LGI Homes, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues reached $444.5 million for the third quarter of 2026, a 10.2% increase year-over-year; homebuilding revenues were $437.5 million, up 10.3%.
• Net income for the quarter was $24.6 million ($1.05 per diluted share), compared to $19.7 million ($0.85 per diluted share) in the prior year period.
• Homebuilding gross margin was 20.2% for the quarter, up 40 basis points sequentially; adjusted homebuilding gross margin was 23.7%.
• SG&A expenses declined in absolute dollars, and SG&A as a percentage of total revenues improved 180 basis points year-over-year.
• For the nine months ended September 30, 2026, total revenues were $1,293.4 million (up 1.4% from $1,275.1 million in 2025), and net income was $53.7 million ($2.31 per diluted share).
• Adjusted net income for the nine months ended September 30, 2026, was $57.2 million ($2.46 per diluted share).
• Total liquidity was $447.7 million at September 30, 2026, consisting of $69.4 million in cash and cash equivalents and $378.3 million available under the revolving credit facility.
• Net debt to capital ratio improved to 40.6% at September 30, 2026, a 420 basis point improvement year-over-year.
• Notes payable (total debt) decreased to $1,544.5 million at September 30, 2026, from $1,656.8 million at December 31, 2025.

Guidance and Future Outlook:

• The company narrowed its full-year 2026 home closings guidance to between 4,600 and 4,800 homes, citing slower sales activity due to affordability pressures.
• Full-year 2026 active selling communities are expected to be between 150 and 160.
• Full-year 2026 average sales price per home closed is expected to be between $360,000 and $370,000.
• Full-year 2026 homebuilding gross margin is expected to be between 19.0% and 21.0%, resulting in an adjusted homebuilding gross margin between 22.5% and 24.5%.
• Full-year 2026 SG&A as a percentage of total revenues is expected to be between 15.0% and 16.0%.
• Full-year 2026 effective tax rate is expected to be approximately 26.5%.
• The outlook assumes economic conditions, input costs, interest rates, and construction costs remain similar to those experienced in 2026 to date.

Business Segments and Product Lines:

• The company ended the quarter with 151 active communities, a 7.1% increase compared to the same time last year.
• Total home closings for the quarter were 1,222 (including 33 leased homes), up 10.4% year-over-year; new home closings were 1,189, up 11.6%.
• Average sales price per home closed for the quarter was $367,962, a decrease of 1.2% year-over-year.
• Segment performance for the nine months ended September 30, 2026, showed home closings of 1,057 in Central, 877 in Southeast, 302 in Northwest, 710 in West, and 489 in Florida.
• As of September 30, 2026, the company held 58,400 total owned and controlled lots, with 50,270 owned (34,119 raw/under development and 16,151 finished) and 8,130 controlled.
• Ending backlog as of September 30, 2026, consisted of 685 homes valued at $273.7 million, down from 1,305 homes valued at $498.7 million in the prior year period.
• Net orders for the nine months ended September 30, 2026, were 2,869, with a cancellation rate of 48.9%.

Market and Competitive Landscape:

• Affordability pressures continued to weigh on demand, leading to slower sales activity in the quarter.
• The company is broadening its sales process to work with more prospective customers who may need additional time to qualify.
• LGI Homes operates in 36 markets across 21 states.

Risks and Challenges:

• Affordability remains a key consideration for buyers, impacting sales pace.
• The outlook is subject to risks including changes in general economic conditions, input costs, materials, product and labor availability, interest rates, mortgage availability, construction costs, land availability, and governmental regulations.
• The outlook does not account for potential changes to U.S. trade policies, including tariffs and duties on homebuilding products.
• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations.

Management Commentary and Tone:

• Eric Lipar, Chairman and CEO, stated the company delivered strong financial results with year-over-year growth in closings, revenue, and earnings while maintaining profitability and strengthening the balance sheet.
• Management expressed confidence in finishing 2026 strong, citing a growing community count, a strengthened balance sheet, and high-level team execution.
• The company believes it is well-positioned to achieve full-year objectives and carry momentum into 2027.

Other Key Points:

• The company reported a homebuilding gross margin excluding inventory impairment of 20.1% for the nine months ended September 30, 2026, compared to 21.9% in the prior year period.
• Inventory impairment of $4.7 million was recorded for the nine months ended September 30, 2026, with no impairment recorded in the third quarter of 2026 or the corresponding periods in 2025.
• Capitalized interest amortized to cost of sales was $41.2 million for the nine months ended September 30, 2026.
• Purchase accounting adjustments included in cost of sales were $1.4 million for the nine months ended September 30, 2026.
• The company has closed over 80,000 homes since its founding in 2003.
• LGI Homes was named to Newsweek's list of the World's Most Trustworthy Companies and received the Top Workplaces USA 2026 Award.