LGI Homes, Inc.

Ladies and gentlemen, please remain on your lines. Your conference call will begin momentarily. Once again, please remain on your lines. Your conference call will begin momentarily. Thank you. Thank you. Welcome to LGI Homes' first quarter 2022 conference call. Today's call is being recorded, and a replay will be available on the company's website later today at www.lgihomes.com. We have allocated an hour for prepared remarks and Q&A. If anyone should require operator assistance during the conference call, please press star zero. At this time, I will turn the call over to Josh Fatter, Vice President of Investor Relations at LGI Homes.

Thank you. Good afternoon and welcome to our conference call to discuss our results for the first quarter of 2022. I'll remind listeners that this call will contain forward-looking statements that include statements regarding LGI Home's business strategy, outlook, plans, objectives, and guidance for 2022. All such statements reflect management's current expectations. However, these statements involve assumptions and estimates and are therefore subject to risks and uncertainties that could cause management expectations to prove to be incorrect. You should review our filings with the SEC, including our risk factors and cautionary statement about forward-looking statements sections, for a discussion of the risks, uncertainties, and other factors that could cause our actual results to differ from those presented in these forward-looking statements. You should consider all forward-looking statements in light of the related risks and not place undue reliance on these forward-looking statements, which speak only as of the date of this conference call and are not guarantees of future performance. Additionally, we will discuss non-GAAP financial measures on today's call. Such information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be found in the earnings release that we issued this morning and in our quarterly report on Form 10-Q for the quarter ended March 31, 2022, that we expect to file with the SEC later today. This filing will be accessible on the SEC's website and in the Investor Relations section of our website. Our hosts for today's call are Eric Lieber, LGI Home's Chief Executive Officer and Chairman of the Board, and Charles Murdian, Chief Financial Officer and Treasurer. I will now turn the call over to Eric.

Thanks, Josh. Good afternoon and welcome to our earnings call. I'll open with highlights on our first quarter, and then Charles will provide more details on our financial results. Finally, I'll close with an update on our performance so far in the second quarter and our outlook for the rest of the year. Despite ongoing supply chain headwinds, we delivered strong first quarter operational results. Our average selling price was over $341,000, an increase of 24% over the same period last year. Absorptions for the quarter came in at six closings per community per month, well above our eight-year first quarter average of 5.5. Dallas-Fort Worth was our top market with 13 closings, per community per month. Houston was second with 11.3, followed by San Antonio with 11.2. Rounding out the top five were Nashville with 9.7 and Las Vegas with 8.7 closings per community per month. Congratulations to the teams in these markets on an impressive first quarter performance. During the quarter, cycle times continued to lengthen as we navigated supply shortages, labor constraints, and inspection delays. Despite the impact these headwinds had on first-quarter deliveries, our systems-based processes and continued pricing power enabled us to deliver record results in virtually all our profitability metrics. Gross margin and adjusted gross margin were up significantly, coming in at all-time highs of 29% and over 30%, respectively. EBITDA margins were also a first quarter record at over 19%. Finally, continued demand-driven efficiencies and disciplined cost controls helped deliver a pre-tax net income margin of over 18% and net income margin of over 14%, both of which were first quarter records. As part of our commitment to providing exceptional customer service, we are releasing homes for sale when they are within 60 days of closing. Doing so provides the clearest view of costs, improves the accuracy of estimating closing dates, limits customers' time and backlog, and eliminates interest rate risk while they prepare to close. Despite rising rates and a metering of our sales pace, our orders were up 32% over last quarter, and we ended March with more than 2,400 homes in backlog. Given the attention on rising interest rates, we're closely monitoring the sales in our backlog and can report that over 96% of our backlog has no interest rate exposure. Demand during the quarter was strong, supported by positive underlying fundamentals, including favorable demographics, low unemployment, a strong economy, tight inventory, rising rents, and the increased preference for homeownership born out of the pandemic. Nevertheless, prices of new and existing homes are up significantly, and mortgage rates are expected to move higher. As a result, we are seeing signs that demand is normalizing from the unprecedented levels witnessed throughout 2021. We carefully monitor demand in each of our markets, and while it's certainly not as hot as last year, we haven't seen the need to adjust our current course. In fact, with only 450 completed homes at quarter end and very few of those homes unsold, the primary constraint to closings continues to be longer cycle times and the opening of new communities. With that, I'll turn the call over to Charles for more details on our financial results.