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Share Name | Share Symbol | Market | Type |
---|---|---|---|
LGI Homes Inc | NASDAQ:LGIH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.67 | -1.60% | 102.81 | 99.25 | 147.62 | 105.48 | 102.56 | 104.90 | 90,692 | 22:30:00 |
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ý
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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46-3088013
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1450 Lake Robbins Drive, Suite 430, The Woodlands, Texas
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77380
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(Address of principal executive offices)
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(Zip code)
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(281) 362-8998
|
||
(Registrant
’
s Telephone Number, Including Area Code)
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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Three Months Ended September 30,
|
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Nine Months Ended September 30,
|
||||||||||||
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|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
|
|
|
|
|
|
|
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|
||||||||
Cost of sales
|
|
283,035
|
|
|
274,000
|
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802,882
|
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631,242
|
|
||||
Selling expenses
|
|
27,890
|
|
|
26,018
|
|
|
80,140
|
|
|
66,318
|
|
||||
General and administrative
|
|
17,794
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|
15,431
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|
51,536
|
|
|
40,376
|
|
||||
Operating income
|
|
51,650
|
|
|
50,447
|
|
|
144,682
|
|
|
115,049
|
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||||
Loss on extinguishment of debt
|
|
3,058
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|
|
—
|
|
|
3,599
|
|
|
—
|
|
||||
Other income, net
|
|
(399
|
)
|
|
(430
|
)
|
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(1,806
|
)
|
|
(1,312
|
)
|
||||
Net income before income taxes
|
|
48,991
|
|
|
50,877
|
|
|
142,889
|
|
|
116,361
|
|
||||
Income tax provision
|
|
11,268
|
|
|
17,190
|
|
|
30,256
|
|
|
38,695
|
|
||||
Net income
|
|
$
|
37,723
|
|
|
$
|
33,687
|
|
|
$
|
112,633
|
|
|
$
|
77,666
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.66
|
|
|
$
|
1.55
|
|
|
$
|
5.07
|
|
|
$
|
3.60
|
|
Diluted
|
|
$
|
1.52
|
|
|
$
|
1.40
|
|
|
$
|
4.57
|
|
|
$
|
3.32
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
22,658,457
|
|
|
21,668,585
|
|
|
22,236,018
|
|
|
21,544,747
|
|
||||
Diluted
|
|
24,896,569
|
|
|
24,050,385
|
|
|
24,642,882
|
|
|
23,413,467
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Total Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|||||||||||||||||||
BALANCE—December 31, 2017
|
|
22,845,580
|
|
|
$
|
228
|
|
|
$
|
229,680
|
|
|
$
|
276,488
|
|
|
$
|
(16,550
|
)
|
|
$
|
489,846
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112,633
|
|
|
—
|
|
|
112,633
|
|
|||||
Issuance of shares in settlement of Convertible Notes
|
|
486,679
|
|
|
5
|
|
|
(475
|
)
|
|
—
|
|
|
—
|
|
|
(470
|
)
|
|||||
Issuance of shares, Wynn Homes Acquisition
|
|
70,746
|
|
|
1
|
|
|
3,999
|
|
|
—
|
|
|
—
|
|
|
4,000
|
|
|||||
Issuance of restricted stock units in settlement of accrued bonuses
|
|
—
|
|
|
—
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|
181
|
|
|||||
Compensation expense for equity awards
|
|
—
|
|
|
—
|
|
|
4,172
|
|
|
—
|
|
|
—
|
|
|
4,172
|
|
|||||
Stock issued under employee incentive plans
|
|
314,148
|
|
|
3
|
|
|
2,054
|
|
|
—
|
|
|
—
|
|
|
2,057
|
|
|||||
BALANCE— September 30, 2018
|
|
23,717,153
|
|
|
$
|
237
|
|
|
$
|
239,611
|
|
|
$
|
389,121
|
|
|
$
|
(16,550
|
)
|
|
$
|
612,419
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
112,633
|
|
|
$
|
77,666
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
543
|
|
|
600
|
|
||
Loss on extinguishment of debt
|
|
3,588
|
|
|
—
|
|
||
Loss on disposal of assets
|
|
6
|
|
|
—
|
|
||
Compensation expense for equity awards
|
|
4,172
|
|
|
2,677
|
|
||
Deferred income taxes
|
|
(1,784
|
)
|
|
(2,353
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
13,327
|
|
|
(15,661
|
)
|
||
Real estate inventory
|
|
(194,387
|
)
|
|
(183,666
|
)
|
||
Pre-acquisition costs and deposits
|
|
(19,938
|
)
|
|
(3,508
|
)
|
||
Other assets
|
|
3,347
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|
|
(3,858
|
)
|
||
Accounts payable
|
|
5,871
|
|
|
13,794
|
|
||
Accrued expenses and other liabilities
|
|
(29,394
|
)
|
|
42,136
|
|
||
Net cash used in operating activities
|
|
(102,016
|
)
|
|
(72,173
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(395
|
)
|
|
(502
|
)
|
||
Payment for business acquisition
|
|
(73,829
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
|
(74,224
|
)
|
|
(502
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from notes payable
|
|
537,717
|
|
|
80,000
|
|
||
Payments on notes payable
|
|
(386,238
|
)
|
|
(15,000
|
)
|
||
Loan issuance costs
|
|
(6,690
|
)
|
|
(4,375
|
)
|
||
Proceeds from sale of stock, net of offering expenses
|
|
2,057
|
|
|
11,049
|
|
||
Payment for offering costs
|
|
(76
|
)
|
|
(69
|
)
|
||
Payment for earnout obligation
|
|
(132
|
)
|
|
(480
|
)
|
||
Net cash provided by financing activities
|
|
146,638
|
|
|
71,125
|
|
||
Net decrease in cash and cash equivalents
|
|
(29,602
|
)
|
|
(1,550
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
67,571
|
|
|
49,518
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
37,969
|
|
|
$
|
47,968
|
|
Purchase Consideration:
|
|
Total
|
||
Cash paid for net assets
|
|
$
|
73,829
|
|
Common Stock
|
|
4,000
|
|
|
Total consideration
|
|
77,829
|
|
|
Assets acquired and liabilities assumed:
|
|
|
||
Real estate inventory
|
|
74,359
|
|
|
Pre-acquisition costs, deposits and other assets
|
|
1,360
|
|
|
Intangible assets
|
|
7,961
|
|
|
Total assets
|
|
83,680
|
|
|
Accounts payable and accrued liabilities
|
|
(5,851
|
)
|
|
Total liabilities
|
|
(5,851
|
)
|
|
|
|
|
||
Net assets acquired
|
|
$
|
77,829
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Retail home sales revenues
|
|
$
|
353,594
|
|
|
$
|
347,626
|
|
|
$
|
1,017,952
|
|
|
$
|
819,309
|
|
Other
|
|
26,775
|
|
|
18,270
|
|
|
61,288
|
|
|
33,676
|
|
||||
Total home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Central
|
|
$
|
150,045
|
|
|
$
|
165,870
|
|
|
$
|
438,811
|
|
|
$
|
370,550
|
|
Southwest
|
|
65,742
|
|
|
66,002
|
|
|
193,055
|
|
|
162,386
|
|
||||
Southeast
|
|
73,507
|
|
|
54,331
|
|
|
178,984
|
|
|
133,665
|
|
||||
Florida
|
|
38,750
|
|
|
56,171
|
|
|
136,211
|
|
|
129,345
|
|
||||
Northwest
|
|
50,697
|
|
|
23,522
|
|
|
129,852
|
|
|
57,039
|
|
||||
Midwest
|
|
1,628
|
|
|
—
|
|
|
2,327
|
|
|
—
|
|
||||
Total home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Land, land under development and finished lots
|
|
$
|
647,580
|
|
|
$
|
494,552
|
|
Information centers
|
|
21,796
|
|
|
18,327
|
|
||
Homes in progress
|
|
242,286
|
|
|
191,659
|
|
||
Completed homes
|
|
276,332
|
|
|
214,395
|
|
||
Total real estate inventory
|
|
$
|
1,187,994
|
|
|
$
|
918,933
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Inventory related obligations
|
|
$
|
9,714
|
|
|
$
|
12,906
|
|
Taxes payable
|
|
4,107
|
|
|
48,733
|
|
||
Retentions and development payable
|
|
23,544
|
|
|
12,025
|
|
||
Accrued compensation, bonuses and benefits
|
|
12,811
|
|
|
14,462
|
|
||
Accrued interest
|
|
7,607
|
|
|
2,096
|
|
||
Warranty reserve
|
|
2,850
|
|
|
2,450
|
|
||
Other
|
|
15,149
|
|
|
10,159
|
|
||
Total accrued expenses and other liabilities
|
|
$
|
75,782
|
|
|
$
|
102,831
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Warranty reserves, beginning of period
|
|
$
|
2,800
|
|
|
$
|
1,850
|
|
|
$
|
2,450
|
|
|
$
|
1,600
|
|
Warranty provision
|
|
1,240
|
|
|
1,990
|
|
|
2,923
|
|
|
3,189
|
|
||||
Warranty expenditures
|
|
(1,190
|
)
|
|
(1,840
|
)
|
|
(2,523
|
)
|
|
(2,789
|
)
|
||||
Warranty reserves, end of period
|
|
$
|
2,850
|
|
|
$
|
2,000
|
|
|
$
|
2,850
|
|
|
$
|
2,000
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Notes payable under the Credit Agreement ($450.0 million revolving credit facility at September 30, 2018) maturing on May 31, 2021; interest paid monthly at LIBOR plus 2.90%; net of debt issuance costs of approximately $4.1 million and $5.3 million at September 30, 2018 and December 31, 2017, respectively
|
|
$
|
264,747
|
|
|
$
|
394,714
|
|
4.25% Convertible Notes due November 15, 2019; interest paid semi-annually at 4.25%; net of debt issuance costs of approximately $0.5 million and $1.0 million at September 30, 2018 and December 31, 2017, respectively; and approximately $1.7 million and $3.5 million in unamortized discount at September 30, 2018 and December 31, 2017, respectively
|
|
67,759
|
|
|
80,481
|
|
||
Senior Notes due July 15, 2026; interest paid semi-annually at 6.875%; net of debt issuance costs of approximately $2.6 million at September 30, 2018 and approximately $2.2 million in unamortized discount at September 30, 2018
|
|
295,189
|
|
|
—
|
|
||
Total notes payable
|
|
$
|
627,695
|
|
|
$
|
475,195
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest incurred
|
|
$
|
10,823
|
|
|
$
|
6,526
|
|
|
$
|
26,803
|
|
|
$
|
17,628
|
|
Less: Amounts capitalized
|
|
(10,823
|
)
|
|
(6,526
|
)
|
|
(26,803
|
)
|
|
(17,628
|
)
|
||||
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash paid for interest
|
|
$
|
4,517
|
|
|
$
|
4,361
|
|
|
$
|
17,786
|
|
|
$
|
13,272
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator (in thousands):
|
|
|
|
|
|
|
|
|
||||||||
Numerator for basic and dilutive earnings per share
|
|
$
|
37,723
|
|
|
$
|
33,687
|
|
|
$
|
112,633
|
|
|
$
|
77,666
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
|
22,658,457
|
|
|
21,668,585
|
|
|
22,236,018
|
|
|
21,544,747
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Convertible Notes - treasury stock method
|
|
1,978,770
|
|
|
2,037,665
|
|
|
2,128,854
|
|
|
1,601,450
|
|
||||
Stock-based compensation units
|
|
259,342
|
|
|
344,135
|
|
|
278,010
|
|
|
267,270
|
|
||||
Diluted weighted average shares outstanding
|
|
24,896,569
|
|
|
24,050,385
|
|
|
24,642,882
|
|
|
23,413,467
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
|
$
|
1.66
|
|
|
$
|
1.55
|
|
|
$
|
5.07
|
|
|
$
|
3.60
|
|
Diluted earnings per share
|
|
$
|
1.52
|
|
|
$
|
1.40
|
|
|
$
|
4.57
|
|
|
$
|
3.32
|
|
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share
|
|
2,245
|
|
|
1,873
|
|
|
9,744
|
|
|
7,801
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
||||||
Beginning balance
|
|
175,100
|
|
|
$
|
27.66
|
|
|
133,853
|
|
|
$
|
20.13
|
|
Granted
|
|
40,844
|
|
|
$
|
63.30
|
|
|
68,109
|
|
|
$
|
32.38
|
|
Vested
|
|
(36,486
|
)
|
|
$
|
15.70
|
|
|
(12,323
|
)
|
|
$
|
15.63
|
|
Forfeited
|
|
(5,941
|
)
|
|
$
|
34.31
|
|
|
(9,219
|
)
|
|
$
|
20.09
|
|
Ending balance
|
|
173,517
|
|
|
$
|
38.34
|
|
|
180,420
|
|
|
$
|
25.06
|
|
Period Granted
|
|
Performance Period
|
|
Target PSUs Outstanding at December 31, 2017
|
|
Target PSUs Granted
|
|
Target PSUs Vested
|
|
Target PSUs Forfeited
|
|
Target PSUs Outstanding at September 30, 2018
|
|
Weighted Average Grant Date Fair Value
|
|||||||
2015
|
|
2015 - 2017
|
|
120,971
|
|
|
—
|
|
|
(120,971
|
)
|
|
—
|
|
|
—
|
|
|
$
|
13.34
|
|
2016
|
|
2016 - 2018
|
|
87,605
|
|
|
—
|
|
|
—
|
|
|
(3,929
|
)
|
|
83,676
|
|
|
$
|
21.79
|
|
2017
|
|
2017 - 2019
|
|
111,035
|
|
|
—
|
|
|
—
|
|
|
(2,788
|
)
|
|
108,247
|
|
|
$
|
31.64
|
|
2018
|
|
2018 - 2020
|
|
—
|
|
|
61,898
|
|
|
—
|
|
|
—
|
|
|
61,898
|
|
|
$
|
64.60
|
|
Total
|
|
|
|
319,611
|
|
|
61,898
|
|
|
(120,971
|
)
|
|
(6,717
|
)
|
|
253,821
|
|
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Fair Value Hierarchy
|
|
Carrying Value
|
|
Estimated Fair Value
(1)
|
|
Carrying Value
|
|
Estimated Fair Value
(1)
|
||||||||
Convertible Notes
|
|
Level 2
|
|
$
|
67,759
|
|
|
$
|
68,149
|
|
|
$
|
80,481
|
|
|
$
|
81,523
|
|
Senior Notes
|
|
Level 2
|
|
$
|
295,189
|
|
|
$
|
297,895
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Excludes the fair value of the equity component of the Convertible Notes. See the “Convertible Notes” section within
Note 6
for further details.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land deposits and option payments
|
|
$
|
38,263
|
|
|
$
|
17,761
|
|
Commitments under the land purchase contracts if the purchases are consummated
|
|
$
|
778,264
|
|
|
$
|
460,714
|
|
Lots under land purchase contracts
|
|
26,836
|
|
|
18,758
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Central
|
|
$
|
150,045
|
|
|
$
|
165,870
|
|
|
$
|
438,811
|
|
|
$
|
370,550
|
|
Southwest
|
|
65,742
|
|
|
66,002
|
|
|
193,055
|
|
|
162,386
|
|
||||
Southeast
|
|
73,507
|
|
|
54,331
|
|
|
178,984
|
|
|
133,665
|
|
||||
Florida
|
|
38,750
|
|
|
56,171
|
|
|
136,211
|
|
|
129,345
|
|
||||
Northwest
|
|
50,697
|
|
|
23,522
|
|
|
129,852
|
|
|
57,039
|
|
||||
Midwest
|
|
1,628
|
|
|
—
|
|
|
2,327
|
|
|
—
|
|
||||
Total home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) before income taxes:
|
|
|
|
|
|
|
|
|
||||||||
Central
|
|
$
|
25,571
|
|
|
$
|
28,824
|
|
|
$
|
75,614
|
|
|
$
|
63,245
|
|
Southwest
|
|
8,824
|
|
|
7,170
|
|
|
23,999
|
|
|
18,347
|
|
||||
Southeast
|
|
7,512
|
|
|
6,225
|
|
|
19,438
|
|
|
15,145
|
|
||||
Florida
|
|
4,522
|
|
|
7,430
|
|
|
16,079
|
|
|
16,222
|
|
||||
Northwest
|
|
7,051
|
|
|
2,524
|
|
|
15,901
|
|
|
6,336
|
|
||||
Midwest
|
|
(600
|
)
|
|
(393
|
)
|
|
(1,800
|
)
|
|
(620
|
)
|
||||
Corporate
(1)
|
|
(3,889
|
)
|
|
(903
|
)
|
|
(6,342
|
)
|
|
(2,314
|
)
|
||||
Total net income (loss) before income taxes
|
|
$
|
48,991
|
|
|
$
|
50,877
|
|
|
$
|
142,889
|
|
|
$
|
116,361
|
|
(1)
|
The Corporate balance consists primarily of general and administration unallocated costs for various shared service functions, as well as our warranty reserve. Actual warranty expenses are reflected within the reportable segments.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
|
||||
Central
|
|
$
|
518,225
|
|
|
$
|
439,833
|
|
Southwest
|
|
186,204
|
|
|
175,786
|
|
||
Southeast
|
|
304,916
|
|
|
155,928
|
|
||
Florida
|
|
104,006
|
|
|
119,257
|
|
||
Northwest
|
|
152,390
|
|
|
80,350
|
|
||
Midwest
|
|
22,718
|
|
|
15,066
|
|
||
Corporate
(1)
|
|
45,328
|
|
|
93,672
|
|
||
Total assets
|
|
$
|
1,333,787
|
|
|
$
|
1,079,892
|
|
(1)
|
As of September 30, 2018, the Corporate balance consists primarily of cash, prepaid insurance and prepaid expenses. As of December 31, 2017, the Corporate balance consists primarily of cash, deposits and pre-acquisition costs, prepaid insurance and prepaid expenses. As of December 31, 2017,
$18.9 million
of deposits and pre-acquisition costs were reported at Corporate and balances as of September 30, 2018 were allocated to the six reportable segments.
|
Central
|
|
Southwest
|
|
Southeast
|
|
Florida
|
|
Northwest
|
|
Midwest
|
Houston, TX
|
|
Phoenix, AZ
|
|
Atlanta, GA
|
|
Tampa, FL
|
|
Seattle, WA
|
|
Minneapolis, MN
|
Dallas/Ft. Worth, TX
|
|
Tucson, AZ
|
|
Charlotte, NC/SC
|
|
Orlando, FL
|
|
Portland, OR
|
|
|
San Antonio, TX
|
|
Albuquerque, NM
|
|
Nashville, TN
|
|
Fort Myers, FL
|
|
Sacramento, CA
|
|
|
Austin, TX
|
|
Denver, CO
|
|
Raleigh, NC
|
|
Jacksonville, FL
|
|
|
|
|
Oklahoma City, OK
|
|
Colorado Springs, CO
|
|
Wilmington, NC
|
|
|
|
|
|
|
|
|
Las Vegas, NV
|
|
Winston-Salem, NC
|
|
|
|
|
|
|
|
|
|
|
Birmingham, AL
|
|
|
|
|
|
|
•
|
Home sales revenues increased
4.0%
to
$380.4 million
from
$365.9 million
.
|
•
|
Homes closed decreased
7.4%
to
1,601
homes from
1,729
homes.
|
•
|
Average sales price of our homes increased
12.3%
to
$237,582
from
$211,623
.
|
•
|
Gross margin as a percentage of home sales revenues increased to
25.6%
from
25.1%
.
|
•
|
Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased to
27.4%
from
26.5%
.
|
•
|
Net income before income taxes decreased
3.7%
to
$49.0 million
from
$50.9 million
.
|
•
|
Net income increased
12.0%
to
$37.7 million
from
$33.7 million
.
|
•
|
EBITDA (non-GAAP) as a percentage of home sales revenues decreased to
14.6%
from
15.4%
.
|
•
|
Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues increased to
15.5%
from
15.3%
.
|
•
|
Total owned and controlled lots increased
14.5%
to
53,647
lots at
September 30, 2018
from
46,855
lots at June 30, 2018.
|
•
|
Home sales revenues increased
26.5%
to
$1,079.2 million
from
$853.0 million
.
|
•
|
Homes closed increased
16.5%
to
4,660
homes from
4,001
homes.
|
•
|
Average sales price of our homes increased
8.6%
to
$231,597
from
$213,193
.
|
•
|
Gross margin as a percentage of home sales revenues decreased to
25.6%
from
26.0%
.
|
•
|
Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to
27.3%
from
27.4%
.
|
•
|
Net income before income taxes increased
22.8%
to
$142.9 million
from
$116.4 million
.
|
•
|
Net income increased
45.0%
to
$112.6 million
from
$77.7 million
.
|
•
|
EBITDA (non-GAAP) as a percentage of home sales revenues decreased to
14.9%
from
15.1%
.
|
•
|
Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues increased to
15.1%
from
14.9%
.
|
•
|
Total owned and controlled lots increased
35.1%
to
53,647
lots at
September 30, 2018
from
39,709
lots at
December 31, 2017
.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(dollars in thousands, except per share data and average home sales price)
|
||||||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
||||||||
Home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
|
283,035
|
|
|
274,000
|
|
|
802,882
|
|
|
631,242
|
|
||||
Selling expenses
|
|
27,890
|
|
|
26,018
|
|
|
80,140
|
|
|
66,318
|
|
||||
General and administrative
|
|
17,794
|
|
|
15,431
|
|
|
51,536
|
|
|
40,376
|
|
||||
Operating income
|
|
51,650
|
|
|
50,447
|
|
|
144,682
|
|
|
115,049
|
|
||||
Loss on extinguishment of debt
|
|
3,058
|
|
|
—
|
|
|
3,599
|
|
|
—
|
|
||||
Other income, net
|
|
(399
|
)
|
|
(430
|
)
|
|
(1,806
|
)
|
|
(1,312
|
)
|
||||
Net income before income taxes
|
|
48,991
|
|
|
50,877
|
|
|
142,889
|
|
|
116,361
|
|
||||
Income tax provision
|
|
11,268
|
|
|
17,190
|
|
|
30,256
|
|
|
38,695
|
|
||||
Net income
|
|
$
|
37,723
|
|
|
$
|
33,687
|
|
|
$
|
112,633
|
|
|
$
|
77,666
|
|
Basic earnings per share
|
|
$
|
1.66
|
|
|
$
|
1.55
|
|
|
$
|
5.07
|
|
|
$
|
3.60
|
|
Diluted earnings per share
|
|
$
|
1.52
|
|
|
$
|
1.40
|
|
|
$
|
4.57
|
|
|
$
|
3.32
|
|
Other Financial and Operating Data:
|
|
|
|
|
|
|
|
|
||||||||
Active communities at end of period
|
|
81
|
|
|
77
|
|
|
81
|
|
|
77
|
|
||||
Home closings
|
|
1,601
|
|
|
1,729
|
|
|
4,660
|
|
|
4,001
|
|
||||
Average sales price of homes closed
|
|
$
|
237,582
|
|
|
$
|
211,623
|
|
|
$
|
231,597
|
|
|
$
|
213,193
|
|
Gross margin
(1)
|
|
$
|
97,334
|
|
|
$
|
91,896
|
|
|
$
|
276,358
|
|
|
$
|
221,743
|
|
Gross margin %
(2)
|
|
25.6
|
%
|
|
25.1
|
%
|
|
25.6
|
%
|
|
26.0
|
%
|
||||
Adjusted gross margin
(3)
|
|
$
|
104,369
|
|
|
$
|
97,085
|
|
|
$
|
294,290
|
|
|
$
|
233,517
|
|
Adjusted gross margin %
(2)(3)
|
|
27.4
|
%
|
|
26.5
|
%
|
|
27.3
|
%
|
|
27.4
|
%
|
||||
EBITDA
(4)
|
|
$
|
55,353
|
|
|
$
|
56,206
|
|
|
$
|
160,517
|
|
|
$
|
128,509
|
|
EBITDA margin %
(2)(4)
|
|
14.6
|
%
|
|
15.4
|
%
|
|
14.9
|
%
|
|
15.1
|
%
|
||||
Adjusted EBITDA
(4)
|
|
$
|
58,862
|
|
|
$
|
55,830
|
|
|
$
|
163,157
|
|
|
$
|
127,423
|
|
Adjusted EBITDA margin %
(2)(4)
|
|
15.5
|
%
|
|
15.3
|
%
|
|
15.1
|
%
|
|
14.9
|
%
|
(1)
|
Gross margin is home sales revenues less cost of sales.
|
(2)
|
Calculated as a percentage of home sales revenues.
|
(3)
|
Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define adjusted gross margin as gross margin less capitalized interest and adjustments resulting from the application of purchase accounting included in cost of sales. Our management believes this information is useful because it isolates the impact that capitalized interest and purchase accounting adjustments have on gross margin. However, because adjusted gross margin information excludes capitalized interest and purchase accounting adjustments, which have real economic effects and could impact our results, the utility of adjusted gross margin information as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted gross margin information in the same manner that we do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. Please see “
—Non-GAAP Measures
” for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.
|
(4)
|
EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales. We define adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) capitalized interest charged to the cost of sales, (v) loss on extinguishment of debt, (vi) other income, net and (vii) adjustments resulting from the application of purchase accounting. Our management believes that the presentation of EBITDA and adjusted EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business. EBITDA and adjusted
|
|
|
Three Months Ended September 30, 2018
|
|||||||||||||||
|
|
Revenues
|
|
Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly
Absorption Rate
|
|||||||
Central
|
|
$
|
150,045
|
|
|
691
|
|
|
$
|
217,142
|
|
|
29.3
|
|
|
7.9
|
|
Southwest
|
|
65,742
|
|
|
229
|
|
|
287,083
|
|
|
15.0
|
|
|
5.1
|
|
||
Southeast
|
|
73,507
|
|
|
352
|
|
|
208,827
|
|
|
19.7
|
|
|
6.0
|
|
||
Florida
|
|
38,750
|
|
|
183
|
|
|
211,749
|
|
|
10.7
|
|
|
5.7
|
|
||
Northwest
|
|
50,697
|
|
|
139
|
|
|
364,727
|
|
|
5.3
|
|
|
8.7
|
|
||
Midwest
|
|
1,628
|
|
|
7
|
|
|
232,571
|
|
|
2.0
|
|
|
1.2
|
|
||
Total
|
|
$
|
380,369
|
|
|
1,601
|
|
|
$
|
237,582
|
|
|
82.0
|
|
|
6.5
|
|
|
|
Three Months Ended September 30, 2017
|
|||||||||||||||
|
|
Revenues
|
|
Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly
Absorption Rate
|
|||||||
Central
|
|
$
|
165,870
|
|
|
830
|
|
|
$
|
199,843
|
|
|
28.0
|
|
|
9.9
|
|
Southwest
|
|
66,002
|
|
|
255
|
|
|
258,831
|
|
|
16.0
|
|
|
5.3
|
|
||
Southeast
|
|
54,331
|
|
|
284
|
|
|
191,306
|
|
|
16.0
|
|
|
5.9
|
|
||
Florida
|
|
56,171
|
|
|
288
|
|
|
195,038
|
|
|
12.0
|
|
|
8.0
|
|
||
Northwest
|
|
23,522
|
|
|
72
|
|
|
326,694
|
|
|
4.3
|
|
|
5.6
|
|
||
Midwest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
$
|
365,896
|
|
|
1,729
|
|
|
$
|
211,623
|
|
|
76.3
|
|
|
7.6
|
|
|
As of September 30,
|
||||
Community count
|
2018
|
|
2017
|
||
Central
|
28
|
|
|
28
|
|
Southwest
|
15
|
|
|
16
|
|
Southeast
|
21
|
|
|
16
|
|
Florida
|
10
|
|
|
12
|
|
Northwest
|
5
|
|
|
5
|
|
Midwest
|
2
|
|
|
—
|
|
Total community count
|
81
|
|
|
77
|
|
|
|
Nine Months Ended September 30, 2018
|
|||||||||||||||
|
|
Revenues
|
|
Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly Absorption Rate |
|||||||
Central
|
|
$
|
438,811
|
|
|
2,062
|
|
|
$
|
212,808
|
|
|
28.8
|
|
|
8.0
|
|
Southwest
|
|
193,055
|
|
|
688
|
|
|
280,603
|
|
|
14.1
|
|
|
5.4
|
|
||
Southeast
|
|
178,984
|
|
|
879
|
|
|
203,622
|
|
|
17.9
|
|
|
5.5
|
|
||
Florida
|
|
136,211
|
|
|
649
|
|
|
209,878
|
|
|
11.2
|
|
|
6.4
|
|
||
Northwest
|
|
129,852
|
|
|
372
|
|
|
349,065
|
|
|
5.3
|
|
|
7.8
|
|
||
Midwest
|
|
2,327
|
|
|
10
|
|
|
232,700
|
|
|
1.7
|
|
|
0.7
|
|
||
Total
|
|
$
|
1,079,240
|
|
|
4,660
|
|
|
$
|
231,597
|
|
|
79.0
|
|
|
6.6
|
|
|
|
Nine Months Ended September 30, 2017
|
|||||||||||||||
|
|
Revenues
|
|
Closings
|
|
ASP
|
|
Average Community Count
|
|
Average Monthly
Absorption Rate |
|||||||
Central
|
|
$
|
370,550
|
|
|
1,824
|
|
|
$
|
203,152
|
|
|
25.4
|
|
|
8.0
|
|
Southwest
|
|
162,386
|
|
|
635
|
|
|
255,726
|
|
|
16.1
|
|
|
4.4
|
|
||
Southeast
|
|
133,665
|
|
|
710
|
|
|
188,261
|
|
|
14.3
|
|
|
5.5
|
|
||
Florida
|
|
129,345
|
|
|
656
|
|
|
197,172
|
|
|
11.4
|
|
|
6.4
|
|
||
Northwest
|
|
57,039
|
|
|
176
|
|
|
324,085
|
|
|
4.1
|
|
|
4.8
|
|
||
Midwest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
$
|
852,985
|
|
|
4,001
|
|
|
$
|
213,193
|
|
|
71.3
|
|
|
6.2
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Home sales revenues
|
|
$
|
380,369
|
|
|
$
|
365,896
|
|
|
$
|
1,079,240
|
|
|
$
|
852,985
|
|
Cost of sales
|
|
283,035
|
|
|
274,000
|
|
|
802,882
|
|
|
631,242
|
|
||||
Gross margin
|
|
97,334
|
|
|
91,896
|
|
|
276,358
|
|
|
221,743
|
|
||||
Capitalized interest charged to cost of sales
|
|
6,185
|
|
|
5,135
|
|
|
17,085
|
|
|
11,548
|
|
||||
Purchase accounting adjustments
(1)
|
|
850
|
|
|
54
|
|
|
847
|
|
|
226
|
|
||||
Adjusted gross margin
|
|
$
|
104,369
|
|
|
$
|
97,085
|
|
|
$
|
294,290
|
|
|
$
|
233,517
|
|
Gross margin %
(2)
|
|
25.6
|
%
|
|
25.1
|
%
|
|
25.6
|
%
|
|
26.0
|
%
|
||||
Adjusted gross margin %
(2)
|
|
27.4
|
%
|
|
26.5
|
%
|
|
27.3
|
%
|
|
27.4
|
%
|
(1)
|
Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.
|
(2)
|
Calculated as a percentage of home sales revenues.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
37,723
|
|
|
$
|
33,687
|
|
|
$
|
112,633
|
|
|
$
|
77,666
|
|
Income taxes
|
|
11,268
|
|
|
17,190
|
|
|
30,256
|
|
|
38,695
|
|
||||
Depreciation and amortization
|
|
177
|
|
|
194
|
|
|
543
|
|
|
600
|
|
||||
Capitalized interest charged to cost of sales
|
|
6,185
|
|
|
5,135
|
|
|
17,085
|
|
|
11,548
|
|
||||
EBITDA
|
|
55,353
|
|
|
56,206
|
|
|
160,517
|
|
|
128,509
|
|
||||
Purchase accounting adjustments
(1)
|
|
850
|
|
|
54
|
|
|
847
|
|
|
226
|
|
||||
Loss on extinguishment of debt
|
|
3,058
|
|
|
—
|
|
|
3,599
|
|
|
—
|
|
||||
Other income, net
|
|
(399
|
)
|
|
(430
|
)
|
|
(1,806
|
)
|
|
(1,312
|
)
|
||||
Adjusted EBITDA
|
|
$
|
58,862
|
|
|
$
|
55,830
|
|
|
$
|
163,157
|
|
|
$
|
127,423
|
|
EBITDA margin %
(2)
|
|
14.6
|
%
|
|
15.4
|
%
|
|
14.9
|
%
|
|
15.1
|
%
|
||||
Adjusted EBITDA margin %
(2)
|
|
15.5
|
%
|
|
15.3
|
%
|
|
15.1
|
%
|
|
14.9
|
%
|
(1)
|
Adjustments result from the application of purchase accounting related to prior acquisitions and represent the amount of the fair value step-up adjustments for real estate inventory included in cost of sales.
|
(2)
|
Calculated as a percentage of home sales revenues.
|
Backlog Data
|
|
Nine Months Ended September 30,
|
||||||
2018
(4)
|
|
2017
(5)
|
||||||
Net orders
(1)
|
|
5,056
|
|
|
4,883
|
|
||
Cancellation rate
(2)
|
|
23.1
|
%
|
|
24.1
|
%
|
||
Ending backlog – homes
(3)
|
|
1,212
|
|
|
1,328
|
|
||
Ending backlog – value
(3)
|
|
$
|
292,594
|
|
|
$
|
308,131
|
|
(1)
|
Net orders are new (gross) orders for the purchase of homes during the period, less cancellations of existing purchase contracts during the period.
|
(2)
|
Cancellation rate for a period is the total number of purchase contracts cancelled during the period divided by the total new (gross) orders for the purchase of homes during the period.
|
(3)
|
Ending backlog consists of homes at the end of the period that are under a purchase contract that has been signed by homebuyers who have met our preliminary financing criteria but have not yet closed and wholesale contracts for which the required deposit has been made. Ending backlog is valued at the contract amount.
|
(4)
|
Two
units and values related to bulk sales agreements are not included in the table above.
|
(5)
|
60
units and values related to bulk sales agreements are not included in the table above.
|
|
|
Nine Months Ended September 30, 2018
|
|
As of September 30, 2018
|
||||||||
Division
|
|
Home Closings
|
|
Owned
(1)
|
|
Controlled
|
|
Total
|
||||
Central
|
|
2,062
|
|
|
14,130
|
|
|
8,019
|
|
|
22,149
|
|
Southwest
|
|
688
|
|
|
2,264
|
|
|
1,401
|
|
|
3,665
|
|
Southeast
|
|
879
|
|
|
6,778
|
|
|
9,231
|
|
|
16,009
|
|
Florida
|
|
649
|
|
|
2,073
|
|
|
5,331
|
|
|
7,404
|
|
Northwest
|
|
372
|
|
|
1,277
|
|
|
2,838
|
|
|
4,115
|
|
Midwest
|
|
10
|
|
|
289
|
|
|
16
|
|
|
305
|
|
Total
|
|
4,660
|
|
|
26,811
|
|
|
26,836
|
|
|
53,647
|
|
(1)
|
Of the
26,811
owned lots as of
September 30, 2018
,
15,551
were raw/under development lots and
11,260
were finished lots.
|
•
|
Identify the contract(s) with a customer
|
•
|
Identify the performance obligations
|
•
|
Determine the transaction price
|
•
|
Allocate the transaction price
|
•
|
Recognize revenue when the performance obligations are met
|
•
|
adverse economic changes either nationally or in the markets in which we operate, including, among other things, increases in unemployment, volatility of mortgage interest rates and inflation and decreases in housing prices;
|
•
|
a slowdown in the homebuilding industry;
|
•
|
volatility and uncertainty in the credit markets and broader financial markets;
|
•
|
the cyclical and seasonal nature of our business;
|
•
|
our future operating results and financial condition;
|
•
|
our business operations;
|
•
|
changes in our business and investment strategy;
|
•
|
the success of our operations in recently opened new markets and our ability to expand into additional new markets;
|
•
|
our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, townhouses, wholesale products and acreage home sites;
|
•
|
our ability to develop our projects successfully or within expected timeframes;
|
•
|
our ability to identify potential acquisition targets and close such acquisitions;
|
•
|
our ability to successfully integrate any acquisitions, including the Wynn Homes acquisition, with our existing operations;
|
•
|
availability of land to acquire and our ability to acquire such land on favorable terms or at all;
|
•
|
availability, terms and deployment of capital;
|
•
|
decisions of the lender group of our revolving credit facility;
|
•
|
the occurrence of the specific conversion events that enable early conversion of our 4.25% Convertible Notes due 2019;
|
•
|
decline in the market value of our land portfolio;
|
•
|
disruption in the terms or availability of mortgage financing or increase in the number of foreclosures in our markets;
|
•
|
shortages of or increased prices for labor, land or raw materials used in land development and housing construction;
|
•
|
delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control;
|
•
|
uninsured losses in excess of insurance limits;
|
•
|
the cost and availability of insurance and surety bonds;
|
•
|
changes in, liabilities under, or the failure or inability to comply with, governmental laws and regulations;
|
•
|
the timing of receipt of regulatory approvals and the opening of projects;
|
•
|
the degree and nature of our competition;
|
•
|
increases in taxes or government fees;
|
•
|
poor relations with the residents of our projects;
|
•
|
existing and future litigation, arbitration or other claims;
|
•
|
availability of qualified personnel and third-party contractors and subcontractors;
|
•
|
information system interruptions or breaches in security;
|
•
|
our ability to retain our key personnel;
|
•
|
our leverage and future debt service obligations;
|
•
|
the impact on our business of any future government shutdown;
|
•
|
other risks and uncertainties inherent in our business;
|
•
|
other factors we discuss under the section entitled “
Management’s Discussion and Analysis of Financial Condition and Results of Operations
”; and
|
•
|
the risk factors set forth in our
Annual Report on Form 10-K
for the fiscal year ended
December 31, 2017
.
|
Exhibit No.
|
|
Description
|
3.1**
|
|
|
3.2**
|
|
|
10.1**
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
101.INS†
|
|
XBRL Instance Document.
|
101.SCH†
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL†
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF†
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB†
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE†
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith.
|
**
|
Previously filed.
|
†
|
XBRL information is deemed not filed or a part of a registration statement or Annual Report for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under such sections.
|
|
|
LGI Homes, Inc.
|
|
|
|
Date:
|
November 6, 2018
|
/s/ Eric Lipar
|
|
|
Eric Lipar
|
|
|
Chief Executive Officer and Chairman of the Board
|
|
|
|
|
November 6, 2018
|
/s/ Charles Merdian
|
|
|
Charles Merdian
|
|
|
Chief Financial Officer and Treasurer
|
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