One of the newer public companies, LGI Homes announced that its closings increased 38.4% to 671 homes on the strength of active selling communities jumping from 28 to 44. With average sales price increasing 14.9% to $179,866, the builder’s revenue jumped 59.0% to $120.7 million.
“One factor contributing to this increase [in sales price] was our first six closings in our new Terrata community, Potranco Ranch San Antonio and Texas,” CEO Eric Lipar said on today’s earnings call. “These six closings had an average sales price of just north of $400,000 with an average size of 3,400 square feet.”
Coming into earnings season, LGI was on a bit of a roll. In March, it set a new record for closings in a month with 298.
"LGI Homes has had an outstanding start to 2015," said CEO Eric Lipar in a statement. "Our first quarter results have set the pace for another year of solid growth and strong performance. With the strength of the market and high demand for homeownership, during the first quarter we delivered a record setting 671 home closings."
LGI’s gross margin, a touchpoint for analysts this earnings season, increased 30 basis points to 27.8%, driven by higher selling, general, and administrative expenses.
In the first quarter, LGI delivered its first two communities in Denver and the first Terrata Homes community in San Antonio, Texas. It also notes that sales remained strong in Houston, with sales hitting 8.1 closings per community per month, up from 7.5 per month.
Lipar mentioned on his earnings call that he thinks the oil and gas issues are causing more problems at the higher price points.
“As of now our performance has not been impacted negatively by the week oil and gas sector in Texas and Houston economies,” Lipar said on his earnings call. “In fact, April absorption Houston was nine closings per community.”
The builder reiterated its guidance of 2,800 to 3,200 closings in 2015. With total owned and controlled lots up to 21,286, more communities are on the way. “We continue to deliver robust year-over-year results and are on track to meet our goal of 2,800 to 3,200 home closings in 2015,” he said.
In the future, J.P. Morgan’s Michael Rehaut sees “above average and near industry leading order/closings growth, driven by the company’s land position, geographic expansion and unique marketing and sales approach, as well as near industry leading gross margins.”