What changed in this filing

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Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 135 added, 98 removed, 406 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

As of September 30, 2024 and December 31, 2023

(in thousands, except share and per share amounts)

September 30,

Cash and cash equivalents

14 unchanged sentences

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, none outstanding

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 31,336,340 and 31,774,615 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 31,337,062 and 31,774,615 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

5 unchanged sentences

Unaudited Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Homebuilding revenues

15 unchanged sentences

Inventory impairment

Other income (expense)

Other expense

Income before income tax expense

5 unchanged sentences

Unaudited Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2024 and 2023

For the Nine Months Ended September 30, 2024 and 2023

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

5 unchanged sentences

Impairment on other investment

Purchase price accounting for acquired work in process inventory

Abandonment of lot option contracts

13 unchanged sentences

Expenditures related to development of rental properties

Business combination and other investing activities

Payments for business combinations

Other investing activities

Net cash used in investing activities

2 unchanged sentences

Payments on revolving credit facilities

( 1,045,000 )

Borrowing under construction loan agreements

5 unchanged sentences

Dividend payments

Other financing activities

Net cash provided by (used in) financing activities

Net (decrease) increase

Cash and cash equivalents and Restricted cash

10 unchanged sentences

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

(in thousands)

For the Three Months Ended June 30, 2024 and 2023

For the Three Months Ended September 30, 2024 and 2023

Additional Paid-In Capital

1 unchanged sentence

Total Stockholders' Equity

Balance at March 31, 2024

Balance at June 30, 2024

Vesting of stock-based compensation awards

3 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at September 30, 2024

Balance at June 30, 2023

Balance at March 31, 2023

Vesting of stock-based compensation awards

3 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2023

For the Six Months Ended June 30, 2024 and 2023

Balance at September 30, 2023

For the Nine Months Ended September 30, 2024 and 2023

Additional Paid-In Capital

7 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2024

Balance at September 30, 2024

Balance at December 31, 2022

4 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2023

Balance at September 30, 2023

See Notes to Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2024

September 30, 2024

Basis of Presentation

23 unchanged sentences

Accordingly, actual results could differ from those estimates.

Business Acquisition

On January 22, 2024, we closed on the acquisition of substantially all the assets of Landmark Homes of Tennessee, Inc.

(“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $ 33.4 million in cash, inclusive of customary holdbacks.

Recently Issued Accounting Standards

12 unchanged sentences

ASU 2023-07 will become effective for us for the fiscal year ending December 31, 2024, and for interim periods starting in our first quarter of 2025 .

Early adoption is permitted, and guidance is required to be applied retrospectively.

Early adoption is permitted, and guidance is required to be applied

retrospectively.

We are currently evaluating the impact of the adoption of ASU 2023-07 on our consolidated financial statements and related disclosures.

19 unchanged sentences

The following table summarizes total revenue and income (loss) before income tax expense by segment (in thousands ):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Century Complete

6 unchanged sentences

The following table summarizes total assets by segment (in thousands):

September 30,

Century Complete

1 unchanged sentence

Corporate assets primarily include costs associated with development of multi-family rental properties, certain cash and cash equivalents, certain property and equipment, deferred tax assets, certain receivables, and prepaid insurance.

Business Combinations

On January 22, 2024, we closed on the acquisition of substantially all the assets and assumed certain liabilities of Landmark Homes of Tennessee, Inc.

(“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $ 33.4 million in cash, inclusive of customary holdbacks.

We concluded that the acquisition represents a business combination, and in connection with this acquisition, we allocated $ 1.7 million in goodwill to the Southeast operating segment.

We incurred $ 0.1 million in acquisition costs, which are reflected in other expense in our condensed consolidated statements of operations.

On July 31, 2024, we closed on the acquisition of substantially all the assets and operations and assumed certain liabilities of Anglia Homes LP (“Anglia”), a homebuilder with operations, including 26 active communities, in the greater Houston, Texas area, for approximately $ 127.0 million in cash, inclusive of customary holdbacks.

We concluded that the acquisition represents a business combination, as we determined that the fair value of the gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets, and the acquired assets and processes have the ability to create outputs in the form of revenue from the sale of single-family residences.

We incurred $ 0.5 million in acquisition costs, which are reflected in other expense in our condensed consolidated statements of operations.

The following is a summary of the allocation of the purchase price for Anglia based on the fair value of assets acquired and liabilities assumed (in thousands):

Prepaid expenses and other assets

Property and equipment, net

Amortizable intangible assets

Accounts payable

Accrued expenses and other liabilities

Total liabilities

Net assets acquired

Acquired inventories consist of work in process inventories and finished lots.

We estimated the fair value of the acquired inventories based upon the stage of production of each unit and a gross margin that we believe a market participant would require to complete the remaining development and requisite selling efforts.

We estimated a market participant would require a gross margin ranging from approximately 8 % to 20 % based upon the stage of production of the individual lot.

Amortizable intangible assets acquired include right of first refusal and non-compete agreements, which we, with the assistance of a third-party valuation firm , estimated to have fair values of $ 0.9 million and $ 1.0 million, respectively.

These intangible assets are amortized each over 2 years.

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed, and in connection with this acquisition, we have allocated $ 7.4 million in goodwill to the Texas operating segment.

Goodwill allocated for tax purposes is expected to be deductible.

We determined that Anglia’s carrying costs approximated fair value for all other acquired assets and assumed liabilities.

From the acquisition date, Anglia’s results of operations, which include home sales revenue of $ 20.3 million and loss before income tax, inclu sive of purchase price accounting, of $ 1.5 million, are included in our accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2024.

Inventories included the following (in thousands):

September 30,

Homes under construction

11 unchanged sentences

Net gains and losses from the sale of mortgage loans held for sale, which are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale, are also included in financial services revenue on the consolidated statements of operations.

Financial services revenue also includes fees earned from originating mortgage loans which are recognized at the time the mortgage loans are funded, which include origination fees and discount points to reduce interest rates based on commitment agreements entered into between our homebuilding and Financial Services segments.

As of June 30, 2024 and December 31, 2023, Inspire had mortgage loans held for sale with an aggregate fair value of $ 255.3 million and $ 251.9 million, respectively, and an aggregate outstanding principal balance of $ 255.3 million and $ 247.7 million, respectively.

Net losses on the sale of mortgage loans were $ 5.8 million and $ 3.8 million for the three and six months ended June 30, 2024 , respectively, and net gains on the sale of mortgage loans were $ 1.7 million and $ 3.5 million for the three and six months ended June 30, 2023, respectively.

The gain from the change in fair value for mortgage loans held for sale was $ 0.9 million for the three months ended June 30, 2024, and the loss from the change in fair value for mortgage loans held for sale was $ 4.2 million for the six months ended June 30, 2024.

Losses from the change in fair value for mortgage loans held for sale were $ 2.0 million for both the three and six months ended June 30, 2023, respectively.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $ 125.0 million and $ 49.6 million at June 30, 2024 and December 31, 2023, respectively, and carried a weighted average interest rate of approximately 5.9 % and 5.8 %, respectively .

Financial services revenue also includes fees earned from originating mortgage loans, which are recognized at the time the mortgage loans are funded, which include origination fees and discount points provided directly to our customers to reduce interest rates based on commitment agreements entered into between our homebuilding and Financial Services segments .

Intercompany fees charged directly to the homebuilder are eliminated from financial services revenue on the condensed consolidated statements of operations upon consolidation.

As of September 30, 2024 and December 31, 2023, Inspire had mortgage loans held for sale with an aggregate fair value of $ 257.2 million and $ 251.9 million, respectively, and an aggregate outstanding principal balance of $ 257.1 million and $ 247.7 million, respectively.

Net losses on the sale of mortgage loans were $ 1.1 million and $ 4.9 million for the three and nine months ended September 30, 2024 , respectively, and were $ 6.9 million and $ 3.4 million for the three and nine months ended September 30, 2023, respectively.

The gain from the change in fair value for mortgage loans held for sale was $ 0.1 million for the three months ended September 30, 2024, and the loss from the change in fair value for mortgage loans held for sale was $ 4.1 million for the nine months ended September 30, 2024.

Losses from the change in fair value for mortgage loans held for sale were $ 2.9 million and $ 4.9 million for the three and nine months ended September 30, 2023, respectively.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $ 146.0 million and $ 49.6 million at September 30, 2024 and December 31, 2023, respectively, and carried a weighted average interest rate of approximately 4.9 % and 5.8 %, respectively .

Interest rate risks related to these obligations are typically mitigated through our interest rate hedging program or by the preselling of loans to investors.

5 unchanged sentences

Prepaid expenses and other assets included the following (in thousands):

September 30,

Prepaid insurance

10 unchanged sentences

(1) Restricted cash consists of restricted cash related to land development, earnest money deposits for home sale contracts held by third parties as required by various jurisdictions, and certain compensating balances associated with our mortgage repurchase facilities and other financing obligations.

(2) During the nine months ended September 30, 2024, certain multi-family rental properties were completed and became available for leasing;

and as such, we reclassified $ 92.4 million from multi-family rental properties under construction, included in prepaid expenses and other assets on the condensed consolidated balance sheets, to property and equipment, net on the condensed consolidated balance sheets.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities included the following (in thousands):

September 30,

Earnest money deposits

11 unchanged sentences

We subsequently assess the adequacy of our warranty accrual on a quarterly basis through a model that incorporates historical payment trends and adjust the amounts recorded, if necessary.

Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $ 0.2 million and $ 0.2 million during the three months ended June 30, 2024 and 2023, respectively, and we reduced our warranty reserve by $ 1.5 million and $ 0.7 million during the six months ended June 30, 2024 and 2023, respectively.

Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $ 0.3 million and $ 0.5 million during the three months ended September 30, 2024 and 2023, respectively, and we reduced our warranty reserve by $ 1.9 million and $ 1.2 million during the nine months ended September 30, 2024 and 2023, respectively.

These adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.

Changes in our warranty accrual for the three and six months ended June 30, 2024 and 2023 are detailed in the table below (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Changes in our warranty accrual for the three and nine months ended September 30, 2024 and 2023 are detailed in the table below (in thousands) :

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning balance

11 unchanged sentences

Estimates of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable.

During the three and six months ended June 30, 2024 and 2023, we recorded no adjustment to our self-insurance reserve.

Based on a third-party actuarial analysis, we reduced our self-insurance reserve by $ 0.8 million during the three and nine months ended September 30, 2024, and we reduced our self-insurance reserve by $ 3.4 million during the three and nine months ended September 30, 2023.

Any adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.

Changes in our self-insurance reserve for incurred but not reported construction defect claims for the three and six months ended June 30, 2024 and 2023 are detailed in the table below (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Changes in our self-insurance reserve for incurred but not reported construction defect claims for the three and nine months ended September 30, 2024 and 2023 are detailed in the table below (in thousands) :

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning balance

2 unchanged sentences

Ending balance

Our outstanding debt obligations included the following as of June 30, 2024 and December 31, 2023 (in thousands):

Our outstanding debt obligations included the following as of September 30, 2024 and December 31, 2023 (in thousands):

September 30,

3.875 % senior notes, due August 2029 (1)

5 unchanged sentences

(1) The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest expense over the respective terms of the senior notes.

(2) As of June 30, 2024, other financing obligations included $ 8.8 million related to insurance premium notes and certain secured borrowings, as well as $ 72.9 million outstanding under construction loan agreements.

(2) As of September 30, 2024, other financing obligations included $ 14.5 million related to insurance premium notes and certain secured borrowings, as well as $ 110.3 million outstanding under construction loan agreements.

As of December 31, 2023, other financing obligations included $ 24.7 million related to insurance premium notes and certain secured borrowings, as well as $ 44.9 million outstanding under construction loan agreements.

6 unchanged sentences

Interest on our construction loan agreements is capitalized to the multi-family properties assets included in prepaid expenses and other assets on the condensed consolidated balance sheets while the related multi-family rental properties are being actively developed .

As of June 30, 2024 and December 31, 2023, $ 72.9 million and $ 44.9 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 7.4 % and 7.4 % as of June 30, 2024 and December 31, 2023, respectively, and we were in compliance with all covenants thereunder.

As of September 30, 2024 and December 31, 2023, $ 110.3 million and $ 44.9 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 7.2 % and 7.4 % as of September 30, 2024 and December 31, 2023, respectively, and we were in compliance with all covenants thereunder.

Revolving Line of Credit

2 unchanged sentences

The revolving line of credit includes a $ 250.0 million sublimit for standby letters of credit and a $ 50.0 million sublimit for swingline loans.

Under the terms of the Second A&R Credit Agreement, we are entitled to request

an increase in the size of the revolving line of credit by an amount not exceeding $ 200.0 million.

Under the terms of the Second A&R Credit Agreement, we are entitled to request an increase in the size of the revolving line of credit by an amount not exceeding $ 200.0 million.

Our obligations under the Second A&R Credit Agreement are guaranteed by certain of our subsidiaries.

1 unchanged sentence

Borrowings under the Second A&R Credit Agreement are based on an adjusted term SOFR reference rate, which equals the greater of (i) 0.50 % or (ii) the one-month quotation of the SOFR administered by the Federal Reserve Bank of New York, plus 0.10 %.

As of June 30, 2024, $ 111.0 million was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 7.5 %, and we were in compliance with all covenants under the Second A&R Credit Agreement.

As of September 30, 2024, $ 414.0 million was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 7.4 %, and we were in compliance with all covenants under the Second A&R Credit Agreement.

As of December 31, 2023, no amount was outstanding under the revolving line of credit.

1 unchanged sentence

Inspire is party to mortgage warehouse facilities with J.P.

Morgan Chase Bank, N.A., Texas Capital Bank, and U.S.

Bank National Association, which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $ 350.0 million as of June 30, 2024, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through March 21, 2025 .

Borrowings under the mortgage repurchase facilities bear interest at variable interest rates per annum equal to SOFR plus an applicable margin, and bore a weighted average interest rate of 7.1 % as of June 30, 2024.

Morgan Chase Bank, N.A., U.S.

Bank National Association and Truist Bank, which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $ 475.0 million as of September 30, 2024, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through September 26, 2025 .

Amounts outstanding under the repurchase facilities are not guaranteed by us or any of our subsidiaries, and the agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type.

As of June 30, 2024 and December 31, 2023, we had $ 248.8 million and $ 239.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

As of September 30, 2024 and December 31, 2023, we had $ 247.2 million and $ 239.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

Interest on Senior Notes and Revolving Line of Credit

Interest on our senior notes and revolving line of credit, if applicable, is capitalized to inventories while the related communities are being actively developed and until homes are completed.

As our qualifying assets exceeded our outstanding debt during the three and six months ended June 30, 2024 and 2023, we capitalized all interest costs incurred on these facilities during these periods.

As our qualifying assets exceeded our outstanding debt during the three and nine months ended September 30, 2024 and 2023, we capitalized all interest costs incurred on these facilities during these periods.

Our interest costs were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Interest capitalized beginning of period

3 unchanged sentences

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period.

Our 2024 estimated annual effective tax rate, before discrete items of 24.6 %, is driven by our blended federal and state statutory rate of 24.5 %, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation offset by estimated federal energy home credits for current year home deliveries, which combined resulted in a net increase of 0.1 %.

For the six months ended June 30, 2024, our estimated annual rate of 24.6 % was benefitted by discrete items which had a net impact of decreasing our rate by 0.5 %, including the impact of excess tax benefits for vested stock-based compensation.

For the three months ended June 30, 2024 and 2023, we recorded income tax expense of $ 26.9 million and $ 17.3 million, respectively .

For the six months ended June 30, 2024 and 2023, we recorded income tax expense of $ 46.9 million and $ 28.0 million, respectively .

Our 2024 estimated annual effective tax rate, before discrete items, of 24.6 %, is driven by our blended federal and state statutory rate of 24.6 %, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation offset by estimated federal energy home credits for current year home deliveries.

For the nine months ended September 30, 2024, our estimated annual rate of 24.6 % was benefitted by discrete items which had a net impact of decreasing our rate by 0.4 %, including the impact of excess tax benefits for vested stock-based compensation.

For the three months ended September 30, 2024 and 2023, we recorded income tax expense of $ 26.9 million and $ 28.8 million, respectively .

For the nine months ended September 30, 2024 and 2023, we recorded income tax expense of $ 73.8 million and $ 56.9 million, respectively .

Fair Value Disclosures

14 unchanged sentences

 Mortgage loans held for investment at fair value – The fair value of mortgage loans held for investment at fair value is calculated based on Level 3 analysis which incorporates information including the value of underlying collateral, from markets where there is little observable trading activity.

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023, respectively (in thousands):

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023, respectively (in thousands):

September 30,

Balance Sheet Classification

10 unchanged sentences

(1) The unobservable inputs used in the valuation of the mortgage loans held for investment at fair value include, among other items, the value of underlying collateral, from markets where there is little observable trading activity.

(2) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 8.7 %, 10.3 %, and $ 0.072 per year per loan, respectively, as of June 30, 2024, and 8.6 %, 10.3 %, and $ 0.072 per year per loan, respectively, as of December 31, 2023.

(2) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 7.8 %, 10.4 %, and $ 0.073 per year per loan, respectively, as of September 30, 2024, and 8.6 %, 10.3 %, and $ 0.072 per year per loan, respectively, as of December 31, 2023.

The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements, with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage servicing rights

2 unchanged sentences

End of period

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage loans held-for-investment at fair value

4 unchanged sentences

End of period

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at June 30, 2024 and December 31, 2023, respectively (in thousands).

June 30, 2024

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at September 30, 2024 and December 31, 2023, respectively (in thousands).

September 30, 2024

December 31, 2023

7 unchanged sentences

(2) Carrying amounts include any associated unamortized deferred financing costs, premiums and discounts.

As of June 30, 2024, these amounts totaled $ 4.0 million and $ 2.4 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

As of September 30, 2024, these amounts totaled $ 3.8 million and $ 2.2 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

As of December 31, 2023, these amounts totaled $ 4.3 million and $ 2.8 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

(3) Carrying amount approximates fair value due to short-term nature and/or interest rate terms.

(4) During the period ended June 30, 2024, other financing obligations included $ 8.8 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 5.0 % to 7.7 %, and $ 72.9 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.4 % as of June 30, 2024.

(4) During the period ended September 30, 2024, other financing obligations included $ 14.5 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 5.0 % to 8.0 %, and $ 110.3 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.2 % as of September 30, 2024.

During the period ended December 31, 2023, other financing obligations included $ 24.7 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 4.8 % to 7.7 %, and $ 44.9 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.4 %.

Non-financial assets and liabilities include items such as inventory and property and equipment that are measured at fair value when acquired and as a result of impairments, if deemed necessary.

D uring the three and six months ended June 30, 2024, we determined that inventory with a carrying value before impairment of $ 4.5 million for 2 communities in our Century Complete segment were not recoverable.

Accordingly, we recognized impairment charges of an aggregate $ 0.6 million in order to record the communities at fair value.

No impairment charges were recorded in the three and six months ended June 30, 2023.

D uring the three months ended September 30, 2024, we determined that inventory with a carrying value before impairment of $ 10.6 million for two communities in our Century Complete and Southeast segments were not recoverable.

During the nine months ended September 30, 2024, we determined that inventory with a carrying value before impairment of $ 15.2 million for four communities in our Century Complete and Southeast segments were not recoverable .

Accordingly, during the three and nine months ended September 30, 2024, we recognized impairment charges of an aggregate $ 1.4 million and $ 1.9 million, respectively, in order to record the communities at fair value.

No impairment charges were recorded in the three and nine months ended September 30, 2023.

When impairment charges are recognized, the estimated fair value of communities are determined through a discounted cash flow approach utilizing Level 3 inputs.

1 unchanged sentence

Stock-Based Compensation

During the six months ended June 30, 2024 and 2023, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.2 million shares of common stock, respectively, with a grant date fair value of $ 85.84 and $ 62.61 per share, respectively, that vest over a three year period.

During the six months ended June 30, 2024 and 2023, we granted 11.0 thousand and 11.0 thousand

shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with a grant date fair value of $ 82.84 and $ 65.77 per share, respectively, to our non-employee directors.

During the six months ended June 30, 2024 and 2023, we granted performance share units (which we refer to as “PSUs”) covering up to 0.3 million and 0.5 million shares of common stock assuming maximum level of performance with a grant date fair value of $ 82.23 and $ 60.05 per share, respectively, that are subject to both service and performance vesting conditions.

During the nine months ended September 30, 2024 and 2023, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.2 million shares of common stock, respectively, with a grant date fair value of $ 86.01 and $ 62.68 per share, respectively, that vest over a three year period.

During the nine months ended September 30, 2024 and 2023, we granted 11.0 thousand and 11.0 thousand shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with a grant date fair value of $ 82.84 and $ 65.77 per share, respectively, to our non-employee directors.

During the nine months ended September 30, 2024 and 2023, we granted performance share units (which we refer to as “PSUs”) covering up to 0.3 million and 0.5 million shares of common stock assuming maximum level of performance with a grant date fair value of $ 82.23 and $ 60.05 per share, respectively, that are subject to both service and performance vesting conditions.

The quantity of shares that will ultimately vest and be issued upon settlement of the PSUs ranges from 0 % to 250 % of a targeted number of shares and will be determined based on an achievement of a three year adjusted pre-tax income performance goal.

During the six months ended June 30, 2024 and 2023, we issued 0.2 million and 0.3 million shares of common stock, respectively, upon the vesting and settlement of PSUs that were granted in previous periods.

During the nine months ended September 30, 2024 and 2023, we issued 0.2 million and 0.3 million shares of common stock, respectively, upon the vesting and settlement of PSUs that were granted in previous periods.

Approximately 1.1 million shares will vest from 2025 to 2027 if the defined maximum performance targets are met, and no shares will vest if the defined minimum performance targets are not met.

A summary of our outstanding PSUs, assuming the current estimated level of performance achievement, and RSUs are as follows (in thousands, except years):

June 30, 2024

September 30, 2024

Unvested units

1 unchanged sentence

Weighted-average years to recognize compensation cost

During the three months ended June 30, 2024 and 2023, we recognized stock-based compensation expense of $ 7.9 million and $ 8.9 million, respectively.

During the six months ended June 30, 2024 and 2023, we recognized stock-based compensation expense of $ 10.7 million and $ 14.3 million, respectively.

During the three months ended September 30, 2024 and 2023, we recognized stock-based compensation expense of $ 7.4 million and $ 12.2 million, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized stock-based compensation expense of $ 18.1 million and $ 26.5 million, respectively.

Stock-based compensation expense is included in selling, general, and administrative expense on our condensed consolidated statements of operations.

3 unchanged sentences

The Company’s authorized capital stock consists of 100.0 million shares of common stock, par value $ 0.01 per share, and 50.0 million shares of preferred stock, par value $ 0.01 per share.

As of June 30, 2024 and December 31, 2023, there were 31.3 million and 31.8 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

As of September 30, 2024 and December 31, 2023, there were 31.3 million and 31.8 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

On May 4, 2022, the stockholders approved the adoption of the Century Communities, Inc.

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Under the 2022 Incentive Plan, 3.1 million shares of common stock are available for issuance to eligible participants, plus 51.2 thousand shares of our common stock that remained available for issuance under the 2017 Incentive Plan and any shares subject to awards outstanding under the 2017 Incentive Plan that are subsequently forfeited, cancelled, expire or otherwise terminate without the issuance of such shares.

During the six months ended June 30, 2024 and 2023, we issued 0.3 million and 0.4 million shares of common stock, respectively, related to the vesting and settlement of RSUs and PSUs.

As of June 30, 2024, approximately 2.2 million shares of common stock remained available for issuance under the 2022 Incentive Plan.

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the six months ended June 30, 2024 and 2023, respectively (in thousands, except per share information):

Six Months Ended June 30, 2024

During the nine months ended September 30, 2024 and 2023, we issued 0.3 million and 0.4 million shares of common stock, respectively, related to the vesting and settlement of RSUs and PSUs.

As of September 30, 2024, approximately 2.2 million shares of common stock remained available for issuance under the 2022 Incentive Plan.

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the nine months ended September 30, 2024 and 2023, respectively (in thousands, except per share information):

Nine Months Ended September 30, 2024

Cash Dividends Declared and Paid

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June 12, 2024

Six Months Ended June 30, 2023

August 14, 2024

August 28, 2024

September 11, 2024

Nine Months Ended September 30, 2023

Cash Dividends Declared and Paid

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June 14, 2023

August 16, 2023

August 30, 2023

September 13, 2023

Under the 2022 Incentive Plan and the previous 2017 Incentive Plan, at the discretion of the Compensation Committee of the Board of Directors, RSUs and PSUs granted under the plan have the right to earn dividend equivalents, which entitles the holders of such RSUs and PSUs to additional RSUs and PSUs equal to the same dividend value per share as holders of common stock.

Dividend equivalents are subject to the same vesting and other terms and conditions as the underlying RSUs and PSUs.

Our Board of Directors authorized a stock repurchase program in 2018, under which we may repurchase up to 4.5 million shares of our outstanding common stock.

During the three and six months ended June 30, 2024, an aggregate of 465.0 thousand and 651.9 thousand shares, respectively, were repurchased for a total purchase price of approximately $ 37.0 million and $ 53.1 million, respectively, and a weighted average price of $ 79.61 and $ 81.49 per share, respectively.

During the three and six months ended June 30, 2023, an aggregate of 30.4 thousand shares were repurchased for a total purchase price of approximately $ 2.0 million and a weighted average price of $ 64.84 per share.

The maximum number of shares available to be repurchased under the stock repurchase program as of June 30, 2024 was 578,143 shares.

On July 22, 2024, our Board of Directors approved a new stock repurchase program under which we may repurchase up to an additional 4.5 million shares.

During the six months ended June 30, 2024 and 2023, shares of common stock at a total cost of $ 10.4 million and $ 10.6 million, respectively, were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock-based compensation awards.

Our stock repurchase programs, authorized by our Board of Directors, authorize us to repurchase up to 9.0 million shares of our outstanding common stock, of which 5.1 million shares remained available to be repurchased as of September 30, 2024.

We did no t repurchase any shares of our common stock during the three months ended September 30, 2024.

During the nine months ended September 30, 2024, an aggregate of 651.9 thousand shares were repurchased for a total purchase price of approximately $ 53.1 million and a weighted average price of $ 81.49 per share.

During the three and nine months ended September 30, 2023, an aggregate of 247.8 thousand and 278.2 thousand shares, respectively, were repurchased for a total purchase price of approximately $ 17.3 million and $ 19.2 million, respectively, and a weighted average price of $ 69.61 and $ 69.09 per share, respectively.

During the nine months ended September 30, 2024 and 2023, shares of common stock at a total cost of $ 10.5 million and $ 10.7 million, respectively, were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock-based compensation awards.

Shares surrendered by the participants in accordance with the applicable award agreements and plan are deemed repurchased and retired by us but are not part of our publicly announced share repurchase programs.

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We use the treasury stock method to calculate earnings per share as our currently issued non-vested RSUs and PSUs do not have participating rights.

The following table sets forth the computation of basic and diluted EPS for the three and six months ended June 30, 2024 and 2023 (in thousands, except share and per share information):

Three Months Ended June 30,

Six Months Ended June 30,

The following table sets forth the computation of basic and diluted EPS for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share and per share information):

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted average common shares outstanding - basic

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Stock-based awards are excluded from the calculation of diluted EPS in the event they are subject to unsatisfied performance conditions or are antidilutive.

We excluded 0.4 million and 0.9 million common stock unit equivalents from diluted earnings per share during the three months ended June 30, 2024 and 2023, respectively, and we excluded 0.4 million and 0.7 million common stock unit equivalents from diluted earnings per share during the six months ended June 30, 2024 and 2023, respectively, related to the PSUs for which performance conditions remained unsatisfied.

We excluded 0.4 million and 0.9 million common stock unit equivalents from diluted earnings per share during the three months ended September 30, 2024 and 2023, respectively, and we excluded 0.4 million and 0.8 million common stock unit equivalents from diluted earnings per share during the nine months ended September 30, 2024 and 2023, respectively, related to the PSUs for which performance conditions remained unsatisfied.

Commitments and Contingencies

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In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities.

As of June 30, 2024 and December 31, 2023, we had $ 514.8 million and $ 510.5 million, respectively, in letters of credit and performance and other bonds issued and outstanding.

As of September 30, 2024 and December 31, 2023, we had $ 527.9 million and $ 510.5 million, respectively, in letters of credit and performance and other bonds issued and outstanding.

Legal Proceedings

We are subject to claims and lawsuits that arise primarily in the ordinary course of business, which consist primarily of construction claims.

It is the opinion of our management that if the claims have merit, parties other than the Company would be, at least in part, liable

for the claims, and the eventual outcome of these claims will not have a material adverse effect upon our consolidated financial condition, results of operations, or cash flows.

It is the opinion of our management that if the claims have merit, parties other than the Company would be, at least in part, liable for the claims, and the eventual outcome of these claims will not have a material adverse effect upon our consolidated financial condition, results of operations, or cash flows.

When we believe that a loss is probable and estimable, we record a charge on our condensed consolidated statements of operations for our estimated loss.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements