LGI Homes, Inc., The Woodlands, Tex. (Nasdaq:LGIH) on Tuesday reported net income of $11.8 million, or $0.55 per basic share and $0.52 per diluted share, for the first quarter of 2017 up $0.1 million, or 0.7%, from $11.7 million for the first quarter of 2016. Analysts were expecting a gain of $0.50.
Home closings during the first quarter of 2017 decreased 9.8% to 761 from 844 during the first quarter of 2016. Active selling communities increased to 69 at the end of the first quarter of 2017, up from 56 communities at the end of the first quarter of 2016.
Home sales revenues for the first quarter of 2017 were $162.9 million, an increase of $0.4 million, or 0.3% over the first quarter of 2016. The increase in home sales revenues was due to an increase in the average home sales price offset by a decrease in the number of homes closed. The decrease in the number of homes closed in the first quarter of 2017 was primarily due to lower home closings in certain communities related to the timing of available land and direct construction inventory and lower backlog at the beginning of the quarter as compared to the first quarter of 2016.
The average home sales price was $214,075 for the first quarter of 2017, an increase of 11.2% over the first quarter of 2016. The increase is largely attributable to changes in product mix, price points in new markets, and a favorable pricing environment.
Gross margin as a percentage of home sales revenues for the first quarter of 2017 was 26.7% as compared to 25.5% for the first quarter of 2016. Adjusted gross margin (non-GAAP) as a percentage of home sales revenues for the first quarter of 2017 was 28.0% as compared to 26.7% for the first quarter of 2016. This increase primarily reflects a combination of leveraging our construction and lot costs with higher average home sales prices. Please see “Non-GAAP Measures” for a reconciliation of adjusted gross margin (non-GAAP) to gross margin, the most comparable GAAP measure.
“Although closings have been down year-over-year, we maintain our belief that homeownership is still in high demand,” said Eric Lipar, CEO and chairman. “Due to the strength of our sales over the past 90 days and strong ending backlog for the first quarter, we anticipate closings for 2017 to be weighted towards the second half of the year.”
“As inventory catches up to this demand over the next few months, we remain confident in our ability to close more than 4,700 homes in 2017 and believe 2017 basic EPS will be in the range of $4.00 to $4.50 per share,” Lipar said.
