What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-21 · 95 added, 84 removed, 640 unchanged (22% of the section changed)

63 unchanged sentences

Retained earnings 1,889,716 1,690,489

Treasury stock, at cost, 3,939,472 shares and 3,046,556 shares, respectively

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

( 355,022 ) ( 355,022 )

30 unchanged sentences

BALANCE—December 31, 2020

26,741,554 $ 267 $ 270,598 $ 934,277 $ ( 66,137 ) $ 1,139,005

Net income — — — 429,645 — 429,645

4 unchanged sentences

BALANCE—December 31, 2021

26,963,915 $ 269 $ 291,577 $ 1,363,922 $ ( 259,920 ) $ 1,395,848

Net income — — — 326,567 — 326,567

4 unchanged sentences

BALANCE—December 31, 2022

27,245,278 $ 272 $ 306,673 $ 1,690,489 $ ( 355,022 ) $ 1,642,412

Net income — — — 199,227 — 199,227

Stock repurchase — — — — ( 95,102 ) ( 95,102 )

Restricted stock units granted for accrued annual bonuses — — 206 — — 206

2 unchanged sentences

BALANCE—December 31, 2023

27,521,120 $ 275 $ 321,062 $ 1,889,716 $ ( 355,022 ) $ 1,856,031

See accompanying notes to the consolidated financial statements.

38 unchanged sentences

Stock repurchases — ( 95,102 ) ( 193,783 )

Net cash provided by (used in) financing activities 357,903 63,263 ( 198,913 )

Net cash provided by financing activities 87,596 357,903 63,263

Net increase (decrease) in cash and cash equivalents 16,980 ( 18,516 ) 14,572

7 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.

On May 6, 2021, we acquired certain real estate assets owned by KenRoe Inc.

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Actual individual community lives will vary based on the size of the community, the sales absorption rate, and whether the property was purchased as raw land or finished lots.

Interest and financing costs incurred under our debt obligations, as more fully discussed in Note 6 , are capitalized to qualifying real estate projects under development and homes under construction.

We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources.

We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns.

In consideration for this repurchase option, we paid a non-refundable commitment fee.

Based on our right to control the ultimate economic outcome of these finished lots, these assets will be held as real estate not owned within our inventory as shown in tabular form in Note 3 and a corresponding obligation was established within our accrued liabilities as more fully discussed in Note 5 to recognize this relationship.

While we are not legally obligated to repurchase the balance of the lots, we will be subject to certain performance obligations, financial and other penalties if the lots are not purchased.

Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory as shown in tabular form in Note 3 and have a corresponding obligation within our accrued liabilities as more fully discussed in Note 5 to recognize this relationship.

While we are not legally obligated to repurchase the balance of the lots, we are subject to certain performance obligations, financial and other penalties if the lots are not purchased.

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.

Interest and financing costs incurred under our debt obligations and financing arrangements, as more fully discussed in Note 6 and Note 5 , respectively, are capitalized to qualifying real estate projects under development and homes under construction.

In accordance with ASC Topic 360, Property, Plant, and Equipment , real estate inventory is evaluated for indicators of impairment by each community during each reporting period.

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Under ASC Topic 810, Consolidation (“ASC 810”), a nonrefundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur.

Non-refundable land purchase and lot option

deposits generally represent our maximum exposure if we elect not to purchase the optioned property.

Non-refundable land purchase and lot option deposits generally represent our maximum exposure if we elect not to purchase the optioned property.

In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to close.

1 unchanged sentence

Therefore, whenever we enter into a land option or purchase contract with an entity and make a nonrefundable deposit, we may have a variable interest in a variable interest entity (“VIE”).

In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE and would consolidate the VIE if we are deemed to be the primary beneficiary.

In accordance with ASC 810, we perform ongoing reassessments of

whether we are the primary beneficiary of a VIE and would consolidate the VIE if we are deemed to be the primary beneficiary.

As of December 31, 2023 and 2022, we were not deemed to be the primary beneficiary for any VIEs associated with non-refundable land deposits.

1 unchanged sentence

Deferred loan costs represent debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.

Other assets consist primarily of municipal utility district reimbursements, income tax receivables related to the federal energy efficient homes tax credit, prepaid insurance, prepaid expenses, financing arrangement commitment fees, right-of-use (“ROU”) assets, investments in unconsolidated entities and other receivables.

Other assets consist primarily of municipal utility district reimbursements, prepaid insurance, prepaid expenses, financing arrangement commitment fees, right-of-use (“ROU”) assets, investments in unconsolidated entities, land held for sale, forward commitments and other receivables.

Our prepaid insurance and prepaid expenses were $ 6.9 million and $ 8.3 million as of December 31, 2023 and 2022, respectively.

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Property and equipment are stated at cost, less accumulated depreciation.

Depreciation expense is recorded in general and administrative expenses.

Depreciation expense is recorded in general and administrative expenses and in other income, net for rental properties.

Upon sale or retirement, the costs and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in other income, net.

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If after assessing these qualitative factors, we determine it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then performing a quantitative test is necessary.

Annually, we have performed a qualitative analysis and determined that it is not “more likely than not” that the fair values of

the reporting units were less than their carrying amounts.

Annually, we have performed a qualitative analysis and determined that it is not “more likely than not” that the fair values of the reporting units were less than their carrying amounts.

No goodwill impairment charges were recorded in 2023, 2022 and 2021.

1 unchanged sentence

Future direct warranty costs are accrued and charged to cost of sales in the period when the related home is closed.

Our warranty liability is based upon historical warranty cost experience and is adjusted as appropriate to reflect qualitative risks associated with the types of homes built, the geographic areas in which they are built, and potential impacts of our continued expansion.

Our warranty liability is based upon historical warranty cost experience and is adjusted as appropriate to reflect qualitative risks

associated with the types of homes built, the geographic areas in which they are built, and potential impacts of our continued expansion.

Warranty reserves are reviewed quarterly to assess the reasonableness and adequacy and adjusted, as needed, to reflect changes in trends and historical data as information becomes available.

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Compensation costs for performance-based restricted stock awards also contain a market condition.

These costs are measured

using the derived grant date fair value, based on a third party valuation analysis, and are expensed in accordance with ASC 718-10-25-20, Compensation - Stock Compensation , which requires an assessment of probability of attainment of the performance target.

These costs are measured using the derived grant date fair value, based on a third party valuation analysis, and are expensed in accordance with ASC 718-10-25-20, Compensation - Stock Compensation , which requires an assessment of probability of attainment of the performance target.

Once the performance target outcome is determined to be probable, the cumulative expense is adjusted, as needed, to recognize compensation expense on a straight-line basis over the award’s requisite service period.

Recent Accounting Pronouncements

Effective April 29, 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.

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.

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.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures.

This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign).

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted.

We are currently evaluating the impact that this standard will have on our financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment’s expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

We are currently evaluating the impact that this standard will have on our financial statements.

REAL ESTATE INVENTORY

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See “Real Estate Inventory” under Note 2 for more information.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

Asset Life 2022 2021

Rental properties $ 43,324 $ 29,833

29,833 13,390

Computer software and equipment 3,946 3,894

$ 3,894 $ 2,950

Leasehold improvements 1,722 1,466

4 unchanged sentences

Property and equipment, net $ 45,522 $ 32,997

During the year ended December 31, 2022, we transferred $ 16.4 million of home assets from real estate inventory to rental properties within property and equipment.

We are lessors of homes.

Contracts are typically one year or less.

During the year ended December 31, 2023, we transferred $ 13.5 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.

Depreciation expense incurred for the years ended December 31, 2023, 2022 and 2021 was $ 2.4 million, $ 1.6 million and $ 1.1 million, respectively.

2 unchanged sentences

Land banking financing arrangements

104,459 141,792

Real estate inventory development and construction payable 71,193 73,678

1 unchanged sentence

Taxes payable 14,694 47,037

Contract deposits 5,545 12,182

Inventory related obligations 13,039 8,803

Warranty reserve 13,600 10,750

Accrued interest 13,522 10,906

Inventory related obligations 11,924 13,039

Lease liability 4,947 5,182

Contract deposits 2,909 5,545

Other 12,074 19,299

1 unchanged sentence

Land Banking Financing Arrangements

We have entered into land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns.

We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns.

Principal payments on these financing arrangements will generally coincide with the repurchase of lot takedowns from the land banker.

We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of approximately two to four years.

We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of approximately one to three years .

Inventory Related Obligations

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Revolving Credit Agreement

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.

On December 5, 2023, we entered into a Fourth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Fourth Amendment”), which amended 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 to date, including the Fourth Amendment, the “Credit Agreement”).

The Credit Agreement provides for a $ 1.205 billion revolving credit facility, which can be increased at the request of the Company by up to $ 95.0 million, subject to the terms and conditions of the Credit Agreement.

The Credit Agreement matures on April 28, 2028 with respect to $ 960.0 million, or 79.7 %, of the $ 1.205 billion of commitments thereunder and on April 28, 2025 with respect to 20.3 % of the commitments thereunder.

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

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

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 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”) and our 8.750 % Senior Notes due 2028 (the “2028 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 December 31, 2022, 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, $ 33.4 million of letters of credit were outstanding and $ 236.6 million was available to borrow under the Credit Agreement.

Interest is paid monthly on borrowings under the Credit Agreement at SOFR plus 1.85 %.

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

At December 31, 2022, SOFR was 4.32 %, subject to the 0.50 % SOFR floor as included in the Credit Agreement.

As of December 31, 2023, the borrowing base under the Credit Agreement was $ 1.7 billion, of which the maximum available to borrow was $ 1.205 billion.

As of December 31, 2023, borrowings under the Credit Agreement and the outstanding principal amount of the 2029 Senior Notes and the 2028 Senior Notes totaled $ 1.3 billion, $ 28.1 million of letters of credit were outstanding and $ 354.8 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 December 31, 2023, the Applicable Margin was 1.85 %, and SOFR was 5.36 %, 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.

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Senior Notes Offering

On June 28, 2021, we issued $ 300.0 million aggregate principal amount of the 2029 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S.

persons in transactions outside the United States pursuant to Regulation S under the Securities Act.

On November 21, 2023, we issued $ 400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S.

persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act.

Interest on the 2028 Senior Notes accrues at a rate of 8.750 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June

The 2028 Senior Notes mature on December 15, 2028.

The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee.

persons in transactions outside the United States pursuant to Regulation S.

Interest on the 2029 Senior Notes accrues at a rate of 4.000 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year.

2 unchanged sentences

Notes payable consist of the following (in thousands):

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

Notes payable under the Credit Agreement ($ 1.205 billion revolving credit facility at December 31, 2023) maturing in part on April 28, 2025 and in part on April 28, 2028;

interest paid monthly at SOFR plus 1.85 %.

3 unchanged sentences

300,000 300,000

8.750 % Senior Notes due December 15, 2028;

interest paid semi-annually at 8.750 %.

Net debt issuance costs ( 21,301 ) ( 11,349 )

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Capitalized Interest

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

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

Year Ended December 31,

4 unchanged sentences

Cash paid for interest $ 80,963 $ 41,593 $ 28,850

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 3.5 million for the year ended December 31, 2022 and $ 2.9 million for each of the years ended December 31, 2021 and 2020.

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 4.0 million, $ 3.5 million and $ 2.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The provision for income taxes consisted of the following (in thousands):

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Federal energy efficient homes tax credits ( 1,207 ) ( 0.5 ) ( 9,142 ) ( 2.2 ) ( 16,151 ) ( 3.0 )

Retroactive federal energy efficient homes tax

credits — — — — ( 29,703 ) ( 8.1 )

Tax at effective rate $ 62,527 23.9 % $ 91,549 21.9 % $ 113,130 20.8 %

The 2023 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the U.S.

Internal Revenue Code, as amended (the “Code”) partially offset by benefits associated with the federal energy efficient homes tax credits enacted into law in December 2019 and the deductions in excess of compensation cost (“windfalls”) for share-based payments.

The 2021 effective tax rate differs from the federal statutory rate primarily due to benefits associated with the federal energy efficient homes tax credits enacted into law in December 2019 and the windfalls for share-based payments, partially offset by state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code.

The 2020 effective tax rate differs from the federal statutory rate primarily due to benefits associated with the federal energy efficient homes tax credits enacted into law in December 2019, partially offset by state income tax expense on current year earnings.

Income tax expense for 2022 and 2021 includes a benefit of $ 9.1 and $ 16.2 million, respectively, associated with the extension of federal energy efficient homes tax credits.

Income tax expense for 2020 includes a benefit of $ 41.2 million associated with the extension of federal energy efficient homes tax credits, including $ 29.7 million related to homes closed in prior open tax years.

Internal Revenue Code, as amended (the “Code”), partially offset by the deductions in excess of compensation cost (“windfalls”) for share-based payments and benefits associated with the federal energy efficient homes tax credits enacted into law in December 2019 (the “45L Tax Credits”).

effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by benefits associated with the 45L Tax Credits and the windfalls for share-based payments.

The 2021 effective tax rate differs from the federal statutory rate primarily due to benefits associated with the 45L Tax Credits and the windfalls for share-based payments, partially offset by state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code.

Income tax expense for 2023, 2022 and 2021 includes a benefit of $ 1.2 million, $ 9.1 million and $ 16.2 million, respectively, associated with the extension of federal energy efficient homes tax credits.

The federal energy efficient homes tax credit provision applies to qualifying homes closed through December 31, 2023.

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Stock Repurchase Program

In November 2018, we announced that our Board of Directors (the “Board”) authorized a stock repurchase program, pursuant to which we may purchase up to $ 50.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws.

In October 2020 and February 2022, the Board approved an increase in our stock repurchase program by an additional $ 300.0 million and $ 200.0 million, respectively.

For the years ended December 31, 2022, 2021 and 2020, we repurchased 892,916 shares of our common stock for $ 95.1 million to be held as treasury stock, 1,288,563 shares of our common stock for $ 193.8 million to be held as treasury stock and 718,993 shares of our common stock for $ 48.1 million to be held as treasury stock, respectively.

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 year ended December 31, 2023, we did not repurchase any shares of our common stock.

During the years ended December 31, 2022

and 2021, we repurchased 892,916 shares of our common stock for 95.1 million to be held as treasury stock and 1,288,563 shares of our common stock for $ 193.8 million to be held as treasury stock, respectively.

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

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In 2022, we issued 16,731 RSUs to senior management for the time-based portion of our 2022 long-term incentive compensation program and 10,404 RSUs for 2021 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date.

In 2020, we issued 22,141 RSUs to senior management for the time-based portion of our 2020 long-term incentive compensation program and 15,585 RSUs for 2019 annual bonuses to managers, which generally cliff

vest on the third anniversary of the grant date.

In 2021, we issued 11,511 RSUs to senior management for the time-based portion of our 2021 long-term incentive compensation program and 8,094 RSUs for 2020 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date.

In addition, during the years ended December 31, 2023, 2022 and 2021, we issued 17,778 , 56,116 and 10,059 RSUs, respectively, to certain employees, executives and non-employee directors, which vest over periods ranging from one to three years .

Under the terms of the grant award agreements, all of the RSUs may only be settled in shares of our common stock.

We recognized $ 3.6 million, $ 3.3 million, and $ 3.5 million of stock-based compensation expense related to RSUs for the years ended December 31, 2022, 2021 and 2020, respectively.

We recognized $ 4.9 million, $ 3.6 million, and $ 3.3 million of stock-based compensation expense related to outstanding RSUs for the years ended December 31, 2023, 2022 and 2021, respectively.

At December 31, 2023, we had unrecognized compensation cost of $ 7.8 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 1.8 years.

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The following table summarizes the activity of our PSUs:

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

Period Granted Performance Period Target PSUs Outstanding at December 31, 2022

Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at December 31, 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 December 31, 2022, management estimates that the recipients will receive approximately 50 %, 97 %, and 200 % of the 2022, 2021, and 2020 target number of PSUs at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

At December 31, 2023, management estimates that the recipients will receive approximately 101 %, 0 %, and 83.2 % 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 $ 2.9 million, $ 4.5 million, and $ 9.0 million of total stock-based compensation expense related to PSUs for the years ended December 31, 2023, 2022 and 2021, respectively.

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

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

At December 31, 2023, we had unrecognized compensation cost of $ 6.2 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.

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We recognized $ 0.9 million, $ 1.0 million, and $ 1.3 million in stock compensation expense related to the ESPP for 2023, 2022, and 2021, respectively.

The ESPP contributions are not refundable (other than in the case of termination of employment) and, therefore, the shares purchasable with the amounts withheld are included in weighted-average shares outstanding for both basic and diluted earnings per share.

and diluted earnings per share.

The maximum aggregate number of shares of our common stock which may be issued pursuant to the ESPP is 500,000 shares, and as of December 31, 2023, 106,715 shares of our common stock remain available for issuance under the ESPP.

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As of December 31, 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).

In order to determine the fair value of each of the 2029 Senior Notes and the 2028 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 December 31, 2023 and 2022 (in thousands):

3 unchanged sentences

Level 2 $ 300,000 $ 296,381 $ 300,000 $ 246,969

(1) See Note 6 for more details regarding the offering of the 2029 Senior Notes.

2028 Senior Notes (1)

$ 400,000 $ 486,306 $ — $ —

(1) See Note 6 for more details regarding the offerings of the 2029 Senior Notes and the 2028 Senior Notes.

RELATED PARTY TRANSACTIONS

Land Purchases from Affiliates

We did not complete any related party transactions during the year ending December 31, 2022.

We did not enter into or complete any related party transactions during the years ended December 31, 2023 and 2022.

For the year ended December 31, 2021, we completed 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.

4 unchanged sentences

Salary deferrals are allowed in amounts up to 100 % of an eligible employee’s salary, not to exceed the maximum permitted by law.

We may make a discretionary match of up to 100 % of the first 4 % of an eligible employee’s deferral, not to exceed the maximum allowed by law.

For each of the years ended December 31, 2022, 2021 and 2020, our matching contributions were $ 4.5 million, $ 4.6 million and $ 4.0 million, respectively.

We may make a discretionary match of

up to 100 % of the first 4 % of an eligible employee’s deferral, not to exceed the maximum allowed by law.

For the years ended December 31, 2023, 2022 and 2021, our matching contributions were $ 4.4 million, $ 4.5 million and $ 4.6 million, respectively.

COMMITMENTS AND CONTINGENCIES

19 unchanged sentences

15,750 13,184

(1) Includes land banking financing arrangements, see No tes 3 and 5 for more details regarding real estate not owned.

(1) Includes land banking financing arrangements, see Note 3 and Note 5 for more details regarding real estate not owned.

As of December 31, 2023 and 2022, approximately $ 11.4 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.

20 unchanged sentences

Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $ 368.1 million (including $ 33.4 million of letters of credit issued under the Credit Agreement) and $ 206.8 million (including $ 9.1 million of letters of credit issued under the Credit Agreement) at December 31, 2022 and 2021, respectively, related to our obligations for site improvements at various projects.

We have outstanding letters of credit and performance and surety bonds totaling $ 357.0 million (including $ 28.1 million of letters of credit issued under the Credit Agreement) and $ 368.1 million (including $ 9.1 million of letters of credit issued under our credit agreement then in effect) at December 31, 2023 and 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 December 31, 2022 and 2021, we have a total of $ 11.2 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.

As of December 31, 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 December 31, 2023 and 2022, we have a total of $ 21.5 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 was $ 5.5 million for the year ended December 31, 2022.

Income associated with our investment in unconsolidated entities was $ 12.8 million and $ 5.5 million, within other income, net on the statement of operations for the years ended December 31, 2023 and 2022, respectively.

We did not have any income recognized for our investment in unconsolidated entities for the year ended December 31, 2021.

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Actual warranty expenses are reflected within the reportable segments.

For the year ended December 31, 2021, the Corporate balance includes $ 14.0 million of loss on extinguishment of debt.

Additionally, for the year ended December 31, 2022, the Corporate balance includes the $ 7.1 million gain on the sale of the three-year interest rate cap of LIBOR prior to its expiration.

Also, for the year ended December 31, 2021, the Corporate balance includes $ 14.0 million of loss on extinguishment of debt.

Central $ 1,026,303 $ 986,779

6 unchanged sentences

Total assets $ 3,407,851 $ 3,124,828

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

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

Additionally, at December 31, 2022, the Corporate balance includes tax receivables.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data