LGIH - Earnings call transcript Q3 2020

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Operator

Welcome to the LGI Homes Third Quarter 2020 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 Joshua Fattor, Vice President of Investor Relations at LGI Homes. Mr. begin. may you Fattor,

Joshua Fattor

afternoon our to results. third Good call Homes’ to discuss quarter and you. LGI welcome conference Thank XXXX financial

we statements include remind contain will strategy, outlook, regarding begin, this objectives. business current Before will All expectations. and call such LGI listeners Homes’ forward-looking management’s other among that that plans things reflect statements statements I

estimates could However, these to uncertainties subject that cause to expectations therefore be statements do incorrect. and involve risks are assumptions prove management’s and to and

SEC, the statements with our filings risk section. cautionary our review should and including about factors You statements forward-looking

factors of could differ For risks, in forward-looking future a discussion the those not from our uncertainties these to and results are other statements. These of statements that actual forward-looking anticipated cause guarantees materially performance.

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

today. section morning www.lgihomes.com. website earnings measures we of in in with as financial the prepared financial for that the expect on this release this the non-GAAP GAAP. press isolation to LGI will or financial www.sec.gov SEC’s of and that quarterly conference a will on September we the the is Homes’ this website filing on XX, these XXXX of accordance Reconciliations the to later measures and report be quarter SEC our in with And issued in most measures to Investors be at Form at GAAP with presented information information ended XX-Q accessible for file in Additionally, are intended in the included the this comparable The considered discussed presentation accordance substitute be non-GAAP call. not

now Eric Our Mr. will Board hosts and and for the of Eric. Merdian, Chairman call Executive call the Officer Treasurer. to Charles Chief and I Mr. turn Officer over Lipar, LGI Financial Chief are Homes’ today’s

Eric Lipar

today. trends the today quarter. the We performance I extraordinary our this sincerely to are few on afternoon of with doing will open for and you, your families everyone outlook XXXX. financial and hope and demand healthy provide recent call Good a participating on comments you with welcome will Josh. then and that call our on our results. Thank I rest And will details our conclude Charles well.

Finally, questions. open we will for the call your

We are this quarter. extremely with pleased our performance past

by locations the impacts we pandemic, the desire of and As across homes saw the and early interest undersupply convenience a rates flexibility for homes the demand past to for market be of and proven of we single-family the and new in sale housing renewed driven is that COVID-XX recovery. unprecedented and available continued move of cornerstone all our levels low economic space, suburban offer. thriving markets, nation’s The existing has

XXX% industry as meet benefit is to LGI dynamics of While whole, our entry-level these we needs the focus especially a spec model is buyers. believe positioned well today’s

September another the it Given positive that our month and sales records was best August company’s single were the in July, and quarter history, same over XX% highest come in Orders sales net was Net backdrop, basis. all up records. both year. in on this no orders last period and gross surprise for history this monthly a quarter breaking our that were the as August company should

to our worked operating are an provided up have with July on on The year-over-year X,XXX closings demand demand, earnings address April. record-breaking now we were was ramped supports and took of as construction and the we In and belief the we preferences. March a quarter, housing doubled we that homes. through consistent brief in muted As expectations August any demand pent-up secular we starts call, the by the backlog than in and the nearly we driven third and result line by a in in surging environment last a strength our of pause more closed shutdowns In our shift sequentially. home up caused our pace early XX%

trends there, replenish mentioned, our by but the in just needed the orders to was were demand time As inventory. order evidenced

approximately During compared X,XXX the quarter, to we successfully X,XXX under quarter. started last homes just

homes markets community Worth Antonio X.X month market XX.X to and a I month. closings active quarter X.X each, of with our by a Austin, have performance our of ability meet September, closings over have XX per third increase Sarasota Our years. with third quickly per third closing in tied partners credit X.X to ground month relationships In per the us quarter inventory the more communities, our followed averaged to month and underscores month, and with September finished December. over closings, on the with call impressive Dallas XX% we and year. outstanding trade per With the quarter. our record turn to X.X% Congratulations our followed we and Charles top closings by highest in so results. quickly will the up ramp to construction our nationwide. ended put an began to for Houston efficient, the enabled also financial last an over to over is Fort a demand and teams and model loyalty quarter built this these quarter, demand we per details In homes strength Portland the with third of X Nashville’s even for increase Notably, flow our was that history the last same closings August, per performance We to company’s with Atlanta best a X.X had XXXX. the a the XXX was to with by closings new community number than other XXX in the up catch that, community on the San

Charles Merdian

Eric. Thanks,

This was the the in company only of in fourth our million. our As $XXX.X press the second this in out surpassed morning, by XXXX. third sales best year-over-year highlighted sent quarter XX.X% quarter home increased performance we to in quarter release history, revenues

As homes of the representing X.X% wholesale X.X% closed XX sold Home total realized closings Eric from quarter quarter, and an homes X.X% over the the was quarter this our closings of X,XXX quarter, a X.X% period increase third highlighted, a homes, X.X% year during year. year-over-year prices compared the total our record offset ahead margin a sales points communities $XXX,XXX, our higher closings increase costs closings. lower through same last highest we and XX.X% homes, included XXXX. closed during driven X.X% quarter year-over-year in favorable last price Average across this or by of of XXX to Gross company same percentage our sequentially. as business higher and a higher quarter sales increased This increases, rising and fewer basis overhead price price points markets, to and interest primarily was increase demand our of a gross sequentially costs. lot input by since hotel transitions driven that by of supported margin the new increases XXX at of to points, price close-outs environment third

basis our points was closings, wholesale Excluding sequentially. XX gross basis margin points up year-over-year XXX and

with total higher year be the XX.X%. to margins offset our will price as recent Given our percentage closings expect sequentially, closings. to line in year-to-date the of of be We that fourth starts in margins our expectation cost backdrop with gross results associated increase would our wholesale quarter home lower full and a by resulting increases of in

quarter the basis this the and was margin Selling in of XXX quarter of for gross were cost second expenses sales $XX.X gross compared same basis or basis $XX.X excludes for the adjusted of of and or to of point to XXXX. to million quarter sales revenue to XXXX, XX.X% quarter general accounting last third Our XX.X% revenues quarter point representing points. charged home last the of quarter Adjusted compared XXX third home during sales million $X.X a year, expenses decrease. revenues sales were related and year the million X.X% purchase selling, of million X.X% for interest XX.X% the XX for together administrative XX.X% compared home XX.X% to quarter increase. a margin Combined, capitalized $X.X

of aside, energy primarily the of year from the increase on XX to income of between year. and with selling that over strong and We a and and a the closed and for revenue, tax up credit or federal compared energy expenses this the the administrative were and to million Pre-tax XX to a between our administrative related in associated XXXX, revenues of to in in improvement higher related from we certification SG&A credits, sales the increase based was reported leverage quarter the quarterly percentage sales $XX.X the basis of driven to SG&A the percentage revenue tax third Sequentially, over our $XX.X General XXXX. XX addition an efficient and additional realized XX.X%, resulting quarter. we full point home during marketing of effective demand compared need during expenses be point benefit prior of our vary sales as to credits, home available the rate quarter and last marketing the a related be general quarter a increase home basis extent, $XX.X XX.X% which million in fourth $XX.X and spend spend related margin our the second operating In of continue third bonus. X% lesser impressive our to uncertainty full The XX.X%.for credits believe the by home to totaled our plan for personnel point recognized and was a spend reduced the down and of sequentially. frontline receive to XX%. quarter XXX cash homes year and a quarter first We points or increase. basis EBITDA for full tax communities year-over-year, $XX.X basis same for period pandemic. a advertising. XX% XXXX Uncertainties as cost increased XX% to identification years of is sales quarter would home that points recognition revenues, the of expenses COVID-XX on impacts tax active sales revenue ongoing of will the was X.X% $XX.X increase as expect revenues quarter-to-quarter XX tax of XXXX. million, year to to improvement basis one-time was million quarter a home million, year We with half XX.X% estimate million EBITDA to workers an of the

Our XX.X% or share. $XX basic year-over-year reported quarter revenue. XX.X% million of share $X.XX third third per was reported EPS to home diluted our income per sales quarter And $X.XX net increased and

an revenue, tax benefit net income of period points million of sales tax year. same $XX.X adjusted to XXX was XX.X% basis the $XX.X related the Excluding or income last energy increase over credits, million, home our

Excluding approximately our an federal energy diluted adjusted per quarter basic increase XX% $X.XX tax credits, year-over-year XX% third share, of was sequentially. share and and per $X.XX EPS

gross is record starting also history backlog was line up third of $XXX rate for the was quarter in of September activities. a This X,XXX, represents orders XXXX, of quarter, X,XXX with the the were our the orders a sequentially. XX.X%. and The XX% the The an homes. we our XX%. and ramped increase increase cancellation land X,XXX XXX% homes Driven an Third In strong backlog acquisition our X,XXX third quarter for of of we quarter third of in to on in value finished million. year-over-year quarter more net with by compared backlog were XXXX demand, highest the quarter a XX

of September we lots During land controlled of the were homes our lots, our increase and portfolio period to with XX.X% new X,XXX of XX.X% and XX.X% the increase consisted year-over-year X,XXX finished either vacant in XX, year development. lots to an X,XXX XX,XXX and and owned doubled XX,XXX. same and owned XX,XXX a completed were we XX.X% added our the total our increase information XX.X% third XX,XXX under owned were of or In quarter, lots nearly sequentially. and at ended centers a lots process, raw those total, number lots, last increase or sequentially. And or controlled a quarter almost of inventory over finally, homes, owned

notes our of $X.X in up At assets estate and billion. the balance acquisitions Our ramped We activities. $XX had billion total $XXX with and approximately ended outstanding facility was strong we the and sheet have million land capacity of under senior remains under debt $X.X even we inventory September, the $XXX total real cash, in credit facility of as million. and quarter borrowing available our million starts end revolving our

to XX.X with approved program, XXXX, increasing the quarter million to remaining than resulting we lowest capitalization the on billion to sequentially reported stock On $X $XXX.X Directors basis the repurchase last will As quarter significantly in ended October of operating results total a now an XX.X%, time since book at to the and and lower shares to down total under over our purchase call million approximately strong the stock net repurchase and authorization flows, We this million equity Eric. $XXX debt shares common ratio of cash the our program net with a outstanding of back we our This result XXXX. ended and our I program. the points of million ratio our Board debt of additional XX, our over XX June was existing $XX.X available turn stock. year. XX.X% capitalization in

Eric Lipar

Charles. Thanks,

far on outlook full share the the year. Let me thoughts some seeing we quarter fourth are for and provide thus in what our

continue between our end was we rest for to another for up between backdrop, homes and year-over-year on of that normal share our demand review strong year expect a reporter closings was to formally the over tomorrow X,XXX for of are X,XXX reflect we total of the which record of Subject October selling in in closings at record. homes communities increase to fundings, to to XXX year verification market XX% October closings. close, active of expect our which With see strong comp make to we business this our to for and with closings. We our to and would the our outlook have month XXXX, month XXX close guidance wholesale after October full XXX XXX our the XXX to and year, prior expectation XX% to of result for X% and our of best expected October, year, a approximately updating

In addition, $XXX,XXX between and we expect average year of price $XXX,XXX. sales an for the

expect the full through we year expect how full results Similar Charles gross XX% As between and accomplished come. the and of margin XX%. and mentioned, by conclude XX% for everything for positioned have years this to providing proud the of XX%. will success LGI this range team and at saying here year-to-date I I in dedication am year Despite to and months, X affordable of our our homes adjusted to gross September high-quality we us quarter. last the our has challenges year for margin customers

will now the questions. call We open for

Operator

question Please you. [Operator Thank Truman Instructions] from Our first ahead. go is Patterson Fargo. with Wells

Truman Patterson

good everyone. Hey, afternoon, morning or early

wanted imagine in to because this you So, on October? And your concern I could in of all? I falloff at throughout there growth, around seen am has any nice I order hoping how a all the elasticity quarter X affordability. the pricing all a least is, you or dig the at results. or I you or you impact lot have part on how in, question touch large XQ, has XX% trended fairly X rates, past Have asking am around been buyer months, if that And that much absorb? aggressively can any pricing over have you seen pricing of negative demand from done October pricing? sensitivity pushed your have

Eric Lipar

orders after Great in approximately QX, Hey, October will morning. strong start thanks, start is up And question in XX%. remain October with order and This gross I – XX% the growth – Truman. I and XX% are Eric. good can

very is our So, last and strong $X nearly that billion especially almost we October, pipeline. consideration over our a into clarify strong, doubled so as backlog year taking in

And and we in have just us. marketing costs, been you a quarter, knew the prices to quarter we average that need is to I really to sales increased is which costs LGI about if traditional pretty have really $XXX everything the increases for model through great margins that of lumber for the increasing even that fourth because the costs price offsetting offset relates position yes, we prices did raised cost sold saw gross under third our be up, necessary the already to dollars, spend So, consistent in. for much and October but

all a really is off seen positive. strong, So, haven’t it’s demand really drop environment at and

Truman Patterson

muni acceptable actually really starting is the the in local there? matched another so, the the Okay, this home? lengthening timeframe labor way And materials, pretty am construction I picture of okay. pulling think X,XXX then XX% much to you are during thinking in at homes backlog investor seen ability is anything your your or permit with And on from order an really concern, or cycle that’s growth, bigger but able those the there deliver your starts I lengthening constraints, quarter have units to your you based getting

Charles Merdian

Yes, morning question. great another Truman, and this is Charles. Good

seen not have any significant delays. We

I think starts and rolling. some we permits quarter in the getting we last seen getting in as Eric on quarter may now starts X,XXX starts are But late mentioned, right the earlier monthly that a and of X,XXX have basis. than on over averaging terms quarter challenges for more

not we delivery delays So any traditional expecting in times. our are construction

we – that as have high advantage our an are builder program. have think of volume had part that and normal a have we I is been we

So, I trade think labor available. are our partners is and available

have can making ramping had to are issues that meet productions very any comfortable guidance. up deliver our with the we So, we sure units we not

Truman Patterson

you up. pull cautious you are me, then Okay, back all usually started final And are land for pressure heat and reaccelerate one really have margin you seeing always market that’s if one gross your purchases is the usually your helpful. competitive, regarding to okay, land pretty but and you

not any land necessarily consider of land usual market currently, cost inflation kind or business seeing would land overheated inflation? it of lot I is a that and whole are operate So, is guess the in you really question the areas as you you

Eric Lipar

business. is XX,XXX describe as owned I of happening XX,XXX and at the quarter the then And LGI big Eric. end of QX, leading a and the looking also, are lot really really after leads more contract. to that with we to pushed we this we we and land under were make deals certain controlled gross is that, comfortable back pieces, sizes, increase of back developer in owned margins. to we pandemic. are for usual raw sure well, the a lot were developments, those our so, it like as capture this And with at which as dropped what’s down profit with we we industry are controlled Truman, comfortable we larger the what XX,XXX, are got same business spend that on And to Yes, a acquisitions came our really with reporting

the So, acres hundred further XXX larger. bit out piece of are communities a raw that that few land leads is a or homes to little

put in We are very contract. those, we comfortable a doing those Texas and of under especially number

lots I finished supply lots to builders to because for looking any overheated think lot or developer it any to for is add XX pipeline. finished their become and of sale, a are

someone will development, competitive. We bid, are which on that to okay, isn’t land focus that but route go not we win and going probably as that’s else we will let

Truman Patterson

guys. upcoming quarter. Okay. Good Thanks, on the luck

Eric Lipar

you. Thank

Charles Merdian

Thanks.

Operator

you. Thank

question Please comes Michael ahead. go JPMorgan. Rehaut with from next Our

Michael Rehaut

Hi, thanks. Good afternoon, everyone.

but are directionally offer ‘XX? just targeted point the about you are to First should from you you a of nice community type high-end I the question, that what have at are. move of this taking footprint. currently I was a there in off I XX% delve bigger count range is point XXX the would just not which we obviously How out XX% understandably at be you of now, past, from bit, where count prior guess kind wanted formal you of on the out a still before. see figure year, end know, I anywhere growth, the community to guidance, by into guess to XXX to the little

any from growth very helpful? community next standpoint year just thoughts count So directionally two a over the or on be would

Eric Lipar

message XXX of guidance Sure, XXXX, Mike. And positive XX, the communities our about if in faster of are December investors, the some count that’s yes, of a a results communities all Eric. taking because to quarter This closing delay out delayed for is of you high-end getting as community development by than year of at communities, we a the it’s anticipated ended correct off and really very market, new COVID in the and you quarter. our are will, because the active

to the end so XXX. or expect yet, end counts, correct and ‘XX ‘XX as be not ‘XX percentage counts will of expand give we numbers of year year year do the for as we on but at year end the increase community guidance directionally, are growing to specific And to we this far XXX the higher year. you next we the I off than So think community are ready

Michael Rehaut

had maybe availability Okay. pre-COVID recall that but pauses if bounced credit often I of appreciate me love temporary in I I your it on correct last around that. I wrong, but guess kind to the currently, saying early I’d bounced some quarter secondly, even levels. am back credit maybe thoughts back pandemic, you availability

changes So or if how types to might more improve case, I am to want recalling do that right the continue today or of credit highlight? stable any you and see of to is you that neither it

Eric Lipar

lower was I uncertainty Yes, available, XX-day exactly around April, XX outside very very to the a last and demand. up a normal, where XX basis I and a seeing same in interest rates market ago us are credit probably the consistent, than of have March as mortgage although back or to to pre-COVID about The points really interest period, they there the feels all affordable Mike. stable helps lot it the response an homebuilding of leads Sure, did would and still rates obviously, market higher describe of certainly as same much I quarter. And month as payment. described strong

consistent. are All refinances. busy They are with mortgage very busy. So, company, no the the in mortgage changes it’s companies

seen days, that we real elongate than times few positive. underwriting by our So a other have but

Michael Rehaut

pricing increases you put continuing kind over maybe that to last how about increases months we rate would the of builders with just of of I Price types at how up one affordability bit in do a should any cadence of price deal more will steady remains just there, moderate that maybe have and as heard there, little question. see in one sure the Quickly flex the experiencing reasonable? of more different you equation X make characterize a that you in kind cadence given or trying your

Charles Merdian

that for use. pricing model really is plus we Yes, us a cost

have months an we environment more X been last So, seen or we probably where X in pricing. of inflation, in a of have really we our than lot have cost history

So price we have to be on had increases. aggressive more our

over We the in communities, XXX% of our quarter have of raised XXX% our prices because communities. costs are in up

more have deals if offer we to then gross costs they rise, margins raise Now match extent, you come would, our to three ago, affordable, to lumber buy our our online, prices will still months flat, seems as continue to costs will more consistent. be able we more coming if the costs we to price, off how be increases six muted. will and will but And to elevated, to some we see to be then and keep pricing next if are those

Michael Rehaut

Thank you.

Eric Lipar

You are welcome.

Operator

Thank you.

with from comes Carl go ahead. BTIG. question Please next Our Reichardt

Carl Reichardt

Hey, thanks, time obviously pretty about approach everybody. what made ask Eric I you for of unique part a is long a to successful sales. wanted to

you you impacted would a you largely your are way sense Are get to one them evolved? that a to want people in on you the person train way to semi your of it’s like when could think folks, COVID? talk find worries just selling Can sort the system to train In pre our hit open? able world continue how now you And stores it’s were be I how your you kind strange, that’s COVID? are do reliance able in unique? because so COVID about of we how are sales you muted. of I of was stabilized with or terms of

Eric Lipar

cars. Great fantastic Carl. And and first out doing our in COVID workers, quarters, what about thanks the arriving two just certainly all team gave deserved. customers situation is of dealing with social all, distancing in fantastic the last job well that job. the wearing we question. frontline a just doing bonus And to we separate masks a Yes, And are point everybody’s of onetime

everyone see precautions the So our necessary safe calling we the is and have taking through exactly process, the believe that really still our customers as answered And hand get demand will, are homeownership approach the strong same, sales them That to certainly walking for walking as ton holding house, have questions right now, not buying. going is the of the customers healthy. means sure exactly questions. their recruiting what you because I and face first the spot if we make you to a direct good they we had keep to be through, in of is face all walking wise, process through a to It’s inventory, are working Recruiting like ever, to we consumer had process, think time we that, really have great. lot are strongly homebuyers and turnover. stack

is the unfortunate that seeing are come industries, lot talented system. available. because our layoffs recruiting in are top there we of a other talent of people We And and through

of the are so Carl, fantastic to field the We everybody system personnel a minimize safe job more is the relied have. field operating have And is to our we a keeping outside healthy. and have and doing now do on and team doing had with we travel. job in the training, same the we great always

Carl Reichardt

business Thanks, nice this cash and aggressively about count sheet to forward. your I you a of bit gross run Eric. on ramped and overview. are you where to three your the course you are the the quarter, What and this to And just looking balance lot like That you also as the wanted Thanks. is then over years? next of comprehensive as would quite is think Charles is have bit a year cap debt comfort sort ideally a you to two the you would ask obviously

Charles Merdian

question Carl. Yes, great

debt So gross in with are cap XXs. we comfortable to the

and, is really can controlled by at have that had inventory land tend under buy are as currently we to estate sheet are management our of looking I driven what think balance raw and our Eric lumpy be deals. most real we deals. mentioned

an inventory from to the standpoint balance continue in estate sheet the will needs we monitor and So then manage our XXs. real

Carl Reichardt

too. to you loaded? expecting a Okay, month am quarters for you has coming in loaded that as great. this or the sorry have one past Does pattern look your more ask I quarter evenly would more be last particular want December spread the little month? this same through one quick historically been it quarter I Are going to roughly closings

Charles Merdian

say traditional be December and Yes, higher December going Yes, this to October and to I flow is pretty higher to us. just would going November be strong than going quarter. be month really is is so for November, than

Carl Reichardt

Okay, lot, Thanks both. a

Eric Lipar

You are welcome.

Operator

Thank you.

comes Our Please next ahead. from [indiscernible]. go Suzanne question

Unidentified Analyst

Thank you. everyone. Good afternoon,

Eric Lipar

afternoon. Good

Unidentified Analyst

my Eric you in course we you we we lot the those I over kind the continuing the is, do October, see that look so two think contrast as XX% mean, what that, of pent with am from pandemic I think fact trying in the really that we that have how for of your you up met you that comments suggested a and to we first potential the about of demand year-over-year, think to are I quarter. fact orders of triangulate the kind that means this saw And growth? that, commentary, that and strong to or ‘XX realized coming of the demand up have pent-up start question through? some do mentioned about really

Eric Lipar

opinions yes, demand was of strong, really focused understood there I Yes, for a it’s is demand. couple I still around was if of that pull-forward our lot months there I comment making the And is some post-COVID, really the think sure question, first Susan. great think

spending marketing we still seeing emphasizing even few dense the at are we compared is going last your XXXX, concept we dollars of the certainly space the and know, COVID getting trends still this amount years I think even the strong how we think with those is continue, tight, and in, feel. the leads getting of more are are we of coming a and home for next are really letting own October through we and through from of are many in strong. situations got the seeing of type weekend, with working secular to we are efficiencies how to to on least living we home, shift be still getting into And also us very and going month yard just demand is out everybody the and

optimistic about for demand and we the trends very are both So, homeownership long-term. short

Unidentified Analyst

couple is, that final question relative local you have has seen economies what you how a some some some differences quarter markets of this those the to there. some in geographies kind in there the last of how Can of And they of lagged trended that’s months? some talk then markets helpful. have Okay, your and that been my especially the bit maybe we seen of maybe based on have factors over across of and

Eric Lipar

seen Yes, we demand. have strong consistent

price everywhere One area, sales least last region of average Every could country, was closings I quarter. X point quarter. per every the the in numbers had to for that is last over up month the year,

So, nationwide. it’s demand pretty consistent

about X we XX Of on been Phoenix, pretty different X Sarasota, came consistent markets, community, our all demand course, north our XX X top some the – communities widespread always shows closings of call per strength X XX markets states Atlanta from of the but with strong, widespread the highlighting success Texas last revenue, are than and closings country. across size also excuse top always XX markets community that Sarasota are in of others, Albuquerque, and so in and most historically so and markets those quarter or different communities of better revenue in top people strength had X, of have and me, Seattle doing were and only market, quarter north Portland the that last familiar emphasize market Florida,

Unidentified Analyst

and Okay, luck. thank good you

Eric Lipar

you. Thank

Operator

you. Thank

Jay Our ahead. next from McCanless go comes Wedbush. Please with question

Jay McCanless

Thanks quarter. good questions. Great my Hey, afternoon. taking for

Eric Lipar

you. Thank

Jay McCanless

buyer buyer you your average age who have are as demand Eric, in maybe millennials traffic the question Zs seems change of that the go coming down the what you aggressively the down, first to that the seeing really said seen towards seen slowed are still to and or average had, I I in the strong you haven’t guess, you have any very So homeownership? be is starting demand.

Eric Lipar

We haven’t, Jay.

a XX XX% XX% That just the was on, in strong third consistent with think and really approximately pandemic year-over-year going up Our of up seeing middle a is quarter, in was domain. demand, but are has credit October XX%, age fantastic every between of XX again for average our been still buyers to strength strong the the we quarter. quarter everything we

Jay McCanless

absolutely. Yes,

had you homes are X to just right roughly little that The X,XXX had said approximately. I then historically you but month X,XXX question or what I trying the you month and supply, you build historically all a about a now? given in extra thinking out before, all at you VDLs second had that or starting is mean, VDL is X the number

Charles Merdian

Jay, is Yes, this Charles.

of X,XXX, supply typically with that managed in what kind have the inventory to in a VDLs our we It is quarter trended really in are our in VDLs. of the down terms give sense have So, year of that looking one bit we typically little we expectation has of the terms every queue.

in So, log also and had raw. we XX,XXX

taken Eric, So, delivered, pause, there COVID. a we have getting those mentioned, for units really had quarter

through demand some of having that’s some in the So, as impact is well. plus churning inventory increase that

rebuild to and to and we we on continue develop ground. new as continue So new lots will it evaluate the put it sections

Jay McCanless

try – there in? rebuild etcetera, as permitting, across any environmental, municipal more you there, sneak you Is will any sorry, will any seeing issues one planning, canal? that you to it’s whether Is there the are are I issues

Charles Merdian

mean, communities our nothing No, significance of we are not, in country. the of I across any

Jay McCanless

taking great. Okay, for Thanks my questions.

Charles Merdian

Yes, you are welcome.

Operator

go with [Operator ahead. Thank from question Barron Research is Instructions] Center. Our Please so next you much. Housing Alex

Alex Barron

on Thanks quarter. guys. Yes. job Hey, and great the

Eric Lipar

Thank you.

Alex Barron

one other wanted with issues, on the was regarding tax two ask and to the energy buyback. the share I different credits

implied a pretty you rates thoughts use the can explain share you be forward? buyback then plan that that doing hoping to homes your how Is authorization So, – around this on sizable it’s going in What to it? so your you credit both the what first can has such get the time and tax energy changed on tax construction And forward? that to going whether of and the credits, is just are systematic? share from going buybacks, a your expand the thoughts on on you

Charles Merdian

is Yes, sure, Charles. This Alex.

and On the homes book XX, for was qualify would to million quarter that first credit. in our the the we second about whether the that had the did time started they so $X.X evaluate process we and

of was early like the not. the of So, December years in able our that in it we success for we whether ‘XX, would where so qualify information all we focused about we like picking since factor first Texas And we or evaluate XXXX. gathering be to to estimate is the the hurdle. of felt announced spent easily the prior half or XX% like just see and up on just focused originally, should the California, we the some what places of Overall, We in places clear year West needed would some we homes we markets. didn’t really qualified, on the to are had of we other we

about are XX,XXX in to overall We related our that picking years up to units prior roughly XXXX. the estimate

So them into qualify. knowing what so, getting to hadn’t before, it we expect, in really very fact we the it success to because had evaluated that went we pleased phenomenal not of really obviously terms with

how it earlier things us talked of we growth gross versus of are to long-term how right is buyback opportunistic. just sheet share we quarters from about really the are long-term we it that the scale expecting in we how On debt getting terms have capital comment comment, about financing for we I think really cap the our strategy. are and XXs a several at size to the certainly kind I in Carl’s see to last managed I strategic for looking think a balance and mean, more number

just some as market, to opportunity are it’s of the flow then have we disconnects see cash inventory will So, excess deploy manage opportunistic. in some and available there capital. potential and the we If that an that

Alex Barron

ask think I of so on, XX in gross come would range is would a end related gave one to lower think or going what you to margin XX, end if the the And cause to to guidance, it on So the trying me it to on what guys that everything that you could am more range, great. of range? the cause I come – just could the in on Okay, momentum? given I understand, what you could lumber lower be have it of

Charles Merdian

in really, wholesale mean, I coming I have fourth and the be books, the sure. is you on a larger year-to-date, in for is one fourth quarter, to Yes, if will XX.X only really, the with think going at quarter components expect two percentage. roughly the three we obviously in quarters we

tailwind. a margin just So, from gross a standpoint, could that be

point just equal. fourth in XX% things we could X%, margins, move to up over this our quarter XX to impact X% to have basis that all the from XX a to example, quarter For if say

factor on as of houses other mentioned, we lot that of started sold we some this those The a is side, construction. from have were we going quarter to prior the homes starting retail

the movement in timing of some terms the the of homes. So there versus is the going on of delivery sale

next mean we to close so retail year-to-date, to that so close achieved expect would XXX be to that catches overall sequentially just around until it into that basis well slightly we have would points to very maybe back average midpoint. we up XX brackets we put be would So, be and should pretty down what down some year, as weighted that would

Alex Barron

Thanks. for great. luck rest very That’s Okay, of helpful the and the good year.

Eric Lipar

Thank you.

Operator

Thank you.

further showing queue. am questions any I so And the not in

final comments. proceed with You may

Eric Lipar

on participating Homes. a day. for LGI and continued your interest everyone for Thanks in you. today’s great Thank call Have

Operator

in Ladies today’s and gentlemen, thank call. conference you participating for

LGI Homes (LGIH) 3 Nov 202020 Q3 Earnings call transcript