What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-01 compared with 2023-07-28 · 104 added, 80 removed, 609 unchanged (23% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 1,048,755 $ 861,561

16 unchanged sentences

Authorized 10,000,000 shares;

none issued and outstanding at June 30, 2023 and December 31, 2022

none issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, par value $ 0.01 .

Authorized 125,000,000 shares;

36,765,267 and 36,571,393 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

36,449,906 and 36,571,393 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 289,109 327,878

6 unchanged sentences

(in thousands, except per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

12 unchanged sentences

Expense ( 2,871 ) ( 2,804 ) ( 8,910 ) ( 7,897 )

(Loss)/earnings from financial services unconsolidated entities and other, net ( 5,795 ) 1,521 ( 5,536 ) 2,695

Financial services (loss)/profit ( 2,557 ) 4,079 366 7,413

Earnings/(loss) from financial services unconsolidated entities and other, net 2,462 1,338 ( 3,074 ) 4,033

Financial services profit 5,700 4,842 6,066 12,255

Commissions and other sales costs ( 99,122 ) ( 77,884 ) ( 277,766 ) ( 212,807 )

2 unchanged sentences

Other income/(expense), net 13,331 ( 74 ) 35,037 ( 849 )

Loss on early extinguishment of debt ( 907 ) — ( 907 ) —

Earnings before income taxes 285,734 329,491 690,561 947,069

11 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation 16,557 16,897

Loss on early extinguishment of debt 907 —

Equity in earnings from unconsolidated entities ( 4,651 ) ( 3,703 )

2 unchanged sentences

Changes in assets and liabilities:

Decrease/(increase) in real estate 14,950 ( 729,450 )

Decrease/(increase) in deposits on real estate under option or contract 5,491 ( 7,288 )

Decrease/(increase) in other receivables, prepaids and other assets 8,962 ( 90,419 )

(Decrease)/increase in accounts payable and accrued liabilities ( 27,754 ) 113,421

Increase in real estate ( 137,543 ) ( 990,106 )

(Increase)/decrease in deposits on real estate under option or contract ( 17,027 ) 176

Increase in other receivables, prepaids and other assets ( 9,447 ) ( 89,177 )

Increase in accounts payable and accrued liabilities 37,085 118,636

Increase in home sale deposits 10,172 15,157

10 unchanged sentences

Repayment of loans payable and other borrowings ( 2,616 ) ( 14,953 )

Repayment of senior notes ( 150,884 ) —

Dividends paid ( 29,695 ) —

29 unchanged sentences

Our homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets.

At June 30, 2023, we were actively selling homes in 291 communities, with base prices ranging from approximately $ 240,000 to $ 1,400,000 .

At September 30, 2023, we were actively selling homes in 272 communities, with base prices ranging from approximately $ 231,000 to $ 1,054,000 .

Basis of Presentation .

8 unchanged sentences

Liquid investments with an initial maturity of three months or less are classified as cash equivalents.

Amounts in transit from title companies or closing agents for home closings of approximately $ 51.7 million and $ 161.5 million are included in Cash and cash equivalents at June 30, 2023 and December 31, 2022, respectively.

Amounts in transit from title companies or closing agents for home closings of approximately $ 81.1 million and $ 161.5 million are included in Cash and cash equivalents at September 30, 2023 and December 31, 2022, respectively.

Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment (“ASC 360-10”) .

4 unchanged sentences

Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase.

When a home closes, we may have incurred costs for goods and services that have not yet been paid.

When a home closes, we may have incurred costs for materials and services that have not yet been paid.

We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.

25 unchanged sentences

Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of any non-refundable deposits and any related capitalized costs.

Our Deposits on real estate under option or contract were $ 71.0 million and $ 76.7 million as of June 30, 2023 and December 31, 2022, respectively.

See Note 3 for additional information related to Deposits on real estate.

Our Deposits on real estate under option or contract were $ 93.5 million and $ 76.7 million as of September 30, 2023 and December 31, 2022, respectively.

See Note 3 for additional information related to Deposits on real estate under option or contract.

In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test.

1 unchanged sentence

Such qualitative factors include:

(1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings.

(1) macroeconomic conditions, such as a deterioration in general economic conditions;

(2) industry and market considerations such as deterioration in the environment in which the entity operates;

(3) cost factors such as increases in raw materials, labor costs, etc.;

and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings.

If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated.

8 unchanged sentences

The table below outlines our ROU assets and lease liabilities (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

ROU assets $ 49,619 $ 19,129

5 unchanged sentences

In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements.

The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and may have staggered purchase schedules.

The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered.

See Note 3 for additional information on these off-balance sheet arrangements.

6 unchanged sentences

The table below outlines our surety bond and letter of credit obligations (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Outstanding Estimated work

7 unchanged sentences

Accrued Liabilities .

Accrued liabilities at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

June 30, 2023 December 31, 2022

Accrued liabilities at September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

September 30, 2023 December 31, 2022

Accruals related to real estate development and construction activities $ 145,467 $ 139,447

12 unchanged sentences

We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available.

Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or six months ended June 30, 2023 or 2022.

Included in the warranty reserve balances at June 30, 2023 and December 31, 2022 are case-specific reserves for warranty matters, as discussed in Note 15.

Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or nine months ended September 30, 2023 or 2022.

Included in the warranty reserve balances at September 30, 2023 and December 31, 2022 are case-specific reserves for warranty matters, as discussed in Note 15.

A summary of changes in our warranty reserves follows (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

24 unchanged sentences

The related contract assets for these estimated future renewal commissions are no t material at

June 30, 2023 and December 31, 2022.

September 30, 2023 and December 31, 2022.

Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements.

3 unchanged sentences

Real estate consists of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Homes under contract under construction (1)

11 unchanged sentences

property taxes, homeowner association dues, etc.) are expensed as incurred.

(3) Includes land held for sale of $ 8.6 million and $ 66.8 million as of June 30, 2023 and December 31, 2022, respectively .

(3) Includes land held for sale of $ 7.1 million and $ 66.8 million as of September 30, 2023 and December 31, 2022, respectively .

Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities.

1 unchanged sentence

A summary of our capitalized interest is as follows (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

10 unchanged sentences

Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively.

As a result of our analyses, we determined that as of June 30, 2023 and December 31, 2022, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.

The table below presents a summary of our lots under option at June 30, 2023 (dollars in thousands):

As a result of our analyses, we determined that as of September 30, 2023 and December 31, 2022, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.

The table below presents a summary of our lots under option at September 30, 2023 (dollars in thousands):

Projected Number

18 unchanged sentences

(3) Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.

(4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2023.

(4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2023.

Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots on a pre-determined schedule in accordance with each respective agreement.

7 unchanged sentences

Based on the structure of these joint ventures, they may or may not be consolidated into our results.

As of June 30, 2023, we had two active equity-method land joint ventures and one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers.

As of September 30, 2023, we had two active equity-method land joint ventures and one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers.

Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

$ 3,855 $ 3,389

6 unchanged sentences

Total liabilities and equity $ 34,569 $ 33,007

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

6 unchanged sentences

This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items:

(i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.

(2) Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in (Loss)/earnings from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements.

(i) timing differences for revenue and distributions recognition;

(ii) step-up basis and corresponding amortization;

(iii) capitalization of interest on qualified assets;

(iv) income deferrals as discussed in Note (2) below;

and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.

(2) Our share of pre-tax earnings/(loss) from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements.

Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income/(expense), net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any.

2 unchanged sentences

Loans payable and other borrowings consist of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Other borrowings, real estate notes payable (1)

8 unchanged sentences

Borrowings under the Credit Facility bear interest at the Company's option, at either (1) term SOFR (based on 1, 3, or 6 month interest periods, as selected by the Company) plus a 10 basis point adjustment plus an applicable margin (ranging from 125 basis points to 175 basis points (the "applicable margin")) based on the Company's leverage ratio as determined in accordance with a pricing grid, (2) the higher of (i) the prime lending rate ("Prime"), (ii) an overnight bank rate plus 50 basis points and (iii) term SOFR (based on a 1 month interest period) plus a 10 basis point adjustment plus 1 %, in each case plus a margin ranging from 25 basis points to 75 basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a 10 basis point adjustment plus the applicable margin.

At June 30, 2023, the interest rate on outstanding borrowings under the Credit Facility would have been 6.490 % per annum, calculated in accordance with option (1) discussed previously and using the 1 month term SOFR.

We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate equal to the applicable margin then in effect.

At September 30, 2023, the interest rate on outstanding borrowings under the Credit Facility would have been 6.670 % per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR.

We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate determined by a tiered fee matrix based on our leverage ratio.

The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $ 2.8 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60 %.

We were in compliance with all Credit Facility covenants as of June 30, 2023.

We had no outstanding borrowings under the Credit Facility as of June 30, 2023 and December 31, 2022.

There were no borrowings or repayments under the Credit Facility during the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023, we had outstanding letters of credit issued under the Credit Facility totaling $ 40.1 million, leaving $ 794.9 million available under the Credit Facility to be drawn.

We were in compliance with all Credit Facility covenants as of September 30, 2023.

We had no outstanding borrowings under the Credit Facility as of September 30, 2023 and December 31, 2022.

We had no borrowings or repayments under the Credit Facility during the three and nine months ended September 30, 2023, and $ 40.0 million in borrowings and repayments during the three and nine months ended September 30, 2022.

As of September 30, 2023, we had outstanding letters of credit issued under the Credit Facility totaling $ 40.6 million, leaving $ 794.4 million available under the Credit Facility to be drawn.

NOTE 6 — SENIOR NOTES, NET

Senior notes, net consist of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

6.00 % senior notes due 2025.

At June 30, 2023 and December 31, 2022 there was approximately $ 1,568 and $ 1,977 in net unamortized premium, respectively.

At September 30, 2023 and December 31, 2022 there was approximately $ 1,169 and $ 1,977 in net unamortized premium, respectively.

251,169 401,977

6 unchanged sentences

The indentures for all of our senior notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, and limitations on sale and leaseback transactions and mergers.

We were in compliance with all such covenants as of June 30, 2023.

We were in compliance with all such covenants as of September 30, 2023.

Obligations to pay principal and interest on the senior notes are guaranteed by substantially all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes Corporation.

4 unchanged sentences

Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor.

In September 2023, we partially redeemed $ 150.0 million of our 6.00 % Senior Notes due 2025 (the "2025 Notes"), incurring $ 0.9 million in early debt extinguishment charges in the three and nine months ended September 30, 2023, reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

After the partial redemption, the 2025 Notes have $ 250.0 million in remaining principal outstanding.

NOTE 7 — FAIR VALUE DISCLOSURES

9 unchanged sentences

The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (Level 2 inputs as per the discussion above) and is as follows (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Principal Estimated Fair

13 unchanged sentences

Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

18 unchanged sentences

Additions — — — — — —

Balance at June 30, 2023 $ — $ — $ 32,962 $ — $ — $ 32,962

Balance at September 30, 2023 $ — $ — $ 32,962 $ — $ — $ 32,962

NOTE 10 — STOCKHOLDERS’ EQUITY

A summary of changes in stockholders’ equity is presented below (in thousands):

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In thousands)

14 unchanged sentences

Balance at June 30, 2023 36,765 $ 368 $ 328,277 $ 3,919,650 $ 4,248,295

Six Months Ended June 30, 2022

Net earnings — — — 221,760 221,760

Stock-based compensation expense — — 6,156 — 6,156

Dividends declared — — — ( 9,841 ) ( 9,841 )

Issuance of stock 4 — — — —

Share repurchases ( 319 ) ( 4 ) ( 45,324 ) — ( 45,328 )

Balance at September 30, 2023 36,450 $ 364 $ 289,109 $ 4,131,569 $ 4,421,042

Nine Months Ended September 30, 2022

(In thousands)

13 unchanged sentences

Balance at June 30, 2022 36,567 $ 366 $ 315,590 $ 3,096,513 $ 3,412,469

During the three months ended June 30, 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.27 per share.

Quarterly dividends declared and paid during the six months ended June 30, 2023 totaled $ 0.54 per share.

There were no such transactions in the three and six months ended June 30, 2022.

Net earnings — — — 262,489 262,489

Stock-based compensation expense — — 6,852 — 6,852

Issuance of stock 4 — — — —

Balance at September 30, 2022 36,571 $ 366 $ 322,442 $ 3,359,002 $ 3,681,810

During the three months ended September 30, 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.27 per share.

Quarterly dividends declared and paid during the nine months ended September 30, 2023 totaled $ 0.81 per share.

There were no such transactions in the three and nine months ended September 30, 2022.

The Inflation Reduction Act of 2022 ("IRA"), which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

During the three and nine months ended September 30, 2023, we reflected the applicable excise tax in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accrued liabilities on the accompanying unaudited consolidated balance sheets.

NOTE 11 — STOCK BASED AND DEFERRED COMPENSATION

4 unchanged sentences

The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants.

The 2018 Plan authorizes 7,400,000 shares of stock to be awarded, of which 1,308,894 shares remain available for grant at June 30, 2023.

The 2018 Plan authorizes 7,400,000 shares of stock to be awarded, of which 1,340,233 shares remain available for grant at September 30, 2023.

We believe that such awards provide a means of long-term compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders.

4 unchanged sentences

A portion of the performance-based restricted stock awards granted to our executive officers contain market conditions as defined by ASC 718.

ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period.

ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a

derived grant date fair value and expensed over the service period.

We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards.

Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

The following table includes additional information regarding our stock compensation plan (dollars in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Unrecognized stock-based compensation cost $ 32,844 $ 29,187

5 unchanged sentences

We do not currently offer a contribution match on the deferred compensation plan.

All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three and six months ended June 30, 2023 or 2022, other than minor administrative costs.

All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the three and nine months ended September 30, 2023 or 2022, other than minor administrative costs.

NOTE 12 — INCOME TAXES

Components of the income tax provision are as follows (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total $ 63,974 $ 67,002 $ 150,664 $ 217,242

The effective tax rate for the three and six months ended June 30, 2023 was 22.0 % and 21.4 %, and for the three and six months ended June 30, 2022 was 24.6 % and 24.3 %, respectively.

The lower tax rate for the three and six months ended June 30, 2023 reflects the increased §45L energy-efficient homes federal tax credit on qualifying homes under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") in August 2022.

There were no such credits available in the first six months of 2022.

The IRA retroactively extended the IRC §45L energy-efficient homes federal tax credit to homes delivered from January 1, 2022 through December 31, 2032, modified the energy standards required to qualify for the tax credit and increased the per-home credit amount starting in 2023.

Among other provisions, the IRA also created a 15% corporate alternative minimum tax on certain profits and a 1% excise tax on net stock repurchases.

The alternative minimum tax and excise tax were effective for us on January 1, 2023 and did not have a material impact on our consolidated financial statements for the three and six months ended June 30, 2023.

At June 30, 2023 and December 31, 2022, we have no unrecognized tax benefits.

The effective tax rate for the three and nine months ended September 30, 2023 was 22.4 % and 21.8 %, and for the three and nine months ended September 30, 2022 was 20.3 % and 22.9 %, respectively.

The higher tax rate for the three months ended September 30, 2023 compared to the 2022 period is due to the retroactive extension of the §45L energy-efficient homes federal tax credit on qualifying homes under the Internal Revenue Code ("IRC") enacted in the IRA in third quarter of 2022, which includes a nine-month catch up in the third quarter of 2022.

The lower effective tax rate for the nine months ended September 30, 2023 compared to the 2022 period reflects the increased per-home energy-efficiency credit amount starting in 2023.

At September 30, 2023 and December 31, 2022, we have no unrecognized tax benefits.

We believe our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change.

3 unchanged sentences

This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carry forward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives.

We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at June 30, 2023.

At June 30, 2023, we have $ 11.0 million in income taxes payable and no income taxes receivable.

The income taxes payable primarily consists of current federal and state tax accruals, net of current energy tax credits and estimated tax payments and is recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at June 30, 2023.

We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at September 30, 2023.

At September 30, 2023, we have $ 16.1 million in income taxes payable and no income taxes receivable.

We conduct business and are subject to tax in the U.S.

5 unchanged sentences

The following table presents certain supplemental cash flow information (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid during the year for:

3 unchanged sentences

Real estate acquired through notes payable $ 6,567 $ 9,861

ROU assets obtained in exchange for new operating lease obligations $ 36,266 $ 4,011

NOTE 14 — OPERATING AND REPORTING SEGMENTS

10 unchanged sentences

The following segment information is in thousands:

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

14 unchanged sentences

Other income/(expense), net 13,331 ( 74 ) 35,037 ( 849 )

Loss on early extinguishment of debt ( 907 ) — ( 907 ) —

Earnings before income taxes $ 285,734 $ 329,491 $ 690,561 $ 947,069

(1) Homebuilding revenue includes the following land closing revenue, by segment:

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

(2) Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.

At June 30, 2023

At September 30, 2023

West Central East Financial Services Corporate and

5 unchanged sentences

Total assets $ 1,744,483 $ 1,506,690 $ 1,784,525 $ 1,320 $ 1,144,852 $ 6,181,870

(1) Balance consists primarily of cash and cash equivalents, prepaids and other assets and property and equipment, net .

(1) Balance consists primarily of cash and cash equivalents, other receivables and property and equipment, net.

(2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities and prepaids and other assets.

19 unchanged sentences

Historically, most disputes regarding warranty claims are resolved prior to litigation.

We believe there are no pending legal or warranty matters as of June 30, 2023 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved.

We believe there are no pending legal or warranty matters as of September 30, 2023 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved.

As discussed in Note 1 under the heading “Warranty Reserves”, we have case specific reserves within our $ 39.1 million of total warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2006 and 2017 and HVAC condensation issues in limited geographies for homes constructed and delivered in 2021 and the first half of 2022.

Our review and handling of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, our judgment and various assumptions and estimates.

Our review and management of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, historical experience, our judgment and various assumptions and estimates.

Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves.

As of June 30, 2023, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we believe our reserves are sufficient to cover the above mentioned matter.

As of September 30, 2023, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we believe our reserves are sufficient to cover the above mentioned matter.

See Note 1 for information related to our warranty obligations.

25 unchanged sentences

the impact of new accounting standards and changes in accounting estimates;

trends and expectations concerning future demand for homes, home construction cycle times, sales prices, sales orders, cancellations, construction and materials costs and availability, gross margins, land costs, community counts and profitability and future home supply and inventories;

trends and expectations concerning future demand for homes, home construction cycle times, sales prices, sales orders, cancellations, construction and materials costs and availability, gross margins, land costs, inflation, community counts and profitability and future home supply and inventories;

our future cash needs and sources, and the impact of seasonality.

35 unchanged sentences

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 1. Financial Statements