Meritage Homes CORP 10-Q

Item 1. Financial Statements MERITAGE HOMES CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands, except share and par value amounts) March 31, 2026 December 31, 2025 Assets Cash and cash equivalents $ 766,632 $ 775,157 Other receivables 280,922 306,956 Real estate 5,962,075 5,987,120 Deposits on real estate under option or contract 166,236 174,170 Investments in unconsolidated entities 60,762 57,268 Property and equipment, net 46,064 46,647 Deferred tax assets, net 51,211 53,293 Prepaids, other assets and goodwill 220,709 221,676 Total assets $ 7,554,611 $ 7,622,287 Liabilities Accounts payable $ 199,943 $ 200,679 Accrued and other liabilities 408,718 387,698 Home sale deposits 10,907 9,213 Loans payable and other borrowings 34,990 24,328 Senior and convertible senior notes, net 1,806,284 1,804,726 Total liabilities 2,460,842 2,426,644 Stockholders’ Equity Preferred stock, par value $ 0.01 . Authorized 10,000,000 shares; none issued and outstanding at March 31, 2026 and December 31, 2025 — — Common stock, par value $ 0.01 . Authorized 125,000,000 shares; 66,702,433 and 68,168,923 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 667 682 Additional paid-in capital — — Retained earnings 5,093,102 5,194,961 Total stockholders’ equity 5,093,769 5,195,643 Total liabilities and stockholders’ equity $ 7,554,611 $ 7,622,287 See accompanying notes to unaudited consolidated financial statements 3 MERITAGE HOMES CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED INCOME STATEMENTS (in thousands, except per share amounts) Three Months Ended March 31, 2026 2025 Homebuilding: Home closing revenue $ 1,107,822 $ 1,342,104 Land closing revenue 9,361 15,421 Total closing revenue 1,117,183 1,357,525 Cost of home closings ( 914,024 ) ( 1,046,454 ) Cost of land closings ( 9,630 ) ( 12,256 ) Total cost of closings ( 923,654 ) ( 1,058,710 ) Home closing gross profit 193,798 295,650 Land closing gross (loss)/profit ( 269 ) 3,165 Total closing gross profit 193,529 298,815 Financial Services: Revenue 6,285 7,082 Expense ( 3,623 ) ( 4,192 ) Earnings from financial services unconsolidated entities and other, net 831 673 Financial services profit 3,493 3,563 Commissions and other sales costs ( 79,472 ) ( 94,720 ) General and administrative expenses ( 51,402 ) ( 56,997 ) Interest expense ( 587 ) — Other income, net 6,963 9,498 Earnings before income taxes 72,524 160,159 Provision for income taxes ( 17,215 ) ( 37,353 ) Net earnings $ 55,309 $ 122,806 Earnings per common share: Basic $ 0.82 $ 1.71 Diluted $ 0.82 $ 1.69 Weighted average number of shares: Basic 67,367 71,915 Diluted 67,806 72,650 See accompanying notes to unaudited consolidated financial statements 4 MERITAGE HOMES CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net earnings $ 55,309 $ 122,806 Adjustments to reconcile net earnings to net cash provided by/(used in) operating activities: Depreciation and amortization 5,373 5,949 Real estate and land impairments 2,427 — Write-off of terminated land deals 1,373 1,433 Stock-based compensation 5,860 6,325 Equity in earnings from unconsolidated entities ( 656 ) ( 626 ) Distributions of earnings from unconsolidated entities 673 588 Other 2,074 489 Changes in assets and liabilities: Decrease/(increase) in real estate 34,049 ( 60,821 ) Decrease/(increase) in deposits on real estate under option or contract 7,389 ( 62,179 ) Decrease/(increase) in other receivables, prepaids and other assets 29,018 ( 37,636 ) Decrease in accounts payable and accrued and other liabilities ( 43,274 ) ( 16,041 ) Increase/(decrease) in home sale deposits 1,694 ( 2,863 ) Net cash provided by/(used in) operating activities 101,309 ( 42,576 ) Cash flows from investing activities: Investments in unconsolidated entities ( 3,517 ) ( 5,850 ) Purchases of property and equipment ( 4,308 ) ( 5,592 ) Proceeds from sales of property and equipment 94 29 Net cash used in investing activities ( 7,731 ) ( 11,413 ) Cash flows from financing activities: Repayment of loans payable and other borrowings ( 33 ) ( 2,150 ) Proceeds from issuance of senior notes — 497,195 Payment of debt issuance costs — ( 5,073 ) Proceeds from liabilities related to consolidated real estate not owned 59,947 — Dividends paid ( 32,017 ) ( 30,887 ) Repurchase of shares ( 130,000 ) ( 44,999 ) Net cash (used in)/provided by financing activities ( 102,103 ) 414,086 Net (decrease)/increase in cash and cash equivalents ( 8,525 ) 360,097 Cash and cash equivalents, beginning of period 775,157 651,555 Cash and cash equivalents, end of period $ 766,632 $ 1,011,652 See Supplemental Disclosure of Cash Flow Information in Note 13. See accompanying notes to unaudited consolidated financial statements 5 MERITAGE HOMES CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION Organization. Meritage Homes Corporation ("Meritage Homes") is a leading designer and builder of single-family attached and detached homes. We primarily build in long-term high-growth markets of the United States and offer a variety of entry-level and first move-up homes. We have homebuilding operations in three regions: West, Central and East, which are comprised of twelve states: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina. We also operate a financial services segment, which offers title and escrow, mortgage, and insurance services to our homebuyers. Carefree Title Agency, Inc. ("Carefree Title"), our wholly-owned title company, provides title insurance and closing/settlement services to our homebuyers in certain states. Managing our own title operations allows us greater control over the entire escrow and closing cycles in addition to generating additional revenue. Meritage Homes Insurance Agency, Inc. (“Meritage Insurance ” ), our wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. Our financial services operations also provide mortgage services to our homebuyers through an unconsolidated joint venture. We commenced our homebuilding operations in 1985 through our predecessor company, Monterey Homes. Meritage Homes Corporation was incorporated in the state of Maryland in 1988 under the name of Homeplex Mortgage Investments Corporation and merged with Monterey Homes in 1996, at which time our name was changed to Monterey Homes Corporation and later ultimately to Meritage Homes Corporation. Since that time, we have engaged in homebuilding and related activities. Meritage Homes Corporation operates as a holding company and has no independent assets or operations. Meritage Homes' 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, 2026, we were actively selling homes in 345 communities, with base prices ranging from approximately $ 162,000 to $ 1,000,000 . Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025 ("Annual Report"). The unaudited consolidated financial statements include the accounts of Meritage Homes and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Certain reclassifications have been made to prior year footnotes and in the accompanying unaudited consolidated financial statements to conform to classifications used in the current year. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year. S tock Split. Effective January 2, 2025, our common stock was split two -for-one (the "Stock Split"), with no adjustment to the number of authorized shares or the par value. Cash and Cash Equivalents. 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 $ 55.3 million and $ 20.1 million are included in Cash and cash equivalents at March 31, 2026 and December 31, 2025, respectively. Real Estate. 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”) . Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings. 6 We capitalize qualifying interest to inventory during the development and construction periods. 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, 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 actively selling 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. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, sales orders absorption rates that differ from our expectations, increases in costs that have not yet been contracted, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control, including weather. To address uncertainty in these budgets, we update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs. Typically, a community's life cycle ranges from three to five years , commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the construction, sale and closing of the homes. Actual community lives will vary based on the size of the community, the sales orders absorption rates and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving smaller finished lot purchases may be significantly shorter. 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 on active communities are performed quarterly, and are bifurcated between started and unstarted lots, 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 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 longer-termed 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: • Our current experience in the market; • 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, such as major employers; • Desirability of the particular community, including unique amenities or other favorable or unfavorable attributes; and • 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 7 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. 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. 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. Our assessments on land held for sale or land held for future development 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 pace 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. Deposits. Deposits paid related to land option and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is used to offset the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are expensed to Cost of home closings if the land acquisition is terminated or no longer considered probable. 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 $ 166.2 million and $ 174.2 million as of March 31, 2026 and December 31, 2025, respectively. See Note 3 for additional information related to Deposits on real estate under option or contract. Goodwill. 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. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions; (2) industry and market considerations such as deterioration in the environment in which the entity operates; (3) cost factors such as increases in raw materials, labor costs, etc.; and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets. Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on our balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued and other liabilities on the accompanying unaudited consolidated balance sheets. 8 The table below outlines our ROU assets and lease liabilities (in thousands): As of March 31, 2026 December 31, 2025 ROU assets $ 57,164 $ 56,985 Lease liabilities 60,784 60,470 Off-Balance Sheet Arrangements - Joint Ventures . We participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. See Note 4 for additional discussion of our Investments in unconsolidated entities . Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered. See Note 3 for additional information on these off-balance sheet arrangements. Surety Bonds and Letters of Credit. We provide surety bonds and letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Surety bonds are generally not wholly released until all development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon. The table below outlines our surety bond and letter of credit obligations (in thousands): As of March 31, 2026 December 31, 2025 Outstanding Estimated work remaining to complete Outstanding Estimated work remaining to complete Sureties: Sureties related to owned projects and lots under contract $ 1,011,633 $ 591,882 $ 965,349 $ 585,768 Total Sureties $ 1,011,633 $ 591,882 $ 965,349 $ 585,768 Letters of Credit (“LOCs”): LOCs for land development 75,958 N/A 70,547 N/A LOCs for general corporate operations 5,000 N/A 5,000 N/A Total LOCs $ 80,958 N/A $ 75,547 N/A Accrued and Other Liabilities . Accrued and other liabilities at March 31, 2026 and December 31, 2025 consisted of the following (in thousands): As of March 31, 2026 December 31, 2025 Accruals related to real estate development and construction activities $ 138,514 $ 144,122 Payroll and other benefits 66,566 98,591 Accrued interest 18,309 14,619 Accrued taxes 18,110 14,205 Warranty reserves 26,042 26,677 Lease liabilities 60,784 60,470 Liabilities related to consolidated real estate not owned 59,947 — Other accruals 20,446 29,014 Total $ 408,718 $ 387,698 9 Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical data and trends for our geographies. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. 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 record any adjustments in the three months ended March 31, 2026 or 2025. Included in the warranty reserve balances at March 31, 2026 and December 31, 2025 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, 2026 2025 Balance, beginning of period $ 26,677 $ 32,693 Additions to reserve from new home deliveries 2,971 4,390 Warranty claims, net of recoveries ( 3,606 ) ( 1,731 ) Adjustments to pre-existing reserves — — Balance, end of period $ 26,042 $ 35,352 Warranty reserves are included in Accrued and other liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in regulatory, legislative, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates. Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below: • Revenue from home closings is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives. • Revenue from land closings is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow. • 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, are 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, 2026 and December 31, 2025. 10 Recent Accounting Pronouncements. In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the disclosure requirements primarily related to the effective tax rate reconciliation and income taxes paid by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. We adopted ASU 2023-09 for the annual period beginning January 1, 2025 and for interim periods beginning January 1, 2026. ASU 2023-09 is applied retrospectively to all prior periods presented in these financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. ASU 2024-03 is effective for our annual report covering the fiscal year beginning January 1, 2027, and for our interim reports beginning January 1, 2028. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures. NOTE 2 — REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands): As of March 31, 2026 December 31, 2025 Homes completed and under construction (1) $ 1,933,033 $ 2,069,548 Finished home sites and home sites under development (2) 3,963,883 3,917,572 Consolidated real estate not owned (3) 65,159 — Total $ 5,962,075 $ 5,987,120 (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, 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 $ 190.9 million and $ 164.4 million as of March 31, 2026 and December 31, 2025, 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. (3) See Note 3 for additional information on consolidated real estate not owned. Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active Real estate when incurred and charged to Cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands): Three Months Ended March 31, 2026 2025 Capitalized interest, beginning of period $ 77,064 $ 53,678 Interest incurred 20,005 14,714 Interest expensed ( 587 ) — Interest amortized to cost of home and land closings ( 12,018 ) ( 11,285 ) Capitalized interest, end of period $ 84,464 $ 57,107 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. Based on these reviews, we recorded the following impairment charges during the three months ended March 31, 2026 and 2025 (in thousands). 11 Three Months Ended March 31, Three Months Ended March 31, 2026 2025 Real estate inventory impairments: West $ — $ — Central 1,273 — East $ 1,154 $ — Total $ 2,427 $ — Impairments of land held for sale: West $ — $ — Central — — East $ — $ — Total $ — $ — Total impairments: West $ — $ — Central 1,273 — East $ 1,154 $ — Total $ 2,427 $ — 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-acquisition costs for terminated land contracts during the periods presented (in thousands): Three Months Ended March 31, 2026 2025 Terminated option/purchase contracts and related pre-acquisition costs: West $ 100 $ 562 Central 342 336 East 931 535 Total $ 1,373 $ 1,433 NOTE 3 — VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. In accordance with ASC 810, Consolidation , we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. 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 and Accrued and other liabilities, respectively. See Notes 2 and 1 for a detail of these asset and liability balances, respectively, if any. 12 The table below presents a summary of our lots under option at March 31, 2026 (dollars in thousands): Projected Number of Lots Purchase Price Option/ Earnest Money Deposits–Cash Purchase and option contracts — committed 19,740 $ 3,739,750 $ 159,149 Purchase and option contracts — uncommitted (1) 14,628 1,014,956 7,087 Total purchase and option contracts (2) 34,368 4,754,706 166,236 (3) Purchase contracts recorded on balance sheet as Real estate (2) 3,161 $ 65,159 $ — (4) (1) We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (2) N one of our purchase or option contracts require us to purchase lots, except for our specific performance contracts. The purchase price for specific performance contracts are recorded on the accompanying unaudited consolidated balance sheets as Real estate . See Note 2 for details of the Real estate balance. (3) Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of March 31, 2026. (4) Deposits for specific performance contracts are recorded on the accompanying unaudited consolidated balance sheets as Real estate. 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. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our expected orders and home starts pace to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract. NOTE 4 - INVESTMENTS IN UNCONSOLIDATED ENTITIES We may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of these joint ventures, they may or may not be consolidated into our results. The primary activity of our land joint ventures is the development and sale of lots to joint venture partners and/or unrelated builders. Our mortgage joint venture is engaged in mortgage activities and primarily provides mortgage services to our homebuyers. As of March 31, 2026, we had three active equity-method land joint ventures and one mortgage joint venture. 13 Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands): As of March 31, 2026 December 31, 2025 Assets: Cash $ 20,320 $ 3,516 Real estate 136,008 181,166 Other assets 55,148 6,748 Total assets $ 211,476 $ 191,430 Liabilities and equity: Accounts payable and other liabilities $ 7,415 $ 8,448 Equity of: Meritage (1) 60,969 57,268 Other 143,092 125,714 Total liabilities and equity $ 211,476 $ 191,430 Three Months Ended March 31, 2026 2025 Revenue $ 12,793 $ 10,740 Costs and expenses ( 10,886 ) ( 9,859 ) Net earnings of unconsolidated entities $ 1,907 $ 881 Meritage’s share of pre-tax earnings (1) (2) $ 656 $ 626 (1) Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses. (2) Our share of pre-tax earnings from our mortgage joint venture is recorded in Earnings from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer. NOTE 5 — LOANS PAYABLE AND OTHER BORROWINGS Loans payable and other borrowings consist of the following (in thousands): As of March 31, 2026 December 31, 2025 Other borrowings, secured real estate notes payable (1) $ 34,990 $ 24,328 $ 910.0 million unsecured revolving credit facility — — Total $ 34,990 $ 24,328 (1) Reflects balance of non-recourse notes payable in connection with land purchases . 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. 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 14 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 March 31, 2026, the interest rate on outstanding borrowings under the Credit Facility would have been 4.865 % 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, 2026. We had no outstanding borrowings under the Credit Facility as of March 31, 2026 and December 31, 2025. There were no borrowings or repayments under the Credit Facility during the three months ended March 31, 2026, and $ 5.0 million of borrowings and repayments under the Credit Facility during the three months ended March 31, 2025. As of March 31, 2026, we had outstanding letters of credit issued under the Credit Facility totaling $ 81.0 million, leaving $ 829.0 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): As of March 31, 2026 December 31, 2025 5.125 % senior notes due 2027 ("2027 Notes") 300,000 300,000 1.750 % convertible senior notes due 2028 ("2028 Convertible Notes") 575,000 575,000 3.875 % senior notes due 2029 ("2029 Notes") 450,000 450,000 5.650 % senior notes due 2035 ("2035 Notes"). At March 31, 2026, there was $ 2,501 in net unamortized discount. 497,499 497,429 Net debt issuance costs ( 16,215 ) ( 17,703 ) Total $ 1,806,284 $ 1,804,726 There have been no material changes to the terms of the 2028 Convertible Notes and the related capped call transactions since those described in Note 7 - Senior and Convertible Senior Notes, Net in the consolidated financial statements included in our Annual Report. During the three months ended March 31, 2026, the circumstances allowing holders of the 2028 Convertible Notes to convert were not met. 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 March 31, 2026. 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. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor may be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of Meritage Homes or any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. 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, and accordingly, the assets, liabilities and results of operations of Meritage Homes Corporation and the Guarantor Subsidiaries 15 are not materially different than the corresponding amounts presented in the unaudited consolidated financial statements of Meritage Homes. NOTE 7 — FAIR VALUE DISCLOSURES ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows: • Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities. • Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market. • Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability. If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs. Financial Instruments : 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): As of March 31, 2026 December 31, 2025 Aggregate Principal Estimated Fair Value Aggregate Principal Estimated Fair Value 5.125 % 2027 Notes $ 300,000 $ 300,750 $ 300,000 $ 301,890 1.750 % 2028 Convertible Notes $ 575,000 $ 574,310 $ 575,000 $ 566,548 3.875 % 2029 Notes $ 450,000 $ 437,625 $ 450,000 $ 442,125 5.650 % 2035 Notes $ 500,000 $ 481,500 $ 500,000 $ 510,050 Other financial assets and liabilities, including our Loans payable and other borrowings, are generally shorter term in nature and the longer term balances are not material to our consolidated balance sheets. Therefore, we consider the carrying amounts of our other financial assets and liabilities to approximate fair value. Non-Financial Instruments: 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. The fair value of real estate inventories that were measured as of March 31, 2026 was $ 259.8 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, and Note 2 for a summary of the impairment charges on Real estate to bring the assets to their estimated fair value. 16 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 March 31, 2026 2025 Basic weighted average number of shares outstanding 67,367 71,915 Effect of dilutive securities: Unvested restricted stock 439 735 Diluted average shares outstanding 67,806 72,650 Net earnings $ 55,309 $ 122,806 Basic earnings per share $ 0.82 $ 1.71 Diluted earnings per share $ 0.82 $ 1.69 We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In accordance with ASC 260-10, Earnings Per Share , we calculate the dilutive effect of the 2028 Convertible Notes using the "if-converted" method. As discussed in Note 7 - Senior and Convertible Senior Notes, Net in the consolidated financial statements included in our Annual Report, the Company will settle any convertible note conversions by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. As the Company will settle the principal amount of convertible notes in cash upon conversion, the convertible notes only have a dilutive impact when the average share price of the Company’s common stock exceeds the conversion price, in any applicable period. NOTE 9 — ACQUISITIONS AND GOODWILL Goodwill. In prior years, we have entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. As a result of these transactions, we recorded approximately $ 33.0 million of goodwill. Goodwill represents the excess purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combinations , and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on the accompanying unaudited consolidated balance sheets in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present. A summary of the carrying amount of goodwill follows (in thousands): West Central East Financial Services Corporate Total Balance at December 31, 2025 $ — $ 10,247 $ 22,715 $ — $ — $ 32,962 Additions — — — — — — Balance at March 31, 2026 $ — $ 10,247 $ 22,715 $ — $ — $ 32,962 17 NOTE 10 — STOCKHOLDERS’ EQUITY A summary of changes in stockholders’ equity is presented below (in thousands): Three Months Ended March 31, 2026 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2025 68,169 $ 682 $ — $ 5,194,961 $ 5,195,643 Net earnings — — — 55,309 55,309 Stock-based compensation expense — — 5,860 — 5,860 Issuance of stock 349 3 ( 3 ) — — Dividends declared — — — ( 32,017 ) ( 32,017 ) Share repurchases ( 1,816 ) ( 18 ) ( 5,857 ) ( 125,151 ) ( 131,026 ) Balance at March 31, 2026 66,702 $ 667 $ — $ 5,093,102 $ 5,093,769 Three Months Ended March 31, 2025 (In thousands) Number of Shares Common Stock Additional Paid-In Capital Retained Earnings Total Balance at December 31, 2024 71,922 $ 360 $ 143,036 $ 4,998,177 $ 5,141,573 Stock Split on January 2, 2025 — 360 ( 360 ) — — Net earnings — — — 122,806 122,806 Stock-based compensation expense — — 6,325 — 6,325 Issuance of stock 514 5 ( 5 ) — — Dividends declared — — — ( 30,887 ) ( 30,887 ) Share repurchases ( 605 ) ( 7 ) ( 45,066 ) — ( 45,073 ) Balance at March 31, 2025 71,831 $ 718 $ 103,930 $ 5,090,096 $ 5,194,744 During the three months ended March 31, 2026 and 2025, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $ 0.48 and $ 0.43 per share, respectively. During the three months ended March 31, 2026 and 2025, 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 and other liabilities on the accompanying unaudited consolidated balance sheets. NOTE 11 — STOCK BASED AND DEFERRED COMPENSATION We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. In May 2023, the Board of Directors and stockholders approved an amendment to the 2018 Plan to increase the number of shares available for issuance by 1,600,000 . The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. 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 1,650,007 shares remain available for grant at March 31, 2026. 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 appointment date. Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to 18 performance-based restricted stock unit awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target(s). As our performance targets are dependent on performance over a specified measurement period, once we determine that a performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock unit awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands): Three Months Ended March 31, 2026 2025 Stock-based compensation expense $ 5,860 $ 6,325 Non-vested shares granted 287,388 320,213 Performance-based non-vested shares granted 94,683 82,907 Performance-based shares issued in excess of target shares granted (1) 21,892 20,556 Restricted stock awards vested (includes performance-based awards) 327,438 493,050 (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 related to the prior fiscal year performance period. The following table includes additional information regarding our stock compensation plan (dollars in thousands): As of March 31, 2026 December 31, 2025 Unrecognized stock-based compensation cost $ 44,160 $ 30,419 Weighted average years expense recognition period 2.27 1.97 Total equity awards outstanding (1) 1,014,616 1,004,268 (1) Includes unvested restricted stock units and performance-based awards (assuming 100 %/target payout). We also offer a non-qualified deferred compensation plan ("Deferred Compensation Plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. 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, 2026 or 2025, 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, 2026 2025 Federal $ 13,826 $ 30,631 State 3,389 6,722 Total $ 17,215 $ 37,353 The effective tax rate for the three months ended March 31, 2026 and 2025 was 23.7 % and 23.3 %, respectively. 19 At March 31, 2026 and December 31, 2025, 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. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in the provision for income taxes. We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes . 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 carryforward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no federal NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at March 31, 2026. At March 31, 2026, we had $ 2.2 million taxes payable and no income taxes receivable. The taxes payable at March 31, 2026 primarily consists of income tax liability accrued in excess of federal and state estimated tax payments and energy tax credits. We have accrued taxes of $ 13.2 million recorded in Accrued and other liabilities on the accompanying unaudited consolidated balance sheets at March 31, 2026 that consists primarily of state franchise tax and federal excise tax. We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2021. We have no federal tax examinations pending resolution at this time, and one state income tax examination covering various years pending resolution at this time. NOTE 13 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The following table presents certain supplemental cash flow information (in thousands): Three Months Ended March 31, 2026 2025 Cash paid during the year for: Interest, net of interest capitalized $ ( 4,972 ) $ ( 14,385 ) Income taxes paid, net $ 98 $ 107 Non-cash operating activities: Real estate acquired through notes payable $ 10,695 $ 7,990 Non-cash investing and financing activities: Distributions of real estate from unconsolidated joint ventures, net $ — $ 2,950 NOTE 14 — OPERATING AND REPORTING SEGMENTS We operate with two principal business segments: homebuilding and financial services. 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. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our three reportable homebuilding segments are as follows: West: Arizona, California, Colorado and Utah Central: Tennessee and Texas East: Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina We define our segments based on the way in which internally reported financial information is regularly provided and reviewed by the Chief Operating Decision Maker ("CODM") to analyze financial performance, make decisions, and allocate resources. 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 and gross margin, total closing 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 20 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 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. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented. The following tables provide financial information about our reportable segments and Corporate and other categories (in thousands): Three Months Ended March 31, 2026 West Central East Total Home closing revenue $ 336,183 $ 376,300 $ 395,339 $ 1,107,822 Land closing revenue — 2,726 6,635 9,361 Total closing revenue 336,183 379,026 401,974 1,117,183 Cost of home closings 274,703 307,695 331,626 914,024 Cost of land closings — 2,670 6,960 9,630 Total cost of closings 274,703 310,365 338,586 923,654 Home closing gross profit 61,480 68,605 63,713 193,798 Land closing gross (loss)/profit — 56 ( 325 ) ( 269 ) Total closing gross profit 61,480 68,661 63,388 193,529 Home closing gross margin 18.3 % 18.2 % 16.1 % 17.5 % Commissions and other sales costs 21,371 28,477 29,624 79,472 General and administrative expenses 10,851 11,172 16,093 38,116 Homebuilding segment operating income 29,258 29,012 17,671 75,941 Financial services segment profit 3,493 Corporate and unallocated costs (1) ( 13,286 ) Interest expense ( 587 ) Other income, net 6,963 Earnings before income taxes $ 72,524 (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. 21 Three Months Ended March 31, 2025 West Central East Total Home closing revenue $ 479,636 $ 412,537 $ 449,931 $ 1,342,104 Land closing revenue 691 930 13,800 15,421 Total closing revenue 480,327 413,467 463,731 1,357,525 Cost of home closings $ 374,665 $ 321,808 $ 349,981 $ 1,046,454 Cost of land closings 142 335 11,779 12,256 Total cost of closings 374,807 322,143 361,760 1,058,710 Home closing gross profit 104,971 90,729 99,950 295,650 Land closing gross profit 549 595 2,021 3,165 Total closing gross profit 105,520 91,324 101,971 298,815 Home closing gross margin 21.9 % 22.0 % 22.2 % 22.0 % Commissions and other sales costs 27,402 32,657 34,661 94,720 General and administrative expenses 13,453 12,839 18,092 44,384 Homebuilding segment operating income 64,665 45,828 49,218 159,711 Financial services segment profit 3,563 Corporate and unallocated costs (1) ( 12,613 ) Interest expense — Other income, net 9,498 Earnings before income taxes $ 160,159 (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, 2026 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 26,558 $ 60,853 $ 78,825 $ — $ — $ 166,236 Real estate 1,762,412 1,648,341 2,551,322 — — 5,962,075 Investments in unconsolidated entities 30,690 29,183 — — 889 60,762 Other assets 45,058 (1) 312,229 (2) 89,553 (3) 2,888 915,810 (4) 1,365,538 Total assets $ 1,864,718 $ 2,050,606 $ 2,719,700 $ 2,888 $ 916,699 $ 7,554,611 (1) Balance consists primarily of prepaid expenses and other assets and property and equipment, net. (2) Balance consists primarily of development reimbursements from local municipalities, prepaid expenses and other assets, and cash and cash equivalents. (3) Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaid expenses and other assets. (4) Balance consists primarily of cash and cash equivalents, prepaids and other assets, and deferred tax assets. 22 At December 31, 2025 West Central East Financial Services Corporate and Unallocated Total Deposits on real estate under option or contract $ 26,155 $ 61,686 $ 86,329 $ — $ — $ 174,170 Real estate 1,782,502 1,685,355 2,519,263 — — 5,987,120 Investments in unconsolidated entities 28,631 27,734 — — 903 57,268 Other assets 37,118 (1) 309,583 (2) 78,724 (3) 2,342 975,962 (4) 1,403,729 Total assets $ 1,874,406 $ 2,084,358 $ 2,684,316 $ 2,342 $ 976,865 $ 7,622,287 (1) Balance consists primarily of property and equipment, net, prepaid expenses and other assets, and development receivables. (2) Balance consists primarily of development reimbursements from local municipalities, property and equipment, net, goodwill (see Note 9), and prepaid expenses and other assets . (3) Balance consists primarily of prepaid expenses and other assets, goodwill (see Note 9), and property and equipment, net . (4) Balance consists primarily of cash and cash equivalents, prepaids and other assets, and deferred tax assets . NOTE 15 — COMMITMENTS AND CONTINGENCIES We are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential material losses related to these matters are not considered probable. 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, 2026 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 $ 26.0 million of total Warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2015 and 2019. Our review and management of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, historical experience, our judgment and various assumptions and estimates. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves. As of March 31, 2026, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we believe our reserves are sufficient to cover the above mentioned matters. See Note 1 for information related to our warranty obligations. 23 Special Note of Caution Regarding Forward-Looking Statements In passing the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Congress encouraged public companies to make “forward-looking statements” by creating a safe-harbor to protect companies from securities law liability in connection with forward-looking statements. We intend to qualify both our written and oral forward-looking statements for protection under the PSLRA. The words “believe,” “expect,” “anticipate,” “forecast,” “plan,” “intend,” “may,” “will,” “should,” “could,” “estimate,” "target," and “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. 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 sufficient liquidity; our goals, strategies and strategic initiatives including our use of interest rate buy-downs and other financing incentives, our spec and move-in ready strategy, 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; the benefits of and our intentions to use options to acquire land; our positions and our expected outcome relating to litigation and regulatory proceedings in general; our intentions to pay quarterly dividends; the sustainability of our tax positions; that we may repurchase our debt and equity securities; our non-use of derivative financial instruments; expectations regarding our industry and our business for the remainder of 2026; the demand for and the pricing of our homes; our land and lot acquisition strategy (including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or opportunities outside of our existing markets if opportunities arise and the benefits relating thereto); that we may expand into new markets; the availability of labor and materials for our operations; that we may seek additional debt or equity capital; our expectation that existing guarantees, letters of credit and performance and surety bonds will not be drawn on; the sufficiency of our insurance coverage and legal and warranty reserves; the outcome of pending litigation; the sources and sufficiency of our capital resources to support our business strategy; 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, and community counts; 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: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; the cost of materials used to develop communities and construct homes; shortages in the availability and cost of subcontract labor; legislation related to tariffs; cancellation rates; supply chain and labor constraints; the ability of our potential buyers to sell their existing homes; the adverse effect of slow absorption rates; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our exposure to counterparty risk with respect to our capped calls; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; sustainability matters and disclosure; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; 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 ("SEC"), including those set forth in our Form 10-K for the year ended December 31, 2025 and this Quarterly Report on Form 10-Q under the caption "Risk Factors." Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain, as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, the investment community is urged not to place undue reliance on forward-looking statements. In addition, we disclaim and undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required by law. 24