What changed in this filing

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Item 1. Financial Statements

2023-08-02 compared with 2023-05-02 · 91 added, 75 removed, 337 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 43,334 $ 31,998

13 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,472,206 shares issued and 23,532,734 shares outstanding as of March 31, 2023 and 27,245,278 shares issued and 23,305,806 shares outstanding as of December 31, 2022

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,485,513 shares issued and 23,546,041 shares outstanding as of June 30, 2023 and 27,245,278 shares issued and 23,305,806 shares outstanding as of December 31, 2022

Additional paid-in capital 315,174 306,673

Retained earnings 1,770,585 1,690,489

Treasury stock, at cost, 3,939,472 shares as of March 31, 2023 and December 31, 2022

Treasury stock, at cost, 3,939,472 shares as of June 30, 2023 and December 31, 2022

( 355,022 ) ( 355,022 )

5 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,

2023 2022 2023 2022

Home sales revenues $ 645,270 $ 723,069 $ 1,132,627 $ 1,269,119

25 unchanged sentences

BALANCE— March 31, 2023 27,472,206 $ 275 $ 311,525 $ 1,717,451 $ ( 355,022 ) $ 1,674,229

Net income — — — 53,134 — 53,134

Compensation expense for equity awards — — 2,360 — — 2,360

Stock issued under employee incentive plans 13,307 — 1,289 — — 1,289

BALANCE— June 30, 2023 27,485,513 $ 275 $ 315,174 $ 1,770,585 $ ( 355,022 ) $ 1,731,012

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

7 unchanged sentences

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.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

29 unchanged sentences

Net cash provided by (used in) financing activities ( 74,657 ) 257,212

Net increase in cash and cash equivalents 10,968 2,811

Net increase (decrease) in cash and cash equivalents 11,336 ( 8,543 )

Cash and cash equivalents, beginning of period 31,998 50,514

14 unchanged sentences

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, 2023, and for the three months ended March 31, 2023 and 2022, include the accounts of the Company and its subsidiaries.

The accompanying unaudited financial statements as of June 30, 2023, and for the three and six months ended June 30, 2023 and 2022, include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

4 unchanged sentences

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 $ 1,934,555 $ 1,911,307

10 unchanged sentences

We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities.

During the three months ended March 31, 2023, we transferred $ 2.7 million of home assets from real estate inventory to

rental properties within property and equipment, net.

During the six months ended June 30, 2023, we transferred $ 5.5 million of home assets from real estate inventory to rental properties within property and equipment, net.

We are lessors of the homes representing these home assets.

Our leasing contracts are typically for terms of one year or less.

Our leasing contracts are typically for terms of one year .

ACCRUED EXPENSES AND OTHER LIABILITIES

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

March 31, December 31,

June 30, December 31,

Land banking financing arrangements $ 135,231 $ 141,792

20 unchanged sentences

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,

2023 2022 2023 2022

Warranty reserves, beginning of period $ 11,350 $ 8,350 $ 10,750 $ 7,850

4 unchanged sentences

Revolving Credit Agreement

On April 29, 2022, we entered into an amendment to 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” and, as so amended by such amendment, the “2022 Credit Agreement”).

The 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 2022 Credit Agreement to $ 1.1 billion, and (b) replaced the London Interbank Offered Rate (“LIBOR”) as the benchmark interest rate with the Secured Overnight Financing Rate (“SOFR”).

Borrowings under the 2022 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 2022 Credit Agreement matures on April 28, 2025.

On April 28, 2023, we entered into a Third Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Third Amendment”), which amends the 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 (as amended by an amendment dated as of April 29, 2022, the “2022 Credit Agreement” and as further amended by the Third Amendment, the “Credit Agreement”).

The Credit Agreement provides for a $ 1.13 billion revolving credit facility, which can be increased at the request of the Company by up to $ 170.0 million, subject to the terms and conditions of the Credit Agreement.

The Credit Agreement matures on April 28, 2027 with respect to $ 775.0 million, or 68.6 %, of the $ 1.13 billion of commitments thereunder and on April 28, 2025 with respect to 31.4% of the commitments thereunder .

The Credit Agreement also permits our subsidiaries that solely own and

operate single family rental homes to incur secured indebtedness not to exceed 6 % of our tangible net worth, and allows such subsidiaries to not guarantee the obligations under the Credit Agreement.

The Credit Agreement otherwise has substantially similar terms and provisions to the 2022 Credit Agreement.

Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date.

The 2022 Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $ 0.5 million.

The Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $ 0.5 million, other than subsidiaries whose sole purpose is to own and operate single-family rental homes.

The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 4.000 % Senior Notes due 2029 (the “2029 Senior Notes”), may not exceed the borrowing base under the Credit Agreement.

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, 2023, the borrowing base under the 2022 Credit Agreement was $ 1.4 billion, of which borrowings, including the 2029 Senior Notes, of $ 1.1 billion were outstanding, $ 26.4 million of letters of credit were outstanding and $ 315.8 million was available to borrow under the 2022 Credit Agreement.

Interest is paid monthly on borrowings under the 2022 Credit Agreement at SOFR plus an applicable margin.

The 2022 Credit Agreement applicable margin for SOFR loans ranges from 1.45 % to 2.10 % based on our leverage ratio.

The applicable margin was 1.85 % during the three months ended March 31, 2023.

At March 31, 2023, SOFR was 4.81 %, subject to the 0.50 % SOFR floor as included in the 2022 Credit Agreement.

As of June 30, 2023, the borrowing base under the Credit Agreement was $ 1.4 billion, of which borrowings, including the 2029 Senior Notes, of $ 1.1 billion were outstanding, $ 18.8 million of letters of credit were outstanding and $ 341.4 million was available to borrow under the Credit Agreement.

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, or (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.

At June 30, 2023, the Applicable Margin was 1.70 %, and SOFR was 5.10 %, 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, 2023, we were in compliance with all of the covenants contained in the 2022 Credit Agreement.

Lenders with $ 775.0 million, or 68.6 %, of the $ 1.13 billion of commitments under the Credit Agreement, agreed to extend the maturity of their commitments to April 28, 2027, with the remaining lenders retaining their existing maturity of April 28, 2025.

The Credit Agreement also permits our subsidiaries that solely own and operate single family rental homes to incur secured indebtedness not to exceed 6 % of our tangible net worth, and allows such subsidiaries to not guarantee the obligations under the Credit Agreement.

The Credit Agreement otherwise has substantially similar terms and provisions to the 2022 Credit Agreement.

At June 30, 2023, we were in compliance with all of the covenants contained in the Credit Agreement.

Senior Notes Offering

5 unchanged sentences

Notes payable consist of the following (in thousands):

March 31, 2023 December 31, 2022

Notes payable under the 2022 Credit Agreement ($ 1.1 billion revolving credit facility at March 31, 2023) maturing on April 28, 2025;

June 30, 2023 December 31, 2022

Notes payable under the Credit Agreement ($ 1.13 billion revolving credit facility at June 30, 2023) maturing in part on April 28, 2025 and in part on April 28, 2027;

interest paid monthly at SOFR plus 1.70 %

7 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Interest incurred $ 22,118 $ 9,438 $ 41,287 $ 16,465

2 unchanged sentences

Cash paid for interest $ 14,256 $ 4,538 $ 39,756 $ 14,206

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 3.1 million and $ 0.7 million for the three months ended March 31, 2023 and 2022, respectively .

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 5.1 million and $ 0.9 million for the three months ended June 30, 2023 and 2022, respectively, and $ 8.2 million and $ 1.6 million for the six months ended June 30, 2023 and 2022, respectively.

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

4 unchanged sentences

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

For the three months ended March 31, 2023, our effective tax rate of 16.7 % is lower than the Federal statutory rate primarily as a result of the deductions in excess of compensation cost for share-based payments and the extension of federal energy efficient homes tax credits, 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.

Income taxes paid were $ 0.1 million and $ 0.4 million for the three months ended March 31, 2023 and 2022, respectively.

For the three months ended June 30, 2023, our effective tax rate of 25.6 % 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 extension of federal energy efficient homes tax credits.

For the six months ended June 30, 2023, our effective tax rate of 22.8 % 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 a decrease in the rate for the deductions in excess of compensation cost for share-based payments and the extension of federal energy efficient homes tax credits.

Income taxes paid were $ 59.7 million and $ 52.0 million for the three months ended June 30, 2023 and 2022, respectively.

Income taxes paid were $ 59.9 million and $ 52.4 million for the six months ended June 30, 2023 and 2022, 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, 2023, we did no t repurchase any shares of our common stock.

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 stock.

During the three and six months ended June 30, 2023, we did no t repurchase any shares of our common stock.

During the three and six months ended June 30, 2022 we repurchased 417,861 shares of our common stock for $ 37.4 million and 892,916 shares of our common stock for $ 95.1 million, respectively, 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, 2023, we may purchase up to $ 211.5 million of shares of our common stock under our stock repurchase program.

As of June 30, 2023, 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.

1 unchanged sentence

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022:

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, 2023 and 2022:

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

2023 2022 2023 2022

Numerator (in thousands):

10 unchanged sentences

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

4 unchanged sentences

Ending balance 137,568 $ 113.56 113,782 $ 101.42

We recognized $ 1.1 million and $ 0.8 million of stock-based compensation expense related to outstanding RSUs for the three months ended March 31, 2023 and 2022, respectively.

We recognized $ 1.3 million and $ 1.1 million of stock-based compensation expense related to outstanding RSUs for the three months ended June 30, 2023 and 2022, respectively.

We recognized $ 2.4 million and $ 1.9 million of stock-based compensation expense related to outstanding RSUs for the six months ended June 30, 2023 and 2022, 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, 2023, we had unrecognized compensation cost of $ 10.7 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.3 years.

At June 30, 2023, we had unrecognized compensation cost of $ 9.5 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.2 years.

Performance-Based Restricted Stock Units

5 unchanged sentences

this market condition applies for amounts recorded above target.

The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period.

The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the

recipients continue to be employed by us through the determination date.

The compensation expense associated with the PSU grants is

determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period.

The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date.

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, 2023:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2022 Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at March 31, 2023 Weighted Average Grant Date Fair Value

The following table summarizes the activity of our PSUs for the six months ended June 30, 2023:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2022 Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at June 30, 2023 Weighted Average Grant Date Fair Value

2020 2020 - 2022 84,435 — — ( 84,435 ) — $ 59.81

3 unchanged sentences

Total 192,828 72,443 ( 1,930 ) ( 84,435 ) 178,906

At March 31, 2023, management estimates that the recipients will receive approximately 134.4 %, 50.0 % and 85.5 % of the 2023, 2022 and 2021 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 $ 1.6 million and $ 2.3 million of total stock-based compensation expense related to outstanding PSUs for the three months ended March 31, 2023 and 2022, respectively.

At June 30, 2023, management estimates that the recipients will receive approximately 120.8 %, 50.0 % and 74.5 % of the 2023, 2022 and 2021 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 $ 0.7 million and $ 2.2 million of total stock-based compensation expense related to outstanding PSUs for the three months ended June 30, 2023 and 2022, respectively.

We recognized $ 2.3 million and $ 4.5 million of total stock-based compensation expense related to outstanding PSUs for the six months ended June 30, 2023 and 2022, respectively.

The 2020 - 2022 performance period PSUs vested and issued on February 27, 2023 at 200 % of the target number.

At March 31, 2023, we had unrecognized compensation cost of $ 13.5 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.5 years.

At June 30, 2023, we had unrecognized compensation cost of $ 11.0 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.

FAIR VALUE DISCLOSURES

12 unchanged sentences

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, 2023, the 2022 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, 2023, 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, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

The following table below shows the level and measurement of liabilities at June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

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

4 unchanged sentences

Contingencies

In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our homebuilding operations.

Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business.

11 unchanged sentences

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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Land deposits and option payments (1)

5 unchanged sentences

(1) Includes land banking financing arrangements, see Notes 2 and 3 for more details regarding real estate not owned.

As of both March 31, 2023 and December 31, 2022, approximately $ 12.8 million 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, 2023 and December 31, 2022, approximately $ 14.3 million and $ 12.8 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

7 unchanged sentences

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 $ 5.4 million and $ 4.9 million at March 31, 2023 and December 31, 2022, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.7 million and $ 5.2 million at March 31, 2023 and December 31, 2022, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.6 million and $ 0.5 million for the three months ended March 31, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the three months ended March 31, 2023 and 2022 was $ 0.5 million and $ 0.4 million, respectively.

As of March 31, 2023, the weighted-average discount rate was 5.7 % and our weighted-average remaining life was 2.6 years.

We do not have any significant lease contracts that have not yet commenced at March 31, 2023.

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2023 (in thousands):

ROU assets, as included in other assets on the consolidated balance sheets, were $ 5.0 million and $ 4.9 million at June 30, 2023 and December 31, 2022, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.4 million and $ 5.2 million at June 30, 2023 and December 31, 2022, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 1.2 million and $ 1.0 million for the six months ended June 30, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the six months ended June 30, 2023 and 2022 was $ 1.0 million and $ 0.9 million, respectively.

As of June 30, 2023, the weighted-average discount rate was 5.7 % and our weighted-average remaining life was 2.5 years.

We do not have any significant lease contracts that have not yet commenced at June 30, 2023.

The table below shows the future minimum payments under non-cancelable operating leases at June 30, 2023 (in thousands):

Year Ending December 31, Operating leases

3 unchanged sentences

Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $ 361.1 million (including $ 26.4 million of letters of credit issued under the 2022 Credit Agreement) and $ 368.1 million at March 31, 2023 and December 31, 2022, respectively, related to our obligations for site improvements at various projects.

We have outstanding letters of credit and performance and surety bonds totaling $ 348.7 million (including $ 18.8 million of letters of credit issued under the Credit Agreement) and $ 368.1 million (including $ 33.4 million of letters of credit issued under the 2022 Credit Agreement) at June 30, 2023 and December 31, 2022, 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.

Investment in Unconsolidated Entities

In 2019, we entered as a limited partner into a real estate investment fund with a maximum $ 30.0 million commitment.

The term of the commitment is eight years and includes renewals of up to two additional years.

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

As of March 31, 2023 and December 31, 2022, we have a total of $ 16.0 million and $ 11.2 million, respectively, within other assets on the balance sheet relating to our investment in this real estate investment fund and the mortgage joint venture.

As of June 30, 2023, we had one equity-method land joint venture and two additional joint ventures engaged in mortgage and insurance activities that primarily provide services to our homebuyers.

As of June 30, 2023 and December 31, 2022, we have a total of $ 16.9 million and $ 11.2 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations.

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 months ended March 31, 2023, and 2022 was $ 2.2 million and $ 0.2 million respectively.

Income associated with our investment in unconsolidated entities during the three and six months ended June 30, 2023 was $ 2.9 million and $ 5.3 million, 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.

Home Sales Revenues

1 unchanged sentence

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,

2023 2022 2023 2022

Retail home sales revenues $ 603,403 $ 686,151 $ 1,059,580 $ 1,180,357

5 unchanged sentences

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, 2023:

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, 2023:

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

7 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Central $ 230,585 $ 316,654 $ 380,965 $ 578,952

15 unchanged sentences

Actual warranty expenses are reflected within the reportable segments.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Central $ 959,239 $ 986,779

8 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements