Commitments and Contingencies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Commitments and Contingencies
Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on our results of operations, financial position, or liquidity.
The Company’s insurance companies agreed in the fourth quarter of 2021 to fund $14.9 million to cover the Company's portion of a settlement resolving litigation involving a wrongful death caused by a former employee. The insurers have reserved the right to later file a claim seeking recovery for some or all of the amounts paid in connection with the settlement of the case. At this time, the Company is not able to estimate the likelihood or timing of such a suit.
Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $177.1 million and $94.7 million of performance bonds outstanding as of March 31, 2022 and December 31, 2021, respectively.
Operating Leases—The Company has various operating leases, most of which relate to office facilities. Future minimum payments under the noncancelable operating leases in effect at March 31, 2022 were as follows (dollars in thousands):
During December 2021 the Company sold model homes and immediately leased these models back for up to two years. The Company recognized lot sales and other revenue of $1.1 million during the three months ended March 31, 2022. Corresponding lot and other cost of sales of $1.1 million were also recognized during the same period. All of the leases from the sale-leasebacks are accounted for as operating leases, and are now reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party, refer to Note 10 - Related Party Transactions for further detail.
Operating lease expense for the three months ended March 31, 2022 was $0.5 million, and is included in general and administrative expense on the consolidated statements of operations. For the three months ended March 31, 2021 operating lease expense was $0.4 million.
The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 7 years and often include one or more options to renew. The weighted average remaining lease term as of March 31, 2022 and December 31, 2021 was 3.9 and 4.1 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised.
The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease, or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company's incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of March 31, 2022 was 3.8%. Lease components and non-lease components are accounted for as a single lease component. As of March 31, 2022, the Company had $11.9 million and $12.5 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2021, the Company had $12.6 million and $13.2 million recognized as a right-of-use asset and lease liability, respectively.
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| Commitments and Contingencies | Commitments and Contingencies
Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on our results of operations, financial position, or liquidity.
The Company’s insurance companies agreed in the fourth quarter of 2021 to fund $14.9 million to cover the Company's portion of a settlement resolving litigation involving a wrongful death caused by a former employee. The insurers have reserved the right to later file a claim seeking recovery for some or all of the amounts paid in connection with the settlement of the case. At this time, the Company is not able to estimate the likelihood or timing of such a suit.
Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $177.1 million and $94.7 million of performance bonds outstanding as of March 31, 2022 and December 31, 2021, respectively.
Operating Leases—The Company has various operating leases, most of which relate to office facilities. Future minimum payments under the noncancelable operating leases in effect at March 31, 2022 were as follows (dollars in thousands):
During December 2021 the Company sold model homes and immediately leased these models back for up to two years. The Company recognized lot sales and other revenue of $1.1 million during the three months ended March 31, 2022. Corresponding lot and other cost of sales of $1.1 million were also recognized during the same period. All of the leases from the sale-leasebacks are accounted for as operating leases, and are now reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party, refer to Note 10 - Related Party Transactions for further detail.
Operating lease expense for the three months ended March 31, 2022 was $0.5 million, and is included in general and administrative expense on the consolidated statements of operations. For the three months ended March 31, 2021 operating lease expense was $0.4 million.
The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 7 years and often include one or more options to renew. The weighted average remaining lease term as of March 31, 2022 and December 31, 2021 was 3.9 and 4.1 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised.
The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease, or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company's incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of March 31, 2022 was 3.8%. Lease components and non-lease components are accounted for as a single lease component. As of March 31, 2022, the Company had $11.9 million and $12.5 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2021, the Company had $12.6 million and $13.2 million recognized as a right-of-use asset and lease liability, respectively.
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