Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip code) | ||||
(Registrant’s Telephone Number, Including Area Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company | ||||
Page | ||
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable | ||||||||
Real estate inventory | ||||||||
Pre-acquisition costs and deposits | ||||||||
Property and equipment, net | ||||||||
Other assets | ||||||||
Deferred tax assets, net | ||||||||
Goodwill and intangible assets, net | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND EQUITY | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses and other liabilities | ||||||||
Notes payable | ||||||||
Total liabilities | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY | ||||||||
Common stock, par value $0.01, 250,000,000 shares authorized, 23,978,883 shares issued and 22,939,883 shares outstanding as of June 30, 2019 and 23,746,385 shares issued and 22,707,385 shares outstanding as of December 31, 2018 | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Treasury stock, at cost, 1,039,000 shares | ( | ) | ( | ) | ||||
Total equity | ||||||||
Total liabilities and equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Home sales revenues | $ | $ | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||||
Selling expenses | ||||||||||||||||
General and administrative | ||||||||||||||||
Operating income | ||||||||||||||||
Loss on extinguishment of debt | ||||||||||||||||
Other income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net income before income taxes | ||||||||||||||||
Income tax provision | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | ||||||||||||||||
Diluted |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Equity | |||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
BALANCE—December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Issuance of restricted stock units in settlement of accrued bonuses | — | — | — | — | |||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | |||||||||||||||||||
Stock issued under employee incentive plans | — | — | |||||||||||||||||||||
BALANCE— March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | |||||||||||||||||||
Stock issued under employee incentive plans | — | — | |||||||||||||||||||||
BALANCE— June 30, 2019 | $ | $ | $ | $ | ( | ) | $ |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Equity | |||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
BALANCE—December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Issuance of shares in settlement of Convertible Notes | ( | ) | — | — | ( | ) | |||||||||||||||||
Issuance of restricted stock units in settlement of accrued bonuses | — | — | — | — | |||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | |||||||||||||||||||
Stock issued under employee incentive plans | — | — | |||||||||||||||||||||
BALANCE— March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Compensation expense for equity awards | — | — | — | — | |||||||||||||||||||
Stock issued under employee incentive plans | — | — | |||||||||||||||||||||
BALANCE— June 30, 2018 | $ | $ | $ | $ | ( | ) | $ |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | ||||||||
Loss on extinguishment of debt | ||||||||
Compensation expense for equity awards | ||||||||
Deferred income taxes | ( | ) | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Real estate inventory | ( | ) | ( | ) | ||||
Pre-acquisition costs and deposits | ( | ) | ( | ) | ||||
Other assets | ||||||||
Accounts payable | ||||||||
Accrued expenses and other liabilities | ( | ) | ( | ) | ||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from notes payable | ||||||||
Payments on notes payable | ( | ) | ( | ) | ||||
Loan issuance costs | ( | ) | ( | ) | ||||
Proceeds from sale of stock, net of offering expenses | ||||||||
Payment for earnout obligation | ( | ) | ||||||
Net cash provided by financing activities | ||||||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents, beginning of period | ||||||||
Cash and cash equivalents, end of period | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Retail home sales revenues | $ | $ | $ | $ | ||||||||||||
Other | ||||||||||||||||
Total home sales revenues | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Central | $ | $ | $ | $ | ||||||||||||
Northwest | ||||||||||||||||
Southeast | ||||||||||||||||
Florida | ||||||||||||||||
West | ||||||||||||||||
Total home sales revenues | $ | $ | $ | $ |
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Land, land under development and finished lots | $ | $ | ||||||
Information centers | ||||||||
Homes in progress | ||||||||
Completed homes | ||||||||
Total real estate inventory | $ | $ |
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Retentions and development payable | $ | $ | ||||||
Accrued compensation, bonuses and benefits | ||||||||
Accrued interest | ||||||||
Taxes payable | ||||||||
Inventory related obligations | ||||||||
Lease Liability | ||||||||
Warranty reserve | ||||||||
Other | ||||||||
Total accrued expenses and other liabilities | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Warranty reserves, beginning of period | $ | $ | $ | $ | ||||||||||||
Warranty provision | ||||||||||||||||
Warranty expenditures | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Warranty reserves, end of period | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | |||||||
Notes payable under the Credit Agreement ($550.0 million revolving credit facility at June 30, 2019) maturing on May 31, 2022; interest paid monthly at LIBOR plus 2.75%; net of debt issuance costs of approximately $5.0 million and $3.7 million at June 30, 2019 and December 31, 2018, respectively | $ | $ | ||||||
4.25% Convertible Notes due November 15, 2019; interest paid semi-annually at 4.25%; net of debt issuance costs of approximately $0.2 million and $0.4 million at June 30, 2019 and December 31, 2018, respectively; and approximately $0.6 million and $1.3 million in unamortized discount at June 30, 2019 and December 31, 2018, respectively | ||||||||
6.875% Senior Notes due July 15, 2026; interest paid semi-annually at 6.875%; net of debt issuance costs of approximately $2.4 million and $2.5 at June 30, 2019 and December 31, 2018, respectively; and approximately $1.9 million and $2.1 million in unamortized discount at June 30, 2019 and December 31, 2018, respectively | ||||||||
Total notes payable | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Interest incurred | $ | $ | $ | $ | ||||||||||||
Less: Amounts capitalized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest expense | $ | $ | $ | $ | ||||||||||||
Cash paid for interest | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Numerator (in thousands): | ||||||||||||||||
Net Income (Numerator for basic and dilutive earnings per share) | $ | $ | $ | $ | ||||||||||||
Denominator: | ||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Convertible Notes - treasury stock method | ||||||||||||||||
Stock-based compensation units | ||||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||
Diluted earnings per share | $ | $ | $ | $ | ||||||||||||
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share |
Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | |||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||
Beginning balance | $ | $ | ||||||||||||
Granted | $ | $ | ||||||||||||
Vested | ( | ) | $ | ( | ) | $ | ||||||||
Forfeited | ( | ) | $ | ( | ) | $ | ||||||||
Ending balance | $ | $ |
Period Granted | Performance Period | Target PSUs Outstanding at December 31, 2018 | Target PSUs Granted | Target PSUs Vested | Target PSUs Forfeited | Target PSUs Outstanding at June 30, 2019 | Weighted Average Grant Date Fair Value | ||||||||||||||
2016 | 2016 - 2018 | — | ( | ) | — | $ | |||||||||||||||
2017 | 2017 - 2019 | — | — | ( | ) | $ | |||||||||||||||
2018 | 2018 - 2020 | — | — | ( | ) | $ | |||||||||||||||
2019 | 2019 - 2021 | — | ( | ) | $ | ||||||||||||||||
Total | ( | ) | ( | ) |
June 30, 2019 | December 31, 2018 | |||||||||||||||||
Fair Value Hierarchy | Carrying Value | Estimated Fair Value (1) | Carrying Value | Estimated Fair Value (1) | ||||||||||||||
Convertible Notes | Level 2 | $ | $ | $ | $ | |||||||||||||
Senior Notes | Level 2 | $ | $ | $ | $ |
(1) | Excludes the fair value of the equity component of the Convertible Notes. See the “Convertible Notes” section within Note 5 for further details. |
June 30, 2019 | December 31, 2018 | |||||||
Land deposits and option payments | $ | $ | ||||||
Commitments under the land purchase contracts if the purchases are consummated | $ | $ | ||||||
Lots under land purchase contracts |
Year Ending December 31, | Operating leases | |||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total | ||||
Lease amount representing interest | ( | ) | ||
Present value of lease liabilities | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Central | $ | $ | $ | $ | ||||||||||||
Northwest | ||||||||||||||||
Southeast | ||||||||||||||||
Florida | ||||||||||||||||
West | ||||||||||||||||
Total home sales revenues | $ | $ | $ | $ | ||||||||||||
Net income (loss) before income taxes: | ||||||||||||||||
Central | $ | $ | $ | $ | ||||||||||||
Northwest | ||||||||||||||||
Southeast | ||||||||||||||||
Florida | ||||||||||||||||
West | ||||||||||||||||
Corporate (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total net income (loss) before income taxes | $ | $ | $ | $ |
(1) | The Corporate amount consists primarily of general and administration unallocated costs for various shared service functions, as well as our warranty reserve and loss on extinguishment of debt. Actual warranty expenses are reflected within the reportable segments. |
June 30, 2019 | December 31, 2018 | |||||||
Assets: | ||||||||
Central | $ | $ | ||||||
Northwest | ||||||||
Southeast | ||||||||
Florida | ||||||||
West | ||||||||
Corporate (1) | ||||||||
Total assets | $ | $ |
(1) |
West | Northwest | Central | Midwest | Florida | Southeast | Mid-Atlantic | ||||||
Phoenix, AZ | Seattle, WA | Houston, TX | Minneapolis, MN | Tampa, FL | Atlanta, GA | Washington, D.C. | ||||||
Tucson, AZ | Portland, OR | Dallas/Ft. Worth, TX | Orlando, FL | Charlotte, NC/SC | ||||||||
Albuquerque, NM | Denver, CO | San Antonio, TX | Fort Myers, FL | Nashville, TN | ||||||||
Sacramento, CA | Colorado Springs, CO | Austin, TX | Jacksonville, FL | Raleigh, NC | ||||||||
Las Vegas, NV | Oklahoma City, OK | Fort Pierce, FL | Wilmington, NC | |||||||||
Winston-Salem, NC | ||||||||||||
Birmingham, AL |
• | Home sales revenues increased 10.0% to $461.8 million from $419.8 million. |
• | Homes closed increased 7.1% to 1,944 homes from 1,815 homes. |
• | Average sales price of our homes increased 2.7% to $237,567 from $231,321. |
• | Gross margin as a percentage of home sales revenues decreased to 24.1% from 26.1%. |
• | Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 26.3% from 27.7%. |
• | Net income before income taxes decreased 3.4% to $60.5 million from $62.7 million. |
• | Net income decreased 3.3% to $46.1 million from $47.6 million. |
• | EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 15.1% from 16.5%. |
• | Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 14.8% from 16.4%. |
• | Total owned and controlled lots increased 6.9% to 54,191 lots at June 30, 2019 from 50,700 lots at March 31, 2019. |
• | Home sales revenues increased 7.2% to $749.4 million from $698.9 million. |
• | Homes closed increased 3.7% to 3,172 homes from 3,059 homes. |
• | Average sales price of our homes increased 3.4% to $236,262 from $228,464. |
• | Gross margin as a percentage of home sales revenues decreased to 23.7% from 25.6%. |
• | Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 25.8% from 27.2%. |
• | Net income before income taxes decreased 12.4% to $82.2 million from $93.9 million. |
• | Net income decreased 14.0% to $64.4 million from $74.9 million. |
• | EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 12.9% from 15.0%. |
• | Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 12.8% from 14.9%. |
• | Total owned and controlled lots increased 5.3% to 54,191 lots at June 30, 2019 from 51,442 lots at December 31, 2018. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(dollars in thousands, except per share data and average home sales price) | ||||||||||||||||
Statement of Income Data: | ||||||||||||||||
Home sales revenues | $ | 461,830 | $ | 419,847 | $ | 749,424 | $ | 698,871 | ||||||||
Expenses: | ||||||||||||||||
Cost of sales | 350,519 | 310,082 | 571,809 | 519,847 | ||||||||||||
Selling expenses | 33,890 | 29,301 | 60,681 | 52,250 | ||||||||||||
General and administrative | 18,980 | 18,302 | 37,418 | 33,742 | ||||||||||||
Operating income | 58,441 | 62,162 | 79,516 | 93,032 | ||||||||||||
Loss on extinguishment of debt | 169 | 365 | 169 | 540 | ||||||||||||
Other income, net | (2,263 | ) | (874 | ) | (2,882 | ) | (1,406 | ) | ||||||||
Net income before income taxes | 60,535 | 62,671 | 82,229 | 93,898 | ||||||||||||
Income tax provision | 14,480 | 15,063 | 17,840 | 18,988 | ||||||||||||
Net income | $ | 46,055 | $ | 47,608 | $ | 64,389 | $ | 74,910 | ||||||||
Basic earnings per share | $ | 2.01 | $ | 2.11 | $ | 2.82 | $ | 3.34 | ||||||||
Diluted earnings per share | $ | 1.82 | $ | 1.90 | $ | 2.55 | $ | 3.01 | ||||||||
Other Financial and Operating Data: | ||||||||||||||||
Active communities at end of period | 93 | 79 | 93 | 79 | ||||||||||||
Home closings | 1,944 | 1,815 | 3,172 | 3,059 | ||||||||||||
Average sales price of homes closed | $ | 237,567 | $ | 231,321 | $ | 236,262 | $ | 228,464 | ||||||||
Gross margin (1) | $ | 111,311 | $ | 109,765 | $ | 177,615 | $ | 179,024 | ||||||||
Gross margin % (2) | 24.1 | % | 26.1 | % | 23.7 | % | 25.6 | % | ||||||||
Adjusted gross margin (3) | $ | 121,256 | $ | 116,353 | $ | 193,584 | $ | 189,921 | ||||||||
Adjusted gross margin % (2)(3) | 26.3 | % | 27.7 | % | 25.8 | % | 27.2 | % | ||||||||
EBITDA (4) | $ | 69,685 | $ | 69,445 | $ | 96,938 | $ | 105,164 | ||||||||
EBITDA margin % (2)(4) | 15.1 | % | 16.5 | % | 12.9 | % | 15.0 | % | ||||||||
Adjusted EBITDA (4) | $ | 68,547 | $ | 68,936 | $ | 95,811 | $ | 104,295 | ||||||||
Adjusted EBITDA margin % (2)(4) | 14.8 | % | 16.4 | % | 12.8 | % | 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 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 |
Three Months Ended June 30, 2019 | |||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||||||||
Central | $ | 189,894 | 888 | $ | 213,845 | 33.3 | 8.9 | ||||||||||
Northwest | 78,996 | 214 | 369,140 | 11.0 | 6.5 | ||||||||||||
Southeast | 77,820 | 360 | 216,167 | 24.0 | 5.0 | ||||||||||||
Florida | 48,187 | 234 | 205,927 | 11.7 | 6.7 | ||||||||||||
West | 66,933 | 248 | 269,891 | 13.0 | 6.4 | ||||||||||||
Total | $ | 461,830 | 1,944 | $ | 237,567 | 93.0 | 7.0 |
Three Months Ended June 30, 2018 | |||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||||||||
Central | $ | 181,967 | 853 | $ | 213,326 | 30.7 | 9.3 | ||||||||||
Northwest | 85,233 | 239 | 356,623 | 9.3 | 8.6 | ||||||||||||
Southeast | 60,369 | 298 | 202,581 | 17.0 | 5.8 | ||||||||||||
Florida | 55,018 | 257 | 214,078 | 11.7 | 7.3 | ||||||||||||
West | 37,260 | 168 | 221,786 | 9.3 | 6.0 | ||||||||||||
Total | $ | 419,847 | 1,815 | $ | 231,321 | 78.0 | 7.8 |
As of June 30, | |||||
Community count | 2019 | 2018 | |||
Central | 33 | 31 | |||
Northwest | 11 | 9 | |||
Southeast | 24 | 17 | |||
Florida | 12 | 12 | |||
West | 13 | 10 | |||
Total community count | 93 | 79 |
Six Months Ended June 30, 2019 | |||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||||||||
Central | $ | 314,091 | 1,466 | $ | 214,250 | 32.7 | 7.5 | ||||||||||
Northwest | 115,250 | 313 | 368,211 | 11.0 | 4.7 | ||||||||||||
Southeast | 130,234 | 590 | 220,736 | 21.5 | 4.6 | ||||||||||||
Florida | 77,099 | 376 | 205,051 | 11.3 | 5.5 | ||||||||||||
West | 112,750 | 427 | 264,052 | 12.2 | 5.8 | ||||||||||||
Total | $ | 749,424 | 3,172 | $ | 236,262 | 88.7 | 6.0 |
Six Months Ended June 30, 2018 | |||||||||||||||||
Revenues | Home Closings | ASP | Average Community Count | Average Monthly Absorption Rate | |||||||||||||
Central | $ | 289,465 | 1,374 | $ | 210,673 | 30.0 | 7.6 | ||||||||||
Northwest | 142,406 | 394 | 361,437 | 9.8 | 6.7 | ||||||||||||
Southeast | 105,477 | 527 | 200,146 | 17.0 | 5.2 | ||||||||||||
Florida | 97,461 | 466 | 209,144 | 11.5 | 6.8 | ||||||||||||
West | 64,062 | 298 | 214,973 | 9.2 | 5.4 | ||||||||||||
Total | $ | 698,871 | 3,059 | $ | 228,464 | 77.5 | 6.6 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Home sales revenues | $ | 461,830 | $ | 419,847 | $ | 749,424 | $ | 698,871 | ||||||||
Cost of sales | 350,519 | 310,082 | 571,809 | 519,847 | ||||||||||||
Gross margin | 111,311 | 109,765 | 177,615 | 179,024 | ||||||||||||
Capitalized interest charged to cost of sales | 8,989 | 6,588 | 14,383 | 10,900 | ||||||||||||
Purchase accounting adjustments (1) | 956 | — | 1,586 | (3 | ) | |||||||||||
Adjusted gross margin | $ | 121,256 | $ | 116,353 | $ | 193,584 | $ | 189,921 | ||||||||
Gross margin % (2) | 24.1 | % | 26.1 | % | 23.7 | % | 25.6 | % | ||||||||
Adjusted gross margin % (2) | 26.3 | % | 27.7 | % | 25.8 | % | 27.2 | % |
(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 June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 46,055 | $ | 47,608 | $ | 64,389 | $ | 74,910 | ||||||||
Income taxes | 14,480 | 15,063 | 17,840 | 18,988 | ||||||||||||
Depreciation and amortization | 161 | 186 | 326 | 366 | ||||||||||||
Capitalized interest charged to cost of sales | 8,989 | 6,588 | 14,383 | 10,900 | ||||||||||||
EBITDA | 69,685 | 69,445 | 96,938 | 105,164 | ||||||||||||
Purchase accounting adjustments(1) | 956 | — | 1,586 | (3 | ) | |||||||||||
Loss on extinguishment of debt | 169 | 365 | 169 | 540 | ||||||||||||
Other income, net | (2,263 | ) | (874 | ) | (2,882 | ) | (1,406 | ) | ||||||||
Adjusted EBITDA | $ | 68,547 | $ | 68,936 | $ | 95,811 | $ | 104,295 | ||||||||
EBITDA margin %(2) | 15.1 | % | 16.5 | % | 12.9 | % | 15.0 | % | ||||||||
Adjusted EBITDA margin %(2) | 14.8 | % | 16.4 | % | 12.8 | % | 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 | Six Months Ended June 30, | |||||||
2019 (4) | 2018 (5) | |||||||
Net orders (1) | 4,196 | 3,427 | ||||||
Cancellation rate (2) | 17.8 | % | 22.5 | % | ||||
Ending backlog – homes (3) | 1,648 | 1,184 | ||||||
Ending backlog – value (3) | $ | 410,006 | $ | 296,904 |
(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) | 79 units and values related to bulk sales agreements are not included in the table above. |
(5) | 41 units and values related to bulk sales agreements are not included in the table above. |
Six Months Ended June 30, 2019 | As of June 30, 2019 | |||||||||||
Reportable Segment | Home Closings | Owned (1) | Controlled | Total | ||||||||
Central | 1,466 | 14,798 | 9,459 | 24,257 | ||||||||
Northwest | 313 | 2,375 | 1,823 | 4,198 | ||||||||
Southeast | 590 | 9,302 | 7,751 | 17,053 | ||||||||
Florida | 376 | 2,613 | 1,516 | 4,129 | ||||||||
West | 427 | 1,888 | 2,666 | 4,554 | ||||||||
Total | 3,172 | 30,976 | 23,215 | 54,191 |
(1) | Of the 30,976 owned lots as of June 30, 2019, 19,489 were raw/under development lots and 11,487 were finished lots. |
• | 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; |
• | 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, 2018. |
Exhibit No. | Description | |
3.1** | ||
3.2** | ||
10.1** | ||
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS† | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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. | |
104† | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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: | August 6, 2019 | /s/ Eric Lipar |
Eric Lipar | ||
Chief Executive Officer and Chairman of the Board | ||
August 6, 2019 | /s/ Charles Merdian | |
Charles Merdian | ||
Chief Financial Officer and Treasurer |
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 Quarterly 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 Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly 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 Quarterly 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 Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly 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. |
August 6, 2019 | /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. |
August 6, 2019 | /s/ Charles Merdian |
Charles Merdian | |
Chief Financial Officer and Treasurer | |
LGI Homes, Inc. |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 23,978,883 | 23,746,385 |
Common stock, shares outstanding | 22,939,883 | 22,707,385 |
Treasury stock, shares | 1,039,000 | 1,039,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Home sales revenues | $ 461,830 | $ 419,847 | $ 749,424 | $ 698,871 |
Cost of sales | 350,519 | 310,082 | 571,809 | 519,847 |
Selling expenses | 33,890 | 29,301 | 60,681 | 52,250 |
General and administrative | 18,980 | 18,302 | 37,418 | 33,742 |
Operating income | 58,441 | 62,162 | 79,516 | 93,032 |
Loss on extinguishment of debt | 169 | 365 | 169 | 540 |
Other income, net | (2,263) | (874) | (2,882) | (1,406) |
Net income before income taxes | 60,535 | 62,671 | 82,229 | 93,898 |
Income tax provision | 14,480 | 15,063 | 17,840 | 18,988 |
Net income | $ 46,055 | $ 47,608 | $ 64,389 | $ 74,910 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 2.01 | $ 2.11 | $ 2.82 | $ 3.34 |
Diluted (in dollars per share) | $ 1.82 | $ 1.90 | $ 2.55 | $ 3.01 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 22,926,156 | 22,616,085 | 22,835,920 | 22,403,266 |
Diluted (in shares) | 25,357,396 | 25,000,647 | 25,226,062 | 24,884,628 |
Organization and Basis of Presentation - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jan. 01, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Organization and Basis of Presentation Disclosures | ORGANIZATION AND BASIS OF PRESENTATION Organization and Description of the Business LGI Homes, Inc., a Delaware corporation (the “Company”, “us,” “we,” or “our”), is engaged in the development of communities and the design, construction and sale of new homes in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada and West Virginia. Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The accompanying unaudited consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. The accompanying unaudited financial statements as of June 30, 2019, and for the three and six months ended June 30, 2019 and 2018, include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. Recently Adopted Accounting Standards On January 1, 2019, we adopted the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which amends the existing standards for lease accounting, requiring lessees to recognize most leases on their balance sheets and disclose key information about leasing arrangements. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than one year. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. We adopted the new standard with a modified retrospective transition approach, so financial information is not updated for periods prior to January 1, 2019. Pursuant to the adoption of the new standard, we elected the practical expedients upon transition that do not require us to reassess existing contracts to determine if they contain leases under the new definition of a lease, or to reassess historical lease classification or initial direct costs.We also elected the practical expedient to not separate lease and non-lease components for new leases after adoption of the new standard. The adoption of Topic 842 is accounted for as a change in accounting principle in conformity with FASB Accounting Standards Codification (“ASC”) 250, “Accounting Changes and Error Corrections.” As a result of the adoption, the most significant changes are related to the recognition of new ROU assets and lease liabilities of $5.4 million as of January 1, 2019 on the balance sheet for office operating leases. The Company's existing material leases are all considered operating leases under the new leasing standard and as a result, no adjustment to retained earnings was required. Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which modifies the disclosure requirements of fair value measurements. ASU 2018-13 is effective for us beginning January 1, 2020. Certain disclosures are required to be applied on a retrospective basis and others on a prospective basis. We are currently evaluating the impact that adoption of this guidance will have on our financial statement disclosures. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment.” (“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for us beginning January 1, 2020, with early adoption permitted, and applied prospectively. We do not expect ASU 2017-04 to have a material impact on our financial statements.
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OperatingLeaseLiabilityandRightofUseAsset | $ 5,400,000 |
Revenue |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer | REVENUES Revenue Recognition Revenues from home sales are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues from home sales are recorded at the time each home sale is closed, title and possession are transferred to the customer and we have no significant continuing involvement with the home. Home sales discounts and incentives granted to customers, which are related to the customers’ closing costs that we pay on the customers’ behalf, are recorded as a reduction of revenue in our consolidated financial statements of operations. The following table presents our home sales revenues disaggregated by revenue stream (in thousands):
The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 13 (in thousands):
Home Sales Revenues We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our luxury series spec homes sold under our Terrata Homes brand. Retail homes sold under both our LGI Homes brand and Terrata Homes brand focus on providing move-in ready homes with standardized features within favorable markets that meet certain demographic and economic conditions. Our LGI Homes brand primarily markets to entry-level or first-time homebuyers, while our Terrata Homes brand primarily markets to move-up homebuyers. Our other revenues are composed of our wholesale home sales under our LGI Homes brand and Terrata Homes brand in existing markets. Wholesale homes are primarily sold under a bulk sales agreement and focus on providing move-in ready homes with standardized features to real estate investors that will ultimately use the single-family homes as rental properties. Performance Obligations Our contracts with customers include a single performance obligation to transfer a completed home to the customer. We generally determine selling price per home on the expected cost plus margin. Our contracts contain no significant financing terms as customers who finance do so through a third party. Performance obligations are satisfied at a moment in time when the home is complete and control of the asset is transferred to the customer at closing. Home sales proceeds are generally received from the title company within a few business days after closing. Sales and broker commissions are incremental costs incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained. Sales and broker commissions are expensed upon fulfillment of a home closing. Advertising costs are costs to obtain a contract that would have been incurred regardless of whether the contract was obtained and are recognized as an expense when incurred. Sales and broker commissions and advertising costs are recorded within sales and marketing expense presented in our consolidated statements of operations as selling expenses.
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Real Estate Inventory |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Inventory Disclosures | REAL ESTATE INVENTORY Our real estate inventory consists of the following (in thousands):
Inventory is stated at cost unless the carrying amount is determined not to be recoverable, in which case the affected inventory is written down to fair value. Land, development and other project costs, including interest and property taxes incurred during development and home construction and net of expected reimbursements of development costs, are capitalized to real estate inventory. Land development and other common costs that benefit the entire community, including field construction supervision and related direct overhead, are allocated to individual lots or homes, as appropriate. The costs of lots are transferred to homes in progress when home construction begins. Home construction costs and related carrying charges are allocated to the cost of individual homes using the specific identification method. Costs that are not specifically identifiable to a home are allocated on a pro rata basis, which we believe approximates the costs that would be determined using an allocation method based on relative sales values since the individual lots or homes within a community are similar in value. Inventory costs for completed homes are expensed to cost of sales as homes are closed. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated to the remaining unsold lots and homes in the community on a pro rata basis. The life cycle of a community generally ranges from two to five years, commencing with the acquisition of land, continuing through the land development phase and concluding with the construction and sale of homes. A constructed home is used as the community information center during the life of the community and then sold. Actual individual community lives will vary based on the size of the community, the sales absorption rate and whether the property was purchased as raw land or finished lots. Interest and financing costs incurred under our debt obligations, as more fully discussed in Note 5, are capitalized to qualifying real estate projects under development and homes under construction.
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Accrued Expenses and Other Liabilities |
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Accrued Expenses and Other Liabilities Disclosures | ACCRUED EXPENSES AND OTHER LIABILITIES Accrued and other liabilities consist of the following (in thousands):
Inventory Related Obligations We own lots in certain communities in Arizona, Florida and Texas 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. This obligation for infrastructure development is attached to the land, which is typically payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed. Such obligations represent a non-cash cost of the lots. Estimated Warranty Reserve We typically provide homebuyers with a one-year warranty on the house and a ten-year limited warranty for major defects in structural elements such as framing components and foundation systems. Changes to our warranty accrual are as follows (in thousands):
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Notes Payable |
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Notes Payable Disclosures | NOTES PAYABLE Revolving Credit Agreement On May 6, 2019, we entered into that certain Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent. The Credit Agreement has substantially similar terms and provisions to our third amended and restated credit agreement entered into in May 2018 with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “2018 Credit Agreement”) but, among other things, provides for, a revolving credit facility of $550.0 million, which can be increased at our request by up to $100.0 million if the lenders make additional commitments, subject to the terms and conditions of the Credit Agreement. The Credit Agreement matures on May 31, 2022. Before each anniversary of the Credit Agreement, we may request a one-year extension of the maturity date. The Credit Agreement is guaranteed by each of our subsidiaries that have gross assets of $0.5 million or more. As of June 30, 2019, the borrowing base under the Credit Agreement was $852.7 million, of which borrowings, including the Convertible Notes (as defined below) and the Senior Notes (as defined below), of $675.0 million were outstanding, $9.2 million of letters of credit were outstanding and $167.1 million was available to borrow under the Credit Agreement, net of deferred purchase price obligations. Interest is paid monthly on borrowings under the Credit Agreement at LIBOR plus 2.75%. The Credit Agreement applicable margin for LIBOR loans ranges from 2.35% to 2.75% based on our leverage ratio. At June 30, 2019, LIBOR was 2.40%. The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a leverage ratio, a minimum liquidity amount and an EBITDA to interest expense ratio. The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments. At June 30, 2019, we were in compliance with all of the covenants contained in the Credit Agreement. Convertible Notes We issued $85.0 million aggregate principal amount of our 4.25% Convertible Notes due 2019 (the “Convertible Notes”) in November 2014 pursuant to an exemption from the registration requirements afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Convertible Notes mature on November 15, 2019. Interest on the Convertible Notes is payable semi-annually in arrears on May 15 and November 15 of each year at a rate of 4.25%. When the Convertible Notes were issued, the fair value of $76.5 million was recorded to notes payable. $5.5 million of the remaining proceeds was recorded to additional paid in capital to reflect the equity component and the remaining $3.0 million was recorded as a deferred tax liability. The carrying amount of the Convertible Notes is being accreted to face value over the term to maturity. As of June 30, 2019, we have $70.0 million aggregate principal amount of Convertible Notes outstanding. Prior to May 15, 2019, the Convertible Notes were convertible only upon satisfaction of any of the specified conversion events. On or after May 15, 2019 and until the close of business on November 14, 2019 (the business day immediately preceding the stated maturity date of the Convertible Notes), the holders of the Convertible Notes can convert their Convertible Notes at any time at their option. Upon the election of a holder of Convertible Notes to convert their Convertible Notes, we may settle the conversion of the Convertible Notes using any combination of cash and shares of our common stock. It is our intent, and belief that we have the ability, to settle in cash the conversion of any Convertible Notes that the holders elect to convert. The initial conversion rate of the Convertible Notes is 46.4792 shares of our common stock for each $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $21.52 per share of our common stock. The conversion rate is subject to adjustments upon the occurrence of certain specified events. On July 6, 2018, concurrently with the offering of the Senior Notes, we entered into that certain First Supplemental Indenture, dated as of July 6, 2018, among us, our subsidiaries that guarantee our obligations under the 2018 Credit Agreement (the “Subsidiary Guarantors”) and Wilmington Trust, National Association, as trustee, which supplements the indenture governing the Convertible Notes, pursuant to which (i) the subordination provisions in the indenture governing the Convertible Notes were eliminated, (ii) each Subsidiary Guarantor agreed (A) to, concurrently with the issuance of the Senior Notes, fully and unconditionally guarantee the Convertible Notes to the same extent that such Subsidiary Guarantor is guaranteeing the Senior Notes and (B) that such Subsidiary Guarantor’s guarantee of the Convertible Notes ranks equally with such Subsidiary Guarantor’s guarantee of the Senior Notes and (iii) the Company agreed to not, directly or indirectly, incur any indebtedness in the form of, or otherwise become liable in respect of, any notes or other debt securities issued pursuant to an indenture or note purchase agreement (including the Senior Notes) unless such indebtedness is equal with or contractually subordinated to the Convertible Notes in right of payment. Senior Notes Offering On July 6, 2018, we issued $300.0 million aggregate principal amount of the Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. 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, commencing on January 15, 2019, and the Senior Notes mature on July 15, 2026. Terms of the Senior Notes are governed by an indenture and supplemental indenture, each dated as of July 6, 2018, among us, the Subsidiary Guarantors and Wilmington Trust, National Association, as trustee. We received net proceeds from the offering of the Senior Notes of approximately $296.2 million, after deducting the initial purchasers’ discounts of $2.3 million and commissions and offering expenses of $1.5 million. The net proceeds from the offering were used to repay a portion of the borrowings under the 2018 Credit Agreement. Notes payable consist of the following (in thousands):
Capitalized Interest Interest activity, including other financing costs, for notes payable for the periods presented is as follows (in thousands):
Included in interest incurred was amortization of deferred financing costs for notes payable and amortization of Convertible Notes and Senior Notes discounts of $1.0 million and $1.4 million for the three months ended June 30, 2019 and 2018, respectively, and $2.1 million and $2.2 million for the six months ended June 30, 2019 and 2018, respectively.
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Income Taxes |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosures | INCOME TAXES We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The statute of limitations with regards to our federal income tax filings is three years. The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty. For the six months ended June 30, 2019, our effective tax rate of 21.7% is higher than the Federal statutory rate primarily as a result of the deductions related to non-deductible salaries related to Section 162(m) of the Internal Revenue Code of 1986, as amended, and an increase in rate for state income taxes, net of the federal benefit payments, offset by the deductions in excess of compensation cost (“windfalls”) for share-based payments. Income taxes paid were $21.4 million and $20.8 million for the three months ended June 30, 2019 and 2018, respectively. Income taxes paid were $21.6 million and $63.7 million for the six months ended June 30, 2019 and 2018, respectively.
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Equity |
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Jun. 30, 2019 | |
Equity [Abstract] | |
Equity Disclosures | EQUITY Shelf Registration Statement We have an effective shelf registration statement on Form S-3 (Registration No. 333-227012), registering the offering and sale of an indeterminate amount of debt securities, guarantees of debt securities, preferred stock, common stock, warrants, depositary shares, purchase contracts and units that include any of these securities, that was filed on August 24, 2018 with the Securities and Exchange Commission.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Disclosures | EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018:
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Stock-Based Compensation |
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Stock-Based Compensation Disclosures | STOCK-BASED COMPENSATION Non-performance Based Restricted Stock Units The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):
We recognized $0.6 million and $0.5 million of stock-based compensation expense related to outstanding RSUs for the three months ended June 30, 2019 and 2018, respectively. We recognized $1.1 million and $0.9 million of stock-based compensation expense related to outstanding RSUs for the six months ended June 30, 2019 and 2018, respectively. Generally, the RSUs cliff vest on the third anniversary of the grant date and can only be settled in shares of our common stock. At June 30, 2019, we had unrecognized compensation cost of $4.8 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.1 years. Performance-Based Restricted Stock Units The Compensation Committee of our Board of Directors has granted awards of Performance-Based RSUs (“PSUs”) under the Amended and Restated LGI Homes, Inc. 2013 Equity Incentive Plan to certain members of senior management based on the three-year performance cycles. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock. The following table summarizes the activity of our PSUs for the six months ended June 30, 2019:
At June 30, 2019, management estimates that the recipients will receive approximately 100%, 100% and 196% of the 2019, 2018 and 2017 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics. We recognized $0.9 million of total stock-based compensation expense related to outstanding PSUs for each of the three months ended June 30, 2019 and 2018. We recognized $2.1 million and $1.8 million of total stock-based compensation expense related to outstanding PSUs for the six months ended June 30, 2019 and 2018, respectively. PSUs granted in 2016 vested on March 15, 2019 at 200% of the target amount, and 167,312 shares of our common stock were issued upon such vesting. At June 30, 2019, we had unrecognized compensation cost of $7.6 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.1 years.
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Fair Value Disclosures |
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Fair Value Disclosures | FAIR VALUE DISCLOSURES ASC Topic 820, Fair Value Measurements (“ASC 820”), defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that differs from the transaction price or market price of the asset or liability. ASC 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows: Level 1 - Fair value is based on quoted prices in active markets for identical assets or liabilities. Level 2 - Fair value is determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities, or quoted prices in markets that are not active. Level 3 - Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow or similar technique. We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets. The fair value of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying amounts due to the short-term nature of these instruments. As of June 30, 2019, our revolving credit facility’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio. In order to determine the fair value of the Convertible Notes and the Senior Notes listed below, the future contractual cash flows are discounted at our estimate of current market rates of interest, which were determined based upon the average interest rates of similar convertible notes and senior notes within the homebuilding industry (Level 2 measurement). The following table below shows the level and measurement of liabilities at June 30, 2019 and December 31, 2018 (in thousands):
(1) Excludes the fair value of the equity component of the Convertible Notes. See the “Convertible Notes” section within Note 5 for further details.
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Related Party Transactions |
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Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosures | RELATED PARTY TRANSACTIONS Land Purchases from Affiliates As of June 30, 2019, we have two land purchase contracts to purchase a total of 198 finished lots in Pasco County and Manatee County, Florida from affiliates of one of our directors for a total base purchase price of approximately $6.9 million. The lots will be purchased in takedowns, subject to annual price escalation ranging from 3% to 6% per annum, and may provide for additional payments to the seller at the time of sale to the homebuyer. We have a $0.7 million non-refundable deposit at June 30, 2019 related to these land purchase contracts. We anticipate the first closing on the Pasco County contract to occur in the second half of 2019 and first closing on the Manatee County contract to occur in 2020.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosures | COMMITMENTS AND CONTINGENCIES Contingencies In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our homebuilding operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. Land Deposits We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):
As of June 30, 2019 and December 31, 2018, approximately $30.3 million and $25.2 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages, or letters of credit or guaranteed by the seller or its affiliates. Lease Obligations As described in the “Recently Adopted Accounting Standards” section within Note 1, as of January 1, 2019, we adopted the provisions of ASU 2016-02 and recognized lease obligations and associated ROU assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets, as included in other assets on the consolidated balance sheets, were $5.1 million as of June 30, 2019. Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $5.3 million as of June 30, 2019. Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, for the three and six months ended June 30, 2019 was $0.3 million and $0.6 million, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases during the three and six months ended June 30, 2019 was $0.3 million and $0.6 million, respectively. As of June 30, 2019, the weighted-average discount rate was 5.74% and our weighted-average remaining life was 7.9 years. The Company does not have any significant lease contracts that have not yet commenced at June 30, 2019. The table below shows the future minimum payments under non-cancelable operating leases at June 30, 2019 (in thousands):
Bonding and Letters of Credit We have outstanding letters of credit and performance and surety bonds totaling $91.5 million (including $9.2 million of letters of credit issued under the Credit Agreement) and $77.5 million at June 30, 2019 and December 31, 2018, respectively, related to our obligations for site improvements at various projects. Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows.
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information Disclosures | SEGMENT INFORMATION Beginning in the fourth quarter of 2018, we changed our reportable segments to Central, Northwest, Southeast, Florida, and West. These segments reflect the way the Company evaluates its business performance and manages its operations. Prior period information has been restated for corresponding items of our segment information. We operate one principal homebuilding business that is organized and reports by division. We have seven operating segments (our Central, Midwest, Northwest, Southeast, Mid-Atlantic, Florida, and West divisions) that we aggregate into five reportable segments at June 30, 2019: our Central, Northwest, Southeast, Florida, and West divisions. The Central division is our largest division and comprised approximately 42% and 41% of total home sales revenues for the six months ended June 30, 2019 and 2018, respectively. In accordance with ASC Topic 280, Segment Reporting, operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision-makers (“CODMs”) in deciding how to allocate resources and in assessing performance. The CODMs primarily evaluate performance based on the number of homes closed, gross margin and average sales price. The seven operating segments qualify as our five reportable segments. In determining the most appropriate reportable segments, we consider operating segments’ economic and other characteristics, including home floor plans, average selling prices, gross margin percentage, geographical proximity, production construction processes, suppliers, subcontractors, regulatory environments, customer type and underlying demand and supply. Each operating segment follows the same accounting policies and is managed by our management team. We have no inter-segment sales, as all sales are to external customers. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. Financial information relating to our reportable segments was as follows (in thousands):
(1) As of June 30, 2019, the Corporate balance consists primarily of cash, prepaid insurance, ROU assets and prepaid expenses.
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Products | The following table presents our home sales revenues disaggregated by revenue stream (in thousands):
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Revenue from External Customers by Geographic Areas | The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 13 (in thousands):
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Real Estate Inventory (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Inventory | Our real estate inventory consists of the following (in thousands):
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Accrued Expenses and Other Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Current Liabilities | Accrued and other liabilities consist of the following (in thousands):
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Changes in Company's Warranty Accrual | Changes to our warranty accrual are as follows (in thousands):
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Notes Payable (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Payable | Notes payable consist of the following (in thousands):
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Schedule of Interest Activity for Notes Payable | Interest activity, including other financing costs, for notes payable for the periods presented is as follows (in thousands):
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018:
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Stock-based Compensation (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Unit Activity | The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):
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Schedule of Performance Based Stock Activity | The following table summarizes the activity of our PSUs for the six months ended June 30, 2019:
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Fair Value Disclosures (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | The following table below shows the level and measurement of liabilities at June 30, 2019 and December 31, 2018 (in thousands):
(1) Excludes the fair value of the equity component of the Convertible Notes. See the “Convertible Notes” section within Note 5 for further details.
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The table below shows the future minimum payments under non-cancelable operating leases at June 30, 2019 (in thousands):
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Summary of Lots Under Option or Contract | The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):
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Segment (Tables) |
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Segment Reporting Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial information relating to our reportable segments was as follows (in thousands):
(1) As of June 30, 2019, the Corporate balance consists primarily of cash, prepaid insurance, ROU assets and prepaid expenses.
|
Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | $ 461,830 | $ 419,847 | $ 749,424 | $ 698,871 |
Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 443,450 | 392,320 | 724,915 | 664,358 |
Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 18,380 | 27,527 | 24,509 | 34,513 |
Central Division | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 189,894 | 181,967 | 314,091 | 289,465 |
Northwest Division | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 78,996 | 85,233 | 115,250 | 142,406 |
Southeast Division | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 77,820 | 60,369 | 130,234 | 105,477 |
Florida Division | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | 48,187 | 55,018 | 77,099 | 97,461 |
West Division | ||||
Disaggregation of Revenue [Line Items] | ||||
Home sales revenues | $ 66,933 | $ 37,260 | $ 112,750 | $ 64,062 |
Schedule of Real Estate Inventory (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Inventory [Line Items] | ||
Land, land under development and finished lots | $ 783,014 | $ 736,402 |
Information centers | 25,618 | 21,179 |
Homes in progress | 297,466 | 149,506 |
Completed homes | 222,601 | 321,169 |
Total real estate inventory | $ 1,328,699 | $ 1,228,256 |
Minimum | ||
Inventory [Line Items] | ||
Community life cycle | P2Y | |
Maximum | ||
Inventory [Line Items] | ||
Community life cycle | P5Y |
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Payables and Accruals [Abstract] | ||
Retentions and development payable | $ 19,290 | $ 18,899 |
Accrued Income Taxes | 6,403 | 10,773 |
Accrued compensation, bonuses and benefits | 10,651 | 14,263 |
Accrued interest | 12,178 | 12,339 |
Inventory related obligations | 5,648 | 7,041 |
Operating Lease, Liability | 5,317 | 0 |
Warranty reserve | 3,050 | 2,950 |
Other | 10,803 | 10,290 |
Total accrued expenses and other liabilities | $ 73,340 | $ 76,555 |
Inventory related obligation term | 30 years |
Changes in Warranty Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Product Warranty, Increase (Decrease) [Roll Forward] | ||||
Warranty reserves, beginning of period | $ 3,000 | $ 2,600 | $ 2,950 | $ 2,450 |
Warranty provision | 879 | 695 | 1,974 | 1,683 |
Warranty expenditures | (829) | (495) | (1,874) | (1,333) |
Warranty reserves, end of period | $ 3,050 | $ 2,800 | $ 3,050 | $ 2,800 |
Other Construction Components | ||||
Product Warranty Liability [Line Items] | ||||
Limited warranty period | 1 year | |||
Structural Elements | ||||
Product Warranty Liability [Line Items] | ||||
Limited warranty period | 10 years |
Schedule of Notes Payable (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Notes payable | $ 664,923 | $ 653,734 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Notes payable | 299,974 | 290,131 |
Debt issuance costs | 5,026 | 3,669 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Notes payable | 69,256 | 68,251 |
Debt issuance costs | 147 | 364 |
Unamortized discount | 559 | 1,347 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Notes payable | 295,693 | 295,352 |
Debt issuance costs | 2,381 | 2,547 |
Unamortized discount | $ 1,926 | $ 2,100 |
Convertible Notes (Details) |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2014
USD ($)
|
Jun. 30, 2019
USD ($)
$ / shares
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 169,000 | $ 530,000 | ||
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Debt conversion, original debt amount | $ 85,000,000.0 | |||
Stated interest rate on convertible note | 4.25% | |||
Line of credit facility, expiration date | Nov. 15, 2019 | |||
Convertible notes, fair value | $ 76,500,000 | $ 69,618,000 | $ 67,787,000 | |
Adjustments to APIC, equity component of convertible debt | 5,500,000 | |||
Adjustments to APIC, deferred tax liability | $ 3,000,000.0 | |||
Convertible notes, conversion ratio | 46.4792 | |||
Convertible notes, amount in multiples that may be converted | $ 1,000 | |||
Convertible notes, conversion price | $ / shares | $ 21.52 | |||
Convertible debt | $ 70,000,000.0 |
Senior Notes (Details) - Senior Notes $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Debt Instrument [Line Items] | |
Senior Notes, Gross | $ 300.0 |
Stated interest rate on convertible note | 6.875% |
Senior Notes maturity date | Jul. 15, 2026 |
Initial debt discount | $ 2.3 |
Proceeds from issuance of debt | 296.2 |
Debt offering commissions and offering costs | $ 1.5 |
Capitalized Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Debt Disclosure [Abstract] | ||||
Interest incurred | $ 12,108 | $ 8,787 | $ 23,525 | $ 15,980 |
Less: Amounts capitalized | (12,108) | (8,787) | (23,525) | (15,980) |
Interest expense | 0 | 0 | 0 | 0 |
Cash paid for interest | 6,199 | 8,100 | 21,032 | 13,269 |
Amortization of Debt Issuance Costs and Discounts | $ 1,000 | $ 1,400 | $ 2,100 | $ 2,200 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate reconciliation, percent | 21.70% | |||
Income taxes paid | $ 21.4 | $ 20.8 | $ 21.6 | $ 63.7 |
Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Equity [Line Items] | |||
Treasury stock, shares | 1,039,000 | 1,039,000 | |
Issuance of shares in settlement of Convertible Notes | $ (470) |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Net income | $ 46,055 | $ 18,334 | $ 47,608 | $ 27,302 | $ 64,389 | $ 74,910 |
Basic weighted average shares outstanding | 22,926,156 | 22,616,085 | 22,835,920 | 22,403,266 | ||
Convertible Notes - treasury stock method | 2,242,933 | 2,166,333 | 2,153,777 | 2,191,836 | ||
Stock-based compensation units | 188,307 | 218,229 | 236,365 | 289,526 | ||
Diluted weighted average shares outstanding | 25,357,396 | 25,000,647 | 25,226,062 | 24,884,628 | ||
Basic earnings per share (in dollars per share) | $ 2.01 | $ 2.11 | $ 2.82 | $ 3.34 | ||
Diluted earnings per share (in dollars per share) | $ 1.82 | $ 1.90 | $ 2.55 | $ 3.01 | ||
Antidilutive non-vested restricted stock units excluded from calculation of diluted earnings per share | 1,379 | 2,871 | 11,268 | 13,118 | ||
Convertible Debt | ||||||
Convertible notes, conversion price | $ 21.52 | $ 21.52 |
Fair Value Disclosures (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Nov. 30, 2014 |
---|---|---|---|
Fair Value Disclosures [Line Items] | |||
Notes payable, carrying value | $ 664,923 | $ 653,734 | |
Convertible Debt | |||
Fair Value Disclosures [Line Items] | |||
Notes payable, carrying value | 69,256 | 68,251 | |
Convertible notes, fair value | 69,618 | 67,787 | $ 76,500 |
Senior Notes | |||
Fair Value Disclosures [Line Items] | |||
Notes payable, carrying value | 295,693 | 295,352 | |
Senior notes, fair value | $ 321,946 | $ 296,905 |
Related Party Transactions (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
lot
|
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | ||
Total lots under option contract to purchase | 23,215 | 22,820 |
FLORIDA | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Total lots under option contract to purchase | lot | 198 | |
Total purchase price for lots under option contract | $ 6.9 | |
Non-refundable deposit related to option contract | $ 0.7 | |
Minimum | FLORIDA | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Annual price escalation rate | 3.00% | |
Maximum | FLORIDA | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Annual price escalation rate | 6.00% |
Commitments and Contingencies Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | $ 481 | |
Lessee, Operating Lease, Liability, Payments, Due Year Two | 927 | |
Lessee, Operating Lease, Liability, Payments, Due Year Three | 926 | |
Lessee, Operating Lease, Liability, Payments, Due Year Four | 799 | |
Lessee, Operating Lease, Liability, Payments, Due Year Five | 722 | |
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 2,838 | |
Lessee, Operating Lease, Liability, Payments, Due | 6,693 | |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | 1,376 | |
Operating Lease, Liability | $ 5,317 | $ 0 |
Segment Information (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
business
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Assets | $ 1,486,060,000 | $ 1,486,060,000 | $ 1,395,473,000 | ||
Home sales revenues | 461,830,000 | $ 419,847,000 | $ 749,424,000 | $ 698,871,000 | |
Number of reporting segments | business | 5 | ||||
Number of operating segments | business | 7 | ||||
Net income before income taxes | 60,535,000 | 62,671,000 | $ 82,229,000 | 93,898,000 | |
Pre-acquisition costs and deposits | 45,991,000 | 45,991,000 | 45,752,000 | ||
Central Division | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 548,289,000 | 548,289,000 | 569,409,000 | ||
Home sales revenues | 189,894,000 | 181,967,000 | 314,091,000 | 289,465,000 | |
Net income before income taxes | 32,593,000 | 33,537,000 | 47,240,000 | 48,843,000 | |
Northwest Division | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 224,960,000 | 224,960,000 | 200,443,000 | ||
Home sales revenues | 78,996,000 | 85,233,000 | 115,250,000 | 142,406,000 | |
Net income before income taxes | 11,853,000 | 12,868,000 | 15,229,000 | 19,130,000 | |
Southeast Division | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 364,634,000 | 364,634,000 | 300,758,000 | ||
Home sales revenues | 77,820,000 | 60,369,000 | 130,234,000 | 105,477,000 | |
Net income before income taxes | 5,745,000 | 7,599,000 | 6,160,000 | 11,926,000 | |
Florida Division | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 128,558,000 | 128,558,000 | 106,398,000 | ||
Home sales revenues | 48,187,000 | 55,018,000 | 77,099,000 | 97,461,000 | |
Net income before income taxes | 4,552,000 | 7,585,000 | 5,767,000 | 11,557,000 | |
West Division | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 171,575,000 | 171,575,000 | 161,514,000 | ||
Home sales revenues | 66,933,000 | 37,260,000 | 112,750,000 | 64,062,000 | |
Net income before income taxes | 7,230,000 | 3,114,000 | 10,337,000 | 4,895,000 | |
Corporate | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 48,044,000 | 48,044,000 | $ 56,951,000 | ||
Net income before income taxes | $ (1,438,000) | $ (2,032,000) | $ (2,504,000) | $ (2,453,000) | |
Operating Segments | Central Division | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of operations | 42.00% | 41.00% | |||
Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Home sales revenues | $ 0 |
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