KBH 10-K & 10-Q changes, risk factors and insider trading

•Soft or negative economic or housing market conditions. Adverse conditions in our served markets or nationally could be caused or worsened by factors outside of our control, including slow or negative economic growth, or growth concentrated in a few business sectors outside of housing; sustained elevated mortgage interest rates and inflation,inflation; high consumer debt levels; and various other macroeconomic as well asand geopolitical concerns, such as the military conflictsconflict in UkraineUkraine, lingering economic and thefinancial Middlemarket East,impacts andfrom the U.S.prolonged shutdown of the federal government’s financialoperations in October and regulatoryNovember stability2025, withwhich may be compounded if Congress cannot agree on, or the recentPresident presidentialdoes electionnot andapprove, changea budget to fully fund the government beyond January 30, 2026, as well as the delay or cancellation of administration.federal funding to certain states, particularly California. Among other impacts, a severe or sustained economic contraction may negatively impact housing demand, exacerbate ongoing housing affordability challenges, decrease traffic at our communities and/or trigger a rise in home sales contract cancellations, which we and the homebuilding industry experienced in our 2022 second half and 2023 first quarter, resulting in significantly lowerfewer net orders as compared to corresponding year-earlier periods. In addition, these conditions, along with heightened competition from other homebuilders and sellers and landlords of existing homes, as discussed below, may lead us to reduce our home selling prices or offer other concessions (such as mortgage interest rate buydowns) to attract or retain buyers,buyers. whichSince mid-February 2025, we didhave selectivelyfocused inon 2024delivering the most compelling value to our buyers through pricing transparency and 2023a (particularly,simplified mortgage-relatedsales concessionsapproach suchto ashelp intereststimulate ratedemand. buydowns),We both reduced selling prices relative to applicable market conditions and expectlowered or eliminated other homebuyer concessions. While we believe this approach drove higher traffic to continue doing in 2025 to varying degrees, negatively affecting our revenuescommunities and marginsstabilized and,demand after its implementation relative to the extentstart the concessions we offer are not sufficient to attract and retain buyers,of our net2025 orders.fiscal Anyear, an extended downturn in the U.S. housing market could result in an oversupply of new home and resale inventory and greater foreclosure activity, which would further impair our ability to sell homes at the same volume, prices and margins as in prior periods. Additionally, we can offer no assurance that our current pricing strategy, and any changes we may implement thereto, including whether we offer or increase any concessions to homebuyers, will improve or sustain demand relative to 2025 levels or our expectations for 2026 and beyond.

•Diminished consumer confidence, whether generally or as to purchasing a home. Consumers may be reluctant to purchase a home compared to housing alternatives (such as renting apartments or homes, or remaining in their existing home) due to location or lifestyle preferences, affordability and home selling price perceptions (particularly in markets that experienced rapid home price appreciation), employment instability or otherwise. Consumers may also decide not to search for a new home, or cancel their home sales contracts with us, due to economic or personal financial uncertainty. The combination of elevated mortgage interest rates since early 2022,rates, several years of rising housing prices, volatility across financial markets, persistent inflationinflation, including for essential consumer expenses (e.g., food, gasoline, electricity, trash, water), and various other macroeconomic and geopolitical concerns have weighed on consumer budgets and confidence throughout 2024 and 2025 and may continue to do so in 2025, including due to the change in U.S. presidential administrations in January and potential attendant regulatory instability.2026. In addition, homeowners who purchased their home with a relatively low mortgage interest rate, as was generally the case from mid-2020 to mid-2022,rate may be reluctant to move given the current higher interest rate levels. With strained housing affordability, these conditions are expected to remain, and may worsen, in 2026, negatively impacting demand and potentially requiring us to lower selling prices or offer other concessions to stimulate net orders, adversely affecting our revenues and margins.

•Tightened availability or affordability of mortgage loans and homeowner insurance coverage. Most of our buyers need a mortgage loan to purchase their home. Their ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the Federal Housing Administration, the Veterans Administration, Federal National Mortgage Association (also known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (also known as Freddie Mac). IfWhile mortgage interest rates increase,began to moderate in the 2025 second half, if mortgage interest rates increase and/or become more volatile, credit standards are tightened, appraisals for our homes are lowered or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing to be able to purchase a home from us. Further, we cannot provide any assurance that any interest rate reduction(s) or other monetary policy changes will positively affect demand for homes or our results of operations.

Since 2022, insurance companies have discontinued, or significantly reduced, underwriting new homeowner insurance policies in areas that have experienced, or are thought to be at risk of experiencing, significant wildfires, hurricanes, flooding or other natural disasters, such as in CaliforniaCalifornia, Florida and Florida.certain Texas markets. If potential homebuyers are unable to obtain affordable homeowner insurance coverage, a challenge which became more widespread in California and Florida during 2024 and is expected to bewas exacerbated by the unprecedented wildfires inand thevarious Lossignificant Angelesweather County areaevents in January 2025, they may not be able to or decide not to pursue purchasing a home or may cancel a home sales contract with us.

•Competition. We face significant competition for customers from other homebuilders, sellers of resale homes and other housing industry participants, including single-family and other rental-housing operators. Relative to the 2021-2023 period, since mid-2024, the supply of resale properties available for sale has generally risen in our served markets, and there has been a higher supply of rental units in some of our served markets. This competitive environment may, among other things, cause us to reduce our home selling prices or offer other concessions to attract or retain buyers. WhileAdditionally, the historically low level of resale home inventory reduced the competition from sellers of resale homes in 2023 and 2024, resale inventory levels rose in our served markets in the 2024 second half and we can provide no assurance that this favorable factor will continue to the same degree, or at all, in 2025. In addition, volatility inunpredictable buyer demand since 2022 increasedhas amplified competitive pressures for our business and is expectedlikely to continueremain intoa thefactor nextin fiscal year.2026.

•Inflation. Since 2021, product and labor costs and general inflation in the economy have increased and remained elevated compared to the prior decade. In turn, we experienced rising land and construction costs, particularly for building materials and construction service providers’ rates, warranty repair costs, and compensation and benefit expenses to attract and retain talent. These trends are expected to continue to an extent in 2025,2026, though they may worsen compared to prior years. Inflation has also tempered consumer demand for homes, disrupted credit and lending markets and may increase our financing costs, as borrowings, if any, under our new, larger unsecured revolving credit facility with various banks (“Credit Facility”) and our recently amended senior unsecured term loan with the lenders party thereto (“Term Loan”) typically accrue interest at a variable rate based on short-term Secured Overnight Financing Rate (“SOFR”). While we attempt to pass on increases in our costs through increased selling prices, including for design choices and options, market forces and buyer affordability constraints can limit our ability to do so. If we are unable to raise selling prices enough to compensate for higher costs, or our borrowing costs increase significantly, our revenues, housing gross profit margin and net income could be adversely affected.

Supply Risks. The following could negatively affect our ability to increase our owned and controlled lot inventory, community count, operational scale and market share, optimize returns on each of our assets, and to grow our business, if at all:

implemented construction process workarounds; simplified our design choices and options; paced lot releases to align with our production capacity; and balanced pace, price and construction starts to enhance margins. Although we have achieved meaningful sequential improvementBeginning in our build times since the 2023 second quarter, we achieved meaningful sequential improvements in our build times and by the end of the 2025 fourth quarter, even with disrupted trade flows and state/municipal/utility processing delays, our company-wide build times returned to approximately their historical average. However, we believe thesethe challenging conditionsenvironment described above, particularly trade restrictions on imported materials, may persist to a certain degree into and potentially throughout 2025,2026, aswhich discussedmay belowslow underor “Outlook.”prevent additional progress in reducing our build times, and could cause them to increase. We may also face increased home warranty and construction defect claims associated with replacing or servicing substitute products or materials used in some instances to address supply shortages due to trade restrictions or other factors in certain served markets or communities.

inhibit our ability to respond to business changes or adjust our debt maturity schedule; curb execution on our current strategies; and/or make us more vulnerable in a downturn than our less-leveraged competitors. The Term Loan will mature on August 25, 2026 or earlier under certain circumstances. The Credit Facility will mature on February 18, 2027. Our next senior note maturity is our $300.0 million in aggregate principal amount of 6.875% senior notes due June 15, 2027 (“6.875% Senior Notes due 2027”).

In addition, our business could be negatively affected if our net orders, homes delivered or backlog-to-homes delivered conversion rate fall; if often-volatile building materials prices or construction services costs increase, which has been the trend over the past few years; or if our community openings are delayed due to, among other things, prolonged development from supply chain disruptions, construction services shortages or otherwise, our strategic adjustments, or protracted government approvals or utility service activations from staff or resource cuts or reallocations for public safety priorities (e.g., earthquakes, wildfires, flooding, hurricanes or other natural disasters). Though the extent is uncertain as of the date of this report, given the scope of the unprecedented wildfires in the Los Angeles County area in January 2025, we expect the recovery efforts to create some of these types of disruptions in the Southern California region during the year and beyond.

Strategy Risks. Our strategies, and any related initiatives or actions, and any changes thereto, including as to the land we acquire and develop and the markets we decide to serve, may not be successful in achieving our goals or generate any growth, earnings or returns, particularly in the highly volatile business environment of the past few years and as may occur in 2025,2026, due to significant inflation, interest rate and financial market volatility, or political or social distress. WeIn 2025, around 55% of our homes delivered were Built to Order, largely reflecting strategies to navigate supply chain disruptions that substantially lengthened our average build time and hindered our even-flow home production process, and market dynamics in areas with then-low resale home inventory. Our intent for 2026 is to bring our mix of homes delivered closer to our historical average. However, we may not achieve positive operational or financial results,results from implementing this or other business strategies, or results equal to or better than we did in any prior period or in comparison to other homebuilders. We may also incur higher costs, or experience sourcing or supply chain disruptions that result in extended times to build our homes, as compared to other homebuilders due to our commitment to sustainability. However,At the same time, we expect there could be an unfavorable reputational impact if we do not maintain our sustainability programs, including if we decide not to construct homes that are designed to be ENERGY STAR certified or are otherwise as energy efficient as those we currently build; fail to achieve ENERGY STAR certification or any other voluntarily elected or mandatory energy-efficiency standard for our homes, which has occurred in a few instances in recent yearsprograms; or if we fail to meet our sustainability objectives. Among other strategic risks, our business is presently concentrated in California, Florida, Nevada and Texas. Poor conditions in any of those markets could have a measurable negative impact on our results, and the impact could be larger for us than for other less-concentrated homebuilders.

Adverse conditions in California would have particular significance to our business. We generate the highest proportion of our revenues from and make significant inventory investments in our California operations. However, we may be constrained or delayed in entitling land and selling and delivering homes in California, and incur higher development or construction costs, from water conservation or wildfire protection measures (including precautionary and event-induced electricity blackouts, temporary or extended local or regional evacuations, development moratoriums in high-risk areas, and community resiliency design requirements) that are intended to address severe drought and climate conditions that have arisen in recent years. In addition, asto the extent large-scale wildfires and flooding, as well as hurricanes, heavy rains and other climate change-driven natural disasters in our served markets become more frequent and intense, as discussed below under “Climate Risk,” we may experience greater disruption to our land development and homebuilding activities, delaying orders and homes delivered, among other impacts. Though the extent is uncertain and none of our communities or operations have been directly affected as of the date of this report, given the scope of the unprecedented wildfires in the Los Angeles County area in January 2025, we may experience some disruption in our homebuilding activities, and potentially with our orders and homes delivered, in the Southern California region during the year and beyond.

Also, California’s highly regulated and litigious business environment has made the state an increasingly difficult place for us to operate. This includes implementing regulations under the state’s Global Warming Solutions Act of 2006 intended to lower GHG emissions. For instance, we have and will continue to incur higher construction costs because of a state law requirement that effectively requires that all newly-built homes have solar power systems, and we may be unable to offset (through customer leases) or cover such costs through selling price increases due to competition and consumer affordability concerns. We also facefaced an uncertain solar power system provider environment in 2025 and 2024 largely due to the federal government’s repealing and/or accelerating the expiration of related tax credits, as described below, and changes in California net metering regulations that created significant instability in the solar power industry, with several providers going out of business or entering bankruptcy. This has disrupted the supply and installation of solar power systems, causing delays in system completions and permissions to operate and, in turn, home deliveries. The federal government’s repeal and/or accelerated expiration of tax credits for solar power systems has also caused lease financing providers to exit the market, pressuring the availability of leases for customers in California.

In 2022, the California Air Resources Board adopted a plan to eliminate installing natural gas appliancesEffective in new2026, homes built in 2026 and beyond. In addition, the state’s energy commission issuedCalifornia’s new energy efficiency standards requiringwill require all new residences to be electric-ready for heating, cooling, cooking, clothes drying and water heating systems. In addition, California and certain of its local governments have implemented restrictions on or disincentives for new suburban and exurban residential communities, generally in favor of higher-density, urban developments that can be attractive to some buyers, but in many cases are on smaller parcels with higher building costs and more complicated entitlement requirements and may be subject to affordable housing mandates, prevailing wage requirements, greater local opposition and/or additional site remediation work. These efforts have and could further significantly increase our land acquisition and development costs and, along with competition from other homebuilders and investors for available developable land, limit our California operations’ growth, while making new homes less affordable to potential buyers in the state, including as a result of its public utilities commission’s decision to significantly reduce net metering payments to homeowners for the rooftop solar power they export to the grid from systems installed.

Climate Risk. While there is considerable debate over its drivers and magnitude, and about the physical, regulatory and/or technical/scientific mitigation or adaptation measures, if any, that should be implemented, global climate change and responses to it present potential risks to our operations, ranging from more frequent extreme weather events to extensive governmental policy developments and shifts in consumer preferences, which could individually or collectively significantly disrupt our business as well as negatively affect our suppliers, independent contractors and customers. Experiencing or addressing thethese various risks from climate change may significantly reduce our revenues and profitability, or cause us to generate losses. For instance, incorporating greater resource efficiency into our home designs, whetherdesigns to comply with upgraded building codes or recommended practices given a region’s particular exposure to climate conditions, or undertaken to satisfy demand from increasingly environmentally conscious customers or to meet our own sustainability goals, often raises our costs to construct homes. In evaluating whether to implement voluntary improvements, we also consider that choosing not to enhance our homes’ resource efficiency can make them less attractive to municipalities, and increase the vulnerability of residents in our communities to rising energy and water expenses and use restrictions. We weighbalance the impact of thethese costs associated with offering more resource-efficient products against our prioritiesgoals of generating higher returnsprofitability and deliveringaffordability homes that are affordable to our corefor first-time and first move-up buyers.buyers, Wewhile alsoconsidering considerpotential whether our buyers may face higher costs for, or may be unable to obtain, fire, flood or other hazardhomeowner insurance coveragechallenges in certain areas due to local environmental conditions orconditions, historical events.events Inand/or balancingthe theseregulatory objectives,environment wefor insurance providers. We may determine we need to absorb most or all the additional operating costs that come with making our homes more efficient and/or from operating in areas with more extensive regulatory requirements, such as California, or certain climates. While our years of experience in sustainable homebuilding, as discussed above under “Sustainability Principles and Practices,” and ability to leverage economies of scale may give us an advantage over other homebuilders in managing these absorbed costs, they may be substantial for us.

Beyond the commercial pressures implicated by climate change concerns, ourOur operations in any of our served markets may face potential adverse physical effects.effects, Forespecially example,in California, our largest market, that has historically experienced, and is projected to continue to experience, climate-related events at an increasing frequency including drought, water scarcity, heat waves, wildfires (such as the unprecedented wildfires in the Los Angeles County area in January 2025),wildfires, and resultant air quality impacts and power shutoffs associated with wildfire prevention. In addition, basedas onwe andevelop Arizonaland stateand orderopen more communities in Juneless 2023,populated areas, new housing subdivisions willmay be subject to potential development moratoriums and not be permitted in some parts of Phoenix unless developers, like us,developers secure alternative water suppliessupplies, among other than local groundwater.conditions. While we have health and safety protocols in place for our construction sites and take steps to safeguard our administrative functions, including our IT resources, as described below under “Information Technology and Information Security Risks,” we can provide no assurance that we or our suppliers or trade partners can successfully operate in areas experiencing frequent or persistent adverse climate-related conditions, and we or they may be more impacted and take longer, and with higher costs, to resume operations in an affected location than other homebuilders or businesses, depending on the nature of the conditions or other circumstances.

As discussed above under “Strategy Risks,” and below under “Legal and Compliance Risks,” international,various federal, state and local authoritiesgovernment and legislative bodies have issued, implemented or proposed regulations, penalties, standards or guidance intendedaimed to restrict, moderate or promote activities consistent with resource conservation, GHG emission reduction, environmental protection or other climate-related objectives. ComplianceThese with those directed at or otherwise affecting our business or our suppliers’ (or their suppliers’) operations, products or services,initiatives could increase our costs, such as with California’s requirement that all new homes have solar power systems andsystems, agency requirements for all-electric readiness and planshigher toefficiency potentiallystandards, eliminate natural gas appliances in new homes built inincluding the stateuse byof zero-emission alternatives, beginning in 2026; delay or complicate home construction, for example, due to a need to reformulate or redesign building materials or components, or source updated or upgraded items or equipment, or specially trained or certified independent contractors, in limited or restricted supply, which has been a challenge for us in certain cases in the past few years, such as with paint, garage doors, insulation, electrical materials, cabinets, HVAC equipment and water heaters that have been out of stock and delayed home construction or required us to install or use temporary or permanent substitutes due to the supply chain disruptions we have experiencedyears; or diminish consumer interest in homes mandated to include or omit certain features, amenities or appliances, particularly if home prices increase as a result.

Adapting to or transitioning from the use of certain items or methods in home construction, or adjusting the products we offer to our buyers, whether due to climate-related governmental rules affecting home construction or our supply chain, market dynamics or consumer preferences, can negatively affect our costs and profitability, production operations in affected markets and customer satisfaction during the transition period, which could be prolonged. For instance, in certain local markets in California where natural gas use is banned in new homes, we have faced some disruptions in reorienting our purchase order, independent contractor engagement, design studio and home construction processes to accommodate the restriction and, longer term,and have implemented certain architectural design changes for all-electric homes. To the extent other jurisdictions or the state adopt such bans and as we implement the state’s all-electric readiness requirements, as discussed above, we will face similar issues.

Further, we expect that as concerns about climate change and other environmental issues continue to increase, homebuilders will be required to comply with new and extensive laws and regulations, including recently enacted climate disclosure laws in California as well as any climate-related disclosure rules that may be adopted by the SEC, each of which we anticipate will result in additional significant compliance costs. In October 2023, California enacted the Climate Corporate Data Accountability Act (“SB-253”), which mandates the disclosure of GHG emissions, including Scope 1, Scope 2 and Scope 3 emissions; and the Climate-Related Financial Risk Act (“SB-261”), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks. WhileCalifornia thehas statedelayed enactedformal SB-219rulemaking in September 2024 that amends certain aspects offor SB-253 andto SB-261,at Californialeast lawlate currentlyFebruary requires2026. We expect to file an initial disclosuresScope in1 2026.and CaliforniaScope also2 enactedGHG aemissions thirdreport climate-disclosure law that requires entities that operatelater in the stateyear under SB-253, pending finalization of the regulations. As of the date of this report, SB-261 is subject to a court injunction on its implementation. Whether we file a climate-related financial risk report under SB-261 in 2026 depends on the outcome of the legal process affecting that statute and makeany netregulations zeroCalifornia emissions claims, carbon-neutral claims or significant GHG reduction claims to disclose, starting in 2024, information about those claims and the purchase or use of voluntary carbon offsets used to achieve those claims.adopts.

We may also experience substantial negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our operations or those of our suppliers or independent contractors in our primary markets, such as in California, Florida, Nevada and Texas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements. Such severe weather events, including impacts from the unprecedented wildfires in the Los Angeles County area in January 2025,events could delay home construction, increase construction costs, reduce the availability of building materials, and damage roads and/or cause transportation delays that stress our supply chain and negatively impact the demand for new homes in affected areas, as well as slow down or otherwise impair the ability of utilities and local government agencies to provide approvals and service to new communities. Further, if our insurance does not fully cover our costs and other losses from such events, our earnings, liquidity, or capital resources could be adversely impacted.

Warranty and Insurance Risks. Our homebuilding business is subject to warranty and construction defect claims. Though we have insurance coverage to partially reduce our exposure, it is limited and costly, in part due to a shrinking provider market, and we have high self-insured retentions that are expected to increase. We self-insure some of our risk through a wholly-owned insurance subsidiary. Because we do not maintain insurance coverage to cover all claims or liabilities that may arise in our business, and have high self-insured retentions with the insurance coverages we do maintain, we may need to use a significant amount of our then-existing liquidity, or obtain external financing, to satisfy any such claims and liabilities.

Due to our dependence on the performance of independent suppliers and contractors to provide products and materials and carry out our homebuilding activities, and the associated risks described above under “Inflation,” “Supply chain and construction services shortageschallenges” and “Poor contractor availability and performance,” as well as inherent uncertainties, including obtaining recoveries from responsible parties and/or their or our insurers, our recorded warranty and other liabilities may be inadequate to address future claims, which, among other things, could require us to record charges to increase such liabilities. We may also record charges to reflect our then-current claims experience, including the actual costs incurred. Home warranty and other construction defect issues may also generate negative publicity, including on social media and the internet, that detracts from our reputation and efforts to sell homes.

Tax-Related Risks. Our future income tax rates and expense can fluctuate or be adversely affected due to legislative and regulatory changes; government or court interpretations of new or existing tax laws and regulations; changes in available tax credits; adjustments to estimated taxes in finalizing our tax returns and/or due to new regulatory guidance, as occurred in our 2023 fourth quarterguidance; changes in non-deductible expenses, particularly those associated with compensation; tax benefits related to stock-based compensation; the realization of our deferred tax assets; and the resolution of tax audits with federal or state tax authorities based on, among other things, tax positions we have taken.

Human Capital Risks. Our directors, officers and employees are important resources. If we cannot attract, retain and develop talent at reasonable pay and benefits levels, or, alternatively, if we need to implement personnel or compensation reductions, our performance, profitability and ability to achieve our strategic goals could be significantly impaired. While we have developed extensive leadership development programs and succession plans, as discussed above, we cannot assure that our programs and plans, and their future iterations, will ensure that employees in key leadership positions who depart will be replaced by equally or more effective successors. In addition, in many of our served markets, we need to have personnel with certain professional licenses, including building contractor and real estate brokerage licenses. Our home selling and construction activities may be severely disrupted or delayed if we do not have sufficient licensed individuals in our workforce.

Our systems have faced a variety of phishing, denial-of-service and other attacks and occasional theft of encrypted employee laptops. To help counter the growing volume and sophistication of cyberattacks,cyberattacks and other attempts to gain unauthorized access to sensitive business or individuals’ personal information, including the potential of fraudulentlyfraudulent schemes inducing our employees, customers, trade partnerspartners, andor other third parties to disclose information or unknowingly provide access to systems or data, aswhether wellin asour statesales offices or elsewhere, and considering the use of artificial intelligence and other actorstechnology usingto artificialcompromise intelligenceour technology,user access protocols, we have implemented administrative, physical and multi-layered technical controls and processesprocesses. These measures are designed to help address and mitigate cybersecurity risks and protect our IT resources,resources includingand sensitive information, and include employee education and awareness training, as well as third-partyassessments assessments.conducted by external third parties. Our technical defense layers are designed to provide multiple, overlapping measures to establish appropriate system security configurations and protect against exploitation of a vulnerability that may arise or if a security control fails. For these defenses, we rely on a combination of artificial intelligence, machine learning computer network monitoring, malware and antivirus resources, firewall systems, vendor cloud service defenses, internet address and content filtering monitoring software that secures against known malicious websites and potential data exfiltration, and a variety of cyber intelligence threat monitoring sources that provide ongoing updates, all provided from third parties that we believe, but cannot guarantee, are capable of performing the protective service for which we have engaged them. We conduct periodic incident response tabletop exercises, with third-party support and reviews, and we perform an annual cybersecurity risk assessment to identify potential areas of focus. Our IT security costs, including cybersecurity insurance, are significant and will likely rise in tandem with the sophistication and frequency of system attacks.

We also depend on our service providers, GR Alliance and other mortgage lenders, with whom we share some personal identifying and confidential information, to secure our data and the homebuyer information they collect from us. However, our, GR Alliance’s and our service providers’ measures may be inadequate and possibly have operational or security vulnerabilities that could go undetected for some period of time. If our IT resources are compromised by an intentional attack, natural or man-made disaster, electricity blackout, IT failure or systems misconfiguration, service provider error, mismanaged user access protocols, personnel action, or otherwise,compromised, we may be severely limited in conducting our business and achieving our strategic goals for an extended period, experience internal control failures or lose access to operational assets or funds. A substantial disruption, or security breach suffered by us, GR Alliance/KBHS or a service provider, particularly our cloud service provider which hosts many of our IT resources, could damage our reputation and result in the loss of customers or revenues, in sensitive personal information being publicly disclosed or misused and/or regulatory or legal proceedings against us. We may incur significant expenses to resolve such issues. While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or consolidated financial statements, there can be no assurance our efforts to maintain the security and integrity of these systems will be effective or that attempted security breaches, cyber-attack, data theft or disruptions would not occur in the future, be successful or damaging.

Legal and Compliance Risks. As discussed above under Item 1 – Business in this report, our operations are subject to myriad legal and regulatory requirements, which can delay our operational activities, raise our costs and/or prohibit or restrict homebuilding in some areas. These requirements often provide broad discretion to government authorities, and they could be interpreted or revised in ways unfavorable to us. The costs to comply, or associated with any noncompliance, are, or can be, significant and variable from period to period. With respect to environmental laws, in addition to the risks and potential operational costs discussed above, we have been, and we may in the future be, involved in federal, state and local air and water quality agency investigations or proceedings for potential noncompliance with their rules, including rules governing discharges of materials into the air and waterways; stormwater discharges from community sites; and wetlands and listed species habitat protection.protection; and governmental health and safety rules and requirements, such as those enforced by the federal Occupational Safety and Health Administration and similar state agencies. We could incur penalties and/or be restricted from developing or building at certain community locations during or as a result of such agencies’ investigations or findings.

The European Union and state governments, notably CaliforniaCalifornia, Colorado, Delaware and Nevada, have enacted or enhanced data privacy regulations, and other governments are considering establishing similar or stronger protections. These regulations impose certain obligations for securing, and potentially removing, specified personal information in our systems, and for apprising individuals of the information we have collected about them. We have incurred costs in an effort to address these data privacy risks and requirements, and our costs may increase significantly as risks become increasingly complex or if new or changing requirements are enacted, and based on how individuals exercise their rights. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage.

Our financial results may be materially affected by our use of critical accounting estimates and the adoption of new or amended financial accounting standards, andas well as regulatory or outside auditor guidance or interpretations. In addition, to the extent we expand our disclosures on our sustainability initiatives in line with certain private reporting frameworks and investor requests, or the proposed SEC rules mentioned above, if adopted, our failure to report accurately or achieve progress on our metrics on a timely basis, or at all, could adversely affect our reputation, business, financial performance and growth.

Our discussion and analysis below is primarily focused on our 20242025 and 20232024 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 20222023 fiscal year specifically, as well as the year-over-year comparison of our 20232024 financial performance to 2022,2023, are located under Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023,2024, filed with the SEC on January 19,24, 2024,2025, which is available on our investor relations website at investor.kbhome.com and the SEC website at www.sec.gov.

Homebuilding revenues for 20242025 and 20232024 were comprised of housing revenues and nominal land sale revenues. HousingOur 2025 housing revenues of $6.90$6.21 billion grewdeclined 8%10% from the previous year,year due to a 7%9% increasedecrease in the number of homes delivered to 14,16912,902 and a slight increasedecrease in the overall average selling price of those homes to $486,900.$481,400. Approximately 50% of our homes delivered in 20242025 were to first-time homebuyers. Homebuilding operating income for 20242025 increasedwas 6% to $763.9$507.1 million, compared to $718.7$763.9 million for 20232024 and, as a percentage of homebuilding revenues was 11.1%,8.2%, compared to 11.3%.11.1%. Our homebuilding operating income margin for 20242025 primarily reflected a 20 basis point decrease in ourlower housing gross profit margin and an increase in selling, general and administrative expenses as a percentage of housing revenues. Our housing gross profit margin for 2025 was 18.6%, compared to 21.0%,21.0% asfor 2024, due to price reductions, higher relative land costs, geographic mix, and an increase in inventory-related charges, partly offset by lower construction costs. Our selling, general and administrative expenses as a percentage of housing revenues wereof nearly10.4% evenfor 2025 increased 40 basis points year over year, primarily reflecting higher marketing expenses associated with our expanded community count, higher relative general and administrative expenses, and decreased operating leverage from lower housing revenues. General and administrative expenses for 2025 included $16.0 million of stock-based compensation expense recognized on an accelerated basis for certain equity awards granted in October 2025 that included new provisions for accelerated vesting of restricted stock and continued vesting of PSUs for long-tenured employees upon retirement. Total pretax income for 2025 decreased to $554.2 million from $850.9 million for 2024, which included a $12.5 million gain associated with the prior year at 10.0%. Net income and diluted earnings per share for 2024 grew 11% and 20%, respectively, each as compared to 2023. The increase in diluted earnings per share for 2024 was driven by higher net income and the favorable impactsale of our commonownership stockinterest repurchasesin overa theprivately pastheld severaltechnology quarters.company.

Reflecting our increased investments in land and land development, we ended 20242025 with 258271 active communities, up 7%5% year over year. Although theThe number of homes in our ending backlog at November 30, 20242025 was down 20%29% year over year to 4,434,3,128, mainlypartly reflectingdue ato 28%an 18% improvement in our 20242025 average build time. At the same time, with our planned new community openings in 2026, we believe we are well-positioned to achieve our projections for 2025,the 2026 first quarter and full year, as described below under “Outlook.”

In 2024,2025, housing revenues grewdeclined 8%10% from the previous year, reflecting a 7%9% increasedecrease in the number of homes delivered and a slight increasedecrease in their overall average selling price. TheOur year-over-year2025 growthhousing revenues were down year over year in the numbereach of homes delivered reflected increases of 28%, 9% and 7% in our West Coast, Southeast and Southwest homebuilding reporting segments, respectively,ranging partiallyfrom offset5% byin aour 10%Southwest decreasesegment to 19% in our Central segment. The slightly higherlower average selling price primarily resultedreflected froma the combined effectcombination of product and geographic mix factors, particularlyas awell greateras proportionthe ofstrategic homesprice deliveredreductions fromwe our higher-priced West Coast homebuilding reporting segment, and a decreaseimplemented in homebuyerresponse concessions.to softer market conditions in 2025.

Operating Income. Our homebuilding operating income increaseddecreased 6%34% in 2024,2025, as compared to the previous year, primarily reflecting higherlower housing gross profits, partly offset by higherlower selling, general and administrative expenses. In 20242025 and 2023,2024, homebuilding operating income included total inventory-related charges of $4.6$32.1 million and $11.4$4.6 million, respectively, as discussed in Note 7 – Inventory Impairments and Land Option Contract Abandonments in the Notes to Consolidated Financial Statements in this report. As a percentage of homebuilding revenues, our homebuilding operating income for 20242025 decreased 20290 basis points year over year to 11.1%,8.2%, mainly due to a lower housing gross profit margin.margin and higher selling, general and administrative expenses as a percentage of housing revenues. Excluding inventory-related charges for both periods, our homebuilding operating income margin declined 30240 basis points to 8.7% in 2025 from 11.1% in 2024 from 11.4% in 2023.2024.

•Housing Gross Profits – In 2024,2025, housing gross profits of $1.45$1.15 billion grewwere 7%down 20% from the previous year, reflecting anboth increase inlower housing revenues,revenues partly offset byand a decrease in our housing gross profit margin. Housing gross profits for 20242025 and 20232024 included inventory-related charges associated with housing operations of $4.6$32.1 million and $11.4$4.6 million, respectively.

Our housing gross profit margin for 20242025 was 21.0%,18.6%, down 20240 basis points from the previous year, primarilyyear due to productprice and geographic mix shifts of homes delivered andreductions, higher relative construction and land costs, largelygeographic mix, and an increase in inventory-related charges, partly offset by decreaseslower inconstruction both inventory-related charges and homebuyer concessions.costs. As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operationsoperations, which is included in construction and land costs, was 1.8% for 2025 and 1.7% for 2024 and 1.9% for 2023.2024. Excluding the above-mentioned inventory-related charges associated with housing operations described above,operations, our adjusted housing gross profit margin decreased 30200 basis points year over year to 21.1%19.1% in 2024.2025. The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.”

•Land Sale Profits – Land sales generated break-even results in 2025. Land sale profits for 2024 totaled $1.5 million for 2024, compared to $1.2 million for 2023.million.

Interest Income/Expense and Other. In 2025, interest income and other was comprised solely of interest income. In 2024, interest income and other was comprised of interest income and a $12.5 million gain associated with the sale of our ownership interest in a privately held technology company in which we held an ownership interest.company. Further information regarding this gain is provided in Note 11 – Other Assets in the Notes to Consolidated Financial Statements in this report. In 2023, interest income and other was comprised solely of interest income. Interest income, which is generated from short-term investments, increased to $19.6 million in 2024, compared to $13.8 million in 2023 due to our higher average balance of cash equivalents and a higher average interest rate in 2024. Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of short-term investments and fluctuations in interest rates.

We incur interest principally from ourborrowings borrowingsused to finance land acquisitions, land development, home construction and other operating and capital needs. The amount of interest incurred generally fluctuates based on the average amount of debt outstanding for the period and the interest rate on that debt. In 2024,2025, total interest incurred ofwas $113.9 million, compared to $105.6 million decreased from $107.1 million in 20232024, primarily due to there being no borrowings during 2025 under the unsecured revolving credit facility we had in place prior to entering into the Credit Facility in 2024.November. As of November 30, 2025, no cash borrowings were outstanding under the Credit Facility. All interest incurred duringin 2025 and 2024 and 2023 was capitalizedcapitalized, as the average amount of our inventory qualifying for interest capitalization wasexceeded higher than ourthe average debt level for each period. As a result,Consequently, we had no interest expense for 20242025 or 2023.2024. Further information regarding our interest incurred and capitalized is provided in Note 6 – Inventories in the Notes to Consolidated Financial EquityStatements in Incomethis (Loss) of Unconsolidated Joint Ventures. Our equity in income of unconsolidated joint ventures was $6.0 million for 2024, compared to a nominal equity in loss of unconsolidated joint ventures for 2023. The year-over-year improvement in 2024 mainly reflected homes delivered by an unconsolidated joint venture in California. In 2023, our unconsolidated joint ventures did not deliver any homes. Further information regarding our investments in unconsolidated joint ventures is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Net Orders, Backlog and Community Count. The following table presents information about our net orders, cancellation rate, ending backlog, and community count for the years ended November 30, 2024 and 2023 (dollars in thousands):report.

Net Orders. Net orders from our homebuilding operations for the year ended November 30, 20242025 grewdecreased 18%11% from the previous year, reflecting an increase inand the pace of monthly net orders per community was 3.7 in 2025, compared to 4.4 in 2024,2024. comparedThe to 3.8decreases in 2023.our net orders and monthly pace per community reflected softer market conditions in 2025.

Our cancellation rate as a percentage of gross orders for the year ended November 30, 20242025 improvedwas year17% over year, reflecting buyers’ ability and willingnesscompared to close14% onin theirthe homesprevious when available for delivery.year.

Backlog. The number of homes in our backlog at November 30, 20242025 decreased 20%29% from the previous year mainly due to aan 28%18% improvement in our 20242025 average build time.time as well as the decrease in our net orders. The potential future housing revenues in our backlog at November 30, 20242025 were down 16%37% year over year, reflecting fewer homes in our backlog,backlog partiallyand offsetan by11% a 4% increasedecrease in the average selling price of those homes. Backlog value decreased in each of our four homebuilding reporting segments, with decreases in value ranging from 5% in our Central segment to 29%21% in our Southeast segment to 59% in our Southwest segment. Based on our historical experience, a portion of the homes in backlog will not result in homes delivered due to cancellations.

Community Count. OurIn 2025, our average community count for 2024 expanded slightly from the previous year, and our ending community count greweach 7%.expanded 5% from the previous year. The year-over-year increase in our average and ending community countcounts primarily reflected our investments in land and land development in 20232024 and 20242025 generating new community openings over the past 12 months that exceeded the number of communities selling out during the same period. Our ending community count for 2024 also reflected a 58% year-over-year increase in our investments in land and land development for the year,year asare discussed below under “Liquidity and Capital Resources.”

Financial Results. Below is a discussion of the financial results of each of our homebuilding reporting segments. Further information regarding these segments, including their pretax income (loss), is included in Note 2 – Segment Information in the Notes to Consolidated Financial Statements in this report. The difference between each homebuilding reporting segment’s operating income (loss) and pretax income (loss) is generally due to the equity in income (loss) of unconsolidated joint ventures, which is also presented in Note 2 – Segment Information in the Notes to Consolidated Financial Statements in this report, and/or interest income and expense.

The financial results of our homebuilding reporting segments for 20242025 and 20232024 were impacted to varying degrees by price reductions and homebuyer concessions we selectively extended to buyers in conjunction with our targeted sales strategies, as well as product and geographic mix shifts of homes delivered.

This segment’s revenues in 2025 and 2024 were generated solely from housing revenues. In 2023, revenues were comprised of both housing revenues and land sale revenues. Housing revenues for 20242025 grewdeclined 13%5% year over year, reflecting increasesa decrease in both the number of homes delivereddelivered, andpartly offset by an increase in their average selling price. Land sale revenues totaled $6.0 million in 2023. Operating income rosewas down from the previous year, primarily due to higherlower housing gross profits, partly offset by higherlower selling, general and administrative expenses and the absence of land sale profits in 2024. Land sale profits totaled $1.1 million in 2023.expenses. As a percentage of revenues, operating income increased year over year, primarilydecreased due to a 14050 basis-point expansiondecline in the housing gross profit margin to 24.8%,24.3%, withpartially offset by a 20 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues nearlyto even at 7.4%.7.2%. The year-over-year improvementdecrease in the housing gross profit margin mainly reflected lowerhigher relative construction and land costs, increasedpartially operatingoffset leverageby fromlower higherconstruction costs. Inventory-related charges associated with housing revenues,operations awere decrease$1.6 million in homebuyer2025, concessions,compared andto product$.3 andmillion geographicin mix shifts of homes delivered.2024.

This segment’s revenues in 2025 were generated solely from housing operations. In 2024, revenues were comprised of both housing revenues and land sale revenues. Housing revenues for 2025 declined 19% from $1.45 billion in the prior year, reflecting decreases in both the number of homes delivered and the average selling price of those homes. Land sale revenues were $3.2 million in 2024. Operating income for 20242025 was down year over year mainly due to lower housing gross profits, partly offset by lower selling, general and administrative expenses. Land sale profits were $1.1 million in 2024, compared to $.1 million in 2023.2024. As a percentage of revenues, operating income declined from the previous year, reflecting ana 80510 basis-point decrease in the housing gross profit margin to 21.7%16.6% and a 15040 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 10.0%.10.4%. The year-over-year decline in the housing gross profit margin was mainly driven by price reductions, higher relative construction and land costs, product and geographic mixmix, shiftsan ofincrease homesin delivered,inventory-related charges, and reduced operating leverage from lower housing revenues, partly offset by a decrease in amortization of previously capitalized interest.revenues. The housing gross profit margin for 20242025 included inventory-related charges of $.8$20.4 million, compared to $2.5$.8 million in 2023.2024. The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues was primarily due to reduced operating leverage from lower housing revenues.

Pretax income. Our financial services pretax income for 2025 declined 28% from the previous year due to a decrease in the equity in income of our unconsolidated joint venture, KBHS, as well as lower operating income from our insurance and title services businesses. In 2025, the equity in income of our unconsolidated joint ventures decreased 38% year over year, reflecting KBHS’ lower income. The year-over-year decrease in KBHS’ income was primarily due to a loss of $11.4 million in the fair value of interest rate lock commitments (“IRLCs”) in 2025, compared to a gain of $2.1 million in 2024. Also contributing to the year-over-year increasedecrease in KBHS’ income was a higherlower principal amount of loans originated, which mainly reflected increasesdecreases in both the number of homes we delivered and the percentage of homebuyers using KBHS. In 2024,2025, 87%85% of the buyers financing their home purchases used KBHS, compared to 83%87% in the prior year. Further information regarding our investments in unconsolidated joint ventures is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report.

We ended 20242025 with total liquidity of $1.68$1.43 billion, including cash and cash equivalents and $1.08nearly $1.20 billion of available capacity under the Credit Facility. Cash and cash equivalents totaled $228.6 million at November 30, 2025, compared to $598.0 million at November 30, 2024, compared to $727.1 million at November 30, 2023.2024. Cash equivalents included in the total were $152.6 million at November 30, 2025 and $385.1 million at November 30, 2024 and $508.2 million at November 30, 2023,2024, and were mainly invested in interest-bearing bank deposit accounts and money market funds. We had no cash borrowings outstanding under the Credit Facility as of November 30, 2024.2025. Based on our financial position as of November 30, 2024,2025, and our business forecast for 20252026 as discussed below under “Outlook,” we have no material concerns related to our liquidity. We believe that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our Credit Facility will be sufficient to fund our anticipated operating and land-related investment needs for at least the next 12 months.

Notes Payable. We have outstanding variable-rate borrowings under the Term Loan, and outstanding fixed-rate senior notes and mortgages and land contracts due to land sellers and other loans with varying maturities. As of November 30, 2024,2025, our notes payable had an aggregate principal amount of $1.70 billion, with $.5$.8 million payable within 12 months. Future interest payments associated with the Term Loan and our senior notes, together with the unused commitment fee associated with our Credit Facility, totaled $421.7$379.5 million as of November 30, 2024,2025, with $102.1$97.2 million payable within 12 months. The Term Loan will mature on AugustNovember 25,12, 2026.2029. Our next senior note maturity is our $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2027. Further information regarding our notes payable is provided in Note 15 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

Investments in Land and Land Development. Our investments in land and land development increaseddecreased 58%8% to $2.61 billion in 2025, compared to $2.84 billion in 2024, compared to $1.80 billion in 2023.2024. Land acquisition expenditures, which are included in our investments in land and land development, increaseddecreased 166%20% to $992.1 million from $1.24 billion from $465.8 million in the year-earlier period. Approximately 44%38% of our total investments in land and land development in 20242025 were related to land acquisitions, compared to approximately 26%44% in 2023.2024. While we made strategic investments in land and land development in each of our homebuilding reporting segments during 20242025 and 2023,2024, approximately 58%51% and 56%,58%, respectively, of these investments for each year were made in our West Coast homebuilding reporting segment.

In 2025,2026, we intend to continue to invest in and develop land positions within attractive submarkets and selectively acquire or control additional land that meets our investment standards. While we expect our land acquisition activity to increase in 2025 as compared to 2024, ourOur investments in land and land development in the future will depend significantly on market conditionsconditions, our expectations for future growth and available opportunities that meet our investment return standards.

The number and carrying value of lots we owned or controlled under land option contracts and other similar contracts at November 30, 20242025 increased 3% year over year, reflectingmainly landdue to investments in 2024, partly offset by homes deliveredland and ourland abandonmentdevelopment ofin 8,389 previously controlled lots.2025. The number of lots we owned and controlled as of November 30, 20242025 increaseddecreased 37%16% from November 30, 2023.2024, largely reflecting homes delivered and our decision to abandon 24,596 previously controlled lots, partly offset by newly optioned lots in 2025. The number of lots in inventory as of November 30, 20242025 included 18,9237,715 lots under contract where the associated deposits were refundable at our discretion, compared to 6,26018,923 of such lots at November 30, 2023.2024. Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 43% at November 30, 2025, compared to 49% at November 30, 2024.

Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 49% at November 30, 2024, compared to 27% at November 30, 2023. Generally, this percentage fluctuates with our decisions to control (or abandon) lots under land option contracts and other similar contracts or to purchase (or sell owned) lots based on available opportunities and our investment return standards.

We believegenerated our3,317 approachnet hasorders resonated with consumers. Inin the 2026 firstsecond quarter, with a steady4% conversiondecrease of traffic to sales,from the lowestyear-earlier cancellation rate we have experienced in the past four years and our higher average community count, we generated 2,846 net orders, a 3% increase year over year,quarter, with a monthly net order pace per community of 3.5,4.0, nearlycompared evento with4.5 for the year‑earlierprior-year quarter.period. Our average community count roseincreased 7%9% year over year to 274,278, and our ending community count increasedrose 8%11% to 276,280, reflecting our continued investments in land and land development to support future growth. The value of net orders for the 2026 first quarter was $1.36$1.55 billion, aboutdown the4% same asfrom the year-earlier quarter,period, withreflecting the higherlower net order volumevolume, partlyas offsettheir by a slight decrease in the$466,800 average selling price ofwas thosenearly neteven orderswith tothe $479,400.year-ago quarter.

Homebuilding revenues for the three months ended FebruaryMay 28,31, 2026 consistedwere ofgenerated from housing revenuesoperations and nominal land sale revenues.sales. For the correspondingthree periodmonths ofended May 31, 2025, homebuilding revenues were generated solely from housing operations. Housing revenues for the 2026 firstsecond quarter decreased 23%27% year over year to $1.07$1.11 billion, due to a 14%23% decrease in the number of homes delivered to 2,3702,395 and a 10%5% decline in their average selling price to $452,100.$461,900. Approximately 50% of our homes delivered in the 2026 firstsecond quarter were to first-time homebuyers. Our homes delivered as a percentage of backlog at the beginning of the quarter grewwere to 76%66% for the 2026 firstsecond quarter, fromcompared 62%to 70% for the year-earlier quarter,quarter. mainlyThis duedecrease toreflects growth in our improvedbacklog buildsince timesthe andbeginning of the year, as well as a greaterlower percentage of homes sold and delivered inwithin the same quarter.

Homebuilding operating income for the three months ended FebruaryMay 28,31, 2026 was $33.0$28.2 million, compared to $127.3$131.5 million for the year-earlier period. As a percentage of revenues, homebuilding operating income was 3.1%2.5% for the 2026 firstsecond quarter, compared to 9.2%8.6% for the corresponding 2025 period, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of revenues. Inventory-relatedOperating chargesincome totaledin $2.2both periods included $5.6 million forof theinventory-related current quarter and $1.5 million for the year-earlier quarter.charges. Our housing gross profit margin was 15.3%,15.2%, compared to 20.2%19.3% for the year-earlier quarter, primarily due to price reductions we implemented in conjunction with our simplified sales strategy to stimulate demand, higher relative land costs, product and geographic mix,costs and reduced operating leverage. Our selling,Selling, general and administrative expenses as a percentage of housing revenues increased 120200 basis points year over year to 12.2%,12.7%, mainly due to a decrease in operating leverage from lower housing revenues, partly offset by $8.0 million of insurance recoveries.revenues. Net income and diluted earnings per share for the three months ended FebruaryMay 28,31, 2026 were $33.4$27.3 million and $.52,$.43, respectively, compared to $109.6$107.9 million and $1.49,$1.50, respectively, for the three months ended FebruaryMay 28,31, 2025. Our diluted earnings per share for the 2026 firstsecond quarter reflected lower net income, partly offset by a 12% reduction in our weighted-average diluted share count reflecting the favorable impact of our common stock repurchases over the past several quarters.

We continue to take a balanced approach to capital allocation, guided by market conditions and our priorities of investing in land and land development to support future growth and returning capital to our stockholders. Our investments in land and land development for the 2026 firstsecond quarter totaled $567.2$495.8 million, a 38%4% decrease compared to the year-earlier quarter; the prior period included the purchase of two sizable land parcels in our Southwest homebuilding reporting segment.quarter. During the 2026 firstsecond quarter, we repurchased 843,3391.4 million shares of our common stock at a total cost of $50.0$75.0 million, compared to 753,9393.7 million shares at a total cost of $50.0$200.0 million in the year-earlier quarter. For the 2026 first half, we invested $1.06 billion in land and land development, representing a 26% decrease from the corresponding year-earlier period, and repurchased 2.2 million shares of our common stock at a total cost of $125.0 million. We ended the 2026 firstsecond quarter with total liquidity of approximately $1.20$1.12 billion, including cash and cash equivalents and $998.4$923.4 million of available capacity under the Credit Facility. We had $200.0$275.0 million of cash borrowings outstanding under the Credit Facility at FebruaryMay 28,31, 2026.

Although our ending backlog value at FebruaryMay 28,31, 2026 decreased 23%7% year over year to approximately $1.70$2.14 billion, we believe we are well positioned to achieve our projections for the 2026 secondthird quarter and full year, as described below under “Outlook.”

Revenues. Homebuilding revenues for the three months ended FebruaryMay 28,31, 2026 consisted of housing revenues and nominal land sale revenues. In the three months ended FebruaryMay 28,31, 2025, homebuilding revenues were generated solely from housing operations. Housing revenues for the 2026 firstsecond quarter declined 23%27% from the year-earlier quarter,quarter drivendue byto adecreases 14%of decrease23% in the number of homes delivered and a 10% decline5% in their overall average selling price. OurEach 2026of first-quarterour housinghomebuilding revenuesreporting includedsegments posted year-over-year decreases ofin 25%second quarter housing revenues, ranging from 17% in our WestSoutheast Coastsegment homebuildingto reporting segment, 42%47% in our Southwest segment and 19% in our Central segment, partially offset by an 11% increase in our Southeast segment. The decline in the overall number of homes delivered largelyprimarily resulted from our having 29%19% fewer homes in backlog at the beginning of the 2026 firstsecond quarter, asquarter compared to the year-earlier quarter.period, as well as our strategic shift toward a higher mix of Built to Order sales in the 2026 first half. The lower average selling price primarilymainly reflected a combination of product and geographic mix factors and the price reductions we implemented in 2025 in conjunction with our simplified sales strategy to stimulate demand.

Land sale revenues for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026 totaled $.6$.9 million.million and $1.4 million, respectively. There were no land sales during the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2025. Generally, land sale revenues fluctuate with our decisions to maintain or decrease our land ownership position in certain markets based upon the volume of our holdings, our business strategy, the strength and number of developers and other land buyers in particular markets at given points in time, the availability of opportunities to sell land at acceptable prices and prevailing market conditions.

Operating Income. Our homebuilding operating income for the three months ended FebruaryMay 28,31, 2026 decreased 74%79% from the prior-year period, reflecting lower housing gross profits, partly offset by lower selling, general and administrative expenses. Operating income for theboth 2026 first quarterperiods included inventory-related$5.6 chargesmillion of $2.2inventory-related million, compared to $1.5 million in the year-earlier quarter.charges. As a percentage of revenues, our operating income for the three months ended FebruaryMay 28,31, 2026 was 3.1%,2.5%, compared to 9.2%8.6% for the corresponding 2025 period, mainly due to a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of housing revenues. Excluding inventory-related charges, our operating income as a percentage of revenues was 3.0% for the three months ended May 31, 2026, compared to 9.0% for the year-earlier period.

•Housing Gross Profits – Housing gross profits of $164.0$168.6 million for the three months ended FebruaryMay 28,31, 2026 were down 41%43% year over year, reflecting lower housing revenues and a 490410 basis-point decrease in our housing gross profit margin to 15.3%.15.2%. The decline in the housing gross profit margin primarily reflected the price reductions we implemented a year ago, higher relative land costs, product and geographic mix,costs and reduced operating leverage. As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations, which is included in construction and land costs, was 1.8% and 1.7% for both the three months ended FebruaryMay 28,31, 2026 and 2025, respectively.2025. Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.5%15.7% for the 2026 firstsecond quarter decreased 480400 basis points year over year. The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.”

•Land Sale Profits – Land sales generated essentially break-evennominal results for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026. There were no land sales during the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2025.

Our selling, general and administrative expenses for the three months ended FebruaryMay 28,31, 2026 decreased 14% compared to the year-earlier period, largelyprimarily reflecting the favorable impact of $8.0 million in insurance recoveries and a decrease in commission expenses asresulting a result offrom fewer homes delivered in the 2026 period.period and a reduction in general and administrative expenses largely due to lower performance-based compensation costs. As a percentage of housing revenues, our selling, general and administrative expenses for the three months ended FebruaryMay 28,31, 2026 increased 120200 basis points year over year, mainly due to a decrease in operating leverage from lower housing revenues. For the six months ended May 31, 2026, selling, general and administrative expenses decreased 14% year over year, primarily due to the same factors described above for the three months ended May 31, 2026 as well as the favorable impact of $8.0 million in insurance recoveries. As a percentage of housing revenues, selling, general and administrative expenses for the six months ended May 31, 2026 increased 170 basis points, primarily reflecting decreased operating leverage from lower housing revenues, partly offset by the insurance recoveries.

Interest Income/Expense. Interest income, which is generated from short-term investments, was $1.3$1.2 million for the three months ended FebruaryMay 28,31, 2026, compared to $2.1$1.7 million for the year-earlier quarter. TheFor year-over-yearthe decreasesix months ended May 31, 2026, interest income was $2.4 million, compared to $3.8 million for the threecorresponding months2025 period. The year-over-year decreases for the three-month and six-month periods ended FebruaryMay 28,31, 2026 reflected our lower average balance of cash equivalents and a lower interest rate in the 2026 period.periods. Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of short-term investments and fluctuations in interest rates.

We incur interest principally from our borrowings to finance land acquisitions, land development, home construction and other operating and capital needs. All interest incurred during the three-month and six-month periods ended FebruaryMay 28,31, 2026 and 2025 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for each period. Accordingly, we had no interest expense for these periods. Further information regarding our interest incurred and capitalized is provided in Note 6 – Inventories in the Notes to Consolidated Financial Statements in this report.

Equity in Income of Unconsolidated Joint Ventures. Our equity in income of unconsolidated joint ventures was $.5$1.3 million for the three months ended FebruaryMay 28,31, 2026, compared to $2.4$1.1 million for the year-earlier period. For the six months ended May 31, 2026, our equity in income of unconsolidated joint ventures was $1.8 million, compared to $3.5 million for the corresponding 2025 period, mainly reflectingdue to a decrease in the number of homes delivered by an unconsolidated joint venture in California. Further information regarding our investments in homebuilding unconsolidated joint ventures is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report.

Net Orders. Net orders for the 2026 firstsecond quarter increaseddecreased 3%4% compared to the year-earlier quarter, reflecting growth of 12% in our West Coast homebuilding reporting segment and 10% in our Southwest segment, partially offsetdriven by declines of 6% and 8%22% in our Southwest and Central homebuilding reporting segments, respectively.respectively, partly offset by growth of 9% in our West Coast segment and 2% in our Southeast segment. The pace of monthly net orders per community was 3.54.0 in the 2026 firstsecond quarter, nearlycompared evento with 3.64.5 for the corresponding 2025 quarter, asreflecting the increase inlower net ordersorder wasvolume moreand than offset by the impact of aour higher average community count. The value of net orders for the 2026 firstsecond quarter was $1.36$1.55 billion, relativelya evendecline withof the4% from year-earlier quarter, asreflecting the higherlower net order volumevolume, was partly offset by a slight decrease inas the average selling price of those net orders towas $479,400.nearly even with the year-earlier quarter at $466,800. Our cancellation rate as a percentage of gross orders for the three months ended FebruaryMay 28,31, 2026 was 12%, compared to 16% for the year-earlier period.

In the 2026 first quarter,half, we continuedmaintained the simplified sales approach we implemented more than a year ago. With this strategy,approach, we provide a straightforward, transparent base price with limited, if any, concessions or incentives, designed to offer customers a compelling value competitive with area resale home prices. In addition,Additionally, while selling through our existing inventory, we emphasizedcontinued to emphasize sales of our Built to Order homes, which are a key industry differentiator for us and typically generate higher gross margins than inventory homes. Our goal is to bring the mix of Built to Order homes delivered to within our historical range of 60% to 70%, compared to approximately 55% in 2025. Supported by demand for personalized homes and a 22% year-over-year improvement in our build times, our mix of net orders in the quarter was predominantly Built to Order.

Backlog. The number of homes in our backlog at FebruaryMay 28,31, 2026 decreased 19%5% compared to FebruaryMay 28,31, 2025. Our overall backlog value at FebruaryMay 28,31, 2026 declined 23%7% year over year due to the lower number of homes in backlog and a 5%slight decrease in their average selling price, reflecting the price reductions implemented during 2025 as well as product and geographic mix.price. Backlog value was down year over year in eachthree of our homebuilding reporting segments, with decreases ranging from 11% in our West CoastSoutheast segment to 46%27% in our Southwest segment, partially offset by a 10% increase in our West Coast segment. Based on our historical experience, a portion of the homes in backlog will not result in homes delivered due to cancellations. AlthoughOur renewed focus on Built to Order contributed to sequential growth in our overallending backlog declinedfor yearboth overthe year,2026 first and second quarters, with the number of homes in backlog increasedat 15%May sequentially31, 2026 up 45% from November 30, 2025,2025. reflectingAmong other benefits, our larger backlog of Built to Order homes generally provides us with greater visibility into future deliveries and enhanced predictability of housing gross profit margins compared to inventory homes, as the higherselling netprice ordersand incost to build are usually known prior to starting the 2026 first quarter.home.

Community Count. We use the term “community count” to refer to the number of communities open for sale with at least five homes left to sell at the end of a reporting period. Our ending community count for the 2026 firstsecond quarter grew 8%11% and our average community count increased 7%,9%, each as compared to the year-earlier quarter.

In addition to the results of our homebuilding reporting segments presented below, our consolidated homebuilding operating income includes the results of Corporate and other, a non-operating segment. Corporate and other had operating losses of $33.8$36.8 million and $36.5$40.4 million in the three months ended FebruaryMay 28,31, 2026 and 2025, respectively. For the six months ended May 31, 2026, Corporate and other had an operating loss of $70.5 million, compared to $76.9 million for the corresponding year-earlier period.

The financial results of our homebuilding reporting segments for the three months and six months ended FebruaryMay 28,31, 2026 and 2025 were impacted to varying degrees by price reductions and other homebuyer concessions we extended to buyers in conjunction with our sales strategies, as well as product and geographic mix shifts of homes delivered.

This segment’s revenues for eachthe three-month and six-month periods ended May 31, 2026 consisted of housing revenues and nominal land sale revenues. For the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 20262025, andthis 2025segment’s revenues were generated solely from housing operations. Housing revenues for the three months and six months ended FebruaryMay 28,31, 2026 declined from the corresponding year-earlier period,periods, reflecting decreases in both the number of homes delivered and their average selling price. Operating income for the three months and six months ended FebruaryMay 28,31, 2026 declined year over year due to lower housing gross profits, partly offset by lower selling, general and administrative expenses. Operating income as a percentage of revenues for the 2026 firstsecond quarter decreased from the year-earlier quarter due to a 400430 basis-point decline in the housing gross profit margin to 14.4%14.0% and a 150190 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.7%. For the six months ended May 31, 2026, operating income as a percentage of revenues declined from the corresponding 2025 period, mainly reflecting a 420 basis-point decrease in the housing gross profit margin to 14.2% and a 170 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.8%. The year-over-year decrease in the housing gross profit margin was primarily due to price reductions, higher relative construction and land costs, product and geographic mix, and reduced operating leverage. For the three months ended February 28, 2026, inventory-related charges associated with housing operations were $.6 million, essentially the same as in the year-earlier period. The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 28, 2026 was mainly due to higher marketing and other expenses associated with our expanded community count in this segment and a decrease in operating leverage from lower housing revenues, partly offset by insurance recoveries.

In each of the three-month and six-month periods ended FebruaryMay 28,31, 2026 and 2025, this segment’s revenues were generated solely from housing operations. This segment’s housing revenues for the three months and six months ended FebruaryMay 28,31, 2026 decreaseddeclined year over year, driven by a decreasedecreases in both the number of homes delivered,delivered partly offset by an increase inand their average selling price. Operating income for theboth three months ended February 28, 2026periods decreased year over year due to lower housing gross profits, partially offset by lower selling, general and administrative expenses. As a percentage of revenues, this segment’s operating income for the 2026 firstsecond quarter declined from the year-earlier quarter, reflecting a 430450 basis-point decrease in the housing gross profit margin to 21.3%20.2% and a 200210 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.7%.9.1%. TheFor year-over-yearthe six months ended May 31, 2026, operating income as a percentage of revenues decreased year over year, mainly reflecting a 450 basis-point decrease in the housing gross profit margin forto the three months ended February 28, 2026 primarily reflected higher relative land costs20.7% and decreaseda operating190 leverage on lower housing revenues, partly offset by lower construction costs. There were no inventory-related charges associated with housing operations for the three months ended February 28, 2026, compared to $.3 million of such charges for the year-earlier period. The year-over-yearbasis-point increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 28, 2026 was mainly due to a decrease in operating leverage from lower housing revenues.8.9%.

InThis eachsegment’s ofrevenues for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026 and 2025, this segment’s revenues2025 were generated solely from housing operations. Housing revenues for the three months and six months ended FebruaryMay 28,31, 2026 were down from the corresponding year-earlier periodperiods due to decreases in both the number of homes delivered and their average selling price. Operating income for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026 declined from the corresponding year-earlier periodperiods mainly due to lower housing gross profits, partly offset by lower selling, general and administrative expenses. This segment’s operating income as a percentage of revenues for the 2026 firstsecond quarter decreased from the year-earlier period due to a 540270 basis-point decline in the housing gross profit margin to 14.8%,15.6% partly offset byand a 70 basis-point improvementincrease in selling, general and administrative expenses as a percentage of housing revenues to 10.3%.11.8%. TheFor the six months ended May 31, 2026, operating income as a percentage of revenues decreased year over year, reflecting a 400 basis-point decrease in the housing gross profit margin for the three months ended February 28, 2026 declined year over year mainly due to price reductions, higher relative construction15.2%, and landa costs,10 andbasis-point product and geographic mix. Inventory-related charges associated with housing operations for the three months ended February 28, 2026 were $.6 million, compared to $.3 million for the year-earlier period. For the three months ended February 28, 2026, the year-over-year improvementincrease in selling, general and administrative expenses as a percentage of housing revenues was mainly due to the favorable impact of insurance recoveries, partly offset by decreased operating leverage from lower housing revenues.11.0%.

Revenues. Financial services revenues for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026 grew 5%9% and 7%, respectively, from the corresponding year-earlier period,periods, reflecting higher insurance commission revenues, partly offset by lower title services revenues. The year-over-year increase in insurance commission revenues in the 2026 periods was primarily due to higher estimated future renewal commissions. Title services revenues decreased mainly due to fewer homes delivered in the 2026 period.periods.

Pretax income. Financial services pretax income for the threethree-month monthsand six-month periods ended FebruaryMay 28,31, 2026 decreased 26%18% and 22%, respectively, from the corresponding year-earlier period,periods, primarily due to lower equity in income of our unconsolidated joint venture, KBHS. TheFor the 2026 second quarter, our equity in income of KBHS declined 51%42% year over year, reflecting a decrease in KBHS’ income. This wasincome mainly due to fewer loans originated as a result of both athe decrease in thelower number of homes we delivered and a lower percentage of our homebuyers using KBHS. The impact of the lower loan volume on KBHS’ income was partially offset by a $.2$.9 million gain in the fair value of IRLCs in the three months ended FebruaryMay 28,31, 2026, compared to a $1.5$2.1 million loss for the year‑earlier period.

We ended the 2026 firstsecond quarter with total liquidity of approximately $1.20$1.12 billion, including cash and cash equivalents and $998.4$923.4 million of available capacity under the Credit Facility, with $200.0$275.0 million of cash borrowings outstanding. Cash and cash equivalents totaled $200.5$199.8 million at FebruaryMay 28,31, 2026, compared to $228.6 million at November 30, 2025. Cash equivalents included in the total were $45.0$63.3 million at FebruaryMay 28,31, 2026 and $152.6 million at November 30, 2025, and were mainly invested in interest-bearing bank deposit accounts and money market funds. Based on our financial position as of FebruaryMay 28,31, 2026, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity. We believe that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our Credit Facility will be sufficient to fund our anticipated operating and land-related investment needs for at least the next 12 months.

Cash Requirements. In the threesix months ended FebruaryMay 28,31, 2026, there have been no significant changes in our cash requirements from those reported in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended November 30, 2025.

Investments in Land and Land Development. Our investments in land and land development for the six months ended May 31, 2026 first quarter totaled $567.2$1.06 million,billion, a 38%26% decrease compared to the year-earlier period; the prior period included our purchase of two sizable land parcels in our Southwest homebuilding reporting segment. In the threesix months ended FebruaryMay 28,31, 2026, land acquisition expenditures, which are included in our investments in land and land development, decreased to $234.3$353.1 million, or 41%33% of our total investments, compared to $538.0$661.9 million, or approximately 58%46% of our total investments, in the corresponding period of 2025. While we made investments in land and land development investments were made in eachall of our homebuilding reporting segments during the threesix months ended FebruaryMay 28,31, 2026 and 2025, approximately 44% and 47%, respectively, of these investments for each period were made in our West Coast homebuildingsegment reportingcomprised segment.44% and 49%, respectively, of our total investments.

The carrying value of lots we owned or controlled under land option contracts and other similar contracts at FebruaryMay 28,31, 2026 increased slightly from November 30, 2025, mainly due to land and land development investments during the threesix months ended FebruaryMay 28,31, 2026. The number of lots we owned or controlled as of FebruaryMay 28,31, 2026 decreased 2%9% from November 30, 2025, largely reflecting homes delivered and our strategic abandonment of 3,4237,301 previously controlled lots, partly offset by newly optioned lots during the period. The number of lots in inventory as of FebruaryMay 28,31, 2026 included 7,7876,319 lots under contract where the associated deposits were refundable at our discretion, compared to 7,715 of such lots at November 30, 2025. Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 41%38% at FebruaryMay 28,31, 2026, compared to 43% at November 30, 2025. Generally, this percentage fluctuates with our decisions to control (or abandon) lots under land option contracts and other similar contracts or to purchase (or sell owned) lots based on available opportunities and our investment return standards.

Land Option Contracts and Other Similar Contracts. As discussed in Note 8 – Variable Interest Entities in the Notes to Consolidated Financial Statements in this report, our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance. Our decision to exercise a particular land option contract or other similar contract depends on the results of our due diligence reviews and ongoing market and project feasibility analysis that we conduct after entering into such a contract. In some cases, our decision to exercise a land option contract or other similar contract may be conditioned on the land seller obtaining necessary entitlements, such as zoning rights and environmental and development approvals, and/or physically developing the underlying land by a pre-determined date. We typically have the ability not to exercise our rights to the underlying land for any reason and, if applicable, forfeit our deposits without further penalty or obligation to the sellers. If we were to acquire all the land we had under land option contracts and other similar contracts at FebruaryMay 28,31, 2026, we estimate the remaining purchase price to be paid would be as follows: 2026 – $949.5$652.1 million; 2027 – $620.6$665.5 million; 2028 – $183.4$197.1 million; 2029 – $71.1$78.0 million; 2030 – $0; and thereafter – $0.

Our financial leverage, as measured by the ratio of debt to capital, increased 260380 basis points to 32.9%34.1% at FebruaryMay 28,31, 2026, compared to 30.3% at November 30, 2025 due to cash borrowings outstanding under the Credit Facility. The ratio of debt to capital is calculated by dividing notes payable by capital (notes payable plus stockholders’ equity).

LOC Facility. We maintain the LOC Facility to obtain letters of credit from time to time in the ordinary course of operating our business. Under the LOC Facility, which expires on February 13, 2028, we may issue up to $100.0 million of letters of credit. As of FebruaryMay 28,31, 2026 and November 30, 2025, we had letters of credit outstanding under the LOC Facility of $57.3$55.4 million and $68.2 million, respectively.

Performance Bonds. As discussed in Note 16 – Commitments and Contingencies in the Notes to Consolidated Financial Statements in this report, we had $1.36$1.38 billion and $1.37 billion of performance bonds outstanding at FebruaryMay 28,31, 2026 and November 30, 2025, respectively.

Unsecured Revolving Credit Facility. We have a $1.20 billion Credit Facility that will mature on November 12, 2030. The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount of available loans can be increased to a maximum of $1.70 billion under certain conditions, including obtaining additional bank commitments. The amount of the Credit Facility available for cash borrowings and the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility. As of FebruaryMay 28,31, 2026, we had $200.0$275.0 million of cash borrowings and $1.6 million of letters of credit outstanding under the Credit Facility. The Credit Facility is further described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

The covenants and other requirements under the Credit Facility and the Term Loan represent the most restrictive covenants that we are subject to with respect to our notes payable. The following table summarizes the financial covenants and other requirements under the Credit Facility and the Term Loan, and our actual levels or ratios (as applicable) with respect to those covenants and other requirements, in each case as of FebruaryMay 28,31, 2026:

As of FebruaryMay 28,31, 2026, we were in compliance with the applicable terms of all of our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. Our ability to access the Credit Facility’s full borrowing capacity, as well as the LOC Facility’s full issuance capacity, also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to meet their commitments to fund loans, extend credit or provide payment guarantees to or for us under those instruments.

Depending on available terms, we finance certain land acquisitions with purchase-money financing from land sellers or with other forms of financing from third parties. At FebruaryMay 28,31, 2026, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $2.8$2.6 million, secured primarily by the underlying property, which had an aggregate carrying value of $20.7$20.8 million.

Unconsolidated Joint Ventures. As discussed in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report, we have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. As of FebruaryMay 28,31, 2026, one of our unconsolidated joint ventures had borrowings outstanding under a term loan with a third-party lender and secured by the underlying property and related project assets. None of our other homebuilding unconsolidated joint ventures had outstanding debt at FebruaryMay 28,31, 2026.