UPDATE: LGI Homes (LGIH) Tops Q4 EPS by $1.07, Revenues Beat
LGI Homes (NASDAQ: LGIH) reported Q4 EPS of $5.34, $1.01 better than the analyst estimate of $4.27. Revenue for the quarter came in at $897.4 million versus the consensus estimate of $854.06 million.
Fourth Quarter 2020 Highlights and Comparisons to Fourth Quarter 2019
- Net Income increased 110.3% to $136.4 million, or $5.45 Basic EPS and $5.34 Diluted EPS
- Adjusted Net Income* of $132.2 million, or $5.28 Adjusted Basic EPS* and $5.18 Adjusted Diluted EPS*
- Net Income Before Income Taxes increased 96.2% to $166.5 million
- Home Sales Revenues increased 48.2% to $897.4 million
- Home Closings increased 35.5% to 3,408 homes
- Average Sales Price Per Home Closed increased 9.3% to $263,321
- Gross Margin as a Percentage of Homes Sales Revenues increased 360 basis points to 27.1%
- Adjusted Gross Margin* as a Percentage of Home Sales Revenues increased 330 basis points to 28.8%
- Active Selling Communities at December 31, 2020 increased 9.4% to 116
Management Comments
“LGI Homes delivered another record-breaking quarter, capping off the best year in our Company’s history,” stated Eric Lipar, the Company’s Chief Executive Officer and Chairman of the Board. “During the fourth quarter we closed 3,408 homes, an increase of over 35% year-over-year. For the full year, we closed a record-breaking 9,339 homes and generated approximately $2.4 billion in revenue making 2020 our seventh consecutive year of double-digit top line growth.
“Most importantly, we achieved this growth while delivering record profitability. During the year, we increased our industry-leading gross margin 180 basis points to 25.5% and our adjusted gross margin 160 basis points to 27.4%. Our full year pre-tax net income margin was 15.5% and our net income increased over 81% to $323.9 million. As a result of our strong performance throughout 2020, we reduced our net debt to capitalization ratio to 30.6% and increased our return on equity to 32.6%.”
Mr. Lipar concluded, “Our outstanding results are a testament to the talent and dedication of our people. Together we met the challenges of the past year and successfully delivered on our shared commitment to make our customers’ dream of homeownership a reality. Their dedication, passion and professionalism have positioned us to achieve our goals in 2021, deliver market leading returns for our shareholders and continue on our path to becoming a top five builder.”
Outlook
Subject to the caveats in the Forward-Looking Statements section of this press release, the Company is providing the following guidance for the full year 2021. The Company believes:
- Home closings will be between 9,200 and 9,800
- Active selling communities at the end of 2021 will be between 112 and 120
- Average sales price per home closed will be between $260,000 and $270,000
- Gross margin as a percentage of home sales revenues will be between 24.0% and 26.0%
- Adjusted gross margin (non-GAAP) as a percentage of home sales revenues will be between 26.0% and 28.0% with capitalized interest accounting for substantially all the difference between gross margin and adjusted gross margin
- SG&A as a percentage of home sales revenues will be between 10.3% and 10.8%
- Effective tax rate for 2021 will be between 21.5% and 22.5%
This outlook assumes that general economic conditions, including interest rates and mortgage availability, in the remainder of 2021 are similar to those experienced to date in 2021 and that the average sales price per home closed, construction costs, availability of land, land development costs and overall absorption rates in the remainder of 2021 are consistent with the Company’s recent experience. In addition, this outlook assumes that governmental regulations relating to land development, home construction and COVID-19 are similar to those currently in place. Any further COVID-19 governmental restrictions on land development, home construction or home sales could negatively impact the Company’s ability to achieve this guidance.
For earnings history and earnings-related data on LGI Homes (LGIH) click here.