48666KAS8

Results of Operations OVERVIEW Revenues are generated from our homebuilding and financial services operations. The following table presents a summary of our consolidated results of operations (dollars in thousands, except per share amounts): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Revenues: Homebuilding $ 1,107,107 $ 1,524,716 (27) % $ 2,179,166 $ 2,911,757 (25) % Financial services 5,328 4,869 9 10,280 9,605 7 Total revenues $ 1,112,435 $ 1,529,585 (27) % $ 2,189,446 $ 2,921,362 (25) % Pretax income: Homebuilding $ 30,584 $ 134,222 (77) % $ 65,373 $ 266,053 (75) % Financial services 6,665 8,161 (18) 12,200 15,687 (22) Total pretax income 37,249 142,383 (74) 77,573 281,740 (72) Income tax expense (9,900) (34,500) 71 (16,800) (64,300) 74 Net income $ 27,349 $ 107,883 (75) % $ 60,773 $ 217,440 (72) % Diluted earnings per share $ .43 $ 1.50 (71) % $ .96 $ 3.00 (68) % In the 2026 second quarter, the housing market continued to be negatively affected by a combination of persistent affordability pressures, elevated mortgage interest rates, and cautious buyer sentiment, which softened further during the period due to rising inflation, heightened macroeconomic uncertainties and geopolitical tensions, including the military conflict in the Middle East. At the same time, underlying demand drivers, such as favorable demographic trends, an ongoing structural undersupply of homes, and the appeal of new, personalized energy‑efficient homes, drove healthy traffic at our communities and interest in our product offerings. We generated 3,317 net orders in the 2026 second quarter, a 4% decrease from the year-earlier quarter, with a monthly net order pace per community of 4.0, compared to 4.5 for the prior-year period. Our average community count increased 9% year over year to 278, and our ending community count rose 11% to 280, reflecting our continued investments in land and land development to support future growth. The value of net orders for the quarter was $1.55 billion, down 4% from the year-earlier period, reflecting the lower net order volume, as their $466,800 average selling price was nearly even with the year-ago quarter. Within this operating environment during the 2026 first half, we maintained the simplified sales approach we implemented more than a year ago. With this 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. Additionally, while selling through our existing inventory, we continued 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. Our Built to Order homes are our core competency and their value proposition to prospective customers has increased with the meaningful reduction in our build times over the past few years. Reflecting this demand – and supported in part by our achieving year-over-year build time improvements for Built to Order homes of 22% in the 2026 first quarter and 24% in the 2026 second quarter – we generated predominantly Built to Order net orders in both quarters of our 2026 first half. We believe this momentum will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond. While our ending backlog at May 31, 2026 was down 5% on a year-over-year basis, our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes at May 31, 2026 up 45% from November 30, 2025. Among 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 selling price and cost to build are usually known prior to starting the home. Our strategic shift toward a higher mix of Built to Order home sales contributed to an anticipated temporary trough in deliveries during the 2026 first half, partly due to both the inherent time between sale and delivery of Built to Order homes and our intentional moderation of inventory starts. We expect the higher level of Built to Order sales generated during this period to 29 benefit our homes delivered and housing gross profit margins in the third and fourth quarters of the year as well as position us to be a stronger company. Homebuilding revenues for the three months ended May 31, 2026 were generated from housing operations and nominal land sales. For the three months ended May 31, 2025, homebuilding revenues were generated solely from housing operations. Housing revenues for the 2026 second quarter decreased 27% year over year to $1.11 billion, due to a 23% decrease in the number of homes delivered to 2,395 and a 5% decline in their average selling price to $461,900. Approximately 50% of our homes delivered in the 2026 second quarter were to first-time homebuyers. Our homes delivered as a percentage of backlog at the beginning of the quarter were 66% for the 2026 second quarter, compared to 70% for the year-earlier quarter. This decrease reflects growth in our backlog since the beginning of the year, as well as a lower percentage of homes sold and delivered within the same quarter. Homebuilding operating income for the three months ended May 31, 2026 was $28.2 million, compared to $131.5 million for the year-earlier period. As a percentage of revenues, homebuilding operating income was 2.5% for the 2026 second quarter, compared to 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. Operating income in both periods included $5.6 million of inventory-related charges. Our housing gross profit margin was 15.2%, compared to 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 and reduced operating leverage. Selling, general and administrative expenses as a percentage of housing revenues increased 200 basis points year over year to 12.7%, mainly due to a decrease in operating leverage from lower housing revenues. Net income and diluted earnings per share for the three months ended May 31, 2026 were $27.3 million and $.43, respectively, compared to $107.9 million and $1.50, respectively, for the three months ended May 31, 2025. Our diluted earnings per share for the 2026 second quarter reflected lower net income, partly offset by a 12% reduction in our weighted-average diluted share count reflecting the 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 second quarter totaled $495.8 million, a 4% decrease compared to the year-earlier quarter. During the 2026 second quarter, we repurchased 1.4 million shares of our common stock at a total cost of $75.0 million, compared to 3.7 million shares at a total cost of $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 second quarter with total liquidity of $1.12 billion, including cash and cash equivalents and $923.4 million of available capacity under the Credit Facility. We had $275.0 million of cash borrowings outstanding under the Credit Facility at May 31, 2026. Although our ending backlog value at May 31, 2026 decreased 7% year over year to approximately $2.14 billion, we believe we are well positioned to achieve our projections for the 2026 third quarter and full year, as described below under “Outlook.” HOMEBUILDING Financial Results. The following table presents a summary of certain financial and operational data for our homebuilding operations (dollars in thousands, except average selling price): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Revenues: Housing $ 1,106,252 $ 1,524,716 $ 2,177,726 $ 2,911,757 Land 855 — 1,440 — Total 1,107,107 1,524,716 2,179,166 2,911,757 Costs and expenses: Construction and land costs Housing (937,629) (1,230,055) (1,845,142) (2,337,469) Land (780) — (1,296) — Total (938,409) (1,230,055) (1,846,438) (2,337,469) Selling, general and administrative expenses (140,547) (163,198) (271,591) (315,486) Total (1,078,956) (1,393,253) (2,118,029) (2,652,955) Operating income 28,151 131,463 61,137 258,802 30 Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Interest income 1,164 1,679 2,445 3,758 Equity in income of unconsolidated joint ventures 1,269 1,080 1,791 3,493 Homebuilding pretax income $ 30,584 $ 134,222 $ 65,373 $ 266,053 Homes delivered 2,395 3,120 4,765 5,890 Average selling price $ 461,900 $ 488,700 $ 457,000 $ 494,400 Housing gross profit margin as a percentage of housing revenues 15.2 % 19.3 % 15.3 % 19.7 % Adjusted housing gross profit margin as a percentage of housing revenues 15.7 % 19.7 % 15.6 % 20.0 % Selling, general and administrative expenses as a percentage of housing revenues 12.7 % 10.7 % 12.5 % 10.8 % Operating income as a percentage of revenues 2.5 % 8.6 % 2.8 % 8.9 % Revenues. Homebuilding revenues for the three months ended May 31, 2026 consisted of housing revenues and nominal land sale revenues. In the three months ended May 31, 2025, homebuilding revenues were generated solely from housing operations. Housing revenues for the 2026 second quarter declined 27% from the year-earlier quarter due to decreases of 23% in the number of homes delivered and 5% in their overall average selling price. Each of our homebuilding reporting segments posted year-over-year decreases in second quarter housing revenues, ranging from 17% in our Southeast segment to 47% in our Southwest segment. The decline in the overall number of homes delivered primarily resulted from our having 19% fewer homes in backlog at the beginning of the 2026 second quarter compared to the year-earlier 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 mainly reflected a combination of product and geographic mix factors and the price reductions we implemented in conjunction with our simplified sales strategy to stimulate demand. For the six months ended May 31, 2026, homebuilding revenues consisted of housing revenues and land sale revenues. In the year-earlier period, homebuilding revenues were generated solely from housing operations. Housing revenues for the six months ended May 31, 2026 decreased 25% from the corresponding 2025 period due to a 19% decline in the number of homes delivered and an 8% decrease in their average selling price. Land sale revenues for the three-month and six-month periods ended May 31, 2026 totaled $.9 million and $1.4 million, respectively. There were no land sales during the three-month and six-month periods ended May 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 May 31, 2026 decreased 79% from the prior-year period, reflecting lower housing gross profits, partly offset by lower selling, general and administrative expenses. Operating income for both periods included $5.6 million of inventory-related charges. As a percentage of revenues, our operating income for the three months ended May 31, 2026 was 2.5%, compared to 8.6% for the corresponding 2025 period, 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. For the six months ended May 31, 2026, our homebuilding operating income declined 76% from the year-earlier period mainly due to a decrease in housing gross profits, partly offset by lower selling, general and administrative expenses. Operating income for the six months ended May 31, 2026 included inventory-related charges of $7.7 million, compared to $7.0 million of such charges for the corresponding 2025 period. As a percentage of revenues, our operating income for the six months ended May 31, 2026 decreased 610 basis points year over year to 2.8%, mainly reflecting a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of revenues. Excluding inventory-related charges, our operating income as a percentage of revenues declined 590 basis points to 3.2% for the six months ended May 31, 2026 from 9.1% for the corresponding year-earlier period. 31 •Housing Gross Profits – Housing gross profits of $168.6 million for the three months ended May 31, 2026 were down 43% year over year, reflecting lower housing revenues and a 410 basis-point decrease in our housing gross profit margin to 15.2%. The decline in the housing gross profit margin primarily reflected the price reductions we implemented a year ago, higher relative land 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 1.7% for both the three months ended May 31, 2026 and 2025. Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.7% for the 2026 second quarter decreased 400 basis points year over year. For the six months ended May 31, 2026, our housing gross profits of $332.6 million decreased from $574.3 million for the year-earlier period due to lower housing revenues and a 440 basis-point decline in our housing gross profit margin. The housing gross profit margin decrease primarily reflected the same factors described above for the three months ended May 31, 2026. As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations was 1.7% for both the six months ended May 31, 2026 and 2025. Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.6% for the six months ended May 31, 2026 decreased 440 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 nominal results for the three-month and six-month periods ended May 31, 2026. There were no land sales during the three-month and six-month periods ended May 31, 2025. •Selling, General and Administrative Expenses – The following table presents the components of our selling, general and administrative expenses (dollars in thousands): Three Months Ended May 31, Six Months Ended May 31, 2026 % of Housing Revenues 2025 % of Housing Revenues 2026 % of Housing Revenues 2025 % of Housing Revenues Marketing expenses $ 39,062 3.5 % $ 42,602 2.8 % $ 77,777 3.6 % $ 82,265 2.8 % Commission expenses (a) 40,161 3.6 52,514 3.4 79,741 3.7 99,680 3.4 General and administrative expenses (b) 61,324 5.6 68,082 4.5 114,073 5.2 133,541 4.6 Total $ 140,547 12.7 % $ 163,198 10.7 % $ 271,591 12.5 % $ 315,486 10.8 % (a)Commission expenses include sales commissions on homes delivered paid to internal sales counselors and external real estate brokers. (b)General and administrative expenses for both the three months and six months ended May 31, 2026 included $1.5 million of costs associated with the planned relocation of our corporate headquarters office, as discussed in Note 21 – Relocation of Corporate Headquarters in the Notes to Consolidated Financial Statements in this report. Our selling, general and administrative expenses for the three months ended May 31, 2026 decreased 14% compared to the year-earlier period, primarily reflecting a decrease in commission expenses resulting from fewer homes delivered in the 2026 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 May 31, 2026 increased 200 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 $1.2 million for the three months ended May 31, 2026, compared to $1.7 million for the year-earlier quarter. For the six months ended May 31, 2026, interest income was $2.4 million, compared to $3.8 million for the corresponding 2025 period. The year-over-year decreases for the three-month and six-month periods ended May 31, 2026 reflected our lower average balance of cash equivalents and a lower interest rate in the 2026 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. 32 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 May 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 $1.3 million for the three months ended May 31, 2026, compared to $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 due 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, Cancellation Rates, Backlog and Community Count. The following table presents information about our net orders, cancellation rate, ending backlog and community count (dollars in thousands): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Net orders 3,317 3,460 6,163 6,232 Net order value (a) $ 1,548,396 $ 1,611,014 $ 2,912,708 $ 2,957,081 Cancellation rate (b) 12 % 16 % 12 % 16 % Ending backlog — homes 4,526 4,776 4,526 4,776 Ending backlog — value $ 2,138,334 $ 2,288,231 $ 2,138,334 $ 2,288,231 Ending community count 280 253 280 253 Average community count 278 254 276 255 (a) Net order value represents potential future housing revenues associated with net orders generated during the period, as well as homebuyer selections of lot and product premiums and design choices and options for homes in backlog during the same period. (b) Cancellation rate represents the total number of contracts for new homes cancelled during a period divided by the total (gross) orders for new homes generated during the same period. Net Orders. Net orders for the 2026 second quarter decreased 4% compared to the year-earlier quarter, driven by declines of 6% and 22% in our Southwest and Central homebuilding reporting segments, 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 4.0 in the 2026 second quarter, compared to 4.5 for the corresponding 2025 quarter, reflecting the lower net order volume and our higher average community count. The value of net orders for the 2026 second quarter was $1.55 billion, a decline of 4% from year-earlier quarter, reflecting the lower net order volume, as the average selling price of those net orders was nearly even with the year-earlier quarter at $466,800. Our cancellation rate as a percentage of gross orders for the three months ended May 31, 2026 was 12%, compared to 16% for the year-earlier period. In the 2026 first half, we maintained the simplified sales approach we implemented more than a year ago. With this 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. Additionally, while selling through our existing inventory, we continued 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. Our Built to Order homes are our core competency and their value proposition to prospective customers has increased with the meaningful reduction in our build times over the past few years. Reflecting demand for our personalized homes, supported in part by our achieving ongoing year-over-year build time improvements, we generated predominantly Built to Order net orders in both the 2026 first and second quarters, momentum that we believe will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond. Backlog. The number of homes in our backlog at May 31, 2026 decreased 5% compared to May 31, 2025. Our overall backlog value at May 31, 2026 declined 7% year over year due to the lower number of homes in backlog and a slight decrease in their 33 average selling price. Backlog value was down year over year in three of our homebuilding reporting segments, with decreases ranging from 11% in our Southeast segment to 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. Our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes in backlog at May 31, 2026 up 45% from November 30, 2025. Among 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 selling price and cost to build are usually known prior to starting the 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 second quarter grew 11% and our average community count increased 9%, each as compared to the year-earlier quarter. HOMEBUILDING REPORTING SEGMENTS Operational Data. The following tables present information about our homes delivered, net orders, cancellation rates as a percentage of gross orders, net order value, average community count and ending backlog (number of homes and value) by homebuilding reporting segment (dollars in thousands): Three Months Ended May 31, Homes Delivered Net Orders Cancellation Rates Segment 2026 2025 2026 2025 2026 2025 West Coast 818 968 1,203 1,104 12 % 14 % Southwest 375 661 523 557 11 13 Central 596 811 803 1,030 13 15 Southeast 606 680 788 769 13 20 Total 2,395 3,120 3,317 3,460 12 % 16 % Net Order Value Average Community Count Segment 2026 2025 Variance 2026 2025 Variance West Coast $ 766,870 $ 728,141 5 % 107 89 20 % Southwest 228,373 268,921 (15) 39 36 8 Central 267,836 328,614 (18) 67 63 6 Southeast 285,317 285,338 — 65 66 (2) Total $ 1,548,396 $ 1,611,014 (4) % 278 254 9 % Six Months Ended May 31, Homes Delivered Net Orders Cancellation Rates Segment 2026 2025 2026 2025 2026 2025 West Coast 1,528 1,817 2,205 2,002 11 % 14 % Southwest 753 1,339 1,037 1,102 10 14 Central 1,271 1,562 1,463 1,750 14 16 Southeast 1,213 1,172 1,458 1,378 12 20 Total 4,765 5,890 6,163 6,232 12 % 16 % 34 Six Months Ended May 31, Net Order Value Average Community Count Segment 2026 2025 Variance 2026 2025 Variance West Coast $ 1,429,004 $ 1,335,320 7 % 103 88 17 % Southwest 449,900 538,143 (16) 39 38 3 Central 503,436 568,339 (11) 67 66 2 Southeast 530,368 515,279 3 67 63 6 Total $ 2,912,708 $ 2,957,081 (2) % 276 255 8 % May 31, Backlog – Homes Backlog – Value Segment 2026 2025 Variance 2026 2025 Variance West Coast 1,618 1,396 16 % $ 1,042,729 $ 947,842 10 % Southwest 751 897 (16) 323,520 443,533 (27) Central 1,064 1,321 (19) 368,893 445,853 (17) Southeast 1,093 1,162 (6) 403,192 451,003 (11) Total 4,526 4,776 (5) % $ 2,138,334 $ 2,288,231 (7) % The composition of our homes delivered, net orders and backlog shifts with the product and geographic mix of our active communities and the corresponding average selling prices of the homes ordered and/or delivered at these communities in any particular period, changing as new communities open and existing communities wind down or sell out in the ordinary course. In addition, with our Built to Order business model, the selling prices of individual homes within a community may vary due to differing lot sizes and locations, home square footage, product premiums and the design choices and options buyers select. These intrinsic variations in our business limit the comparability of our homes delivered, net orders and backlog, as well as their corresponding values, between sequential and year-over-year periods, in addition to the effect of prevailing economic or housing market conditions in or across any particular periods. Financial Results. Below is a discussion of the financial results for 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 and/or interest income and expense. 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 $36.8 million and $40.4 million in the three months ended May 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 May 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. West Coast. The following table presents financial information related to our West Coast segment (dollars in thousands, except average selling price): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Revenues $ 511,493 $ 660,193 (23) % $ 960,702 $ 1,261,842 (24) % Construction and land costs (440,175) (539,124) 18 (824,507) (1,030,292) 20 Selling, general and administrative expenses (44,645) (45,475) 2 (84,303) (89,464) 6 Operating income $ 26,673 $ 75,594 (65) % $ 51,892 $ 142,086 (63) % 35 Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Homes delivered 818 968 (15) % 1,528 1,817 (16) % Average selling price $ 624,300 $ 682,000 (8) % $ 628,200 $ 694,500 (10) % Operating income as a percentage of revenues 5.2 % 11.5 % (630) bps 5.4 % 11.3 % (590) bps This segment’s revenues for the three-month and six-month periods ended May 31, 2026 consisted of housing revenues and nominal land sale revenues. For the three-month and six-month periods ended May 31, 2025, this segment’s revenues were generated solely from housing operations. Housing revenues for the three months and six months ended May 31, 2026 declined from the corresponding year-earlier 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 May 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 second quarter decreased from the year-earlier quarter due to a 430 basis-point decline in the housing gross profit margin to 14.0% and a 190 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 for the three months and six months ended May 31, 2026 was primarily due to price reductions, higher relative construction and land costs, increased inventory-related charges, product and geographic mix, and reduced operating leverage. For the three months ended May 31, 2026, inventory-related charges associated with housing operations were $4.3 million, compared to $1.2 million for the year-earlier period. For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $5.0 million, compared to $1.8 million for 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 and six months ended May 31, 2026 was mainly due to higher marketing and other expenses associated with our expanded community count in this segment as well as a decrease in operating leverage from lower housing revenues. For the six months ended May 31, 2026, these impacts were partly offset by insurance recoveries. Southwest. The following table presents financial information related to our Southwest segment (dollars in thousands, except average selling price): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Revenues $ 166,625 $ 314,102 (47) % $ 346,857 $ 626,981 (45) % Construction and land costs (133,001) (236,406) 44 (274,920) (469,124) 41 Selling, general and administrative expenses (15,231) (22,315) 32 (30,937) (43,701) 29 Operating income $ 18,393 $ 55,381 (67) % $ 41,000 $ 114,156 (64) % Homes delivered 375 661 (43) % 753 1,339 (44) % Average selling price $ 444,300 $ 475,200 (7) % $ 460,600 $ 468,200 (2) % Operating income as a percentage of revenues 11.0 % 17.6 % (660) bps 11.8 % 18.2 % (640) bps In the three-month and six-month periods ended May 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 May 31, 2026 declined year over year, driven by decreases in both the number of homes delivered and their average selling price. Operating income for both periods 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 second quarter declined from the year-earlier quarter, reflecting a 450 basis-point decrease in the housing gross profit margin to 20.2% and a 210 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 9.1%. For the 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 to 20.7% and a 190 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.9%. 36 The year-over-year decrease in the housing gross profit margin for the three months and six months ended May 31, 2026 primarily reflected higher relative land costs and decreased operating leverage on lower housing revenues, partly offset by lower construction costs. There were $.4 million of inventory-related charges associated with housing operations for the three months and six months ended May 31, 2026, compared to $.8 million and $1.1 million, respectively, of such charges for the corresponding year-earlier periods. The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months and six months ended May 31, 2026 was mainly due to a decrease in operating leverage from lower housing revenues. Central. The following table presents financial information related to our Central segment (dollars in thousands, except average selling price): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Revenues $ 205,829 $ 282,966 (27) % $ 429,437 $ 558,579 (23) % Construction and land costs (173,626) (231,321) 25 (364,080) (451,217) 19 Selling, general and administrative expenses (24,230) (30,966) 22 (47,290) (61,195) 23 Operating income $ 7,973 $ 20,679 (61) % $ 18,067 $ 46,167 (61) % Homes delivered 596 811 (27) % 1,271 1,562 (19) % Average selling price $ 345,400 $ 348,900 (1) % $ 337,900 $ 357,600 (6) % Operating income as a percentage of revenues 3.9 % 7.3 % (340) bps 4.2 % 8.3 % (410) bps This segment’s revenues for the three-month and six-month periods ended May 31, 2026 and 2025 were generated solely from housing operations. Housing revenues for the three months and six months ended May 31, 2026 were down from the corresponding year-earlier periods due to decreases in both the number of homes delivered and their average selling price. Operating income for the three-month and six-month periods ended May 31, 2026 declined from the corresponding year-earlier periods 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 second quarter decreased from the year-earlier period due to a 270 basis-point decline in the housing gross profit margin to 15.6% and a 70 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 11.8%. For 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 to 15.2%, and a 10 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 11.0%. The housing gross profit margin declined year over year for both the three-month and six-month periods ended May 31, 2026, mainly due to price reductions, higher relative construction and land costs, and product and geographic mix. Inventory-related charges associated with housing operations for the three months ended May 31, 2026 were $.4 million, compared to $1.8 million for the year-earlier period. For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $1.0 million, compared to $2.1 million for 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 May 31, 2026 primarily reflected decreased operating leverage from lower housing revenues. For the six months ended May 31, 2026, the year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues was mainly due to decreased operating leverage, largely offset by the favorable impact of insurance recoveries. Southeast. The following table presents financial information related to our Southeast segment (dollars in thousands, except average selling price): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Revenues $ 223,160 $ 267,455 (17) % $ 442,170 $ 464,355 (5) % Construction and land costs (189,773) (221,064) 14 (378,842) (383,120) 1 Selling, general and administrative expenses (21,518) (26,161) 18 (42,622) (47,928) 11 Operating income $ 11,869 $ 20,230 (41) % $ 20,706 $ 33,307 (38) % 37 Three Months Ended May 31, Six Months Ended May 31, 2026 2025 Variance 2026 2025 Variance Homes delivered 606 680 (11) % 1,213 1,172 3 % Average selling price $ 368,300 $ 393,300 (6) % $ 364,000 $ 396,200 (8) % Operating income as a percentage of revenues 5.3 % 7.6 % (230) bps 4.7 % 7.2 % (250) bps This segment’s revenues for the three months ended May 31, 2026 and the three months and six months ended May 31, 2025 were generated solely from housing operations. For the six months ended May 31, 2026, this segment’s revenues were comprised of housing revenues and nominal land sale revenues. Housing revenues for the three months ended May 31, 2026 were down year over year due to decreases in both the number of homes delivered and their average selling price. For the six months ended May 31, 2026, housing revenues declined from the corresponding year-earlier period to $441.6 million, reflecting a decrease in the average selling price of homes delivered, partly offset by an increase in the number of homes delivered. Operating income for the three months and six months ended May 31, 2026 declined from the corresponding year-earlier periods as a result of lower housing gross profits, partially offset by lower selling, general and administrative expenses. As a percentage of revenues, operating income for the 2026 second quarter declined from the year-earlier quarter primarily due to a 230 basis-point decrease in the housing gross profit margin to 15.0%, partly offset by a 20 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.6%. Operating income as a percentage of revenues for the six months ended May 31, 2026 declined from the year-earlier period due to a 320 basis-point decrease in the housing gross profit margin to 14.3%, partly offset by a 70 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.7%. The year-over-year decrease in the housing gross profit margin for the three months and six months ended May 31, 2026 mainly reflected price reductions, higher construction and land costs, and product and geographic mix. Inventory-related charges associated with housing operations for the three months ended May 31, 2026 were $.5 million, compared to $1.7 million for the year-earlier quarter. For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $1.3 million, compared to $1.9 million for the corresponding 2025 period. The year-over-year improvement in selling, general and administrative expenses as a percentage of housing revenues for both the three months and six months ended May 31, 2026 was mainly due to a decrease in sales commissions. FINANCIAL SERVICES REPORTING SEGMENT The following table presents a summary of selected financial and operational data for our financial services reporting segment (dollars in thousands): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Revenues $ 5,328 $ 4,869 $ 10,280 $ 9,605 Expenses (1,493) (1,570) (3,043) (3,109) Equity in income of unconsolidated joint venture 2,830 4,862 4,963 9,191 Pretax income $ 6,665 $ 8,161 $ 12,200 $ 15,687 Total originations (a): Loans 1,727 2,249 3,321 4,316 Principal $ 687,065 $ 930,825 $ 1,292,943 $ 1,799,480 Percentage of homebuyers using KBHS 83 % 88 % 82 % 89 % Average FICO score 741 743 742 744 Loans sold (a): Loans sold to GR Alliance 1,230 1,814 2,571 3,235 Principal $ 503,276 $ 747,144 $ 1,019,285 $ 1,322,444 Loans sold to third parties 333 425 697 988 Principal $ 116,801 $ 191,697 $ 242,733 $ 441,674 (a)Loan originations and sales occurred within KBHS. 38 Revenues. Financial services revenues for the three-month and six-month periods ended May 31, 2026 grew 9% and 7%, respectively, from the corresponding year-earlier 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 periods. Pretax income. Financial services pretax income for the three-month and six-month periods ended May 31, 2026 decreased 18% and 22%, respectively, from the corresponding year-earlier periods, primarily due to lower equity in income of our unconsolidated joint venture, KBHS. For the 2026 second quarter, our equity in income of KBHS declined 42% year over year, reflecting a decrease in KBHS’ income mainly due to fewer loans originated as a result of both the lower 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 $.9 million gain in the fair value of IRLCs in the three months ended May 31, 2026, compared to a $2.1 million loss for the year‑earlier period. For the six months ended May 31, 2026, our equity in income of KBHS decreased 46% from the corresponding year-earlier period, due to a decline in KBHS’ income that primarily reflected the same factors described above for the three months ended May 31, 2026. The impact of the lower loan volume for the six months ended May 31, 2026 was partly offset by a $1.0 million gain in the fair value of IRLCs, compared to a $3.6 million loss in the corresponding period of 2025. Further information regarding our investments in unconsolidated joint ventures, including KBHS, is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report. INCOME TAXES Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Income tax expense $ 9,900 $ 34,500 $ 16,800 $ 64,300 Effective tax rate 26.6 % 24.2 % 21.7 % 22.8 % Our effective tax rate for the three months ended May 31, 2026 increased from the year-earlier period, primarily due to the lower pretax income we generated for the 2026 period, which heightened the relative impact of non-deductible executive compensation expense. For the six months ended May 31, 2026, our effective tax rate decreased from the year-earlier period, mainly due to the lower pretax income, which resulted in a higher relative impact of excess tax benefits from stock-based compensation in the 2026 period, partly offset by a higher relative impact of non-deductible executive compensation expense. On July 4, 2025, the OBBBA was signed into law. Among its provisions is the repeal of Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, our income tax expense and effective tax rate take into account the anticipated lower Section 45L benefit for the homes delivered after the effective date. The other tax-related provisions of the OBBBA did not have a material impact on our consolidated financial statements. Further information regarding our income taxes is provided in Note 13 – Income Taxes in the Notes to Consolidated Financial Statements in this report. NON-GAAP FINANCIAL MEASURES This report contains information about our adjusted housing gross profit margin, which is not calculated in accordance with GAAP. We believe this non-GAAP financial measure is relevant and useful to investors in understanding our operations, and may be helpful in comparing us with other companies in the homebuilding industry to the extent they provide similar information. However, because it is not calculated in accordance with GAAP, this non-GAAP financial measure may not be completely comparable to other companies in the homebuilding industry and, thus, should not be considered in isolation or as an alternative to operating performance and/or financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement the most directly comparable GAAP financial measure in order to provide a greater understanding of the factors and trends affecting our operations. 39 Adjusted Housing Gross Profit Margin. The following table reconciles our housing gross profit margin calculated in accordance with GAAP to the non-GAAP financial measure of our adjusted housing gross profit margin (dollars in thousands): Three Months Ended May 31, Six Months Ended May 31, 2026 2025 2026 2025 Housing revenues $ 1,106,252 $ 1,524,716 $ 2,177,726 $ 2,911,757 Housing construction and land costs (937,629) (1,230,055) (1,845,142) (2,337,469) Housing gross profits 168,623 294,661 332,584 574,288 Add: Inventory-related charges (a) 5,579 5,558 7,734 7,013 Adjusted housing gross profits $ 174,202 $ 300,219 $ 340,318 $ 581,301 Housing gross profit margin as a percentage of housing revenues 15.2 % 19.3 % 15.3 % 19.7 % Adjusted housing gross profit margin as a percentage of housing revenues 15.7 % 19.7 % 15.6 % 20.0 % (a) Represents inventory impairment and land option contract abandonment charges associated with housing operations. Adjusted housing gross profit margin is a non-GAAP financial measure, which we calculate by dividing housing revenues less housing construction and land costs excluding housing inventory impairment and land option contract abandonment charges (as applicable) recorded during a given period, by housing revenues. The most directly comparable GAAP financial measure is housing gross profit margin. We believe adjusted housing gross profit margin is a relevant and useful financial measure to investors in evaluating our performance as it measures the gross profits we generated specifically on the homes delivered during a given period. This non-GAAP financial measure isolates the impact that the housing inventory impairment and land option contract abandonment charges have on housing gross profit margins, and allows investors to make comparisons with our competitors that adjust housing gross profit margins in a similar manner. We also believe investors will find adjusted housing gross profit margin relevant and useful because it represents a profitability measure that may be compared to a prior period without regard to variability of housing inventory impairment and land option contract abandonment charges. This financial measure assists us in making strategic decisions regarding community location and product mix, product pricing and construction pace. Liquidity and Capital Resources Overview. We have funded our homebuilding and financial services activities over the last several years with: •internally generated cash flows; •public issuances of debt securities; •borrowings under the Credit Facility; •the Term Loan; •land option contracts and other similar contracts and seller notes; •public issuances of our common stock; and •letters of credit and performance bonds. We manage our use of cash in the operation of our business to support the execution of our primary strategic goals. Over the past several years, we have primarily used cash for: •land acquisitions and land development; •home construction; •operating expenses; •principal and interest payments on notes payable; •repayments of borrowings under the Credit Facility; •dividends paid to stockholders; and •repurchases of our common stock. We ended the 2026 second quarter with total liquidity of $1.12 billion, including cash and cash equivalents and $923.4 million of available capacity under the Credit Facility, with $275.0 million of cash borrowings outstanding. Cash and cash equivalents totaled $199.8 million at May 31, 2026, compared to $228.6 million at November 30, 2025. Cash equivalents included in the total were $63.3 million at May 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 May 31, 2026, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity. We believe that our 40 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 six months ended May 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 totaled $1.06 billion, a 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 six months ended May 31, 2026, land acquisition expenditures, which are included in our investments in land and land development, decreased to $353.1 million, or 33% of our total investments, compared to $661.9 million, or 46% of our total investments, in the corresponding period of 2025. While land and land development investments were made in all of our homebuilding reporting segments during the six months ended May 31, 2026 and 2025, our West Coast segment comprised 44% and 49%, respectively, of our total investments. For the remainder of 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, depending significantly on market conditions and available opportunities that meet our investment return standards. The following table presents the number of lots we owned or controlled under land option contracts and other similar contracts and the carrying value of inventory by homebuilding reporting segment (dollars in thousands): May 31, 2026 November 30, 2025 Variance Segment Lots Carrying Value Lots Carrying Value Lots Carrying Value West Coast 19,056 $ 3,066,783 20,750 $ 3,048,056 (1,694) $ 18,727 Southwest 10,668 1,094,519 11,142 969,260 (474) 125,259 Central 18,750 735,233 20,614 758,962 (1,864) (23,729) Southeast 10,632 836,022 12,106 894,524 (1,474) (58,502) Total 59,106 $ 5,732,557 64,612 $ 5,670,802 (5,506) $ 61,755 The carrying value of lots we owned or controlled under land option contracts and other similar contracts at May 31, 2026 increased slightly from November 30, 2025, mainly due to land and land development investments during the six months ended May 31, 2026. The number of lots we owned or controlled as of May 31, 2026 decreased 9% from November 30, 2025, largely reflecting homes delivered and our strategic abandonment of 7,301 previously controlled lots, partly offset by newly optioned lots during the period. The number of lots in inventory as of May 31, 2026 included 6,319 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 38% at May 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 May 31, 2026, we estimate the remaining purchase price to be paid would be as follows: 2026 – $652.1 million; 2027 – $665.5 million; 2028 – $197.1 million; 2029 – $78.0 million; 2030 – $0; and thereafter – $0. 41 Liquidity. The table below summarizes our cash and cash equivalents, and total liquidity (in thousands): May 31, 2026 November 30, 2025 Cash and cash equivalents $ 199,819 $ 228,614 Credit Facility commitment 1,200,000 1,200,000 Borrowings outstanding under the Credit Facility (275,000) — Letters of credit outstanding under the Credit Facility (1,610) (1,610) Credit Facility availability 923,390 1,198,390 Total liquidity $ 1,123,209 $ 1,427,004 Capital Resources. Our notes payable consisted of the following (in thousands): May 31, 2026 November 30, 2025 Variance Credit Facility $ 275,000 $ — $ 275,000 Term Loan 358,532 358,317 215 Senior notes 1,332,568 1,331,584 984 Mortgages and land contracts due to land sellers and other loans 2,614 3,076 (462) Total $ 1,968,714 $ 1,692,977 $ 275,737 Our financial leverage, as measured by the ratio of debt to capital, increased 380 basis points to 34.1% at May 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 May 31, 2026 and November 30, 2025, we had letters of credit outstanding under the LOC Facility of $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 $1.38 billion and $1.37 billion of performance bonds outstanding at May 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 May 31, 2026, we had $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. Under the terms of the Credit Facility and the Term Loan, we are required, among other things, to maintain compliance with various covenants, including financial covenants regarding our consolidated tangible net worth, Leverage Ratio, and either an Interest Coverage Ratio or minimum liquidity level, each as defined therein. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the Credit Facility and the Term Loan and can differ in certain respects from comparable GAAP or other commonly used terms. The financial covenant requirements under the Credit Facility and the Term Loan are set forth below: •Consolidated tangible net worth – We must maintain a consolidated tangible net worth at the end of any fiscal quarter greater than or equal to the sum of (a) $2.70 billion, plus (b) an amount equal to 50% of the aggregate of the cumulative consolidated net income for each fiscal quarter commencing after August 31, 2025 and ending as of the last day of such fiscal quarter (though there is no reduction if there is a consolidated net loss in any fiscal quarter), plus (c) an amount equal to 50% of the cumulative net proceeds we receive from the issuance of our capital stock after August 31, 2025. 42 •Leverage Ratio – We must also maintain a Leverage Ratio of less than or equal to .60 at the end of each fiscal quarter. The Leverage Ratio is calculated as the ratio of our consolidated total indebtedness to the sum of consolidated total indebtedness and consolidated tangible net worth, all as defined under the Credit Facility and the Term Loan. •Interest Coverage Ratio or liquidity – We are also required to maintain either (a) an Interest Coverage Ratio of greater than or equal to 1.50 at the end of each fiscal quarter; or (b) a minimum level of liquidity, but not both. The Interest Coverage Ratio is the ratio of our consolidated adjusted EBITDA to consolidated interest incurred, each as defined under the Credit Facility and the Term Loan, in each case for the previous 12 months. Our minimum liquidity is required to be greater than or equal to consolidated interest incurred, as defined under the Credit Facility and the Term Loan, for the four most recently ended fiscal quarters in the aggregate. In addition, under the Credit Facility and the Term Loan, our equity investments in joint ventures and non-guarantor subsidiaries and other unconsolidated entities as of the end of each fiscal quarter cannot exceed the sum of (a) $104.8 million and (b) 20% of consolidated tangible net worth. Further, for so long as we do not hold an investment grade rating, as defined under the Credit Facility and the Term Loan, the Credit Facility and the Term Loan do not permit our borrowing base indebtedness, which, subject to certain exceptions, is the aggregate principal amount of our and certain of our subsidiaries’ outstanding indebtedness for borrowed money and non-collateralized financial letters of credit, to be greater than our borrowing base (a measure relating to our inventory and unrestricted cash assets). 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 May 31, 2026: Financial Covenants and Other Requirements Covenant Requirement Actual Consolidated tangible net worth > $2.78 billion $3.75 billion Leverage Ratio < .600 .324 Interest Coverage Ratio (a) > 1.500 4.601 Minimum liquidity (a) > $109.9 million $1.12 billion Investments in joint ventures and non-guarantor subsidiaries < $855.8 million $480.6 million Borrowing base in excess of borrowing base indebtedness (as defined) n/a $2.01 billion (a) Under the terms of the Credit Facility and the Term Loan, we are required to maintain either a minimum Interest Coverage Ratio or a minimum level of liquidity. The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale-leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets. As of May 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. There are no agreements that restrict our payment of dividends other than the Credit Facility and the Term Loan, which would restrict our payment of certain dividends, such as cash dividends on our common stock, if a default under the Credit Facility or the Term Loan exists at the time of any such payment, or if any such payment would result in such a default (other than dividends paid within 60 days after declaration, if there was no default at the time of declaration). 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 May 31, 2026, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $2.6 million, secured primarily by the underlying property, which had an aggregate carrying value of $20.8 million. 43 Senior Unsecured Term Loan. We have a $360.0 million Term Loan with the lenders party thereto that will mature on November 12, 2029, or earlier if we secure borrowings under the Credit Facility without similarly securing the Term Loan (subject to certain exceptions). The Term Loan is further described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report. 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 May 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 May 31, 2026. Consolidated Cash Flows. The following table presents a summary of net cash provided by (used in) our operating, investing and financing activities (in thousands): Six Months Ended May 31, 2026 2025 Net cash provided by (used in): Operating activities $ (93,470) $ (165,883) Investing activities (30,275) (20,416) Financing activities 94,062 (101,952) Net decrease in cash and cash equivalents $ (29,683) $ (288,251) Operating Activities. Generally, our net operating cash flows fluctuate mainly based on changes in our inventories and our profitability. Our net cash used by operating activities for the six months ended May 31, 2026 mainly reflected a net decrease in accounts payable, accrued expenses and other liabilities of $93.3 million, a net increase in inventories of $73.6 million and a net increase in receivables of $25.1 million, partly offset by net income of $60.8 million. In the six months ended May 31, 2025, our net cash used by operating activities primarily reflected a net increase in inventories of $390.6 million and a net decrease in accounts payable, accrued expenses and other liabilities of $68.3 million, partly offset by net income of $217.4 million and a net decrease in receivables of $20.7 million. Investing Activities. In the six months ended May 31, 2026, net cash used in investing activities consisted of $22.9 million for net purchases of property and equipment and $8.9 million of contributions to unconsolidated joint ventures, partially offset by a return of investments in unconsolidated joint ventures of $1.6 million. In the six months ended May 31, 2025, the net cash used in investing activities included $22.7 million for net purchases of property and equipment, partly offset by a $2.3 million return of investments in unconsolidated joint ventures. Financing Activities. In the six months ended May 31, 2026, cash was provided by $275.0 million of net borrowings under the Credit Facility and $.6 million of issuances of common stock under employee stock plans. The cash provided was partly offset by stock repurchases and excise taxes paid of $130.1 million, dividend payments on our common stock of $32.6 million, and tax payments associated with stock-based compensation awards of $18.3 million. In the six months ended May 31, 2025, our uses of cash included stock repurchases of $250.0 million, dividend payments on our common stock of $36.5 million and tax payments associated with stock-based compensation awards of $15.9 million. The cash used was partially offset by $200.0 million of net borrowings under the Credit Facility and $.4 million of issuances of common stock under employee stock plans. Dividends. In the 2026 and 2025 second quarters, our board of directors declared, and we paid, a quarterly cash dividend of $.25 per share. Quarterly dividends declared and paid during each of the six-month periods ended May 31, 2026 and 2025 totaled $.50 per share. The declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our board of directors, and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions. Share Repurchase Program. On October 9, 2025, our board of directors authorized us to repurchase up to $1.00 billion of our outstanding common stock. As of November 30, 2025, there was $900.0 million of remaining availability under this share repurchase authorization. In the six months ended May 31, 2026, we repurchased 2,216,336 shares of our common stock at a total cost of $125.0 million. Repurchases under the authorization may occur periodically through open market purchases, privately negotiated transactions or otherwise, with the timing and amount at management’s discretion and dependent on market, business and other conditions. This share repurchase authorization will continue in effect until fully used or earlier 44 terminated or suspended by our board of directors, and does not obligate us to purchase any shares. As of May 31, 2026, there was $775.0 million of remaining availability under this share repurchase authorization. As stated above, we believe we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business. For the remainder of 2026, we expect to use or redeploy our cash resources or cash borrowings under the Credit Facility to support our business within the context of prevailing market conditions. During this time, we may also engage in capital markets, bank loan, project debt or other financial transactions, including the repurchase of debt or equity securities or potential new issuances of debt or equity securities to support our business needs. The amounts involved in these transactions, if any, may be material. In addition, as necessary or desirable, we may adjust or amend the terms of and/or expand the capacity of the Credit Facility or the LOC Facility, or enter into additional letter of credit facilities, or other similar facility arrangements, in each case with the same or other financial institutions, or allow any such facilities or loans to mature or expire. Our ability to engage in such transactions may be constrained by volatile or tight economic, capital, credit and/or financial market conditions or other factors, including those described below under “Outlook,” and/or our liquidity, leverage and net worth, and we can provide no assurance as to successfully completing, the costs of, or the operational limitations arising from any one or series of such transactions. Supplemental Guarantor Financial Information As of May 31, 2026, we had $1.34 billion in aggregate principal amount of outstanding senior notes, $275.0 million of borrowings outstanding under the Credit Facility and $360.0 million in aggregate principal amount of borrowings outstanding under the Term Loan. Our obligations to pay principal and interest on the senior notes and borrowings, if any, under the Credit Facility and the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries. Our other subsidiaries, including all of our subsidiaries associated with our financial services operations, do not guarantee any such indebtedness (collectively, “Non-Guarantor Subsidiaries”), although we may cause a Non-Guarantor Subsidiary to become a Guarantor Subsidiary if we believe it to be in our or the relevant subsidiary’s best interest. See Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report for additional information regarding the terms of our senior notes, the Credit Facility and the Term Loan. The guarantees are full and unconditional, and the Guarantor Subsidiaries are 100% owned by us. The guarantees are senior unsecured obligations of each of the Guarantor Subsidiaries and rank equally in right of payment with all unsecured and unsubordinated indebtedness and guarantees of such Guarantor Subsidiaries. The guarantees are effectively subordinated to any secured indebtedness of such Guarantor Subsidiaries to the extent of the value of the assets securing such indebtedness, and structurally subordinated to indebtedness and other liabilities of Non-Guarantor Subsidiaries. Pursuant to the terms of the indenture governing the senior notes and the terms of the Credit Facility and the Term Loan, if any of the Guarantor Subsidiaries ceases to be a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X using a 5% rather than a 10% threshold (provided that the assets of our Non-Guarantor Subsidiaries do not in the aggregate exceed 10% of an adjusted measure of our consolidated total assets), it will be automatically and unconditionally released and discharged from its guaranty of the senior notes, the Credit Facility and the Term Loan so long as all guarantees by such Guarantor Subsidiary of any other of our or our subsidiaries’ indebtedness are terminated at or prior to the time of such release. The following tables present summarized financial information for KB Home and the Guarantor Subsidiaries on a combined basis, excluding unconsolidated joint ventures and after the elimination of (a) intercompany transactions and balances between KB Home and the Guarantor Subsidiaries and (b) equity in earnings from and investments in the Non-Guarantor Subsidiaries. See Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report for additional information regarding our unconsolidated joint ventures. May 31, 2026 November 30, 2025 Summarized Balance Sheet Data (in thousands) Assets Cash $ 161,559 $ 170,338 Inventories 5,394,905 5,311,390 Amounts due from Non-Guarantor Subsidiaries 248,551 278,680 Total assets 6,465,046 6,360,871 45 May 31, 2026 November 30, 2025 Summarized Balance Sheet Data (in thousands) Liabilities and Stockholders’ Equity Notes payable $ 1,968,714 $ 1,692,977 Amounts due to Non-Guarantor Subsidiaries 453,861 438,762 Total liabilities 3,054,864 2,831,933 Stockholders’ equity 3,410,182 3,528,938 Summarized Statement of Operations Data (in thousands) Six Months Ended May 31, 2026 Revenues $ 1,974,877 Construction and land costs (1,661,854) Selling, general and administrative expenses (259,983) Interest income from Non-Guarantor Subsidiaries 9,073 Pretax income 63,956 Net income 50,556 Critical Accounting Policies and Estimates The preparation of our consolidated financial statements requires the use of judgment in the application of accounting policies and estimates of uncertain matters. There have been no significant changes to our critical accounting policies and estimates during the three months ended May 31, 2026 from those disclosed 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. Recent Accounting Pronouncements There are no recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements. Outlook We continue to view the long‑term outlook for the housing market favorably, supported by positive demographic trends and an ongoing structural undersupply of homes. However, we expect the challenging market conditions we experienced in the 2026 second quarter – marked by persistent affordability pressures, elevated mortgage interest rates, and cautious buyer sentiment, which softened further during the period due to rising inflation, heightened macroeconomic uncertainties and geopolitical tensions, including the military conflict in the Middle East – to continue in the near term. To the extent these trends continue or worsen, net order activity could remain subdued, including net orders for our Built to Order homes. As we move into the 2026 second half, we plan to maintain our simplified sales approach we implemented more than a year ago. With this 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. Additionally, while selling through our existing inventory, we will continue to emphasize sales of our Built to Order homes, with the goal of bringing the mix closer to our historical average of 60% to 70% of homes delivered. Our mix of net orders in both the 2026 first and second quarters was predominantly Built to Order, momentum that we believe will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond. Although the number of homes in our backlog at May 31, 2026 was down 5% year over year, our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes in backlog at May 31, 2026 up 45% from November 30, 2025. We expect our year-over-year ending backlog comparison to turn positive in the 2026 third quarter. Among other benefits, a larger backlog of Built to Order homes generally provides us greater visibility into future deliveries and higher gross margins than we typically generate on inventory sales. We also intend to continue focusing on improving our build times and tightly managing our direct construction costs. While our strategic shift toward a higher mix of Built to Order homes and our intentional moderation of inventory starts contributed to an anticipated temporary trough in the number of homes delivered during the 2026 first half, we expect the higher level of Built to Order sales generated during this period to produce sequential improvement in our homes delivered and 46 housing gross profit margins during the 2026 second half, although each is projected to be lower on a year-over-year basis in the third and fourth quarters. Specifically as to our housing gross profit margin, we anticipate more pronounced sequential improvement as the year progresses, supported by increased operating leverage and a favorable mix of homes delivered, including a growing proportion of Built to Order homes and a greater share from our Northern California operations, which have historically generated relatively high average selling prices and margins. In addition, we believe that our selling, general and administrative expenses as a percentage of housing revenues will benefit in the 2026 second half from an expected increase in operating leverage. We have maintained a strong financial position and financial flexibility, supported by our Credit Facility, which we expanded at the end of our 2025 fiscal year. For the remainder of 2026, in order to strengthen our long-term growth platform, we intend, subject to the operating environment and available opportunities, to acquire and control additional land positions within attractive submarkets in our served markets that meet our investment standards. We also plan to continue to develop land we own in a manner that prioritizes capital efficiency, including developing lots where possible in smaller phases and aligning development with our starts pace to optimally manage our inventory of finished lots. Reflecting our ongoing investments in land and land development, our ending community count for the 2026 second quarter increased 11% year over year to 280. Consistent with our balanced approach to capital allocation, we plan to continue returning capital to our stockholders, primarily through additional share repurchases. As of May 31, 2026, we had $775.0 million remaining under our current board of directors share repurchase authorization. This provides us with the opportunity to repurchase our common stock in the remainder of 2026, with the pace, volume and timing based on considerations of our operating cash flow, liquidity outlook, land investment opportunities and needs, the market price of our common stock, and the housing market and general economic conditions. Based on the factors discussed above, we have updated our 2026 projections. We are providing our current projections for the 2026 third quarter, reaffirming, with narrower ranges, the 2026 full‑year projections for deliveries and housing revenues previously disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2026, and providing additional details on our present 2026 full‑year outlook for certain metrics, as follows: 2026 Third Quarter •We expect deliveries to be in the range of 2,600 to 2,800, compared to 3,393 for the 2025 third quarter. •We expect to generate housing revenues in the range of $1.20 billion to $1.35 billion, compared to $1.61 billion for the corresponding 2025 period. •We expect our housing gross profit margin will be in the range of 16.0% to 16.6%, assuming no inventory-related charges, compared to 18.9% for the corresponding 2025 quarter. •We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 11.3% to 11.9%, compared to 10.0% for the 2025 third quarter. •We expect our effective tax rate will be in the range of 19.0% to 21.0%, compared to 23.3% for the year-earlier quarter. •We expect our ending community count will be in the range of 270 to 280, compared to 264 for the 2025 third quarter. •We expect our common stock repurchases to be in the range of $50.0 million to $100.0 million. 2026 Full Year •We expect deliveries to be in the range of 10,500 to 11,000, compared to 12,902 for 2025. •We expect our housing revenues to be in the range of $4.90 billion to $5.30 billion, compared to $6.21 billion for 2025. •We expect our housing gross profit margin will be in the range of 16.1% to 16.5%, assuming no inventory-related charges, compared to 19.1% for 2025. •We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 11.4% to 11.8%, compared to 10.4% for 2025. •We expect our effective tax rate will be in the range of 22.0% to 24.0%, compared to 22.6% for 2025. In addition to factors discussed elsewhere in this report, our future performance and the strategies we implement (and adjust or refine as necessary or appropriate) will depend significantly on economic, employment, homebuilding industry and capital, 47 credit and financial market conditions, as well as a fairly stable and constructive political and regulatory environment, particularly in regard to housing and mortgage loan financing policies. This includes U.S. trade policy and any tariffs, and other countries’ countervailing measures, that remain in effect on raw building materials such as steel, lumber, drywall and concrete, and/or finished products. Though certain tariffs and countervailing measures instituted in 2025 have affected pricing in adjacent sectors, we have not experienced significant cost increases or raw material/finished product availability constraints to date. However, if U.S. or foreign governments take actions that cause tariff-related cost or availability pressures to escalate or expand, we could experience higher construction costs and/or supply chain disruptions that would affect our business and consolidated financial statements in future reporting periods. We also believe the ongoing significant volatility in global energy, credit and capital markets, international shipping instability, and negative consumer confidence impacts from the conflict in the Middle East, particularly if it intensifies or is prolonged, could cause supply chain disruptions, increase our land development and input costs – such as for lumber and oil‑ and petroleum‑based building products – or reduce our revenues or housing gross profit margins beyond our ability to offset through pricing or cost‑management initiatives. Additionally, while the Federal Reserve reduced interest rates in 2025 and may lower rates further in 2026 or later periods, there is no assurance it will do so, or that any reduction(s), or other monetary policy changes, will meaningfully lower mortgage interest rates or positively affect demand or our business, results of operations or consolidated financial statements. The potential extent and effect of these and other factors on our business is highly uncertain, unpredictable and outside our control, and our past performance, including in the three months ended May 31, 2026, should not be considered indicative of our future results on any metric or set of metrics, including, but not limited to, our net orders, backlog, revenues, margins and returns. Forward-Looking Statements Investors are cautioned that certain statements contained in this report, as well as some statements by us in periodic press releases and other public disclosures and some oral statements by us to securities analysts, stockholders and others during presentations, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “hope,” and similar expressions constitute forward-looking statements. In addition, any statements that we may make or provide concerning future financial or operating performance (including without limitation future revenues, community count, homes delivered, net orders, selling prices, sales pace per new community, expenses, expense ratios, housing gross profits, housing gross profit margins, earnings or earnings per share, or growth or growth rates), future market conditions, future interest rates, and other economic conditions, ongoing business strategies or prospects, future dividends and changes in dividend levels, the value of our backlog (including amounts that we expect to realize upon delivery of homes included in our backlog and the timing of those deliveries), the value of our net orders, potential future asset acquisitions and the impact of completed acquisitions, future share issuances or repurchases, future debt issuances, repurchases or redemptions and other possible future actions are also forward-looking statements as defined by the Act. Forward-looking statements are based on our current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our operations, economic and market factors, and the homebuilding industry, among other things. These statements are not guarantees of future performance, and we have no specific policy or intention to update these statements. If we update or revise any such statement(s), no assumption should be made that we will further update or revise that statement(s) or update or revise any other such statement(s). In addition, forward-looking and other statements in this report and in other public or oral disclosures that express or contain opinions, views or assumptions about market or economic conditions; the success, performance, effectiveness and/or relative positioning of our strategies, initiatives or operational activities; and other matters, may be based in whole or in part on general observations or opinions of our management, limited or anecdotal evidence and/or business or industry experience without in-depth or any particular empirical investigation, inquiry or analysis and are not intended, and do not express, factual assertions about past events. Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, the following: •general economic, employment and business conditions; •population growth or decline, household formations and demographic trends; •conditions in the capital, credit and financial markets; •our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms; 48 •the execution of any securities repurchases pursuant to our board of directors’ authorization; •material and trade costs and availability, including the costs associated with achieving the current standards for ENERGY STAR certified homes, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages; •rising consumer and producer price inflation; •changes in interest rates, including those set by the Federal Reserve, and those available in the capital markets or from financial institutions and other lenders, and applicable to mortgage loans; •our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule; •our compliance with the terms of the Credit Facility and the Term Loan; •the ability and willingness of the applicable lenders and financial institutions, or any substitute or additional lenders and financial institutions, to meet their commitments or fund borrowings, extend credit or provide payment guarantees to or for us under the Credit Facility or LOC Facility; •volatility in the market price of our common stock; •our obtaining adequate levels of affordable insurance for our business and our ability to cover any incurred costs, liabilities or losses that are not covered by the insurance we have procured or that are due to our deciding not to procure certain types or amounts of insurance coverage; •home selling prices, including our homes’ selling prices, being unaffordable relative to consumer incomes; •weak or declining consumer confidence, either generally or specifically with respect to purchasing homes; •competition from other sellers of new and resale homes, particularly homebuilders with significant unsold inventory; •weather events, significant natural disasters and other climate and environmental factors, such as a lack of adequate water supply to permit new home communities in certain areas; •potential instability associated with the regulatory and executive policies, proposals and orders of the U.S. presidential administration, including any directed at or affecting our operations, business practices or capital allocation strategies; •government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies, and the potential significant scaling back or ending of the federal conservatorship of the government-sponsored enterprises), the homebuilding industry, or construction activities; •changes in existing tax laws or enacted corporate income tax rates, including those resulting from regulatory guidance and interpretations issued with respect thereto, such as IRS guidance regarding heightened qualification requirements for federal tax credits for building energy-efficient homes and the pending expiration of such tax credits in 2026; •changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries, and financial markets’ and business’ reactions to any such policies; •disruptions in world and regional trade flows, economic activity and supply chains due to the military conflicts in the Middle East and in Ukraine, including those stemming from wide-ranging sanctions and other restrictions the U.S. and other countries have imposed or may further impose respectively on Iranian or Russian business sectors, financial organizations, individuals and raw materials, the impact of which may, among other things, increase our operational costs, exacerbate building materials and appliance shortages and/or reduce our revenues and earnings; •the adoption of new or amended financial accounting standards and the guidance and/or interpretations with respect thereto; •the availability and cost of land in desirable areas and our ability to timely and efficiently develop acquired land parcels and open new home communities; •impairment, land option contract abandonment or other inventory-related charges, including any stemming from decreases in the value of our land assets; •our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred; 49 •costs and/or charges arising from regulatory compliance requirements or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals; •our ability to use/realize the net deferred tax assets we have generated; •our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets, through, among other things, our making substantial investments in land and land development, which, in some cases, involves putting significant capital over several years into large projects in one location, and in entering into new markets; •our operational and investment concentration in markets in California; •consumer interest in and responsiveness to our new home communities, products and simplified selling process with transparent pricing and limited initiatives, particularly from first-time homebuyers and higher-income consumers; •our ability to generate orders and convert our backlog of orders to home deliveries and revenues, particularly in key markets in California; •our ability to successfully implement our business strategies and achieve any associated financial and operational targets and objectives, including those discussed in this report or in any of our other public filings, presentations or disclosures; •income tax expense volatility associated with stock-based compensation; •the costs we incur in connection with relocating our corporate headquarters office from Los Angeles, California to Tempe, Arizona in 2027, including costs for employee-related severance, retention and relocation, as well as recruitment and onboarding; •the ability of our homebuyers to obtain homeowners and flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all; •the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services, which may depend on the ability and willingness of lenders and financial institutions to offer such loans and services to our homebuyers; •the performance of mortgage lenders to our homebuyers; •the performance of KBHS; •the ability and willingness of lenders and financial institutions to extend credit facilities to KBHS to fund its originated mortgage loans; •information technology failures and data security breaches; •an epidemic, pandemic or significant seasonal or other disease outbreak, and the control response measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; •widespread protests and/or civil unrest, whether due to political events, social movements or other reasons; and •other events outside of our control. Please see our Annual Report on Form 10-K for the year ended November 30, 2025 and other filings with the SEC for a further discussion of these and other risks and uncertainties applicable to our business.