BEAZER HOMES USA INC
For the period ended Dec 31, 2024. Filed Jan 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Jan 30, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000915840-24-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-01-30.
0000915840-25-000006
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 156 previous paragraphs and 104 current paragraphs.
50 unchanged; 42 reworded; 12 added; 63 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
The first fiscal quarter presented a challenging sales environment, with demand constrained by affordability concerns. Elevated mortgage rates and the uncertainty surrounding the post-election political environment contributed to weaker consumer sentiment. As mortgage rates rose to the low seven percent range and sales activity moderated, we offered discounts and incentives, including interest rate buydowns, to stimulate sales and prevent inventory buildup, which led to lower homebuilding gross margins.
Current report
While these headwinds persist, we are encouraged by the volume of prospective buyer traffic and lead generation metrics. Foot traffic and online inquiries indicate sustained interest in homeownership, but buyer urgency to convert interest into new home orders has lessened in the current environment.
Current report
•During the quarter ended December 31, 2024, sales per community per month was 1.9 compared to 2.0 in the prior year quarter, and our net new orders were 932, up 13.2% from 823 in the prior year quarter. The expanded average active community count allowed us to deliver higher net new orders year-over-year despite a slight decline in sales pace to 1.9 orders per community per month during the quarter ended December 31, 2024. The sales pace of 1.9 orders per community per month reflected the challenging sales environment as well as typical seasonality as our fiscal first quarter historically tends to experience the slowest sales pace.
Current report
•Our Average Selling Price (ASP) for homes closed during the quarter ended December 31, 2024 was $507.6 thousand, down 1.0% from $512.7 thousand in the prior year quarter. Our closing ASP was down from the prior year quarter primarily due to an increase in price concession on spec homes that were sold and closed within the current year quarter, an increased share of spec home closings, as well as changes in product and community mix. Our backlog ASP of$541.5 thousand as of December 31, 2024 wasup from$520.8 thousand compared to prior year quarter. The increase in backlog ASP compared to prior year quarterwas primarily due to changes in product and community mix and price appreciation in certain communities.
Current report
Net new orders for the quarter ended December 31, 2024 increased to 932, up 13.2% from the quarter ended December 31, 2023. The increase in net new orders compared to the prior year quarter was driven by a 17.8% increase in average active community count from 137 in the prior year quarter to 161, partially offset by a 3.8% decrease in sales pace from 2.0 orders per community per month in the prior year quarter to 1.9. The sales pace of 1.9 orders per community per month reflected the challenging sales environment as well as typical seasonality as our fiscal first quarter historically tends to experience the slowest sales pace.
Current report
West Segment: Net new orders for the quarter ended December 31, 2024 was 589, up 10.5% from the quarter ended December 31, 2023. The increase in net new orders compared to the prior year quarter was driven by a 17.2% increase in average active community count from 87 in the prior year quarter to 102, partially offset by a 5.7% decrease in sales pace from 2.0 orders per community per month in the prior year quarter to 1.9. During the current year quarter, the sales environment was particularly challenging in our Texas and Florida submarkets due to higher inventory levels and increased competition.
Current report
East Segment: Net new orders for the quarter ended December 31, 2024 was 227, up 32.0% from the quarter ended December 31, 2023. The increase in net new orders compared to the prior year quarter was driven by a 35.9% increase in average active community count from 26 in the prior year quarter to 35, partially offset by a 2.9% decrease in sales pace from 2.2 orders per community per month in the prior year quarter to 2.1.
Current report
Southeast Segment: Net new orders for the quarter ended December 31, 2024 decreased to 116, down 1.7% from the quarter ended December 31, 2023. The slight decrease in new orders compared to the prior year quarter was driven by a 1.7% decrease in sales pace from 1.7 orders per community per month in the prior year quarter to 1.6, while average active community count remained flat at 24 year-over-year.
Current report
West Segment: Compared to the prior year quarter, homebuilding gross profit increased by $2.5 million due to an increase in homebuilding revenue, partially offset by lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 18.3%, down from 21.7% in the prior year quarter, primarily due to an increase in closing cost incentives, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.
Current report
West Segment: The $0.9 million decrease in operating income compared to the prior year quarter was primarily due to higher commissions expense on higher homebuilding revenue and higher sales and marketing costs driven by community count growth, partially offset by higher gross profit in the segment.
Current report
East Segment: The $0.3 million increase in operating income compared to the prior year quarter was primarily due to the higher gross profit previously discussed, partially offset by higher commissions expense on higher homebuilding revenue and higher sales and marketing costs driven by community count growth.
Current report
Below operating income, we experienced a year-over-year decrease within other income, net primarily due to lower interest income driven by lower interest rates on lower operating cash balances.
Removed paragraphs (63)
Previous report
Mortgage rate fluctuations, an increase in new home inventory, and weaker market sentiment led to softer sales performance in the fiscal third quarter. Our strategic decision to not prioritize price concessions and higher closing cost incentives as primary sales tools also contributed to the slower sales pace. We are currently transitioning to Zero Energy Ready homes, and we believe these homes should command a premium compared to our previous series, driven by their innovative designs, superior quality, and durable construction. While we have committed that 100% of our starts will be Zero Energy Ready homes by the end of 2025, we are substantially ahead of schedule with 93% of our starts being built to this standard during the quarter ended June 30, 2024. From a product perspective, we are committed to delivering differentiated, high-quality homes in desirable locations.
Previous report
•During the quarter ended June 30, 2024, sales per community per month was 2.4 compared to 3.2 in the prior year quarter, and our net new orders were 1,070, down 10.8% from 1,200 in the prior year quarter. We experienced softer sales performance in various sub-markets due to weaker market sentiment as well as our strategic decision to not prioritize price concessions and higher closing cost incentives as primary sales tools. We are committed to delivering differentiated, high-quality homes in desirable locations.
Previous report
•Our Average Selling Price (ASP) for homes closed during the quarter ended June 30, 2024 was $505.3 thousand, down 1.1% from $510.8 thousand in the prior year quarter. The decrease in closing ASP was attributed to changes in product and community mix, as well as our effort to address 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 report
Net new orders for the quarter ended June 30, 2024 decreased to 1,070, down 10.8% from the quarter ended June 30, 2023. The decrease in net new orders compared to the prior year quarter was driven by a 23.9% decrease in sales pace from 3.2 orders per community per month in the prior year quarter to 2.4, partially offset by a 17.2% increase in average active community count from 124 in the prior year quarter to 146.
Previous report
Net new orders for the nine months ended June 30, 2024 increased to 3,192, up 11.5% from the nine months ended June 30, 2023. The year-over-year increase in net new orders was primarily attributed to growth in community count.
Previous report
West Segment: Net new orders for the quarter ended June 30, 2024 was 715, up 1.4% from the quarter ended June 30, 2023. The increase in net new orders compared to the prior year quarter was driven by a 23.4% increase in average active community count from 77 in the prior year quarter to 95, partially offset by a 19.4% decrease in sales pace from 3.1 orders per community per month in the prior year quarter to 2.5.
Previous report
East Segment: Net new orders for the quarter ended June 30, 2024 was 250, down 0.4% from the quarter ended June 30, 2023. The slight decrease in net new orders compared to the prior year quarter was driven by a 29.7% decrease in sales pace from 3.7 orders per community per month in the prior year quarter to 2.6, partially offset by a 45.5% increase in average active community count from 22 in the prior year quarter to 32.
Previous report
Southeast Segment: Net new orders for the quarter ended June 30, 2024 decreased to 105, down 57.0% from the quarter ended June 30, 2023. The decrease in new orders compared to the prior year quarter was driven by a 40.6% decrease in sales pace from 3.2 orders per community per month in the prior year quarter to 1.9 and a 28.0% decrease in average active community count from 25 in the prior year quarter to 18. The decrease in sales pace was due to a softening in demand as well as higher cancellation rates in various sub-markets.
Previous report
West Segment: Net new orders for the nine months ended June 30, 2024 increased to 2,108, up 33.1% from the nine months ended June 30, 2023. The increase in net new orders was driven by a 24.7% increase in average active community count from 73 to 91 and an 8.3% increase in sales pace from 2.4 orders per community per month to 2.6.
Previous report
East Segment: Net new orders for the nine months ended June 30, 2024 increased to 685, up 2.7% from the nine months ended June 30, 2023. The increase in net new orders was driven by a 20.8% increase in average active community count from 24 to 29, partially offset by a 16.1% decrease in sales pace from 3.1 orders per community per month to 2.6.
Previous report
Southeast Segment: Net new orders for the nine months ended June 30, 2024 decreased to 399, down 34.8% from the nine months ended June 30, 2023. The decrease in net new orders was driven by a 19.2% decrease in average active community count from 26 to 21 and a 19.2% decrease in sales pace from 2.6 orders per community per month to 2.1.
Previous report
Southeast Segment: Homebuilding revenue decreased by 7.5% for the three months ended June 30, 2024 compared to the prior year quarter due to a 13.5% decrease in closings, partially offset by a 6.9% increase in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to prior year quarter.
Previous report
East Segment: Homebuilding revenue decreased by 10.1% for the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023 due to an 8.2% decrease in closings and a 2.0% decrease in ASP. The decrease in closings was primarily due to lower beginning backlog, part ially offset by improved construction cycle times compared to the prior year period.
Previous report
Southeast Segment: Homebuilding revenue decreased by 9.8% nine months ended June 30, 2024 compared to the nine months ended June 30, 2023 due to a 13.5% decrease in closings, partially offset by a 4.2% increase in ASP. The decrease in closings was primarily due to lower beginning backlog, part ially offset by improved construction cycle times compared to the prior year period.
Previous report
West Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $5.6 million due to lower gross margin, partially offset by an increase in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 20.6%, down from 24.9% in the prior year quarter,primarily due to increased share of speculative home closings which generally have lower margins than "to be built" homes, changes in product and community mix, and an increase in closing cost incentives, partially offset by a decrease in price concessions.
Previous report
East Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $6.4 million due to lower gross margin as well as a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 16.3%, down from 19.6% in the prior year quarter, primarily due to an increase in price concessions.
Previous report
Our homebuilding gross profit decreased by $23.5 million to $278.7 million for the nine months ended June 30, 2024, from $302.2 million in the prior year period. The decrease in homebuilding gross profit compared to the prior year period was primarily due to a decrease in homebuilding revenue of $47.4 million and a decrease in gross margin of 90 basis points to 18.5%. Similar to the three-month period discu ssed above, the comparability of our gross profit and gross margin for the nine-month period was slightly impacted by impairment and abandonment charges, which decreased by $0.4 million, and interest amortized to homebuilding cost of sales, which decreased by $4.0 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$28.0 million compared to the prior year period, while homebuilding gross margin decreased by 120 basis points to 21.4%. The decrease in gross margin for the nine months ended June 30, 2024 compared to the prior year period was primarily driven by changes in product and community mix, and an increase in closing cost incentives.
Previous report
West Segment: Compared to the prior year period, homebuilding gross profit decreased by $11.3 million due to lower gross margin, partially offset by an increase in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 21.2%, down from 22.8% in the prior year period, primarily driven by changes in product and community mix and an increase in closing cost incentives, partially offset by a decrease in price concessions.
Previous report
Southeast Segment: Compared to the prior year period, homebuilding gross profit decreased by $7.3 million due to a decrease in homebuilding revenue as well as lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 22.1%, down from 22.4% in the prior year period, primarily driven by changes in product and community mix and an increase in price concessions.
Previous report
In particular, the magnitude and volatility of non-cash inventory impairments and abandonment charges for the Company and other homebuilders have been significant historically and, as such, have made financial analysis of our industry more difficult. Homebuilding metrics excluding these charges, as well as interest amortized to cost of sales and other similar presentations by analysts and other companies, are frequently used to assist investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective level of impairments and levels of debt. Management believes these non-GAAP measures enable holders of our securities to better understand the cash implications of our operating performance, and our ability to service our debt obligations as they currently exist and as additional indebtedness is incurred in the future. These measures are also useful internally, helping management to compare operating results and to measure cash available for discretionary spending.
Previous report
In a given period, our reported gross profit is generated from both communities previously impaired and communities not previously impaired. In addition, as indicated above, certain gross profit amounts arise from recoveries of prior period costs, including warranty items that are not directly tied to communities generating revenue in the period. Home closings from communities previously impaired would, in most instances, generate very low or negative gross margins prior to the impact of the previously recognized impairment. Gross margin for each home closing is higher for a particular community after an impairment because the carrying value of the underlying land was previously reduced to the present value of future cash flows as a result of the impairment, leading to lower cost of sales at the home closing. This improvement in gross margin resulting from one or more prior impairments is frequently referred to in the aggregate as the “impairment turn” or “flow-back” of impairments within the reporting period. The amount of this impairment turn may exceed the gross margin for an individual impaired asset if the gross margin for that asset prior to the impairment would have been negative. The extent to which this impairment turn is greater than the reported gross margin for the individual asset is related to the specific historical cost basis of that individual asset.
Previous report
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 June 30, 2024, our homebuilding gross margin was 19.3%. Excluding interest amortized to cost of sales and inventory impairments and abandonments, our homebuilding gross margin for the trailing 12-month period ended June 30, 2024 was 22.3%. For the same trailing 12-month period, homebuilding gross margin was as follows in those communities that have previously been impaired, which represented 89 homes and 2.1% of total closings during this period:
Previous report
Our operating income decreased by $30.4 million to $84.8 million for the nine months ended June 30, 2024, compared to operating income of $115.2 million for the nine months ended June 30, 2023. This decrease compared to the prior year period was primarily due to the previously discussed decrease in gross profit and higher sales and marketing costs. SG&A as a percentage of total revenue increased by 80 basis points compared to the prior year period, from 11.6% to 12.4%, primarily due to slightly higher commissions expense as well as higher sales and marketing costs as we prepare for new community activations.
Previous report
West Segment: The $10.0 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed, higher commissions expense on higher homebuilding revenue in the segment, higher sales and marketing costs, and higher other G&A expenses in the segment.
Previous report
East Segment: The $7.3 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 in the segment.
Previous report
Southeast Segment: The $4.2 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed while total SG&A expense remained relatively flat in the segment.
Previous report
West Segment: The $18.5 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed as well as higher sales and marketing expenses, higher other G&A expenses, and higher commissions expense on higher homebuilding revenue in the segment.
Previous report
East Segment: The $14.1 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed, and higher sales and marketing expenses, partially offset by lower commission expenses on lower homebuilding revenue and lower other G&A expenses in the segment.
Previous report
Corporate and Unallocated: For the nine months ended June 30, 2024, corporate and unallocated net expenses decreased by $8.5 million over the prior year period. This decrease was primarily due to lower amortization of capitalized interest and capitalized indirect costs to cost of sales on lower closings and homebuilding revenue.
Previous report
Below operating income, we had three noteworthy fluctuations for thenine months ended June 30, 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 thenine months ended June 30, 2024 compared to no such transaction in the prior year periods (See the "Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)" section above for further discussion on this transaction) and (2) within other income, net, we experienced a year-over-year increase in interest income due to higher interest rates on cash balances.
Previous report
FORWARD-LOOKING STATEMENTS
Previous report
This Quarterly Report on Form 10-Q (Form 10-Q) contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events or results, and it is possible that such events or results described in this Form 10-Q will not occur or be achieved. These forward-looking statements can generally be identified by the use of statements that include words such as "outlook," "may," "will," "strategy," "believe," "expect," "anticipate," "intend," "plan," "foresee," "likely," "goal," "target," "estimate," "project," "initial" or other similar words or phrases.
Previous report
These forward-looking statements involve risks, uncertainties and other factors, many of which are outside of our control, that could cause actual events or results to differ materially from the results discussed in the forward-looking statements, including, among other things, the matters discussed in this Form 10-Q in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional information about factors that could lead to material changes is contained in Part I, Item 1A— Risk Factors of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. These factors are not intended to be an all-inclusive list of risks and uncertainties that may affect the operations, performance, development and results of our business, but instead are the risks that we currently perceive as potentially being material. Such factors may include:
Previous report
•the cyclical nature of the homebuilding industry and deterioration in homebuilding industry conditions;
Previous report
•other economic changes nationally and in local markets, including declines in employment levels, increases in the number of foreclosures and wage levels, each of which are outside our control and may impact consumer confidence and affect the affordability of, and demand for, the homes we sell;
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•elevated mortgage interest rates for prolonged periods, as well as further increases and reduced availability of mortgage financing due to, among other factors, additional actions by the Federal Reserve to address sharp increases in inflation;
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•financial institution disruptions, such as the bank failures that occurred in 2023;
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•continued supply chain challenges negatively impacting our homebuilding production, including shortages of raw materials and other critical components such as windows, doors, and appliances;
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•continued shortages of or increased costs for labor used in housing production, and the level of quality and craftsmanship provided by such labor;
Previous report
•inaccurate estimates related to homes to be delivered in the future (backlog), as they are subject to various cancellation risks that cannot be fully controlled;
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Reworded paragraphs (42)
Previous wording
Although we expect uncertainty around mortgage interest rates in near-term market conditions to persist, we are optimistic in the long-term outlook of the housing market, anchored by supply and demand factors at a macro level. Both the shortfalls in new home production over the past decade and the lock-in effect of higher mortgage rates have contributed to a tight supply, and demand for housing remains resilient characterized by low unemployment and wage growth, although limited by affordability and interest rate volatility.
Current wording
Although we expect fluidity in near-term demand trends, we are optimistic in the long-term outlook of the housing market, anchored by supply and demand factors at a macroeconomic level. The shortfalls in new home production over the past decade have contributed to an underproduction of housing in the country, and demand for housing remains resilient characterized by low unemployment and wage growth, although still limited by affordability and mortgage rate volatility.
Previous wording
Looking ahead to fiscal 2025, our focus remains on positioning our business for durable long-term growth. 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. We believe we are making progress to achieve all of the goals. With a strong balance sheet, ample liquidity, and a focused sales strategy, we believe we are well-equipped to navigate the evolving market dynamics as we continue to make strides in achieving our long-term strategic objectives.
Current wording
For the remainder of fiscal 2025, we will continue to focus on positioning our business for durable long-term growth. Our multi-year strategic goals, established during fiscal 2023, include reaching more than 200 active communities 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 calendar year 2025. With a strong balance sheet, ample liquidity, and a focused sales strategy, we believe we are well-equipped to navigate the evolving market dynamics as we continue to pursue our multi-year strategic goals.
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Overview of Results for Our Fiscal Third Quarter
Current wording
Overview of Results for Our Fiscal First Quarter
Previous wording
•During the quarter ended June 30, 2024, our average active community count of 146 was up 17.2% from 124 in the prior year quarter. This marks the ninth 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$201.1 million in land acquisition and land development during the quarter ended June 30, 2024, representing anincrease of 52.7% compared to$131.6 million in land spend during the quarter ended June 30, 2023.
Current wording
•During the quarter ended December 31, 2024, our average active community count of 161 was up 17.8% from 137 in the prior year quarter. As of December 31, 2024, our ending active community count was 163, up 19.9% from 136 in the prior year quarter as we work towards our goal of reaching more than 200 active communities by the end of fiscal 2026. We invested $211.3 million in land acquisition and land development during the quarter ended December 31, 2024, representing anincrease of 6.3% compared to$198.7 million in land spend during the quarter ended December 31, 2023.
Previous wording
•As of June 30, 2024, our land position included 28,365 controlled lots, up 24.9% from 22,719 as of June 30, 2023. Excluding land held for future development and land held for sale lots, we controlled 27,822 active lots, up 26.1% from a year ago. The majority of the growth in controlled lots was through the usage of lot option agreements, which allow us to position for future growth while providing the flexibility to respond market conditions. As of June 30, 2024, we had 15,434 lots, or 55.5% of our total active lots, under option agreements as compared to 11,510 lots, or 52.2% of our total active lots, under option agreements as of June 30, 2023.
Current wording
•As of December 31, 2024, our land position included 28,874 controlled lots, up 9.5% from 26,374 as of December 31, 2023. Excluding land held for future development and land held for sale lots, we controlled 28,178 active lots, up 9.6% from a year ago. The majority of the growth in controlled lots was through the usage of lot option agreements, which allow us to position for future growth while providing the flexibility to respond to market conditions. As of December 31, 2024, we had 16,609 lots, or 58.9% of our total active lots, under option agreements as compared to 13,648 lots, or 53.1% of our total active lots, under option agreements as of December 31, 2023.
Previous wording
•Homebuilding gross margin for the quarter ended June 30, 2024 was 17.3%, down from 20.2% compared to the prior year quarter. Homebu ilding gross margin, excluding impairments, abandonments, and interest for the quarter ended June 30, 2024, was 20.3%, down from 23.4% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter wasprimarily due to increased share of speculative home closings which generally have lower margins than "to be built" homes, changes in product and community mix, and an increase in closing cost incentives. If market conditions deteriorate due to unfavorable mortgage rate movements, gross margin may be compressed in the future.
Current wording
•Homebuilding gross margin for the quarter ended December 31, 2024 was 15.2%, down from 19.9% compared to the prior year quarter. Homebu ilding gross margin, excluding impairments, abandonments, and interest for the quarter ended December 31, 2024, was 18.2%, down from 22.9% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter wasprimarily due to an increase in price concessions and closing cost incentives, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.
Previous wording
•SG&A for the quarter ended June 30, 2024 was 11.9% of total revenue, up from 11.5% 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 commissions expense and higher sales and marketing costs as we prepare for new community activations. We remain focused on prudently managing overhead costs.
Current wording
•SG&A for the quarter ended December 31, 2024 was 14.0% of total revenue, down from 14.3% in the prior year quarter. The improvement in SG&A as a percentage of total revenue compared to the prior year quarter was due to total revenue growth outpacing SG&A expense growth. 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 and nine months ended June 30, 2024 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 months ended December 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 20.3% and 23.4% for the three months ended June 30, 2024 and 2023, respectively, and 21.4% and 22.6% for the nine months ended June 30, 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 (non-GAAP measures) 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 18.2% and 22.9% for the three months ended December 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 (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.
Previous wording
(c) Calculated as tax expense for the period divided by income from continuing operations. Our income tax expenses are not always directly correlated to the amount of pre-tax income for the associated period due to a variety of factors, including, but not limited to, the impact of tax credits and permanent differences. Our tax credits are predominantly due to the energy efficiency of our homes and, historically, were valued at $2,000 per single family home. The Inflation Reduction Act increased these credits to $2,500 or $5,000 per single family home meeting Energy Star or Zero Energy Ready qualifications, respectively. As we work towards our goal of building 100% Zero Energy Ready homes, we expect our energy efficiency tax credits to shift increasingly towards $5,000 per single family home in the current and future years.
Current wording
(c) Calculated as tax expense for the period divided by income from continuing operations. Our income tax expenses are not always directly correlated to the amount of pre-tax income for the associated period due to a variety of factors, including, but not limited to, the impact of tax credits and permanent differences. Our tax credits are predominantly due to the energy efficiency of our homes and, historically, were valued at $2,000 per single family home. The Inflation Reduction Act increased these credits to $2,500 or $5,000 per single family home meeting Energy Star or Zero Energy Ready qualifications, respectively. As we work towards our goal of building 100% Zero Energy Ready homes, we expect our energy efficiency tax credits to continue to shift towards $5,000 per single family home.
Previous wording
Reconciliation of Adjusted EBITDA (a non-GAAP financial measure) to total company net income, the most directly comparable GAAP measure, is provided for each period discussed below. Management believes that Adjusted EBITDA assists investors in understanding and comparing core operating results and underlying business trends by eliminating many of the differences in companies' respective capitalization, tax position, level of impairments, and other non-recurring items. This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Current wording
Reconciliation of net income (GAAP measure) to Adjusted EBITDA (Non-GAAP measure) is provided for each period discussed below. Management believes that Adjusted EBITDA assists investors in understanding and comparing core operating results and underlying business trends by eliminating many of the differences in companies' respective capitalization, tax position, level of impairments, and other non-recurring items. This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Previous wording
Reconciliation of net debt to net capitalization ratio (a non-GAAP financial measure) to total debt to total capitalization ratio, the most directly comparable GAAP measure, is provided for each period below. Management believes that net debt to net capitalization ratio is useful in understanding the leverage employed in our operations and as an indicator of our ability to obtain financing. This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Current wording
Reconciliation of total debt to total capitalization ratio (GAAP measure) to net debt to net capitalization ratio (non-GAAP measure) is provided for each period below. Management believes that net debt to net capitalization ratio is useful in understanding the leverage employed in our operations and as an indicator of our ability to obtain financing. This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
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 June 30, 2024 increased 3.6% compared to June 30, 2023 due to a 3.2% increase in the ASP of homes in backlog and a 0.4% increase in backlog units. The increase in backlog ASP compared to prior year quarterwas primarily due to changes in product and community mix as well as price appreciation in a number of submarkets. The decrease in backlog units in the Southeast was primarily driven by a softening in sales pace and a decrease in average active community count.
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 December 31, 2024 decreased 12.5% compared to December 31, 2023 due to a 15.9% decrease in backlog units, partially offset by a 4.0% increase in the ASP of homes in backlog. The decrease in backlog units was primarily due to beginning the fiscal quarter with fewer backlog units and year-over-year growth in closings outpacing growth in net new orders for the quarter ended December 31, 2024. The increase in backlog ASP compared to prior year quarterwas primarily due to changes in product and community mix and price appreciation in certain communities.
Previous wording
West Segment: Homebuilding revenue increased by 11.9% for the three months ended June 30, 2024 compared to the prior year quarter due to a 14.8% increase in closings, partially offset by a 2.5% decrease in ASP. The increase in closings was primarily due to higher beginning backlog as well as improved construction cycle times compared to prior year quarter.
Current wording
West Segment: Homebuilding revenue increased by 24.5% for the three months ended December 31, 2024 compared to the prior year quarter due to a 28.0% increase in closings, partially offset by a 2.7% decrease in ASP. The increase in closings was primarily due to higher volume of spec homes that sold and closed within the current fiscal quarter and improved construction cycle times compared to prior year quarter.
Previous wording
West Segment: Homebuilding revenue increased by 1.6% for the nine months ended June 30, 2024 compared to the nine months ended June 30, 2023 due to a 4.2% increase in closings, partially offset by a 2.4% decrease in ASP. The increase in closings was primarily due to increased spec sales as well as improved construction cycle times compared to prior year period.
Current wording
East Segment: Homebuilding revenue increased by 51.3% for the three months ended December 31, 2024 compared to the prior year quarter due to an 47.8% increase in closings and a 2.4% increase in ASP. The increase in closings was primarily due to higher volume of spec homes that sold and closed within the current fiscal quarter and improved construction cycle times compared to prior year quarter.
Previous wording
East Segment: Homebuilding revenue decreased by 8.7% for the three months ended June 30, 2024 compared to the prior year quarter due to an 5.1% decrease in closings and a 3.8% decrease in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to prior year quarter.
Current wording
Southeast Segment: Homebuilding revenue decreased by 19.7% for the three months ended December 31, 2024 compared to the prior year quarter due to an 18.3% decrease in closings and a 1.8% decrease in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to prior year quarter.
Previous wording
Reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (each a non-GAAP financial measure) to their most directly comparable GAAP measures is provided for each period discussed below. Management believes that this information assists investors in comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective level of impairments and level of debt. These non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Current wording
Reconciliation of homebuilding gross profit and homebuilding gross margin (GAAP measures) to homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (non-GAAP measures) is provided for each period discussed below. Management believes that this information assists investors in comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective level of impairments and level of debt. These non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Previous wording
Our homebuilding gross profit decreased by $13.5 million to $102.0 million for the three months ended June 30, 2024, compared to $115.5 million in the prior year quarter. The decrease in homebuilding gross profit compared to the prior year quarter was primarily due to a decrease in gross margin of 290 basis points to 17.3%, partially offset by an increase in homebuilding revenue of $19.1 million. 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 $0.1 million, and interest amortized to homebuilding cost of sales, which decreased by $0.2 million compared to the prior year quarter (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 $13.9 million compared to the prior year quarter, while homebuilding gross margin decreased by 310 basis points to 20.3%. The decrease in gross margin for the three months ended June 30, 2024 compared to the prior year quarter was primarily due to increased share of speculative home closings which generally have lower margins than "to be built" homes, changes in product and community mix, and an increase in closing cost incentives.
Current wording
Our homebuilding gross profit decreased by $6.0 million to $70.0 million for the three months ended December 31, 2024, compared to $75.9 million in the prior year quarter. The decrease in homebuilding gross profit compared to the prior year quarter was primarily due to a decrease in gross margin of 470 basis points to 15.2%, partially offset by an increase in homebuilding revenue of $79.5 million. As shown in the tables above, the comparability of our gross profit was slightly impacted by interest amortized to homebuilding cost of sales, which increased by $2.7 million compared to the prior year quarter (refer to Note 5 of the notes to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $3.2 million compared to the prior year quarter, while homebuilding gross margin decreased by 470 basis points to 18.2%. The decrease in gross margin for the three months ended December 31, 2024 compared to the prior year quarter was primarily due to an increase in price concessions and closing cost incentives, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.
Previous wording
East Segment: Compared to the prior year period, homebuilding gross profit decreased by $14.5 million due to a decrease in homebuilding revenue as well as lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 17.8%, down from 20.3% in the prior year period, primarily driven by changes in product and community mix, and an increase in closing close incentives, partially offset by a decrease in price concessions.
Current wording
East Segment: Compared to the prior year quarter, homebuilding gross profit increased by $3.7 million due to an increase in homebuilding revenue, partially offset by lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 15.1%, down from 17.7% in the prior year quarter, primarily due to an increase in price concessions, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.
Previous wording
Southeast Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $4.2 million due to a lower gross margin and a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 21.4%, down from 23.5% in the prior year quarter, primarily due to mix of speculative homes and "to be built" homes closed each period, changes in product and community mix, and an increase in prices concession.
Current wording
Southeast Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $7.1 million due to a lower gross margin and a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, decreased to 16.1%, down from 22.4% in the prior year quarter, primarily due to an increase in price concessions, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.
Previous wording
For the three months ended June 30, 2024, land sales and other revenue increased by $4.0 million to $6.0 million, and land sales and other gross profit remained relatively flat at $1.3 million compared to the prior year quarter. For the nine months ended June 30, 2024, land sales and other revenue increased by $10.1 million to $14.8 million, and land sales and other gross profit increased by $1.0 million to $4.2 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 are 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.
Current wording
For the three months ended December 31, 2024, land sales and other revenue increased by $2.6 million to $8.5 million, and land sales and other gross profit increased by $0.3 million to $2.1 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 are 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 $19.4 million to $28.5 million for the three months ended June 30, 2024, compared to operating income of $47.9 million for the three months ended June 30, 2023. This decrease compared to the prior year quarter was primarily due to the previously discussed decrease in gross profit, higher sales and marketing costs, and higher commissions expense on higher homebuilding revenue. SG&A as a percentage of total revenue increased by 40 basis points compared to the prior year quarter, from 11.5% to 11.9%, primarily due to higher commissions expense and higher sales and marketing costs as we prepare for new community activations.
Current wording
Our operating income decreased by $18.1 million to $2.1 million for the three months ended December 31, 2024, compared to operating income of $20.3 million for the three months ended December 31, 2023. This decrease compared to the prior year quarter was primarily due to the previously discussed decrease in gross profit and gross margin. SG&A expense increased by 19.3% compared to prior year quarter in prop ortion to active community count growth. SG&A as a percentage of total revenue improved by 30 basis points compared to the prior year quarter, from 14.3% to 14.0%, due to total revenue growth outpacing SG&A expense growth.
Previous wording
Southeast Segment: The $6.3 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed as well as higher sales and marketing expenses, partially offset by lower commissions expense on lower homebuilding revenue and lower other G&A expenses in the segment.
Current wording
Southeast Segment: The $6.5 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 homebuilding revenue 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 June 30, 2024, corporate and unallocated net expenses decreased by $2.1 million from the prior year quarter primarily due to lower amortization of capitalized indirect costs to cost of sales.
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 December 31, 2024, corporate and unallocated net expenses increased by $11.0 million from the prior year quarter primarily due to higher G&A expenses as well as higher amortization of capitalized interest and capitalized indirect costs to cost of sales on higher closings and homebuilding revenue.
Previous wording
We recognized income tax expense from continuing operations of $2.5 million and$10.4 million for the three and nine months ended June 30, 2024, respectively, compared to $6.2 million and$15.5 million for the three and nine months ended June 30, 2023, respectively. Income tax expense for the nine months ended June 30, 2024 was primarily driven by income tax expense on earnings from continuing operations and permanent differences, partially offset by energy efficiency tax credits generated from expected closings during the current year, the discrete tax benefits related to the generation of additional energy efficiency tax credits from homes closed in prior periods, and stock-based compensation activity in the period. Income tax expense for the nine months ended June 30, 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.
Current wording
We recognized income tax expense from continuing operations of $36 thousand for the three months ended December 31, 2024, compared to $1.2 million for the three months ended December 31, 2023. Income tax expense for the three months ended December 31, 2024 was primarily driven by income tax expense on earnings from continuing operations and permanent differences, partially offset by energy efficiency tax credits generated from expected closings during the current fiscal year, and stock-based compensation activity in the period. Income tax expense for the three months ended December 31, 2023 was primarily driven income tax expense on earnings from continuing operations and permanent differences, partially offset by both energy efficiency tax credits generated from expected closings during fiscal 2023 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. 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
Our sources of liquidity include, but are not limited to, cash from operations, proceeds from Senior Notes, the Unsecured Facility and other bank borrowings, the issuance of equity and equity-linked securities, and other external sources of funds. Our short-term and long-term liquidity depends primarily upon our level of net income, working capital management (cash, accounts receivable, accounts payable and other liabilities), and available credit facilities.
Current wording
Our sources of liquidity include, but are not limited to, cash from operations, proceeds from Senior Notes, our Senior Unsecured Revolving Credit Facility and other bank borrowings, the issuance of equity and equity-linked securities, and other external sources of funds. Our short-term and long-term liquidity depends primarily upon our level of net income, working capital management (cash, accounts receivable, accounts payable and other liabilities), and available credit facilities.
Previous wording
Net cash used in operating activities was $323.0 million for the nine months ended June 30, 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 $412.7 million resulting from land acquisition, land development and house construction spending, and a net increase in non-inventory working capital balances of $15.7 million. This was partially offset by cash inflows from income before income taxes of $98.5 million, which included $6.9 million of non-cash charges.
Current wording
Net cash used in operating activities was $159.4 million for the three months ended December 31, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development spending. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $122.3 million resulting from land acquisition, land development and house construction spending to support continued growth, and a net increase in non-inventory working capital balances of $46.1 million. This was partially offset by cash inflows from income before income taxes of $3.2 million, which included $5.9 million of non-cash charges.
Previous wording
Net cash provided by operating activities was $95.8 million for nine months ended June 30, 2023. Net cash provided by operating activities during the period was primarily driven by cash inflows from income before income taxes of $118.3 million, which included $16.0 million of non-cash charges. This was partially offset by a net increase in non-inventory working capital balances of $37.3 million and an increase in inventory of $1.2 million resulting from land acquisition, land development and house construction spending.
Current wording
Net cash used in operating activities was $225.6 million for the three months ended December 31, 2023. 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 to support continued growth, 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.
Previous wording
Net cash used in investing activities was $23.9 million for the nine months ended June 30, 2024, primarily driven by capital expenditures for model homes and information systems infrastructure, and purchases of investment securities.
Current wording
Net cash used in investing activities was $5.7 million for the three months ended December 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 was $21.8 million for the nine months ended June 30, 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 activities was $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.
Previous wording
Net cash provided by financing activities was $69.0 million for the nine months ended June 30, 2024, primarily driven by inflows from the issuance of the 2031 Notes and borrowings from our Unsecured Facility, 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), repurchases of common stock, and tax payments for stock-based compensation awards vesting.
Current wording
Net cash provided by financing activities was $41.9 million for the three months ended December 31, 2024, primarily driven by net borrowings from our Unsecured Facility (see Note 6 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion), partially offset by tax payments for stock-based compensation awards vesting.
Previous wording
Net cash used in financing activities was $10.2 million for the nine months ended June 30, 2023, primarily driven by the repurchase of a portion of our 2025 Notes, debt issuance costs for the Unsecured Facility, and tax payments for stock-based compensation awards vesting.
Current 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, and tax payments for stock-based compensation awards vesting.
Previous wording
As of June 30, 2024, our liquidity position consisted of $73.2 million in cash and cash equivalents and $255.0 million of remaining capacity under the Unsecured Facility, compared to $276.1 million in cash and cash equivalents and $265.0 million of remaining capacity under the Unsecured Facility as of June 30, 2023. Meanwhile, we invested $201.1 million and $131.6 million in land acquisition and land development during quarters ended June 30, 2024 and June 30, 2023, respectively.
Current wording
As of December 31, 2024, our liquidity position consisted of $80.4 million in cash and cash equivalents and $255.0 million of remaining capacity under the Unsecured Facility, compared to $104.2 million in cash and cash equivalents and $300.0 million of remaining capacity under the Unsecured Facility as of December 31, 2023. Meanwhile, we invested $211.3 million and $198.7 million in land acquisition and land development during quarters ended December 31, 2024 and December 31, 2023, respectively.
Previous wording
We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings. Additionally, our Unsecured Facility provides working capital and letter of credit capacity of $300.0 million. As of June 30, 2024, we had$45.0 million in borrow ings and no letters of credit were outstanding under the Unsecured Facility, resulting in a remaining capacity of $255.0 million.
Current wording
We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings. Additionally, our Unsecured Facility provides working capital and letter of credit capacity of $300.0 million, which includes a letter of credit capacity of $100.0 million. As of December 31, 2024, we had$45.0 million in borrow ings and no letters of credit were outstanding under the Unsecured Facility, resulting in a remaining borrowing capacity of $255.0 million. Subsequently in January 2025, we increased our available borrowing capacity under the$300.0 million to $365.0 million. See Note 6 and Note 15 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion.
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 $34.9 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 $37.1 million of outstanding letters of credit under these facilities.
Previous 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.
Current wording
Our credit ratings are periodically reviewed by rating agencies. In June 2024, S&P reaffirmed the Company’s corporate credit rating of B+ and reaffirmed the Company's outlook of stable. In October 2024, Moody's reaffirmed the Company's issuer corporate family rating of B1 and reaffirmed the Company's outlook of stable. In addition, our Senior Notes have a rating of B+ and B1 per S&P and Moody's, respectively. 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. The repurchase program has no expiration date. The Company repurchased 455 thousand shares of its common stock for$12.9 million at an average price per share of $28.41 during the three and nine months ended June 30, 2024 through open market transactions. No share repurchases were made during fiscal year 2023. All shares have been retired upon repurchase. The aggregate reduction to stockholders' equity related to share repurchases during the three and nine months ended June 30, 2024 was$12.9 million. As of June 30, 2024, the remaining availability of the share repurchase program was$28.9 million.
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. The repurchase program has no expiration date. No share repurchases were made during the three months ended December 31, 2024 and 2023. As of December 31, 2024, the remaining availability of the share repurchase program was$28.9 million. 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 and nine months ended June 30, 2024 or 2023.
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 months ended December 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 June 30, 2024, we controlled 28,365 lots, which includes 272 lots of land held for future development and 271 lots of land held for sale. Of the 27,822 active lots, we controlled 15,434 of these lots, or 55.5%, through option agreements, as compared to 11,510 active lots controlled, or 52.2% of our total active lots, through option agreements as of June 30, 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.
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 December 31, 2024, we controlled 28,874 lots, which includes 272 lots of land held for future development and 424 lots of land held for sale. Of the 28,178 active lots, we controlled 16,609 of these lots, or 58.9%, through option agreements, as compared to 13,648 active lots controlled, or 53.1% of our total active lots, through option agreements as of December 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 $206.4 million as of June 30, 2024. The total remaining purchase price, net of cash deposits, committed under all options was $1.20 billion as of June 30, 2024. 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 $297.8 million as of December 31, 2024. The total remaining purchase price, net of cash deposits, committed under all options was $1.60 billion as of December 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.
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Previous report — wording carried elsewhere
For further discussion of our impairment policies, refer to Note 4 of the notes to the condensed consolidated financial statements in this Form 10-Q.