What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-04-28 · 278 added, 166 removed, 379 unchanged (54% of the section changed)

12 unchanged sentences

Southern California Tennessee

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

We delivered positive second 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.

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

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

For the three months ended June 30, 2026, we closed 1,440 homes, including 75 currently and previously leased single-family homes.

Excluding the 75 currently or previously leased single-family homes, our average sales price per home closed was $367,407.

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

For the three months ended June 30, 2025, we closed 1,323 homes with an average sales price per home closed of $365,446.

For the six months ended June 30, 2026, we closed 2,356 homes, including 110 currently and previously leased single-family homes.

Excluding the 110 currently or previously leased single-family homes, our average sales price per home closed was $365,649.

For the six months ended June 30, 2025, we closed 2,319 homes with an average sales price per home closed of $360,028.

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

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.

Our 151 active communities at June 30, 2026 included 16 Terrata Homes communities.

At June 30, 2025, we had 146 active communities, including 16 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.

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.

Recent Developments

On July 9, 2026, we commenced the dual listing and trading of our common stock on Nasdaq Texas, LLC under the trading symbol “LGIH”.

Key financial results as of and for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, were as follows:

• Homebuilding revenues increased 3.7% to $501.5 million from $483.5 million.

• Homes closed increased 3.2% to 1,365 homes from 1,323 homes.

• Average sales price per home closed increased 0.5% to $367,407 from $365,446.

• Homebuilding gross margin as a percentage of homebuilding revenues decreased to 19.8% from 22.9%.

• Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.2% from 25.5%.

• Net income before income taxes decreased 13.0% to $36.6 million from $42.0 million.

• Net income decreased 14.3% to $27.0 million from $31.5 million.

• EBITDA (non-GAAP) as a percentage of total revenues decreased to 10.5% from 11.2%.

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

Key financial results as of and for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, were as follows:

• Homebuilding revenues decreased 1.6% to $821.2 million from $834.9 million.

• Homes closed decreased 3.1% to 2,246 homes from 2,319 homes.

• Average sales price per home closed increased 1.6% to $365,649 from $360,028.

• Gross margin as a percentage of home sales revenues decreased to 18.7% from 21.0%.

• Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 23.4% from 23.6%.

• Homebuilding gross margin as a percentage of homebuilding revenues decreased to 19.4% from 22.1%.

• Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.3% from 24.7%.

• Net income before income taxes decreased 14.4% to $40.9 million from $47.8 million.

• Net income decreased 18.0% to $29.1 million from $35.5 million.

• 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 59,028 lots at March 31, 2026 as compared to 60,842 lots at December 31, 2025.

• EBITDA (non-GAAP) as a percentage of total revenues increased to 8.2% from 8.0%.

We owned and controlled 57,406 lots at June 30, 2026 as compared to 59,028 lots at March 31, 2026 and 60,842 lots at December 31, 2025.

Results of Operations

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

Three Months Ended March 31,

The following table sets forth our results of operations for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

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

Statement of Income Data:

Home sales revenues $ 319,736 $ 351,420

Homebuilding revenues $ 501,511 $ 483,485 $ 821,247 $ 834,905

Land and other revenues 14,537 4,757 27,677 36,725

Total revenues 516,048 488,242 848,924 871,630

Cost of sales

Homebuilding costs 402,117 372,877 661,924 650,584

Land and other costs 12,235 5,725 24,175 32,729

Total cost of sales 414,352 378,602 686,099 683,313

Selling expenses 44,149 41,599 76,799 83,941

General and administrative 28,571 29,401 56,432 60,603

Operating income (loss) (582) 169

Other income, net (7,615) (3,400) (11,316) (3,991)

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Average sales price per home closed 367,407 365,446 365,649 360,028

Gross margin (1)

Homebuilding gross margin (1)

99,394 110,608 159,323 184,321

Gross margin % (2)

Homebuilding gross margin % (2)

19.8 % 22.9 % 19.4 % 22.1 %

Adjusted gross margin (3)

Adjusted homebuilding gross margin (3)

116,410 123,486 191,385 206,275

Adjusted gross margin % (2)(3)

Adjusted homebuilding gross margin % (2)(3)

23.2 % 25.5 % 23.3 % 24.7 %

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EBITDA margin % (4)(5)

10.5 % 11.2 % 8.2 % 8.0 %

Adjusted EBITDA (4)

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Adjusted EBITDA margin % (4)(5)

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

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

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

11.4 % 12.4 % 9.8 % 9.1 %

(1) Homebuilding gross margin is homebuilding revenues less homebuilding costs.

(2) Calculated as a percentage of homebuilding revenues.

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

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

We define adjusted homebuilding gross margin as homebuilding 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 homebuilding gross margin is useful because it isolates the impact that capitalized interest, purchase accounting adjustments and inventory impairment have on homebuilding gross margin.

However, because adjusted homebuilding 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 homebuilding gross margin as a measure of our operating performance may be limited.

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

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

Please see “ —Non-GAAP Measures ” for a reconciliation of adjusted homebuilding gross

margin to homebuilding gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.

(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.

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

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.

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.

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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

(5) Calculated as a percentage of total revenues.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Our homebuilding revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the three months ended June 30, 2026 and 2025, and our community count by reportable segment as of June 30, 2026 and 2025, were as follows (revenues in thousands):

Three Months Ended June 30, 2026 As of June 30, 2026

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

Central $ 127,777 419 $ 304,957 50.0 2.8 50

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Total $ 501,511 1,365 $ 367,407 149.7 3.0 151

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

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

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

Central $ 112,986 360 $ 313,850 47.3 2.5 46

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Total $ 483,485 1,323 $ 365,446 146.0 3.0 146

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 $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.

Homebuilding Revenues.

Homebuilding revenues for the three months ended June 30, 2026 were $501.5 million, an increase of $18.0 million, or 3.7%, from $483.5 million for the three months ended June 30, 2025.

The increase in homebuilding revenues was primarily due to a 3.2% increase in the number of homes closed during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

The overall increase in home closings was a result of

greater wholesale closings during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

The increase in wholesale closings was primarily driven by home deliveries related to a previously contracted bulk sales agreement during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

The average sales price per home closed during the three months ended June 30, 2026 was $367,407, an increase of $1,961, or 0.5%, from the average sales price per home closed of $365,446 for the three months ended June 30, 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 a higher volume of wholesale closings and discounted older inventory.

Included within our homebuilding revenues for the three months ended June 30, 2026 was $73.5 million in wholesale revenues resulting from 295 home closings, representing 21.6% of the 1,365 total number of homes closed during the three months ended June 30, 2026.

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

The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to a previously contracted bulk sales agreement during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

• Homebuilding revenues in our Central reportable segment increased by $14.8 million, or 13.1%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 16.4% increase in the number of homes closed, partially offset by a decrease in the average sales price per home closed.

The increase in home closings was the result of a higher absorption rate and an increase in the average community count.

• Homebuilding revenues in our Southeast reportable segment decreased by $42.0 million, or 28.0%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 29.2% 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.

• Homebuilding revenues in our Northwest reportable segment increased by $6.1 million, or 11.4%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 21.0% increase in the number of homes closed, partially offset by a 7.9% decrease in the average sales price per home closed.

The increase in home closings was the result of a higher absorption rate and an increase in the average community count.

• Homebuilding revenues in our West reportable segment increased by $34.3 million, or 34.2%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 30.0% increase in the number of homes closed and a 3.2% 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 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.

• Homebuilding revenues in our Florida reportable segment increased by $4.8 million, or 7.2%, during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to a 14.7% increase in the number of homes closed, partially offset by a 6.5% decrease in the average sales price per home closed.

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

Land and Other Revenues .

Land and other revenues for the three months ended June 30, 2026 were $14.5 million, an increase of $9.7 million, or 202.1%, from $4.8 million for the three months ended June 30, 2025.

The increase in land and other revenues was primarily due to greater lot sales.

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs).

Homebuilding costs for the three months ended June 30, 2026 were $402.1 million, an increase of $29.2 million, or 7.8%, from $372.9 million for the three months ended June 30, 2025.

This overall increase was primarily due to a 3.2% increase in the number of homes closed.

Homebuilding gross margin for the three months ended June 30, 2026 was $99.4 million, a decrease of $11.2 million, or 10.1%, from $110.6 million for the three months ended June 30, 2025.

Homebuilding gross margin as a percentage of homebuilding revenues was 19.8% for the three months ended June 30, 2026 and 22.9% for the three months ended June 30, 2025.

The decrease in homebuilding gross margin as a percentage of homebuilding revenues was primarily due to higher lot costs, higher capitalized interest, and higher vertical costs during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Selling Expenses.

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.

Selling expenses for the three months ended June 30, 2026 were $44.1 million, an increase of $2.5 million, or 6.0%, from $41.6 million for the three months ended June 30, 2025.

The increase in selling expenses was primarily due to an increase in the number of homes closed for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Sales commissions increased to $19.2 million for the three months ended June 30, 2026 from $18.9 million for the three months ended June 30, 2025, primarily due to an increase in the number of homes closed.

Selling expenses as a percentage of total revenues were 8.6% and 8.5% for the three months ended June 30, 2026 and 2025, respectively.

The increase in selling expenses as a percentage of total revenues was primarily due to higher advertising expenses during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

General and Administrative.

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.

General and administrative expenses for the three months ended June 30, 2026 were $28.6 million, a decrease of $0.8 million, or 2.7%, from $29.4 million for the three months ended June 30, 2025.

General and administrative expenses as a percentage of total revenues were 5.5% and 6.0% during the three months ended June 30, 2026 and 2025, respectively.

The decrease in general and administrative expenses as a percentage of total revenues was due to higher revenues and lower overall other general and administrative expenses during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Other Income, Net.

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 (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:

Other income, net of other expenses for the three months ended June 30, 2026 was $7.6 million, an increase of $4.2 million from $3.4 million for the three months ended June 30, 2025.

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

Net Income before Income Taxes.

Net income before income taxes for the three months ended June 30, 2026 was $36.6 million, a decrease of $5.4 million, or 12.9%, from $42.0 million for the three months ended June 30, 2025.

The overall decrease in net income before income taxes was primarily due to overall increases in cost of sales related to lot costs, capitalized interest costs, and house costs, offset by an increase in other income, net.

Our reportable segments contributed to net income before income taxes during the three months ended June 30, 2026 as follows:

Central - $12.8 million, or 35.0%;

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Income Taxes .

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.

Income tax provision for the three months ended June 30, 2026 was $9.6 million, a decrease of $0.9 million, or 8.6%, from income tax provision of $10.5 million for the three months ended June 30, 2025.

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 26.3% for the three months ended June 30, 2026 from 25.0% for the three months ended June 30, 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 June 30, 2026 was $27.0 million, a decrease of $4.5 million, or 14.3%, from $31.5 million for the three months ended June 30, 2025.

The decrease in net income during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily attributed to overall lower homebuilding gross margin.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Our homebuilding revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the six months ended June 30, 2026 and 2025, and our community count by reportable segment as of June 30, 2026 and 2025, were as follows (revenues in thousands):

Six Months Ended June 30, 2026 As of June 30, 2026

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

Central $ 216,937 715 $ 303,408 48.5 2.5 50

Southeast 180,468 542 332,967 29.7 3.0 30

Northwest 96,611 187 516,636 15.7 2.0 17

West 210,459 471 446,834 27.7 2.8 29

Florida 116,772 331 352,785 23.6 2.3 25

Total $ 821,247 2,246 $ 365,649 145.2 2.6 151

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

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

Central $ 214,132 690 $ 310,336 49.2 2.3 46

Southeast 251,792 768 327,854 31.5 4.1 35

Northwest 87,724 165 531,661 16.3 1.7 16

West 167,295 389 430,064 25.2 2.6 25

Florida 113,962 307 371,212 24.8 2.1 24

Total $ 834,905 2,319 $ 360,028 147.0 2.6 146

Homebuilding Revenues .

Homebuilding revenues for the six months ended June 30, 2026 were $821.2 million, a decrease of $13.7 million, or 1.6%, from $834.9 million for the six months ended June 30, 2025.

The decrease in homebuilding revenues was primarily due to a decrease in the number of homes closed during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

The overall decrease in home closings was a result of a lower average community count, partially offset by a higher average sales price per home closed, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

The overall decrease in average community count related to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

The average sales price per home closed during the six months ended June 30, 2026 was $365,649, an increase of $5,621, or 1.6%, from the average sales price per home closed of $360,028 for the six months ended June 30, 2025.

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

The absorption rate remained unchanged.

Included within our homebuilding revenues for the six months ended June 30, 2026 was $103.3 million in wholesale revenues resulting from 423 home closings, representing 18.8% of the 2,246 total number of homes closed during the six months ended June 30, 2026.

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

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 related to a previously contracted bulk sales agreement during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

• Homebuilding revenues in our Central reportable segment increased by $2.8 million, or 1.3%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 3.6% increase in the number of homes closed, offset by a 2.2% decrease in the average sales price per home closed.

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

• Homebuilding revenues in our Southeast reportable segment decreased by $71.3 million, or 28.3%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 29.4% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.

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

• Homebuilding revenues in our Northwest reportable segment increased by $8.9 million, or 10.1%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 13.3% increase in the number of homes closed, partially offset by a 2.8% decrease in the average sales price per home closed.

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

• Homebuilding revenues in our West reportable segment increased by $43.2 million, or 25.8%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 21.1% increase in the number of homes closed and a 3.9% increase in the average sales price per home closed.

The increase in home closings was the result of an increase in the average community count and a higher absorption rate.

• Homebuilding revenues in our Florida reportable segment increased by $2.8 million, or 2.5%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 7.8% increase in the number of homes closed, partially offset by a 5.0% decrease in the average sales price per home closed.

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

Land and Other Revenues .

Land and other revenues for the six months ended June 30, 2026 were $27.7 million, a decrease of $9.0 million, or 24.5%, from $36.7 million for the six months ended June 30, 2025.

The decrease in land and other revenues was primarily due to fewer lot sales.

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs).

Homebuilding costs for the six months ended June 30, 2026 were $661.9 million, an increase of $11.3 million, or 1.7%, from $650.6 million for the six months ended June 30, 2025.

This overall increase was primarily due to higher house costs, higher lot costs, higher capitalized interest and higher indirect overhead.

Homebuilding gross margin for the six months ended June 30, 2026 was $159.3 million, a decrease of $25.0 million, or 13.6%, from $184.3 million for the six months ended June 30, 2025.

Homebuilding gross margin as a percentage of homebuilding revenues (inclusive of an inventory impairment charge) was 19.4% for the six months ended June 30, 2026 and 22.1% for the six months ended June 30, 2025.

The decrease in homebuilding gross margin as a percentage of homebuilding revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to higher lot costs, higher capitalized interest and higher indirect overhead, 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.

Selling Expenses.

Selling expenses for the six months ended June 30, 2026 were $76.8 million, a decrease of $7.1 million, or 8.5%, from $83.9 million for the six months ended June 30, 2025.

The decrease in selling expenses was primarily due to a decrease in advertising expenses, personnel costs, and commissions for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Sales commissions decreased to $31.7 million during the six months ended June 30, 2026 from $33.0 million for the six months ended June 30, 2025, primarily due to a decrease in homebuilding revenues.

Selling expenses as a percentage of total revenues were 9.0% and 9.6% for the six months ended June 30, 2026 and 2025, respectively.

The decrease in selling expenses as a percentage of total revenues was primarily due to lower overall expenses, offset by a decrease in total revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

General and Administrative.

General and administrative expenses for the six months ended June 30, 2026 were $56.4 million, a decrease of $4.2 million, or 6.9%, from $60.6 million for the six months ended June 30, 2025.

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

General and administrative expenses as a percentage of total revenues were 6.6% and 7.0% for the six months ended June 30, 2026 and 2025, respectively.

The decrease in general and administrative expenses as a percentage of total revenues was primarily due to lower overall expenses, offset by a decrease in total revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Other Income, Net.

Other income, net of other expenses was $11.3 million for the six months ended June 30, 2026, an increase of $7.3 million from $4.0 million for the six months ended June 30, 2025.

The increase in other income, net of other expenses, primarily reflected the increase in income associated with our investment in unconsolidated entities, offset by the decrease in interest income and the decrease in the gain on sale of assets.

Net Income before Income Taxes.

Net income before income taxes for the six months ended June 30, 2026 was $40.9 million, a decrease of $6.9 million, or 14.4%, from $47.8 million for the six months ended June 30, 2025.

The overall decrease in net income before income taxes was primarily due to overall lower homebuilding revenues, higher homebuilding costs, and

an inventory impairment charge during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Our reportable segments contributed to net income before income taxes during the six months ended June 30, 2026 as follows:

Central - $15.9 million, or 38.9%;

Southeast - $11.6 million, or 28.4%;

Northwest - $(0.5) million, or (1.2)%;

West - $18.5 million, or 45.2%;

and Florida - $(4.8) million, or (11.7)%.

Income Taxes .

Income tax provision for the six months ended June 30, 2026 was $11.8 million, a decrease of $0.4 million, or 3.3%, from income tax provision of $12.2 million for the six months ended June 30, 2025.

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 28.8% for the six months ended June 30, 2026 from 25.6% for the six months ended June 30, 2025 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, the compensation cost in excess of deductions for share-based payments, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

Net income for the six months ended June 30, 2026 was $29.1 million, a decrease of $6.4 million, or 18.0%, from $35.5 million for the six months ended June 30, 2025.

The decrease in net income was primarily attributed to lower homebuilding revenues and homebuilding gross margin, as well as an inventory impairment charge during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Non-GAAP Measures

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

Cost of sales 259,807 277,707

Gross margin $ 59,929 $ 73,713

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 homebuilding gross margin excluding inventory impairment, adjusted homebuilding gross margin, EBITDA, adjusted EBITDA, net debt to capital ratio, adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share.

Homebuilding Gross Margin Excluding Inventory Impairment and Adjusted Homebuilding Gross Margin

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

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

We define adjusted homebuilding gross margin as homebuilding 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 homebuilding gross margin excluding inventory impairment and adjusted homebuilding gross margin are useful because they isolate the impact that capitalized interest, purchase accounting adjustments, and inventory impairment have on homebuilding gross margin.

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

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

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

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

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

2026 2025 2026 2025

Homebuilding revenues $ 501,511 $ 483,485 $ 821,247 $ 834,905

Homebuilding costs 402,117 372,877 661,924 650,584

Homebuilding gross margin $ 99,394 $ 110,608 $ 159,323 $ 184,321

Inventory impairment

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

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

Homebuilding gross margin excluding inventory impairment $ 99,394 $ 110,608 $ 164,004 $ 184,321

Capitalized interest amortized to cost of sales 16,472 11,836 26,448 20,103

Purchase accounting adjustments (1)

Adjusted gross margin $ 74,975 $ 82,789

Gross margin % (2)

544 1,042 933 1,851

Gross margin % excluding inventory impairment (2)

Adjusted homebuilding gross margin $ 116,410 $ 123,486 $ 191,385 $ 206,275

Homebuilding gross margin % (2)

19.8 % 22.9 % 19.4 % 22.1 %

Adjusted gross margin % (2)

Homebuilding gross margin % excluding inventory impairment (2)

19.8 % 22.9 % 20.0 % 22.1 %

Adjusted homebuilding gross margin % (2)

23.2 % 25.5 % 23.3 % 24.7 %

(1) Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.

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

(2) Calculated as a percentage of homebuilding revenues.

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.

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

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

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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.

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.

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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.

These GAAP measures include 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 and adjusted EBITDA.

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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,

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

2026 2025 2026 2025

Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527

Income tax provision (benefit) 2,159 1,730

Income tax provision 9,607 10,507 11,766 12,237

Depreciation and amortization 1,331 1,014 2,521 1,875

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

Capitalized interest amortized to cost of sales 16,472 11,836 26,448 20,103

EBITDA $ 54,394 $ 54,890 $ 69,879 $ 69,742

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EBITDA margin % (1)

10.5 % 11.2 % 8.2 % 8.0 %

Adjusted EBITDA margin % (1)

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

11.4 % 12.4 % 9.8 % 9.1 %

(1) Calculated as a percentage of total revenues.

Net Debt to Capital Ratio

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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.

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):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Total debt (Notes payable)

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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,

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

2026 2025 2026 2025

Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527

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Diluted earnings per share $ 1.16 $ 1.36 $ 1.25 $ 1.52

Three Months Ended March 31,

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

2026 2025 2026 2025

Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527

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We permit our retail homebuyers to cancel the purchase contract and obtain a refund of their deposit in the event mortgage financing cannot be obtained within a certain period of time, as specified in their purchase contract.

Typically, our retail homebuyers provide documentation regarding their ability to obtain mortgage financing within 14 days after the purchase contract is signed.

Typically, our retail homebuyers provide

documentation regarding their ability to obtain mortgage financing within 14 days after the purchase contract is signed.

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.

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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.

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.

Net orders for the six months ended June 30, 2026 were 2,260 homes, a decrease of 10.6% from 2,528 homes for the six months ended June 30, 2025, reflecting continued affordability pressures and higher mortgage rates.

The cancellation rate increased to 47.4% in 2026 from 24.2% 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.

Ending backlog grew to 1,298 homes, with an aggregate value of $525.5 million at June 30, 2026, compared to 808 homes valued at $322.5 million at June 30, 2025, which represented increases of 60.6% in units and 63.0% 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.

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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.

Elevated cancellation rates and changes in market conditions could affect the pace of backlog conversion and future homebuilding 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):

Three Months Ended March 31,

Six Months Ended June 30,

Backlog Data 2026 (4)

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Ending backlog is valued at the contract amount.

(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.

(4) As of June 30, 2026, we had 269 units related to bulk sales agreements associated with our wholesale business.

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

Land Acquisition Policies and Development

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

We had 151 and 144 active communities as of June 30, 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 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.

Our lot inventory decreased to 57,406 owned or controlled lots as of June 30, 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.

In consideration for this repurchase option, we paid a non-refundable commitment fee.

Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory and a corresponding obligation was established within our accrued liabilities, as discussed in Note 3 , “Accrued Expenses and Other Liabilities” to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, to recognize this relationship.

Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory and a corresponding obligation was established within our accrued liabilities, as discussed in Note 3 , “Accrued Expenses and Other Liabilities” to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, to recognize this relationship.

While we are not legally obligated to repurchase the balance of the lots, we will be subject to certain performance obligations, financial and other penalties if the lots are not purchased.

We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities.

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

As of June 30, 2026, we have completed the repurchase of all lots via takedowns associated with these transactions.

The table below shows (i) home closings by reportable segment for the six months ended June 30, 2026 and (ii) our owned or controlled lots by reportable segment as of June 30, 2026.

Six Months Ended June 30, 2026 As of June 30, 2026

Reportable Segment Home Closings Owned (1)

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Total 2,246 50,522 6,884 57,406

(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.

(1) Of the 50,522 owned lots as of June 30, 2026, 33,775 were raw/under development lots and 16,747 were finished lots.

Homes in Inventory

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

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

As of June 30, 2026, we had a total of 1,858 completed homes, including information centers, and 1,899 homes in progress.

Raw Materials and Labor

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Liquidity and Capital Resources

As of March 31, 2026, we had $60.9 million of cash and cash equivalents.

As of June 30, 2026, we had $61.1 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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Early stages of development or expansion require significant cash outlays for land acquisitions, land development, plats, vertical development, construction of information centers, general landscaping, and other amenities.

Because these costs are a component of our inventory and are not recognized in our statement of operations until a home closes, we incur significant cash outflows prior to recognition of home sales revenues.

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

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

Net Debt to Capital Ratio

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

As of June 30, 2026, our net debt to capital ratio was 41.6%.

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 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.

At June 30, 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 June 30, 2026, $406.9 million was available to borrow under the Credit Agreement, providing ample liquidity to support operations and growth initiatives.

Short-term Liquidity and Capital Resources

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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.

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.

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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 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.

As of June 30, 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 June 30, 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 $1.5 billion, $19.0 million of letters of credit were outstanding and $406.9 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 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.

At June 30, 2026, the Applicable Margin was 1.85%, and SOFR was 3.64%, 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.

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 June 30, 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.

On July 23, 2025, the Company’s 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.

As of June 30, 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.

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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.

At June 30, 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.

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.

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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 $380.1 million as of March 31, 2026.

Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $416.0 million as of June 30, 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 March 31, 2026 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 June 30, 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 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.

During the three and six months ended June 30, 2026, we did not repurchase any shares of our common stock.

During the three and six months ended June 30, 2025, we repurchased 367,568 shares of our common stock at a total cost, including commissions and excise taxes, of $20.6 million and 409,253 shares of our common stock at a total cost, including commissions and excise taxes, of $23.6 million, 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.

As of June 30, 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 $55.5 million during the three months ended March 31, 2026.

Net cash provided by operating activities was $59.0 million during the six months ended June 30, 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 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.

Net cash provided by operating activities during the six months ended June 30, 2026 was primarily driven by the $42.6 million increase in accounts payable and the $20.1 million increase in the net change related to pre-acquisition costs and deposits, inventory impairment, and compensation expense for equity awards, partially offset by cash outflow of $19.9 million in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity.

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

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

Net cash used in operating activities during the 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.

Net cash used in operating activities during the six months ended June 30, 2025 was primarily driven by cash outflow from the $240.3 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and a $30.0 million decrease in the net change in accrued expenses and other liabilities, and $2.9 million increase in the net change in other assets, partially offset by the $12.8 million increase in the net change of accounts payable.

Investing Activities

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.

Net cash provided by investing activities was $25.5 million during the six months ended June 30, 2026, primarily due to $28.4 million in proceeds from the sale of property and equipment, partially offset by an additional $1.9 million investment in unconsolidated entities.

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

Financing Activities

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.

Net cash used in financing activities was $84.7 million during the six months ended June 30, 2026, primarily driven by $222.0 million of repayments on the Credit Agreement and payments of $8.1 million related to a financing arrangement with a third-party land banker, offset by $143.3 million of borrowings under the Credit Agreement.

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

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

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 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.

As of June 30, 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

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 the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

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 the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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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 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.

We believe that there have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 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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Actual results may differ materially from those expressed or implied by these statements.

You can generally identify our forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will” or other similar words.

You can generally identify our forward-looking

statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “will” or other similar words.

We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made.

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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