What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-05 · 229 added, 182 removed, 382 unchanged (52% of the section changed)

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Nashville, TN

Our results in the second quarter of 2025 were achieved against a challenging macroeconomic backdrop.

Mortgage rates have remained persistently high, straining affordability and while the demand environment remains positive, muted consumer sentiment is impacting customers’ willingness to purchase new homes.

Against this backdrop, we continued to offer buyers financial incentives in an effort to bridge the affordability gap and put homeownership within reach of as many customers as possible while preserving margins at our targeted level.

During the six months ended June 30, 2025, we had 2,319 home closings, compared to 2,738 home closings during the six months ended June 30, 2024.

Our third quarter 2025 results were achieved against a challenging macroeconomic backdrop that included elevated mortgage rates, persistent inflation, and a government shutdown.

Throughout the quarter, we continued executing on our strategy of delivering affordable homes to entry-level buyers across our markets.

Although mortgage rates have trended downward since June, they continue to be a key pressure point for entry-level buyers.

Additionally, subdued consumer sentiment continues to impact buyers’ willingness to purchase new homes.

In response, we continued offering affordable, move-in ready homes supported by financial incentives and discounts on older inventory.

These strategies are designed to bridge the ongoing affordability gap and make homeownership accessible to as many customers as possible.

For the nine months ended September 30, 2025, we closed 3,384 homes, compared to 4,495 homes during the nine months ended September 30, 2024.

We sell homes under the LGI Homes and Terrata Homes brands.

Our 146 active communities at June 30, 2025 included 16 Terrata Homes communities.

At June 30, 2024, we had 128 active communities, including 17 Terrata Homes communities.

Our 141 active communities at September 30, 2025 included 14 Terrata Homes communities.

At September 30, 2024, we had 138 active communities, including 18 Terrata Homes communities.

For additional discussion regarding our business and operations, see Item 7.

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Recent Developments

Amendment to June 2025 Credit Agreement

On August 1, 2025, we entered into the Letter Agreement Amendment, which amended the June 2025 Credit Agreement.

The Letter Agreement Amendment, among other things, amended (i) the borrowing base by removing model housing units from the borrowing base sublimit, (ii) the financial covenants to (a) decrease the minimum EBITDA to interest expense ratio through December 31, 2026, (b) increase the minimum liquidity amount, (c) decrease the maximum leverage ratio through December 31, 2026 and (d) delete the covenant related to limitations on wholesale sales contracts, (iii) the permitted secured debt basket by increasing the available capacity thereunder and (iv) the restricted payment covenant to restrict the repurchase of shares and payment of dividends through December 31, 2026, subject to the terms and conditions set forth therein.

For additional information on the Credit Agreement (including defined terms used in this paragraph), see Note 4, “Notes Payable” to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

LGI Living Loan Agreement

On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living – SFR 1, LLC (“LGI Living SFR”) entered into a Loan Agreement (the “Loan Agreement”) with Evergreen Residential Capital, LLC, as lender.

The Loan Agreement provides for a secured non-recourse loan for up to $50.0 million, which can be increased at the request of LGI Living SFR by up to $75.0 million (for a total of $125.0 million), subject to the terms and conditions of the Loan Agreement.

As of July 31, 2025, the total amount of borrowings outstanding under the loan was $50.0 million.

The loan matures on July 8, 2030 and bears interest at a rate of 6.433% per annum, which may be adjusted in connection with an increase in the amount of the loan.

The loan is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events.

The loan is unconditionally guaranteed as to payment and performance by LGI Living – ER FIN, LLC, as the direct owner of the equity interests in LGI Living SFR, but recourse under such guaranty is limited to LGI Living – ER FIN, LLC’s equity interests in LGI Living SFR, which are pledged as collateral for the loan.

The loan is also secured by a security interest in all assets of LGI Living SFR, including a mortgage lien on certain of LGI Living SFR’s real property.

The Loan Agreement includes certain restrictive covenants that may limit LGI Living SFR’s ability to, among other things, incur additional indebtedness or make certain investments.

The Loan Agreement contains representations and warranties, affirmative covenants, and events of default, all of which the Company believes are customary for special purpose subsidiary real estate secured loan agreements.

If an event of default exists under the Loan Agreement, the lender will be able to accelerate the maturity of the loan and exercise other rights and remedies.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting corporations.

The OBBBA, among other changes, terminates the energy efficient homes tax credit for homes closing after June 30, 2026.

However, none of these tax law changes are expected to have an impact on the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

Key financial results as of and for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, were as follows:

Impact of October 2025 U.S.

Government Shutdown

During October 2025, the U.S.

federal government experienced a partial shutdown that affected several agencies and regulatory functions.

While LGI Homes’ core operations continued uninterrupted, we have identified certain areas where the shutdown may have implications for our business and financial reporting:

Government-Backed Mortgage Programs:

LGI Homes serves a significant number of entry-level and first-time homebuyers who utilize federally backed mortgage programs, including FHA and VA loans.

During the shutdown, we observed delays in loan processing and approvals, which may impact the timing of certain home closings and backlog conversion in future periods.

In addition to delays in FHA and VA loan processing, the government shutdown has impacted USDA loan

programs, which are a critical financing option for many of our entry-level buyers in rural and suburban markets.

The disruption in USDA loan approvals may result in delayed closings and increased cancellations.

Economic Data Availability:

The shutdown disrupted the release of key economic indicators, including employment and inflation data, which are typically used to inform our market outlook and strategic planning.

As a result, our forward-looking statements and guidance may reflect increased uncertainty.

Affordable Housing and Development Approvals:

For communities involving federal funding or oversight, including certain affordable housing initiatives, we may experience delays in approvals and contract processing.

While these delays were not material to our results for the third quarter of 2025, extended disruptions could affect future development timelines and revenue recognition.

We continue to monitor the situation closely and will provide updates in future filings should the shutdown or its effects materially impact our operations, financial condition, or results of operations.

Key financial results as of and for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, were as follows:

• Home sales revenues decreased 39.2% to $396.6 million from $651.9 million.

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For reconciliations of the non-GAAP financial measures of adjusted gross margin and EBITDA to the most directly comparable GAAP financial measures, please see “ —Non-GAAP Measures .”

Key financial results as of and for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, were as follows:

• Home sales revenues decreased 16.0% to $834.9 million from $993.3 million.

Key financial results as of and for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, were as follows:

• Home sales revenues decreased 25.1% to $1.2 billion from $1.6 billion.

• Homes closed decreased 24.7% to 3,384 homes from 4,495 homes.

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For reconciliations of the non-GAAP financial measures of adjusted gross margin and EBITDA to the most directly comparable GAAP financial measures, please see “ —Non-GAAP Measures .”

We owned and controlled 64,756 lots at June 30, 2025 as compared to 67,792 lots at March 31, 2025 and 70,899 lots at December 31, 2024.

We owned and controlled 62,564 lots at September 30, 2025 as compared to 64,756 lots at June 30, 2025 and 70,899 lots at December 31, 2024.

Results of Operations

The following table sets forth our results of operations for the three and six months ended June 30, 2025 and 2024:

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

The following table sets forth our results of operations for the three and nine months ended September 30, 2025 and 2024:

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

2025 2024 2025 2024

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In addition, other companies may not calculate adjusted gross margin information in the same manner that we do.

Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our

Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance.

Please see “ —Non-GAAP Measures ” for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.

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Our management believes that the presentation of EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business.

EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring.

unusual or non-recurring.

Accordingly, our management believes that this measure is useful for comparing general operating performance from period to period.

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Please see “ —Non-GAAP Measures ” for reconciliations of EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the three months ended June 30, 2025 and 2024, and our community count by reportable segment as of June 30, 2025 and 2024, were as follows (revenues in thousands):

Three Months Ended June 30, 2025 As of June 30, 2025

Revenues Home Closings ASP Average Community Count Average

Absorption Rate Community Count at End of Period

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the three months ended September 30, 2025 and 2024, and our community count by reportable segment as of September 30, 2025 and 2024, were as follows (revenues in thousands):

Three Months Ended September 30, 2025 As of September 30, 2025

Revenues Home Closings ASP Average Community Count Average Monthly Absorption Rate Community Count at End of Period

Central $ 99,355 307 $ 323,632 45.0 2.3 45

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Total $ 396,632 1,065 $ 372,424 142.0 2.5 141

Three Months Ended June 30, 2024 As of June 30, 2024

Revenues Home Closings ASP Average Community Count Average

Absorption Rate Community Count at End of Period

Three Months Ended September 30, 2024 As of September 30, 2024

Revenues Home Closings ASP Average Community Count Average Monthly Absorption Rate Community Count at End of Period

Central $ 164,439 509 $ 323,063 45.7 3.7 47

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Total $ 651,854 1,757 $ 371,004 133.3 4.4 138

Home sales revenues for the three months ended June 30, 2025 were $483.5 million, a decrease of $119.0 million, or 19.8%, from $602.5 million for the three months ended June 30, 2024.

The decrease in home sales revenues was primarily due to a 20.1% decrease in homes closed, partially offset by a 0.4% increase in the average sales price per home closed during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the three months ended

June 30, 2025 as compared to the three months ended June 30, 2024.

The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The average sales price per home closed during the three months ended June 30, 2025 was $365,446, an increase of $1,400, or 0.4%, from the average sales price per home closed of $364,047 for the three months ended June 30, 2024.

The increase in the average sales price per home closed was primarily due to geographic mix.

Home sales revenues for the three months ended September 30, 2025 were $396.6 million, a decrease of $255.2 million, or 39.2%, from $651.9 million for the three months ended September 30, 2024.

The decrease in home sales revenues was primarily due to a 39.4% decrease in the number of homes closed during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

The average sales price per home closed during the three months ended September 30, 2025 was $372,424, an increase of $1,420, or 0.4%, from the average sales price per home closed of $371,004 for the three months ended September 30, 2024.

The increase in the average sales price per home closed was primarily due to geographic mix and a decrease in sales incentives.

The overall decrease in absorption rate generally relates to the impact of ongoing affordability constraints, new community openings, and the overall increase in community count.

Included within our home sales revenues for the three months ended June 30, 2025 was $71.4 million in wholesale revenues resulting from 237 home closings, representing 17.9% of the 1,323 total homes closed during the three months ended June 30, 2025.

Included within our home sales revenues for the three months ended June 30, 2024 was $35.7 million in wholesale revenues resulting from 117 home closings, representing 7.1% of the 1,655 total homes closed during the three months ended June 30, 2024.

The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

• Home sales revenues in our Central reportable segment decreased by $60.4 million, or 34.9%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to a 32.7% decrease in the number of homes closed and a 3.2% decrease in the average sales price per home closed.

Included within our home sales revenues for the three months ended September 30, 2025 was $54.5 million in wholesale revenues resulting from 163 home closings, representing 15.3% of the 1,065 total number of homes closed during the three months ended September 30, 2025.

Included within our home sales revenues for the three months ended September 30, 2024 was $49.5 million in wholesale revenues resulting from 160 home closings, representing 9.1% of the 1,757 total number of homes closed during the three months ended September 30, 2024.

The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to lower retail demand during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

• Home sales revenues in our Central reportable segment decreased by $65.1 million, or 39.6%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a 39.7% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate and a decrease in the average community count.

• Home sales revenues in our Southeast reportable segment decreased by $53.8 million, or 34.7%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a 35.8% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our Southeast reportable segment increased by $14.7 million, or 10.8%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to an 11.2% increase in the number of homes closed, partially offset by a 0.3% decrease in the average sales price per home closed.

The increase in home closings was the result of an increase in the average community count, partially offset by a lower absorption rate.

• Home sales revenues in our Northwest reportable segment decreased by $14.6 million, or 21.5%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a 24.2% decrease in the number of homes closed, partially offset by a 3.6% increase in the average sales price per home closed.

• Home sales revenues in our Northwest reportable segment decreased by $33.7 million, or 40.5%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a 27.3% decrease in the number of homes closed and an 18.1% decrease in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our West reportable segment decreased by $27.8 million, or 21.7%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a 25.3% decrease in the number of homes closed, partially offset by a 4.8% increase in the average sales price per home closed.

• Home sales revenues in our West reportable segment decreased by $58.9 million, or 39.1%, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a 43.8% decrease in the number of homes closed, partially offset by an 8.2% increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our Florida reportable segment decreased by $30.8 million, or 31.6%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a 34.4% decrease in the number of homes closed, partially offset by a 4.3% increase in the average sales price per home closed.

• Home sales revenues in our Florida reportable segment decreased by $43.8 million, or 44.4%, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to a 45.8% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Cost of Sales and Gross Margin (home sales revenues less cost of sales).

Cost of sales for the three months ended June 30, 2025 was $372.9 million, a decrease of $78.7 million, or 17.4%, from $451.6 million for the three months ended June 30, 2024.

This overall decrease was primarily due to a 20.1% decrease in homes closed.

Gross margin for the three months ended June 30, 2025 was $110.6 million, a decrease of $40.3 million, or 26.7%, from $150.9 million for the three months ended June 30, 2024.

Gross margin as a percentage of home sales revenues was 22.9% for the three months ended June 30, 2025 and 25.0% for the three months ended June 30, 2024.

The decrease in gross margin as a percentage of home sales revenues was primarily due to a higher number of wholesale closings, higher lot costs, higher capitalized interest, and higher indirect overhead as a percentage of revenue, partially offset by a decrease in sales incentives offered during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Cost of sales for the three months ended September 30, 2025 was $311.5 million, a decrease of $176.8 million, or 36.2%, from $488.4 million for the three months ended September 30, 2024.

This overall decrease was primarily due to a 39.4% decrease in the number of homes closed.

Gross margin for the three months ended September 30, 2025 was $85.1 million, a decrease of $78.4 million, or 47.9%, from $163.5 million for the three months ended September 30, 2024.

Gross margin as a percentage of home sales revenues was 21.5% for the three months ended September 30, 2025 and 25.1% for the three months ended September 30, 2024.

The decrease in gross margin as a percentage of home sales revenues was primarily due to higher lot costs, higher capitalized interest and higher indirect overhead, partially offset by the impact of lower sales incentives offered during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Selling Expenses.

Selling expenses for the three months ended June 30, 2025 were $41.6 million, a decrease of $11.3 million, or 21.3%, from $52.9 million for the three months ended June 30, 2024.

The decrease in selling expenses was primarily due to a decrease in sales commissions and, to a lesser extent, personnel expenses.

Sales commissions decreased to $18.9 million for the three months ended June 30, 2025 from $27.2 million for the three months ended June 30, 2024, primarily due to a 19.8% decrease in home sales revenues during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Selling expenses as a percentage of home sales revenues were 8.6% and 8.8% for the three months ended June 30, 2025 and 2024, respectively.

The decrease in selling expenses as a percentage of home sales revenues was primarily

due to lower commissions and other personnel expenses during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Selling expenses for the three months ended September 30, 2025 were $35.7 million, a decrease of $19.5 million, or 35.4%, from $55.2 million for the three months ended September 30, 2024.

The decrease in selling expenses was primarily due to a decrease in the number of homes closed for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Sales commissions decreased to $15.2 million for the three months ended September 30, 2025 from $27.6 million for the three months ended September 30, 2024, primarily due to a decrease in the number of homes closed.

Selling expenses as a percentage of home sales revenues were 9.0% and 8.5% for the three months ended September 30, 2025 and 2024, respectively.

The increase in selling expenses as a percentage of home sales revenues was primarily due to a decrease in home sales revenues during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

General and Administrative.

General and administrative expenses for the three months ended June 30, 2025 were $29.4 million, a decrease of $1.1 million, or 3.6%, from $30.5 million for the three months ended June 30, 2024.

The decrease in general and administrative expenses was primarily due to a decrease in indirect overhead expenses and bonuses, partially offset by an increase in other expenses.

General and administrative expenses as a percentage of home sales revenues were 6.1% and 5.1% during the three months ended June 30, 2025 and 2024, respectively.

The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

General and administrative expenses for the three months ended September 30, 2025 were $28.0 million, which was consistent with $28.0 million for the three months ended September 30, 2024.

General and administrative expenses as a percentage of home sales revenues were 7.1% and 4.3% during the three months ended September 30, 2025 and 2024, respectively.

The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Other Income, Net.

Other income, net of other expenses was $2.4 million for the three months ended June 30, 2025, a decrease of $6.9 million from $9.4 million for the three months ended June 30, 2024.

The decrease in other income, net of other expenses, primarily reflects the decrease in income associated with our investment in unconsolidated entities, the decrease in interest income and the decrease in gains realized from the sale of residential lots not directly associated with our core homebuilding operations.

Other income, net of other expenses was $5.2 million for the three months ended September 30, 2025, a decrease of $6.3 million from $11.5 million for the three months ended September 30, 2024.

Operating Income and Net Income before Income Taxes.

Operating income for the three months ended June 30, 2025 was $39.6 million, a decrease of $27.9 million, or 41.3%, from $67.5 million for the three months ended June 30, 2024.

Net income before income taxes for the three months ended June 30, 2025 was $42.0 million, a decrease of $34.8 million, or 45.3%, from $76.9 million for the three months ended June 30, 2024.

The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and higher indirect overhead expenses associated with the increase in average community count during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Our reportable segments contributed to net income before income taxes during the three months ended June 30, 2025 as follows:

Operating income for the three months ended September 30, 2025 was $21.5 million, a decrease of $58.8 million, or 73.2%, from $80.3 million for the three months ended September 30, 2024.

Net income before income taxes for the three months ended September 30, 2025 was $26.7 million, a decrease of $65.2 million, or 71.0%, from $91.9 million for the three months ended September 30, 2024.

The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and other costs associated with the increase in average community count during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Our reportable segments contributed to net income before income taxes during the three months ended September 30, 2025 as follows:

Central - $9.1 million, or 34.2%;

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Income Taxes .

Income tax provision for the three months ended June 30, 2025 was $10.5 million, a decrease of $7.8 million, or 42.6%, from income tax provision of $18.3 million for the three months ended June 30, 2024.

The decrease in our income tax provision is primarily due to the overall decrease in net income before income taxes.

The increase in our effective tax rate to 25.0% for the three months ended June 30, 2025 from 23.8% for the three months ended June 30, 2024 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

Net income for the three months ended June 30, 2025 was $31.5 million, a decrease of $27.0 million, or 46.2%, from $58.6 million for the three months ended June 30, 2024.

The decrease in net income was primarily attributed to overall lower home sales revenues and gross margin during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the six months ended June 30, 2025 and 2024 were as follows (revenues in thousands):

Six Months Ended June 30, 2025

Revenues Home Closings ASP Average Community Count Average

Absorption Rate

Income tax provision for the three months ended September 30, 2025 was $7.0 million, a decrease of $15.3 million, or 68.7%, from income tax provision of $22.3 million for the three months ended September 30, 2024.

The decrease in our income tax provision was primarily due to the overall decrease in net income before income taxes.

The increase in our effective tax rate to 26.2% for the three months ended September 30, 2025 from 24.3% for the three months ended September 30, 2024 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

Net income for the three months ended September 30, 2025 was $19.7 million, a decrease of $49.9 million, or 71.7%, from $69.6 million for the three months ended September 30, 2024.

The decrease in net income was primarily attributed to an overall decrease in the number of homes closed, home sales revenues and gross margin during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the nine months ended September 30, 2025 and 2024 were as follows (revenues in thousands):

Nine Months Ended September 30, 2025

Revenues Home Closings ASP Average Community Count Average Monthly Absorption Rate

Central $ 313,487 997 $ 314,430 47.8 2.3

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Total $ 1,231,537 3,384 $ 363,929 145.3 2.6

Six Months Ended June 30, 2024

Revenues Home Closings ASP Average Community Count Average Monthly

Absorption Rate

Nine Months Ended September 30, 2024

Revenues Home Closings ASP Average Community Count Average Monthly Absorption Rate

Central $ 441,609 1,363 $ 323,998 43.8 3.5

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Total $ 1,645,202 4,495 $ 366,007 126.1 4.0

Home sales revenues for the six months ended June 30, 2025 were $834.9 million, a decrease of $158.4 million, or 16.0%, from $993.3 million for the six months ended June 30, 2024.

The decrease in home sales revenues was primarily due to a 15.3% decrease in homes closed and a 0.8% decrease in the average sales price per home closed during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The average sales price per home closed during the six months ended June 30, 2025 was $360,028, a decrease of $2,773, or 0.8%, from the average sales price per home closed of $362,801 for the six months ended June 30, 2024.

The decrease in the average sales price per home closed was primarily due to geographic mix and an increase in the number of wholesale homes closed.

Home sales revenues for the nine months ended September 30, 2025 were $1.2 billion, a decrease of $413.7 million, or 25.1%, from $1.6 billion for the nine months ended September 30, 2024.

The decrease in home sales revenues was primarily due to a 24.7% decrease in the number of homes closed and a decrease in the average sales price per home closed during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The average sales price per home closed during the nine months ended September 30, 2025 was $363,929, a decrease of $2,078, or 0.6%, from the average sales price per home closed of $366,007 for the nine months ended September 30, 2024.

The decrease in the average sales price per home closed was primarily due to an increase in wholesale home closings and to a lesser extent geographic mix.

The overall decrease in absorption rate generally relates to the impact of ongoing affordability constraints, new community openings, and the overall increase in community count.

Included within our home sales revenues for the six months ended June 30, 2025 was $125.9 million in wholesale revenues resulting from 416 home closings, representing 17.9% of the 2,319 total homes closed during the six months ended June 30, 2025.

Included within our home sales revenues for the six months ended June 30, 2024 was $64.3 million in wholesale revenues resulting from 219 home closings, representing 8.0% of the 2,738 total homes closed during the six months ended June 30, 2024.

The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

• Home sales revenues in our Central reportable segment decreased by $63.0 million, or 22.7%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 19.2% decrease in the

number of homes closed and a 4.4% decrease in the average sales price per home closed.

Included within our home sales revenues for the nine months ended September 30, 2025 was $180.4 million in wholesale revenues resulting from 579 home closings, representing 17.1% of the 3,384 total number of homes closed during the nine months ended September 30, 2025.

Included within our home sales revenues for the nine months ended September 30, 2024 was $113.7 million in wholesale revenues resulting from 379 home closings, representing 8.4% of the 4,495 total number of homes closed during the nine months ended September 30, 2024.

The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

• Home sales revenues in our Central reportable segment decreased by $128.1 million, or 29.0%, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a 26.9% decrease in the number of homes closed and a 3.0% decrease in the average sales price per home closed.

in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our Southeast reportable segment decreased by $53.9 million, or 13.2%, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a 13.3% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our Southeast reportable segment decreased by $0.1 million during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 0.4% decrease in the average sales price per home closed, offset by a 0.4% increase in the number of homes closed.

The increase in home closings was the result of an increase in community count, partially offset by a lower absorption rate.

• Home sales revenues in our Northwest reportable segment decreased by $16.5 million, or 15.8%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 14.9% decrease in the number of homes closed and a 1.0% decrease in the average sales price per home closed.

• Home sales revenues in our Northwest reportable segment decreased by $50.1 million, or 26.8%, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a 20.3% decrease in the number of homes closed and an 8.1% decrease in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our West reportable segment decreased by $33.9 million, or 16.9%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 20.1% decrease in the number of homes closed, partially offset by a 4.1% increase in the average sales price per home closed.

• Home sales revenues in our West reportable segment decreased by $92.9 million, or 26.4%, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a 30.2% decrease in the number of homes closed, partially offset by a 5.4% increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

• Home sales revenues in our Florida reportable segment decreased by $44.9 million, or 28.3%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a 29.9% decrease in the number of homes closed, partially offset by a 2.3% increase in the average sales price per home closed.

• Home sales revenues in our Florida reportable segment decreased by $88.7 million, or 34.5%, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to a 36.0% decrease in the number of homes closed, partially offset by a 2.4% increase in the average sales price per home closed.

The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Cost of Sales and Gross Margin (home sales revenues less cost of sales).

Cost of sales for the six months ended June 30, 2025 was $650.6 million, a decrease of $100.5 million, or 13.4%, from $751.1 million for the six months ended June 30, 2024.

This overall decrease was primarily due to a 15.3% decrease in homes closed.

Gross margin for the six months ended June 30, 2025 was $184.3 million, a decrease of $58.0 million, or 23.9%, from $242.3 million for the six months ended June 30, 2024.

Gross margin as a percentage of home sales revenues was 22.1% for the six months ended June 30, 2025 and 24.4% for the six months ended June 30, 2024.

The decrease in gross margin as a percentage of home sales revenues was primarily due to a lower average sales price per home closed, a higher number of wholesale closings, higher lot costs and higher capitalized interest as a percentage of revenue, partially offset by a decrease in sales incentives offered during the six months ended June 30, 2025.

Cost of sales for the nine months ended September 30, 2025 was $962.1 million, a decrease of $277.3 million, or 22.4%, from $1.2 billion for the nine months ended September 30, 2024.

This overall decrease was primarily due to a 24.7% decrease in the number of homes closed.

Gross margin for the nine months ended September 30, 2025 was $269.4 million, a decrease of $136.3 million, or 33.6%, from $405.8 million for the nine months ended September 30, 2024.

Gross margin as a percentage of home sales revenues was 21.9% for the nine months ended September 30, 2025 and 24.7% for the nine months ended September 30, 2024.

The decrease in gross margin as a percentage of home sales revenues during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to a lower average sales price per home closed, a higher number of wholesale closings, higher lot costs, higher capitalized interest and higher indirect overhead as a percentage of revenue, partially offset by a decrease in sales incentives offered during the nine months ended September 30, 2025.

Selling Expenses.

Selling expenses for the six months ended June 30, 2025 were $83.9 million, a decrease of $10.1 million, or 10.7%, from $94.0 million for the six months ended June 30, 2024.

The decrease in selling expenses was primarily due to a decrease in sales commissions and other selling expenses, partially offset by an increase in advertising and other personnel selling expenses, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Sales commissions decreased to $33.0 million during the six months ended June 30, 2025 from $44.6 million for the six months ended June 30, 2024, primarily due to a 16.0% decrease in home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Selling expenses as a percentage of home sales revenues were 10.1% and 9.5% for the six months ended June 30, 2025 and 2024, respectively.

The increase in selling expenses as a percentage of home sales revenues was primarily due to higher advertising and other personnel expenses, offset by a decrease in commissions during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Selling expenses for the nine months ended September 30, 2025 were $119.6 million, a decrease of $29.6 million, or 19.8%, from $149.2 million for the nine months ended September 30, 2024.

The decrease in selling expenses was primarily due to a decrease in the number of homes closed for the nine months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Sales commissions decreased to $48.1 million during the nine months ended September 30, 2025 from $72.2 million for the nine months ended September 30, 2024, primarily due to a decrease in the number of homes closed.

Selling expenses as a percentage of home sales revenues were 9.7% and 9.1% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in selling expenses as a percentage of home sales revenues was primarily due to a decrease in home sales revenues during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

General and Administrative.

General and administrative expenses for the six months ended June 30, 2025 were $60.6 million, a decrease of $1.4 million, or 2.3%, from $62.0 million for the six months ended June 30, 2024.

The decrease in general and administrative expenses was primarily due to a decrease in indirect overhead expenses and bonuses, partially offset by an increase in other expenses.

General and administrative expenses as a percentage of home sales revenues were 7.3% and 6.2% for the six months ended June 30, 2025 and 2024, respectively.

The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

General and administrative expenses for the nine months ended September 30, 2025 were $88.6 million, a decrease of $1.5 million, or 1.7%, from $90.0 million for the nine months ended September 30, 2024.

The decrease in general and administrative expenses was primarily due to a decrease in bonuses and indirect overhead costs, partially offset by an increase in other general and administrative expense.

General and administrative expenses as a percentage of home sales revenues were 7.2% and 5.5% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Other Income, Net.

Other income, net of other expenses was $8.0 million for the six months ended June 30, 2025, a decrease of $5.7 million from $13.7 million for the six months ended June 30, 2024.

The decrease in other income, net of other expenses, primarily reflects the decrease in income associated with our investment in unconsolidated entities and the decrease in interest income, partially offset by gains realized from the sale of residential lots not directly associated with our core homebuilding operations.

Other income, net of other expenses was $13.2 million for the nine months ended September 30, 2025, a decrease of $12.1 million from $25.3 million for the nine months ended September 30, 2024.

The decrease in other income, net of other expenses, primarily reflects the decrease in income associated with our investment in unconsolidated entities and the decrease in interest income.

Operating Income and Net Income before Income Taxes.

Operating income for the six months ended June 30, 2025 was $39.8 million, a decrease of $46.5 million, or 53.9%, from $86.3 million for the six months ended June 30, 2024.

Net income before income taxes for the six months ended June 30, 2025 was $47.8 million, a decrease of $52.2 million, or 52.2%, from $100.0 million for the six months ended June 30, 2024.

The overall decreases in operating income and net income before

income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and higher advertising and other costs associated with the increase in average community count during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Our reportable segments contributed to net income before income taxes during the six months ended June 30, 2025 as follows:

Operating income for the nine months ended September 30, 2025 was $61.3 million, a decrease of $105.3 million, or 63.2%, from $166.6 million for the nine months ended September 30,

Net income before income taxes for the nine months ended September 30, 2025 was $74.5 million, a decrease of $117.4 million, or 61.2%, from $191.8 million for the nine months ended September 30, 2024.

The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and the increase in other costs associated with the increase in average community count during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Our reportable segments contributed to net income before income taxes during the nine months ended September 30, 2025 as follows:

Central - $15.1 million, or 20.3%;

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Income Taxes .

Income tax provision for the six months ended June 30, 2025 was $12.2 million, a decrease of $12.1 million, or 49.7%, from income tax provision of $24.4 million for the six months ended June 30, 2024.

The decrease in our income tax provision is primarily due to the overall decrease in net income before income taxes.

The increase in our effective tax rate to 25.6% for the six months ended June 30, 2025 from 24.4% for the six months ended June 30, 2024 was primarily 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.

Net income for the six months ended June 30, 2025 was $35.5 million, a decrease of $40.1 million, or 53.0%, from $75.6 million for the six months ended June 30, 2024.

The decrease in net income was primarily attributed to overall lower home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Income tax provision for the nine months ended September 30, 2025 was $19.2 million, a decrease of $27.4 million, or 58.8%, from income tax provision of $46.6 million for the nine months ended September 30, 2024.

The decrease in our income tax provision was primarily due to the overall decrease in net income before income taxes.

The increase in our effective tax rate to 25.8% for the nine months ended September 30, 2025 from 24.3% for the nine months ended September 30, 2024 was primarily 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.

Net income for the nine months ended September 30, 2025 was $55.2 million, a decrease of $90.0 million, or 62.0%, from $145.2 million for the nine months ended September 30, 2024.

The decrease in net income was primarily attributed to overall lower number of homes closed, home sales revenues and gross margin during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Non-GAAP Measures

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The following table reconciles adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands):

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

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

2025 2024 2025 2024

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These GAAP measures include operating income, net income and cash flow data.

We have significant uses of cash flows, including capital expenditures, interest payments and other non-recurring charges, which are not reflected in our EBITDA.

EBITDA is not intended as an alternative to net income as an indicator of our operating

performance, as an alternative to any other measure of performance in conformity with GAAP or as an alternative to cash flows as a measure of liquidity.

We have significant uses of cash flows, including capital expenditures, interest payments and other non-recurring charges, which

are not reflected in our EBITDA.

EBITDA is not intended as an alternative to net income as an indicator of our operating performance, as an alternative to any other measure of performance in conformity with GAAP or as an alternative to cash flows as a measure of liquidity.

You should therefore not place undue reliance on our EBITDA calculated using these measures.

The following table reconciles EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands):

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

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

2025 2024 2025 2024

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(1) Calculated as a percentage of home sales revenues.

Net Debt to Capital Ratio Reconciliation

Net debt to capital ratio is a non-GAAP financial measure used by management as a supplemental measure in understanding the leverage employed in our operations and as an indicator of our ability to obtain financing.

We define net debt to capital ratio as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity.

Our management believes that the presentation of net debt to capital ratio provides useful information to investors regarding the Company’s financial leverage and its ability to meet long-term obligations.

By excluding cash and cash equivalents from total debt, the ratio offers a clearer view of our capital structure and financial flexibility.

Our management uses this metric to monitor our capital efficiency and to evaluate the effectiveness of our capital management strategies over time.

Other companies may define this measure differently and, as a result, our measure of net debt to capital ratio may not be directly comparable to the measures of other companies.

The following table reconciles net debt to capital ratio (a non-GAAP financial measure) to debt to capital ratio, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands):

September 30, 2025 December 31, 2024

Total debt (Notes payable)

$ 1,751,427 $ 1,480,718

2,079,374 2,037,228

Total capital

$ 3,830,801 $ 3,517,946

Debt to capital ratio

45.7 % 42.1 %

Total debt (Notes payable)

$ 1,751,427 $ 1,480,718

Cash and cash equivalents

61,979 53,197

$ 1,689,448 $ 1,427,521

2,079,374 2,037,228

Total net capital

$ 3,768,822 $ 3,464,749

Net debt to capital ratio (1)

44.8 % 41.2 %

(1) Net debt to capital ratio is calculated as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity.

We sell our homes under standard purchase contracts, which generally require a homebuyer to pay a deposit at the time of signing the purchase contract.

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If we determine that the homebuyer is not qualified to obtain mortgage financing or is not otherwise financially able to purchase the home, we will terminate the purchase contract.

If a purchase contract has not been cancelled or terminated within 14 days after the purchase contract has been signed, then the homebuyer has met the preliminary criteria to obtain mortgage financing.

If a purchase contract has not been cancelled or terminated within 14 days after

the purchase contract has been signed, then we have assumed the homebuyer will meet the preliminary criteria to obtain mortgage financing.

Only purchase contracts that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing are included in new (gross) orders.

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Backlog may be impacted by customer cancellations for various reasons that are beyond our control, and in light of our minimal required deposit, there is little negative impact to the potential homebuyer from the cancellation of the purchase contract.

Our net orders decreased for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to ongoing affordability constraints and other challenges in the overall housing market including muted consumer sentiment impacting customers’ willingness to purchase new homes.

As a result of the slower sales pace, the number of homes in our backlog at June 30, 2025 decreased 42.0% compared to June 30, 2024.

Our net orders decreased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to lower demand in the first six months of the year.

The number of homes in our backlog at September 30, 2025 increased 19.9% compared to September 30, 2024.

The increase generally relates to management’s focus on newly implemented sales initiatives, an increase in sales personnel and an increase in community count, partially offset by ongoing affordability constraints and the limited use of incentives during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

As of the dates set forth below, our net orders, cancellation rate and ending backlog homes and value were as follows (dollars in thousands):

Backlog Data Six Months Ended June 30,

Nine Months Ended September 30,

Backlog Data 2025 (4)

Net orders (1)

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Ending backlog is valued at the contract amount.

(4) As of June 30, 2025, we had 91 units related to bulk sales agreements associated with our wholesale business.

(5) As of June 30, 2024, we had 181 units related to bulk sales agreements associated with our wholesale business.

(4) As of September 30, 2025, we had 60 units related to bulk sales agreements associated with our wholesale business.

(5) As of September 30, 2024, we had 212 units related to bulk sales agreements associated with our wholesale business.

Land Acquisition Policies and Development

We had 146 and 151 active communities as of June 30, 2025 and December 31, 2024, respectively.

Generally, it takes us two to three years to turn raw or undeveloped land into an active community.

We had 141 and 151 active communities as of September 30, 2025 and December 31, 2024, respectively.

Generally, it takes us three to four years to turn raw or undeveloped land into an active community.

To mitigate our exposure to real estate inventory risks, we have utilized, on a limited and strategic basis, land banking financing arrangements.

Our lot inventory decreased to 64,756 owned or controlled lots as of June 30, 2025 from 70,899 owned or controlled lots as of December 31, 2024, primarily related to our disciplined underwriting criteria and selective approval of new land deals.

Our lot inventory decreased to 62,564 owned or controlled lots as of September 30, 2025 from 70,899 owned or controlled lots as of December 31, 2024, primarily related to our discipline in the evaluation and selective approval of new land deals and strategic lot sales in select markets.

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.

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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.

The table below shows (i) home closings by reportable segment for the six months ended June 30, 2025 and (ii) our owned or controlled lots by reportable segment as of June 30, 2025.

Six Months Ended June 30, 2025 As of June 30, 2025

The table below shows (i) home closings by reportable segment for the nine months ended September 30, 2025 and (ii) our owned or controlled lots by reportable segment as of September 30, 2025.

Nine Months Ended September 30, 2025 As of September 30, 2025

Reportable Segment Home Closings Owned (1)

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Total 3,384 53,148 9,416 62,564

(1) Of the 53,555 owned lots as of June 30, 2025, 37,374 were raw/under development lots and 16,181 were finished lots.

(1) Of the 53,148 owned lots as of September 30, 2025, 36,316 were raw/under development lots and 16,832 were finished lots.

Homes in Inventory

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As homes are closed, we start more homes to maintain our inventory.

As of June 30, 2025, we had a total of 2,524 completed homes, including information centers, and 1,512 homes in progress.

As of September 30, 2025, we had a total of 2,801 completed homes, including information centers, and 895 homes in progress.

Raw Materials and Labor

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Liquidity and Capital Resources

As of June 30, 2025, we had $59.6 million of cash and cash equivalents.

As of September 30, 2025, we had $62.0 million of cash and cash equivalents.

Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.

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In the later stages of an active community, cash inflows may exceed home sales revenues reported for financial statement purposes, as the costs associated with home and land construction were previously incurred.

Net Debt to Capital Ratio

As of September 30, 2025, our net debt to capital ratio was 44.8%.

We use this ratio as a supplemental measure of financial leverage and capital efficiency.

This ratio is calculated as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity.

Our net debt to capital ratio reflects our balanced approach to financing growth while maintaining liquidity.

We continue to monitor leverage levels in light of evolving market conditions to keep an eye on capital efficiency and shareholder value.

At September 30, 2025, we were in compliance with all of the covenants contained in the Credit Agreement, including minimum tangible net worth, maximum leverage ratio, minimum liquidity amount, and minimum EBITDA to interest expense ratio, and with all of the covenants contained in the Loan Agreement.

As of September 30, 2025, $367.9 million was available to borrow under the Credit Agreement, providing ample liquidity to support operations and growth initiatives.

Short-term Liquidity and Capital Resources

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As of the date of this Quarterly Report on Form 10-Q, we believe that we will be able to fund our current and foreseeable liquidity needs for at least the next twelve months with our cash on hand, cash generated from operations and cash expected to be available from the Credit Agreement or through accessing debt or equity capital, as needed.

However, our ability to engage in the transactions described above may be constrained by volatile or tight economic, capital, credit and financial market

conditions, as well as moderated investor or lender interest or capacity and our liquidity, leverage and net worth, and we can provide no assurance as to successfully completing, the costs of, or the operational limitations arising from any one or series of such transactions.

However, our ability to engage in the transactions described above may be constrained by volatile or tight economic, capital, credit and financial market conditions, as well as moderated investor or lender interest or capacity and our liquidity, leverage and net worth, and we can provide no assurance as to successfully completing, the costs of, or the operational limitations arising from any one or series of such transactions.

Long-term Liquidity and Capital Resources

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We believe that we will be able to fund our long-term liquidity needs with cash generated from operations and cash expected to be available to borrow under the Credit Agreement or through accessing debt or equity capital, as needed, although no assurance can be provided that such additional debt or equity capital will be available when needed or on terms that we find attractive.

Additionally, we plan to further utilize, on a limited and strategic basis, land banking financing arrangements to maximize long-term liquidity for lot development projects where we have sufficient finished lot availability in certain markets.

Additionally, we may further utilize, on a limited and strategic basis, land banking financing arrangements to maximize long-term liquidity for lot development projects where we have sufficient finished lot availability in certain markets.

To the extent these sources of capital are insufficient to meet our needs, we may also conduct additional public or private offerings of our securities, refinance our indebtedness, or dispose of certain assets to fund our operating activities and capital needs.

Revolving Credit Facility

On August 1, 2025, we entered into a Letter Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Letter Agreement Amendment”), which amended the June 2025 Credit Agreement (as so amended by the Letter Agreement Amendment, the “Credit Agreement”).

On August 1, 2025, we entered into a Letter Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Letter Agreement 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 Letter Agreement Amendment, the “Credit Agreement”).

The Credit Agreement provides for a $1.1825 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.

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

As of June 30, 2025, the borrowing base under the June 2025 Credit Agreement was $2.1 billion, of which the maximum available to borrow was $2.0 billion.

As of June 30, 2025, borrowings under the June 2025 Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.8 billion, $27.4 million of letters of credit were outstanding and $263.0 million was available to borrow under the June 2025 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 June 30, 2025, the Applicable Margin was 1.85%, and SOFR was 4.33%, subject to the 0.50% SOFR floor as included in the June 2025 Credit Agreement.

As of September 30, 2025, the borrowing base under the Credit Agreement was $2.1 billion, of which the maximum available to borrow was $2.1 billion.

As of September 30, 2025, borrowings under the Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.7 billion, $27.0 million of letters of credit were outstanding and $367.9 million was available to borrow under the Credit Agreement.

At September 30, 2025, the Applicable Margin was 1.95%, and SOFR was 4.16%, 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 maximum leverage ratio, a minimum liquidity amount and a minimum 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, 2025, we were in compliance with all of the covenants contained in the June 2025 Credit Agreement.

At September 30, 2025, we were in compliance with all of the covenants contained in the Credit Agreement.

LGI Living Loan Agreement

On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living - SFR 1, LLC (“LGI Living SFR”) entered into a Loan Agreement (the “Loan Agreement”) with Evergreen Residential Capital, LLC, as lender.

As of September 30, 2025, the total amount of borrowings outstanding under the Loan Agreement was $50.0 million.

The loan matures on July 8, 2030 and bears interest at a rate of 6.433% per annum, which may be adjusted in connection with an increase in the amount of the loan.

The Loan Agreement requires that the Company, as guarantor, maintain (i) liquidity of not less than 15% of the loan amount and (ii) maintain net worth in excess of 50% of the loan amount.

The loan is unconditionally guaranteed as to payment and performance by LGI Living - ER FIN, LLC, as the direct owner of the equity interests in LGI Living SFR, but recourse under such guaranty is limited to LGI Living - ER FIN, LLC’s equity interests in LGI Living SFR, which are pledged as collateral for the loan.

The loan is also secured by a security interest in all assets of LGI Living SFR, including a mortgage lien on certain of LGI Living SFR’s real property.

The Loan Agreement includes certain restrictive covenants that may limit LGI Living SFR’s ability to, among other things, incur additional indebtedness or make certain investments.

If an event of default exists under the Loan Agreement, the lender will be able to accelerate the maturity of the loan and exercise other rights and remedies.

At September 30, 2025, we were in compliance with all of the covenants contained in the Loan Agreement.

Senior Notes Offering

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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.

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.

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Under these letters of credit, surety bonds and financial guarantees, we are committed to perform certain development and construction activities and provide certain guarantees in the normal course of business.

Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $431.4 million as of June 30, 2025.

Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $423.1 million as of September 30, 2025.

Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed.

We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of June 30, 2025 will be drawn upon.

We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of September 30, 2025 will be drawn upon.

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, 2025, we repurchased 367,568 shares of our common stock at a total cost, including commissions and excise taxes, of $20.6 million and 409,253 shares of our common stock at a total cost, including commissions and excise taxes, of $23.6 million, respectively, to be held as treasury stock.

During the three and six months ended June 30, 2024, we repurchased 83,763 shares of our common stock at a total cost, including commissions and excise taxes, of $8.0 million and 172,990 shares of our common stock at a total cost, including commissions and excise taxes, of $18.0 million, respectively, to be held as treasury stock.

During the three months ended September 30, 2025, we did not repurchase any shares of our common stock.

During the nine months ended September 30, 2025, we repurchased 409,253 shares of our common stock at a total cost, including commissions and excise taxes, of $23.6 million, to be held as treasury stock.

During the three months ended September 30, 2024, we did not repurchase any shares of our common stock.

During the nine months ended September 30, 2024, we repurchased 172,990 shares of our common stock at a total cost, including commissions and excise taxes, of $18.0 million, to be held as treasury stock.

A total of 3,656,592 shares of our common stock has been repurchased since our stock repurchase program commenced in 2022.

As of June 30, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program.

As of September 30, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program.

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

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Operating Activities

Net cash used in operating activities was $213.5 million during the six months ended June 30, 2025.

Net cash used in operating activities was $226.7 million during the nine months ended September 30, 2025.

The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.

Net cash used in operating activities during the six months ended June 30, 2025 was primarily driven by cash outflow from the $286.7 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and the $30.0 million decrease in the net change in accrued expenses and other liabilities, partially offset by the $43.6 million decrease in the net change in other assets and the $12.8 million increase in the net change of accounts payable.

Net cash used in operating activities was $183.0 million during the six months ended June 30, 2024.

The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and

Net cash used in operating activities during the six months ended June 30, 2024 was primarily driven by cash outflow from the $287.2 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and the $9.1 million decrease in the net change in accrued expenses and other liabilities, partially offset by net income of $75.6 million and the $35.1 million increase in the net change in accounts payable.

Net cash used in operating activities during the nine months ended September 30, 2025 was primarily driven by cash outflow of $347.3 million in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and a $12.8 million decrease in the net change in accrued expenses and other liabilities, partially offset by the $45.7 million increase in the net change in other assets and the $22.9 million increase in the net change related to pre-acquisition costs and deposits, accounts receivable and compensation expense for equity awards.

Net cash used in operating activities was $200.7 million during the nine months ended September 30, 2024.

The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.

Net cash used in operating activities during the nine months ended September 30, 2024 was primarily driven by cash outflow from the $390.9 million decrease in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and partially offset by net income of $145.2 million and the $21.7 million increase in the net change in accounts payable.

Investing Activities

Net cash provided by investing activities was $2.1 million during the six months ended June 30, 2025, primarily due to $6.4 million in return of capital, partially offset by an additional $3.4 million investment in unconsolidated entities.

Net cash used in investing activities was $2.9 million during the six months ended June 30, 2024, primarily due to the purchase of property and equipment and additional investment in unconsolidated entities.

Net cash provided by investing activities was $14.3 million during the nine months ended September 30, 2025, primarily due to $10.2 million in proceeds from the sale of property and equipment and $8.6 million in return of capital, partially offset by an additional $3.6 million investment in unconsolidated entities.

Net cash used in investing activities was $6.6 million during the nine months ended September 30, 2024, primarily due to additional investment in unconsolidated entities.

Financing Activities

Net cash provided by financing activities was $217.8 million during the six months ended June 30, 2025, primarily driven by $390.6 million of borrowings under our credit agreement then in effect, offset by $130.0 million of repayments on our credit agreement then in effect and payments of $17.5 million related to a financing arrangement with a third-party land banker.

In addition, during the six months ended June 30, 2025, we repurchased $23.6 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Net cash provided by financing activities was $188.0 million during the six months ended June 30, 2024, primarily driven by $349.1 million of borrowings under our credit agreement then in effect, offset by $99.0 million of repayments on our credit agreement then in effect and payments of $46.7 million related to a financing arrangement with a third-party land banker.

In addition, during the six months ended June 30, 2024, we repurchased $18.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Net cash provided by financing activities was $221.2 million during the nine months ended September 30, 2025, primarily driven by $594.6 million of borrowings under the Credit Agreement, offset by $323.0 million of repayments on our credit agreement then in effect and payments of $24.2 million related to a financing arrangement with a third-party land banker.

addition, during the nine months ended September 30, 2025, we repurchased $23.6 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Net cash provided by financing activities was $219.3 million during the nine months ended September 30, 2024, primarily driven by $507.7 million of borrowings under our credit agreement then in effect, offset by $214.0 million of repayments on our credit agreement then in effect and payments of $60.3 million related to a financing arrangement with a third-party land banker.

In addition, during the nine months ended September 30, 2024, we repurchased $18.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Our business can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs.

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Material Cash Requirements

As of June 30, 2025, there have been no material changes to our known contractual and other obligations appearing in the “Material Cash Requirements” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of September 30, 2025, there have been no material changes to our known contractual and other obligations appearing in the “Material Cash Requirements” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Critical Accounting Policies and Estimates

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Actual results could differ from these estimates using different estimates and assumptions, or if conditions are significantly different in the future.

We believe that there have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 2025 as compared to those disclosed in Management ’ s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We believe that there have been no significant changes to our critical accounting policies and estimates during the nine months ended September 30, 2025 as compared to those disclosed in Management ’ s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Cautionary Statement about Forward-Looking Statements

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• availability of qualified personnel and third-party contractors and subcontractors;

• the impact on our business of any future government shutdown;

• the impact on our business of the ongoing U.S.

government shutdown and any future U.S.

government shutdown;

• other risks and uncertainties inherent in our business;

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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 2. Management’s Discussion and Analysis