LGI Homes raises full-year margin and price guidance
The homebuilder reported second-quarter revenues of $501.5 million, a 3.7% increase from the prior year.
LGI Homes (LGIH), the residential homebuilder, reported second-quarter homebuilding revenues of $501.5 million, up 3.7% from $483.5 million in the same period last year.
The results followed a period of expansion in delivery volume and footprint. Total home closings increased 8.8% year-over-year to 1,440 units, compared to 1,323 in the second quarter of 2024. The company also expanded its reach, with active selling communities rising 3.4% to 151 as of June 30, 2024.
Average sales price per home closed rose 0.5% to $367,407, up from $365,446 in the prior-year quarter. Despite the volume growth, profitability metrics faced pressure. Homebuilding gross margin compressed to 19.8% from 22.9% a year ago, while adjusted homebuilding gross margin declined to 23.2% from 25.5%.
LGI Homes raised its full-year 2024 outlook for the second consecutive quarter. The company now expects average sales prices to range between $360,000 and $370,000, up from the $355,000 to $365,000 range provided in the first quarter.
Full-year homebuilding gross margin guidance was also increased to 19.0%–21.0%, with an adjusted range of 22.5%–24.5%. This is an increase from the 18.5%–20.5% range (adjusted: 22.0%–24.0%) issued in the previous quarter.
Backlog dynamics showed volatility during the first half of the year. Ending backlog homes for the six months ended June 30, 2024, rose to 1,298 units from 808 units in the same period in 2023, though the cancellation rate increased to 47.4% from 24.2%.
The company reduced its leverage during the quarter, paying down $128.6 million in debt. This brought the debt-to-capital ratio down 220 basis points year-over-year to 42.6%. The net debt to capital ratio decreased to 41.6% as of June 30, 2024, from 44.0% at the end of March.