LGI Homes Inc

Previous wording

At March 31, 2024, we had 120 active communities, including 16 Terrata Homes communities. At March 31, 2023, we had 99 active communities, including 10 Terrata Homes communities.

Current wording

At June 30, 2024, we had 128 active communities, including 17 Terrata Homes communities. At June 30, 2023, we had 102 active communities, including 11 Terrata Homes communities.

Previous wording

We believe the long-term outlook for new homes remains strong, driven by solid fundamentals, including a historically low inventory of new and existing homes for sale, an aging housing stock, rising rents, strong household formations and low unemployment. However, the housing market is currently in a state of transition and we expect interest rate driven affordability constraints to continue to impact demand for the foreseeable future.

Current wording

While the housing market is currently in a state of transition driven by interest rate-related affordability constraints, demand remains healthy where those affordability challenges can be bridged through a combination of product offerings and rate buydown assistance. The long-term outlook for new homes remains strong, driven by solid fundamentals, including a historically low inventory of new and existing homes for sale, an aging housing stock, rising rents, strong household formations and continued strength in the employment market.

Previous wording

•Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased to 25.3% from 22.1%.

Current wording

•Adjusted gross margin (non-GAAP) as a percentage of home sales revenues increased to 27.0% from 23.8%.

Previous wording

We owned and controlled 70,145 lots at March 31, 2024 as compared to 71,081 lots at December 31, 2023.

Current wording

We owned and controlled 69,904 lots at June 30, 2024 as compared to 70,145 lots at March 31, 2024 and 71,081 lots at December 31, 2023.

Previous wording

The following table sets forth our results of operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table sets forth our results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

Homes Sales. Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate for the three months ended March 31, 2024 and 2023, and our community count as of March 31, 2024 and 2023, by reportable segment were as follows (revenues in thousands):

Current wording

Homes Sales. Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the three months ended June 30, 2024 and 2023, and our community count by reportable segment as of June 30, 2024 and 2023, were as follows (revenues in thousands):

Previous wording

Home sales revenues for the three months ended March 31, 2024 were $390.9 million, a decrease of $96.5 million, or 19.8%, from $487.4 million for the three months ended March 31, 2023. The decrease in home sales revenues was primarily due to a 20.7% decrease in homes closed, partially offset by an increase in the average sales price per home closed during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The overall decrease in home closings was a result of an overall lower absorption rate, partially offset by a higher average community count, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease in home closings is due to continued pressure on affordability due to inflation and mortgage rates which continue to be elevated. The overall increase in average community count relates to timing associated with the close out of some higher performing communities, new openings that are still in the early stages, or transition between certain active communities during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The average sales price per home closed during the three months ended March 31, 2024 was $360,897, an increase of $4,120, or 1.2%, from the average sales price per home closed of $356,777 for the three months ended March 31, 2023. The increase in the average sales price per home closed was primarily due to geographic mix and our ability to increase prices in those markets.

Current wording

Home sales revenues for the three months ended June 30, 2024 were $602.5 million, a decrease of $42.8 million, or 6.6%, from $645.3 million for the three months ended June 30, 2023. The decrease in home sales revenues was primarily due to a 10.7% decrease in homes closed, partially offset by an increase in the average sales price per home closed during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The overall decrease in home closings was a result of an overall lower absorption rate, partially offset by a higher average community count, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The decrease in home closings is due to continued pressure on affordability due to inflation and mortgage rates which continue to be elevated. The overall increase in average community count relates to timing associated with the close out of some higher performing communities, new openings that are still in the early stages, or transition between certain active communities during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The average sales price per home closed during the three months ended June 30, 2024 was $364,047, an increase of $16,005, or 4.6%, from the average sales price per home closed of $348,042 for the three months ended June 30, 2023. The increase in the average sales price per home closed was primarily due to geographic mix and a favorable pricing environment.

Previous wording

•Home sales revenues in our Central reportable segment decreased by $46.6 million, or 31.0%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a 29.6% decrease in the number of homes closed and a slight decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Current wording

•Home sales revenues in our Central reportable segment decreased by $57.2 million, or 24.8%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, due to a 24.6% decrease in the number of homes closed and a slight decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Previous wording

•Home sales revenues in our Northwest reportable segment decreased by $38.7 million, or 51.8%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a 61.0% decrease in the number of homes closed, offset by a 23.6% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Current wording

•Home sales revenues in our Northwest reportable segment decreased by $2.3 million, or 3.2%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to a 7.7% decrease in the number of homes closed, partially offset by a 4.8% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Previous wording

•Home sales revenues in our West reportable segment decreased by $5.8 million, or 7.4%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a 14.4% decrease in the number of homes closed, partially offset by an 8.2% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Current wording

•Home sales revenues in our West reportable segment increased by $45.4 million, or 54.9%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to a 43.9% increase in the number of homes closed and a 7.6% increase in the average sales price per home closed. The increase in home closings was the result of an increase in the average community count, partially offset by a lower absorption rate.

Previous wording

Cost of Sales and Gross Margin (home sales revenues less cost of sales). Cost of sales for the three months ended March 31, 2024 was $299.5 million, a decrease of $89.1 million, or 22.9%, from $388.5 million for the three months ended March 31, 2023. This decrease was primarily due to a 20.7% decrease in homes closed. Gross margin for the three months ended March 31, 2024 was $91.4 million, a decrease of $7.4 million, or 7.5%, from $98.8 million for the three months ended March 31, 2023. Gross margin as a percentage of home sales revenues was 23.4% for the three months ended March 31, 2024 and 20.3% for the three months ended March 31, 2023. The increase in gross margin as a percentage of home sales revenues during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily due to a combination of lower input costs and higher sales prices during the three months ended March 31, 2024.

Current wording

Cost of Sales and Gross Margin (home sales revenues less cost of sales). Cost of sales decreased for the three months ended June 30, 2024 to $451.6 million, a decrease of $51.7 million, or 10.3%, from $503.3 million for the three months ended June 30, 2023, primarily due to a 10.7% decrease in homes closed. Gross margin for the three months ended June 30, 2024 was $150.9 million, an increase of $8.9 million, or 6.3%, from $141.9 million for the three months ended June 30, 2023. Gross margin as a percentage of home sales revenues was 25.0% for the three months ended June 30, 2024 and 22.0% for the three months ended June 30, 2023. This increase in gross margin as a percentage of home sales revenues was primarily due to a combination of lower input costs and higher sales prices during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

General and Administrative. General and administrative expenses for the three months ended March 31, 2024 were $31.5 million, an increase of $1.6 million, or 5.3%, from $30.0 million for the three months ended March 31, 2023. General and administrative expenses as a percentage of home sales revenues were 8.1% and 6.1% for the three months ended March 31, 2024 and 2023, respectively. The increase in general and administrative expenses as a percentage of home sales revenues is primarily due to lower home sales revenues during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

General and Administrative. General and administrative expenses for the three months ended June 30, 2024 were $30.5 million, an increase of $2.9 million, or 10.4%, from $27.6 million for the three months ended June 30, 2023. The increase in general and administrative expenses was primarily a result of community count growth during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. General and administrative expenses as a percentage of home sales revenues were 5.1% and 4.3% for the three months ended June 30, 2024 and 2023, respectively. The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

Other Income. Other income, net of other expenses was $4.4 million for the three months ended March 31, 2024, a decrease of $1.9 million from $6.3 million for the three months ended March 31, 2023. The decrease in other income, net of other expenses, primarily reflects gains realized from the sale of land and lots not directly associated with our core homebuilding operations for the three months ended March 31, 2023.

Current wording

Other Income. Other income, net of other expenses was $9.4 million for the three months ended June 30, 2024, an increase of $3.0 million from $6.3 million for the three months ended June 30, 2023. The increase in other income, net of other expenses, primarily reflects gains realized from the sale of residential lots and commercial acreage not directly associated with our core homebuilding operations.

Previous wording

Included within our home sales revenues for the three months ended March 31, 2024 was $28.6 million in wholesale revenues resulting from 102 home closings, representing 9.4% of the 1,083 total homes closed during the three months ended March 31, 2024. Included within our home sales revenues for the three months ended March 31, 2023 was $31.2 million in wholesale revenues resulting from 103 home closings, representing 7.5% of the 1,366 total homes closed during the three months ended March 31, 2023. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to fewer retail home closings during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Included within our home sales revenues for the six months ended June 30, 2024 was $64.3 million in wholesale revenues resulting from 219 home closings, representing 8.0% of the 2,738 total homes closed during the six months ended June 30, 2024. Included within our home sales revenues for the six months ended June 30, 2023 was $73.0 million in wholesale revenues resulting from 242 home closings, representing 7.5% of the 3,220 total homes closed during the six months ended June 30, 2023. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to fewer retail home closings during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Previous wording

•Home sales revenues in our Southeast reportable segment increased by $12.1 million, or 11.6%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a 12.3% increase in the number of homes closed, partially offset by a 0.7% decrease in the average sales price per home closed. The increase in home closings was the result of an increase in the average community count.

Current wording

•Home sales revenues in our Southeast reportable segment increased by $3.8 million, or 1.5%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to a 1.4% increase in the average sales price per home closed and a slight increase in the number of homes closed. The increase in home closings was the result of an increase in the average community count.

Previous wording

•Home sales revenues in our Florida reportable segment decreased by $17.4 million, or 22.0%, during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to a 26.6% decrease in the number of homes closed, partially offset by a 6.3% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Current wording

•Home sales revenues in our Florida reportable segment decreased by $37.9 million, or 19.3%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to a 22.9% decrease in the number of homes closed, partially offset by a 4.7% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.

Previous wording

Selling Expenses. Selling expenses for the three months ended March 31, 2024 were $41.1 million, a decrease of $1.7 million, or 3.9%, from $42.8 million for the three months ended March 31, 2023. The decrease in selling expenses was primarily due to a decrease in sales commissions for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Sales commissions decreased to $17.4 million during the three months ended March 31, 2024 from $20.3 million for the three months ended March 31, 2023, primarily due to fewer homes closed. Selling expenses as a percentage of home sales revenues were 10.5% and 8.8% for the three months ended March 31, 2024 and 2023, respectively. The increase in selling expenses as a percentage of home sales revenues was driven primarily by increased advertising expense and other expenses incurred in addition to lower homes sales revenues during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Selling Expenses. Selling expenses for the six months ended June 30, 2024 were $94.0 million, an increase of $2.0 million, or 2.1%, from $92.0 million for the six months ended June 30, 2023. The increase in selling expenses was primarily due to an increase in advertising expense and personnel costs, partially offset by a decrease in sales commissions for the six months ended June 30, 2024 as compared to the three months ended June 30, 2023. Sales commissions decreased to $44.6 million during the six months ended June 30, 2024 from $49.2 million for the six months ended June 30, 2023, primarily due to fewer homes closed. Selling expenses as a percentage of home sales revenues were 9.5% and 8.1% for the six months ended June 30, 2024 and 2023, respectively. The increase in selling expenses as a percentage of home sales revenues was driven primarily by increased advertising expense and other expenses incurred in addition to lower home sales revenues during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Previous wording

Operating Income and Net Income before Income Taxes. Operating income for the three months ended March 31, 2024 was $18.7 million, a decrease of $7.3 million, or 28.1%, from $26.1 million for the three months ended March 31, 2023. Net income before income taxes for the three months ended March 31, 2024 was $23.1 million, a decrease of $9.3 million, or 28.6%, from $32.3 million for the three months ended March 31, 2023. The following reportable segments contributed to net income before income taxes during the three months ended March 31, 2024 as follows: Central - $3.5 million, or 15.0%; Southeast - $15.7 million, or 68.2%; Northwest - $(0.5) million, or (2.0)%; West - $3.0 million, or 12.8%; and Florida - $2.1 million, or 9.2%. The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, higher advertising and other selling expenses incurred partially offset by a higher gross margin and a higher average community count during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Operating Income and Net Income before Income Taxes. Operating income for the six months ended June 30, 2024 was $86.3 million, a decrease of $4.9 million, or 5.4%, from $91.1 million for the six months ended June 30, 2023. Net income before income taxes for the six months ended June 30, 2024 was $100.0 million, a decrease of $3.8 million, or 3.6%, from $103.8 million for the six months ended June 30, 2023. Our reportable segments contributed to net income before income taxes during the six months ended June 30, 2024 as follows: Central - $25.2 million, or 25.2%; Southeast - $40.0 million, or 40.0%; Northwest - $7.3 million, or 7.3%; West - $19.9 million, or 19.9%; and Florida - $9.9 million, or 9.9%. The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, higher advertising and other selling expenses incurred partially offset by a higher gross margin and a higher average community count during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Previous wording

Income Taxes. Income tax provision for the three months ended March 31, 2024 was $6.0 million, an increase of $0.7 million, or 12.2%, from income tax provision of $5.4 million for the three months ended March 31, 2023. The increase in our effective tax rate to 26.2% for the three months ended March 31, 2024 from 16.7% for the three months ended March 31, 2023 was primarily due to an increase in the rate for the compensation cost in excess of deductions for share-based payments, state income taxes, net of the federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended, partially offset by the retroactive extension of the federal energy efficient homes tax credits for the three months ended March 31, 2023.

Current wording

Income Taxes. Income tax provision for the six months ended June 30, 2024 was $24.4 million, an increase of $0.7 million, or 2.9%, from income tax provision of $23.7 million for the six months ended June 30, 2023. The increase in our effective tax rate to 24.4% for the six months ended June 30, 2024 from 22.8% for the six months ended June 30, 2023 was primarily a result of an increase in the compensation cost in excess of deductions for share-based payments, partially offset by the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

Previous wording

Net Income. Net income for the three months ended March 31, 2024 was $17.1 million, a decrease of $9.9 million, or 36.8%, from $27.0 million for the three months ended March 31, 2023. The decrease in net income was primarily attributed to overall lower homes closed, lower home sales revenues and lower operating leverage during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Net Income. Net income for the six months ended June 30, 2024 was $75.6 million, a decrease of $4.5 million, or 5.6%, from $80.1 million for the six months ended June 30, 2023. The decrease in net income was primarily attributed to overall lower homes closed and lower home sales revenues, partially offset by a higher gross margin during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Previous wording

Our net orders decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to lower demand resulting from higher mortgage rates.

Current wording

Our net orders decreased for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to lower demand resulting from higher mortgage rates.

Previous wording

The number of homes in our backlog at March 31, 2024 decreased 14.1% compared to March 31, 2023. The decrease in ending backlog is primarily a result of lower demand resulting from higher mortgage rates during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

The number of homes in our backlog at June 30, 2024 decreased 15.0% compared to June 30, 2023. The decrease in ending backlog is primarily a result of lower demand resulting from higher mortgage rates during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

(4)As of March 31, 2024, we had 178 units related to bulk sales agreements associated with our wholesale business.

Current wording

(4)As of June 30, 2024, we had 181 units related to bulk sales agreements associated with our wholesale business.

Previous wording

(5)As of March 31, 2023, we had 130 units related to bulk sales agreements associated with our wholesale business.

Current wording

(5)As of June 30, 2023, we had 131 units related to bulk sales agreements associated with our wholesale business.

Previous wording

We had 120 and 117 active communities as of March 31, 2024 and December 31, 2023, respectively. Generally, it takes us two to three years to turn raw or undeveloped land into an active community. To mitigate our exposure to real estate inventory risks, we utilize, on a limited and strategic basis, land banking financing arrangements.

Current wording

We had 128 and 117 active communities as of June 30, 2024 and December 31, 2023, respectively. Generally, it takes us two to three years to turn raw or undeveloped land into an active community. To mitigate our exposure to real estate inventory risks, we utilize, on a limited and strategic basis, land banking financing arrangements.

Previous wording

Our lot inventory decreased to 70,145 owned or controlled lots as of March 31, 2024 from 71,081 owned or controlled lots as of December 31, 2023, primarily related to our discipline in the evaluation of and selective approval of new land deals.

Current wording

Our lot inventory decreased to 69,904 owned or controlled lots as of June 30, 2024 from 71,081 owned or controlled lots as of December 31, 2023, primarily related to our discipline in the evaluation of and selective approval of new land deals.

Previous wording

The table below shows (i) home closings by reportable segment for the three months ended March 31, 2024 and (ii) our owned or controlled lots by reportable segment as of March 31, 2024.

Current wording

The table below shows (i) home closings by reportable segment for the six months ended June 30, 2024 and (ii) our owned or controlled lots by reportable segment as of June 30, 2024.

Previous wording

(1)Of the 54,763 owned lots as of March 31, 2024, 39,601 were raw/under development lots and 15,162 were finished lots.

Current wording

(1)Of the 54,362 owned lots as of June 30, 2024, 39,284 were raw/under development lots and 15,078 were finished lots.

Previous wording

When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. As of March 31, 2024, we had a total of 2,154 completed homes, including information centers, and 2,000 homes in progress.

Current wording

When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. As of June 30, 2024, we had a total of 2,032 completed homes, including information centers, and 2,639 homes in progress.

Previous wording

As of March 31, 2024, we had $49.0 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.

Current wording

As of June 30, 2024, we had $51.1 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.

Previous wording

The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of March 31, 2024, the borrowing base under the Credit Agreement was $1.9 billion, and borrowings under the Credit Agreement and the outstanding principal amount of the 2029 Senior Notes and the 2028 Senior Notes totaled approximately $1.4 billion, $22.5 million of letters of credit were outstanding and $442.5 million was available to borrow under the Credit Agreement.

Current wording

The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of June 30, 2024, the borrowing base under the Credit Agreement was $1.9 billion, and borrowings under the Credit Agreement and the outstanding principal amount of the 2029 Senior Notes and the 2028 Senior Notes totaled approximately $1.5 billion, $29.5 million of letters of credit were outstanding and $354.8 million was available to borrow under the Credit Agreement.

Previous wording

On November 21, 2023, we issued $400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2024. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee.

Current wording

On November 21, 2023, we issued $400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee.

Previous wording

Under these letters of credit, surety bonds and financial guarantees, we are committed to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $351.7 million as of March 31, 2024. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed. We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of March 31, 2024 will be drawn upon.

Current wording

Under these letters of credit, surety bonds and financial guarantees, we are committed to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $371.2 million as of June 30, 2024. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed. We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of June 30, 2024 will be drawn upon.

Previous wording

In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three months ended March 31, 2024, we repurchased 89,227 shares of our common stock for $10.0 million to be held as treasury stock. During the three months ended March 31, 2023, we did not repurchase any shares of our common stock. A total of 3,028,699 shares of our common stock has been repurchased since our stock repurchase program commenced. As of March 31, 2024, we may purchase up to $201.5 million of shares of our common stock under our stock repurchase program. The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements. Our stock repurchase program may be modified, discontinued or suspended at any time.

Current wording

In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three and six months ended June 30, 2024, we repurchased 83,763 shares of our common stock for $8.0 million and 172,990 shares of our common stock for $18.0 million, respectively, to be held as treasury stock. During the six months ended June 30, 2023, we did not repurchase any shares of our common stock. A total of 3,112,462 shares of our common stock has been repurchased since our stock repurchase program commenced. As of June 30, 2024, we may purchase up to $193.5 million of shares of our common stock under our stock repurchase program. The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements. Our stock repurchase program may be modified, discontinued or suspended at any time.

Previous wording

Net cash used in operating activities was $99.5 million during the three 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. Net cash used in operating activities during the three months ended March 31, 2024 was primarily driven by cash outflow from the $139.6 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity, and the $16.6 million decrease in the net change in accrued expenses and other liabilities, partially offset by net income of $17.1 million as well as the $14.2 million increase in accounts receivable and the $14.5 million increase in the net change in accounts payable.

Current wording

Net cash used in operating activities was $183.0 million during the six 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. Net cash used in operating activities during the six months ended June 30, 2024 was primarily driven by cash outflow from the $287.2 million decrease in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity, and the $9.1 million decrease in the net change in accrued expenses and other liabilities, partially offset by net income of $75.6 million and the $35.1 million increase in the net change in accounts payable.

Previous wording

Net cash provided by operating activities was $77.6 million during the three months ended March 31, 2023. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash provided by operating activities during the three months ended March 31, 2023 was primarily driven by cash inflow from the $15.9 million increase in the net change in real estate inventory, which was primarily related to the number of home closings outpacing the homes under construction and land acquisitions and development level of activity, net income of $27.0 million, as well as the $22.3 million increase in other assets and $14.7 million increase in the net change in accounts payable.

Current wording

Net cash provided by operating activities was $92.8 million during the six months ended June 30, 2023. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash provided by operating activities during the six months ended June 30, 2023 was primarily driven by cash inflow from net income of $80.1 million, and the $34.1 million and $22.9 million increase in the net change in accounts payable and other assets, respectively.

Previous wording

Net cash provided by investing activities was $2.0 million during the three months ended March 31, 2024, primarily due to proceeds from the sale of assets offset by the purchase of property and equipment.

Current wording

Net cash used in investing activities was $2.9 million during the six months ended June 30, 2024, primarily due to the purchase of property and equipment and additional investment in unconsolidated entities.

Previous wording

Net cash used in investing activities was $4.9 million during the three months ended March 31, 2023, primarily due to additional investment in unconsolidated entities.

Current wording

Net cash used in investing activities was $6.8 million during the six months ended June 30, 2023, primarily due to additional investment in unconsolidated entities.

Previous wording

Net cash provided by financing activities was $97.5 million during the three months ended March 31, 2024, primarily driven by $172.4 million of borrowings under our Credit Agreement, offset by $39.0 million of repayments on our Credit Agreement and payments of $27.3 million related to a financing arrangement with a third-party land banker. In addition, during the three months ended March 31, 2024, we repurchased $10.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Current wording

Net cash provided by financing activities was $188.0 million during the six months ended June 30, 2024, primarily driven by $349.1 million of borrowings under our Credit Agreement, offset by $99.0 million of repayments on our Credit Agreement and payments of $46.7 million related to a financing arrangement with a third-party land banker. In addition, during the six months ended June 30, 2024, we repurchased $18.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.

Previous wording

Net cash used in financing activities was $61.8 million during the three months ended March 31, 2023, primarily driven by $105.0 million of repayments on our credit agreement then in effect and the $17.9 million of payments related to a financing arrangement with a third-party land banker, offset by proceeds of $32.9 million under our credit agreement then in effect and proceeds of $26.9 million related to a financing arrangement with a third-party land banker.

Current wording

Net cash used in financing activities was $74.7 million during the six months ended June 30, 2023, primarily driven by net payments of $60.2 million on our credit agreement then in effect and net payments of $11.8 million related to a financing arrangement with a third-party land banker.