LGI Homes Q4 2024: Unpacking Contradictions in Gross Margins, Sales Pace, and Community Growth Plans

These are the key contradictions discussed in LGI Homes' latest 2024 Q4 earnings call, specifically including: Gross Margin Expectations, Sales Pace in 2025, and Community Growth Plans:



Sales Performance and Market Conditions:
- LGI Homes reported 6,028 homes closed in 2024, with an average sales price of $365,394, resulting in total revenue of over $2.2 billion.
- The challenging macroeconomic backdrop and affordability issues, primarily influenced by rising mortgage rates, led to a lower sales pace compared to previous years.

Community Growth and Strategic Expansion:
- The company installed and opened 80 new communities in 2024, bringing the total to 151 active communities, a year-over-year increase of 29%.
- This growth was driven by strategic investments in land, inventory, and operating platforms to support affordability and drive sustainable growth.

Profitability and Margins:
- LGI Homes' full year gross margin was 24.2% and adjusted gross margin was 26.3%, representing year-over-year increases of 120 basis points and 160 basis points, respectively.
- The improvements were due to the company's focus on expanding gross margins and managing costs effectively despite market challenges.

Land Position and Inventory:
- At the end of 2024, the company owned and controlled 7,899 lots, a slight decrease year-over-year but a 3.4% increase sequentially.
- The company maintained a strong balance sheet and land position to support its growth strategy and ability to start affordable, move-in ready homes.