What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-07-10 compared with 2025-04-09 · 167 added, 128 removed, 632 unchanged (32% of the section changed)

2 unchanged sentences

(In Thousands, Except Per Share Amounts – Unaudited)

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Total revenues $ 1,529,585 $ 1,709,813 $ 2,921,362 $ 3,177,579

4 unchanged sentences

Operating income 131,463 188,183 258,802 345,859

Interest income

Interest income and other

1,679 19,449 3,758 25,306

Equity in income (loss) of unconsolidated joint ventures

5 unchanged sentences

Equity in income of unconsolidated joint venture

4,862 6,435 9,191 13,490

Financial services pretax income 8,161 13,263 15,687 24,840

38 unchanged sentences

Stockholders’ equity:

Common stock — 74,437,477 and 74,409,977 shares issued at February 28, 2025 and November 30, 2024, respectively

Common stock — 74,437,477 and 74,409,977 shares issued at May 31, 2025 and November 30, 2024, respectively

74,437 74,410

5 unchanged sentences

Treasury stock, at cost:

2,703,963 and 2,253,156 at February 28, 2025 and November 30, 2024, respectively

6,387,293 and 2,253,156 shares at May 31, 2025 and November 30, 2024, respectively

( 370,841 ) ( 141,562 )

5 unchanged sentences

(In Thousands – Unaudited)

Three Months Ended February 28, 2025 and February 29, 2024

Three Months Ended May 31, 2025 and 2024

Number of Shares

3 unchanged sentences

Ownership Trust Treasury Stock Total Stockholders’ Equity

Balance at November 30, 2024

Balance at February 28, 2025

74,437 — ( 2,704 ) $ 74,437 $ 834,306 $ 3,359,669 $ ( 3,704 ) $ — $ ( 172,030 ) $ 4,092,678

1 unchanged sentence

Dividends on common stock — — — — — ( 17,202 ) — — — ( 17,202 )

Employee stock options/other 27 — — 27 418 — — — — 445

— — 51 — ( 3,163 ) — — — 3,163 —

2 unchanged sentences

— — ( 3,734 ) — — — — — ( 201,974 ) ( 201,974 )

Tax payments associated with stock-based compensation awards

Balance at May 31, 2025

74,437 — ( 6,387 ) $ 74,437 $ 840,296 $ 3,450,350 $ ( 3,704 ) $ — $ ( 370,841 ) $ 3,990,538

1 unchanged sentence

101,862 ( 6,705 ) ( 19,241 ) $ 101,862 $ 839,772 $ 3,799,234 $ ( 3,671 ) $ ( 72,718 ) $ ( 781,809 ) $ 3,882,670

Net income — — — — — 168,419 — — — 168,419

Dividends on common stock — — — — — ( 18,775 ) — — — ( 18,775 )

Employee stock options/other 30 — — 30 438 — — — — 468

Stock awards — — 23 — ( 938 ) — — — 938 —

Stock-based compensation — — — — 9,363 — — — — 9,363

Stock repurchases, including excise tax

— — ( 765 ) — — — — — ( 50,441 ) ( 50,441 )

Balance at May 31, 2024

101,892 ( 6,705 ) ( 19,983 ) $ 101,892 $ 848,635 $ 3,948,878 $ ( 3,671 ) $ ( 72,718 ) $ ( 831,312 ) $ 3,991,704

Six Months Ended May 31, 2025 and 2024

Number of Shares

Stock Grantor

Trust Treasury

Stock Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Grantor Stock

Ownership Trust Treasury Stock Total Stockholders’ Equity

Balance at November 30, 2024

6 unchanged sentences

Stock repurchases, including excise tax — — ( 4,488 ) — — — — — ( 252,277 ) ( 252,277 )

Tax payments associated with stock-based compensation awards — — ( 258 ) — — — — — ( 15,884 ) ( 15,884 )

Balance at May 31, 2025

74,437 — ( 6,387 ) $ 74,437 $ 840,296 $ 3,450,350 $ ( 3,704 ) $ — $ ( 370,841 ) $ 3,990,538

Balance at November 30, 2023

101,276 ( 6,705 ) ( 18,704 ) $ 101,276 $ 845,693 $ 3,676,924 $ ( 3,671 ) $ ( 72,718 ) $ ( 737,364 ) $ 3,810,140

Net income — — — — — 307,084 — — — 307,084

Dividends on common stock — — — — — ( 35,130 ) — — — ( 35,130 )

Employee stock options/other 616 — — 616 8,656 — — — — 9,272

Stock awards — — 571 — ( 22,998 ) — — — 22,998 —

Stock-based compensation — — — — 17,284 — — — — 17,284

Stock repurchases, including excise tax — — ( 1,592 ) — — — — — ( 100,441 ) ( 100,441 )

Tax payments associated with stock-based compensation awards — — ( 258 ) — — — — — ( 16,505 ) ( 16,505 )

Balance at February 29, 2024

Balance at May 31, 2024

101,892 ( 6,705 ) ( 19,983 ) $ 101,892 $ 848,635 $ 3,948,878 $ ( 3,671 ) $ ( 72,718 ) $ ( 831,312 ) $ 3,991,704

1 unchanged sentence

(In Thousands – Unaudited)

Three Months Ended

February 28, 2025 February 29, 2024

Six Months Ended May 31,

Cash flows from operating activities:

3 unchanged sentences

Distributions of earnings from unconsolidated joint ventures

Amortization of debt issuance costs and premiums 889 860

Amortization of debt issuance costs

Depreciation and amortization

18,034 18,843

Deferred income taxes

Gain on sale of investment — ( 12,516 )

Stock-based compensation

16,711 17,284

Inventory impairments and land option contract abandonments

4 unchanged sentences

( 68,338 ) ( 40,632 )

3,797 ( 8,227 )

Net cash provided by (used in) operating activities

3 unchanged sentences

Return of investments in unconsolidated joint ventures

Proceeds from sale of investment

Purchases of property and equipment, net

4 unchanged sentences

Repayments under revolving credit facility

( 180,000 ) —

Payments on mortgages and land contracts due to land sellers and other loans

5 unchanged sentences

( 36,513 ) ( 35,130 )

Net cash provided by (used in) financing activities

Net cash used in financing activities

( 101,952 ) ( 144,102 )

13 unchanged sentences

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for the fair presentation of our results for the interim periods presented.

The results of our consolidated operations for the three months ended February 28, 2025 are not necessarily indicative of the results to be expected for the full year due to seasonal variations in operating results and other factors.

The results of our consolidated operations for the three months and six months ended May 31, 2025 are not necessarily indicative of the results to be expected for the full year due to seasonal variations in operating results and other factors.

Unless the context indicates otherwise, the terms “we,” “our,” and “us” used in this report refer to KB Home, a Delaware corporation, and its subsidiaries.

4 unchanged sentences

We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents.

Our cash equivalents totaled $ 48.7 million at February 28, 2025 and $ 385.1 million at November 30, 2024.

At February 28, 2025 and November 30, 2024, our cash equivalents were mainly invested in interest-bearing bank deposit accounts and money market funds.

Our cash equivalents totaled $ 161.2 million at May 31, 2025 and $ 385.1 million at November 30, 2024.

At May 31, 2025 and November 30, 2024, our cash equivalents were mainly invested in interest-bearing bank deposit accounts and money market funds.

Comprehensive Income.

Our comprehensive income was $ 109.6 million for the three months ended February 28, 2025 and $ 138.7 million for the three months ended February 29, 2024.

Our comprehensive income for each of the three-month periods ended February 28, 2025 and February 29, 2024 was equal to our net income for the respective periods.

Our comprehensive income was $ 107.9 million for the three months ended May 31, 2025 and $ 168.4 million for the three months ended May 31, 2024.

For the six months ended May 31, 2025 and 2024, our comprehensive income was $ 217.4 million and $ 307.1 million, respectively.

Our comprehensive income for each of the three-month and six-month periods ended May 31, 2025 and 2024 was equal to our net income for the respective periods.

Recent Accounting Pronouncements Not Yet Adopted.

19 unchanged sentences

The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The guidance is to be applied either (1) prospectively to financial statements issued for reporting

periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements.

adoption is permitted.

The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

1 unchanged sentence

We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment.

As of February 28, 2025, our homebuilding reporting segments conducted ongoing operations in the following states:

As of May 31, 2025, our homebuilding reporting segments conducted ongoing operations in the following states:

California, Idaho and Washington

12 unchanged sentences

The following tables present financial information relating to our homebuilding reporting segments (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

West Coast $ 660,193 $ 698,417 $ 1,261,842 $ 1,256,719

10 unchanged sentences

Total $ 134,222 $ 207,856 $ 266,053 $ 370,944

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Inventory impairment and land option contract abandonment charges:

13 unchanged sentences

The following tables present financial information relating to our financial services reporting segment (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Insurance commissions $ 2,376 $ 5,402 $ 4,937 $ 8,994

4 unchanged sentences

Equity in income of unconsolidated joint venture

4,862 6,435 9,191 13,490

Pretax income $ 8,161 $ 13,263 $ 15,687 $ 24,840

9 unchanged sentences

Total liabilities $ 2,954 $ 2,719

(a) Other assets at February 28, 2025 and November 30, 2024 included $ 38.5 million and $ 38.2 million, respectively, of contract assets for estimated future renewal commissions.

(a) Other assets at May 31, 2025 and November 30, 2024 included $ 38.3 million and $ 38.2 million, respectively, of contract assets for estimated future renewal commissions.

Earnings Per Share

Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Net income $ 107,883 $ 168,419 $ 217,440 $ 307,084

6 unchanged sentences

Undistributed earnings allocated to participating securities

588 1,136 1,161 2,072

Undistributed earnings reallocated to participating securities

9 unchanged sentences

Our outstanding nonvested shares of restricted stock contain non-forfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method.

We had no other participating securities at February 28, 2025 and February 29, 2024.

For the three-month periods ended February 28, 2025 and February 29, 2024, no outstanding stock options were excluded from the diluted earnings per share calculations.

We had no other participating securities at May 31, 2025 and 2024.

For the three-month and six-month periods ended May 31, 2025 and 2024, no outstanding stock options were excluded from the diluted earnings per share calculations.

Contingently issuable shares associated with outstanding performance-based restricted stock units (each, a “PSU”) were not included in the basic earnings per share calculations for the periods presented, as the applicable vesting conditions had not been satisfied.

14 unchanged sentences

Total $ 5,913,348 $ 5,528,020

Land under development at February 28, 2025 and November 30, 2024 included land held for future development of $ 21.7 million and $ 21.2 million, respectively.

Land under development at May 31, 2025 and November 30, 2024 included land held for future development of $ 32.1 million and $ 21.2 million, respectively.

Interest is capitalized to inventories while the related communities or land parcels are being actively developed and until homes are completed or the land is available for immediate sale.

Capitalized interest is amortized to construction and land costs as the related inventories are delivered to homebuyers or land buyers (as applicable).

In the case of land held for future development and land held for sale, applicable interest is expensed as incurred.

We do not capitalize interest on land held for future development and land held for sale.

Our interest costs were as follows (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Capitalized interest at beginning of period $ 125,356 $ 134,377 $ 122,387 $ 134,375

3 unchanged sentences

Capitalized interest at end of period $ 128,676 $ 131,765 $ 128,676 $ 131,765

(a) Interest amortized to construction and land costs for the three months ended February 29, 2024 included a nominal amount related to land sales during the period.

(a) Interest amortized to construction and land costs for the six months ended May 31, 2024 included a nominal amount related to land sales during the period.

Inventory Impairments and Land Option Contract Abandonments

2 unchanged sentences

These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques.

We record an inventory impairment charge on land held for

sale when the carrying value of a land parcel is greater than its fair value.

These real estate assets are written down to fair value, less associated costs to sell.

We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value.

These real estate assets are written down to fair

value, less associated costs to sell.

The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information.

We evaluated 11 active communities or land parcels for recoverability as of February 28, 2025 with a carrying value of $ 201.9 million.

We evaluated 10 active communities or land parcels for recoverability as of May 31, 2025 with a carrying value of $ 143.2 million.

As of November 30, 2024, we evaluated eight active communities or land parcels for recoverability with a carrying value of $ 139.5 million.

In addition, we evaluated land held for future development for recoverability as of both February 28, 2025 and November 30, 2024.

Based on the results of our evaluations, we recognized no inventory impairment charges for the three-month periods ended February 28, 2025 and February 29, 2024.

As of February 28, 2025, the aggregate carrying value of our inventory that had been impacted by previous inventory impairment charges was $ 19.9 million, representing four communities and various other land parcels.

In addition, we evaluated land held for future development for recoverability as of both May 31, 2025 and November 30, 2024.

Based on the results of our evaluations, we recognized no inventory impairment charges for the three-month and six-month periods ended May 31, 2025 and 2024.

As of May 31, 2025, the aggregate carrying value of our inventory that had been impacted by previous inventory impairment charges was $ 13.0 million, representing four communities and various other land parcels.

As of November 30, 2024, the aggregate carrying value of our inventory that had been impacted by previous inventory impairment charges was $ 32.1 million, representing four communities and various other land parcels.

1 unchanged sentence

When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the related inventory costs, including non-refundable deposits and unrecoverable pre-acquisition costs.

Based on the results of our assessments, we recognized land option contract abandonment charges of $ 1.5 million for the three months ended February 28, 2025 and $ 1.3 million for the three months ended February 29, 2024.

Based on the results of our assessments, we recognized land option contract abandonment charges of $ 5.6 million and $ 7.0 million for the three-month and six-month periods ended May 31, 2025, respectively.

For the three-month and six-month periods ended May 31, 2024, we recognized land option contract abandonment charges of $ 1.2 million and $ 2.5 million, respectively.

Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, and in our estimations of the remaining operating lives of our inventory assets and the realization of our inventory balances, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated.

4 unchanged sentences

We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary.

Based on our analyses, we determined that one of our joint ventures at February 28, 2025 and November 30, 2024 was a VIE, but we were not the primary beneficiary of the VIE.

Therefore, all of our joint ventures at February 28, 2025 and November 30, 2024 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

Based on our analyses, we determined that one of our joint ventures at May 31, 2025 and November 30, 2024 was a VIE, but we were not the primary beneficiary of the VIE.

Therefore, all of our joint ventures at May 31, 2025 and November 30, 2024 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

Land Option Contracts and Other Similar Contracts.

3 unchanged sentences

Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary.

As a result of our analyses, we determined that as of February 28, 2025 and November 30, 2024, we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts.

As a result of our analyses, we determined that as of May 31, 2025 and November 30, 2024, we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts.

The following table presents a summary of our interests in land option contracts and other similar contracts (in thousands):

February 28, 2025 November 30, 2024

May 31, 2025 November 30, 2024

Deposits Aggregate

6 unchanged sentences

$ 81,931 $ 2,413,711 $ 81,939 $ 2,591,130

In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $ 35.7 million at February 28, 2025 and $ 34.3 million at November 30, 2024.

In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $ 46.9 million at May 31, 2025 and $ 34.3 million at November 30, 2024.

These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets.

2 unchanged sentences

For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s).

As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $ 23.5 million at February 28, 2025 and $ 26.0 million at November 30, 2024.

As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $ 23.9 million at May 31, 2025 and $ 26.0 million at November 30, 2024.

Investments in Unconsolidated Joint Ventures

3 unchanged sentences

The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents.

We had investments in six homebuilding unconsolidated joint ventures as of February 28, 2025 and November 30, 2024.

We had investments in six homebuilding unconsolidated joint ventures as of May 31, 2025 and November 30, 2024.

The following table presents combined condensed information from the statements of operations for our homebuilding unconsolidated joint ventures (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Revenues $ 14,371 $ 5,298 $ 39,740 $ 5,298

3 unchanged sentences

$ 2,213 $ 481 $ 7,028 $ ( 373 )

The combined revenues and construction and land costs for the three months ended February 28, 2025 related to homes delivered by an unconsolidated joint venture in California.

In the three months ended February 29, 2024, our unconsolidated joint ventures did not deliver any homes.

The combined revenues and construction and land costs for the three-month and six-month periods ended May 31, 2025 and 2024 related to homes delivered by an unconsolidated joint venture in California, which delivered its first homes in the 2024 second quarter.

The following table presents combined condensed balance sheet information for our homebuilding unconsolidated joint ventures (in thousands):

8 unchanged sentences

Total liabilities and equity $ 164,106 $ 181,161

(a) As of both February 28, 2025 and November 30, 2024, the unconsolidated joint venture in California that delivered homes in the three months ended February 28, 2025 had borrowings outstanding under a term loan with a third-party lender to finance its land acquisition, development and construction activities.

(a) As of both May 31, 2025 and November 30, 2024, the unconsolidated joint venture in California that delivered homes in the three-month and six-month periods ended May 31, 2025 and 2024 had borrowings outstanding under a term loan with a third-party lender to finance its land acquisition, development and construction activities.

In January 2025, the loan agreement was amended, increasing the aggregate commitment to $ 60.0 million from $ 55.0 million, and providing an eight-month loan extension option to replace the two previous six-month extension options.

3 unchanged sentences

Borrowings under the term loan are secured by the underlying property and related project assets.

None of our other unconsolidated joint ventures had outstanding debt at February 28, 2025 or November 30, 2024 .

None of our other unconsolidated joint ventures had outstanding debt at May 31, 2025 or November 30, 2024 .

We provide certain guarantees and indemnities to the lender in connection with the above-described term loan, including a guaranty of interest and carry costs;

8 unchanged sentences

The following table presents combined condensed information from the statements of operations for our financial services unconsolidated joint venture (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Revenues $ 27,349 $ 31,458 $ 52,964 $ 61,870

15 unchanged sentences

Total liabilities and equity $ 201,245 $ 177,345

(a) Cash and cash equivalents includes restricted cash of $ 1.3 million at both February 28, 2025 and November 30, 2024 .

(a) Cash and cash equivalents included restricted cash of $.8 million at May 31, 2025 and $ 1.3 million at November 30, 2024 .

Mortgage loans held for sale .

5 unchanged sentences

The fair value of IRLCs is based on market prices, which includes an estimate of the fair value of the associated mortgage servicing rights, adjusted for estimated costs to originate the underlying mortgage loans as well as the probability that the mortgage loans will fund within the terms of the IRLCs.

The fair value of IRLCs included in other assets in KBHS’ balance sheets was $ 14.4 million at February 28, 2025 and $ 16.0 million at November 30, 2024.

The changes in the fair value of IRLCs, which were reported in revenues for the applicable periods, were a loss of $ 1.5 million for the three months ended February 28, 2025 and a gain of $ 2.9 million for the three months ended February 29, 2024.

The fair value of IRLCs included in other assets in KBHS’ balance sheets was $ 12.4 million at May 31, 2025 and $ 16.0 million at November 30, 2024.

The changes in the fair value of IRLCs, which were reported in revenues for the applicable periods, were losses of $ 2.1 million and $ 3.6 million for the three-month and six-month periods ended May 31, 2025, respectively, and gains of $ 1.3 million and $ 4.2 million for the three-month and six-month periods ended May 31, 2024, respectively.

KBHS manages the interest rate and price risk associated with its outstanding IRLCs by entering into best efforts forward sale commitments under which mortgage loans locked with a borrower are simultaneously committed to a secondary market investor at a fixed price, subject to the underlying mortgage loans being funded.

4 unchanged sentences

The agreements contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquid assets, maximum debt to net worth ratio and positive net income, as defined in the agreements.

KBHS was in compliance with these covenants as of February 28, 2025.

KBHS was in compliance with these covenants as of May 31, 2025.

In addition to its compliance with these covenants, KBHS also depends on the ability and willingness of the applicable lenders and financial institutions to extend such credit facilities to KBHS to fund its originated mortgage loans.

8 unchanged sentences

Total $ 107,530 $ 105,920

(a) Other includes investments in equity securities without readily determinable fair values of $ 15.2 million at February 28, 2025 and November 30, 2024 .

(a) On March 1, 2024, substantially all the assets of an investee company, in which we had an aggregate ownership interest of approximately 13.5 %, held largely through a limited liability company we established to hold the investment, were sold to a privately held buyer through a merger.

From the sale, we received cash plus certain preferred and common equity interests in the buyer.

Other includes these investments in equity securities without readily determinable fair values of $ 15.2 million at May 31, 2025 and November 30, 2024 .

In connection with the sale, we recognized a gain of $ 12.5 million, which is included in interest income and other in our consolidated statements of operations for the three months and six months ended May 31, 2024.

Accrued Expenses and Other Liabilities

4 unchanged sentences

Warranty liability 97,658 96,026

Customer deposits 44,365 44,029

Inventory-related obligations (a) 49,604 44,408

Lease liabilities 22,386 20,859

Federal and state taxes payable 19,346 —

Customer deposits 44,296 44,029

Accrued interest payable 29,180 28,806

Lease liabilities 23,396 20,859

Real estate and business taxes 10,968 17,056

Federal and state taxes payable 6,461 —

Other 47,655 46,766

7 unchanged sentences

Lease expense is included in selling, general and administrative expenses in our consolidated statements of operations and includes costs for leases with terms of more than 12 months as well as short-term leases with terms of 12 months or less.

Our total lease expense for the three months ended February 28, 2025 and February 29, 2024 was $ 4.8 million and $ 5.1 million, respectively , and included short-term lease costs of $ 1.5 million and $ 1.8 million, respectively.

Variable lease costs and external sublease income for the three-month periods ended February 28, 2025 and February 29, 2024 were immaterial.

Our total lease expense for the three months ended May 31, 2025 and 2024 was $ 5.1 million and $ 5.2 million, respectively , and included short-term lease costs of $ 1.8 million and $ 1.9 million, respectively.

For the six months ended May 31, 2025 and 2024, our total lease expense was $ 9.9 million and $ 10.3 million, respectively, and included short-term lease costs of $ 3.3 million and $ 3.7 million, respectively.

Variable lease

costs and external sublease income for the three-month and six-month periods ended May 31, 2025 and 2024 were immaterial.

The following table presents our lease right-of-use assets and lease liabilities (in thousands):

7 unchanged sentences

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

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Income tax expense $ 34,500 $ 52,700 $ 64,300 $ 88,700

1 unchanged sentence

24.2 % 23.8 % 22.8 % 22.4 %

Our income tax expense and effective tax rate for the three months ended February 28, 2025 included the favorable impact of $ 5.4 million of excess tax benefits related to stock-based compensation and $ 1.7 million of Internal Revenue Code Section 45L (“Section 45L”) tax credits we recognized primarily from building energy-efficient homes, partly offset by $ 2.4 million of non-deductible executive compensation expense.

Our income tax expense and effective tax rate for the three months ended February 29, 2024 reflected the favorable impact of $ 6.1 million of excess tax benefits related to stock-based compensation and $ 4.1 million of Section 45L tax credits, partly offset by $ 2.5 million of non-deductible executive compensation expense.

The year-over-year decrease in Section 45L tax credits reflects the impact of guidance the Internal Revenue Service (“IRS”) issued in 2023 that heightened the Section 45L energy-efficiency qualification standard for homes built in California relative to other states and our decision to build homes in many of our markets beginning in 2025 that are highly energy efficient and qualify for ENERGY STAR® certification but do not qualify for Section 45L tax credits.

Our income tax expense and effective tax rate for the three months ended May 31, 2025 included the favorable impact of $ 3.1 million of Internal Revenue Code Section 45L (“Section 45L”) tax credits we recognized primarily from building energy-efficient homes, partly offset by $ 2.8 million of non-deductible executive compensation expense.

Our income tax expense and effective tax rate for the three months ended May 31, 2024 reflected the favorable impact of $ 4.8 million of Section 45L tax credits and $.4 million of excess tax benefits related to stock-based compensation, partly offset by $ 3.0 million of non-deductible executive compensation expense.

For the six months ended May 31, 2025, our income tax expense and effective tax rate included the favorable impacts of $ 5.4 million of excess tax benefits related to stock-based compensation and $ 4.8 million of Section 45L tax credits, partly offset by $ 5.2 million of non-deductible executive compensation expense.

Our income tax expense and effective tax rate for the six months ended May 31, 2024 reflected the favorable impacts of $ 8.9 million of Section 45L tax credits and $ 6.5 million of excess tax benefits related to stock-based compensation, partly offset by $ 5.5 million of non-deductible executive compensation expense.

The year-over-year decreases in Section 45L tax credits for the three months and six months ended May 31, 2025 reflect the impact of guidance the Internal Revenue Service (“IRS”) issued in 2023 that heightened the Section 45L energy-efficiency qualification standard for homes built in California relative to other states and our decision to build homes in many of our markets beginning in 2025 that are highly energy efficient and qualify for ENERGY STAR® certification but do not qualify for Section 45L tax credits.

We believe the additional costs necessary to satisfy the higher standards for some of our homes outweigh the possible benefits of meeting those higher standards for both our business and our buyers.

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The value of our deferred tax assets depends on applicable income tax rates.

As of both February 28, 2025 and November 30, 2024, we had deferred tax assets of $ 119.2 million that were partly offset by valuation allowances of $ 16.8 million.

The deferred tax asset valuation allowances at February 28, 2025 and November 30, 2024 were primarily related to certain state net operating losses that had not met the “more likely than not” realization standard at those dates.

Based on the evaluation of our deferred tax assets as of February 28, 2025, we determined that most of our deferred tax assets would be realized.

Therefore, no adjustments to our deferred tax asset valuation allowance were needed for the three months ended February 28, 2025.

As of both May 31, 2025 and November 30, 2024, we had deferred tax assets of $ 119.2 million that were partly offset by valuation allowances of $ 16.8 million.

The deferred tax asset valuation allowances at May 31, 2025 and November 30, 2024 were primarily related to certain state net operating losses that had not met the “more likely than not” realization standard at those dates.

Based on the evaluation of our deferred tax assets as of May 31, 2025, we determined that most of our deferred tax assets would be realized.

Therefore, no adjustments to our deferred tax asset valuation allowance were needed for the six months ended May 31, 2025.

We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets.

The accounting for deferred tax assets is based upon estimates of future results.

The accounting for deferred tax assets is based upon estimates

of future results.

Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements.

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$ 1,892,941 $ 1,691,679

The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, which totaled $ 10.8 million at February 28, 2025 and $ 11.5 million at November 30, 2024.

The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, which totaled $ 10.2 million at May 31, 2025 and $ 11.5 million at November 30, 2024.

Unsecured Revolving Credit Facility.

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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 28, 2025, we had $ 100.0 million of cash borrowings and $ 8.3 million of letters of credit outstanding under the Credit Facility.

Therefore, as of February 28, 2025, we had $ 981.7 million available for cash borrowings under the Credit Facility, with up to $ 241.7 million of that amount available for the issuance of letters of credit.

As of February 28, 2025, the weighted average annual interest rate on our outstanding borrowings under the Credit Facility was 5.7 %.

As of May 31, 2025, we had $ 200.0 million of cash borrowings and $ 8.3 million of letters of credit outstanding under the Credit Facility.

Therefore, as of May 31, 2025, we had $ 881.7 million available for cash borrowings under the Credit Facility, with up to $ 241.7 million of that amount available for the issuance of letters of credit.

As of May 31, 2025, the weighted average annual interest rate on our outstanding borrowings under the Credit Facility was 5.7 %.

Senior Unsecured Term Loan.

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The proceeds drawn under the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries.

As of February 28, 2025, the weighted average annual interest rate on our outstanding borrowings under the Term Loan was 5.8 %.

As of May 31, 2025, the weighted average annual interest rate on our outstanding borrowings under the Term Loan was 5.8 %.

Letter of Credit Facility.

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Under the LOC Facility, which expires on February 13, 2028 , we may issue up to $ 100.0 million of letters of credit.

As of February 28, 2025 and November 30, 2024, we had letters of credit outstanding under the LOC Facility of $ 72.6 million and $ 73.3 million, respectively.

As of May 31, 2025 and November 30, 2024, we had letters of credit outstanding under the LOC Facility of $ 74.4 million and $ 73.3 million, respectively.

Senior Notes.

All the senior notes outstanding at February 28, 2025 and November 30, 2024 represent senior unsecured obligations that are guaranteed by our Guarantor Subsidiaries and rank equally in right of payment with all of our and our Guarantor Subsidiaries’ existing unsecured and unsubordinated indebtedness.

All the senior notes outstanding at May 31, 2025 and November 30, 2024 represent senior unsecured obligations that are guaranteed by our Guarantor Subsidiaries and rank equally in right of payment with all of our and our Guarantor Subsidiaries’ existing unsecured and unsubordinated indebtedness.

All of our senior notes were issued in underwritten public offerings.

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In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets.

As of February 28, 2025, 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, 2025, 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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Mortgages and Land Contracts Due to Land Sellers and Other Loans.

As of February 28, 2025, inventories having a carrying value of $ 16.5 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

As of February 28, 2025, principal payments on our senior notes, mortgages and land contracts due to land sellers and other loans are due during each year ending November 30 as follows:

As of May 31, 2025, inventories having a carrying value of $ 15.0 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

As of May 31, 2025, principal payments on our senior notes, mortgages and land contracts due to land sellers and other loans are due during each year ending November 30 as follows:

2025 – $.3 million;

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Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable.

Our inventories are generally Level 3 assets.

We had no inventories with carrying values that were adjusted to fair value during the three months ended February 28, 2025 or the year ended November 30, 2024.

These measurements are generally Level 3 within the fair value hierarchy.

We had no inventories with carrying values that were adjusted to fair value during the six months ended May 31, 2025 or the year ended November 30, 2024.

See Note 7 – Inventory Impairments and Land Option Contract Abandonments for information regarding the valuation of these assets.

The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands):

February 28, 2025 November 30, 2024

May 31, 2025 November 30, 2024

Description Fair Value

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The fair values of our senior notes are generally estimated based on quoted market prices for these instruments.

The carrying values reported for cash and cash equivalents, outstanding borrowings under the Credit Facility, if any, the Term

Loan, and mortgages and land contracts due to land sellers and other loans approximate fair values.

The carrying value of corporate-owned life insurance is based on the cash surrender value of the policies and, accordingly, approximates fair value.

The carrying values reported for cash and cash equivalents, outstanding borrowings under the Credit Facility, if any, the Term Loan, and mortgages and land contracts due to land sellers and other loans approximate fair values.

The carrying value of

corporate-owned life insurance is based on the cash surrender value of the policies and, accordingly, approximates fair value.

Commitments and Contingencies

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Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home.

Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program.

Our warranty liability covers the costs of repairs associated with homeowner claims made under our limited warranty program.

These claims are generally made directly by a homeowner and involve their individual home.

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We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment.

Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events.

Our assessment includes a review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events.

While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates.

The changes in our warranty liability were as follows (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Balance at beginning of period $ 96,067 $ 95,920 $ 96,026 $ 98,000

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Our self-insurance liability is presented on a gross basis for all periods without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any.

Estimated probable insurance and other recoveries of $ 22.9 million and $ 22.6 million are included in receivables in our consolidated balance sheets at February 28, 2025 and November 30, 2024, respectively.

Estimated probable insurance and other recoveries of $ 25.2 million and $ 22.6 million are included in receivables in our consolidated balance sheets at May 31, 2025 and November 30, 2024, respectively.

These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment and legal precedent, and are subject to a high degree of variability from period to period.

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The changes in our self-insurance liability were as follows (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

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

2025 2024 2025 2024

Balance at beginning of period $ 180,253 $ 177,331 $ 185,428 $ 179,832

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In these instances, the claims and related repair work generally are initially covered by our warranty liability, and the costs associated with resolving the legal matter (including any additional repair work) are covered by our self-insurance liability.

The payments we make in connection with claims and related repair work may be recovered from our insurers to the extent such payments exceed the self-insured retentions or deductibles under our general liability insurance policies.

Also, in certain instances, in the course of resolving a claim, we pay amounts in advance of and/or on behalf of an independent contractor(s) or their insurer(s) and believe we will be reimbursed for such payments.

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Under Chapter 558, homeowners must serve written notice of a construction defect(s) and provide the served construction and/or design contractor(s) with an opportunity to respond to the noticed issue(s) before they can file a lawsuit.

Although we have resolved many of these claims without litigation, and a number of others have been resolved with applicable trade partners or their insurers covering the related costs, as of February 28, 2025, we had approximately 389 outstanding noticed claims, and some are scheduled for trial over the next few quarters and beyond.

Although we have resolved many of these claims without litigation, and a number of others have been resolved with applicable trade partners or their insurers covering the related costs, as of May 31, 2025, we had approximately 280 outstanding noticed claims, and some are scheduled for trial over the next few quarters and beyond.

In addition, some of our trade partners’ insurers in some of these cases have informed us of their inability to continue to pay claims-related costs.

At February 28, 2025, we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries, including an estimate for claims incurred but not reported.

At May 31, 2025, we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries, including an estimate for claims incurred but not reported.

While it is reasonably possible that our losses could exceed the amounts accrued and our recoveries could be less than the amounts recorded, at this time, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible as each of these is dependent on several factors, including the extent of additional claims to be reported in future periods;

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We are often required to provide to various municipalities and other government agencies performance bonds and/or letters of credit to secure the completion of our projects and/or in support of obligations to build community improvements such as roads, sewers, water systems and other utilities, and to support similar development activities by certain of our unconsolidated joint ventures.

At February 28, 2025, we had $ 1.31 billion of performance bonds and $ 80.9 million of letters of credit outstanding.

At May 31, 2025, we had $ 1.44 billion of performance bonds and $ 82.7 million of letters of credit outstanding.

At November 30, 2024, we had $ 1.33 billion of performance bonds and $ 81.6 million of letters of credit outstanding.

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In the ordinary course of our business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes.

At February 28, 2025, we had total cash deposits of $ 89.2 million to purchase land having an aggregate purchase price of $ 2.53 billion.

At May 31, 2025, we had total cash deposits of $ 81.9 million to purchase land having an aggregate purchase price of $ 2.41 billion.

Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

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On October 2, 2023, we received a subpoena from the U.S.

Department of Justice Civil Division, dated September 27, 2023, to produce certain documents and testimony with respect to the inspection, rating, marketing and

advertising of our ENERGY STAR certified homes, including our contracts and/or communications with U.S.

Department of Justice Civil Division, dated September 27, 2023, to produce certain documents and testimony with respect to the inspection, rating, marketing and advertising of our ENERGY STAR certified homes, including our contracts and/or communications with U.S.

Environmental Protection Agency and third-party ENERGY STAR rating companies, real estate brokers, real estate appraisers, financial institutions and other parties, as well as inspection-related guidelines, instructions, methods, policies, processes and procedures.

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We are involved in litigation and regulatory proceedings incidental to our business that are in various procedural stages.

We believe the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of February 28, 2025, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized or disclosed in our consolidated financial statements.

We believe the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of May 31, 2025, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized or disclosed in our consolidated financial statements.

We evaluate our accruals for litigation and regulatory proceedings at least quarterly and, as appropriate, adjust them to reflect (a) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments;

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As of November 30, 2024, there was $ 700.0 million of remaining availability under this share repurchase authorization.

In the 2025 first quarter, we repurchased 753,939 shares of our common stock at a total cost of $ 50.0 million.

In the 2025 first half, we repurchased 4,488,614 shares of our common stock at a total cost of $ 250.0 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 February 28, 2025, there was $ 650.0 million of remaining availability under this share repurchase authorization.

As of May 31, 2025, there was $ 450.0 million of remaining availability under this share repurchase authorization.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a non-deductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

In the three months ended February 28, 2025 and February 29, 2024, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in accrued expenses and other liabilities on our consolidated balance sheet.

All dollar amounts presented in this report related to our share repurchases and our share

repurchase authorization exclude such excise taxes, to the extent applicable, unless otherwise indicated.

In the 2025 first quarter, our board of directors declared, and we paid, a quarterly cash dividend of $ .25 per share.

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 three months and six months ended May 31, 2025 and 2024, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in accrued expenses and other liabilities on our consolidated balance sheet.

All dollar amounts presented in this report related to our share repurchases and our share repurchase authorization exclude such excise taxes, to the extent applicable, unless otherwise indicated.

In the 2025 and 2024 second quarters, our board of directors declared, and we paid, a quarterly cash dividend of $ .25 per share.

Quarterly dividends declared and paid during the six months ended May 31, 2025 and 2024 totaled $ .50 and $ .45 per share, respectively.

Stock-Based Compensation

Stock Options.

At February 28, 2025 and November 30, 2024, we had 390,641 and 418,141 stock options outstanding with a weighted average exercise price of $ 16.16 and $ 16.17 , respectively.

At May 31, 2025 and November 30, 2024, we had 390,641 and 418,141 stock options outstanding with a weighted average exercise price of $ 16.16 and $ 16.17 , respectively.

We have not granted any stock option awards since 2016.

During the three months ended February 28, 2025, a total of 27,500 stock options with a weighted average exercise price of $ 16.21 were exercised.

As of February 28, 2025, stock options outstanding and stock options exercisable each had a weighted average remaining contractual life of 1.6 years.

As all outstanding stock options have been fully vested since 2019, there was no stock-based compensation expense associated with stock options for the three months ended February 28, 2025 and February 29, 2024.

Stock options outstanding and stock options exercisable each had an aggregate intrinsic value of $ 17.5 million at February 28, 2025.

During the six months ended May 31, 2025, a total of 27,500 stock options with a weighted average exercise price of $ 16.21 were exercised.

As of May 31, 2025, stock options outstanding and stock options exercisable each had a weighted average remaining contractual life of 1.4 years.

As all outstanding stock options have been fully vested since 2019, there was no stock-based compensation expense associated with stock options for the three-month and six-month periods ended May 31, 2025 and 2024.

Stock options outstanding and stock options exercisable each had an aggregate intrinsic value of $ 13.8 million at May 31, 2025.

(The intrinsic value of a stock option is the amount by which the market value of a share of the underlying common stock exceeds the exercise price of the stock option.)

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From time to time, we grant restricted stock and PSUs to various employees as a compensation benefit.

We recognized total compensation expense of $ 7.6 million and $ 7.9 million for the three months ended February 28, 2025 and February 29, 2024, respectively, related to restricted stock and PSUs.

We recognized total compensation expense of $ 9.2 million and $ 9.4 million for the three months ended May 31, 2025 and 2024, respectively, related to restricted stock and PSUs.

For the six months ended May 31, 2025 and 2024, we recognized total compensation expense of $ 16.7 million and $ 17.3 million, respectively, related to restricted stock and PSUs.

Supplemental Disclosure to Consolidated Statements of Cash Flows

The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

Six Months Ended May 31,

Summary of cash and cash equivalents at end of period:

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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 1. Financial Statements