LGI Homes, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of LGI Homes, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of LGI Homes, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 19, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 52 Table of Contents Land development costs Description of the Matter For the year ended December 31, 2025, the Company’s cost of sales was approximately $1.3 billion, which includes construction costs of each closed home and allocable land acquisition and land development costs, capitalized interest, and other related costs. As discussed in Note 2 to the consolidated financial statements, land development costs that are not specifically identifiable to a home are allocated on a pro rata basis. At the time of home closings, land development activities may not be finalized. To recognize the appropriate amount of cost of sales, the Company estimates the total remaining development costs. Estimates are affected by changes to the land development project’s schedule; the cost of labor, materials, and subcontractors; and potential cost reimbursements from various municipalities. Auditing the Company's land development cost measurement was complex and subjective due to the significant estimation required to determine the costs to complete land development. Specifically, the land development cost estimate is sensitive to significant management assumptions, including the project’s schedule, estimated cost of labor, materials and subcontractors and potential reimbursements. Auditing the Company's land development cost measurement was complex and subjective due to the significant estimation required to determine the costs to complete land development. Specifically, the land development cost estimate is sensitive to significant management assumptions, including the project’s schedule, estimated cost of labor, materials and subcontractors and potential reimbursements. How We Addressed the Matter in Our Audit We obtained an understanding and tested the design and operating effectiveness of the Company's process and controls over its land development cost measurement, including controls over management's review of the estimated costs to complete. To test the Company's land development cost measurement, our audit procedures included, among others, testing the significant assumptions used to develop the estimated costs to complete the land development projects and testing the completeness and accuracy of the underlying data. For example, we sampled the Company’s land development project budgets and agreed the estimated development costs and cost reimbursements to supporting documentation, including underlying contracts; and performed observational procedures to understand the completeness of development activities included in the estimated land development costs. In addition, we performed look back analyses to historical actual costs to assess management’s ability to estimate and performed sensitivity analyses of the significant assumptions to evaluate the changes in total costs of land development that would result from changes in these assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2013. Houston, Texas February 19, 2026 53 Table of Contents LGI HOMES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2025 2024 ASSETS Cash and cash equivalents $ 61,247 $ 53,197 Accounts receivable 32,467 28,717 Real estate inventory 3,520,563 3,387,853 Pre-acquisition costs and deposits 28,950 36,049 Property and equipment, net 107,145 57,038 Other assets 154,948 174,391 Deferred tax assets, net 9,904 9,271 Goodwill 12,018 12,018 Total assets $ 3,927,242 $ 3,758,534 LIABILITIES AND EQUITY Accounts payable $ 16,179 $ 33,271 Accrued expenses and other liabilities 157,971 207,317 Notes payable 1,656,803 1,480,718 Total liabilities 1,830,953 1,721,306 COMMITMENTS AND CONTINGENCIES EQUITY Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,789,678 shares issued and 23,133,086 shares outstanding as of December 31, 2025 and 27,644,413 shares issued and 23,397,074 shares outstanding as of December 31, 2024 277 276 Additional paid-in capital 347,308 337,161 Retained earnings 2,158,339 2,085,787 Treasury stock, at cost, 4,656,592 shares as of December 31, 2025 and 4,247,339 shares as of December 31, 2024 ( 409,635 ) ( 385,996 ) Total equity 2,096,289 2,037,228 Total liabilities and equity $ 3,927,242 $ 3,758,534 See accompanying notes to the consolidated financial statements. 54 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Year Ended December 31, 2025 2024 2023 Home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Cost of sales 1,351,958 1,669,310 1,816,393 Selling expenses 162,149 199,950 191,582 General and administrative 111,621 121,192 117,350 Operating income 79,776 212,146 233,255 Other income, net ( 18,710 ) ( 46,767 ) ( 28,499 ) Net income before income taxes 98,486 258,913 261,754 Income tax provision 25,934 62,842 62,527 Net income $ 72,552 $ 196,071 $ 199,227 Earnings per share: Basic $ 3.13 $ 8.33 $ 8.48 Diluted $ 3.12 $ 8.30 $ 8.42 Weighted average shares outstanding: Basic 23,188,965 23,529,724 23,507,136 Diluted 23,254,595 23,610,457 23,648,548 See accompanying notes to the consolidated financial statements. 55 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Total Equity Shares Amount BALANCE—December 31, 2022 27,245,278 $ 272 $ 306,673 $ 1,690,489 $ ( 355,022 ) $ 1,642,412 Net income — — — 199,227 — 199,227 Restricted stock units granted for accrued annual bonuses — — 206 — — 206 Compensation expense for equity awards — — 8,926 — — 8,926 Stock issued under employee incentive plans 275,842 3 5,257 — — 5,260 BALANCE—December 31, 2023 27,521,120 $ 275 $ 321,062 $ 1,889,716 $ ( 355,022 ) $ 1,856,031 Net income — — — 196,071 — 196,071 Restricted stock units granted for accrued annual bonuses — — 786 — — 786 Stock repurchase including excise tax — — — — ( 30,974 ) ( 30,974 ) Compensation expense for equity awards — — 10,483 — — 10,483 Stock issued under employee incentive plans 123,293 1 4,830 — — 4,831 BALANCE—December 31, 2024 27,644,413 $ 276 $ 337,161 $ 2,085,787 $ ( 385,996 ) $ 2,037,228 Net income — — — 72,552 — 72,552 Restricted stock units granted for accrued annual bonuses — — 540 — — 540 Stock repurchase including excise tax — — — — ( 23,639 ) ( 23,639 ) Compensation expense for equity awards — — 6,001 — — 6,001 Stock issued under employee incentive plans 145,265 1 3,605 — — 3,607 BALANCE— December 31, 2025 27,789,678 $ 277 $ 347,307 $ 2,158,339 $ ( 409,635 ) $ 2,096,289 See accompanying notes to the consolidated financial statements. 56 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 72,552 $ 196,071 $ 199,227 Adjustments to reconcile net income to net cash used in operating activities: Equity in income of unconsolidated entities ( 1,928 ) ( 13,302 ) ( 12,834 ) Distributions of earnings from unconsolidated entities 4,801 14,372 14,825 Depreciation and amortization 4,322 3,108 2,408 Gain on disposal of assets ( 2,598 ) ( 14,013 ) ( 1,634 ) Compensation expense for equity awards 6,001 10,483 8,926 Inventory impairment 6,717 — — Deferred income taxes ( 633 ) ( 1,108 ) ( 1,977 ) Changes in assets and liabilities: Accounts receivable ( 3,750 ) 12,602 ( 16,176 ) Real estate inventory ( 257,041 ) ( 365,889 ) ( 255,518 ) Pre-acquisition costs and deposits 7,099 ( 5,695 ) ( 5,322 ) Other assets 60,420 3,851 23,033 Accounts payable ( 17,092 ) 1,655 6,330 Accrued expenses and other liabilities ( 18,843 ) 14,126 ( 18,256 ) Net cash used in operating activities ( 139,973 ) ( 143,739 ) ( 56,968 ) Cash flows from investing activities: Purchases of property and equipment ( 924 ) ( 1,952 ) ( 1,443 ) Proceeds from sale of property and equipment 24,700 25,441 — Investment in unconsolidated entities ( 4,451 ) ( 7,869 ) ( 17,889 ) Return of capital from unconsolidated entities 8,613 — 5,684 Net cash provided by (used in) investing activities 27,938 15,620 ( 13,648 ) Cash flows from financing activities: Proceeds from notes payable 668,695 992,313 887,283 Payments on notes payable ( 493,000 ) ( 760,000 ) ( 746,000 ) Proceeds from financing arrangements — — 50,402 Payments on financing arrangements ( 29,937 ) ( 67,850 ) ( 95,027 ) Loan issuance costs ( 5,641 ) ( 5,982 ) ( 14,322 ) Proceeds from sale of stock, net of offering expenses 3,607 4,831 5,260 Stock repurchase ( 23,639 ) ( 30,974 ) — Net cash provided by financing activities 120,085 132,338 87,596 Net increase in cash and cash equivalents 8,050 4,219 16,980 Cash and cash equivalents, beginning of period 53,197 48,978 31,998 Cash and cash equivalents, end of period $ 61,247 $ 53,197 $ 48,978 See accompanying notes to the consolidated financial statements. 57 Table of Contents LGI HOMES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND BUSINESS Organization and Description of the Business LGI Homes, Inc., a Delaware corporation (the “Company”, “we,” “us,” or “our”), is headquartered in The Woodlands, Texas. We engage in the development of communities and the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ( “ GAAP ” ) and include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. The significant accounting estimates include land development cost of sales, impairment of real estate inventory, warranty reserves, loss contingencies, incentive compensation expense, and income taxes. Cash and Cash Equivalents and Concentration of Credit Risk Cash and cash equivalents are defined as cash on hand, demand deposits with financial institutions, and short-term liquid investments with an initial maturity date of less than three months. Our cash in demand deposit accounts may exceed federally insured limits and could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or diminished access to cash in our demand deposit accounts. Accounts Receivable Accounts receivable consist primarily of proceeds due from title companies for sales closed prior to period end and are generally collected within a few days from closing. Real Estate Inventory Inventory consists of land, land under development, finished lots, information centers, homes in progress, completed homes and real estate not owned. Inventory is stated at cost unless the carrying amount is determined not to be recoverable, in which case the affected inventory is written down to fair value.Land, development and other project costs, including interest and property taxes incurred during development and home construction, net of expected reimbursable development costs, are capitalized to real estate inventory. Land development and other common costs that benefit the entire community, including field construction supervision and related direct overhead, are allocated to individual lots or homes, as appropriate. The costs of lots are transferred to homes in progress when home construction begins. Home construction costs and related carrying charges are allocated to the cost of individual homes using the specific identification method. Costs that are not specifically identifiable to a home are allocated on a pro rata basis, which we believe approximates the costs that would be determined using an allocation method based on relative sales values since the individual lots or homes within a community are similar in value. Changes to estimated total development costs subsequent to initial home closings in a community are generally allocated to the remaining unsold lots and homes in the community on a pro rata basis. Inventory costs for completed homes are expensed to cost of sales as homes are closed. We purchase both finished lots and land to be developed. Generally, the life cycle of a community ranges from two to five years . For projects we develop, the period between the acquisition of a raw piece of land and completion of the development of that land generally ranges from two to three years . During the life of a project, a constructed home is used as the community information center and then sold. Actual individual community lives will vary based on the size of the community, the sales absorption rate, and whether the property was purchased as raw land or finished lots. 58 Table of Contents 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 as shown in tabular form in Note 3 and have a corresponding obligation within our accrued liabilities as more fully discussed in Note 5 to recognize this relationship. While we are not legally obligated to repurchase the balance of the lots, we are subject to certain performance obligations, financial and other penalties if the lots are not purchased. We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities. Interest and financing costs incurred under our debt obligations and financing arrangements, as more fully discussed in Note 6 and Note 5 , respectively, are capitalized to qualifying real estate projects under development and homes under construction. We evaluate our actively selling communities for indicators of inventory impairment on a quarterly basis. Inventory is written down when the estimated fair value is less than its carrying amount. Indicators of impairment include, but are not limited to, significant decreases in gross margins on homes closed, significant downward trends in average selling prices, significant reductions in absorption, and operating cash flow losses at the community level. When impairment indicators are present, we analyze cash flows at the lowest level for which there are identifiable cash flows, which we have concluded is the community level. If the undiscounted cash flows are less than the community’s carrying value, we estimate the fair value using the estimated future discounted cash flows of the respective communities and applying a probability-weighted approach to determine the estimated future discounted cash flows. A community with a fair value less than its carrying value is impaired and is written down to its calculated fair value. Any losses identified are presented in our costs of goods sold and are not subsequently reversed. During the year ended December 31, 2025, the Company tested 15 out of 144 communities and we determined that inventory with a carrying value before impairment of $ 29.6 million, related to four actively selling communities in our Central, Midwest and Florida operating segments were impaired. As a result, we recorded inventory impairment charges of $ 6.7 million for the year ended December 31, 2025. There were no inventory impairment charges recorded for the years ended December 31, 2024 and 2023. We make various assumptions about the underlying factors impacting a project’s financial performance when estimating undiscounted cash flows, including the following: expected home sales revenue, absorption pace, average sales price of homes offered for sale, the costs incurred to date and the anticipated spend remaining to complete the project, including, but not limited to, land and land development costs, home construction costs, interest and overhead costs. The key assumptions relating to estimating future cash flows are impacted by both local market and national economic conditions, which contain inherent uncertainties. Our quarterly assessments reflect management’s best estimates. However, there are inherent uncertainties in these estimates and in our operations and industry, as discussed in Item 1A. Risk Factors of this Annual Report on Form 10‑K. As a result, we cannot predict if future impairments will occur or determine the potential magnitude of any such impairments. In addition, the selection of discount rates involves significant judgment, and variations in these rates can materially affect the outcome of our fair value analyses. Capitalized Interest Interest and other financing costs are capitalized as cost of inventory during community development and home construction activities, in accordance with Accounting Standards Codification (“ASC”) Topic 835, Interest and expensed in cost of sales as homes in the community are closed. To the extent the debt exceeds qualified assets, a portion of the interest incurred is expensed. Pre-Acquisition Costs and Deposits Amounts paid for land options, deposits on land purchase contracts, and other pre-acquisition costs are capitalized and classified as deposits to purchase. Upon execution of the purchase, these deposits are applied to the acquisition price of the land and recorded as a cost component of the land in real estate inventory. To the extent that any deposits are nonrefundable and the associated land acquisition process is terminated or no longer determined probable, the deposit and related pre-acquisition costs are charged to general and administrative expenses. Management reviews the likelihood of the acquisition of contracted lots in conjunction with its periodic real estate impairment analysis. Under ASC Topic 810, Consolidation (“ASC 810”), a nonrefundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Non-refundable land purchase and lot option deposits generally represent our maximum exposure if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to close. Such costs are classified as preacquisition costs, which we would have to absorb should the option not be exercised. Therefore, 59 Table of Contents whenever we enter into a land option or purchase contract with an entity and make a nonrefundable deposit, we may have a variable interest in a variable interest entity (“VIE”). In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE and would consolidate the VIE if we are deemed to be the primary beneficiary. As of December 31, 2025 and 2024, we were not deemed to be the primary beneficiary for any VIEs associated with non-refundable land deposits. Deferred Loan Costs Deferred loan costs represent debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Other Assets Other assets consist primarily of land held for sale, municipal utility district reimbursements, prepaid insurance, prepaid expenses, financing arrangement commitment fees, right-of-use (“ROU”) assets, investments in unconsolidated entities, forward commitments and other receivables. Prepaid insurance and prepaid expenses were $ 14.9 million and $ 14.1 million as of December 31, 2025 and 2024, respectively. We have investments in unconsolidated entities with independent third parties. The equity method of accounting is used for unconsolidated entities over which we have significant influence; generally, this represents ownership interests of at least 20% and not more than 50%. Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of this entity. We evaluate our investments in unconsolidated entities for recoverability in accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures . If we determine that a loss in the value of any of the investments is other than temporary, we write down the investment to its estimated fair value. Any such losses are recorded to equity in (earnings) loss of unconsolidated entities, which is reflected in other income, net. Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation. Depreciation expense is recorded in general and administrative expenses and in other income, net for rental properties. Upon sale or retirement, the costs and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in other income, net. Depreciation is generally computed using the straight-line method over the estimated useful lives of the assets, ranging from two to five years for property and equipment and 27.5 years for our rental properties. Leasehold improvements are depreciated over the shorter of the asset life or the term of the lease. Maintenance and repair costs are expensed as incurred. We are lessors of the homes representing rental properties. Our leasing contracts are typically for terms of one year . Impairments of long-lived assets are determined periodically when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on judgments as to the future undiscounted operating cash flows to be generated from these assets throughout the remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related asset, impairment is recognized for the excess of the carrying value over its fair value. There were no impairments of property, equipment and leasehold improvements recorded during the years ended December 31, 2025, 2024, and 2023. Goodwill The excess of the purchase price of a business acquisition over the net fair value of assets acquired and liabilities assumed is capitalized as goodwill in accordance with ASC 805, Business Combinations . Goodwill that do not have finite lives are not amortized, but are assessed for impairment at least annually or more frequently if certain impairment indicators are present. The $ 12.0 million of goodwill is related to the reorganization transactions completed in connection with the initial public offering of our common stock in November 2013. In applying the goodwill impairment test, we have the option to perform a qualitative test. Under the optional qualitative test, we first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting units is less than their carrying value. Qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other entity and reporting unit specific events. If after assessing these qualitative factors, we determine it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then performing a quantitative test is necessary. Annually, we have performed a qualitative analysis and determined that it is not “more likely than not” that the fair values of the reporting units were less than their carrying amounts. No goodwill impairment charges were recorded in 2025, 2024, and 2023. Warranty Reserves Future direct warranty costs are accrued and charged to cost of sales in the period when the related home is closed. Our warranty liability is based upon historical warranty cost experience and is adjusted as appropriate to reflect qualitative risks 60 Table of Contents associated with the types of homes built, the geographic areas in which they are built, and potential impacts of our continued expansion. Warranty reserves are reviewed quarterly to assess the reasonableness and adequacy and adjusted, as needed, to reflect changes in trends and historical data as information becomes available. Customer Deposits Customer deposits are received upon signing a purchase contract and are typically $ 1,000 to $ 10,000 . Deposits are generally refundable if the customer is unable to obtain financing. Forfeited buyer deposits related to home sales are recognized in other income in the period in which it is determined that the buyer will not complete the purchase of the property and the deposit is nonrefundable to the buyer. Home Sales In accordance with ASC Topic 606, Revenue from Contracts with Customers , revenues from home sales are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues from home sales are recorded at the time each home sale is closed, title and possession are transferred to the customer and we have no significant continuing involvement with the home. Home sales discounts and incentives granted to customers, which are related to the customers’ closing costs that we pay on the customers’ behalf , are recorded as a reduction of revenue in our consolidated financial statements of operations. Cost of Sales As discussed under “Real Estate Inventory” above, cost of sales for homes closed include the construction costs of each home and allocable land acquisition and land development costs, capitalized interest, and other related common costs (both incurred and estimated to be incurred). Selling and Commission Costs Sales commissions are paid and expensed based on homes closed. Other selling costs are expensed in the period incurred. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were $ 40.2 million, $ 43.6 million, and $ 33.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. Income Taxes We are a taxable entity subject to federal and state taxes. We utilize the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Changes in tax rates are recognized in the year of enactment. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Our ability to realize deferred tax assets is assessed throughout the year and a valuation allowance is established, if required. We recognize the impact of a tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. We recognize potential interest and penalties related to uncertain tax positions in income tax expense. Earnings Per Share Basic earnings per share is based on the weighted average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted average number of shares of common stock and dilutive securities outstanding. Diluted earnings per share excludes all dilutive potential shares of common stock if their effect is antidilutive. Stock-Based Compensation Compensation costs for non-performance-based restricted stock awards are measured using the closing price of our common stock on the date of grant and are expensed on a straight-line basis over the requisite service period of the award. Compensation costs for performance-based restricted stock awards also contain a market condition. These costs are measured using the derived grant date fair value, based on a third party valuation analysis, and are expensed in accordance with ASC 718-10-25-20, Compensation - Stock Compensation , which requires an assessment of probability of attainment of the performance target. Once the performance target outcome is determined to be probable, the cumulative expense is adjusted, as needed, to recognize compensation expense on a straight-line basis over the award’s requisite service period. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is 61 Table of Contents intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for annual 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 applied the amendment on a prospective basis. See Note 7 . 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. 3. REAL ESTATE INVENTORY Our real estate inventory consists of the following (in thousands): December 31, 2025 2024 Land, land under development and finished lots $ 2,601,578 $ 2,287,352 Information centers 61,940 57,622 Homes in progress 261,850 325,579 Completed homes 587,219 680,160 Total owned inventory 3,512,587 3,350,713 Real estate not owned 7,976 37,140 Total real estate inventory $ 3,520,563 $ 3,387,853 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. See “Real Estate Inventory” under Note 2 for more information. 4. PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): December 31, 2025 2024 Rental properties $ 107,152 $ 54,435 Computer software and equipment 5,661 4,937 Leasehold improvements 1,799 1,799 Furniture and fixtures 3,033 2,906 Machinery and equipment 301 261 Total property and equipment 117,946 64,338 Less: Accumulated depreciation ( 10,801 ) ( 7,300 ) Property and equipment, net $ 107,145 $ 57,038 We build and lease a number of single-family homes in select, existing communities. During the years ended December 31, 2025 and 2024, we transferred $ 77.1 million and $ 25.1 million, respectively, of home assets from real estate inventory to rental properties within property and equipment, net. During the year ended December 31, 2025, we had a sale of 62 Table of Contents 103 currently or previously leased single-family homes and realized gains of $ 4.9 million included in Other Income, net. We are lessors of the homes representing these home assets. Depreciation expense incurred for the years ended December 31, 2025, 2024, and 2023 was $ 4.3 million, $ 3.1 million, and $ 2.4 million, respectively. 5. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued and other liabilities consist of the following (in thousands): December 31, 2025 2024 Real estate inventory development and construction payable $ 57,103 $ 48,019 Taxes payable 9,704 43,076 Land banking financing arrangements 7,976 37,140 Accrued compensation, bonuses and benefits 14,677 18,653 Warranty reserve 14,500 16,100 Accrued interest 14,223 13,560 Inventory related obligations 11,641 8,779 Lease liability 5,139 6,134 Contract deposits 5,845 4,143 Other 17,163 11,713 Total accrued expenses and other liabilities $ 157,971 $ 207,317 Land Banking Financing Arrangements We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns. Principal payments on these financing arrangements will generally coincide with the repurchase of lot takedowns from the land banker. We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of less than a 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. The obligations assumed by the homebuyer represent a non-cash cost of the lots. Estimated Warranty Reserve We generally provide homebuyers with a one-year warranty on the house and a limited warranty for major defects in structural elements, such as framing components and foundation systems, typically ranging from six to ten years depending on the applicable state. Changes to our warranty accrual are as follows (in thousands): December 31, 2025 2024 2023 Warranty reserves, beginning of period $ 16,100 $ 13,600 $ 10,750 Warranty provision 1,789 7,609 8,510 Warranty expenditures ( 3,389 ) ( 5,109 ) ( 5,660 ) Warranty reserves, end of period $ 14,500 $ 16,100 $ 13,600 63 Table of Contents 6. NOTES PAYABLE Revolving 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. 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. Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date. The Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $ 0.5 million, other than subsidiaries whose sole purpose is to own and operate single-family rental homes. The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 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 Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of December 31, 2025, the borrowing base under the Credit Agreement was $ 1.9 billion, of which the maximum available to borrow was $ 1.9 billion. As of December 31, 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 $ 1.6 billion, $ 19.5 million of letters of credit were outstanding and $ 273.6 million was available to borrow under the Credit Agreement. Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10 , 15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At December 31, 2025, the Applicable Margin was 1.85 %, and SOFR was 3.72 %, 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, (i) limit the amount of our additional debt and our ability to make certain investments and (ii) restrict the repurchase of shares and payment of dividends through December 31, 2026. At December 31, 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 “LGI Living Loan Agreement”) with Evergreen Residential Capital, LLC, as lender. The LGI Living 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 LGI Living Loan Agreement. As of December 31, 2025, the total amount of borrowings outstanding under the LGI Living 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 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 LGI Living Loan Agreement requires that the Company maintain, as guarantor, (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 LGI Living 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 LGI Living Loan Agreement contains representations and warranties, 64 Table of Contents 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 LGI Living Loan Agreement, the lender will be able to accelerate the maturity of the loan and exercise other rights and remedies. At December 31, 2025, we were in compliance with all of the covenants contained in the LGI Living Loan Agreement. Senior Notes Offering On November 15, 2024, we issued $ 400.0 million aggregate principal amount of the 2032 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 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. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee. On June 28, 2021, we issued $ 300.0 million aggregate principal amount of the 2029 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2029 Senior Notes accrues at a rate of 4.000 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on July 15, 2029. The terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee. Notes payable consist of the following (in thousands): December 31, 2025 2024 Notes payable under the Credit Agreement ($ 1.1825 billion revolving credit facility at December 31, 2025, maturing in part on April 28, 2028 and in part on April 28, 2029, with interest paid monthly at SOFR plus 1.85 %; $ 1.205 billion revolving credit facility at December 31, 2024, maturing in part on April 28, 2025 and in part on April 28, 2028, with interest paid monthly at SOFR plus 1.85 %) $ 527,641 $ 401,946 Loan payable under the LGI Living Loan Agreement maturing on July 8, 2030; with interest paid monthly at an annual rate of 6.433% 50,000 — 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; interest paid semi-annually at 4.000 % 300,000 300,000 7.000 % Senior Notes due November 15, 2032; interest paid semi-annually at 7.000 % 400,000 400,000 Net debt issuance costs ( 20,838 ) ( 21,228 ) Total notes payable $ 1,656,803 $ 1,480,718 65 Table of Contents As of December 31, 2025, the annual aggregate maturities of notes payable during each of the next five fiscal years are as follows (in thousands): Amount 2026 $ — 2027 — 2028 493,703 2029 733,938 2030 50,000 Thereafter 400,000 Total notes payable $ 1,677,641 Less: Net debt issuance costs ( 20,838 ) Net notes payable $ 1,656,803 Capitalized Interest Interest activity, including other financing costs, for notes payable and financing arrangements for the periods presented is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Interest incurred $ 126,847 $ 119,009 $ 87,604 Less: Amounts capitalized ( 126,847 ) ( 119,009 ) ( 87,604 ) Interest expense $ — $ — $ — Cash paid for interest $ 120,533 $ 112,984 $ 80,963 Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 9.9 million, $ 14.0 million and $ 13.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. 7. INCOME TAXES All of the Company’s operations are domestic. We do not have foreign subsidiaries or foreign operations therefore, no foreign income taxes are incurred or reported. The provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ 21,601 $ 53,114 $ 54,013 State 4,966 10,836 10,492 Current tax provision 26,567 63,950 64,505 Deferred: Federal ( 437 ) ( 931 ) ( 1,638 ) State ( 196 ) ( 177 ) ( 340 ) Deferred tax provision (benefit) ( 633 ) ( 1,108 ) ( 1,978 ) Total income tax provision $ 25,934 $ 62,842 $ 62,527 66 Table of Contents Income taxes paid (net of refunds) consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Federal $ 54,500 $ 24,500 $ 85,458 State Florida — 2,485 — California — 3,103 — Other states (combined) 7,887 5,295 10,838 Total net cash paid for income taxes $ 62,387 $ 35,383 $ 96,296 State taxes for Florida and California did not exceed the 5% threshold for net income taxes paid in 2025 and 2023. Domestic net income before income taxes and related income tax expense consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Domestic (U.S.) $ 98,486 $ 258,913 $ 261,754 Total net income before income taxes $ 98,486 $ 258,913 $ 261,754 A reconciliation of the provision for income taxes and the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the years ended December 31, 2025, 2024, and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Tax at federal statutory rate $ 20,682 21.0 % $ 54,372 21.0 % $ 54,968 21.0 % State income taxes (net of federal benefit) 3,877 3.9 8,448 3.3 8,052 3.1 Stock-based compensation 798 0.8 ( 93 ) — ( 2,230 ) ( 0.9 ) Non deductible expenses and other 1,167 1.2 2,054 0.8 3,033 1.2 Change in tax rates - deferred taxes ( 403 ) ( 0.4 ) ( 187 ) ( 0.1 ) ( 89 ) — Federal energy efficient homes tax credits ( 187 ) ( 0.2 ) ( 1,752 ) ( 0.7 ) ( 1,207 ) ( 0.5 ) Tax at effective rate $ 25,934 2593400000.0% 26.3 % $ 62,842 24.3 % $ 62,527 23.9 % The 2025 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the U.S. Internal Revenue Code, as amended (the “Code”). The 2024 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by the windfalls for share-based payments and benefits associated with the federal energy efficient homes tax credits (the “45L Tax Credits”). The 2023 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by benefits associated with the 45L Tax Credits and the windfalls for share-based payments. Income tax expense for 2025, 2024, and 2023 includes a benefit of $ 0.2 million, $ 1.8 million and $ 1.2 million, respectively, associated with the 45L Tax Credits. The 45L Tax Credits provision applies to qualifying homes closed through December 31, 2025. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. 67 Table of Contents The components of net deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows (in thousands): December 31, 2025 2024 Deferred tax assets: Accruals and reserves $ 4,641 $ 5,752 Stock-based compensation 2,893 3,136 Inventory 3,750 1,531 Leases 956 1,181 Other 3,624 2,938 Total deferred tax assets 15,865 14,538 Deferred tax liabilities: Prepaids $ ( 1,382 ) $ ( 1,075 ) Leases ( 1,127 ) ( 1,305 ) Goodwill and other assets amortized for tax ( 1,400 ) ( 1,258 ) Tax depreciation in excess of book depreciation ( 1,250 ) ( 885 ) Other ( 802 ) ( 744 ) Total deferred tax liabilities ( 5,961 ) ( 5,267 ) Total net deferred tax assets $ 9,904 $ 9,271 We file U.S. 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. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty. 8. EQUITY We are authorized to issue 250,000,000 shares of common stock, par value $ 0.01 per share, and 5,000,000 shares of preferred stock, par value $ 0.01 per share. As of December 31, 2025 and 2024, no shares of preferred stock were issued or outstanding. At December 31, 2025, we had 27,789,678 shares of common stock issued and 23,133,086 shares of common stock outstanding, including 4,656,592 treasury shares of our common stock. At December 31, 2024, we had 27,644,413 shares of common stock issued and 23,397,074 shares of common stock outstanding, including 4,247,339 treasury shares of our common stock. 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 December 31, 2025, we did not repurchase any shares of our common stock. During the year ended December 31, 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 December 31, 2024, we did not repurchase any shares of our common stock. During the year ended December 31, 2024, we repurchased 307,867 shares of our common stock at a total cost, including commissions and excise taxes, of $ 30.8 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 2018. As of December 31, 2025, we may purchase up to $ 157.3 million of shares of our common stock under our stock repurchase program. 68 Table of Contents Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2025, 2024, and 2023 . Year Ended December 31, 2025 2024 2023 Numerator (in thousands): Net income (Numerator for basic and diluted earnings per share) $ 72,552 $ 196,071 $ 199,227 Denominator: Basic weighted average shares outstanding 23,188,965 23,529,724 23,507,136 Effect of dilutive securities: Stock-based compensation units 65,630 80,733 141,412 Diluted weighted average shares outstanding 23,254,595 23,610,457 23,648,548 Basic earnings per share $ 3.13 $ 8.33 $ 8.48 Diluted earnings per share $ 3.12 $ 8.30 $ 8.42 Antidilutive non-vested restricted stock units excluded from calculations of diluted earnings per share 47,436 46,146 11,412 9. STOCK-BASED COMPENSATION Non-performance Based Restricted Stock Units A total of 2,680,172 shares of our common stock have been reserved for issuance under the LGI Homes, Inc. Amended and Restated 2013 Equity Incentive Plan (the “2013 Incentive Plan”). There were 222,828 restricted stock units (“RSUs”) outstanding at December 31, 2025, issued at a $ 0.00 exercise price. The following table summarizes the activity of our time-vested RSUs: Shares Weighted Average Grant Date Fair Value Balance at December 31, 2022 146,239 $ 100.93 Granted 48,946 $ 109.47 Vested ( 53,894 ) $ 71.84 Forfeited ( 7,932 ) $ 115.05 Balance at December 31, 2023 133,359 $ 114.98 Granted 105,350 $ 104.63 Vested ( 28,100 ) $ 138.06 Forfeited ( 15,656 ) $ 108.24 Balance at December 31, 2024 194,953 $ 106.60 Granted 107,305 $ 64.65 Vested ( 13,297 ) $ 92.22 Forfeited ( 66,133 ) $ 109.14 Balance at December 31, 2025 222,828 $ 86.51 In 2025, we issued 29,063 RSUs to senior management for the time-based portion of our 2025 long-term incentive compensation program and 31,521 RSUs for 2024 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2024, we issued 17,767 RSUs to senior management for the time-based portion of our 2024 long-term incentive compensation program and 30,876 RSUs for 2023 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2023, we issued 22,912 RSUs to senior management for the time-based portion of our 2023 long-term incentive compensation program and 8,256 RSUs for 2022 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In addition, during the years ended December 31, 2025, 2024, and 2023, we issued 46,721 , 56,707 and 17,778 RSUs, respectively, to certain employees, executives and non-employee directors, which vest 69 Table of Contents over periods ranging from one to three years. Under the terms of the grant award agreements, all of the RSUs may only be settled in shares of our common stock. Performance-Based Restricted Stock Units The Compensation Committee of the Board has granted awards of performance-based RSUs (“PSUs”) under the 2013 Incentive Plan to certain members of senior management based on three-year performance cycles. At December 31, 2025, there were 248,122 PSUs outstanding that have been granted to certain members of management at a $ 0.00 exercise price. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0 % to 200 % of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100 % of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock. The following table summarizes the activity of our PSUs for the year ended December 31, 2025: Shares Weighted Average Grant Date Fair Value Balance at December 31, 2024 196,770 $ 111.38 Granted 116,227 $ 75.09 Vested — $ — Forfeited ( 64,875 ) $ 118.8 Balance at December 31, 2025 248,122 $ 92.92 We recognized $( 1.6 ) million, $ 4.3 million and $ 2.9 million of total stock-based compensation expense related to outstanding PSUs for the years ended December 31, 2025, 2024, and 2023, respectively. PSUs granted in 2022 were forfeited based on actual results as compared to the target performance metrics. At December 31, 2025, we had unrecognized compensation cost of $ 0.6 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 0.3 years. PSUs granted in 2025 and 2024 are excluded from the calculation of diluted EPS as they are subject to unsatisfied performance conditions. Employee Stock Purchase Plan The LGI Homes, Inc. Employee Stock Purchase Plan (the “ESPP”) provides for employees to make quarterly elections for payroll withholdings to purchase shares of our common stock at a 15% discount from the closing price of our common stock on the purchase date, which is the last business day of each calendar quarter. On April 24, 2025, our stockholders approved and authorized 500,000 additional shares of our common stock that may be sold under the ESPP. The maximum number of shares of our common stock that may be sold under the ESPP is 1,000,000 shares. During the years ended December 31, 2025, 2024, and 2023, we issued 79,132 , 54,794 and 53,078 shares of our common stock to the ESPP participants. We received net proceeds of approximately $ 3.6 million, $ 4.8 million and $ 5.3 million related to the ESPP for 2025, 2024, and 2023, respectively. We recognized $ 0.6 million in stock compensation expense related to the ESPP for 2025 and $ 0.9 million in stock compensation expense related to the ESPP for each of 2024 and 2023. The ESPP contributions are not refundable (other than in the case of termination of employment) and, therefore, the shares purchasable with the amounts withheld are included in weighted-average shares outstanding for both basic and diluted earnings per share. As of December 31, 2025, 471,927 shares of our common stock remain available for issuance under the ESPP. 10. FAIR VALUE DISCLOSURES ASC 820, Fair Value Measurements, defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Fair value is determined based on the principal market for the asset or liability, or, in the absence of a principal market, most advantageous market. The principal market is the market with the greatest volume and level of activity for the assets or liability, regardless of of whether the Company ultimately transacts in that market. As a result, a fair value determined under this exit price concept may differ from the transaction price or quoted market price for the asset or liability. ASC 820 establishes a framework for measuring fair value under GAAP, expands disclosure requirements for fair value 70 Table of Contents measurements, and establishes a three-level fair value hierarchy that prioritizes the inputs used in valuation techniques. The hierarchy requires the use of observable inputs when available and the minimization of unobservable inputs. The three levels of the fair value hierarchy are as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 - Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company uses fair value measurements to account for certain assets and liabilities in its consolidated financial statements. Fair value measurements are applied on both a recurring basis, such as for certain financial instruments, and on a nonrecurring basis, such as when measuring assets subject to impairment. Fair value measurements on a nonrecurring basis occur when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, including impairment of long-lived assets and inventory. These nonrecurring fair value measurements are generally classified within Level 3 of the fair value hierarchy due to the use of significant observable inputs. During the year ended December 31, 2025, the Company recorded impairment charges related to inventory, which were measured at fair value and classified within Level 3 of the fair value hierarchy. The fair value of the impaired assets was determined using valuation techniques that included discounted cash flow models and other market-based approaches. Significant unobservable inputs used in these valuations included estimated future selling prices, projected costs, absorption rates, expected holding periods and discount rates reflecting market participant assumptions. Changes in these assumptions could have a material impact on the estimated fair value and the amount of impairment recognized. The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and certain accrued liabilities, approximate fair value due to the short-term nature of these instruments. As of December 31, 2025, the carrying value of amounts outstanding under the Credit Agreement approximated fair value due to the variable interest rate, which adjusts based on market interest rates and the Company’s leverage ratio. The fair value of the 2028 Senior Notes, the 2029 Senior Notes, the 2032 Senior Notes and the LGI Living Loan Agreement was estimated by discounting future contractual cash flows using market rates for similar instruments within the homebuilding industry. The fair value measurements are classified as Level 2 within the fair value hierarchy. The following table below presents the Company’s liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2025 and December 31, 2024 (in thousands): December 31, 2025 December 31, 2024 Fair Value Hierarchy Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value 2028 Senior Notes (1) Level 2 $ 400,000 $ 437,152 $ 400,000 $ 436,783 2029 Senior Notes (1) Level 2 $ 300,000 $ 286,726 $ 300,000 $ 274,692 2032 Senior Notes (1) Level 2 $ 400,000 $ 437,114 $ 400,000 $ 421,247 LGI Living Loan Agreement(1) Level 2 $ 50,000 $ 52,181 $ — $ — (1) See Note 4 for more details regarding the offerings of the 2028 Senior Notes, the 2029 Senior Notes, and the 2032 Senior Notes and the LGI Living Loan Agreement. 11. RETIREMENT BENEFITS Our employees are eligible to participate in a 401(k) savings plan. Employees are eligible to participate beginning in the quarterly period after completing 30 days of service and attaining the age of 21 . Salary deferrals are allowed in amounts up to 100 % of an eligible employee’s salary, not to exceed the maximum permitted by law. We may make a discretionary match of up to 100 % of the first 4 % of an eligible employee’s deferral, not to exceed the maximum allowed by law. For the years ended December 31, 2025, 2024, and 2023, our matching contributions were $ 4.1 million, $ 4.5 million and $ 4.4 million, respectively. 71 Table of Contents 12. RELATED PARTY TRANSACTIONS The Company has entered into forward purchase commitments with LoanDepot, Inc. Parent, the co-owner of the LGI Mortgage Solutions joint venture in which the Company holds a 50 % interest. The commitments relate to mortgage products originated by the LGI Mortgage Solutions joint venture for the Company’s homebuyers and were entered into as part of an interest rate buydown program designed to reduce the effective interest rate for borrowers. Total commitments during 2025 were $ 173.0 million, with $ 18.8 million unsettled at December 31, 2025 included in Other Assets. These transactions are considered related-party due to LoanDepot, Inc. Parent’s ownership and influence over the LGI Mortgage Solutions joint venture. 13. 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 homebuilding operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. LGI Living Loan Agreement On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living SFR entered into the LGI Living Loan Agreement with Evergreen Residential Capital, LLC, as lender. The loan under the LGI Living Loan Agreement 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 LGI Living 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 under the LGI Living Loan Agreement is secured by certain of LGI Living SFR’s single-family rental properties. The LGI Living 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 LGI Living Loan Agreement. As of December 31, 2025, LGI Living SFR had $ 50.0 million of borrowings outstanding under the LGI Living Loan Agreement. Land Deposits We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count): December 31, 2025 2024 Land deposits and option payments (1) $ 19,187 $ 29,040 Commitments under the land purchase option and deposit contracts if the purchases are consummated (1) 285,654 653,861 Lots under land options and land purchase contracts (1) 8,952 17,582 (1) Includes land banking financing arrangements, see Note 2 and Note 3 for more details regarding real estate not owned. As of December 31, 2025 and December 31, 2024, approximately $ 8.2 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. 72 Table of Contents Lease Obligations We recognize lease obligations and associated ROU assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. 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 $ 4.7 million and $ 5.6 million as of December 31, 2025 and December 31, 2024, respectively. Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.1 million and $ 6.1 million as of December 31, 2025 and December 31, 2024, respectively. Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, totaled $ 2.0 million, $ 2.4 million and $ 2.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases during the years ended December 31, 2025 and 2024 was $ 2.5 million and $ 1.9 million, respectively. As of December 31, 2025, the weighted-average discount rate was 5.9 % and our weighted-average remaining life was 1.9 years. We do not have any significant lease contracts that have not yet commenced at December 31, 2025. The table below shows the future minimum payments under non-cancelable operating leases at December 31, 2025 (in thousands): Year Ending December 31, Operating leases 2026 $ 1,882 2027 1,675 2028 1,188 2029 532 2030 288 Thereafter 110 Total 5,675 Lease amount representing interest ( 536 ) Present value of lease liabilities $ 5,139 Bonding and Letters of Credit We have outstanding letters of credit and performance and surety bonds totaling $ 392.2 million (including $ 19.5 million of letters of credit issued under the Credit Agreement) and $ 377.5 million (including $ 24.5 million of letters of credit issued under the credit agreement then in effect) at December 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 December 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 December 31, 2025 and 2024, we have a total of $ 21.2 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 was $ 1.9 million, $ 13.3 million and $ 12.8 million, within other income, net on the statement of operations for the years ended December 31, 2025, 2024, and 2023, respectively. 73 Table of Contents 14. REVENUES Revenue Recognition Revenues from home sales are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues from home sales are recorded at the time each home sale is closed, title and possession are transferred to the customer and we have no significant continuing involvement with the home. Home sales discounts and incentives granted to customers, which are related to the customers’ closing costs that we pay on the customers’ behalf , are recorded as a reduction of revenue in our consolidated financial statements of operations. The following table presents our home sales revenues disaggregated by revenue stream (in thousands): Year Ended December 31, 2025 2024 2023 Retail home sales revenues $ 1,475,173 $ 2,038,520 $ 2,156,237 Wholesale home sales revenues 230,331 164,078 202,343 Total home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Our home sales revenues are disaggregated by geography, based on our determined reportable segments. The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 15 (in thousands): Year Ended December 31, 2025 2024 2023 Central $ 419,240 $ 564,608 $ 730,688 Southeast 472,150 538,170 556,808 Northwest 188,969 258,407 251,171 West 387,232 472,655 381,102 Florida 237,913 368,758 438,811 Home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Home Sales Revenues We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our luxury series spec homes sold under our Terrata Homes brand. Retail homes sold under both our LGI Homes brand and Terrata Homes brand focus on providing move-in ready homes with standardized features within favorable markets that meet certain demographic and economic conditions. Our LGI Homes brand primarily markets to entry-level or first-time homebuyers, while our Terrata Homes brand primarily markets to move-up homebuyers. Wholesale homes are primarily sold under a bulk sales agreement and focus on providing move-in ready homes with standardized features to real estate investors that will ultimately use the single-family homes as rental properties. Performance Obligations Our contracts with customers include a single performance obligation to transfer a completed home to the customer. We generally determine selling price per home on the expected cost plus margin. Our contracts contain no significant financing terms as customers who finance do so through a third party. Performance obligations are satisfied at a moment in time when the home is complete and control of the asset is transferred to the customer at closing. Home sales proceeds are generally received from the title company within a few business days after closing. Sales and broker commissions are incremental costs incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained. Sales and broker commissions are expensed upon fulfillment of a home closing. Advertising costs are costs to obtain a contract that would have been incurred regardless of whether the contract was obtained and are recognized as an expense when incurred. Sales and broker commissions and advertising costs are recorded within sales and marketing expense presented in our consolidated statements of operations as selling expenses. 74 Table of Contents 15. SEGMENT INFORMATION 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 December 31, 2025: our Central, Southeast, Northwest, West, and Florida divisions. These segments reflect the way we evaluate our business performance and manage our operations. For reporting purposes, our homebuilding operations are aggregated into five reportable segments as follows: Central: Texas, Oklahoma, Minnesota Southeast: Georgia, Alabama, Tennessee, North Carolina, South Carolina, West Virginia, Maryland, Pennsylvania, Virginia Northwest: Colorado, Washington, Oregon West: Arizona, New Mexico, Nevada, California, Utah Florida: Florida 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. Each operating segment follows the same accounting policies and is managed by our management team. We have no inter-segment sales, as all sales are to external customers. 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. 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 net income before income tax expense in the annual budget and forecasting process. These operating results are reviewed against actual and forecasted figures, with net income before income taxes being the key operating metric used to measure profit or loss. 75 Table of Contents Financial information relating to our reportable segments was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Revenues: Central $ 419,240 $ 564,608 $ 730,688 Southeast 472,150 538,170 556,808 Northwest 188,969 258,407 251,171 West 387,232 472,655 381,102 Florida 237,913 368,758 438,811 Total home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Cost of sales: Central $ 329,825 $ 433,932 $ 556,664 Southeast 363,880 389,626 416,579 Northwest 158,824 199,217 197,637 West 296,863 359,406 304,550 Florida 202,566 287,129 340,963 Total cost of sales $ 1,351,958 $ 1,669,310 $ 1,816,393 Other segment items (1) : Central $ 65,640 $ 63,988 $ 87,728 Southeast 60,571 63,265 61,235 Northwest 26,995 33,277 29,850 West 56,837 61,036 47,429 Florida 41,875 51,274 49,524 Corporate (2) 3,142 1,535 4,667 Total other segment items $ 255,060 $ 274,375 $ 280,433 Net income (loss) before income taxes: Central $ 23,776 $ 66,688 $ 86,296 Southeast 47,699 85,279 78,994 Northwest 3,150 25,913 23,684 West 33,532 52,213 29,123 Florida ( 6,529 ) 30,355 48,324 Corporate ( 3,142 ) ( 1,535 ) ( 4,667 ) Total net income before income taxes $ 98,486 $ 258,913 $ 261,754 (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. 76 Table of Contents December 31, 2025 2024 Assets: Central $ 1,162,355 $ 1,096,500 Southeast 801,556 733,339 Northwest 598,193 567,088 West 800,548 759,042 Florida 452,555 480,921 Corporate (1) 112,035 121,644 Total assets $ 3,927,242 $ 3,758,534 (1) The Corporate balance consists primarily of investments in unconsolidated entities. 77 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.