LGI Homes Q4 Revenue Falls 15% to $474M, EPS Drops to $0.97
LGI Homes reported Q4 revenue of $474 million, down 15% year-over-year, with adjusted EPS of $0.97 versus $2.15 and operating margin halved to 3.9% as cancellation rates climbed to 43.3%. The builder cut controlled lots by 14.2%, kept finished lot costs at about $70,000 (21% of selling price), and guided 4,600–5,400 closings with 18%–20% gross margins in 2026.
1. Q4 2025 Financial Results
LGI Homes reported Q4 revenue of $474 million, down 15% year-over-year, driven by tightened demand and higher cancellation rates. Adjusted EPS was $0.97 versus $2.15 in Q4 2024, operating margin fell to 3.9%, and gross margin excluding inventory charges stood at 19.2%. Cancellation rates rose to 43.3% due to extended timelines between contract and closing.
2. Operational Discipline and Land Strategy
The company reduced controlled lots by 14.2% to align with current absorption rates, maintaining finished lot costs at approximately $70,000, or 21% of average selling price. Management emphasized a high-volume gross sales strategy, accepting elevated cancellation metrics and employing incentives, mortgage rate buydowns, and price adjustments to clear aged inventory.
3. 2026 Outlook and Capacity Expansion
LGI Homes forecasts 4,600–5,400 home closings in 2026 with gross margins pressured to 18%–20% as it continues affordability incentives. Community count is expected to grow from 144 to between 150 and 160 by year-end 2026, with wholesale closings paused pending regulatory clarity and new institutional orders on hold.