−Removed: We are engaged in the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania and Maryland.
+Added: We are engaged in the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah.
Our management team has been in the residential land development business since the mid-1990s.
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Business Opportunities
−Removed: Since our initial public offering in November 2013, we have grown substantially by expanding our operations from nine markets in four states to 35 markets in 20 states.
+Added: Since December 2013, we have grown substantially, expanding our operations from eight markets in four states to 36 markets in 21 states.
We currently offer homes for sale in 117 communities throughout the United States.
We focus on demographic and economic trends forecasted for these markets and expect to continue to grow.
−Removed: Our sales and marketing-focused operating model has enabled us to enter new markets efficiently and profitably.
−Removed: We intend to continue to expand into new markets where we identify opportunities to develop communities and sell homes that meet our profit and return objectives.
Driven by commitment to our customers and our desire to make their dreams of homeownership a reality, we offer multiple product lines, including attached and detached entry-level homes and active adult offerings that are marketed and sold under our LGI Homes brand and luxury homes that are marketed and sold under our Terrata Homes brand.
−Removed: During 2022, our average home completion time was approximately 90 to 165 days, our average home size ranged between 1,000 to 4,100 square feet and our overall sales prices ranged from approximately $190,000 to more than $1,200,000.
+Added: During 2023, our average home completion time was approximately 108 to 150 days, our home size ranged between 950 to approximately 4,100 square feet and our overall sales prices ranged from approximately $189,000 to more than $1,000,000.
For the year ended December 31, 2023, we closed 6,729 homes at an average sales price per home closed of $350,510.
−Removed: During 2021, our average home completion time was approximately 90 to 130 days, our average home size ranged between 1,000 to 4,100 square feet and our overall sales prices ranging from approximately $150,000 to more than $1,100,000.
+Added: During 2022, our average home completion time was approximately 90 to 165 days, our home size ranged between 1,000 to approximately 4,100 square feet and our overall sales prices ranged from approximately $190,000 to more than $1,200,000.
For the year ended December 31, 2022, we closed 6,621 homes at an average sales price per home closed of $348,052.
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We consider development opportunities that meet our profit and return objectives, including opportunities that may involve the sale of home sites as a part of the product mix.
−Removed: Projects of interest are typically evaluated at the division level using an extensive due diligence checklist that includes assessing the permitting and regulatory requirements, environmental considerations, local market conditions and anticipated floor plans, pricing and financial returns.
+Added: Projects of interest are typically evaluated at the division level using an extensive due diligence checklist that includes assessing the permitting and regulatory requirements, environmental considerations and local market conditions and evaluating anticipated floor plans, pricing and financial returns.
We also determine the number of potential residents in the market and rental households that are within driving distance of the proposed project.
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Additionally, we engage in other business activities that leverage or complement our core homebuilding operations.
−Removed: Our wholesale business builds and sells homes to large institutions interested in acquiring single-family rental properties through bulk sales agreements.
+Added: Our wholesale business builds and sells homes primarily to large institutions interested in acquiring single-family rental properties through bulk sales agreements.
Beginning in 2021, we began building and leasing a number of single-family homes in select, existing communities.
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Finally, our strategic joint ventures, LGI Mortgage Solutions and LGI Insurance Solutions, provide mortgage financing and homeowners insurance services to our customers.
−Removed: During the second half of 2022, we experienced a slowdown in demand caused by the Federal Reserve’s ongoing actions to stem inflation and the resulting increases in mortgage rates compared to the beginning of 2022.
−Removed: As a result, many buyers paused their home purchasing decisions.
−Removed: In response to this slowdown in buyer demand, we increased advertising spending to connect with more potential homebuyers.
−Removed: Beginning in September 2022, we began offering mortgage buy-down programs and other sales incentives to offset some of the affordability pressures resulting from higher mortgage rates and increased our allocation of inventory available for sale to our wholesale channel.
−Removed: Additionally, we evaluated our land position and significantly reduced our owned and controlled lots and right sized the number of finished homes in inventory.
−Removed: Given the market conditions experienced during the second half of 2022 and our continued focus on future community count growth, we have chosen to allocate available capital to near-term land development.
−Removed: While we expect that many of these challenges will persist in 2023 and could potentially worsen, we believe the long-term outlook for new homes remains strong, driven by solid fundamentals, including a historically low inventory of new and existing homes for sale, an aging housing stock, rising rents, strong household formations and low unemployment.
Sales and Marketing
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We use extensive digital and print advertising to attract potential homebuyers.
−Removed: We employ various marketing methods, such as interactive online media, social media, direct mail, directional signage, and billboards.
+Added: We employ various marketing methods, such as digital marketing strategies, interactive online media, social media, direct mail, directional signage, and billboards.
These methods have proven highly successful in reaching our target market, placing potential homebuyers in front of our trained sales professionals and communicating our core messages of value and dream fulfillment.
While a proportion of our business comes from realtors, our marketing efforts are principally designed to connect directly with potential customers currently renting their residences and encourage them to schedule an in-person appointment at one of our information centers.
−Removed: Our information centers are typically open 11 hours per day, 359 days per year, and generally staffed by two to five sales professionals who are supported by a dedicated loan officer.
+Added: Our information centers are typically open eight to ten hours per day, 359 days per year, and generally staffed by two to four sales professionals who are supported by a dedicated loan officer.
Our commission-based sales professionals are trained to learn about the current housing situation of the customer, educate them on the value proposition of owning an LGI home and provide them with a comprehensive understanding of the steps required to achieve homeownership.
We also inform customers of our history, vision and values.
−Removed: Our sales professionals determine credit and income qualifications, provide floor plans and pricing information, and conduct tours of our homes based on the customer’s needs and budget.
+Added: Our sales professionals review credit and income qualifications if applicable, provide floor plans and pricing information, and conduct tours of our homes based on the customer’s needs and budget.
We provide each customer with a comprehensive introduction to the community and the surrounding area, furnishing them with detailed information regarding utilities, schools, homeowners association dues and restrictions, local entertainment and nearby dining and shopping options.
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Southern CA Daytona Beach, FL Columbia, SC
−Removed: Sarasota, FL Greenville, SC
+Added: Salt Lake City, UT Sarasota, FL Greenville, SC
Birmingham, AL
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During 2023, we closed 249 Terrata Homes at an average sales price per home closed of $573,000, compared to 217 Terrata Homes at an average sales price per home closed of $549,551, in 2022.
−Removed: As of December 31, 2022, we offered Terrata Homes in ten of our active communities.
−Removed: We expect that home closings in our Terrata Homes branded communities will be approximately 5.0% of our annual home closings during 2023.
+Added: As of December 31, 2023, we offered Terrata Homes in 15 of our active communities.
+Added: We expect that home closings in our Terrata Homes branded communities will be less than 5% of our annual home closings during 2024.
Our mortgage financing and homeowners insurance joint ventures provide a streamlined, customer-focused experience for our homebuyers.
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LGI Insurance Solutions provides homeowners and other insurance products to our customers through an unconsolidated joint venture.
−Removed: Our wholesale business provides opportunities for us to leverage our even-flow construction methodology to build and sell homes to large institutions interested in acquiring homes to be used as rental properties, primarily through bulk sales agreements.
+Added: Our wholesale business provides opportunities for us to leverage our even-flow construction methodology to build and sell homes primarily to large institutions interested in acquiring homes to be used as rental properties, primarily through bulk sales agreements.
During 2023 and 2022, we had 679 and 1,233 wholesale home closings, respectively, which represented 10.1% and 18.6% of our total home closings in 2023 and 2022, respectively.
−Removed: We expect our wholesale business to represent approximately 5% to 10% of our annual home closings during 2023.
+Added: We expect our wholesale business to represent approximately 5% of our annual home closings during 2024.
Land Acquisition Policies and Development
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We also maintain a pipeline of desirable land positions for replacement communities and new communities.
−Removed: Our lot inventory decreased to 71,904 owned or controlled lots as of December 31, 2022 from 91,845 owned or controlled lots as of December 31, 2021 primarily related to controlled lots that were terminated during the second and third quarters of 2022 to manage our overall inventory.
−Removed: Additionally, during 2022, we experienced intermittent delays that lowered the lot counts and have been compounded by nationwide inflationary headwinds.
+Added: Our lot inventory decreased to 71,081 owned or controlled lots as of December 31, 2023 from 71,904 owned or controlled lots as of December 31, 2022 primarily related to our discipline in the evaluation of and selective approval of new land deals.
We had 117 and 99 active communities as of December 31, 2023 and December 31, 2022, respectively.
−Removed: The overall decrease in community count is seen as transitory, primarily due to the close out of active communities and to a lesser extent available finished lots in certain active markets.
Generally, it takes us two to three years to turn raw or undeveloped land into an active community.
−Removed: To mitigate our exposure to real estate inventory risks, we utilize, on a limited and strategic basis, land banking financing arrangements.
−Removed: During the year ended December 31, 2022, we entered into several land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources.
+Added: We utilize land banking financing arrangements on a limited and strategic basis.
+Added: During the years ended December 31, 2023 and 2022, we entered into several land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns.
In consideration for this repurchase option, we paid a non-refundable commitment fee.
−Removed: Based on our right to control the ultimate economic outcome of these finished lots, these assets will be held as real estate not owned within our inventory and a corresponding obligation was established within our accrued liabilities to recognize this relationship.
−Removed: While we are not legally obligated to repurchase the balance of the lots, we will be subject to certain performance obligations, financial and other penalties if the lots are not purchased.
+Added: Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory and have a corresponding obligation within our accrued liabilities to recognize this relationship.
+Added: While we are not legally obligated to repurchase the balance of the lots, we are subject to certain performance obligations, financial and other penalties if the lots are not purchased.
We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities.
Our allocation of capital for land investment is performed at the corporate level with a disciplined approach to portfolio management.
−Removed: Our Acquisitions Committee meets periodically and consists of our Chief Executive Officer, Chief Financial Officer, and Executive Vice President of Acquisitions.
+Added: Our Acquisitions Committee consists of our Chief Executive Officer, Chief Financial Officer, and Executive Vice President of Acquisitions.
Annually, our divisions prepare a strategic plan for their respective geographic areas.
Supply and demand are analyzed to ensure land investment is targeted appropriately.
−Removed: The long-term plan is compared on an ongoing basis to our experience in the marketplace and is then adjusted to the extent necessary.
+Added: On an ongoing basis, the long-term plan is compared to our recent experience in the marketplace and adjusted accordingly.
We have also purchased larger tracts of land across our markets which will provide us with more opportunities to build homes with multiple price points in our communities.
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We have strong relationships with the land brokerage community in many of our markets.
−Removed: We believe that in the brokerage community we have a reputation for knowing our business, having the capital to close deals, and making accurate and timely decisions that benefit both the buyer and seller.
−Removed: For these reasons, we believe that brokers routinely notify us when desirable tracts of land are available for purchase.
−Removed: In our land acquisition process, projects of interest are evaluated at the division level using an extensive due diligence checklist which includes assessing the permitting and regulatory requirements, environmental considerations, local market conditions, and anticipated floor plans, pricing, and financial returns.
+Added: We believe that we have established a reputation within the brokerage community for our systems-based approach to acquiring land, for having the capital to close deals and for making accurate and timely decisions that benefit both the buyer and seller.
+Added: For these reasons, we believe that brokers routinely notify us when desirable land opportunities that meet our criteria arise.
+Added: In our land acquisition process, projects of interest are typically evaluated at the division level using an extensive due diligence checklist that includes assessing the permitting and regulatory requirements, environmental considerations and local market conditions and evaluating anticipated floor plans, pricing and financial returns.
We also acquire and develop land for use in our wholesale business.
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Typically, the price changes that most significantly influence our operations are price increases in labor, commodities and lumber.
−Removed: In future quarters, we could see various cost pressures associated with widespread global inflation similar to the severity experienced during 2022.
+Added: In future quarters, we could see various cost pressures associated with inflation similar to the cost pressures experienced in the last few years.
Generally, we have successfully increased the sales prices of our homes to absorb these increased costs or have successfully made cost-effective changes as we endeavor to keep our homes affordable.
−Removed: Additionally, during the year ended December 31, 2022, significant supply chain disruptions have extended our land development and homebuilding construction cycles across the markets we serve.
−Removed: We are continuing to focus on our supply chain to limit the impact to both our business and customers.
−Removed: We believe these challenges will continue to impact our operations in 2023.
The homebuilding industry generally exhibits seasonality.
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Under various environmental laws, current or former owners of real estate, as well as certain other categories of parties, may be required to investigate and clean up hazardous or toxic substances or petroleum product releases, and may be held strictly and/or jointly and severally liable to a governmental entity or to third parties for related damages, including property damage or bodily injury, and for investigation and cleanup costs incurred by such parties in connection with the contamination.
−Removed: A mitigation plan may be implemented during the construction of a home if a cleanup does not remove all contaminants of concern or to address a naturally occurring condition, such as methane or radon.
+Added: A mitigation plan may be implemented during the construction of a home if a cleanup does not remove all contaminants of
+Added: concern or to address a naturally occurring condition, such as methane or radon.
Some homebuyers may not want to purchase a home that is, or may have been, subject to a mitigation plan.
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We compete in each of our markets with numerous other national, regional and local homebuilders for homebuyers, desirable properties, financing, raw materials and skilled labor.
−Removed: We also compete with sales of existing homes and with the rental housing market.
+Added: We also compete with sales of existing homes and with the apartment and housing rental markets.
Our homes compete on the basis of quality, price, design, mortgage financing terms and location.
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Human Capital Resources
−Removed: LGI Homes is committed to being a people-focused organization and actively promotes a workplace of dignity and respect for all.
+Added: LGI Homes is committed to being a people-focused organization and actively promotes a respectful and dignified workplace.
We strive to uphold all applicable laws and regulations in the markets where we conduct business and pursue business relationships with external partners who share our commitment to lawful, ethical business conduct.
−Removed: We believe our commitments to diversity and inclusion, training, safety and sustainability form the foundation of our people-focused culture.
+Added: We believe our commitments to hiring, training, safety and employee retention form the foundation of our people-focused culture.
As of December 31, 2023, we employed 1,089 people, of whom 89 were located at our corporate headquarters.
Of our employees located outside our corporate headquarters, 631 were on-site sales and support personnel, and 369 were involved with acquisition and development, purchasing, and construction.
−Removed: We have built a diverse and inclusive team of professionals with a wide range of industry experience across our markets.
+Added: We have built a diverse team of professionals with a wide range of industry experience across our markets.
We are dedicated to supporting our employees when times are challenging.
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This policy is expressly described in our Code of Business Conduct and Ethics and our Employee Handbook and includes, but is not limited to, any protected status or characteristic, including race, color, ethnicity or national origin, age, sex, religion, disability, marital status, status as a veteran, genetic information, or any other status or characteristic protected by any federal, state, or local law.
−Removed: Our employees are expected to treat their coworkers, our business partners’ employees and our customers with dignity and respect.
−Removed: We focus on identifying and attracting the best talent and providing those individuals with world-class training and continuous development.
+Added: We focus on identifying and attracting the best talent and providing our employees with world-class training and continuous development.
Typically, all new vice presidents, sales professionals and purchasing managers come to our corporate headquarters for a week of training in their first 100 days.
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Our SEC filings are also available to the public on the SEC’s website at www.sec.gov .
−Removed: In addition to our SEC filings, our corporate governance documents, including our Corporate Governance Guidelines and Code of Business
−Removed: Conduct and Ethics, are available on the “Investor Relations” page of our website under “Corporate Governance” at https://investor.lgihomes.com/corporate-governance .
+Added: In addition to our SEC filings, our corporate governance documents, including our Corporate Governance Guidelines and Code of Business Conduct and Ethics, are available on the “Investor Relations” page of our website under “Corporate Governance” at https://investor.lgihomes.com/corporate-governance .
Our stockholders may also obtain these documents in paper format free of charge upon request made to our Investor Relations department.
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Ryan Edone - Chief Financial Officer of Petroleum Wholesale L.P., a distributor of branded and wholesale motor fuel products and operator of retail convenience stores/travel centers.
−Removed: Shailee Parikh - Global Head of Strategy and Solution Development for Health Solutions at Aon plc, a leading global professional services firm.
−Removed: Bryan Sansbury - Chief Executive Officer, Chairman, and a founding partner of AEGIS Hedging Solutions, LLC, formerly known as AEGIS Energy Risk, LLC.
+Added: Shailee Parikh - Managing Partner of ARK Real Estate, LLC, a real estate investment and management company.
+Added: Bryan Sansbury - Chief Executive Officer, Chairman of the Board of Directors, and a founding partner of AEGIS Hedging Solutions, LLC, formerly known as AEGIS Energy Risk, LLC.
Sansbury serves as our Lead Independent Director.
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He is a former shareholder of the law firm Baker Donelson.
−Removed: Robert Vahradian - Senior Managing Director of GTIS Partners, LP, a global real estate investment firm.
+Added: Robert Vahradian - Partner of GTIS Partners, LP, a global real estate investment firm.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.