LGI Homes, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operation, references to “we,” “our,” “us” or similar terms refer to LGI Homes, Inc. and its subsidiaries. Business Overview Our management team has been in the residential land development business since the mid-1990s. Since commencing home building operations in 2003, we have constructed and closed over 80,000 homes. We are engaged in the design, construction and sale of new homes in the following markets: West Northwest Central Midwest Florida Southeast Mid-Atlantic Arizona Washington Central Texas Minnesota Central Florida Georgia Maryland New Mexico Oregon Dallas/Ft Worth East Florida North Carolina Pennsylvania Nevada Colorado Houston West Florida South Carolina Virginia Northern California Oklahoma Alabama West Virginia Southern California Tennessee Utah 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. Persistently high mortgage rates continue to be a key pressure point for entry-level buyers. During the quarter, mortgage rates trended upward, driven by ongoing inflation, economic uncertainty, and geopolitical developments, including the conflict in the Middle East. Additionally, subdued consumer sentiment continues to impact buyers’ willingness to purchase new homes. In response to these dynamics, we continued offering affordable, move-in ready homes supported by compelling financial incentives and targeted discounts on older completed inventory. These strategies are designed to bridge the ongoing affordability gap and make homeownership accessible to as many customers as possible. For the 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 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 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. Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. For additional discussion regarding risks associated with our business and operations, see Item 1A. Risk Factors in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. 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”. 21 Table of Contents Key Results 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. • 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 total revenues increased to 8.2% from 8.0%. 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 .” 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. 22 Table of Contents Results of Operations 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: Revenues 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 Other income, net (7,615) (3,400) (11,316) (3,991) Net income before income taxes 36,591 42,040 40,910 47,764 Income tax provision 9,607 10,507 11,766 12,237 Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527 Basic earnings per share $ 1.16 $ 1.36 $ 1.26 $ 1.52 Diluted earnings per share $ 1.16 $ 1.36 $ 1.25 $ 1.52 Other Financial and Operating Data: Average community count 149.7 146.0 145.2 147.0 Community count at end of period 151 146 151 146 Home closings 1,365 1,323 2,246 2,319 Average sales price per home closed 367,407 365,446 365,649 360,028 Homebuilding gross margin (1) 99,394 110,608 159,323 184,321 Homebuilding gross margin % (2) 19.8 % 22.9 % 19.4 % 22.1 % Adjusted homebuilding gross margin (3) 116,410 123,486 191,385 206,275 Adjusted homebuilding gross margin % (2)(3) 23.2 % 25.5 % 23.3 % 24.7 % EBITDA (4) 54,394 54,890 69,879 69,742 EBITDA margin % (4)(5) 10.5 % 11.2 % 8.2 % 8.0 % Adjusted EBITDA (4) 58,654 60,640 83,031 79,390 Adjusted EBITDA margin % (4)(5) 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 23 Table of Contents 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 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. EBITDA and adjusted EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, management believes that these measures are useful for comparing general operating performance from period to period. Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies. Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP. Please see “ —Non-GAAP Measures ” for reconciliations of EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable. (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 Southeast 108,145 323 334,814 29.7 3.6 30 Northwest 59,605 121 492,603 17.0 2.4 17 West 134,609 299 450,197 28.7 3.5 29 Florida 71,375 203 351,601 24.3 2.8 25 Total $ 501,511 1,365 $ 367,407 149.7 3.0 151 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 Southeast 150,110 456 329,189 33.7 4.5 35 Northwest 53,487 100 534,870 16.0 2.1 16 West 100,339 230 436,257 24.7 3.1 25 Florida 66,563 177 376,062 24.3 2.4 24 Total $ 483,485 1,323 $ 365,446 146.0 3.0 146 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 24 Table of Contents 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. • 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. • 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 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. 25 Table of Contents General and Administrative. 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 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%; Southeast - $7.9 million, or 21.6%; Northwest - $1.1 million, or 3.0%; West - $15.2 million, or 41.5%; and Florida - $(1.0) million, or (2.7)%. Income Taxes . 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 . 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. 26 Table of Contents 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. 27 Table of Contents • 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 28 Table of Contents 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 . 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 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): 29 Table of Contents 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 — — 4,681 — 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) 544 1,042 933 1,851 Adjusted homebuilding gross margin $ 116,410 $ 123,486 $ 191,385 $ 206,275 Homebuilding gross margin % (2) 19.8 % 22.9 % 19.4 % 22.1 % 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 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 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. EBITDA and adjusted EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, 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. Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are: (i) they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments, including for purchase of land; (ii) they do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements or improvements; (iv) they do not adjust for all non-cash income or expense items that are reflected in our statements of cash flows; (v) they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and (vi) other companies in our industry may calculate them differently than we do, limiting their usefulness as a comparative measure. 30 Table of Contents Because of these limitations, our EBITDA and adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using our EBITDA and adjusted EBITDA along with other comparative tools, together with GAAP measures, to assist in the evaluation of operating performance. These GAAP measures include 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. EBITDA and adjusted EBITDA are not intended as alternatives to net income as indicators of our operating performance, as alternatives to any other measure of performance in conformity with GAAP or as alternatives to cash flows as a measure of liquidity. You should therefore not place undue reliance on our EBITDA and adjusted EBITDA calculated using these measures. The following table reconciles EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527 Income tax provision 9,607 10,507 11,766 12,237 Depreciation and amortization 1,331 1,014 2,521 1,875 Capitalized interest amortized to cost of sales 16,472 11,836 26,448 20,103 EBITDA $ 54,394 $ 54,890 $ 69,879 $ 69,742 Inventory impairment — — 4,681 — Stock-based compensation 2,393 2,826 4,604 5,387 Purchase accounting adjustments 544 1,042 933 1,851 Dead deal costs 1,323 1,882 2,934 2,410 Adjusted EBITDA $ 58,654 $ 60,640 $ 83,031 $ 79,390 EBITDA margin % (1) 10.5 % 11.2 % 8.2 % 8.0 % Adjusted EBITDA margin % (1) 11.4 % 12.4 % 9.8 % 9.1 % (1) Calculated as a percentage of total revenues. Net Debt to Capital Ratio Net debt to capital ratio is a non-GAAP financial measure used by management as a supplemental measure in understanding the leverage employed in our operations and as an indicator of our ability to obtain financing. We define net debt to capital ratio as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity. Our management believes that the presentation of net debt to capital ratio provides useful information to investors regarding our financial leverage and our ability to meet long-term obligations. By excluding cash and cash equivalents from total debt, the ratio offers a clearer view of our capital structure and financial flexibility. Our management uses this metric to monitor our capital efficiency and to evaluate the effectiveness of our capital management strategies over time. Other companies may define this measure differently and, as a result, our measure of net debt to capital ratio may not be directly comparable to the measures of other companies. The following table reconciles net debt to capital ratio (a non-GAAP financial measure) to debt to capital ratio, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands): June 30, 2026 December 31, 2025 Total debt (Notes payable) $ 1,580,907 $ 1,656,803 Total equity 2,132,656 2,096,289 Total capital $ 3,713,563 $ 3,753,092 Debt to capital ratio 42.6 % 44.1 % Total debt (Notes payable) $ 1,580,907 $ 1,656,803 Less: Cash and cash equivalents 61,081 61,247 Net debt $ 1,519,826 $ 1,595,556 Total equity 2,132,656 2,096,289 31 Table of Contents Total net capital $ 3,652,482 $ 3,691,845 Net debt to capital ratio (1) 41.6 % 43.2 % (1) Net debt to capital ratio is calculated as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity. Adjusted Net Income, Adjusted Basic Earnings per Share, and Adjusted Diluted Earnings per Share Adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define adjusted net income as net income less inventory impairment charges. We define adjusted basic earnings per share as adjusted net income divided by weighted average basic shares outstanding. We define adjusted diluted earnings per share as adjusted net income divided by weighted average diluted shares outstanding. Our management believes that the presentation of adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share provides useful information to investors because such measures isolate the impact that inventory impairment charges have on net income and earnings per share. However, because adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share exclude the inventory impairment charge, which has real economic effects and could impact the results, the utility of adjusted net income. adjusted basic earnings per share, and adjusted diluted earnings per share as measures of our operating performance may be limited. In addition, other companies may not calculate adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share in the same manner that we do. Accordingly, adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share should be considered only as supplements to net income, basic earnings per share, and earnings per share, respectively, as measures of our performance. The following table reconciles adjusted net income to net income, which is the GAAP financial measure that our management believes to be most directly comparable, and adjusted basic earnings per share and adjusted diluted earnings per share are calculated by dividing adjusted net income by basic or diluted weighted average shares outstanding, respectively (dollars in thousands, except earnings per share): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527 Basic weighted average number of shares outstanding 23,201,571 23,221,565 23,191,411 23,308,534 Basic earnings per share $ 1.16 $ 1.36 $ 1.26 $ 1.52 Diluted weighted average number of shares outstanding 23,279,553 23,265,062 23,248,046 23,364,957 Diluted earnings per share $ 1.16 $ 1.36 $ 1.25 $ 1.52 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 26,984 $ 31,533 $ 29,144 $ 35,527 Inventory impairment — — 4,681 — Tax impact due to above reconciling item — — (1,225) — Adjusted net income $ 26,984 $ 31,533 $ 32,600 $ 35,527 Basic weighted average number of shares outstanding 23,201,571 23,221,565 23,191,411 23,308,534 Adjusted basic earnings per share $ 1.16 $ 1.36 $ 1.41 $ 1.52 Diluted weighted average number of shares outstanding 23,279,553 23,265,062 23,248,046 23,364,957 Adjusted diluted earnings per share $ 1.16 $ 1.36 $ 1.40 $ 1.52 Backlog We sell our homes under standard purchase contracts, which generally require a homebuyer to pay a deposit at the time of signing the purchase contract. The amount of the required deposit is minimal (typically $1,000 to $10,000). 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 32 Table of Contents 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. If a purchase contract has not been cancelled or terminated within 14 days after the purchase contract has been signed, then we have assumed the homebuyer will meet the preliminary criteria to obtain mortgage financing. Only purchase contracts that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing are included in new (gross) orders. Our “backlog” consists of homes that are under a purchase contract that has been signed by homebuyers who have met the preliminary criteria to obtain mortgage financing but have not yet closed and wholesale contracts with varying terms. Since our business model is generally based on building move-in ready homes before a purchase contract is signed, the majority of our homes in backlog are currently under construction or complete. Ending backlog represents the number of homes in backlog from the previous period plus the number of net orders (new orders for homes less cancellations) generated during the current period minus the number of homes closed during the current period. Our backlog at any given time will be affected by cancellations, the number of our active communities and the timing of home closings. Homes in backlog are generally closed within one to two months, although home closings have been, and may continue to be, delayed. In addition, we may experience cancellations of purchase contracts at any time prior to closing. It is important to note that net orders, backlog and cancellation metrics are operational, rather than accounting data, and should be used only as a general gauge to evaluate performance. 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 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 1,298 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. A significant portion of backlog relates to homes further along in construction and expected to close in the near term. However, conversion to revenue remains subject to construction timing, buyer financing, and incentive levels. Elevated cancellation rates and changes in market conditions could affect the pace of backlog conversion and future 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): Six Months Ended June 30, Backlog Data 2026 (4) 2025 (5) Net orders (1) 2,260 2,528 Cancellation rate (2) 47.4 % 24.2 % Ending backlog – homes (3) 1,298 808 Ending backlog – value (3) $ 525,549 $ 322,466 (1) Net orders are new (gross) orders for the purchase of homes during the period, less cancellations of existing purchase contracts during the period. (2) Cancellation rate for a period is the total number of purchase contracts cancelled during the period divided by the total new (gross) orders for the purchase of homes during the period. (3) Ending backlog consists of retail homes at the end of the period that are under a purchase contract that has been signed by homebuyers who have met our preliminary financing criteria but have not yet closed and wholesale contracts with varying terms. Ending backlog is valued at the contract amount. (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 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 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. 33 Table of Contents We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources. In consideration for this repurchase option, we paid a non-refundable commitment fee. Based on our right to control the ultimate economic outcome of these finished lots, these assets will continue to be held as real estate not owned within our inventory 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. 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) Controlled Total Central 715 18,272 256 18,528 Southeast 542 12,868 1,212 14,080 Northwest 187 5,795 1,142 6,937 West 471 8,621 3,145 11,766 Florida 331 4,966 1,129 6,095 Total 2,246 50,522 6,884 57,406 (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 When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. 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 When constructing homes, we use various materials and components. We generally contract for our materials and labor at a fixed price for the anticipated construction period of our homes. This allows us to mitigate the risks associated with increases in building materials and labor costs between the time construction begins on a home and the time it is closed. Typically, the raw materials and most of the components used in our business are readily available in the United States. We purchase some components and materials centrally to achieve volume discounts, a practice that often reduces costs and ensures timely deliveries. We typically do not store significant inventories of construction materials, except for work in progress materials for homes under construction. In addition, the majority of our raw materials are supplied to us by our subcontractors and are included in the price of our contract with such subcontractors. Most of the raw materials necessary for our subcontractors are standard items carried by major suppliers. Our construction work is substantially completed by third-party subcontractors, most of whom are non-unionized. We continue to monitor the supply markets to achieve the best prices available. Typically, the price changes that most significantly influence our operations are price increases in labor, commodities and lumber. In future quarters, we could see various cost pressures associated with inflation similar to the cost pressures experienced in the last few years. Generally, we have successfully increased the sales prices of our homes to absorb these increased costs or have successfully made cost-effective changes as we endeavor to keep our homes affordable. Seasonality In all of our reportable segments, we have historically experienced similar variability in our results of operations and in capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry. We generally close more homes in our second, third and fourth quarters. Thus, our revenues may fluctuate on a quarterly basis and we may have higher capital requirements in our second, third and fourth quarters in order to maintain our inventory levels. Our revenues and capital requirements are generally similar across our second, third and fourth quarters. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular quarter, especially the first quarter, are not necessarily representative of the results we expect at year end. We expect this seasonal pattern to continue in the long term. 34 Table of Contents Liquidity and Capital Resources Overview 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. Our principal uses of capital are operating expenses, land and lot purchases, lot development, home construction, interest costs on our indebtedness and the payment of various liabilities. In addition, we may purchase land, lots, homes under construction or other assets as part of an acquisition and repurchase shares of our common stock. 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 homebuilding revenues. 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 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. This ratio is calculated as net debt (which is total debt minus cash and cash equivalents) divided by net debt plus total equity. Our net debt to capital ratio reflects our balanced approach to financing growth while maintaining liquidity. We continue to monitor leverage levels in light of evolving market conditions to keep an eye on capital efficiency and shareholder value. At 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 We generally rely on our ability to finance our operations by generating operating cash flows and borrowing under the Credit Agreement to adequately fund our short-term working capital obligations and to purchase land and other assets, develop lots and homes and repurchase shares of our common stock. As needed, we will consider accessing the debt and equity capital markets as part of our ongoing financing strategy. We rely on our ability to obtain performance, payment and completion surety bonds as well as letters of credit to finance our projects. Furthermore, we utilize, on a limited and strategic basis, land banking financing arrangements to access short-term liquidity. As of the date of this Quarterly Report on Form 10-Q, we believe that we will be able to fund our current and foreseeable liquidity needs for at least the next twelve months with our cash on hand, cash generated from operations and cash expected to be available from the Credit Agreement or through accessing debt or equity capital, as needed. However, our ability to engage in the transactions described above may be constrained by volatile or tight economic, capital, credit and financial market conditions, as well as moderated investor or lender interest or capacity and our liquidity, leverage and net worth, and we can provide no assurance as to successfully completing, the costs of, or the operational limitations arising from any one or series of such transactions. Long-term Liquidity and Capital Resources We believe that our long-term principal uses of liquidity and capital resources will be inventory related purchases concerning land, lot development, repurchases of shares of our common stock, other capital expenditures, and principal and interest payments on our debt obligations maturing between 2028 and 2032. We believe that we will be able to fund our long-term liquidity needs with cash generated from operations and cash expected to be available to borrow under the Credit Agreement or through accessing debt or equity capital, as needed, although no assurance can be provided that such additional debt or equity capital will be available when needed or on terms that we find attractive. Additionally, we may further utilize, on a limited and strategic basis, land banking financing arrangements to maximize long-term liquidity for lot development projects where we have sufficient finished lot availability in certain markets. To the extent these sources of capital are insufficient to meet our needs, we may also conduct additional public or private offerings of our securities, refinance our indebtedness, or dispose of certain assets to fund our operating activities and capital needs. Revolving Credit Facility 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 35 Table of Contents 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 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 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 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 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 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. 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 to accelerate the maturity of the loan and exercise other rights and remedies. 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 36 Table of Contents 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. Letters of Credit, Surety Bonds and Financial Guarantees We are often required to provide letters of credit and surety bonds to secure our performance under construction contracts, development agreements and other arrangements. The amount of such obligations outstanding at any time varies in accordance with our pending development activities. In the event any such bonds or letters of credit are drawn upon, we would be obligated to reimburse the issuer of such bonds or letters of credit. 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 $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 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 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 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. Our stock repurchase program may be modified, discontinued or suspended at any time. Cash Flows Operating Activities 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 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. 37 Table of Contents 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 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 $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 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. Inflation Our business can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs. In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. See “Industry and Economic Risks—Inflation could adversely affect our business and financial results” in Item 1A. Risk Factors in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Material Cash Requirements 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 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. On an ongoing basis, management evaluates such estimates and judgments and makes adjustments as deemed necessary. Actual results could differ from these estimates using different estimates and assumptions, or if conditions are significantly different in the future. We believe that there have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 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 From time to time we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. You can generally identify our forward-looking 38 Table of Contents 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. We caution you that assumptions, beliefs, expectations, intentions and projections about future events may, and often do, vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements: • adverse economic changes either nationally or in the markets in which we operate, including, among other things, potential impacts from political uncertainty, civil unrest, increases in unemployment, volatility of mortgage interest rates, supply chain disruptions (including due to the conflict between Russia and Ukraine and the wide-ranging sanctions the United States and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials and the conflict in the Middle East), inflation, the possibility of recession and decreases in housing prices; • a slowdown in the homebuilding industry or changes in population growth rates in our markets; • volatility and uncertainty in the credit markets and broader financial markets; • elevated mortgage interest rates for prolonged periods, disruption in the terms or availability of mortgage financing or increase in the number of foreclosures in our markets; • disruptions in global trade, including as a result of tariffs, trade restrictions, retaliatory trade measures or the effect of such actions on trading relationships between the United States and other countries; • the cyclical and seasonal nature of our business; • our future operating results and financial condition; • our business operations; • changes in our business and investment strategy; • the success of our operations in recently opened new markets and our ability to expand into additional new markets; • our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, town houses, wholesale products, and acreage home sites; • our ability to develop our projects successfully or within expected timeframes; • our ability to identify potential acquisition targets, close such acquisitions and realize the benefits of such acquisitions; • increases in taxes or government fees; • decline in the market value of our land portfolio; • our ability to successfully integrate any acquisitions with our existing operations; • availability of land to acquire and our ability to acquire such land on favorable terms or at all; • availability, terms and deployment of capital and ability to meet our ongoing liquidity needs; • decisions of the Credit Agreement lender group; • the cost and availability of insurance and surety bonds; • shortages of or increased prices for labor, land, or raw materials used in land development and housing construction, including due to tariffs or trade restrictions imposed by the U.S. government, and any effect on trading relationships between the United States and other countries; • delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control; • uninsured losses in excess of insurance limits; • our leverage and future debt service obligations; • changes in, liabilities under, or the failure or inability to comply with, governmental laws and regulations, including environmental, privacy and security laws and regulations; • the timing of receipt of regulatory approvals and the opening of projects; • the degree and nature of our competition; • information system failures, cyber incidents or breaches in security; • our ability to retain our key personnel; 39 Table of Contents • the impact of an epidemic or pandemic and its effect on us, our business, customers, subcontractors and suppliers (including associated supply chain disruptions); • negative publicity or poor relations with the residents of our projects; • existing and future litigation, arbitration or other claims; • availability of qualified personnel and third-party contractors and subcontractors; • the impact on our business of the ongoing U.S. government shutdown and any future U.S. government shutdown; • other risks and uncertainties inherent in our business; • other factors we discuss under the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ”; and • the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q.