LGIH - Earnings call transcript Q2 2019

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Operator

Welcome to the LGI Homes Second Quarter 2019 Conference Call. Today's call is being recorded and a replay will be available on the company's website later today at www.lgihomes.com.

We have allocated an hour for prepared remarks and Q&A. [Operator Instructions] At this time, I will turn the call over to Rachel Eaton, Chief Marketing Officer at LGI Homes. Mrs. begin. may you Eaton,

Rachel Eaton

to the Homes' and second June months Welcome our the call, results ended XXXX. for quarter XX, the you. conference LGI discussing six Thank of XXXX

that conference include, LGI's Today's strategy, objectives All XXXX plans, confirmation outlook, contain current such will forward-looking statements business among things, reflect statements call other regarding of guidance. and statements expectations.

to and that could However, uncertainties prove be they and to do other involve risks incorrect. assumptions our expectations estimates cause

risk filings of differ You cause cautionary the not and with factors should these of our section discussion and results materially performance. about including a other our in are anticipated the guarantees future forward-looking statements forward-looking to review those our actual could statement These SEC, statements. statements uncertainties from factors for that risks, forward-looking

forward-looking risks the You reliance undue only this these of in statements should you should not as light consider of speak and which place the these of forward-looking statements, on call. date related

measure on isolation presented or margin with substitute information to accordance in a considered Additionally, presentation call. the financial be for is not be GAAP. this this will non-GAAP as adjusted of The in conference intended gross financial information discussed a

with the the website SEC's today. our the June the Investors we later measure XX-Q to GAAP, XX, SEC press gross gross Form in adjusted ended reconciliation lgihomes.com. of quarter our file filing that report at section issued for in most quarterly that A is with in accessible on this of margin, will we the XXXX, This and website accordance included comparable release in margin earnings to prepared on be the morning and expect

Chief Homes' Eric Lipar, Chief the Charles Officer; Joining Merdian, Officer. Executive me today Financial and LGI are company's

from today's our then During six we of results months will the XXXX first financial in discuss highlights detail. the second more and summarize quarter call,

the and questions. conclude we call comments open that, Following will for the

Now Eric. I'll turn the call over to

Eric Lipar

LGI LGI in is We we this and to interest your as sustainable. we have unique culture, history, that to continued appreciate everyone operating continued Homes. our Rachel, welcome maintained Throughout on demonstrating you, grow, the call. our Thank have model

hard to the work to significant America. builder. Since is your our last as loyalty outstanding residential all accomplished of and results to for call, employees our XXth builder place commitment thank has of are continue becoming processes, could our dedication and us without and five largest earned we not a have top in path for our our consistency employees. a national This a This we milestone as commitment announce the been our LGI and that proud we

quarter second closed For past results, strong which a the $XXX price million of homes, community This and generating we revenue, quarter the over of XXXX. increase XX% XXXX, we second sales home sales producing X,XXX represented approximately count. delivered in home closings, record-setting revenue, average quarter,

XX.X closings, For community followed Absorption the seven the was community closings, Houston by XX per performance quarter, Houston per quarter averaged we XX.X Jacksonville second closings markets. at for highlighted per and averaged at per per in Sacramento and per month our Sacramento, the Jacksonville month. month, community company-wide. by

active at had quarter, that communities last year. the active end states, Company-wide, QX communities, increase, the roughly the XX XX% with second XX we an we ended in of over XX

closings. our Austin, quarter, let's closings second the XXX Minneapolis first Houston, the down, Breaking our results Antonio, total markets, from Comprised San it and Division represented central approximately from Oklahoma look of XX% generated City operations highlights, our Worth, Central at of operations. which Dallas/Fort in

Division. outside closings a an Division, for the in that was our in the averaging Central increase was closings, strongest divisions, rate, Central took Division, second of Southeast closings XX% month. quarter, across X.X the place the the Of all absorption per highlight per of Our community

XXX the homes to quarter, This second year. division, of last quarter we XXX closed closed this in compared homes in

Our resulting communities, Southeast of new our primarily seven Raleigh, in Wynn in acquisition count with communities, also four had Division from an community Homes. of increase

accretive August believe X, business. mark very we the our one year anniversary, to of acquisition, Homes the been has Wynn which

compared the closed the XXX the year, last homes, addition second west three Our in Las Sacramento include primarily active of and driven increase to of markets. which the quarter Vegas division XXX communities, new by

coupled In continue investment $XX.X count and quarter, expansion, in with revenues. from XX a positive to our affordable closed the response wholesale see second buyers million this to with business, demand quarter, we interest homes Throughout different we three generating for groups, homes, lower rates. community

last XXXX Second initiative, CompleteHome consistent and of year. increase second providing our over to value On new desired quarter features, X,XXX, an to call, the home homebuyers orders, basis, XX% introduced includes on prior product national the make a a price. our quarter our we our most net were This greater package. affordable more

our well orders. responded have this Customers in increase XX% to evidenced initiative, by

the During second of closings quarter, packages. included half our the approximately CompleteHome

quarter be fourth third will of substantially closings the our CompleteHome and that, expect package. the We all quarter of our majority

our With turn that, the in-depth Chief to a Merdian, Financial over review, I'd Charles results. more our financial of for call Officer to like

Charles Merdian

Eric. Thanks,

the earlier, the to As over homes quarter, a $XXX,XXX, $XXX,XXX prices XX% closed, from ranged based XXXX. quarter, over a of an revenue XXXs second the home XXXX increase. increase sales year-over-year realized for the second Sales averaged on mentioned million, from were closed X.X% homes quarter $XXX.X during

changes sales and of and addition average Vegas, due primarily prices lesser product and Sacramento the in markets, in sales existing in extent as price price new per certain in to the a to home Las higher was communities. mix, such increases increase points This

the of Central, Florida, prices the West, Southeast, $XXX,XXX $XXX,XXX in second XXXX. for the were in second the in $XXX,XXX approximate from which the $XXX,XXX was up average In quarter and quarter by in sales in Northwest, $XXX,XXX segment $XXX,XXX

quarter, year, the a Gross margin of as a was last for XX.X% basis XX.X% of this percentage sales same quarter decrease XXX compared points. to

XX assets we in million acquired $XX.X the in related approximately homes quarter, acquisition. Wynn During generating revenues the closed to

accounting prior to our purchase related is included overall to gross basis compared XX $XXX,XXX by impacting So year. in the margins margin points, gross

call, overhead prior XXX the on last in impacted incurred and favorable year. mentioned margins first community had year, as basis count Sequentially, our points as gross a has and to geographic this additional have per to closings were compared impact gross the as compared up margins our we of expansion on increase overhead. the quarter investment addition in In community construction construction

to the Our million basis million adjusted during gross in $X in to quarter in the to XX.X% of margin for the capitalized debt, increase XXXX. an of basis points of compared second XXX senior XX excludes quarter representing interest primarily XXX due gross was margin decrease. XX.X% points sales XXXX, last this Adjusted the basis approximately issuance quarter charged year, cost of $XXX higher notes the overall cost or of with quarter approximately same than average point

$XX.X X.X% revenue quarter for margin to to XX.X% home expenses increase. point quarter in similar in quarters the of sales for to the or and compared year gross $XX.X second prior currently XXXX, from sales quarter We selling, X% ending home home million expect general year. the our the compared previously million, within XX basis and Selling second Combined the fourth the a or guidance. revenue remain third were year administrative expenses of stated of were our for sales revenue full XX.X%

a compared home and $XX.X home or and sales in to revenue General XX of or revenues second point administrative of prices. percentage and average higher revenue expenses reflects X.X% administrative general million Decrease were higher expenses X.X% basis to $XX XXXX, a the generated as the quarter closings for million, due sales decrease. sales also higher of

expect related home costs revenue in increases be as We based over quarter. quarter-to-quarter and third the communities quarters expected believe similar upfront several we the on of fourth SG&A revenue to would will overall sales a continue the percentage and next to compared and vary new second to quarters

reflects of of track a a million. $X.X income million, sale the gain or quarter $XX.X from sales commercial the of home for XX.X% this income approximately quarter was Pre-tax revenue. Other

tax XX.X% effective generated per We $X.XX and our with share $X.XX and share home income tax of XX.X% the which rate that share. year. rate for remainder would net basic to quarter quarter, continue second of of revenue million per $XX.X line we range per in represents the the expectations in between effective XX.X% the is sales earnings the or expect of will XX% For diluted of and

the owned. centers owned and XX, amount, XX,XXX of controlled either were XX,XXX second this were or XX,XXX were vacant and in with or lots. of raw as Of June or process. portfolio development XX% homes under We And ended information X,XXX a lots, completed X,XXX quarter were finished either homes

notes. quarter the convertible in for calculating by Weighted outstanding share average second quarter. XXXX, was diluted million stock the are the $XX, outstanding the resulting weighted calculation shares price average And our outstanding to earnings increase shares share approximately in for diluted X.X approximately per for EPS impacted our

that and the quarter we X,XXX expectations and XX% Our the calculation. cancellation and the stock and in diluted year, increase X,XXX community active mature later count Ending compared year increase last settle with XX.X%. convertible with this were premium it's a in net the backlog to principal our growth. second quarter consistent orders in Gross notes in the for the consistent will EPS was rate orders X,XXX was for the homes, cash

billion the end total facility, notes in XX, estate in our Also senior convertible debt cash, inventory assets had million of total at notes. As of had revolving million real of outstanding we we $X.X approximately and $X.X under $XX of June billion. $XXX June, credit and

outstanding which convertible capacity borrowing was settling the takes account the notes available approximately $XXX balance of principal Our million. into

and Our gross XX% approximately was net debt-to-capitalization debt-to-capitalization approximately XX%. was

can of credit we $XXX million conditions facilities, reported, credit amendment which company our request fourth the and entered restated terms a the be to of May provides by agreement the previously As and agreement. on at up subject increased the revolving to into $XXX million credit for X, which

to point, At back call to like turn this Eric. the over I'd

Eric Lipar

Thanks, Charles.

and into guidance year. in third are remainder provide thoughts looking quarter me the thus what far the and ahead Let on we of some seeing the

from averaging July community absorption quarter last up start to XXX solid the XXX These in came third closings X.X with per resulting year. communities, in closings closings off from month. per XXX a great in XX% a XXX The active pace, very closings of is July,

The confident will the the of had to year and XXX continue goal to to our year. metrics. between grow in first XXX X,XXX for XXXX, are active on hit homes meet of ability seven team Throughout ending of X,XXX track months the we remainder community all put our to us selling count, closed our communities and

the will XXXX ending for price sales average an between price year our believe continue we sales and with $XXX,XXX. increase, to overall $XXX,XXX addition, average In

margin maintain XX.X%. range the year in and of guidance We XX.X% the our gross for

ending the will gross year effects excludes expectations expect XX.X%. and We adjusted accounting purchase which be previous in the between of to margin, with line interest and XX.X% continue

margins earnings basic $X per our year Given count, share our continue we share. sales full be per home average believe $X active and community gross will guidance and closings, for price, reaffirmed between to

we'll questions. Now to happy be take your

Operator

Rehaut Michael from JPMorgan. come to going is question first from Our Instructions] [Operator you. Thank

line open. Your is now

Michael Rehaut

good right, All on and Thanks. congrats results. the afternoon, everyone

Eric Lipar

Thank you.

Charles Merdian

you. Thank

Michael Rehaut

A think little I quarter to The first come XQ in on expect you rest had be did were them year. I the what your expectations different I I expecting were believe believe gross ago you for the for a was quarter and second XQ. question little half. margins the better similar back for. XQ of improvement than the looking throughout margins the gross we where a bit to than

maybe mix took pricing it to is of movement from there's if change the more back between bit would guide is outlook? that. XQ terms within just that or a was any if a of this you than if of or think I wondering type little environment a XQ was bit again mixed little from standpoint competitive change quarters, a a But standpoint, half little improvement slight of little bit in there the I a causing it in the out of

Charles Merdian

and bit what second than point absolutely Charles. start This can you a Mike. on think guided the we had that little Thanks was I quarter you're question gross showing for is improvement XXX add. call. originally to is the Eric margins the last But I can right basis stronger

either to, us there standpoint the for some means communities so of think of that has year. also and communities certainly we from then more similar is helped open side as consistency of the remainder how consistency guide I markets, in And variability those definition basis what new the expected in. new us giving would come points that bit of to depending XX on we typically that number or we a little is on open

the and And then costs seeing I'll overall our to very cost build. of structure terms of the just cost terms we're basis address similar in cost part in net

and us And well materials. both we're the increases so in always that's out into don't looking costs of labor terms necessarily but there but always for as future, a variable out see we that as is in dramatic

has bit always there the that and factored be assumption little as well. Our up, been there's of cost will materials in always so labor of a

we the the markets let that. and And to with are where address Eric related pricing then I'll in

Eric Lipar

Yeah.

agree said. I think Mike I margin. question everything Charles great on with gross

Our of margin excited goal prices is with positive really as the Plus really some to usual start in to the offset increase of to costs. is that component that’s CompleteHome back CompleteHome gross there But with and volume by we be year the additional we're year. Very half of and rest the year. consistent volume. now for for would driven really right the positive gross a of on optimistic think And rest margins the

Michael Rehaut

appreciate ago just difference I kind more this I one zeroing decline. the when question you of just the eluded the year to at my gross certainly the question environment? maybe the to in can is and year of I has think I year-over-year pricing back guess And the driven great. half if That's you look obviously it. talk factors follow-up environment just one margin the on competitive when between of that

quarter characterize of would end for impacted wondering the But this end again the a pricing in From second back environment, year the margins. outlook was you particularly kind of have the first quarter. And you of the any could I to the backdrop? discounts, the things the -- talk quarter standpoint if half second in how progressed how about sequential if way competitive that's from

Eric Lipar

are really Eric. is is on interest mean rates from And a is start demand I landscape I This competitive our lower. strong pricing can the Yeah. fine. that.

standpoint, really up in seen game sales the prices going really impact the from that think good that pricing. the costs offset competitors big or to are would so have a don't anything and we're discounting from So is in still like certainly increasing costs shape plan. But still a I negatively

do talking entry-level lot first-time an but it from more of and and certainly companies are homebuyers standpoint acquisition single-family The those business view I by competitive about about that we out looking a the that I very XX,XXX controlled looking to companies owned is margins talking more demographic in rental development. positively, getting we good entry-level we landscape position lots for builders into we're feel really know think because including but and certainly have that and and really about land future more our competitive, And on. good

deal this to we we're talk also should an position up from And to ramping our a new a acquisition that it's in that in lot margin lot over standpoint, feel of meet doesn't the next we And I of really think threshold. a communities. nor couple about still don't of important of have stretch year buy a growth we we are quarters

really and the and we the pretty quarter we over new year-over-year benefit going difference hire and couple So that spending are XXXX. and to the about really is all have of to at call we're construction of on it that the the years significant last the we talked that in staff additional and set-up next get looking offices these expenses see

Michael Rehaut

absorption last ask When an talking terms SG&A the that. thinking can you could I of is obviously see rate the XXXX some one see that but I but from margin typically maybe I newer markets the gross better a stays I you're better be you say say benefit improvement? the should If backdrop on in on I'd that just you leverage even be again about and in presume, thinking also mature that similar side, should -- that about one that about as also Great. --

Eric Lipar

Yes.

of slot markets new an is rate be this everything coming a certainly a communities closings mean and the XXXX. new in sales said of it expect as we've XX new you I probably to of but closings getting got That's first that opening mean be in of their mature, expenses just any to up communities going quarter of quarters in lot year We for going in ramping early of certainly new lot XXXX. expense, I a kind overhead couple construction communities. Maybe we're the few fourth again after those what personnel of new are have couple around on absorption think offset. possible. opened I see in of in But we'll all of up we're are won't lot in and that communities XXXX communities to a XX and fully lot talking as an XXXX about. all so a that communities of example operational spending a those expense. is

Michael Rehaut

much. so Thanks Great.

Eric Lipar

welcome. You’re

Operator

our going is And question from from Wedbush. you. to Jay Thank come next McCanless

Your now open. line is

Jay McCanless

the we thought look That's on you net that quarter. really community guys beating great spend, my did SG&A. of additional everyone. some We afternoon, in questions. reasons at guys almost you one that XX% going taking talking G&A job this about the there keep our count and could of didn't estimate for was Eric, if had you count, a expansion Good but be your community went net to number Thanks change.

and we the -- higher about some XQ, expect either function step talking but talked all you're in I initiatives you XQ what XQ about? you money? we for just are that not that for these deploy of mean, as should other So

Charles Merdian

that. been to G&A quarter is dollars start. being between million so $XX past Jay, high $XX million $XX the this the million last being Charles. this have I'll quarters, five absolute over mark ranging of

depend general and we we're the expect would to to more going Obviously, increase. see about that to continue administrative selling talked expect in absolute the closings G&A, on component. in is to is number revenue you dollars the dollars on like -- where come so I but see would going incremental on, that component say we've the So of revenues, absolute to percentage certainly in as feel the to G&A continue going

for last on look selling the distribution determine see whether spend investment, five to you little quarters depending of the expenses kind in offices we geographic need generally marketing, what think dollar bit office us, higher of if a not. that the upfront I to the or openings, in you tend those maybe

quarter, what bracketing So of second increases. revenue line dollars that's stays you'll we the as the XX.X% relatively kind consistent did is we around for what said if absolute see increase

Jay McCanless

I Is the prior last versus like absorptions. communities? alloc, have of rest it on the The nice gap it. gap versus something guys, you of is in in absorptions next but timing you that guys West was pickup Got year. or Looks just down function on were a just the year, segments not but that question geographic a have alloc the concerns

Eric Lipar

per Yes, this is Eric. out No region training each absorptions based and and people and really that some absorption Vegas very Jacksonville average communities of way, concern. strong a of Texas but A But the the markets when in of had good in noise new We our communities opening. led lot strong closings have newer consider Sacramento seven. QX community a and on selling like we on in quarter. absorption. Las strong and startups

really we're and QX going think with maintain in that's absorption think I QX. pleased to in and So QX

Jay McCanless

two margin And then questions. got on -- I've gross

should The impact expect first Homes Wynn see deal accounting? more the from we how to much one, purchase on

Eric Lipar

Well, XX it's basis points. roughly

as of I when a time. basis quite reasonable were there range probably it some think X,XXX being XX Wynn lots there is acquisitions, assumption. total we're going to in acquired so quarter-over-quarter The see that a from points we consistent guide, were for

Jay McCanless

about was out I gross with communities make last because drag putting CompleteHome, quarter? margin type CompleteHome to property the consistent had guys there from was newer of and any there retrofitting group on more I Was you drag, any the think them during that some there. talked protect Okay. package then And wondering quarter

Eric Lipar

No.

Jay McCanless

taking for questions. Thanks great. Okay, my

Eric Lipar

bet. You

Operator

comes Truman Wells you. Thank next from Patterson Fargo. And from question our

is line Your open. now

Truman Patterson

guys. morning Hi. Good

last going actually the -- following that, nice question, just quarter way, that but is first up the CompleteHome completed nationwide? on other rollout, Just on off,

just And gross to guys finishes the your us what differential could that? you forward? expect realize Maybe versus through realized you or margin is, walk economics of the going that prior

Eric Lipar

CompleteHome Yeah. are rolled packages This Truman. CompleteHome Eric. is The out Plus Sure. nationwide. and Thanks,

April In start been has company fact, forward, or of X CompleteHome from start the every QX in starts.

And half going of we we would out like CompleteHome all fourth by almost in quarter, about, to that homes increase rolled our we're is the talked So package. where be percentages, quarter, about the to closings were of think nationwide, the our CompleteHome.

associated last consumer. We we put $X,XXX about cost costs, that average to the We price And the earnings raised there's the on to pass was the talked a it. the call, on to thought place. with $X,XXX $X,XXX, package around cost in

covering we So are little extra. bit gross the a maybe margin,

XX what higher to houses, if kind inventory of points So, in XX existing CompleteHome margin rather you gross seeing we're will. as than come through, basis the the for they

haven't are the in been very also, selling that long. inventory But CompleteHomes

pretty that costs So out after starting. we existing we they in are have closing don't inventories. carrying quickly, And have the

margin. margins. So, be we our happy get consistent CompleteHome the with as, with this, see we've gross been And to it historical really through once gross

Truman Patterson

Okay. that. Thanks for

lack fairly lack alluded Looking at Could a before? you you in quarter, communities and to have kind and occur we orders, due purely gap closing inventory. that are new to, second the guys of as seen a of large inventory, of that which discuss

driving else issues, standards manual FHA anything there or is the the -- possibly of delaying any there longer were change driving cycle, construction the previously, it? Any underwriting closings? Or of labor

Eric Lipar

Truman, Eric. because this the underwriting standards. main Yeah. delays, closing No, is

closings. everybody non-factor And… I has by really it and that in now, our been sales seen think a that has

Truman Patterson

…Yeah.

Eric Lipar

and starting And new and online. certainly as that grown have we we all years over getting development are similar … causing out, the communities builders all and a dealing times we've do, and have, with the of challenges, lot utilities, plants as at kind reported, off. getting

But across now. a we I like communities got make we few ago. one two had spread won't or And enough that substantial we're years think enough difference, country, large a when the

of end we be inventory year. good So our through way. any talking won't think I And in shortages, all about in hit to metrics of the the we're shape,

Truman Patterson

Thanks Okay. guys.

Eric Lipar

welcome. You're

Operator

BTIG. Instructions] Reichardt Carl you. Our from [Operator comes Thank from next question

now Your open. line is

Carl Reichardt

quarter impact but Hi, questions as Charles? to have Thanks. if gross that you Most can prices lumber my margins answered, quantify this the curious of been guys. I'm of on

Charles Merdian

of I mean margins way. lumber would for year-over-year, some relatively any on nominal been intents and improvement, lumber have changes that sequentially Yes. the but purposes in Lumber price in affect we have prices consistent. -- terms overall all saw really been prices significant

Carl Reichardt

And I think time for housing that? of guys? was how buyer Is sort family competition that only adjusting -- but entry-level the it what single Okay. not peers. from where I'm underwriting? of rental then do so, changing a curious dynamic Eric some here particular it too is increased your been perspective? you've the think mentioned are you you're quantification of your the we Eric, are hint sort being of of price from for builders, mentioned like how And aggressive from the you first lots are seeing And peers you there's given -- sudden some there I'm just markets from kind are your the -- moves of some seeing

Eric Lipar

Yeah.

the market is popular that I market. well. like a operators as and standpoint traditional of think like a Florida us market popular all a a is from really market. it's Carl, Phoenix markets those rental single-family

deal. Northwest no the single-family in homes sacrifice in criteria. or to so, margins we going We're success us, to a have underwrite underwriting operators, We change for selling rental how not

on deal it's good a If and to now. competitive we But deals. owned deal, there to on in get lots stretch certain the and idea not of said, pressure to our think good in more I are right and market that deal. we're on somewhat like and a do price shape certain pass that might buy That's of bit on we controlled market the multiple a that's potentially have is more or seller's bids off a

plays are it as we'll now, as So, I'll market the seller's a and right classify available. see out, it land far entry as lots but level that how

Carl Reichardt

Thanks. it. Appreciate

Eric Lipar

it. Got

Operator

Housing our Center. Barron comes And Alex Research you. from Thank question from next

Your line is now open.

Alex Barron

job on you Thank quarter. and good Yes. the

Eric Lipar

you. Thank

Alex Barron

the are to by mean guys or count is you plans into or to looking include existing ask that that new into? include possibly next it's footprint year-end year. maybe to wanted markets get community about get that Does whether to XXX, I sometime you

Eric Lipar

is this Alex, Eric.

point have is count the of of and we’ll going newer XXX that for about December we us, between California. Riverside year on And Columbia in on our So be we good in to markets by would which that. end really and the end year markets have -- of out manage I the plan XXX. couple A existing market a the is existing community feel primarily by It's -- Charlotte, that that the could and plan markets. South opening then deeper new our also end Carolina,

into as the southern well. California, in then that market. existing I opening will part another community will believe So, of getting be And other be every

Alex Barron

you operate Got as it. guess, of I I there's price moving more market and out market been And then of parts But kind guess, builders have pointed into the others that guys And in do you for enough feel around? you to potentially or guys to everybody that maintain for that there's sales feel lower you the pace, go sales do is going to like demand your pace? points.

Eric Lipar

outside been as Houston, builders at as various and as the pace. come have Texas. onentrylevel the fact there's we sales pace, maintain as been years, as far we've that their and our able and sales more less or of expanded over competition. expanded of we've And We'll proud we times go have our think we've count, outside maintain been of other Yeah. and I to But community focus grown

competition have in won't So any the sales impact our pace.

Alex Barron

pushing it relates that maximize pricing, the prices? dynamic? trying And the to you as necessarily are to you trying are of not pace or How just about thinking kind guys sales focused prices, raise guys on to

Eric Lipar

guidance continue and we maintain sure Yeah. and in gross years been to costs make is development, our our telling we We to consistent a our of investors think price a really of last cost we think enough for eight want of we materials, the margin. cost rising offset hit going seven, that year to to raise maintain the land, it plan prices margins, of we've six, are are environment, all costs the want the far cost and gross about the we labor, cost to the and whether rise consistent of as those the to it's for

Alex Barron

it. Got

you. Okay. Best of Thank luck.

Eric Lipar

All right. Thank you.

Charles Merdian

you. Thank

Operator

McCanless Jay from our And you. follow-up next Wedbush. Thank question a from is

line Your open. is now

Jay McCanless

ask you and a Hey, gross follow-up. a guys. up the from yes, I guys you're of where I Two may call than builders and faster question now quarters that as some little a you other margin amount trying said maybe the seeing against lumber ago building as lumber and time to relative But other these way. the moving to taking cycle some moving markets. do maybe were worried you, asked little of a to maybe for especially working in if wanted into you different savings I'm count bit as in be -- bottom, all about some my be with benefit. shortage put lumber you specs newer are Thanks community Charles out to some wondering can prices seeing builders, prices guys lumber we're

Charles Merdian

it's great Jay, follow-up. a

So I And general. commentary Eric of communities. think I really basis on part that prices we're then our pricing, updating mean in tying all into just a of said what the margins about answers around monthly gross in

good So visibility. we have

and just all to of information even look package bit now the at pretty were that have labor but before the other CompleteHome, good standardized allows from and that I it we I but think way us fees little implementation a permitting We in has the general better. not better with the lumber, CompleteHome categories. pricing at think all

compensate think the pricing of each adjust in can expensive, movement So, that are other individual that any our may and we direction although as for build it happening the changes go the be we think to other for along house. we more I that with particularly budgets in lumber

Jay McCanless

Okay. Thanks That's again. great.

Charles Merdian

You bet.

Operator

over further would to Thank like for now the call turn you. And remarks. to back Lipar I Eric

Eric Lipar

great everyone Have your continued interest and Thanks today's LGI Homes. participating afternoon. a call in for on for

Operator

and Ladies concludes participating you thank today's in This today's gentlemen, conference. for program.

great disconnect. all Everyone day. have may a You

LGI Homes (LGIH) 6 Aug 192019 Q2 Earnings call transcript