With an aggressive growth strategy, it's no surprise LGI posted 853 home closings in the second quarter—setting a company record. But that success translated into a stronger earnings per share than the Street projected as The Woodlands, Texas-based builder raised its 2015 closings from 2,800-3,200 to 3,000-3,300.
“We continue to expand and execute our growth plan maintaining an appropriate supply of move-in ready homes to fuel our dynamic sales team and maximizing our return on capital through efficient build-times and even-flow construction methodology,” said Eric Lipar, LGI’s CEO and Chairman of the Board in a news release. “We have been able to replicate our success in our markets outside of the state of Texas and stay dedicated to our systems and processes as we continue to grow and capture more market share.”
The results were well received.
“We reiterate our Overweight rating, as we believe LGIH’s valuation, trading at only 6.5x our 2016E EPS versus its smaller-cap higher growth peers’ 9.4x average as well as our broader universe average of 11.0x, does not properly reflect our outlook for 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,” wrote J.P. Morgan’s Michael Rehaut.
Here are some of the highlights from LGI’s 2Q 2015 compared to 2Q 2014:
- Second Quarter 2015 Highlights and Comparisons to Second Quarter 2014
- Net Income of $14.0 million, or $0.70 Basic EPS and $0.66 Diluted EPS
- Net Income Before Income Taxes increased 52.8% to $21.2 million
- Home Closings increased 28.9% to 853 homes
- Home Sales Revenues increased 49.3% to $158.8 million
- Average Home Sales Price increased 15.8% to $186,197
- Adjusted Gross Margin (non-GAAP) as a Percentage of Home Sales Revenues increased 30 basis points to 28.2%
- Active Selling Communities at quarter-end increased to 45 from 31
With a strong July, Lipar is expecting a robust second half of 2015.
“July continued our trend of strong home closings with a 79% increase over the previous year,” Lipar said. “Based on this solid start to the third quarter and the success we have seen during the first half of the year, we feel we are well positioned to meet our goals and are raising our guidance. For the full year 2015, we now anticipate closing between 3,000 and 3,300 homes and believe basic EPS will be in the range of $2.15 to $2.50 per share.”