Taylor Morrison Home Corp (TMHC)

CIK: 0001562476. SIC: 1531 Operative Builders. Latest 10-K as of: 2026-02-18.

SIC breadcrumb: Construction > Building Construction General Contractors And Operative Builders > SIC 1531 Operative Builders

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1562476. Latest filing source: 0001628280-26-009030.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-18. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001562476.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-22. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001562476.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001628280-26-026535.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-22. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three Months Ended

March 31,

2026

2025

Supplemental data:

Average FICO score

750

751

Funded origination breakdown:

Government (FHA,VA,USDA)

28.2

%

23.7

%

Other agency

69.2

%

73.4

%

Total agency

97.4

%

97.1

%

Non-agency

2.6

%

2.9

%

Total funded originations

100.0

%

100.0

%

Total financial services revenue decreased by 3.8% to $49.3 million for the three months ended March 31, 2026 compared to the same period in the prior year. The decrease was primarily due to a decrease in the number of loans originated, offset by an increase in revenue earned on the sale of loans.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs as a percentage of home closings revenue, net increased to 6.9% from 6.0% for the three months ended March 31, 2026 compared to the same period in the prior year. Variable expenses such as commission costs decreased in the current quarter compared to the same period in the prior year, but total sales commissions and other marketing costs as a percentage of home closings revenue, net increased as a result of fixed marketing costs and less leverage from home closings revenue, net.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, increased to 4.5% from 3.7% for the three months ended March 31, 2026 compared to the same period in the prior year. The increase was primarily due to the deleverage from home closings revenue, net.

Net Income from Unconsolidated Entities

Net income from unconsolidated entities was $2.9 million and $2.0 million for the three months ended March 31, 2026 and 2025, respectively. The increase in net income from unconsolidated entities was primarily due to increases in income from our joint ventures related to our financial services segment. This increase was partially offset by decreases in income from our joint venture related to our Build-to-Rent operations which is still in the ramp-up phase.

Interest Expense, Net

Interest expense, net was $11.2 million and $8.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase in interest expense, net was primarily due to an increase in the number and size of our land banking arrangements. At March 31, 2026 we had approximately ten thousand lots in land banking arrangements related to our home building operations compared to approximately seven thousand at March 31, 2025. Lots acquired through land banking arrangements typically incur more non-capitalizable interest than lots acquired through other means.

Income Tax Provision

The effective tax rate for the three months ended March 31, 2026 was 23.2%, compared to 23.3% for the same period in 2025. For the three months ended March 31, 2026, the effective tax rate differed from the U.S. federal statutory income tax rate primarily due to state income taxes, excess tax benefits from share-based compensation, and non-deductible executive compensation.

Our income tax rate for the first quarter of 2026 was marginally lower than the same period last year primarily due to an increase in excess tax benefits from share-based compensation, offset by an increase in state taxes.

Net Income

Net income and diluted earnings per share for the three months ended March 31, 2026 were $98.6 million and $1.01, respectively. Net income and diluted earnings per share for the three months ended March 31, 2025 were $213.5 million and $2.07, respectively. The decreases in net income and diluted earnings per share from the prior year were primarily attributable to lower home closings revenue, net and lower gross margin dollars driven by fewer homes closed.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

•Cash generated from operations;

•Borrowings under our Revolving Credit Facility;

•Various series of senior notes;

•Mortgage warehouse facilities;

•Project-level real estate financing (including non-recourse loans, land banking arrangements, and joint ventures); and

•Performance, payment and completion surety bonds, and letters of credit.

Cash flows for each of our communities depend on the status of the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash expenditures for land acquisitions, on and off-site development, construction of homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our unaudited Condensed consolidated statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):

As of

(Dollars in thousands)

March 31, 2026

December 31, 2025

Total cash, excluding restricted cash

$

652,933 

$

850,037 

Revolving Credit Facility availability

1,000,000 

1,000,000 

Letters of credit outstanding

(94,803)

(72,109)

Revolving Credit Facility availability

905,197 

927,891 

Total liquidity

$

1,558,130 

$

1,777,928 

We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources from borrowings under our Revolving Credit Facility to conduct our operations for the next twelve months. Beyond the next twelve months, our primary demand for funds will be for payments of our long-term debt as it becomes due, land purchases, lot development, home and amenity construction, long-term capital investments, investments in our joint ventures, payments of ongoing operating expenses, and repurchases of our Common Stock. We believe we will generate sufficient cash from our operations to meet the demands for such funds, however we may also access the capital markets to obtain additional liquidity through debt and equity offerings or refinance debt to secure capital for such long-term demands. As part of our operations, we may also from time to time purchase our outstanding debt or equity through open market purchases, privately negotiated transactions or otherwise. Purchases or retirements of debt and/or purchases of equity, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Cash Flow Activities

Operating Cash Flow Activities

Our net cash used in operating activities was $10.4 million for the three months ended March 31, 2026 compared to net cash provided by operating activities of $77.2 million for the three months ended March 31, 2025. The increase in cash used in operating activities was primarily due to a decrease in net income, an increase in spend in real estate inventory and land deposits, as well as a decrease in income taxes payable. These items were partially offset by the change in accounts payable, accrued expenses and other liabilities.

Investing Cash Flow Activities

Net cash used in investing activities was $18.1 million for the three months ended March 31, 2026 compared to $45.1 million for the three months ended March 31, 2025. The decrease in cash used in investing activities was due to a decrease in investments of capital into unconsolidated entities, partially offset by a net increase in purchases of fixed-maturity and equity securities.

Financing Cash Flow Activities

Net cash used in financing activities was $169.2 million for the three months ended March 31, 2026 compared to $141.2 million for the three months ended March 31, 2025. The increase in cash used in financing activities was primarily due to an increase in the repurchase of our Common Stock and higher repayments on loans payable and other borrowings.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Debt Instruments

For information regarding our debt instruments, including the terms governing our senior notes and our Revolving Credit Facility, see Note 7 - Debt to the unaudited Condensed consolidated financial statements included in this quarterly report.

Off-Balance Sheet Arrangements as of March 31, 2026

Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities

We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties. Our participation with these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on terms that are as favorable. Our partners in these joint ventures historically have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial or strategic partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.

For the three months ended March 31, 2026 and 2025, total cash investments of capital into unconsolidated joint ventures were $6.5 million and $36.6 million, respectively, which are carried on our balance sheet.

Land Option Contracts and Land Banking Agreements

We are subject to the usual obligations associated with entering into contracts (including land option contracts and land banking arrangements) for the purchase, development, and sale of real estate in our routine business. We have a number of land purchase option contracts and land banking agreements, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property and the creditors of the property owner generally have no recourse to the Company. Our obligations with respect to such contracts are generally limited to the forfeiture of the related non-refundable cash deposits and/or letters of credit provided to obtain the options. The aggregate purchase price for land under these contracts was $3.4 billion at both March 31, 2026 and December 31, 2025.

Seasonality

Our business is seasonal. We have historically experienced, and in the future expect to continue to experience, variability in our results on a quarterly basis. We generally have more homes under construction, close more homes and have greater revenue and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are obtained throughout the year, a higher portion of our home closings occur during the third and fourth calendar quarters. Our revenue therefore may fluctuate significantly on a quarterly basis, and we must maintain sufficient liquidity to meet short-term operating requirements. Factors expected to contribute to these fluctuations include, but are not limited to:

•the timing of the introduction and start of construction of new projects;

•the timing of sales orders;

•the timing of closings of homes, lots and parcels;

•the condition of the real estate market and general economic conditions in the areas in which we operate;

•mix of homes closed;

•construction timetables;

•the timing of receipt of regulatory approvals for development and construction;

•the cost and availability of materials and labor; and

•weather conditions in the markets in which we build.

As a result of seasonal activity, our quarterly results of operations and financial position are not necessarily representative of the results we expect for the full year

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-18. Report date: 2025-12-31.

ITEM 7   | 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General Overview

Our principal business is residential homebuilding and the development of lifestyle communities with operations across 12 states. We provide a collection of homes across a wide range of price points to appeal to a variety of consumer groups. We design, build and sell single and multi-family detached and attached homes in traditionally high growth markets for entry-level, move-up, and resort lifestyle buyers. Our homebuilding segments operate under the Taylor Morrison and Esplanade brand names. We also have a “Build-to-Rent” homebuilding business which operates under the Yardly brand name. In addition, we provide financial services to customers through our wholly owned mortgage subsidiary, TMHF, title services through our wholly owned title services subsidiary, Inspired Title, and homeowner’s insurance policies through our insurance agency, TMIS. For reporting purposes, Taylor Morrison Home Corporation (“TMHC”) and Taylor Morrison Communities, Inc. ("TM Communities") are substantially similar, with no material differences. Our business is organized into multiple homebuilding operating components, and a financial services component, all of which are organized as four operating segments: East, Central, West and Financial Services, as follows:

East

Atlanta, Charlotte, Jacksonville, Naples, Orlando, Raleigh, Sarasota, and Tampa

Central

Austin, Dallas, Denver, Houston, and Indianapolis

West

Bay Area, Las Vegas, Phoenix, Pacific Northwest, Sacramento, and Southern California

Financial Services

Taylor Morrison Home Funding, Inspired Title Services, and Taylor Morrison Insurance Services

(1) During the year ended December 31, 2025, we combined our Portland and Seattle divisions to become Pacific Northwest.

Annual Overview and Business Strategy

We benefit from a dynamic and flexible operating strategy that allows us to serve a broad range of consumers and respond to market and economic conditions, community by community, to maximize our financial performance. This flexible but prudent approach allows for shifts in our pricing strategies, community openings, financing incentives, starts volume and land investments to minimize risk and recalibrate affordability, while maintaining strong performance metrics.

We continuously adjust sales prices and our finance product offerings across our portfolio based on market conditions to drive sales while also protecting the value of our backlog. Pricing adjustments are utilized in a variety of ways including finance incentives, adjustments to the pricing of lot premiums, options and upgrades, and in some instances base price of the home. Each community’s buyer profile mix of adjustments is dependent on its backlog, inventory, duration, and competitive dynamics.

Our balance sheet remained strong at December 31, 2025, ending the year with approximately $1.8 billion in total liquidity, a homebuilding debt-to-capitalization ratio of 26.0% on a gross basis and 17.8% net of unrestricted cash. We believe we have a balanced capital allocation approach and continue to allocate capital and manage our land portfolio to acquire assets that have attractive characteristics, including access to preferred schools, shopping, recreation and transportation facilities. In connection with our overall land inventory management and investment process, our management team reviews these considerations, as well as other financial metrics, to decide the highest and best use of our capital.

Factors Affecting Comparability of Results

For the years ended December 31, 2025, 2024, and 2023 we recognized $28.8 million, $5.0 million, and $11.8 million in inventory impairment charges, respectively. Impairment charges are recorded to Cost of home closings on the Consolidated statements of operations.

For the year ended December 31, 2024, we recognized $17.8 million in impairment charges relating to our Urban Form properties. Impairment charges relating to our Urban Form properties are recorded to Amenity and other expenses on the Consolidated statements of operations. For the years ended December 31, 2025 and 2023, no such impairment charges were incurred.

At December 31, 2025, 2024, and 2023, our legal accruals were $53.3 million, $49.1 million, and $26.2 million, respectively. Legal expenses and settlements are recorded to Other expense, net on the Consolidated statements of operations.

For the years ended December 31, 2025, 2024, and 2023, we recognized $14.8 million, $9.5 million, and $4.2 million in pre-acquisition abandonment charges, respectively. These charges are recorded to Other expense, net on the Consolidated statements of operations.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the years ended December 31, 2025 and 2023, we recognized $13.3 million and $0.3 million of loss on extinguishment of debt, net, respectively. These charges are recorded to Loss on extinguishment of debt, net on the Consolidated statements of operations. There was no loss or gain on extinguishment of debt for the year ended December 31, 2024.

For the years ended December 31, 2024 and 2023, we recognized $23.1 million and $14.8 million as a change in estimate for our Estimated Development Liability. There was no change in our Estimated Development Liability on our Consolidated balance sheet for the year ended December 31, 2025. These charges are recorded to Other expense, net on the Consolidated statements of operations.

Critical Accounting Policies and Estimates

General

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.

Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses. The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. The significant accounting policies that management believes are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

Revenue Recognition

Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ("ASC 606"). The standard’s core principle requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Home and Land Closings Revenue

Under ASC 606, the following steps are applied to determine home closings revenue and land closings revenue recognition: (1) identify the contract(s) with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the performance obligation(s) are satisfied. Our home sales transactions have one contract, with one performance obligation, with each customer to build and deliver a home (or develop and deliver land). Based on the application of the five steps, the following summarizes the timing and manner of home and land closings revenue:

•Revenue from home closings is recognized when the buyer has made the required minimum down payment, obtained necessary financing, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.

•Revenue from land closings is recognized when a significant down payment is received, title passes and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow. From time to time we may enter into land or other asset sales that require recognition of revenue over time, however as of December 31, 2025, no such transactions have been material.

Amenity and Other Revenue

We own and operate certain amenities such as golf courses, club houses, and fitness centers, which require us to provide club members with access to the facilities in exchange for the payment of club dues. We collect club dues and other fees from club members, which are invoiced on a monthly basis. Revenue from our golf club operations is also included in Amenity and other revenue. Amenity and other revenue also includes revenue from our Urban Form and Build-to-Rent operations which is recorded as control transfers to the buyer at transaction close and when other criteria of ASC 606 are met. In addition, lease revenue is recognized by Urban Form for commercial and residential leases and Build-to-Rent operations for rental home leases.

Financial Services Revenue

Mortgage operations and hedging activity related to financial services are not within the scope of Topic 606. Generally, the loans TMHF originates are sold to third-party investors within a short period of time, on a non-recourse basis. Gains and losses from the sale of mortgages are recognized in accordance with ASC Topic 860-20, Sales of Financial Assets. TMHF generally does not have continuing involvement with the transferred assets; therefore, we derecognize the mortgage loans at time of sale, based on the difference between the selling price and carrying value of the related loans upon sale,

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

recording a gain/loss on sale in the period of sale. Also included in Financial services revenue/expenses is the realized and unrealized gains and losses from hedging instruments. ASC Topic 815-25, Derivatives and Hedging, requires that all hedging instruments be recognized as assets or liabilities on the Consolidated balance sheets at their fair value. We do not meet the criteria for hedge accounting; therefore, we account for these instruments as free-standing derivatives, with changes in fair value recognized in Financial services revenue/expenses on the Consolidated statement of operations in the period in which they occur.

Real Estate Inventory Valuation and Costing

Inventory consists of raw land, land under development, homes under construction, completed homes, and model homes, all of which are stated at cost. In addition to direct carrying costs, we also capitalize interest, real estate taxes, and related development costs that benefit the entire community, such as field construction supervision and related direct overhead. Vertical construction costs are accumulated and charged to Cost of home closings at the time of home closings when revenue is recognized using the specific identification method. Land acquisition, development, interest, and real estate taxes are capitalized and allocated generally using the relative sales value method. Generally, all overhead costs relating to purchasing, vertical construction, and construction utilities are considered overhead costs and are allocated on a per unit basis. These costs are capitalized to inventory beginning with the start of development through construction completion. Changes in estimated costs to be incurred in a community are generally allocated to the remaining project on a prospective basis.

The life cycle of the community generally ranges from two to five years, commencing with the acquisition of unentitled or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery of homes. Actual community lives will vary based on the size of the community, the sales absorption rate and whether we purchased the property as raw land or finished lots.

We capitalize qualifying interest costs to inventory during the development and construction periods. Capitalized interest is charged to Cost of home closings when the related inventory is charged to Cost of home closings.

We assess the recoverability of our inventory in accordance with the provisions of ASC Topic 360, Property, Plant, and Equipment ("ASC 360"). We review our real estate inventory for indicators of impairment on a community-level basis during each reporting period. If indicators of impairment are present for a community, an undiscounted cash flow analysis is generally prepared to determine if the carrying value of the assets in that community exceeds the estimated undiscounted cash flows. Generally, if the carrying value of the assets exceeds their estimated undiscounted cash flows, the assets are potentially impaired, requiring a fair value analysis. Our determination of fair value is primarily based on a discounted cash flow model which includes projections and estimates relating to sales prices, construction costs, sales pace, and other factors. However, in certain circumstances, fair value can also be determined through other methods, such as appraisals, contractual purchase offers, and other third-party opinions of value. Changes in these expectations may lead to a change in the outcome of our impairment analysis, and actual results may also differ from our assumptions.

In certain cases, we may elect to cease development and/or marketing of an existing community if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow for market conditions to improve. We refer to such communities as long-term strategic assets. The decision may be based on financial and/or operational metrics as determined by us. For those communities that have been temporarily closed or development has been discontinued, we do not allocate or capitalize interest or other costs to the community’s inventory until activity resumes and such costs are expensed as incurred. If we decide to cease development, we will evaluate the project for impairment and discontinue future development and marketing activity until such a time when we believe that market conditions have improved and positive economic performance can be achieved. Our assessment of the carrying value of our long-term strategic assets typically includes subjective estimates of future performance, including the timing of when development will recommence, the type of product to be offered, and the margin to be realized. In the future, some of these inactive communities may be re-opened while others may be sold.

In the ordinary course of business, we enter into land banking agreements with various sellers to acquire lots. As a method of acquiring land in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources, we may transfer our right under certain specific performance agreements, for land we own, to entities owned by third parties (“land banking arrangements”). These entities use equity contributions from their owners and/or incur debt to finance the acquisition and development of the land. We incur interest expense and fees on these arrangements. We capitalize qualifying interest costs to inventory during the development and construction periods with the remainder expensed and included in Interest expense/(income), net on the Consolidated statements of operations. These lots are considered controlled, however we are not legally obligated to purchase lots under these agreements and would forfeit any existing deposits and could be subject to financial and other penalties if the lots are not purchased. We do not have an ownership interest in these entities or title to their assets and do not guarantee their liabilities. As such, these entities are not consolidated. These land banking arrangements help us manage the financial and market risk associated with land holdings which are not included on the Consolidated balance sheets.

In some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land. Land is

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ITEM 7   | 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

considered held for sale once it meets all criteria in accordance with ASC 360. Land held for sale is recorded at the lower of cost or fair value less costs to sell. In determining the value of land held for sale, we consider recent offers received, prices for land in recent comparable sales transactions, and other factors. We record fair value adjustments for land held for sale within Cost of land closings on the Consolidated statements of operations.

INSURANCE COSTS, SELF-INSURANCE RESERVES AND WARRANTY RESERVES

Insurance Costs and Self-Insurance Reserves

We are the parent of Beneva Indemnity Company (“Beneva”), which provides insurance coverage for construction defects discovered up to ten years following the close of a home, coverage for premise operations risk, and from time to time, property damage. We have certain deductible limits for each of our policies under our workers’ compensation, automobile, and general liability insurance policies, and we record expense and liabilities for the estimated costs of potential claims for construction defects. We also generally require our subcontractors and design professionals to indemnify us and provide evidence of insurance for liabilities arising from their work, subject to certain limitations. Excess liability exposure is aggregated annually and applied in excess of automobile liability, employer’s liability under workers compensation and general liability policies. We accrue for the expected costs associated with the deductibles and self-insured amounts under our various insurance policies based on historical claims, estimates for claims incurred but not reported, and potential for recovery of costs from insurance and other sources. The estimates are subject to significant variability due to factors such as claim settlement patterns, litigation trends, and the extended period of time in which a construction defect claim might be made after the closing of a home.

Our loss reserves for claims insured by Beneva are based on factors that include an actuarial study for historical and anticipated claims, trends related to similar product types, number of homes closed, and geographical areas. We regularly review the reasonableness and adequacy of our reserves and make adjustments to the balance of the preexisting reserves to reflect changes in trends and historical data as information becomes available. Self-insurance reserves are included in Accrued expenses and other liabilities on the Consolidated balance sheets. Due to the degree of judgment required in making these estimates and the inherent uncertainty in potential outcomes, it is reasonably possible that actual costs could differ from those recorded and such differences could be material, resulting in a change in future estimated reserves.

Warranty Reserves

We offer a one-year limited warranty to cover various defects in workmanship or materials, a two-year limited warranty on certain systems (such as electrical or cooling systems), and a ten-year limited warranty on structural defects. In addition, any outstanding warranties which were offered by our acquired companies are also honored. We also provide third-party warranty coverage on homes where required by FHA or VA lenders. Warranty reserves are established as homes close in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. Our warranty is not considered a separate performance obligation in the sales arrangement since it is not priced apart from the home; therefore, it is accounted for in accordance with ASC Topic 450, Contingencies, which states that warranties that are not separately priced are generally accounted for by accruing the estimated costs to fulfill the warranty obligation. We accrue the estimated costs to fulfill the warranty obligation at the time a home closes, as a component of Cost of home closings on the Consolidated statements of operations and warranty reserves are included in Accrued expenses and other liabilities on the Consolidated balance sheets.

INVESTMENTS IN UNCONSOLIDATED ENTITIES AND VARIABLE INTEREST ENTITIES

We are involved in joint ventures with independent third parties for real estate development, homebuilding and mortgage lending activities. We use the equity method of accounting for entities over which we exercise significant influence but do not have a controlling interest over the operating and financial results of the investee. For unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint venture partners and determined that they have substantive participating rights that preclude the presumption of control. For these unconsolidated joint ventures, our share of net earnings or losses is included in Net income from unconsolidated entities on the Consolidated statements of operations when earned and distributions are credited against our Investment in unconsolidated entities on the Consolidated balance sheets when received.

We evaluate our investments in unconsolidated joint ventures for indicators of impairment semi-annually. A series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized, if any, is the excess of the investment’s carrying amount over its estimated fair value. Additionally, we consider various qualitative factors to determine if a decrease in the value of the investment is other-than-temporary. These factors include age of the venture, stage in its life cycle, intent and ability to recover our investment in the unconsolidated entity, financial condition and long-term prospects of the unconsolidated entity, short-term liquidity needs of the unconsolidated entity, trends in the general economic environment of the land, entitlement status of the land held by the unconsolidated entity, overall projected returns on investment, defaults under contracts with third parties (including bank debt), recoverability of the investment through future cash flows and relationships with the other partners. If we believe that the decline in the fair value of the investment is temporary, then no impairment is recorded.

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In the ordinary course of business, we enter into land purchase contracts, lot option contracts and land banking arrangements in order to procure land or lots for the construction of homes. Such contracts enable us to control significant lot positions with a minimal initial capital investment and substantially reduce the risks associated with land ownership and development. In accordance with ASC Topic 810, Consolidation, we have concluded that when we enter into an option or purchase agreement to acquire land or lots and pay a non-refundable deposit, a variable interest entity ("VIE") may be created because we are deemed to have provided subordinated financial support that will absorb some or all of an entity’s expected losses, or benefit from rights to residual returns, if they occur. If we are the primary beneficiary of the VIE, we consolidate the VIE in our Consolidated financial statements and reflect such assets and liabilities as Consolidated real estate not owned and Liabilities attributable to consolidated real estate not owned, respectively, on the Consolidated balance sheets.

VALUATION OF DEFERRED TAX ASSETS

We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities be recognized based on future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. Changes in existing federal and state tax laws and corporate income tax rates could affect future tax results and the realization of deferred tax assets over time.

In accordance with ASC Topic 740-10, Income Taxes, we evaluate our deferred tax assets by tax jurisdiction, including the benefit from net operating loss (“NOL”) carryforwards by tax jurisdiction, to determine if a valuation allowance is required. We must assess, using significant judgments, whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, experience with operating losses and experience of utilizing tax credit carryforwards and tax planning alternatives. We have not made any material changes in our methodology used to establish our valuation allowance during these periods. If a specific event or transaction were to occur that impacts our valuation allowance, we would reassess the evidence and adjust the allowance accordingly. Although management believes our valuation allowance is reasonable, no assurance can be given that the final tax outcome of these matters will not be different from our current valuation of our deferred tax assets and it is reasonably possible that such differences could be material, resulting in a change in future valuations.

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Results of Operations

The following table sets forth our results of operations for the periods presented:

Years Ended December 31,

(Dollars in thousands, except per share information)

2025

2024

2023

Statements of Operations Data:

Home closings revenue, net

$

7,755,434 

$

7,755,219 

$

7,158,857 

Land closings revenue

36,944 

81,417 

60,971 

Financial services revenue

209,407 

199,459 

160,312 

Amenity and other revenue

119,695 

132,041 

37,691 

Total revenue

8,121,480 

8,168,136 

7,417,831 

Cost of home closings

6,008,007 

5,863,743 

5,451,401 

Cost of land closings

30,898 

73,609 

55,218 

Financial services expenses

104,618 

108,592 

93,990 

Amenity and other expenses

107,749 

137,980 

34,149 

Total cost of revenue

6,251,272 

6,183,924 

5,634,758 

Gross margin

1,870,208 

1,984,212 

1,783,073 

Sales, commissions and other marketing costs

461,485 

456,092 

418,134 

General and administrative expenses

273,506 

314,406 

280,573 

Net income from unconsolidated entities

(4,867)

(6,347)

(8,757)

Interest expense/(income), net

47,003 

13,316 

(12,577)

Other expense, net

37,714 

50,627 

87,567 

Loss on extinguishment of debt, net

13,324 

— 

295 

Income before income taxes

1,042,043 

1,156,118 

1,017,838 

Income tax provision

250,780 

269,548 

248,097 

Net income before allocation to non-controlling interests

791,263 

886,570 

769,741 

Net income attributable to non-controlling interests

(8,763)

(3,261)

(812)

Net income

$

782,500 

$

883,309 

$

768,929 

Home closings gross margin

22.5

%

24.4

%

23.9

%

Average selling price per home closed

$

597 

$

601 

$

623 

Sales, commissions and other marketing costs as a percentage of home closings revenue, net

6.0

%

5.9

%

5.9

%

General and administrative expenses as a percentage of home closings revenue, net

3.5

%

4.0

%

3.9

%

Effective income tax rate

24.1

%

23.3

%

24.4

%

Earnings per common share-

Basic

$

7.90 

$

8.43 

$

7.09 

Diluted

$

7.77 

$

8.27 

$

6.98 

Non-GAAP Measures

In addition to the results reported in accordance with GAAP, we have provided information in this Annual Report relating to: (i) adjusted net income and adjusted earnings per common share, (ii) adjusted income before income taxes and related margin, (iii) adjusted home closings gross margin, (iv) EBITDA and adjusted EBITDA and (v) net homebuilding debt to capitalization ratio.

Adjusted net income, adjusted earnings per common share and adjusted income before income taxes and related margin are non-GAAP financial measures that reflect the net income/(loss) available to the Company excluding, to the extent applicable in a given period, the impact of real estate and inventory impairment charges, impairment of investment in unconsolidated entities, pre-acquisition abandonment charges, unique and unusual warranty charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net, and legal reserves or settlements that the Company deems not to be in the ordinary course of business and in the case of adjusted net income and adjusted earnings per common share, the tax impact due to such items. The legal reserves or settlements amounts presented in the year ended December 31, 2024

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relate to the same claim and are discussed in Note 13 - Commitments and Contingencies in the Notes to the Consolidated financial statements included in this Annual Report.

EBITDA and adjusted EBITDA are non-GAAP financial measures that measure performance by adjusting net income before allocation to non-controlling interests to exclude, as applicable, interest expense/(income), net, amortization of capitalized interest, income provisions, depreciation and amortization to calculate EBITDA. Adjusted EBITDA further excludes non-cash compensation expense, if any, real estate and inventory impairment charges, impairment of investments in unconsolidated entities, pre-acquisition abandonment charges, unique and unusual warranty charges, gains/losses on land transfers to joint ventures, extinguishment of debt, net and legal reserves or settlements that the Company deems not to be in the ordinary course of business, in each case, as applicable in a given period.

Net homebuilding debt to capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) total debt, plus unamortized debt issuance cost/(premium), net, and less mortgage warehouse borrowings, net of unrestricted cash and cash equivalents ("net homebuilding debt"), by (ii) total capitalization (the sum of net homebuilding debt and total stockholders’ equity).

Adjusted home closings gross margin is a non-GAAP financial measure based on GAAP home closings gross margin (which is inclusive of capitalized interest), excluding inventory impairment charges and unique and unusual warranty charges.

Management uses these non-GAAP financial measures to evaluate our performance on a consolidated basis, as well as the performance of our segments, and to set targets for performance-based compensation. We also use the ratio of net homebuilding debt to total capitalization ratio as an indicator of overall financial leverage and to evaluate our performance against other companies in the homebuilding industry. In the future, we may include additional adjustments in the above-described non-GAAP financial measures to the extent we deem them appropriate and useful to management and investors.

We believe that adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, as well as EBITDA and adjusted EBITDA, are useful for investors in order to allow them to evaluate our operations without the effects of various items we do not believe are characteristic of our ongoing operations or performance and also because such metrics assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted EBITDA also 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, or unusual items. Because we use the net homebuilding debt to total capitalization ratio to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. We believe that adjusted home closings gross margin is useful to investors because it allows investors to evaluate the performance of our homebuilding operations without the varying effects of items or transactions we do not believe are characteristic of our ongoing operations or performance.

These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measures of our operating performance or liquidity. Although other companies in the homebuilding industry may report similar information, their definitions may differ. We urge investors to understand the methods used by other companies to calculate similarly-titled non-GAAP financial measures before comparing their measures to ours.

A reconciliation of adjusted net income, adjusted earnings per common share, adjusted income before income taxes and related margin, adjusted home closings gross margin, EBITDA, adjusted EBITDA, and ratio of net homebuilding debt to total capitalization to the comparable GAAP measures follows. For purposes of our presentation of our non-GAAP financial measures for the year ended December 31, 2024, such measures have been recast to include certain adjustments being presented in the year ended December 31, 2025 that were previously deemed immaterial in the prior period.

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Adjusted Net Income and Adjusted Earnings Per Common Share

Year ended December 31,

(Dollars in thousands, except per share data)

2025

2024

Net income

$

782,500 

$

883,309 

Legal reserves or settlements

— 

23,682 

Real estate impairment charges

28,821 

29,637 

Pre-acquisition abandonment charges

14,791 

9,453 

Warranty adjustment charges

5,596 

3,656 

Loss on extinguishment of debt, net

13,324 

— 

Tax impact due to above non-GAAP reconciling items

(15,049)

(15,488)

Adjusted net income

$

829,983 

$

934,249 

Basic weighted average number of shares

99,069

104,813

Adjusted earnings per common share - Basic

$

8.38 

$

8.91 

Diluted weighted average number of shares

100,707

106,846

Adjusted earnings per common share - Diluted

$

8.24 

$

8.74 

Adjusted Income Before Income Taxes and Related Margin

Year ended December 31,

(Dollars in thousands)

2025

2024

Income before income taxes

$

1,042,043 

$

1,156,118 

Legal reserves or settlements

— 

23,682 

Real estate impairment charges

28,821 

29,637 

Pre-acquisition abandonment charges

14,791 

9,453 

Warranty adjustment charges

5,596 

3,656 

Loss on extinguishment of debt, net

13,324 

— 

Adjusted income before income taxes

$

1,104,575 

$

1,222,546 

Total revenue

$

8,121,480 

$

8,168,136 

Income before income taxes margin

12.8

%

14.2

%

Adjusted income before income taxes margin

13.6

%

15.0

%

Adjusted Home Closings Gross Margin

Year Ended December 31,

(Dollars in thousands)

2025

2024

Home closings revenue, net

$

7,755,434 

$

7,755,219 

Cost of home closings

6,008,007 

5,863,743 

Home closings gross margin

$

1,747,427 

$

1,891,476 

Inventory impairment charges

28,821 

5,036 

Warranty adjustment charges

5,596 

3,656 

Adjusted home closings gross margin

$

1,781,844 

$

1,900,168 

Home closings gross margin as a percentage of home closings revenue, net

22.5

%

24.4

%

Adjusted home closings gross margin as a percentage of home closings revenue, net

23.0

%

24.5

%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EBITDA and Adjusted EBITDA Reconciliation

Year Ended December 31,

(Dollars in thousands)

2025

2024

Net income before allocation to non-controlling interests

$

791,263 

$

886,570 

Interest expense, net

47,003 

13,316 

Amortization of capitalized interest

104,100 

114,199 

Income tax provision

250,780 

269,548 

Depreciation and amortization

7,485 

11,535 

EBITDA

$

1,200,631 

$

1,295,168 

Legal reserves or settlements

— 

23,682 

Non-cash compensation expense

29,049 

22,461 

Real estate impairment charges

28,821 

29,637 

Pre-acquisition abandonment charges

14,791 

9,453 

Warranty adjustment charges

5,596 

3,656 

Loss on extinguishment of debt, net

13,324 

— 

Adjusted EBITDA

$

1,292,212 

$

1,384,057 

Total revenue

$

8,121,480 

$

8,168,136 

Net income before allocation to non-controlling interests as a percentage of total revenue

9.7

%

10.9

%

EBITDA as a percentage of total revenue

14.8

%

15.9

%

Adjusted EBITDA as a percentage of total revenue

15.9

%

16.9

%

Debt to Capitalization Ratios Reconciliation

As of December 31,

(Dollars in thousands)

2025

2024

Total debt

$

2,291,107 

$

2,120,483 

Plus: unamortized debt issuance cost, net

11,667 

6,616 

Less: mortgage warehouse facilities borrowings

(82,605)

(174,460)

Total homebuilding debt

$

2,220,169 

$

1,952,639 

Total stockholders' equity

6,309,289 

5,878,180 

Total capitalization

$

8,529,458 

$

7,830,819 

Total homebuilding debt to capitalization ratio

26.0

%

24.9

%

Total homebuilding debt

$

2,220,169 

$

1,952,639 

Less: cash and cash equivalents

(850,037)

(487,151)

Net homebuilding debt

$

1,370,132 

$

1,465,488 

Total stockholders' equity

6,309,289 

5,878,180 

Total capitalization

$

7,679,421 

$

7,343,668 

Net homebuilding debt to capitalization ratio

17.8

%

20.0

%

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

The following tables and related discussion set forth key operating and financial data for our operations as of and for the fiscal years ended December 31, 2025 and 2024. For similar operating and financial data and discussion of our fiscal 2024 results compared to our fiscal 2023 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 19, 2025, and is incorporated herein by reference.

Ending Active Selling Communities

Year Ended December 31,

Change

2025

2024

East

138

124

11.3

%

Central

91

99

(8.1

%)

West

112

116

(3.4

%)

Total

341

339

0.6

%

Ending active selling communities were relatively consistent as of December 31, 2025 and 2024. The increase in the East segment was primarily attributable to the timing of community openings, including master planned communities, which were partially offset by community close-outs. The decreases in the Central and West segments were due to the close-out of several higher paced communities in certain markets. In addition, we strategically delayed certain community openings from the fourth quarter of 2025 into the first quarter of 2026.

Net Sales Orders

Year Ended December 31,

Net Sales Orders (1)

Sales Value (1)

Average Selling Price

(Dollars in thousands)

2025

2024

Change

2025

2024

Change

2025

2024

Change

East

4,581

4,588

(0.2

%)

$

2,373,529 

$

2,537,245 

(6.5

%)

$

518 

$

553 

(6.3

%)

Central

2,799

3,250

(13.9

%)

1,398,603 

1,773,792 

(21.2

%)

$

500 

$

546 

(8.4

%)

West

3,694

4,410

(16.2

%)

2,647,752 

2,991,700 

(11.5

%)

$

717 

$

678 

5.8

%

Total

11,074

12,248

(9.6

%)

$

6,419,884 

$

7,302,737 

(12.1

%)

$

580 

$

596 

(2.7

%)

(1)Net sales orders and sales value represent the number and dollar value, respectively, of new sales contracts executed with customers, net of cancellations.

The number of net sales orders decreased by 9.6% for the year ended December 31, 2025, compared to the prior year, which we believe to be primarily due to consumer apprehension as a result of macro economic factors such as mortgage interest rates and inflation which continue to remain elevated. To a lesser extent, we also experienced an increase in cancellations as a result of these factors. Average selling price on net sales orders decreased 2.7% year-over-year primarily due to an increase in discounts, partially offset by increases in option and lot premium revenues in certain markets.

Sales Order Cancellations

Cancellation Rate(1)

Year Ended December 31,

2025

2024

East

12.9

%

9.3

%

Central

12.0

%

9.2

%

West

14.5

%

10.0

%

Total Company

13.2

%

9.5

%

(1) Cancellation rate represents the number of canceled sales orders divided by gross sales orders.

The total company cancellation rate for the year ended December 31, 2025 increased to 13.2 % from 9.5 %, compared to the prior year. We believe the higher cancellation rate was driven by market conditions, including the inability of homeowners to sell their current homes prior to closing on a new home, coupled with consumer apprehension as a result of macroeconomic factors such as mortgage interest rates and inflation, which continue to remain elevated. In addition, we have reduced required customer deposits as means of stimulating new sales orders which can further contribute to higher cancellation rates.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sales Order Backlog

As of December 31,

Sold Homes in Backlog (1)

Sales Value

Average Selling Price

(Dollars in thousands)

2025

2024

Change

2025

2024

Change

2025

2024

Change

East

1,146

1,737

(34.0

%)

$

747,416 

$

1,190,884 

(37.2

%)

$

652 

$

686 

(5.0

%)

Central

497

1,098

(54.7

%)

286,717 

668,574 

(57.1

%)

$

577 

$

609 

(5.3

%)

West

1,176

1,907

(38.3

%)

822,466 

1,332,690 

(38.3

%)

$

699 

$

699 

—

%

Total

2,819

4,742

(40.6

%)

$

1,856,599 

$

3,192,148 

(41.8

%)

$

659 

$

673 

(2.1

%)

(1)Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of the period (including homes sold but not yet started). Some of the sales contracts in our sales order backlog are subject to contingencies including mortgage loan approval and buyers selling their existing homes, which can result in future cancellations.

Total backlog units and total sales value decreased by 40.6% and 41.8%, respectively, at December 31, 2025 compared to December 31, 2024. Overall, we had fewer net sales orders and more quick move-in homes which sold and closed during the year ended December 31, 2025 compared to the year ended December 31, 2024, which contributed to the decrease in company-wide sales order backlog. All of our operating segments improved construction cycle times in the year ended December 31, 2025 which further contributed to the decrease in sales order backlog.

Home Closings Revenue, Net

Year Ended December 31,

Homes Closed

Home Closings Revenue, Net

Average Selling Price

(Dollars in thousands)

2025

2024

Change

2025

2024

Change

2025

2024

Change

East

5,172

4,922

5.1

%

$

2,816,997 

$

2,826,628 

(0.3

%)

$

545 

$

574 

(5.1

%)

Central

3,400

3,552

(4.3

%)

1,780,460 

1,969,381 

(9.6

%)

$

524 

$

554 

(5.4

%)

West

4,425

4,422

0.1

%

3,157,977 

2,959,210 

6.7

%

$

714 

$

669 

6.7

%

Total

12,997

12,896

0.8

%

$

7,755,434 

$

7,755,219 

—

%

$

597 

$

601 

(0.7

%)

The number of homes closed and home closings revenue, net remained relatively consistent for the year ended December 31, 2025, compared to the prior year. For the year ended December 31, 2025, we improved construction cycle times and sold and closed more quick move-in homes compared to the prior year which favorably impacted home closing units. However, we also experienced fewer net sales orders for the year ended December 31, 2025 as well as lower opening backlog compared to the prior year which unfavorably impacted home closing units.

Land Closings Revenue

Year Ended December 31,

(Dollars in thousands)

2025

2024

Change

East

$

471 

$

30,612 

$

(30,141)

Central

23,941 

24,514 

(573)

West

12,532 

26,291 

(13,759)

Total

$

36,944 

$

81,417 

$

(44,473)

We generally purchase land and lots with the intent to build and sell homes. However, in some locations where we act as a developer, we occasionally purchase land that includes commercially zoned parcels or areas designated for school or government use, which we typically sell to commercial developers or municipalities, as applicable. We also sell residential lots or land parcels to manage our land and lot supply on larger tracts of land or if we determine certain properties no longer fit our strategic plans. Land and lot sales occur at various intervals and varying degrees of profitability. Therefore, the revenue and gross margin from land closings will fluctuate from period to period, depending on market conditions and opportunities. Land closings revenue for the year ended December 31, 2025 decreased primarily due to the change in the East region. In the prior year, we sold various lots in our Florida market for a total of $27.9 million, but did not have similar sales in the current year.

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Amenity and Other Revenue

Year Ended December 31,

(Dollars in thousands)

2025

2024

Change

East

$

21,439 

$

22,296 

$

(857)

Central

— 

— 

— 

West

1,850 

1,316 

534 

Corporate

96,406 

108,429 

(12,023)

Total

$

119,695 

$

132,041 

$

(12,346)

Several of our communities operate amenities such as golf courses, club houses, and fitness centers (generally in the East segment). We provide club members access to the amenity facilities and other services in exchange for club dues and fees. Our Corporate region includes the activity relating to our Build-to-Rent and Urban Form operations. Amenity and other revenue for the year ended December 31, 2025 in Corporate was primarily due to the sale of one Build-to-Rent project and the sale of one Urban Form asset for $55.2 million and $22.8 million, respectively. Amenity and other revenue for the year ended December 31, 2024 in Corporate was primarily due to the sale of two Build-to-Rent projects for an aggregate of $88.4 million.

Segment Home Closings Gross Margins and Adjusted Gross Margins

The following table sets forth a reconciliation of adjusted home closings gross margin to GAAP home closings gross margin on a segment basis (see “Non-GAAP Measures” above for additional information about our use of non-GAAP measures).

Year Ended December 31,

East

Central

West

Consolidated

(Dollars in thousands)

2025

2024

2025

2024

2025

2024

2025

2024

Home closings revenue, net

$

2,816,997 

$

2,826,628 

$

1,780,460 

$

1,969,381 

$

3,157,977 

$

2,959,210 

$

7,755,434 

$

7,755,219 

Cost of home closings

2,176,900 

2,065,218 

1,374,183 

1,485,968 

2,456,924 

2,312,557 

6,008,007 

5,863,743 

Home closings gross margin

$

640,097 

$

761,410 

$

406,277 

$

483,413 

$

701,053 

$

646,653 

$

1,747,427 

$

1,891,476 

Inventory impairment charges

25,851 

2,325 

— 

2,711 

2,970 

— 

28,821 

5,036 

Warranty adjustment charges

5,596 

3,656 

— 

— 

— 

— 

5,596 

3,656 

Adjusted home closings gross margin

$

671,544 

$

767,391 

$

406,277 

$

486,124 

$

704,023 

$

646,653 

$

1,781,844 

$

1,900,168 

Home closings gross margin as a percentage of home closings revenue

22.7

%

26.9

%

22.8

%

24.5

%

22.2

%

21.9

%

22.5

%

24.4

%

Adjusted home closings gross margin as a percentage of home closings revenue

23.8

%

27.1

%

22.8

%

24.7

%

22.3

%

21.9

%

23.0

%

24.5

%

Consolidated home closings gross margin decreased 190 basis points to 22.5% for the year ended December 31, 2025, compared to 24.4% in the prior year. Adjusted home closings gross margin decreased 150 basis points to 23.0% for the year ended December 31, 2025, compared to 24.5% in the prior year. Home closings gross margin decreased in the East and Central regions primarily as a result of closing product mix. The East region was also negatively impacted by impairment and increased warranty charges. In addition, a decrease in average selling prices due to an increase in discounts, partially offset by increases in lot premium and option revenue, further contributed to the changes in home closings gross margin for the East and Central regions. The increase in the West region was primarily due to closing product mix. In addition, the West region was negatively impacted by an impairment charge during the year ended December 31, 2025.

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Financial Services

The following is a summary for the periods presented of financial services income before income taxes as well as supplemental data:

Year Ended

December 31,

(Dollars in thousands)

2025

2024

Change

Mortgage services revenue

$

161,814 

$

154,812 

4.5

%

Title services and other revenues

47,593 

44,647 

6.6

%

 Total financial services revenue

209,407 

199,459 

5.0

%

Financial services net income from unconsolidated entities

12,540 

8,915 

40.7

%

 Total revenue

221,947 

208,374 

6.5

%

Financial services expenses

104,618 

108,592 

(3.7

%)

Financial services income before income taxes

$

117,329 

$

99,782 

17.6

%

Total originations:

Number of Loans

8,815

8,827

(0.1

%)

Principal

$

4,091,254 

$

4,092,845 

—

%

Year Ended

December 31,

2025

2024

Supplemental data:

Average FICO score

751

752

Funded origination breakdown:

Government (FHA,VA,USDA)

24

%

22

%

Other agency

72

%

75

%

Total agency

96

%

97

%

Non-agency

4

%

3

%

Total

100

%

100

%

Total financial services revenue increased by 5.0% for the year ended December 31, 2025, compared to the prior year. The increase in total financial services revenue was primarily a result of increased revenue earned on the sale of loans and increased title production.

Sales, Commissions and Other Marketing Costs

Sales, commissions and other marketing costs, as a percentage of home closings revenue, net, marginally increased to 6.0% from 5.9% for the year ended December 31, 2025 compared to the prior year. The relatively consistent results are primarily driven by leverage in controllable sales and marketing costs.

General and Administrative Expenses

General and administrative expenses as a percentage of home closings revenue, net, decreased to 3.5% for the year ended December 31, 2025 compared to 4.0% for the prior year. The decrease was primarily due to a decrease in variable compensation-related expenses.

Net Income from Unconsolidated Entities

Net income from unconsolidated entities was $4.9 million and $6.3 million for the years ended December 31, 2025 and 2024, respectively. The decrease in net income from unconsolidated entities was primarily due to our joint venture relating to our Build-to-Rent operations which is still in the lease ramp-up phase. This decrease was partially offset by increases in income from our joint ventures related to our financial services segment.

Interest Expense, net

Interest expense, net was $47.0 million and $13.3 million for the years ended December 31, 2025 and 2024, respectively. The increase in interest expense, net was primarily due to an increase in the amount of non-capitalizable interest expense relating to our land banking arrangements as well as a decrease in interest income earned on our outstanding cash

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balances. The number of communities financed via land banking arrangements increased by 48% year-over-year, driving the increase in expense.

Other Expense, net

Other expense, net for the years ended December 31, 2025 and 2024 was $37.7 million and $50.6 million, respectively. The year ended December 31, 2025 primarily consisted of $19.6 million in insurance losses and $14.8 million in pre-acquisition abandonment charges for projects we are no longer pursuing. The year ended December 31, 2024 included an aggregate of $23.7 million in legal charges, $21.3 million in insurance losses, and $9.5 million in pre-acquisition abandonment charges. Refer to Note 13 - Commitments and Contingencies in the Notes to Consolidated financial statements included in this Annual Report for additional discussion regarding the legal charges for the year ended December 31, 2024.

Loss on Extinguishment of Debt, net

Loss on extinguishment of debt, net for the year ended December 31, 2025 was $13.3 million. We recognized $12.2 million of loss as a result of our redemption of all of our 2027 5.875% Senior Notes (as defined herein) and the redemption of all of the 2027 6.625% Senior Notes (as defined herein). In addition, we recognized $1.1 million of loss relating to our amended Revolving Credit Facility, due to the write-off of prepaid unamortized debt issuance costs. We had no extinguishment of debt for the year ended December 31, 2024. Refer to “Liquidity and Capital Resources” and Note 7 - Debt in the Notes to the Consolidated Financial Statements included in this Annual Report for additional details regarding the purchase and redemptions.

Income Tax Provision

Our effective tax rate was 24.1% and 23.3% for the years ended December 31, 2025 and December 31, 2024, respectively. Our effective tax rate for both years was affected by state income taxes, non-deductible executive compensation, and excess tax benefits from stock-based compensation. Additionally, the effective tax rate in 2024 benefitted from certain energy tax credits related to homebuilding activities. We did not pursue energy credits in 2025 due to increasing costs to qualify which outweighed the benefits of obtaining such credits.

Net Income

Net income before allocation to non-controlling interests and diluted earnings per common share for the year ended December 31, 2025 were $791.3 million and $7.77, respectively. Net income before allocation to non-controlling interests and diluted earnings per common share for the year ended December 31, 2024 were $886.6 million and $8.27, respectively. The decreases in net income and diluted earnings per common share in the year ended December 31, 2025 compared to the prior year were primarily attributable to lower homebuilding gross margin, higher interest expense, and higher loss on extinguishment of debt, partially offset by lower general and administrative expenses, other expenses, and lower weighted average shares outstanding.

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

•Cash generated from operations;

•Borrowings under our Revolving Credit Facility;

•Various series of senior notes;

•Mortgage warehouse facilities;

•Project-level real estate financing (including non-recourse loans, land banking, and joint ventures); and

•Performance, payment and completion surety bonds, and letters of credit.

Cash flows for each of our communities depend on the status of the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash expenditures for land acquisitions, on and off-site development, construction of homes, general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in our Consolidated statements of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

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During 2025, we (i) completed a cash tender offer (“Tender Offer”) to purchase approximately $479.2 million principal amount of the 5.875% Senior Notes due 2027 issued by TM Communities (a wholly owned subsidiary of the Company) (the "2027 5.875% Senior Notes") and redeemed the remaining $20.8 million principal amount of the 2027 5.875% Senior Notes and (ii)fully redeemed all $1.63 million principal amount of the 6.625% Senior Notes due 2027 issued by William Lyon Homes, Inc. (an indirect wholly owned subsidiary of the Company) (the "2027 6.625% WLH Notes") and $25.44 million principal amount of the 6.625% Senior Notes due 2027 issued by TM Communities (the "2027 6.625% TM Communities Notes," and together with the 2027 6.625% WLH Notes, the "2027 6.625% Senior Notes"), in each case, using net proceeds, together with cash on hand, from the issuance of $525.0 million aggregate principal amount of 5.75% Senior Notes due 2032 issued by TM Communities (the “2032 Senior Notes”). We also amended and restated our existing Revolving Credit Facility, resulting in a loss on extinguishment of debt due to the write-off of prepaid unamortized debt issuance costs. As a result of the redeemed senior notes and amended and restated Revolving Credit Facility, we recorded a net loss on extinguishment of debt of $13.3 million for the year ended December 31, 2025. Refer to Note 7 - Debt in the Notes to the Consolidated financial statements included in this Annual Report for additional details regarding the Tender Offer and redemptions.

The table below summarizes our total cash and liquidity as of the dates indicated (in thousands):

As of

(Dollars in thousands)

December 31, 2025

December 31, 2024

Cash and cash equivalents

$

850,037 

$

487,151 

Revolving Credit Facility availability

1,000,000 

1,000,000 

Letters of credit outstanding

(72,109)

(52,914)

Revolving Credit Facility availability

927,891 

947,086 

Total liquidity

$

1,777,928 

$

1,434,237 

We believe we have adequate capital resources from cash generated from operations and sufficient access to external financing sources from borrowings under our Revolving Credit Facility to conduct our operations for the next twelve months. Beyond the next twelve months, our primary demand for funds will be for payments of our long-term debt as it becomes due, land purchases, lot development, home and amenity construction, long-term capital investments, investments in our joint ventures, payments of ongoing operating expenses, and repurchases of common stock. We believe we will generate sufficient cash from our operations to meet the demands for such funds, however we may also access the capital markets to obtain additional liquidity through debt and equity offerings or refinance debt to secure capital for such long-term demands. As part of our operations, we may from time to time purchase our outstanding debt or equity through open market purchases, privately negotiated transactions or otherwise. Purchases or retirements of debt and/or purchases of equity, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

Material Cash Requirements

We have various contractual obligations with commitments to pay third parties, including but not limited to our debt facilities, land purchase and land banking contracts, and leases. These obligations impact our liquidity and capital resource needs and are presented in the table below. Our short-term demands are cash requirements for the next twelve months and long-term demands are cash requirements beyond twelve months.

Cash Requirements

(Dollars in thousands)

Totals

Short-Term Demands

Long-Term Demands

Lease obligations (1)

$

314,429 

$

16,508 

$

297,921 

Lot options and land banking arrangements

3,361,534 

897,827 

2,463,707 

Senior notes

1,475,000 

- 

1,475,000 

Other debt outstanding

827,774 

314,730 

513,044 

Estimated interest expense (2)

207,414 

65,742 

141,672 

Totals

$

6,186,151 

$

1,294,807 

$

4,891,344 

(1)Amount includes interest.

(2)Estimated interest expense amounts for debt outstanding at the respective contractual interest rates, the weighted average of which was 5.1% as of December 31, 2025.

In addition to our contractual obligations, we also have forecasted operational cash outlays on items such as future land purchases or common stock repurchases, to maintain our strategic growth and returns to our investors. Management expects to invest approximately $2.0 billion in land acquisition and development during the next twelve months which is

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slightly lower than our spend during 2025. As of December 31, 2025 we had approximately $529.1 million remaining on our share repurchase authorization. On February 11, 2026, the Board of Directors authorized a renewal of the stock repurchase program, permitting repurchases up to $1.0 billion. This program expires on December 31, 2027 and replaces the prior authorization.

Cash Flow Activities

Operating Cash Flow Activities

Our net cash provided by operating activities was $817.3 million for the year ended December 31, 2025 compared to $210.1 million for the year ended December 31, 2024. The increase in net cash provided by operating activities was primarily attributable to a decrease in spend on real estate inventory and land deposits. Spending also decreased in 2025 as a result of our increased vigilance in underwriting and approving new transactions and additional phases of communities in the current market.

Investing Cash Flow Activities

Net cash used in investing activities was $154.8 million for the year ended December 31, 2025 compared to $136.4 million for the year ended December 31, 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of fixed-maturity and equity securities, partially offset by a decrease in investments of capital into unconsolidated entities.

Financing Cash Flow Activities

Net cash used in financing activities was $298.5 million for the year ended December 31, 2025 compared to $393.6 million for the year ended December 31, 2024. The decrease in cash used in financing activities was primarily due to a net increase in loans payable and other borrowings as well as the proceeds from the issuance of senior notes which were partially offset by repayments on senior notes. Refer to Note 7 - Debt in the Notes to the Consolidated financial statements included in this Annual Report for additional details regarding the issuance of the 2032 Senior Notes and redemption of the 2027 6.625% Senior Notes and 2027 5.875% Senior Notes.

Debt Instruments

For information regarding our debt instruments, including the terms governing our senior notes and our Revolving Credit Facility, see Note 7—Debt in the Notes to the Consolidated financial statements included in this Annual Report.

Financial Guarantees

The following table summarizes our letters of credit and surety bonds as of the dates indicated:

As of December 31,

(Dollars in thousands)

2025

2024

Letters of credit (1)

$

72,109 

$

52,914 

Surety bonds

1,454,944 

1,355,242 

Total outstanding letters of credit and surety bonds

$

1,527,053 

$

1,408,156 

(1)As of December 31, 2025 and 2024, there was $200.0 million total capacity of letters of credit available under our Revolving Credit Facility.

Off-Balance Sheet Arrangements as of December 31, 2025

Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities

We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties. Our participation with these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or could not obtain access on terms that are as favorable. Our partners in these joint ventures historically have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial or strategic partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.

For the years ended December 31, 2025 and 2024, total cash contributed to unconsolidated joint ventures was $85.6 million and $129.8 million, respectively.

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The following is a summary of investments in unconsolidated joint ventures:

As of December 31,

(Dollars in thousands)

2025

2024

East

$

97,679 

$

86,378 

Central

206,571 

164,434 

West

75,473 

94,864 

Financial Services / Corporate

107,255 

94,045 

Total

$

486,978 

$

439,721 

Land Option Contracts and Land Banking Agreements

We are subject to the usual obligations associated with entering into contracts (including land option contracts and land banking arrangements) for the purchase, development, and sale of real estate in our routine business. We have a number of land purchase option contracts and land banking agreements, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property and the property owners and their creditors generally have no recourse to the Company. Our exposure with respect to such contracts is generally limited to the forfeiture of the related non-refundable cash deposits. The aggregate purchase price for assets under these contracts was $3.4 billion at December 31, 2025 and $1.9 billion at December 31, 2024.

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