THE WOODLANDS, Texas, Feb. 23, 2021 (GLOBE NEWSWIRE) -- LGI Homes, Inc. (NASDAQ: LGIH) today announced financial results for the fourth quarter and year ended December 31, 2020.

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

Full Year 2020 Highlights and Comparisons to Full Year 2019

• Net Income increased 81.3% to $323.9 million, or $12.89 Basic EPS and $12.76 Diluted EPS
• Adjusted Net Income* of $294.2 million, or $11.70 Adjusted Basic EPS* and $11.59 Adjusted Diluted EPS*
• Net Income Before Income Taxes increased 58.7% to $367.8 million
• Home Sales Revenues increased 28.8% to $2.4 billion
• Home Closings increased 21.4% to 9,339 homes
• Average Sales Price Per Home Closed increased 6.1% to $253,553
• Gross Margin as a Percentage of Homes Sales Revenues increased 180 basis points to 25.5%
• Adjusted Gross Margin* as a Percentage of Home Sales Revenues increased 160 basis points to 27.4%
• Owned lots increased to 35,268 and Controlled lots increased to 26,236 for total Owned and Controlled lots of 61,504 at December 31, 2020
• Ending Backlog of 2,964 homes at December 31, 2020, an increase of 140.4%
• Ending Backlog Value of $775.5 million at December 31, 2020, an increase of 167.0%

*Non-GAAP

Please see “Non-GAAP Measures” for a reconciliation of Adjusted Net Income and Adjusted Earnings Per Share (non-GAAP measures) to Net Income and Earnings Per Share, the most directly comparable GAAP measures, and Adjusted Gross Margin (a non-GAAP measure) to Gross Margin, the most directly comparable GAAP measure.

Balance Sheet

• 718,993 shares of common stock repurchased during the year ended December 31, 2020 at an average price per share of $66.84 for an aggregate amount of $48.1 million
• Total liquidity of $428.4 million at December 31, 2020 including cash and cash equivalents of $35.9 million and $392.5 million of availability under the Company’s revolving credit facility
• Net debt to capitalization of 30.6% at December 31, 2020, compared to 43.6% at December 31, 2019

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.”

2020 Fourth Quarter Results

Home closings during the fourth quarter of 2020 totaled 3,408, an increase of 35.5% from 2,515 home closings during the fourth quarter of 2019.

At the end of the fourth quarter, active selling communities increased to 116, up from 106 communities at the end of the fourth quarter of 2019.

Home sales revenues for the fourth quarter of 2020 were $897.4 million, an increase of $291.7 million, or 48.2%, over the fourth quarter of 2019. The increase in home sales revenues is primarily due to a 35.5% increase in homes closed, a 9% increase in average community count and an increase in the average sales price per home closed during the fourth quarter of 2020.

The average sales price per home closed for the fourth quarter of 2020 was $263,321, an increase of $22,506, or 9.3%, over the fourth quarter of 2019. This increase in the average sales price per home closed was primarily due to a favorable pricing environment, higher price points in certain new markets and changes in product mix.

Gross margin as a percentage of home sales revenues for the fourth quarter of 2020 was 27.1% as compared to 23.5% for the fourth quarter of 2019. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the fourth quarter of 2020 was 28.8% as compared to 25.5% for the fourth quarter of 2019. The increase in gross margin and adjusted gross margin as a percentage of home sales revenues was primarily driven by a favorable pricing environment, operating leverage obtained and product mix in the fourth quarter of 2020 as compared to the fourth quarter of 2019. Please see “Non-GAAP Measures” for a reconciliation of adjusted gross margin (non-GAAP) to gross margin, the most comparable GAAP measure.

Net income for the fourth quarter of 2020 was $136.4 million, or $5.45 per basic share and $5.34 per diluted share, an increase of $71.6 million, or 110.3%, from $64.9 million, or $2.69 per basic share and $2.52 per diluted share, for the fourth quarter of 2019. The increase in net income is primarily attributed to operating leverage realized from the increase in home sales revenues, higher average sales price per home closed during the fourth quarter of 2020 as compared to the fourth quarter of 2019, as well as $8.3 million of federal energy efficient homes tax credits recognized during the fourth quarter of 2020.

Full Year 2020 Results

Home closings for the year ended December 31, 2020 totaled 9,339, an increase of 21.4%, from 7,690 home closings during the year ended December 31, 2019.

Home sales revenues for the year ended December 31, 2020 were $2.4 billion, an increase of $529.8 million, or 28.8%, over the year ended December 31, 2019. The increase in home sales revenues is primarily due to a 21.4% increase in homes closed, a 16.8% increase in average community count and an increase in the average sales price per home closed during the year ended December 31, 2020.

The average sales price per home closed for the year ended December 31, 2020 was $253,553, an increase of $14,521, or 6.1%, over the year ended December 31, 2019. This increase in the average sales price per home closed was primarily due to a favorable pricing environment, increased closings at higher price points in certain markets and changes in product mix.

Gross margin as a percentage of home sales revenues for the year ended December 31, 2020 was 25.5% as compared to 23.7% for the year ended December 31, 2019. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the year ended December 31, 2020 was 27.4% as compared to 25.8% for the year ended December 31, 2019. The increase in gross margin and adjusted gross margin as a percentage of home sales revenues is primarily due to an increase in homes closed with a higher average sales price per home closed, which was primarily driven by a favorable pricing environment, operating leverage obtained and product mix, partially offset by an increase in wholesale home closings as a percentage of total home closings in the year ended December 31, 2020 as compared to the year ended December 31, 2019. Please see “Non-GAAP Measures” for a reconciliation of adjusted gross margin (non-GAAP) to gross margin, the most comparable GAAP measure.

Net income for the year ended December 31, 2020 was $323.9 million, or $12.89 per basic share and $12.76 per diluted share, an increase of $145.3 million, or 81.3%, from $178.6 million, or $7.70 per basic share and $7.02 per diluted share, for the year ended December 31, 2019. The increase in net income is primarily due to overall stronger gross margins driven by the 28.8% increase in home sales revenues, 6.1% higher average sales price per home closed during the year ended December 31, 2020 as compared to the year ended December 31, 2019 and $41.2 million of tax benefits relating to the federal energy efficient homes tax credits recognized during the year ended December 31, 2020.

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.

About LGI Homes, Inc.

Headquartered in The Woodlands, Texas, LGI Homes, Inc. engages in the design, construction and sale of homes in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia and Pennsylvania. Since 2018, LGI Homes has been ranked as the 10^th largest residential builder in the United States based on units closed. The Company has a notable legacy of more than 17 years of homebuilding operations, over which time it has closed more than 45,000 homes. For more information about the Company and its new home developments, please visit the Company’s website at www.lgihomes.com.