Q1 2025 LGI Homes Inc Earnings Call
Welcome to the L. G. I homes first quarter 2025 conference call today's call is being recorded and a replay will be available on the company's website at www Dot L. G. I homes dotcom after management's prepared comments, there will be an opportunity.
To ask questions.
Joshua Father: At this time I'll turn the call over to Joshua father, Executive Vice President of Investor Relations and capital markets.
Thanks, and good afternoon.
Joshua Father: Listeners that this call contains forward looking statements, including managements views on the company's business strategy outlook plans objectives and guidance for future periods.
Joshua Father: Such statements reflect management's current expectations and involve assumptions and estimates that are subject to risks and uncertainties that could cause those expectations to prove to be incorrect.
Joshua Father: You should review our filings with the SEC for a discussion of the risks uncertainties and other factors that could cause actual results to differ from those presented today.
Joshua Father: All forward looking statements must be considered in light of those related risks and you should not place undue reliance on such statements, which reflect management's current view points that are not guarantees of future performance.
Joshua Father: On this call, we'll discuss non-GAAP financial measures that are not intended to be considered in isolation or as substitutes for financial information presented in accordance with GAAP.
Joshua Father: Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be found in the press release, we issued this morning in our quarterly report on Form 10-Q for the quarter ended March 31, 2025 that we expect to file with the SEC later today.
Joshua Father: This filing will be accessible on the Sec's website and in the Investor Relations section of our website.
Speaker Change: I'm joined today by Eric Lieber L. J Home's, Chief Executive Officer, and Chairman of the Board and Charles <unk>, Chief Financial Officer, and Treasurer, I'll now turn the call over to Eric.
Speaker Change: Thanks, Josh Good afternoon, and welcome to <unk> earnings call during the quarter, we continued to see strong demand for new homes families across the country are excited about the possibility of homeownership and the lack of existing inventory combined with our ability to offset persistently high mortgage rates youre compelling financing incentives.
Speaker Change: Is drawing customers into our information centers.
Speaker Change: Affordability remains the biggest challenge for buyers and rate volatility affects not only their ability to purchase a home, but also their confidence in moving forward with that decision.
Speaker Change: Against this challenging and uncertain backdrop, we're pleased with the solid results we delivered in the first quarter of 2025.
Speaker Change: As we noted in our last call higher mortgage rates in October and November weighed on our year end backlog and with rates rising and further in January the first quarter got off to a slow start.
Speaker Change: While February brought some improvement the overall trend remained muted however.
Speaker Change: However in March the pace materially improved signaling our latest star and spray sales activity just as the quarter ended.
Speaker Change: As highlighted in our press release. This morning, we delivered 996 homes in the first quarter at an average sales price of $352831, resulting in revenue of $351 $4 million.
Speaker Change: During the quarter, we recognized a onetime expense related to the completion of our forward commitment incentive program that weighed on revenue and gross margins as well as fees related to that charge that flowed through our G&A expense.
Speaker Change: We ended the first quarter with 146 communities, a 22% increase over the prior year.
Speaker Change: During the first quarter, our top markets on a closings per community basis, where Richmond with five three.
Speaker Change: Charlotte with forecast six.
Speaker Change: Raleigh with $4 three.
Speaker Change: Atlanta was three eight and Nashville with three six <unk>.
Speaker Change: Congratulations to the teams in these markets and their strong performance last quarter.
Speaker Change: The improvement in lead in order trends in March enabled us to close out the first quarter with a strong backlog as we transitioned into the second quarter we.
Speaker Change: We signed one 437 net contracts for the first quarter and ended March with 1040 homes in our backlog representing over $406 million.
Speaker Change: Throughout our history evidence has shown that training and time spent role are the keys in new salespeople hitting standards and delivering their best results as part of last year's rapid community count growth, we welcomed hundreds of new team members across every level of our organization.
Speaker Change: As these individuals' enter their second year LTI homes, we're confident that their proficiency with our selling system and growing confidence will positively impact our results.
Speaker Change: Earlier this month, we welcomed our sales leaders to our corporate headquarters for intensive sales training that they will rollout to our sales teams across the country setting the stage for a higher performing more agile sales organization.
Speaker Change: Reinforcing foundations building belief sharpening skills enhancing alignment with our core values. We are ensuring that our team is well equipped to seize every opportunity that comes through our doors, particularly while the market remains challenging.
Speaker Change: Despite recent headwinds we're confident in the long term outlook for the housing market.
Speaker Change: The persistent shortage of entry level homes across the country represents a societal challenge the underscores the importance of affordable new residential construction.
Speaker Change: Underlying demographic fundamentals will only increase this need setting the stage for a long runway of sustained demand for homeownership.
Speaker Change: These structural dynamics provide us with clarity and conviction as we continued to invest in our future growth.
Speaker Change: I'll invite Charles to provide additional details on our financial results.
Charles: Thanks, and good afternoon.
Charles: Revenue in the first quarter was 351 $4 million based on 996 homes closed at an average sales price of $352831.
Charles: The 10, 1% decrease in revenue year over year was driven by an 8% decline in home closings and a two 2% decline in our average sales price.
Charles: As Eric noted in his opening comments, we recognized a onetime expense of $8 6 million in the first quarter related to the completion of our forward commitment incentive program of which $6 5 million was recorded as additional sales incentives and revenue.
Charles: The decline in our reported ASP was driven by geographic mix higher wholesale closings and the onetime expense.
Charles: Excluding this charge ASP was essentially flat year over year.
Charles: Of our total closings 179 homes were through our wholesale channel representing 18% of total closings compared to nine 4% last year.
Charles: Our first quarter gross margin was 21% compared to 23, 4% during the same period last year.
Charles: The decrease as a percentage of revenue was primarily due to the forward commitment expense an increase in wholesale closings and to a lesser extent higher construction overhead lot costs and capitalized interest as a percentage of revenue as well as reduced operating leverage resulting from lower volumes.
Charles: Adjusted gross margin was 23, 6% compared to 25, 3% during the same period last year.
Charles: Adjusted gross margin excluded $8 $3 million of capitalized interest charged to cost of sales.
Charles: And $809000 related to purchase accounting together, representing 260 basis points compared to 190 basis points last year.
Charles: Excluding the $6 $5 million charge to revenue gross margin and adjusted gross margin was slightly below the guidance range. We provided on our last call, but we're in line with our expectations, which factored into typical first quarter seasonality.
Charles: Combined selling general and administrative expenses for the first quarter totaled $73 5 million or 29% of revenue.
Charles: Selling expenses were $42 3 million or 12% of revenue compared with 10, 5% in the same period last year.
Charles: The increase was primarily related to higher advertising and personnel costs and was partially offset by lower commissions due to fewer closings.
Charles: General and administrative expenses were $31 2 million or eight 9% of revenue compared to eight 1% in the same period last year.
Charles: Included in G&A was $2 $1 million related to the buy down expense.
Charles: For the full year, we are maintaining our view that combined SG&A will be 14% to 15% of revenue.
Charles: Pre tax net income was $5 $7 million or one 6% of revenue.
Charles: Our effective tax rate was 32% compared to 26, 2% in the same period last year, the higher rate was related to the timing of the impact of compensation costs for share based payments. We continue to expect our full year tax rate will be approximately 24, 5%.
Charles: Finally.
Charles: Net income in the first quarter was $4 million or <unk> 17 per basic and diluted share.
Gross orders in the first quarter were 1716 and net orders were 1437, our cancellation rate was 16, 3% compared to 16, 8% in the same period last year.
Charles: As highlighted earlier, we ended March with 1040 homes in backlog, representing $406 2 million.
Charles: Turning to our land position.
Charles: At March 31, our portfolio consisted of 67792 owned and controlled lots.
Charles: Decrease of three 4% year over year, and four 4% sequentially.
Charles: Those lots 53761, or 79, 3% were owned and 2014 and 31 lots or 27% were controlled.
Charles: Of our owned blocks 37064, raw land and land under development with less than 30% of those lots inactive development.
Charles: Of the remaining 16697 owned blocks 12473 were finished vacant lots and we had 2702 completed homes information centers.
Charles: During the quarter, we started 1176 homes and ended March with 1522 homes in progress.
Charles: I'll now turn the call over to Josh for a discussion of our capital position next.
Josh: Thanks Charles.
Josh: We ended the quarter with $1 6 billion of debt outstanding, including $544 4 million.
Josh: Brought on our revolver, resulting in a debt to cap ratio of 44, 3% and a net debt to cap ratio of 43, 4%.
Josh: Total liquidity was $360 million, including $57 $6 million of cash and a $302 4 million of availability under our credit facility.
Josh: Yesterday, we successfully completed the recast of our credit agreement extending our maturity from 2028 to 2029.
Josh: Total commitments through 2028 will be $1 2 billion.
Josh: After which total commitments will be $972 $5 million through 2029.
Josh: During the quarter, we repurchased 41685 shares of our common stock for $3 1 million.
Josh: And ended the quarter with $177 $7 million remaining on our current stock buyback authorization.
Josh: Finally, our stockholders' equity at March 31 was over $2 billion.
Josh: And our book value per share was $87 and 27%.
Eric Lieber: At this point I'll turn the call back over to Eric.
Eric Lieber: Thanks, Josh the slower start to the year was factored into the full year guidance, we shared on our last earnings call. Therefore, we remain confident in our original closing target of between 6000 207000 homes.
Speaker Change: 160 to 170 active communities by year end, and an average selling price between 360 and $370000.
We continue to monitor tariffs and potential impacts that higher cost could have on margins beginning in March we began receiving notices of price increases from some suppliers related to tariffs imposed to date, particularly those utilizing value added components from China.
Speaker Change: With this in mind, we are proactively trimming our full year gross margin expectations by 150 basis points at the low end and 100 basis points at the high end of our prior range to account for these additional costs and the potential for additional market uncertainty over the coming quarters.
Speaker Change: As a result, we now expect our full year gross margin between 21, 7% and 23, 2% and adjusted gross margin between 24 and 25, 5%.
Speaker Change: To conclude I want to thank our team members again for their dedication and congratulate them on the results. They delivered in the face of a challenging market.
Speaker Change: We deeply value our people and being named a top workplaces USA recipient for the fifth consecutive year is a powerful testament to our enthusiastic our team members.
Speaker Change: Are about being part of LG <unk>.
Speaker Change: Thank you for your belief in our mission and your continued commitment to our company and our customers.
Speaker Change: We'll now open the call for questions.
Speaker Change: Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Speaker Change: Ladies standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Michael <unk> from J P. Morgan.
Speaker Change: Hi, good afternoon, everyone, It's Mike Rehaut.
Speaker Change: Thanks for all the detail and color as always I was hoping to get a little more granular in terms of my first question on the.
Speaker Change: <unk>.
Speaker Change: Gross margin trajectory that you've adjusted for.
Speaker Change: In terms of guidance.
Speaker Change:
Speaker Change: Specifically.
Speaker Change: Or we should think about two Q3 Q <unk> in terms of the cadence.
Speaker Change: And of the.
Speaker Change: A reduction in overall guidance.
Speaker Change: What is kind of related to the expected increase in <unk>.
Speaker Change: Costs related to tariffs as opposed to other.
Speaker Change: Drivers of the margin.
Eric Lieber: Yes, Thanks, Mike This is Eric.
Eric Lieber: On the margin question Theres really three components to it let me start with the tariffs.
Eric Lieber: And we've seen minimal cost increases yet, but there is no question. We are getting letters from our suppliers with tariffs surcharges that are going into effect in April and May.
Eric Lieber: Right now, it's not immaterial amounts.
Eric Lieber: As a factor in our decision to lower gross margins.
Eric Lieber: And more than that is just the uncertainty of what will happen next week on tariffs or our costs. We're still seeing cost generally inquiries from it comes to doing business with cities various fees.
Eric Lieber: The results of Q1.
Eric Lieber: Gross margin was less than we thought it was prudent taken all that into consideration, we're leaning into incentives with our customers.
Eric Lieber: Those are averaging 5% to 6%.
Eric Lieber: Now of ASB, which impacts gross margin.
Eric Lieber: So with all those things considered we thought it is prudent for the ended the year gross margin to be adjusted.
Eric Lieber: Yes, no I appreciate that Eric.
Eric Lieber: I guess your comments also kind of lead into my second question, which is you said that you were maybe leaning into her into incentives a little more of this past quarter.
Eric Lieber: And I was curious I think you said, 5% to 6% just now.
Eric Lieber: What that compares to maybe last quarter.
Eric Lieber: And.
Eric Lieber: How much of this is just more related to when you think about.
Eric Lieber: What's driving the need to do that is it more.
Eric Lieber: Yes.
Eric Lieber: Ken buyers kind of maybe on the sideline amid some of the volatility going on here.
Eric Lieber: Or other factors driving.
Eric Lieber: Maybe a more competitive market I know that you've kind of said in your prepared remarks, a lack of existing inventory.
Eric Lieber: Across your markets as being a positive fundamental.
Eric Lieber: Element of the housing backdrop.
Eric Lieber: <unk>.
Eric Lieber: Just wanted to kind of circle back to that as well and if that's at all part of whats driving the higher incentives as well or in fact that to the extent that there is some increase in inventory. That's also been a reason.
Eric Lieber: Yes, I think incentives as a percentage is similar to last quarter.
Eric Lieber: What we're what we're doing on incentives and we think we need to be competitive in the market. So the market dynamic is certainly playing a role and now we don't think we need to be racing to the bottom as far as incentives go about the three components are closing costs incentive as most of our competitors or do something we've always done with our customers cash out of pocket.
Eric Lieber: As important for our customers and we are incentivizing closing costs assistance.
Eric Lieber: Second one is we're currently incentives incentivizing.
Eric Lieber: Incentivizing with rate buy downs as most builders are doing that trend continues that's a big expense for LG is we're getting that fixed rates.
Eric Lieber: As low as we possibly can for our buyers because certainly in affordable payment and qualifying for a mortgage of our sales prices are today as important and then finally and right now the slower sales pace. It leads to more finished inventory across our portfolio and when you have more finished inventory that leads to more price does.
Eric Lieber: Counting our more heavily incentives on the older inventory so all of that it up all those added up is a more.
Eric Lieber: How do your incentives as a percentage of similar but we're talking about what is going to look like over the next two or three quarters, obviously depends on the sales base, but without reducing our gross margin was was prudent.
Speaker Change: Alright, great. Thank you very much.
Eric Lieber: Youre welcome.
Eric Lieber: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Trevor Allinson from Wolfe Research.
Trevor Allinson: Hi, good afternoon, and thank you for taking my questions first one just on the midpoint of the full year closing Scott I think it implies a roughly three five.
Absorption paced on closings you did more like $2 two here in the first quarter. So can you just talk about your confidence in accelerating pace. The rest of the year to drive at that full year target range, especially given some of the volatility we're seeing here recently.
Scott: Yes, it's great question Trevor I can start January February certainly sluggish March sales were great March sales were more in the four to five months pace, which is fantastic.
Scott: April so far it's been a little bit more sluggish even last week sales, we are getting the loan application, but not as strong as April we're going to close approximately 450 houses in April which is more of the three month cadence.
Scott: Every month January to February February to March March to April has been increasing closing so we're trending in the in the correct direction and yes, we need to be in that four four closings a month absorption pace for the rest of the year.
Scott: And I think the rest of the year or does it look like more like March or the first couple of weeks of April that looks more like March than we're going to be in really good shape. We're still seeing demands. So we're confident in our end of the year closing guidance.
Speaker Change: Okay I appreciate all that color and then second question is.
As more of kind of the pace and price trade off here Youre, taking down your gross margin estimates.
Speaker Change: Guidance some of that is due to tariffs some of that is due to market conditions should we interpret the adjustment as a view that the $3 three absorption pace implied at the low end of your guidance represents a floor for you all in that if demand were to soften that you would lean more heavily into either incentives or discounting to make sure you don't fall below.
Speaker Change: At pace.
Speaker Change: Or should we think that if demand were to soften that would play through a slower pace, how you're thinking about the trade off between those two things.
Speaker Change: Yes, I'd say the other the other component on demand as our wholesale business was 18% of our closings in Q1. So it depends what percentage of that flows through the rest of the year, because we're willing to take a lower gross margin when we sold wholesale houses to our investor friends.
Speaker Change: So that will have a factor as well on gross margin.
Speaker Change: And then demand when we talk about demand in <unk> is how many leads the way.
Speaker Change: Having come through our systems, how many inquiries, we're having how many people are going to our website. The good news for all of us.
Speaker Change: Is the demand is still strong I would say more having 6% to 7000 inquiries a week people looking to change your address primarily getting out of a lease situation to homeownership or challenges in affordability. So we think demand is going to be there. It's just getting the customers qualified and that comes into it.
Speaker Change: What's the what's the 10 year due one whereas the mortgage rate market what is pricing doing so we're going to keep an eye on all of those factors very closely.
Speaker Change: Thanks for all the color and good luck moving forward.
Speaker Change: Alright, thank you.
Speaker Change: Thank you one moment for our next question.
Carl Reichardt: Our next question comes from the line of Carl Reichardt from <unk>.
Speaker Change: Hey, guys. Thanks for talking my.
Speaker Change: All my questions.
Speaker Change: Eric you talked about confidence related to rate volatility is because it is a hindrance in Q1.
Speaker Change: That seemed odd to me and just I am wondering if youre seeing confidence related to say worries about income worries about cost out the door worries about savings or the market.
Speaker Change: Im trying to see how broad the lack of confidence is we know rate fall impacts business, but I'm curious if youre seeing it morph into deeper concerns when you talk to your sales teams about the consumers they are seeing.
Carl Reichardt: Yes, I think Carl it's a great question I think first thing we look at is affordability and qualifying like I said on the previous answer, but certainly as homes have gotten more expensive I mean, our average credit score for our buyers around 700, now last quarter and the 690 <unk> with very good income and very good debt to income ratio.
Carl Reichardt: So we have a very strong buyer that probably is paying attention more to the market dynamics in the job market and uncertainty in the economy than our entry level true entry level was buyer was from five years ago. So I think thats thats playing a role.
Carl Reichardt: So general uncertainty, but the demand is there obviously poor market conditions, we talked about our five strongest markets on the call for Q1 closings those for US we're all in the southeast so on a closing volume, Florida, Texas and the west were not as strong.
Carl Reichardt: That's playing into the market dynamic as well.
Speaker Change: Great. Thank you and then just on new community openings as you go. So two things one typically I am expecting that new stores are going to generate faster sales when they open but.
Carl Reichardt: Yeah.
Speaker Change: The sale system. So important training so important to your folks I think you said in past, sometimes it takes new salespeople at new communities, a while to get ramped up so between those two dynamics as you look out for this year. What are you expecting to see in terms of mix from new communities, helping sales rate or improving.
Carl Reichardt: Sales people as they get experience.
Speaker Change: Helping your sales rate.
Speaker Change: Yes, those are both great comments, Carl and probably should have been added to travelers comments on why we're confident in our overall year end closing guidance, because a lot with 22% year over year closing growth, we hired a lot of new people a lot of new managers over the last 12 months and we expect all of those salespeople to improve.
Speaker Change: In year two in the business that's been consistent for the last 25 years and then also community count will be opening up we do expect.
Speaker Change: Communities to get off to a sometimes a fast or sometimes a cautious start but it will improve as the community gets more experience as well and then just the overall volume of new communities from 146 reported last month to the end of the year 160 170, those additional commune.
Speaker Change: <unk> will help us achieve our closing target.
Eric Lieber: Great I appreciate it thank you Eric Thanks Fellas.
Speaker Change: Alright. Thanks.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Kenneth Zenner from Seaport Research partners.
Speaker Change: Afternoon, everybody.
Speaker Change: Good afternoon, Ken.
Speaker Change: Alright look.
Speaker Change: Obviously <unk> came in below what had been a strong <unk>, where you guys were confident in your land model.
Speaker Change: Delivering those higher margins.
Speaker Change: Part of your long term DNA.
Speaker Change: The Street's, obviously skeptical given the book the stock's valuation so.
Speaker Change: With that.
Speaker Change: January February slow March picked up Youre, giving guidance.
Speaker Change: Sequentially right.
Speaker Change: You can understand why people are.
Speaker Change: Given what other builders have been say skeptical of that so it sounds like.
Speaker Change: In reference to Karl's question.
Speaker Change: Mix is playing a big piece of that and then I wasn't clear if you Gabe.
Speaker Change: Or I guess I missed it if you did give the answer to the earlier question about is there a ramp up in gross margins or is that kind of just the click up occurs all at once.
Speaker Change: And then we hold steady for the year.
Speaker Change: If you could just I know there was a little broad question and I was trying to get.
Speaker Change: And understanding where your confidence and clearly the markets.
Speaker Change: Lacking a little bit.
Speaker Change: Yes al.
Speaker Change: Star Ken on the ramp up of gross margin I think I think gross margin will ramp up through the end of the year, primarily because we expect volume to ramp up through the year I think the costs associated with gross margin incentives I would say, it's similar but I think it will ramp up because of volume component. Charles you have anything to add to that I would just add in terms.
Speaker Change: Of the land management, how we're thinking about it.
Speaker Change: Is that our acquisition pace has tempered as.
Speaker Change: As we are modeling to our current absorption expectations, we're working through our development spend as we are bringing on the communities that we just delivered in addition to the new communities that we expect to deliver.
Speaker Change: Into 2026 development timelines continued to be elongated and take longer to get a development from.
Speaker Change: Initial completion of engineering and design to getting the community ready.
Speaker Change: And on boarded and ready for for sales teams to be active.
Speaker Change: So I think in the first quarter and what you see is just the lower absorption rate kind of impacts that from a timing standpoint, so as absorptions start to reaccelerate in the back half of the year Youll see us recover more cash than we're reinvesting because our communities are.
Speaker Change: Delivering the sections the timing of the next section is being pushed out and re evaluated that just takes some time for that to happen.
Speaker Change: So few things adjust the cash flow spend.
Speaker Change: Then make sure we can get the homes delivered.
Speaker Change: Into the sales process.
Speaker Change: And that just takes it takes a little bit longer than I think it sees in a single quarter.
Speaker Change: Really appreciate that and then I guess given your comment about gross margins going up partly due to higher volume could you.
Speaker Change: Refresh us on what cost do you have I guess gross margin this is Chris.
Speaker Change: Sales like is it like 3% with sales or fixed.
Speaker Change: That Cogs line and then.
Speaker Change: What do you expect your year end inventory units to be thank you very much.
Speaker Change: Yes.
Speaker Change: Questions. Ken So included in gross margins I mean, youre going to have capitalized overhead as the primary variable.
Speaker Change: If you've got.
Speaker Change: Lower lower volume the amount of dollars that come through related to construction related costs. That's typical when absorptions are lower the percentage of revenue that is allocated based on the construction dollars is typically going to be higher so that that levels out through the year that is that is not.
Speaker Change: Unique to 2025, that's really been the case why we guide to lower gross margin would have been first quarter for that.
Speaker Change: Do you have a number for that 4% for the year, we can do the modeling ourselves.
Speaker Change: Yes, im going to say over time is going to be somewhere around 30, maybe up to 50 basis points improvement directly related to absorptions, but obviously going to be tied to how much volume comes through and then staffing levels per community and make a difference as well, but around 30% to 50 basis points.
Speaker Change: Okay, and then yearend inventory talk thank you.
Speaker Change: Yes.
Speaker Change: Year end inventory I think we're trending too. We ended we ended first quarter at about 4200 units.
Speaker Change: So I'd say, we're probably going to be somewhere in that range a lot of it is going to depend on timing of 2026.
Speaker Change: Openings and what that outlook looks like but I would say, we would end the year similar somewhere similar to where we are today, maybe a little bit more balanced in terms of we would expect our completed homes.
Speaker Change: And with to be a little bit more balanced 60, 40, rather than we're a little bit heavier in completed units at the moment that is also typical in the first quarter as we move into the summer.
Speaker Change: Thank you.
Speaker Change: Youre welcome.
Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Jay Mccanless from Wedbush.
Jay Mccanless: Hey, guys. Thanks for taking my questions.
Jay Mccanless: The first one I had you called out I think wholesale at roughly 18% of closings this quarter and I think that's probably the highest number you all had in at least the last five or six quarters is there enough demand in the wholesale channel that if you needed to lean into that the buyers are there to support that margin percentage.
Speaker Change: Yes, Jane is there I think it's very market specific and then that 18% number was on a pretty low overall volume number.
Speaker Change: So it certainly wasn't the biggest wholesale number we've had in our history as an absolute number I don't believe.
Speaker Change: So I would say the wholesale appetite for houses Theyre still a significant bid ask spread difference.
Speaker Change: But as the business is there for the right price also very market specific and even submarket specific.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And then it was nice to see liquidity went up sequentially from the fourth quarter and also like to see in the stock buyback could you tell us how much you have outstanding on the repurchase authorization right now.
Speaker Change: Hey, Jay This is Josh Yeah, we currently have $177 million still outstanding on that.
Speaker Change: Although we did about $3 $1 million last quarter was about 41000 shares probably worth hitting on the point that.
Speaker Change: So the comment that Charles made earlier right when Youre seeing a 2.2 absorption pace and thats going to delineate where youre underwriting criteria is for that period makes it a little bit more compelling for you to be going out and using some of that cash to buy back shares. There was obviously a nice arbitrage on that so you should expect for us to put a higher priority on share repurchases in the future as well.
Speaker Change: I think as they try to get a 36% discount to the book value were just.
Speaker Change: We just reported and so that is a compelling investment for our business.
Speaker Change: And then one more if I may.
Speaker Change: Eric I know you said at the beginning that.
Eric Lieber: The full year volume guidance was predicated on a slow start to the year.
Eric Lieber: And on a couple of other people have asked about this but maybe could you talk about where some of the openings are going to happen in the rest of the year and are they in some of your higher volume markets are lower volume markets is there anything geographically. Besides just the volume of communities opening maybe something geographically that's going to help you guys get to the full year.
Eric Lieber: Closing guidance.
Eric Lieber: Yes, I think it's more the absolute number Jay then than geography, and also replacement communities. We're talking about net new communities a lot of replacement communities coming online.
Eric Lieber: We are opening a number in the Carolinas, which has a higher volume community for us, but we're also opening quite a few communities in the west coast wasn't necessarily higher volume, but certainly higher asps and higher revenue. So we're excited about those those openings as well.
Speaker Change: Okay, great. Thanks, guys.
Eric Lieber: Thank you.
Eric Lieber: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Alex Barron from housing Research Center.
Eric Lieber: Yes.
Speaker Change: Thank you gentlemen.
Speaker Change: I wanted to ask you know some of your larger competitors, who focus on specs.
Speaker Change: And the affordable segment seem to be.
Speaker Change: More focused on cutting prices these days.
I'm just wondering how you guys are responding to that and what criteria do you use when.
Speaker Change: When you think about the need to.
Prices Thats. My first question. The other question is with regards to the forward commitment.
Speaker Change: What interest rates generally speaking are you guys offering to buyers.
Speaker Change: Is that incentive.
Speaker Change: Yes, it's a good.
Speaker Change: Good question Alex.
Speaker Change: I'll start with the right question.
Speaker Change: We're buying down to lowest fifth straight powerful every week. So obviously that changes and there are some market dynamics to it.
Speaker Change: Right now we are buying down in most of our customers are in the mid fives for the FHA rate with good credit.
Speaker Change: Which we think we can sell a lot of houses the mid five rates, but it also comes into price.
Speaker Change: All the other incentives so we're leaning into centers, we think it's really compelling the value in the offering we're having for consumers right now.
Speaker Change: Discounting houses.
Speaker Change: Something we don't do a lot of unless it's a standing inventory house and then once the house has been in inventory for a while that's another tool that we have.
Speaker Change: But our communities tend to be larger they tend to have a couple of hundred houses per community and so we're a little bit more and more cautious on doing steep discounts to the price.
Speaker Change: And a lot of cases is not necessarily as well.
Speaker Change: Yes.
Speaker Change: Got it thank you so much.
Speaker Change: Alright, thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Michael Rehaut from Jpmorgan.
Speaker Change: Okay. Thanks.
Speaker Change: I appreciate it just wanted to circle back to a couple of.
Speaker Change: Clarifying remarks, I guess around.
Speaker Change: Margins first off you broke out the charge I believe of $8 6 million.
Speaker Change: On the forward commitment expenses kind of one time.
Speaker Change: $6 5 million was in gross margin I guess through five virtue of the ASP.
Speaker Change: So there obviously were just want to make sure I have it right the remainder would be in <unk>.
SG&A, the $2 1 million.
Mike: Mike This Charles Yes, that's correct.
Okay.
Mike: All revenue and $2 one stop G&A.
Mike: Six 5% in revenue and $2, one and G&A okay.
Mike: And then secondly.
Mike: Again, just any thoughts around.
Mike: <unk> gross margin cadence.
Mike: Would be helpful for modeling.
Speaker Change: Well I think it's going to ramp up as we go because of a volume component and Charles or I talked about that 30% to 50 basis points without and then we gave our annual our annual guidance of 24% to 25, 5% is where we're comfortable for the year end range.
Speaker Change: Okay Alright.
I'll work it that way thanks very much.
Speaker Change: Thank you and welcome.
Speaker Change: Thank you at this time I'm not showing any further questions.
Speaker Change: Thanks, everyone for participating on today's call and your continued interest in <unk> homes.
Speaker Change: This concludes LNG I homes first quarter 2025 conference call have a great day.
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