LGI Homes, Inc. Q4 FY2025 earnings call

• Successfully navigated dynamic and challenging market environment in 2025.
• Fourth quarter delivered 1,362 homes, with 1,301 contributing to revenue. Ended 2025 with 144 active communities and averaged 3.1 closings per community per month in Q4.
• Margins remained resilient relative to industry expectations, supported by pricing, incentives and inventory management.
• Net orders increased 39% year-over-year in Q4, backlog grew 133% to 1,394 homes with value over $501 million.
• Focused on disciplined execution, managing costs, offering competitive financing, supporting margins and delivering affordable move-in ready homes.

In the fourth quarter, LGI Homes delivered 1,362 homes. Of this total, 1,301 homes contributed to revenue of $474 million. The remaining 61 were currently or previously leased homes. For the full year, 4,788 homes were delivered, with 4,685 homes contributing to revenue of $1.7 billion. Fourth quarter gross margin before inventory related charges was over 19%, adjusted gross margin over 22%. Full year gross margin excluding inventory-related charges was 21.1%, adjusted gross margin was 24%. Wholesale business: 12.1% of fourth quarter closings were through wholesale, and 15.7% of full year closings were through wholesale.

• 2026 full year expected closings: 4,600 - 5,400 homes.
• Ending 2026 with 150 - 160 active selling communities.
• Average selling price expected: $355,000 - $365,000.
• Gross margin expected: 18% - 20%, adjusted gross margin: 21% - 23%.
• SG&A expected: 15% - 16%, full year tax rate approximately 26.5%.

• Affordability pressure and rate volatility as primary market pressures.
• Higher cancellation rate due to affordability pressures and economic uncertainty.
• Potential impact of wholesale business policy changes.
• Risk of future inventory impairments.

Q: Michael Rehaut asked about drivers of Q4 gross margin decline and upside to 2026 gross margin range.

A: Eric Lipar said Q4 decline due to incentives, discounts, etc., and 2026 guidance similar to Q4 as leaning into same incentives.

Q: Paul Przybylski asked about profitability of wholesale 480 orders and community count growth.

A: Eric Lipar said wholesale operating margin similar to retail, community count growth back half weighted.

Q: Alex Rygiel asked about older inventory and land sale in 2026.

A: Eric Lipar and Charles Merdian said selling finished lots, evaluating older inventory.

Q: Jay McCanless asked about buyer mix and current conditions.

A: Eric Lipar said move-up buyers growing, all leaning into incentives, still affordability pressure.

Q: Michael Rehaut circled back to gross margin range drivers.

A: Eric Lipar said factors like lower incentives, costs, wholesale business percentage affect gross margin.

Q: Paul Przybylski asked about G&A comp and closing pace.

A: Charles Merdian said G&A comp more bonus-driven, Eric Lipar said continue with 3 a month pace.