What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-24 compared with 2024-07-25 · 171 added, 146 removed, 448 unchanged (41% of the section changed)

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Statements regarding the following subjects, among others, may be forward-looking and subject to risks and uncertainties including among others:

 econo mic changes, either nationally or in the markets in which we operate, including increased interest rates and the resulting impact on the accessibility of mortgage loans to homebuyers, persistent inflation, and decreased employment levels;

 econo mic changes, either nationally or in the markets in which we operate, including changes in interest rates and the resulting impact on the accessibility of mortgage loans to homebuyers, persistent inflation, and decreased employment levels;

 shortages of or increased prices for labor, land or raw materials used in housing construction and resource shortages;

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 availability and price of land to acquire, and our ability to acquire such land on favorable terms or at all;

 the effect of and risks associated with our recent acquisitions;

 availability, terms and deployment of capital;

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Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing our customers greater certainty on their financing and allowing us to more appropriately price the homes and deploy our capital.

Of the 4,975 homes delivered during the first six months of 2024, approximately 94% of our deliveries were made to entry-level homebuyers that were below the Federal Housing Administration-insured mortgage limits and approximately 98% of homes delivered were built as move-in ready homes.

We generated solid financial results during the three and six months ended June 30, 2024 and are encouraged by recent housing market conditions demonstrating strong, underlying demand for affordable new homes.

While uncertainty remains surrounding interest rates , we experienced strong demand during the first half of 2024, as net new home contracts (new home contracts net of cancellations) for the three and six months ended June 30, 2024 increased 20.0% and 30.1%, respectively, as compared to the same prior year periods.

We have continued to provide, when necessary, incentive offerings across our communities during the first six months of 2024, including

discounts on base home prices, lot premiums, and options and upgrades and financing incentives, including interest rate buydowns.

During the six months ended June 30, 2024, cycle times have remained in the four- to five-month timeframe.

We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot provide any assurance that our strategies will remain consistent or continue to be successful.

Of the 7,809 homes delivered during the first nine months of 2024, approximately 93% of our deliveries were made to entry-level homebuyers that were below the Federal Housing Administration-insured mortgage limits and approximately 98% of homes delivered were built as move-in ready homes.

During 2024, we have completed two acquisitions.

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 in the greater Houston, Texas area, for approximately $127.0 million in cash, inclusive of customary holdbacks.

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.

Current housing market conditions demonstrate solid, underlying demand for affordable new homes and, coupled with a more recent moderation in mortgage rates, we experienced solid demand during the first nine months of 2024, as net new home contracts (new home contracts net of cancellations) for the three and nine months ended September 30, 2024 increased 19.3% and 26.5%, respectively, as compared to the same prior year periods.

We have continued to provide, when necessary, incentive offerings across our communities during the first nine months of 2024, including discounts on base home prices, lot premiums, and options and upgrades and financing incentives, including interest rate buydowns.

During the nine months ended September 30, 2024, cycle times have remained in the four- to five-month timeframe.

provide any assurance that our strategies will remain consistent or continue to be successful.

We believe future demand for our homes remains uncertain as future economic and market conditions remain uncertain, in particular with respect to inflation;

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housing demand;

the effect of the U.S.

Presidential election on the economy, consumer confidence and homebuilding;

and other factors, including those described elsewhere in this Form 10-Q.

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As a result, our past performance may not be indicative of our future results.

Despite future macro-economic uncertainty, especially in relation to the interest rate environment, we believe we are well-positioned to benefit from the ongoing shortage of both new and resale homes available for purchase in our key markets and the favorable demographics that support the need for new affordable housing.

We believe we are well-positioned to benefit from any future declines in mortgage interest rates, the ongoing shortage of both new and resale homes available for purchase in our key markets, and the favorable demographics that support the need for new affordable housing.

We believe our operations are prepared to withstand volatility in future market conditions as a result of our product offerings which both span the home buying segment and focus on affordable price points, and our current and future inventories of attractive land positions.

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Results of Operations

During the three and six months ended June 30, 2024, we generated $110.6 million and $195.0 million, respectively, in income before income tax expense, as compared to $68.7 million and $112.8 million, respectively, in the respective prior year periods.

During the three and six months ended June 30, 2024, we generated net income of $83.7 million, or $2.61 per diluted share, and $148.1 million, or $4.60 per diluted share, respectively, as compared to $51.4 million, or $1.60 per diluted share, and $84.8 million, or $2.63 per diluted share, respectively, in the respective prior year periods.

During the three and six months ended June 30, 2024, we generated total revenues of $1.0 billion and $2.0 billion, respectively, which represent increases of 23.1% and 24.5%, respectively, as compared to the respective prior year periods, driven primarily by increased home sales revenue from increased number of homes available for sale and increased average sales prices .

During the three and six months ended June 30, 2024, we delivered 2,617 and 4,975 homes, respectively, with an average sales price of $388.8 thousand and $389.9 thousand, respectively.

The number of homes delivered increased by 17.1% and 20.0%, respectively, during the three and six months ended June 30, 2024, as compared to the respective prior year periods, representing growth across all of our segments.

Average sales price increased 6.2% and 4.1%, respectively, during the three and six months ended June 30, 2024, as compared to the respective prior year periods.

During the three and six months ended June 30, 2024, net new contracts increased 20.0% and 30.1%, respectively, to 2,780 and 5,646, respectively, as compared to the respective prior year periods.

We ended the first quarter of 2024 with $111.0 million outstanding under our revolving line of credit, $106.7 million of cash and cash equivalents, $44.8 million of cash held in escrow, a homebuilding debt to capital ratio of 31.1%, and a net homebuilding debt to net capital ratio of 28.1%.

During the three and six months ended June 30, 2024, we paid quarterly cash dividends to our stockholders of $0.26 per share, which represents a 13% increase from the $0.23 per share quarterly dividends paid during the three and six months ended June 30, 2023.

During the six months ended June 30, 2024, we have continued to strategically increase our lot pipeline, including both organically and through an acquisition, resulting in 78,097 lots owned and controlled at June 30, 2024.

For the three and six months ended June 30, 2024, our Financial Services segment generated income before income tax of $5.7 million and $15.7 million, respectively, representing a decrease of 54.7% and 10.6%, respectively, as compared to the respective prior year periods.

During the three and six months ended June 30, 2024, the number of mortgages originated increased by 30.0% and 39.4%, respectively, compared to the respective prior year periods, primarily due to our increased capture rate of 81% for both the three and six months ended June 30, 2024 as compared to 73% and 70% for the respective prior year periods, as well as a 34.6% and 37.8% increase, respectively, in the number of loans sold to third parties as compared to the respective prior year periods.

While volume increased, the decreases in income before income tax for both the three- and six-month comparisons were primarily driven by an increase in financial services costs related to increased commissions, investor fees, and other support fees, and increases in net losses on the sale of mortgage loans, in each case in the current year periods as compared to the respective prior year period.

Our Century Living operations are engaged in construction on three multi-family for rent projects in Colorado, which commenced in 2022 and currently comprise over 900 total units.

As of June 30, 2024, all three projects have begun leasing or pre-leasing, with 107 units completed, 90 units of which are occupied, and 845 units under development.

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.

The following table summarizes our results of operations for the three and six months ended June 30, 2024 and 2023:

During the three and nine months ended September 30, 2024, we generated $109.9 million and $304.9 million, respectively, in income before income tax expense, as compared to $112.0 million and $224.8 million, respectively, in the respective prior year periods.

During the three and nine months ended September 30, 2024, we generated net income of $83.0 million, or $2.59 per diluted share, and $231.1 million, or $7.19 per diluted share, respectively, as compared to $83.2 million, or $2.58 per diluted share, and $167.9 million, or $5.21 per diluted share, respectively, in the respective prior year periods.

During the three and nine months ended September 30, 2024, we generated total revenues of $1.1 billion and $3.1 billion, respectively, which represent increases of 27.8% and 25.7%, respectively, as compared to the respective prior year periods, driven primarily by increased home sales revenue from increased number of homes available for sale and increased average sales prices .

During the three and nine months ended September 30, 2024, we delivered 2,834 and 7,809 homes, respectively, with an average sales price of $393.8 thousand and $391.3 thousand, respectively.

The number of homes delivered increased by 25.2% and 21.8%, respectively, during the three and nine months ended September 30, 2024, as compared to the respective prior year periods, representing growth across all of our segments.

Average sales price increased 3.1 % and 3.7%, respectively, during the three and nine months ended September 30, 2024, as compared to the respective prior year periods.

During the three and nine months ended September 30, 2024, net new contracts increased 19.3% and 26.5%, respectively, to 2,563 and 8,209, respectively, as compared to the respective prior year periods.

We ended the third quarter of 2024 with $149.2 million of cash and cash equivalents and $70.8 million of cash held in escrow.

We had $414.0 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 35.8% and a net homebuilding debt to net capital ratio of 32.1%.

During the three and nine months ended September 30, 2024, we paid quarterly cash dividends to our stockholders of $0.26 per share, which represents a 13% increase from the $0.23 per share quarterly dividends paid during the three and nine months ended September 30, 2023.

During the nine months ended September 30, 2024, we have continued to strategically increase our lot pipeline, including both organically and through acquisitions, resulting in 80,121 lots owned and controlled at September 30, 2024.

For the three and nine months ended September 30, 2024, our Financial Services segment generated income before income tax of $3.1 million and $18.8 million, respectively, representing a decrease of 74.8% and 36.9%, respectively, as compared to the respective prior year periods.

During the three and nine months ended September 30, 2024, the number of mortgages originated increased 45.5% and 41.6%, respectively, as compared to the respective prior year periods, which benefited from increased capture rates, and the number of loans sold to third parties increased 35.5% and 37.0%, respectively, as compared to the respective prior year periods.

While total loan origination volumes increased during the three and nine months ended September 30, 2024, the decrease in income before income tax is primarily driven by lower margins on mortgages originated due to a more competitive market, as well as a decrease in the fair value of our mortgage servicing rights portfolio.

Our Century Living operations are engaged in the development, construction and management of multi-family rental properties in Colorado, and currently comprise over 1,200 total units.

As of September 30, 2024, one project had been successfully completed and available for leasing, and three projects remain under construction, two of which were available for pre-leasing.

As of September 30, 2024, 407 units had been completed, 193 units of which were occupied, and 872 units were under development.

The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023:

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consolidated Statements of Operations:

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(2) Homebuilding gross margin percentage is inclusive of impairment charges, if applicable.

We recorded impairment charges of $0.6 million during the three and six months ended June 30, 2024.

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

We recorded impairment charges of $1.4 million and $1.9 million during the three and nine months ended September 30, 2024.

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

Results of Operations by Segment

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Income before Income Tax Expense

Three Months Ended June 30,

Three Months Ended September 30,

Century Complete

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Income before Income Tax Expense

Six Months Ended June 30,

Nine Months Ended September 30,

Century Complete

Financial Services

During the three and six months ended June 30, 2024, our West segment generated income before income tax expense of $32.2 million and $58.9 million, respectively, an increase of 114.9% and 156.7%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $64.4 million and $107.8 million, respectively.

The revenue increases for the three and six- month comparisons were primarily driven by an increase of 28.0% and 33.3%, respectively, in the number of homes delivered, and increases of 14.3% and 5.2%, respectively, in the average sales price per home.

The increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

During the three and six months ended June 30, 2024, our Mountain segment generated income before income tax expense of $34.4 million and $62.2 million, respectively, an increase of 39.2% and 18.4%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $29.7 million and $38.3 million, respectively.

The revenue increases for the three and six- month comparisons were primarily driven by an increase of 6.8% and 7.8%, respectively, in the number of homes delivered, and for the three-month comparison increases of 5.8% in the average sales price per home.

During the three and nine months ended September 30, 2024, our West segment generated income before income tax expense of $35.2 million and $94.1 million, respectively, an increase of 12.1% and 73.1%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $73.0 million and $180.8 million, respectively.

The revenue increases for the three- and nine-month comparisons were primarily driven by an increase of 29.2% and 31.7%, respectively, in the number of homes delivered, and increases of 11.1% and 7.4%, respectively, in the average sales price per home.

During the three and six months ended June 30, 2024, our Texas segment generated income before income tax expense of $17.8 million and $31.7 million, respectively, an increase of 55.7% and 109.6%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $19.5 million and $61.2 million, respectively.

The revenue increases for the three and six- month comparisons were primarily driven by an increase of 7.8% and 17.0%, respectively, in the number of homes delivered, and increases of 7.1% and 9.7%, respectively, in the average sales price per home.

The increases in the number of homes delivered were primarily driven

by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

During the three and six months ended June 30, 2024, our Southeast segment generated income before income tax expense of $25.8 million and $46.6 million, respectively, an increase of 43.6% and 55.7%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $36.7 million and $111.3 million, respectively.

The revenue increases for the three and six- month comparisons were primarily driven by an increase of 26.9% and 53.9%, respectively, in the number of homes delivered, and for the three-month comparison increases of 3.5% in the average sales price per home.

During the three and nine months ended September 30, 2024, our Mountain segment generated income before income tax expense of $31.8 million and $93.9 million, respectively, an increase of 24.8% and 20.5%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $64.2 million and $102.4 million, respectively.

The revenue increases for the three and nine-month comparisons were primarily driven by an increase of 23.6% and 12.8%, respectively, in the number of homes delivered, and increases of 6.0% and 2.0%, respectively, in the average sales price per home.

During the three months ended September 30, 2024, our Texas segment generated income before income tax expense of $14.7 million, a decrease of 10.3% over the prior year period, which was primarily driven by a decrease of 5.5% in the percentage of income before income tax expense to home sales revenues due to a decreased gross margin on home sales, which included purchase price accounting of $2.7 million related to our purchase of Anglia.

This decrease was partially offset by an increase in home sales revenue of $47.8

million, primarily driven by an increase of 38.7% in the number of homes delivered and an increase of 2.9% in the average sales price per home.

During the nine months ended September 30, 2024, our Texas segment generated income before income tax expense of $46.4 million, an increase of 47.2% over the prior year period, which was driven by an increase in home sales revenue of $109.0 million.

The revenue increase was primarily driven by an increase of 24.2% in the number of homes delivered, and an increase of 7.3% in the average sales price per home.

For both the three- and nine-month comparisons, the increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price increases were driven by the mix of deliveries within individual communities.

During the three months ended September 30, 2024, our Southeast segment generated income before income tax expense of $27.2 million, a decrease of 19.3% over the prior year period, which was primarily driven by a decrease of 5.4% in the percentage of income before income tax expense to home sales revenues due to a decreased margin on home sales and impairment recognized during the current year period.

This decrease was partially offset by an increase in home sales revenue of $15.4 million, primarily driven by an increase of 13.0% in the number of homes delivered, and partially offset by a decrease of 3.2% in the average sales price per home.

During the nine months ended September 30, 2024, our Southeast segment generated income before income tax expense of $73.9 million, an increase of 16.0% over the prior year period, which was driven by an increase in home sales revenue of $126.6 million.

The revenue increase was primarily driven by an increase of 35.7% in the number of homes delivered, and partially offset by a decrease of 1.0% in the average sales price per home.

For both the three- and nine-month comparisons, the increases in the number of homes delivered were primarily driven by increases in the number of homes under construction, and the average sales price decreases were driven by the mix of deliveries within individual communities.

Century Complete

During the three and six months ended June 30, 2024, our Century Complete segment generated income before income tax expense of $29.0 million and $50.1 million, respectively, an increase of 77.6% and 65.5%, respectively, over the respective prior year period, which were driven by increases in home sales revenue of $48.7 million and $67.3 million, respectively.

The revenue increases for the three and six- month comparisons were primarily driven by an increase of 21.3% and 14.2%, respectively, in the number of homes delivered, and increases of 1.9% and 2.6%, respectively, in the average sales price per home.

During the three and nine months ended September 30, 2024, our Century Complete segment generated income before income tax expense of $34.1 million and $84.2 million, respectively, an increase of 10.3% and 37.6%, respectively, over the respective prior year period, which increases were driven by increases in home sales revenue of $50.7 million and $118.0 million, respectively.

The revenue increases for the three and nine- month comparisons were primarily driven by an increase of 23.9% and 17.6%, respectively, in the number of homes delivered, primarily driven by increases in the number of homes under construction.

Financial Services

Our Financial Services segment originates mortgages primarily for our homebuyers, and as such, performance typically correlates to our number of homes delivered.

While volume increased, the decreases in income before income tax for both the three- and six-month comparisons were primarily driven by an increase in financial services costs related to increased commissions, investor fees, and other support fees, and increases in net losses on the sale of mortgage loans , in each case in the current year periods as compared to the respective prior year periods.

Our Financial Services segment originates mortgages primarily for our homebuyers, and as such, the volume of loans originated typically correlates to our number of homes delivered.

Fluctuations in financial services income before income tax may occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned.

The following table presents selected operational data for our Financial Services segment in relation to our loan origination activities (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total originations:

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Number of loans sold

During the three and six months ended June 30, 2024, our Corporate segment generated losses of $34.3 million and $70.3 million, respectively as compared to a losses of $29.2 million and $55.6 million, respectively, during the same respective periods in 2023.

The increase in loss for the three-month comparison was primarily due to an increase in compensation costs as compared to the period year period, and the increase in loss for the six-month comparison was primarily due to a $7.7 million impairment related to other investments during the six months ended June 30, 2024, as well as increased compensation costs as compared to the prior year period.

During the three and nine months ended September 30, 2024, our Corporate segment generated losses of $36.1 million and $106.4 million, respectively as compared to a losses of $38.0 million and $93.7 million, respectively, during the same respective periods in 2023.

The decrease in loss for the three-month comparison was primarily due to a decrease in compensation costs as compared to the prior year period.

The increase in loss for the nine-month comparison was primarily due to increased insurance and acquisition costs and a reduction in interest income as compared to the prior year period, as well as a $7.7 million impairment related to other investments during the nine months ended September 30, 2024.

Homebuilding Gross Margin

Homebuilding gross margin represents home sales revenues less cost of home sales revenues and inventory impairment, if applicable.

Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, increased for the three and six months ended June 30, 2024 to 22.5% and 22.0%, respectively, as compared to 19.7% and 19.0%, respectively, for the three and six months ended June 30, 2023.

The increase was primarily driven by deliveries during the prior year periods that carried both higher incentives and elevated construction costs due to homes commencing construction during high costs periods in 2022.

Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, decreased to 21.7% for the three months ended September 30, 2024 as compared to 24.6% in the prior year period, and increased to 21.9% during the nine months ended September 30, 2024 as compared to 21.0% in the prior year period.

The decrease for the three-month comparison was primarily driven by higher incentives in the current year period.

The increase for the nine-month comparison was primarily driven by deliveries during the prior year period that carried higher incentives.

In the following table, we calculate our homebuilding gross margin and our adjusted homebuilding gross margin, as adjusted to exclude inventory impairment, if applicable, and interest in cost of home sales revenues, and further adjusted to exclude the effect of purchase price accounting for acquired work in process inventory, if applicable.

(dollars in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Home sales revenues

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Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory (1)

Six Months Ended June 30,

Nine Months Ended September 30,

Home sales revenues

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See the reconciliations to the most comparable GAAP measure and other information under “Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

For the three and six months ended June 30, 2024, our adjusted homebuilding gross margin percentage excluding inventory impairment (if applicable), interest in cost of home sales revenues, and purchase price accounting for work in process inventory (if applicable), was 24.0% and 23.4%, respectively, as compared to 21.0% and 20.3% for the same respective periods in 2023.

For the three and nine months ended September 30, 2024, our adjusted homebuilding gross margin percentage, excluding inventory impairment (if applicable), interest in cost of home sales revenues, and purchase price accounting for work in process inventory (if applicable), was 23.6% and 23.5%, respectively, as compared to 25.8% and 22.3% for the same respective periods in 2023.

We believe the above information is meaningful as it isolates the impact that inventory impairment (if applicable), indebtedness, and acquisitions (if applicable) have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to previous periods and our competitors .

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(dollars in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Selling, general and administrative

As a percentage of home sales revenue

Six Months Ended June 30,

Nine Months Ended September 30,

Selling, general and administrative

As a percentage of home sales revenue

Our selling, general and administrative expense increased $20.8 million and $36.6 million, respectively, for the three and six months ended June 30, 2024 as compared to the respective prior year periods.

For both the three and six-month comparisons, these increases were primarily attributable to an increase in internal and external commission expense associated with the increase in home sales revenue and increased compensation and other costs due to increased active community count.

As a percentage of home sales revenue, our selling, general and administrative expense decreased 40 basis points and 70 basis points, respectively, during the three and six months ended June 30, 2024, driven primarily by increased revenue on a partially fixed cost base.

Our selling, general and administrative expense increased $21.1 million and $57.7 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods.

For both the three and nine-month comparisons, these increases were primarily attributable to an increase in internal and external commission expense associated with the increase in home sales revenue and increased compensation and other costs due to increased active community count.

As a percentage of home sales revenue, our selling, general and administrative expense decreased 100 basis points and 80 basis points during the three and nine months ended September 30, 2024, respectively, driven primarily by increased revenue on a partially fixed cost base.

Income Tax Expense

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.

Segment Assets

(dollars in thousands)

September 30,

Increase (Decrease)

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Financial Services

Total assets increased to $4.3 billion as of June 30, 2024 as compared to $4.1 billion as of December 31, 2023 , primarily as a result of changes in our inventory balances within our homebuilding segments related to timing of home and land development construction activities and an increase in the number of homes under construction.

Total assets increased to $4.8 billion as of September 30, 2024 as compared to $4.1 billion as of December 31, 2023 , primarily as a result of changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities and an increase in the number of homes under construction.

Lots owned and controlled

June 30, 2024

September 30, 2024

December 31, 2023

Century Complete

Of our total lots owned and controlled as of June 30, 2024, 42.0% were owned and 58.0% were controlled, as compared to 41.5% owned and 58.5% controlled as of December 31, 2023.

During the nine months ended September 30, 2024, we continued to strategically increase our lot pipeline, including both organically and through acquisitions, resulting in 80,121 lots owned and controlled at September 30, 2024, compared to 73,720 at December 31, 2023.

Of our total lots owned and controlled as of September 30, 2024, 44.5% were owned and 55.5% were controlled, as compared to 41.5% owned and 58.5% controlled as of December 31, 2023.

Other Homebuilding Operating Data

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

September 30,

Increase (Decrease)

Century Complete

Net new home contracts (new home contracts net of cancellations) for the three months ended June 30, 2024 increased by 463 homes, or 20.0%, to 2,780 as compared to 2,317 for the same period in 2023.

Net new home contracts for the six months ended June 30, 2024 increased by 1,307 homes, or 30.1%, to 5,646 as compared to 4,339 for the same period in 2023.

These increases were primarily due to more homes available for sale, as well as favorable market conditions.

Net new home contracts (new home contracts net of cancellations) for the three months ended September 30, 2024 increased by 414 homes, or 19.3%, to 2,563 as compared to 2,149 for the same period in 2023.

Net new home contracts for the nine months ended September 30, 2024 increased by 1,721 homes, or 26.5%, to 8,209 as compared to 6,488 for the same period in 2023.

These increases were primarily due to more homes available for sale, as well as favorable market conditions including a more recent moderation in mortgage interest rates.

Monthly absorption rate

Our overall monthly “absorption rate” (the rate at which home orders are contracted, net of cancellations) for the three and six months ended June 30, 2024 and 2023 by segment are included in the tables below:

Three Months Ended June 30,

Our overall monthly “absorption rate” (calculated as monthly net new home contracts divided by selling communities at period end) for the three and nine months ended September 30, 2024 and 2023 by segment are included in the tables below:

Three Months Ended September 30,

Increase (Decrease)

Century Complete

Six Months Ended June 30,

Nine Months Ended September 30,

Increase (Decrease)

Century Complete

During the three and six months ended June 30, 2024, our absorption rates increased by 6.1% and 19.4%, respectively, to 3.5 per month and 3.7 per month, respectively, as compared to the same respective periods in 2023, driven by strong demand for new homes during the current period as homebuyers adjust to the higher interest rate environment.

During the three months ended September 30, 2024 and 2023, our absorption rates remained consistent at 2.8 per month, respectively.

Absorptions in our Texas segment during the three months ended September 30, 2024 were impacted by a partial period of operations from our Anglia acquisition, which occurred on July 31, 2024.

During the nine months ended September 30, 2024, our absorption rates increased by 17.2% per month, as compared to the same respective period in 2023, driven by strong demand for new homes during the current period.

Selling communities at period end

As of June 30,

As of September 30,

Increase/Decrease

Century Complete

Our selling communities increased by 33 communities to 266 communities at June 30, 2024 as compared to 233 at June 30, 2023.

This 14.2% increase was a result of an increased land pipeline that resulted in new community openings in excess of community closeouts during the first six months of 2024.

Our selling communities increased by 53 communities to 305 communities at September 30, 2024 as compared to 252 at September 30, 2023.

This 21.0% increase was a result of an increased land pipeline that resulted in new community openings in excess of community closeouts during the first nine months of 2024, and includes our acquisition of Anglia, which added 26 new communities in our Texas segment as of September 30, 2024.

(dollars in thousands)

As of June 30,

As of September 30,

Average Sales Price

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Backlog reflects the number of homes, net of cancellations, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home.

At June 30, 2024, we had 1,753 homes in backlog, which represents a decrease of 12.4% as compared to 2,002 homes in backlog at June 30, 2023, with a total value of $754.6 million, as compared to $750.1 million at June 30, 2023.

Backlog dollar value remained consistent due to an increase in average sales prices of backlog units offset by a decrease in the number of backlog units.

Backlog average sales price increased 14.9% as compared to the period year period, largely due to mix, including a decrease in the percentage of Century Complete homes to total homes in backlog.

As of September 30, 2024, we had 1,580 homes in backlog, which represents a decrease of 16.3% as compared to 1,887 homes in backlog at September 30, 2023, with a total value of $671.4 million, as compared to $707.2 million at September 30, 2023.

Backlog dollar value decreased due to the decrease in the number of backlog units, and was partially offset by a 13.4% increase in the average sales price of backlog units, largely due to mix.

Supplemental Guarantor Information

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The guarantees are effectively subordinated to any secured debt of the Guarantors.

As of June 30, 2024, Century Communities, Inc.

As of September 30, 2024, Century Communities, Inc.

had outstanding $1.0 billion in total principal amount of Senior Notes.

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This may occur when, among other factors, it is found that the guarantor originally received less than fair consideration for the guarantee and the guarantor would be rendered insolvent by enforcement of the guarantee.

On the basis of historical financial information, operating history and other factors, we believe that each of the guarantors, after giving effect to the issuance of its guarantee of the Senior Notes when the guarantee was issued, was not insolvent and did not and has not incurred debts beyond its ability to pay such debts as they mature.

such debts as they mature.

The Company cannot predict, however, what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

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Summarized Balance Sheet Data (in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

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Summarized Statements of Operations Data (in thousands)

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

December 31, 2023

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Inventory impairment

Other income (expense)

Other expense

Income before income tax expense

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Liquidity and Capital Resources

Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and revolving line of credit availability, was $840.5 million as of June 30, 2024 and $1.1 billion as of December 31, 2023.

Our principal uses of capital for the three and six months ended June 30, 2024 were our land purchases, land development, home construction, the acquisition of Landmark Homes, share repurchases, dividends, and the payment of routine liabilities.

Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and revolving line of credit availability, was $605.9 million as of September 30, 2024 and $1.1 billion as of December 31, 2023.

Our principal uses of capital for the nine months ended September 30, 2024 were our land purchases, land development, home construction, the acquisition of Anglia and Landmark, share repurchases, dividends, and the payment of routine liabilities.

Cash flows for each of our communities depend on the stage in the development cycle and can differ substantially from reported earnings.

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Short-term Liquidity and Capital Resources

We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short term working capital obligations and fund our purchases of land, as well as land development, home construction activities, and other cash needs.

We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short-term working capital obligations and our purchases of land, as well as land development, home construction activities, and other cash needs.

We had $414.0 million outstanding under our revolving line of credit as of September 30, 2024, as compared to no amounts outstanding as of December 31, 2023, which increase was primarily driven by increased community count and an increase in our investment in homes under construction during the period, as well as our acquisitions of Anglia and Landmark.

Our Financial Services operations use funds generated from operations and availability under our mortgage repurchase facilities to finance its operations, including originations of mortgage loans to our homebuyers.

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Beyond the next twelve months, we believe that our principal uses of capital will be land and inventory purchases and other expenditures, as well as principal and interest payments on our long-term debt obligations.

We believe that we will be able to fund our long-term liquidity needs with cash generated from operations and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available, or on favorable terms, especially if rising interest rates remain high.

In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit, repurchase facilities, and construction loan agreements.

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Material Cash Requirements

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future in addition to our outstanding debt obligations and debt service requirements described below.

These obligations impact our short-term and long-term liquidity and capital resource needs.

For the three and six months ended June 30, 2024, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

For the three and nine months ended September 30, 2024, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 5, 2024.

In the ordinary course of business, we enter into land purchase contracts in order to procure lots for the construction of our homes.

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Our obligations with respect to purchase contracts and option contracts are generally limited to the forfeiture of the related non-refundable cash deposits.

As of June 30, 2024, we had outstanding purchase contracts and option contracts for 45,320 lots totaling approximately $2.6 billion and we had $86.8 million of deposits for land contracts, of which $46.7 million were non-refundable cash deposits pertaining to land contracts.

As of September 30, 2024, we had outstanding purchase contracts and option contracts for 44,435 lots totaling approximately $2.6 billion and we had $94.4 million of deposits for land contracts, of which $56.0 million were non-refundable cash deposits pertaining to land contracts.

For contracts for which cash deposits were non-refundable, and subject to the terms of the outstanding contracts continuing to meet our investment criteria, we currently anticipate performing on the majority of our purchase and option contracts during the next 24 months.

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Our outstanding indebtedness is described in detail in Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements.

We are required to meet certain covenants, and as of June 30, 2024, we were in compliance with all such covenants and requirements under the agreements governing our revolving line of credit, mortgage repurchase facilities, and construction loan agreements.

We are required to meet certain covenants, and as of September 30, 2024, we were in compliance with all such covenants and requirements under the agreements governing our revolving line of credit, mortgage repurchase facilities, and construction loan agreements.

See Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements for further detail.

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)

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(1) The carrying value of the senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost 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, as described below.

(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 described below.

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.

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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.

Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and performance and other bonds are not generally fully released until all development and construction activities are completed.

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

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

Revolving Line of Credit

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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 our revolving line of credit, with borrowings that bore an interest rate of 7.5%, and were in compliance with all covenants under the Second A&R Credit Agreement.

As of September 30, 2024, $414.0 million was outstanding under our revolving line of credit, with borrowings that bore an interest rate of 7.4%, and 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.

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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.

Stock Repurchases

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.

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 not 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.

Under the terms of these programs, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws.

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Cash Dividends

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

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

We expect to continue paying our quarterly cash dividends to stockholders for the remainder of 2024.

However, the declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our Board of Directors and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions.

Cash Flows— Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

For the six months ended June 30, 2024 and 2023, the comparison of cash flows is as follows:

Cash Flows— Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024 and 2023, the comparison of cash flows is as follows:

 Our primary sources of cash flows from operations are from the sale of single-family attached and detached homes and mortgages.

Our primary uses of cash flows from operations are the acquisition of land and expenditures associated with the construction of our single-family attached and detached homes and the origination of mortgages held for sale.

Net cash used in operating activities was $78.5 million during the six months ended June 30, 2024 as compared to net cash provided by operating activities of $132.8 million during the prior year period.

This change is primarily a result of increased expenditures related to land acquisition and expenditures associated with the construction of homes during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Net cash used in operating activities was $174.0 million during the nine months ended September 30, 2024 as compared to net cash provided by operating activities of $33.0 million during the prior year period.

This change is primarily a result of increased expenditures related to land acquisition and expenditures associated with the construction of homes during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

These increased expenditures were primarily offset by a $63.2 million increase in net income.

 Net cash used in investing activities increased to $87.6 million during the six months ended June 30, 2024, compared to $48.6 million used during the prior year period.

This increase was primarily related to (1) $32.7 million in expenditures related to our acquisition of Landmark during the six months ended June 30, 2024 and (2) a $14.6 million increase in purchases of property and equipment, partially offset by $11.0 million in proceeds from the sale of property and equipment during the six months ended June 30, 2024.

 Net cash provided by financing activities was $52.6 million during the six months ended June 30, 2024, compared to net cash used in financing activities of $23.4 million during the prior year period.

 Net cash used in investing activities increased to $277.7 million during the nine months ended September 30, 2024, compared to $74.6 million used during the prior year period.

This increase was primarily related to (1) $157.1 million in expenditures related to our acquisitions of Anglia and Landmark during the nine months ended September 30, 2024 and (2) a $38.2 million increase in expenditures related to the development, construction, and management of multi-family rental properties by our wholly owned subsidiary, Century Living .

 Net cash provided by financing activities was $388.6 million during the nine months ended September 30, 2024, compared to net cash used in financing activities of $56.8 million during the prior year period.

This change was primarily attributable to (1) a $414.0 increase in borrowings under our revolving credit facility;

(2) a $43.4 million increase in net proceeds for our mortgage repurchase facilities;

and (3) a $14.2 million increase in borrowings under construction loan agreements, in each case, during the six months ended June 30, 2024, and as compared to the prior year period.

These increases were partially offset by (1) $53.1 million in repurchases of our common stock during the six months ended June 30, 2024 as compared to $2.0 million in repurchases of our common stock during the prior year period;

and (2) a $12.7 million net increase in payments for insurance premium notes.

As of June 30, 2024, our cash and cash equivalents and restricted cash balance was $128.5 million, as compared to $242.0 million as of December 31, 2023.

and (3) a $44.0 million increase in borrowings under construction loan agreements, in each case, during the nine months ended September 30, 2024, and as compared to the prior year period.

These increases were partially offset by $53.1 million in repurchases of our common stock during the nine months ended September 30, 2024 as compared to $19.2 million in repurchases of our common stock during the prior year period.

As of September 30, 2024, our cash and cash equivalents and restricted cash balance was $178.9 million, as compared to $242.0 million as of December 31, 2023.

Non-GAAP Financial Measures

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EBITDA and Adjusted EBITDA

The following table presents EBITDA and adjusted EBITDA for the three and six months ended June 30, 2024 and 2023.

The following table presents EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

EBITDA and adjusted EBITDA are non-GAAP financial measures we use as a supplemental measure in evaluating operating performance.

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(dollars in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Income tax expense

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(dollars in thousands)

September 30,

Notes payable

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(in thousands, except share and per share information)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted average common shares outstanding - basic

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Adjusted diluted earnings per share

(1) The tax rates used in calculating adjusted net income for the three and six months ended June 30, 2024 were 24.1%, respectively, which are reflective of our GAAP tax rates for the six months ended June 30, 2024.

The tax rates used in calculating adjusted net income for the three and six months ended June 30, 2023 were 25.2% and 24.8%, respectively, which are reflective of our GAAP tax rates for the applicable periods.

(1) The tax rates used in calculating adjusted net income for the three and nine months ended September 30, 2024 were 24.2%, respectively, which are reflective of our GAAP tax rates for the nine months ended September 30, 2024.

The tax rates used in calculating adjusted net income for the three and nine months ended September 30, 2023 were 25.8% and 25.3%, respectively, which are reflective of our GAAP tax rates for the applicable periods.

QUANTIT ATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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Our homebuilding operations have been and may continue to be adversely impacted by inflation, primarily from higher land, financing, labor, material, and construction costs.

While inflation remained elevated during the three and six months ended June 30, 2024, it has generally slowed since the second quarter of 2022.

In addition, inflation has led and could continue to lead to higher mortgage rates, which has and could continue to significantly affect the affordability of mortgage financing to homebuyers and lead to weakened demand for our homes, as well as increased cancellations compared to prior year periods.

The Federal Reserve aggressively raised the federal funds interest rates during 2022 and 2023, in order to mitigate persistent inflation, which significantly impacting the U.S housing market.

While the Federal Reserve reduced the federal funds interest rate during the third quarter of 2024, we cannot provide any assurance as to the impact of changes to the federal funds interest rate or mortgage rates on our current or future business.

Inflation has led and could continue to lead to higher mortgage rates, which has and could continue to significantly affect the affordability of mortgage financing to homebuyers and lead to weakened demand for our homes, as well as increased cancellations compared to prior year periods.

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements.

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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 2. Management’s Discussion and Analysis