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☒
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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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,
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Suite 430,
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The Woodlands,
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TX
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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)
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362-8998
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(Registrant’s Telephone Number, Including Area Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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LGIH
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NASDAQ Global Select Market
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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West
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Northwest
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Central
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Midwest
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Florida
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Southeast
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Mid-Atlantic
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Phoenix, AZ
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Seattle, WA
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Houston, TX
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Minneapolis, MN
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Tampa, FL
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Atlanta, GA
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Washington, DC
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Tucson, AZ
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Portland, OR
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Dallas Ft. Worth, TX
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Orlando, FL
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Charlotte, NC
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Richmond, VA
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Albuquerque, NM
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Denver, CO
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San Antonio, TX
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Fort Myers, FL
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Columbia, SC
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Las Vegas, NV
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Colorado Springs, CO
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Austin, TX
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Jacksonville, FL
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Raleigh, NC
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Sacramento, CA
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Oklahoma City, OK
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Fort Pierce, FL
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Wilmington, NC
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Riverside, CA
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Winston-Salem, NC
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Birmingham, AL
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Nashville, TN
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Year Ended December 31, 2019
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As of December 31, 2019
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Reportable Segment
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Home Closings
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Owned (1)
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Controlled
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Total
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||||
Central
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3,304
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15,152
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6,764
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21,916
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Southeast
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1,592
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9,810
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5,894
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15,704
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Northwest
|
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827
|
|
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2,197
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|
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723
|
|
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2,920
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West
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1,056
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1,934
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809
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2,743
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Florida
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911
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2,764
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2,015
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4,779
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Total
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7,690
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31,857
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16,205
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48,062
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(1)
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Of the 31,857 owned lots as of December 31, 2019, 20,561 were raw/under development lots and 11,296 were finished lots.
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Reportable Segment
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Homes in Inventory (1)
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Inventory Value (1)
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Central
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1,296
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$
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175,777
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Southeast
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974
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136,086
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Northwest
|
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398
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96,296
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West
|
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478
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83,078
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Florida
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445
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68,777
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Total
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3,591
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$
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560,014
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(1)
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Includes homes in progress and completed homes; excludes information centers.
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Name
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Age
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Position
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Eric Lipar
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49
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Chief Executive Officer and Chairman of the Board
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Michael Snider
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48
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President and Chief Operating Officer
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Charles Merdian
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50
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Chief Financial Officer and Treasurer
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Jack Lipar
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51
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Executive Vice President of Acquisitions
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Rachel Eaton
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38
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Chief Marketing Officer
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Scott Garber
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48
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General Counsel and Corporate Secretary
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Eric Lipar. Mr. Lipar is our Chief Executive Officer and serves as Chairman of our Board of Directors. He has served as our Chief Executive Officer since 2009, as a director since June 2013 and as Chairman of the Board since July 2013. Previously, Mr. Lipar served as our President from 2003 until 2009. Mr. Lipar has been in the residential land development business since the mid-1990s and is one of our founders. He has overseen land acquisition, development and the sales of over 35,000 homes since our inception. Mr. Lipar currently serves on the Residential Neighborhood Development Council for the Urban Land Institute and is a Policy Advisor Board Member for the Harvard Joint Center of Housing Studies.
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Michael Snider. Mr. Snider has served as our President since 2009 and our Chief Operating Officer since July 2013. He oversees all aspects of our sales, construction, and product development. Prior to serving as our President, Mr. Snider was Executive Vice President of Homebuilding (2005-2009) and in the role of Homebuilding Manager (2004). Before joining the Company in 2004, Mr. Snider was a Project Manager for Tadian Homes, a homebuilder based in Troy, Michigan.
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Charles Merdian. Mr. Merdian has served as our Chief Financial Officer and Treasurer since 2013 and served as our Secretary from 2013 to 2016. Prior to becoming our Chief Financial Officer in 2010, Mr. Merdian was our Controller from 2004 through 2010. Prior to joining us in 2004, Mr. Merdian served as Accounting and Finance Manager for The Woodlands Operating Company where he specialized in accounting and financial analysis of real estate ventures, focusing primarily on residential and commercial developments. Prior to The Woodlands Operating Company, Mr. Merdian served as an accounting manager working at the Williamson-Dickie Manufacturing Co. and as a senior auditor for Coopers & Lybrand, LLP. Mr. Merdian has worked in residential real estate and homebuilding finance since 1998. Mr. Merdian is a Certified Public Accountant and is a member of the Texas Society of Certified Public Accountants. In February 2020, Mr. Merdian was elected to serve on the Montgomery County Habitat for Humanity Board of Directors.
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Jack Lipar. Mr. Lipar has served as our Executive Vice President of Acquisitions since March 2013. He previously served as Vice President of Acquisitions from December 2010 through February 2013, and Acquisitions Manager from 2006 to December 2010. Mr. Lipar oversees land acquisitions and development for the Company. Prior to joining us, Mr. Lipar worked at HP Pelzer, an auto parts manufacturing company based in Germany, as the Vice President of Purchasing and Director of Operations. Mr. Lipar was also the General Manager and a member of the Board of Directors at Alliance Interiors, an affiliate of HP Pelzer. Prior to HP Pelzer, Mr. Lipar was a worldwide Purchasing Manager for Cooper Standard, one of the world’s leading manufacturers of automotive parts.
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Rachel Eaton. Ms. Eaton serves as our Chief Marketing Officer and is responsible for the overall growth and direction of our marketing initiatives, brand image, social media, recruiting and information technology. Prior to becoming our Chief Marketing Officer in June 2013, Ms. Eaton served as our Vice President of Marketing and Administration from May 2012 through May 2013 and Director of Marketing & Special Events from 2007 to May 2012. Ms. Eaton joined the Company in 2003.
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Scott Garber. Mr. Garber has served as our General Counsel and Corporate Secretary since April 2018. His responsibilities include all company legal matters, as well as corporate governance and risk management. Prior to joining the Company, Mr. Garber served as Assistant General Counsel at Chevron Phillips Chemical Company (CPChem), where he was responsible for major company transactions (both domestic and international) and corporate governance of its Qatar-based joint ventures, and managed commercial legal matters for various company product lines and divisions. Prior to joining CPChem, Mr. Garber served as Associate General Counsel for United Airlines (formerly Continental Airlines), then the world’s largest airline, where he was responsible for its litigation, antitrust and intellectual property matters. Mr. Garber previously worked at Howrey Simon Arnold & White, a major international law firm, where he specialized in all aspects of intellectual property law. Mr. Garber is a member of the State Bar of Texas and is also admitted to practice before the U.S. Patent & Trademark Office. Mr. Garber is also a member of the Board of Directors of Archway Insurance, Ltd, a captive insurance company.
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•
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our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt, which is likely to result in acceleration of such indebtedness;
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•
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our indebtedness may increase our vulnerability to adverse economic and industry conditions with no assurance that our profitability will increase with higher financing cost;
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•
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we may be required to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for operations and capital expenditures, future investment opportunities or other purposes; and
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•
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the terms of any refinancing may not be as favorable as the terms of the indebtedness being refinanced.
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•
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general market conditions;
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•
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the market’s perception of our growth potential;
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•
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with respect to acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed;
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•
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our current debt levels;
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•
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our current and expected future earnings;
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•
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our cash flow; and
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•
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the market price per share of our common stock.
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•
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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;
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•
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a slowdown in the homebuilding industry;
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•
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volatility and uncertainty in the credit markets and broader financial markets;
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•
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the cyclical and seasonal nature of our business;
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•
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our future operating results and financial condition;
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•
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our business operations;
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•
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changes in our business and investment strategy;
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•
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the success of our operations in recently opened new markets and our ability to expand into additional new markets;
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•
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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;
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•
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our ability to develop our projects successfully or within expected timeframes;
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•
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our ability to identify potential acquisition targets and close such acquisitions;
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•
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our ability to successfully integrate any acquisitions with our existing operations;
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•
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availability of land to acquire and our ability to acquire such land on favorable terms or at all;
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•
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availability, terms and deployment of capital and ability to meet our ongoing liquidity needs;
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•
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decisions of the Credit Agreement lender group;
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•
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decline in the market value of our land portfolio;
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•
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disruption in the terms or availability of mortgage financing or increase in the number of foreclosures in our markets;
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•
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shortages of or increased prices for labor, land, or raw materials used in land development and housing construction, including due to changes in trade policies;
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•
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delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control;
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•
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uninsured losses in excess of insurance limits;
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•
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the cost and availability of insurance and surety bonds;
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•
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changes in, liabilities under, or the failure or inability to comply with, governmental laws and regulations;
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•
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the timing of receipt of regulatory approvals and the opening of projects;
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•
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the degree and nature of our competition;
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•
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increases in taxes or government fees;
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•
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negative publicity or poor relations with the residents of our projects;
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•
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existing and future litigation, arbitration or other claims;
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•
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availability of qualified personnel and third-party contractors and subcontractors;
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•
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information system failures, cyber incidents or breaches in security;
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•
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our ability to retain our key personnel;
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•
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our leverage and future debt service obligations;
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•
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the impact on our business of any future government shutdown;
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•
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other risks and uncertainties inherent in our business; and
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•
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other factors we discuss under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
|
12/31/2019
|
LGIH
|
|
$100.00
|
|
$163.07
|
|
$192.56
|
|
$502.88
|
|
$303.08
|
|
$473.53
|
S&P 500 Index
|
|
$100.00
|
|
$99.27
|
|
$108.74
|
|
$129.86
|
|
$121.76
|
|
$156.92
|
S&P Homebuilders Index
|
|
$100.00
|
|
$100.18
|
|
$99.27
|
|
$129.70
|
|
$95.25
|
|
$133.47
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
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|
(dollars in thousands, except per share data and average home sales price)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
|
$
|
838,320
|
|
|
$
|
630,236
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
|
1,401,675
|
|
|
1,124,484
|
|
|
937,540
|
|
|
616,707
|
|
|
463,304
|
|
|||||
Selling expenses
|
|
131,561
|
|
|
109,460
|
|
|
94,957
|
|
|
66,984
|
|
|
52,998
|
|
|||||
General and administrative
|
|
77,380
|
|
|
70,345
|
|
|
55,662
|
|
|
43,158
|
|
|
34,260
|
|
|||||
Operating income
|
|
227,538
|
|
|
200,111
|
|
|
169,801
|
|
|
111,471
|
|
|
79,674
|
|
|||||
Loss on extinguishment of debt
|
|
169
|
|
|
3,599
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other income, net
|
|
(4,463
|
)
|
|
(2,586
|
)
|
|
(1,601
|
)
|
|
(2,201
|
)
|
|
(606
|
)
|
|||||
Net income before income taxes
|
|
231,832
|
|
|
199,098
|
|
|
171,402
|
|
|
113,672
|
|
|
80,280
|
|
|||||
Income tax provision
|
|
53,224
|
|
|
43,812
|
|
|
58,096
|
|
|
38,641
|
|
|
27,450
|
|
|||||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
|
$
|
75,031
|
|
|
$
|
52,830
|
|
Basic earnings per share (1)
|
|
$
|
7.70
|
|
|
$
|
6.89
|
|
|
$
|
5.24
|
|
|
$
|
3.61
|
|
|
$
|
2.65
|
|
Diluted earnings per share (1)
|
|
$
|
7.02
|
|
|
$
|
6.24
|
|
|
$
|
4.73
|
|
|
$
|
3.41
|
|
|
$
|
2.44
|
|
Other Financial and Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Active communities at end of year
|
|
106
|
|
|
88
|
|
|
78
|
|
|
63
|
|
|
52
|
|
|||||
Home closings
|
|
7,690
|
|
|
6,512
|
|
|
5,845
|
|
|
4,163
|
|
|
3,404
|
|
|||||
Average sales price of homes closed
|
|
$
|
239,032
|
|
|
$
|
231,020
|
|
|
$
|
215,220
|
|
|
$
|
201,374
|
|
|
$
|
185,146
|
|
Gross margin (2)
|
|
$
|
436,479
|
|
|
$
|
379,916
|
|
|
$
|
320,420
|
|
|
$
|
221,613
|
|
|
$
|
166,932
|
|
Gross margin % (3)
|
|
23.7
|
%
|
|
25.3
|
%
|
|
25.5
|
%
|
|
26.4
|
%
|
|
26.5
|
%
|
|||||
Adjusted gross margin (4)
|
|
$
|
475,033
|
|
|
$
|
405,635
|
|
|
$
|
338,066
|
|
|
$
|
232,778
|
|
|
$
|
175,120
|
|
Adjusted gross margin % (3)(4)
|
|
25.8
|
%
|
|
27.0
|
%
|
|
26.9
|
%
|
|
27.8
|
%
|
|
27.8
|
%
|
|||||
EBITDA (5)
|
|
$
|
267,705
|
|
|
$
|
224,120
|
|
|
$
|
189,593
|
|
|
$
|
125,441
|
|
|
$
|
87,221
|
|
EBITDA margin % (3)(5)
|
|
14.6
|
%
|
|
14.9
|
%
|
|
15.1
|
%
|
|
15.0
|
%
|
|
13.8
|
%
|
|||||
Adjusted EBITDA (5)
|
|
$
|
266,735
|
|
|
$
|
226,541
|
|
|
$
|
188,238
|
|
|
$
|
123,725
|
|
|
$
|
88,746
|
|
Adjusted EBITDA margin % (3)(5)
|
|
14.5
|
%
|
|
15.1
|
%
|
|
15.0
|
%
|
|
14.8
|
%
|
|
14.1
|
%
|
|
|
December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
|
$
|
38,345
|
|
|
$
|
46,624
|
|
|
$
|
67,571
|
|
|
$
|
49,518
|
|
|
$
|
37,568
|
|
Real estate inventory
|
|
$
|
1,499,624
|
|
|
$
|
1,228,256
|
|
|
$
|
918,933
|
|
|
$
|
717,681
|
|
|
$
|
531,228
|
|
Goodwill and intangibles
|
|
$
|
12,018
|
|
|
$
|
12,018
|
|
|
$
|
12,018
|
|
|
$
|
12,018
|
|
|
$
|
12,234
|
|
Total assets
|
|
$
|
1,666,115
|
|
|
$
|
1,395,473
|
|
|
$
|
1,079,892
|
|
|
$
|
814,514
|
|
|
$
|
618,702
|
|
Notes payable
|
|
$
|
690,559
|
|
|
$
|
653,734
|
|
|
$
|
475,195
|
|
|
$
|
400,483
|
|
|
$
|
304,561
|
|
Total liabilities
|
|
$
|
820,922
|
|
|
$
|
739,530
|
|
|
$
|
590,046
|
|
|
$
|
459,313
|
|
|
$
|
371,313
|
|
Total equity
|
|
$
|
845,193
|
|
|
$
|
655,943
|
|
|
$
|
489,846
|
|
|
$
|
355,201
|
|
|
$
|
247,389
|
|
(1)
|
Earnings per share is presented for the years ended December 31, 2019, 2018, 2017, 2016 and 2015. See Note 9 “Equity” to our consolidated financial statements included in Part II, Item 8 of this Annual Report of this Form 10-K for calculation of earnings per share.
|
(2)
|
Gross margin is home sales revenues less cost of sales.
|
(3)
|
Calculated as a percentage of home sales revenues.
|
(4)
|
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 the 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—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.
|
(5)
|
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 EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, our management believes that these measures are useful for comparing general operating performance from period to period. Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies. Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for reconciliations of EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable.
|
•
|
Home sales revenues increased 22.2% to $1.8 billion from $1.5 billion.
|
•
|
Homes closed increased 18.1% to 7,690 homes from 6,512 homes.
|
•
|
Average sales price of our homes increased $8,012 to $239,032 from $231,020.
|
•
|
Gross margin as a percentage of home sales revenues decreased to 23.7% from 25.3%.
|
•
|
Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 25.8% from 27.0%.
|
•
|
Net income before income taxes increased 16.4% to $231.8 million from $199.1 million.
|
•
|
Net income increased 15.0% to $178.6 million from $155.3 million.
|
•
|
EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 14.6% from 14.9%.
|
•
|
Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 14.5% from 15.1%.
|
•
|
Active communities at the end of 2019 increased to 106 from 88.
|
•
|
Total owned and controlled lots decreased 6.6% to 48,062 lots at December 31, 2019 from 51,442 lots at December 31, 2018.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(dollars in thousands, except per share data and average home sales price)
|
||||||||||
|
|
|
|
|
||||||||
Statement of Income Data:
|
|
|
|
|
|
|
||||||
Home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
Expenses:
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
1,401,675
|
|
|
1,124,484
|
|
|
937,540
|
|
|||
Selling expenses
|
|
131,561
|
|
|
109,460
|
|
|
94,957
|
|
|||
General and administrative
|
|
77,380
|
|
|
70,345
|
|
|
55,662
|
|
|||
Operating income
|
|
227,538
|
|
|
200,111
|
|
|
169,801
|
|
|||
Loss on extinguishment of debt
|
|
169
|
|
|
3,599
|
|
|
—
|
|
|||
Other income, net
|
|
(4,463
|
)
|
|
(2,586
|
)
|
|
(1,601
|
)
|
|||
Net income before income taxes
|
|
231,832
|
|
|
199,098
|
|
|
171,402
|
|
|||
Income tax provision
|
|
53,224
|
|
|
43,812
|
|
|
58,096
|
|
|||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
Basic earnings per share
|
|
$
|
7.70
|
|
|
$
|
6.89
|
|
|
$
|
5.24
|
|
Diluted earnings per share
|
|
$
|
7.02
|
|
|
$
|
6.24
|
|
|
$
|
4.73
|
|
Other Financial and Operating Data:
|
|
|
|
|
|
|
||||||
Active communities at end of year
|
|
106
|
|
|
88
|
|
|
78
|
|
|||
Home closings
|
|
7,690
|
|
|
6,512
|
|
|
5,845
|
|
|||
Average sales price of homes closed
|
|
$
|
239,032
|
|
|
$
|
231,020
|
|
|
$
|
215,220
|
|
Gross margin (1)
|
|
$
|
436,479
|
|
|
$
|
379,916
|
|
|
$
|
320,420
|
|
Gross margin % (2)
|
|
23.7
|
%
|
|
25.3
|
%
|
|
25.5
|
%
|
|||
Adjusted gross margin (3)
|
|
$
|
475,033
|
|
|
$
|
405,635
|
|
|
$
|
338,066
|
|
Adjusted gross margin % (2)(3)
|
|
25.8
|
%
|
|
27.0
|
%
|
|
26.9
|
%
|
|||
EBITDA (4)
|
|
$
|
267,705
|
|
|
$
|
224,120
|
|
|
$
|
189,593
|
|
EBITDA margin % (2)(4)
|
|
14.6
|
%
|
|
14.9
|
%
|
|
15.1
|
%
|
|||
Adjusted EBITDA (4)
|
|
$
|
266,735
|
|
|
$
|
226,541
|
|
|
$
|
188,238
|
|
Adjusted EBITDA margin % (2)(4)
|
|
14.5
|
%
|
|
15.1
|
%
|
|
15.0
|
%
|
(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 the 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 EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates,
|
|
|
Year Ended December 31, 2019
|
|||||||||||||||
|
|
Revenues
|
|
Home Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly Absorption Rate |
|||||||
Central
|
|
$
|
724,981
|
|
|
3,304
|
|
|
$
|
219,425
|
|
|
33.0
|
|
|
8.3
|
|
Southeast
|
|
347,817
|
|
|
1,592
|
|
|
218,478
|
|
|
24.5
|
|
|
5.4
|
|
||
Northwest
|
|
304,294
|
|
|
827
|
|
|
367,949
|
|
|
12.4
|
|
|
5.6
|
|
||
West
|
|
271,186
|
|
|
1,056
|
|
|
256,805
|
|
|
12.8
|
|
|
6.9
|
|
||
Florida
|
|
189,876
|
|
|
911
|
|
|
208,426
|
|
|
13.1
|
|
|
5.8
|
|
||
Total
|
|
$
|
1,838,154
|
|
|
7,690
|
|
|
$
|
239,032
|
|
|
95.7
|
|
|
6.7
|
|
|
|
Year Ended December 31, 2018
|
|||||||||||||||
|
|
Revenues
|
|
Home Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly Absorption Rate |
|||||||
Central
|
|
$
|
623,751
|
|
|
2,937
|
|
|
$
|
212,377
|
|
|
30.7
|
|
|
8.0
|
|
Southeast
|
|
271,073
|
|
|
1,324
|
|
|
204,738
|
|
|
18.7
|
|
|
5.9
|
|
||
Northwest
|
|
277,567
|
|
|
760
|
|
|
365,220
|
|
|
10.3
|
|
|
6.1
|
|
||
West
|
|
151,059
|
|
|
627
|
|
|
240,923
|
|
|
9.3
|
|
|
5.6
|
|
||
Florida
|
|
180,950
|
|
|
864
|
|
|
209,433
|
|
|
11.6
|
|
|
6.2
|
|
||
Total
|
|
$
|
1,504,400
|
|
|
6,512
|
|
|
$
|
231,020
|
|
|
80.6
|
|
|
6.7
|
|
|
At December 31,
|
||||
Community count
|
2019
|
|
2018
|
||
Central
|
33
|
|
|
32
|
|
Southeast
|
29
|
|
|
21
|
|
Northwest
|
13
|
|
|
11
|
|
West
|
14
|
|
|
10
|
|
Florida
|
17
|
|
|
14
|
|
Total community count
|
106
|
|
|
88
|
|
|
|
Year Ended December 31, 2018
|
|||||||||||||||
|
|
Revenues
|
|
Home Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly Absorption Rate |
|||||||
Central
|
|
$
|
623,751
|
|
|
2,937
|
|
|
$
|
212,377
|
|
|
30.7
|
|
|
8.0
|
|
Southeast
|
|
271,073
|
|
|
1,324
|
|
|
204,738
|
|
|
18.7
|
|
|
5.9
|
|
||
Northwest
|
|
277,567
|
|
|
760
|
|
|
365,220
|
|
|
10.3
|
|
|
6.1
|
|
||
West
|
|
151,059
|
|
|
627
|
|
|
240,923
|
|
|
9.3
|
|
|
5.6
|
|
||
Florida
|
|
180,950
|
|
|
864
|
|
|
209,433
|
|
|
11.6
|
|
|
6.2
|
|
||
Total
|
|
$
|
1,504,400
|
|
|
6,512
|
|
|
$
|
231,020
|
|
|
80.6
|
|
|
6.7
|
|
|
|
Year Ended December 31, 2017
|
|||||||||||||||
|
|
Revenues
|
|
Home Closings
|
|
ASP
|
|
Average Community Count
|
|
Average
Monthly Absorption Rate |
|||||||
Central
|
|
$
|
533,254
|
|
|
2,616
|
|
|
$
|
203,843
|
|
|
26.2
|
|
|
8.3
|
|
Southeast
|
|
183,422
|
|
|
973
|
|
|
188,512
|
|
|
15.0
|
|
|
5.4
|
|
||
Northwest
|
|
215,421
|
|
|
629
|
|
|
342,482
|
|
|
10.3
|
|
|
5.1
|
|
||
West
|
|
126,130
|
|
|
613
|
|
|
205,759
|
|
|
10.1
|
|
|
5.1
|
|
||
Florida
|
|
199,733
|
|
|
1,014
|
|
|
196,975
|
|
|
11.5
|
|
|
7.3
|
|
||
Total
|
|
$
|
1,257,960
|
|
|
5,845
|
|
|
$
|
215,220
|
|
|
73.1
|
|
|
6.7
|
|
|
At December 31,
|
||||
Community count
|
2018
|
|
2017
|
||
Central
|
32
|
|
|
29
|
|
Southeast
|
21
|
|
|
17
|
|
Northwest
|
11
|
|
|
11
|
|
West
|
10
|
|
|
10
|
|
Florida
|
14
|
|
|
11
|
|
Total community count
|
88
|
|
|
78
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
Cost of sales
|
|
1,401,675
|
|
|
1,124,484
|
|
|
937,540
|
|
|||
Gross margin
|
|
436,479
|
|
|
379,916
|
|
|
320,420
|
|
|||
Capitalized interest charged to cost of sales
|
|
35,230
|
|
|
24,311
|
|
|
17,400
|
|
|||
Purchase accounting adjustments (1)
|
|
3,324
|
|
|
1,408
|
|
|
246
|
|
|||
Adjusted gross margin
|
|
$
|
475,033
|
|
|
$
|
405,635
|
|
|
$
|
338,066
|
|
Gross margin % (2)
|
|
23.7
|
%
|
|
25.3
|
%
|
|
25.5
|
%
|
|||
Adjusted gross margin % (2)
|
|
25.8
|
%
|
|
27.0
|
%
|
|
26.9
|
%
|
(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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
Income taxes
|
|
53,224
|
|
|
43,812
|
|
|
58,096
|
|
|||
Depreciation and amortization
|
|
643
|
|
|
711
|
|
|
791
|
|
|||
Capitalized interest charged to cost of sales
|
|
35,230
|
|
|
24,311
|
|
|
17,400
|
|
|||
EBITDA
|
|
267,705
|
|
|
224,120
|
|
|
189,593
|
|
|||
Purchase accounting adjustments(1)
|
|
3,324
|
|
|
1,408
|
|
|
246
|
|
|||
Loss on extinguishment of debt
|
|
169
|
|
|
3,599
|
|
|
—
|
|
|||
Other income, net
|
|
(4,463
|
)
|
|
(2,586
|
)
|
|
(1,601
|
)
|
|||
Adjusted EBITDA
|
|
$
|
266,735
|
|
|
$
|
226,541
|
|
|
$
|
188,238
|
|
EBITDA margin %(2)
|
|
14.6
|
%
|
|
14.9
|
%
|
|
15.1
|
%
|
|||
Adjusted EBITDA margin %(2)
|
|
14.5
|
%
|
|
15.1
|
%
|
|
15.0
|
%
|
(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.
|
Backlog Data
|
|
Year Ended December 31,
|
||||||||||
2019 (4)
|
|
2018 (5)
|
|
2017 (6)
|
||||||||
Net orders (1)
|
|
8,299
|
|
|
6,320
|
|
|
6,215
|
|
|||
Cancellation rate (2)
|
|
20.6
|
%
|
|
24.2
|
%
|
|
25.4
|
%
|
|||
Ending backlog - homes (3)
|
|
1,233
|
|
|
624
|
|
|
816
|
|
|||
Ending backlog - value (3)
|
|
$
|
290,438
|
|
|
$
|
156,109
|
|
|
$
|
191,831
|
|
(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)
|
As of December 31, 2019, we have 481 units related to bulk sales agreements associated with our wholesale business, of which 117 units and values are not included in the table above.
|
(5)
|
As of December 31, 2018, we have 163 units related to bulk sales agreements associated with our wholesale business, of which 92 units and values are not included in the table above.
|
(6)
|
As of December 31, 2017, we have 149 units related to bulk sales agreements associated with our wholesale business, of which 106 units and values are not included in the table above.
|
|
|
Payments due by period (in thousands)
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less
than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
||||||||||
Borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Credit Agreement (a)
|
|
$
|
399,558
|
|
|
$
|
—
|
|
|
$
|
399,558
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior Notes (b)
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|||||
Inventory related obligations(c)
|
|
7,808
|
|
|
172
|
|
|
364
|
|
|
391
|
|
|
6,881
|
|
|||||
Interest and fees (d)
|
|
209,658
|
|
|
43,445
|
|
|
66,483
|
|
|
42,097
|
|
|
57,633
|
|
|||||
Operating leases
|
|
6,911
|
|
|
1,140
|
|
|
2,039
|
|
|
1,493
|
|
|
2,239
|
|
|||||
Total
|
|
$
|
923,935
|
|
|
$
|
44,757
|
|
|
$
|
468,444
|
|
|
$
|
43,981
|
|
|
$
|
366,753
|
|
(a)
|
Represents borrowings under the Credit Agreement, which matures on May 31, 2022. See Note 7 “Notes Payable” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding our long-term debt.
|
(b)
|
Represents $300.0 million aggregate principal amount of our 6.875% Senior Notes due 2026. The Senior Notes mature on July 15, 2026. See Note 7 “Notes Payable” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding our long-term debt.
|
(c)
|
The Company owns lots in certain communities that have Community Development Districts or similar utility and infrastructure development special assessment programs that allocate a fixed amount of debt service associated with development activities to each lot. Such obligations represent a non-cash cost of the lots.
|
(d)
|
All of the outstanding borrowings under the Credit Agreement are at variable rates based on LIBOR, or subject to an interest rate floor. The interest rate for our variable rate indebtedness as of December 31, 2019 was LIBOR plus 2.50%. Fees under the Credit Agreement are approximately $0.1 million per year. Interest on the Senior Notes accrues at a rate of 6.875% per annum, payable semi-annually in arrears on January 15 and July 15 of each year. Inventory related obligations for infrastructure development attached to the land are subject to a fixed interest rate generally ranging from 1.35% to 6.02%, typically payable over a 30 year period, and are ultimately assumed by the homebuyer when home sales are closed.
|
•
|
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
|
|
|
Land development costs
|
Description of the Matter
|
|
At December 31, 2019, the Company’s cost of sales was approximately $1.4 billion, which includes construction costs of each closed home and allocable land acquisition and land development costs, capitalized interest, and other related costs. As discussed in Note 2 to the consolidated financial statements, land development costs that are not specifically identifiable to a home are allocated on a pro rata basis. At the time of home closings, land development activities are not yet finalized. To recognize the appropriate amount of cost of sales, the Company estimates the total remaining development costs. Estimates are affected by changes to the land development project’s schedule; the cost of labor, material, and subcontractors; and potential cost reimbursements from various municipalities.
Auditing the Company's land development cost measurement and allocation to unsold lots and homes was complex and subjective due to the significant estimation required to determine the costs to complete land development. Specifically, the land development cost estimate is sensitive to significant management assumptions, including the project’s schedule, estimated cost of labor and potential reimbursements.
|
|
|
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding and tested the design and operating effectiveness of the Company's process and controls over its land development cost measurement and allocation to unsold lots and homes, including controls over management's review of the estimated costs to complete.
To test the Company's land development cost measurement and allocation to unsold lots and homes, our audit procedures included, among others, testing the significant assumptions used to develop the estimated costs to complete of the land development budgets and testing the completeness and accuracy of the underlying data and allocation calculation. For example, we compared the estimated land development costs to actual costs of similar communities developed by the Company; agreed the estimated development costs and cost reimbursements to supporting documentation, including underlying contracts; and performed observational procedures to understand the completeness of development activities included in the budgets. In addition, we performed lookback analyses to historical actual costs to assess management’s ability to estimate and performed sensitivity analyses of the significant assumptions to evaluate the changes in total costs of land development that would result from changes in these assumptions.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
||||||
Home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
1,401,675
|
|
|
1,124,484
|
|
|
937,540
|
|
|||
Selling expenses
|
|
131,561
|
|
|
109,460
|
|
|
94,957
|
|
|||
General and administrative
|
|
77,380
|
|
|
70,345
|
|
|
55,662
|
|
|||
Operating income
|
|
227,538
|
|
|
200,111
|
|
|
169,801
|
|
|||
Loss on extinguishment of debt
|
|
169
|
|
|
3,599
|
|
|
—
|
|
|||
Other income, net
|
|
(4,463
|
)
|
|
(2,586
|
)
|
|
(1,601
|
)
|
|||
Net income before income taxes
|
|
231,832
|
|
|
199,098
|
|
|
171,402
|
|
|||
Income tax provision
|
|
53,224
|
|
|
43,812
|
|
|
58,096
|
|
|||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
Earnings per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
7.70
|
|
|
$
|
6.89
|
|
|
$
|
5.24
|
|
Diluted
|
|
$
|
7.02
|
|
|
$
|
6.24
|
|
|
$
|
4.73
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
23,191,595
|
|
|
22,551,762
|
|
|
21,604,932
|
|
|||
Diluted
|
|
25,430,841
|
|
|
24,892,274
|
|
|
23,933,122
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Total Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
BALANCE—December 31, 2016
|
22,311,310
|
|
|
$
|
223
|
|
|
$
|
208,346
|
|
|
$
|
163,182
|
|
|
$
|
(16,550
|
)
|
|
$
|
355,201
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
113,306
|
|
|
—
|
|
|
113,306
|
|
|||||
Issuance of shares, net of offering costs
|
354,620
|
|
|
3
|
|
|
15,339
|
|
|
—
|
|
|
—
|
|
|
15,342
|
|
|||||
Issuance of restricted stock units in settlement of accrued bonuses
|
—
|
|
|
—
|
|
|
167
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|||||
Compensation expense for equity awards
|
—
|
|
|
—
|
|
|
4,188
|
|
|
—
|
|
|
—
|
|
|
4,188
|
|
|||||
Stock issued under employee incentive plans
|
179,650
|
|
|
2
|
|
|
1,640
|
|
|
—
|
|
|
—
|
|
|
1,642
|
|
|||||
BALANCE—December 31, 2017
|
22,845,580
|
|
|
$
|
228
|
|
|
$
|
229,680
|
|
|
$
|
276,488
|
|
|
$
|
(16,550
|
)
|
|
$
|
489,846
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
155,286
|
|
|
—
|
|
|
155,286
|
|
|||||
Issuance of shares in settlement of Convertible Notes
|
486,679
|
|
|
5
|
|
|
(482
|
)
|
|
—
|
|
|
—
|
|
|
(477
|
)
|
|||||
Issuance of shares, Wynn Homes Acquisition
|
70,746
|
|
|
1
|
|
|
3,999
|
|
|
—
|
|
|
—
|
|
|
4,000
|
|
|||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,506
|
)
|
|
(1,506
|
)
|
|||||
Issuance of restricted stock units in settlement of accrued bonuses
|
—
|
|
|
—
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|
181
|
|
|||||
Compensation expense for equity awards
|
—
|
|
|
—
|
|
|
5,923
|
|
|
—
|
|
|
—
|
|
|
5,923
|
|
|||||
Stock issued under employee incentive plans
|
343,380
|
|
|
3
|
|
|
2,687
|
|
|
—
|
|
|
—
|
|
|
2,690
|
|
|||||
BALANCE—December 31, 2018
|
23,746,385
|
|
|
$
|
237
|
|
|
$
|
241,988
|
|
|
$
|
431,774
|
|
|
$
|
(18,056
|
)
|
|
$
|
655,943
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
178,608
|
|
|
—
|
|
|
178,608
|
|
|||||
Issuance of shares in settlement of Convertible Notes
|
2,381,751
|
|
|
24
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of restricted stock units in settlement of accrued bonuses
|
—
|
|
|
—
|
|
|
217
|
|
|
—
|
|
|
—
|
|
|
217
|
|
|||||
Compensation expense for equity awards
|
—
|
|
|
—
|
|
|
7,539
|
|
|
—
|
|
|
—
|
|
|
7,539
|
|
|||||
Stock issued under employee incentive plans
|
270,273
|
|
|
3
|
|
|
2,883
|
|
|
—
|
|
|
—
|
|
|
2,886
|
|
|||||
BALANCE—December 31, 2019
|
26,398,409
|
|
|
$
|
264
|
|
|
$
|
252,603
|
|
|
$
|
610,382
|
|
|
$
|
(18,056
|
)
|
|
$
|
845,193
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
643
|
|
|
711
|
|
|
791
|
|
|||
Loss on extinguishment of debt
|
|
169
|
|
|
3,588
|
|
|
—
|
|
|||
Loss on disposal of assets
|
|
37
|
|
|
6
|
|
|
13
|
|
|||
Compensation expense for equity awards
|
|
7,539
|
|
|
5,937
|
|
|
4,188
|
|
|||
Deferred income taxes
|
|
(1,831
|
)
|
|
(724
|
)
|
|
(2,092
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(13,554
|
)
|
|
1,870
|
|
|
(27,651
|
)
|
|||
Real estate inventory
|
|
(266,651
|
)
|
|
(234,664
|
)
|
|
(200,609
|
)
|
|||
Pre-acquisition costs and deposits
|
|
8,507
|
|
|
(18,853
|
)
|
|
(8,215
|
)
|
|||
Other assets
|
|
6,228
|
|
|
(1,398
|
)
|
|
(8,643
|
)
|
|||
Accounts payable
|
|
3,254
|
|
|
(2,779
|
)
|
|
(257
|
)
|
|||
Accrued expenses and other liabilities
|
|
35,117
|
|
|
(25,703
|
)
|
|
60,702
|
|
|||
Net cash used in operating activities
|
|
(41,934
|
)
|
|
(116,723
|
)
|
|
(68,467
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(734
|
)
|
|
(475
|
)
|
|
(518
|
)
|
|||
Investment in unconsolidated entity
|
|
(1,059
|
)
|
|
—
|
|
|
—
|
|
|||
Payment for business acquisition
|
|
—
|
|
|
(74,463
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(1,793
|
)
|
|
(74,938
|
)
|
|
(518
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from notes payable
|
|
309,308
|
|
|
612,717
|
|
|
100,000
|
|
|||
Payments on notes payable
|
|
(273,762
|
)
|
|
(436,238
|
)
|
|
(25,000
|
)
|
|||
Loan issuance costs
|
|
(2,984
|
)
|
|
(6,741
|
)
|
|
(4,375
|
)
|
|||
Proceeds from sale of stock, net of offering expenses
|
|
2,886
|
|
|
2,690
|
|
|
17,130
|
|
|||
Stock repurchase
|
|
—
|
|
|
(1,506
|
)
|
|
—
|
|
|||
Payment for offering costs
|
|
—
|
|
|
(76
|
)
|
|
(69
|
)
|
|||
Payment for earnout obligation
|
|
—
|
|
|
(132
|
)
|
|
(648
|
)
|
|||
Net cash provided by financing activities
|
|
35,448
|
|
|
170,714
|
|
|
87,038
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
(8,279
|
)
|
|
(20,947
|
)
|
|
18,053
|
|
|||
Cash and cash equivalents, beginning of year
|
|
46,624
|
|
|
67,571
|
|
|
49,518
|
|
|||
Cash and cash equivalents, end of year
|
|
$
|
38,345
|
|
|
$
|
46,624
|
|
|
$
|
67,571
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Retail home sales revenues
|
|
$
|
1,714,277
|
|
|
$
|
1,394,475
|
|
|
$
|
1,217,191
|
|
Other
|
|
123,877
|
|
|
109,925
|
|
|
40,769
|
|
|||
Total home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Central
|
|
$
|
724,981
|
|
|
$
|
623,751
|
|
|
$
|
533,254
|
|
Southeast
|
|
347,817
|
|
|
271,073
|
|
|
183,422
|
|
|||
Northwest
|
|
304,294
|
|
|
277,567
|
|
|
215,421
|
|
|||
West
|
|
271,186
|
|
|
151,059
|
|
|
126,130
|
|
|||
Florida
|
|
189,876
|
|
|
180,950
|
|
|
199,733
|
|
|||
Home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Land, land under development, and finished lots
|
|
$
|
912,651
|
|
|
$
|
736,402
|
|
Information centers
|
|
26,959
|
|
|
21,179
|
|
||
Homes in progress
|
|
234,470
|
|
|
149,506
|
|
||
Completed homes
|
|
325,544
|
|
|
321,169
|
|
||
Total real estate inventory
|
|
$
|
1,499,624
|
|
|
$
|
1,228,256
|
|
|
|
|
|
December 31,
|
||||||
|
|
Asset Life
|
|
2019
|
|
2018
|
||||
|
|
(years)
|
|
|
|
|
||||
Computer equipment
|
|
2-5
|
|
$
|
1,395
|
|
|
$
|
1,342
|
|
Machinery and equipment
|
|
5
|
|
154
|
|
|
102
|
|
||
Furniture and fixtures
|
|
2-5
|
|
3,758
|
|
|
3,183
|
|
||
Buildings
|
|
30
|
|
145
|
|
|
—
|
|
||
Leasehold improvements
|
|
5
|
|
272
|
|
|
267
|
|
||
Total property and equipment
|
|
|
|
5,724
|
|
|
4,894
|
|
||
Less: Accumulated depreciation
|
|
|
|
(4,092
|
)
|
|
(3,462
|
)
|
||
Property and equipment, net
|
|
|
|
$
|
1,632
|
|
|
$
|
1,432
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Taxes payable
|
|
$
|
28,679
|
|
|
$
|
10,773
|
|
Retentions and development payable
|
|
26,790
|
|
|
18,899
|
|
||
Accrued compensation, bonuses and benefits
|
|
16,748
|
|
|
13,913
|
|
||
Accrued interest
|
|
11,361
|
|
|
12,339
|
|
||
Inventory related obligations
|
|
7,808
|
|
|
7,041
|
|
||
Lease Liability
|
|
5,645
|
|
|
—
|
|
||
Warranty reserve
|
|
3,500
|
|
|
2,950
|
|
||
Other
|
|
17,337
|
|
|
10,640
|
|
||
Total accrued expenses and other liabilities
|
|
$
|
117,868
|
|
|
$
|
76,555
|
|
|
|
December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Warranty reserves, beginning of period
|
|
$
|
2,950
|
|
|
$
|
2,450
|
|
|
$
|
1,600
|
|
Warranty provision
|
|
5,286
|
|
|
4,438
|
|
|
4,999
|
|
|||
Warranty expenditures
|
|
(4,736
|
)
|
|
(3,938
|
)
|
|
(4,149
|
)
|
|||
Warranty reserves, end of period
|
|
$
|
3,500
|
|
|
$
|
2,950
|
|
|
$
|
2,450
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Notes payable under the Credit Agreement ($650.0 million revolving credit facility at December 31, 2019) maturing on May 31, 2022; interest paid monthly at LIBOR plus 2.50%; net of debt issuance costs of approximately $5.0 million and $3.7 million at December 31, 2019 and December 31, 2018, respectively
|
|
$
|
394,531
|
|
|
$
|
290,131
|
|
6.875% Senior Notes due July 15, 2026; interest paid semi-annually at 6.875%; net of debt issuance costs of approximately $2.2 million and $2.5 at December 31, 2019 and December 31, 2018, respectively; and approximately $1.8 million and $2.1 million in unamortized discount at December 31, 2019 and December 31, 2018, respectively
|
|
296,028
|
|
|
295,352
|
|
||
Convertible Notes matured November 15, 2019; interest paid semi-annually at 4.25%; net of debt issuance costs of approximately $0.0 million and $0.4 million at December 31, 2019 and December 31, 2018, respectively; and approximately $0.0 million and $1.3 million in unamortized discount at December 31, 2019 and December 31, 2018, respectively
|
|
—
|
|
|
68,251
|
|
||
Total Notes Payable
|
|
$
|
690,559
|
|
|
$
|
653,734
|
|
|
|
Amount
|
||
2020
|
|
$
|
—
|
|
2021
|
|
—
|
|
|
2022
|
|
399,558
|
|
|
2023
|
|
—
|
|
|
2024
|
|
—
|
|
|
Thereafter
|
|
300,000
|
|
|
Total notes payable
|
|
699,558
|
|
|
Less: Debt discount
|
|
(1,758
|
)
|
|
Less: Debt issuance costs
|
|
(7,241
|
)
|
|
Net notes payable
|
|
$
|
690,559
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest incurred
|
|
$
|
45,555
|
|
|
$
|
38,216
|
|
|
$
|
24,275
|
|
Less: Amounts capitalized
|
|
(45,555
|
)
|
|
(38,216
|
)
|
|
(24,275
|
)
|
|||
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
42,438
|
|
|
$
|
23,376
|
|
|
$
|
19,704
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
47,886
|
|
|
$
|
39,053
|
|
|
$
|
55,218
|
|
State
|
|
7,169
|
|
|
5,483
|
|
|
4,970
|
|
|||
Current tax provision
|
|
55,055
|
|
|
44,536
|
|
|
60,188
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(1,637
|
)
|
|
(663
|
)
|
|
(1,918
|
)
|
|||
State
|
|
(194
|
)
|
|
(61
|
)
|
|
(174
|
)
|
|||
Deferred tax provision (benefit)
|
|
(1,831
|
)
|
|
(724
|
)
|
|
(2,092
|
)
|
|||
Total income tax provision
|
|
$
|
53,224
|
|
|
$
|
43,812
|
|
|
$
|
58,096
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Tax at federal statutory rate (1)
|
|
$
|
48,685
|
|
|
21.0
|
%
|
|
$
|
41,816
|
|
|
21.0
|
%
|
|
$
|
60,008
|
|
|
35.0
|
%
|
State income taxes (net of federal benefit)
|
|
5,497
|
|
|
2.4
|
|
|
4,263
|
|
|
2.1
|
|
|
3,060
|
|
|
1.8
|
|
|||
Domestic production activity deduction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,461
|
)
|
|
(3.2
|
)
|
|||
Stock-based compensation
|
|
(1,749
|
)
|
|
(0.8
|
)
|
|
(3,107
|
)
|
|
(1.5
|
)
|
|
(1,039
|
)
|
|
(0.6
|
)
|
|||
Non deductible expenses and other
|
|
771
|
|
|
0.4
|
|
|
850
|
|
|
0.4
|
|
|
382
|
|
|
0.2
|
|
|||
Change in tax rates - deferred taxes
|
|
20
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
1,146
|
|
|
0.7
|
|
|||
Tax at effective rate
|
|
$
|
53,224
|
|
|
23.0
|
%
|
|
$
|
43,812
|
|
|
22.0
|
%
|
|
$
|
58,096
|
|
|
33.9
|
%
|
|
|
December 31
|
||||||
|
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Accruals and reserves
|
|
$
|
3,035
|
|
|
$
|
2,642
|
|
Lease
|
|
1,026
|
|
|
—
|
|
||
Inventory
|
|
692
|
|
|
755
|
|
||
Stock-based compensation
|
|
2,892
|
|
|
1,918
|
|
||
Debt Extinguishment
|
|
134
|
|
|
531
|
|
||
Other
|
|
79
|
|
|
297
|
|
||
Total deferred tax assets
|
|
7,858
|
|
|
6,143
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Discount on Convertible Notes
|
|
—
|
|
|
(307
|
)
|
||
Prepaids
|
|
(1,382
|
)
|
|
(2,370
|
)
|
||
Lease
|
|
(1,219
|
)
|
|
—
|
|
||
Tax depreciation in excess of book depreciation
|
|
(19
|
)
|
|
(183
|
)
|
||
Goodwill and other assets amortized for tax
|
|
(617
|
)
|
|
(493
|
)
|
||
Total deferred tax liabilities
|
|
(3,237
|
)
|
|
(3,353
|
)
|
||
Total net deferred tax assets (liabilities)
|
|
$
|
4,621
|
|
|
$
|
2,790
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator (in thousands):
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
178,608
|
|
|
$
|
155,286
|
|
|
$
|
113,306
|
|
Denominator:
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
|
23,191,595
|
|
|
22,551,762
|
|
|
21,604,932
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
||||||
Convertible Notes - treasury stock method
|
|
1,966,639
|
|
|
2,030,023
|
|
|
1,975,648
|
|
|||
Stock-based compensation units
|
|
272,607
|
|
|
310,489
|
|
|
352,542
|
|
|||
Diluted weighted average shares outstanding
|
|
25,430,841
|
|
|
24,892,274
|
|
|
23,933,122
|
|
|||
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
|
$
|
7.70
|
|
|
$
|
6.89
|
|
|
$
|
5.24
|
|
Diluted earnings per share
|
|
$
|
7.02
|
|
|
$
|
6.24
|
|
|
$
|
4.73
|
|
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share
|
|
14,211
|
|
|
20,462
|
|
|
16,473
|
|
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Balance at December 31, 2016
|
|
133,853
|
|
|
$
|
20.13
|
|
Granted
|
|
76,586
|
|
|
$
|
36.83
|
|
Vested
|
|
(25,803
|
)
|
|
$
|
18.45
|
|
Forfeited
|
|
(9,536
|
)
|
|
$
|
20.48
|
|
Balance at December 31, 2017
|
|
175,100
|
|
|
$
|
27.66
|
|
Granted
|
|
54,874
|
|
|
$
|
57.60
|
|
Vested
|
|
(51,694
|
)
|
|
$
|
20.79
|
|
Forfeited
|
|
(7,225
|
)
|
|
$
|
34.77
|
|
Balance at December 31, 2018
|
|
171,055
|
|
|
$
|
39.04
|
|
Granted
|
|
62,512
|
|
|
$
|
60.72
|
|
Vested
|
|
(55,230
|
)
|
|
$
|
26.47
|
|
Forfeited
|
|
(15,651
|
)
|
|
$
|
47.73
|
|
Balance at December 31, 2019
|
|
162,686
|
|
|
$
|
50.84
|
|
Period Granted
|
|
Performance Period
|
|
Target PSUs Outstanding at December 31, 2018
|
|
Target PSUs Granted
|
|
Target PSUs Vested
|
|
Target PSUs Forfeited
|
|
Target PSUs Outstanding at December 31, 2019
|
|
Weighted Average Grant Date Fair Value
|
|||||||
2016
|
|
2016 - 2018
|
|
83,656
|
|
|
—
|
|
|
(83,656
|
)
|
|
—
|
|
|
—
|
|
|
$
|
21.79
|
|
2017
|
|
2017 - 2019
|
|
108,247
|
|
|
—
|
|
|
—
|
|
|
(3,477
|
)
|
|
104,770
|
|
|
$
|
31.64
|
|
2018
|
|
2018 - 2020
|
|
61,898
|
|
|
—
|
|
|
—
|
|
|
(1,858
|
)
|
|
60,040
|
|
|
$
|
64.60
|
|
2019
|
|
2019 -2021
|
|
—
|
|
|
83,367
|
|
|
—
|
|
|
(2,125
|
)
|
|
81,242
|
|
|
$
|
56.49
|
|
Total
|
|
|
|
253,801
|
|
|
83,367
|
|
|
(83,656
|
)
|
|
(7,460
|
)
|
|
246,052
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Fair Value Hierarchy
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value(1)
|
||||||||
Convertible Notes(2)
|
|
Level 2
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,251
|
|
|
$
|
67,787
|
|
Senior Notes
|
|
Level 2
|
|
$
|
296,028
|
|
|
$
|
337,853
|
|
|
$
|
295,352
|
|
|
$
|
296,905
|
|
(1)
|
Excludes the fair value of the equity component of the Convertible Notes. See the “Convertible Notes” section within Note 7 for further details.
|
(2)
|
The Convertible Notes matured on November 15, 2019 and were repaid in full on such date.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Land deposits and option payments
|
|
$
|
35,111
|
|
|
$
|
40,015
|
|
Commitments under the land purchase contracts if the purchases are consummated
|
|
$
|
539,122
|
|
|
$
|
776,224
|
|
Lots under land purchase contracts
|
|
16,205
|
|
|
22,820
|
|
Year Ending December 31,
|
|
Operating leases
|
||
2020
|
|
1,140
|
|
|
2021
|
|
1,095
|
|
|
2022
|
|
944
|
|
|
2023
|
|
819
|
|
|
2024
|
|
674
|
|
|
Thereafter
|
|
2,239
|
|
|
Total
|
|
6,911
|
|
|
Lease amount representing interest
|
|
(1,266
|
)
|
|
Present value of lease liabilities
|
|
$
|
5,645
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Central
|
|
$
|
724,981
|
|
|
$
|
623,751
|
|
|
$
|
533,254
|
|
Southeast
|
|
347,817
|
|
|
271,073
|
|
|
183,422
|
|
|||
Northwest
|
|
304,294
|
|
|
277,567
|
|
|
215,421
|
|
|||
West
|
|
271,186
|
|
|
151,059
|
|
|
126,130
|
|
|||
Florida
|
|
189,876
|
|
|
180,950
|
|
|
199,733
|
|
|||
Total home sales revenues
|
|
$
|
1,838,154
|
|
|
$
|
1,504,400
|
|
|
$
|
1,257,960
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) before income taxes:
|
|
|
|
|
|
|
||||||
Central
|
|
$
|
117,350
|
|
|
$
|
104,625
|
|
|
$
|
89,133
|
|
Southeast
|
|
30,316
|
|
|
29,078
|
|
|
19,959
|
|
|||
Northwest
|
|
46,863
|
|
|
40,906
|
|
|
34,206
|
|
|||
West
|
|
28,504
|
|
|
13,595
|
|
|
5,890
|
|
|||
Florida
|
|
16,012
|
|
|
21,341
|
|
|
25,687
|
|
|||
Corporate (1)
|
|
(7,213
|
)
|
|
(10,447
|
)
|
|
(3,473
|
)
|
|||
Total net income (loss) before income taxes
|
|
$
|
231,832
|
|
|
$
|
199,098
|
|
|
$
|
171,402
|
|
|
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
||||||||
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
||||||||
Total home sales revenues
|
|
$
|
287,594
|
|
|
$
|
461,830
|
|
|
$
|
483,081
|
|
|
$
|
605,649
|
|
Gross margin
|
|
66,304
|
|
|
111,311
|
|
|
116,650
|
|
|
142,214
|
|
||||
Income before income taxes
|
|
21,694
|
|
|
60,535
|
|
|
64,732
|
|
|
84,871
|
|
||||
Net income
|
|
18,334
|
|
|
46,055
|
|
|
49,349
|
|
|
64,870
|
|
||||
Basic earnings per share
|
|
0.81
|
|
|
2.01
|
|
|
2.15
|
|
|
2.69
|
|
||||
Diluted earnings per share
|
|
0.73
|
|
|
1.82
|
|
|
1.93
|
|
|
2.52
|
|
|
|
First
Quarter |
|
Second
Quarter |
|
Third Quarter
|
|
Fourth
Quarter |
||||||||
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
||||||||
Total home sales revenues
|
|
$
|
279,024
|
|
|
$
|
419,847
|
|
|
$
|
380,369
|
|
|
$
|
425,160
|
|
Gross margin
|
|
69,259
|
|
|
109,765
|
|
|
97,334
|
|
|
103,558
|
|
||||
Income before income taxes
|
|
31,227
|
|
|
62,671
|
|
|
48,991
|
|
|
56,209
|
|
||||
Net income
|
|
27,302
|
|
|
47,608
|
|
|
37,723
|
|
|
42,653
|
|
||||
Basic earnings per share
|
|
1.23
|
|
|
2.11
|
|
|
1.66
|
|
|
1.89
|
|
||||
Diluted earnings per share
|
|
1.10
|
|
|
1.90
|
|
|
1.52
|
|
|
1.72
|
|
(1)
|
The following Consolidated Financial Statements as set forth in Item 8 of this report are filed herein.
|
|
Consolidated Financial Statements
|
|
|
|
|
(2)
|
|
Financial Statement Schedules
|
|
|
|
(3)
|
|
Exhibits
|
Exhibit No.
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
10.1+
|
|
|
10.2+
|
|
|
10.3+
|
|
|
10.4
|
|
|
10.5
|
|
|
21.1*
|
|
|
23.1*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
101.INS†
|
|
Inline XBRL Instance Document — the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH†
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL†
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF†
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB†
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE†
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104†
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
*
|
Filed herewith.
|
+
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
|
†
|
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:
|
February 25, 2020
|
/s/ Eric Lipar
|
|
|
Eric Lipar
|
|
|
Chief Executive Officer and Chairman of the Board
|
Signature
|
|
Title
|
|
Date
|
/s/ Eric Lipar
|
|
Chief Executive Officer and Chairman of the Board
|
|
February 25, 2020
|
Eric T. Lipar
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Charles Merdian
|
|
Chief Financial Officer and Treasurer
|
|
February 25, 2020
|
Charles Merdian
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Ryan Edone
|
|
Director
|
|
February 25, 2020
|
Ryan Edone
|
|
|
|
|
|
|
|
|
|
/s/ Duncan Gage
|
|
Director
|
|
February 25, 2020
|
Duncan Gage
|
|
|
|
|
|
|
|
|
|
/s/ Laura Miller
|
|
Director
|
|
February 25, 2020
|
Laura Miller
|
|
|
|
|
|
|
|
|
|
/s/ Bryan Sansbury
|
|
Director
|
|
February 25, 2020
|
Bryan Sansbury
|
|
|
|
|
|
|
|
|
|
/s/ Steven Smith
|
|
Director
|
|
February 25, 2020
|
Steven Smith
|
|
|
|
|
|
|
|
|
|
/s/ Robert Vaharadian
|
|
Director
|
|
February 25, 2020
|
Robert Vaharadian
|
|
|
|
|
•
|
make nominations in the election of directors;
|
•
|
propose any repeal or change in our bylaws; or
|
•
|
propose any other business to be brought before an annual or special meeting of stockholders.
|
•
|
a description of the proposal or business to be brought before the meeting (including the complete text of any resolutions to be presented, and, in the event that such business includes a proposal to amend the bylaws, the text of the proposed amendment);
|
•
|
the reasons for conducting such business at the meeting;
|
•
|
any material interest in such business of the stockholder or any Stockholder Associated Person (as defined in our bylaws);
|
•
|
the name and address of any other stockholder known by such stockholder to be supporting the proposal; and
|
•
|
the Proposing Stockholder Information (as defined in our bylaws) of such stockholder and any Stockholder Associated Person.
|
•
|
in connection with an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the Company first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the immediately preceding year’s annual meeting of stockholders, but in the event that no annual meeting of stockholders was held in the previous year or the annual meeting of stockholders is called for a date that is not within 30 days from the first anniversary of the immediately preceding year’s annual meeting date, a stockholder notice will be timely if received by us not earlier than the 120th day before the date of such annual meeting and not later than the later of the 90th day before the date of such annual meeting, as originally convened, or the close of business on the tenth day following the day on which the first public disclosure of the date of such annual meeting was made; or
|
•
|
in connection with the election of a director at a special meeting of stockholders, not later than the close of business on the tenth day following the day on which the first public disclosure of the date of such special meeting was made.
|
•
|
any breach of the director’s duty of loyalty to our company or our stockholders;
|
•
|
any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;
|
•
|
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law (the “DGCL”); and
|
•
|
any transaction from which the director derived an improper personal benefit.
|
•
|
authorize our board of directors, without further action by our stockholders, to issue up to five million shares of our preferred stock in one or more series, and with respect to each series, to fix the number of shares constituting that series and establish the rights and other terms of that series;
|
•
|
require that actions to be taken by our stockholders may be taken only at an annual or special meeting of our stockholders and not by written consent;
|
•
|
specify that special meetings of our stockholders can be called only by our board of directors, the chairman of our board of directors, our chief executive officer or our president (if we do not have a chief executive officer);
|
•
|
establish advance notice procedures for our stockholders to submit nominations of candidates for election to our board of directors and other proposals to be brought before a stockholders meeting;
|
•
|
provide that our bylaws may be amended by our board of directors without stockholder approval;
|
•
|
allow our directors to establish the size of our board of directors by action of the board of directors, subject to a
|
•
|
provide that vacancies on our board of directors or newly created directorships resulting from an increase in the number of our directors may be filled only by vote of a majority of directors then in office, even though less than a quorum; and
|
•
|
do not give the holders of our common stock cumulative voting rights with respect to the election of directors.
|
•
|
prior to the time that person became an interested stockholder, our board of directors had approved either the business combination or the transaction that resulted in the person becoming an interested stockholder;
|
•
|
upon consummation of the transaction that resulted in the person becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and shares owned in employee stock plans in which participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
at or subsequent to the time the person became an interested stockholder, the business combination is approved by our board of directors and by the affirmative vote of at least 66 2/3% of our outstanding voting stock which is not owned by the interested stockholder.
|
(1)
|
Registration Statement (Form S-8 No. 333-217811) of LGI Homes, Inc. pertaining to the Amended and Restated LGI Homes, Inc. 2013 Equity Incentive Plan,
|
(2)
|
Registration Statement (Form S-8 No. 333-211843) of LGI Homes, Inc. pertaining to the LGI Homes, Inc. 2016 Employee Stock Purchase Plan, and
|
(3)
|
Registration Statement (No. 333-227012) on Form S-3 of LGI Homes, Inc. and certain subsidiaries pertaining to an indeterminate number or amount of debt securities, preferred stock, common stock, warrants, depositary shares, purchase contracts, units and guarantees of debt securities of LGI Homes, Inc.;
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
By:
|
/s/ Eric Lipar
|
|
Eric Lipar
|
|
Chief Executive Officer and Chairman of the Board
|
|
LGI Homes, Inc.
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
By:
|
/s/ Charles Merdian
|
|
Charles Merdian
|
|
Chief Financial Officer and Treasurer
|
|
LGI Homes, Inc.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 25, 2020
|
/s/ Eric Lipar
|
|
Eric Lipar
|
|
Chief Executive Officer and Chairman of the Board
|
|
LGI Homes, Inc.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 25, 2020
|
/s/ Charles Merdian
|
|
Charles Merdian
|
|
Chief Financial Officer and Treasurer
|
|
LGI Homes, Inc.
|