Smith Douglas Homes Corp.

Previous wording

In the first quarter of 2026, we continued to see affordability challenges related to elevated mortgage interest rates impact our potential homebuyers. In response to these challenges, we have offered various financing incentives, such as closing cost credits and mortgage rate buydowns. As a result, we achieved a 28% increase in net new home orders and a 10% increase in the number of homes in backlog over the same period of the prior year. We aim to construct most of our homes on a pre-sold basis, where our homebuyers choose their homes based on a select number of value-engineered floor plans and are offered flexibility on the selection of home options. Our SMART Builder enterprise resource planning system and efficient construction process, which we call Rteam, allows us to provide this optionality for homebuyers based on just-in-time modifications. As a result of our differentiated value proposition and efficient construction cycle times, we typically achieve a high level of homebuyer satisfaction and experience low cancellation rates, which were 9% and 8% for the three months ended March 31, 2026 and 2025, respectively.

Current wording

We aim to construct most of our homes on a pre-sold basis, where our homebuyers choose their homes based on a select number of value-engineered floor plans and are offered flexibility on the selection of home options. Our SMART Builder enterprise resource planning system and efficient construction process, which we call Rteam, allows us to provide this optionality for homebuyers based on just-in-time modifications. As a result of our differentiated value proposition and efficient construction cycle times, we typically achieve a high level of homebuyer satisfaction and experience low cancellation rates, which were 13% and 10% for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

At the core of our land-light operating strategy lies the principle and discipline of primarily acquiring finished lots from a diverse pool of third-party land developers or land bankers through the effective utilization of lot-option contracts. Our lot acquisition strategy reduces our upfront capital requirements and generally seeks to provide for “just-in-time” lot delivery, better aligning our pace of home orders and home starts. While using land bankers and third-party developers comes at an additional cost, we believe our lot acquisition strategy reduces our operational and financial risk relative to other homebuilders that own a higher percentage of their land supply. As of March 31, 2026, we had 750 owned unstarted lots in real estate inventory on our balance sheet which represented only 3.2% of our total controlled lot supply.

Current wording

At the core of our land-light operating strategy lies the principle and discipline of primarily acquiring finished lots from a diverse pool of third-party land developers or land bankers through the effective utilization of lot-option contracts. Our lot acquisition strategy reduces our upfront capital requirements and generally seeks to provide for “just-in-time” lot delivery, better aligning our pace of home orders and home starts. While using land bankers and third-party developers comes at an additional cost, we believe our lot acquisition strategy reduces our operational and financial risk relative to other homebuilders that own a higher percentage of their land supply. As of June 30, 2026, we had 664 owned unstarted lots in real estate inventory on our balance sheet, which represented only 2.8% of our total controlled lot supply.

Previous wording

Comparison of three months ended March 31, 2026 and 2025

Current wording

Comparison of three and six months ended June 30, 2026 and 2025

Previous wording

Home closing gross profit for the three months ended March 31, 2026 was$40.5 million, a decrease of$13.1 million, or 24%, from$53.5 million for the three months ended March 31, 2025. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 19.6% in the three months ended March 31, 2026 compared to 23.8% in the same period in 2025.

Current wording

Home closing gross profit for the three months ended June 30, 2026 was$47.9 million, a decrease of$4.0 million, or 8%, from$51.9 million for the three months ended June 30, 2025. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 17.6% in the three months ended June 30, 2026 compared to 23.2% in the same period in 2025. Home closing gross profit for thesix months ended June 30, 2026 was$88.4 million, adecrease of$17.1 million, or 16%, from$105.5 million for thesix months ended June 30, 2025. Home closing gross margin, expressed as a percentage and calculated as home closing gross profit divided by home closing revenue, was 18.4% in thesix months ended June 30, 2026 compared to 23.5% in the same period in 2025.

Previous wording

The decrease in home closing gross margin for the three months ended March 31, 2026 compared to the same period of the prior year was primarily driven by an increase of 4% in the average cost of home closings while the ASP of homes closed decreased 1%.

Current wording

The decrease in home closing gross margin for each of the three and six months ended June 30, 2026 compared to the same periods of the prior year was for each period primarily driven by a 4% increase in the average cost of home closings while the ASP of homes closed decreased by 3% and 2%, respectively.

Previous wording

The increase for the three months ended March 31, 2026 compared to the same periods of the prior year was primarily due to an increase in sales commissions and advertising costs associated with our increase in active community count, an increase in division overhead related primarily to our recently formed divisions, Dallas-Fort Worth, and Alabama Gulf Coast, and increased compensation expense on higher employee headcount.

Current wording

Theincrease for thethree and six months ended June 30, 2026 compared to the same periods of the prior year was for each period primarily dueto an increase in sales commissions, advertising costs, and division overhead associated with our increase in homes closed and related home closing revenue, an increase in division overhead primarily due to our recently formed divisions, Dallas-Fort Worth and Alabama Gulf Coast, and increased compensation expenses attributable to higher employee headcount.

Previous wording

Equity in income from unconsolidated entities consists of our portion of income from our interest in the title company in which we hold a 49% interest and which operates in certain of our markets to provide title insurance to our homebuyers and our portion of income from our interest in thecompany engaged in providing mortgage broker services to our homebuyers. For the three months ended March 31, 2026, equity in income from unconsolidated entities increased$0.3 million from the three months ended March 31, 2025, due to an increase inincome from the mortgage brokerage company, which ramped up operations in 2025.

Current wording

Equity in income from unconsolidated entities consists primarily of our portion of income from our interest in the title company in which we hold a 49% interest and which operates in certain of our markets to provide title insurance to our homebuyers and our portion of income from our interest in thecompany engaged in providing mortgage broker services to our homebuyers. For the three and six months ended June 30, 2026, equity in income from unconsolidated entities increased $0.2 million and $0.5 million from the three and six months ended June 30, 2025, respectively, in each case primarily due to an increase in income from the mortgage brokerage company, which ramped up operations in 2025.

Previous wording

Interest expense is comprised of interest incurred, but not capitalized on our Amended Credit Facility, other borrowings, and amortization of debt issuance costs. Our interest expense increased $0.2 million to $0.8 million for the three months ended March 31, 2026 from$0.7 million for thethree months ended March 31, 2025, which was primarily driven by an increase in interest incurred on our Amended Credit Facility due to a higher average outstanding balance.

Current wording

Interest expense is comprised of interest incurred, but not capitalized on our Amended Credit Facility, other borrowings, and amortization of debt issuance costs. For the three months ended June 30, 2026, interest expense decreased $0.1 million from the three months ended June 30, 2025, primarily due to higher interest eligible for capitalization. For the six months ended June 30, 2026, interest expense increased $0.1 million from the six months ended June 30, 2025, primarily due to higher outstanding borrowings on our Amended Credit Facility.

Previous wording

Other (income) expense, net primarily consists of interest income, credit card rebates, insurance settlements, and other miscellaneous income and expenses. For the three months ended March 31, 2026, other (income) expense, net decreased by$0.6 million from$0.5 million of net expense to $(0.1) million of net income, which was primarily driven by a $0.7 million lot option contract abandonment charge duringthe three months ended March 31, 2025, which did not recur in the current year.

Current wording

Other expense (income), net primarily consists of interest income, credit card rebates, insurance settlements, and other miscellaneous income and expenses. For the three and six months ended June 30, 2026, other expense (income), net increased by $4.4 million and $3.8 million, respectively, from the three and six months ended June 30, 2025, primarily due to lot option contract abandonment charges of $4.5 million during the three and six months ended June 30, 2026 compared to none and $0.7 million during the three and six months ended June 30, 2025.

Previous wording

Smith Douglas Homes Corp. is subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes, since the taxable income or loss is passed through to its members. Provision for income taxes was$0.3 million and $0.9 million for thethree months ended March 31, 2026 and 2025, respectively, which reflects an effective tax rate of 5.9% and 4.4%, respectively. The increase in the effective tax rate is primarily related to an increase in state income taxes.

Current wording

Smith Douglas Homes Corp. is subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of Smith Douglas Holdings LLC assessed at the prevailing corporate tax rates. Smith Douglas Holdings LLC operates as a limited liability company and is treated as a partnership for income tax purposes. Accordingly, it incurs no significant liability for federal or state income taxes, since the taxable income or loss is passed through to its members. Provision for income taxes was$0.1 million and $0.7 million, respectively, for thethree months ended June 30, 2026 and 2025, which reflects an effective tax rate of 5.4% and 4.3%, respectively. Provision for income taxes was $0.4 million and $1.6 million, respectively, for the six months ended June 30, 2026 and 2025, which reflects an effective tax rate of 5.7% and 4.4%, respectively. The increase in the effective tax rate is primarily related to an increase in state income taxes.

Previous wording

Our adjusted home closing gross profit and adjusted home closing gross margin decreased from the three months ended March 31, 2025 to the same period in 2026. Thedecrease in adjusted home closing gross profit primarily results from adecrease in home closings of 7%. Thedecrease in adjusted home closing gross margin was driven by anincrease in the average cost of home closings of 4%.

Current wording

Our adjusted home closing gross profit and adjusted home closing gross margin decreased from both the three and six months ended June 30, 2025 to the same periods in 2026. The decreases in adjusted home closing gross profit and adjusted home closing gross margin were primarily due to increases in the average cost of home closings of 4% in both periods.

Previous wording

(1)For the three months ended March 31, 2026 and 2025, our tax expenses assume a 26.6% and 24.9% federal and state blended tax rate, respectively, (assuming 100% public ownership to adjust for the impact of taxes on earnings attributable to Smith Douglas Holdings LLC as if Smith Douglas Holdings LLC was a subchapter C corporation in the periods presented).

Current wording

(1)For the three and six months ended June 30, 2026 and 2025, our tax expenses assume a 26.9% and 24.9% federal and state blended tax rate, respectively, (assuming 100% public ownership to adjust for the impact of taxes on earnings attributable to Smith Douglas Holdings LLC as if Smith Douglas Holdings LLC was a subchapter C corporation in the periods presented).

Previous wording

EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are not measures of net income or net income margin as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, and (v) depreciation. We define EBITDA margin as EBITDA as a percentage of home closing revenue. We define adjusted EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, (v) depreciation, (vi) share-based payment expense, (vii) adjustments resulting from the application of purchase accounting included in cost of sales, (viii) adjustments resulting from the application of purchase accounting included inother (income) expense, net, and (ix) real estate inventory impairment and lot option contract abandonment charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of home closing revenue.

Current wording

EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are not measures of net income or net income margin as determined by GAAP. EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies. We define EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, and (v) depreciation. We define EBITDA margin as EBITDA as a percentage of home closing revenue. We define adjusted EBITDA as net income before (i) interest income, (ii) capitalized interest charged to cost of home closings, (iii) interest expense, (iv) income tax expense, (v) depreciation, (vi) share-based payment expense, (vii) adjustments resulting from the application of purchase accounting included in cost of sales, (viii) adjustments resulting from the application of purchase accounting included inother expense (income), net, and (ix) real estate inventory impairment and lot option contract abandonment charges. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of home closing revenue.

Previous wording

Our EBITDA and EBITDA margin decreased from the three months ended March 31, 2025 to the same period in 2026, primarily as a result of a$14.6 million decrease in net income and $0.4 million increase in capitalized interest charge to cost of home closings. Our adjusted EBITDA and adjusted EBITDA margin decreased from the three months ended March 31, 2025 to the same period in 2026, primarily as a result of the underlying decrease in EBITDA, as well as a$0.6 million increase in share-based payment expense, partially offset by a $0.4 million decrease in real estate inventory impairment and lot option contract abandonment charges.

Current wording

Our EBITDA and EBITDA margin decreased from the three and six months ended June 30, 2025 to the same periods in 2026, primarily as a result of decreases in net income of $14.7 million and $29.3 million, respectively. Our adjusted EBITDA and adjusted EBITDA margin also decreased from the three and six months ended June 30, 2025 to the same periods in 2026, primarily as a result of the decrease in net income described above, partially offset by the increases in the add-back for real estate inventory impairment and lot option contract abandonment charges of $7.6 million and $7.2 million, respectively.

Previous wording

As of March 31, 2026, we had$28.0 million of cash and cash equivalents. We believe existing cash and cash equivalents, availability under our Amended Credit Facility and positive cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our credit facilities and other borrowings. We exercise strict controls and have a prudent strategy for our cash management, including those related to cash outlays for lot acquisitions and deposits on lot-option contracts. We require multiple party account control and authorization for payments. We competitively bid each phase of the development and construction process and closely manage production schedules and payments. Land acquisitions are reviewed and analyzed by our senior management team and ultimately approved by our Chief Executive Officer and Chief Financial Officer. Additionally, our land-light business model reduces our upfront capital requirements and generally provides for “just-in-time” lot delivery, which better aligns our pace of home orders and home starts. Our principal uses of cash include deposits on lot-option contracts, acquisition of finished lots, home construction, operating expenses, and the payment of interest and routine liabilities.

Current wording

As of June 30, 2026, we had$14.2 million of cash and cash equivalents. We believe existing cash and cash equivalents, availability under our Amended Credit Facility, and positive cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our credit facilities and other borrowings. We exercise strict controls and have a prudent strategy for our cash management, including those related to cash outlays for lot acquisitions and deposits on lot-option contracts. We require multiple party account control and authorization for payments. We competitively bid each phase of the development and construction process and closely manage production schedules and payments. Land acquisitions are reviewed and analyzed by our senior management team and ultimately approved by our Chief Executive Officer and Chief Financial Officer. Additionally, our land-light business model reduces our upfront capital requirements and generally provides for “just-in- time” lot delivery, which better aligns our pace of home orders and home starts. Our principal uses of cash include deposits on lot-option contracts, acquisition of finished lots, home construction, operating expenses, and the payment of interest and routine liabilities.

Previous wording

The Amended Credit Facility contains certain financial covenants, among others, including requirements to maintain (i) a minimum tangible net worth equal to the sum of (a) $286.1 million, (b) 32.5% of positive pre-tax income earned in any fiscal quarter after March 31, 2025, and (c) 50% of new equity proceeds of Smith Douglas Homes Corp. and its subsidiaries at any time after March 31, 2025, (ii) a maximum leverage ratio of 60%, (iii) a minimum ratio of EBITDA to interest incurred of 2.00 to 1.00, and (iv) a minimum liquidity requirement of $15.0 million. The Amended Credit Facility also contains various covenants that, among other restrictions, limit the ability of Smith Douglas Holdings LLC and the other borrowers to incur additional debt and to make certain investments and distributions. Additionally, the Amended Credit Facility contains certain covenants that restrict certain activities of Smith Douglas Homes Corp. The Amended Credit Facility also contains customary events of default relating to, among other things, failure to make payments, breach of covenants and breach of representations. If an event of default occurs and is continuing, the borrowers may be required immediately to repay all amounts outstanding under the Amended Credit Facility. As of March 31, 2026, we were in compliance with all covenants related to the Amended Credit Facility.

Current wording

The Amended Credit Facility contains certain financial covenants, among others, including requirements to maintain (i) a minimum tangible net worth equal to the sum of (a) $286.1 million, (b) 32.5% of positive pre‑tax income earned in any fiscal quarter after March 31, 2025, and (c) 50% of any new equity proceeds of Smith Douglas Homes Corp. and its subsidiaries at any time after March 31, 2025, (ii) a maximum leverage ratio of 60%, (iii) a minimum ratio of EBITDA to interest incurred of 2.00 to 1.00, and (iv) a minimum liquidity requirement of $15.0 million. The Amended Credit Facility also contains various covenants that, among other restrictions, limit the ability of Smith Douglas Holdings LLC and the other borrowers to incur additional debt and to make certain investments and distributions. Additionally, the Amended Credit Facility contains certain covenants that restrict certain activities of Smith Douglas Homes Corp. The Amended Credit Facility also contains customary events of default relating to, among other things, failure to make payments, breach of covenants, and breach of representations. If an event of default occurs and is continuing, the borrowers may be required to immediately repay all amounts outstanding under the Amended Credit Facility. As of June 30, 2026, the Company was in compliance with all covenants related to the Amended Credit Facility.

Previous wording

As of March 31, 2026 and April 24, 2026, there were $65.0 million and $77.0 million of outstanding borrowings under the Amended Credit Facility, respectively. As of both March 31, 2026 and April 24, 2026, there were $0.5 million outstanding letters of credit.

Current wording

As of June 30, 2026 and December 31, 2025, there were $63.0 million and $40.0 million, respectively, of outstanding borrowings under the Amended Credit Facility. As of June 30, 2026 and December 31, 2025, there were$0.8 million and $0.5 million of outstanding letters of credit, respectively.

Previous wording

In addition, under the Tax Receivable Agreement, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize (or in certain circumstances are deemed to realize), as a result of (i) Basis Adjustments; (ii) Section 704(c) Allocations; and (iii) certain tax benefits (such as interest deductions) arising from payments made under the Tax Receivable Agreement. We expect the amount of the cash payments that we will be required to make under the Tax Receivable Agreement will be significant. The actual amount and timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors, including the timing of redemptions or exchanges by the Continuing Equity Owners, the amount of gain recognized by the Continuing Equity Owners, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable. Any payments made by us to the Continuing Equity Owners under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us.

Current wording

In addition, under the Tax Receivable Agreement, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize (or in certain circumstances are deemed to realize), as a result of (i) Basis Adjustments; (ii) Section 704(c) Allocations; and (iii) certain tax benefits (such as interest deductions) arising from payments made under the Tax Receivable Agreement. We expect the amount of the cash payments we will be required to make under the Tax Receivable Agreement will be significant. The actual amount and timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors, including the timing of redemptions or exchanges by the Continuing Equity Owners, the amount of gain recognized by the Continuing Equity Owners, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable. Any payments made by us to the Continuing Equity Owners under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us.

Previous wording

Cash flows from operating, investing, and financing activities – comparison for the three months ended March 31, 2026 and 2025

Current wording

Cash flows from operating, investing, and financing activities – comparison for the six months ended June 30, 2026 and 2025

Previous wording

We generated $0.3 million and used $34.9 million in net cash in operating activities for the three months ended March 31, 2026 and 2025, respectively. Operating cash flows for the three months ended March 31, 2026 benefited from cash generated by net income of $4.1 million, non-cash operating expenses of $3.6 million, and a $21.3 million increase in accounts payable, which were more than offset by a $22.0 million increase in real estate inventory, $3.2 million increase in deposits on real estate under option or contract, and $4.0 million increase in other assets. Operating cash flows for the three months ended March 31, 2025 benefited from cash generated by net income of $18.7 million, non-cash operating expenses of $3.3 million, and a $2.7 million increase in accounts payable, which were more than offset by a $19.5 million increase in real estate inventory, $17.0 million increase in deposits on real estate under option or contract, $11.5 million increase in other assets, and $11.9 million decrease in accrued expenses and other liabilities.

Current wording

We generated $4.9 million and used $63.8 million in net cash in operating activities for the six months ended June 30, 2026 and 2025, respectively. Operating cash flows for the six months ended June 30, 2026 benefited from cash generated by net income of $5.8 million and non-cash operating expenses of $14.3 million, which were partially offset by a $32.9 million increase in real estate inventory, $5.0 million increase in deposits on real estate under option or contract, and $25.0 million increase in accounts payable. Operating cash flows for the six months ended June 30, 2025 benefited from cash generated by net income of $35.1 million and non-cash operating expenses of $5.4 million, which were more than offset by a $64.0 million increase in real estate inventory, $30.1 million increase in deposits on real estate under option or contract, and $10.3 million decrease in accrued expenses and other liabilities.

Previous wording

We used$0.6 million and$2.1 million in net cash in investing activities for thethree months ended March 31, 2026 and 2025, respectively. The net cash used in investing activities during thethree months ended March 31, 2026 was primarily due to$0.5 million inpurchases of property and equipment. The net cash used in investing activities during thethree months ended March 31, 2025 was primarily due to$1.0 million in purchases of property and equipment and $1.1 million in investments in unconsolidated entities.

Current wording

We used $1.2 million and $4.2 million in net cash in investing activities for the six months ended June 30, 2026 and 2025, respectively. The net cash used in investing activities during the six months ended June 30, 2026 was primarily due to $1.1 million in purchases of property and equipment. The net cash used in investing activities during the six months ended June 30, 2025 was primarily due to $3.2 million in purchases of property and equipment and $1.1 million in investments in unconsolidated entities.

Previous wording

We generated$15.5 million and$27.3 million in net cash from financing activities for thethree months ended March 31, 2026 and 2025, respectively. The net cash provided by financing activities during thethree months ended March 31, 2026 was primarily due to$25.0 million in net borrowings under the Amended Credit Facility and $4.9 million in net cash inflows from real estate not owned transactions, partially offset by $7.1 million in tax distributions and $5.7 million in share repurchases. The net cash provided by financing activities during thethree months ended March 31, 2025 was primarily due to$40.0 million in net borrowings under the Amended Credit Facility, partially offset by $13.9 million in tax distributions.

Current wording

We used $2.2 million and generated $62.5 million in net cash from financing activities for the six months ended June 30, 2026 and 2025, respectively. The net cash used in financing activities during the six months ended June 30, 2026 was primarily due to $23.0 million in net borrowings under the Amended Credit Facility, $16.1 million in payments related to repurchases of real estate not owned, $10.1 million in share repurchases, and $8.9 million in tax distributions, which were partially offset by $12.3 million in proceeds from sale of real estate not owned. The net cash provided by financing activities during the six months ended June 30, 2025 was primarily due to $68.9 million in net borrowings under the Amended Credit Facility and $27.1 million in proceeds from sale of real estate not owned, partially offset by $23.6 million in tax distributions, $6.8 million in payments related to repurchases of real estate not owned, and $2.2 million in debt issuance costs.

Previous wording

While using land bankers and third-party developers as part of our land-light operating strategy comes at an additional cost, we believe our lot acquisition strategy reduces our operating and financial risk relative to other homebuilders that own and develop a higher percentage of their land supply. As of March 31, 2026, we had 750 owned unstarted lots in real estate inventory on our balance sheet which represented only 3.2% of our total controlled lot supply.

Current wording

While using land bankers and third-party developers as part of our land-light operating strategy comes at an additional cost, we believe our lot acquisition strategy reduces our operating and financial risk relative to other homebuilders that own and develop a higher percentage of their land supply. As of June 30, 2026, we had 664 owned unstarted lots in real estate inventory on our balance sheet which represented only 2.8% of our total controlled lot supply.

Previous wording

As of March 31, 2026, we had$140.2 million of non-refundable cash deposits under land and lot-option contracts pertaining to 14,925 lots with a remaining aggregate purchase price of approximately$1.11 billion.

Current wording

As of June 30, 2026, we had $134.8 million of non-refundable cash deposits under land and lot-option contracts pertaining to 13,986 lots with a remaining aggregate purchase price of approximately $1.05 billion.

Previous wording

From time to time, we may enter into surety bond and letter of credit arrangements with local municipalities, government agencies and developers. These arrangements relate to certain performance or maintenance-related obligations. As of both March 31, 2026 and December 31, 2025, there were $0.5 million outstanding letters of credit. Surety bonds do not have stated expiration dates, rather, we are released from the bonds as the contractual performance is completed. These bonds, which totaled $55.9 million and $47.4 million as of March 31, 2026 and December 31, 2025, respectively, are typically outstanding over a period of approximately one to five years depending on the pace of development. If banks were to decline to issue letters of credit or surety companies were to decline to issue surety bonds, our ability to operate could be restricted and could have an adverse effect on our business and results of operations.

Current wording

From time to time, we may enter into surety bond and letter of credit arrangements with local municipalities, government agencies and developers. These arrangements relate to certain performance or maintenance-related obligations. As of June 30, 2026 and December 31, 2025, there were $0.8 million and $0.5 million outstanding letters of credit. Surety bonds do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. These bonds, which totaled $56.6 million and $47.4 million as of June 30, 2026 and December 31, 2025, respectively, are typically outstanding over a period of approximately one to five years depending on the pace of development. If banks were to decline to issue letters of credit or surety companies were to decline to issue surety bonds, our ability to operate could be restricted and could have an adverse effect on our business and results of operations.