LGI Homes prices $400M senior notes offering

THE WOODLANDS, Texas - LGI Homes , Inc. (NASDAQ:LGIH), a Texas-based homebuilder, has priced a $400 million offering of unsecured senior notes with a 7.000% interest rate per annum, due in 2032. The sale is anticipated to be finalized on November 15, 2024, subject to standard closing conditions.

The notes, aimed at qualified institutional buyers and certain non-U.S. persons, are part of a private offering and are not registered under U.S. securities laws. They will not be available for sale to the public in the United States without registration or an exemption from registration requirements.

LGI Homes intends to use the net proceeds from the offering to repay part of the outstanding borrowings under its revolving credit facility. The notes will be guaranteed on a senior unsecured basis by LGI Homes’ subsidiaries that also guarantee the company's obligations under its revolving credit facility.

Established in 2003, LGI Homes has been recognized for its systematic approach to homebuilding, closing over 70,000 homes across 21 states. The company has been acknowledged for its quality construction and customer service, earning a spot on Newsweek’s list of the World’s Most Trustworthy Companies. LGI Homes also prides itself on its workplace environment, having received the Top Workplaces USA 2024 Award.

The company's press release includes forward-looking statements regarding the offering's closure and the intended use of proceeds. However, it notes that actual results may differ and that such statements are not guarantees of future performance. The company cautions that these statements are subject to risks and uncertainties, and investors should not place undue reliance on them.

This news is based on a press release statement from LGI Homes, Inc., and the information provided is intended for general informational purposes. The offering of notes is only through a private offering memorandum, and it is not an offer to sell or a solicitation of an offer to buy securities in any jurisdiction where such an offer or sale would be unlawful.

In other recent news, LGI Homes, Inc. has launched a private offering aimed at raising $400 million through unsecured Senior Notes due in 2032. The proceeds from this offering are anticipated to repay part of the outstanding borrowings under the company's existing revolving credit facility. In terms of financial performance, LGI Homes reported a successful third quarter in 2024. The company delivered 1,757 homes 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. The company's community count grew by 30% from the previous year, totaling 138. Despite a reported cancellation rate of 26.2%, 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, expecting 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

As LGI Homes, Inc. (NASDAQ:LGIH) prepares to issue $400 million in senior notes, investors may find additional context from recent financial data and expert analysis valuable. According to InvestingPro, LGIH's market capitalization stands at $2.47 billion, reflecting its significant presence in the homebuilding sector.

The company's financial health appears robust, with InvestingPro data showing a P/E ratio of 12.47, suggesting a relatively modest valuation compared to earnings. This could be particularly interesting for investors considering the new debt issuance. Additionally, LGIH's revenue for the last twelve months as of Q3 2024 was reported at $2.25 billion, with a slight growth of 0.68% over the same period.

InvestingPro Tips highlight that LGIH's liquid assets exceed short-term obligations, which may provide reassurance to potential note buyers about the company's ability to meet its financial commitments. This liquidity position aligns well with the company's plan to use the new note proceeds to repay part of its revolving credit facility.

It's worth noting that LGIH does not pay a dividend to shareholders, which may indicate a focus on reinvesting in growth or, in this case, restructuring its debt. This strategy could potentially enhance long-term value for investors.

For those seeking a more comprehensive analysis, InvestingPro offers 9 additional tips that could provide deeper insights into LGIH's financial position and market performance.

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