LGIH - Earnings call transcript Q4 2021

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Operator

0:02 Welcome to the LGI Homes Fourth Quarter and Full Year 2021 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 a Q&A. [Operator Instructions]. 0:25 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

forward-looking Good guidance our welcome year fourth listeners reflect outlook, expectations. will I'll you. LGI current statements call business management's XXXX. Homes' XXXX our All to remind strategy, contain call this discuss quarter objectives that that afternoon, Thank include to regarding and and plans, conference results. statements, for X:XX and statements full such

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

should our in risk our cause discussion other about forward-looking these sections You review SEC, and filings including presented could a factors forward-looking actual statements. with our results for of the uncertainties that statement the to risks, and differ cautionary factors those statements from

today's Eric call. of Such this or of all to risks future Merdian, guarantees call and forward-looking call statements, Homes' of X:XX for You Financial today's forward-looking related the discuss Lipar, non-GAAP Executive Charles Officer and place Mr. Treasurer. reliance of the light as the conference Additionally, Board; This with be performance. over be that isolation our financial of Our only financial Reconciliations X:XX Investor Officer now in in or Chief statements to SEC for the with this Relations on the to annual filing on today. year expect XX-K a on to issued in comparable will measures accordance accordance turn the on we and SEC's not the most are in of with of is December the undue measures website. website GAAP Chairman accessible consider substitute in date morning our considered financial ended we call as which these we not will earnings and LGI and be release will not the in I the section XXXX, and the non-GAAP should press are Chief that file intended hosts GAAP. prepared later Mr. fiscal found information information for report presented Eric. measures XX, can Form speak

Eric Lipar

joined Welcome highlights open I'll Josh. of and to our performance you, today. will details financial everyone in key XXXX. who Thank on our results. outstanding call X:XX with then provide our Charles accomplishments

XXXX with conclude and current I'll Homes. for details XXXX. on for LGI year new records extraordinary we our market closings set numerous guidance Despite Finally, and account, revenues. of again the was view X:XX for By our an every challenges,

second to year year. time month double-digit fourth of both revenue driven to For This homes, significantly a guidance averaged last growth than in provided of per full-year our the increase wide. our community the year row, increased XXXX, XX,XXX eighth For in XX% this the and billion, a November the closings at in closings top higher end closing was over of quarter consecutive XX% over closings marked per guidance in which nearly and eight revenue. by company $X we X:XX

were, Daytona month quarter higher of a averaged increase XX. top closings per place tied per per for XX.X X.X year X:XX with five out per per with market Nashville This Houston Houston second and number month. Our San XX% average closings the month. this per Beach Austin record DFW XX.X. fourth our and with Charlotte Dallas with was Fort one five-year for markets with XX% closings came with We XX.X, an in of XX.X, rounding XX.X year-over-year five XX.X with community Worth closings per X.X. each in month. historical community Antonio top the was Our community with Vegas Las each per was than XXXX. XX.X and and community company-wide and

environment. adjusted significantly most return addition of translate our Our line on in we Mid-Atlantic XXX delivered the in and our profitability with ability the EBITDA, all-time both EPS, geographic Maryland together equity XXX% consistent a the homes gross to owned our and LED new from fixtures, to for included our our and stress active are our in Norfolk, income customers records business. to and energy with S&P the two markets: with lighting XX%, sector. improve acquired products resulting year way. of energy margin, appliances, and income, our to of fully impacts inventory. highlights two the this closed XXX In money, the margin, year communities, the other expanded outperforming second we and every year absorptions star finished infrastructure guidance, metric: and added controlled X:XX Watersense Baltimore, We the industry-leading November into efficiency closings row, the presence continues to operating Both in gross profitability A differentiate pretax lots homes, into our net companies of XXXX. We reducing are and LGI our our easing Virginia. X:XX and of X,XXX saving few builders designed integrated that we over saving on For additional year the organization

the With significant In $XXX year, we increasing our sheet. credit our annualized with in while the facility, come. cost. to to balance million million amended refinanced nearly senior in XX,XXX year, result of XX% growth future April, to million we growth, capacity land $X homes our over expanding invested closed X:XX qualified and of to standards that XX%. $XXX due underwriting our XXXX, Thanks last for owned our fuel a June, savings. simultaneously land meets portfolio our In lowering combination land new $XX changes progress profitable in the billion country, to in efforts our notes XXL increase for made continue During interest across focus we we our revolver, an will on Additionally, source which to the Tax and XXXX we will lots, X:XX the Credits. of strengthening our strict acquisitions the controlled years we our teams

we is morning, board's more in this I'm additional common pleased we Loan first record call During I'll with Charles by the markets purchase the future and of shares million of XX for the our the financial an expect that, to our that Depot, year, shareholders million of in repurchases. our announce venture now to Finally, almost stock $XXX we Solutions, results. on Mortgage end With share states, be LGI licensed of joint $XXX to our turn to it X:XX for announced X.X details and through returned over of million all operational quarter. X:XX our approval the

Charles Merdian

X:XX Thanks, Eric.

homes, the in million, a press the sold to was X.X% this year-over-year up XX.X% our community $XXX.X year-over-year XX.X% through selling of Revenue was due last by this XX.X% up absorptions, business revenue our lower for fourth in XXX homes the and same closings quarter X,XXX year. a of closings morning, During sequentially release and price. total of increase homes in our $X.X average closed wholesale quarter, count highlighted XX.X% compared offset decrease billion. we including the or total quarter quarter, As to X:XX representing XXX to XX.X%

this we representing included a Eric wholesale will increase cover XXXX. our in record XX.X% $XXX.X our homes business X,XXX and to of quarter, year, of business represent total and of we XX.X% total our X:XX As approximately wholesale an generating our closings closed highlighted, homes the XX% in in closings raise XXXX, closings through sold XX,XXX costs. million that expect fourth prices revenue. During rising our continued We currently to year-over-year

markets in a and increase the driven higher Our interest gross record year-over-year higher sales was and percentage driven partially XX.X% by and was XXX average quarter XX.X% XXXX. of million to offset charged year, representing $XXX,XXX, prices Adjusted during quarter. points a points the were prior primarily a XX.X% sales changes price year-over-year. Higher together during as average in environment, a adjusted million our accounting, the $X.X quarter purchase quarter mix. of closings in of gross a wholesale cost certain a the by the to sales related favorable Increases of price environment, sales basis favorable by of XX.X%. were fourth in certain margin increase and $XXX,XXX, $X.X Gross demand capitalized price excludes sales percentage margin over price compared an X.X% points. was full to were new was product X:XX primarily this higher the markets margin price year For fourth XX:XX increase average and

compared an For XX.X% year the full a XXX year, our gross to margin was full XX.X% the points. basis increase of record for XXXX,

basis of wholesale gross a for were to cost basis of basis the to selling, our increase at $X of XXX together XX:XX full XXX was full related Full margin closings, margin XX:XX points. company impact was year. the points. gross purchase also gross to adjusted XX.X% of $XX.X and up an excludes and X.X% interest compared for charged million XX XX.X% quarter margin capitalized accounting, and general record during year of the Combined year expenses X.X% Adjusted points XXXX, fourth new year for administrative Excluding the year-over-year. sales representing revenue million

$XX.X point XXX basis for result for to quarter over improvement million Selling fourth X.X% as million XXXX basis full-year revenue ratio was the revenue lowest a the expenses point of company. were we compared quarter X.X% $XX.X reported Our represented a XX the XXXX, or public a and or of of have improvement.

favorable have essentially revenue, as was as sequentially flat increase represented of revenue, public result reported In lowest lower to year-over-year company. were a As we a in addition of realized advertising a operating percentage and selling quarterly XX:XX level our expenses tailwinds. the from leverage spend demand the

or company, a to we as This million revenue driven of lowest expenses the were the XX;XX compared basis of X.X% when selling and in or public the was by X.X% point improvement. year. $XXX or General the expenses X.X% expenses totaled continued compared X.X% to $XX.X full last lower and million XXXX, to year. compared in revenue our delivered For prior have fourth of advertising revenue a quarter of million year, level operating revenue administrative XX $XXX.X leverage

revenue approximately X.X% our XX improvement, primarily X.X% basis by year, the leverage. million expenses For revenue point administrative XXXX, $XXX.X operating general a and of full driven to compared or were of in

We to year we increase grow as advertising expect operating and this expenses count. community

of as result, basis XX.X% between revenue. year As million, XX.X%, XXX Full quarter record. over an a XXXX will and a percentage income XX.X% $XXX.X margin SG&A of of a currently the record increase XX:XX a range our the new year expense a XXXX. year year Full was EBITDA prior or $XXX.X improvement over revenue was we and X% million for expect EBITDA company XX%. full Pretax point was

For year, the of XXXX. million, income of increase $XXX.X over XX.X% full net generated an we pretax

XX:XX XX:XX of Energy fourth in of of XX.X% resulting the income $X.XX $XXX.X Our reported information for estimate full net rate prior year. us pretax in on and or between the at represented over earnings was basis is pretax XX.X% was in our to and revenue, the Credits. our an per year Our Tax in to history. midpoint, income rate XXXX per net this as the our revenue, XX.X% XXX credits expiration margin available At share current outlook result diluted basic tax Based higher This will The of effective million in points annual of and tax income XXX year the and million was the $X.XX net XXXX this company's range increase of previous year-over-year retroactive federal year. was full energy in increase than result XX.X% approximately XXL basis the recognized time, we of XXXX XX.X%. a quarter compared $XX.X points share. tax XXXX. highest XX.X% Our

X,XXX, year were year million. orders released increase sale the homes XX.X% share, full and respectively. XX,XXX, quarter. of $XXX.X Full per year-over-year revenue. rate basic share rate or XX:XX million orders record year earnings income increases Net in the as orders X,XXX year-over-year resulted in cancellation XX.X% Our year of with a per XX.X% the and XX.X%, and for orders $XX.XX quarter were more sequentially gross XX.X% $XX.XX full diluted reported fourth was of in and XX.X%. This X,XXX valued at net this we were were increased Fourth to $XXX.X net backlog ended representing homes for gross the We cancellation quarter X,XXX fourth XX.X%. was a

we growth our During $X over acquiring support objectives. and year, attractive land to billion the invested long-term positions developing

XX,XXX were Of or land our of consisted over a lots XX.X% XX,XXX XX.X% lots, end or end capital our and quarter XXXX. controlled development. to X,XXX our under $X.X lots, information finished year-end of XX% or those X,XXX these estate the XX.X% increase remaining lots homes, compared completed an XX, $X.X December at XX,XXX lots of XX:XX or at of and centers of owned. the XXXX. were owned I'll of controlled XX,XXX of undeveloped controlled. at vacant ended owned just were year-end And homes We XX% raw process. lots in the total As and portfolio XXXX were with position. at excess and and XX% billion. were update real our of billion lots, assets conclude raw on with inventory the in were of

total and facility. of we results, our a we the our $XXX.X billion result a total revolving XX:XX XX.X% debt year capitalization and December with cash million $X.X XX, total equity, ended increase operating ended net to As over XX.X%. quarter ratio in year-over-year, $XX.X million in strong of the of book $XXX.X had million a of liquidity, including under As available with debt, credit million $XXX.X we and of

aggregate Board At common at million, board's back increase million approved under this the the $XXX.X million XXXX, common the XX:XX was $XXX repurchase we of a shareholders remaining total stock, XX, year-end call we million continue Eric. through with to point, primary we our of Over shares $XXX.X the future shares authorization, previous shares to year of last fuel to opportunistically of to repurchase ended $XXX.X our February to and stock. that investment turn XX.X and the outstanding. allocation XX:XX will On growth our to share priority, authorization. While year, including amount I'll our million land repurchase our systematically capital the returned over available Directors bringing remains million the X.X

Eric Lipar

XX:XX Thanks, Charles.

in in supply timelines. and of Our achievements challenges volatility strength outstanding unprecedented labor shortages, rising deliver market of Tight in reflect price were chains, numerous ability to despite development the costs XXXX housing and that challenges resulted the and the our long available a construction lots our input limited results that impacted delays and supply input industry.

We normalize. expect availability continue dynamics and these product until will lead times

we closings view that and our cost will XX:XX built X, inflation the have a January of in achieved eight X.X per per throughout well continue closings prior same closings reported guidance of year. month, remains per community excess homes. We over the the while represented This demand average with supply community years. XXX was in X.X per February constraints month of month which strong On the

their dynamic accelerated absorptions, community lags has communities XXXX finished communities As count in open. some due XXXX This a replacements of highlighted, in between experienced in continued we closed-out decrease lots time likely to and into and persist and shortages active markets. will until additional

XXX XXXX Thereafter, expect with we've We accelerating to selling the in the communities. begin expect XXXX, year beyond. to over finish will two years and XX:XX to we community XXX last fuel the lots count active acquired

ASP see looks and strong, last move will costs more continue price levels they likely in this demand per continued current the like reality lower increases while the per last and attribute this in some that we compared will prices Finally, most month believe between to of X% prior year normalization will While of XX,XXX range additional long strong be In costs we homes should the employment don't needed our Additionally, to inflation the raise impact the in been for wage and the average year, increases increased an community month. low count quarter, this resulting healthy both increased set interest has we for the closings we we've rising cost the to the attractive combination and X,XXX on month remain remain expect and our sales XXXX a remain well growth, homes. will last we as full fourth We'll homes some selling over believe of saw sale with the January, than in not maintain bring eight news year around cover year, for rates rates and had has our our in that of have X result been prices one inventory expected in years full nation's absorption rate, of In The we've XX:XX expect demand. our the these historical $XXX,XXX record margin for year. believe Throughout expectations, unlike and community lifetime. that XXXX. we sustainable the the price it concerns to interest will to over most Despite industry. margins. highest to above we the be closings our rate XX:XX before. years XX:XX X last And affordability seen believe homes profile and is per demand absorption $XXX,XXX. term. our anything to over measurable desire experienced consistent X.X the will homes cover and We of we quarter, rates, in

We delivering XX.X% come. revenue deliver and to challenges, with and your to margins profitable year significant a year this growth our and XX%. profitability and successful records numerous This between XX:XX well results adjusted achieving between margins extremely be objectives double-digit year. every for questions. happy is and we value this closing take pleased XX:XX to our year expect setting XX% we to full achieve our category. new Despite maintain all strong in and positioned Now most shareholders consistency, start, of we're are for In XX.X% years that we'll attractive conclusion, off to to ever, gross and our and and year gross delivered the

Operator

you. Raghavan Securities. [Operator from Wells question Thank XX:XX with Fargo comes Instructions] Our Deepa first

Deepa Raghavan

spike thoughts your it rate color you your what sales seen your you morning, such good initial about typically for on us these else your are talk buyer there? a this you we office, that Eric, so example? for anything even be taking or Can give to bit of should more impact front buyer little Charles, aware interest any the react increases? the out XX:XX just headwinds and backlogs Thanks demand, you price my Hi, in macro to given log, on of everyone. to Or question. as far, for does some take point of steep how that normalization have

Eric Lipar

We're Deepa. office. week as community I of more office per in a to reports is by very the projecting And Eric, And far are in so Thanks, date monitoring I sales question. continuing field. guidance we're had demand. to start. see can Yes. weekend, by we week, last Great per XX:XX closings This strong as very seven think good that's the reflective up even month our and the than it weekend

We demand are inventory year and though, waiting still consumers homes higher going are still to with are XX that points to really the sales the we're release those for nationwide longer in as basis strong. a houses ago, they to in is sale, days release Even about of a rates because close to position very we demand. we most strong next seeing than selling were we're XXX our interest XX

Deepa Raghavan

from housing based about moderation. what's your to think the market? could any understand so these have that see is half, you level purchasing how housing of forward see benefit will there are decisions. on parallels out would second buyers mean, in Therefore, maybe motivated their much this then generally to happening you we market. with really we probably, draw stronger have from may there just I we some say How experience, XXXX a high a could pulling by first or But XX:XX half, the you

Eric Lipar

XX:XX Yes.

also make activity. happening think, And lifestyle, Deepa, life. standpoint, from decisions We're based what's people are very lot I their on investor their seeing pro of our in a we homeownership. housing

in they've continue. very I as to that's rise and are to already agreement, done think everybody's rates likely going

saw scripted a Anyone continue that the But We as X,XXX can our to the, do to we house they're And a a rise, environment still smaller the we the an X,XXX rates square rates that urgency floor payment like we're in to XXXX, consumers for foot time. message in our maybe that though economic there. our interested square interest in remarks. maybe example. is borrowers. spreading Even demand if select the home, we're is buying anticipate, in that's monthly XX:XX very spreading see selecting positive field footage and about talked the that's assuming important rise, house instead the the So our they square rates of qualification that's buyers. are foot continue still creates now's plan. in and If we to as higher, and

we it think market strong pretty housing remains So a throughout year. the

Deepa Raghavan

fair. Thanks. that's XX:XX Okay,

my QX final Charles? Just anything be any puts margin. gross cadence to Is you'd half-second And first quarter That's question. on as those is model specific half we point should some aware to we takes, second try my in of? there question and of

Charles Merdian

so. XX:XX Yes, don't Thanks, Deepa. I think sure.

I think it's going to vary quarter-to-quarter.

XXXX, to it we I margin vary will the gross range our saw within provided. would but quarter-to-quarter, think But from the it we guidance expect we consistent range most throughout that year.

Deepa Raghavan

pass it XX:XX Thanks so on. much. will I

Operator

XX:XX Thank you.

comes the from are question your Carl to Jay I'll go next Our open, McCanless muted? with Securities. with line BTIG. Jay, Wedbush Reichardt next you is question,

Carl Reichardt

mix I of 'XX. about ask the in XX:XX Thanks, wanted that everybody. you're to expecting open communities to

southeast good versus got the in drop communities 'XX amount fair land. sized fairly and in of a 'XX So a you've had

saw of I seven seven think almost or there. years of owned owned I years

a base So your are likely to in in 'XX? shift mix see store you geographic

Eric Lipar

Carl. XX:XX Not necessarily,

pretty to be going I think consistent around country. the it's

United of raw Most that its it raw has to Almost with land. a lot States. get it the A is and plant than of ever taking land. buying that's been different longer that development have and We all delayed across lot has. is and the engineering through of timeline approvals, land of

communities in think markets. in no a growth I lot of growth our new per the southeast, pretty going we it's to be Texas a in as of markets. our Florida, in basis community this largest But just because established have widespread. is geographically, concentration Not where really So much

project City, to going count XXXX. be until Lake Salt the to in community but We that don't we are

Carl Reichardt

at that back-end the a or is there load? And even as it Thanks. Thanks. Okay. a year? of XX:XX in Or now, be across is community then likely terms front-end relatively, of look relatively to you cadence openings, the

Eric Lipar

It of XX:XX going going be is loaded. the one will maybe moves throughout. do up. weighted. February, to to point, be believe it's on, lowest believe Yes. We from probably more back-end We ramping month But then in two we be our think it's back-end XX it's March spread or

Carl Reichardt

Okay. XX:XX lot. a Thanks

Eric Lipar

XX:XX You welcome. are

Operator

XX:XX Thank you.

Our McCanless. next question comes from Jay

James McCanless

Thanks. XX:XX

that. about Sorry

through asking, guess, on I improvement a target this following than I count expected an you it of the the for ambitious Or big little issues? move municipal just going was more a the self-development year? Carl through have that's I process because faster? little you're pretty mean, guys some is from from for getting you in potentially year. Maybe just XXX's us what So community talk to the XX seen

Eric Lipar

XX:XX Jay. as think it's I Yes. expected No,

it of think the December. end it than the like at because XX out we is of larger so year I many seems the because closed what it's in communities

we because and up So closing new it -- end is of count XXX up is any to as to what missed last that We closings what faster seen been, it XX% expected. and increase have of We ever communities ramping our like the ended regard. community year, has we of in communities and year that But – community end not XXX, a And that's than XXX count relief count of lot as absorptions then the-year challenging were the was higher. last we expect. community XX% going to expect. XXX

James McCanless

sell might demand XX:XX institutions the with guess of seen the specific press that's large the out the on amount targets, for-rent with what wholesale you less I year, Okay. especially to thinking this And in single-family business? there you're into get trying reason we've numerous and then any why

Eric Lipar

of couple point A Jay. I'd things yes. Yes, XX:XX to,

very don't have off from buy single-family to We very inventory, First strong limited industry we're strong. retail a the the demand of They're correct, all, you're on just year. starting LGI. from is still entirely homes strong and rental business the pipeline and there's

did But case as yet. that we and retail business seen we as many that the not we year. not is sell think that be under strong, So could I would last have as the

James McCanless

questions. taking Thanks Great. for my Okay. XX:XX

Eric Lipar

You’re XX:XX welcome.

Operator

XX:XX Thank you.

Barron with comes question Alex Center. Housing from Our next Research

Alex Barron

guys. you Yeah. in start I versus XX:XX started quarter you last to homes the of see Thanks, number wanted provide could year? if to guys the

Charles Merdian

Sure, Alex. is Yes. XX:XX This Charles.

of in X,XXX starts quarter fourth to the this quarter compares in the X,XXX fourth That over almost Just of year. 'XX.

Alex Barron

okay. X,XXX, XX:XX

Charles Merdian

XX:XX Yes, X,XXX.

Alex Barron

okay, X,XXX, sorry. I'm XX:XX

the The last is, traditionally, in were other homes that wanted to finished. that being to year you know guess, used ask closer changed. I supply guys I with I chain, I question sell the more, think would And to say, I changes

guys, to are or go guys going thinking aiming houses? So are at selling this you to Or -- that? point, pretty how basically you much back back what about completed

Eric Lipar

Eric. Yes, XX:XX is this take that. can I

enough permitting, Our sold change. inflation sales. ahead and fit the ahead the XXX% permitting We're preselect pandemic sold build -- where still and target. to builder, didn't we spec happened we a got our didn't finish business model ourselves houses of and went way a the we and What house in is at was start of in of stage before we

we Because started. our team a sale has that of a started, our that we price on that to time, for a we're has it's put date once sure on so not involved we middle house have understand we deliver know can the So and essentially, deliver we the accordingly. to until agreed about XX:XX comfortable and we are and house customer that also to house. We house have all deliver make margin decided went, house that can just comfortable year, so protect also to house it last the up costs will

Otherwise, have model business only It's the of that So taking exactly we some we're margin the is out changed. same. risk. and timing the thing the just

Alex Barron

And rental that renters, up? XX:XX communities, lot as case homes a buyers or to business to emphasize has in the ASP gone terms Got of the is stuff. mailers, of the to selling Difficulty] that first-time mix of model, still it. that of buyers, Is has I know the changed [Technical to the marketing kind

Eric Lipar

It's And We're a customers different. the than point the have We're selling and the chain. still just more up and supply inflation even the of everybody's obviously, more price little It's didn't X because ago. investors business case. homebuyers. to X still still XX:XX investors first-time And up expensive. years big are But exist selling be so to we and the to selling is or slightly ever is same. that institutional wholesale needed

new. it X% business luxury be is brand, the our but But still our which year, first-time will is other on that is XX% So our be there, of our business is that to this traditional approximately Terrata first-time homebuyers. homebuyer. selling brand, to focused is going That

Alex Barron

And first guys not X it, that take ramp-up we last could deliveries? significant you missed January if month each as Should the just I'm quarter provide X. I it. if do a by? Got did XX:XX or I number, from any guidance but expect you goes for or ask sure roughly estimate

Eric Lipar

give February and didn't per XXX on right for closings guidance. can February, you will be We We – quarter in annual XXX XX:XX that closings community in right historicals, a to line tell so online expect on be January with based between with line our guidance. first total basis we and

Alex Barron

Okay. and best Thanks XX:XX of luck.

Eric Lipar

XX:XX Alex. Thanks, All right.

Operator

XX:XX Thank you.

Our next JPMorgan. Mike with question comes from Rehaut

Michael Rehaut

afternoon, of XX:XX couple Thanks. the on everyone. questions guidance. Good A

year the in points is looking gross end low plus XXX year above fourth First, what quarter, you or full of at basically being or slightly minus the and you're what range midpoint for did 'XX. you a margins, range the for that on did full roughly the the above basis

that understand weren't your said what that for better to behind seeing trying remarks in baking I just you believe assumption in. necessarily if So -- are that, you're prepared any assumptions there's costs. you the if

trying get at year at average. gross sense the if something move than the and to that a the we throughout level end, also, build that's would year that the would year, a end of Just higher And margin. in full of

Charles Merdian

which had we accordingly Eric thinking in take pleased factor like about always as to communities Charles, with we kind We the transition into mix. year. that lower full floor is terms a and prices. And it we we're came relatively XXXX, Great be there's were continue very XXXX where margin results between monitoring when we Well That rising mentioned standpoint, And margins. we're play might have, start. thinking the average is with we're gross and think markets. certainly, with closeout out Yes. turnover taking the XX:XX is a to raise I factor and community into comes down shift for is costs there Mike. we are rise for to within that community do going costs our affordability about I certainly question, transition the sales certainly into from that account, account still in of balance so plans constantly costs. can a get to that how record-breaking This think a more prices geographic gross into of, then count maybe

Michael Rehaut

if -- be I appreciate understand. of through say you'd So of more primary so fair that of in Charles. But XX:XX say land cost that, answer, cadence the Is in 'XX? is again, the what had through parsing it's I of kind terms kind be mix to that's would year you it driver? it would coming And that that boil helpful. that throughout to basis is just down, and just comments the any

Charles Merdian

more to it's margin. think I pricing No, sure. of Yes, of just our XX:XX philosophy

think it. I thinking how about we're that's

I communities factors from that certainly to all XXXX so our a into come going of XXXX, turnover portion are that closings think certainly, come a play is of in component. didn't exist those good in because

consistency quarters. we're better the the year, the expecting We to have in strong was margins relative I I from terms being XXXX in cadence, sense of tend on different the higher quarters. – of the year. a little think think absorptions throughout This slightly across absorption in

lower But margins. it's the going quarter, across think as can lower in to absorptions think gross So generally are I slightly we be consistent you the expect quarters.

Michael Rehaut

helpful. warranted of of also if throughout the improvement a there to upside, year? were higher price $XXX,XXX Okay. increases be kind steady that normal let's to of further as assuming the of on Also you $XXX,XXX, guidance, sort range? kind or is see that Or by ASP to XX:XX say are inflation, end a That's might cost

Eric Lipar

Yes. correct, Mike. That's XX:XX

sales difference because depends I between a what's think point to exceed price geographic our markets, an on largest a average compared and $XX,XXX have plan, price. bearing on more mix smallest rate the influence plan plays that discussion it price If happening. There's the The community. is just some lower plan per on the a our what Also, individual of fix that's ASP going market. usually has component. really expectations our the there's to expensive our into about we range in

not percentage put large year as a this out realistic last we range, a increase think as So year. we

think we I as well. the market forecasts of some that's the with consistent in see

Michael Rehaut

one Okay. if last One XX:XX I on could, community count. just

half comments but much first that believe be might more be be growth I to 'XX end about the maybe back talked showing showing and to around may 'XX of of also Your half greater quarter, the growth 'XX. accelerated 'XX. or you weighted growth, 'XX last similar 'XX

kind on if growth the a about that into type thinking you about over say, given still we flattish second know you've of 'XX, we should when the had it? of through of year, half year-over-year, the into past growth something right dynamic, kind starting And about in once XX%-plus way in first average, wanted think the things. of half? count that XX% back growth thinking up, Is lot let's Just the 'XX how think half maybe get maybe be a to you're that's to

Eric Lipar

what That's going a spent a think Yes. land. We've Mike. to happen, of of lot got XX:XX is We've money on we communities. lot

our the doing teams selective We're being are with criteria. Our great underwriting a field job. in

for Our that projection we'd have with expect XX% count XXXX is, to in year-end. than agree would to count up to that XX% our community expectation. number larger this I to over year is XXXX, in, more and that be be use is you XX% up In so community

Michael Rehaut

lot. a Thanks Great. XX:XX

Eric Lipar

bet. You XX:XX

Operator

XX:XX Thank you.

comes next Truman from with question Our Wolfe Patterson Research.

Truman Patterson

XX:XX for Hey, my questions. afternoon, good taking everyone. Thanks

but January. XX a more you ending ask Just had communities in bit explicitly, little all wanted to

to of it to XXX the year. You expect end the by ramp

us you think expecting the demand of So which remains are back healthy? through the being weighted, back weighted 'XX? And your it ramping in and safe that kind half to year of to help might potential pretty two-part – Can also half quarter, able then through be starts if closings what first just you're is will with level a orders, assume in communities question. extrapolate for

Charles Merdian

start XX:XX we to the more. a was ended or we're of starts, with maybe and but That kind around year number in Yes, houses start we what Truman, similar inventory. to in the ended slightly in X,XXX XXXX we where of ended quarter. from I think We roughly third I closed, line slightly units can down similar

we to the our quarter So, and similar pace your to that in point, up the then first is closed little pick starts assuming what think bit. a then I probably half back ramping up, to

Truman Patterson

And that mortgage has Okay, in expectations XX:XX any earnings 'XX? matured, your then now for [Indiscernible] okay.

Charles Merdian

Yes. XX:XX

We're – venture. mentioned, the which going get XX first to the is by we're licensed. not majority work existing currently in not continue the hopeful Eric states all of we've our joint We'll that through got As to states the end of licensed quarter. backlog, our

be range pacing [Indiscernible]. roughly that $X in out might year somewhere looking for around we loan XX in at So basis to the volume, the year, billion XX points

Truman Patterson

XX:XX Okay.

Thanks. Okay. final And one me. for

chain mentioned 'XX. constraints all really tight You materials supply were in and

which have had Omicron to We now looks the be dissipating. flare,

it. doors, trying name been to paint, windows, garage of check availability to the things. roof side materials on trusses, recent Just any see you there's thinking or if near-term improvement I'm

Eric Lipar

to through regard challenges challenges in these we And the in our be guidance best We having either. teams supply not relief development year. the great but we this year that on are expect we teams not that still Truman. manage closings getting communities record-breaking there at seen our will that have XX:XX I field, to have And online, the X,XXX chain side, our new seen job can. the also a XX,XXX, that, mean, doing last in

Truman Patterson

you. XX:XX All right. Thank

Eric Lipar

are welcome. XX:XX You

Operator

XX:XX Lipar And like hand Mr. I'm showing the this at Eric questions. further Thank no to to conference you. I'd comments. back closing time, for over

Eric Lipar

you. Thank XX:XX

take of welcome new valuable expertise our to and we board members, Shailee their our Maria Before and to Parikh a and wealth Maria Sharpe. wanted experience two I close, board moment Shailee and contribute and and everyone bring the your for throughout to will long-term interest participating achievements today our We year. continued to success to and the look for growth. Homes. in forward LGI on Thanks our insights call sharing a

Operator

your gentlemen, Ladies you XX:XX and participation. for thank

wonderful You Everyone, may disconnect. a have now day.

LGI Homes (LGIH) 15 Feb 222021 Q4 Earnings call transcript