Company: LGIH
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001580670-25-000076
Chunk: 116

Company: LGI Homes, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 8
Chunk 116
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 cycle and can differ substantially from reported earnings.

Our principal uses of capital are operating expenses, land and lot purchases, lot development, home construction, interest costs on our indebtedness and the payment of various liabilities. In addition, we may purchase land, lots, homes under construction or other assets as part of an acquisition and repurchase shares of our common stock.  Early stages of development or expansion require significant cash outlays for land acquisitions, land development, plats, vertical development, construction of information centers, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our statement of operations until a home closes, we incur significant cash outflows prior to recognition of home sales revenues. In the later stages of an active community, cash inflows may exceed home sales revenues reported for financial statement purposes, as the costs associated with home and land construction were previously incurred.

Net Debt to Capital Ratio

As of September 30, 2025, our net debt to capital ratio was 44.8%.  We use this ratio as a supplemental measure of financial leverage and capital efficiency. This ratio is calculated as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity.  Our net debt to capital ratio reflects our balanced approach to financing growth while maintaining liquidity.  We continue to monitor leverage levels in light of evolving market conditions to keep an eye on capital efficiency and shareholder value.  At September 30, 2025, we were in compliance with all of the covenants contained in the Credit Agreement, including minimum tangible net worth, maximum leverage ratio, minimum liquidity amount, and minimum EBITDA to interest expense ratio, and with all of the covenants contained in the Loan Agreement.  As of September 30, 2025, $367.9 million was available to borrow under the Credit Agreement, providing ample liquidity to support operations and growth initiatives.

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Short-term Liquidity and Capital Resources

We generally rely on our ability to finance our operations by generating operating cash flows and borrowing under the Credit Agreement to adequately fund our short-term working capital obligations and to purchase land and other assets, develop lots and homes and repurchase shares of our common stock. As needed, we will consider accessing the debt and equity capital markets as part of our ongoing financing strategy. We rely on our ability to obtain performance, payment and completion surety bonds as well as letters of credit to finance our projects. Furthermore, we utilize, on a limited and strategic basis