LGI Homes (NASDAQ: LGIH) reported Q4 EPS of $1.72, $0.03 worse than the analyst estimate of $1.75. Revenue for the quarter came in at $425.2 million versus the consensus estimate of $429.46 million.

• Net Income increased 19.7% to $42.7 million, or $1.89 Basic EPS and $1.72 Diluted EPS
• Net Income Before Income Taxes increased 2.1% to $56.2 million
• Home Sales Revenues increased 5.0% to $425.2 million
• Home Closings increased 0.4% to 1,852 homes
• Average Home Sales Price increased 4.5% to $229,568
• Gross Margin as a Percentage of Homes Sales Revenues remained approximately the same at 24.4%
• Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues increased to 26.2% from 25.8%
• Active Selling Communities at December 31, 2018 increased to 88 from 78
• 51,442 Total Owned and Controlled Lots at December 31, 2018

Management Comments

“We are extremely pleased with the results of 2018 and our record setting performance during the fourth quarter,” said Eric Lipar, the Company's Chief Executive Officer and Chairman of the Board. “We finished the year with a record-breaking 6,512 homes closed, we achieved significant growth in revenues, active community count and average home sales price, and we increased basic earnings per share more than 31% over 2017.”

“We believe we are poised to take advantage of continued growth and believe we are well positioned to continue to increase our revenues, community count and earnings per share, allowing LGI Homes to achieve our long-term goals and objectives of market leading returns for our stockholders.”

“As we turn our attention to 2019, we remain focused on delivering strong results. Our sales to date in 2019 have been solid and we believe these sales will fuel our future closings over the next few months. As a result, we maintain our positive outlook for the year. Assuming that general economic conditions, including interest rates and mortgage availability, in 2019 are similar to those experienced so far in the first quarter of 2019, we expect to close between 6,900 and 7,800 homes and end the year between 105 and 115 active communities, and we believe basic EPS will be in the range of $7.00 to $8.00 per share,” Lipar concluded.

GUIDANCE:

LGI Homes sees FY2019 EPS of $7.00-$8.00, versus the consensus of $6.96.

Outlook

Subject to the caveats in the Forward-Looking Statements section of this press release, the Company offers the following guidance for 2019. The Company believes it will have between 105 and 115 active selling communities at the end of 2019, close between 6,900 and 7,800 homes in 2019, and generate basic EPS between $7.00 and $8.00 per share during 2019. In addition, the Company believes 2019 gross margin as a percentage of home sales revenues will be in the range of 23.5% and 25.5% and 2019 adjusted gross margin (non-GAAP) as a percentage of home sales revenues will be in the range of 25.5% and 27.5% with capitalized interest accounting for substantially all of the difference between gross margin and adjusted gross margin. The Company also believes that the average home sales price in 2019 will be between $235,000 and $245,000. This outlook assumes that general economic conditions, including interest rates and mortgage availability, in the remainder of 2019 are similar to those experienced so far in the first quarter of 2019 and that average home sales price, construction costs, availability of land, land development costs and overall absorption rates in the remainder of 2019 are consistent with the Company’s recent experience. In addition, this outlook assumes that none of the Company’s 4.25% Convertible Notes due 2019 ($70.0 million aggregate principal amount currently outstanding) are converted prior to their maturity on November 15, 2019.

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