What changed in this filing

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Item 1. Financial Statements

2023-07-25 compared with 2023-04-25 · 114 added, 62 removed, 540 unchanged (25% of the section changed)

30 unchanged sentences

(000’s omitted, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Home sale revenues $ 4,058,930 $ 3,763,167 $ 7,546,567 $ 6,795,384

25 unchanged sentences

($000’s omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income $ 720,345 $ 652,435 $ 1,252,604 $ 1,107,158

11 unchanged sentences

Earnings Total

Shareholders' equity, March 31, 2023 223,522 $ 2,235 $ 3,345,005 $ — $ 5,916,569 $ 9,263,809

Share issuances 30 — — — — —

Dividends declared — — — — ( 35,633 ) ( 35,633 )

Share repurchases ( 3,660 ) ( 36 ) — — ( 249,964 ) ( 250,000 )

Excise tax on share repurchases — — — — ( 2,480 ) ( 2,480 )

Cash paid for shares withheld for taxes — — — — ( 329 ) ( 329 )

Share-based compensation — — 9,313 — 9,313

Net income — — — — 720,345 720,345

Other comprehensive income — — — — —

Shareholders' equity, June 30, 2023 219,892 $ 2,199 $ 3,354,318 $ — $ 6,348,508 $ 9,705,025

Shareholders' equity, December 31, 2022 225,840 $ 2,258 $ 3,330,138 $ — $ 5,581,702 $ 8,914,098

6 unchanged sentences

Net income — — — — 1,252,604 1,252,604

Shareholders' equity, March 31, 2023 223,522 $ 2,235 $ 3,345,005 $ — $ 5,916,569 $ 9,263,809

Other comprehensive income — — — — — —

Shareholders' equity, June 30, 2023 219,892 $ 2,199 $ 3,354,318 $ — $ 6,348,508 $ 9,705,025

Capital Accumulated

2 unchanged sentences

Earnings Total

Shareholders' equity, March 31, 2022 239,622 $ 2,396 $ 3,309,912 $ ( 20 ) $ 4,100,976 $ 7,413,264

Share issuances 48 — — — — —

Dividends declared — — — — ( 35,514 ) ( 35,514 )

Share repurchases ( 7,100 ) ( 70 ) — — ( 294,157 ) ( 294,227 )

Cash paid for shares withheld for taxes — — — — — —

Share-based compensation — — 9,238 — — 9,238

Net income — — — — 652,435 652,435

Other comprehensive income — — — 20 — 20

Shareholders' equity, June 30, 2022 232,570 $ 2,326 $ 3,319,150 $ — $ 4,423,740 $ 7,745,216

Shareholders' equity, December 31, 2021 249,326 $ 2,493 $ 3,290,791 $ ( 45 ) $ 4,196,276 $ 7,489,515

6 unchanged sentences

Other comprehensive income — — — 45 — 45

Shareholders' equity, March 31, 2022 239,622 $ 2,396 $ 3,309,912 $ ( 20 ) $ 4,100,976 $ 7,413,264

Shareholders' equity, June 30, 2022 232,570 $ 2,326 $ 3,319,150 $ — $ 4,423,740 $ 7,745,216

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

($000’s omitted)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

23 unchanged sentences

Repayments of notes payable ( 17,305 ) ( 4,152 )

Borrowings under revolving credit facility — 110,000

Repayments under revolving credit facility — ( 110,000 )

Financial Services repayments, net ( 271,128 ) ( 183,307 )

Debt issuance costs — ( 11,167 )

Proceeds from liabilities related to consolidated inventory not owned 91,354 —

34 unchanged sentences

As a result, all sales incentives provided to customers are classified as a reduction of home sale revenues.

This reclassification had the effect of reducing both home sale revenues and home sale cost of revenues by the amount of such closing cost incentives, which totaled $ 81.2 million and $ 38.1 million for the three months ended March 31, 2023 and 2022, respectively.

This reclassification had the effect of reducing both home sale revenues and home sale cost of revenues by the amount of such closing cost incentives, which totaled $ 46.4 million and $ 84.5 million for the three and six months ended June 30, 2022, respectively.

Subsequent events

2 unchanged sentences

Other income (expense), net consists of the following ($000’s omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Write-offs of deposits and pre-acquisition costs $ ( 1,490 ) $ ( 4,503 ) $ ( 7,173 ) $ ( 8,013 )

9 unchanged sentences

Home sale contract assets consist of cash from home closings held in escrow for our benefit, typically for less than five days, which are considered deposits in-transit and classified as cash.

Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $ 796.4 million and $ 783.6 million at March 31, 2023 and December 31, 2022, respectively.

Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $ 797.2 million and $ 783.6 million at June 30, 2023 and December 31, 2022, respectively.

Substantially all of our home sales are scheduled to close and be recorded to revenue within one year from the date of receiving a customer deposit.

12 unchanged sentences

Our performance obligations for policy renewal commissions are considered satisfied upon issuance of the initial policy.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 61.9 million and $ 57.3 million at March 31, 2023 and December 31, 2022, respectively.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 66.3 million and $ 57.3 million at June 30, 2023 and December 31, 2022, respectively.

Residential mortgage loans available-for-sale

Substantially all of the loans originated by us are sold in the secondary mortgage market within a short period of time after origination, generally within 30 days.

At March 31, 2023 and December 31, 2022, residential mortgage loans available-for-sale had an aggregate fair value of $ 420.6 million and $ 677.2 million, respectively, and an aggregate outstanding principal balance of $ 420.7 million and $ 680.5 million, respectively.

Net gains from the sale of mortgages were $ 20.6 million and $ 52.4 million for the three months ended March 31, 2023 and 2022, respectively, and have been included in Financial Services revenues.

At June 30, 2023 and December 31, 2022, residential mortgage loans available-for-sale had an aggregate fair value of $ 432.5 million and $ 677.2 million, respectively, and an aggregate outstanding principal balance of $ 435.5 million and $ 680.5 million, respectively.

Net gains from the sale of mortgages were $ 48.6 million and $ 45.1 million for the three months ended June 30, 2023 and 2022, respectively, and $ 69.2 million and $ 97.5 million for the six months ended June 30, 2023 and 2022, respectively, and have been included in Financial Services revenues.

Derivative instruments and hedging activities

We are party to IRLCs with customers resulting from our mortgage origination operations.

At March 31, 2023 and December 31, 2022, we had aggregate IRLCs of $ 766.0 million and $ 653.2 million, respectively, which were originated at interest rates prevailing at the date of commitment.

At June 30, 2023 and December 31, 2022, we had aggregate IRLCs of $ 627.3 million and $ 653.2 million, respectively, which were originated at interest rates prevailing at the date of commitment.

Since we can terminate a loan commitment if the borrower does not comply with the terms of the contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements.

1 unchanged sentence

Forward contracts on mortgage-backed securities are the predominant derivative financial instruments we use to minimize market risk during the period from the time we extend an interest rate lock to a loan applicant until the time the loan is sold to an investor.

At March 31, 2023 and December 31, 2022, we had unexpired forward contracts of $ 1.1 billion and $ 1.0 billion, respectively, and whole loan investor commitments of

At June 30, 2023 and December 31, 2022, we had unexpired forward contracts of $ 908.0 million and $ 1.0 billion, respectively, and whole loan investor commitments of

PULTEGROUP, INC.

7 unchanged sentences

The fair values of derivative instruments and their locations in the Condensed Consolidated Balance Sheets are summarized below ($000’s omitted):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Other Assets Accrued and Other Liabilities Other Assets Accrued and Other Liabilities

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income $ 720,345 $ 652,435 $ 1,252,604 $ 1,107,158

14 unchanged sentences

We assess and monitor each counterparty’s ability to pay amounts owed by considering contractual terms and conditions, the counterparty’s financial condition, macroeconomic factors, and business strategy.

At March 31, 2023 and December 31, 2022, we reported $ 208.9 million and $ 222.9 million, respectively, of assets in-scope under ASC 326, "Financial Instruments - Credit Losses".

At June 30, 2023 and December 31, 2022, we reported $ 191.5 million and $ 222.9 million, respectively, of assets in-scope under ASC 326, "Financial Instruments - Credit Losses".

These assets consist primarily of insurance receivables, contract assets related to insurance brokerage commissions, and vendor rebate receivables.

Counterparties associated with these assets are generally highly rated.

Allowances on the aforementioned in-scope assets were not material as of March 31, 2023.

Allowances on the aforementioned in-scope assets were not material as of June 30, 2023.

New accounting pronouncements

17 unchanged sentences

Information related to interest capitalized into inventory is as follows ($000’s omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Interest in inventory, beginning of period $ 141,271 $ 158,670 $ 137,262 $ 160,756

12 unchanged sentences

If an entity holding the land under option is a variable interest entity ("VIE"), our deposit represents a variable interest in that entity.

No VIEs required consolidation at either March 31, 2023 or December 31, 2022 because we determined that we were not any VIE's primary beneficiary.

No VIEs required consolidation at either June 30, 2023 or December 31, 2022 because we determined that we were not any VIE's primary beneficiary.

Our maximum exposure to loss related to these VIEs is generally limited to our deposits and pre-acquisition costs under the land option agreements.

The following provides a summary of our interests in land option agreements as of March 31, 2023 and December 31, 2022 ($000’s omitted):

The following provides a summary of our interests in land option agreements as of June 30, 2023 and December 31, 2022 ($000’s omitted):

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Pre-acquisition

20 unchanged sentences

($000’s omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Revenues (a) :

12 unchanged sentences

($000’s omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Income (loss) before income taxes:

12 unchanged sentences

(b) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes insurance reserve reversals of $ 64.9 million in the three months ended June 30, 2023.

Operating Data by Segment

($000’s omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Land-related charges (a) :

4 unchanged sentences

Texas 214 294 329 534

West 3,059 591 3,800 728

Other homebuilding 189 — 189 —

$ 4,427 $ 4,503 $ 10,110 $ 8,013

(a) Land-related charges include land impairments, net realizable value adjustments on land held for sale, and write-offs of deposits and pre-acquisition costs for land option contracts we elected not to pursue.

Other homebuilding consists primarily of write-offs of capitalized interest related to such land-related charges.

PULTEGROUP, INC.

2 unchanged sentences

($000's omitted)

March 31, 2023

June 30, 2023

Construction Land Under

27 unchanged sentences

$ 5,440,186 $ 5,134,432 $ 679,341 $ 72,058 $ 11,326,017 $ 14,796,515

(a) Florida includes goodwill of $ 28.6 million, net of a goodwill impairment charge of $ 20.2 million during 2020.

(a) Florida includes goodwill of $ 28.6 million, net of cumulative impairment charges of $ 20.2 million.

(b) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.

25 unchanged sentences

Other notes payable

Other notes payable include non-recourse and limited recourse notes with third parties that totaled $ 51.0 million and $ 55.2 million at March 31, 2023 and December 31, 2022, respectively.

Other notes payable include non-recourse and limited recourse notes with third parties that totaled $ 42.2 million and $ 55.2 million at June 30, 2023 and December 31, 2022, respectively.

These notes have maturities ranging up to four years , are secured by the applicable land positions to which they relate, and generally have no recourse to other assets.

The stated interest rates on these notes range up to 6 %.

We recorded $ 6.7 million and $ 0.7 million of inventory financed by sellers in the three months ended March 31, 2023 and 2022, respectively.

We recorded $ 17.7 million and $ 4.5 million of inventory financed by sellers in the six months ended June 30, 2023 and 2022, respectively.

Revolving credit facility

3 unchanged sentences

The Revolving Credit Facility contains financial covenants that require us to maintain a minimum Tangible Net Worth and a maximum Debt-to-Capitalization Ratio (as each term is defined in the Revolving Credit Facility).

As of March 31, 2023, we were in compliance with all covenants.

As of June 30, 2023, we were in compliance with all covenants.

Outstanding balances under the Revolving Credit Facility are guaranteed by certain of our wholly-owned subsidiaries.

At March 31, 2023, we had no borrowings outstanding, $ 288.8 million of letters of credit issued, and $ 961.2 million of remaining capacity under the Revolving Credit Facility.

At June 30, 2023, we had no borrowings outstanding, $ 285.0 million of letters of credit issued, and $ 965.0 million of remaining capacity under the Revolving Credit Facility.

At December 31, 2022, we had no borrowings outstanding, $ 303.4 million of letters of credit issued, and $ 946.6 million of remaining capacity under the Revolving Credit Facility.

Joint venture debt

At March 31, 2023, aggregate outstanding debt of unconsolidated joint ventures was $ 80.6 million, of which $ 42.0 million was related to one joint venture in which we have a 50 % interest.

At June 30, 2023, aggregate outstanding debt of unconsolidated joint ventures was $ 81.0 million, of which $ 39.4 million was related to one joint venture in which we have a 50 % interest.

In connection with this loan, we and our joint venture partner provided customary limited recourse guaranties in which our maximum financial loss exposure is limited to our pro rata share of the debt outstanding.

3 unchanged sentences

Pulte Mortgage maintains a master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") that matures on July 27, 2023.

The maximum aggregate commitment was $ 360.0 million at March 31, 2023 and will increase to $ 500.0 million on June 26, 2023 through maturity.

The maximum aggregate commitment was $ 500.0 million at June 30, 2023, which continues through maturity.

Borrowings under the Repurchase Agreement are secured by residential mortgage loans available-for-sale.

The Repurchase Agreement contains various affirmative and negative covenants applicable to Pulte Mortgage, including quantitative thresholds related to net worth, net income, and liquidity.

At March 31, 2023, Pulte Mortgage had $ 324.4 million oustanding at a weighted average interest rate of 6.18 % and $ 35.6 million of remaining capacity under the Repurchase Agreement.

At June 30, 2023, Pulte Mortgage had $ 315.6 million outstanding at a weighted average interest rate of 6.68 % and $ 184.4 million of remaining capacity under the Repurchase Agreement.

At December 31, 2022, Pulte Mortgage had $ 586.7 million outstanding at a weighted average interest rate of 5.39 % and $ 213.3 million of remaining capacity under the Repurchase Agreement.

1 unchanged sentence

Shareholders’ equity

In the three months ended March 31, 2023, we declared cash dividends totaling $ 36.1 million and repurchased 2.8 million shares under our repurchase authorization for $ 150.0 million.

In the three months ended March 31, 2022, we declared cash dividends totaling $ 36.5 million and repurchased 10.3 million shares under our repurchase authorization for $ 500.0 million.

On January 31, 2022, the Board of Directors increased our share repurchase authorization by $ 1.0 billion.

At March 31, 2023, we had remaining authorization to repurchase $ 232.9 million of common shares.

This repurchase authorization was increased by $ 1.0 billion on April 24, 2023.

In the six months ended June 30, 2023, we declared cash dividends totaling $ 71.8 million and repurchased 6.4 million shares under our repurchase authorization for $ 400.0 million.

In the six months ended June 30, 2022, we declared cash dividends totaling $ 72.0 million and repurchased 17.4 million shares under our repurchase authorization for $ 794.2 million.

On April 24, 2023, the Board of Directors increased our share repurchase authorization by $ 1.0 billion.

At June 30, 2023, we had remaining authorization to repurchase $ 982.9 million of common shares.

Under our share-based compensation plans, we accept shares as payment under certain conditions related to the vesting of shares, generally related to the payment of minimum tax obligations.

In the three months ended March 31, 2023 and 2022, participants surrendered shares valued at $ 10.1 million and $ 13.6 million, respectively, under these plans.

In the six months ended June 30, 2023 and 2022, participants surrendered shares valued at $ 10.4 million and $ 13.6 million, respectively, under these plans.

Such share transactions are excluded from the above noted share repurchase authorization.

Our effective tax rate was 24.2 % for both the three months ended March 31, 2023 and 2022.

Our effective tax rate was 24.4 % and 24.3 % for the three and six months ended June 30, 2023, respectively, compared with 24.5 % and 24.4 %, respectively, for the same periods in 2022.

Our effective tax rate for each of these periods differs from the federal statutory rate primarily due to state income tax expense.

At March 31, 2023 and December 31, 2022, we had net deferred tax liabilities of $ 161.3 million and $ 133.1 million, respectively.

At June 30, 2023 and December 31, 2022, we had net deferred tax liabilities of $ 226.5 million and $ 133.1 million, respectively.

The accounting for deferred taxes is based upon estimates of future results.

2 unchanged sentences

Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes.

We had $ 23.6 million of gross unrecognized tax benefits at both March 31, 2023 and December 31, 2022.

Additionally, we had accrued interest and penalties of $ 4.6 million and $ 4.1 million at March 31, 2023 and December 31, 2022, respectively.

We had $ 58.7 million and $ 23.6 million of gross unrecognized tax benefits at June 30, 2023 and December 31, 2022, respectively.

Additionally, we had accrued interest and penalties of $ 5.1 million and $ 4.1 million at June 30, 2023 and December 31, 2022, respectively.

Fair value disclosures

29 unchanged sentences

If quoted market prices are not available, fair values are based on quoted market prices of similar issues.

The carrying value of senior notes was $ 2.0 billion at both March 31, 2023 and December 31, 2022 .

The carrying value of senior notes was $ 2.0 billion at both June 30, 2023 and December 31, 2022 .

Commitments and contingencies

2 unchanged sentences

The majority of these letters of credit and surety bonds are in support of our land development and construction obligations to various municipalities, other government agencies, and utility companies related to the construction of roads, sewers, and other infrastructure.

We had outstanding letters of credit and surety bonds totaling $ 288.8 million and $ 2.1 billion, respectively, at March 31, 2023 and $ 303.4 million and $ 2.2 billion, respectively, at December 31, 2022.

We had outstanding letters of credit and surety bonds totaling $ 285.0 million and $ 2.2 billion, respectively, at June 30, 2023 and $ 303.4 million and $ 2.2 billion, respectively, at December 31, 2022.

In the event any such letter of credit or surety bond is drawn, we would be obligated to reimburse the issuer of the letter of credit or surety bond.

22 unchanged sentences

Changes to warranty liabilities were as follows ($000’s omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Warranty liabilities, beginning of period $ 105,980 $ 106,640 $ 108,348 $ 107,117

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our insurance coverage requires a per occurrence deductible up to an overall aggregate retention level.

Our insurance coverage requires a per occurrence retention up to an overall aggregate retention level.

Beginning with the first dollar, amounts paid to satisfy insured claims generally apply to our per occurrence and aggregate retention obligations.

5 unchanged sentences

IBNR represents losses related to claims incurred but not yet reported plus development on reported claims.

Our recorded reserves for all such claims totaled $ 652.7 million and $ 635.9 million at March 31, 2023 and December 31, 2022, respectively.

Our recorded reserves for all such claims totaled $ 605.2 million and $ 635.9 million at June 30, 2023 and December 31, 2022, respectively.

The recorded reserves include loss estimates related to both (i) existing claims and related claim expenses and (ii) IBNR and related claim expenses.

Liabilities related to IBNR and related claim expenses represented approximately 73 % and 74 % of the total general liability reserves at both March 31, 2023 and December 31, 2022, respectively.

Liabilities related to IBNR and related claim expenses represented approximately 77 % and 74 % of the total general liability reserves at June 30, 2023 and December 31, 2022, respectively.

The actuarial analyses that determine the IBNR portion of reserves consider a variety of factors, including the frequency and severity of losses, which are based on our historical claims experience supplemented by industry data.

6 unchanged sentences

Adjustments to reserves are recorded in the period in which the change in estimate occurs.

We reduced general liability reserves by $ 64.9 million during the three months ended June 30, 2023 as a result of changes in estimates resulting from actual claim experience being less than anticipated in previous actuarial projections.

The changes in actuarial estimates were driven by changes in actual claims experience that, in turn, impacted actuarial estimates for potential future claims.

These changes in actuarial estimates did not involve any changes in actuarial methodology but did impact the development of estimates for future periods, which resulted in adjustments to the IBNR portion of our recorded liabilities.

There were no material adjustments to individual claims.

Costs associated with our insurance programs are classified within selling, general, and administrative expenses.

Changes in these liabilities were as follows ($000's omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Balance, beginning of period $ 652,745 $ 644,278 $ 635,857 $ 627,067

6 unchanged sentences

Estimates of anticipated recoveries of our costs under various insurance policies or from subcontractors or other third parties are recorded when recovery is considered probable.

Such receivables are recorded in other assets and totaled $ 43.7 million at both March 31, 2023 and December 31, 2022.

Those receivables relate to costs incurred to perform corrective repairs, settle claims with customers, and other costs related to the continued progression of construction defect claims that we believe are insured.

Given the complexity inherent with resolving construction defect claims in the homebuilding industry described above, there generally exists a significant lag between our payment of claims and our reimbursements from applicable insurance carriers or third parties.

Such receivables are recorded in other assets and totaled $ 39.7 million and $ 43.7 million at June 30, 2023 and December 31, 2022, respectively.

Those receivables relate to costs incurred to perform

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

corrective repairs, settle claims with customers, and other costs related to the continued progression of construction defect claims that we believe are insured.

We lease certain office space and equipment for use in our operations.

8 unchanged sentences

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

ROU assets and lease liabilities were $ 72.9 million and $ 89.4 million at March 31, 2023, respectively, and $ 73.5 million and $ 90.1 million at December 31, 2022, respectively.

In the three months ended March 31, 2023 and 2022, we recorded an additional $ 3.9 million and $ 0.5 million, respectively, of lease liabilities under operating leases.

Payments on lease liabilities in the three months ended March 31, 2023 and 2022 totaled $ 5.4 million and $ 5.5 million, respectively.

ROU assets and lease liabilities were $ 73.0 million and $ 88.8 million at June 30, 2023, respectively, and $ 73.5 million and $ 90.1 million at December 31, 2022, respectively.

In the three and six months ended June 30, 2023, we recorded an additional $ 4.4 million and $ 8.3 million, respectively, of lease liabilities under operating leases, and $ 3.7 million and $ 4.2 million in the comparable prior year periods.

Payments on lease liabilities in the three and six months ended June 30, 2023 totaled $ 6.0 million and $ 11.3 million, respectively, and $ 5.6 million and $ 11.1 million in the comparable prior year periods.

Lease expense includes costs for leases with terms in excess of one year as well as short-term leases with terms of less than one year.

In the three months ended March 31, 2023 and 2022 our total lease expense was $ 14.2 million and $ 12.9 million, respectively, inclusive of variable lease costs of $ 3.0 million and $ 2.2 million, respectively, as well as short-term lease costs of $ 4.2 million and $ 5.1 million, respectively.

In the three and six months ended June 30, 2023 our total lease expense was $ 14.3 million and $ 28.5 million, respectively, and $ 13.4 million and $ 26.2 million in the comparable prior year periods.

Our total lease expense is inclusive of variable lease costs of $ 3.2 million and $ 6.2 million in the three and six months ended June 30, 2023, respectively, and $ 2.2 million and $ 4.4 million in the comparable prior year periods, as well as short-term lease costs of $ 4.5 million and $ 8.7 million in the three and six months ended June 30, 2023 respectively, and $ 5.5 million and $ 10.5 million in the comparable prior year periods.

Sublease income was de minimis.

The future minimum lease payments required under our leases as of March 31, 2023 were as follows ($000's omitted):

The future minimum lease payments required under our leases as of June 30, 2023 were as follows ($000's omitted):

Years Ending December 31,

2 unchanged sentences

Present value of lease liabilities (d)

(a) Remaining payments are for the nine months ending December 31, 2023.

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 2.2 million of legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2023.

(a) Remaining payments are for the six months ending December 31, 2023.

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 5.8 million of legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2023.

Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 4.9 years and 5.4 %, respectively, at March 31, 2023.

As a result, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 4.9 years and 4.0 %, respectively, at June 30, 2023.

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