LGI Homes (LGIH) Q1 2025 earnings summary

Executive summary

• Delivered 996 homes in Q1 2025 with revenue of $351.4 million, reflecting a 10.1% year-over-year decrease due to lower closings and average sales price.

• Net income for Q1 2025 was $4.0 million ($0.17 EPS), down 76.6% year-over-year, impacted by a one-time $8.6 million expense for a forward commitment incentive program.

• Ended Q1 with a backlog of 1,040 homes valued at $406 million and 67,792 owned or controlled lots.

• Affordability and mortgage rate volatility remain key challenges, but demand is supported by low existing inventory and effective financing incentives.

• Average monthly absorption rate declined to 2.2 from 3.1 year-over-year.

Financial highlights

• Gross margin was 21.0% (down from 23.4%); adjusted gross margin was 23.6% (down from 25.3%).

• Net income before taxes was $5.7 million, down from $23.1 million year-over-year.

• SG&A expenses totaled $73.5 million (20.9% of revenue), with selling expenses at 12% and G&A at 8.9%.

• Cash and cash equivalents stood at $57.6 million; total liquidity was $360 million.

• 179 homes (18% of closings) were through the wholesale channel, up from 9.4% last year.

Outlook and guidance

• Full-year closing target remains 6,200–7,000 homes, with 160–170 active communities and ASP between $360,000–$370,000.

• Gross margin guidance trimmed to 21.7%–23.2%; adjusted gross margin to 24%–25.5% due to tariffs and market uncertainty.

• Full-year tax rate expected at 24.5%; SG&A expected at 14%–15% of revenue.

• Management focuses on community count growth and inventory management.

• Company expects to fund liquidity needs for at least the next twelve months through cash, operations, and credit.