What changed in this filing

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Item 1. Financial Statements

2023-10-31 compared with 2023-08-02 · 82 added, 70 removed, 358 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 46,981 $ 31,998

13 unchanged sentences

COMMITMENTS AND CONTINGENCIES

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

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,503,340 shares issued and 23,563,868 shares outstanding as of September 30, 2023 and 27,245,278 shares issued and 23,305,806 shares outstanding as of December 31, 2022

Additional paid-in capital 319,795 306,673

Retained earnings 1,837,627 1,690,489

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

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

( 355,022 ) ( 355,022 )

5 unchanged sentences

(In thousands, except share and per share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

30 unchanged sentences

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

Net income — — — 67,042 — 67,042

Compensation expense for equity awards — — 3,123 — — 3,123

Stock issued under employee incentive plans 17,827 — 1,498 — — 1,498

BALANCE— September 30, 2023 27,503,340 $ 275 $ 319,795 $ 1,837,627 $ ( 355,022 ) $ 1,802,675

See accompanying notes to the consolidated financial statements.

6 unchanged sentences

Net income — — — 78,686 — 78,686

Stock repurchase — — — — ( 57,659 ) ( 57,659 )

Restricted stock units granted for accrued annual bonuses — — 294 — — 294

Stock repurchase — — — — ( 57,659 ) ( 57,659 )

Compensation expense for equity awards — — 3,570 — — 3,570

6 unchanged sentences

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

Net income — — — 90,390 — 90,390

Compensation expense for equity awards — — 1,516 — — 1,516

Stock issued under employee incentive plans 17,650 1 1,153 — — 1,154

BALANCE— September 30, 2022 27,229,758 $ 272 $ 305,357 $ 1,656,374 $ ( 355,022 ) $ 1,606,981

See accompanying notes to the consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income $ 147,138 $ 292,452

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Equity in income of unconsolidated entities ( 8,493 ) ( 3,990 )

1 unchanged sentence

Depreciation and amortization 1,780 1,134

Gain on sale of interest rate cap — ( 7,055 )

Gain on disposal of assets ( 1,634 ) ( 2,206 )

8 unchanged sentences

Accrued expenses and other liabilities ( 34,980 ) 43,824

Net cash provided by (used in) operating activities 92,835 ( 263,300 )

Net cash used in operating activities ( 22,675 ) ( 359,552 )

Cash flows from investing activities:

11 unchanged sentences

Stock repurchase — ( 95,102 )

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

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

Net cash provided by financing activities 45,254 363,804

Net increase in cash and cash equivalents 14,983 2,146

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

6 unchanged sentences

LGI Homes, Inc., a Delaware corporation (the “Company”, “we,” “us,” or “our”), is headquartered in The Woodlands, Texas.

We engage in the development of communities and the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania and Maryland.

Basis of Presentation

5 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 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.

The accompanying unaudited financial statements as of September 30, 2023, and for the three and nine months ended September 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):

June 30, December 31,

September 30, December 31,

Land, land under development and finished lots $ 1,965,477 $ 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 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.

During the nine months ended September 30, 2023, we transferred $ 9.8 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.

2 unchanged sentences

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

June 30, December 31,

September 30, December 31,

Land banking financing arrangements $ 118,905 $ 141,792

20 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

6 unchanged sentences

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.

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 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.

3 unchanged sentences

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 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.

As of September 30, 2023, the borrowing base under the Credit Agreement is $ 1.8 billion of which the maximum available to borrow is $ 1.4 billion.

As of September 30, 2023, borrowings under the Credit Agreement and the outstanding principal amount of the 2029 Senior Notes totaled $ 1.2 billion, $ 28.1 million of letters of credit were outstanding and $ 196.2 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) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, 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) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin.

At September 30, 2023, the Applicable Margin was 1.70 %, and SOFR was 5.32 %, 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 June 30, 2023, we were in compliance with all of the covenants contained in the Credit Agreement.

At September 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):

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;

September 30, 2023 December 31, 2022

Notes payable under the Credit Agreement ($ 1.13 billion revolving credit facility at September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Cash paid for interest $ 23,358 $ 14,874 $ 63,114 $ 29,080

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.

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 2.4 million and $ 0.9 million for the three months ended September 30, 2023 and 2022, respectively, and $ 10.6 million and $ 2.5 million for the nine months ended September 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 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.

For the three months ended September 30, 2023, our effective tax rate of 25.1 % 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 federal energy efficient homes tax credits.

For the nine months ended September 30, 2023, our effective tax rate of 23.8 % 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 federal energy efficient homes tax credits.

Income taxes paid were $ 20.2 million and $ 3.8 million for the three months ended September 30, 2023 and 2022, respectively.

Income taxes paid were $ 80.0 million and $ 56.2 million for the nine months ended September 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 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.

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

During the three months ended September 30, 2022, we did not repurchase any shares of our common stock.

During the nine months ended September 30, 2022, we repurchased 892,916 shares of our common stock for $ 95.1 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 June 30, 2023, we may purchase up to $ 211.5 million of shares of our common stock under our stock repurchase program.

As of September 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 and six months ended June 30, 2023 and 2022:

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

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

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

4 unchanged sentences

Ending balance 135,569 $ 113.52 113,087 $ 101.47

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.

We recognized $ 1.2 million and $ 0.9 million of stock-based compensation expense related to outstanding RSUs for the three months ended September 30, 2023 and 2022, respectively.

We recognized $ 3.6 million and $ 2.8 million of stock-based compensation expense related to outstanding RSUs for the nine months ended September 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 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.

At September 30, 2023, we had unrecognized compensation cost of $ 8.1 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.0 years.

Performance-Based Restricted Stock Units

9 unchanged sentences

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

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

The following table summarizes the activity of our PSUs for the nine months ended September 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 September 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 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.

At September 30, 2023, management estimates that the recipients will receive approximately 125.0 %, 50.0 % and 80.7 % 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 $ 1.7 million and $ 0.4 million of total stock-based compensation expense related to outstanding PSUs for the three months ended September 30, 2023 and 2022, respectively.

We recognized $ 4.0 million and $ 4.9 million of total stock-based compensation expense related to outstanding PSUs for the nine months ended September 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 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.

At September 30, 2023, we had unrecognized compensation cost of $ 10.0 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

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 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.

As of September 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 June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

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

September 30, 2023 December 31, 2022

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

18 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):

June 30, 2023 December 31, 2022

September 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 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.

As of September 30, 2023 and December 31, 2022, approximately $ 13.0 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 $ 5.0 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 $ 0.6 million and $ 0.5 million for the three months ended June 30, 2023 and 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):

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

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.3 million and $ 5.2 million at September 30, 2023 and December 31, 2022, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.7 million and $ 0.5 million for the three months ended September 30, 2023 and 2022, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 1.9 million and $ 1.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases during the nine months ended September 30, 2023 and 2022 was $ 1.4 million and $ 1.3 million, respectively.

As of September 30, 2023, the weighted-average discount rate was 5.8 % and our weighted-average remaining life was 2.4 years.

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

The table below shows the future minimum payments under non-cancelable operating leases at September 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 $ 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.

We have outstanding letters of credit and performance and surety bonds totaling $ 382.9 million (including $ 28.1 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 September 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

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.

As of September 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 September 30, 2023 and December 31, 2022, we have a total of $ 16.5 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 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.

Income associated with our investment in unconsolidated entities during the three and nine months ended September 30, 2023 was $ 3.2 million and $ 8.5 million, respectively.

Income associated with our investment in unconsolidated entities during the three and nine months ended September 30, 2022 was $ 2.2 million and $ 4.0 million, respectively.

Home Sales Revenues

We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our luxury series spec homes sold under our Terrata Homes brand.

We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our move-up and luxury series spec homes sold under our Terrata Homes brand.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

6 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 June 30, 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 September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

16 unchanged sentences

Actual warranty expenses are reflected within the reportable segments.

June 30, 2023 December 31, 2022

Additionally, for the three and nine months ended September 30, 2022, the balance includes the $ 7.1 million gain on the sale of the three-year interest rate cap of LIBOR prior to its expiration.

September 30, 2023 December 31, 2022

Central $ 1,016,130 $ 986,779

6 unchanged sentences

Total assets $ 3,335,011 $ 3,124,828

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

(1) The Corporate balance consists primarily of cash and investments in unconsolidated entities as of September 30, 2023.

Additionally, the Corporate balance consists of cash, investments in unconsolidated entities and tax receivables as of December 31, 2022.

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