BEAZER HOMES USA INC

Previous wording

For the remainder of fiscal 2024, we plan to continue to position our business for longer-term growth, while focusing on the appropriate balance between pursuing growth opportunities, controlling risk, and maintaining a strong liquidity position. Our long-term strategic business objectives include increasing active communities to more than 200 by the end of fiscal 2026, reducing our net debt to net capitalization ratio to below 30% by the end of fiscal 2026, and reaching our target of 100% of home starts as Zero Energy Ready by the end of the calendar year 2025.

Current wording

Although we expect uncertainty around mortgage interest rates in near-term market conditions to persist, we remain confident in the long-term outlook for the housing market, supported by favorable demographic trends and a multimillion unit housing deficit that has accumulated over the past decade. Our long-term strategic business objectives encompass expanding our active communities to over 200 by the end of fiscal 2026, reducing our net debt to net capitalization ratio below 30% by the end of fiscal 2026, and reaching our target of 100% of home starts as Zero Energy Ready by the end of the calendar year 2025.

Previous wording

Overview of Results for Our Fiscal First Quarter

Current wording

Overview of Results for Our Fiscal Second Quarter

Previous wording

•During the quarter ended December 31, 2023, our average active community count of 137 was up 13.5% from 121 in the prior year quarter. We plan to continue to grow community counts by increasing investments in new communities strategically in order to meet our goal of reaching more than 200 active communities by the end of 2026. We invested $198.7 million and $114.7 million in land acquisition and land development during the quarters ended December 31, 2023 and 2022, respectively.

Current wording

•During the quarter ended March 31, 2024, our average active community count of 140 was up 13.8% from 123 in the prior year quarter. We ended the quarter with 145 active communities, up 19.8% from 121 a year ago. This marks the eighth consecutive quarter of year-over-year growth in community count as we work towardsour goal of reaching more than 200 active communities by the end of fiscal 2026. We invested $197.8 million in land acquisition and land development during the quarter ended March 31, 2024, representing an increase of 75.0% compared to $113.0 million in land spend during the quarter ended March 31, 2023.

Previous wording

•As of December 31, 2023, our land position included 26,374 controlled lots, up 6.6% from 24,735 as of December 31, 2022. Excluding land held for future development and land held for sale lots, we controlled 25,716 active lots, up 7.3% from the prior year. As of December 31, 2023, we had 13,648 lots, or 53.1% of our total active lots, under option agreements as compared to 13,035 lots, or 54.4% of our total active lots, under option agreements as of December 31, 2022.

Current wording

•As of March 31, 2024, our land position included 26,887 controlled lots, up 12.9% from 23,820 as of March 31, 2023. Excluding land held for future development and land held for sale lots, we controlled 26,218 active lots, up 13.5% from a year ago. As of March 31, 2024, we had 13,527 lots, or 51.6% of our total active lots, under option agreements as compared to 12,460 lots, or 54.0% of our total active lots, under option agreements as of March 31, 2023.

Previous wording

•Our Average Selling Price (ASP) for homes closed during the quarter ended December 31, 2023 was$512.7 thousand, down 3.8% from $533.1 thousand in the prior year quarter. Our closing ASP was down from the prior year quarter as anticipated, reflecting a combination of the challenging sales environment at the time the closed homes were sold, as well as our efforts to improve new home affordability by altering our product strategy in certain markets through reduction of homes sizes and/or features included in our base price. Meanwhile, our backlog ASP has remained relatively stable at $520.3 thousand, $518.0 thousand, and $520.8 thousand for the fiscal quarters ended June 30, 2023, September 30, 2023 and December 31, 2023, respectively, with a slight sequential increase in the current fiscal quarter, indicating improved market conditions.

Current wording

•Our Average Selling Price (ASP) for homes closed during the quarter ended March 31, 2024 was $515.9 thousand, up 1.2% from $509.9 thousand in the prior year quarter. Our backlog ASP of$525.5 thousand as of March 31, 2024 wasdown slightly from$531.3 thousand as of March 31, 2023. We are addressing new home affordability challenges by altering our product strategy in certain markets through reduction of homes sizes and/or features included in our base price.

Previous wording

•Homebuilding gross margin for the quarter ended December 31, 2023 was 19.9%, up from 19.2% in the prior year quarter. Homebuilding gross margin, excluding impairments, abandonments, and interest for the quarter ended December 31, 2023, was 22.9%, up from 22.3% in the prior year quarter. The increase in homebuilding gross margin compared to the prior year quarter was primarily attributed to a decrease in build costs, partially offset by an increase in price concessions and closing cost incentives.

Current wording

•Homebuilding gross margin for the quarter ended March 31, 2024 remained consistent at 18.7% compared to the prior year quarter. Homebu ilding gross margin, excluding impairments, abandonments, and interest for the quarter ended March 31, 2024, was 21.7%, down from 22.0% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter was primarily due to changes in product and community mix and an increase in closing cost incentives, partially offset by a decrease in build costs. If market conditions deteriorate due to unfavorable mortgage rate movements, gross margin may be compressed in the future.

Previous wording

•SG&A for the quarter ended December 31, 2023 was 14.3% of total revenue, up from 12.3% in the prior year quarter. The increase in SG&A as a percentage of total revenue was primarily due to lower revenues for the quarter ended December 31, 2023 compared to the prior year quarter. We remain focused on prudently managing overhead costs.

Current wording

•SG&A for the quarter ended March 31, 2024 was 11.5% of total revenue, up from 11.2% in the prior year quarter. The increase in SG&A as a percentage of total revenue compared to the prior year quarter was primarily due to higher sales and marketing costs as we prepare for new community activations and future growth, as well as a slight decrease in homebuilding revenues. We remain focused on prudently managing overhead costs.

Previous wording

Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality. Accordingly, our financial results for the three months ended December 31, 2023 may not be indicative of our full year results.

Current wording

Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality. Accordingly, our financial results for the three and six months ended March 31, 2024 may not be indicative of our full year results.

Previous wording

(a)Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 22.9% and 22.3% for the three months ended December 31, 2023 and 2022, respectively. Please see "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized tocost of sales to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.

Current wording

(a)Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 21.7% and 22.0% for the three months ended March 31, 2024 and 2023, respectively, and 22.2% and 22.1% for the six months ended March 31, 2024 and 2023, respectively. Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized tocost of sales to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.

Previous wording

Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet delivered the home. The aggregate dollar value of homes in backlog as of December 31, 2023 decreased 0.9% compared to December 31, 2022 due to a 3.7% decrease in the ASP of homes in backlog, partially offset by a 2.9% increase in backlog units. The increase in backlog units compared to the prior year quarter is primarily due to the increase in new net orders discussed above, partially offset by beginning the fiscal year with fewer backlog units.

Current wording

Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet delivered the home. The aggregate dollar value of homes in backlog as of March 31, 2024 increased 8.9% compared to March 31, 2023 due to a 10.1% increase in backlog units, partially offset by a 1.1% decrease in the ASP of homes in backlog. The increase in backlog units compared to the prior year quarter is primarily due to the increase in new net orders discussed above. The decrease in backlog ASP was partially due to our efforts inaddressing new home affordability challenges by altering our product strategy in certain markets through reduction of homes sizes and/or features included in our base price.

Previous wording

West Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $8.6 million primarily due to a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, remained consistent at 21.7% with the prior year quarter, primarily driven by a decrease in build costs, offset by an increase in price concessions and closing cost incentives.

Current wording

West Segment: Compared to the prior year quarter, homebuilding gross profit increased by $2.9 million primarily due to an increase in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 21.5%, down from 21.7% in the prior year quarter, primarily due to changes in product and community mix, partially offset by a decrease in build costs and price concessions.

Previous wording

East Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $3.8 million due to lower gross margin as well as a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 17.7%, down from 19.4% in the prior year quarter, primarily driven by an increase in price concessions and closing cost incentives, partially offset by changes in product and community mix.

Current wording

East Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $4.3 million due to lower gross margin as well as a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 19.5%, down from 21.7% in the prior year quarter, primarily due to changes in product and community mix.

Previous wording

Our homebuilding gross profit decreased by $9.2 million to $75.9 million for the three months ended December 31, 2023, compared to $85.1 million in the prior year quarter. The decrease in homebuilding gross profit was primarily due to a decrease in homebuilding revenue of $63.2 million, partially offset by an increase in gross margin of 70 basis points to 19.9%. As shown in the tables above, the comparability of our gross profit and gross margin was slightly impacted by impairment and abandonment charges, which decreased by $0.2 million, and interest amortized to homebuilding cost of sales, which decreased by $2.6 million period-over-period (refer to Note 4 and Note 5 of the notes to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of impairment and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $11.9 million compared to the prior year quarter, while homebuilding gross margin increased by 60 basis points to 22.9%. The quarter-over-quarter increase in gross margin for the three months ended December 31, 2023 was primarily due to a decrease in build costs, lower amortization of capitalized indirect costs due to lower closings, partially offset by an increase in price concessions and closing cost incentives. Across our markets, homebuyers areusing closing cost incentives largely in the form of mortgage interest rate buydowns given the elevated interest rate environment.

Current wording

Our homebuilding gross profit decreased by $10.0 million to $176.7 million for the six months ended March 31, 2024, from $186.7 million in the prior year period. The decrease in homebuilding gross profit was primarily due to a decrease in homebuilding revenue of $66.5 million, partially offset by an increase in gross margin of 30 basis points to 19.2%. Similar to thethree-month period discussed above, the comparability of our gross profit and gross margin for the six-month period was slightly impacted by impairment and abandonment charges, which decreased by $0.3 million, and interest amortized to homebuilding cost of sales, which decreased by $3.8 million year-over-year (refer to Note 4 and Note 5 of the notes to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of impairment and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by$14.1 million compared to the prior year period, while homebuilding gross margin increased by 10 basis points to 22.2%. The increase in gross margin for the six months ended March 31, 2024 compared to the prior year period wasprimarily driven by a decrease in build costs and lower amortization of capitalized indirect costs due to lower closings, partially offset by changes in product and community mix.

Previous wording

Southeast Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $1.8 million due to a decrease in homebuilding revenue, partially offset by higher gross margin. Homebuilding gross margin, excluding impairments and abandonments, increased to 22.4%, up from 22.1% in the prior year quarter, primarily driven by a decrease in build costs, partially offset by an increase in price concessions and closing cost incentives, as well as changes in product and community mix.

Current wording

Southeast Segment: Compared to the prior year period, homebuilding gross profit decreased by $3.1 million due to a decrease in homebuilding revenue, partially offset by higher gross margin. Homebuilding gross margin, excluding impairments and abandonments, increased to 22.5%, up from 21.8% in the prior year period, primarily driven by lower build costs, partially offset by changes in product and community mix.

Previous wording

The asset valuations that result from our impairment calculations are based on discounted cash flow analyses and are not derived by simply applying prospective gross margins to individual communities. As such, impaired communities may have gross margins that are somewhat higher or lower than the gross margins for unimpaired communities. The mix of home closings in any particular quarter varies to such an extent that comparisons between previously impaired and never impaired communities would not be a reliable way to ascertain profitability trends or to assess the accuracy of previous valuation estimates. In addition, since any amount of impairment turn is tied to individual lots in specific communities, it will vary considerably from period to period. As a result of these factors, we review the impairment turn impact on gross margin on a trailing 12-month basis rather than a quarterly basis as a way of considering whether our impairment calculations are resulting in gross margins for impaired communities that are comparable to our unimpaired communities. For the trailing 12-month period ended December 31, 2023, our homebuilding gross margin was 20.1%. Excluding interest amortized to cost of sales and inventory impairments and abandonments, our homebuilding gross margin for the trailing 12-month period ended December 31, 2023 was 21.7%. For the same trailing 12-month period, homebuilding gross margin was as follows in those communities that have previously been impaired, which represented 71 homes and 1.7% of total closings during this period:

Current wording

The asset valuations that result from our impairment calculations are based on discounted cash flow analyses and are not derived by simply applying prospective gross margins to individual communities. As such, impaired communities may have gross margins that are somewhat higher or lower than the gross margins for unimpaired communities. The mix of home closings in any particular quarter varies to such an extent that comparisons between previously impaired and never impaired communities would not be a reliable way to ascertain profitability trends or to assess the accuracy of previous valuation estimates. In addition, since any amount of impairment turn is tied to individual lots in specific communities, it will vary considerably from period to period. As a result of these factors, we review the impairment turn impact on gross margin on a trailing 12-month basis rather than a quarterly basis as a way of considering whether our impairment calculations are resulting in gross margins for impaired communities that are comparable to our unimpaired communities. For the trailing 12-month period ended March 31, 2024, our homebuilding gross margin was 20.1%. Excluding interest amortized to cost of sales and inventory impairments and abandonments, our homebuilding gross margin for the trailing 12-month period ended March 31, 2024 was 23.1%. For the same trailing 12-month period, homebuilding gross margin was as follows in those communities that have previously been impaired, which represented 79 homes and 1.9% of total closings during this period:

Previous wording

Land sales relate to land and lots sold that do not fit within our homebuilding programs and strategic plans. We also have other revenue related to title examinations provided for our homebuyers in certain markets. The following tables summarize our land sales and other revenue and related gross profit by reportable segment for the periods presented:

Current wording

Land sales relate to land and lots sold that do not fit within our homebuilding programs or strategic plans. We also have other revenue related to title examinations provided for our homebuyers in certain markets. The following tables summarize our land sales and other revenue and related gross profit by reportable segment for the periods presented:

Previous wording

For the three months ended December 31, 2023, land sales and other revenue increased by $5.1 million to $5.9 million, and land sales and other gross profit increased by $1.1 million to $1.8 million compared to the prior year quarter. Period-over-period fluctuations on land sales and other revenue are primarily driven by the timing and volume of land and lot sales closings. Land sales and other gross profit is primarily impacted by the profitability of individual land and lot sale transactions. Future land and lot sales will depend on a variety of factors, including local market conditions, individual community performance, and changing strategic plans.

Current wording

For the three months ended March 31, 2024, land sales and other revenue increased by $1.0 million to $2.9 million, and land sales and other gross profit decreased by $0.2 million to $1.1 million compared to the prior year quarter. For the six months ended March 31, 2024, land sales and other revenue increased by $6.1 million to $8.8 million, and land sales and other gross profit increased by $0.9 million to $2.9 million compared to the prior year period. Period-over-period fluctuations on land sales and other revenue are primarily driven by the timing and volume of land and lot sales closings. Land sales and other gross profit is primarily impacted by the profitability of individual land and lot sale transactions as well as the volume of our title examinations operations. Future land and lot sales will depend on a variety of factors, including local market conditions, individual community performance, and changing strategic plans.

Previous wording

Our operating income decreased by $8.2 million to $20.3 million for the three months ended December 31, 2023, compared to operating income of $28.5 million for the three months ended December 31, 2022. This decrease was primarily due to the previously discussed decrease in gross profit and higher sales and marketing costs, partially offset by lower commissions expense on lower revenue and lower other G&A expenses during the period. SG&A as a percentage of total revenue increased by 200 basis points quarter-over-quarter, from 12.3% to 14.3%, primarily due to the decrease of homebuilding revenues.

Current wording

Our operating income decreased by $2.8 million to $36.0 million for the three months ended March 31, 2024, compared to operating income of $38.8 million for the three months ended March 31, 2023. This decrease compared to the prior year quarter was primarily due to the previously discussed decrease in gross profit and higher sales and marketing costs, partially offset by lower commissions expense onlower homebuilding revenue and lower other G&A expenses. SG&A as a percentage of total revenue increased by 30 basis points compared to the prior year quarter, from 11.2% to 11.5%, primarily due to higher sales and marketing costs as we prepare for new community activations, and a decrease in homebuilding revenues.

Previous wording

West Segment: The $9.0 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs and other G&A expenses, partially offset by lower commissions expense on lower revenue in the segment.

Current wording

East Segment: The $4.0 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense onlower homebuilding revenue, and lower other G&A expenses in the segment.

Previous wording

Southeast Segment: The $1.5 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed, partially offset by lower commissions expense on lower revenue, as well as lower sales and marketing costs and other G&A expenses in the segment.

Current wording

Southeast Segment: The $0.6 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed as well as higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue, and lower other G&A expenses in the segment.

Previous wording

Corporate and Unallocated: Our corporate and unallocated results include amortization of capitalized interest, capitalization and amortization of indirect costs, impairment of capitalized interest and capitalized indirect costs, expenses for various shared services functions that benefit all segments but are not allocated, including information technology, treasury, corporate finance, legal, branding and national marketing, and certain other amounts that are not allocated to our operating segments. For the three months ended December 31, 2023, corporate and unallocated net expenses decreased by $5.2 million from the prior year quarter primarily due to lower amortization of capitalized interest and capitalized indirect costs to cost of sales on lower closings and homebuilding revenue.

Current wording

Corporate and Unallocated: Our corporate and unallocated results include amortization of capitalized interest, capitalization and amortization of indirect costs, impairment of capitalized interest and capitalized indirect costs, expenses for various shared services functions that benefit all segments but are not allocated, including information technology, treasury, corporate finance, legal, branding and national marketing, and certain other amounts that are not allocated to our operating segments. For the three months ended March 31, 2024, corporate and unallocated net expenses decreased by $1.2 million from the prior year quarter primarily due to lower amortization of capitalized interest and capitalized indirect costs to cost of sales on lower closings and homebuilding revenue.

Previous wording

Below operating income, we had two noteworthy quarter-over-quarter fluctuations for thethree months ended December 31, 2023 compared to the prior period. Specifically, (1) we experienced an increase in other income, net, primarily attributable to a quarter-over-quarter increase in interest income due to higher interest rates on operating cash bank accounts, and (2) we recorded a loss on extinguishment of debt of $13 thousand during the current quarter as compared to $0.5 million in the prior year quarter. See Note 6 of the notes to our condensed consolidated financial statements in this Form 10-Q for a further discussion of debt.

Current wording

Below operating income, we had three noteworthy fluctuations for thethree and six months ended March 31, 2024 compared to the prior periods. Specifically, (1) within other income, net, we recognized a gain on sale of investment of $8.6 million during the three and six months ended March 31, 2024 compared to no such transaction in the prior year periods (See the "EBITDA: Reconciliation of Net Income to Adjusted EBITDA" section above for further discussion on this transaction), (2) within other income, net, we experienced a year-over-year increase in interest income due to higher interest rateson cash balances, and (3) we recorded a loss on extinguishment of debt of $0.4 million during thethree and six months ended March 31, 2024 compared to no such loss and a loss of $0.5 million during thethree and six months ended March 31, 2023, respectively. See Note 6 of the notes to our condensed consolidated financial statements in this Form 10-Q for a further discussion of debt.

Previous wording

We recognized income tax expense from continuing operations of $1.2 million for the three months ended December 31, 2023, compared to $4.2 million for the three months ended December 31, 2022. Income tax expense for the three months ended December 31, 2023 was primarily driven byincome tax expense on earnings from continuing operations and permanent differences, partially offset by both energy efficiency tax credits generated from expected closings during the current year and the discrete tax benefits related to the generation of additional energy efficiency tax credits from homes closed in prior periods, as well as stock-based compensation activity in the period. Income tax expense for the three months ended December 31, 2022 was primarily driven by income tax expense on earnings from continuing operations, permanent differences, and the discrete tax expense related to stock-based compensation activity in the period, partially offset by the discrete tax benefits related to the generation of additional energy efficiency tax credits from homes closed in prior periods. Refer to Note 10 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion of our income taxes.

Current wording

We recognized income tax expense from continuing operations of $6.7 million and$7.9 million for the three and six months ended March 31, 2024, compared to $5.1 million and$9.2 million for the three and six months ended March 31, 2023. Income tax expense for the six months ended March 31, 2024 was primarily driven by income tax expense on earnings from continuing operations and permanent differences, partially offset by both energy efficiency tax credits generated from expected closings during the current year and the discrete tax benefits related to the generation of additional energy efficiency tax credits from homes closed in prior periods, as well as stock-based compensation activity in the period. Income tax expense for the six months ended March 31, 2023 was primarily driven by income tax expense on earnings from continuing operations, permanent differences, and the discrete tax expense related to stock-based compensation activity in the period, partially offset by the discrete tax benefits related to the generation of additional energy efficiency tax credits for homes closed in prior periods and interest received with the refund of our alternative minimum tax credit. Refer to Note 10 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion of our income taxes.

Previous wording

Net cash used in operating activities was $225.6 million for the three months 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 spending. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $196.3 million resulting from land acquisition, land development and house construction spending, and a net increase in non-inventory working capital balances of $56.0 million. This was partially offset by cash inflows from income before income taxes of $22.9 million, which included $3.8 million of non-cash charges.

Current wording

Net cash used in operating activities was $239.6 million for the six months ended March 31, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development spending. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $299.1 million resulting from land acquisition, land development and house construction spending, and a net increase in non-inventory working capital balances of $9.8 million. This was partially offset by cash inflows from income before income taxes of $68.8 million, which included $0.5 million of non-cash charges.

Previous wording

Net cash used in operating activities was $86.8 million for the three months ended December 31, 2022, primarily driven by an increase in inventory of $40.5 million resulting from land acquisition, land development and house construction spending, and a net decrease in non-inventory working capital balances of $80.8 million. This was partially offset by cash inflows from income before income taxes of $28.5 million, which included $6.0 million of non-cash charges.

Current wording

Net cash provided by operating activities was $40.3 million for the six months ended March 31, 2023, primarily driven by cash inflows from income before income taxes of $68.4 million, which included $10.8 million of non-cash charges. This was partially offset by a net increase in non-inventory working capital balances of $36.6 million and an increase in inventory of $2.3 million resulting from land acquisition, land development and house construction spending.

Previous wording

Net cash used in investing activitieswas $12.8 million for the three months ended December 31, 2023, primarily driven by capital expenditures for model homes and information systems infrastructure, and purchases of investment securities.

Current wording

Net cash used in investing activitieswas $18.8 million for the six months ended March 31, 2024, primarily driven by capital expenditures for model homes and information systems infrastructure, and purchases of investment securities.

Previous wording

Net cash used in investing activities for the three months ended December 31, 2022 was $3.2 million, primarily driven by capital expenditures for model homes and information systems infrastructure.

Current wording

Net cash used in investing activities was $7.8 million for the six months ended March 31, 2023, primarily driven by capital expenditures for model homes and information systems infrastructure.

Previous wording

Net cash used in financing activities was $9.6 million for the three months ended December 31, 2023, primarily driven by the repurchase of a portion of our 2025 Notes, debt issuance costs related to expanding the borrowing capacity of our Unsecured Facility (see Note 6), and tax payments for stock-based compensation awards vesting.

Current wording

Net cash provided by financing activities was $37.4 million for the six months ended March 31, 2024, primarily driven by inflows from the issuance of the 2031 Notes, partially offset by outflows from redemption of our 2025 Notes, debt issuance costs related to the 2031 Notes and extension of the term of our Unsecured Facility (see Note 6), and tax payments for stock-based compensation awards vesting.

Previous wording

Net cash used in financing activities for the three months ended December 31, 2022 was $5.2 million primarily driven by debt issuance costs from entering into our Unsecured Facility, and tax payments for stock-based compensation awards vesting.

Current wording

Net cash used in financing activities was $5.2 million for the six months ended March 31, 2023, primarily driven by debt issuance costs for the Unsecured Facility and tax payments for stock-based compensation awards vesting.

Previous wording

As of December 31, 2023, our liquidity position consisted of $104.2 million in cash and cash equivalents and$300.0 million of remaining capacity under the Unsecured Facility, compared to $120.7 million in cash and cash equivalents and $265.0 million of remaining capacity under the Unsecured Facility as of December 31, 2022. Meanwhile, we invested $198.7 million and $114.7 million in land acquisition and land development during quarters ended December 31, 2023 and December 31, 2022, respectively.

Current wording

As of March 31, 2024, our liquidity position consisted of $132.9 million in cash and cash equivalents and$300.0 million of remaining capacity under the Unsecured Facility, compared to $240.8 million in cash and cash equivalents and $265.0 million of remaining capacity under the Unsecured Facility as of March 31, 2023. Meanwhile, we invested $197.8 million and $113.0 million in land acquisition and land development during quarters ended March 31, 2024 and March 31, 2023, respectively.

Previous wording

We have also entered into a number of stand-alone letter of credit agreements with banks, secured with cash or certificates of deposit. These combined facilities provide for letter of credit needs collateralized by either cash or assets of the Company. We currently have $36.7 million of outstanding letters of credit under these facilities.

Current wording

We have also entered into a number of stand-alone letter of credit agreements with banks, secured with cash or certificates of deposit. These combined facilities provide for letter of credit needs collateralized by either cash or assets of the Company. We currently have $34.8 million of outstanding letters of credit under these facilities.

Previous wording

Our credit ratings are periodically reviewed by rating agencies. In August 2023, S&P upgraded the Company’s corporate credit rating of B to B+, updated the Company's outlook from positive to stable, and upgraded the rating for our senior unsecured notes from B to B+. In October 2023, Moody's upgraded the rating for our senior unsecured notes from B2 to B1, upgraded the Company's issuer corporate family rating from B2 to B1, and updated the Company's outlook from positive to stable. These ratings and our current credit condition affect, among other things, our ability to access new capital. These ratings are not recommendations to buy, sell or hold debt securities. Negative changes to these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt. Our credit ratings could be lowered, or rating agencies could issue adverse commentaries in the future, which could have a material adverse effect on our business, financial condition, results of operations, and liquidity. In particular, a weakening of our financial condition, including any further increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, could result in a credit rating downgrade or change in outlook, or could otherwise increase our cost of borrowing.

Current wording

Our credit ratings are periodically reviewed by rating agencies. In March 2024, upon the issuance of our 2031 Notes, S&P reaffirmed the rating for our senior unsecured notes of B+, reaffirmed the Company’s corporate credit rating of B+, and reaffirmed the Company's outlook of stable; Moody's reaffirmed the rating for our senior unsecured notes of B1, reaffirmed the Company's issuer corporate family rating of B1, and reaffirmed the Company's outlook of stable. These ratings and our current credit condition affect, among other things, our ability to access new capital. These ratings are not recommendations to buy, sell or hold debt securities. Negative changes to these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt. Our credit ratings could be lowered, or rating agencies could issue adverse commentaries in the future, which could have a material adverse effect on our business, financial condition, results of operations, and liquidity. In particular, a weakening of our financial condition, including any further increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, could result in a credit rating downgrade or change in outlook, or could otherwise increase our cost of borrowing.

Previous wording

In May 2022, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock. This share repurchase program replaced the prior share repurchase program, authorized in the first quarter of fiscal 2019 of up to $50.0 million of common stock repurchases, pursuant to which $12.0 million of the capacity remained prior to the replacement of the program. No share repurchases were made during thethree months ended December 31, 2023 or 2022. As of December 31, 2023, the remaining availability of the new share repurchase program was $41.8 million. The repurchase program has no expiration date. Previously repurchased shares under the program have been retired.

Current wording

In May 2022, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock. This share repurchase program replaced the prior share repurchase program, authorized in the first quarter of fiscal 2019 of up to $50.0 million of common stock repurchases, pursuant to which $12.0 million of the capacity remained prior to the replacement of the program. No share repurchases were made during thethree and sixmonths ended March 31, 2024 or 2023. As of March 31, 2024, the remaining availability of the new share repurchase program was $41.8 million. The repurchase program has no expiration date. Previously repurchased shares under the program have been retired.

Previous wording

The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on the payment of dividends. There were no dividends paid during the three months ended December 31, 2023 or 2022.

Current wording

The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on the payment of dividends. There were no dividends paid during the three and sixmonths ended March 31, 2024 or 2023.

Previous wording

In addition to purchasing land directly, we control a portion of our land supply through lot option agreements with land developers and land bankers, which generally require the payment of cash or issuance of an irrevocable letter of credit or surety bond for the right to acquire lots during a specified period of time at a specified price. In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of December 31, 2023, we controlled 26,374 lots, which includes 272 lots of land held for future development and 386 lots of land held for sale. Of the 25,716 active lots, we controlled 13,648 of these lots, or 53.1%, through option agreements, as compared to 13,035 active lots controlled, or 54.4% of our total active lots, through option agreements as of December 31, 2022. Lot option agreements allow us to position for future growth while providing the flexibility to respond to market conditions by renegotiating the terms of the options prior to exercise or terminating the agreement.

Current wording

In addition to purchasing land directly, we control a portion of our land supply through lot option agreements with land developers and land bankers, which generally require the payment of cash or issuance of an irrevocable letter of credit or surety bond for the right to acquire lots during a specified period of time at a specified price. In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of March 31, 2024, we controlled 26,887 lots, which includes 272 lots of land held for future development and 397 lots of land held for sale. Of the 26,218 active lots, we controlled 13,527 of these lots, or 51.6%, through option agreements, as compared to 12,460 active lots controlled, or 54.0% of our total active lots, through option agreements as of March 31, 2023. Lot option agreements allow us to position for future growth while providing the flexibility to respond to market conditions by renegotiating the terms of the options prior to exercise or terminating the agreement.

Previous wording

Under option agreements, purchase of the properties is contingent upon satisfaction of certain requirements by us and the sellers, and our liability is generally limited to forfeiture of the non-refundable deposits, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $166.4 million as of December 31, 2023. The total remaining purchase price, net of cash deposits, committed under all options was $924.8 million as of December 31, 2023. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supp lement our owned inventory supply.

Current wording

Under option agreements, purchase of the properties is contingent upon satisfaction of certain requirements by us and the sellers, and our liability is generally limited to forfeiture of the non-refundable deposits, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $174.6 million as of March 31, 2024. The total remaining purchase price, net of cash deposits, committed under all options was $989.4 million as of March 31, 2024. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supp lement our owned inventory supply.

Previous wording

In connection with the development of our communities, we are frequently required to provide performance, maintenance, and other bonds and letters of credit in support of our related obligations with respect to such developments. The amount of such obligations outstanding at any time varies in accordance with our pending development activities. In the event any such bonds or letters of credit are drawn upon, we would be obligated to reimburse the issuer of such bonds or letters of credit. We had outstanding letters of credit and surety bonds of$36.7 million and$259.5 million, respectively, as of December 31, 2023, primarily related to our obligations to local governments to construct roads and other improvements in various developments.

Current wording

In connection with the development of our communities, we are frequently required to provide performance, maintenance, and other bonds and letters of credit in support of our related obligations with respect to such developments. The amount of such obligations outstanding at any time varies in accordance with our pending development activities. In the event any such bonds or letters of credit are drawn upon, we would be obligated to reimburse the issuer of such bonds or letters of credit. We had outstanding letters of credit and surety bonds of$34.8 million and$255.4 million, respectively, as of March 31, 2024, primarily related to our obligations to local governments to construct roads and other improvements in various developments.

Previous wording

Our critical accounting policies require the use of judgment in their application and in certain cases require estimates of inherently uncertain matters. Although our accounting policies are in compliance with accounting principles generally accepted in the United States of America (GAAP), a change in the facts and circumstances of the underlying transactions could significantly change the application of the accounting policies and the resulting financial statement impact. It is also possible that other professionals applying reasonable judgment to the same set of facts and circumstances could reach a different conclusion. As disclosed in our 2023 Annual Report, our most critical accounting policies relate to inventory valuation of projects in progress, warranty reserves, and income tax valuation allowances. There have been no significant changes to our critical accounting policies and estimates during the three months ended December 31, 2023 as compared to those described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Annual Report on Form 10-K.

Current wording

Our critical accounting policies require the use of judgment in their application and in certain cases require estimates of inherently uncertain matters. Although our accounting policies are in compliance with accounting principles generally accepted in the United States of America (GAAP), a change in the facts and circumstances of the underlying transactions could significantly change the application of the accounting policies and the resulting financial statement impact. It is also possible that other professionals applying reasonable judgment to the same set of facts and circumstances could reach a different conclusion. As disclosed in our 2023 Annual Report, our most critical accounting policies relate to inventory valuation of projects in progress, warranty reserves, and income tax valuation allowances. There have been no significant changes to our critical accounting policies and estimates during the six months ended March 31, 2024 as compared to those described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Annual Report on Form 10-K.

Previous wording

•changes in tax laws or otherwise regarding the deductibility of mortgage interest expenses and real estate taxes;

Current wording

•changes in tax laws or otherwise regarding the deductibility of mortgage interest expenses and real estate taxes, including those resulting from regulatory guidance and interpretations issued with respect thereto, such as the IRS's recent guidance regarding heightened qualification requirements for federal credits for building energy-efficient homes;