10-Q · April 28, 2026
LGI Homes reported Q1 home sales revenue of $319.736 million, down 9.0% from $351.420 million a year earlier, with diluted EPS of $0.09 versus $0.17 in Q1 2025. Gross margin as a percentage of home sales fell to 18.7%…
Earnings analysis · 10-Q
LGIH earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
LGI Homes posted Q2 total revenue of $516.048 million, up 5.7% year over year, and diluted EPS of $1.16, but earnings declined from $1.36 as homebuilding gross margin contracted to 19.8% from 22.9%. Growth in the West,…
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LGI Homes posted Q2 total revenue of $516.048 million, up 5.7% year over year, and diluted EPS of $1.16, but earnings declined from $1.36 as homebuilding gross margin contracted to 19.8% from 22.9%. Growth in the West, Central, Northwest and Florida segments more than offset a $41.965 million decline in Southeast revenue, while cash generation improved sharply and debt fell to $1.581 billion. The central offsets are weak underlying order conversion: first-half net orders fell to 2,260 and cancellations rose to 47.4%, amid continuing mortgage-rate and affordability pressure.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $1.16
- Gross margin
- 19.8%
What stood out
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Revenue and closings grew in Q2
Total revenue rose 5.7% year over year to $516.048 million, consisting of $501.511 million of homebuilding revenue and $14.537 million of land and other revenue. Home closings increased 3.2% to 1,365, while average sales price increased 0.5% to $367,407.
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West-led segment growth
The West segment delivered the strongest growth, with homebuilding revenue up 34.2% to $134.609 million on a 30.0% increase in closings to 299. Central revenue increased 13.1% to $127.777 million and Northwest revenue rose 11.4% to $59.605 million.
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Operating cash flow swung positive
Operating cash flow improved to an inflow of $59.0 million for the first six months of 2026, compared with a $213.5 million outflow a year earlier. The improvement included a $42.6 million increase in accounts payable, partly offset by $19.9 million of cash deployed to real-estate inventory.
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Leverage and liquidity improved
Total debt declined by $75.9 million from year-end to $1.581 billion, while cash was essentially stable at $61.1 million. Net debt to capital improved to 41.6% from 43.2%, and $406.9 million remained available under the credit agreement.
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Backlog expanded materially
Ending backlog increased 60.6% to 1,298 homes and 63.0% to $525.549 million. Of the June 30 backlog, 269 units were associated with wholesale bulk-sales agreements.
What to watch
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Material year-over-year margin compression
Homebuilding gross margin compressed 310 basis points year over year to 19.8% from 22.9%, and adjusted homebuilding gross margin fell 230 basis points to 23.2%. Management attributes the decline primarily to higher lot costs, capitalized interest and vertical costs.
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Orders declined and cancellations surged
Net orders declined 10.6% to 2,260 homes for the first six months, while the cancellation rate nearly doubled to 47.4% from 24.2%. Management cites financing challenges, buyer sensitivity to market conditions, affordability pressures and higher mortgage rates.
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Profit and EPS declined despite revenue growth
Diluted EPS fell 14.7% year over year to $1.16 from $1.36, and net income declined 14.3% to $26.984 million despite the 5.7% increase in total revenue. Net income before taxes decreased 13.0% to $36.591 million.
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Impairment charge and Florida losses
The company recorded a $4.681 million inventory impairment charge in the first six months, including $2.356 million in Florida and $2.325 million in Central. Florida generated a $4.8 million pre-tax segment loss for the six-month period.
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Interest-rate exposure remains meaningful
LGI had $449.0 million of variable-rate credit-facility debt outstanding at June 30; a hypothetical 100-basis-point increase in rates would raise annual interest expense by about $4.5 million. The company identifies persistently high mortgage rates as a key pressure on entry-level buyers.
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No risk-factor updates disclosed
The filing states there were 0 material changes to risk factors previously disclosed in the 2025 Form 10-K.
Management's outlook
The 10-Q contains no explicit quantitative full-year revenue or EPS guidance. Management says it expects the historical pattern of higher second-, third- and fourth-quarter closings to continue, and believes cash on hand, operating cash flow and credit-facility availability will fund foreseeable liquidity needs for at least the next 12 months.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.