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Aug. 3, 2021, 4:41 p.m. EDT

10-Q: LGI HOMES, INC.

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(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For purposes of this Management's Discussion and Analysis of Financial Condition and Results of Operation, references to "we," "our," "us" or similar terms refer to LGI Homes, Inc. and its subsidiaries. Business Overview We are engaged in the design, construction and sale of new homes in the following markets: West Northwest Central Midwest Florida Southeast Mid-Atlantic Phoenix, AZ Seattle, WA Houston, TX Minneapolis, MN Tampa, FL Atlanta, GA Washington, D.C. Tucson, AZ Portland, OR Dallas Ft. Worth, TX Orlando, FL Charlotte, NC Richmond, VA Albuquerque, NM Denver, CO San Antonio, TX Fort Myers, FL Raleigh, NC Baltimore, MD Las Vegas, NV Austin, TX Jacksonville, FL Wilmington, NC Northern CA Oklahoma City, OK Fort Pierce, FL Winston-Salem, NC Southern CA Daytona Beach, FL Columbia, SC Sarasota, FL Greenville, SC Birmingham, AL Nashville, TN

Our management team has been in the residential land development business since the mid-1990s. Since commencing home building operations in 2003, we have constructed and closed over 50,000 homes. During the six months ended June 30, 2021, we had 5,417 home closings, compared to 3,840 home closings during the six months ended June 30, 2020.







        Results of Operations
        The following table sets forth our results of operations for the three and six
        months ended June 30, 2021 and 2020:
                                                              Three Months Ended June 30,                  Six Months Ended June 30,
                                                               2021                  2020                  2021                  2020
                                                            (dollars in thousands, except per share data and average home sales price)
        Statement of Income Data:
        Home sales revenues                              $    791,512            $  481,602          $    1,497,465          $  936,329
        Expenses:
        Cost of sales                                         577,433               363,629               1,093,437             711,792
        Selling expenses                                       44,796                29,960                  87,579              62,723
        General and administrative                             23,276                20,179                  47,999              40,102
           Operating income                                   146,007                67,834                 268,450             121,712
        Loss on extinguishment of debt                            662                     -                     662                   -
        Other income, net                                      (3,776)                 (763)                 (4,609)             (1,774)
           Net income before income taxes                     149,121                68,597                 272,397             123,486
        Income tax provision                                   30,987                12,973                  54,605              25,023
           Net income                                    $    118,134            $   55,624          $      217,792          $   98,463
        Basic earnings per share                         $       4.75            $     2.22          $         8.75          $     3.91
        Diluted earnings per share                       $       4.71            $     2.21          $         8.66          $     3.88
        Other Financial and Operating Data:
        Average community count                                 105.0                 116.0                   105.7               112.3
        Community count at end of period                          106                   117                     106                 117
        Home closings                                           2,856                 2,005                   5,417               3,840
        Average sales price per home closed              $    277,140            $  240,200          $      276,438          $  243,836
        Gross margin (1)                                 $    214,079            $  117,973          $      404,028          $  224,537
        Gross margin % (2)                                       27.0    %             24.5  %                 27.0  %             24.0  %
        Adjusted gross margin (3)                        $    225,967            $  127,909          $      427,401          $  244,026
        Adjusted gross margin % (2)(3)                           28.5    %             26.6  %                 28.5  %             26.1  %
        EBITDA (4)                                       $    159,812            $   77,437          $      294,049          $  141,417
        EBITDA margin % (2)(4)                                   20.2    %             16.1  %                 19.6  %             15.1  %
        Adjusted EBITDA (4)                              $    158,144            $   77,926          $      292,360          $  141,518
        Adjusted EBITDA margin % (2)(4)                          20.0    %             16.2  %                 19.5  %             15.1  %
        


(1)Gross margin is home sales revenues less cost of sales.







                                                                            Three Months Ended June 30, 2021                                                  As of June 30, 2021
                                                                                                                                          Average
                                                                                                                                          Monthly             Community Count at
                                    Revenues             Home Closings              ASP             Average Community Count           Absorption Rate            End of Period
        Central                   $  347,963                 1,348              $ 258,133                      38.0                         11.8                            40
        Southeast                    159,714                   632                252,712                      25.7                          8.2                            25
        Northwest                    106,197                   255                416,459                      10.3                          8.3                            11
        West                          80,813                   232                348,332                      10.7                          7.2                            10
        Florida                       96,825                   389                248,907                      20.3                          6.4                            20
        Total                     $  791,512                 2,856              $ 277,140                     105.0                          9.1                           106
                                                                            Three Months Ended June 30, 2020                                                  As of June 30, 2020
                                                                                                                                          Average
                                                                                                                                          Monthly             Community Count at
                                    Revenues             Home Closings              ASP             Average Community Count           Absorption Rate            End of Period
        Central                   $  167,924                   747              $ 224,798                      34.0                          7.3                            34
        Southeast                    128,577                   559                230,013                      37.3                          5.0                            38
        Northwest                     56,369                   153                368,425                      11.3                          4.5                            12
        West                          60,592                   236                256,746                      15.3                          5.1                            15
        Florida                       68,140                   310                219,806                      18.0                          5.7                            18
        Total                     $  481,602                 2,005              $ 240,200                     116.0                          5.8                           117
        


Our results of operations for the three months ended June 30, 2021 reflect a significant rebound following the slowdown related to the COVID-19 pandemic that occurred during March and April 2020. Increase in the demand for our homes driven by benefits of homeownership, low interest rates and an undersupply of new and existing homes available for sale have resulted in a 53.2% increase to our backlog net orders at June 30, 2021 as compared to June 30, 2020. Home sales revenues for the three months ended June 30, 2021 were $791.5 million, an increase of $309.9 million, or 64.3%, from $481.6 million for the three months ended June 30, 2020. The increase in home sales revenues is primarily due to a 42.4% increase in homes closed and an increase in the average sales price per home closed during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. The average sales price per home closed during the three months ended June 30, 2021 was $277,140, an increase of $36,940, or 15.4%, from the average sales price per home closed of $240,200 for the three months ended June 30, 2020. This increase in the average sales price per home closed is primarily due to a favorable pricing environment, increased closings at higher price points in certain markets and changes in product mix. The overall increase in home closings was largely due to a strong demand environment leading to higher average monthly absorption rates within certain markets in all reportable segments during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. Our community count at June 30, 2021 decreased to 106 from 117 at June 30, 2020. The decrease in community count is due to close out of or transition between certain active communities for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020.

Aug 03, 2021

COMTEX_390873253/2041/2021-08-03T16:40:38

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