LGI HOMES Reports Fourth Quarter Earnings Results for FY2022 Ending February 21 2023

Earnings Overview

On February 21 2023, LGI HOMES ($NASDAQ:LGIH) reported their fourth quarter of FY2022 earnings results, which ended on December 31 2022. Total revenue for the quarter decreased by 69.3% year-over-year, amounting to USD 34.1 million, while net income decreased 39.0% to USD 488.3 million.

Transcripts Simplified

LGI Homes reported fourth quarter revenue of $488.3 million, a decrease of 39% year-over-year, primarily due to a 42.7% decrease in closings to 1,448 homes and partially offset by a 6.3% increase in average selling price to $337,198. Gross margin as a percentage of sales for the quarter was 20.7%, compared to 26.4% in the same period last year. Adjusted gross margin was 22.1%. Combined selling, general, and administrative expenses were 12.3% of revenue for the fourth quarter. Pretax income for the quarter was $46.9 million, or 9.6% of revenue. Net income was $34.1 million, or $1.46 per basic share and $1.45 per diluted share.

For the full year 2022, revenue was $2.3 billion, a decline of 24.4%, primarily due to a 36.6% decrease in closings, offset by a 19.2% increase in average sales price to $348,052. Gross margin was 28.1%, and adjusted gross margin was 29.2%, both new company records. Combined selling, general, and administrative expense were 11.1% for the full year. Net income was $326.6 million or $13.90 per basic share and $13.76 per diluted share. Gross orders for the fourth quarter were 1,431, net orders were 895, and cancellation rate during the quarter was 37.5%.

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Lgi Homes. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Lgi Homes. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Lgi Homes. More…

Key Ratios Snapshot

Some of the financial key ratios for Lgi Homes are shown below. More…

Price History

The stock opened at $108.8 and closed at $104.7, dropping by 8.4% from the prior closing price of 114.3. This marked a substantial decline in the share price of LGI Homes for the quarter. As far as outlook is concerned, LGI Homes’ management provided positive guidance for the near future and expects to continue growing their revenues and profitability in the upcoming quarters. The company reaffirmed that they remain focused on delivering quality homes to their customers while concurrently expanding their business at a steady rate.

Overall, LGI Homes’ results for the fourth quarter of FY2022 were solid, despite the negative impact of the stock price drop. The company’s outlook remains positive and investors will continue to monitor its progress in the coming quarters. Live Quote…

Analysis

At GoodWhale, we have done extensive research on LGI HOMES, analyzing various aspects of their financial and business fundamentals. Our Risk Rating analysis has concluded that LGI HOMES is a high risk investment. We have discovered four risk warnings in their income statement, balance sheet, cash flow statement and financial journal. Sign up with us to find out more about these risk warnings. We take our analysis seriously and strive to provide the most accurate and comprehensive assessment of LGI HOMES’s potential as an investment. We believe that our research and analysis can help you make informed decisions when investing in LGI HOMES. More…

Peers

Its main competitors are Tri Pointe Homes Inc, Taylor Wimpey PLC, and Skyline Champion Corp. All three companies are large homebuilders that operate in the United States.

– Tri Pointe Homes Inc ($NYSE:TPH)

Tri Pointe Homes Inc is a homebuilding company that focuses on the construction and sale of single-family homes in the United States. As of 2022, the company had a market capitalization of 1.64 billion dollars and a return on equity of 16.87%. The company builds homes in a variety of locations across the country, including California, Colorado, Arizona, and Washington. In addition to new home construction, the company also provides homebuyers with a variety of services, such as home financing, home insurance, and home warranty services.

– Taylor Wimpey PLC ($LSE:TW.)

Taylor Wimpey PLC is a leading homebuilder in the United Kingdom with a strong focus on creating sustainable communities. The company has a market cap of 3.3 billion as of 2022 and a return on equity of 10.94%. Taylor Wimpey PLC is committed to creating value for all of its stakeholders and is dedicated to building high-quality homes and communities that people can be proud of.

– Skyline Champion Corp ($NYSE:SKY)

Skyline Champion Corp is a leading manufacturer and seller of modular and manufactured homes in North America. With a market cap of 2.69B and a ROE of 34.19%, the company is well-positioned to continue its growth trajectory in the coming years. Skyline’s homes are known for their quality construction and attention to detail, and the company has a strong reputation in the industry. In addition to its manufacturing and sales operations, Skyline also provides financing and insurance services to its customers.

Summary

Investors were unimpressed with LGI Homes’ fourth quarter earnings results for FY2022, ending on February 21 2023, as the company saw a year-over-year decrease of 69.3% in total revenue and 39.0% decrease in net income. As a result, the stock price saw a significant drop in response to the results. This serves as a warning for potential investors to be cautious when investing in the company and to consider their own risk tolerance. Despite this, LGI Homes’ performance throughout the year and the coming quarters will still be closely monitored by investors.