THE WOODLANDS, Texas - LGI Homes , Inc. (NASDAQ: NASDAQ:LGIH), a Texas-based homebuilding company, disclosed the launch of a private offering aimed at raising $400 million through unsecured Senior Notes due in 2032. The offering is targeted at qualified institutional buyers in accordance with Rule 144A, and certain non-U.S. persons in line with Regulation S, both under the Securities Act of 1933.
The issuance of the notes is contingent on market conditions and other influencing factors. The company's subsidiaries, which are also guarantors of its revolving credit facility, are expected to initially guarantee the notes on a joint and several bases.
The proceeds from this offering are intended to be used by LGI Homes to repay part of the outstanding borrowings under its existing revolving credit facility. Details regarding the pricing and terms of the notes will be determined based on the prevailing market conditions.
It is important to note that the notes, along with the related guarantees, will not be registered under the Securities Act or any state securities laws. Consequently, they may not be offered or sold within the United States or to U.S. persons without registration or an applicable exemption from registration requirements.
LGI Homes has a notable track record in the homebuilding industry, with over 70,000 homes closed since its inception in 2003. The company has been recognized for its quality construction and customer service, earning a spot on Newsweek's list of the World's Most Trustworthy Companies. Additionally, LGI Homes has received accolades for its workplace environment, including the Top Workplaces USA 2024 Award.
The company's forward-looking statements, as included in the press release, indicate plans for the use of proceeds from the offering and other aspects of the notes. However, these statements are subject to a variety of risks and uncertainties, and there is no assurance that the anticipated results will be achieved. Investors are advised that the information is based on a press release statement and should be considered in light of potential risks and uncertainties.
In other recent news, LGI Homes, Inc. reported a successful third quarter in 2024, with significant increases in both revenue and community count. The company delivered 1,757 homes, achieving a record average sales price of $371,004, and generated $652 million in revenue, marking a 5.6% year-over-year increase. The adjusted gross margin improved slightly to 27.2%, and diluted earnings per share rose to $2.95, a 4% increase from the previous year.
The company's community count grew by 30% from the previous year, totaling 138. Despite a slowdown in sales activity in October and a reported cancellation rate of 26.2%, the long-term outlook remains positive, supported by strong housing market fundamentals. The company is optimistic about demand, citing a robust number of leads for homeownership.
LGI Homes anticipates closing between 6,100 and 6,400 homes in 2024, with the average selling price projected to be between $360,000 and $370,000. The company has raised its gross margin guidance by 50 basis points, with expectations of 24% to 25% gross margins and 26% to 27% adjusted gross margins. Looking ahead, the community count is expected to grow by 10% to 20% in 2025.
InvestingPro Insights
LGI Homes' recent move to raise $400 million through unsecured Senior Notes aligns with its financial strategy, as reflected in the latest InvestingPro data. The company's market capitalization stands at $2.55 billion, indicating its significant presence in the homebuilding sector.
InvestingPro Tips reveal that LGI Homes' liquid assets exceed short-term obligations, which could be further bolstered by this new offering. This financial cushion may provide the company with additional flexibility to manage its debt and invest in growth opportunities.
The company's P/E ratio of 12.87 suggests that investors are willing to pay a premium for its earnings, possibly due to its strong market position and growth prospects. This is further supported by an InvestingPro Tip highlighting LGI Homes' high return over the last decade.
Despite the positive indicators, it's worth noting that 4 analysts have revised their earnings downwards for the upcoming period, according to another InvestingPro Tip. This could be a factor for investors to consider when evaluating the company's near-term performance.
For a more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable for investors interested in LGI Homes' financial outlook and market position.
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