LGIH earnings analysis
What we found in LGIH's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
- 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.
- 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.
- 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.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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.
- 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.
- 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.
- 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.
- 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.
- No risk-factor updates disclosed
- The filing states there were 0 material changes to risk factors previously disclosed in the 2025 Form 10-K.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.16
- Gross margin
- 19.8%
- Segment
- Central homebuilding revenue: $127.777 million, up 13.1% year over year from $112.986 million.
- Segment
- Southeast homebuilding revenue: $108.145 million, down 28.0% year over year from $150.110 million.
- Segment
- Northwest homebuilding revenue: $59.605 million, up 11.4% year over year from $53.487 million.
- Segment
- West homebuilding revenue: $134.609 million, up 34.2% year over year from $100.339 million.
- Segment
- Florida homebuilding revenue: $71.375 million, up 7.2% year over year from $66.563 million.
What they said about what is next.
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.
The filing reads about the same as the one before it.
What came before.
- 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%…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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