LGI Homes, Inc.

Welcome to LGI Homes' third 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. To ask a question during the Q&A session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. I will turn the call over to Josh Fatter, Vice President, Investor Relations at LGI Homes.

Thank you and good afternoon. I'll remind listeners this call contains forward-looking statements, including management's views on LGI's home's business strategy, outlook plans, objectives, and guidance for 2022. Such statements reflect management's current expectations and involve assumptions and estimates that are subject to risks and uncertainties that could cause management's expectations to prove to be incorrect. You should review our filings with the SEC, including the risk factors and cautionary statement about forward-looking statements sections, for discussion of the risks, uncertainties, and other factors that could cause actual results to differ from those presented today. 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 viewpoints as of the date of this conference call and are not guarantees of future performance. Additionally, on today's call, we will discuss non-GAAP financial measures that are not intended to be considered in isolation or as a substitute for 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 press release we issued this morning and in our quarterly report on Form 10-Q for the quarter ended September 30, 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 today are Eric Leeper, LGI Homes 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, everyone, and welcome to our earnings call. I'll open by congratulating the LGI team on our accomplishments in the third quarter. In prior calls, we've said we were preparing for the housing market to normalize. Now it's clear the pendulum has swung past normal and into challenging. With mortgage rates doubling and expectations they could move higher, demand has cooled considerably. Finding buyers who are both motivated and qualified is the new game in town, and we're pivoting in line with our core competencies to meet this challenge. I'm pleased to report our teams across the country are charging forward with enthusiasm and confidence. As we said on the last call, we've ramped up our marketing efforts to find qualified buyers. This continued in the third quarter, and we saw positive results with over 74,000 leads and an increase of 72% over our prior quarter. I want to commend our marketing team for their ability to quickly pivot and for their success connecting with families interested in home ownership. In our information centers, we aren't focused on treasury yields, equity markets, or global instability. Instead, we're focused on the needs of the customers who call us looking to discover if home ownership is possible for them. To understand and meet our customers' needs, we're focused on training. The selling skills that differentiate our model and built our company are currently being refreshed, rehearsed, drilled, and successfully executed every day in every information center across the nation. We want to thank our salespeople for their commitment focus and positivity they demonstrate each day. We've seen considerable success driving demand to our information centers. However, the main headwind is buyer qualification. Higher selling prices combined with higher rates has further stretched affordability and pushed ownership beyond the reach of many renters. To address this, we've implemented a number of incentives designed to make monthly payments more affordable. Additionally, in high margin communities where existing backlog isn't at risk, as well as in communities where input costs are normalizing, we've rolled out selective price reductions while maintaining gross margins in our historical ranges. These efforts are ongoing, but results to date have been positive with third quarter net orders at a pace of 5.5 homes per month per community. mashing our third quarter closing space of 5.5 homes per community. As noted on previous calls, our wholesale channel, selling homes to the single-family rental space, is a powerful lever to drive volume, and this quarter was no exception. During the quarter, we delivered 443 homes into this channel and had an additional 591 wholesale contracts in our backlog at quarter end. Our wholesale business has now generated cumulative revenue of over $1 billion since beginning operations in 2016. Congratulations to the LGI Living team on this impressive milestone and on their accomplishments during the quarter. With that, I'll turn the call over to Charles to discuss our financial results.