Company: LGIH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001580670-25-000016
Chunk: 103

Company: LGI Homes, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1
Chunk 103
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 do. Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. 

The following table reconciles adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands):

 Year Ended December 31,  202420232022Home sales revenues$2,202,598 $2,358,580 $2,304,455 Cost of sales1,669,310 1,816,393 1,657,855 Gross margin533,288 542,187 646,600 Capitalized interest charged to cost of sales42,071 33,368 20,276 Purchase accounting adjustments (1)4,034 6,492 6,869 Adjusted gross margin$579,393 $582,047 $673,745 Gross margin % (2)24.2 %23.0 %28.1 %Adjusted gross margin % (2)26.3 %24.7 %29.2 %

(1)Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.

(2)Calculated as a percentage of home sales revenues.

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EBITDA 

EBITDA is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales. Our management believes that the presentation of EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business. EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, our management believes that this measure is useful for comparing general operating performance from period to period. Other companies may define this measure differently and, as a result, our measure of EBITDA may not be directly comparable to the measures of other companies. Although we use EBITDA as a financial measure to assess the performance of our business, the use of this measure is