thereunder and on April 28, 2025 with respect to 20.3% of the commitments thereunder. Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date. The Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $0.5 million, other than subsidiaries whose sole purpose is to own and operate single-family rental homes. The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of March 31, 2024, the borrowing base under the Credit Agreement was $1.9 billion, and borrowings under the Credit Agreement and the outstanding principal amount of the 2029 Senior Notes and the 2028 Senior Notes totaled approximately $1.4 billion, $22.5 million of letters of credit were outstanding and $442.5 million was available to borrow under the Credit Agreement. Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10, 15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At March 31, 2024, the Applicable Margin was 1.85%, and SOFR was 5.33%, subject to the 0.50% SOFR floor as included in the Credit Agreement. The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a leverage ratio, a minimum liquidity amount and an EBITDA to interest expense ratio. The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments. At March 31, 2024, we were in compliance with all of the covenants contained in the Credit Agreement. Senior Notes Offering On November 21, 2023, we issued $400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2024. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee. On June 28, 2021, we issued $300.0 million aggregate principal amount of the 2029 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2029 Senior Notes accrues at a rate of 4.000% per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on July 15, 2029. The terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee. Notes payable consist of the following (in thousands):
Capitalized Interest Interest activity, including other financing costs, for notes payable and financing arrangements for the periods presented is as follows (in thousands):
Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $4.9 million and $3.1 million for the three months ended March 31, 2024 and 2023, respectively.
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Income Taxes |
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Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosures | INCOME TAXES We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The statute of limitations with regards to our federal income tax filings is three years. The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty. For the three months ended March 31, 2024, our effective tax rate of 26.2% is higher than the Federal statutory rate primarily as a result of an increase in the rate for state income taxes, net of the federal benefit, the compensation cost in excess of deductions for share-based payments, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, partially offset by a decrease in the rate for the federal energy efficient homes tax credits. Income taxes paid were $12.1 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.
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Equity |
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Mar. 31, 2024 | |
Equity [Abstract] | |
Equity Disclosures | EQUITY Stock Repurchase Program In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three months ended March 31, 2024, we repurchased 89,227 shares of our common stock for $10.0 million to be held as treasury stock. During the three months ended March 31, 2023, we did not repurchase any shares of our common stock. A total of 3,028,699 shares of our common stock has been repurchased since our stock repurchase program commenced. As of March 31, 2024, we may purchase up to $201.5 million of shares of our common stock under our stock repurchase program. The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements. Our stock repurchase program may be modified, discontinued or suspended at any time.
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Earnings Per Share |
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Earnings Per Share Disclosures | EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023:
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Disclosures | STOCK-BASED COMPENSATION Non-performance Based Restricted Stock Units The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):
We recognized $1.4 million and $1.1 million of stock-based compensation expense related to outstanding RSUs for the three months ended March 31, 2024 and 2023, respectively. Generally, the RSUs cliff vest on the third anniversary of the grant date and can only be settled in shares of our common stock. At March 31, 2024, we had unrecognized compensation cost of $11.3 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.2 years. Performance-Based Restricted Stock Units The Compensation Committee of the Board has granted awards of performance-based RSUs (“PSUs”) under the Amended and Restated LGI Homes, Inc. 2013 Equity Incentive Plan to certain members of senior management based on three-year performance cycles. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock. The following table summarizes the activity of our PSUs for the three months ended March 31, 2024:
At March 31, 2024, management estimates that the recipients will receive approximately 100.0%, 100.5% and 0.0% of the 2024, 2023 and 2022 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics. We recognized $2.0 million and $1.6 million of total stock-based compensation expense related to outstanding PSUs for the three months ended March 31, 2024 and 2023, respectively. The 2021 - 2023 performance period PSUs vested and issued on February 27, 2024, at 93.6% of the target number. At March 31, 2024, we had unrecognized compensation cost of $12.7 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.6 years.
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Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | FAIR VALUE DISCLOSURES Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements (“ASC 820”), defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the most significant volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that differs from the transaction price or market price of the asset or liability. ASC 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows: Level 1 - Fair value is based on quoted prices in active markets for identical assets or liabilities. Level 2 - Fair value is determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities, or quoted prices in markets that are not active. Level 3 - Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow or similar technique. We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets. The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. As of March 31, 2024, the Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio. In order to determine the fair value of each of the 2029 Senior Notes and the 2028 Senior Notes, the future contractual cash flows are discounted at our estimate of current market rates of interest, which were determined based upon the average interest rates of similar senior notes within the homebuilding industry (Level 2 measurement). The following table below shows the level and measurement of liabilities at March 31, 2024 and December 31, 2023 (in thousands): (1)See Note 4 for more details regarding the offerings of the 2029 Senior Notes and the 2028 Senior Notes.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosures | COMMITMENTS AND CONTINGENCIES Contingencies In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. Land Deposits We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):
(1)Includes land banking financing arrangements, see Note 2 and Note 3 for more details regarding real estate not owned. As of March 31, 2024 and December 31, 2023, approximately $14.6 million and $11.4 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates. Lease Obligations We recognize lease obligations and associated right-of-use (“ROU”) assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets, as included in other assets on the consolidated balance sheets, were $4.7 million and $4.6 million as of March 31, 2024 and December 31, 2023, respectively. Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $5.1 million and $4.9 million as of March 31, 2024 and December 31, 2023, respectively. Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $0.4 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases during the three months ended March 31, 2024 and 2023 was $0.6 million and $0.5 million, respectively. As of March 31, 2024, the weighted-average discount rate was 5.9% and our weighted-average remaining life was 2.4 years. We do not have any significant lease contracts that have not yet commenced at March 31, 2024. The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2024 (in thousands):
Bonding and Letters of Credit We have outstanding letters of credit and performance and surety bonds totaling $351.7 million (including $22.5 million of letters of credit issued under the Credit Agreement) and $357.0 million (including $28.1 million of letters of credit issued under the Credit Agreement) at March 31, 2024 and December 31, 2023, respectively, related to our obligations for site improvements at various projects. Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows. Investment in Unconsolidated Entities As of March 31, 2024, we had one equity-method land joint venture and two additional joint ventures engaged in mortgage and insurance activities that primarily provide services to our homebuyers. As of March 31, 2024 and December 31, 2023, we have a total of $21.6 million and $21.5 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage services, respectively. Income associated with our investment in unconsolidated entities during the three months ended March 31, 2024 and 2023 was $2.0 million and $2.2 million, respectively.
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Revenues |
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Revenues Disclosure | REVENUES Home Sales Revenues We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our move-up and luxury series spec homes sold under our Terrata Homes brand. The following table presents our home sales revenues disaggregated by revenue stream (in thousands):
Our home sales revenues are disaggregated by geography, based on our determined reportable segments. See Note 12 for tabular presentation of this information.
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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information Disclosures | SEGMENT INFORMATION We operate one principal homebuilding business that is organized and reports by division. We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five qualifying reportable segments at March 31, 2024: our Central, Southeast, Northwest, West, and Florida divisions. These segments reflect the way the Company evaluates its business performance and manages its operations. In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision-makers (“CODMs”) in deciding how to allocate resources and in assessing performance. The CODMs primarily evaluate performance based on the number of homes closed, gross margin and average sales price per home closed. In determining the most appropriate reportable segments, we consider operating segments’ economic and other characteristics, including home floor plans, average selling prices, gross margin percentage, geographical proximity, production construction processes, suppliers, subcontractors, regulatory environments, customer type and underlying demand and supply. Each operating segment follows the same accounting policies and is managed by our management team. We have no inter-segment sales, as all sales are to external customers. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. Financial information relating to our reportable segments is as follows (in thousands):
(1)The Corporate balance consists of general and administration unallocated costs for various shared service functions offset by non-strategic other income, as well as our warranty reserve. Actual warranty expenses are reflected within the reportable segments.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
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Pay vs Performance Disclosure | ||
Net income | $ 17,053 | $ 26,962 |
Insider Trading Arrangements |
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Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization and Basis of Presentation |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. We are currently evaluating the impact that this standard will have on our financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the impact that this standard will have on our financial statements.
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Real Estate Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Inventory | Our real estate inventory consists of the following (in thousands):
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Accrued Expenses and Other Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Current Liabilities | Accrued and other liabilities consist of the following (in thousands):
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Changes in Company's Warranty Accrual | Changes to our warranty accrual are as follows (in thousands):
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Notes Payable (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Payable | Notes payable consist of the following (in thousands):
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Schedule of Interest Activity for Notes Payable | Interest activity, including other financing costs, for notes payable and financing arrangements for the periods presented is as follows (in thousands):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023:
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Stock-based Compensation (Tables) |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Unit Activity | The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):
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Schedule of Performance Based Stock Activity | The following table summarizes the activity of our PSUs for the three months ended March 31, 2024:
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Fair Value Disclosures (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | The following table below shows the level and measurement of liabilities at March 31, 2024 and December 31, 2023 (in thousands): (1)See Note 4 for more details regarding the offerings of the 2029 Senior Notes and the 2028 Senior Notes.
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lots Under Option or Contract | The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):
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Lessee, Operating Lease, Liability, Maturity | The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2024 (in thousands):
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Revenues (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Products | The following table presents our home sales revenues disaggregated by revenue stream (in thousands):
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Segment (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial information relating to our reportable segments is as follows (in thousands):
(1)The Corporate balance consists of general and administration unallocated costs for various shared service functions offset by non-strategic other income, as well as our warranty reserve. Actual warranty expenses are reflected within the reportable segments.
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Schedule of Real Estate Inventory (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Inventory [Line Items] | ||
Land, land under development and finished lots | $ 2,145,846 | $ 2,099,133 |
Information centers | 52,164 | 47,936 |
Homes in progress | 419,997 | 313,124 |
Completed homes | 533,284 | 542,996 |
Total real estate inventory | 3,151,291 | 3,003,189 |
Real estate not owned | 77,809 | 104,459 |
Total real estate inventory | 3,229,100 | $ 3,107,648 |
Transfer of real estate inventory to rental properties | $ 3,900 | |
Lessor, contract term | 1 year |
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Payables and Accruals [Abstract] | ||||
Real estate inventory development and construction payable | $ 64,443 | $ 71,193 | ||
Land banking financing arrangements | 77,809 | 104,459 | ||
Accrued compensation, bonuses and benefits | 8,737 | 22,550 | ||
Taxes payable | 7,661 | 14,694 | ||
Contract deposits | 4,244 | 2,909 | ||
Accrued interest | 20,105 | 13,522 | ||
Inventory related obligations | 11,830 | 11,924 | ||
Warranty reserve | 14,000 | 13,600 | $ 11,350 | $ 10,750 |
Operating Lease, Liability | 5,077 | 4,947 | ||
Other | 10,401 | 12,074 | ||
Total accrued expenses and other liabilities | $ 224,307 | $ 271,872 |
Accrued Expenses and Other Liabilities - Narrative (Details) |
3 Months Ended |
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Mar. 31, 2024 | |
Product Warranty Liability [Line Items] | |
Inventory related obligation term | 30 years |
Minimum | |
Product Warranty Liability [Line Items] | |
Repurchase period related to takedowns | 1 year |
Maximum | |
Product Warranty Liability [Line Items] | |
Repurchase period related to takedowns | 3 years |
Other Construction Components | |
Product Warranty Liability [Line Items] | |
Limited warranty period | 1 year |
Structural Elements | Minimum | |
Product Warranty Liability [Line Items] | |
Inventory related obligation term | 6 years |
Structural Elements | Maximum | |
Product Warranty Liability [Line Items] | |
Inventory related obligation term | 10 years |
Changes in Warranty Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
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Product Warranty, Increase (Decrease) [Roll Forward] | ||
Warranty reserves, beginning of period | $ 13,600 | $ 10,750 |
Warranty provision | 1,790 | 1,852 |
Warranty expenditures | (1,390) | (1,252) |
Warranty reserves, end of period | $ 14,000 | $ 11,350 |
Other Construction Components | ||
Product Warranty Liability [Line Items] | ||
Limited warranty period | 1 year |
Notes Payable - Senior Notes (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jun. 28, 2021 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Notes payable | $ 1,383,220 | $ 1,248,332 | |
4.000% Senior Notes Due 2029 | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 300,000 | 300,000 | |
4.000% Senior Notes Due 2029 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 300,000 | ||
Stated interest rate on note | 4.00% | 4.00% |
Notes Payable - Schedule of Notes Payable (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
Jun. 28, 2021 |
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Debt Instrument [Line Items] | |||
Notes payable | $ 1,383,220,000 | $ 1,248,332,000 | |
Net debt issuance costs | $ (19,835,000) | (21,301,000) | |
SOFR | |||
Debt Instrument [Line Items] | |||
Base spread on variable rate | 1.85% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 703,055,000 | 569,633,000 | |
Line of credit facility | 1,205,000,000 | ||
4.000% Senior Notes Due 2029 | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 300,000,000 | 300,000,000 | |
4.000% Senior Notes Due 2029 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Notes payable | 300,000,000 | ||
Stated interest rate on note | 4.00% | 4.00% | |
8.750% Senior Notes Due 2028 | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 400,000,000 | 400,000,000 | |
8.750% Senior Notes Due 2028 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Notes payable | $ 400,000,000 | $ 400,000,000 | |
Stated interest rate on note | 8.75% |
Notes Payable - Capitalized Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Debt Disclosure [Abstract] | ||
Interest incurred | $ 29,363 | $ 19,169 |
Less: Amounts capitalized | (29,363) | (19,169) |
Interest expense | 0 | 0 |
Cash paid for interest | 21,286 | 25,500 |
Net debt issuance costs | $ 4,900 | $ 3,100 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | 26.20% | |
Income taxes paid | $ 12.1 | $ 0.1 |
Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | 25 Months Ended | |
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2024 |
Feb. 28, 2022 |
|
Equity [Abstract] | |||
Stock repurchase program, additional amount authorized | $ 200,000 | ||
Stock repurchase program, authorized amount | $ 550,000 | ||
Shares repurchased | 89,227 | 3,028,699 | |
Stock repurchased during period | $ 10,002 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 201,500 | $ 201,500 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 17,053 | $ 26,962 |
Basic weighted average shares outstanding | 23,578,576 | 23,381,294 |
Stock-based compensation units | 96,777 | 248,485 |
Diluted weighted average shares outstanding | 23,675,353 | 23,629,779 |
Basic earnings per share (in dollars per share) | $ 0.72 | $ 1.15 |
Diluted earnings per share (in dollars per share) | $ 0.72 | $ 1.14 |
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share | 34,252 | 24,288 |
Fair Value Disclosures (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Fair Value Disclosures [Line Items] | ||
Notes payable, carrying value | $ 1,383,220 | $ 1,248,332 |
4.000% Senior Notes Due 2029 | ||
Fair Value Disclosures [Line Items] | ||
Notes payable, carrying value | 300,000 | 300,000 |
Senior notes, fair value | 296,908 | 296,381 |
8.750% Senior Notes Due 2028 | ||
Fair Value Disclosures [Line Items] | ||
Notes payable, carrying value | 400,000 | 400,000 |
Senior notes, fair value | $ 442,706 | $ 486,306 |
Commitments and Contingencies (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024
USD ($)
|
Mar. 31, 2023
USD ($)
|
Jun. 30, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
|
Other Commitments [Line Items] | ||||
Land deposits and option payments (1) | $ 28,368 | $ 26,955 | ||
Commitments under the land purchase contracts if the purchases are consummated (1) | $ 537,736 | $ 513,941 | ||
Lots under land purchase contracts (1) | 15,382 | 15,750 | ||
Refundable land deposits of purchase contracts of finished lots | $ 14,600 | $ 11,400 | ||
Operating Lease, Right-of-Use Asset | 4,700 | 4,600 | ||
Present value of lease liabilities | 5,077 | 4,947 | ||
Operating Lease, Cost | 400 | $ 600 | ||
Operating Lease, Payments | $ 600 | 500 | ||
Operating lease, weighted average discount rate | 5.90% | |||
Operating lease, weighted average remaining lease term | 2 years 4 months 24 days | |||
Letters of credit, surety bonds, and other financials guarantees | $ 351,700 | $ 357,000 | ||
Contributions to limited partnership | 21,600 | $ 21,500 | ||
Income from unconsolidated entities | $ 2,043 | $ 2,245 |
Commitments and Contingencies Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
2024 | $ 1,260 | |
2025 | 1,434 | |
2026 | 1,262 | |
2027 | 1,085 | |
2028 | 640 | |
Thereafter | 35 | |
Total | 5,716 | |
Lease amount representing interest | (639) | |
Present value of lease liabilities | $ 5,077 | $ 4,947 |
Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||
Home sales revenues | $ 390,851 | $ 487,357 |
Retail | ||
Disaggregation of Revenue [Line Items] | ||
Home sales revenues | 362,289 | 456,177 |
Wholesale | ||
Disaggregation of Revenue [Line Items] | ||
Home sales revenues | $ 28,562 | $ 31,180 |
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