LGI Homes, Inc. (NASDAQ:LGIH) Q4 2023 Earnings Call Transcript

Operator: And our next question will be coming from Alex Barron of Housing Research Center.

Alex Barron: Yes, I was hoping you guys could share, how many homes you guys have under production and how many of those are completed specs?

Charles Merdian: Yes, sure. We’ve got about 1,400 that are homes in progress and 1,850 completed homes.

Alex Barron: Okay. So a total of 3,250?

Charles Merdian: Yes. And then the rest would be information centers to get to a 3,427.

Alex Barron: Okay. Great. And then I guess, just philosophically speaking, given everything that’s going on right now, are you guys more inclined to try to preserve margins or try to preserve sales pace to maintain volume even if that affects margins?

Eric Lipar: Yes, Alex, it’s a great question. I think it’s what margin you’re talking about. I mean we’re protective with gross margin. We want to maintain our sales pace. And for us, that means looking at mortgage incentives, it also means spending more money on advertising. So — because we’d like to maintain the pace and also keep our adjusted gross margin high as well, but probably more towards the margin right now. We’re starting to see some appraisal challenges across the United States, but it’s still a very minimal amount. So we’re comfortable at our sales prices that we’re getting good value to our customers. But we’re watching that, and we’ll have to adjust accordingly if the market dictates that we do so.

Alex Barron: And in terms of incentives, roughly, how much are they as a percentage of your sales price?

Eric Lipar: Yes. I think there’s a couple of different factors there. We’ve done big forward commitments before. Our typical incentive, I’d say, on average, is 2% to 3% of the sales price and you’re really just focused on getting that monthly payment as low as possible. But that would be a good average.

Operator: And at this time, I’m not showing any further questions. I would like to hand the call back to Eric for closing remarks.

Eric Lipar: Thank you to everyone for participating on the call today and for your interest in LGI Homes. Have a great day. Thank you.

Operator: Ladies and gentlemen, thank you for participating in today’s conference.