What changed in this filing

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Item 1. Financial Statements

2025-04-30 compared with 2024-11-05 · 127 added, 135 removed, 331 unchanged (44% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, December 31,

March 31, December 31,

Cash and cash equivalents $ 57,600 $ 53,197

13 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,625,950 shares issued and 23,513,488 shares outstanding as of September 30, 2024 and 27,521,120 shares issued and 23,581,648 shares outstanding as of December 31, 2023

Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,693,526 shares issued and 23,404,502 shares outstanding as of March 31, 2025 and 27,644,413 shares issued and 23,397,074 shares outstanding as of December 31, 2024

Additional paid-in capital 341,515 337,161

Retained earnings 2,089,781 2,085,787

Treasury stock, at cost, 4,112,462 shares as of September 30, 2024 and 3,939,472 shares as of December 31, 2023

Treasury stock, at cost, 4,289,024 shares as of March 31, 2025 and 4,247,339 shares as of December 31, 2024

( 389,047 ) ( 385,996 )

5 unchanged sentences

(In thousands, except share and per share data)

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

2024 2023 2024 2023

Three Months Ended March 31,

Home sales revenues $ 351,420 $ 390,851

26 unchanged sentences

BALANCE— March 31, 2025 27,693,526 $ 277 $ 341,515 $ 2,089,781 $ ( 389,047 ) $ 2,042,526

Net income — — — 58,573 — 58,573

Stock repurchase — — — — ( 7,998 ) ( 7,998 )

Compensation expense for equity awards — — 2,841 — — 2,841

Stock issued under employee incentive plans 16,602 — 1,223 — — 1,223

BALANCE— June 30, 2024 27,612,742 $ 276 $ 331,246 $ 1,965,342 $ ( 373,022 ) $ 1,923,842

Net income — — — 69,575 — 69,575

Compensation expense for equity awards — — 2,256 — — 2,256

Stock issued under employee incentive plans 13,208 — 1,290 — — 1,290

BALANCE— September 30, 2024 27,625,950 $ 276 $ 334,792 $ 2,034,917 $ ( 373,022 ) $ 1,996,963

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

3 unchanged sentences

Restricted stock units granted for accrued annual bonuses — — 786 — — 786

Stock repurchase — — — — ( 10,002 ) ( 10,002 )

Compensation expense for equity awards — — 3,829 — — 3,829

1 unchanged sentence

BALANCE— March 31, 2024 27,596,140 $ 276 $ 327,182 $ 1,906,769 $ ( 365,024 ) $ 1,869,203

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

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.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Depreciation and amortization 861 673

Gain on disposal of assets — ( 1,634 )

Loss on disposal of assets 2,284 —

Compensation expense for equity awards 2,625 3,829

10 unchanged sentences

Purchases of property and equipment ( 831 ) ( 1,001 )

Proceeds from sale of assets held for sale — 3,019

Investment in unconsolidated entities ( 1,497 ) —

Return of capital from unconsolidated entities 2,083 —

Net cash used in investing activities ( 6,641 ) ( 7,596 )

Net cash provided by (used in) investing activities ( 245 ) 2,018

Cash flows from financing activities:

1 unchanged sentence

Payments on notes payable ( 30,000 ) ( 39,000 )

Proceeds from financing arrangements — 50,402

Payments on financing arrangements ( 8,600 ) ( 27,336 )

20 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 September 30, 2024, and for the three and nine months ended September 30, 2024 and 2023, include the accounts of the Company and its subsidiaries.

The accompanying unaudited financial statements as of March 31, 2025, and for the three months ended March 31, 2025 and 2024, include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

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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.

The guidance is effective for annual reporting 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.

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

The amendments in this update are to be applied on a prospective basis, with the option for retrospective application.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

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

REAL ESTATE INVENTORY

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

September 30, December 31,

March 31, December 31,

Land, land under development and finished lots $ 2,405,163 $ 2,287,352

5 unchanged sentences

Total real estate inventory $ 3,553,143 $ 3,387,853

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.

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 continue to be held as real estate not owned within our inventory and a corresponding obligation was established within our accrued liabilities as discussed in Note 3 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.

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.

Our real estate not owned relates to 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 build and lease a number of single-family homes in select, existing communities.

During the nine months ended September 30, 2024, we transferred $ 17.4 million of home assets from real estate inventory to rental properties within property and equipment, net.

During the three months ended March 31, 2025 and 2024, we transferred $ 13.4 million and $ 3.9 million, respectively, 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.

1 unchanged sentence

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

September 30, December 31,

March 31, December 31,

Real estate inventory development and construction payable $ 55,437 $ 48,019

Land banking financing arrangements 45,735 104,459

Taxes payable 5,055 43,076

Land banking financing arrangements 28,565 37,140

Accrued compensation, bonuses and benefits 7,769 18,653

9 unchanged sentences

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 one to two years .

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

Inventory Related Obligations

We own lots in certain communities in Florida and Texas that have Community Development Districts or similar utility and infrastructure development special assessment programs that allocate a fixed amount of debt service associated with development activities to each lot.

This obligation for infrastructure development is attached to the land, which is typically

payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed.

This obligation for infrastructure development is attached to the land, which is typically payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed.

The obligations assumed by the homebuyer represent a non-cash cost of the lots.

2 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Warranty reserves, beginning of period $ 16,100 $ 13,600

4 unchanged sentences

Revolving Credit Agreement

On December 5, 2023, we entered into an amendment to 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 amendments thereto dated as of February 22, 2022, April 29, 2022, April 28, 2023 and December 5, 2023, the “2023 Credit Agreement”).

On October 9, 2024, we entered into an amendment to 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 through October 9, 2024, the “2024 Credit Agreement”).

The 2024 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 2024 Credit Agreement.

The 2023 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.

The 2024 Credit Agreement matures on April 28, 2028 with respect to $ 1.085 billion, or 90.0 %, of the $ 1.205 billion of commitments thereunder and on April 28, 2025 with respect to 10.0 % of the commitments thereunder.

Before each anniversary of the 2024 Credit Agreement, we may request a one-year extension of its maturity date.

The 2024 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 2023 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 2023 Credit Agreement.

The borrowings and letters of credit outstanding under the 2024 Credit Agreement, together with the outstanding principal balance of our 8.750 % Senior Notes due 2028 (the “2028 Senior Notes”), our 4.000 % Senior Notes due 2029 (the “2029 Senior Notes”) and our 7.000 % Senior Notes due 2032 (the “2032 Senior Notes”), may not exceed the borrowing base under the 2024 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 2024 Credit Agreement.

As of September 30, 2024, the borrowing base under the 2023 Credit Agreement was $ 2.0 billion, of which the maximum available to borrow is $ 1.9 billion.

As of September 30, 2024, borrowings under the 2023 Credit Agreement and the outstanding principal amount of the 2029 Senior Notes and the 2028 Senior Notes totaled approximately $ 1.6 billion, $ 26.1 million of letters of credit were outstanding and $ 314.5 million was available to borrow under the 2023 Credit Agreement.

As of March 31, 2025, the borrowing base under the 2024 Credit Agreement was $ 2.0 billion, of which the maximum available to borrow was $ 2.0 billion.

As of March 31, 2025, borrowings under the 2024 Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $ 1.6 billion, $ 24.5 million of letters of credit were outstanding and $ 302.4 million was available to borrow under the 2024 Credit Agreement.

Borrowings under the 2024 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, 2024, the Applicable Margin was 1.85 %, and SOFR was 4.85 %, subject to the 0.50 % SOFR floor as included in the 2023 Credit Agreement.

At March 31, 2025, the Applicable Margin was 1.85 %, and SOFR was 4.32 %, subject to the 0.50 % SOFR floor as included in the 2024 Credit Agreement.

The 2024 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 2024 Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments.

At September 30, 2024, we were in compliance with all of the covenants contained in the 2023 Credit Agreement.

On October 9, 2024, we entered into a Fifth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Fifth Amendment”), which amended the 2023 Credit Agreement (as so amended by the Fifth Amendment, the “Credit Agreement”).

Amendment, among other things, (a) amended the negative covenant in Section 10.1(g) of the Credit Agreement relating to housing inventory and (b) extended the maturity of the commitments of certain lenders under the Credit Agreement to April 28, 2028.

The Credit Agreement matures on April 28, 2028 with respect to $ 1.085 billion, or 90.0 %, of the $ 1.205 billion of commitments thereunder and on April 28, 2025 with respect to 10.0 % of the commitments thereunder.

At March 31, 2025, we were in compliance with all of the covenants contained in the 2024 Credit Agreement.

On April 28, 2025, we entered into a Sixth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Sixth Amendment”), which amended the 2024 Credit Agreement (as so amended by the Sixth Amendment, the “Credit Agreement”).

The Sixth Amendment, among other things, (a) extended the maturity of the commitments of certain lenders under the Credit Agreement to April 28, 2029, (b) added certain financial institutions as issuers of letters of credit and (c) reset the tangible net worth financial covenant for the period from and after the date of the Sixth Amendment.

The Credit Agreement matures on April 28, 2029 with respect to $ 972.5 million, or 82.2 %, of the $ 1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8 % of the commitments thereunder.

The Credit Agreement otherwise has substantially similar terms and provisions to the 2024 Credit Agreement.

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

Interest on the 2032 Senior Notes accrues at a rate of 7.000 % per annum, payable semi-annually in arrears on May 15 and November 15 of each year.

The 2032 Senior Notes mature on November 15, 2032.

The terms of the 2032 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fifth Supplemental Indenture thereto, dated as of November 15, 2024, 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.

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 and to certain non-U.S.

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

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.

7 unchanged sentences

Notes payable consist of the following (in thousands):

September 30, 2024 December 31, 2023

Notes payable under the 2023 Credit Agreement ($ 1.205 billion revolving credit facility at September 30, 2024) maturing in part on April 28, 2025 and in part on April 28, 2028;

March 31, 2025 December 31, 2024

Notes payable under the 2024 Credit Agreement ($ 1.205 billion revolving credit facility at March 31, 2025) maturing in part on April 28, 2025 and in part on April 28, 2028;

interest paid monthly at SOFR plus 1.85 %

$ 544,413 $ 401,946

8.750 % Senior Notes due December 15, 2028;

interest paid semi-annually at 8.750 %

400,000 400,000

4.000 % Senior Notes due July 15, 2029;

1 unchanged sentence

300,000 300,000

8.750 % Senior Notes due December 15, 2028;

7.000 % Senior Notes due November 15, 2032;

interest paid semi-annually at 7.000 %

4 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 September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Interest incurred $ 29,924 $ 29,363

2 unchanged sentences

Cash paid for interest $ 15,518 $ 21,286

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 3.1 million and $ 2.4 million for the three months ended September 30, 2024 and 2023, respectively, and $ 11.5 million and $ 10.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 2.7 million and $ 4.9 million for the three months ended March 31, 2025 and 2024, respectively.

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

The statute of limitations with regards to our federal income tax filings is three years.

The statute of limitations for our state tax jurisdictions is three to

four years depending on the jurisdiction.

The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction.

In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes.

1 unchanged sentence

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

For the three months ended September 30, 2024, our effective tax rate of 24.3 % is higher than the Federal statutory rate primarily as a result of an increase in the rate for state income taxes, net of the federal benefit, the compensation cost in excess of deductions for share-based payments, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

For the nine months ended September 30, 2024, our effective tax rate of 24.3 % is higher than the Federal statutory rate primarily as a result of an increase in the rate for state income taxes, net of the federal benefit, and the compensation cost in excess of deductions for share-based payments, offset by a decrease in the rate for the federal energy efficient homes tax credits.

Income taxes paid were $ 5.2 million and $ 20.2 million for the three months ended September 30, 2024 and 2023, respectively.

Income taxes paid were $ 33.5 million and $ 80.0 million for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended March 31, 2025, our effective tax rate of 30.2 % is higher than the Federal statutory rate primarily as a result of an increase in the rate for state income taxes, net of the federal benefit, and the compensation cost in excess of deductions for share-based payments.

Income taxes paid were $ 38.6 million and $ 12.1 million for the three months ended March 31, 2025 and 2024, 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 September 30, 2024, we did no t repurchase any shares of our common stock.

During the nine months ended September 30, 2024, we repurchased 172,990 shares of our common stock for $ 18.0 million 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 March 31, 2025 and 2024, we repurchased 41,685 shares of our common stock for $ 3.1 million to be held as treasury stock and 89,227 shares of our common stock for $ 10.0 million to be held as treasury stock, respectively.

A total of 3,289,024 shares of our common stock has been repurchased since our stock repurchase program commenced.

As of September 30, 2024, we may purchase up to $ 193.5 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.

Our stock repurchase program may be modified, discontinued or suspended at any time.

As of March 31, 2025, we may purchase up to $ 177.7 million of shares of our common stock under our stock repurchase program.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Numerator (in thousands):

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

Nine Months Ended September 30,

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

Three Months Ended March 31,

Shares Weighted Average Grant Date Fair Value

Beginning balance 194,953 $ 106.60

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Ending balance 235,984 $ 95.18

We recognized $ 1.3 million and $ 1.2 million of stock-based compensation expense related to outstanding RSUs for the three months ended September 30, 2024 and 2023, respectively.

We recognized $ 4.1 million and $ 3.6 million of stock-based compensation expense related to outstanding RSUs for the nine months ended September 30, 2024 and 2023, respectively.

We recognized $ 1.7 million and $ 1.4 million of stock-based compensation expense related to outstanding RSUs for the three months ended March 31, 2025 and 2024, 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 September 30, 2024, we had unrecognized compensation cost of $ 8.2 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 1.9 years.

At March 31, 2025, we had unrecognized compensation cost of $ 13.6 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.3 years.

Performance-Based Restricted Stock Units

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

The following table summarizes the activity of our PSUs for the nine months ended September 30, 2024:

Period Granted Performance Period Target PSUs Outstanding at December 31, 2023 Target PSUs Granted Target PSUs Forfeited Target PSUs Vested Target PSUs Outstanding at September 30, 2024 Weighted Average Grant Date Fair Value

2021 2021 - 2023 43,159 — ( 43,159 ) — $ 141.00

2022 2022 - 2024 63,304 — ( 1,516 ) — 61,788 $ 118.80

2023 2023 - 2025 72,443 — ( 1,630 ) — 70,813 $ 104.36

2024 2024 - 2026 70,947 ( 1,768 ) 69,179 $ 111.94

Total 178,906 70,947 ( 4,914 ) ( 43,159 ) 201,780

At September 30, 2024, management estimates that the recipients will receive approximately 100.0 %, 86.5 % and 0.0 % of the 2024, 2023 and 2022 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 $ 0.8 million and $ 1.7 million of total stock-based compensation expense related to outstanding PSUs for the three months ended September 30, 2024 and 2023,

respectively.

We recognized $ 4.0 million of total stock-based compensation expense related to outstanding PSUs for each of the nine months ended September 30, 2024 and 2023.

The 2021 - 2023 performance period PSUs vested and issued on March 8, 2024, at 93.6 % of the target number.

At September 30, 2024, we had unrecognized compensation cost of $ 7.5 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 2.2 years.

The following table summarizes the activity of our PSUs for the three months ended March 31, 2025:

Three Months Ended March 31,

Target Shares

Weighted Average Grant Date Fair Value

Beginning balance 196,770 $ 111.38

Granted 116,227 $ 75.09

Forfeited ( 60,272 ) $ 118.80

Ending balance 252,725 $ 92.92

At March 31, 2025, management estimates that the recipients will receive approximately 86.3 % of the weighted average target number of PSUs outstanding at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics.

PSUs granted in 2022 were forfeited based on actual results as compared to the target performance metrics.

We recognized $ 0.6 million and $ 2.0 million of total stock-based compensation expense related to outstanding PSUs for the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025, we had unrecognized compensation cost of $ 14.0 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.

PSUs granted in 2022, 2023 and 2024 are excluded from the calculation of diluted EPS as they are subject to unsatisfied performance conditions.

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

As of September 30, 2024, the 2023 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 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 September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

As of March 31, 2025, the 2024 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 each of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 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, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

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

3 unchanged sentences

Level 2 $ 300,000 $ 276,314 $ 300,000 $ 274,692

(1) See Note 4 for more details regarding the offerings of the 2029 Senior Notes and the 2028 Senior Notes.

2032 Senior Notes (1)

Level 2 $ 400,000 $ 421,643 $ 400,000 $ 421,247

(1) See Note 4 for more details regarding the offerings of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes.

COMMITMENTS AND CONTINGENCIES

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 operations.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Land deposits and option payments (1)

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

As of September 30, 2024 and December 31, 2023, approximately $ 11.9 million and $ 11.4 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 March 31, 2025 and December 31, 2024, approximately $ 8.0 million and $ 10.4 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

Lease Obligations

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

ROU assets, as included in other assets on the consolidated balance sheets, were $ 5.7 million and $ 4.6 million as of September 30, 2024 and December 31, 2023, respectively.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 6.1 million and $ 4.9 million as of September 30, 2024 and December 31, 2023, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.6 million and $ 0.7 million for the three months ended September 30, 2024 and 2023, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 1.8 million and $ 1.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases was $ 1.4 million for each of the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, the weighted-average discount rate was 5.9 % and our weighted-average remaining life was 2.2 years.

We do not have any significant lease contracts that have not yet commenced at September 30, 2024.

The table below shows the future minimum payments under non-cancelable operating leases at September 30, 2024 (in thousands):

ROU assets, as included in other assets on the consolidated balance sheets, were $ 5.6 million as of both March 31, 2025 and December 31, 2024.

Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 6.1 million as of both March 31, 2025 and December 31, 2024.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.5 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively.

Cash paid for amounts included in the measurement of lease liabilities for operating leases was $ 0.6 million and $ 0.6 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the weighted-average discount rate was 5.9 % and our weighted-average remaining life was 2.1 years.

We do not have any significant lease contracts that have not yet commenced at March 31, 2025.

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2025 (in thousands):

Year Ending December 31, Operating leases

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Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $ 376.3 million (including $ 26.1 million of letters of credit issued under the 2023 Credit Agreement) and $ 357.0 million (including $ 28.1 million of letters of credit issued under the 2023 Credit Agreement) at September 30, 2024 and December 31, 2023, respectively, related to our obligations for site improvements at various projects.

We have outstanding letters of credit and performance and surety bonds totaling $ 427.2 million (including $ 24.5 million of letters of credit issued under the 2024 Credit Agreement) and $ 377.5 million (including $ 24.5 million of letters of credit issued under the 2024 Credit Agreement) at March 31, 2025 and December 31, 2024, 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 September 30, 2024, we had two equity-method real estate joint ventures and two additional joint ventures engaged in mortgage and insurance activities that primarily provide services to our homebuyers.

As of September 30, 2024 and December 31, 2023, we have a total of $ 25.5 million and $ 21.5 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations.

As of March 31, 2025, we had two equity-method real estate joint ventures and four additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers.

As of March 31, 2025 and December 31, 2024, we have a total of $ 24.6 million and $ 28.3 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 nine months ended September 30, 2024 was $ 4.6 million and $ 9.6 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 months ended March 31, 2025 and 2024 was $ 0.9 million and $ 2.0 million, respectively.

Home Sales Revenues

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Retail home sales revenues $ 296,939 $ 362,289

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

We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West, and Florida divisions) that we aggregate into five qualifying reportable segments at September 30, 2024:

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, 2025:

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

These segments reflect the way we evaluate our business performance and manage our operations.

In accordance with ASC 280, Segment Reporting , operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision-makers (“CODMs”) in deciding how to allocate resources and in assessing performance.

The CODMs primarily evaluate performance based on the number of homes closed, gross margin and average sales price per home closed.

For reporting purposes, our homebuilding operations are aggregated into five reportable segments as follows:

Texas, Oklahoma, Minnesota

Georgia, Alabama, Tennessee, North Carolina, South Carolina,

West Virginia, Maryland, Pennsylvania, Virginia

Colorado, Washington, Oregon

Arizona, New Mexico, Nevada, California, Utah

In determining the most appropriate reportable segments, we consider operating segments’ economic and other characteristics, including home floor plans, average selling prices, gross margin percentage, geographical proximity, production construction processes, suppliers, subcontractors, regulatory environments, customer type and underlying demand and supply.

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Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.

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

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

2024 2023 2024 2023

Our Chief Executive Officer and Chairman of the Board and our President and Chief Operating Officer have been determined to be our chief operating decision-makers (“CODMs”).

The CODMs primarily evaluate the segments’ operating performance and allocate resources for all of our reportable segments based on net income before income taxes.

For all of the segments, the CODMs use segment income before income tax expense in the annual budget and forecasting process.

These operating results are reviewed against actual and forecasted figures, with income before income taxes being the key operating metric used to measure profit or loss.

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

Three Months Ended March 31,

Central $ 101,146 $ 103,736

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Total home sales revenues $ 351,420 $ 390,851

Net income (loss) before income taxes:

Cost of sales:

Central $ 80,515 $ 79,482

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Florida 39,254 48,396

Total cost of sales $ 277,707 $ 299,450

Other segment items (1) :

Central $ 23,727 $ 20,898

Southeast 15,842 15,770

Northwest 4,609 7,762

West 12,676 12,468

Florida 10,607 11,073

Corporate (2)

Total other segment items $ 67,989 $ 68,307

Net income (loss) before income taxes:

Central $ ( 3,096 ) $ 3,356

Southeast 8,119 15,615

Northwest 1,206 ( 490 )

West 2,485 2,894

Florida ( 2,462 ) 2,055

( 528 ) ( 336 )

Total net income before income taxes $ 5,724 $ 23,094

(1) The Corporate balance consists of general and administration unallocated costs for various shared service functions offset by non-strategic other income, as well as our warranty reserve.

Actual warranty expenses are reflected within the reportable segments.

September 30, 2024 December 31, 2023

(1) Other segment items reflects other sources of income and expense, including selling expenses, general and administrative expenses and other income, net.

(2) The Corporate balance consists of general and administrative unallocated costs for various shared service functions and non-strategic other income.

March 31, 2025 December 31, 2024

Central $ 1,142,303 $ 1,096,500

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Total assets $ 3,888,659 $ 3,758,534

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

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

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