What changed in this filing

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Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 103 added, 78 removed, 336 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 41,971 $ 50,514

13 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,187,895 shares issued and 23,666,284 shares outstanding as of March 31, 2022 and 26,963,915 shares issued and 23,917,359 shares outstanding as of December 31, 2021

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,212,108 shares issued and 23,272,636 shares outstanding as of June 30, 2022 and 26,963,915 shares issued and 23,917,359 shares outstanding as of December 31, 2021

Additional paid-in capital 302,688 291,577

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Home sales revenues $ 723,069 $ 791,512 $ 1,269,119 $ 1,497,465

3 unchanged sentences

Operating income 159,006 146,007 254,726 268,450

Loss on extinguishment of debt — 662 — 662

Other income, net ( 4,006 ) ( 3,776 ) ( 7,836 ) ( 4,609 )

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BALANCE— March 31, 2022 27,187,895 $ 271 $ 297,451 $ 1,442,608 $ ( 317,579 ) $ 1,422,751

Net income — — — 123,376 — 123,376

Stock repurchase — — — — ( 37,443 ) ( 37,443 )

Compensation expense for equity awards — — 3,545 — — 3,545

Stock issued under employee incentive plans 24,213 — 1,692 — — 1,692

BALANCE— June 30, 2022 27,212,108 $ 271 $ 302,688 $ 1,565,984 $ ( 355,022 ) $ 1,513,921

See accompanying notes to the consolidated financial statements.

LGI HOMES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Total Equity

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BALANCE— March 31, 2021 26,908,643 $ 269 $ 276,398 $ 1,033,935 $ ( 91,964 ) $ 1,218,638

Net income — — — 118,134 — 118,134

Stock repurchase — — — — ( 55,776 ) ( 55,776 )

Compensation expense for equity awards — — 3,395 — — 3,395

Stock issued under employee incentive plans 18,050 — 2,015 — — 2,015

BALANCE— June 30, 2021 26,926,693 $ 269 $ 281,808 $ 1,152,069 $ ( 147,740 ) $ 1,286,406

See accompanying notes to the consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Depreciation and amortization 730 537

Gain on disposal of assets ( 1,564 ) —

Loss on extinguishment of debt — 662

(Gain) loss on disposal of assets ( 1,564 ) 350

Compensation expense for equity awards 7,115 6,817

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Return of capital from unconsolidated entities — 2,660

Net cash provided by (used in) investing activities ( 1,373 ) 404

Payment for business acquisition — ( 27,279 )

Net cash used in investing activities ( 2,455 ) ( 29,763 )

Cash flows from financing activities:

1 unchanged sentence

Payments on notes payable ( 20,000 ) ( 564,000 )

Loan issuance costs ( 2,567 ) ( 10,500 )

Proceeds from sale of stock, net of offering expenses 3,704 4,123

1 unchanged sentence

Net cash provided by (used in) financing activities 257,212 ( 34,327 )

Net increase in cash and cash equivalents 2,811 12,215

Net increase (decrease) in cash and cash equivalents ( 8,543 ) 75,762

Cash and cash equivalents, beginning of period 50,514 35,942

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Organization and Description of the Business

LGI Homes, Inc., a Delaware corporation (the “Company”, “we,” “us,” or “our”), is engaged in the development of communities and the design, construction and sale of new homes in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia and Pennsylvania.

Basis of Presentation

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Results for interim periods are not necessarily indicative of results to be expected for the full year.

The accompanying unaudited financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, include the accounts of the Company and its subsidiaries.

The accompanying unaudited financial statements as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021, include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

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Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

Effective April 28, 2022, we adopted the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No.

2020-04, “Reference Rate Reform (“Topic 848”):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

In January 2021, the FASB issued ASU No.

Effective April 28, 2022, we adopted FASB ASU No.

2021-01, “Reference Rate Reform (Topic 848):

Scope” (“ASU 2021-01”), which clarified the scope and application of the original guidance.

We expect to adopt ASU 2020-04 and ASU 2021-01 when the Second Amendment (as defined herein) replaces LIBOR as the benchmark interest rate with the Secured Overnight Financing Rate (“SOFR”).

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements or related disclosures.

The adoption of both ASU 2020-04 and ASU 2021-01 replaced LIBOR as the benchmark interest rate with the Secured Overnight Financing Rate (“SOFR”) and did not have a material effect on our consolidated financial statements or related disclosures.

REAL ESTATE INVENTORY

Our real estate inventory consists of the following (in thousands):

March 31, December 31,

June 30, December 31,

Land, land under development and finished lots $ 1,776,558 $ 1,499,761

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Interest and financing costs incurred under our debt obligations, as more fully discussed in Note 4 , are capitalized to qualifying real estate projects under development and homes under construction.

During May and July of 2021, we acquired certain real estate assets owned by two private home builders and assumed certain related liabilities within the states of Minnesota and Texas for $ 67.0 million.

These acquisitions are accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”).

As of March 31, 2022, our purchase accounting for these acquisitions is final.

ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued and other liabilities consist of the following (in thousands):

March 31, December 31,

June 30, December 31,

Real estate inventory development and construction payable $ 63,296 $ 48,656

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Changes to our warranty accrual are as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Warranty reserves, beginning of period $ 8,350 $ 5,950 $ 7,850 $ 5,350

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Revolving Credit Agreement

On April 28, 2021, we entered into that certain Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “2021 Credit Agreement”), which amended and restated that certain Fourth Amended and Restated Credit Agreement, dated as of May 6, 2019.

The 2021 Credit Agreement had revolving commitments of $ 850.0 million.

On April 29, 2022, we entered into that certain Lender Addition and Acknowledgement Agreement and Second Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Second Amendment”), which amends the 2021 Credit Agreement (as so amended and as otherwise amended prior to the date of the Second Amendment, the “Credit Agreement”).

The Second Amendment, among other things, (a) increases the commitments under the 2021 Credit Agreement by an additional $ 250.0 million, bringing the total commitments under the Credit Agreement to $ 1.1 billion, and (b) replaces LIBOR as the benchmark interest rate with SOFR.

Borrowings under the Credit Agreement will bear interest, payable monthly in arrears, at the Company’s option, at either (1) term SOFR (based on 1, 3 or 6 month interest periods, as selected by the Company) plus a 10 , 15 or 25 basis point adjustment, respectively, which rate will be subject to a 50 basis point floor, plus an applicable margin (ranging from 145 basis points to 210 basis points (the “Applicable Margin”)) based on the Company’s leverage ratio as determined in accordance with a pricing grid, and (2) term SOFR based on a 1 month interest period plus a 10 basis point adjustment, subject to a 50 basis point floor, plus the Applicable Margin.

On April 29, 2022, we entered into that certain Lender Addition and Acknowledgement Agreement and Second Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Second Amendment” and, as so amended, “the Credit Agreement”), which amended that certain Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “2021 Credit Agreement”).

The Second Amendment, among other things, (a) increased the commitments under the 2021 Credit Agreement by an additional $ 250.0 million, bringing the total commitments under the Credit Agreement to $ 1.1 billion, and (b) replaced LIBOR as the benchmark interest rate with SOFR.

Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) term SOFR (based on 1, 3 or 6 month interest periods, as selected by the Company) plus a 10 , 15 or 25 basis point adjustment, respectively, which rate is subject to a 50 basis point floor, plus an applicable margin (ranging from 145 basis points to 210 basis points (the “Applicable Margin”)) based on the Company’s leverage ratio as determined in accordance with a pricing grid, and (2) term SOFR based on a 1 month interest period plus a 10 basis point adjustment, subject to a 50 basis point floor, plus the Applicable Margin.

The Credit Agreement matures on April 28, 2025.

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The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement.

As of March 31, 2022, the borrowing base under the 2021 Credit Agreement was $ 1.1 billion, of which borrowings, including the 2029 Senior Notes, of $ 1.0 billion were outstanding, $ 25.0 million of letters of credit were outstanding and $ 108.3 million was available to borrow under the 2021 Credit Agreement.

Prior to the Second Amendment, interest was paid monthly on borrowings under the 2021 Credit Agreement at LIBOR plus 1.60 %.

Prior to the Second Amendment, the 2021 Credit Agreement applicable margin for LIBOR loans ranged from 1.45 % to 2.10 % based on our leverage ratio.

At March 31, 2022, LIBOR was 0.40 %;

however, the 2021 Credit Agreement has a 0.50 % LIBOR floor.

As of June 30, 2022, the borrowing base under the Credit Agreement was $ 1.4 billion, of which borrowings, including the 2029 Senior Notes, of $ 1.2 billion were outstanding, $ 26.9 million of letters of credit were outstanding and $ 203.7 million was available to borrow under the Credit Agreement.

Interest is paid monthly on borrowings under the Credit Agreement at SOFR plus 1.75 %.

The Credit Agreement applicable margin for SOFR loans ranges from 1.45 % to 2.10 % based on our leverage ratio.

At June 30, 2022, SOFR was 1.50 %, subject to the 0.50 % SOFR floor as included in the Credit Agreement.

The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a leverage ratio, a minimum liquidity amount and an EBITDA to interest expense ratio.

The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments.

At March 31, 2022, we were in compliance with all of the covenants contained in the 2021 Credit Agreement.

At June 30, 2022, we were in compliance with all of the covenants contained in the Credit Agreement.

Senior Notes Offering

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The 2029 Senior Notes mature on July 15, 2029.

Terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee.

The terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee.

Notes payable consist of the following (in thousands):

March 31, 2022 December 31, 2021

Notes payable under the 2021 Credit Agreement ($ 850.0 million revolving credit facility at March 31, 2022) maturing on April 28, 2025;

interest paid monthly at LIBOR plus 1.60 %.

June 30, 2022 December 31, 2021

Notes payable under the Credit Agreement ($ 1.1 billion revolving credit facility at June 30, 2022) maturing on April 28, 2025;

interest paid monthly at SOFR plus 1.75 %.

$ 868,616 $ 517,439

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Interest activity, including other financing costs, for notes payable for the periods presented is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Interest incurred $ 9,438 $ 8,040 $ 16,465 $ 15,772

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Cash paid for interest $ 4,538 $ 1,859 $ 14,206 $ 14,492

Included in interest incurred was amortization of deferred financing costs and discounts for notes payable of $ 0.7 million for each of the three months ended March 31, 2022 and 2021.

Included in interest incurred was amortization of deferred financing costs and discounts for notes payable of $ 0.9 million and $ 0.7 million for each of the three months ended June 30, 2022 and 2021, respectively, and $ 1.6 million and $ 1.4 million for each of the six months ended June 30, 2022 and 2021, respectively.

and state income tax returns in jurisdictions with varying statutes of limitations.

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however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty.

For the three months ended March 31, 2022, our effective tax rate of 21.0 % is equal to the Federal statutory rate primarily as a result of the deductions in excess of compensation cost for share-based payments, offset by an increase in the rate for the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, and for state income taxes, net of the federal benefit payments.

Income taxes paid were $ 0.4 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively.

For the three months ended June 30, 2022, our effective tax rate of 24.3 % is higher than the Federal statutory rate primarily as a result of an increase in the rate for the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, and for state income taxes, net of the federal benefit.

For the six months ended June 30, 2022, our effective rate of 23.1 % is higher than the Federal statutory rate primarily as a result of an increase in the rate for the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, and for state income taxes, net of the federal benefit, offset by the deductions in excess of compensation cost for share-based payments.

Income taxes paid were $ 52.0 million and $ 63.5 million for the three months ended June 30, 2022 and 2021, respectively.

Income taxes paid were $ 52.4 million and $ 63.7 million for the six months ended June 30, 2022 and 2021, respectively.

Stock Repurchase Program

In February 2022, our Board of Directors (the “Board”) approved a $ 200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $ 550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws.

During the three months ended March 31, 2022, we repurchased 475,055 shares of our common stock for $ 57.7 million to be held as treasury

During the three months ended March 31, 2021, we repurchased 216,221 shares of our common stock for $ 25.8 million to be held as treasury stock.

During the three months ended June 30, 2022, we repurchased 417,861 shares of our common stock for $ 37.4 million to be held as treasury stock.

During the six months ended June 30, 2022, we repurchased 892,916 shares of our common stock for $ 95.1 million to be held as treasury stock.

During the three months ended June 30, 2021, we repurchased 335,000 shares of our common stock for $ 55.8 million to be held as treasury stock.

During the six months ended June 30, 2021, we repurchased 551,221 shares of our common stock for $ 81.6 million to be held as treasury stock.

A total of 2,939,472 shares of our common stock has been repurchased since our stock repurchase program commenced.

As of March 31, 2022, we may purchase up to $ 249.0 million of shares of our common stock under our stock repurchase program.

As of June 30, 2022, we may purchase up to $ 211.5 million of shares of our common stock under our stock repurchase program.

The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements.

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EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Numerator (in thousands):

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The following table summarizes the activity of our time-vested restricted stock units (“RSUs”):

Three Months Ended March 31,

Six Months Ended June 30,

Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value

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Ending balance 113,782 $ 101.42 129,839 $ 77.01

We recognized $ 0.8 million of stock-based compensation expense related to outstanding RSUs for each of the three months ended March 31, 2022 and 2021.

We recognized $ 1.1 million and $ 0.9 million of stock-based compensation expense related to outstanding RSUs for the three months ended June 30, 2022 and 2021, respectively.

We recognized $ 1.9 million and $ 1.7 million of stock-based compensation expense related to outstanding RSUs for the six months ended June 30, 2022 and 2021, respectively.

Generally, the RSUs cliff vest on the third anniversary of the grant date and can only be settled in shares of our common stock.

At March 31, 2022, we had unrecognized compensation cost of $ 7.4 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.2 years.

At June 30, 2022, we had unrecognized compensation cost of $ 6.4 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.1 years.

Performance-Based Restricted Stock Units

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The PSUs can only be settled in shares of our common stock.

The following table summarizes the activity of our PSUs for the three months ended March 31, 2022:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2021 Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at March 31, 2022 Weighted Average Grant Date Fair Value

The following table summarizes the activity of our PSUs for the six months ended June 30, 2022:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2021 Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at June 30, 2022 Weighted Average Grant Date Fair Value

2019 2019 - 2021 81,242 — ( 767 ) ( 80,475 ) — $ 56.49

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Total 215,807 66,909 ( 2,261 ) ( 80,475 ) 199,980

At March 31, 2022, management estimates that the recipients will receive approximately 100 %, 200 % and 200 % of the 2022, 2021 and 2020 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

We recognized $ 2.3 million and $ 2.2 million of total stock-based compensation expense related to outstanding PSUs for the three months ended March 31, 2022 and 2021, respectively.

The 2019 - 2021 performance period PSUs vested and issued on March 15, 2022 at 200 % of the target number.

At March 31, 2022, we had unrecognized compensation cost of $ 17.6 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.3 years.

At June 30, 2022, management estimates that the recipients will receive approximately 100 %, 200 % and 200 % of the 2022, 2021 and 2020 target number of PSUs, respectively, at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

We recognized $ 2.2 million of total stock-based compensation expense related to outstanding PSUs for each of the three months ended June 30, 2022 and 2021.

We recognized $ 4.5 million and $ 4.4 million of total stock-based compensation expense related to outstanding PSUs for the six months ended June 30, 2022 and 2021, respectively.

The 2019 - 2021 performance period PSUs vested and issued on March 15, 2022 at 200 %

of the target number.

At June 30, 2022, we had unrecognized compensation cost of $ 15.4 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.1 years.

FAIR VALUE DISCLOSURES

ASC Topic 820, Fair Value Measurements (“ASC 820”) , defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any.

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements (“ASC 820”) , defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any.

The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous.

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The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.

As of March 31, 2022, the 2021 Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio.

As of June 30, 2022, the Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio.

In order to determine the fair value of the 2029 Senior Notes, the future contractual cash flows are discounted at our estimate of current market rates of interest, which were determined based upon the average interest rates of similar senior notes within the homebuilding industry (Level 2 measurement).

The following table below shows the level and measurement of liabilities at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

The following table below shows the level and measurement of liabilities at June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

Fair Value Hierarchy Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

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Land Purchases from Affiliates

We did not enter into or complete any land purchase contracts with affiliates during the three months ended March 31, 2022.

As of March 31, 2021, we had a land purchase contract to purchase a total of 25 finished lots in Burnet County, Texas from an affiliate of a family member of our chief executive officer for a total base purchase price of approximately $ 2.5 million.

Additionally, we had a land purchase contract to purchase a total of 110 finished lots in Pasco County, Florida from an affiliate of one of our directors for a total base purchase price of approximately $ 4.0 million.

As of December 31, 2021, we completed both the land purchase contracts in Burnet County and Pasco County.

We did not enter into or complete any land purchase contracts with affiliates during the six months ended June 30, 2022.

During the three months ended June 30, 2021, we completed a land purchase contract to purchase a total of 25 finished lots in Burnet County, Texas from an affiliate of a family member of our chief executive officer for a total base purchase price of approximately $ 2.5 million and a land purchase contract to purchase a total of 110 finished lots in Pasco County, Florida from an affiliate of one of our directors for a total base purchase price of approximately $ 4.0 million.

COMMITMENTS AND CONTINGENCIES

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The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Land deposits and option payments $ 33,925 $ 37,499

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Lots under land purchase contracts 28,091 36,978

As of March 31, 2022 and December 31, 2021, approximately $ 19.4 million and $ 19.3 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

As of June 30, 2022 and December 31, 2021, approximately $ 16.6 million and $ 19.3 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

Lease Obligations

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As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

ROU assets, as included in other assets on the consolidated balance sheets, were $ 5.1 million as of each of March 31, 2022 and December 31, 2021.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.4 million and $ 5.3 million at March 31, 2022 and December 31, 2021, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.5 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the three months ended March 31, 2022 and 2021 was $ 0.4 million and $ 0.2 million, respectively.

As of March 31, 2022, the weighted-average discount rate was 5.2 % and our weighted-average remaining life was 3.1 years.

We do not have any significant lease contracts that have not yet commenced at March 31, 2022.

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2022 (in thousands):

ROU assets, as included in other assets on the consolidated balance sheets, were $ 5.0 million and $ 5.1 million at June 30, 2022 and December 31, 2021, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.2 million and $ 5.3 million at June 30, 2022 and December 31, 2021, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 1.0 million and $ 0.8 million for the six months ended June 30, 2022 and 2021, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the six months ended June 30, 2022 and 2021 was $ 0.9 million and $ 0.8 million, respectively.

As of June 30, 2022, the weighted-average discount rate was 5.2 % and our weighted-average remaining life was 2.8 years.

We do not have any significant lease contracts that have not yet commenced at June 30, 2022.

The table below shows the future minimum payments under non-cancelable operating leases at June 30, 2022 (in thousands):

Year Ending December 31, Operating leases

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Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $ 268.8 million (including $ 25.0 million of letters of credit issued under the 2021 Credit Agreement) and $ 206.8 million at March 31, 2022 and December 31, 2021, respectively, related to our obligations for site improvements at various projects.

We have outstanding letters of credit and performance and surety bonds totaling $ 284.6 million (including $ 26.9 million of letters of credit issued under the Credit Agreement) and $ 206.8 million at June 30, 2022 and December 31, 2021, respectively, related to our obligations for site improvements at various projects.

Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows.

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Additionally, in 2021, we entered into a joint venture with a mortgage lender.

As of March 31, 2022 and December 31, 2021, we have a total of $ 6.0 million and $ 5.6 million, respectively, within other assets on the balance sheet relating to our investment in this real estate investment fund and this mortgage joint venture.

Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage servic es, respectively.

As of June 30, 2022 and December 31, 2021, we have a total of $ 7.1 million and $ 5.6 million, respectively, within other assets on the balance sheet relating to our investment in this real estate investment fund and the mortgage joint venture.

Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage services, respectively.

Income associated with our investment in unconsolidated entities during the three and six months ended June 30, 2022, was $ 1.6 million and $ 1.8 million, respectively.

We did not have any income recognized for our investment in unconsolidated entities during each of the three and six months ended June 30, 2021.

Home Sales Revenues

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The following table presents our home sales revenues disaggregated by revenue stream (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Retail home sales revenues $ 686,151 $ 696,826 $ 1,180,357 $ 1,340,398

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We operate one principal homebuilding business that is organized and reports by division.

We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five qualifying reportable segments at March 31, 2022:

We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five

qualifying reportable segments at June 30, 2022:

our Central, Southeast, Northwest, West, and Florida divisions.

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Financial information relating to our reportable segments was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Central $ 316,654 $ 347,963 $ 578,952 $ 636,713

15 unchanged sentences

Actual warranty expenses are reflected within the reportable segments.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Central $ 976,656 $ 857,174

6 unchanged sentences

Total assets $ 2,873,357 $ 2,351,865

(1) The Corporate balance consists primarily of cash, prepaid insurance, ROU assets, prepaid expenses, investments in unconsolidated entities and tax receivables.

(1) The Corporate balance consists primarily of cash, investments in unconsolidated entities and tax receivables.

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

What changed 10-Q

Item 1. Financial Statements