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Item 1. Financial Statements

2025-07-25 compared with 2025-04-25 · 172 added, 98 removed, 663 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Cash and cash equivalents $ 930,463 $ 651,555

16 unchanged sentences

Authorized 10,000,000 shares;

none issued and outstanding at March 31, 2025 and December 31, 2024

none issued and outstanding at June 30, 2025 and December 31, 2024

Common stock, par value $ 0.01 .

Authorized 125,000,000 shares;

71,830,262 and 71,921,972 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

71,156,138 and 71,921,972 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 62,084 143,036

6 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended March 31,

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

2025 2024 2025 2024

Homebuilding:

6 unchanged sentences

Home closing gross profit 341,328 439,506 636,978 817,464

Land closing gross profit 3,165 7

Land closing gross (loss)/profit ( 719 ) — 2,446 7

Total closing gross profit 340,609 439,506 639,424 817,471

3 unchanged sentences

Earnings/(loss) from financial services unconsolidated entities and other, net 842 450 1,515 ( 3,590 )

Financial services profit/(loss) 3,563 ( 690 )

Financial services profit 5,611 4,837 9,174 4,147

Commissions and other sales costs ( 108,830 ) ( 104,665 ) ( 203,550 ) ( 206,215 )

2 unchanged sentences

Other income, net 10,853 11,498 20,351 20,520

Loss on early extinguishment of debt — ( 631 ) — ( 631 )

Earnings before income taxes 193,060 297,361 353,219 531,376

12 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net earnings $ 269,685 $ 417,571

Adjustments to reconcile net earnings to net cash (used in)/provided by operating activities:

Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation and amortization 12,612 12,812

7 unchanged sentences

(Increase)/decrease in other receivables, prepaids and other assets ( 43,264 ) 24,237

(Decrease)/increase in accounts payable and accrued liabilities ( 16,041 ) 27,668

Decrease in accounts payable and accrued liabilities ( 21,013 ) ( 12,965 )

(Decrease)/increase in home sale deposits ( 9,564 ) 2,775

Net cash (used in)/provided by operating activities ( 42,576 ) 81,930

Net cash used in operating activities ( 28,875 ) ( 36,017 )

Cash flows from investing activities:

2 unchanged sentences

Proceeds from sales of property and equipment 126 130

Maturities/sales of investments and securities 750 750

Payments to purchase investments and securities ( 750 ) ( 750 )

Net cash used in investing activities ( 21,610 ) ( 19,639 )

1 unchanged sentence

Repayment of loans payable and other borrowings ( 11,213 ) ( 7,445 )

Repayment of senior notes — ( 250,695 )

Proceeds from issuance of senior notes 497,195 575,000

Payment of debt issuance costs ( 5,106 ) ( 17,303 )

Purchase of capped calls related to issuance of convertible senior notes — ( 61,790 )

Dividends paid ( 61,484 ) ( 54,484 )

Repurchase of shares ( 89,999 ) ( 55,933 )

Net cash provided by/(used in) financing activities 414,086 ( 90,094 )

Net increase/(decrease) in cash and cash equivalents 360,097 ( 15,929 )

Net cash provided by financing activities 329,393 127,350

Net increase in cash and cash equivalents 278,908 71,694

Cash and cash equivalents, beginning of period 651,555 921,227

23 unchanged sentences

Meritage Homes Corporation operates as a holding company and has no independent assets or operations.

Its homebuilding construction, development and sales activities are conducted through its subsidiaries.

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

At March 31, 2025, we were actively selling homes in 290 communities, with base prices ranging from approximately $ 203,000 to $ 1,092,000 .

Meritage Homes' homebuilding construction, development and sales activities are conducted through its subsidiaries.

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

At June 30, 2025, we were actively selling homes in 312 communities, with base prices ranging from approximately $ 170,000 to $ 1,040,000 .

Basis of Presentation.

18 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 $ 60.2 million and $ 29.0 million are included in Cash and cash equivalents at March 31, 2025 and December 31, 2024, respectively.

Amounts in transit from title companies or closing agents for home closings of approximately $ 59.7 million and $ 29.0 million are included in Cash and cash equivalents at June 30, 2025 and December 31, 2024, 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 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 $ 254.5 million and $ 192.4 million as of March 31, 2025 and December 31, 2024, respectively.

Our Deposits on real estate under option or contract were $ 221.4 million and $ 192.4 million as of June 30, 2025 and December 31, 2024, 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):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

ROU assets $ 53,116 $ 52,941

14 unchanged sentences

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Outstanding Estimated work

7 unchanged sentences

Accrued Liabilities .

Accrued liabilities at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

March 31, 2025 December 31, 2024

Accrued liabilities at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

June 30, 2025 December 31, 2024

Accruals related to real estate development and construction activities $ 177,255 $ 167,075

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 months ended March 31, 2025 or 2024.

Included in the warranty reserve balances at March 31, 2025 and December 31, 2024 are case-specific warranty reserves, 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 six months ended June 30, 2025 or 2024.

Included in the warranty reserve balances at June 30, 2025 and December 31, 2024 are case-specific warranty reserves, as discussed in Note 15.

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Balance, beginning of period $ 35,352 $ 36,364 $ 32,693 $ 37,360

20 unchanged sentences

• Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow.

Home closing and land closing revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material.

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 March 31, 2025 and December 31, 2024.

The related contract assets for these estimated future renewal commissions are no t material at June 30, 2025 and December 31, 2024.

Recent Accounting Pronouncements.

2 unchanged sentences

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 the Chief Operating Decision Maker ("CODM").

We adopted ASU 2023-07 in our annual report covering the fiscal year beginning January 1, 2024, and for this interim report beginning January 1, 2025.

We adopted ASU 2023-07 for the annual period beginning January 1, 2024, and for interim periods beginning January 1, 2025.

ASU 2023-07 is applied retrospectively to all prior periods presented in the accompanying unaudited consolidated financial statements.

12 unchanged sentences

Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

We adopted ASU 2024-04 on January 1, 2025 on a prospective basis and will apply the amendments to any future settlements of convertible debt instruments.

We adopted ASU 2024-04 on January 1, 2025 on a prospective basis and will apply the amendments to any future settlements of convertible debt instruments, if applicable.

The adoption of ASU 2024-04 did not have any impact on the accompanying unaudited consolidated financial statements.

1 unchanged sentence

Real estate consists of the following (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Homes completed and under construction (1)

10 unchanged sentences

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Capitalized interest, beginning of period $ 57,107 $ 54,227 $ 53,678 $ 54,516

9 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 March 31, 2025 and December 31, 2024, 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 March 31, 2025 (dollars in thousands):

We determined that as of June 30, 2025 and December 31, 2024, 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, 2025 (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 March 31, 2025.

(4) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of June 30, 2025.

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.

9 unchanged sentences

Our mortgage joint venture is engaged in mortgage activities and primarily provides mortgage services to our homebuyers.

As of March 31, 2025, we had two active equity-method land joint ventures and one mortgage joint venture.

The mortgage joint venture is engaged in mortgage activities and primarily provides mortgage services to our homebuyers.

As of June 30, 2025, we had two active equity-method land joint ventures and one mortgage joint venture.

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

$ 12,184 $ 4,434

6 unchanged sentences

Total liabilities and equity $ 98,766 $ 78,163

Three Months Ended March 31,

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

2025 2024 2025 2024

Revenue $ 13,813 $ 12,739 $ 24,553 $ 23,329

2 unchanged sentences

Meritage’s share of pre-tax earnings (1) (2)

$ 1,538 $ 1,655 $ 2,164 $ 2,627

(1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures.

6 unchanged sentences

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Other borrowings, secured 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;

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

extend the maturity date to June 12, 2029;

and revise the applicable pricing grid.

The Credit Facility's aggregate commitment is $ 910.0 million with an

accordion feature permitting the size of the facility to increase to a maximum of $ 1.4 billion, subject to certain conditions, including the availability of additional bank commitments.

See Note 16 for details on the amendment entered into subsequent to June 30, 2025.

The Credit Facility's aggregate commitment is $ 910.0 million with an accordion feature permitting the size of the facility to increase to a maximum of $ 1.4 billion, subject to certain conditions, including the availability of additional bank

Borrowings under the Credit Facility bear interest at the Company's option, at either (1) term Secured Overnight Financing Rate ("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 March 31, 2025, the interest rate on outstanding borrowings under the Credit Facility would have been 5.519 % per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR.

At June 30, 2025, the interest rate on outstanding borrowings under the Credit Facility would have been 5.522 % 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 March 31, 2025.

We had no outstanding borrowings under the Credit Facility as of March 31, 2025 and December 31, 2024.

There were $5.0 million of borrowings and repayments under the Credit Facility during the three months ended March 31, 2025, and no borrowings or repayments under the Credit Facility during the three months ended March 31, 2024.

As of March 31, 2025, we had outstanding letters of credit issued under the Credit Facility totaling $ 139.4 million, leaving $ 770.6 million available under the Credit Facility to be drawn.

We were in compliance with all Credit Facility covenants as of June 30, 2025.

We had no outstanding borrowings under the Credit Facility as of June 30, 2025 and December 31, 2024.

There were no borrowings or repayments under the Credit Facility during the three months ended June 30, 2025, and $ 5.0 million of borrowings and repayments under the Credit Facility during the six months ended June 30, 2025.

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

As of June 30, 2025, we had outstanding letters of credit issued under the Credit Facility totaling $ 95.0 million, leaving $ 815.0 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):

March 31, 2025 December 31, 2024

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

June 30, 2025 December 31, 2024

5.125 % senior notes due 2027 ("2027 Notes")

5 unchanged sentences

5.650 % senior notes due 2035 ("2035 Notes").

At March 31, 2025, there was $ 2,782 in net unamortized discount.

At June 30, 2025, there was $ 2,711 in net unamortized discount.

Net debt issuance costs ( 20,680 ) ( 18,465 )

Total $ 1,801,609 $ 1,306,535

The indentures for our 2027 Notes, 2029 Notes and 2035 Notes contain non-financial covenants including, among others, limitations on the amount of secured debt we may incur, on sale and leaseback transactions and mergers.

We were in compliance with all such covenants as of March 31, 2025.

We were in compliance with all such covenants as of June 30, 2025.

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.

3 unchanged sentences

We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage Homes (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several.

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

Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor, and accordingly, the assets, liabilities and results of operations of Meritage Homes Corporation and the Guarantor Subsidiaries are not materially different than the corresponding amounts presented in the unaudited consolidated financial statements of Meritage Homes.

In March 2025, we completed an offering of $ 500.0 million aggregate principal amount of 5.650 % 2035 Notes.

3 unchanged sentences

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 % Senior Notes due 2025 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 at an initial conversion rate of 8.6096 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $ 116.15 per share and is subject to adjustment in certain circumstances.

2 unchanged sentences

Prior to February 15, 2028, the holders of the 2028 Convertible Notes may convert their notes only upon satisfaction of certain circumstances.

During the three months ended March 31, 2025, the circumstances allowing holders of the 2028 Convertible Notes to convert were not met.

During the three and six months ended June 30, 2025, the circumstances allowing holders of the 2028 Convertible Notes to convert were not met.

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.

5 unchanged sentences

The Capped Calls will reduce our obligation to settle, in shares or in cash, conversions when our stock price is between $ 116.15 and $ 175.32 .

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.

11 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):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Principal Estimated Fair

16 unchanged sentences

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Basic weighted average number of shares outstanding 71,456 72,644 71,684 72,634

24 unchanged sentences

Additions — — — — — —

Balance at March 31, 2025 $ — $ 10,247 $ 22,715 $ — $ — $ 32,962

Balance at June 30, 2025 $ — $ 10,247 $ 22,715 $ — $ — $ 32,962

(1) Effective January 1, 2025, the Tennessee homebuilding operating segment has been reclassified from the East reporting segment to the Central reporting segment.

3 unchanged sentences

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

Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

(In thousands)

4 unchanged sentences

Balance at December 31, 2024 71,922 $ 360 $ 143,036 $ 4,998,177 $ 5,141,573

Stock Split on January 2, 2025 (See Note 1) — 360 ( 360 ) — —

Stock Split effective January 2, 2025 (See Note 8) — 360 ( 360 ) — —

Net earnings — — — 122,806 122,806

4 unchanged sentences

Balance at March 31, 2025 71,831 $ 718 $ 103,930 $ 5,090,096 $ 5,194,744

Three Months Ended March 31, 2024

Net earnings — — — 146,879 146,879

Stock-based compensation expense — — 3,597 — 3,597

Dividends declared — — — ( 30,597 ) ( 30,597 )

Share repurchases ( 674 ) ( 6 ) ( 45,443 ) — ( 45,449 )

Balance at June 30, 2025 71,157 $ 712 $ 62,084 $ 5,206,378 $ 5,269,174

Six Months Ended June 30, 2024

(In thousands)

5 unchanged sentences

Stock-based compensation expense — — 6,114 — 6,114

Dividends declared — — — ( 27,239 ) ( 27,239 )

Issuance of stock 512 3 ( 3 ) — —

Dividends declared — — — ( 27,239 ) ( 27,239 )

Share repurchases ( 724 ) ( 4 ) ( 56,214 ) — ( 56,218 )

Balance at March 31, 2024 72,638 $ 363 $ 240,852 $ 4,479,358 $ 4,720,573

Net earnings — — — 231,555 231,555

Stock-based compensation expense — — 4,718 — 4,718

Issuance of stock 16 — — — —

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

Share repurchases — — — — —

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

Balance at June 30, 2024 72,654 363 198,503 4,683,668 4,882,534

(1) Share amounts have been retroactively adjusted to reflect the Stock Split that was effective on January 2, 2025.

During the three months ended March 31, 2025 and 2024, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.43 and $ 0.375 per share, respectively.

During the three months ended March 31, 2025 and 2024, 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.

During the three months ended June 30, 2025 and 2024, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.43 and $ 0.375 per share, respectively.

Quarterly dividends declared and paid during the six months ended June 30, 2025 and 2024, totaled $ 0.86 and $ 0.75 per share, respectively.

During the three and six months ended June 30, 2025 and 2024, 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

4 unchanged sentences

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

The 2018 Plan authorizes 14,800,000 shares of stock to be awarded, of which 1,883,235 shares remain available for grant at March 31, 2025.

The 2018 Plan authorizes 14,800,000 shares of stock to be awarded, of which 1,991,543 shares remain available for grant at June 30, 2025.

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 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.

5 unchanged sentences

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Stock-based compensation expense $ 3,597 $ 4,718 $ 9,922 $ 10,832

4 unchanged sentences

Restricted stock awards vested (includes performance-based awards) — 16,400 493,050 497,236

(1) Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics.

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Unrecognized stock-based compensation cost $ 41,319 $ 30,666

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 months ended March 31, 2025 or 2024, 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 six months ended June 30, 2025 or 2024, other than minor administrative costs.

NOTE 12 — INCOME TAXES

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Federal $ 38,498 $ 52,340 $ 69,129 $ 90,462

1 unchanged sentence

Total $ 46,181 $ 65,806 $ 83,534 $ 113,805

The effective tax rate for the three months ended March 31, 2025 and 2024 was 23.3 % and 20.5 %, respectively.

The increase in the effective tax rate for the three months ended March 31, 2025 reflects fewer homes qualifying for the §45L energy-efficient homes federal tax credit under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") due to higher construction thresholds required to earn these tax credits beginning in 2025.

At March 31, 2025 and December 31, 2024, we have no unrecognized tax benefits.

The effective tax rate for the three and six months ended June 30, 2025 was 23.9 % and 23.6 %, respectively, and for the three and six months ended June 30, 2024 was 22.1 % and 21.4 %, respectively.

The increase in the effective tax rate for the three and six months ended June 30, 2025 reflects fewer homes qualifying for the §45L energy-efficient homes federal tax credit under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") due to higher construction thresholds required to earn these tax credits beginning in 2025.

At June 30, 2025 and December 31, 2024, we have no unrecognized tax benefits.

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

2 unchanged sentences

We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required.

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 March 31, 2025.

At March 31, 2025, we had $ 47.4 million income taxes payable and no income taxes receivable.

The income taxes payable primarily consists of 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 March 31, 2025.

This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carryforward 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, 2025.

At June 30, 2025, we had $ 0.6 million income taxes payable and no income taxes receivable.

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

3 unchanged sentences

We do not have any Federal or state income tax examinations pending resolution at this time.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which includes several significant corporate tax changes.

The legislation modifies or extends provisions originally enacted under the Tax Cuts and Jobs Act of 2017, including but not limited to the reinstatement of immediate expensing for research and development expenditures and the restoration of 100% bonus depreciation for qualified property.

In addition, OBBBA introduces new provisions, including the repeal of the §45L energy-efficient home credit for homes acquired after June 30, 2026, and a new 1% floor on charitable contribution deductions.

We are currently evaluating the full impact of the legislation, but do not expect it to have a material effect on our effective tax rate for the year ending December 31, 2025.

NOTE 13 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

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

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid during the year for:

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Our CODM is the chief executive officer.

The CODM’s evaluation of the homebuilding segment performance is based on segment home closing revenue, home closing gross profit/(loss), home closing gross margin, total gross profit/(loss), commissions and other sales costs, general and administrative costs incurred by or allocated to each segment, including impairments, and operating income/(loss).

The CODM’s evaluation of the homebuilding segment performance is based on segment home closing revenue, home closing gross profit and gross margin, total gross profit, commissions and other sales costs, general and administrative expenses incurred by or allocated to each segment, including impairments, and operating income.

The CODM uses these performance metrics predominantly in the annual budget and forecasting process and considers budget-to-actual variances on a quarterly basis for these measures when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses these data points to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees.

The CODM also reviews financial services profit/(loss) to evaluate the performance of the financial services segment and make decisions about allocation of resources and financial services related product offerings.

The CODM also reviews financial services profits and losses to evaluate the performance of the financial services segment and make decisions about allocation of resources and financial services related product offerings.

Effective January 1, 2025, we realigned our internal organizational structure and resources following continued growth and recent entry into new markets.

As a result of the change in our organizational structure, the Tennessee homebuilding operating segment was reclassified from the East reporting segment to the Central reporting segment for the purpose of making

operational and resource decisions and assessing financial performance.

Prior period balances have been retroactively adjusted to reflect this reclassification.

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The following tables provide financial information about our reportable segments and Corporate and other categories (in thousands):

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

West Central East Total

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Home closing gross profit 114,462 106,587 120,279 341,328

Land closing gross (loss)/profit — ( 724 ) 5 ( 719 )

Total closing gross profit 114,462 105,863 120,284 340,609

Home closing gross margin 20.8 % 22.2 % 20.5 % 21.1 %

Commissions and other sales costs 32,184 35,654 40,992 108,830

General and administrative expenses 13,184 12,543 19,189 44,916

Homebuilding segment operating income 69,094 57,666 60,103 186,863

Financial services segment profit 5,611

Corporate and unallocated costs (1) ( 10,267 )

Interest expense —

Other income, net 10,853

Earnings before income taxes $ 193,060

(1) 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.

Three Months Ended June 30, 2024

West Central East Total

Home closing revenue $ 622,837 $ 528,380 $ 542,521 $ 1,693,738

Land closing revenue — — — —

Total closing revenue 622,837 528,380 542,521 1,693,738

Cost of home closings $ 474,573 $ 385,267 $ 394,392 $ 1,254,232

Cost of land closings — — — —

Total cost of closings 474,573 385,267 394,392 1,254,232

Home closing gross profit 148,264 143,113 148,129 439,506

Land closing gross profit — — — —

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Other income, net 11,498

Loss on early extinguishment of debt ( 631 )

Earnings before income taxes $ 297,361

(1) 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.

Three Months Ended March 31, 2024

Six Months Ended June 30, 2025

West Central East Total

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Home closing gross profit 219,433 197,316 220,229 636,978

Land closing gross profit/(loss) 549 ( 129 ) 2,026 2,446

Total closing gross profit 219,982 197,187 222,255 639,424

Home closing gross margin 21.3 % 22.1 % 21.3 % 21.5 %

Commissions and other sales costs 59,586 68,311 75,653 203,550

General and administrative expenses 26,637 25,382 37,281 89,300

Homebuilding segment operating income 133,759 103,494 109,321 346,574

Financial services segment profit 9,174

Corporate and unallocated costs (1) ( 22,880 )

Interest expense —

Other income, net 20,351

Earnings before income taxes $ 353,219

(1) 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.

Six Months Ended June 30, 2024

West Central East Total

Home closing revenue $ 1,138,469 $ 1,012,150 $ 1,009,215 $ 3,159,834

Land closing revenue — — 2,305 2,305

Total closing revenue 1,138,469 1,012,150 1,011,520 3,162,139

Cost of home closings 875,077 735,638 731,655 2,342,370

Cost of land closings — — 2,298 2,298

Total cost of closings 875,077 735,638 733,953 2,344,668

Home closing gross profit 263,392 276,512 277,560 817,464

Land closing gross profit — — 7 7

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Homebuilding segment operating income 172,043 180,586 179,616 532,245

Financial services segment loss ( 690 )

Financial services segment profit 4,147

Corporate and unallocated costs (1) ( 24,905 )

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Other income, net 20,520

Loss on early extinguishment of debt ( 631 )

Earnings before income taxes $ 531,376

(1) 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 March 31, 2025

At June 30, 2025

West Central East Financial Services Corporate and

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Total assets $ 1,928,472 $ 2,113,118 $ 2,627,926 $ 2,160 $ 1,084,693 $ 7,756,369

(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, goodwill (see Note 9), and prepaids and other assets.

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

(2) Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities, prepaids and other assets, and goodwill (see Note 9).

(3) Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), 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 March 31, 2025 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 June 30, 2025 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 have case specific reserves within our $ 35.6 million of total Warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2006 and 2017.

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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 March 31, 2025, 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 June 30, 2025, 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

As discussed in Note 12, on July 4, 2025, the President signed into law the One Big Beautiful Bill Act, which includes several significant corporate tax changes.

See Note 12 for additional information.

On July 9, 2025, we entered into the Eleventh Amendment to Amended and Restated Credit Agreement (the “Eleventh Amendment”), the Eleventh Amendment extends the maturity date from June 12, 2029 to July 9, 2030.

Special Note of Caution Regarding Forward-Looking Statements

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All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act").

Forward-looking statements in this Quarterly Report include statements concerning our belief that we have ample liquidity;

our goals, strategies and strategic initiatives including our 60-day closing ready commitment strategy, our use of interest rate buy-downs and other financing incentives, our partnership with external realtors, and the anticipated benefits relating thereto;

Forward-looking statements in this Quarterly Report may include statements concerning our belief that we have ample liquidity;

our goals, strategies and strategic initiatives including our 60-day closing ready commitment, our use of interest rate buy-downs and other financing incentives, our partnership with external realtors, and the anticipated benefits relating thereto;

our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up home buyer and housing demand for affordable homes;

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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 incentives, sales orders, cancellations, construction and materials costs and availability, general and administrative costs, mortgage interest rates, 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.

our future cash needs and sources;

and the impact of seasonality.

Important factors that could cause actual results to differ materially from those in forward-looking statements, and that could negatively affect our business include, but are not limited to, the following:

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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