Q2 2024 LGI Homes Inc Earnings Call Transcript
Key Points
- LGI Homes Inc (LGIH) delivered 1,655 homes at a record-breaking average sales price of $364,000, resulting in revenue of over $602 million.
- Gross margin improved significantly to 25%, up 300 basis points from last year, and adjusted gross margin rose to 27%, up 320 basis points.
- Pretax net income for the quarter was approximately $77 million, representing a pretax profit margin of 12.8%, a 170-basis-point improvement over last year.
- The company hit a new record of 130 communities in May and ended June with 128 communities, up 26% from the past year.
- Earnings per share increased by 10.2% compared to the same period last year, reaching $2.48.
- Constrained affordability remains the number one challenge for customers, limiting higher sales and closings.
- Selling expenses increased to $52.9 million or 8.8% of revenue, up from 7.6% last year, primarily due to higher advertising spend.
- General and administrative expenses rose to $30.5 million or 5.1% of revenue, compared to 4.3% last year, due to higher indirect overhead expenses.
- The cancellation rate for the quarter was 22.2%, indicating a significant number of customers backing out of their purchases.
- The company ended the quarter with $1.5 billion of debt outstanding, resulting in a debt-to-capital ratio of 43.8%.
Welcome to LGI Homes' second-quarter 2024 conference call. Today's call is being recorded and a replay will be available on the company's website at www.lgihomes.com. (Operator Instructions)
At this time, I would now like to turn the call over to Joshua Fattor, Executive Vice President of Investor Relations and Capital Markets. Please go ahead.
Thanks and good afternoon. I'll remind listeners that this call contains forward-looking statements, including management's views and the Company's business strategy, outlook, plans, objectives, and guidance for future periods. Such statements reflect management's current expectations and involve assumptions and estimates that are subject to risks and uncertainties that could cause those expectations to prove to be incorrect. You should review our filings with the SEC for a discussion of the risks, uncertainties, and other factors that could cause actual results to differ from those presented today.
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