LGI Homes, Inc., The Woodlands, Texas (Nasdaq:LGIH) on Tuesday reported net Income of $49.3 million, or $1.93 per diluted share, for the third quarter 2019 and the nine months ended September 30, up $11.6 million, or 30.8%, from $37.7 million, or $1.52 per diluted share, for the third quarter of 2018. Wall Street was looking for a gain of $1.89.
Home closings during the third quarter of 2019 totaled 2,003, an increase of 25.1%, up from 1,601 home closings during the third quarter of 2018. The increase in homes closed was largely due to geographic expansion in the company’s West reportable segment and by deepening its presence within certain markets in the Northwest, Southeast, and Central reportable segments.
At the end of the third quarter, active selling communities increased to 103, up from 81 communities at the end of the third quarter of 2018.
Home sales revenues for the third quarter of 2019 were $483.1 million, an increase of $102.7 million, or 27.0%, over the third quarter of 2018. The increase in home sales revenues is primarily due to the increase in home closings and an increase in the average home sales price during the third quarter of 2019.
The average home sales price for the third quarter of 2019 was $241,179, an increase of $3,597, or 1.5%, over the third quarter of 2018. This increase in average home sales price was primarily due to changes in product mix, higher price points in new markets and a favorable pricing environment.
Gross margin as a percentage of home sales revenues for the third quarter of 2019 was 24.1% as compared to 25.6% for the third quarter of 2018. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the third quarter of 2019 was 26.3% as compared to 27.4% for the third quarter of 2018. This decrease in gross margin as a percentage of home sales revenues is primarily due to higher lot costs and higher capitalized interest costs recognized for the third quarter of 2019 as compared to the third quarter of 2018. Please see “Non-GAAP Measures” for a reconciliation of adjusted gross margin (non-GAAP) to gross margin, the most comparable GAAP measure.
“We are proud to announce another record setting quarter at LGI Homes,” stated Eric Lipar, CEO and chairman. “In addition to a record setting 2,003 home closings, the quarter was also highlighted by record- setting results across home sales revenues, average home sales price, community count and net income.”
