Company: LGIH
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001580670-25-000058
Chunk: 30

Company: LGI Homes, Inc.
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 1
Chunk 30
---
act for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that differs from the transaction price or market price of the asset or liability.ASC 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:Level 1 - Fair value is based on quoted prices in active markets for identical assets or liabilities.Level 2 - Fair value is determined using significant observable inputs, generally either quoted prices in active markets for                similar assets or liabilities, or quoted prices in markets that are not active.Level 3 - Fair value is determined using one or more significant inputs that are unobservable in active markets at the                measurement date, such as a pricing model, discounted cash flow or similar technique.We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets. The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and 

15

certain accrued liabilities, approximate their carrying amounts due to the short-term nature of these instruments. As of June 30, 2025, the June 2025 Credit Agreement’s carrying value approximates market value since it has a floating interest rate, which increases or decreases with market interest rates and our leverage ratio.In order to determine the fair value of each of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes, the future contractual cash flows are discounted at our estimate of current market rates of interest, which were determined based upon the average interest rates of similar senior notes within the homebuilding industry (Level 2 measurement).The following table below shows the level and measurement of liabilities at June 30, 2025 and December 31, 2024 (in thousands):June 30, 2025December 31, 2024Fair Value HierarchyCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value2028 Senior Notes (1)Level 2$400,000 $439,936 $400,000 $436,783 2029 Senior Notes (1)Level 2$300,000