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What changed in LGI Homes, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LGI Homes, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+366 added−343 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-26)

Top changes in LGI Homes, Inc.'s 2025 10-K

366 paragraphs added · 343 removed · 290 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

54 edited+6 added−12 removed51 unchanged
Biggest changeAs of December 31, 2024, we had a total of 2,685 completed homes, including information centers, and 1,358 homes in progress. 7 Table of Contents The following is a summary of our homes in inventory by reportable segment as of December 31, 2024 (dollar values in thousands): Reportable Segment Homes in Inventory (1) Inventory Value (1) Central 1,150 $ 263,005 Southeast 845 178,907 Northwest 321 130,377 West 688 204,018 Florida 866 229,432 Total 3,870 $ 1,005,739 (1) Includes homes in progress and completed homes; excludes information centers.
Biggest changeThe following is a summary of our homes in inventory by reportable segment as of December 31, 2025 (dollar values in thousands): Reportable Segment Homes in Inventory (1) Inventory Value (1) Central 1,085 $ 228,073 Southeast 692 159,693 Northwest 261 108,785 West 514 160,994 Florida 627 191,524 Total 3,179 $ 849,069 (1) Includes homes in progress and completed homes; excludes information centers. 7 Table of Contents Backlog See discussion included in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Backlog .” Raw Materials and Labor When constructing homes, we use various materials and components.
Our wholesale business builds and sells homes primarily to large institutions interested in acquiring single-family rental properties through bulk sales agreements. Beginning in 2021, we began building and leasing a number of single-family homes in select, existing communities. These rental projects are income producing and we maintain the option to sell these homes in a bulk purchase agreement.
Our wholesale business sells homes primarily to large institutions interested in acquiring single-family rental properties through bulk sales agreements. Beginning in 2021, we began building and leasing a number of single-family homes in select, existing communities. These rental projects are income producing and we maintain the option to sell these homes in a bulk purchase agreement.
In 2019, we introduced our CompleteHome TM and CompleteHome Plus TM packages to continue our legacy of offering buyers well-appointed, move-in ready homes, a streamlined buying experience, and superior quality with even more standard features than offered before.
In 2019, we introduced our CompleteHome TM and CompleteHome Plus TM packages to continue our legacy of offering buyers well-appointed, move-in ready homes, a streamlined buying experience, and superior quality with even more standard features than were offered before.
From constructing fences and cleaning up parks, organizing food, and volunteering at children's centers, we are committed to being a positive presence in the communities we build.
From constructing fences, cleaning up parks, organizing food, and volunteering at children's centers, we are committed to being a positive presence in the communities where we build.
Additional information on our operating segments and product information is contained in Note 14 , “ Segment Information ” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. We offer a set number of floor plans in each community with standardized finishes.
Additional information on our operating segments and product information is contained in Note 15 , “ Segment Information ” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. We offer a set number of floor plans in each community with standardized finishes.
We expect that home closings in our Terrata Homes branded communities will be less than 5% of our annual home closings during 2025. Our two equity-method real estate joint ventures and four additional joint ventures provide a streamlined, customer-focused experience for our homebuyers. LGI Mortgage Solutions provides mortgage services to our customers through an unconsolidated joint venture.
We expect that home closings in our Terrata Homes branded communities will be less than 5% of our annual home closings during 2026. Our two equity-method real estate joint ventures and four additional joint ventures provide a streamlined, customer-focused experience for our homebuyers. LGI Mortgage Solutions provides mortgage brokerage services to our customers through an unconsolidated joint venture.
Our CompleteHome Plus package includes everything in the CompleteHome package plus 42” upper cabinets, nine-foot ceilings, designer paint selections, additional landscaping and window blinds in every room of the house. We offer an attached townhome product in certain markets that enables us to keep our entry-level price point within reach of more new homebuyers.
Our CompleteHome Plus package includes everything in the CompleteHome package plus 42” upper cabinets, nine-foot ceilings, designer paint selections, additional landscaping, and window blinds in every room of the house. We offer an attached town home product in certain markets that enables us to keep our entry-level price point within reach of more new homebuyers.
Additionally, our construction managers monitor our compliance with zoning, safety, and other regulations, production schedules, and quality standards for our projects. 5 Table of Contents We endeavor to obtain favorable pricing from subcontractors through long-term relationships and consistent workflow. A number of our trade partners have subcontracted on our projects since we commenced homebuilding operations in 2003.
Additionally, our construction managers monitor our compliance with zoning, safety and other regulations, production schedules, and quality standards for our projects. We endeavor to obtain favorable pricing from subcontractors through long-term relationships and consistent workflow. A number of our trade partners have subcontracted on our projects since we commenced homebuilding operations in 2003.
A number of our subcontractors and tradespeople have worked on our homes since we commenced homebuilding operations in 2003 and, therefore, are familiar with our business model. We are committed to providing competitive benefits to attract and retain employees, including benefits that facilitate healthy lifestyles, mental well-being and preparedness for retirement.
A number of our subcontractors and trades people have worked on our homes since we commenced homebuilding operations in 2003 and, therefore, are familiar with our business model. We are committed to providing competitive benefits to attract and retain employees, including benefits that facilitate healthy lifestyles, mental well-being, and preparedness for retirement.
A mitigation plan may be implemented during the construction of a home if a cleanup does not remove all contaminants of concern or to address a naturally occurring condition, such as methane or radon. Some homebuyers may not want to purchase a home that is, or may have been, subject to a mitigation plan.
A mitigation plan may be implemented during the construction of a home if a cleanup does not remove all contaminants of 8 Table of Contents concern or to address a naturally occurring condition, such as methane or radon. Some homebuyers may not want to purchase a home that is, or may have been, subject to a mitigation plan.
We use extensive digital and print advertising to attract potential homebuyers. We employ various marketing methods, such as digital marketing strategies, interactive online media, social media, direct mail, directional signage, and billboards.
We use extensive digital and print advertising to attract potential homebuyers. We employ various marketing methods, such as digital marketing strategies, interactive online media, social media, directional signage, and billboards.
Our master build schedule allows our trade partners to receive their specific tasks from our electronic system and plan several weeks in advance before starting their work. This means of communication allows our subcontractors to schedule their crews efficiently, thereby allowing for better pricing and better quality of work.
Our master build schedule allows our trade partners to receive their specific tasks from our electronic system and plan several weeks in advance before starting their work. This means of communication allows our subcontractors to schedule their 5 Table of Contents crews efficiently, thereby allowing for better pricing and better quality of work.
We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities. Our allocation of capital for land investment is performed at the corporate level with a disciplined approach to portfolio management.
We do not have any ownership interest or title to the assets that we have sold to the land banker and we do not guarantee any of the land banker’s liabilities. 6 Table of Contents Our allocation of capital for land investment is performed at the corporate level with a disciplined approach to portfolio management.
None of our employees are covered by collective bargaining agreements, and we have not experienced any strikes or work stoppages. We believe we have good relations with our employees. Our human capital resources objectives include, as applicable, identifying, recruiting, training, retaining, incentivizing and integrating our existing and additional employees.
None of our employees are covered by collective bargaining agreements, and we have not experienced any strikes or work stoppages. We believe we have good relations with our employees. Our human capital resources objectives include, as applicable, identifying, recruiting, training, retaining, and incentivizing our employees.
We also work closely with our construction managers and subcontractors and train them using a comprehensive construction manual that outlines the most efficient way to build an LGI home. Our homebuilding operations utilize a paperless purchase order system to conduct business with our subcontractors and suppliers.
We also work closely with our construction managers and subcontractors and provide them a comprehensive construction manual that outlines the most efficient way to build an LGI home. Our homebuilding operations utilize a paperless purchase order system to conduct business with our subcontractors and suppliers.
We believe that our land development expertise will allow us to meet our growth and profit objectives with respect to opportunities in which we are the developer. Similar to our home building operations, our personnel oversee the contractors who perform the development work.
We believe that our land development expertise will allow us to meet our growth and profit objectives with respect to opportunities in which we are the developer. Similar to our homebuilding operations, our personnel oversee the contractors who perform the development work.
We offer our employees a wide array of company-paid benefits, which we believe are competitive relative to others in our industry. We utilize subcontractors and tradespeople to perform the construction of our homes. We believe we have good relations with our subcontractors and tradespeople.
We offer our employees a wide array of company-paid benefits, which we believe are competitive relative to others in our industry. We utilize subcontractors and trades people to perform the construction of our homes. We believe we have good relations with our subcontractors and trades people.
Garber is a member of the State Bar of Texas and is also admitted to practice before the U.S. Patent & Trademark Office. Mr. Garber is also a member of the Board of Directors and of the Executive Committee of Archway Insurance, Ltd, a captive insurance company. Board of Directors of LGI Homes, Inc. Mr.
Garber is a member of the State Bar of Texas and is admitted to practice before the U.S. Patent & Trademark Office. Mr. Garber is also President of the Board of Directors of Archway Insurance, Ltd., a captive insurance company. Board of Directors of LGI Homes, Inc. Mr.
Our continued commitment to our sales personnel is reflected in the ongoing weekly training sessions held in each of our information centers and quarterly regional training events. We also work closely with our subcontractors and tradespeople, training them on the most efficient way to build an LGI home.
Our continued commitment to our sales personnel is reflected in the ongoing weekly training sessions held in each of our information centers and quarterly regional training events. We also work closely with our subcontractors and trades people, collaborating with them on the most efficient way to build an LGI home.
Snider was a Project Manager for Tadian Homes, a homebuilder based in Troy, Michigan. 10 Table of Contents Charles Merdian. Mr. Merdian has served as our Chief Financial Officer and Treasurer since 2013 and served as our Secretary from 2013 to 2016. Prior to becoming our Chief Financial Officer in 2010, Mr. Merdian was our Controller from 2004 through 2010.
Snider was a Project Manager for Tadian Homes, a homebuilder based in Troy, Michigan. Charles Merdian. Mr. Merdian has served as our Chief Financial Officer and Treasurer since 2013 and served as our Secretary from 2013 to 2016. Prior to becoming our Chief Financial Officer in 2010, Mr. Merdian was our Controller from 2004 through 2010.
These methods have proven highly successful in reaching our target market, placing potential homebuyers in front of our trained sales professionals and communicating our core messages of value and dream fulfillment.
These 4 Table of Contents methods have proven highly successful in reaching our target market, placing potential homebuyers in front of our trained sales professionals and communicating our core messages of value and dream fulfillment.
Of our employees located outside our corporate headquarters, 689 were on-site sales and support personnel, and 383 were involved with acquisition and development, purchasing, and construction. We have built a diverse team of professionals with a wide range of industry experience across our markets.
Of our employees located outside our corporate headquarters, 622 were on-site sales and support personnel, and 342 were involved with acquisition and development, purchasing, and construction. We have built a diverse team of professionals with a wide range of industry experience across our markets.
We believe that this product helps to counter rising land and home costs. Our active adult community offers affordable homes in both open and age-restricted lifestyles in amenity-rich communities. This community leverages existing floor plans with minor modifications designed to meet the needs of active adult homebuyers at prices that present a compelling value-proposition.
We believe that this product helps to counter rising land and home costs. Our active adult communities offer affordable homes in both open and age-restricted lifestyles in an amenity-rich community. These communities leverage existing floor plans with minor modifications designed to meet the needs of active adult homebuyers at prices that present a compelling value-proposition.
Eric Lipar - Chief Executive Officer of LGI Homes, Inc. and serves as Chairman of our Board of Directors. Mr. Ryan Edone - Chief Financial Officer of Petroleum Wholesale L.P., a distributor of branded and wholesale motor fuel products and operator of retail convenience stores/travel centers. Ms.
Eric Lipar - Chief Executive Officer of LGI Homes, Inc. and serves as Chairman of our Board of Directors. Mr. Ryan Edone - Chief Financial Officer of Petroleum Wholesale L.P., a distributor of branded and wholesale motor fuel products and operator of retail convenience stores/travel centers across the southwestern United States. Ms.
Merdian also serves on the Montgomery County Habitat for Humanity Board of Directors. Scott Garber. Mr. Garber has served as our General Counsel and Corporate Secretary since April 2018. His responsibilities include all company legal matters, as well as corporate governance and risk management. Prior to joining the Company, Mr.
Merdian also serves on the Montgomery County Habitat for Humanity Advisory Council and is a past President of the Board of Directors. Scott Garber. Mr. Garber has served as our General Counsel and Corporate Secretary since April 2018. His responsibilities include all company legal matters, as well as corporate governance and risk management. Prior to joining the Company, Mr.
Environmental laws and conditions may result in delays, may cause us to incur substantial compliance and other costs, and can 8 Table of Contents prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.
Environmental laws and conditions may result in delays, may cause us to incur substantial compliance and other costs, and can prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.
Information about our Executive Officers The following table sets forth information regarding our executive officers as of February 25, 2025: Name Age Position Eric Lipar 54 Chief Executive Officer and Chairman of the Board Michael Snider 53 President and Chief Operating Officer Charles Merdian 55 Chief Financial Officer and Treasurer Scott Garber 53 General Counsel and Corporate Secretary Eric Lipar.
Information about our Executive Officers The following table sets forth information regarding our executive officers as of February 19, 2026: Name Age Position Eric Lipar 55 Chief Executive Officer and Chairman of the Board Michael Snider 54 President and Chief Operating Officer Charles Merdian 56 Chief Financial Officer and Treasurer Scott Garber 54 General Counsel and Corporate Secretary Eric Lipar.
LGI Insurance Solutions provides homeowners and other insurance products to our customers through an unconsolidated joint venture. Our wholesale business provides opportunities for us to leverage our even-flow construction methodology to build and sell homes primarily to large institutions interested in acquiring homes to be used as rental properties through bulk sales agreements.
LGI Insurance Solutions provides homeowners insurance and other insurance products to our customers through an unconsolidated joint venture. Our wholesale business provides opportunities for us to sell homes primarily to large institutions interested in acquiring homes to be used as rental properties through bulk sales agreements.
As part of this commitment, we have implemented a systems-based program of regularly scheduled safety reviews, meetings 9 Table of Contents and continuing education that are held in our communities and include our employees and the employees of our subcontractors and tradespeople. We are committed to improving and giving back to the communities we serve.
As part of this commitment, we have implemented a systems-based program of regularly scheduled safety reviews, meetings, and continuing education that are held in our communities and include our employees and the employees of our subcontractors and trades people. We are committed to improving and giving back to the communities we serve.
We have two equity-method real estate joint ventures and four additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers. 4 Table of Contents Sales and Marketing Our well-defined sales and marketing approach focuses on converting renters of apartments and single-family homes into homeowners.
Finally, from time to time, we enter into strategic joint ventures. We have two equity-method real estate joint ventures and four additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers. Sales and Marketing Our well-defined sales and marketing approach focuses on converting renters of apartments and single-family homes into homeowners.
We believe our commitments to hiring, training, safety and employee retention form the foundation of our people-focused culture. As of December 31, 2024, we employed 1,170 people, of whom 98 were located at our corporate headquarters.
We believe our commitments to hiring, training, safety, and employee retention form the foundation of our people-focused culture. As of December 31, 2025, we employed 1,056 people, of whom 92 were located at our corporate headquarters.
Generally, it takes us two to five years to turn raw or undeveloped land into an active community. 6 Table of Contents We utilize land banking financing arrangements on a limited and strategic basis.
Generally, it takes us two to four years to turn raw or undeveloped land into an active community. We utilize land banking financing arrangements on a limited and strategic basis.
We continue to monitor the supply markets to achieve the best prices available. Typically, the price changes that most significantly influence our operations are price increases in labor, commodities and lumber. In future quarters, we could see various cost pressures associated with inflation similar to the cost pressures experienced in the last few years.
Typically, the price changes that most significantly influence our operations are price increases in labor, commodities and lumber. In future quarters, we could see various cost pressures associated with inflation similar to the cost pressures experienced in the last few years.
He oversees all aspects of our sales, construction, and product development. Prior to serving as our President, Mr. Snider was Executive Vice President of Homebuilding (2005-2009) and in the role of Homebuilding Manager (2004). Before joining the Company in 2004, Mr.
Snider has served as our President since 2009 and our Chief Operating Officer since July 2013. He oversees all aspects of our sales, construction, and product development. Prior to serving as our President, Mr. Snider was Executive Vice President of Homebuilding (2005-2009) and in the role of Homebuilding Manager (2004). Before joining the Company in 2004, Mr.
During 2024, we closed 318 Terrata Homes at an average sales price per home closed of $637,000, compared to 260 Terrata Homes at an average sales price per home closed of $587,000 in 2023. As of December 31, 2024, we offered Terrata Homes in 18 of our active communities.
During 2025, we closed 189 Terrata Homes at an average sales price per home closed of $672,000, compared to 318 Terrata Homes at an average sales price per home closed of $637,000 in 2024. As of December 31, 2025, we offered Terrata Homes in 20 of our active communities.
Steven Smith - Owner and solo practitioner of Steven R. Smith Law, LLC. He is a former shareholder of the law firm Baker Donelson. Mr. Robert Vahradian - Partner of GTIS Partners, LP, a global real estate investment firm. 11 Table of Contents
Steven Smith - Owner and solo practitioner of Steven R. Smith Law, LLC. He is a former shareholder of the law firm Baker Donelson. Mr. Robert Vahradian - Partner of GTIS Partners, LP, a global real estate investment firm managing residential, industrial, office, hotel and mixed-use properties in the U.S. and Brazil. 11 Table of Contents
During 2024, our average home completion time was approximately 105 to 135 calendar days, our home size ranged between 900 to approximately 4,100 square feet and our overall sales prices ranged from approximately $191,000 to more than $1,000,000. For the year ended December 31, 2024, we closed 6,131 homes, including the bulk sale of 103 leased, single-family homes.
During 2025, our average home completion time was approximately 105 to 135 days, our home size ranged between 900 to approximately 4,000 square feet and our overall sales prices ranged from approximately $192,000 to more than $1,230,000. For the year ended December 31, 2025, we closed 4,788 homes, including 103 currently or previously leased single-family homes.
Our lot inventory decreased to 70,899 owned or controlled lots as of December 31, 2024 from 71,081 owned or controlled lots as of December 31, 2023 primarily related to our discipline in the evaluation of and selective approval of new land deals. We had 151 and 117 active communities as of December 31, 2024 and December 31, 2023, respectively.
Our lot inventory decreased to 60,842 owned or controlled lots as of December 31, 2025 from 70,899 owned or controlled lots as of December 31, 2024, primarily related to our disciplined evaluation of and selective approval of new land opportunities. We had 144 and 151 active communities as of December 31, 2025 and December 31, 2024, respectively.
Given our successful history as a land developer, we are experienced in converting raw land into residential communities. We endeavor to maintain a pipeline of desirable land positions for replacement and new communities.
We pursue a flexible land acquisition strategy of purchasing or optioning finished lots at attractive prices, or purchasing raw land for residential development. Given our successful history as a land developer, we are experienced in converting raw land into residential communities. We endeavor to maintain a pipeline of desirable land positions for replacement and new communities.
Our information centers are typically open eight to ten hours per day, 359 days per year, and generally staffed by two to four sales professionals who are supported by a dedicated loan officer.
Our information centers are typically open 8 to 10 hours per day, 359 days per year, and are generally staffed by two to four sales professionals.
We provide each customer with a comprehensive introduction to the community and the surrounding area, furnishing them with detailed information regarding utilities, schools, homeowners association dues and restrictions, local entertainment and nearby dining and shopping options.
Our sales professionals provide floor plans, pricing information, and conduct tours of our homes based on the customer’s needs and budget. We provide each customer with a comprehensive introduction to the community and the surrounding area, furnishing them with detailed information regarding utilities, schools, homeowners association dues and restrictions, local entertainment, and nearby dining and shopping options.
Excluding the bulk sale of 103 leased, single-family homes, our average sales price per home closed was $365,394. During 2023, our average home completion time was approximately 108 to 150 days, our home size ranged between 950 to approximately 4,100 square feet and our overall sales prices ranged from approximately $189,000 to more than $1,000,000.
Excluding the 103 currently or previously leased single-family homes, our average sales price per home closed was $364,035. During 2024, our average home completion time was approximately 105 to 135 days, our home size ranged between 900 to approximately 4,100 square feet and our overall sales prices ranged from approximately $191,000 to more than $1,000,000.
Shailee Parikh - Chief Operating Officer of Revantage, a Blackstone portfolio company that provides support to Blackstone’s real estate portfolio, and Managing Partner of ARK Real Estate, LLC, a real estate investment and management company. Mr.
Shailee Parikh - Chief Operating Officer and Managing Director, Head of North America, of Revantage, a Blackstone portfolio company, and Managing Partner of ARK Real Estate, LLC, a real estate investment and management company. 10 Table of Contents Mr.
Lipar has been in the residential land development business since the mid-1990s and is one of our founders. He has overseen land acquisitions, development and the sale of over 75,000 homes since our inception. Mr.
Lipar has been in the residential land development business since the mid-1990s and is one of our founders. He has overseen land acquisitions, development and the closing of over 80,000 homes since our inception. Mr. Lipar is a member of the Policy Advisory Board for the Harvard Joint Center for Housing Studies. Michael Snider. Mr.
Homes in Inventory When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory.
Homes in Inventory We intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. As of December 31, 2025, we had a total of 2,311 completed homes, including information centers, and 1,054 homes in progress.
In addition, the majority of our raw materials are supplied to us by our subcontractors and are included in the price of our contract with such subcontractors. Most of the raw materials necessary for our subcontractors are standard items carried by major suppliers. Our construction work is substantially completed by third-party subcontractors, most of whom are non-unionized.
Most of the raw materials necessary for our subcontractors are standard items carried by major suppliers. Our construction work is substantially completed by third-party subcontractors, most of whom are non-unionized. We continue to monitor the supply markets to achieve the best prices available.
This allows us to mitigate the risks associated with increases in building materials and labor costs between the time construction begins on a home and the time it is closed. Typically, the raw materials and most of the components used in our business are readily available in the United States.
We generally contract for our materials and labor at a fixed price for the anticipated construction period of our homes. This allows us to mitigate the risks associated with increases in building materials and labor costs between the time construction begins on a home and the time it is closed.
During 2024 and 2023, we had 552 and 679 wholesale home closings, respectively, which represented 9.2% and 10.1% of our total home closings in 2024 and 2023, respectively. We expect our wholesale business to represent approximately 10% of our annual home closings during 2025.
During 2025 and 2024, we had 737 and 552 wholesale home closings, respectively, which represented 15.7% and 9.2% of our total home closings in 2025 and 2024, respectively. Home closings related to previously leased homes totaled 103 in both 2025 and 2024.
Available Information We make available, as soon as reasonably practicable, on our website, www.lgihomes.com , all of our reports required to be filed with the Securities and Exchange Commission (“SEC”).
Since 2016, we have contributed over $4.0 million in corporate, non-profit sponsorships and donated over 50,000 employee service hours in an effort to make a meaningful impact in our local communities. 9 Table of Contents Available Information We make available, as soon as reasonably practicable, on our website, www.lgihomes.com , all of our reports required to be filed with the Securities and Exchange Commission (“SEC”).
We purchase some components and materials centrally to leverage our purchasing power to achieve volume discounts, a practice that often reduces costs and ensures timely deliveries. We typically do not store significant inventories of construction materials, except for work in progress materials for homes under construction.
Typically, the raw materials and most of the components used in our business are readily available in the United States. We purchase some components and materials centrally to achieve volume discounts, a practice that often reduces costs and ensures timely deliveries.
We directly invest in our sales professionals by conducting an intensive 100-day introductory training program consisting of 30 days of initial in-depth, in-house education about our time-proven selling strategies and secondary training at the local division.
We focus on identifying and attracting the best talent and providing our employees with world-class training and continuous development. We invest directly in our sales professionals through a structured 100-day training program consisting of 30 days of intensive, in-house instruction on our proven selling strategies, followed by field training at the local division.
As of December 31, 2024, we were active in 151 communities throughout the United States. We focus on demographic and economic trends forecasted for these markets and expect to continue increasing our community count in the future.
Business Opportunities Since December 2013, we have grown substantially, expanding our operations from eight markets in four states to 36 markets in 21 states. As of December 31, 2025, we were active in 144 communities throughout the United States and expect to continue increasing our community count in the future.
Our principal executive offices are located at 1450 Lake Robbins Drive, Suite 430, The Woodlands, Texas 77380, and our telephone number is (281) 362-8998. Information on or linked to our website is not incorporated by reference into this Annual Report on Form 10-K unless expressly noted.
Information on or linked to our website is not incorporated by reference into this Annual Report on Form 10-K unless expressly noted. Unless otherwise indicated or the context requires, “LGI,” the “Company,” “we,” “our” and “us” refer collectively to LGI Homes, Inc. and its subsidiaries.
Since commencing home building operations in 2003, we have constructed and closed over 75,000 homes. During the year ended December 31, 2024, we had 6,131 home closings, including the bulk sale of 103 leased, single-family homes, compared to 6,729 home closings in 2023. LGI Homes, Inc. is a Delaware corporation incorporated on July 9, 2013.
Since commencing home building operations in 2003, we have constructed and closed over 80,000 homes. LGI Homes, Inc. is a Delaware corporation incorporated on July 9, 2013. Our principal executive offices are located at 1450 Lake Robbins Drive, Suite 430, The Woodlands, Texas 77380, and our telephone number is (281) 362-8998.
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Unless otherwise indicated or the context requires, “LGI,” the “Company,” “we,” “our” and “us” refer collectively to LGI Homes, Inc. and its subsidiaries. Business Opportunities Since December 2013, we have grown substantially, expanding our operations from eight markets in four states to 36 markets in 21 states.
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For the year ended December 31, 2024, we closed 6,131 homes, including the bulk sale of 103 leased single-family homes. Excluding the bulk sale of 103 leased single-family homes, our average sales price per home closed was $365,394.
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For the year ended December 31, 2023, we closed 6,729 homes at an average sales price per home closed of $350,510. We pursue a flexible land acquisition strategy of purchasing or optioning finished lots at attractive prices, or purchasing raw land for residential development.
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The Midwest division is included in our Central reportable segment and the Mid-Atlantic division is included in our Southeast reportable segment.
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Finally, from time to time, we enter into strategic joint ventures.
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West Northwest Central Midwest Florida Southeast Mid-Atlantic Arizona Washington Central Texas Minnesota Central FL Georgia Maryland New Mexico Oregon Dallas/Ft Worth East FL North Carolina Pennsylvania Nevada Colorado Houston West FL South Carolina Virginia Northern CA Oklahoma Alabama West Virginia Southern CA Tennessee Utah These operating segments reflect the way we evaluate our business performance and manage our operations.
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Our sales professionals review credit and income qualifications if applicable, provide floor plans and pricing information, and conduct tours of our homes based on the customer’s needs and budget.
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In addition, as part of our overall homebuilding operations, we periodically sell previously leased homes that were part of our rental activities. Sales of previously leased homes are generally made to individual homebuyers or investors.
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The Midwest division is included in our Central reportable segment and the Mid-Atlantic division is included in our Southeast reportable segment. We operate in the following markets within these seven operating segments: West Northwest Central Midwest Florida Southeast Mid-Atlantic Phoenix, AZ Seattle, WA Houston, TX Minneapolis, MN Tampa, FL Atlanta, GA Washington, D.C. Tucson, AZ Portland, OR Dallas Ft.
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The table below shows (i) home closings by reportable segment for the year ended December 31, 2025 and (ii) our owned or controlled lots by reportable segment as of December 31, 2025: Year Ended December 31, 2025 As of December 31, 2025 Reportable Segment Home Closings Owned (1) Controlled Total Central 1,340 19,108 517 19,625 Southeast 1,431 13,372 2,629 16,001 Northwest 384 5,877 1,250 7,127 West 879 8,367 3,323 11,690 Florida 651 5,166 1,233 6,399 Total 4,685 51,890 8,952 60,842 (1) Of the 51,890 owned lots as of December 31, 2025, 35,416 were raw/under development lots and 16,474 were finished lots.
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Worth, TX Orlando, FL Charlotte, NC Norfolk, VA Albuquerque, NM Denver, CO San Antonio, TX Fort Myers, FL Raleigh, NC Richmond, VA Las Vegas, NV Austin, TX Jacksonville, FL Wilmington, NC Baltimore, MD Northern CA Oklahoma City, OK Fort Pierce, FL Winston-Salem, NC Southern CA Daytona Beach, FL Columbia, SC Salt Lake City, UT Sarasota, FL Greenville, SC Birmingham, AL Nashville, TN These operating segments reflect the way we evaluate our business performance and manage our operations.
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We typically do not store significant inventories of construction materials, except for work in progress materials for homes under construction. In addition, the majority of our raw materials are supplied to us by our subcontractors and are included in the price of our contract with such subcontractors.
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The table below shows (i) home closings by reportable segment for the year ended December 31, 2024 and (ii) our owned or controlled lots by reportable segment as of December 31, 2024.
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Year Ended December 31, 2024 As of December 31, 2024 Reportable Segment Home Closings Owned (1) Controlled Total Central 1,757 20,099 3,542 23,641 Southeast 1,635 13,870 4,434 18,304 Northwest 483 5,161 3,000 8,161 West 1,140 8,829 4,119 12,948 Florida 1,013 5,358 2,487 7,845 Total 6,028 53,317 17,582 70,899 (1) Of the 53,317 owned lots as of December 31, 2024, 37,432 were raw/under development lots and 15,885 were finished lots.
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Backlog See discussion included in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Backlog .” Raw Materials and Labor When constructing homes, we use various materials and components. We generally contract for our materials and labor at a fixed price for the anticipated construction period of our homes.
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We focus on identifying and attracting the best talent and providing our employees with world-class training and continuous development. Typically, all new vice presidents, sales professionals and purchasing managers come to our corporate headquarters for a week of training in their first 100 days.
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Since 2016, we have contributed over $3.5 million in corporate, non-profit sponsorships, donated over 40,000 employee service hours and collaborated with over 100 non-profit organizations in an effort to make a meaningful impact in our local communities.
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Lipar currently serves on the Residential Neighborhood Development Council for the Urban Land Institute and is a member of the Policy Advisory Board for the Harvard Joint Center for Housing Studies. Michael Snider. Mr. Snider has served as our President since 2009 and our Chief Operating Officer since July 2013.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks are discussed more fully below and include, but are not limited to, risks related to: • Operational Risks Related to Our Business: ◦ our ability to acquire finished lots and land parcels suitable for residential homebuilding at reasonable prices; ◦ labor and raw material shortages and price fluctuations that could delay or increase the cost of home construction or land development; ◦ the impact of an epidemic or pandemic; • Industry and Economic Risks: ◦ higher mortgage interest rates, and the tightening of mortgage lending standards and mortgage financing requirements; ◦ a significant downturn in our housing markets or in the homebuilding industry; ◦ the homebuilding industry is highly competitive; ◦ new and existing laws and regulations or other governmental actions, including environmental, health and safety laws and regulations; ◦ increasing attention to environmental, social and governance matters; ◦ the seasonal nature of our business; • Strategic Risks Related to Our Business: ◦ our growth or expansion strategies may not be successful; • Risks Related to Our Organization and Structure: ◦ we depend on key management personnel and other experienced employees; ◦ our use of leverage in executing our business strategy; ◦ we are a holding company, and we are accordingly dependent upon distributions from our subsidiaries to service our debt and pay dividends, if any, taxes and other expenses; • General Risks: ◦ we may be subject to litigation, arbitration or other claims; ◦ information system failures, cyber incidents or breaches in security by us or third parties upon which we rely; ◦ complex and evolving U.S. laws and regulations regarding privacy and data protection; and ◦ access to financing sources may not be available on favorable terms, or at all.
Biggest changeThese risks are discussed more fully below and include, but are not limited to, risks related to: • Industry and Economic Risks: ◦ Higher mortgage interest rates, and the tightening of mortgage lending standards and mortgage financing requirements; ◦ Significant downturn in our housing markets or in the homebuilding industry; ◦ The homebuilding industry is highly competitive; ◦ New and existing laws and regulations or other governmental actions, including environmental, health and safety laws and regulations; ◦ Inflation could adversely affect our business and financial results; ◦ The seasonal nature of our business; • Operational and Construction Risks: ◦ Our ability to acquire finished lots and land parcels suitable for residential homebuilding at reasonable prices; ◦ Labor and raw material shortages, price fluctuations and supply chain constraints that could delay or increase the cost of home construction or land development; ◦ The impact of an epidemic or pandemic; • Strategic and Financial Risks: ◦ Our efforts to expand into new markets or increase operations may not achieve expected results and could expose us to additional operational and financial risk; ◦ We are a holding company, and we are accordingly dependent upon distributions from our subsidiaries to service our debt and pay dividends, if any, taxes and other expenses; • Organization and Structure Risks: ◦ We depend on key management personnel and other experienced employees; ◦ Our use of leverage in executing our business strategy; • General Risks: ◦ We may be subject to litigation, arbitration, governmental investigations or other claims; ◦ Information system failures, cyber incidents or breaches in security by us or third parties upon which we rely; ◦ Complex and evolving U.S. laws and regulations regarding privacy and data protection; ◦ Changing sentiments with respect to sustainability, matters; and ◦ Access to financing sources may not be available on favorable terms, or at all.
Risks Related to Our Organization and Structure We depend on key management personnel and other experienced employees. Our success depends to a significant degree upon the contributions of certain key management personnel, including, but not limited to, Eric Lipar, our Chief Executive Officer and Chairman of the Board. Although we have entered into an employment agreement with Mr.
Organization and Structure Risks We depend on key management personnel and other experienced employees. Our success depends to a significant degree upon the contributions of certain key management personnel, including, but not limited to, Eric Lipar, our Chief Executive Officer and Chairman of the Board. Although we have entered into an employment agreement with Mr.
If there is limited economic growth, declines in employment and consumer income, changes in consumer behavior, including as a result of an epidemic or pandemic, the conflict between Russia and Ukraine, the conflict in the Middle East, impacts from the change in U.S presidential administration, and/or tightening of mortgage lending standards, practices and regulation in the geographic areas in which we operate, or if interest rates for mortgage loans or home prices continue to rise or stay at similar levels, there could likely be a corresponding adverse effect on our business, prospects, liquidity, financial condition and results of operations, including, but not limited to, the number of homes we sell, our average sales price per home closed , cancellations of home purchase contracts and the amount of revenues or profits we generate, and such effect may be material.
If there is limited economic growth, declines in employment and consumer income, changes in consumer behavior, including as a result of an epidemic or pandemic, the conflict between Russia and Ukraine, the conflict in the Middle East, impacts from the change in U.S. presidential administration, and/or tightening of mortgage lending standards, practices and 13 Table of Contents regulation in the geographic areas in which we operate, or if interest rates for mortgage loans or home prices continue to rise or stay at similar levels, there could likely be a corresponding adverse effect on our business, prospects, liquidity, financial condition, and results of operations, including, but not limited to, the number of homes we sell, our average sales price per home closed , cancellations of home purchase contracts and the amount of revenues or profits we generate, and such effect may be material.
If, at the time of any refinancing, prevailing interest rates or other factors result in higher interest rates on refinancings, increases in interest expense could adversely affect our cash flows and results of operations.
If, at the time of any refinancing, prevailing interest rates or other factors result in higher interest rates on refinancing, increases in interest expense could adversely affect our cash flows and results of operations.
Incurring substantial indebtedness could subject us to many risks that, if realized, would adversely affect us, including the risk that: 25 Table of Contents • our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt, which is likely to result in acceleration of such indebtedness; • our indebtedness may increase our vulnerability to adverse economic and industry conditions with no assurance that our profitability will increase with higher financing cost; • we may be required to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for operations and capital expenditures, future investment opportunities or other purposes; and • the terms of any refinancing may not be as favorable as the terms of the indebtedness being refinanced.
Incurring substantial indebtedness could subject us to many risks that, if realized, would adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt, which is likely to result in acceleration of such indebtedness; • our indebtedness may increase our vulnerability to adverse economic and industry conditions with no assurance that our profitability will increase with higher financing cost; • we may be required to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for operations and capital expenditures, future investment opportunities or other purposes; and • the terms of any refinancing may not be as favorable as the terms of the indebtedness being refinanced.
Further, the mortgage banking business is subject to numerous federal, state and local laws and regulations, which, among other things: prohibit discrimination and establish underwriting guidelines; provide for audits and inspections; require appraisals and/or credit reports on prospective borrowers and disclosure of certain information concerning credit and settlement costs; establish maximum loan amounts; prohibit predatory lending practices; and regulate the referral of business to affiliated entities.
Further, the mortgage brokerage business is subject to numerous federal, state and local laws and regulations, which, among other things: prohibit discrimination and establish underwriting guidelines; provide for audits and inspections; require appraisals and/or credit reports on prospective borrowers and disclosure of certain information concerning credit and settlement costs; establish maximum loan amounts; prohibit predatory lending practices; and regulate the referral of business to affiliated entities.
We can make no assurances that potential home closings affected by any such shutdown or slowdown will occur after the shutdown or slowdown has ended. Natural disasters, severe weather and adverse geological conditions may increase costs, cause project delays and reduce consumer demand for housing, all of which could materially and adversely affect us.
We can make no assurances that potential home closings affected by any future shutdown or slowdown will occur after the shutdown or slowdown has ended. Natural disasters, severe weather and adverse geological conditions may increase costs, cause project delays and reduce consumer demand for housing, all of which could materially and adversely affect us.
In addition to directly damaging our land or projects, many of these natural events could damage roads and highways providing access to our assets, affect the desirability of our land or projects or result in potential buyers facing higher costs for, or being unable to obtain, fire, flood or other hazard insurance coverage in certain areas, thereby reducing the number of potential buyers who can afford, or are willing, to purchase homes in those areas, adversely affecting our ability to market homes or sell land in those areas and possibly increasing the costs of homebuilding completion.
In addition to directly damaging our land or projects, many of these natural events could damage roads and highways providing access to our assets, affect the desirability of our land or projects or result in potential buyers facing higher costs for, or being unable to obtain, fire, flood or other hazard insurance coverage in certain areas, thereby reducing the number of potential buyers who can afford, or are willing, to purchase homes in 16 Table of Contents those areas, adversely affecting our ability to market homes or sell land in those areas and possibly increasing the costs of homebuilding completion.
Other factors that might impact the homebuilding industry include uncertainty in domestic and international financial, credit and consumer lending markets amid slow economic growth or recessionary conditions in various regions or industries around the world, including as a result of an epidemic or pandemic, the conflict between Russia and Ukraine, the conflict in the Middle East, or impacts from the change in U.S. presidential administration, tight lending standards and practices for mortgage loans 17 Table of Contents that limit consumers’ ability to qualify for mortgage financing to purchase a home, including increased minimum credit score requirements, credit risk/mortgage loan insurance premiums, homeowners’ insurance premiums and/or other fees and required down payment amounts, higher home prices, more conservative appraisals, changing consumer preferences, higher loan-to-value ratios and extensive buyer income and asset documentation requirements, changes to mortgage regulations, slower rates of population growth or population decline in our markets, or Federal Reserve policy changes.
Other factors that might impact the homebuilding industry include uncertainty in domestic and international financial, credit and consumer lending markets amid slow economic growth or recessionary conditions in various regions or industries around the world, including as a result of an epidemic or pandemic, the conflict between Russia and Ukraine, the conflict in the Middle East, or impacts from U.S. presidential administration policies, tight lending standards and practices for mortgage loans that limit consumers’ ability to qualify for mortgage financing to purchase a home, including increased minimum credit score requirements, credit risk/mortgage loan insurance premiums, homeowners’ insurance premiums and/or other fees and required down payment amounts, higher home prices, more conservative appraisals, changing consumer preferences, higher loan-to-value ratios and extensive buyer income and asset documentation requirements, changes to mortgage regulations, slower rates of population growth or population decline in our markets, or Federal Reserve policy changes.
Our business can be substantially affected by adverse changes in general economic or business conditions that are outside of our control, including changes in short-term and long-term interest rates; employment levels and job and personal income growth; housing demand from population growth, household formation and other demographic changes, among other factors (which may be driven by birth rate changes, economic factors or U.S. immigration policies); availability and pricing of mortgage financing for homebuyers; housing affordability; consumer confidence generally and the confidence of potential homebuyers in particular; consumer spending; financial system and credit market stability; private party and government mortgage loan programs (including changes in FHA, USDA, VA, Fannie Mae and Freddie Mac conforming mortgage loan limits, credit risk/mortgage loan insurance premiums and/or other fees, down payment requirements and underwriting standards), and federal and state regulation, oversight and legal action regarding lending, appraisal, foreclosure and short sale practices; federal and state personal income tax rates and provisions, including provisions for the deduction of mortgage loan interest payments, real estate taxes and other expenses; supply of and prices for available new or resale homes (including lender-owned homes) and other housing alternatives, such as apartments, single-family rentals and other rental housing; homebuyer interest in our current or new product designs and new home community locations; general consumer interest in purchasing a home compared to choosing other housing alternatives; interest of financial institutions or other businesses in purchasing wholesale homes; and real estate taxes.
Our business can be substantially affected by adverse changes in general and local economic or business conditions that are outside of our control, including changes in short-term and long-term interest rates; employment levels and job and personal income growth; housing demand from population growth, household formation and other demographic changes, among other factors (which may be driven by birth rate changes, economic factors or U.S. immigration policies); availability and pricing of mortgage financing for homebuyers; housing affordability; consumer confidence generally and the confidence of potential homebuyers in particular; consumer spending; financial system and credit market stability; private party and government mortgage loan programs (including changes in FHA, USDA, VA, Fannie Mae and Freddie Mac conforming mortgage loan limits, credit risk/mortgage loan insurance premiums and/or other fees, down payment requirements and underwriting standards), and federal and state regulation, oversight and legal action regarding lending, appraisal, foreclosure and short sale practices; federal and state personal income tax rates and provisions, including provisions for the deduction of mortgage loan interest payments, real estate taxes, the cost of homeowners’ insurance and other expenses; supply of and prices for available new or resale homes (including lender-owned homes) and other housing alternatives, such as apartments, single-family rentals and other rental housing; homebuyer interest in our current or new product designs and new home community locations; general consumer interest in purchasing a home compared to choosing other housing alternatives; and interest of financial institutions or other businesses in purchasing wholesale homes or their ability to do so.
A decline in our ability to develop and market one of our new undeveloped communities successfully and to generate positive cash flow from these operations in a timely manner could have a material adverse effect on our business and results of operations and on our ability to service our debt and to meet our working capital requirements.
A decline in our ability to develop and market more than one of our new undeveloped communities successfully and to generate positive cash flow from these operations in a timely manner could have a material adverse effect on our business and results of operations and on our ability to service our debt and to meet our working capital requirements.
Such government-imposed tariffs and trade regulations on imported building supplies, and retaliatory measures by other countries, may in the future have significant impacts on the cost to construct our homes and on our customers’ budgets, including by causing disruptions or shortages in our supply chain.
Such government-imposed tariffs and trade regulations on imported building supplies, and retaliatory measures by the United States or other countries, may in the future have significant impacts on the cost to construct our homes and on our customers’ budgets, including by causing disruptions or shortages in our supply chain.
A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, public pension funds, universities and other members of the investing community.
A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to sustainability matters, including through the investment and voting practices of investment advisers, public pension funds, universities and other members of the investing community.
Other potential changes to the U.S. Internal Revenue Code, as amended (the “Code”), include changes to the U.S. corporate income tax rate and provisions limiting or eliminating various deductions, credits or tax preferences. Interpretations of the Code and regulations promulgated by the Internal Revenue Service are likewise subject to change.
Internal Revenue Code, as amended (the “Code”), include changes to the U.S. corporate income tax rate and provisions limiting or eliminating various deductions, credits or tax preferences. Interpretations of the Code and regulations promulgated by the Internal Revenue Service are likewise subject to change.
In addition, as of December 31, 2024, we had outstanding $400.0 million aggregate principal amount of the 2028 Senior Notes, which bear interest at a fixed rate of 8.750%, $300.0 million aggregate principal amount of the 2029 Senior Notes, which bear interest at a fixed rate of 4.000%, and $400.0 million aggregate principal amount of the 2032 Senior Notes, which bear interest at a fixed rate of 7.000%.
In addition, as of December 31, 2025, we had outstanding $400.0 million aggregate principal amount of the 2028 Senior Notes, which bear interest at a fixed rate of 8.750%, $300.0 million aggregate principal amount of the 2029 Senior Notes, which bear interest at a fixed rate of 4.000%, and $400.0 million aggregate principal amount of the 2032 Senior Notes, which bear interest at a fixed rate of 7.000%.
For the past decade, the domestic financial markets have experienced a high degree of volatility, uncertainty and, during certain periods, tightening of liquidity in both the high yield debt and equity capital markets, resulting in certain periods where new capital has been both more difficult and more expensive to access.
The domestic financial markets have in the past experienced a high degree of volatility, uncertainty and, during certain periods, tightening of liquidity in both the high yield debt and equity capital markets, resulting in certain periods where new capital has been both more difficult and more expensive to access.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings systems for evaluating companies on their approach to ESG matters. These ratings are used by some investors to inform their investment and voting decisions.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings systems for evaluating companies on their approach to sustainability matters. These ratings are used by some investors to inform their investment and voting decisions.
We are subject to numerous local, state, federal and other statutes, ordinances, rules and regulations concerning zoning, development, building design, construction, accessibility, anti-discrimination and other matters, which, among other things, impose restrictive zoning and density requirements, the result of which is to limit the number of homes that can be built within 20 Table of Contents the boundaries of a particular area.
We are subject to numerous local, state, federal and other statutes, ordinances, rules, and regulations concerning zoning, development, building design, construction, accessibility, anti-discrimination, and other matters, which, among other things, impose restrictive zoning and density requirements, the result of which is to limit the number of homes that can be built within the boundaries of a particular area.
As a homebuilder and developer, we are subject to construction defect, product liability and home and other warranty claims arising in the ordinary course of business. These claims are common to the homebuilding industry and can be costly.
We are subject to warranty and liability claims arising in the ordinary course of business that can be significant. As a homebuilder and developer, we are subject to construction defect, product liability and home and other warranty claims arising in the ordinary course of business. These claims are common to the homebuilding industry and can be costly.
A failure to comply with investor or customer expectations and standards, which are evolving, or if we are perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could also cause reputational harm to our business and could have a material adverse effect on us.
A failure to comply with investor or customer expectations and standards, which are evolving, or if we are perceived to not have responded appropriately to the concern for sustainability issues, regardless of whether there is a legal requirement to do so, could also cause reputational harm to our business and could have a material adverse effect on us.
In addition, our LGI Mortgage Solutions joint venture involves additional risks associated with the mortgage banking business. The mortgage banking business is competitive, and competitors include mortgage lenders, such as national, regional and local mortgage banks and other financial institutions.
In addition, our LGI Mortgage Solutions joint venture involves additional risks associated with the mortgage brokerage business. The mortgage brokerage business is competitive, and competitors include mortgage lenders, such as national, regional and local mortgage banks and other financial institutions.
Our homebuilding operations are located in areas that are subject to natural disasters, severe weather or adverse geological conditions. These include, but are not limited to, hurricanes, tornadoes, droughts, floods, storm surge, coastal erosion, sea level rise, brushfires, wildfires, prolonged periods of precipitation, landslides, soil subsidence, earthquakes and other natural disasters.
Our homebuilding operations are located in areas that are subject to natural disasters, severe weather or adverse geological conditions. These include, but are not limited to, hurricanes, tornadoes, droughts, floods, storm surge, coastal erosion, sea level rise, brush fires, wildfires, prolonged periods of precipitation, landslides, soil subsidence, earthquakes, and other natural disasters.
Increased lending volume and losses insured by the FHA have resulted in a reduction of the FHA insurance fund. The USDA rural development program provides for zero down payment and 100% 16 Table of Contents financing for homebuyers in qualifying areas. If the USDA program was discontinued or if funding was decreased, then our business could be adversely affected.
Increased lending volume and losses insured by the FHA have resulted in a reduction of the FHA insurance fund. The USDA rural development program provides for zero down payment and 100% financing for homebuyers in qualifying areas. If the USDA program was discontinued or if funding was decreased, then our business could be adversely affected.
For example, losses associated with hurricanes, landslides, prolonged periods of precipitation, earthquakes and other weather-related and geologic events may not be insurable and other losses, such as those arising from terrorism, may not be economically insurable. A sizeable uninsured loss could materially and adversely affect our business, prospects, liquidity, financial condition and results of operations.
For example, losses associated with hurricanes, floods, landslides, prolonged periods of precipitation, earthquakes, and other weather-related and geologic events may not be insurable and other losses, such as those arising from terrorism, may not be economically insurable. A sizable uninsured loss could materially and adversely affect our business, prospects, liquidity, financial condition, and results of operations.
If we need to repay existing indebtedness during periods of rising interest rates, we could be required to refinance our then-existing indebtedness on unfavorable terms or liquidate one or more of our assets to repay such indebtedness 26 Table of Contents at times which may not permit realization of the maximum return on such assets and could result in a loss.
If we need to repay existing indebtedness during periods of rising interest rates, we could be required to refinance our then-existing indebtedness on unfavorable terms or liquidate one or more of our assets to repay such indebtedness at times which may not permit realization of the maximum return on such assets and could result in a loss.
Moreover, our valuations are made on the basis of assumptions that may not prove to reflect economic or demographic reality. 19 Table of Contents If housing demand fails to meet our expectations when we acquired our inventory, our profitability may be adversely affected and we may not be able to recover our costs when we build and sell houses.
Moreover, our valuations are made on the basis of assumptions that may not prove to reflect economic or demographic reality. If housing demand fails to meet our expectations when we acquired our inventory, our profitability may be adversely affected and we may not be able to recover our costs when we build and sell houses.
Labor and raw material shortages, price increases for labor and raw materials and supply chain constraints could cause delays in and increase our costs of home 13 Table of Contents construction or land development, which in turn could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.
Labor and raw material shortages, price increases for labor and raw materials and supply chain constraints could cause delays in and increase our costs of home construction or land development, which in turn could have a material adverse effect on our business, prospects, liquidity, financial condition, and results of operations.
Further, the coverage offered by, and the availability of, general liability insurance for completed operations and construction defects are currently limited and costly. We 14 Table of Contents cannot provide assurance that coverage will not be further restricted, increasing our risks and financial exposure to claims, and/or become costlier.
Further, the coverage offered by, and the availability of, general liability insurance for completed operations and construction defects are currently limited and costly. We cannot provide assurance that coverage will not be further restricted, increasing our risks and financial exposure to claims, and/or become costlier.
Despite our oversight, contractual protections, and other mitigation efforts, our employees or subcontractors could violate some of these laws or regulations, as a result of which 27 Table of Contents we may incur fines, penalties or other liabilities, which could be significant, and our reputation with governmental agencies, customers, vendors or suppliers could be damaged.
Despite our oversight, contractual protections, and other mitigation efforts, our employees or subcontractors could violate some of these laws or regulations, as a result of which we may incur fines, penalties or other liabilities, which could be significant, and our reputation with governmental agencies, customers, vendors or suppliers could be damaged.
Higher mortgage interest rates, tightening of mortgage lending standards and mortgage financing requirements, and untimely or incomplete mortgage loan originations for our homebuyers could adversely affect the availability of mortgage loans for potential purchasers of our homes and thereby materially and adversely affect our business, prospects, liquidity, financial condition and results of operations.
Industry and Economic Risks Higher mortgage interest rates, tightening of mortgage lending standards and mortgage financing requirements, and untimely or incomplete mortgage loan originations for our homebuyers, could adversely affect the availability of mortgage loans for potential purchasers of our homes and thereby materially and adversely affect our business, prospects, liquidity, financial condition, and results of operations .
As of December 31, 2024 and 2023, we have contributed a total of $28.3 million and $21.5 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into these unconsolidated entities are used by the entities to invest in certain real estate transactions and residential mortgage services, respectively.
As of December 31, 2025 and 2024, we have contributed a total of $21.2 million and $28.3 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into these unconsolidated entities are used by the entities to invest in certain real estate transactions and residential mortgage services, respectively.
Despite our quality control and jobsite safety efforts, we may discover from time to time that our subcontractors have engaged in improper construction or safety practices or have installed defective materials in our homes or subdivisions. When we discover these issues, we typically utilize our subcontractors to repair the defects.
Despite our quality control and job site safety efforts, we may discover from time to time that our subcontractors have engaged in improper construction or safety practices or have installed defective materials in our homes or subdivisions. When we discover these issues, we typically utilize our subcontractors to repair the defects.
We rely on subcontractors to perform the construction of our homes and the development of our communities and, in some cases, to select and obtain building materials. Although we provide subcontractors with detailed specifications and perform quality control procedures, subcontractors may, in some cases, use improper construction processes or defective materials.
We rely on subcontractors to perform the construction of our homes and the development of our communities and, in some cases, to select and obtain building materials. Although we provide subcontractors with detailed specifications and perform quality control procedures, 21 Table of Contents subcontractors may, in some cases, use improper construction processes or defective materials.
As of December 31, 2024, borrowings under the Credit Agreement bore interest at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 1.85% per annum.
As of December 31, 2025, borrowings under the Credit Agreement bore interest at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 1.85% per annum.
There can be no assurance that we will be able to employ or retain the necessary personnel to successfully implement a disciplined management process and culture with local management, that our expansion operations will be successful, or that we will be able to successfully integrate any acquired homebuilder.
There can be no assurance that we will be able to employ or retain the necessary personnel to successfully implement a disciplined management process and culture with local management, that our expansion operations will be successful, that we will be able to successfully integrate any acquired homebuilder or that we will be able to achieve any expected synergies.
The availability of suitable land assets could also affect the 12 Table of Contents success of our land acquisition strategy, which may impact our ability to maintain or increase the number of our active communities, as well as to sustain and grow our revenues and margins, and achieve or maintain profitability.
The availability of suitable land assets could also affect the success of our land acquisition strategy, which may impact our ability to maintain or increase the number of our active communities, as well as to sustain and grow our revenues and margins, and achieve or maintain profitability.
In the event of shortages in labor or raw materials in such markets, local subcontractors, tradespeople and suppliers may choose to allocate their resources to homebuilders with an established presence in the market and with whom they have longer-standing relationships.
In the event of shortages in labor or raw materials in such markets, local subcontractors, trades people and suppliers may choose to allocate their resources to homebuilders with an established presence in the market and with whom they have longer-standing relationships.
The regulatory environment for mortgage lending is complex and ever changing and has led to an increase in the number of audits, examinations and investigations in the industry. The 2008 housing 15 Table of Contents downturn resulted in numerous changes in the regulatory framework of the financial services industry.
The regulatory environment for mortgage lending is complex and ever changing and has led to an increase in the number of audits, examinations and investigations in the industry. The 2008 housing downturn resulted in numerous changes in the regulatory framework of the financial services industry.
We may be unable to achieve the anticipated benefits of any such growth or expansion, including through add-on acquisitions or through efficiencies that we may 24 Table of Contents be unable to achieve, the anticipated benefits may take longer to realize than expected or we may incur greater costs than expected in attempting to achieve the anticipated benefits.
We may be unable to achieve the anticipated benefits of any such growth or expansion, including through add-on acquisitions or through efficiencies that we may be unable to achieve, the anticipated benefits may take longer to realize than expected or we may incur greater costs than expected in attempting to achieve the anticipated benefits.
Such cybersecurity incidents or IT resource failures could significantly disrupt our ability to close 28 Table of Contents on land transactions or our customers’ ability to close on their homes, as well as our production schedules and delivery forecasts, and could have a material impact on our operations or consolidated financial statements, including by causing home sales contract cancellations.
Such cybersecurity incidents or IT resource failures could significantly disrupt our ability to close on land transactions or our customers’ ability to close on their homes, as well as our production schedules and delivery forecasts, and could have a material impact on our operations or consolidated financial statements, including by causing home sales contract cancellations.
The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements: • adverse economic changes either nationally or in the markets in which we operate, including, among other things, potential impacts from political uncertainty, civil unrest, increases in unemployment, volatility of mortgage rates, supply chain disruptions (including due to the conflict between Russia and Ukraine and the wide-ranging sanctions the United States and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials and the conflict in the Middle East), inflation, the possibility of recession and decreases in housing prices; • a slowdown in the homebuilding industry or changes in population growth rates in our markets; • volatility and uncertainty in the credit markets and broader financial markets; • elevated mortgage interest rates for prolonged periods, disruption in the terms or availability of mortgage financing or increase in the number of foreclosures in our markets; • the cyclical and seasonal nature of our business; • our future operating results and financial condition; • our business operations; 30 Table of Contents • changes in our business and investment strategy; • the success of our operations in recently opened new markets and our ability to expand into additional new markets; • our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, townhouses, wholesale products, and acreage home sites; • our ability to develop our projects successfully or within expected timeframes; • our ability to identify potential acquisition targets, close such acquisitions and realize the benefits of such acquisitions; • increases in taxes or government fees; • decline in the market value of our land portfolio; • our ability to successfully integrate any acquisitions with our existing operations; • availability of land to acquire and our ability to acquire such land on favorable terms or at all; • availability, terms and deployment of capital and ability to meet our ongoing liquidity needs; • decisions of the Credit Agreement lender group; • the cost and availability of insurance and surety bonds; • shortages of or increased prices for labor, land, or raw materials used in land development and housing construction, including due to changes in trade policies; • delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control; • uninsured losses in excess of insurance limits; • our leverage and future debt service obligations; • changes in, liabilities under, or the failure or inability to comply with, governmental laws and regulations, including environmental, privacy and security laws and regulations; • the timing of receipt of regulatory approvals and the opening of projects; • the degree and nature of our competition; • information system failures, cyber incidents or breaches in security; • our continued ability to qualify for additional federal energy efficient homes tax credits and the extension of the availability of such tax credits beyond 2032; • our ability to retain our key personnel; • the impact of an epidemic or pandemic and its effect on us, our business, customers, subcontractors and suppliers (including associated supply chain disruptions); • negative publicity or poor relations with the residents of our projects; • existing and future litigation, arbitration or other claims; • availability of qualified personnel and third-party contractors and subcontractors; • the impact on our business of any future government shutdown; • other risks and uncertainties inherent in our business; and • other factors we discuss under the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations .” You should not place undue reliance on forward-looking statements.
The following are some of the factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements: 30 Table of Contents • adverse economic changes either nationally or in the markets in which we operate, including, among other things, potential impacts from political uncertainty, civil unrest, increases in unemployment, volatility of mortgage interest rates, supply chain disruptions (including due to the conflict between Russia and Ukraine and the wide-ranging sanctions the United States and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials and the conflict in the Middle East), inflation, the possibility of recession and decreases in housing prices; • a slowdown in the homebuilding industry or changes in population growth rates in our markets; • volatility and uncertainty in the credit markets and broader financial markets; • elevated mortgage interest rates for prolonged periods, disruption in the terms or availability of mortgage financing or increase in the number of foreclosures in our markets; • disruptions in global trade, including as a result of tariffs, trade restrictions, retaliatory trade measures or the effect of such actions on trading relationships between the United States and other countries; • the cyclical and seasonal nature of our business; • our future operating results and financial condition; • our business operations; • changes in our business and investment strategy; • the success of our operations in recently opened new markets and our ability to expand into additional new markets; • our ability to successfully extend our business model to building homes with higher price points, developing larger communities and producing and selling multi-unit products, town homes, wholesale products, and acreage home sites; • our ability to develop our projects successfully or within expected timeframes; • our ability to identify potential acquisition targets, close such acquisitions and realize the benefits of such acquisitions; • increases in taxes or government fees; • decline in the market value of our land portfolio; • our ability to successfully integrate any acquisitions with our existing operations; • availability of land to acquire and our ability to acquire such land on favorable terms or at all; • availability, terms and deployment of capital and ability to meet our ongoing liquidity needs; • decisions of the Credit Agreement lender group; • the cost and availability of insurance and surety bonds; • shortages of or increased prices for labor, land, or raw materials used in land development and housing construction, including due to tariffs or trade restrictions imposed by the U.S. government, and any effect on trading relationships between the United States and other countries; • delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control; • uninsured losses in excess of insurance limits; • our leverage and future debt service obligations; • changes in, liabilities under, or the failure or inability to comply with, governmental laws and regulations, including environmental, privacy and security laws and regulations; • the timing of receipt of regulatory approvals and the opening of projects; • the degree and nature of our competition; • information system failures, cyber incidents or breaches in security; • our ability to retain our key personnel; • the impact of an epidemic or pandemic and its effect on us, our business, customers, subcontractors and suppliers (including associated supply chain disruptions); • negative publicity or poor relations with the residents of our projects; • existing and future litigation, arbitration or other claims; • availability of qualified personnel and third-party contractors and subcontractors; • the impact on our business of any future U.S. government shutdown; 31 Table of Contents • other risks and uncertainties inherent in our business; and • other factors we discuss under the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations .” You should not place undue reliance on forward-looking statements.
Any failure in health and safety performance on our building sites may result in penalties for non-compliance with relevant regulatory requirements or litigation, and a failure that results in a major or significant health and safety incident is likely to be costly in terms of potential liabilities incurred as a result.
Any failure in health and safety performance on our building sites, whether by us or a subcontractor, may result in penalties for non-compliance with relevant regulatory requirements or litigation, and a failure that results in a major or significant health and safety incident is likely to be costly in terms of potential liabilities incurred as a result.
All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Annual Report on Form 10-K. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 31 Table of Contents
All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Annual Report on Form 10-K. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If mortgage interest rates increase, the ability of prospective homebuyers to finance home purchases may be adversely affected, and, as a result, our operating results may be significantly negatively impacted.
If mortgage interest rates increase, the ability of prospective homebuyers to 12 Table of Contents finance home purchases may be adversely affected, and, as a result, our operating results may be significantly negatively impacted.
The residential construction industry experiences labor and raw material shortages from time to time, including shortages in qualified subcontractors and tradespeople and supplies of materials such as insulation, drywall, cement, steel and lumber.
The residential construction industry experiences labor and raw material shortages from time to time, including shortages in qualified subcontractors and trades people and supplies of materials such as insulation, drywall, cement, steel and lumber.
For these reasons, our joint venture may not be able to compete effectively in the mortgage banking business.
For these reasons, our joint venture may not be able to compete effectively in the mortgage brokerage business.
We maintain, and require our subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance and generally seek to require our subcontractors to indemnify us for liabilities arising from their work.
We maintain, and, other than in California, we require our subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance and generally seek to require our subcontractors to indemnify us for liabilities arising from their work.
We may develop communities in which we build townhomes or other multi-family homes in addition to single-family homes, sell acreage home sites as a part of the development, sell homes to investors or portfolio management companies, or develop commercial properties that may be complementary to our communities.
We may develop communities in which we build town homes or other multi-family homes in addition to single-family homes, sell acreage home sites as a part of the development, sell homes to investors or portfolio management companies, or 23 Table of Contents develop commercial properties that may be complementary to our communities.
For example, the federal government previously imposed, and has recently proposed, new or increased tariffs or duties on an array of imported materials and goods that are used in connection with the construction and delivery of our homes, including lumber, raising our costs for these items (or products made with them).
For example, the federal government has imposed, and may propose in the future, new or increased tariffs or duties on an array of imported materials and goods that are used in connection with the construction and delivery of our homes, including lumber, raising our costs for these items (or products made with them).
In addition, future indebtedness may contain financial covenants limiting our ability to, for example, incur additional indebtedness, make certain investments, reduce liquidity below certain levels and pay dividends to our stockholders, and otherwise affect our operating policies.
In addition, future indebtedness may contain financial covenants limiting our ability to, for example, incur additional indebtedness, make certain investments, reduce liquidity below certain levels, pay dividends to our stockholders and repurchase shares of our common stock, and otherwise affect our operating policies.
There is no guarantee that a future outbreak of any widespread epidemics or pandemics will not occur, or that the U.S. economy will fully recover therefrom, either of which could materially and adversely affect our business. Industry and Economic Risks Inflation could adversely affect our business and financial results.
There is no guarantee that a future outbreak of any widespread epidemics or pandemics will not occur, or that the U.S. economy will fully recover therefrom, either of which could materially and adversely affect our business.
We have also experienced labor shortages, price fluctuations and increased labor costs, including as a result of inflation or wage increases, particularly over the past few years, before stabilizing recently, due to historic inflation rates in the United States. It is uncertain whether these conditions will continue as is, improve or worsen.
We have also experienced labor shortages, price fluctuations and increased labor costs, including as a result of inflation or wage increases, particularly over the past few years, despite moderation in the rate of inflation during 2025, due to historic inflation rates in the United States. It is uncertain whether these conditions will continue as is, improve or worsen.
Unfavorable media related to our industry, company, brands, marketing, personnel, operations, business performance, or prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy.
Our reputation and brand are critical to our success. Unfavorable media related to our industry, company, brands, marketing, personnel, operations, business performance, or prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy.
First-time homebuyers are generally more affected by the availability of mortgage financing than other potential homebuyers. These homebuyers are a key source of demand for our new homes. A limited availability of suitable mortgage financing may adversely affect the volume and sales price of our home sales.
First-time homebuyers are generally more affected than other potential homebuyers by the availability of mortgage financing and other costs of homeownership such as insurance and taxes. These homebuyers are a key source of demand for our new homes. A limited availability of suitable mortgage financing may adversely affect the volume and sales price of our homes.
Our ability to acquire finished lots and land parcels for new single-family homes and other projects may be adversely affected by changes in the general availability of land parcels, the willingness of land sellers to sell land parcels at reasonable prices, competition for available land parcels, availability of financing to acquire land parcels, zoning, regulations that limit housing density, the ability to obtain building permits, environmental requirements and other market conditions and regulatory requirements.
Our ability to acquire finished lots and land parcels for new single-family homes and other projects may be adversely affected by changes in the general availability of land parcels, the willingness of land sellers to sell land parcels at reasonable prices, competition for available land parcels, availability of financing to acquire land parcels (whether directly for us or indirectly through land bankers or other land financing vehicles), zoning, regulations that limit housing density, the ability to obtain building permits, 19 Table of Contents environmental requirements, and other market conditions and regulatory requirements.
We could suffer physical damage to property or sustain liabilities resulting in losses that may not be fully recoverable by insurance.
We may suffer uninsured losses or material losses in excess of insurance limits. We could suffer physical damage to property or sustain liabilities resulting in losses that may not be fully recoverable by insurance.
Increased competition could hurt our business, as it could prevent us from acquiring attractive land parcels on which to build homes or make such acquisitions more expensive, hinder our market share expansion and cause us to increase our selling incentives and reduce our prices.
Our competitors may independently develop land and construct homes that are substantially similar to our products. Increased competition could hurt our business, as it could prevent us from acquiring attractive land parcels on which to build homes or make such acquisitions more expensive, hinder our market share expansion and cause us to increase our selling incentives and reduce our prices.
As of December 31, 2024, we had total outstanding borrowings of $401.9 million under the Credit Agreement, and we could borrow an additional $270.5 million under the Credit Agreement. As of December 31, 2024, borrowings under the Credit Agreement bore interest at a rate of SOFR plus 1.85% per annum.
As of December 31, 2025, we had total outstanding borrowings of $527.6 million under the Credit Agreement, and we could borrow an additional $273.6 million under the Credit Agreement. As of December 31, 2025, borrowings under the Credit Agreement bore interest at a rate of SOFR plus 1.85% per annum.
We cannot predict what changes to trade policy will be made by the current presidential administration, the U.S. Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business.
Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business.
As of December 31, 2024, we had 599 homes with an ending backlog value of $236.5 million. With the weakening of the housing market over the past several years, we have experienced an increase in cancellation rates.
As of December 31, 2025, we had 1,394 homes with an ending backlog value of $501.3 million. With the weakening of the housing market over the past several years, we have experienced an increase in cancellation rates.
We have expanded our business through selected investments in new geographic markets and by diversifying our products in certain markets. Investments in land, finished lots, home inventories and rental properties can expose us to risks of economic loss and inventory impairments if housing conditions weaken or we are unsuccessful in implementing our growth strategies.
Investments in land, finished lots, home inventories and rental properties can expose us to risks of economic loss and inventory impairments if housing conditions weaken or we are unsuccessful in implementing our growth strategies.
As of December 31, 2024, we had a $1.205 billion revolving credit facility under the Credit Agreement to finance our construction and development activities. As of December 31, 2024, we had outstanding borrowings of $401.9 million under the Credit Agreement and we could borrow an additional $270.5 million under the Credit Agreement.
As of December 31, 2025, we had a $1.1825 billion revolving credit facility under the Credit Agreement to finance our construction and development activities. As of December 31, 2025, we had outstanding borrowings of $527.6 million under the Credit Agreement and we could borrow an additional $273.6 million under the Credit Agreement.
In addition, as of December 31, 2024, we had outstanding $400.0 million aggregate principal amount of the 2028 Senior Notes (as defined herein), $300.0 million aggregate principal amount of the 2029 Senior Notes (as defined herein) and $400.0 million aggregate principal amount of the 2032 Senior Notes (as defined herein).
In addition, as of December 31, 2025, we had outstanding $400.0 million aggregate principal amount of the 2028 Senior Notes (as defined herein), $300.0 million aggregate principal amount of the 2029 Senior Notes (as defined herein), $400.0 million aggregate principal amount of the 2032 Senior Notes (as defined herein) and $50.0 million total borrowings under the LGI Living Loan Agreement (as defined herein).
Access to financing sources may not be available on favorable terms, or at all, especially in light of current market conditions, which could adversely affect our ability to maximize our returns. 29 Table of Contents Our access to additional third-party sources of financing will depend, in part, on: • general market conditions; • the market’s perception of our growth potential; • with respect to acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed; • our current debt levels; • our current and expected future earnings; • our cash flow; and • the market price per share of our common stock.
Our access to additional third-party sources of financing will depend, in part, on: • general market conditions; • the market’s perception of our growth potential; • with respect to acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed; • our current debt levels; • our current and expected future earnings; • our cash flow; and • the market price per share of our common stock.
As of December 31, 2024, we had 2,512 completed homes in inventory and 1,358 homes in progress in inventory.
As of December 31, 2025, we had 2,311 completed homes in inventory and 1,054 homes in progress in inventory.
Failure to attract and retain such personnel or to ensure that their experience and knowledge is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, prospects, liquidity, financial condition and results of operations.
Failure to attract and retain such personnel or to ensure that their experience and knowledge is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, prospects, liquidity, financial condition, and results of operations. 24 Table of Contents Termination of the employment agreement with our Chief Executive Officer could be costly and prevent a change in control of our company.
There is an inherent risk that the value of the land owned by us may decline after purchase. The valuation of property is inherently subjective and based on the individual characteristics of each property.
We acquire land for expansion into new markets and for replacement of land inventory and expansion within our current markets. There is an inherent risk that the value of the land owned by us may decline after purchase. The valuation of property is inherently subjective and based on the individual characteristics of each property.
Our business is subject to complex and evolving U.S. laws and regulations regarding privacy and data security. As part of our normal business activities, we collect, process and store certain information, including information specific to homebuyers, customers, employees, vendors and suppliers. We may share some of this information with third parties who assist us with certain aspects of our business.
As part of our normal business activities, we collect, process and store certain information, including information specific to homebuyers, customers, employees, vendors and suppliers. We may share some of this information with third parties who 28 Table of Contents assist us with certain aspects of our business.
In addition, we could be required to make material expenditures related to the settlement of such issues or disputes or to modify our community development plans, which could adversely affect our results of operations.
In addition, we could be required to make material expenditures related to the settlement of such issues or disputes or to modify our community development plans, which could adversely affect our results of operations. A major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage.
We are a holding company and have no material assets other than our ownership of membership interests or limited partnership interests in our subsidiaries. We have no independent means of generating revenue.
We are a holding company, and we are accordingly dependent upon distributions from our subsidiaries to service our debt and pay dividends, if any, taxes and other expenses. We are a holding company and have no material assets other than our ownership of membership interests or limited partnership interests in our subsidiaries. We have no independent means of generating revenue.
Increases in cancellations of purchase contracts could have an adverse effect on our business. Our backlog reflects standard purchase contracts with our homebuyers for homes that still need to be delivered.
The potential difficulties described above could also lead some homebuyers to cancel or refuse to honor their home purchase contracts altogether. Increases in cancellations of purchase contracts could have an adverse effect on our business. Our backlog reflects standard purchase contracts with our homebuyers for homes that still need to be delivered.
In September 2023, California passed climate-related disclosure mandates that are broader than the SEC’s rules. Compliance with these disclosure rules may be costly and subject a company to criticism by regulators, investors, the media or other stakeholders for the accuracy, adequacy or completeness of its ESG disclosures and could adversely impact a company’s reputation and financial position.
Multiple lawsuits have been filed challenging California’s climate-related disclosure rules. Compliance with these disclosure rules may be costly and subject the Company to criticism by regulators, investors, the media or other stakeholders for the accuracy, adequacy or completeness of its sustainability disclosures and could adversely impact the Company’s reputation and financial position.
Certain litigation or the resolution thereof may affect the availability or cost of some of our insurance coverage, which could materially and adversely impact us, expose us to increased risks that would be uninsured, and materially and adversely impact our ability to attract directors and officers. We may suffer uninsured losses or material losses in excess of insurance limits.
Certain litigation or the resolution thereof may affect the availability or cost of some of our insurance coverage, which could materially and adversely impact us, expose us to increased risks that would be uninsured, and materially and adversely impact our ability to attract directors and officers. 27 Table of Contents Negative publicity could adversely affect our reputation as well as our business, financial results and stock price.
Changes in tax law could adversely affect our business. U.S. tax law is always subject to change (possibly with retroactive effect). For example, in August 2022, the United States enacted the IRA 2022, which contains significant changes to U.S. tax law including, but not limited to, a corporate minimum tax and 1% excise tax on stock repurchases.
For example, in August 2022, the United States enacted the Inflation Reduction Act of 2022 (the “IRA 2022”), which contains significant changes to U.S. tax law including, but not limited to, a corporate minimum tax and 1% excise tax on stock repurchases.
Our industry is cyclical and adverse changes in general and local economic conditions could reduce the demand for homes and, as a result, could have a material adverse effect on us.
Furthermore, if buyer demand for new homes in these markets decreases, home prices could decline, which would have a material adverse effect on our business. 14 Table of Contents Our industry is cyclical and adverse changes in general and local economic conditions could reduce the demand for homes and, as a result, could have a material adverse effect on us.
Civil unrest or acts of terrorism can also have a negative effect on our business. If the homebuilding industry experiences another significant or sustained downturn, it would materially adversely affect our business and results of operations in future years. In 2022, the Federal Reserve’s aggressive actions to stem inflation caused mortgage interest rates to increase significantly.
Civil unrest or acts of terrorism can also have a negative effect on our business. The homebuilding industry is cyclical in nature and if it experiences another significant or sustained downturn as a result of factors described above or otherwise, it would materially adversely affect our business and results of operations in future years.
Such a failure could generate significant negative publicity and have a corresponding impact on our reputation and our relationships with relevant regulatory agencies, governmental authorities and local communities, which in turn could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations.
Such a failure could generate significant negative publicity and have a corresponding impact on our reputation and our relationships with relevant regulatory agencies, governmental authorities and local communities, which in turn could have a material adverse effect on our business, prospects, liquidity, financial condition, and results of operations. 22 Table of Contents Any joint venture investments that we make could be adversely affected by our lack of sole decision making authority, our reliance on the financial condition of our joint venture partners and disputes between us and our joint venture partners.
Inflation could adversely affect our business and financial results by increasing the costs of land, raw materials and labor needed to operate our business. Inflation may also accompany higher interest rates, which could adversely impact potential customers’ ability to obtain financing on favorable terms, thereby decreasing demand for our homes.
Inflation may also accompany higher interest rates, which could adversely impact potential customers’ ability to obtain financing on favorable terms, thereby decreasing demand for our homes. Historically, we have experienced a significant increase in land, labor, materials, and costs related to construction.
These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters, and generally there is no term or damage limitation on these indemnities. Increasing attention to environmental, social and governance matters may impact our business, financial results or stock price.
These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters, and generally there is no term or damage limitation on these indemnities. Inflation could adversely affect our business and financial results. Inflation could adversely affect our business and financial results by increasing the costs of land, raw materials and labor needed to operate our business.
In particular, the Credit Agreement requires us to maintain (i) a tangible net worth of not less than $1,218.2 million plus 50% of the net proceeds of equity issuances after December 31, 2022 plus 50.0% of our positive consolidated earnings after taxes for each fiscal quarter ended after December 31, 2022, (ii) a leverage ratio of not greater than 60.0%, (iii) liquidity of at least $50.0 million and (iv) a ratio of EBITDA to interest expense for the most recent four quarters of at least 1.75 to 1.00.
In particular, the Credit Agreement requires us to maintain (i) a tangible net worth of not less than $1.512 billion plus 50% of the net proceeds of equity issuances after December 31, 2024 plus 50.0% of our positive consolidated earnings after taxes for each fiscal quarter ended after December 31, 2024, (ii) a leverage ratio of not greater than (a) from the period beginning on August 1, 2025 and ending December 31, 2026 (or, if we provide written notice to the administrative agent, on such earlier date as we specify in the notice) (the “Specified Covenant Termination Date”), 55.0%, 25 Table of Contents and (b) after the Specified Covenant Termination Date, 60.0%, (iii) liquidity of at least $100.0 million and (iv) a ratio of EBITDA to interest expense for the most recent four quarters of at least (a) from the period beginning on August 1, 2025 and ending on the Specified Covenant Termination Date, 1.15 to 1.00, and (b) after the Specified Covenant Termination Date, 1.50 to 1.00.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe conduct annual and periodic assessments of these third-party engagements to evaluate compliance with our cybersecurity standards. To our knowledge, we have not been subject to cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, the Company, its operations or financial standing. Governance Our cybersecurity risk management program is overseen by management at multiple levels.
Biggest changeWe conduct annual and periodic assessments of these third-party engagements to evaluate compliance with our cybersecurity standards. To our knowledge, we have not been subject to cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, the Company, its operations or financial standing.
These include but are not limited to: • Maintaining a defined and practiced incident response plan; • Employing appropriate incident prevention and detection safeguards; • Maintaining a defined disaster recovery policy and employing disaster recovery software, where appropriate; • Educating, training and testing our user community on information security practices and identification of potential cybersecurity risks and threats; and • Reviewing and evaluating new developments in the cyber threat landscape.
These include but are not limited to: • Maintaining a defined and practiced incident response plan; • Employing appropriate incident prevention and detection safeguards; • Maintaining a defined disaster recovery policy and employing disaster recovery software, where appropriate; • Educating, training and testing our employees and user community on information security practices and identification of potential cybersecurity risks and threats; and • Reviewing and evaluating new developments in the cyber threat landscape.
Furthermore, at the Board meetings at which our Vice President, Information Technology or other members of our information technology group do not provide in-person updates to the Board, our CEO or another executive team member 32 Table of Contents provides current updates to the Board.
Furthermore, at the Board meetings at which our Vice President, Information Technology or other members of our information technology group do not provide in-person updates to the Board, our CEO or another executive team member typically provides current updates to the Board.
Removed
Our Vice President, Information Technology plays a key role in assessing, monitoring and managing our cybersecurity risks with support from dedicated information technology and security personnel. Our cybersecurity and risk management protocols are led by our Vice President of IT, who has served in this role since 2019.
Added
Governance Our cybersecurity and risk management program is led by our Vice President of Information Technology, who has served in executive technology and cybersecurity leadership roles for over 20 years. She holds a Master of Science in Telecommunications Engineering & Management and is ITIL certified.
Removed
Our Vice President, Information Technology has an MS in Engineering and Technology Management and over 20 years of experience in managing and leading information technology or cybersecurity teams and oversees a team of information technology professionals who identify, assess, and manage cybersecurity threats on an ongoing basis.
Added
She oversees enterprise cybersecurity strategy, architecture, and operations across a nationwide organization, directing a team responsible for identifying, assessing, and mitigating cybersecurity risks on an ongoing basis. Her experience includes leading incident response efforts, implementing disaster recovery capabilities, modernizing enterprise networks, supporting regulatory audits, and achieving strong third-party penetration testing and phishing resilience results.
Added
This leadership supports the Company’s commitment to maintaining a secure, resilient, and well-governed technology environment. Under her direction, the Company establishes and executes enterprise-wide cybersecurity strategy, governance, and risk management practices designed to protect the confidentiality, integrity, and availability of our systems and data.
Added
She leads a 32 Table of Contents dedicated team responsible for the continuous identification, assessment, and mitigation of cybersecurity threats and oversees incident response, disaster recovery, third-party security testing, and compliance with internal controls and audit requirements. Her oversight supports the Company’s efforts to maintain a secure and resilient technology environment aligned with business objectives and regulatory expectations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We lease approximately 25,000 square feet in The Woodlands, Texas for our corporate headquarters; this lease expires in 2028. In addition, to adequately meet the needs of our operations, we lease offices in Arizona, California, Colorado, Florida, Georgia, Maryland, Minnesota, Nevada, North Carolina, Tennessee, Texas, Utah and Washington.
Biggest changeITEM 2. PROPERTIES We lease approximately 26,000 square feet in The Woodlands, Texas for our corporate headquarters; this lease expires in 2028. In addition, to adequately meet the needs of our operations, we lease offices in Arizona, California, Colorado, Florida, Georgia, Maryland, Minnesota, Nevada, North Carolina, Tennessee, Texas, Utah and Washington.
See “ Business—Land Acquisition Policies and Development ” for a summary of the other property which we owned or controlled as of December 31, 2024.
See “ Business—Land Acquisition Policies and Development ” for a summary of the other property which we owned or controlled as of December 31, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeManagement believes that these claims include usual obligations incurred by real estate developers and residential homebuilders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows.
Biggest changeManagement believes that these claims include usual obligations incurred by real estate developers and residential homebuilders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II
Removed
Class Action Lawsuit On May 23, 2023, a class action lawsuit was filed by Rikki McAlister, a former sales representative, on behalf of herself and all others similarly situated, in the District Court of Arapahoe County, State of Colorado, against LGI Homes Corporate, LLC, a subsidiary of the Company, alleging violations of Colorado employment law, including failure to pay overtime compensation, failure to provide rest periods and improper deductions from wages.
Removed
On November 21, 2023, the lawsuit was removed to the United States District Court for the District of Colorado, which granted the plaintiff’s motion for class certification on December 6, 2024.
Removed
The plaintiff in the lawsuit is requesting as damages, on behalf of the plaintiff and all members of the class, unpaid back wages, unpaid minimum wages, unpaid overtime compensation, reimbursement for unlawfully-deducted wages, compensation for rest periods not provided, certain mandatory and additional penalties, reasonable attorney’s fees and incurred costs.
Removed
We have responded to the complaint and intend to defend ourselves vigorously against the allegations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Repurchase Program The following table summarizes the repurchase of shares of our common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (in thousands) October 1-31, 2024 — $ — — $ 193,528 November 1-30, 2024 — $ — — $ 193,528 December 1-31, 2024 134,877 $ 94.89 134,877 $ 180,729 134,877 $ 94.89 134,877 (1) On February 15, 2022, the Board announced that it had approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws.
Biggest changeStock Repurchase Program On February 15, 2022, the Board announced that it had approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws.
The chart assumes $100.00 was invested at the close of market on December 31, 2019 and assumes the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. Comparison of Cumulative Total Return among LGI Homes, Inc.
The chart assumes $100.00 was invested at the close of market on December 31, 2020 and assumes the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. Comparison of Cumulative Total Return among LGI Homes, Inc.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NASDAQ Stock Market (NASDAQ) under the symbol “LGIH.” As of February 21, 2025, the closing price of our common stock on the NASDAQ was $77.80, and we had 22 stockholders of record, including Cede & Co. as nominee of The Depository Trust Company.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NASDAQ Stock Market (NASDAQ) under the symbol “LGIH.” As of February 12, 2026, the closing price of our common stock on the NASDAQ was $59.77, and we had 24 stockholders of record, including Cede & Co. as nominee of The Depository Trust Company.
As of December 31, 2024, we may purchase up to $180.7 million of shares of common stock under our stock repurchase program. The IRA 2022 imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable.
As of December 31, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program. The IRA 2022 imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented include such excise taxes, as applicable.
Our stock repurchase program may be modified, discontinued or suspended at any time. During the three months ended December 31, 2024, we repurchased 134,877 shares of our common stock for $12.8 million to be held as treasury stock. A total of 3,247,339 shares of our common stock has been repurchased since our stock repurchase program commenced.
Our stock repurchase program may be modified, discontinued or suspended at any time. During the three months ended December 31, 2025, we did not repurchase any shares of our common stock. A total of 3,656,592 shares of our common stock has been repurchased since our stock repurchase program commenced in 2018.
Common Stock, the S&P 500 Index, and the S&P Homebuilders Index for the years ended December 31, 2024, 2023, 2022, 2021 and 2020. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 LGIH $100.00 $149.82 $218.66 $131.07 $188.48 $126.54 S&P 500 Index $100.00 $116.26 $147.52 $118.84 $147.64 $182.05 S&P Homebuilders Index $100.00 $126.16 $187.73 $132.08 $209.43 $228.94
Common Stock, the S&P 500 Index, and the S&P Homebuilders Index for the years ended December 31, 2025, 2024, 2023, 2022 and 2021. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 LGIH $100.00 $145.94 $87.48 $125.80 $84.46 $40.59 S&P 500 Index $100.00 $126.89 $102.22 $126.99 $156.59 $182.25 S&P Homebuilders Index $100.00 $148.81 $104.70 $166.00 $181.47 $179.02 ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncluding the bulk sale of 103 leased, single-family homes, homes closed decreased 8.9% to 6,131 homes from 6,729 homes. • Average sales price per home closed increased 4.2% to $365,394 from $350,510. • Gross margin as a percentage of home sales revenues increased to 24.2% from 23.0%. • Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased to 26.3% from 24.7%. • Net income before income taxes decreased 1.1% to $258.9 million from $261.8 million. • Net income decreased 1.6% to $196.1 million from $199.2 million. • EBITDA (non-GAAP) as a percentage of home sales revenues increased to 13.8% from 12.6%. • Active communities at the end of 2024 increased 29.1% to 151 from 117. • Total owned and controlled lots decreased 0.3% to 70,899 lots at December 31, 2024 from 71,081 lots at December 31, 2023.
Biggest changeFor purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operation, references to “we,” “our,” “us” or similar terms refer to LGI Homes, Inc. and its subsidiaries. 35 Table of Contents Key Results Key financial results as of and for the year ended December 31, 2025, as compared to the year ended December 31, 2024, were as follows: • Home sales revenues decreased 22.6% to $1.7 billion from $2.2 billion. • Homes closed decreased 22.3% to 4,685 homes from 6,028 homes. • Average sales price per home closed decreased 0.4% to $364,035 from $365,394. • Gross margin as a percentage of home sales revenues decreased to 20.7% from 24.2%. • Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 24.0% from 26.3%. • Net income before income taxes decreased 62.0% to $98.5 million from $258.9 million. • Net income decreased 63.0% to $72.6 million from $196.1 million. • EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 8.7% from 13.8%. • Adjusted EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 9.1% from 13.8%. • Active communities at the end of 2025 decreased 4.6% to 144 from 151. • Total owned and controlled lots decreased 14.2% to 60,842 lots at December 31, 2025 from 70,899 lots at December 31, 2024.
Financing Activities Net cash provided by financing activities was $132.3 million during the year ended December 31, 2024, primarily driven by $592.3 million of borrowings under our credit agreement then in effect and $400.0 million of proceeds from the offering of our 2032 Senior Notes.
Net cash provided by financing activities was $132.3 million during the year ended December 31, 2024, primarily driven by $592.3 million of borrowings under our credit agreement then in effect and $400.0 million of proceeds from the offering of our 2032 Senior Notes.
In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. See “Industry and Economic Risks—Inflation could adversely affect our business and financial results” in Item 1A. Risk Factors in Part I of this Annual Report on Form 10-K.
In addition, inflation can lead to higher mortgage interest rates, which can significantly affect the affordability of mortgage financing to homebuyers. See “Industry and Economic Risks—Inflation could adversely affect our business and financial results” in Item 1A. Risk Factors in Part I of this Annual Report on Form 10-K.
Accordingly, adjusted gross margin information should be considered only as a supplement to gross margin information as a measure of our performance. Please see “ —Non-GAAP Measures ” for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.
Accordingly, adjusted gross margin should be considered only as a supplement to gross margin as a measure of our performance. Please see “ —Non-GAAP Measures ” for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.
Included within our home sales revenues for the year ended December 31, 2024 was $164.1 million in wholesale revenues resulting from 552 home closings, representing 9.2% of the 6,028 total homes closed during the year ended December 31, 2024.
Included within our home sales revenues for the year ended December 31, 2024 was $164.1 million in wholesale revenues resulting from 552 home closings, representing 9.2% of the 6,028 total number of homes closed during the year ended December 31, 2024.
We compensate for these limitations by using our EBITDA along with other comparative tools, together with GAAP measures, to assist in the evaluation of operating performance. These GAAP measures include operating income, net income and cash flow data.
We compensate for these limitations by using our EBITDA and adjusted EBITDA along with other comparative tools, together with GAAP measures, to assist in the evaluation of operating performance. These GAAP measures include operating income, net income and cash flow data.
Our management believes that the presentation of EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business.
Our management believes that the presentation of EBITDA and adjusted EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business.
We have significant uses of cash flows, including capital expenditures, interest payments and other non-recurring charges, which are not reflected in our EBITDA.
We have significant uses of cash flows, including capital expenditures, interest payments and other non-recurring charges, which are not reflected in our EBITDA and adjusted EBITDA.
Net cash used in operating activities during the year ended December 31, 2024 was primarily driven by cash outflow from the $365.9 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity, partially offset by net income of $196.1 million.
Net cash used in operating activities during the year ended December 31, 2024 was primarily driven by cash outflow from the $365.9 million decrease in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and partially offset by net income of $196.1 million .
Our historical consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K contain additional information that should be referred to when reviewing this material. This section covers fiscal years 2024 and 2023 and discusses the results of operations for fiscal year 2024 compared to fiscal year 2023.
Our historical consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K contain additional information that should be referred to when reviewing this material. This section covers fiscal years 2025 and 2024 and discusses the results of operations for fiscal year 2025 compared to fiscal year 2024.
Long-term Liquidity and Capital Resources We believe that our long-term principal uses of liquidity and capital resources will be inventory related purchases concerning land, lot development, repurchases of shares of our common stock, other capital expenditures, and principal and interest payments on our debt obligations maturing between 2025 and 2032.
Long-term Liquidity and Capital Resources We believe that our long-term principal uses of liquidity and capital resources will be inventory related purchases concerning land, lot development, repurchases of shares of our common stock, other capital expenditures, and principal and interest payments on our debt obligations maturing between 2028 and 2032.
For reconciliations of the non-GAAP financial measures of adjusted gross margin and EBITDA to the most directly comparable GAAP financial measures, please see “— Non-GAAP Measures .” 36 Table of Contents Results of Operations The following table sets forth our results of operations for the years ended December 31, 2024, 2023 and 2022.
For reconciliations of the non-GAAP financial measures of adjusted gross margin, EBITDA and adjusted EBITDA to the most directly comparable GAAP financial measures, please see “— Non-GAAP Measures .” 36 Table of Contents Results of Operations The following table sets forth our results of operations for the years ended December 31, 2025, 2024, and 2023.
However, because adjusted gross margin information excludes capitalized interest and purchase accounting adjustments, which have real economic effects and could impact our results, the utility of adjusted gross margin information as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted gross margin information in the same manner that we do.
However, because adjusted gross margin excludes capitalized interest, purchase accounting adjustments and inventory impairment, which have real economic effects and could impact our results, the utility of adjusted gross margin as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted gross margin in the same manner that we do.
The Credit Agreement provides for a $1.205 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement.
The Credit Agreement provides for a $1.1825 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement.
Short-term Liquidity and Capital Resources We generally rely on our ability to finance our operations by generating operating cash flows and borrowing under the Credit Agreement (as defined below) to adequately fund our short-term working capital obligations and to purchase land and other assets, develop lots and homes and repurchase shares of our common stock.
Short-term Liquidity and Capital Resources We generally rely on our ability to finance our operations by generating operating cash flows and borrowing under the Credit Agreement to adequately fund our short-term working capital obligations and to purchase land and other assets, develop lots and homes and repurchase shares of our common stock.
Interest on the 2032 Senior Notes accrues at a rate of 7.000% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2025. The 2032 Senior Notes mature on November 15, 2032.
Interest on the 2032 Senior Notes accrues at a rate of 7.000% per annum, payable semi-annually in arrears on May 15 and November 15 of each year. The 2032 Senior Notes mature on November 15, 2032.
Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2024. The 2028 Senior Notes mature on December 15, 2028.
Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. The 2028 Senior Notes mature on December 15, 2028.
The timing, amount and other terms and conditions of any repurchases 46 Table of Contents of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements.
The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements.
We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of December 31, 2024 will be drawn upon.
We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of December 31, 2025 will be drawn upon.
During the life of a project, a constructed home is used as 48 Table of Contents the community information center and then sold. Actual individual community lives will vary based on the size of the community, the sales absorption rate, and whether the property was purchased as raw land or finished lots.
During the life of a project, a constructed home is used as the community information center and then sold. Actual individual community lives will vary based on the size of the community, the sales absorption rate, and whether the property was purchased as raw land or finished lots.
For more information regarding our primary obligations, refer to Note 5 , “Accrued Expenses and Other Liabilities,” Note 6 , “Notes Payable,” and Note 12 , “Commitments and Contingencies,” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for amounts outstanding as of December 31, 2024, related to accrued expenses and other liabilities, debt and commitments and contingencies, respectively.
For more information regarding our primary obligations, refer to Note 5 , “Accrued Expenses and Other Liabilities,” Note 6 , “Notes Payable,” and Note 13 , “Commitments and Contingencies,” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for amounts outstanding as of December 31, 2025, related to accrued expenses and other liabilities, debt and commitments and contingencies, respectively.
EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.
EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.
EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.
EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items.
The discussion of fiscal year 2022 and the results of operations for fiscal year 2023 compared to fiscal year 2022 is included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 20, 2024, and is incorporated by reference into this Annual Report on Form 10-K.
The discussion of fiscal year 2023 and the results of operations for fiscal year 2024 compared to fiscal year 2023 is included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 26, 2025 , and is incorporated by reference into this Annual Report on Form 10-K.
The overall increase in average community count is related to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The overall increase in average community count related to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
If a purchase contract has not been cancelled or terminated within 14 days after the purchase contract has been signed, then the homebuyer has met the preliminary criteria to obtain mortgage financing. Only purchase contracts that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing are included in new (gross) orders.
If a purchase contract has not been cancelled or terminated within 14 days after the purchase contract has been signed, then we have assumed the homebuyer will meet the preliminary criteria to obtain mortgage financing. Only purchase contracts that are signed by homebuyers who have met the preliminary criteria to obtain mortgage financing are included in new (gross) orders.
Since our business model is generally based on building move-in ready homes before a purchase contract is signed, the majority of our homes in backlog are currently under construction or complete.
Since our 43 Table of Contents business model is generally based on building move-in ready homes before a purchase contract is signed, the majority of our homes in backlog are currently under construction or complete.
Interest on the 2029 Senior Notes accrues at a rate of 4.000% per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on July 15, 2029.
Interest on the 2029 Senior Notes accrues at a rate of 4.000% per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on 47 Table of Contents July 15, 2029.
The decrease in home closings was the result of a lower absorption rate, partially offset by a 17.2% increase in the average community count. Cost of Sales and Gross Margin (home sales revenues less cost of sales).
The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count. Cost of Sales and Gross Margin (home sales revenues less cost of sales).
(4) As of December 31, 2024, we had 146 units related to bulk sales agreements associated with our wholesale business. (5) As of December 31, 2023, we had 60 units related to bulk sales agreements associated with our wholesale business.
(4) As of December 31, 2025, we had 506 units related to bulk sales agreements associated with our wholesale business. (5) As of December 31, 2024, we had 146 units related to bulk sales agreements associated with our wholesale business. (6) As of December 31, 2023, we had 60 units related to bulk sales agreements associated with our wholesale business.
Our stock repurchase program may be modified, discontinued or suspended at any time. Cash Flows Operating Activities Net cash used in operating activities was $143.7 million during the year ended December 31, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.
Our stock repurchase program may be modified, discontinued or suspended at any time. Cash Flows Operating Activities Net cash used in operating activities was $140.0 million during the year ended December 31, 2025. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.
We define adjusted gross margin as gross margin less capitalized interest and adjustments resulting from the application of purchase accounting included in the cost of sales. Our management believes this information is useful because it isolates the impact that capitalized interest and purchase accounting adjustments have on gross margin.
We define adjusted gross margin as gross margin excluding inventory impairment, less capitalized interest, and adjustments resulting from the application of purchase accounting included in the cost of sales. Our management believes adjusted gross margin is useful because it isolates the impact that capitalized interest, purchase accounting adjustments and inventory impairment have on gross margin.
Outstanding letters of credit, surety bonds and financial guarantees under these arrangements, totaled $377.5 million as of December 31, 2024. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed.
Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $392.2 million as of December 31, 2025. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed.
Additionally, we plan to further utilize, 44 Table of Contents on a limited and strategic basis, land banking financing arrangements to maximize long-term liquidity for lot development projects where we have sufficient finished lot availability in certain markets.
Additionally, we may further utilize, on a limited and strategic basis, land banking financing arrangements to maximize long-term liquidity for lot development projects where we have sufficient finished lot availability in certain markets.
(2) Calculated as a percentage of home sales revenues. 41 Table of Contents EBITDA EBITDA is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales.
(2) Calculated as a percentage of home sales revenues. EBITDA and Adjusted EBITDA EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales.
Net cash used in operating activities was $57.0 million during the year ended December 31, 2023. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.
Net cash used in operating activities was $143.7 million during the year ended December 31, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development.
Other companies may define this measure differently and, as a result, our measure of EBITDA may not be directly comparable to the measures of other companies.
Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies.
Other companies may define this measure differently and, as a result, our measure of EBITDA may not be directly comparable to the measures of other companies.
Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies.
As of the dates set forth below, our net orders, cancellation rate, and ending backlog homes and value were as follows (dollars in thousands): Backlog Data Year Ended December 31, 2024 (4) 2023 (5) 2022 (6) Net orders (1) 6,037 6,617 5,268 Cancellation rate (2) 22.8 % 25.4 % 24.4 % Ending backlog - homes (3) 599 590 702 Ending backlog - value (3) $ 236,511 $ 224,851 $ 252,002 (1) Net orders are new (gross) orders for the purchase of homes during the period, less cancellations of existing purchase contracts during the period.
As of the dates set forth below, our net orders, cancellation rate and ending backlog homes and value were as follows (dollars in thousands): Year Ended December 31, Backlog Data 2025 (4) 2024 (5) 2023 (6) Net orders (1) 5,549 6,037 6,617 Cancellation rate (2) 32.8 % 22.8 % 25.4 % Ending backlog – homes (3) 1,394 599 590 Ending backlog – value (3) $ 501,296 $ 236,511 $ 224,851 (1) Net orders are new (gross) orders for the purchase of homes during the period, less cancellations of existing purchase contracts during the period.
Revolving Credit Facility On October 9, 2024, we entered into a Fifth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Fifth Amendment”), which amended the Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (as amended to date, including the Fifth Amendment, the “Credit Agreement”).
Revolving Credit Facility On August 1, 2025, we entered into a Letter Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Letter Agreement Amendment”), which amended the Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (as amended to date, including the Letter Agreement Amendment, the “Credit Agreement”).
As of December 31, 2024, borrowings under the Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.5 billion, $24.5 million of letters of credit were outstanding and $270.5 million was available to borrow under the Credit Agreement.
As of December 31, 2025, borrowings under the Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.6 billion, $19.5 million of letters of credit were outstanding and $273.6 million was available to borrow under the Credit Agreement.
The decrease in home closings was primarily the result of a lower absorption rate, partially offset by an increase in the average community count. • Home sales revenues in our Southeast reportable segment decreased by $18.6 million, or 3.3%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a 4.7% decrease in the number of homes closed, offset by a slight increase in the average sales price per home closed.
The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count. • Home sales revenues in our Southeast reportable segment decreased by $66.0 million, or 12.3%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a 12.5% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed.
Some of these limitations are: (i) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments, including for purchase of land; (ii) it does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA does not reflect any cash requirements for such replacements or improvements; (iv) it does not adjust for all non-cash income or expense items that are reflected in our statements of cash flows; (v) it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and (vi) other companies in our industry may calculate it differently than we do, limiting its usefulness as a comparative measure.
Some of these limitations are: (i) they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments, including for purchase of land; (ii) they do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements or improvements; (iv) they do not adjust for all non-cash income or expense items that are reflected in our statements of cash flows; (v) they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and (vi) other companies in our industry may calculate them differently than we do, limiting their usefulness as a comparative measure. 41 Table of Contents Because of these limitations, our EBITDA and adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Pre-acquisition costs, land development and other common costs that benefit the entire community, including field construction supervision and related direct overhead, are allocated to individual lots or homes, as appropriate, on a pro rata basis which we believe approximates the costs that would be determined using an allocation method based on relative sales values since the individual lots or homes within a community are similar in value.
Pre-acquisition costs, land development and other common costs that benefit the entire community, including field construction supervision and related direct overhead, are allocated to individual lots or homes, as appropriate, on a pro rata basis which we believe approximates the costs that would be determined using an allocation method based on relative sales values since the individual lots or homes within a community are similar in value. 49 Table of Contents We use judgments and assumptions to recognize the appropriate amount of cost of sales by estimating the total land development costs.
We generally close more homes in our second, third and fourth quarters. Thus, our revenues may fluctuate on a quarterly basis and we may have higher capital requirements in our second, third and fourth quarters in order to maintain our inventory levels. Our revenues and capital requirements are generally similar across our second, third and fourth quarters.
We generally close more homes in our second, third and fourth quarters. Thus, our revenues may fluctuate on a quarterly basis and we may have higher 44 Table of Contents capital requirements in our second, third and fourth quarters in order to maintain our inventory levels.
We recognize potential interest and penalties related to uncertain tax positions in income tax expense, as applicable. 49 Table of Contents
We recognize potential interest and penalties related to uncertain tax positions in income tax expense, as applicable.
The decrease in home closings was the result of a lower absorption rate, partially offset by a 9.7% increase in the average community count. • Home sales revenues in our Northwest reportable segment increased by $7.2 million, or 2.9%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to an 8.8% increase in the average sales price per home closed, partially offset by a 5.5% decrease in the number of homes closed.
The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count. • Home sales revenues in our Northwest reportable segment decreased by $69.4 million, or 26.9%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a 20.5% decrease in the number of homes closed and an 8.0% decrease in the average sales price per home closed.
EBITDA is not intended as an alternative to net income as an indicator of our operating performance, as an alternative to any other measure of performance in conformity with GAAP or as an alternative to cash flows as a measure of liquidity. You should therefore not place undue reliance on our EBITDA calculated using these measures.
EBITDA and adjusted EBITDA are not intended as alternatives to net income as indicators of our operating performance,as alternatives to any other measure of performance in conformity with GAAP or as alternatives to cash flows as a measure of liquidity. You should therefore not place undue reliance on our EBITDA and adjusted EBITDA calculated using these measures.
(4) EBITDA is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales.
(4) EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest charged to the cost of sales. We define adjusted EBITDA as EBITDA before inventory impairment, as applicable during a period.
The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, and higher advertising and other costs associated with the increase in average community count during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin, the increase in other costs associated with the increase in average community count, and an inventory impairment charge during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
Please see “ —Non-GAAP Measures ” for reconciliations of EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable. 38 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Homes Sales.
Please see “ —Non-GAAP Measures ” for reconciliations of EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable. Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Home Sales.
Approximately $10.4 million of the cash deposits as of December 31, 2024 are secured by third-party guarantees or indemnity mortgages on the related property.
Approximately $8.2 million of the cash deposits as of December 31, 2025 are secured by third-party guarantees or indemnity mortgages on the related property.
We purchase both finished lots and land to be developed. Generally, the life cycle of a community ranges from two to five years. For projects we develop, the period between the acquisition of a raw piece of land and completion of the development of that land generally ranges from two to three years.
Generally, the life cycle of a community ranges from two to five years. For projects we develop, the period between the acquisition of a raw piece of land and completion of the development of that land generally ranges from two to four years.
These were partially offset by $760.0 million of repayments on our credit agreement then in effect, net of payments of $67.9 million related to a financing arrangement with a third-party land banker and by the $31.0 million in payments for shares of our common stock under our stock repurchase program.
These were partially offset by $760.0 million of repayments on our credit agreement then in effect and payments of $67.9 million related to a financing arrangement with a third-party land banker.
EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, our management believes that this measure is useful for comparing general operating performance from period to period.
EBITDA and adjusted EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, our management believes that these measures are useful for comparing general operating performance from period to period.
The increase in home closings was the result of a 55.0% increase in the average community count, partially offset by a lower absorption rate. • Home sales revenues in our Florida reportable segment decreased by $70.1 million, or 16.0%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a 20.2% decrease in the number of homes closed, partially offset by a 5.3% increase in the average sales price per home closed.
The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count. • Home sales revenues in our Florida reportable segment decreased by $130.8 million, or 35.5%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a 35.7% decrease in the number of homes closed, partially offset by a 0.4% increase in the average sales price per home closed.
Our use of EBITDA is limited as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP.
Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP.
Our use of EBITDA is limited as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP.
Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP.
We increased our warranty reserve by $2.5 million, $2.9 million and $2.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. Taxes We utilize the liability method of accounting for income taxes.
We decreased our 50 Table of Contents warranty reserve by $1.6 million for the year ended December 31, 2025 and increased our warranty reserve by $2.5 million and $2.9 million for the years ended December 31, 2024 and 2023, respectively. Taxes We utilize the liability method of accounting for income taxes.
The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count during the year ended December 31, 2024 as compared to the year ended December 31, 2023. Our average community count at December 31, 2024 increased to 130.5 from 103.9 at December 31, 2023.
The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
In addition, our deposit may also be refundable if the land seller does not satisfy all conditions precedent in the respective contract. As of December 31, 2024, we had $29.0 million of cash deposits pertaining to land purchase contracts for 17,582 lots with an aggregate purchase price of $653.9 million.
In addition, our deposit may also be refundable if the land seller does not satisfy all conditions precedent in the respective contract. As of December 31, 2025, we had $19.2 million of cash deposits pertaining to land purchase contracts for 8,952 lots with an aggregate purchase price of $285.7 million.
The increase in our effective tax rate to 24.3% from 23.9% was primarily due to an increase in the rate for the deductions in excess of compensation cost for share-based payments, and the rate for state income taxes, net of the federal benefit, offset by a decrease in the rate for the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, and the retroactive extension of the federal energy efficient homes tax credits for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The increase in our effective tax rate to 26.3% for the year ended December 31, 2025 from 24.3% for the year ended December 31, 2024 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, the compensation cost in excess of deductions for share-based payments, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.
Although we use EBITDA as a financial measure to assess the performance of our business, the use of this measure is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business.
Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business.
Liquidity and Capital Resources Overview As of December 31, 2024, we had $53.2 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.
We expect this seasonal pattern to continue in the long term. Liquidity and Capital Resources Overview As of December 31, 2025, we had $61.2 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.
In the later stages of an active community, cash inflows may exceed home sales revenues reported for financial statement purposes, as the costs associated with home and land construction were previously incurred.
In the later stages of an active community, cash inflows may exceed home sales revenues reported for financial statement purposes, as the costs associated with home and land construction were previously incurred. Net Debt to Capital Ratio As of December 31, 2025, our net debt to capital ratio was 43.2%.
Our management believes that the presentation of EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business.
We define adjusted EBITDA as EBITDA before inventory impairment, as applicable during a period. Our management believes that the presentation of EBITDA and adjusted EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business.
Discussed below are accounting policies that we believe are critical because of the significance of the activity to which they relate or because they require the use of significant judgment in their application. 47 Table of Contents Home Sales Revenue Recognition We recognize home sales revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process: • Identify the contract(s) with a customer • Identify the performance obligations • Determine the transaction price • Allocate the transaction price • Recognize revenue when the performance obligations are met Our contracts with customers include a single performance obligation to transfer a completed home to the customer.
Home Sales Revenue Recognition We recognize home sales revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process: • Identify the contract(s) with a customer • Identify the performance obligations • Determine the transaction price • Allocate the transaction price • Recognize revenue when the performance obligations are met Our contracts with customers include a single performance obligation to transfer a completed home to the customer.
The increase in selling expenses as a percentage of home sales revenues was primarily due to higher advertising expenses, fewer wholesale home closings and higher other personnel expenses incurred during the year ended December 31, 2024 as compared to the year ended December 31, 2023. General and Administrative.
The increase in selling expenses as a percentage of home sales revenues was primarily due to a decrease in home sales revenues during the year ended December 31, 2025 as compared to the year ended December 31, 2024. General and Administrative.
Cost of sales decreased for the year ended December 31, 2024 to $1.7 billion, a decrease of $147.1 million, or 8.1%, from $1.8 billion for the year ended December 31, 2023. This overall decrease was primarily due to a 10.4% decrease in homes closed.
Cost of sales for the year ended December 31, 2025 was $1.4 billion, a decrease of $317.4 million, or 19.0%, from $1.7 billion for the year ended December 31, 2024. This overall decrease was primarily due to a 22.3% decrease in the number of homes closed.
The decrease in the number of homes closed was the result of a lower absorption rate, offset by a 40.2% increase in the average community count. • Home sales revenues in our West reportable segment increased by $91.6 million, or 24.0%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a 14.9% increase in the number of homes closed and a 7.9% increase in the average sales price per home closed.
The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count. • Home sales revenues in our West reportable segment decreased by $85.4 million, or 18.1%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a 22.9% decrease in the number of homes closed, partially offset by a 6.2% increase in the average sales price per home closed.
(6) As of December 31, 2022, we had 157 units related to bulk sales agreements associated with our wholesale business. 43 Table of Contents Land Acquisition Policies and Development See discussion included in “ Business—Land Acquisition Policies and Development .” Homes in Inventory See discussion included in “ Business—Homes in Inventory .” Raw Materials and Labor See discussion included in “ Business—Raw Materials and Labor .” Seasonality In all of our reportable segments, we have historically experienced similar variability in our results of operations and in capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry.
Land Acquisition Policies and Development See discussion included in “ Business—Land Acquisition Policies and Development .” Homes in Inventory See discussion included in “ Business—Homes in Inventory .” Raw Materials and Labor See discussion included in “ Business—Raw Materials and Labor .” Seasonality In all of our reportable segments, we have historically experienced similar variability in our results of operations and in capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry.
The following table reconciles adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands): Year Ended December 31, 2024 2023 2022 Home sales revenues $ 2,202,598 $ 2,358,580 $ 2,304,455 Cost of sales 1,669,310 1,816,393 1,657,855 Gross margin 533,288 542,187 646,600 Capitalized interest charged to cost of sales 42,071 33,368 20,276 Purchase accounting adjustments (1) 4,034 6,492 6,869 Adjusted gross margin $ 579,393 $ 582,047 $ 673,745 Gross margin % (2) 24.2 % 23.0 % 28.1 % Adjusted gross margin % (2) 26.3 % 24.7 % 29.2 % (1) Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.
Accordingly, gross margin excluding inventory impairment and adjusted gross margin should be considered only as supplements to gross margin as a measure of our performance. 40 Table of Contents The following table reconciles gross margin excluding inventory impairment and adjusted gross margin to to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable (dollars in thousands): Year Ended December 31, 2025 2024 2023 Home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Cost of sales 1,351,958 1,669,310 1,816,393 Gross margin $ 353,546 $ 533,288 $ 542,187 Inventory impairment 6,717 — — Gross margin excluding inventory impairment $ 360,263 $ 533,288 $ 542,187 Capitalized interest charged to cost of sales 45,543 42,071 33,368 Purchase accounting adjustments (1) 3,459 4,034 6,492 Adjusted gross margin $ 409,265 $ 579,393 $ 582,047 Gross margin % (2) 20.7 % 24.2 % 23.0 % Gross margin % excluding inventory impairment (2) 21.1 % 24.2 % 23.0 % Adjusted gross margin % (2) 24.0 % 26.3 % 24.7 % (1) Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.
EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, our management believes that this measure is useful for comparing general operating performance from period to period.
EBITDA and adjusted EBITDA provide indicators of 37 Table of Contents general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, management believes that these measures are useful for comparing general operating performance from period to period.
As of December 31, 2024, the borrowing base under the Credit Agreement was $1.205 billion, of which the 45 Table of Contents maximum available to borrow was $1.8 billion.
As of December 31, 2025, the borrowing base under the Credit Agreement was $1.9 billion, of which the maximum available to borrow was $1.9 billion.
Year Ended December 31, 2024 2023 2022 (dollars in thousands, except per share data and average home sales price) Statement of Income Data: Home sales revenues $ 2,202,598 $ 2,358,580 $ 2,304,455 Expenses: Cost of sales 1,669,310 1,816,393 1,657,855 Selling expenses 199,950 191,582 144,928 General and administrative 121,192 117,350 111,565 Operating income 212,146 233,255 390,107 Other income, net (46,767) (28,499) (28,009) Net income before income taxes 258,913 261,754 418,116 Income tax provision 62,842 62,527 91,549 Net income $ 196,071 $ 199,227 $ 326,567 Basic earnings per share $ 8.33 $ 8.48 $ 13.90 Diluted earnings per share $ 8.30 $ 8.42 $ 13.76 Other Financial and Operating Data: Average community count 130.5 103.9 91.9 Community count at end of period 151 117 99 Home closings 6,028 6,729 6,621 Average sales price per home closed $ 365,394 $ 350,510 $ 348,052 Gross margin (1) $ 533,288 $ 542,187 $ 646,600 Gross margin % (2) 24.2 % 23.0 % 28.1 % Adjusted gross margin (3) $ 579,393 $ 582,047 $ 673,745 Adjusted gross margin % (2)(3) 26.3 % 24.7 % 29.2 % EBITDA (4) $ 304,092 $ 297,530 $ 439,968 EBITDA margin % (2)(4) 13.8 % 12.6 % 19.1 % (1) Gross margin is home sales revenues less cost of sales.
Year Ended December 31, 2025 2024 2023 Statement of Income Data: (dollars in thousands, except per share data and average home sales price) Home sales revenues $ 1,705,504 $ 2,202,598 $ 2,358,580 Expenses: Cost of sales 1,351,958 1,669,310 1,816,393 Selling expenses 162,149 199,950 191,582 General and administrative 111,621 121,192 117,350 Operating income 79,776 212,146 233,255 Other income, net (18,710) (46,767) (28,499) Net income before income taxes 98,486 258,913 261,754 Income tax provision 25,934 62,842 62,527 Net income $ 72,552 $ 196,071 $ 199,227 Basic earnings per share $ 3.13 $ 8.33 $ 8.48 Diluted earnings per share $ 3.12 $ 8.30 $ 8.42 Other Financial and Operating Data: Average community count 144.4 130.5 103.9 Community count at end of period 144 151 117 Home closings 4,685 6,028 6,729 Average sales price per home closed $ 364,035 $ 365,394 $ 350,510 Gross margin (1) $ 353,546 $ 533,288 $ 542,187 Gross margin % (2) 20.7 % 24.2 % 23.0 % Adjusted gross margin (3) $ 409,265 $ 579,393 $ 582,047 Adjusted gross margin % (2)(3) 24.0 % 26.3 % 24.7 % EBITDA (4) $ 148,351 $ 304,092 $ 297,530 EBITDA margin % (2)(4) 8.7 % 13.8 % 12.6 % Adjusted EBITDA (4) $ 155,068 $ 304,092 $ 297,530 Adjusted EBITDA margin % (2)(4) 9.1 % 13.8 % 12.6 % (1) Gross margin is home sales revenues less cost of sales.
Home sales revenues for the year ended December 31, 2024 were $2.2 billion, a decrease of $156.0 million, or 6.6%, from $2.4 billion for the year ended December 31, 2023.
Home sales revenues for the year ended December 31, 2025 were $1.7 billion, a decrease of $497.1 million, or 22.6%, from $2.2 billion for the year ended December 31, 2024.
Although we use EBITDA as a financial measure to assess the performance of our business, the use of this measure is limited because it does not include certain material costs, such as interest and 37 Table of Contents taxes, necessary to operate our business.
Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business.
The Credit Agreement matures on April 28, 2028 with respect to $1.085 billion, or 90.0%, of the $1.205 billion of commitments thereunder and on April 28, 2025 with respect to 10.0% of the commitments thereunder. Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date.
The Credit Agreement matures on April 28, 2029 with respect to $972.5 million, or 82.2%, of the $1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8% of the commitments thereunder. Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date.
The decrease in net income was primarily attributed to overall lower homes closed and lower home sales revenues, partially offset by a higher gross margin during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The decrease in net income was primarily attributed to overall lower number of homes closed, lower home sales revenues and gross margin, as well as an inventory impairment charge during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
Other income, net of other expenses was $46.8 million for the year ended December 31, 2024, an increase of $18.3 million from $28.5 million for the year ended December 31, 2023.
Other income, net of other expenses was $18.7 million for the year ended December 31, 2025, a decrease of $28.1 million from $46.8 million for the year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed3 unchanged
Biggest changeWe are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate indebtedness. As of December 31, 2024, we had $401.9 million of variable rate indebtedness outstanding under the Credit Agreement. All of the outstanding borrowings under the Credit Agreement are at variable rates based on SOFR.
Biggest changeRisk Factors in Part I of this Annual Report on Form 10-K. We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate indebtedness. As of December 31, 2025, we had $527.6 million of variable rate indebtedness outstanding under the Credit Agreement.
We currently do not hold derivatives for trading or speculative purposes, but we may do so in the future. Many of the statements contained in this section are forward looking and should be read in conjunction with our disclosures under the heading “ Cautionary Statement about Forward-Looking Statements ” in Item 1A. Risk Factors .
We currently do not hold derivatives for trading or speculative purposes, but we may do so in the future. Many of the statements contained in this section are forward looking and should be read in conjunction with our disclosures under the heading “ Cautionary Statement about Forward-Looking Statements ” in Item 1A.
Based on the current interest rate management policies we have in place with respect to our outstanding indebtedness, we do not believe that the future interest rate risks related to our existing indebtedness will have a material adverse impact on our financial position, results of operations, or liquidity. 50 Table of Contents
Based on the current interest rate management policies we have in place with respect to our outstanding indebtedness, we do not believe that the future interest rate risks related to our existing indebtedness will have a material adverse impact on our financial position, results of operations or liquidity. 51 Table of Contents
A hypothetical 100 basis point increase in the average interest rate above the SOFR floor on our variable rate indebtedness would increase our annual interest cost by approximately $4.0 million.
A hypothetical 100 basis point increase in the average interest rate above the SOFR floor on our variable rate indebtedness would increase our annual interest cost by approximately $5.3 million.
The interest rate for our variable rate indebtedness as of December 31, 2024 was SOFR plus 1.85%. At December 31, 2024, SOFR was 4.36%, subject to the 0.50% SOFR floor as included in the Credit Agreement.
All of the outstanding borrowings under the Credit Agreement are at variable rates based on SOFR. The interest rate for our variable rate indebtedness as of December 31, 2025 was SOFR plus 1.85%. At December 31, 2025, SOFR was 3.72%, subject to the 0.50% SOFR floor as included in the Credit Agreement.

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