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Item 1. Financial Statements

2024-10-31 compared with 2024-07-26 · 123 added, 94 removed, 643 unchanged (25% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 831,559 $ 921,227

16 unchanged sentences

Authorized 10,000,000 shares;

none issued and outstanding at June 30, 2024 and December 31, 2023

none issued and outstanding at September 30, 2024 and December 31, 2023

Common stock, par value $ 0.01 .

Authorized 125,000,000 shares;

36,327,214 and 36,425,037 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

36,179,602 and 36,425,037 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 176,929 290,955

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,

2024 2023 2024 2023

12 unchanged sentences

Expense ( 3,706 ) ( 2,871 ) ( 10,633 ) ( 8,910 )

Earnings/(loss) from financial services unconsolidated entities and other, net 450 ( 5,795 ) ( 3,590 ) ( 5,536 )

Financial services profit/(loss) 4,837 ( 2,557 ) 4,147 366

(Loss)/earnings from financial services unconsolidated entities and other, net ( 1,263 ) 2,462 ( 4,853 ) ( 3,074 )

Financial services profit 3,101 5,700 7,248 6,066

Commissions and other sales costs ( 97,898 ) ( 99,122 ) ( 304,113 ) ( 277,766 )

16 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 19,305 16,557

Loss on early extinguishment of debt 631 907

Equity in earnings from unconsolidated entities ( 3,925 ) ( 4,651 )

2 unchanged sentences

Changes in assets and liabilities:

(Increase)/decrease in real estate ( 450,551 ) 14,950

(Increase)/decrease in deposits on real estate under option or contract ( 45,576 ) 5,491

Decrease in other receivables, prepaids and other assets 24,237 8,962

Decrease in accounts payable and accrued liabilities ( 12,965 ) ( 27,754 )

Increase in home sale deposits 2,775 11,818

Increase in real estate ( 723,835 ) ( 137,543 )

Increase in deposits on real estate under option or contract ( 96,404 ) ( 17,027 )

Decrease/(increase) in other receivables, prepaids and other assets 7,307 ( 9,447 )

Increase in accounts payable and accrued liabilities 21,387 37,085

(Decrease)/increase in home sale deposits ( 4,472 ) 10,172

Net cash (used in)/provided by operating activities ( 128,013 ) 460,092

16 unchanged sentences

Net cash provided by/(used in) financing activities 69,782 ( 238,195 )

Net increase in cash and cash equivalents 71,694 301,682

Net (decrease)/increase in cash and cash equivalents ( 89,668 ) 187,194

Cash and cash equivalents, beginning of period 921,227 861,561

26 unchanged sentences

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

At June 30, 2024, we were actively selling homes in 287 communities, with base prices ranging from approximately $ 243,000 to $ 1,080,000 .

At September 30, 2024, we were actively selling homes in 278 communities, with base prices ranging from approximately $ 241,000 to $ 1,080,000 .

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 $ 75.1 million and $ 95.7 million are included in Cash and cash equivalents at June 30, 2024 and December 31, 2023, respectively.

Amounts in transit from title companies or closing agents for home closings of approximately $ 63.6 million and $ 95.7 million are included in Cash and cash equivalents at September 30, 2024 and December 31, 2023, 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”) .

32 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 $ 156.7 million and $ 111.4 million as of June 30, 2024 and December 31, 2023, respectively.

Our Deposits on real estate under option or contract were $ 207.5 million and $ 111.4 million as of September 30, 2024 and December 31, 2023, respectively.

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

13 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

ROU assets $ 54,631 $ 51,275

1 unchanged sentence

Off-Balance Sheet Arrangements - Joint Ventures .

We may participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital, although our participation in such ventures is currently limited.

See Note 4 for additional discussion of our investments in unconsolidated entities .

10 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Outstanding Estimated work

7 unchanged sentences

Accrued Liabilities .

Accrued liabilities at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Accrued liabilities at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30, 2024 December 31, 2023

Accruals related to real estate development and construction activities $ 190,575 $ 137,489

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, 2024 or 2023.

Included in the warranty reserve balances at June 30, 2024 and December 31, 2023 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, 2024 or 2023.

Included in the warranty reserve balances at September 30, 2024 and December 31, 2023 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,

2024 2023 2024 2023

23 unchanged sentences

Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker.

The related contract assets for these estimated future renewal commissions are no t material at June 30, 2024 and December 31, 2023.

The related contract assets for these estimated future renewal commissions are no t material at September 30, 2024 and December 31, 2023.

Recent Accounting Pronouncements.

1 unchanged sentence

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which aligns interim segment disclosure requirements with existing annual requirements and includes updates to segment reporting, most notably through enhanced disclosures about significant segment expenses and various Chief Operating Decision Maker ("CODM")-related disclosures.

ASU 2023-07 is effective for our annual report covering the fiscal year beginning January 1, 2024, and for our interim reports beginning January 1, 2025.

ASU 2023-07 is required to be applied retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.

We are currently evaluating the impact adopting this standard will have on our financial statement disclosures.

In December 2023, the FASB issued ASU No.

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ASU 2023-09 is effective for us beginning January 1, 2025 and may be applied either retrospectively or prospectively.

We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.

We are currently evaluating the impact adopting this standard will have on our financial statement disclosures.

NOTE 2 — REAL ESTATE AND CAPITALIZED INTEREST

Real estate consists of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Homes under contract under construction (1)

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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,

2024 2023 2024 2023

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.

We determined that as of June 30, 2024 and December 31, 2023, 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, 2024 (dollars in thousands):

We determined that as of September 30, 2024 and December 31, 2023, 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, 2024 (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, 2024.

(4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2024.

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.

3 unchanged sentences

We may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital.

While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as critical to the success of our homebuilding operations.

Our joint venture partners generally are other homebuilders, land sellers or other real estate investors.

1 unchanged sentence

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

As of June 30, 2024, we had one active equity-method land joint venture and one mortgage joint venture, which is engaged in mortgage activities and primarily provides mortgage services to our homebuyers.

As of September 30, 2024, we had one active equity-method land joint venture and one mortgage joint venture.

The mortgage joint venture is engaged in mortgage activities and primarily provides mortgage 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, 2024 December 31, 2023

September 30, 2024 December 31, 2023

$ 4,348 $ 3,546

6 unchanged sentences

Total liabilities and equity $ 40,752 $ 38,455

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

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

2024 2023 2024 2023

7 unchanged sentences

(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.

(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.

Our share of pre-tax earnings/(loss) from all other joint ventures is recorded in Other income, 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, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Other borrowings, real estate notes payable (1)

4 unchanged sentences

The Company entered into an amended and restated unsecured revolving credit facility agreement ("Credit Facility") in 2014 that has been amended from time to time.

In June 2024, the Credit Facility was amended to increase the facility size, amend the accordion feature to permit the facility size to be increased, subject to certain conditions, extended the maturity date from June 2, 2028 to June 12, 2029, and revised the applicable pricing grid.

In June 2024, the Credit Facility was amended to:

increase the facility size;

refresh the accordion feature permitting the facility size to be increased subject to certain conditions;

extend the maturity date from June 2, 2028 to June 12, 2029;

and revise the applicable pricing grid.

The Credit Facility's aggregate commitment is

1 unchanged sentence

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 110 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 10 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, 2024, the interest rate on outstanding borrowings under the Credit Facility would have been 6.537 % per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR.

At September 30, 2024, the interest rate on outstanding borrowings under the Credit Facility would have been 6.046 % 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 $ 3.3 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, 2024.

We had no outstanding borrowings under the Credit Facility as of June 30, 2024 and December 31, 2023.

There were no borrowings or repayments under the Credit Facility during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, we had outstanding letters of credit issued under the Credit Facility totaling $ 114.7 million, leaving $ 795.3 million available under the Credit Facility to be drawn.

We were in compliance with all Credit Facility covenants as of September 30, 2024.

We had no outstanding borrowings under the Credit Facility as of September 30, 2024 and December 31, 2023.

There were no borrowings or repayments under the Credit Facility during the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024, we had outstanding letters of credit issued under the Credit Facility totaling $ 113.3 million, leaving $ 796.7 million available under the Credit Facility to be drawn.

NOTE 6 — SENIOR AND CONVERTIBLE SENIOR NOTES, NET

S enior and convertible senior notes, net consist of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

6.00 % senior notes due 2025 ("2025 Notes").

8 unchanged sentences

The indentures for our 2027 Notes and 2029 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, 2024.

We were in compliance with all such covenants as of September 30, 2024.

Obligations to pay principal and interest on the senior and convertible 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 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 had $ 250.0 million in remaining principal outstanding.

Convertible Senior Notes due 2028

In May 2024, we issued $ 575.0 million aggregate principal amount of 1.750 % 2028 Convertible Notes pursuant to an Indenture dated as of May 9, 2024 (the “Indenture”).

In May 2024, we issued $ 575.0 million aggregate principal amount of 1.750 % 2028 Convertible Notes (the "2028 Convertible Notes") pursuant to an Indenture dated as of May 9, 2024 (the “Indenture”).

The 2028 Convertible Notes were issued at par and will mature on May 15, 2028, unless converted earlier in accordance with their terms prior to such date.

We used a portion of the net proceeds from the offering to pay the cost of entering into the capped calls, as defined and described below, and to redeem all $ 250.0 million

aggregate principal then outstanding of our 6.00 % 2025 Notes for which we incurred $ 0.6 million in early debt extinguishment charges in the three and six months ended June 30, 2024 , reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

The 2028 Convertible Notes are convertible into shares of the Company’s common stock (“common stock”) at an initial conversion rate of 4.3048 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $ 232.30 per share.

The conversion rate will be subject to adjustment upon the occurrence of certain events specified in the Indenture but will not be adjusted for accrued and unpaid interest or quarterly cash dividends.

In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change" as defined in the Indenture.

We used a portion of the net proceeds from the offering to pay the cost of entering into the capped calls, as defined and described below, and to redeem the remaining $ 250.0 million aggregate principal then outstanding of our 2025 Notes for which we incurred $ 0.6 million in early debt extinguishment charges in the nine months ended September 30, 2024 , reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

There were no such charges in the three months ended September 30, 2024.

The 2028 Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 4.3048 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $ 232.30 per share.

The conversion rate will be subject to adjustment upon the occurrence of certain events but will not be adjusted for accrued and unpaid interest or quarterly cash dividends.

In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change".

The Company is required to satisfy its conversion obligations by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election.

4 unchanged sentences

On or after February 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

The 2028 Convertible Notes are accounted for in accordance with ASC 470, Debt , and ASC 815, Derivatives and Hedging .

The 2028 Convertible Notes are accounted for in accordance with ASC 470, Debt , and ASC 815, Derivatives and Hedging ("ASC 815") .

The conversion options and the 2028 Convertible Notes are reflected as a single instrument in Senior and convertible senior notes, net on the accompanying unaudited consolidated balance sheets and the conversion options are not bifurcated as a derivative.

Capped Call Transactions

Concurrent with the offering of the 2028 Convertible Notes, we used $ 61.8 million of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Call counterparties (the counterparties") to provide shares of our common stock to converting debt holders up to a cap price.

Concurrent with the offering of the 2028 Convertible Notes, we used $ 61.8 million of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Calls counterparties (the "Counterparties") to provide shares of our common stock to converting debt holders up to a cap price.

The Capped Calls each have an initial strike price of approximately $ 232.30 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Convertible Notes.

1 unchanged sentence

The Capped Calls will reduce our obligation to settle, in shares or in cash, conversions when our stock price is between $ 232.30 and $ 350.64 .

The Capped Calls are separate transactions entered into by the Company with each of the counterparties, are not part of the terms of the 2028 Convertible Notes and do not change the holders’ rights under the 2028 Convertible Notes or the Indenture.

The Capped Calls are separate transactions entered into by the Company with each of the Counterparties, are not part of the terms of the 2028 Convertible Notes and do not change the note holders’ rights under the 2028 Convertible Notes or the Indenture.

Holders of the 2028 Convertible Notes do not have any rights with respect to the Capped Calls.

As the Capped Calls are considered indexed to the Company's own stock, they are recorded in stockholders’ equity as a reduction of Additional paid-in capital in the accompanying unaudited consolidated balance sheets, and are not accounted for as derivatives under ASC 815-10, Derivatives and Hedging .

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, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Principal Estimated Fair

12 unchanged sentences

Non-Financial Instruments:

Our Real estate assets are Level 3 instruments that are required to be recorded at fair value on non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable.

Refer to Note 1 for information regarding the valuation of these assets.

Our Real estate assets are Level 3 instruments that are required to be recorded at fair value only if events and circumstances indicate that the carrying value may not be recoverable.

See Note 1 for additional information regarding the valuation of these assets.

NOTE 8 — EARNINGS PER SHARE

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,

2024 2023 2024 2023

17 unchanged sentences

The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition.

The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on our unaudited consolidated balance sheets in Prepaids, other assets and goodwill.

The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on the accompanying unaudited consolidated balance sheets in Prepaids, other assets and goodwill.

In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present.

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Additions — — — — — —

Balance at June 30, 2024 $ — $ — $ 32,962 $ — $ — $ 32,962

Balance at September 30, 2024 $ — $ — $ 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, 2024

Nine Months Ended September 30, 2024

(In thousands)

14 unchanged sentences

Dividends declared — — — ( 27,245 ) ( 27,245 )

Share repurchases — — — — —

Capped call transactions, net of tax — — ( 47,067 ) — ( 47,067 )

Balance at June 30, 2024 36,327 $ 363 $ 198,503 $ 4,683,668 $ 4,882,534

Six Months Ended June 30, 2023

Net earnings — — — 195,966 195,966

Stock-based compensation expense — — 8,473 — 8,473

Issuance of stock 4 — — — —

Dividends declared — — — ( 27,135 ) ( 27,135 )

Share repurchases ( 151 ) (1) ( 30,047 ) — ( 30,048 )

Balance at September 30, 2024 36,180 $ 362 $ 176,929 $ 4,852,499 $ 5,029,790

Nine Months Ended September 30, 2023

(In thousands)

13 unchanged sentences

Dividends declared — — — ( 9,927 ) ( 9,927 )

Share repurchases — — — — —

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

During the three months ended June 30, 2024 and 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.75 and $ 0.27 per share, respectively.

Quarterly dividends declared and paid during the six months ended June 30, 2024 and 2023, totaled $ 1.50 and $ 0.54 per share, respectively.

During the three and six months ended June 30, 2024 and 2023, we reflected the applicable excise tax on share repurchases in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability in Accrued liabilities on the accompanying unaudited consolidated balance sheets.

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

During the three months ended September 30, 2024 and 2023, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.75 and $ 0.27 per share, respectively.

Quarterly dividends declared and paid during the nine months ended September 30, 2024 and 2023, totaled $ 2.25 and $ 0.81 per share, respectively.

During the three and nine months ended September 30, 2024 and 2023, we reflected the applicable excise tax on share repurchases in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability in Accrued liabilities on the accompanying unaudited consolidated balance sheets.

NOTE 11 — STOCK BASED AND DEFERRED COMPENSATION

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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 1,151,115 shares remain available for grant at June 30, 2024.

The 2018 Plan authorizes 7,400,000 shares of stock to be awarded, of which 1,147,353 shares remain available for grant at September 30, 2024.

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.

Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock units and performance-based awards granted to senior executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date.

Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock units and performance-based awards granted to executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their start date.

Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award.

Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target.

As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period.

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

Compensation cost related to performance-based restricted stock unit awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target(s).

As our performance targets are dependent on performance over a

specified measurement period, once we determine that a performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period.

A portion of the performance-based restricted stock unit 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.

1 unchanged sentence

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,

2024 2023 2024 2023

7 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Unrecognized stock-based compensation cost $ 36,262 $ 27,791

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, 2024 or 2023, 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, 2024 or 2023, other than minor administrative costs.

NOTE 12 — INCOME TAXES

Components of the provision for income taxes 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,

2024 2023 2024 2023

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Total $ 53,966 $ 63,974 $ 167,771 $ 150,664

The effective tax rate for the three and six months ended June 30, 2024 was 22.1 % and 21.4 %, and for the three and six months ended June 30, 2023 was 22.0 % and 21.4 %, respectively.

The rate for all periods 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.

At June 30, 2024 and December 31, 2023, we have no unrecognized tax benefits.

The effective tax rate for the three and nine months ended September 30, 2024 was 21.6 % and 21.5 %, and for the three and nine months ended September 30, 2023 was 22.4 % and 21.8 %, respectively.

The rate for all periods reflects the §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.

At September 30, 2024 and December 31, 2023, 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.

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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, 2024.

At June 30, 2024, we have $ 7.7 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, 2024.

We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at September 30, 2024.

At September 30, 2024, we have $ 17.8 million in income taxes receivable and no income taxes payable.

The income taxes receivable primarily consists of federal and state estimated tax payments and energy tax credits in excess of income tax liability accrued as of September 30, 2024, and is recorded in Other receivables on the accompanying unaudited consolidated balance sheets at September 30, 2024.

In addition, we have accrued taxes of $ 15.2 million recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets as of September 30, 2024 that consists primarily of state franchise tax, sales and use tax and federal excise tax.

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

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federal, state, or local income tax examinations by taxing authorities for years prior to 2020.

We have no state income tax examinations being conducted at this time.

We have one state income tax examination being conducted at this time.

NOTE 13 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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:

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Real estate acquired through notes payable $ 3,630 $ 6,567

ROU assets obtained in exchange for new operating lease obligations $ 9,139 $ 36,266

Non-cash investing and financing activities:

Distributions of real estate from unconsolidated joint ventures, net $ 9,315 $ —

NOTE 14 — OPERATING AND REPORTING SEGMENTS

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Management’s evaluation of segment performance is based on homebuilding segment operating income, which we define as home and land closing revenue less cost of home and land closings, including land development and other land sales costs, commissions and other sales costs, and other general and administrative costs incurred by or allocated to each segment, including impairments.

Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.

Each reportable segment follows the same accounting policies described in Note 1, “Organization and

Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.

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,

2024 2023 2024 2023

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(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,

2024 2023 2024 2023

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(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, 2024

At September 30, 2024

West Central East Financial Services Corporate and

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Total assets $ 1,929,208 $ 1,622,888 $ 2,567,282 $ 1,858 $ 982,216 $ 7,103,452

(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, development reimbursements from local municipalities, and property and equipment, net .

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

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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, 2024 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, 2024 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 $ 35.4 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.

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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, 2024, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we did not adjust such reserves and we believe our reserves are sufficient to cover the above mentioned matters.

As of September 30, 2024, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we did not adjust such reserves and we believe our reserves are sufficient to cover the above mentioned matters.

See Note 1 for information related to our warranty obligations.

NOTE 16 — SUBSEQUENT EVENTS

On October 29, 2024, we closed on the asset acquisition of the homebuilding assets of Elliott Homes, a private homebuilder in the Gulf Coast area with operations in Mississippi, Alabama and the Florida panhandle.

Special Note of Caution Regarding Forward-Looking Statements

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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, general and administrative costs, gross margins, land costs, inflation, 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 incentives, sales orders, cancellations, construction and materials costs and availability, general and administrative costs, 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.

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potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it;

and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2023 under the caption "Risk Factors."

Forward-looking statements express expectations of future events.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements