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Item 1. Financial Statements

2025-10-31 compared with 2025-07-25 · 171 added, 96 removed, 739 unchanged (27% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Cash and cash equivalents $ 728,937 $ 651,555

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Authorized 10,000,000 shares;

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

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

Common stock, par value $ 0.01 .

Authorized 125,000,000 shares;

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

70,406,707 and 71,921,972 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 11,416 143,036

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,

2025 2024 2025 2024

7 unchanged sentences

Home closing gross profit 266,957 392,565 903,935 1,210,029

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

Land closing gross profit 192 680 2,638 687

Total closing gross profit 267,149 393,245 906,573 1,210,716

23 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 18,603 19,358

Real estate and land impairments 9,292 —

Stock-based compensation 14,780 19,305

Loss on early extinguishment of debt — 631

Equity in earnings from unconsolidated entities ( 3,133 ) ( 3,925 )

5 unchanged sentences

(Increase)/decrease in other receivables, prepaids and other assets ( 77,840 ) 7,307

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

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

(Decrease)/increase in accounts payable and accrued liabilities ( 45,326 ) 21,387

Decrease in home sale deposits ( 11,093 ) ( 4,472 )

Net cash used in operating activities ( 125,385 ) ( 128,013 )

9 unchanged sentences

Repayment of senior notes — ( 250,695 )

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

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

Payment of debt issuance costs ( 5,106 ) ( 17,332 )

3 unchanged sentences

Net cash provided by financing activities 243,808 69,782

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

Net increase/(decrease) in cash and cash equivalents 77,382 ( 89,668 )

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

11 unchanged sentences

Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina.

We also operate a financial services reporting segment.

In this segment, we offer title and escrow, mortgage, and insurance services.

We also operate a financial services segment, which offers title and escrow, mortgage, and insurance services to our homebuyers.

Carefree Title Agency, Inc.

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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 .

At September 30, 2025, we were actively selling homes in 334 communities, with base prices ranging from approximately $ 176,000 to $ 1,020,000 .

Basis of Presentation.

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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 $ 59.7 million and $ 29.0 million are included in Cash and cash equivalents at June 30, 2025 and December 31, 2024, respectively.

Amounts in transit from title companies or closing agents for home closings of approximately $ 57.6 million and $ 29.0 million are included in Cash and cash equivalents at September 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”) .

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Capitalized interest is included in Cost of closings when the related inventory is closed.

Included within our Real estate inventory is land held for development and land held for sale.

Included within our Real estate inventory is land held for development, land held for sale, and mothball communities.

Land held for development primarily represents land and development costs related to land where development activity is not currently underway but is expected to begin in the future.

For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years.

Mothball communities represent communities where we have elected to stop development of an existing community because we believe the economic performance of the community would be maximized by deferring development for a period of time to allow market conditions to improve.

We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e.

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

See Note 2 for additional information related to capitalized interest.

We rely on certain estimates to determine our construction and land development costs.

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All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP.

Existing communities.

Community-level reviews are performed quarterly to determine if indicators of potential impairment exist.

If indicators of potential impairment exist and the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value.

The impairment of a community is allocated to each remaining unstarted lot in the community on a straight-line basis and is recognized in Cost of home closings in the period in which the impairment is determined.

Our determination of fair value is based on projections and estimates.

Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions, although if financial metrics improve, we do not reverse impairments once recorded.

The impairment of a community is allocated across the remaining lots in the community and is recognized in Cost of home closings in the period in which the impairment is determined.

The fair value of the community’s assets is determined using either a market-based approach for projects to be sold or a discounted cash flow model for projects we intend to build out.

If a market-based approach is used, we determine fair value based on recent comparable purchase and sale activity in the local market, adjusted for variances as determined by our knowledge of the region and general real estate expertise.

If a discounted cash flow approach is used, we compute fair value using projections, estimates and observable and unobservable inputs such as (i) home selling prices in the community adjusted for current and expected sales discounts and incentives, (ii) costs related to the community — both land development and home construction — including costs spent to date and budgeted remaining costs to spend, (iii) projected sales absorption rates, reflecting any product mix change strategies implemented to stimulate the orders pace, (iv) expected cancellation rates, (v) alternative land uses including disposition of all or a portion of the land owned, if applicable, and (vi) discount rate, which is currently 10 - 14 % and varies based on the perceived risk inherent in the community’s other cash flow assumptions.

These assumptions vary widely across different communities and geographies and are largely dependent on local market conditions.

Community-level factors that may impact our key estimates include:

• The presence and significance of local competitors, including their offered product type, comparable lot size, remaining lots and competitive actions such as incentive offerings;

• Economic and related demographic conditions for the surrounding community;

• Desirability of the particular community, including unique amenities or other favorable or unfavorable attributes;

• Existing home inventory supplies for the surrounding community.

These local circumstances may significantly impact our assumptions and the resulting computation of fair value and are, therefore, closely evaluated by our division personnel in their preparation of the discounted cash flow models.

The models are also evaluated by regional and corporate personnel for consistency and integration, as decisions that affect pricing or absorption at one community may have resulting consequences for neighboring communities.

Mothball communities.

In certain cases, we may elect to stop development of an existing actively selling community (mothball) if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow market conditions to improve.

The decision may be based on financial and/or operational metrics.

If we decide to mothball a community, we will impair it to its fair value, if applicable, as discussed above and then cease future development activity until such a time when management believes that market conditions have improved and economic performance will be maximized.

Impairment charges, if any, are recognized in Cost of home closings in the period in which the impairment is determined.

No costs are capitalized to communities that are designated as mothballed.

When a community is initially placed into mothball status, it is management’s belief that the community is affected by local market conditions that are expected to improve within the next 1-5 years.

Therefore, a temporary postponement of construction and development work is expected to yield better overall returns.

Mothballed communities are reviewed at least annually to determine if they are at risk of future impairment.

The financial and operational status and expectations of these communities are analyzed as well as any unique attributes that could be viewed as indicators for future impairments.

Adjustments are made accordingly and incremental impairments, if any, are recorded at each re-evaluation.

Land held for sale or future development.

Land held for sale or future development is reviewed at least annually to determine if it is at risk of future impairment.

For land held for sale, our assessments typically involve third-party valuations, such as broker opinions, and recent comparable land sales in the area.

For land held for future development, our assessments typically include highly subjective estimates for future performance, including the timing of development, the product to be offered, orders rates and selling prices of the product when the community is anticipated to open for sales, and the projected costs to develop and construct the community.

We evaluate various factors to develop our forecasts, including the availability of and demand for homes and finished lots within the surrounding community, historical, current and future sales trends, and third-party data, if available.

Based on these factors, we reach conclusions for future performance based on our judgment.

If land held for sale or future development is deemed to be impaired, impairment changes are recognized in the period in which the impairment is determined.

Impairments on land held for sale are recognized in Cost of land closings and impairments on land held for future development are recognized in Cost of home closings.

See Note 2 for additional information related to Real estate.

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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 $ 221.4 million and $ 192.4 million as of June 30, 2025 and December 31, 2024, respectively.

Our Deposits on real estate under option or contract were $ 198.2 million and $ 192.4 million as of September 30, 2025 and December 31, 2024, 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.

ASC 350 states that an entity may first assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test.

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

ROU assets $ 58,800 $ 52,941

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Outstanding Estimated work

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Accrued Liabilities .

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

June 30, 2025 December 31, 2024

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

September 30, 2025 December 31, 2024

Accruals related to real estate development and construction activities $ 171,107 $ 167,075

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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, 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.

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, 2025 or 2024.

Included in the warranty reserve balances at September 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 June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

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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, 2025 and December 31, 2024.

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

Recent Accounting Pronouncements.

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

In September 2025, the FASB issued ASU No.

2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"), which modernizes the accounting for the costs of internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods.

ASU 2025-06 is effective for our annual and interim reports covering the fiscal year beginning January 1, 2028, and may be applied on a retrospective, modified transition or prospective basis.

We are currently evaluating the impact adopting this guidance will have on our consolidated financial statements.

NOTE 2 — REAL ESTATE AND CAPITALIZED INTEREST

Real estate consists of the following (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Homes completed and under construction (1)

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(1) Includes the allocated land and land development costs associated with each lot for sold and unsold homes.

(2) Includes raw land, land held for development and land held for sale, less impairments, if any.

We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e.

(2) Includes raw land, land held for development, land held for sale and communities in mothball status, less impairments, if any.

Land held for development, land held for sale and communities in mothball status totaled $ 118.5 million and $ 62.7 million as of September 30, 2025 and December 31, 2024, respectively.

We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e.

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

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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,

2025 2024 2025 2024

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Capitalized interest, end of period $ 71,201 $ 53,731 $ 71,201 $ 53,731

As discussed in Note 1, and in accordance with ASC 360-10, all of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP.

Due to the current economic environment, we evaluated our Real estate assets during the three months ended September 30, 2025.

Based on these reviews, we recorded the following impairment charges during the three and nine months ended September 30, 2025 (in thousands).

There were no impairment charges recorded during the three and nine months ended September 30, 2024.

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

Real estate inventory impairments:

West $ 543 $ 543

Central 1,243 1,243

East $ 6,907 $ 6,907

Total $ 8,693 $ 8,693

Impairments of land held for sale:

East 599 $ 599

Total $ 599 $ 599

Total impairments:

Central 1,243 1,243

East 7,506 7,506

Total $ 9,292 $ 9,292

As discussed in Note 1, non-refundable deposits are expensed to Cost of home closings when a land acquisition is terminated or no longer considered probable.

The following tables summarizes the write-offs of non-refundable deposits and associated pre-acquisitions costs for terminated land deals during the periods presented (in thousands):

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

2025 2024 2025 2024

Terminated option/purchase contracts and related pre-acquisition costs:

West $ 2,544 $ 976 $ 3,667 $ 2,182

Central 104 474 663 623

East $ 3,151 572 $ 7,107 1,126

Total $ 5,799 $ 2,022 $ 11,437 $ 3,931

NOTE 3 — VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED

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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, 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):

We determined that as of September 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 September 30, 2025 (dollars in thousands):

Projected Number

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(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, 2025.

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

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The primary activity of our land joint ventures is the development and sale of lots to joint venture partners and/or unrelated builders.

In 2024, we entered into a new land joint venture from which we expect to purchase lots in the future for home construction.

Our 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.

As of September 30, 2025, we had three 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):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

$ 16,559 $ 4,434

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Total liabilities and equity $ 150,027 $ 78,163

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

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

2025 2024 2025 2024

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Other borrowings, secured real estate notes payable (1)

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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.

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

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

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.

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 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.

At September 30, 2025, the interest rate on outstanding borrowings under the Credit Facility would have been 5.329 % 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, 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.

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

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

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

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

As of September 30, 2025, we had outstanding letters of credit issued under the Credit Facility totaling $ 84.1 million, leaving $ 825.9 million available under the Credit Facility to be drawn.

NOTE 6 — SENIOR AND CONVERTIBLE SENIOR NOTES, NET

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

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

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

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

At September 30, 2025, there was $ 2,642 in net unamortized discount.

Net debt issuance costs ( 19,191 ) ( 18,465 )

Total $ 1,803,167 $ 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 on mergers.

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

The indentures for our 2027 Notes, 2029 Notes and 2035 Notes contain covenants that place limits on secured debt and sale and leaseback transactions.

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

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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.

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 nine months ended September 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.

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

During the three and nine months ended September 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.

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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, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Principal Estimated Fair

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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.

The fair value of inventories that were measured as of September 30, 2025 was $ 392.4 million.

See Note 1 for information on the significant observable and unobservable inputs we utilized in our fair value measurements with respect to the real estate assets measured at fair value.

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,

2025 2024 2025 2024

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Additions — — — — — —

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

Balance at September 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.

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

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

(In thousands)

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

Six Months Ended June 30, 2024

Net earnings — — — 99,297 99,297

Stock-based compensation expense — — 4,858 — 4,858

Issuance of stock 22 — — — —

Dividends declared — — — ( 30,275 ) ( 30,275 )

Share repurchases ( 772 ) ( 8 ) ( 55,526 ) — ( 55,534 )

Balance at September 30, 2025 70,407 $ 704 $ 11,416 $ 5,275,400 $ 5,287,520

Nine Months Ended September 30, 2024

(In thousands)

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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

Net earnings — — — 195,966 195,966

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

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

Issuance of stock 8 — — — —

Share repurchases ( 302 ) ( 1 ) ( 30,047 ) — ( 30,048 )

Balance at September 30, 2024 72,360 $ 362 $ 176,929 $ 4,852,499 $ 5,029,790

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

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.

During the three months ended September 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 nine months ended September 30, 2025 and 2024, totaled $ 1.29 and $ 1.125 per share, respectively.

During the three and nine months ended September 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

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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 1,991,543 shares remain available for grant at June 30, 2025.

The 2018 Plan authorizes 14,800,000 shares of stock to be awarded, of which 2,009,685 shares remain available for grant at September 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.

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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 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).

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.

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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,

2025 2024 2025 2024

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Unrecognized stock-based compensation cost $ 35,161 $ 30,666

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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, 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 nine months ended September 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 June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

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Total $ 28,951 $ 53,966 $ 112,485 $ 167,771

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.

The effective tax rate for the three and nine months ended September 30, 2025 was 22.6 % and 23.4 %, respectively, and for the three and nine months ended September 30, 2024 was 21.6 % and 21.5 %, respectively.

The increase in the effective tax

rate for the three and nine months ended September 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 September 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.

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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 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.

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 June 30, 2025.

We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at September 30, 2025.

At September 30, 2025, we had no income taxes payable and $ 16.2 million income taxes receivable.

The income taxes receivable primarily consists of federal and state estimated tax payments and energy tax credits in excess of income tax liability accrued at September 30, 2025.

We have accrued income taxes of $ 11.6 million recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at September 30, 2025 that consists primarily of state franchise tax and federal excise tax.

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

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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.

We have incorporated the effective changes into our provision and continue to evaluate the full impact of the legislation.

However, we do not expect the legislative changes 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):

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 $ 7,990 $ 3,630

ROU assets obtained in exchange for new operating lease obligations $ 12,172 $ 9,139

Non-cash investing and financing activities:

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As defined in ASC 280-10, Segment Reporting , we have twelve homebuilding operating segments.

The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services.

The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer

We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity.

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

West Central East Total

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(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

Three Months Ended September 30, 2024

West Central East Total

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Other income, net 10,682

Loss on early extinguishment of debt ( 631 )

Earnings before income taxes $ 249,932

(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, 2025

Nine Months Ended September 30, 2025

West Central East Total

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(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

Nine Months Ended September 30, 2024

West Central East Total

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(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 June 30, 2025

At September 30, 2025

West Central East Financial Services Corporate and

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(3) Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.

(4) Balance consists primarily of cash and cash equivalents, deferred tax assets and prepaids and other assets.

(4) Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.

At December 31, 2024

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(3) Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets .

(4) Balance consists primarily of cash and cash equivalents, deferred tax assets, prepaid expenses and other assets .

(4) Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets .

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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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, 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 September 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 $ 32.4 million of total Warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2015 and 2019.

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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, 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 September 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 may include statements concerning our belief that we have ample liquidity;

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

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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, 2024 and this Quarterly Report on Form 10-Q under the caption "Risk Factors."

and other factors identified in documents filed by the Company with the Securities and Exchange Commission ("SEC"), including those set forth in our Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q 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