LGIH June / Q2 Home closings report

http://finance.yahoo.com/news/lgi-homes-inc-reports-june-002…

New record high of 331 up 7.3% Q on Q vs last year’s June. 1st half was up 29.4% at 1972.
Ant

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New record high of 331 up 7.3% Q on Q vs last year’s June.

Correction, Ant: There were 355 closings in June, up from 331 last June. This was not a monthly record, because last month (May) saw 432 closings. The 1128 for the second quarter was a record.

These month-to-month numbers can be encouraging or discouraging, and this one isn’t as impressive as most. But I wonder how much we can actually glean from them. Such a powerhouse May – was a light-ish June inevitable? Will July be better after a light June? Maybe only time will tell.

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Such a powerhouse May – was a light-ish June inevitable?

I am thinking they may be a victim of their own success.
Perhaps buyers looked elsewhere because of a long wait to
occupy a new home because of the high sales rate the first
two months of Q2.

JT

Mr. Market is not thrilled with those numbers (or there is some other info out there I am not aware of) - LGIH is getting slapped around this morning, down >%5.

A quick look at last years April thru June months shows inconsistent home closing numbers as well. Sales even out over the course of the quarter.

THE WOODLANDS, Texas, May 5, 2015 (GLOBE NEWSWIRE) – LGI Homes, Inc. (Nasdaq:LGIH) today announced 267 homes closed in April 2015, up from 191 home closings in April 2014, representing year-over-year growth of 39.8%. As of the end of April 2015, the Company had 44 active selling communities.

THE WOODLANDS, Texas, June 2, 2015 (GLOBE NEWSWIRE) – LGI Homes, Inc. (Nasdaq:LGIH) today announced 255 homes closed in May 2015, up from 228 home closings in May 2014, representing year-over-year growth of 11.8%. As of the end of May 2015, the Company had 44 active selling communities.

THE WOODLANDS, Texas, July 2, 2015 (GLOBE NEWSWIRE) – LGI Homes, Inc. (Nasdaq:LGIH) today announced an all-time record for closings during a single month in June 2015, surpassing its previous record set in March 2015. Home closings for June 2015 totaled 331, up from 243 homes closed in June 2014, representing year-over-year growth of 36.2%.
In addition, the Company announced record-setting quarterly closings of 853 for the second quarter of 2015, finishing out the first six months of the year with a total of 1,524 homes closed, a 32.9% increase over homes closed during the first six months of 2014.

JT

Interesting! You can see that last year May was light so this year May’s growth seemed huge compared to a low base. Last year June was quite strong so this year June’s growth seemed light by comparison.

I also like the idea someone gave that maybe they sold out all their inventory in May, so they didn’t have enough new houses completed in June to keep up with demand…

Saul

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I was thinking about whether LGIH has any exposure to the mortgages on their homes.

According to their investor presentation, they don’t seem to have much, as they have “onsite independent mortgage brokers” available to assist customers with mortgages. But their growth certainly is somewhat dependent upon easy money being available for mortgages.

So while they don’t have any direct exposure, I would still identify credit tightening as a risk. What happens to LGIH if credit tightens like it did in 2009-10? I’m hearing a lot of things from normal people about how easy it is to get a mortgage these days which reminds me a bit of 2007 (though it doesn’t sound as ridiculous as what was happening then).

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