What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-10-23 compared with 2025-07-24 · 236 added, 199 removed, 488 unchanged (47% 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 changes in interest rates and the resulting impact on the accessibility of mortgage loans to homebuyers, persistent inflation, and decreased employment levels and consumer confidence, and increased recessionary conditions;

 econo mic changes, either nationally or in the regional and local 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 and consumer confidence, and increased recessionary conditions;

 shortages of or increased prices for labor, land or raw materials used in housing construction and resource shortages , including as a result of recent tariffs and immigration reform;

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 changes in assumptions used to make industry forecasts, population growth rates or trends affecting housing demand or prices;

 volatility and uncertainty in the credit markets and broader financial markets and the impact on such markets and our ability to access them , including as a result of geopolitical conditions and in the event of a threatened or actual U.S.

government shutdown or sovereign default;

government shutdown, and in the event of a threatened or actual sovereign default;

 our future business operations, operating results and financial condition;

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and changes in our business and investment strategy;

 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 acquisitions;

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

 the effect of and risks associated with our prior and any future acquisitions;

 availability, terms and deployment of capital;

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 the degree and nature of our competition;

 unstable economic and political conditions as well as geopolitical conflicts, could adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes and/or increases to the price of gasoline and other fuels and cause higher interest rates, inflation, reduced consumer confidence and/or general economic uncertainty;

 the ability of our homebuyers to obtain or afford homeowners and flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all;

 unstable economic and political conditions as well as geopolitical conflicts, which could adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes and/or increases to the price of gasoline and other fuels and cause higher interest rates, inflation, reduced consumer confidence and/or general economic uncertainty;

 our leverage, debt service obligations and exposure to changes in interest rates and our ability to obtain additional or refinance our existing debt when needed or on favorable terms;

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 availability of qualified personnel and contractors and our ability to obtain additional or retain existing key personnel and contractor relationships;

 income tax expense variability due to changes in availability and amount of federal home tax credits and volatility associated with stock-based compensation;

 our ability to continue to pay dividends and make stock repurchases in the future;

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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 4,871 homes delivered during the first six months of 2025, approximately 94% of homes delivered had purchase prices below the Federal Housing Administration-insured mortgage limits and approximately 99% of homes delivered were built as move-in ready homes.

Of the 7,357 homes delivered during the first nine months of 2025, approximately 94% of homes delivered had purchase prices below the Federal Housing Administration-insured mortgage limits and approximately 99% of homes delivered were built as move-in ready homes.

Market conditions in the homebuilding industry have continued to be impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, and broader concerns about affordability by homebuyers.

Amidst these market conditions, we experienced a slowing in demand during the first six months of 2025, as net new home contracts (new home contracts net of cancellations) for the three and six months ended June 30, 2025 decreased 8.4% and 7.2%, respectively, as compared to the respective prior year periods.

Amidst these market conditions, we experienced a slowing in demand during the first nine months of 2025, as net new home contracts (new home contracts net of cancellations) for the three and nine months ended September 30, 2025 decreased 6.9% and 7.1%, respectively, as compared to the respective prior year periods.

Still, there remains an underlying need for affordable new homes, supported by solid demographic trends, and w e have continued to provide, when necessary, incentive offerings across our communities, including discounts on base home prices, lot premiums, options and upgrades, and financing incentives, including interest rate buydowns and closing cost concessions.

During the six months ended June 30, 2025, cycle times remained approximately in the four-month timeframe.

During the nine months ended September 30, 2025, cycle times remained approximately in the four-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.

We believe future demand for our homes

remains uncertain as future economic, market and geopolitical conditions remain uncertain, in particular with respect to inflation;

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

the impact of potential future increases or decreases to the U.S.

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the possibility of an economic recession;

the current U.S.

governmental shutdown;

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

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Changes in demand for our homes or cancellations due to mortgage interest rates, consumer confidence or otherwise affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of and revenues from our Financial Services segment, and net income.

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

Certain tariffs and other measures implemented during 2025 have impacted trade throughout various sectors.

In October 2025, certain new tariffs took effect related to various imported products used in the homebuilding industry, including cabinets, lumber, and certain other wood products.

As of the date of the filing of this report, we have not experienced significant cost increases or supply chain disruptions for raw materials;

however, we could experience increases in the costs of materials utilized for the construction of our homes and/or supply chain disruptions that, in turn, would impact our business and our consolidated financial statements in future reporting periods.

Additionally, during the three months ended September 30, 2025, the U.S.

Federal Reserve reduced the U.S.

Federal funds interest rate, and we cannot provide any assurance as to the impact of any future potential changes to the U.S.

Federal funds interest rate on mortgage rates or our current or future business.

The potential extent and effect of these and other factors on our business is highly uncertain and outside our control, and our past performance may not be indicative of our future results.

We believe we are well-positioned to benefit from 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.

We have continued to focus on maintaining an appropriate balance of home and land inventories in relation to anticipated future demand, as well as prudent leverage;

and, as a result, we believe we are well positioned to continue to execute on our strategy to optimize stockholder returns.

Results of Operations

During the three and six months ended June 30, 2025, we generated $47.1 million and $99.6 million, respectively, in income before income tax expense, as compared to $110.6 million and $195.0 million, respectively, in the respective prior year periods.

During the three and six months ended June 30, 2025, we generated net income of $34.9 million, or $1.14 per diluted share, and $74.2 million, or $2.40 per diluted share, respectively, as compared to $83.7 million, or $2.61 per diluted share, and $148.1 million, or $4.60 per diluted share, respectively, in the respective prior year periods.

‎During the three and six months ended June 30, 2025, we generated total revenues of $1.0 billion and $1.9 billion, respectively, as compared to $1.0 billion and $2.0 billion, respectively, in the respective prior year periods.

During the three and six months ended June 30, 2025, we delivered 2,587 and 4,871 homes, respectively, with an average sales price of $377.5 thousand and $381.9 thousand, respectively.

The number of homes delivered decreased by 1.1% and 2.1%, respectively, as compared to the respective prior year periods, primarily due to slower absorption rates, and average sales price decreased 2.9% and 2.1%, respectively, as compared to the respective prior year periods, primarily due to higher incentives in the current year periods.

During the three and six months ended June 30, 2025, net new contracts decreased 8.4% and 7.2%, respectively, to 2,546 and 5,238, respectively, as compared to the respective prior year periods.

We ended the second quarter of 2025 with $93.2 million of cash and cash equivalents and $34.3 million of cash held in escrow.

During the three and nine months ended September 30, 2025, we generated $47.8 million and $147.4 million, respectively, in income before income tax expense, as compared to $109.9 million and $304.9 million, respectively, in the respective prior year periods.

During the three and nine months ended September 30, 2025, we generated net income of $37.4 million, or $1.25 per diluted share, and $111.6 million, or $3.65 per diluted share, respectively, as compared to $83.0 million, or $2.59 per diluted share, and $231.1 million, or $7.19 per diluted share, respectively, in the respective prior year periods.

‎During the three and nine months ended September 30, 2025, we generated total revenues of $980.3 million and $2.9 billion, respectively, as compared to $1.1 billion and $3.1 billion, respectively, in the respective prior year periods.

During the three and nine months ended September 30, 2025, we delivered 2,486 and 7,357 homes, respectively, with an average sales price of $384.2 thousand and $382.7 thousand, respectively.

The number of homes delivered decreased by 12.3% and 5.8%, respectively, as compared to the respective prior year periods, primarily due to slower absorption rates, and average sales price per home decreased 2.4% and 2.2%, respectively, as compared to the respective prior year periods, primarily due to higher incentives in the current year periods.

During the three and nine months ended September 30, 2025, net new contracts decreased 6.9% and 7.1%, respectively, to 2,386 and 7,624, respectively, as compared to the respective prior year periods.

We ended the third quarter of 2025 with $130.1 million of cash and cash equivalents and $44.7 million of cash held in escrow.

We had $339.0 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 34.5% and a net homebuilding debt to net capital ratio of 31.4%.

During the three and six months ended June 30, 2025, we paid quarterly cash dividends to our stockholders of $0.29 per share, a 12% increase from the $0.26 per share quarterly dividend paid during the three and six months ended June 30, 2024.

We have continued to strategically manage our lot pipeline, while selectively reducing our land acquisition and development activities by terminating certain contracts in our markets that no longer met our investment criteria, in light of market conditions, resulting in 68,701 lots owned and controlled at June 30, 2025.

For the three and six months ended June 30, 2025, our Financial Services segment generated income before income tax expense of $6.2 million and $8.6 million, respectively, representing an increase of 9.9% and a decrease of 45.4% from the respective prior year periods.

During the three and six months ended June 30, 2025, the number of mortgages originated decreased 1.6% and 2.1%, respectively, and the number of loans sold to third parties increased 9.5% and 3.4%, respectively, as compared to the respective prior year periods.

The increase in income before income tax expense of our Financial Services segment for the three-month comparison was primarily driven by the benefit of the sale of our mortgage servicing rights portfolio during the period, which was partially offset by fair value adjustments related to our mortgage loans held for investment.

The decrease in income before income tax expense for the six-month comparison was primarily driven by lower margins on mortgages originated due to a more competitive market.

The following table summarizes our results of operations for the three and six months ended June 30, 2025 and 2024:

During the three and nine months ended September 30, 2025, we paid quarterly cash dividends to our stockholders of $0.29 per share, a 12% increase from the $0.26 per share quarterly dividend paid during the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2025, our Financial Services segment generated income before income tax expense of $3.0 million and $11.6 million, respectively, representing a decrease of 2.7% and 38.4% from the respective prior year periods.

During the three and nine months ended September 30, 2025, the number of mortgages originated decreased 13.7% and 6.3%, respectively, and the number of loans sold to third parties decreased 13.6% and 2.8%, respectively, as compared to the respective prior year periods.

The following table summarizes our results of operations for the three and nine months ended September 30, 2025 and 2024:

(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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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 .

(2) Beginning in the third quarter of 2025, we added “Abandonment of lot option contracts” as an adjustment in our non-GAAP adjusted EBITDA and adjusted net income calculation.

Accordingly, we have recast the corresponding prior period information to conform to the current presentation and calculation.

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

We recorded impairment charges of $7.4 million and $7.8 million, respectively, during the three and six months ended June 30, 2025, and w e recorded impairment charges of $0.6 million during the three and six months ended June 30, 2024.

We recorded impairment charges of $3.2 million and $11.0 million, respectively, during the three and nine months ended September 30, 2025, and w e recorded impairment charges of $1.4 million and $1.9 million during the three and nine months ended September 30, 2024.

NM – Not meaningful

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Commencing in the first quarter of 202 5 , we have separately reported our Century Living segment, previously included in our Corporate segment, in order to reflect the distinct nature of our multi-family rental operations.

Accordingly, we have re cast the corresponding segment information for the three and six months ended June 30, 202 4 .

Three months ended June 30, 2025

Accordingly, we have re cast the corresponding segment information for the three and nine months ended September 30, 202 4 .

Three months ended September 30, 2025

Century Complete

4 unchanged sentences

Cost of home sales

Inventory impairment

Selling, general and administrative

Financial services costs

Selling, general and administrative

Inventory impairment

Other segment items (1)

Income (loss) before tax expense

Three months ended June 30, 2024

Three months ended September 30, 2024

Century Complete

4 unchanged sentences

Cost of home sales

Inventory impairment

Selling, general and administrative

Financial services costs

Selling, general and administrative

Inventory impairment

Other segment items (1)

Income (loss) before tax expense

Six months ended June 30, 2025

Nine months ended September 30, 2025

Century Complete

4 unchanged sentences

Cost of home sales

Inventory impairment

Selling, general and administrative

Financial services costs

Selling, general and administrative

Inventory impairment

Other segment items (1)

Income (loss) before tax expense

Six months ended June 30, 2024

Nine months ended September 30, 2024

Century Complete

4 unchanged sentences

Cost of home sales

Inventory impairment

Selling, general and administrative

Financial services costs

Selling, general and administrative

Inventory impairment

Other segment items (1)

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(1) Includes cost of land sales and other revenues, and other income (expense).

During the three and six months ended June 30, 2025, our West segment generated income before income tax expense of $25.0 million and $ 46 .4 million, respectively, representing decreases of 22.3% and 21.2% from the respective prior year periods, which were primarily driven by decreases in homebuilding gross margin.

For the three-month comparison, revenue decreased $1.8 million as compared to the prior year period, primarily driven by a 3.9% decrease in the average sales price per home, and partially offset by a 3.1% increase in the number of homes delivered.

For the six-month comparison, revenue increased $7.3 million as compared to the prior year period, primarily driven by a 4.8% increase in the number of homes delivered, and partially offset by a 2.6% decrease in the average sales price per home.

During the three and nine months ended September 30, 2025, our West segment generated income before income tax expense of $21.2 million and $ 67.6 million, respectively, representing decreases of 39.8% and 28.2% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and nine months ended September 30, 2025, revenue decreased $22.6 million and $15.3 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 10.8% and 5.8%, respectively, in the average sales price per home, and partially offset by increases of 1.7% and 3.6%, respectively, in the number of homes delivered.

The average sales price per home decreases were driven by higher incentives, and the increases in the number of homes delivered were primarily driven by increases in open communities, partially offset by slower absorption rates.

Homebuilding gross margin decreased from the respective prior year periods, primarily driven by higher incentives in the respective current year periods.

During the three and six months ended June 30, 2025, our Mountain segment generated income before income tax expense of $15.1 million and $38.6 million, respectively, representing decreases of 56.0% and 38.0% from the respective prior year periods, which were primarily driven by decreases in revenue and decreases in homebuilding gross margin.

During the three and six months ended June 30, 2025, revenue decreased $52.5 million and $81.8 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 18.5% and 15.9%, respectively, in the number of homes delivered, and decreases of 2.2% and 0.1%, respectively, in the average sales price per home.

The decreases in the number of homes delivered were primarily driven by slower absorption rates, and

the decreases in average sales price per home were driven by higher incentives.

Homebuilding gross margin decreased from the respective prior year periods, primarily driven by higher incentives in the respective current year periods.

During the three and six months ended June 30, 2025, our Texas segment generated income before income tax expense of $8.1 million and $18.5 million, respectively, representing decreases of 54.4% and 41.7% from the respective prior year periods, which were primarily driven by decreases in homebuilding gross margin.

During the three and six months ended June 30, 2025, revenue increased $1.4 million and $6.8 million, respectively, compared to the respective prior year periods, primarily driven by increases of 3.3% and 5.4%, respectively, in the number of homes delivered, and were partially offset by decreases of 2.3% and 2.8%, respectively, in the average sales price per home.

The increases in the number of homes delivered were primarily driven by increases in open communities mainly due to our acquisition of Anglia Homes during the third quarter of 2024, and partially offset by slower absorption rates;

and the decreases in average sales price per home were driven by higher incentives.

Homebuilding gross margin decreased from the respective prior year periods, primarily driven by higher incentives in the respective current year periods.

During the three and six months ended June 30, 2025, our Southeast segment generated income before income tax expense of $11.2 million and $25.4 million, respectively, representing decreases of 56.7% and 45.6% from the respective prior year periods, which were primarily driven by decreases in homebuilding gross margin.

For the three-month comparison, revenue increased $18.3 million as compared to the respective prior year period, primarily driven by a 14.9% increase in the number of homes delivered, and partially offset by a 2.6% decrease in the average sales price per home.

The increase in the number of homes delivered was primarily driven by an increase in open communities, partially offset by slower absorption rates;

and the decrease in average sales price per home was driven by higher incentives.

For the six-month comparison, revenue decreased $8.9 million as compared to the prior year period, primarily driven by a 3.3% decrease in the number of homes delivered, primarily due to slower absorption rates.

Homebuilding gross margin decreased from the respective prior year periods, primarily driven by impairment charges of $3.8 million during the three months ended June 30, 2025, as well as higher incentives in the respective current year periods.

Century Complete

During the three and six months ended June 30, 2025, our Century Complete segment generated income before income tax expense of $15.0 million and $28.8 million, respectively, representing decreases of 48.4% and 42.5% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and six months ended June 30, 2025, revenue decreased $6.3 million and $3.2 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 1.9% and 0.1%, respectively, in the number of homes delivered, and decreases of 0.6% and 0.6%, respectively, in the average sales price per home.

Homebuilding gross margin decreased from the respective prior year periods, due primarily to higher incentives in the respective current year periods.

During the three and nine months ended September 30, 2025, our Mountain segment generated income before income tax expense of $14.8 million and $53.4 million, respectively, representing decreases of 53.4% and 43.2% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and nine months ended September 30, 2025, revenue decreased $63.2 million and $145.0 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 21.8% and 17.9%, respectively, in the number of homes delivered, and decreases of 4.2% and 1.4%, respectively, in the average sales price per home.

The decreases in the number of homes delivered were primarily driven by slower absorption rates, and the decreases in average sales price per home were driven by higher incentives.

Homebuilding gross margin decreased from the respective prior year periods, primarily driven by impairment charges during the three and six months ended June 30, 2025 of $3.6 million and $4.0 million, respectively, as well as higher incentives in the respective current year periods.

Homebuilding gross margin decreased from the respective prior year periods, due primarily to higher incentives in the respective current year periods.

During the three and nine months ended September 30, 2025, our Texas segment generated income before income tax expense of $5.1 million and $23.6 million, respectively, representing decreases of 65.3% and 49.2% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and nine months ended September 30, 2025, revenue decreased $24.4 million and $17.5 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 13.2% and 1.5%, respectively, in the number of homes delivered, and decreases of 2.4% and 2.6%, respectively, in the average sales price per home.

The decreases in the number of homes delivered were primarily driven by slower absorption rates, and the decreases in average sales price per home were driven by higher incentives.

Homebuilding gross margin decreased from the respective prior year periods, due primarily to higher incentives in the respective current year periods and impairment charges of $0.5 million during the three months ended September 30, 2025.

During the three and nine months ended September 30, 2025, our Southeast segment generated income before income tax expense of $13.2 million and $38.6 million, respectively, representing decreases of 51.5% and 47.8% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and nine months ended September 30, 2025, revenue decreased $5.1 million and $14.0 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 0.9% and 2.4%, respectively, in the number of homes delivered, and decreases of 1.9% and 0.4%, respectively, in the average sales price per home.

The decreases in the number of homes delivered were primarily driven by slower absorption rates, and the decreases in average sales price per home were driven by higher incentives.

Homebuilding gross margin decreased from the respective prior year periods, due primarily to higher incentives in the respective current year periods and impairment charges of $2.4 million and $6.2 million during the three and nine months ended September 30, 2025, respectively.

Century Complete

During the three and nine months ended September 30, 2025, our Century Complete segment generated income before income tax expense of $20.1 million and $48.9 million, respectively, representing decreases of 40.9% and 41.9% from the respective prior year periods, which were primarily driven by decreases in revenue and homebuilding gross margin.

During the three and nine months ended September 30, 2025, revenue decreased $40.6 million and $43.8 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 16.8% and 6.2%, respectively, in the number of homes delivered, and partially offset by increases of 1.6% and 0.1%, respectively, in the average sales price per home.

The decreases in the number of homes delivered were primarily driven by slower absorption rates, and the increases in average sales price per home were driven by the mix of deliveries within individual communities.

Homebuilding gross margin decreased from the respective prior year periods, due primarily to higher incentives in the respective current year periods and impairment charges during the three and nine months ended September 30, 2025 of $0.2 million and $4.2 million, respectively.

Financial Services

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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 decrease in income before income tax expense for the six-month comparison was primarily driven by lower margins on mortgages originated due to a more competitive market.

The decrease in income before income tax expense for the three-month comparison was primarily driven by lower margins on mortgages originated during the period and partially offset by fair value adjustments related to our mortgage servicing rights portfolio.

The decrease in income before income tax expense for the nine-month comparison was primarily driven by lower margins on mortgages originated during the period and fair value adjustments related to our mortgage loans held for investment, and was partially offset by the benefit of a sale of mortgage servicing rights during the second quarter of 2025.

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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Our Century Living operations are engaged in the development, construction, management, and disposition of multi-family rental properties, currently all located in Colorado.

During the six months ended June 30, 2025, the Company had three multi-family rental properties;

one of which was completed and two of which were under active construction.

Two of the properties were currently available for leasing.

These three projects represent over 1,000 total multi-family units, including 471 under active construction and 581 completed units, of which 526 units were leased as of June 30, 2025 .

During the three and six months ended June 30, 2025, our Corporate segment generated losses of $35.0 million and $66.6 million, respectively, as compared to losses of $33.6 million and $68.9 million, respectively, during the same respective periods in 2024.

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

The decrease in loss for the six-month comparison was primarily due to $7.7 million in prior year impairment charges related to other investments during the six months ended June 30, 2024, and was partially offset by increased compensation costs during the current year period as compared to the prior year period.

During the nine months ended September 30, 2025, the Company had three multi-family rental properties, two of which were complete and currently available for leasing.

These three projects represent over 1,000 total multi-family units, including 327 under active construction and 725 completed units, of which 565 units were leased as of September 30, 2025 .

During the three and nine months ended September 30, 2025, our Corporate segment generated losses of $29.3 million and $95.9 million, respectively, as compared to losses of $35.4 million and $104.3 million, respectively, during the same respective periods in 2024.

The decrease in loss for the three-month comparison was primarily driven by a decrease in compensation cost during the current year period as compared to the prior year period.

The decrease in loss for the nine-month comparison was primarily due to decreased compensation costs during the current year period as compared to the prior year period, as well as a $7.7 million in prior year impairment charges 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, decreased for the three and six months ended June 30, 2025 to 17.6% and 18.7%, respectively, as compared to 22.5% and 22.0% for the same respective periods in 2024.

The decreases were primarily driven by reductions in average sales price per home due to higher incentives in the current year periods.

Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, decreased for the three and nine months ended September 30, 2025 to 17.9% and 18.4%, respectively, as compared to 21.7% and 21.9% for the same respective periods in 2024.

The decreases were primarily driven by higher incentives in the current year periods.

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.

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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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, 2025, our adjusted homebuilding gross margin percentage excluding inventory impairment, interest in cost of home sales revenues, and purchase price accounting for acquired work in process inventory was 20.0% and 20.8%, respectively, as compared to 24.0% and 23.4% for the same respective periods in 2024.

For the three and nine months ended September 30, 2025, our adjusted homebuilding gross margin percentage excluding inventory impairment, interest in cost of home sales revenues, and purchase price accounting for acquired work in process inventory was 20.1% and 20.6%, respectively, as compared to 23.6% and 23.5% for the same respective periods in 2024.

We believe the above information is meaningful as it isolates the impact that inventory impairment, indebtedness, and acquisitions (in each case as applicable) during any period, have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to prior periods and to homebuilding gross margins of 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 $2.9 million and $9.5 million for the three and six months ended June 30, 2025 as compared to the same respective periods in 2024.

These increases were primarily attributable to advertising costs and other costs due to higher active community count.

During the three and six months ended June 30, 2025, our selling, general and administrative expense as a percentage of home sales revenue increased 80 basis points and 100 basis points, respectively, driven primarily by decreased revenue on a partially fixed cost base.

Our selling, general and administrative expense decreased $13.1 million and $3.6 million for the three and nine months ended September 30, 2025 as compared to the same respective periods in 2024.

These decreases were primarily attributable to decreased compensation costs, including adjustments in stock-based compensation expense to reflect a decreased estimate in the number of shares which will ultimately vest and be issued upon settlement of certain performance share unit awards.

These decreases were partially offset by increased advertising costs and other costs due to a higher active community count during the current year periods.

During the three and nine months ended September 30, 2025, our selling, general and administrative expense as a percentage of home sales revenue increased 70 basis points and 90 basis points, respectively, driven primarily by decreased 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 2025 estimated annual effective tax rate, before discrete items, of 25.6%, is driven by our blended federal and state statutory rate of 24.9%, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation, and partially offset by estimated federal energy home credits for current year home deliveries.

For the six months ended June 30, 2025, our estimated annual rate of 25.6% was benefitted by discrete items which had a net impact of decreasing our rate by 0.1%, including the impact of excess tax benefits for vested stock-based compensation.

Our 2025 estimated annual effective tax rate, before discrete items, of 25.0%, is driven by our blended federal and state statutory rate of 24.8%, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation, and offset by estimated federal energy home credits for current year home deliveries.

For the nine months ended September 30, 2025, our estimated annual rate of 25.0% was benefitted by discrete items which had a net impact of decreasing our rate by 0.7%, including federal energy home tax credits claimed in excess of previous estimates and the impact of excess tax benefits for vested stock-based compensation.

On July 4, 2025, H.R.1, the One Big Beautiful Bill Act , was signed into law, which disallows Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026.

As a result, our income tax expense and effective tax rate would not reflect a benefit from such tax credits as to homes delivered after that date.

For the three months ended June 30, 2025 and 2024, we recorded income tax expense of $12.2 million and $26.9 million, respectively.

For the six months ended June 30, 2025 and 2024, we recorded income tax expense of $25.4 million and $46.9 million, respectively .

We are currently evaluating other elements of the legislation, but do not expect it to have a material effect on our effective tax rate for the year ending December 31, 2025.

For the three months ended September 30, 2025 and 2024, we recorded income tax expense of $10.4 million and $26.9 million, respectively.

For the nine months ended September 30, 2025 and 2024, we recorded income tax expense of $35.8 million and $73.8 million, respectively.

Segment Assets

(dollars in thousands)

September 30,

Increase (Decrease)

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Century Living

Total assets increased to $4.6 billion as of June 30, 2025 as compared to $4.5 billion as of December 31, 202 4, primarily due to changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities.

This increase was partially offset by a decrease in our Financial Services assets, including a decrease in mortgage loans held for sale, and a decrease in our mortgage servicing rights due to the sale of the portfolio during the three months ended June 30, 2025.

Total assets increased to $4.7 billion as of September 30, 2025 as compared to $4.5 billion as of December 31, 202 4, primarily due to changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities.

This increase was partially offset by a decrease in our Financial Services assets, including a decrease in mortgage loans held for sale, and a decrease in our mortgage servicing rights due to the sale of approximately $3.0 billion of unpaid principal balance of our portfolio during the nine months ended September 30, 2025.

Homebuilding lots owned and controlled

June 30, 2025

September 30, 2025

December 31, 2024

Century Complete

During the three and six months ended June 30, 2025, we continued to strategically manage our lot pipeline, resulting in 68,701 lots owned and controlled at June 30, 2025, compared to 80,632 at December 31, 2024.

Of our total lots owned and controlled as of June 30, 2025, 54.5% were owned and 45.5% were controlled, as compared to 44.3% owned and 55.7% controlled as of December 31, 2024.

During the three and nine months ended September 30, 2025, we continued to strategically manage our lot pipeline, resulting in 62,239 lots owned and controlled at September 30, 2025, compared to 80,632 at December 31, 2024.

Of our total lots owned and controlled as of September 30, 2025, 58.6% were owned and 41.4% were controlled, as compared to 44.3% owned and 55.7% controlled as of December 31, 2024.

The decrease in the number of controlled lots was driven by the termination of certain contracts in our markets that no longer met our investment criteria, in light of market conditions.

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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, 2025 decreased by 234 homes, or 8.4%, to 2,546 as compared to 2,780 for the same period in 2024.

Net new home contracts for the six months ended June 30, 2025 decreased by 408 homes, or 7.2%, to 5,238 as compared to 5,646 for the same period in 2024.

Net new home contracts (new home contracts net of cancellations) for the three months ended September 30, 2025 decreased by 177 homes, or 6.9%, to 2,386 as compared to 2,563 for the same period in 2024.

Net new home contracts for the nine months ended September 30, 2025 decreased by 585 homes, or 7.1%, to 7,624 as compared to 8,209 for the same period in 2024.

Average monthly absorption rate

Our overall average monthly “absorption rate” (calculated as monthly net new home contracts divided by average selling communities) for the three and six months ended June 30, 2025 and 2024 by segment is included in the table below:

Three Months Ended June 30,

Our overall average monthly “absorption rate” (calculated as monthly net new home contracts divided by average selling communities) for the three and nine months ended September 30, 2025 and 2024 by segment is included in the table 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, 2025, our absorption rates decreased by 22.9% and 22.2%, respectively, to 2.7 per month and 2.8 per month, respectively, as compared to the same respective periods in 2024, primarily driven by slowing demand during the first six months of 2025 amidst homebuilding market conditions impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, and broader concerns about affordability by homebuyers.

During the three and nine months ended September 30, 2025, our absorption rates decreased by 13.8% and 20.6%, respectively, to 2.5 per month and 2.7 per month, respectively, as compared to the same respective periods in 2024, primarily driven by slowing demand during the first nine months of 2025 amidst homebuilding market conditions impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, and broader concerns about affordability by homebuyers.

Selling communities

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Average Selling Communities

As of June 30,

Three Months Ended June 30,

Six Months Ended June 30,

As of September 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Century Complete

Our selling communities increased by 61 communities to 327 communities at June 30, 2025 as compared to 266 at June 30, 2024.

This 22 .9% increase was a result of an increased land pipeline that resulted in new community openings in excess of community closeouts, as well as the acquisition of Anglia Homes completed during the third quarter of 2024.

Our selling communities increased by 16 communities to 321 communities at September 30, 2025 as compared to 305 at September 30, 2024.

This 5.2 % increase was a result of an increased land pipeline that resulted in new community openings in excess of community closeouts.

(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.

As of June 30, 2025, we had 1,217 homes in backlog, which decreased as compared to 1,753 homes in backlog at June 30, 2024, with a total value of $466.0 million, as compared to $754.6 million at June 30, 2024.

Backlog dollar value decreased due to the decrease in the number of backlog units, and a 11.1% decrease in the average sales price of backlog units, generally due to higher incentives.

As of September 30, 2025, we had 1,117 homes in backlog, which decreased as compared to 1,580 homes in backlog at September 30, 2024, with a total value of $416.9 million, as compared to $671.4 million at September 30, 2024.

Backlog dollar value decreased due to the decrease in the number of backlog units, and a 12.1% decrease in the average sales price of backlog units, generally due to higher incentives, and partially offset by mix within individual communities.

Supplemental Guarantor Information

Our 6.750% senior notes due 2027 (which we collectively refer to as our “2027 Notes”) and our 3.875% senior notes due 2029 (which we collectively refer to as our “2029 Notes” and together with the 2027 Notes, the “Senior Notes”) are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as “Guarantors”).

Our subsidiaries associated with our Financial Services operations (referred to as “Non-Guarantors”) do not guarantee the Senior Notes.

The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all subordinated debt of the Guarantors.

Our 6.625% senior notes due 2033 (which we refer to collectively as our “2033 Notes”) and our 3.875% senior notes due 2029 (which we refer to collectively as our “2029 Notes” and collectively with our 2033 Notes, the “Senior Notes”) are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as the “Guarantors”).

Our subsidiaries associated with our Financial Services operations (which we refer to as the “Non-Guarantors”) do not guarantee the Senior Notes.

The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all existing and future subordinated debt of the Guarantors.

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

As of June 30, 2025, Century Communities, Inc.

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

As of September 30, 2025, Century Communities, Inc.

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

Each of the indentures governing our Senior Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged:

(1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a “Restricted Subsidiary” (as defined in the respective indentures), which sale, transfer, exchange or other disposition does not constitute an “Asset Sale” (as defined in the respective indentures) or is made in compliance with applicable provisions of the applicable indenture;

(2) upon any sale, transfer, exchange or

other disposition (by merger, consolidation or otherwise) of all of the assets of such Guarantor, which sale, transfer, exchange or other disposition does not constitute an Asset Sale or is made in compliance with applicable provisions of the applicable indenture;

provided, that after such sale, transfer, exchange or other disposition, such Guarantor is an “Immaterial Subsidiary” (as defined in the respective indentures);

(1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a “Restricted Subsidiary” (as defined in the applicable indenture), which sale, transfer, exchange or other disposition does not constitute an “Asset Sale” (as defined in the applicable indenture) or is made in compliance with applicable provisions of the applicable indenture;

(2) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the assets of such Guarantor, which sale, transfer, exchange or other disposition does not constitute an Asset Sale or is made in compliance with applicable provisions of the applicable indenture;

provided, that after such sale, transfer, exchange or other disposition, such Guarantor is an “Immaterial Subsidiary” (as defined in the applicable indenture);

(3) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the applicable indenture;

provided that if such Guarantor has incurred any indebtedness in reliance on its status as a Guarantor in compliance with applicable provisions of the applicable indenture, such Guarantor’s obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the applicable indenture;

(4) upon the designation of such Guarantor as an “Unrestricted Subsidiary” (as defined in the respective Indentures), in accordance with the applicable indenture;

(4) upon the designation of such Guarantor as an “Unrestricted Subsidiary” (as defined in the applicable indenture), in accordance with the applicable indenture;

(5) if the Company exercises its legal defeasance option or covenant defeasance option under the applicable indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the applicable indenture, upon such exercise or discharge;

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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.

Only the 2027 Notes and the related guarantees are registered securities under the Securities Act of 1933, as amended (the “Securities Act”).

The offer and sale of the 2029 Notes and the related guarantees were not and will not be registered under the Securities Act or the securities laws of any other jurisdiction and instead were issued in reliance upon an exemption from such registration.

Unless they are subsequently registered under the Securities Act, neither the 2029 Notes nor the related guarantees may be offered and sold only in transactions that are exempt from the registration requirements under the Securities Act and the applicable securities laws of any other jurisdiction.

The Guarantors’ condensed supplemental financial information is presented in this report as if the Senior Note guarantees existed during the periods presented pursuant to applicable SEC rules and guidance.

If any Guarantors are released from the guarantees in future periods, the changes are reflected prospectively.

The offer and sale of the Senior Notes and the related guarantees were issued in reliance upon an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), and other applicable securities laws.

Unless we subsequently register the resale of the Senior Notes and related guarantees, they may be offered or sold only in transactions that are exempt from the registration requirements under the Securities Act and the applicable securities laws of any other jurisdiction.

The Guarantors’ condensed supplemental financial information is presented in this report as if the guarantees of the Senior Notes existed during the periods presented.

If any Guarantors are released from their respective guarantees in future periods, the changes are reflected prospectively.

We have determined that separate, full financial statements of the Guarantors would not be material to investors, and accordingly, supplemental financial information is presented below.

The following summarized financial information is presented for Century Communities, Inc.

and the Guarantor Subsidiaries on a combined basis after eliminating intercompany transactions and balances among Century Communities, Inc.

and the Guarantor Subsidiaries , as well as their investment in, and equity in earnings from Non-Guarantor Subsidiaries.

and the Guarantors on a combined basis after eliminating intercompany transactions and balances among Century Communities, Inc.

and the Guarantors, as well as their investment in, and equity in earnings from, the Non-Guarantors.

Century Communities, Inc.

and Guarantor Subsidiaries

and Guarantors

Summarized Balance Sheet Data (in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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Summarized Statements of Operations Data (in thousands)

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

December 31, 2024

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Liquidity and Capital Resources

Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and current capacity on our revolving line of credit, was $857.6 million as of June 30, 2025 and $918.0 million as of December 31, 2024 .

Our principal uses of capital for the three and six months ended June 30, 2025 were our land purchases, land development, home construction, construction of multi-family rental properties, share repurchases, dividends, and the payment of routine liabilities.

Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and current capacity on our revolving line of credit, was $835.8 million as of September 30, 2025 and $918.0 million as of December 31, 2024 .

Our principal uses of capital for the three and nine months ended September 30, 2025 were our land purchases, land development, home construction, construction of multi-family rental properties, 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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From a liquidity standpoint, we continue to acquire and develop lots in our markets when they meet our current investment criteria.

During the six months ended June 30, 2025, we reduced our land acquisition and development activities by terminating certain contracts in our markets that no longer met our investment criteria, in light of current market conditions.

During the nine months ended September 30, 2025, we reduced our land acquisition and development activities by terminating certain contracts in our markets that no longer met our investment criteria, in light of current market conditions.

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 our purchases of land, as well as land development, home construction activities, and other cash needs.

We had $270.0 million outstanding under our revolving line of credit as of June 30, 2025, as compared to $135.5 million outstanding as of December 31, 2024.

We had $339.0 million outstanding under our revolving line of credit as of September 30, 2025, as compared to $135.5 million outstanding as of December 31, 2024.

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

For the three and six months ended June 30, 2025, 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, 2024 that was filed with the SEC on January 30, 2025.

For the three and nine months ended September 30, 2025, 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, 2024 that was filed with the SEC on January 30, 2025, other than the issuance of $500.0 million aggregate principal amount of our 6.625% senior notes due 2033 and the extinguishment and redemption of $500.0 million in outstanding principal of our former 6.750% senior notes due 2027, as described in more detail below.

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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This balance allows us flexibility to adjust to market conditions as they develop.

As of June 30, 2025, we had outstanding purchase contracts and option contracts for 31,282 lots totaling approximately $2.5 billion and we had $103.1 million of deposits for land contracts, of which $70.1 million were non-refundable cash deposits pertaining to land contracts.

As of September 30, 2025, we had outstanding purchase contracts and option contracts for 25,756 lots totaling approximately $1.8 billion and we had $92.6 million of deposits for land contracts, of which $69.0 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 utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics.

Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

Options may be more difficult to procure from land sellers in strong housing markets and are more or less prevalent in certain geographic regions.

In addition, in the ordinary course of business, we explore, and from time to time, enter into purchase agreements to opportunistically acquire other homebuilders to add existing and future lots to our land portfolio and augment the organic expansion of our land portfolio.

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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, 2025, 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, 2025, we were in compliance with all such covenants and requirements under the agreements governing our senior notes, revolving line of credit, construction loan agreements, and mortgage repurchase facilities.

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, 2025 and December 31, 2024, respectively (in thousands):

Our outstanding debt obligations included the following as of September 30, 2025 and December 31, 2024, respectively (in thousands):

September 30,

6.750% senior notes, due June 2027 (1)

3.875% senior notes, due August 2029 (1)

6.625% senior notes, due September 2033 (1)

Other financing obligations (2)

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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, 2025, other financing obligations included $12.3 million related to certain secured borrowings, as well as $127.7 million outstanding under construction loan agreements related to Century Living, as described below.

(2) As of September 30, 2025, other financing obligations included $26.1 million related to insurance premium notes and certain secured borrowings, as well as $131.1 million outstanding under construction loan agreements related to Century Living, as described below.

As of December 31, 2024, other financing obligations included $11.0 million related to insurance premium notes and certain secured borrowings, as well as $102.4 million outstanding under construction loan agreements.

We may from time to time seek to refinance or increase our outstanding debt or retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise.

Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Such repurchases, exchanges or redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may or may not be material during any particular reporting period.

6.750% Senior Notes Due 2027

As of June 30, 2025, we had outstanding $500.0 million in aggregate principal amount of our 6.750% Senior Notes due 2027, which principal balance is due in June 2027.

Prior to that date, interest only payments are due semi-annually in June and December of each year.

These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions.

As of June 30, 2025, the aggregate obligation of these notes, inclusive of unamortized financing costs on these notes was $498.4 million as reported on our condensed consolidated financial statements.

Issuance of 6.625% Senior Notes Due 2033

During the three months ended September 30, 2025, we entered into an indenture with U.S.

Bank Trust Company, National Association, as trustee pursuant to which we issued $500.0 million aggregate principal amount of our 6.625% Senior Notes due 2033 (the “2033 Notes”).

The 2033 Notes were issued at 100% of their principal amount and we received proceeds of $493.1 million, net of $6.9 million in issuance costs.

The indenture contains certain restrictive covenants on issuing future secured debt and other transactions and contains various optional redemption provisions to redeem the 2033 Notes, in whole or in part, at a time before, or on or after, September 15, 2028, and a put provision triggered by certain change of control events.

The aggregate principal balance of the 2033 Notes is due in September 2033.

Interest on the 2033 Notes will accrue from September 17, 2025 at a rate of 6.625% per annum, and will be payable semi-annually in cash in March and September of each year, beginning in March 2026.

As of September 30, 2025, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $493.1 million.

Extinguishment of 6.750% Senior Notes Due 2027

During the three months ended September 30, 2025, we legally extinguished $500.0 million in outstanding principal of our 6.750% Senior Notes due 2027 at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, totaling $511.4 million.

The extinguishment transaction resulted in a loss on debt extinguishment of $1.4 million included in other expense in the condensed consolidated statements of operations.

3.875% Senior Notes Due 2029

As of June 30, 2025, we had outstanding $500.0 million in aggregate principal amount of our 3.875% Senior Notes due 2029, which principal balance is due in August 2029.

As of September 30, 2025, we had outstanding $500.0 million in aggregate principal amount of our 3.875% Senior Notes due 2029, which principal balance is due in August 2029.

Prior to that date, interest only payments are due semi-annually in February and August of each year.

These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions.

As of June 30, 2025, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $496.8 million, as reported on our condensed consolidated financial statements.

These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions and contains various optional redemption provisions to redeem the 2029 Notes, in whole or in part, at a time before, or on or after, February 15, 2029, and a put provision triggered by certain change of control events.

As of September 30, 2025, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $497.0 million.

Construction Loan Agreements

Certain wholly owned subsidiaries of Century Living, LLC are parties to construction loan agreements with various banks (which we collectively refer to as “the lenders”).

Certain wholly owned subsidiaries of Century Living, LLC are parties to secured construction loan agreements with various banks (which we collectively refer to as “the lenders”).

These construction loan agreements collectively provide that we may borrow up to an aggregate of $204.7 million from the lenders for purposes of construction of multi-family projects in Colorado, with advances made by the lenders upon the satisfaction of certain conditions.

The obligations under construction loan agreements are guaranteed by certain of our subsidiaries.

Portions of the obligations under the secured construction loan agreements are

guaranteed by us.

Borrowings under the construction loan agreements bear interest at various rates, including a fixed rate and floating interest rates per annum equal to the Secured Overnight Financing Rate (which we refer to as “SOFR”) plus an applicable margin.

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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, 2025 and December 31, 2024, $127.7 million and $102.4 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 6.6% and 6.5% as of June 30, 2025 and December 31, 2024, respectively, and we were in compliance with all covenants thereunder.

As of September 30, 2025 and December 31, 2024, $131.1 million and $102.4 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 6.6% and 6.5% as of September 30, 2025 and December 31, 2024, respectively, and we were in compliance with all covenants thereunder.

Revolving Line of Credit

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The Credit Agreement also provides for customary fees including commitment fees payable to each lender ranging from 0.20% to 0.35% per annum based on our leverage ratio of the unused portion of the revolving line of credit and other customary fees.

As of June 30, 2025 and December 31, 2024, $270.0 million and $135.5 million, respectively, was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 5.8% and 5.9%, respectively, and we were in compliance with all covenants under the Credit Agreement.

As of September 30, 2025 and December 31, 2024, $339.0 million and $135.5 million, respectively, was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 5.7% and 5.9%, respectively, and we were in compliance with all covenants under the Credit Agreement.

Mortgage Repurchase Facilities – Financial Services

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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 $375.0 million as of June 30, 2025, secured by the mortgage loans financed thereunder.

Bank National Association and Truist Bank, which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $375.0 million as of September 30, 2025, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through June 1, 2026.

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 6.0% as of June 30, 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, 2025 and December 31, 2024, we had $181.4 million and $232.8 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

As of September 30, 2025 and December 31, 2024, we had $176.6 million and $232.8 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

Letters of Credit and Performance Bonds

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, 2025 and December 31, 2024, we had issued and outstanding letters of credit of $90.8 million and $97.5 million, respectively, and we had issued and outstanding performance and other bonds of $454.0 million and $466.0 million, respectively.

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.

As of September 30, 2025 and December 31, 2024, we had issued and outstanding letters of credit of $74.7 million and $97.5 million, respectively, and we had issued and outstanding performance and other bonds of $450.1 million and $466.0 million, respectively.

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.

Stock Repurchases

Our stock repurchase program authorizes us to repurchase up to 4.5 million shares of our outstanding common stock, of which 3.1 million shares remained available to be repurchased as of June 30, 2025.

During the three and six months ended June 30, 2025, an aggregate of 883.6 thousand and 1.6 million shares, respectively, were repurchased under our stock repurchase program for a total purchase price of approximately $48.0 million and $103.6 million, respectively, and a weighted average price of $54.35 and $63.26 per share, respectively.

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.

Our stock repurchase program authorizes us to repurchase up to 4.5 million shares of our outstanding common stock, of which 2.8 million shares remained available to be repurchased as of September 30, 2025.

During the three and nine months ended September 30, 2025, an aggregate of 296.9 thousand and 1.9 million shares, respectively, were repurchased under our stock repurchase program for a total purchase price of approximately $20.0 million and $123.6 million, respectively, and a weighted average price of $67.36 and $63.91 per share, respectively.

We did not repurchase any shares of 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.

Under the terms of our stock repurchase program, 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 three and six months ended June 30, 2025 and 2024, respectively (in thousands, except per share information):

Six months ended June 30, 2025

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the three and nine months ended September 30, 2025 and 2024, respectively (in thousands, except per share information):

Nine months ended September 30, 2025

Cash Dividends Declared and Paid

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June 11, 2025

Six months ended June 30, 2024

August 13, 2025

August 27, 2025

September 10, 2025

Nine months ended September 30, 2024

Cash Dividends Declared and Paid

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June 12, 2024

August 14, 2024

August 28, 2024

September 11, 2024

We expect to continue paying our quarterly cash dividends to stockholders for the remainder of 2025.

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, 2025 Compared to the Six Months Ended June 30, 2024

For the six months ended June 30, 2025 and 2024, the comparison of cash flows is as follows:

Cash Flows— Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, 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 $47.6 million during the six months ended June 30, 2025 as compared to net cash used in operating activities of $78.5 million during the prior year period.

This decrease in net cash used is primarily a result of reduced expenditures related to land acquisition and expenditures associated with the construction of homes during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Net cash used in operating activities was $57.7 million during the nine months ended September 30, 2025 as compared to net cash used in operating activities of $174.0 million during the prior year period.

This decrease in net cash used is primarily a result of reduced expenditures related to land acquisition and expenditures associated with the construction of homes during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

This was offset by (1) a $119.4 million decrease in net income during the current year period and (2) changes in cash balances held in escrow, in each case compared to the prior year period.

 Net cash provided by investing activities increased to $29.6 million during the six months ended June 30, 2025, compared to $87.6 million used in investing activities during the prior year period.

This change was primarily related to (1) $42.8 million cash proceeds related to the sale of our mortgage servicing rights portfolio during the six months ended June 30, 2025, (2) $42.4 million in expenditures related to the development, construction, and management of multi-family rental properties by our Century Living segment during the six months ended June 30, 2024.

During the first quarter of 2025, our strategy evolved for our Century Living multi-family rental properties to be predominantly focused on the disposition of the assets and we determined that these operations have become part of our ordinary activities, and cash flows from development activities and the disposition of properties are recorded as operating activities on the condensed consolidated statement of cash flows, and (3) $32.7 million in expenditures related to our acquisition of Landmark during the six months ended June 30, 2024.

 Net cash used in financing activities was $31.0 million during the six months ended June 30, 2025, compared to $52.6 million net cash provided by financing activities during the prior year period.

This change was primarily attributable to a (1) a $60.9 million increase in net payments for our mortgage repurchase facilities, and (2) a $50.5 million increase in stock repurchases during the current year period, in each case compared to the prior year period.

As of June 30, 2025, our cash and cash equivalents and restricted cash balance was $126.4 million, as compared to $175.3 million as of December 31, 2024.

 Net cash provided by investing activities was $30.6 million during the nine months ended September 30, 2025, compared to net cash used in investing activities of $277.7 million during the prior year period.

This change was primarily related to (1) $44.9 million in cash proceeds related to the sale of our mortgage servicing rights portfolio during the nine months ended September 30, 2025, (2) $157.1 million in expenditures related to our acquisitions of Anglia and Landmark during the nine months ended September 30, 2024, and (3) $98.0 million in expenditures related to the development, construction, and management of multi-family rental properties by our Century Living segment during the nine months ended September 30, 2024.

During the first quarter of 2025, our strategy evolved for our Century Living multi-family rental properties to be predominantly focused on the disposition of the assets shortly after lease stabilization and we determined that these operations have become part of our ordinary activities, and cash flows from development activities and the disposition of properties are now recorded as operating activities on the condensed consolidated statement of cash flows.

 Net cash provided by financing activities was $14.9 million during the nine months ended September 30, 2025, compared to net cash provided by financing activities of $388.6 million during the prior year period.

This change was primarily attributable to (1) a $70.5 million increase in stock repurchases (2) a $64.1 million increase in net payments for our mortgage repurchase facilities, and (3) a $36.7 million decrease in borrowings under construction loan agreements, in each case during the current year period as compared to the prior year period.

As of September 30, 2025, our cash and cash equivalents and restricted cash balance was $163.2 million, as compared to $175.3 million as of December 31, 2024.

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, 2025 and 2024.

The following table presents EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024.

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

We define EBITDA as net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense (income), and (iv) depreciation and amortization expense.

We define adjusted EBITDA as EBITDA before inventory impairment, restructuring costs, impairment on other investment, purchase price accounting for acquired work in process inventory and loss on debt extinguishment, in each case as applicable during a period.

We define adjusted EBITDA as EBITDA before inventory impairment, abandonment of lot option contracts, restructuring costs, loss on debt extinguishment, impairment on other investment, and purchase price accounting for acquired work in process inventory, in each case as applicable during a period.

We believe EBITDA and adjusted EBITDA provide an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring.

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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

Interest in cost of home sales revenues

Interest income

Interest expense (income)

Depreciation and amortization expense

Inventory impairment

Abandonment of lot option contracts (1)

Restructuring costs

Loss on debt extinguishment

Impairment on other investment

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NM – Not Meaningful

(1) Beginning in the third quarter of 2025, we added “Abandonment of lot option contracts” as an adjustment in our non-GAAP adjusted EBITDA calculation.

Accordingly, we have recast the corresponding prior period information to conform to the current presentation and calculation.

Net Homebuilding Debt to Net Capital

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Homebuilding debt is our total debt minus our outstanding borrowings under our construction loan agreements and our repurchase facilities.

The most directly comparable GAAP measure is the ratio of debt to total capital.

The most directly comparable GAAP measure is the ratio of homebuilding debt to total capital.

We believe the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in our operations and as an indicator of our ability to obtain external financing.

(dollars in thousands)

September 30,

Notes payable

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(ii) inventory impairment;

(iii) restructuring costs;

(iv) impairment on other investment;

(v) purchase price accounting for acquired work in process inventory;

and (vi) loss on debt extinguishment;

(iii) abandonment of lot option contracts;

(iv) restructuring costs;

(v) loss on debt extinguishment;

(vii) impairment on other investment;

and (vii) purchase price accounting for acquired work in process inventory;

in each case, as applicable during a period, less adjusted income tax expense, calculated using our estimated annual effective tax rate after discrete items for the applicable period.

1 unchanged sentence

(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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Inventory impairment

Abandonment of lot option contracts (1)

Restructuring costs

Loss on debt extinguishment

Impairment on other investment

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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, 2025 were each 25.5%, respectively, which are reflective of our GAAP tax rates for the six months ended June 30, 2025.

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

(1) Beginning in the third quarter of 2025, we added “Abandonment of lot option contracts” as an adjustment in our non-GAAP adjusted net income calculation.

Accordingly, we have recast the corresponding prior period information to conform to the current presentation and calculation.

(2) The tax rates used in calculating adjusted net income for the three and nine months ended September 30, 2025 were each 24.3%, respectively, which are reflective of our GAAP tax rates for the nine months ended September 30, 2025.

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

QUANTIT ATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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Interest Rates

Our primary exposure to market risk is interest rate risk associated with our Credit Agreemen t and construction loan agreements, as discussed in more detail in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this report, and the impact of interest rate changes on the affordability of mortgage financing to homebuyers, which affects demand for our homes.

Federal Reserve did not change the U.S.

Federal funds interest rate during the first six months of 2025, and we cannot provide any assurance as to the impact of any future potential changes to the U.S.

Our primary exposure to market risk is interest rate risk associated with our Credit Agreemen t and construction loan agreements and the operation of our Financial Services business.

Exposure to market risk includes the impact of interest rate changes on our interest expense and the affordability of mortgage financing to homebuyers, which affects demand for our homes, as discussed in more detail in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this report.

During the three months ended September 30, 2025, the U.S.

Federal Reserve reduced the U.S.

Federal funds interest rate.

We cannot provide any assurance as to the impact of any future potential changes to the U.S.

Federal funds interest rate on mortgage rates or our current or future business.

Our Financial Services business, which is significantly tied to the sale of our homes utilizes mortgage-backed securities forward commitments, option contracts and investor commitments to protect the value of rate-locked commitments and loans held for sale from fluctuations in mortgage-related interest rates.

To mitigate interest risk associated with loans held for sale, we typically use derivative financial instruments to economically hedge our exposure to risk from the time a borrower locks a loan until the time the loan is securitized.

We also typically hedge our interest rate exposure through entering into interest rate swap futures.

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

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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