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Item 2. Management’s Discussion and Analysis

2024-07-05 compared with 2024-04-05 · 278 added, 196 removed, 400 unchanged (54% of the section changed)

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The following table presents a summary of our consolidated results of operations (dollars in thousands, except per share amounts):

Three Months Ended

February 29, 2024 February 28, 2023 Variance

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance

Homebuilding $ 1,701,512 $ 1,757,846 (3) % $ 3,163,210 $ 3,136,383 1 %

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$ 2.15 $ 1.94 11 % $ 3.91 $ 3.38 16 %

We generated solid results in our 2024 first quarter, including year-over-year expansion in deliveries, revenues, net income and diluted earnings per share, and a significant increase in our net orders.

This performance principally reflected healthy housing market conditions, including a decline in mortgage interest rates since the 2023 fourth quarter, favorable demographic trends, the long-term underproduction of new homes relative to population growth, constrained resale home inventory and demand for homes at our price points.

We also continued to employ targeted sales strategies during the quarter, including homebuyer concessions (particularly, mortgage-related concessions such as interest rate buydown or lock programs), to address homebuyer affordability challenges and help drive order activity and minimize cancellations.

In this environment, our net orders for the 2024 first quarter rose 55% from the year-earlier quarter, driven by a higher monthly net order pace per community of 4.6, which increased from 2.8 a year ago, partly offset by a 4% year-over-year decrease in our average community count.

Net order value for the 2024 first quarter improved 58% year over year to $1.58 billion, reflecting the growth in net orders and a higher average selling price of those orders.

Homebuilding revenues for the three months ended February 29, 2024 were generated from housing revenues and $3.6 million of land sales.

Housing revenues of $1.46 billion grew 6% from the year-earlier quarter due to a 9% increase in the number of homes delivered to 3,037, partly offset by a 3% decline in their average selling price to $480,100.

Approximately 50% of our homes delivered in the 2024 first quarter were to first-time homebuyers.

Homebuilding operating income for the three months ended February 29, 2024 totaled $157.7 million, up slightly from $156.5 million for the year-earlier quarter, and as a percentage of revenues, was 10.8%, compared to 11.4%.

Our homebuilding operating income margin for the 2024 first quarter mainly reflected an increase in selling, general and administrative expenses as a percentage of housing revenues due to higher costs associated with a planned increase in our community count during the year as we position our operations for growth.

Our housing gross profit margin of 21.5% for the 2024 first quarter was even with the year-earlier quarter.

Net income and diluted earnings per share for the three months ended February 29, 2024 increased 10% and 21%, respectively, year over year.

Our diluted earnings per share for the 2024 first quarter reflected the favorable impact of our common stock repurchases over the past several quarters.

During the 2024 first quarter, we remained focused on balancing pace, price and construction starts at each community to optimize our return on each inventory asset within its market context.

The significant supply chain disruptions we experienced in recent years have largely subsided, and together with our ongoing initiative to simplify our product offerings, we have maintained the improvement in our construction cycle times that we achieved last year.

Reflecting our improved build times, our homes delivered as a percentage of beginning backlog increased to 55% for the 2024 first quarter, from 36% for the year-earlier quarter.

Though we are encouraged by our progress, there are some ongoing supply chain-related challenges that could

continue to negatively affect our land development and home construction activities, and it is possible they may worsen during this year and/or in later periods.

We believe our strong balance sheet and liquidity position provide us with the flexibility to operate effectively through evolving market conditions in 2024 and pursue our priorities of investing in land and land development to support future growth and returning capital to our stockholders.

In the 2024 first quarter, we increased our investments in land and land development to $587.1 million, up 60% from the year-earlier period.

We also repurchased approximately 826,663 shares of our common stock during the quarter at a total cost of $50.0 million.

With our strong operating cash flow, we ended the 2024 first quarter with total liquidity of $1.75 billion, including cash and cash equivalents and $1.08 billion of available capacity under the Credit Facility.

We had no cash borrowings outstanding under the Credit Facility at February 29, 2024.

Although our ending backlog value at February 29, 2024 decreased 16% year over year to approximately $2.79 billion, we believe we are well-positioned to achieve solid results for the 2024 second quarter and full year, as described below under “Outlook.” On a sequential basis, our ending backlog value increased 5% from the 2023 fourth quarter.

Our 2024 second quarter performance was solid.

We generated total revenues of $1.71 billion and year-over-year improvement in net income, diluted earnings per share, net orders and net order value.

Additionally, longer-term housing market drivers remained largely positive, including favorable demographic trends, rising household formations, solid employment, the undersupply of new and resale homes, and demand for homes at our price points.

At the same time, mortgage interest rates were volatile and generally rose during the period, which created uncertainty for homebuyers and challenged housing affordability.

Within this environment, we continued to employ targeted sales strategies during the quarter, as we have to varying degrees since the 2022 second half, including homebuyer concessions (particularly, mortgage-related concessions such as interest rate buydowns), to support homebuyers, helping to drive order activity and minimize cancellations.

Net orders for the 2024 second quarter rose 2% from the year-earlier quarter, reflecting an increased monthly net order pace per community of 5.5, which was one of our highest second-quarter levels in many years and up from 5.2 a year ago, partly offset by a 4% year-over-year decrease in our average community count.

We believe sequentially higher traffic levels to our communities over the course of the quarter, a meaningfully lower cancellation rate compared to the prior-year period, the degree of personalization we offer our homebuyers and our improved build times also contributed to this net order result.

Net order value for the 2024 second quarter expanded 7% year over year to $2.03 billion due to the increase in net orders and a higher average selling price of those orders, which largely reflected shifts in product and geographic mix.

Homebuilding revenues for the three months ended May 31, 2024 were generated solely from housing revenues.

Housing revenues of $1.70 billion were down 3% from the year-earlier quarter due to a 4% decrease in the number of homes delivered to 3,523, partly offset by a slight increase in their average selling price to $483,000.

Approximately 50% of our homes delivered in the 2024 second quarter were to first-time homebuyers.

Homebuilding operating income for the three months ended May 31, 2024 was $188.2 million, compared to $202.1 million for the year-earlier quarter, and as a percentage of revenues, was 11.1%, compared to 11.5%.

Our homebuilding operating income margin for the 2024 second quarter mainly reflected an increase in selling, general and administrative expenses as a percentage of housing revenues due to higher costs associated with a planned increase in our community count during the year as we position our operations for growth.

Our housing gross profit margin of 21.1% for the 2024 second quarter was even with the year-earlier quarter.

Our total pretax income for the 2024 second quarter rose 3% compared to the prior year period to $221.1 million, and included a $12.5 million gain associated with the sale of a privately held technology company in which we held an ownership interest.

Net income and diluted earnings per share for the three months ended May 31, 2024 increased 2% and 11%, respectively, year over year.

Our improved diluted earnings per share for the 2024 second quarter reflected the higher net income and the favorable impact of our common stock repurchases over the past several quarters.

During the 2024 first half, we remained focused on balancing pace, price and construction starts at each community to optimize our return on each inventory asset within its market context.

The significant supply chain disruptions we experienced in recent

years have largely subsided, and together with our ongoing initiative to simplify our product offerings, we have continued to improve our construction cycle times compared to last year.

Among other benefits, faster construction times make our Built to Order® homes more appealing to customers, increase our inventory turns and expand the population of homes available for delivery.

Reflecting our improved build times and lower cancellation rate in the current period, our homes delivered as a percentage of backlog at the beginning of the quarter increased to 61% for the 2024 second quarter, from 52% for the year-earlier quarter.

We believe our strong balance sheet and liquidity position provide us with the flexibility to operate effectively through evolving market conditions for the remainder of 2024 and pursue our priorities of investing in land and land development to support future growth and returning capital to our stockholders.

In the 2024 first half, we increased our investments in land and land development to $1.26 billion, up 64% from the year-earlier period.

We also repurchased 1,591,405 shares of our common stock during the six months ended May 31, 2024 at a total cost of $100.0 million, and raised our quarterly cash dividend on our common stock by $.05 per share, or 25%, to $.25 per share.

With our strong operating cash flow, we ended the 2024 second quarter with total liquidity of $1.73 billion, including cash and cash equivalents and $1.08 billion of available capacity under the Credit Facility.

We had no cash borrowings outstanding under the Credit Facility at May 31, 2024.

Although our ending backlog value at May 31, 2024 decreased 10% year over year to approximately $3.12 billion, we believe we are well-positioned to achieve solid results for the 2024 third quarter and full year, as described below under “Outlook.” On a sequential basis, our ending backlog value increased 12% from the 2024 first quarter.

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

February 29, 2024 February 28, 2023

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 2024 2023

Housing $ 1,701,512 $ 1,757,846 $ 3,159,638 $ 3,136,383

Land — — 3,572 —

Total 1,701,512 1,757,846 3,163,210 3,136,383

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Operating income 188,183 202,102 345,859 358,591

Interest income 5,857 467

Equity in loss of unconsolidated joint ventures (445) (757)

Interest income and other

19,449 1,729 25,306 2,196

Equity in income (loss) of unconsolidated joint ventures

224 (313) (221) (1,070)

Homebuilding pretax income $ 207,856 $ 203,518 $ 370,944 $ 359,717

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Operating income as a percentage of revenues 11.1 % 11.5 % 10.9 % 11.4 %

Homebuilding revenues for the three months ended February 29, 2024 were comprised of housing revenues and land sale revenues.

In the three months ended February 28, 2023, revenues were generated solely from housing operations.

Housing revenues for the 2024 first quarter grew 6% from the year-earlier quarter, driven by a 9% increase in the number of homes delivered, partly offset by a 3% decrease in their overall average selling price.

The year-over-year growth in the number of homes delivered reflected increases of 5%, 34% and 17% in our West Coast, Southwest and Southeast homebuilding reporting segments, respectively, partly offset by a 7% decrease in our Central segment.

The lower overall average selling price primarily reflected product and geographic mix factors, partly offset by a year-over-year decrease in homebuyer concessions we selectively extended to buyers within backlog prior to delivery in conjunction with our targeted sales strategies.

Land sale revenues for the quarter ended February 29, 2024 totaled $3.6 million.

There were no land sales in the year-earlier quarter.

Homebuilding revenues for the three months ended May 31, 2024 and 2023 were generated solely from housing operations.

Housing revenues for the 2024 second quarter were down 3% from the year-earlier quarter, reflecting a 4% decrease in the number of homes delivered, partly offset by a slight increase in their overall average selling price.

The year-over-year decline in the number of homes delivered reflected decreases of 8%, 21% and 6% in our Southwest, Central and Southeast homebuilding reporting segments, respectively, partly offset by a 30% increase in our West Coast segment.

The higher overall average selling price primarily reflected the combined effect of product and geographic mix factors and a year-over-year decrease in homebuyer concessions we selectively extended to buyers within backlog prior to delivery in conjunction with our targeted sales strategies.

For the six months ended May 31, 2024, homebuilding revenues were generated from housing operations and land sales.

In the year-earlier period, homebuilding revenues were generated solely from housing operations.

Housing revenues for the six months ended May 31, 2024 rose slightly from the corresponding 2023 period due to a 2% increase in the number of homes delivered, partially offset by a slight decrease in their average selling price.

Land sale revenues for the six months ended May 31, 2024 totaled $3.6 million.

There were no land sales in the three months ended May 31, 2024 or the three-month and six-month periods ended May 31, 2023.

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 February 29, 2024 was up slightly year over year, reflecting higher housing gross profits and land sale profits, partly offset by higher selling, general and administrative expenses.

Operating income for the 2024 first quarter included inventory-related charges of $1.3 million, compared to $5.3 million in the year-earlier quarter.

As a percentage of revenues, our operating income for the three months ended February 29, 2024 was 10.8%, compared to 11.4% for the corresponding 2023 period, mainly due to higher selling, general and administrative expenses as a percentage of housing revenues.

Excluding inventory-related charges, our operating income as a percentage of revenues decreased to 10.9% for the 2024 first quarter from 11.7% for the year-earlier quarter.

• Housing Gross Profits – Housing gross profits of $313.7 million for the three months ended February 29, 2024 increased 6% from $295.7 million for the year-earlier period, reflecting an increase in housing revenues with our housing gross profit margin of 21.5% for the 2024 first quarter remaining even with the 2023 first quarter.

The housing gross profit margin mainly reflected higher relative construction and land costs and a shift in product and geographic mix, offset by decreases in inventory-related charges and homebuyer concessions.

As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations, which is included in construction and land costs, was 1.8% and 1.9% for the three months ended February 29, 2024 and February 28, 2023, respectively.

Excluding the inventory-related charges associated with housing operations of $1.3 million in the current quarter and $5.3 million in the year-earlier quarter, our adjusted housing gross profit margin for the 2024 first quarter decreased 20 basis points year over year.

Our homebuilding operating income for the three months ended May 31, 2024 decreased 7% year over year, reflecting lower housing gross profits and higher selling, general and administrative expenses.

Operating income for the 2024 second quarter included inventory-related charges of $1.2 million, compared to $4.3 million in the year-earlier quarter.

As a percentage of revenues, our operating income for the three months ended May 31, 2024 was 11.1%, compared to 11.5% for the corresponding 2023 period due to 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 11.1% for the 2024 second quarter, compared to 11.7% for the year-earlier quarter.

For the six months ended May 31, 2024, our operating income decreased 4% from the year-earlier period due to higher selling, general and administrative expenses, partly offset by higher housing gross profits and land sale profits.

Operating income for the six months ended May 31, 2024 included inventory-related charges of $2.5 million, compared to $9.6 million of such charges in the corresponding 2023 period.

As a percentage of revenues, our operating income for the six months ended May 31, 2024 decreased 50 basis points year over year to 10.9%, reflecting higher selling, general and administrative expenses as a percentage of revenues.

Excluding inventory-related charges, our operating income as a percentage of revenues declined 70 basis points to 11.0% for the six months ended May 31, 2024 from 11.7% for the corresponding year-earlier period.

• Housing Gross Profits – Housing gross profits of $359.4 million for the three months ended May 31, 2024 were down 3% from $371.3 million for the year-earlier period due to lower housing revenues, as our housing gross profit margin of 21.1% for the 2024 second quarter remained even with the 2023 second quarter.

The housing gross profit margin primarily reflected higher relative construction and land costs, and product and geographic mix shifts of homes delivered, offset by decreases in inventory-related charges and homebuyer concessions.

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% and 1.8% for the three months ended May 31, 2024 and 2023, respectively.

Excluding the inventory-related charges associated with housing operations of $1.2 million in the current quarter and $4.3 million in the year-earlier quarter, our adjusted housing gross profit margin of 21.2% for the 2024 second quarter decreased 20 basis points year over year.

For the six months ended May 31, 2024, our housing gross profits of $673.1 million increased from $667.0 million for the year-earlier period due to higher housing revenues, as our housing gross profit margin for the six months ended May 31, 2024 remained flat at 21.3%.

The housing gross profit margin primarily reflected the same factors described above for the three months ended May 31, 2024.

As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations was 1.8% for the six months ended May 31, 2024, compared to 1.9% for the corresponding 2023 period.

Excluding the inventory-related charges associated with housing operations of $2.5 million in the current period and $9.6 million in the year-earlier period, our adjusted housing gross profit margin of 21.4% for the six months ended May 31, 2024 decreased 20 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 sale profits totaled $1.5 million for the three months ended February 29, 2024.

There were no land sales in the year-earlier period.

• Land Sale Profits – Land sale profits totaled $1.5 million for the six months ended May 31, 2024.

There was no land sale activity in the three months ended May 31, 2024 or the three-month and six-month periods ended May 31, 2023.

• Selling, General and Administrative Expenses – The following table presents the components of our selling, general and administrative expenses (dollars in thousands):

Three Months Ended

February 29, 2024 % of Housing Revenues February 28, 2023 % of Housing Revenues

Three Months Ended May 31, Six Months Ended May 31,

2024 % of Housing Revenues 2023 % of Housing Revenues 2024 % of Housing Revenues 2023 % of Housing Revenues

Marketing expenses $ 39,884 2.3 % $ 37,788 2.1 % $ 76,244 2.4 % $ 70,926 2.2 %

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(a) Commission expenses include sales commissions on homes delivered paid to internal sales counselors and external real estate brokers.

Selling, general and administrative expenses for the three months ended February 29, 2024 increased 13% from the year-earlier quarter.

As a percentage of housing revenues, our selling, general and administrative expenses for the 2024 first quarter increased 70 basis points, mainly reflecting higher costs including marketing, advertising and other expenses associated with a planned increase in our community count during the year as we position our operations for growth, and an increase in sales commissions.

Selling, general and administrative expenses for the three months ended May 31, 2024 increased 1% from the year-earlier quarter.

As a percentage of housing revenues, our selling, general and administrative expenses for the 2024 second quarter increased 50 basis points, mainly reflecting higher costs including marketing and other expenses associated with a planned increase in our community count during the year as we position our operations for growth.

We also invested in personnel and other resources in alignment with the expected larger scale of our business.

Interest Income/Expense .

Interest income, which is generated from short-term investments, increased to $5.9 million for the three months ended February 29, 2024, compared to $.5 million for the year-earlier quarter, reflecting our higher average balance of cash equivalents and a higher interest rate in the 2024 period.

For the six months ended May 31, 2024, selling, general and administrative expenses increased 7% year over year.

As a percentage of housing revenues, selling, general and administrative expenses for the six months ended May 31, 2024 increased 60 basis points, primarily due to the reasons described above with respect to the three months ended May 31, 2024.

Interest Income/Expense and Other .

Interest income and other for the three months and six months ended May 31, 2024 was comprised of interest income and a $12.5 million gain associated with the sale of a privately held technology company in which we held an ownership interest.

Further information regarding this gain is provided in Note 10 – Other Assets in the Notes to Consolidated Financial Statements in this report.

For the three months and six months ended May 31, 2023, interest income and other was comprised solely of interest income.

Interest income, which is generated from short-term investments, increased to $6.9 million for the three months ended May 31, 2024, compared to $1.7 million for the year-earlier quarter.

For the six months ended May 31, 2024, interest income increased to $12.8 million, compared to $2.2 million for the corresponding period of 2023.

The year-over-year increases for the three-month and six-month periods ended May 31, 2024 reflected our higher average balance of cash equivalents and a higher interest rate in the 2024 periods.

Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of short-term investments and fluctuations in interest rates.

We incur interest principally from our borrowings to finance land acquisitions, land development, home construction and other operating and capital needs.

All interest incurred during the three-month periods ended February 29, 2024 and February 28,

2023 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for each period.

All interest incurred during the three-month and six-month periods ended May 31, 2024 and 2023 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 Loss of Unconsolidated Joint Ventures .

Our equity in loss of unconsolidated joint ventures was $.4 million and $.8 million for the three months ended February 29, 2024 and February 28, 2023, respectively.

Equity in Income (Loss) of Unconsolidated Joint Ventures .

Our equity in income (loss) of unconsolidated joint ventures was nominal for the three months ended May 31, 2024 and 2023.

For the six months ended May 31, 2024, our equity in loss of unconsolidated joint ventures was nominal, compared to $1.1 million for the year-earlier period.

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.

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The following table presents information about our net orders, cancellation rate, ending backlog and community count (dollars in thousands):

Three Months Ended

February 29, 2024 February 28, 2023

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 2024 2023

Net orders 3,997 3,936 7,320 6,078

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(b) Cancellation rates represent 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 for the 2024 first quarter rose 55% from the year-earlier quarter, reflecting improved demand and a lower cancellation rate.

The pace of monthly net orders per community increased to 4.6 in the 2024 first quarter, compared to 2.8 in the corresponding 2023 quarter.

We had positive momentum throughout the 2024 first quarter, with monthly net orders increasing sequentially as the quarter progressed.

The value of our net orders grew 58% year over year as a result of the growth in net orders and a 2% increase in the average selling price for those homes to $476,100.

In the 2024 first quarter, the year-over-year growth in our overall net order value reflected increases in all four homebuilding reporting segments, ranging from 18% in our West Coast segment to 161% in our Central segment.

Our cancellation rate as a percentage of gross orders for the three months ended February 29, 2024 improved from the year-earlier period, reflecting stronger housing market demand in the current period.

On a sequential basis, the cancellation rate for the 2024 first quarter improved from 28% in the 2023 fourth quarter.

The number of homes in our backlog and our backlog value at February 29, 2024 decreased 17% and 16%, respectively, from February 28, 2023.

The year-over-year decline in our overall backlog value at February 29, 2024 reflected decreases in three of our homebuilding reporting segments, ranging from 10% in our Southeast segment to 53% in our Central segment, partly offset by a 20% increase in our West Coast segment.

On a sequential basis, the number of homes in our ending backlog and our backlog value each increased 5% from the previous quarter.

Net orders for the 2024 second quarter increased 2% from the year-earlier quarter.

The pace of monthly net orders per community increased to 5.5 in the 2024 second quarter, one of our highest second-quarter levels in many years, compared to 5.2 in the corresponding 2023 quarter.

The value of our net orders expanded 7% year over year as a result of the higher net orders and a 5% increase in the average selling price for those homes to $508,400, primarily reflecting a shift in product and geographic mix.

In the 2024 second quarter, the year-over-year growth in our overall net order value reflected increases of 4%, 5% and 33% in our West Coast, Southwest and Central homebuilding reporting segments, respectively, partly offset by a decrease of 12% in our Southeast segment.

Our cancellation rate as a percentage of gross orders for the three months ended May 31, 2024 improved from the year-earlier period, reflecting stronger housing market demand in the current period.

On a sequential basis, the cancellation rate for the 2024 second quarter improved slightly from 14% in the 2024 first quarter.

The number of homes in our backlog and our backlog value at May 31, 2024 decreased 14% and 10%, respectively, from May 31, 2023.

The year-over-year decreases narrowed for the fourth consecutive quarter.

The decline in our overall backlog value at May 31, 2024, compared to May 31, 2023, reflected decreases in three of our homebuilding reporting segments, ranging from 6% in our Southwest segment to 31% in our Central segment, partly offset by a 7% increase in our West Coast segment.

On a sequential basis, the number of homes in our 2024 second quarter ending backlog and corresponding ending backlog value increased 8% and 12%, respectively, from the previous quarter.

A portion of the homes in backlog will not result in homes delivered due to cancellations.

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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 average community count for the three months ended February 29, 2024 decreased 4% from the year-earlier period.

Our ending community count for the 2024 first quarter was down 7% year over year, as the number of communities selling out exceeded the number of new community openings over the past twelve months.

On a sequential basis, our average community count for the 2024 first quarter expanded 2%.

In order to drive future community count growth, we increased our investments in land and land development on a year-over-year basis in the 2024

first quarter, and expect to increase our investments on a year-over-year basis in the remaining 2024 quarters, as discussed below under “Liquidity and Capital Resources.”

Our average community count for the three months ended May 31, 2024 decreased 4% from the year-earlier period.

Our ending community count for the 2024 second quarter was essentially flat with the year-earlier quarter.

On a sequential basis, our 2024 second quarter ending community count expanded 4%.

To help drive future community count growth, we increased our investments in land and land development on a year-over-year basis in the 2024 first half, and expect to increase our investments on a year-over-year basis in the remaining 2024 quarters, as discussed below under “Liquidity and Capital Resources.”

HOMEBUILDING REPORTING SEGMENTS

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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

Three Months Ended May 31,

Homes Delivered Net Orders Cancellation Rates

Segment February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Segment 2024 2023 2024 2023 2024 2023

West Coast 1,043 802 1,226 1,299 11 % 12 %

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Net Order Value Average Community Count

Segment February 29, 2024 February 28, 2023 Variance February 29, 2024 February 28, 2023 Variance

Segment 2024 2023 Variance 2024 2023 Variance

West Coast $ 902,483 $ 870,149 4 % 77 78 (1) %

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Total $ 2,031,903 $ 1,899,649 7 % 243 253 (4) %

Six Months Ended May 31,

Homes Delivered Net Orders Cancellation Rates

Segment 2024 2023 2024 2023 2024 2023

West Coast 1,871 1,588 2,176 2,156 12 % 16 %

Southwest 1,429 1,314 1,483 1,259 10 20

Central 1,898 2,237 2,317 1,453 13 43

Southeast 1,362 1,315 1,344 1,210 20 29

Total 6,560 6,454 7,320 6,078 13 % 28 %

Net Order Value Average Community Count

Segment 2024 2023 Variance 2024 2023 Variance

West Coast $ 1,535,883 $ 1,405,688 9 % 75 79 (5) %

Southwest 677,651 522,732 30 44 44 —

Central 849,747 504,681 68 78 81 (4)

Southeast 550,813 468,416 18 45 46 (2)

Total $ 3,614,094 $ 2,901,517 25 % 242 250 (3) %

Backlog – Homes Backlog – Value

Segment February 29, 2024 February 28, 2023 Variance February 29, 2024 February 28, 2023 Variance

Segment 2024 2023 Variance 2024 2023 Variance

West Coast 1,850 1,855 — % $ 1,304,955 $ 1,224,334 7 %

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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 $35.1 million and $30.2 million in the three months ended February 29, 2024 and February 28, 2023, respectively.

The financial results of our homebuilding reporting segments for the three-month periods ended February 29, 2024 and February 28, 2023 were negatively impacted to varying degrees by homebuyer concessions we selectively extended to buyers in conjunction with our targeted sales strategies, as well as product and geographic mix shifts of homes delivered.

Corporate and other had operating losses of $38.6 million and $38.3 million in the three months ended May 31, 2024 and 2023, respectively.

For the six months ended May 31, 2024, Corporate and other had an operating loss of $73.7 million, compared to an operating loss of $68.5 million for the corresponding year-earlier period.

The financial results of our homebuilding reporting segments for the three-month and six-month periods ended May 31, 2024 and 2023 were negatively impacted to varying degrees by homebuyer concessions we selectively extended to buyers in conjunction with our targeted sales strategies, as well as product and geographic mix shifts of homes delivered.

The following table presents financial information related to our West Coast segment (dollars in thousands, except average selling price):

Three Months Ended

February 29, 2024 February 28, 2023 Variance

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance 2024 2023 Variance

Revenues $ 698,417 $ 564,350 24 % $ 1,256,719 $ 1,104,369 14 %

4 unchanged sentences

Average selling price $ 669,600 $ 703,700 (5) % $ 671,500 $ 695,400 (3) %

Operating income as a percentage of revenues 11.8 % 11.2 % 60 bps

In the 2024 first quarter, this segment’s revenues were comprised of housing revenues and land sale revenues.

In the 2023 first quarter, revenues were generated solely from housing operations.

Housing revenues for the three months ended February 29, 2024 grew 3% from the year-earlier period to $557.9 million due to an increase in the number of homes delivered, partially offset by a decrease in their average selling price.

Operating income for the three months ended February 29, 2024 was up year over year, reflecting higher housing gross profits, partly offset by increased selling, general and administrative expenses.

Operating income as a percentage of revenues for the 2024 first quarter increased from the year-earlier quarter, primarily due to a 150 basis-point increase in the housing gross profit margin to 19.8%, partly offset by a 90 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.0%.

The year-over-year expansion in the housing gross profit margin for the three months ended February 29, 2024 mainly reflected lower relative construction and land costs.

In the three months ended February 29, 2024, inventory-related charges associated with housing operations were $1.3 million, compared to $.9 million in the year-earlier period.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 29, 2024 reflected higher costs including marketing and other expenses associated with a planned increase in our community count in this segment during the year, and an increase in sales commissions.

Operating income as a percentage of revenues 12.4 % 9.9 % 250 bps 12.2 % 10.5 % 170 bps

In the three months ended May 31, 2024 and the three-month and six-month periods ended of May 31, 2023, revenues were generated solely from housing operations.

In the six months ended May 31, 2024, this segment’s revenues were comprised of housing revenues and nominal land sale revenues.

Housing revenues for the three months ended May 31, 2024 grew 24% from the year-earlier period to $698.4 million due to an increase in the number of homes delivered, partially offset by a decrease in their average selling price.

For the six months ended May 31, 2024, housing revenues increased 14% year over year to $1.26 billion due to an increase in the number of homes delivered, partly offset by a decrease in their average selling price.

Operating income for the three months ended May 31, 2024 was up year over year, reflecting higher housing gross profits, partly offset by increased selling, general and administrative expenses.

Operating income as a percentage of revenues for the 2024 second quarter increased from the year-earlier quarter, primarily due to a 160 basis-point increase in the housing gross profit margin to 19.2% and a 90 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 6.7%.

For the six months ended May 31, 2024, operating income as a percentage of revenues increased from the corresponding 2023 period, reflecting a 160 basis-point expansion in the housing gross profit margin to 19.5% and a 10 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 7.3%.

The year-over-year expansion in the housing gross profit margin for the three-month and six-month periods ended May 31, 2024 mainly reflected lower relative construction and land costs, a decrease in inventory-related charges and increased operating leverage from higher housing revenues.

For the three months ended May 31, 2024, inventory-related charges

associated with housing operations were $.6 million, compared to $3.1 million for the year-earlier period.

For the six months ended May 31, 2024, inventory-related charges associated with housing operations were $1.9 million, compared to $3.9 million for the year-earlier period.

The year-over-year improvement in selling, general and administrative expenses as a percentage of housing revenues for the three-month and six-month periods ended May 31, 2024 reflected a decrease in sales commissions and improved operating leverage from higher housing revenues, partly offset by higher costs including marketing and other expenses associated with a planned increase in our community count in this segment during the year.

The following table presents financial information related to our Southwest segment (dollars in thousands, except average selling price):

Three Months Ended

February 29, 2024 February 28, 2023 Variance

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance 2024 2023 Variance

Revenues $ 318,665 $ 335,828 (5) % $ 641,790 $ 575,415 12 %

6 unchanged sentences

Average selling price $ 447,600 $ 431,700 4 % $ 449,100 $ 437,900 3 %

Operating income as a percentage of revenues 17.3 % 18.4 % (110) bps

The year-over-year growth in this segment’s revenues for the three months ended February 29, 2024 reflected increases in both the number of homes delivered and their average selling price.

Operating income for the three months ended February 29, 2024 rose from the corresponding year-earlier period due to higher housing gross profits, partly offset by increased selling, general

and administrative expenses.

As a percentage of revenues, this segment’s operating income for the 2024 first quarter declined from the year-earlier quarter, reflecting a 180 basis-point decrease in the housing gross profit margin to 24.3%, partly offset by a 70 basis-point decrease in selling, general and administrative expenses as a percentage of housing revenues to 7.0%.

The year-over-year decline in the housing gross profit margin for the three months ended February 29, 2024 was mainly due to higher construction and land costs and a product and geographic mix shift of homes delivered, partly offset by a decrease in homebuyer concessions and increased operating leverage from higher housing revenues.

The year-over-year decrease in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 29, 2024 primarily reflected increased operating leverage from higher housing revenues, partly offset by higher costs including marketing and other expenses associated with a planned increase in our community count in this segment during the year, and an increase in sales commissions.

Operating income as a percentage of revenues 17.2 % 17.0 % 20 bps 17.2 % 17.6 % (40) bps

The year-over-year decrease in this segment’s revenues for the three months ended May 31, 2024 reflected a decline in the number of homes delivered, partly offset by an increase in their average selling price.

For the six months ended May 31, 2024, housing revenues grew as a result of increases in both the number of homes delivered and their average selling price.

Operating income for the three months ended May 31, 2024 decreased from the corresponding year-earlier period, mainly due to lower housing gross profits.

As a percentage of revenues, this segment’s operating income for the 2024 second quarter improved from the year-earlier quarter, reflecting a 60 basis-point increase in the housing gross profit margin to 24.4%, partly offset by a 40 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 7.2%.

For the six months ended May 31, 2024, operating income grew from the corresponding year-earlier period due to higher housing gross profits, partly offset by higher selling, general and administrative expenses.

Operating income as a percentage of revenues for the six months ended May 31, 2024 declined from the corresponding 2023 period, reflecting a 30 basis-point decrease in the housing gross profit margin to 24.4% and a 10 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 7.1%.

The year-over-year increase in the housing gross profit margin for the three months ended May 31, 2024 was mainly due to lower construction and land costs.

The year-over-year decrease in the housing gross profit margin for the six months ended May 31, 2024 was primarily due to higher construction and land costs and product and geographic mix shifts of homes delivered.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended May 31, 2024 was mainly due to reduced operating leverage from lower housing revenues.

The following table presents financial information related to our Central segment (dollars in thousands, except average selling price):

Three Months Ended

February 29, 2024 February 28, 2023 Variance

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance 2024 2023 Variance

Revenues $ 375,790 $ 545,214 (31) % $ 696,274 $ 935,165 (26) %

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Operating income $ 46,563 $ 78,982 (41) % $ 85,134 $ 137,808 (38) %

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance 2024 2023 Variance

Homes delivered 1,028 1,302 (21) % 1,898 2,237 (15) %

Average selling price $ 365,600 $ 418,800 (13) % $ 365,200 $ 418,000 (13) %

Operating income as a percentage of revenues 12.0 % 15.1 % (310) bps

In the 2024 first quarter, this segment’s revenues were comprised of housing revenues and land sale revenues.

In the 2023 first quarter, revenues were generated solely from housing operations.

Housing revenues for the three months ended February 29, 2024 were $317.3 million, down 19% from the year-earlier period, reflecting decreases in both the number of homes delivered and their average selling price.

Operating income for the 2024 first quarter declined from the year-earlier quarter due to lower housing gross profits, partly offset by lower selling, general and administrative expenses and current-quarter land sale profits of $1.1 million.

This segment’s operating income as a percentage of revenues for the three months ended February 29, 2024 was down from the year-earlier period primarily due to a 190 basis-point decline in the housing gross profit margin to 21.9% and a 140 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 10.1%.

The year-over-year decrease in the housing gross profit margin for the three months ended February 29, 2024 primarily reflected higher relative construction and land costs, a product and geographic mix shift of homes delivered, an increase in homebuyer concessions and reduced operating leverage from lower housing revenues.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 29, 2024 was primarily due to higher costs including marketing, advertising and other expenses associated with a planned increase in our community count in this segment during the year, an increase in sales commissions and reduced operating leverage from lower housing revenues.

Operating income as a percentage of revenues 12.4 % 14.5 % (210) bps 12.2 % 14.7 % (250) bps

In the three months ended May 31, 2024 and the three-month and six-month periods ended May 31, 2023, this segment’s revenues were generated solely from housing operations.

In the six months ended May 31, 2024, this segment’s revenues were comprised of housing revenues and land sale revenues.

Housing revenues for the three months ended May 31, 2024 decreased 31% from the year-earlier period.

For the six months ended May 31, 2024, housing revenues of $693.1 million were down 26% year over year.

The lower housing revenues for the three-month and six-month periods ended May 31, 2024 reflected decreases in both the number of homes delivered and their average selling price.

Operating income for the three months ended May 31, 2024 declined from the year-earlier period 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 2024 second quarter decreased from the year-earlier period primarily due to a 210 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 9.7%.

The housing gross profit margin was even with the year-earlier quarter at 22.1%.

For the six months ended May 31, 2024, operating income was down from the corresponding year-earlier period due to lower housing gross profits, partly offset by lower selling, general and administrative expenses and current-period land sale profits of $1.1 million.

Operating income as a percentage of revenues for the six months ended May 31, 2024 decreased from the corresponding 2023 period, reflecting an 80 basis-point decrease in the housing gross profit margin to 22.0% and a 170 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 9.9%.

The housing gross profit margin for the three months ended May 31, 2024 remained even with the year-earlier period, as decreases in inventory-related charges and amortization of previously capitalized interest were offset by reduced operating leverage from lower housing revenues.

Inventory-related charges associated with housing operations were $.3 million for the 2024 second quarter, compared to $1.1 million for the year-earlier period.

For the six months ended May 31, 2024, the year-over-year decrease in the housing gross profit margin primarily reflected higher relative construction and land costs, product and geographic mix shifts of homes delivered, and reduced operating leverage from lower housing revenues, partly offset by a decrease in inventory-related charges.

For the six months ended May 31, 2024, inventory-related charges associated with housing operations were $.3 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 and six months ended May 31, 2024 was primarily due to higher costs including marketing and other expenses associated with a planned increase in our community count in this segment during the year, an increase in sales commissions and reduced operating leverage from lower housing revenues.

The following table presents financial information related to our Southeast segment (dollars in thousands, except average selling price):

Three Months Ended

February 29, 2024 February 28, 2023 Variance

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 Variance 2024 2023 Variance

Revenues $ 308,640 $ 312,454 (1) % $ 568,427 $ 521,434 9 %

6 unchanged sentences

Average selling price $ 417,100 $ 398,500 5 % $ 417,300 $ 396,500 5 %

Operating income as a percentage of revenues 12.4 % 11.3 % 110 bps

This segment’s revenues for the three months ended February 29, 2024 grew year over year as a result of increases in both the number of homes delivered and their average selling price.

Operating income for the 2024 first quarter increased from the year-earlier quarter, reflecting higher housing gross profits, partly offset by higher selling, general and administrative expenses.

As a percentage of revenues, operating income for the 2024 first quarter increased from the year-earlier quarter mainly due to a 60 basis-point increase in the housing gross profit margin to 21.6% and a 50 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.2%.

The year-over-year expansion in the housing gross profit margin for the three months ended February 29, 2024 primarily reflected the absence of inventory-related charges in the current quarter, compared to $3.5 million of such charges in the year-earlier period, a decrease in homebuyer concessions and improved operating leverage from higher housing revenues, partly offset by higher construction and land costs.

The year-over-year decrease in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 29, 2024 was primarily due to improved operating leverage from higher housing revenues, partly offset by higher costs including marketing, advertising and other expenses associated with a planned increase in our community count in this segment during the year, and an increase in sales commissions.

Operating income as a percentage of revenues 12.5 % 15.6 % (310) bps 12.5 % 13.9 % (140) bps

This segment’s revenues for the three months ended May 31, 2024 were down slightly year over year as a decrease in the number of homes delivered was largely offset by an increase in their average selling price.

For the six months ended May 31, 2024, revenues improved from the year-earlier period due to increases in both the number of homes delivered and their average selling price.

Operating income for the 2024 second quarter decreased from the year-earlier quarter, reflecting lower housing

gross profits and higher selling, general and administrative expenses.

As a percentage of revenues, operating income for the 2024 second quarter decreased from the year-earlier quarter due to a 240 basis-point decrease in the housing gross profit margin to 21.3% and a 70 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.8%.

For the six months ended May 31, 2024, operating income was down from the corresponding year-earlier period due to higher selling, general and administrative expenses, partly offset by higher housing gross profits.

Operating income as a percentage of revenues for the six months ended May 31, 2024 decreased from the year-earlier period, reflecting a 120 basis-point decline in the housing gross profit margin to 21.4% and a 20 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 9.0%.

The year-over-year decrease in the housing gross profit margin for the three months ended May 31, 2024 primarily reflected higher construction and land costs and product and geographic mix shifts of homes delivered, partly offset by a decrease in homebuyer concessions.

For the six months ended May 31, 2024, the housing gross profit margin decreased year over year mainly due to higher construction and land costs, partly offset by decreases in both homebuyer concessions and inventory-related charges.

For the six months ended May 31, 2024, inventory-related charges associated with housing operations were nominal, compared to $3.5 million for the year-earlier period.

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

February 29, 2024 February 28, 2023

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 2024 2023

Revenues $ 8,301 $ 7,470 $ 14,369 $ 13,247

1 unchanged sentence

Equity in income of unconsolidated joint venture

6,435 5,426 13,490 7,008

Pretax income

11 unchanged sentences

(a) Loan originations and sales occurred within KBHS.

Financial services revenues for the three months ended February 29, 2024 rose from the year-earlier period due to increases in both title services revenues and insurance commissions.

Financial services revenues for the three months and six months ended May 31, 2024 rose from the year-earlier period due to an increase in insurance commissions, partly offset by a decrease in title services revenues.

Pretax income.

Financial services pretax income for the three months ended February 29, 2024 grew 93% from the year-earlier period, mainly due to an increase in the equity in income of our unconsolidated joint venture, KBHS.

In the 2024 first quarter, the equity in income of our unconsolidated joint venture increased to $7.1 million, from $1.6 million in the year-earlier quarter, due to an increase in KBHS’ income.

The year-over-year increase in KBHS’ income was due to gains of $2.9 million in the fair value of IRLCs in the current quarter, compared to $1.5 million of losses in the fair value of IRLCs in the year-earlier quarter.

Also contributing to the year-over-year increase in KBHS’ income was the higher principal amount of loans originated, as more homes were delivered in the current period and 85% of the buyers financing their home purchases used KBHS, up from 79% in the year-earlier quarter.

Further information regarding our investments in unconsolidated joint ventures is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report.

Financial services pretax income for the three months ended May 31, 2024 grew 16% from the year-earlier period, largely due to an increase in the equity in income of our unconsolidated joint venture, KBHS.

In the 2024 second quarter, the equity in income of our unconsolidated joint venture increased to $6.4 million, from $5.4 million in the year-earlier quarter, due to an increase in KBHS’ income.

The year-over-year increase in KBHS’ income reflected gains of $1.3 million in the fair value of IRLCs in the current quarter, compared to $2.7 million of losses in the fair value of IRLCs in the year-earlier quarter.

Also contributing to the year-over-year increase in KBHS’ income was the higher principal amount of loans originated, as 86% of the buyers financing their home purchases used KBHS, up from 80% in the year-earlier quarter.

For the six months ended May 31, 2024, our financial services pretax income increased 43% from the corresponding 2023 period, mostly due to an increase in the equity in income of our unconsolidated joint venture.

In the 2024 first half, the equity in income of unconsolidated joint venture rose to $13.5 million, compared to $7.0 million in the year-earlier period, mainly as a result of an increase in KBHS’ income.

The year-over-year increase in KBHS’ income was primarily due to gains of $4.2 million in the fair value of IRLCs in the current period, compared to losses of $4.2 million in the year-earlier period, as well as the factors described above for the three months ended May 31, 2024.

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 Tax Expense.

Our income tax expense and effective tax rates were as follows (dollars in thousands):

Three Months Ended

February 29, 2024 February 28, 2023

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 2024 2023

Income tax expense $ 52,700 $ 50,500 $ 88,700 $ 87,200

Effective tax rate 23.8 % 23.5 % 22.4 % 23.1 %

Our effective tax rate for the three months ended February 29, 2024 decreased from the year-earlier period, mainly due to a $3.4 million increase in excess tax benefits related to stock-based compensation and a $.6 million decrease in nondeductible executive compensation expense, partly offset by a $1.6 million decrease in the Section 45L tax credits we recognized primarily from building energy-efficient homes.

Our effective tax rate for the three months ended May 31, 2024 increased slightly from the year-earlier period, mainly due to a $2.0 million decrease in the Section 45L tax credits we recognized primarily from building energy-efficient homes and a $.7 million decrease in excess tax benefits related to stock-based compensation, partly offset by a $.5 million decrease in nondeductible executive compensation expense.

For the six months ended May 31, 2024, our effective tax rate decreased from the year-earlier period, mainly due to a $2.7 million increase in excess tax benefits related to stock-based compensation and a $1.1 million decrease in nondeductible executive compensation expense, partly offset by a $3.6 million decrease in the Section 45L tax credits we recognized primarily from building energy-efficient homes.

Further information regarding our income taxes is provided in Note 13 – Income Taxes in the Notes to Consolidated Financial Statements in this report.

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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

February 29, 2024 February 28, 2023

Three Months Ended May 31, Six Months Ended May 31,

2024 2023 2024 2023

Housing revenues $ 1,701,512 $ 1,757,846 $ 3,159,638 $ 3,136,383

2 unchanged sentences

Inventory-related charges (a)

1,210 4,287 2,508 9,576

Adjusted housing gross profits $ 360,620 $ 375,575 $ 675,617 $ 676,580

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• repurchases of our common stock.

We ended the 2024 first quarter with total liquidity of $1.75 billion, including cash and cash equivalents and $1.08 billion of available capacity under the Credit Facility.

Based on our financial position as of February 29, 2024, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity.

We ended the 2024 second quarter with total liquidity of $1.73 billion, including cash and cash equivalents and $1.08 billion of available capacity under the Credit Facility.

Based on our financial position as of May 31, 2024, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity.

We believe that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our Credit Facility will be sufficient to fund our anticipated operating and land-related investment needs for at least the next 12 months.

Cash Requirements .

In the three months ended February 29, 2024, 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, 2023.

In the six months ended May 31, 2024, 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, 2023.

Investments in Land and Land Development.

Our investments in land and land development for the three months ended February 29, 2024 increased 60% to $587.1 million, compared to $367.0 million for the year-earlier period.

Land acquisition expenditures, which are included in our investments in land and land development, increased to $214.4 million in the three months ended February 29, 2024, from $50.0 million in the corresponding period of 2023.

Approximately 37% of our total investments for the three months ended February 29, 2024 related to land acquisitions, compared to approximately 14% in the prior-year period.

While we made strategic investments in land and land development in each of our homebuilding reporting segments during the three months ended February 29, 2024 and February 28, 2023, approximately 50% and 53%, respectively, of these investments for each period were made in our West Coast homebuilding reporting segment.

Our investments in land and land development for the six months ended May 31, 2024 increased 64% to $1.26 billion, compared to $763.2 million for the year-earlier period.

Land acquisition expenditures, which are included in our investments in land and land development, increased to $491.9 million in the six months ended May 31, 2024, from $130.6 million in the corresponding period of 2023.

Approximately 39% of our total investments for the six months ended May 31, 2024 related to land acquisitions, compared to approximately 17% in the prior-year period.

While we made strategic investments in land and land development in each of our homebuilding reporting segments during the six months ended May 31, 2024 and 2023, approximately 53% and 55%, respectively, of these investments for each period were made in our West Coast homebuilding reporting segment.

For the remainder of 2024, 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.

1 unchanged sentence

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):

February 29, 2024 November 30, 2023 Variance

May 31, 2024 November 30, 2023 Variance

Segment Lots Carrying Value Lots Carrying Value Lots Carrying Value

4 unchanged sentences

Total 65,533 $ 5,335,185 55,976 $ 5,133,646 9,557 $ 201,539

The carrying value of lots we owned or controlled under land option contracts and other similar contracts at February 29, 2024 increased 2% from November 30, 2023, reflecting land investments during the three months ended February 29, 2024, partly offset by homes delivered and our abandonment of 1,439 previously controlled lots.

The number of lots we owned or controlled as of February 29, 2024 was essentially even with November 30, 2023.

The number of lots in inventory as of February 29, 2024 included 6,885 lots under contract where the associated deposits were refundable at our discretion, compared to 6,260 of such lots at November 30, 2023.

Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 28% at February 29, 2024, compared to 27% at November 30, 2023.

The carrying value of lots we owned or controlled under land option contracts and other similar contracts at May 31, 2024 increased 4% from November 30, 2023, reflecting land investments during the six months ended May 31, 2024, partly offset by homes delivered and our abandonment of 3,274 previously controlled lots.

The number of lots we owned or controlled as of May 31, 2024 increased 17% from November 30, 2023.

The number of lots in inventory as of May 31, 2024 included 14,962 lots under contract where the associated deposits were refundable at our discretion, compared to 6,260 of such lots at November 30, 2023.

Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 39% at May 31, 2024, compared to 27% at November 30, 2023.

Generally, this percentage fluctuates with our decisions to control (or abandon) lots under land option contracts and other similar contracts or to purchase (or sell owned) lots based on available opportunities and our investment return standards.

4 unchanged sentences

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 February 29, 2024, we estimate the remaining purchase price to be paid would be as follows:

If we were to acquire all the land we had under land option contracts and other similar contracts at May 31, 2024, we estimate the remaining purchase price to be paid would be as follows:

2024 – $826.1 million;

3 unchanged sentences

2028 – $65.4 million;

and thereafter – $0.

and thereafter – $.7 million.

The table below summarizes our cash and cash equivalents, and total liquidity (in thousands):

5 unchanged sentences

Total liquidity $ 1,725,276 $ 1,810,426

Our cash equivalents at February 29, 2024 and November 30, 2023 were mainly invested in interest-bearing bank deposit accounts and money market funds.

Our cash equivalents at May 31, 2024 and November 30, 2023 were mainly invested in interest-bearing bank deposit accounts and money market funds.

Capital Resources.

6 unchanged sentences

$ 1,695,196 $ 1,689,898 $ 5,298

Our financial leverage, as measured by the ratio of debt to capital, was 30.4% at February 29, 2024, compared to 30.7% at November 30, 2023.

Our financial leverage, as measured by the ratio of debt to capital, improved 90 basis points to 29.8% at May 31, 2024, compared to 30.7% at November 30, 2023.

On a year-over-year basis, our debt to capital ratio improved 110 basis points from 30.9%.

3 unchanged sentences

Under the LOC Facility, which expires on February 18, 2027, we may issue up to $75.0 million of letters of credit.

As of February 29, 2024 and November 30, 2023, we had letters of credit outstanding under the LOC Facility of $25.5 million and $12.5 million, respectively.

As of May 31, 2024 and November 30, 2023, we had letters of credit outstanding under the LOC Facility of $45.9 million and $12.5 million, respectively.

Performance Bonds .

As discussed in Note 16 – Commitments and Contingencies in the Notes to Consolidated Financial Statements in this report, we had $1.30 billion and $1.32 billion of performance bonds outstanding at February 29, 2024 and November 30, 2023, respectively.

As discussed in Note 16 – Commitments and Contingencies in the Notes to Consolidated Financial Statements in this report, we had $1.31 billion and $1.32 billion of performance bonds outstanding at May 31, 2024 and November 30, 2023, respectively.

Unsecured Revolving Credit Facility .

2 unchanged sentences

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 February 29, 2024, we had no cash borrowings and $6.7 million of letters of credit outstanding under the Credit Facility.

As of May 31, 2024, we had no cash borrowings and $8.3 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.

12 unchanged sentences

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 February 29, 2024:

Financial Covenants and Other Requirements Covenant Requirement Actual

7 unchanged sentences

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.

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 February 29, 2024, 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.

As of May 31, 2024, 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.

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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 February 29, 2024, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $6.0 million, secured primarily by the underlying property, which had an aggregate carrying value of $19.6 million.

At May 31, 2024, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $7.9 million, secured primarily by the underlying property, which had an aggregate carrying value of $30.3 million.

Senior Unsecured Term Loan .

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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 February 29, 2024, one of our unconsolidated joint ventures had borrowings outstanding under a revolving line of credit with a third-party lender and secured by the underlying property and related project assets.

None of our other unconsolidated joint ventures had outstanding debt at February 29, 2024.

As of May 31, 2024, one of our unconsolidated joint ventures had borrowings outstanding under a revolving line of credit with a third-party lender and secured by the underlying property and related project assets.

None of our other unconsolidated joint ventures had outstanding debt at May 31, 2024.

Credit Ratings.

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In March 2024, S&P Global Ratings upgraded our corporate credit rating to BB+ from BB and maintained its rating outlook at stable.

In May 2024, Moody’s Ratings upgraded our corporate credit rating to Ba1 from Ba2 and changed its rating outlook to stable from positive.

Consolidated Cash Flows .

The following table presents a summary of net cash provided by (used in) our operating, investing and financing activities (in thousands):

Three Months Ended

February 29, 2024 February 28, 2023

Six Months Ended May 31,

Net cash provided by (used in):

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Financing activities (144,102) (350,534)

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

$ (83,090) $ 227,259

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Generally, our net operating cash flows fluctuate mainly based on changes in our inventories and our profitability.

Our net cash provided by operating activities for the three months ended February 29, 2024 mainly reflected net income of $138.7 million and a net decrease in receivables of $10.1 million, partly offset by a net increase in inventories of $107.5 million and a net decrease in accounts payable, accrued expenses and other liabilities of $38.5 million.

In the three months ended February 28, 2023, our net cash provided by operating activities primarily reflected net income of $125.5 million and a net decrease in inventories of $101.3 million, partly offset by a net decrease in accounts payable, accrued expenses and other liabilities of $131.7 million and a net increase in receivables of $25.3 million.

Our net cash provided by operating activities for the six months ended May 31, 2024 mainly reflected net income of $307.1 million, partly offset by a net increase in inventories of $195.3 million and a net decrease in accounts payable, accrued expenses and other liabilities of $40.6 million.

In the six months ended May 31, 2023, our net cash provided by operating activities primarily reflected a net decrease in inventories of $413.8 million and net income of $289.9 million, partly offset by a net decrease in accounts payable, accrued expenses and other liabilities of $132.2 million and a net increase in receivables of $18.5 million.

Investing Activities .

In the three months ended February 29, 2024, our uses of cash included $9.5 million for net purchases of property and equipment and $3.1 million for contributions to unconsolidated joint ventures.

In the three months ended February 28, 2023, the net cash used for investing activities reflected $13.2 million for contributions to unconsolidated joint

ventures and $8.8 million for net purchases of property and equipment.

The cash used was partially offset by a $5.1 million return of investments in unconsolidated joint ventures.

In the six months ended May 31, 2024, our uses of cash included $19.8 million for net purchases of property and equipment and $10.9 million for contributions to unconsolidated joint ventures.

In the six months ended May 31, 2023, the net cash used for investing activities reflected $18.3 million for net purchases of property and equipment and $17.7 million for contributions to unconsolidated joint ventures.

These uses of cash were partially offset by a $5.1 million return of investments in unconsolidated joint ventures.

Financing Activities .

In the three months ended February 29, 2024, our uses of cash included stock repurchases of $50.0 million, tax payments associated with stock-based compensation awards of $16.5 million, dividend payments on our common stock of $16.4 million, and payments on mortgages and land contracts due to land sellers and other loans of $.9 million.

In the six months ended May 31, 2024, our uses of cash included stock repurchases of $100.0 million, dividend payments on our common stock of $35.1 million, tax payments associated with stock-based compensation awards of $16.5 million, and payments on mortgages and land contracts due to land sellers and other loans of $1.7 million.

The cash used was partly offset by $9.3 million of issuances of common stock under employee stock plans.

In the three months ended February 28, 2023, our uses of cash included stock repurchases of $75.0 million, net repayments under the Credit Facility of $50.0 million, dividend payments on our common stock of $12.5 million, tax payments associated with stock-based compensation awards of $9.7 million and payments on mortgages and land contracts due to land sellers and other loans of $.2 million.

In the six months ended May 31, 2023, our uses of cash included stock repurchases of $167.1 million, net repayments under the Credit Facility of $150.0 million, dividend payments on our common stock of $25.7 million, tax payments associated with stock-based compensation awards of $9.7 million and payments on mortgages and land contracts due to land sellers and other loans of $3.0 million.

The cash used was partially offset by $5.0 million of issuances of common stock under employee stock plans.

In the 2024 first quarter, our board of directors declared, and we paid, a quarterly cash dividend on our common stock of $.20 per share.

In the 2023 first quarter, our board of directors declared, and we paid, a quarterly cash dividend on our common stock of $.15 per share.

In the 2024 second quarter, our board of directors approved a $.05 per share increase in the quarterly cash dividend on our common stock to $.25 per share and declared, and we paid, a quarterly cash dividend on our common stock of $.25 per share.

In the 2023 second quarter, our board of directors declared, and we paid, a quarterly cash dividend on our common stock of $.15 per share.

Quarterly dividends declared and paid during the six-month periods ended May 31, 2024 and 2023 totaled $.45 per share and $.30 per share, respectively.

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.

As of the date of this report, 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.

Share Repurchase Program.

On March 21, 2023, our board of directors authorized us to repurchase up to $500.0 million of our outstanding common stock.

As of November 30, 2023, there was $163.6 million of remaining availability under this share repurchase authorization.

In the 2024 first quarter, we repurchased 826,663 shares of our common stock at a total cost of $50.0 million.

On April 18, 2024, our board of directors authorized us to repurchase up to $1.00 billion of our outstanding common stock.

This authorization replaced the prior board of directors authorization, which had $113.6 million remaining.

In the 2024 second quarter, we repurchased 764,742 shares of our common stock at a total cost of $50.0 million, bringing our total repurchases for the six months ended May 31, 2024 to 1,591,405 shares of common stock at a total cost of $100.0 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 terminated or suspended by our board of directors, and does not obligate us to purchase any shares.

As of May 31, 2024, there was $950.0 million of remaining availability under this share repurchase authorization.

ordinary course of our business.

As 2024 progresses, we expect to use or redeploy our cash resources or cash borrowings under the Credit Facility primarily to position our operations for growth within the context of prevailing market conditions.

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Supplemental Guarantor Financial Information

As of February 29, 2024, we had $1.34 billion in aggregate principal amount of outstanding senior notes, no borrowings outstanding under the Credit Facility and $360.0 million in aggregate principal amount of borrowings outstanding under the Term Loan.

As of May 31, 2024, we had $1.34 billion in aggregate principal amount of outstanding senior notes, no 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.

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Stockholders’ equity 3,687,099 3,532,855

Three Months Ended

February 29, 2024

Six Months Ended

Summarized Statement of Operations Data (in thousands)

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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 February 29, 2024 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, 2023.

There have been no significant changes to our critical accounting policies and estimates during the six months ended May 31, 2024 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, 2023.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements.

Since our 2023 fiscal year ended, housing demand has improved largely in conjunction with a decline in mortgage interest rates since the 2023 fourth quarter and has been supported by positive factors, such as favorable demographic trends, the long-term underproduction of new homes relative to population growth, constrained resale home inventory and demand for homes at our price points.

Our 3,323 net orders for the 2024 first quarter were up 55% from the year-earlier quarter and we improved our pace to 4.6 monthly net orders per community, compared to 2.8 a year ago.

This positive momentum in our net orders has continued into the 2024 second quarter to date and we believe we are well-positioned to capitalize on it given our commitment to offering homebuyers the ability to personalize their home, our well-designed products and attractive price points, as well as our expanding community count.

At the same time, there is uncertainty regarding the near-term direction of mortgage interest rates, inflation, consumer confidence and the overall economy, and the degree to which these factors, individually or collectively, may impact housing affordability and demand for our homes in the remainder of 2024 and beyond.

We plan to continue to focus on generating cash flows from our homebuilding operations and on balancing pace, price and

construction starts at each community to optimize our return on each inventory asset within its market context.

We anticipate the pricing adjustments and other homebuyer concessions we have selectively extended to buyers since the 2022 second half will negatively impact the average selling price of homes delivered in the remainder of 2024.

We have generated solid results through our 2024 first half.

Our performance reflects, among other things, longer-term housing market drivers remaining largely positive, including favorable demographic trends, rising household formations, solid employment, the undersupply of new and resale homes, and demand for homes at our price points, though elevated and volatile mortgage interest rates continued to challenge housing affordability while also creating uncertainty for homebuyers.

Despite this volatility, in the 2024 second quarter, buyers demonstrated a strong desire for homeownership.

Our 3,997 net orders for the 2024 second quarter were up 2% from the year-earlier quarter and we improved our absorption pace to 5.5 monthly net orders per community, one of our highest second-quarter levels in many years.

We believe this performance, as well as our generating a higher mix of net orders for Built to Order homes in the 2024 second quarter than we have in several quarters, reflected an increased appeal of the personalized homes we offer to our buyers as our build times continued to improve to a more normal range.

In the 2024 second half, we plan to continue to focus operationally on maintaining high customer satisfaction levels, achieving additional improvement in our build times, and further simplifying and value engineering our products to lower direct costs.

More broadly, our key objectives remain to increase our scale and profitability, as well as generate cash flows, by expanding our lot count through land acquisitions that meet our underwriting standards, opening new communities on time, driving net orders and balancing pace, price and construction starts at each community to optimize our return on each inventory asset within its market context.

At the same time, we anticipate the homebuyer concessions we have selectively extended to buyers since the 2022 second half will continue to temper the average selling price of homes delivered.

Our use of such concessions in the remaining quarters of 2024 will depend on, among other things, market dynamics, including mortgage interest rates and overall housing affordability, as well as community-specific considerations, including the size and construction stage of the backlog, net order pace and lots remaining available for sale.

While we expect our land acquisition activity to increase during the remainder of 2024 as compared to the corresponding 2023 period, our investments in land and land development will depend significantly on market conditions and available opportunities that meet our investment return standards.

In addition, our focus is on capital efficiency, developing lots where possible in smaller phases and balancing development with our starts pace to manage our inventory of finished lots.

With our strong balance sheet and liquidity position, we believe we can operate effectively through evolving market conditions in 2024 and continue to prioritize investing in land acquisition and development to support future growth, as well as returning capital to our stockholders.

While we expect our land acquisition activity to increase during the remainder of 2024 as compared to the corresponding period of 2023, our investments in land and land development will depend significantly on market conditions and available opportunities that meet our investment return standards.

We ended the 2024 first quarter with $113.6 million remaining under our current board of directors share repurchase authorization.

This provides us the opportunity to continue to repurchase our common stock in 2024, with the 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.

We plan to continue to balance pace, price and construction starts at each community to optimize our return on each inventory asset within its market context, leveraging our differentiated, highly customer-centric Built to Order business model and operational capabilities to help effectively meet evolving consumer preferences and budgets, and shifts in demand arising from, among other things, additional increases in mortgage interest rates and/or softening economic conditions.

With our backlog value of $2.79 billion at February 29, 2024, we believe we can achieve our projected results for 2024, subject to the factors and risks described in this report.

Our present outlook for the 2024 second quarter and the 2024 full year as to certain metrics is as follows:

2024 Second Quarter

We ended the 2024 second quarter with $950.0 million remaining under our current board of directors share repurchase authorization.

This provides us the opportunity to continue to repurchase our common stock in the remainder of 2024, with the 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.

Overall, we believe we are well positioned to achieve our goals over the remainder of 2024 given our commitment to offering homebuyers the ability to meaningfully personalize their home;

our well-designed products and attractive price points;

backlog value of $3.12 billion at May 31, 2024;

and measurable improvement in our build times, subject to the factors and risks described in this report, including uncertainty regarding the near-term direction of mortgage interest rates, inflation, consumer confidence and the economy.

Our present outlook for the 2024 third quarter and the 2024 full year as to certain metrics is as follows:

2024 Third Quarter

• We expect to generate housing revenues in the range of $1.65 billion to $1.75 billion, compared to $1.57 billion for the corresponding 2023 period, and anticipate our average selling price to be approximately $482,000, compared to $466,300 in the year-earlier period.

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• We expect our housing gross profit margin will be in the range of 21.0% to 21.4%, assuming no inventory-related charges, compared to 21.5% for the corresponding 2023 quarter.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be approximately 10.5%, compared to 9.6% in the 2023 second quarter.

• We expect our effective tax rate will be approximately 24%, essentially the same as the year-earlier quarter.

• We expect our ending community count will be around 250, a sequential increase of about 5%, and our average community count will be 244.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 9.9% to 10.3%, compared to 10.2% for the 2023 third quarter.

• We expect our effective tax rate will be approximately 24.0%, compared to 22.9% for the year-earlier quarter.

• We expect our average community count will be up in the low single digits and a mid-to-high single-digit increase in our ending community count, both as compared to the prior-year quarter.

2024 Full Year

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• We expect our effective tax rate to be approximately 23.0%, compared to 23.5% for 2023.

• We expect our ending community count to be about 260, up 7%, compared to 242 for 2023.

• We expect our ending community count to be in the range of 250 to 255, compared to 242 for 2023.

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 prevailing economic, employment, homebuilding industry and capital, credit and financial market conditions and on a fairly stable and constructive political and regulatory environment (particularly in regard to housing and mortgage loan financing policies).

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inflation created significant and ongoing headwinds for the housing market, tempering consumer demand for homes and disrupting credit and lending markets.

While the Federal Reserve is expected to lower interest rates in 2024, we cannot provide any assurance it will or that any interest rate reduction(s) will positively affect demand or our business, results of operations or consolidated financial statements.

While the Federal Reserve may lower interest rates in 2024, we cannot provide any assurance it will or that any interest rate reduction(s) will positively affect demand or our business, results of operations or consolidated financial statements.

In addition, while we experienced improvement with respect to supply chain-related disruptions as described in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we believe they could persist to a certain degree during 2024.

The potential extent and effect of these factors on our business is highly uncertain, unpredictable and outside our control, and our past performance, including in the 2024 first quarter, 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 and returns.

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 2024 first half, 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 and returns.

Forward-Looking Statements

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• 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;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis