管理層發言
Welcome to the LGI Homes Second Quarter 2026 Conference Call. Today's call is being recorded and a replay will be available on the company's website at www.lgihomes.com. After management's prepared comments, there will be an opportunity to ask questions. At this time, I will turn the call over to Joshua D. Fattor, Executive Vice President of Finance and Capital Markets.
Thanks, and good afternoon. I will remind listeners that this call contains forward-looking statements, including management's views on 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. Forward-looking statements must be considered in light of those related risks, and you should not place undue reliance on such statements which reflect management's current viewpoints and are not guarantees of future performance. On this call, we will discuss non-GAAP financials that are not intended to be considered in isolation or as substitutes for financial information presented in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be found in the press release we issued this morning and on our quarterly report on Form 10-Q for the period ended 06/30/2026 that will be filed with the SEC today. This filing will be accessible on the SEC's website and on the investor relations section of our website. I am joined today by Eric Thomas Lipar, LGI Homes' chief executive officer and chairman of the board, and Charles Michael Merdian, chief financial officer and treasurer. I will now turn the call over to Eric.
Thanks, Joshua. Good afternoon, and welcome to our earnings call. During the second quarter, our team delivered strong results while continuing to navigate a dynamic operating environment. We delivered a total of 1.44 thousand homes during the quarter, an increase of 9% over the prior year. Of this total, 1.36 thousand homes contributed directly to homebuilding revenue of $502 million, an increase of 4% compared to the prior year. The additional 75 closings were currently or previously leased homes, the gains from which were reflected in other income. Year to date, we have delivered a total of 2.36 thousand homes, an increase of 2% over the same period last year, leaving us well positioned to achieve our full-year closing guidance. Our average selling price for new homes increased to over $367 thousand while we continue to support affordability through targeted price discounts on older inventory and financing incentives. We ended the quarter with 151 active communities, already achieving the low end of our full-year guidance range just six months into the year and representing an increase of 3.4% from a year ago. We are beginning to see some improvement in the land market, with a broader set of opportunities becoming available and transaction economics improving. We are finding more deals where pricing and terms align with our disciplined underwriting standards, particularly as new projects are brought to market later in the development process. This provides greater certainty around cost and demand assumptions, enabling us to underwrite using today's market conditions and more readily achieve risk-adjusted returns. Beyond 2026, our development pipeline positions us well for additional community openings in 2027 and continued community count growth. As we continue to grow our community count, we have invested in the capabilities of our organization. We have strengthened sales leadership, expanded leadership development initiatives, and continued refining our product along with the systems and processes that support our sales organization. We believe these capabilities will build upon our proven ability to deliver exceptional customer experience in high-quality homes which together contribute to the strong customer satisfaction and low warranty cost that are hallmarks of the LGI Homes brand. During the quarter, we averaged 3.2 total closings per community per month. Our strongest performing markets on a closings-per-community basis were Atlanta at 5.0, Southern California at 4.7, Charlotte at 4.2, Las Vegas at 3.9, and Albuquerque at 3.8 closings per community per month. We delivered a homebuilding gross margin of 19.8% and an adjusted homebuilding gross margin of 23.2%, both of which were above the midpoint of the increased guidance range we provided on our last call. Our predominantly self-developed on-balance-sheet land position remains an important advantage supporting higher profitability and providing operational flexibility regardless of housing market conditions. Our adjusted EBITDA for the quarter was $59 million, or 11.4% of total revenue, reflecting prudent cost discipline, sound decision-making, and a sustained focus on the fundamentals. Demand for new homes during the second quarter was mixed but still proved more resilient than many would have expected. We ended the quarter with 1.3 thousand homes in backlog, up 61% compared to the prior year. The increase reflects both continued interest in homeownership and a longer buying process as customers navigate affordability challenges and financing qualification requirements. In addition to delivering growth and solid profitability, we continue to strengthen our balance sheet. During the quarter, we paid down approximately $130 million on our credit facility, reducing our leverage ratio by 22 basis points to 42.6%. This progress was driven by disciplined capital allocation, thoughtful management of our development investments, strategic balance sheet initiatives and continued success monetizing noncore and aged inventory, positioning us to capitalize on opportunities as market conditions improve. As we look ahead, we believe our strong balance sheet, liquidity and operating platform position us well to evaluate opportunities in an increasingly active M&A environment. Our focus continues to be on smaller strategic acquisitions that can enhance our existing platform and strengthen our position in attractive markets. Consistent with our approach to capital allocation, we remain focused on opportunities that are strategically aligned, culturally compatible, financially accretive, and capable of creating long-term shareholder value. Last week, members of our Board had the opportunity to visit communities within our Charlotte operation and see firsthand the exceptional work being done by the team. Charlotte continues to be one of our top-performing markets, driven by the team's relentless focus on execution, customer service, and operational excellence. Their impact on our overall success has been significant. I want to congratulate and thank everyone in the Carolinas for their hospitality and continued commitment to delivering best-in-class results. Finally, on July 9, LGI Homes common stock was listed and began trading on Nasdaq in Texas. LGI Homes was founded in Texas. We are headquartered here in The Woodlands, and many of the families we help become homeowners call this state home. We are pleased we were one of the early companies on this new exchange and believe it is a good reflection of our ongoing commitment to our home state. Now I will invite Charles to provide additional details on our financial results.
Thank you, Eric, and good afternoon. Total revenue in the second quarter was $516 million, including $502 million of homebuilding revenue generated from 1.36 thousand new home closings and $14.5 million of revenue from the sale of land and lots and income from leasing operations. Of the 1.36 thousand new home closings delivered during the quarter, 295, or 21.6%, were through our wholesale channel, compared to 17.9% during the same period last year. Our homebuilding gross margin of 19.8% and adjusted homebuilding gross margin of 23.2% each exceeded the midpoint of the increased guidance range provided on our last call. Adjusted homebuilding gross margin excluded $16.5 million of capitalized interest and $544 thousand related to purchase accounting. Combined selling, general, and administrative expenses totaled $72.7 million, or 14.1% of total revenue, an improvement of 40 basis points year over year. Selling expenses were $44.1 million, or 8.6% of total revenue, compared to 8.5% in the same period last year. The increase was primarily due to higher overall spending to drive leads to our communities. General and administrative expenses were $28.6 million, or 5.5% of total revenue, compared to 6% in the same period last year, reflecting higher revenues and our continued focus on controlling costs, improving efficiency, and maintaining a disciplined operating structure. Other income was $7.6 million, driven primarily by the sale of 75 currently or previously leased homes. Adjusted EBITDA totaled $58.7 million, representing 11.4% of total revenue. Pretax net income was $36.6 million, or 7.1% of total revenue. And we generated net income of $27 million for the quarter, or $1.16 per basic and diluted share. Net orders in the second quarter were 1.04 thousand homes, a decrease of 4.8% from 1.09 thousand homes during the same period last year, reflecting continued affordability pressures, higher mortgage rates, and elevated energy costs arising from the conflict in the Middle East. Our cancellation rate in the second quarter was 49.4% compared to 32.7% in the same period last year, driven by a wider pool of buyers needing more time to get across the finish line. We ended the quarter with 1.3 thousand homes in backlog, valued at $526 million, representing increases of 60.6% and 63%, respectively. Turning to our land position: as of June 30, we owned and controlled 57.4 thousand lots, a decrease of 11.4% year over year and 2.7% sequentially. This marked our sixth consecutive quarter of reducing our lot position while focusing capital on markets where demand and returns support the additional investment. Of our total lots, 50.5 thousand, or 88%, were owned, and 6.88 thousand lots, or 12%, were controlled. Of our owned lots, 33.8 thousand were broad land or land under development, 19% of which were in active development and 81% were in engineering or undeveloped land. Although early-stage lots represent two-thirds of our owned lot count, they require only modest investment per lot. In contrast, 26% of our $3.5 billion real estate inventory is invested in the 7% of lots that are homes in progress or completed, positioning us for near-term revenue conversion. Of the remaining 16.7 thousand owned lots, 13 thousand were finished vacant lots and 1.86 thousand were completed homes. During the quarter, we started 1.56 thousand homes, and ended June with 1.9 thousand homes under construction. I will now turn the call over to Joshua for a discussion of our capital position.
Thank you, Charles. We ended the quarter with just under $1.6 billion of debt outstanding, including $449 million drawn on our revolver, resulting in a debt-to-capital ratio of 42.6% and a net debt-to-capital ratio of 41.6%, sequential decreases of 222 and 240 basis points, respectively. Total debt declined by approximately $129 million from the prior quarter and approximately $160 million year over year, representing strong progress on our deleveraging objectives. These efforts are intended to enhance flexibility and position us to act opportunistically as attractive opportunities emerge. We ended the quarter with $468 million in liquidity, including $61 million of cash on hand and $107 million available to borrow under our credit facility. As of June 30, our stockholders' equity was over $2.1 billion and our book value per share was $91.73. At this point, I will turn the call back over to Eric.
Thanks, Joshua. Pleased with our performance during the quarter and remain confident in our ability to continue navigating the current market successfully. Our focus remains on affordability, inventory management, capital allocation, and helping more families achieve the dream of homeownership as we move through the second half of the year. Customers remain highly payment sensitive, particularly in an environment where mortgage rates continue to rise. However, our backlog remains strong, and buyers continue to inquire about homeownership and engage with our sales teams. After a quieter first half, we are seeing more of our wholesale partners reenter the market in pursuit of growth opportunities. Demand for affordable homeownership continues to support our business, and we are right on track to achieve our 2026 objectives and continue executing against our long-term growth strategy. Pending verification of fundings, we expect to announce that we closed 25 homes in July, an increase of 11.5% over last year, bringing our year-to-date closings to 2.78 thousand. As a result, we are well positioned to achieve the full-year guidance metrics we provided on our last call, including annual closings between 4.6 thousand and 5.4 thousand homes and 150 to 160 active communities by year end. Given our ability to maintain price year to date and current visibility into our backlog, we are raising the guidance range for our average selling price by $5 thousand at both the low and high end of our prior range, resulting in a full-year ASP range between $360 and $370 thousand. We continue to expect SG&A as a percentage of revenue to be between 15% and 16%. Given our margin outperformance and visibility into the strong margins in our backlog, we are raising full-year homebuilding gross margin and adjusted homebuilding gross margin by 50 basis points at both the low and high end of our prior ranges. We now expect homebuilding gross margin will range between 19% and 21% and adjusted homebuilding gross margin between 22.5% and 24.5%. This is our second consecutive quarter of raising gross margin guidance. Our teams continue to execute at a high level, delivering strong results across the business. We are pleased with our results to date and remain confident in our ability to achieve all of our full-year expectations. We will now open the call for questions.
分析師問答
And our first question will be coming from the line of Trevor Allinson of Wolfe Research. Your line is open.
Eric, I wanted to follow up on the raise to gross margin guidance for the second quarter in a row. That was despite mortgage rates moving higher through the quarter. So can you talk about what is driving the better performance than you expected? Is it a less significant reaction from customers to the higher rates? What is going better than what you thought that is leading to the higher gross margins than what you originally anticipated?
Yes, Trevor, thanks. I think part of it starts with our land development profits. We had some land development profits in that gross margin. There is a mix component to that as well. There is also a conservative component—not knowing exactly where incentives were going to be at the beginning of the year, our guidance was conservative. As we work through our older inventory, the new homes that we are closing have a higher gross margin, so that has been helpful. Sequentially, the team across the country has done a great job of getting rid of some older inventory. Our house costs are down year over year, which is contributing to that as well. So it is really a combination of many factors. We're pleased with our progress even though gross margins are still down year over year. We are still incentivizing our customers and still dealing with a higher rate environment, but we're making really good progress.
Okay. Thanks for that, Eric. And then second one is on the demand trends through the quarter. I think you called the mix. Can you just talk about kind of sequentially how that performed relative to normal seasonality given the move higher in rates and then a similar comment or question on July. How has July trended so far relative to normal seasonality? Thanks.
Yeah. We are definitely dealing with some normal seasonality in the summer months here in July. The higher rates, the negative news cycle, and the higher gas prices are always going to be a headwind to sales. I think we are seeing some of that in July. But our July closing number that we report tomorrow, which is really focused on June and Q2 sales, we were happy with reporting approximately 425 closings. We will also report an increase of another community, so we are going to report 102 active communities, and we will report that tomorrow night. We believe that is the highest active community count in company history. Thanks for the color.
Goodbye, moving forward.
Thanks, Trevor. Appreciate it. Hello?
And as a reminder, to ask a question, please press 1-1 on your touch tone telephone and wait for your name to be announced. Our next question will come from the line of Alex Rygiel of Texas Capital Securities.
Good morning, gentlemen. Nice quarter. Thank you. Can you talk a little bit more about the new communities that came online during the quarter, and even subsequently? How they may impact ASPs and gross margin? It seems like quite a few of these might have come online at the later portion of the quarter. Is that correct?
Yeah, that is correct, Alex. We just opened up a few new communities. We added some in California—we are having a lot of success in California. We added a few new communities in the Western United States that will influence ASP. We also added a new project in Dallas that just became an active community. We have a really good community that is off to a fast start in Seattle that is going to ramp up closings over the next six months and will influence ASP. So there is certainly a mix component to our raising ASP guidance. We have also seen a component of mix within the floor plans of the community. Even though we are dealing with an affordability-challenged market, a lot of the customers that qualify today are not necessarily picking the smallest homes in the community. If they qualify, they sometimes pick the larger square footage in the community. So there is a mix intra-community as well.
That sounds great. And then regarding the closings in July, which looks pretty good, how does that compare to what you might have expected a few months ago? Do you feel it is a little bit better, in line, or a little bit lighter?
I think it is in line to slightly better, Alex. We always track everything to our annual guidance of 4.6 thousand to 5.4 thousand homes. So I would say it was right on track to continue our pace to hit our closings and margin guidance for the year.
That is great. And one last question: you referenced land looking to be a little bit more attractive. How should we think about how that improved pricing flows through your income statement? Sort of how far down the road would we anticipate to see that play out?
Hey, Alex. I think most of what we are still seeing are land deals, although they are further along in the entitlement process. Our development timelines are still running at about 12 to 18 months, so it would be into 2028. Most of these are communities that we are looking at that will affect our community count further out, not as much in the near term because most of those projects are currently on our balance sheet. We have developed the first initial sections. So what is coming through in the short run are projects that we had purchased several years ago. That is very helpful.
Thank you.
Our next question will be coming from the line of Jay McCanless of Citizens Bank. Jay, your line is open.
Hey, good afternoon, everyone. Thanks for taking my questions. Great progress on getting the finished spec count down. I guess could we talk about the comment—I cannot remember who made it—but about demand from wholesale getting better, especially now that the Road to Housing Act is finished? Is that turning into tangible contracts yet, and is this an opportunity for LGI to offload some of the older specs you referenced earlier, Eric?
Yes and yes, Jay. I think it is not necessarily turning into orders yet, but for most of the year until the Road to Housing Act was finalized, there was just uncertainty. Uncertainty leads to pencils down and not a lot of engagement from our wholesale partners. Now that the Road to Housing Act is finalized, which was positive, we have seen investors pick up their pencils. They are engaged and talking to our teams. It's not necessarily resulting in orders yet, but we are talking to them, and it is very much a positive for our business—not only to finish out the year on older inventory but also to make agreements to look at contracts and deliver houses going into next year as well.
Got it. And then the next one: you said you are seeing at the beginning of the prepared comments that you are seeing better opportunities for land deals, maybe a little more rational pricing. I think last quarter you talked about more finished lot deals that you were able to see. Is that what happened again this quarter, that there are more finished lots available out there—stuff that you can turn a little bit quicker?
Yeah. Charles commented, most opportunities are still land, and we are comfortable developing land. But we are starting to see some finished-lot opportunities that we can turn quicker. Even the land parcels we are seeing are smaller and further in the development cycle. The pricing is more reflective of it. It is a challenging market right now for developers to capture development profit, especially if they have bought projects over the last few years. So the finished-lot opportunities are very accretive because you can buy finished lots or partially developed lots and turn them more quickly. The developer profit is challenging right now, so we are seeing those opportunities. Our acquisitions teams are doing a great job and letting everyone know that we are open for business and looking at growing our community count.
That is great. On the flip side, on some of the older land parcels that LGI is trying to sell, what type of investor interest or interest level have you seen with those sales?
I think the opportunity for us is really on the finished lots. We are very comfortable holding older land parcels because our basis is very strong on what we bought. But the opportunity to sell lots is really on finished-lot opportunities where we have a section that may be too large for the current absorption pace, and we can sell some finished lots to another builder who would be a good partner. They would reinvest those dollars in an additional community count somewhere else.
Okay. That is great. Thanks again.
Thanks, Jay.
Thank you. At this time, I am showing no further questions. I would now like to turn the call back to Eric for closing remarks.
Yes. Thanks, everyone, for participating on today's call and for your continued interest in LGI Homes. Have a great day.
And this concludes today's conference call. Thank you for participating. You may now disconnect.