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Jun 30, 2022
LGI Homes Q2 2022 Earnings Report
LGI Homes reported record setting profitability despite decreased home sales revenues and home closings, but increased average sales price.
Key Takeaways
LGI Homes announced strong Q2 2022 results with record profitability. Net income increased by 4.4% to $123.4 million, driven by a 28.7% increase in average sales price to $356,719 and a 500 basis point improvement in gross margin to 32.0%. Despite a decrease in home sales revenues and home closings, the company achieved record pre-tax income and net income. Updated full year guidance reflects adjustments for recent interest rate hikes and macro events.
Net income increased 4.4% to $123.4 million, or $5.24 Basic EPS and $5.20 Diluted EPS.
Home Sales Revenues decreased 8.6% to $723.1 million.
Home Closings decreased 29.0% to 2,027 homes closed.
Average Sales Price increased 28.7% to $356,719.
LGI Homes
LGI Homes
Forward Guidance
LGI Homes updated its full year 2022 guidance to reflect recent interest rate hikes and macro events. The company now expects to close between 7,500 and 8,300 homes at an average sales price between $345,000 and $360,000. SG&A as a percentage of revenue is expected to range between 10.0% and 11.0%, and the company anticipates ending the year with 100 to 110 active communities. Gross margins are projected to be between 27.0% and 29.0%, adjusted gross margins between 28.5% and 30.5%, and an effective tax rate between 23.5% and 24.5%.
Positive Outlook
- Home closings between 7,500 and 8,300
- Active selling communities at the end of 2022 between 100 and 110
- Average sales price per home closed between $345,000 and $360,000
- Gross margin as a percentage of home sales revenue between 27.0% and 29.0%
- Effective tax rate between 23.5% and 24.5%
Challenges Ahead
- Homes are more expensive
- Consumer prices are up
- Mortgage rates have nearly doubled
- Uncertainty due to interest rate hikes
- Macro events