What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-28 compared with 2025-11-04 · 221 added, 287 removed, 324 unchanged (61% of the section changed)

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West Northwest Central Midwest Florida Southeast Mid-Atlantic

Phoenix, AZ Seattle, WA Houston, TX Minneapolis, MN Tampa, FL Atlanta, GA Washington, D.C.

Tucson, AZ Portland, OR Dallas Ft.

Worth, TX Orlando, FL Charlotte, NC Norfolk, VA

Albuquerque, NM Denver, CO San Antonio, TX Fort Myers, FL Raleigh, NC Richmond, VA

Las Vegas, NV Austin, TX Jacksonville, FL Wilmington, NC Baltimore, MD

Northern CA Oklahoma City, OK Fort Pierce, FL Winston-Salem, NC

Southern CA Daytona Beach, FL Columbia, SC

Salt Lake City, UT

Sarasota, FL Greenville, SC

Birmingham, AL

Nashville, TN

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

Arizona Washington Central Texas Minnesota Central Florida Georgia Maryland

New Mexico Oregon Dallas/Ft Worth East Florida North Carolina Pennsylvania

Nevada Colorado Houston West Florida South Carolina Virginia

Northern California Oklahoma Alabama West Virginia

Southern California Tennessee

We delivered positive first quarter 2026 results that were in line with our expectations, despite a macroeconomic backdrop that remains challenging.

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.

Persistently high mortgage rates continue to be a key pressure point for entry-level buyers.

During the quarter, mortgage rates trended upward, driven by ongoing inflation, economic uncertainty, and geopolitical developments, including the conflict in the Middle East.

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.

In response to these dynamics, we continued offering affordable, move-in ready homes supported by compelling financial incentives and targeted discounts on older completed 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.

For the three months ended March 31, 2026, we closed 916 homes, including 35 currently and previously leased single-family homes.

Excluding the 35 currently or previously leased single-family homes, our average sales price per home closed was $362,924.

For the three months ended March 31, 2025, we closed 996 homes with an average sales price per home closed of $352,831.

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

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.

Our 142 active communities at March 31, 2026 included 18 Terrata Homes communities.

At March 31, 2025, we had 146 active communities, including 17 Terrata Homes communities.

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

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Risk Factors in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent Developments

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:

Key financial results as of and for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, were as follows:

• Home sales revenues decreased 9.0% to $319.7 million from $351.4 million.

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• Net income decreased 45.1% to $2.2 million from $4.0 million.

• EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 9.8% from 16.2%.

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 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.

• Average sales price per home closed decreased 0.6% to $363,929 from $366,007.

• Gross margin as a percentage of home sales revenues decreased to 21.9% from 24.7%.

• Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 24.6% from 26.7%.

• Net income before income taxes decreased 61.2% to $74.5 million from $191.8 million.

• Net income decreased 62.0% to $55.2 million from $145.2 million.

• EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 8.8% from 13.6%.

• EBITDA (non-GAAP) as a percentage of home sales revenues increased to 4.8% from 4.2%.

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 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.

We owned and controlled 59,028 lots at March 31, 2026 as compared to 60,842 lots at December 31, 2025.

Results of Operations

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

The following table sets forth our results of operations for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(dollars in thousands, except per share data and average home sales price)

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General and administrative 27,861 31,202

Operating income 21,484 80,305 61,261 166,559

Operating income (loss) (582) 169

Other income, net (4,901) (5,555)

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EBITDA margin % (2)(4)

Adjusted EBITDA (4)

24,377 18,750

Adjusted EBITDA margin % (2)(4)

(1) Gross margin is home sales revenues less cost of sales.

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(3) Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance.

We define adjusted gross margin as gross margin less capitalized interest and adjustments resulting from the application of purchase accounting included in the cost of sales.

Our management believes this information is useful because it isolates the impact that capitalized interest and purchase accounting adjustments have on gross margin.

However, because adjusted gross margin information excludes capitalized interest and purchase accounting adjustments, which have real economic effects and could impact our results, the utility of adjusted gross margin information as a measure of our operating performance may be limited.

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 performance.

We define gross margin excluding inventory impairment as gross margin less inventory impairment charges.

We define adjusted gross margin as gross margin excluding inventory impairment, less capitalized interest, and adjustments resulting from the application of purchase accounting included in the cost of sales.

Our management believes adjusted gross margin is useful because it isolates the impact that capitalized interest, purchase accounting adjustments and inventory impairment have on gross margin.

However, because adjusted gross margin excludes capitalized interest, purchase accounting adjustments and inventory impairment, which have real economic effects and could impact our results, the utility of adjusted gross margin as a measure of our operating performance may be limited.

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

Accordingly, adjusted gross margin should be considered only as a supplement to gross margin 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.

(4) EBITDA is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance.

(4) EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance.

We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales.

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.

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

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

Although we use EBITDA as a financial measure to assess the performance of our business, the use of this measure is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business.

EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance.

Our presentation of EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.

Our use of EBITDA is limited as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP.

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 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

We define adjusted EBITDA as EBITDA before inventory impairment, stock-based compensation, purchase accounting adjustments, and dead deal costs, as applicable during a period.

Our management believes that the presentation of EBITDA and adjusted 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 and adjusted EBITDA provide indicators of general economic performance that are 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.

Accordingly, management believes that these measures are useful for comparing general operating performance from period to period.

Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies.

Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business.

EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance.

Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.

Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP.

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

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

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 March 31, 2026 and 2025, and our community count by reportable segment as of March 31, 2026 and 2025, were as follows (revenues in thousands):

Three Months Ended March 31, 2026 As of March 31, 2026

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

Central $ 89,160 296 $ 301,216 47.0 2.1 47

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Total $ 319,736 881 $ 362,924 140.7 2.1 142

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

Three Months Ended March 31, 2025 As of March 31, 2025

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

Central $ 101,146 330 $ 306,503 51.0 2.2 50

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Total $ 351,420 996 $ 352,831 148.0 2.2 146

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 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.

Home sales revenues for the three months ended March 31, 2026 were $319.7 million, a decrease of $31.7 million, or 9.0%, from $351.4 million for the three months ended March 31, 2025.

The decrease in home sales revenues was primarily due to an 11.5% decrease in the number of homes closed during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

The overall decrease in home closings was a result of fewer wholesale closings and a lower absorption rate during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

The decrease in wholesale closings was primarily related to lower institutional demand during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

The decrease in absorption rate was generally related to the impact of ongoing affordability constraints.

The average sales price per home closed during the three months ended March 31, 2026 was $362,924, an increase of $10,093, or 2.9%, from the average sales price per home closed of $352,831 for the three months ended March 31, 2025.

The increase in the average sales price per home closed was primarily due to geographic mix and a decrease in sales incentives, partially offset by discounted older inventory.

Included within our home sales revenues for the three months ended March 31, 2026 was $29.8 million in wholesale revenues resulting from 111 home closings, representing 12.6% of the 881 total number of homes closed during the three months ended March 31, 2026.

Included within our home sales revenues for the three months ended March 31, 2025 was $54.5 million in wholesale revenues resulting from 179 home closings, representing 18.0% of the 996 total number of homes closed during the three months ended March 31, 2025.

The decrease in home closings as a percentage of revenues through our wholesale channel was primarily related to lower institutional demand during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

• Home sales revenues in our Central reportable segment decreased by $12.0 million, or 11.9%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a 10.3% decrease in the number of homes closed and a decrease 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 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 $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 $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.

• Home sales revenues in our Southeast reportable segment decreased by $29.4 million, or 28.9%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a 29.8% 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.

• Home sales revenues in our Northwest reportable segment increased by $2.8 million, or 8.1%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a 1.5% increase in the number of homes closed and a 6.5% increase in the average sales price per home closed.

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

• Home sales revenues in our West reportable segment increased by $8.9 million, or 13.3%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to an 8.2% increase in the number of homes closed and a 4.7% increase in the average sales price per home closed.

The increase in home closings was the result of a higher absorption rate.

• Home sales revenues in our Florida reportable segment decreased by $2.0 million, or 4.2%, during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to a 1.5% decrease in the number of homes closed and a 2.7% decrease in the average sales price per home closed.

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

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

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.

Cost of sales for the three months ended March 31, 2026 was $259.8 million, a decrease of $17.9 million, or 6.4%, from $277.7 million for the three months ended March 31, 2025.

This overall decrease was primarily due to an 11.5% decrease in the number of homes closed.

Gross margin for the three months ended March 31, 2026 was $59.9 million, a decrease of $13.8 million, or 18.7%, from $73.7 million for the three months ended March 31, 2025.

Gross margin as a percentage of home sales revenues was 18.7% for the three months ended March 31, 2026 and 21.0% for the three months ended March 31, 2025.

The decrease in gross margin as a percentage of home sales revenues was primarily due to inventory-related impairment charges, price discounts on older inventory, higher capitalized interest, and higher indirect overhead costs, partially offset by a lower volume of wholesale home closings and lower house costs as a percentage of revenue during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Selling Expenses.

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.

Selling expenses for the three months ended March 31, 2026 were $32.7 million, a decrease of $9.7 million, or 22.9%, from $42.3 million for the three months ended March 31, 2025.

The decrease in selling expenses was primarily due to a decrease in the number of homes closed for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Sales commissions decreased to $12.5 million for the three months ended March 31, 2026 from $14.0 million for the three months ended March 31, 2025, primarily due to a decrease in the number of homes closed.

Selling expenses as a percentage of home sales revenues were 10.2% and 12.0% for the three months ended March 31, 2026 and 2025, respectively.

The decrease in selling expenses as a percentage of home sales revenues was primarily due to a decrease in home sales revenues and overall cost efficiencies in advertising expense during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

General and Administrative.

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.

General and administrative expenses for the three months ended March 31, 2026 were $27.9 million, a decrease of $3.3 million, or 10.7%, from $31.2 million for the three months ended March 31, 2025.

General and administrative expenses as a percentage of home sales revenues were 8.7% and 8.9% during the three months ended March 31, 2026 and 2025, respectively.

The decrease in general and administrative expenses as a percentage of home sales revenues was due to a one-time sales incentive fee in the prior period and reduced spending related to meetings, entertainment and travel during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Other Income, Net.

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.

Other income, net of other expenses for the three months ended March 31, 2026 was $4.9 million, a decrease of $0.7 million from $5.6 million for the three months ended March 31, 2025.

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 recognized.

Operating Income and Net Income before Income Taxes.

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%;

Southeast - $10.7 million, or 40.1%;

Northwest - $(0.8) million, or (2.9)%;

West - $9.7 million, or 36.4%;

and Florida - $(1.1) million, or (4.1)%.

Income Taxes .

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

Southeast 353,211 1,067 331,032 31.8 3.7

Northwest 137,132 274 500,482 15.8 1.9

West 258,994 592 437,490 25.3 2.6

Florida 168,713 454 371,615 24.6 2.1

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

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

Southeast 407,068 1,231 330,681 26.2 5.2

Northwest 187,253 344 544,340 13.6 2.8

West 351,880 848 414,953 20.7 4.6

Florida 257,392 709 363,035 21.8 3.6

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

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 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 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 $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 $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 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 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 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 $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 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:

Operating Income (Loss) and Net Income before Income Taxes.

Operating loss for the three months ended March 31, 2026 was $(0.6) million, a decrease of $0.8 million, or 473.4%, from operating income of $0.2 million for the three months ended March 31, 2025.

Net income before income taxes for the three months ended March 31, 2026 was $4.3 million, a decrease of $1.4 million, or 24.5%, from $5.7 million for the three months ended March 31, 2025.

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, other costs associated with the decrease in average community count, and $4.7 million of impairment changes related to inventory during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Our reportable segments contributed to net income before income taxes during the three months ended March 31, 2026 as follows:

Central - $3.1 million, or 72.4%;

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Income Taxes .

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.

Income tax provision for the three months ended March 31, 2026 was $2.2 million, an increase of $0.4 million, or 23.1%, from income tax provision of $1.7 million for the three months ended March 31, 2025.

The increase in our income tax provision was primarily due to the increase in our effective tax rate.

The increase in our effective tax rate to 50.0% for the three months ended March 31, 2026 from 30.2% for the three months ended March 31, 2025 was primarily a result of an increase in the rate for the compensation cost in excess of deductions for share-based payments, 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 March 31, 2026 was $2.2 million, a decrease of $1.8 million, or 45.1%, from $4.0 million for the three months ended March 31, 2025.

The decrease in net income during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily attributed to an overall decrease in the number of homes closed, home sales revenues and gross margin, as well as an inventory impairment charge of $4.7 million, of which $2.4 million was related to our Florida reportable segment and $2.3 million was related to our Central reportable segment.

Non-GAAP Measures

Adjusted Gross Margin

Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance.

We define adjusted gross margin as gross margin less capitalized interest and adjustments resulting from the application of purchase accounting included in the cost of sales.

Our management believes this information is useful because it isolates the impact that capitalized interest and purchase accounting adjustments have on gross margin.

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 performance.

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 September 30, Nine Months Ended September 30,

2025 2024 2025 2024

In addition to the results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided information in this Quarterly Report on Form 10-Q relating to gross margin excluding inventory impairment, adjusted gross margin, EBITDA, adjusted EBITDA, net debt to capital ratio, adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share.

Gross Margin Excluding Inventory impairment and Adjusted Gross Margin

Gross margin excluding inventory impairment and adjusted gross margin are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance.

We define gross margin excluding inventory impairment as gross margin less inventory impairment charges.

We define adjusted gross margin as gross margin excluding inventory impairments, less capitalized interest, and adjustments resulting from the application of purchase accounting included in the cost of sales.

Our management believes gross margin excluding inventory impairment and adjusted gross margin are useful because they isolate the impact that capitalized interest, purchase accounting adjustments, and inventory impairment have on gross margin.

However, because gross margin excluding inventory impairment and adjusted gross margin exclude capitalized interest, purchase accounting adjustments, and inventory impairment, which have real economic effects and could impact our results, the utility of gross margin excluding inventory impairment and adjusted gross margin as measures of our operating performance may be limited.

In addition, other companies may not calculate gross margin excluding inventory impairment and adjusted gross margin in the same manner that we do.

Accordingly, gross margin excluding inventory impairment and adjusted gross margin should be considered only as supplements to gross margin as a measure of our performance.

The following table reconciles gross margin excluding inventory impairment and 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 March 31,

Home sales revenues $ 319,736 $ 351,420

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Gross margin $ 59,929 $ 73,713

Inventory impairment

Gross margin excluding inventory impairment $ 64,610 $ 73,713

Capitalized interest charged to cost of sales 9,976 8,267

Purchase accounting adjustments (1)

999 1,157 2,850 3,134

Adjusted gross margin $ 74,975 $ 82,789

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18.7 % 21.0 %

Gross margin % excluding inventory impairment (2)

20.2 % 21.0 %

Adjusted gross margin % (2)

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

EBITDA is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance.

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance.

We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales.

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

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

EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance.

Our presentation of EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.

Our use of EBITDA is limited as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP.

We define adjusted EBITDA as EBITDA before inventory impairment, stock-based compensation, purchase accounting adjustments, and dead deal costs, as applicable during a period.

Our management believes that the presentation of EBITDA and adjusted 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.

Accordingly, our management believes that these measures are useful for comparing general operating performance from period to period.

Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of

other companies.

EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance.

Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.

Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP.

Some of these limitations are:

(i) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments, including for purchase of land;

(ii) it does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

(iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA does not reflect any cash requirements for such replacements or improvements;

(iv) it does not adjust for all non-cash income or expense items that are reflected in our statements of cash flows;

(v) it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

(vi) other companies in our industry may calculate it differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, our EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.

We compensate for these limitations by using our EBITDA along with other comparative tools, together with GAAP measures, to assist in the evaluation of operating performance.

(i) they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments, including for purchase of land;

(ii) they do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

(iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements or improvements;

(iv) they do not adjust for all non-cash income or expense items that are reflected in our statements of cash flows;

(v) they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

(vi) other companies in our industry may calculate them differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, our EBITDA and adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

We compensate for these limitations by using our EBITDA and adjusted EBITDA along with other comparative tools, together with GAAP measures, to assist in the evaluation of operating performance.

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.

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 September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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

EBITDA and adjusted EBITDA are not intended as alternatives to net income as indicators of our operating performance, as alternatives to any other measure of performance in conformity with GAAP or as alternatives to cash flows as a measure of liquidity.

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

The following table reconciles EBITDA and adjusted 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 March 31,

Net income $ 2,160 $ 3,994

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EBITDA $ 15,485 $ 14,852

Inventory impairment 4,681 —

Stock-based compensation 2,211 2,561

Purchase accounting adjustments 389 809

Dead deal costs 1,611 528

Adjusted EBITDA $ 24,377 $ 18,750

EBITDA margin % (1)

9.8 % 16.2 % 8.8 % 13.6 %

Adjusted EBITDA margin % (1)

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

Net Debt to Capital Ratio Reconciliation

Net Debt to Capital Ratio

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 believes that the presentation of net debt to capital ratio provides useful information to investors regarding our financial leverage and our 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.

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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

March 31, 2026 December 31, 2025

Total debt (Notes payable)

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(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.

Adjusted Net Income, Adjusted Basic Earnings per Share, and Adjusted Diluted Earnings per Share

Adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance.

We define adjusted net income as net income less inventory impairment charges.

We define adjusted basic earnings per share as adjusted net income divided by weighted average basic shares outstanding.

We define adjusted diluted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

Our management believes that the presentation of adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share provides useful information to investors because such measures isolate the impact that inventory impairment charges have on net income and earnings per share.

However, because adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share exclude the inventory impairment charge, which has real economic effects and could impact the results, the utility of adjusted net income.

adjusted basic earnings per share, and adjusted diluted earnings per share as measures of our operating performance may be limited.

In addition, other companies may not calculate adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share in the same manner that we do.

Accordingly, adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share should be considered only as supplements to net income, basic earnings per share, and earnings per share, respectively, as measures of our performance.

The following table reconciles adjusted net income to net income, which is the GAAP financial measure that our management believes to be most directly comparable, and adjusted basic earnings per share and adjusted diluted earnings per share are calculated by dividing adjusted net income by basic or diluted weighted average shares outstanding, respectively (dollars in thousands, except earnings per share):

Three Months Ended March 31,

Net income $ 2,160 $ 3,994

Basic weighted average number of shares outstanding 23,149,912 23,396,470

Basic earnings per share $ 0.09 $ 0.17

Diluted weighted average number of shares outstanding 23,219,224 23,466,746

Diluted earnings per share $ 0.09 $ 0.17

Three Months Ended March 31,

Net income $ 2,160 $ 3,994

Inventory Impairment 4,681 —

Tax impact due to above reconciling item (1,225) —

Adjusted net income $ 5,616 $ 3,994

Basic weighted average number of shares outstanding 23,149,912 23,396,470

Adjusted basic earnings per share $ 0.24 $ 0.17

Diluted weighted average number of shares outstanding 23,219,224 23,466,746

Adjusted diluted earnings per share $ 0.24 $ 0.17

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 we have assumed the homebuyer will meet 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 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.

Net orders for the three months ended March 31, 2026 were 1,221 homes, a decrease of 15.0% from 1,437 homes for the three months ended March 31, 2025, reflecting continued affordability pressures and higher mortgage rates.

The cancellation rate increased to 45.6% in 2026 from 16.3% in 2025, primarily due to financing challenges and buyer sensitivity to market conditions.

Ending backlog grew to 1,699 homes, with an aggregate value of $660.5 million at March 31, 2026, compared to 1,040 homes valued at $406.2 million at March 31, 2025, which represented increases of 63.4% in units and 62.6% in value.

The increases were driven by slower conversion of homes under contract to closings and a higher volume of homes under contract at quarter end.

A significant portion of backlog relates to homes further along in construction and expected to close in the near term.

However, conversion to revenue remains subject to construction timing, buyer financing, and incentive levels.

Elevated cancellation rates and changes in market conditions could affect the pace of backlog conversion and future gross margins.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Backlog Data 2026 (4)

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Ending backlog is valued at the contract amount.

(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.

(4) As of March 31, 2026, we had 442 units related to bulk sales agreements associated with our wholesale business.

(5) As of March 31, 2025, we had 253 units related to bulk sales agreements associated with our wholesale business.

Land Acquisition Policies and Development

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

We had 142 and 144 active communities as of March 31, 2026 and December 31, 2025, 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 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.

Our lot inventory decreased to 59,028 owned or controlled lots as of March 31, 2026 from 60,842 owned or controlled lots as of December 31, 2025, 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 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

The table below shows (i) home closings by reportable segment for the three months ended March 31, 2026 and (ii) our owned or controlled lots by reportable segment as of March 31, 2026.

Three Months Ended March 31, 2026 As of March 31, 2026

Reportable Segment Home Closings Owned (1)

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Total 881 51,193 7,835 59,028

(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.

(1) Of the 51,193 owned lots as of March 31, 2026, 34,168 were raw/under development lots and 17,025 were finished lots.

Homes in Inventory

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

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

As of March 31, 2026, we had a total of 2,266 completed homes, including information centers, and 1,355 homes in progress.

Raw Materials and Labor

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Liquidity and Capital Resources

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

As of March 31, 2026, we had $60.9 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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Net Debt to Capital Ratio

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

As of March 31, 2026, our net debt to capital ratio was 44.0%.

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

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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.

At March 31, 2026, we were in compliance with all of the covenants contained in the Credit Agreement (as defined herein), 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 LGI Living Loan Agreement (as defined herein).

As of March 31, 2026, $294.2 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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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 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”).

We are a party to the Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (as amended to date, 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 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.

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

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.

As of March 31, 2026, the borrowing base under the Credit Agreement was $2.0 billion, of which the maximum available to borrow was $2.0 billion.

As of March 31, 2026, 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, $19.3 million of letters of credit were outstanding and $294.2 million was available to borrow under the Credit Agreement.

At March 31, 2026, the Applicable Margin was 1.85%, and SOFR was 3.67%, 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 September 30, 2025, we were in compliance with all of the covenants contained in the Credit Agreement.

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 March 31, 2026, 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.

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

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 March 31, 2026, 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 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 LGI Living Loan Agreement requires that the Company, as guarantor, maintain (i) liquidity of not less than 15% of the loan amount and (ii) 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.

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.

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

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, 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 March 31, 2026, we were in compliance with all of the covenants contained in the LGI Living Loan Agreement.

Senior Notes Offering

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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 $423.1 million as of September 30, 2025.

Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $380.1 million as of March 31, 2026.

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 September 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 March 31, 2026 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 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.

During the three months ended March 31, 2026, we did not repurchase any shares of our common stock.

During the three months ended March 31, 2025, we repurchased 41,685 shares of our common stock at a total cost, including commissions and excise taxes, of $3.1 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 September 30, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program.

As of March 31, 2026, 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 $226.7 million during the nine months ended September 30, 2025.

Net cash used in operating activities was $55.5 million during the three months ended March 31, 2026.

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, 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.

Net cash used in operating activities during the three months ended March 31, 2026 was primarily driven by cash outflow of $99.1 million in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity, a $12.5 million decrease in the net change in accounts receivable, partially offset by the $22.4 million increase in accounts payable, and the $13.2 million increase in the net change in other assets and the $12.1 million increase in the net change related to pre-acquisition costs and deposits, inventory impairment, and compensation expense for equity awards.

Net cash used in operating activities was $127.1 million during the three months ended March 31, 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 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.

Net cash used in operating activities during the three months ended March 31, 2025 was primarily driven by cash outflow from the $186.6 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 a $27.9 million decrease in the net change in accrued expenses and other liabilities, partially offset by increases in the net changes of $43.8 million in other assets and $18.6 million in accounts payable.

Investing Activities

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.

Net cash provided by investing activities was $6.4 million during the three months ended March 31, 2026, primarily due to $8.9 million in proceeds from the sale of property and equipment, partially offset by an additional $1.9 million investment in unconsolidated entities.

Net cash used in investing activities was $0.2 million during the three months ended March 31, 2025, primarily due to additional $1.5 million investment in unconsolidated entities, offset by $2.1 million in return of capital.

Financing Activities

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.

Net cash provided by financing activities was $48.7 million during the three months ended March 31, 2026, primarily driven by $116.2 million of borrowings under the Credit Agreement, offset by $65.0 million of repayments on the Credit Agreement and payments of $3.8 million related to a financing arrangement with a third-party land banker.

Net cash provided by financing activities was $131.8 million during the three months ended March 31, 2025, primarily driven by $172.5 million of borrowings under our credit agreement then in effect, offset by $30.0 million of repayments on our credit agreement then in effect and payments of $8.6 million related to a financing arrangement with a third-party land banker.

In addition, during the three months ended March 31, 2025, we repurchased $3.1 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 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.

As of March 31, 2026, 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, 2025.

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 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.

We believe that there have been no significant changes to our critical accounting policies and estimates during the three months ended March 31, 2026 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, 2025.

Cautionary Statement about Forward-Looking Statements

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The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements:

• adverse economic changes either nationally or in the markets in which we operate, including, among other things, potential impacts from political uncertainty, civil unrest, increases in unemployment, volatility of mortgage rates, supply chain disruptions (including due to the conflict between Russia and Ukraine and the wide-ranging sanctions the United States and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials and the conflict in the Middle East), inflation, the possibility of recession and decreases in housing prices;

• adverse economic changes either nationally or in the markets in which we operate, including, among other things, potential impacts from political uncertainty, civil unrest, increases in unemployment, volatility of mortgage interest rates, supply chain disruptions (including due to the conflict between Russia and Ukraine and the wide-ranging sanctions the United States and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials and the conflict in the Middle East), inflation, the possibility of recession and decreases in housing prices;

• a slowdown in the homebuilding industry or changes in population growth rates in our markets;

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• the success of our operations in recently opened new markets and our ability to expand into additional new markets;

• our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, townhouses, wholesale products, and acreage home sites;

• our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, town houses, wholesale products, and acreage home sites;

• our ability to develop our projects successfully or within expected timeframes;

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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