Earnings call transcript Q4 2022

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Operator

Hello and welcome to LGI Homes Fourth Quarter 2022 Conference Call. Today’s call is being recorded and a replay will be available on the company’s website at www.lgihomes.com. After managements prepared comments, there will be an opportunity to ask questions. I’ll now turn the call over to Josh Fattor, Vice President of Investor Relations.

You may begin.

Josh Fattor

afternoon. good and Thanks that on will outlook, LGI for and listeners including plans, forward-looking management’s guidance views Homes’ XXXX. this remind contain call statements objectives I’ll business strategy, management’s and uncertainties could and reflect Such be involve prove expectations that expectations incorrect. subject risks are cause assumptions statements to estimates current to that to management’s and

All You of cause and today. uncertainties, that on could statements the actual management’s guarantees those and reflect our to forward-looking other risks with from current should which not SEC, the considered are not those filings review place future be risks, should of for undue discussion differ results in-light reliance a must related statements, viewpoints you factors such presented of and performance.

non-GAAP to with in not discuss measures non-GAAP as the that this to in information or isolation of most call, be prepared be in substitute with comparable financial intended accordance for a financial financial GAAP in the accordance can presented we’ll are found measures Reconciliations considered GAAP. On measures This on we morning and section file XX-Q XX, will the and Form annual on year-ended report fiscal our later the of accessible website Investor for that this release SEC today. the website. we be expect XXXX issued with the in to SEC’s our press Relations filing in December

and Chief Officer Chief and Chairman Officer Financial Executive of on joined Homes’ and Eric call today’s Charles Board; LGI I’m Merdian, Lipar, by the Treasurer.

now turn over I’ll call Eric. the to

Eric Lipar

a talking off investors hook, spoke of and to wanting waiting a the phones XX,XXX what difference buy, purchase at we preparation closings, today's took over for last about and remarkable makes. to Josh. look homes. year February, Thanks, to lists In Good commentary people we up year's call, multiple everyone lining were When ringing our a XXXX call. welcome earnings afternoon, last we it's

of the so it and made that we because we high we advantage knew was didn't. it turned demand off wouldn't fact, time, In are strong, at clear taking environment demand we last marketing. And it

different year. much XXXX was a

of This home narrow was not Home chain Let's up. a we last during went the Supply disappointed by even affordable be housing such We're and at set. the numbers. prices inflated, guidance frank, year in some were closings affordability our look margin. the we the we year, to got missed tightened, business And goal and costs were X,XXX. constrained.

went One exceeded in rates Beginning January, to first on. in September, X% accelerated rates slowly mortgage surpassed for years. time they month the but year later, as for first XX XXXX. increase, of November started quickly the time X% the By since over

got the expanded As back to affordability And to it our tightened, training. buyers We paused did, as marketing. we We back decelerated. and got market basics.

people selling, make our We had to every work were invested resources and sale. time and the We homes way. on LGI certain process, closing building, to for

As a year. achievements result, we had a last number of notable

let's absorptions. example, about talk For

the and ninth averaged at success six systems, people. the For leading month, that per our of demonstrates community, industry least an closings per consecutive processes, result we year,

closings XX market deeper was Antonio second X.X. Dallas month. was Going last with number with Worth community per our year X here, per Fort San

Charlotte markets per with in community was month. per Congratulations top the Third X.X with rounding out closings X.X. teams X was results. delivered these the your Raleigh X.X. to Houston outstanding And and

active guidance most finished high-end profitable quarter communities. our we delivered ever. issued of the years We year of at the XX one last We the with

for over gross the XX% full-year margin was and XX%. gross Our over adjusted was margin

was XX%. metrics margin pretax and our net was more these full-year company than of more represents Our Each new XX% margin a income record. than

flow on ending third XX%, and and and and our lots our point representing we controlled inventory demand in align as projected inventory total cash ended On our the reduced by completed to over the we progress net to focused right we with ratio the XX% side, with the a year call, and year basis with preserving improvement last approximately XXX quarter. owned debt almost below We capital, a on X,XXX capital homes. sized

from LGI proud Centers. these to Therapeutic still announce We're held This the to more delivering of for the new Education to needs $XXX,XXX Center and SIRE facility Day, positive specifically found opportunities and hours September the a XX, special and designed over is SIRE’s Equestrian and Service communities. to organizations local their On completion commitment annual back Homes give families. of LGI in XX our results, support in While X,XXX the volunteering Homes represents support Visitors XX riders we we $XXX,XXX than Impact contributing our states. of

privileged they're The community. work across country we're meaningful mission, us enabled the they're doing year. to positive for support and LGI in impacts important the grateful make SIRE's As initiative last to giving the

With I'll more Charles results. financial record call that, on our turn over to the for details

Charles Merdian

due X,XXX with to closings by Starting to XX.X% Eric. XX% partially our to Thanks, price primarily revenue $XXX.X in the million, our homes increase of decrease fourth year-over-year, was a a $XXX,XXX. offset X.X% a decrease selling in quarter, average and

decreased prices lesser quarter, heavier a weighting extent Our to and due of closings and fourth quarter. X.X% from markets incentives the the lower a average third price in in to selling lower priced sales

inventory. the through the XXX last sales to basis prices, due XX.X% in XX.X% of wholesale total Gross closings, in margin costs year. as fourth our fourth was XX.X% or well closings XX.X%, fourth closed total same a to and We year. the lower the XXX homes our higher last quarter in to in compared representing compared through incentives The of sales as was business period decrease XXX as our of homes working quarter, point percentage vertical quarter input

X.X% quarter $XX.X gross margin XXX revenue administrative expenses revenue expenses XXXX. compared $X.X charged basis XX.X% fourth or of or XX.X%. selling, the the Combined revenue, for quarter. million million Selling fourth million in were capitalized of and gross of interest of fourth to general, were margin together $XX.X in X.X% accounting to quarter to million the of $X.X excludes representing Adjusted Adjusted of and cost points. sales purchase was related

lower of fourth The increase $XX.X expenses or variable for revenue by the a million in of quarter, increased commissions. was as and offset was last million as sales X.X% advertising expenses income partially of such period quarter the to driven $XX.X percentage in administrative or by and investment totaled year. revenues General X.X% Pretax the in X.X% $XX.X revenue compared fourth revenue. same million of or was

Highlighting our increase average million full-year decline decrease offset by results, a per net in quarter to $XXX,XXX. billion, full-year income $X.XX XX.X% of share was due XXXX basic price $X.XX Fourth share. revenue few to diluted was $XX.X a sales closings, per $X.X primarily and a XX.X%, in a XX.X% or

currently our year, of through X% we wholesale between our the X,XXX XXXX. will XX% represent closings $XXX.X in our business, business expect During and wholesale closed our of total in homes representing million total and revenue. We closings XX.X% generating

company margin and general, XX.X% both was margin Combined full-year. new records. was XX.X%, administrative Our gross and expense were XX.X%, adjusted gross full-year selling, for the

Our revenue, of company pre-tax net a XX.X% also income represented record. new

tax was rate between XX.X% XX.X% rate estimate for our year last Our and and XXXX we effective XX.X%. will range

and net per income share. basic share $XX.XX was diluted Finally, per $XXX.X or million $XX.XX our

year XXX Full-year X,XXX, quarter cancellation was net during were the cancellation $XXX in with quarter rate million. orders homes valued We Fourth ended the backlog were gross rate XXX, XX.X%. and at XX.X% was orders the

the Turning a an year-over-year finished developed XX.X% actively our controlled but decrease a with of ended lots, being to total decrease and lots. of vacant of approximately we and of sequentially. XX,XXX our sequentially. raw XX,XXX lots of a owned X% land position. and We were were were owned At land Of X% X.X% those year-over-year, XX,XXX or increase December quarter owned the XX, land XX,XXX Of owned at XX% lots, remaining development X,XXX under lots, lots, year-end.

any time. vertical closings of expected We at six target one construction approximately months full-year in

to quarter, period the chosen pace and last year X,XXX in started our release a XXX fourth we to size homes, we continue During in the same the XXX right quarter, to last inventory. quarter. at And starts compared

at and for second vertical a information acquisitions at deals XXXX more the no year third criteria year-end, This homes in centers, decrease a progress. XX, decrease result our X,XXX to we of from that and or year-over-year XX.X% controlled of The be our or At As homes, decision sequentially. in we XX,XXX the walk aligns decrease from and lots, XX.X% inventory where available in result, compelling or with pausing our XX.X% closings. our met land was terms might of longer quarter a of half was opportunities a the we our activities outlook values December future. had similar believe the completed

was $X.X was $X.X points sheet. basis balance sequential We estate cash, XX.X% of our And of XXX quarter the inventory, debt-to-capital of our assets the total at approximately the billion quarter billion. of to end of ended million was net respectively. ratio ratio Total debt XX.X% and year-end and with $X.X debt-to-capital improvements $XX basis and Turning real over at points XXX billion. representing the

the instead year and $XXX.X our stock repurchases maintaining ended liquidity, available and the cash including revolving of over facility. to develop in equity, growth. to the on We with $XXX.X we on Similar total paused quarter credit under last borrow investing million in to hand quarter, to fourth million focusing per December quarter increased book our as total $X.X count of a increase XX.X% community book XX. $XX.XX land that We share XX.X% value per billion and will ended share year-over-year the drive with liquidity our

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

Eric Lipar

Not in-spite see proud challenges, pleased times of We're made around and Charles. Thanks, I'm reveal our XXXX. when but of employees. the Tough in we're of the character them. commitment and look our of I results with because what and

us success people head into Our of and systems and confidence reflects gives effectiveness in XXXX as the our XXXX. we

headlines business. welcomed see sales was February date. continue corporate On we're we class for to XXX largest in layoffs, opportunities training sales focus on This started headquarters news our training. mode. professionals to new While the side We the of our to land to hiring on X,

approve five didn't a we For months, deal.

and January finished our already most will will deliver months. XX to closings expect be next new lot in that deals still we on new February, count to that community selective on the over months We're and highly growth. drive approved deals of three developing focus own XX However, we land

team job connecting generated doing is quarter, customers. we fourth leads. marketing XX,XXX with In over incredible new an Our the

more it's And XXX over community. we alone, than per so February. XX,XXX leads into continued far In leads averaging in even trend This XXXX, better. January generated gotten

of net we weeks QX. retail way, fourth the XXX% the net the quarter. eight of over the XXXX, sales frame compared the weekly eight sales our over pace in averaged in year sales in our we community, weeks X.X result, a first in it X.X to weekly approximately As To first generated up is pace another net per

vertical our trend so year, managing allocating we're of great to While of We're approaching achievements, is our fund weeks business partners we're long-term that a capital conservatively. with suppliers We're our we're know matching guarantee trade to optimism a our over growth. and period positive XXXX and these reduce inventory and we excited a by tempered closings. with working no costs, to

in points here's those for XXXX. our current outlook mind, With

close X,XXX this average to between $XXX,XXX and sales We X,XXX expect between an year homes price and $XXX,XXX. at

and to XXX New an communities, and in communities XXXX are XX% XXX online, count we XX% between XXXX. active end to growth selling coming community expected with expect additional in with

gross and We expect XX.X%. and XX.X% XX% between margins between and XX% margins full-year adjusted gross

expense headcount growth of Finally, past expect and thanking employees community by and to SG&A drive full-year range count invest increase in close revenue as as this for a our will their we enthusiasm XX.X% and I'll our year. percentage commitment all advertising between of to we XX.X% support objectives. that leads

of our are positive in times. about successfully we'll excited through I'm accomplish Our together proof that to XXXX. uncertain ability all manage results

Now, open for questions. the we'll call

Operator

instructions] JP Morgan. Rehaut line [Operator Michael first question of the from you. Our Thank with comes

open. is line Your

Michael Rehaut

commentary. first and try Thanks margins below I range. your your Appreciate fourth wanted very on finer guidance fiscal to little you're quarter. much. your and Obviously, you granularity XXXX get hopefully gross look all about quarter, the how if the the Great. thinking a at were guidance

to be fourth know, about, progresses how the may things know, And XQ you you the will know, to margins as as curious current challenging, you the inventory bit little your of quarter confidence so, as that, – gross in think you what's first view right-size driving in year know, be or, environment a levels if you XXXX? and be we I'm expecting perhaps if, or quarter to from be the a continue improving more similar to progress should you're you you and a the little know,

Eric Lipar

is Yeah. Great Mike, this question. Eric.

to we gross to we QX. spiked interest we And so, yes, QX QX X% similar cash, and expect focused be rates in inventory. when to focused sales moving our standing on margins on were And the up slower,

have turns as builders, that we than builder spec a of a didn't much inventory as most know, You quicker backlog.

with closed, know, we gross So, that. of the our is And And gross lower need standpoint. price a backlog a led associated year. to about our for find price have inventory. that you margins of led the had sales to also group peer working just then most talked been lot margin, our, but record-breaking to from a moving And

we're prices excited averaging weeks So, as eight year first really raising or of about community. net X.X sales seven the been retail And go. we've per we sales

margin – in homes year, most expensive QX in increasing plan our also for house built – combination QX raising the raising that applies implies gross through and of costs. both closing As are at gross we also and were prices, margin the on the a

same, margins a time will is every be gross So, price the we closed the improving. house, if

Michael Rehaut

weeks, first you I this year. wrong, seven secondly, helpful, the mentioned Eric. me appreciate if seven far it. pace know, the you – That's I sales it's sense. for correct I'm think so I guess, Makes

One a is there's pace, sometimes number? a – you're shape from and or when able sales how us of similar as little overall, pace the expect just the just component, a closing talk you I total know, little of give February a pace think that – up was retail And, views, clarity the consolidated net obviously, you you maybe to about know, a if though, wondering sense you we to of on type net of can sales wholesale sales standpoint.

Eric Lipar

XX% the to business. of percentage last quarter, XXX and expect the In closings, was X% then for Yeah, the XX% about anticipated to February know, to we of it approximately closings, we component, being year. you guided of a wholesale our first February. the year, our we for larger close month

having significant And the January. of the pretty increase expect, well, over from to start know, year. the a March we as in So, good weeks then improving XXX year these you a first

even ending strong, week, but included more well. the the number of even you and that we're which because of positive We weeks, year said made counting number, as X, is, the eight believe, that know, went first our I week wasn't January and we in week as ahead last X.X

Michael Rehaut

Thanks Right. luck. best Appreciate of it. and

Eric Lipar

All Mike. right. Thanks,

Operator

by our next Thank you. Please stand question. for

Patterson the question next Truman Research. from of with Our comes line Wolfe

Your line is open.

Truman Patterson

been here early for raising year back taking of, Have guide just to to start Hey, good there on margin morning, you your mix gross know, of raising all wholesale? prices. Thanks you is my up maybe around sort all on Eric, questions. guys. follow in that or actually wanted the factors able comments some you prices pulled in have

Eric Lipar

our Yeah, gross in there mix a is margin guide. factor

last, You know, gross States. to had in margins do more discounting United of Western we'd the

a in that different there's a accelerated demand, in of we found seen communities because raise prices a our number absorptions. in lot did We to mix believe communities price the we we've component. February has increased of led So, for and

says know, month, we you at that from now, here. that per net be And X.X, orders should raising prices know, you

doing? on week. of And the think spiked doing, rates is on is an big rates an conjunction affordability, how a what again seeing Rates on the be eye raising keeping prices I will are our payment demand. an of are that monthly in keeping eye because lot eye know, You we on keeping asterisk last

more We talked of we're higher rates about prices harder to homeownership. need know, in some makes But qualify. them amount qualify every you week plus the inquiring people XX,XXX-plus they cases. And about getting, leads to

Truman Patterson

two guide And understand know, midpoint that's not then right? the due I'm to helpful? of in for – your XXXX way months of absorptions just net you asking quarter. February, whether, fourth capped level any monthly to of closing availability I'm metric is point in any per because Okay. that pausing or spec five Anything would starts absorption January Got like the and you the of closings implies that. on X,XXX for be there know, combined, color lots you level developed – you seven order the kind intentionally, month. the clarity, to absorption, trying all the

Eric Lipar

of a I couple think points. Yeah,

to sales absorptions and strong the been We X.X. blended what the months. can difference but net between it's retail that's the rate is, January you get First, both February, for on back

The I a slower our to We would what going in which but correct gross absorption other we conservative. go. our conservative, guidance Hopefully, don't slow we as margin, we rates you're know plan be. that that's about, guidance, talk thing rate. want to implies absorption are And on prices, raising be should

impact. And quarter sales the other an X.X, factor February and is will the fourth closings, have was based which on January at

X.X is bigger starting the March help we're have April, and throughout the but going impact So, in to sales year. in February, a

our how with So, closing up blended together guidance. is came we

Truman Patterson

all. you, Perfect. Thank Okay.

Eric Lipar

welcome. You're

Operator

question. Thank next you. stand Please by our for

Our line BTIG. with Reichardt Carl next of question comes from the

is open. line Your

Carl Reichardt

Good everyone, Thanks. net of range the plan? year-end net afternoon. is communities what midpoint for of the morning, target, communities openings, closings year your XXX Eric, the your gave, of the or you at the in

Eric Lipar

We at But may Carl. familiar – have that, on to which you're get the with. in my back to office, board just you a looking

Carl Reichardt

am. Yes, I

Eric Lipar

You know.

know, we're out, You you but we're to closing XX, XX know, XX. opening probably net-wise,

XX You accurate – probably out opening a statement. know, closing out XX is XX XX or and pretty to closing

Carl Reichardt

you. Super. for and of roughly in asking you in, as your it, you'd you Okay. price incentives said, sense, And market. in the or as Thank prices, what base including and at know, price however Eric, you peak-to-trough the Do think cuts, price you the about then – some all a do you have raising to, you LGI? look was decline you thought found floor talked

Eric Lipar

Instead a payments. houses mix lot great customers to or same you plans, or That But house, seeing smaller selected you actually purchased. that. [X,XXX-square-foot X,XXX-square-foot on component the selecting know, may of the because back we're a X,XXX-square-foot] for of we square-foot seeing get X,XXX- monthly [ph] are select question is or there's so a there, Carl,

out that footage That's square floor trigger can communities, affordability. we help to on plans with of communities in new a but pull also plans smaller We're square has rolling not working some lot footages. are a smaller

So, it's really community by community.

we that that. we As trough, but have could far with don't plans, back you probably a on with as lot floor similar absolute similar communities of get

Carl Reichardt

Okay. And then…

Eric Lipar

I would say be a XX% to estimate. would good XX% probably really

Carl Reichardt

XX to XX.

Okay. just be your percentage And Thank last real in do expect Roughly you. closings Terrata quick. Super. to you then what XXXX? of

Eric Lipar

Approximately X%.

Carl Reichardt

so Thanks much. Appreciate Great. it. X%.

Operator

stand Please you. next Thank question. for by our

line Our from of with Wedbush. the comes question Jay next McCanless

Your line open. is

Jay McCanless

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

If X.X closing here. seeing is or closings math and cancellation is a some running around weeks, blend it that fall-out check and right four but still January that rate taking you're to eight absorption February, like on them? want orders, just net the net if looks are orders first the high rate So, running that pretty for about many you you're

Eric Lipar

No. No, sales that's number. there. were closings about, the already four-ish in you're talking the cancellation slower That's the having The is X.X because net orders QX.

Jay McCanless

Okay.

for So, see you almost acceleration – is that's should February, mean, we XXX hit there an I – the of one assuming turn.

I makes that sense. So, guess

Eric Lipar

Yeah. Yeah.

Jay McCanless

clarifying Thank you for that.

Eric Lipar

of know, in you that we’re six monthly should about – see guidance, to community We closings seven now March month. but per the we per getting business

Jay McCanless

guess when now Okay. I next in as Great. have those a XXXX and cancel getting at if net who home? you're net new percentage leads rates orders then people spiked of looking back into you're back to my them of November you. are question, had versus And Thank may those what orders,

Eric Lipar

come sell very we XX% days. within percentage. recently, are leads comfortable have be Yeah, very very that and them in a saying very, I'd large XX

Jay McCanless

to only had, during is question said the gross other guess great. you one, guess, more owned but I deals of I lot mean, anything, your conditions then there if slower finished what, make buy developed? is that know, margin lot to And I number going three the think up terms getting three and you finished be opportunities guys of That's now for, deals bought in land XQ. you I to I that? communities, impact it's some –

Eric Lipar

a well. Yeah. on a lower historical. more gross part will We forecast on of of margin the plan Well, developer finished lot is our our opportunities factor, we at the believe than going business, based to maybe if a Terrata having guidance more gross the opportunities, land be should be developing which profit bigger and have do that's gross Terrata. percentage in as margin margin on we're and we make

gross it in Terrata a margin our forecast of really We Jay, lower And the going question, business. on happen market. what's a to is

now. You based see challenging know, see how builders, the lot what We'll of I are the the last particularly happens interest we're believe, market We'll on private seeing, right week. rates what spiked is. on side, throughout a year. struggling

They are are They're probably they Their don't with large. renegotiating committed takedown developers. sizes probably section schedules too like. to

our the also we creating think focus there And some some dry can why business thinking on want to we're that's clearing really tremendous inventory, powder. opportunities. of long-term. about We So, then be

XXXX, rates that's in long-term The create more for many the to gets gets market market in buy over going but down, opportunity more challenging not better the go better, that's the deals. back as the more obviously, opportunities, LGI to the If short-term.

Jay McCanless

Right. And then other. just one

Sorry. just to this one want in. I sneak

averages You what about is to this the the three of part know historical them gross are talk XXXX. maybe just than the top pushing pricing, again I below margins know, are base resetting you things margins for it historical but the norms the and gross year? be that the lower could factors for

Eric Lipar

Yeah.

seeing is price floor. Jay, think thing affordability, I the and the biggest

know gross clear doing. yet, appraisals the with really have we pricing also are margin most through other necessarily inventory. builders flow normalized believe margins I what some have gross and though to through builders I below are deal We don't to everybody's or

They compared very to higher the elevated. much if build much pre-pandemic, elevated, to pre-pandemic. approximately our XX% down still was costs came where Our it is are you from But very from peak. house, compare it costs a

lot So, that should more that's standard a just than we inflation see. – more

Jay McCanless

you. Got

questions. my taking for Thanks great. Okay,

Eric Lipar

you. Thank

Operator

question. for standby you. Thank our Please next

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

Your open. is line

Alex Barron

line the to interest that some that's right much. the chance come or now, of interest is know, could of idea cost remain wanted to what sold the interest me. a goods the Excuse very incurred ask It you below? Thank is that the expense. expense versus amount it's Yes. through you Yeah, through there been the will basically, going I extra about similar of

Charles Merdian

is Yeah. Great Charles. Alex. question, This

So, basis for points the XXX we about averaged fourth quarter.

going costs interest interest incurred just elevated. our have So, up rates with

However, that, development. capitalized they're number of communities you having said know, a against getting under

know, are online So, but developed way to brought slightly, tick-up work over income take, think, it's as a time, of I to and couple that going years through their projects will statement. those you the

So, up I think implies be at statement. but over see we'll we're it. it that of The those it'll lots come slightly where time period a from guidance long as will income today, in come through the

Alex Barron

Okay. ask That sense. your I helpful. makes Very about time. wanted build also to

back know, that. You that's, recall, like XX were what come normal. think some to in days extent I like of something you I or kind to pre-pandemic, houses If building number guys

So, to I because obviously makes quickly. guys from your of backlog to you is your normal I'm has you to extent, guess just gone – pretty the go less know, that order back curious relevant because build closing time what able to whatever are kind

gave starts that. you on if us help for I'm not it. if or I the the And if out curious missed you also, was I number sure could So, quarter

Charles Merdian

we we Yeah. a build XX can where markets depends you Charles times it of think, the know, on XX I This country. saw days you know, few mentioned, would the you our nationwide know, But know, times, area last again, the days accomplish say increase that. there's that really so, that, is by build year. or shorter you you I

little will but coming you product as just Terrata say, LGI may can out. dramatically, say I deliveries our in product of bit traditional not the managing way but way a well, a – would slightly. than we're houses in I project would little just also our build handling our longer starts that We're completed that a necessarily range. further know, we wide that is time be times build bit the take are so pretty a It's

to putting whether we the more can permits very quickly. be then So, ready to in adjust start, and queue it's

were XXX done that time a very well, quarter that then around for So, starts to conditions adjust quick is fourth frame. – And to we've [so historically starts XXX] pretty thing the is able be quarter. one in [ph]

Alex Barron

Okay.

sold then, what's homes or total So, the of under sold? construction number they're whether not

Charles Merdian

Yeah.

So, which our had includes X,XXX just we – information total, centers.

end X,XXX work-in about houses X,XXX the to about progress. completed had and we in So, quarter

Alex Barron

Very luck, helpful. Best of Okay. Thank guys. you.

Charles Merdian

You're welcome.

Operator

Please you. for our standby question. Thank next

Research. of a have Patterson from Wolfe the We follow-up Truman line with

Your line is open.

Truman Patterson

Hey, guys.

XXXX follow short-term any Alex's amount you And could to know, way, question interest you Is wanted capitalized rates, the or know, on actually discuss us you buyback, know, share capital dollar you, the annual help in getting in could is XXXX between, allocation that's reduction, regarding out given there incurred up Just with? then just expense. in debt there in company? movement you priorities reinvesting an

Charles Merdian

Yeah, sure, Truman.

estimate credit have me. business know, don't the in So, to manage I an of annual vary front through But, revolving you we since going it's the facility.

the bit yield going revolving X%. notes have then point facility. And have high X% now dependent north really we much right any be to little we it's the We're on at on outstanding how So, credit a at one in time. running of just about

know, debt, of the back model, the part you your similar – can then you second And you level question? balance so, sheet that of way. in then if that'll of repeat of kind And a kind you assume can, into

Truman Patterson

Just priorities. capital allocation

Charles Merdian

Yeah.

question. great So,

mentioned So, our that what comments count the for we're about in as on year, XXXX to mentioned, know, also community XX% focused in but in we past, we we've our we well. new to similar you our talked you community count by increase obviously know, then guidance scripted expect communities. XX% to bringing this mentioned on We

About under that under finished already of third allocated our lots think I are are lots development. or through focus the working our development. to currently currently is that are not So, a primary to houses

priority. main the that's So,

opportunities, advantage to Eric that go to that take to see to well. make sure got as mentioned, some powder want we've ready also, we're We and finished starting dry as of lot

out in in are or, timeline submarket. is gapping we're So, most cases, a those bit in where likely our to development be taking longer some opportunities places little beneficial where

opportunity we to So, you further opportunities those that bit take do out, backfill, we a several best our community advantage isn't unlike used If not know, of those are use what ago. for years ideally, to the we line that can can coming little fill finished next in. to

And repurchases have you consideration. know, a share then, as we

think we're to that maintaining I allocating on where in we that we as and is ratio general landed our liquidity right the certainly, currently opportunistic that of from end continue stance standpoint our the where opportunistic But dollars for kind now year. of development is of acquisitions. and debt-to-capital XX% land and area the focus more to

Truman Patterson

imagine Okay. might monthly of, rate you right, or you you. with, all XX% paydowns, reduced pricing able a levels. peak from then XX% And don't have to know, mortgage reduce be all know, peak from mortgage by, [guesstimation] XX% greater, And levels. Thank you know, I [ph] to payment I you some

So, I'm payment specific across kind bit you mortgage you you to rents metro know, your equivalent clearly, little the of hoping bit not either or a same your just, one maybe stickier, payment? an homes of rent a understand versus, the could for Because to have softening, of but nationwide, degree. discuss little know, a been

Eric Lipar

in, has month the X,XXX payment using about somebody about of been the country, pick is, a $X,XXX mortgage, need community kind is you payment. this their obviously, a by that mean, standard amount and is for speaking, community make to but community price metrics Truman, with Xx Yeah. of if that and the is for well, you qualify entry-level all one is everything know, across qualify Eric. generally the by and to incentives to community, we've pre-pandemic, month, insurance where it varies, taxes and the a I as we of that about monthly sales a number

to and At about number that to meant the should quarter, had month. interest up getting seven, to make past this you which which a a $X,XXX peak, $X,XXX that still got about month, with QX, elevated prices be rates

rates week, but big last where to X,XXX X,XXX We So, back to year. weeks in amount. up we've, X.X dollar X.XX a Interest range eight of is of spiked apples a the take first apples. kind generally, month to averaging the X,XXX about the been over X.XX

best better. that's So,

case, rent family that up more but single but That peak, business. between a of month We've through the more the ownership. to, a that decrease national it you have in a is than made people it's difference renting And, or can we our that certainly elevated been $XXX you and has always know, that's is but apartment, difference than higher pricing elevated. spread got an some and normal, access stuff the mortgages its for probably most believe

Truman Patterson

you. Okay. Thank you. Got

Eric Lipar

You're welcome.

Operator

time, this I questions. to showing to Eric now Thank further any closing for call like turn you. would I'm remarks. the At not back over Lipar

Eric Lipar

you, sharing year. everyone, interest your great the a for and in throughout forward Have on participating Homes. call our day. the We Thank look to achievements LGI for

Operator

your today's conference. Ladies you and in gentlemen, participating thank for

You may now disconnect.

LGI Homes (LGIH) 21 Feb 232022 Q4 Earnings call transcript