LGI Homes, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS LGI HOMES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share data) March 31, December 31, 2026 2025 ASSETS Cash and cash equivalents $ 60,860 $ 61,247 Accounts receivable 45,011 32,467 Real estate inventory 3,540,731 3,520,563 Pre-acquisition costs and deposits 24,970 28,950 Property and equipment, net 124,805 107,145 Other assets 192,849 154,948 Deferred tax assets, net 8,921 9,904 Goodwill 12,018 12,018 Total assets $ 4,010,165 $ 3,927,242 LIABILITIES AND EQUITY Accounts payable $ 38,569 $ 16,179 Accrued expenses and other liabilities 159,725 157,971 Notes payable 1,709,457 1,656,803 Total liabilities 1,907,751 1,830,953 COMMITMENTS AND CONTINGENCIES EQUITY Common stock, par value $ 0.01 , 250,000,000 shares authorized, 27,888,871 shares issued and 23,232,279 shares outstanding as of March 31, 2026 and 27,789,678 shares issued and 23,133,086 shares outstanding as of December 31, 2025 278 277 Additional paid-in capital 351,272 347,308 Retained earnings 2,160,499 2,158,339 Treasury stock, at cost, 4,656,592 shares as of March 31, 2026 and December 31, 2025 ( 409,635 ) ( 409,635 ) Total equity 2,102,414 2,096,289 Total liabilities and equity $ 4,010,165 $ 3,927,242 See accompanying notes to the consolidated financial statements. 4 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share data) Three Months Ended March 31, 2026 2025 Home sales revenues $ 319,736 $ 351,420 Cost of sales 259,807 277,707 Selling expenses 32,650 42,342 General and administrative 27,861 31,202 Operating income (loss) ( 582 ) 169 Other income, net ( 4,901 ) ( 5,555 ) Net income before income taxes 4,319 5,724 Income tax provision 2,159 1,730 Net income $ 2,160 $ 3,994 Earnings per share: Basic $ 0.09 $ 0.17 Diluted $ 0.09 $ 0.17 Weighted average shares outstanding: Basic 23,149,912 23,396,470 Diluted 23,219,224 23,466,746 See accompanying notes to the consolidated financial statements. 5 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (In thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Total Equity Shares Amount BALANCE— December 31, 2025 27,789,678 $ 277 $ 347,307 $ 2,158,339 $ ( 409,635 ) $ 2,096,289 Net income — — — 2,160 — 2,160 Restricted stock units granted for accrued annual bonuses — — ( 696 ) — — ( 696 ) Compensation expense for equity awards — — 3,418 — — 3,418 Stock issued under employee incentive plans 99,193 1 1,242 — — 1,243 BALANCE— March 31, 2026 27,888,871 $ 278 $ 351,272 $ 2,160,499 $ ( 409,635 ) $ 2,102,414 Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Total Equity Shares Amount BALANCE— December 31, 2024 27,644,413 $ 276 $ 337,161 $ 2,085,787 $ ( 385,996 ) $ 2,037,228 Net income — — — 3,994 — 3,994 Restricted stock units granted for accrued annual bonuses — — 540 — — 540 Stock repurchase — — — — ( 3,051 ) ( 3,051 ) Compensation expense for equity awards — — 2,625 — — 2,625 Stock issued under employee incentive plans 49,113 1 1,189 — — 1,190 BALANCE— March 31, 2025 27,693,526 $ 277 $ 341,515 $ 2,089,781 $ ( 389,047 ) $ 2,042,526 See accompanying notes to the consolidated financial statements. 6 Table of Contents LGI HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 2,160 $ 3,994 Adjustments to reconcile net income to net cash used in operating activities: Equity in income of unconsolidated entities ( 427 ) ( 875 ) Distributions of earnings from unconsolidated entities 318 3,979 Depreciation and amortization 1,190 861 Loss (gain) on disposal of assets ( 1,646 ) 2,284 Compensation expense for equity awards 3,418 2,625 Inventory impairment 4,681 — Deferred income taxes 983 1,117 Changes in assets and liabilities: Accounts receivable ( 12,544 ) 6,992 Real estate inventory ( 99,061 ) ( 186,583 ) Pre-acquisition costs and deposits 3,980 4,014 Other assets 13,174 43,763 Accounts payable 22,390 18,591 Accrued expenses and other liabilities 5,835 ( 27,910 ) Net cash used in operating activities ( 55,549 ) ( 127,148 ) Cash flows from investing activities: Purchases of property and equipment ( 696 ) ( 831 ) Proceeds from sale of property and equipment 8,916 — Investment in unconsolidated entities ( 1,882 ) ( 1,497 ) Return of capital from unconsolidated entities 105 2,083 Net cash provided by (used in) investing activities 6,443 ( 245 ) Cash flows from financing activities: Proceeds from notes payable 116,229 172,467 Payments on notes payable ( 65,000 ) ( 30,000 ) Payments on financing arrangements ( 3,752 ) ( 8,600 ) Loan issuance costs — ( 210 ) Proceeds from sale of stock, net of offering expenses 1,242 1,190 Stock repurchase — ( 3,051 ) Net cash provided by financing activities 48,719 131,796 Net increase (decrease) in cash and cash equivalents ( 387 ) 4,403 Cash and cash equivalents, beginning of period 61,247 53,197 Cash and cash equivalents, end of period $ 60,860 $ 57,600 See accompanying notes to the consolidated financial statements. 7 Table of Contents LGI HOMES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. ORGANIZATION AND BASIS OF PRESENTATION Organization and Description of the Business LGI Homes, Inc., a Delaware corporation (the “Company”, “we,” “us,” or “our”), is headquartered in The Woodlands, Texas. We engage in the development of communities and the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah. Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year. The accompanying unaudited financial statements as of March 31, 2026, and for the three months ended March 31, 2026 and 2025, include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. The amendments in this update are to be applied on a prospective basis, with the option for retrospective application. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our disclosures. 2. REAL ESTATE INVENTORY Our real estate inventory consists of the following (in thousands): March 31, December 31, 2026 2025 Land, land under development and finished lots $ 2,585,692 $ 2,601,578 Information centers 64,016 61,940 Homes in progress 321,503 261,850 Completed homes 565,296 587,219 Total owned inventory 3,536,507 3,512,587 Real estate not owned 4,224 7,976 Total real estate inventory $ 3,540,731 $ 3,520,563 Our real estate not owned relates to land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources. 8 Table of Contents We build and lease a number of single-family homes in select, existing communities. During the three months ended March 31, 2026 and 2025, we transferred $ 25.4 million and $ 13.4 million, respectively, of home assets from real estate inventory to rental properties within property and equipment, net. We are lessors of the homes representing these home assets. 3. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued and other liabilities consist of the following (in thousands): March 31, December 31, 2026 2025 Real estate inventory development and construction payable $ 57,001 $ 57,103 Taxes payable 10,689 9,704 Land banking financing arrangements 4,224 7,976 Accrued compensation, bonuses and benefits 7,703 14,677 Warranty reserve 14,300 14,500 Accrued interest 26,929 14,223 Inventory related obligations 11,371 11,641 Lease liability 5,049 5,139 Contract deposits 6,380 5,845 Other 16,079 17,163 Total accrued expenses and other liabilities $ 159,725 $ 157,971 Land Banking Financing Arrangements We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns. Principal payments on these financing arrangements will generally coincide with the repurchase of lot takedowns from the land banker. We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of less than a year. Inventory Related Obligations We own lots in certain communities in Florida and Texas that have Community Development Districts or similar utility and infrastructure development special assessment programs that allocate a fixed amount of debt service associated with development activities to each lot. This obligation for infrastructure development is attached to the land, which is typically payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed. The obligations assumed by the homebuyer represent a non-cash cost of the lots. Estimated Warranty Reserve We generally provide homebuyers with a one-year warranty on the house and a limited warranty for major defects in structural elements, such as framing components and foundation systems, typically ranging from six to ten years depending on the applicable state. Changes to our warranty accrual are as follows (in thousands): Three Months Ended March 31, 2026 2025 Warranty reserves, beginning of period $ 14,500 $ 16,100 Warranty provision 535 1,594 Warranty expenditures ( 735 ) ( 1,194 ) Warranty reserves, end of period $ 14,300 $ 16,500 9 Table of Contents 4. NOTES PAYABLE Revolving 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. The Credit Agreement matures on April 28, 2029 with respect to $ 972.5 million, or 82.2 %, of the $ 1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8 % of the commitments thereunder. Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date. The Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $ 0.5 million, other than subsidiaries whose sole purpose is to own and operate single-family rental homes. The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 8.750 % Senior Notes due 2028 (the “2028 Senior Notes”), our 4.000 % Senior Notes due 2029 (the “2029 Senior Notes”) and our 7.000 % Senior Notes due 2032 (the “2032 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of 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. Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10 , 15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At 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, (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 “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 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 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 10 Table of Contents 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 On November 15, 2024, we issued $ 400.0 million aggregate principal amount of the 2032 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 2032 Senior Notes accrues at a rate of 7.000 % per annum, payable semi-annually in arrears on May 15 and November 15 of each year. The 2032 Senior Notes mature on November 15, 2032. The terms of the 2032 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fifth Supplemental Indenture thereto, dated as of November 15, 2024, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee. On November 21, 2023, we issued $ 400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2028 Senior Notes accrues at a rate of 8.750 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee. On June 28, 2021, we issued $ 300.0 million aggregate principal amount of the 2029 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2029 Senior Notes accrues at a rate of 4.000 % per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on July 15, 2029. The terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee. Notes payable consist of the following (in thousands): March 31, December 31, 2026 2025 Notes payable under the Credit Agreement ($ 1.1825 billion revolving credit facility at March 31, 2026, maturing in part on April 28, 2028 and in part on April 28, 2029, with interest paid monthly at SOFR plus 1.85 %; $ 1.1825 billion revolving credit facility at December 31, 2025, maturing in part on April 28, 2028 and in part on April 28, 2029, with interest paid monthly at SOFR plus 1.85 %) $ 578,870 $ 527,641 8.750 % Senior Notes due December 15, 2028; interest paid semi-annually at 8.750 % 400,000 400,000 4.000 % Senior Notes due July 15, 2029; interest paid semi-annually at 4.000 % 300,000 300,000 7.000 % Senior Notes due November 15, 2032; interest paid semi-annually at 7.000 % 400,000 400,000 Loan payable under the LGI Living Loan Agreement maturing on July 8, 2030; with interest paid monthly at an annual rate of 6.433 % 50,000 50,000 Net debt issuance costs ( 19,413 ) ( 20,838 ) Total notes payable $ 1,709,457 $ 1,656,803 Capitalized Interest Interest activity, including other financing costs, for notes payable and financing arrangements for the periods presented is as follows (in thousands): Three Months Ended March 31, 2026 2025 Interest incurred $ 30,177 $ 29,924 Less: Amounts capitalized ( 30,177 ) ( 29,924 ) Interest expense $ — $ — Cash paid for interest $ 16,032 $ 15,518 11 Table of Contents Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $ 2.2 million and $ 2.7 million for the three months ended March 31, 2026 and 2025, respectively. 5. INCOME TAXES We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The statute of limitations with regards to our federal income tax filings is three years. The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty. For the three months ended March 31, 2026, our effective tax rate of 50.0 % is higher than the Federal statutory rate primarily as a result of a 23.84 % increase for a discrete item related to the compensation cost in excess of deductions for share-based payments, the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, and state income taxes, net of the federal benefit. Income taxes paid were $ 0.2 million and $ 38.6 million for the three months ended March 31, 2026 and 2025, respectively. 6. EQUITY 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 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 March 31, 2026, we may purchase up to $ 157.3 million of shares of our common stock under our stock repurchase program. 7. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Numerator (in thousands): Net income (Numerator for basic and diluted earnings per share) $ 2,160 $ 3,994 Denominator: Basic weighted average shares outstanding 23,149,912 23,396,470 Effect of dilutive securities: Stock-based compensation units 69,312 70,276 Diluted weighted average shares outstanding 23,219,224 23,466,746 Basic earnings per share $ 0.09 $ 0.17 Diluted earnings per share $ 0.09 $ 0.17 Antidilutive non-vested restricted stock units excluded from calculations of diluted earnings per share 76,194 50,771 12 Table of Contents 8. STOCK-BASED COMPENSATION Non-performance Based Restricted Stock Units The following table summarizes the activity of our time-vested restricted stock units (“RSUs”) for the three months ended March 31, 2026: Three Months Ended March 31, 2026 Shares Weighted Average Grant Date Fair Value Beginning balance 222,828 $ 86.51 Granted 110,997 $ 42.61 Vested ( 2,995 ) $ 71.97 Forfeited ( 30,882 ) $ 104.36 Ending balance 299,948 $ 68.63 We recognized $ 1.5 million and $ 1.7 million of stock-based compensation expense related to outstanding RSUs for the three months ended March 31, 2026 and 2025, respectively. Generally, the RSUs cliff vest on the third anniversary of the grant date and can only be settled in shares of our common stock. At March 31, 2026, we had unrecognized compensation cost of $ 11.6 million related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.1 years. Performance-Based Restricted Stock Units The Compensation Committee of the Board has granted awards of performance-based RSUs (“PSUs”) under the Amended and Restated LGI Homes, Inc. 2013 Equity Incentive Plan to certain members of senior management based on three-year performance cycles. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0 % to 200 % of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100 % of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock. The following table summarizes the activity of our PSUs for the three months ended March 31, 2026: Three Months Ended March 31, 2026 Target Shares Weighted Average Grant Date Fair Value Beginning balance 248,122 $ 92.92 Granted 191,158 $ 44.40 Vested ( 36,883 ) $ — Forfeited ( 32,205 ) $ 104.36 Ending balance 370,192 $ 65.81 At March 31, 2026, management estimates that the recipients will receive approximately 51.6 % of the weighted average target number of PSUs outstanding at the end of the applicable three-year performance cycle based on projected performance compared to the target performance metrics. We recognized $ 0.6 million and $ 0.6 million of total stock-based compensation expense related to outstanding PSUs for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, we had unrecognized compensation cost of $ 8.3 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 3 years. PSUs granted in 2024, 2025, and 2026 are excluded from the calculation of diluted EPS as they are subject to unsatisfied performance conditions. 13 Table of Contents 9. FAIR VALUE DISCLOSURES Accounting Standards Codification (“ASC”) 820, Fair Value Measurements, defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Fair value is determined based on the principal market for the asset or liability, or, in the absence of a principal market, the most advantageous market. The principal market is the market with the greatest volume and level of activity for the assets or liability, regardless of whether the Company ultimately transacts in that market. As a result, a fair value determined under this exit price concept may differ from the transaction price or quoted market price for the asset or liability. ASC 820 establishes a framework for measuring fair value under GAAP, expands disclosure requirements for fair value measurements, and establishes a three-level fair value hierarchy that prioritizes the inputs used in valuation techniques. The hierarchy requires the use of observable inputs when available and the minimization of unobservable inputs. The three levels of the fair value hierarchy are as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 - Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Fair value measurements on a nonrecurring basis occur when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, including impairment of long-lived assets and inventory. These nonrecurring fair value measurements are generally classified within Level 3 of the fair value hierarchy due to the use of significant observable inputs. During the three months ended March 31, 2026, the Company recognized $ 4.7 million of impairment charges related to inventory, which were recorded in inventory on the consolidated balance sheets and cost of sales in the consolidated statement of operations. Of the total impairment charge, $ 2.4 million was related to our Florida reportable segment and $ 2.3 million was related to our Central reportable segment. The impairment charges were measured at fair value and classified within Level 3 of the fair value hierarchy. The fair value of the impaired assets was determined using valuation techniques that included discounted cash flow models and other market-based approaches. Significant unobservable inputs used in these valuations included estimated future selling prices, projected costs, absorption rates, expected holding periods and discount rates reflecting market participant assumptions. Changes in these assumptions could have a material impact on the estimated fair value and the amount of impairment recognized. The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and certain accrued liabilities, approximate fair value due to the short-term nature of these instruments. As of March 31, 2026, the carrying value of amounts outstanding under the Credit Agreement approximated fair value due to the variable interest rate, which adjusts based on market interest rates and the Company’s leverage ratio. The fair value of the 2028 Senior Notes, the 2029 Senior Notes, the 2032 Senior Notes and the LGI Living Loan Agreement was estimated by discounting future contractual cash flows using market rates for similar instruments within the homebuilding industry. The fair value measurements are classified as Level 2 within the fair value hierarchy. The following table below presents the Company’s debt measured at fair value by level within the fair value hierarchy as of March 31, 2026 and December 31, 2025 (in thousands): March 31, 2026 December 31, 2025 Fair Value Hierarchy Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value 2028 Senior Notes (1) Level 2 $ 400,000 $ 426,062 $ 400,000 $ 437,152 2029 Senior Notes (1) Level 2 $ 300,000 $ 280,890 $ 300,000 $ 286,726 2032 Senior Notes (1) Level 2 $ 400,000 $ 418,153 $ 400,000 $ 437,114 LGI Living Loan Agreement (1) Level 2 $ 50,000 $ 50,519 $ 50,000 $ 52,181 (1) See Note 4 for more details regarding the offerings of the 2028 Senior Notes, the 2029 Senior Notes, and the 2032 Senior Notes and the LGI Living Loan Agreement. 14 Table of Contents 10. COMMITMENTS AND CONTINGENCIES Contingencies In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our homebuilding operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. LGI Living Loan Agreement On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living SFR entered into the LGI Living Loan Agreement with Evergreen Residential Capital, LLC, as lender. The loan under the LGI Living Loan Agreement is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events. The LGI Living Loan Agreement requires that the Company, as guarantor, maintain (i) liquidity of not less than 15 % of the loan amount and (ii) net worth in excess of 50 % of the loan amount. The loan under the LGI Living Loan Agreement is secured by certain of LGI Living SFR’s single-family rental properties. The LGI Living Loan Agreement provides for a secured non-recourse loan for up to $ 50.0 million, which can be increased at the request of LGI Living SFR by up to $ 75.0 million (for a total of $ 125.0 million), subject to the terms and conditions of the LGI Living Loan Agreement. As of March 31, 2026, LGI Living SFR had $ 50.0 million of borrowings outstanding under the LGI Living Loan Agreement. Land Deposits We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count): March 31, 2026 December 31, 2025 Land deposits and option payments (1) $ 16,904 $ 19,187 Commitments under the land purchase option and deposit contracts if the purchases are consummated (1) $ 246,553 $ 285,654 Lots under land options and land purchase contracts (1) 7,822 8,952 (1) Includes land banking financing arrangements, see Note 2 and Note 3 for more details regarding real estate not owned. As of March 31, 2026 and December 31, 2025, approximately $ 9.3 million and $ 8.2 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates. Lease Obligations We recognize lease obligations and associated right-of-use (“ROU”) assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets, as included in other assets on the consolidated balance sheets, were $ 4.6 million and $ 4.7 million as of March 31, 15 Table of Contents 2026 and December 31, 2025, respectively. Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $ 5.0 million and $ 5.1 million as of March 31, 2026 and December 31, 2025, respectively. Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $ 0.5 million and $ 0.5 million for the three months ended March 31, 2026 and 2025, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases was $ 0.7 million and $ 0.6 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the weighted-average discount rate was 5.9 % and our weighted-average remaining life was 1.8 years. We do not have any significant lease contracts that have not yet commenced at March 31, 2026. The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2026 (in thousands): Year Ending December 31, Operating leases 2026 $ 1,494 2027 1,760 2028 1,265 2029 611 2030 308 Thereafter 109 Total 5,547 Lease amount representing interest ( 498 ) Present value of lease liabilities $ 5,049 Bonding and Letters of Credit We have outstanding letters of credit and performance and surety bonds totaling $ 380.1 million (including $ 19.3 million of letters of credit issued under the Credit Agreement) and $ 392.2 million (including $ 19.5 million of letters of credit issued under the Credit Agreement) at March 31, 2026 and December 31, 2025, respectively, related to our obligations for site improvements at various projects. Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows. Investment in Unconsolidated Entities As of March 31, 2026, we had two equity-method real estate joint ventures and five additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers. As of March 31, 2026 and December 31, 2025, we have a total of $ 23.1 million and $ 21.2 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage services, respectively. Income associated with our investment in unconsolidated entities during the three months ended March 31, 2026 and 2025 was $ 0.4 million and $ 0.9 million, respectively. 11. REVENUES Home Sales Revenues We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our move-up and luxury series spec homes sold under our Terrata Homes brand. The following table presents our home sales revenues disaggregated by revenue stream (in thousands): Three Months Ended March 31, 2026 2025 Retail home sales revenues $ 289,975 $ 296,939 Wholesale home sales revenues 29,761 54,481 Total home sales revenues $ 319,736 $ 351,420 Our home sales revenues are disaggregated by geography, based on our determined reportable segments. 16 Table of Contents 12. SEGMENT INFORMATION We operate one principal homebuilding business that is organized and reports by division. We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West and Florida divisions) that we aggregate into five qualifying reportable segments at March 31, 2026: our Central, Southeast, Northwest, West, and Florida divisions. These segments reflect the way we evaluate our business performance and manage our operations. For reporting purposes, our homebuilding operations are aggregated into five reportable segments as follows: Central: Texas, Oklahoma, Minnesota Southeast: Georgia, Alabama, Tennessee, North Carolina, South Carolina, West Virginia, Maryland, Pennsylvania, Virginia Northwest: Colorado, Washington, Oregon West: Arizona, New Mexico, Nevada, California, Utah Florida: Florida In determining the most appropriate reportable segments, we consider operating segments’ economic and other characteristics, including home floor plans, average selling prices, gross margin percentage, geographical proximity, production construction processes, suppliers, subcontractors, regulatory environments, customer type and underlying demand and supply. Each operating segment follows the same accounting policies and is managed by our management team. We have no inter-segment sales, as all sales are to external customers. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. Our Chief Executive Officer and Chairman of the Board and our President and Chief Operating Officer have been determined to be our chief operating decision-makers (“CODMs”). The CODMs primarily evaluate the segments’ operating performance and allocate resources for all of our reportable segments based on net income before income taxes. For all of the segments, the CODMs use segment net income before income tax expense in the annual budget and forecasting process. These operating results are reviewed against actual and forecasted figures, with net income before income taxes being the key operating metric used to measure profit or loss. 17 Table of Contents Financial information relating to our reportable segments was as follows (in thousands): Three Months Ended March 31, 2026 2025 Revenues: Central $ 89,160 $ 101,146 Southeast 72,323 101,682 Northwest 37,006 34,237 West 75,850 66,956 Florida 45,397 47,399 Total home sales revenues $ 319,736 $ 351,420 Cost of sales: Central (1) $ 73,456 $ 80,515 Southeast 56,495 77,721 Northwest 31,171 28,422 West 58,301 51,795 Florida (1) 40,384 39,254 Total cost of sales $ 259,807 $ 277,707 Other segment items (2) : Central $ 12,576 $ 23,727 Southeast 12,116 15,842 Northwest 7,456 4,609 West 14,215 12,676 Florida 8,795 10,607 Corporate (3) 452 528 Total other segment items $ 55,610 $ 67,989 Net income (loss) before income taxes: Central $ 3,128 $ ( 3,096 ) Southeast 3,712 8,119 Northwest ( 1,620 ) 1,206 West 3,333 2,485 Florida ( 3,783 ) ( 2,462 ) Corporate ( 451 ) ( 528 ) Total net income before income taxes $ 4,319 $ 5,724 (1) The Company recognized $ 4.7 million of impairment charges related to inventory, of which $ 2.4 million was related to our Florida reportable segment and $ 2.3 million was related to our Central reportable segment. (2) Other segment items reflects other sources of income and expense, including selling expenses, general and administrative expenses and other income, net. (3) The Corporate balance consists of general and administrative unallocated costs for various shared service functions and non-strategic other income. 18 Table of Contents March 31, 2026 December 31, 2025 Assets: Central $ 1,189,620 $ 1,162,355 Southeast 819,316 801,556 Northwest 621,890 598,193 West 827,113 800,548 Florida 446,840 452,555 Corporate (1) 105,386 112,035 Total assets $ 4,010,165 $ 3,927,242 (1) The Corporate balance consists primarily of investments in unconsolidated entities. 19 Table of Contents