KB HOME 10-Q

Item 1. Financial Statements KB HOME CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts – Unaudited) Three Months Ended February 28, 2026 2025 Total revenues $ 1,077,011 $ 1,391,777 Homebuilding: Revenues $ 1,072,059 $ 1,387,041 Construction and land costs ( 908,029 ) ( 1,107,414 ) Selling, general and administrative expenses ( 131,044 ) ( 152,288 ) Operating income 32,986 127,339 Interest income 1,281 2,079 Equity in income of unconsolidated joint ventures 522 2,413 Homebuilding pretax income 34,789 131,831 Financial services: Revenues 4,952 4,736 Expenses ( 1,550 ) ( 1,539 ) Equity in income of unconsolidated joint venture 2,133 4,329 Financial services pretax income 5,535 7,526 Total pretax income 40,324 139,357 Income tax expense ( 6,900 ) ( 29,800 ) Net income $ 33,424 $ 109,557 Earnings per share: Basic $ .53 $ 1.52 Diluted $ .52 $ 1.49 Weighted average shares outstanding: Basic 62,663 71,537 Diluted 63,730 73,012 See accompanying notes. 3 KB HOME CONSOLIDATED BALANCE SHEETS (In Thousands, Except Shares – Unaudited) February 28, 2026 November 30, 2025 Assets Homebuilding: Cash and cash equivalents $ 200,526 $ 228,614 Receivables 357,010 350,636 Inventories 5,703,970 5,670,802 Investments in unconsolidated joint ventures 76,835 72,436 Property and equipment, net 104,567 101,457 Deferred tax assets, net 88,665 88,665 Other assets 113,832 107,833 6,645,405 6,620,443 Financial services 57,432 59,809 Total assets $ 6,702,837 $ 6,680,252 Liabilities and stockholders’ equity Homebuilding: Accounts payable $ 285,923 $ 351,261 Accrued expenses and other liabilities 666,720 731,946 Notes payable 1,893,258 1,692,977 2,845,901 2,776,184 Financial services 1,929 3,210 Stockholders’ equity: Common stock — 74,506,740 and 74,477,254 shares issued at February 28, 2026 and November 30, 2025, respectively 74,507 74,477 Paid-in capital 836,755 863,718 Retained earnings 3,645,806 3,629,638 Accumulated other comprehensive loss ( 3,538 ) ( 3,538 ) Treasury stock, at cost — 11,858,494 and 11,303,643 shares at February 28, 2026 and November 30, 2025, respectively ( 698,523 ) ( 663,437 ) Total stockholders’ equity 3,855,007 3,900,858 Total liabilities and stockholders’ equity $ 6,702,837 $ 6,680,252 See accompanying notes. 4 KB HOME CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands – Unaudited) Three Months Ended February 28, 2026 and 2025 Number of Shares Common Stock Treasury Stock Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Balance at November 30, 2025 74,477 ( 11,304 ) $ 74,477 $ 863,718 $ 3,629,638 $ ( 3,538 ) $ ( 663,437 ) $ 3,900,858 Net income — — — — 33,424 — — 33,424 Dividends on common stock — — — — ( 17,256 ) — — ( 17,256 ) Employee stock options/other 30 — 30 447 — — — 477 Stock awards — 569 — ( 33,405 ) — — 33,405 — Stock-based compensation — — — 5,995 — — — 5,995 Stock repurchases, including excise tax — ( 843 ) — — — — ( 50,279 ) ( 50,279 ) Tax payments associated with stock-based compensation awards — ( 280 ) — — — — ( 18,212 ) ( 18,212 ) Balance at February 28, 2026 74,507 ( 11,858 ) $ 74,507 $ 836,755 $ 3,645,806 $ ( 3,538 ) $ ( 698,523 ) $ 3,855,007 Balance at November 30, 2024 74,410 ( 2,253 ) $ 74,410 $ 862,049 $ 3,269,423 $ ( 3,704 ) $ ( 141,562 ) $ 4,060,616 Net income — — — — 109,557 — — 109,557 Dividends on common stock — — — — ( 19,311 ) — — ( 19,311 ) Employee stock options/other 27 — 27 418 — — — 445 Stock awards — 561 — ( 35,719 ) — — 35,719 — Stock-based compensation — — — 7,558 — — — 7,558 Stock repurchases, including excise tax — ( 754 ) — — — — ( 50,303 ) ( 50,303 ) Tax payments associated with stock-based compensation awards — ( 258 ) — — — — ( 15,884 ) ( 15,884 ) Balance at February 28, 2025 74,437 ( 2,704 ) $ 74,437 $ 834,306 $ 3,359,669 $ ( 3,704 ) $ ( 172,030 ) $ 4,092,678 See accompanying notes. 5 KB HOME CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands – Unaudited) Three Months Ended February 28, 2026 2025 Cash flows from operating activities: Net income $ 33,424 $ 109,557 Adjustments to reconcile net income to net cash used in operating activities: Equity in income of unconsolidated joint ventures ( 2,655 ) ( 6,742 ) Distributions of earnings from unconsolidated joint ventures 4,000 13,444 Amortization of debt issuance costs 1,050 889 Depreciation and amortization 10,117 8,815 Stock-based compensation 5,995 7,558 Inventory impairments and land option contract abandonments 2,155 1,455 Changes in assets and liabilities: Receivables 2,821 39,258 Inventories ( 37,973 ) ( 416,363 ) Accounts payable, accrued expenses and other liabilities ( 148,131 ) ( 99,031 ) Other, net 3,830 6,839 Net cash used in operating activities ( 125,367 ) ( 334,321 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures ( 4,748 ) — Return of investments in unconsolidated joint ventures — 556 Purchases of property and equipment, net ( 13,224 ) ( 11,220 ) Net cash used in investing activities ( 17,972 ) ( 10,664 ) Cash flows from financing activities: Borrowings under revolving credit facility 350,000 180,000 Repayments under revolving credit facility ( 150,000 ) ( 80,000 ) Payments on mortgages and land contracts due to land sellers and other loans ( 315 ) — Issuance of common stock under employee stock plans 477 445 Stock repurchases ( 50,000 ) ( 50,000 ) Tax payments associated with stock-based compensation awards ( 18,212 ) ( 15,884 ) Payments of cash dividends ( 17,256 ) ( 19,311 ) Net cash provided by financing activities 114,694 15,250 Net decrease in cash and cash equivalents ( 28,645 ) ( 329,735 ) Cash and cash equivalents at beginning of period 230,443 599,193 Cash and cash equivalents at end of period $ 201,798 $ 269,458 See accompanying notes. 6 KB HOME NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Significant Accounting Policies Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended November 30, 2025, which are contained in our Annual Report on Form 10-K for that period. The consolidated balance sheet at November 30, 2025 has been taken from the audited consolidated financial statements as of that date. 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, 2026 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. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents. 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 $ 45.0 million at February 28, 2026 and $ 152.6 million at November 30, 2025. At February 28, 2026 and November 30, 2025, our cash equivalents were mainly invested in interest-bearing bank deposit accounts and money market funds. Comprehensive Income. Our comprehensive income was $ 33.4 million for the three months ended February 28, 2026 and $ 109.6 million for the three months ended February 28, 2025. Our comprehensive income for each of the three-month periods ended February 28, 2026 and 2025 was equal to our net income for the respective periods. Recent Accounting Pronouncements Not Yet Adopted. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. 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. ASU 2024-03 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. In September 2025, the FASB issued Accounting Standards Update No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which modernizes the accounting for costs related to internal-use software by removing all references to project stages and clarifying the threshold entities apply to begin capitalizing costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and may 7 be applied using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. 2. Segment Information We operate two principal businesses: homebuilding and financial services. An operating segment is defined as a component of an enterprise for which separate financial information is available and for which segment results are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Each of our homebuilding divisions has been identified as an operating segment. Our homebuilding operating segments have been aggregated into four homebuilding reporting segments, based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. Through February 28, 2026, our chief executive officer and chief operating officer together served as our CODM for purposes of our reportable segment disclosures and regularly reviewed the operating results for the individual operating segments that comprise our reporting segments. Effective March 1, 2026, our chief executive officer transitioned to executive chairman of the board and our chief operating officer was promoted to chief executive officer. As a result, effective March 1, 2026, our CODM is our executive chairman of the board and our chief executive officer. This CODM transition did not affect the CODM’s approach to deciding how to allocate resources or to assessing performance with respect to our operating segments. The CODM evaluates the performance of our homebuilding operating segments primarily based on their respective housing gross profit margin and pretax income (loss). These profitability measures are used by the CODM in making operating and capital resource allocation decisions at the segment level, including their review and approval of land acquisition and land sale transactions. The CODM also uses these measures in business planning and forecasting, and considers budget-to-actual variances for these measures when assessing segment performance. In addition, segment pretax income (loss) is used by the CODM in determining the compensation of certain employees. As of February 28, 2026, our homebuilding reporting segments conducted ongoing operations in the following states: West Coast: California, Idaho and Washington Southwest: Arizona and Nevada Central: Colorado and Texas Southeast: Florida and North Carolina Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land. We also have one financial services reporting segment. The CODM reviews pretax income for our financial services segment to assess performance and to inform decisions about the allocation of resources to the segment and as to financial services product offerings. Our financial services reporting segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provides title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments. Our financial services reporting segment earns revenues primarily from insurance commissions and from the provision of title services. We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), our unconsolidated joint venture with GR Alliance Ventures, LLC (“GR Alliance”), a subsidiary of Guaranteed Rate, Inc. We and GR Alliance each have a 50.0 % ownership interest, with GR Alliance providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements and in Note 3 – Financial Services. Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate 8 management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to our homebuilding reporting segments. Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods. The following tables present certain statements of operations information relating to our homebuilding reporting segments (dollars in thousands): Three Months Ended February 28, 2026 West Coast Southwest Central Southeast Corporate and Other Total Revenues: Housing $ 449,209 $ 180,232 $ 223,608 $ 218,425 $ — $ 1,071,474 Land — — — 585 — 585 Total 449,209 180,232 223,608 219,010 — 1,072,059 Construction and land costs: Housing ( 383,687 ) ( 141,919 ) ( 189,805 ) ( 187,692 ) ( 2,255 ) ( 905,358 ) Land — — — ( 516 ) — ( 516 ) Inventory-related charges ( 645 ) — ( 649 ) ( 861 ) — ( 2,155 ) Total ( 384,332 ) ( 141,919 ) ( 190,454 ) ( 189,069 ) ( 2,255 ) ( 908,029 ) Gross profits: Housing (a) 64,877 38,313 33,154 29,872 ( 2,255 ) 163,961 Land — — — 69 — 69 Total 64,877 38,313 33,154 29,941 ( 2,255 ) 164,030 Marketing expenses ( 15,535 ) ( 5,375 ) ( 8,667 ) ( 7,094 ) ( 2,044 ) ( 38,715 ) Commission expenses ( 15,202 ) ( 5,928 ) ( 9,752 ) ( 8,698 ) — ( 39,580 ) General and administrative expenses ( 8,921 ) ( 4,403 ) ( 4,641 ) ( 5,312 ) ( 29,472 ) ( 52,749 ) Operating income (loss) 25,219 22,607 10,094 8,837 ( 33,771 ) 32,986 Other (b) 562 ( 37 ) 1 ( 3 ) 1,280 1,803 Homebuilding pretax income (loss) $ 25,781 $ 22,570 $ 10,095 $ 8,834 $ ( 32,491 ) $ 34,789 Housing gross profit margin as a percentage of housing revenues 14.4 % 21.3 % 14.8 % 13.7 % — % 15.3 % 9 Three Months Ended February 28, 2025 West Coast Southwest Central Southeast Corporate and Other Total Revenues: Housing $ 601,649 $ 312,879 $ 275,613 $ 196,900 $ — $ 1,387,041 Land — — — — — — Total 601,649 312,879 275,613 196,900 — 1,387,041 Construction and land costs: Housing ( 490,522 ) ( 232,408 ) ( 219,578 ) ( 161,875 ) ( 1,576 ) ( 1,105,959 ) Land — — — — — — Inventory-related charges ( 646 ) ( 310 ) ( 318 ) ( 181 ) — ( 1,455 ) Total ( 491,168 ) ( 232,718 ) ( 219,896 ) ( 162,056 ) ( 1,576 ) ( 1,107,414 ) Gross profits: Housing (a) 110,481 80,161 55,717 34,844 ( 1,576 ) 279,627 Land — — — — — — Total 110,481 80,161 55,717 34,844 ( 1,576 ) 279,627 Marketing expenses ( 14,324 ) ( 5,762 ) ( 9,772 ) ( 6,623 ) ( 3,182 ) ( 39,663 ) Commission expenses ( 16,883 ) ( 10,101 ) ( 12,048 ) ( 8,134 ) — ( 47,166 ) General and administrative expenses ( 12,782 ) ( 5,523 ) ( 8,409 ) ( 7,010 ) ( 31,735 ) ( 65,459 ) Operating income (loss) 66,492 58,775 25,488 13,077 ( 36,493 ) 127,339 Other (b) 2,399 17 5 ( 3 ) 2,074 4,492 Homebuilding pretax income (loss) $ 68,891 $ 58,792 $ 25,493 $ 13,074 $ ( 34,419 ) $ 131,831 Housing gross profit margin as a percentage of housing revenues 18.4 % 25.6 % 20.2 % 17.7 % — % 20.2 % (a) Housing gross profits are calculated by subtracting housing construction and land costs and inventory-related charges from housing revenues. (b) Other is primarily comprised of interest income, interest expense and equity in income (loss) of unconsolidated joint ventures. The following table summarizes the equity in income (loss) of unconsolidated joint ventures by homebuilding reporting segment (in thousands): Three Months Ended February 28, 2026 2025 Equity in income (loss) of unconsolidated joint ventures: West Coast $ 562 $ 2,399 Southwest ( 37 ) 17 Central — — Southeast ( 3 ) ( 3 ) Total $ 522 $ 2,413 The following tables present certain balance sheet information relating to our homebuilding reporting segments (in thousands): February 28, 2026 November 30, 2025 Inventories: West Coast $ 3,075,043 $ 3,048,056 Southwest 1,046,060 969,260 Central 721,833 758,962 Southeast 861,034 894,524 Total $ 5,703,970 $ 5,670,802 10 February 28, 2026 November 30, 2025 Investments in unconsolidated joint ventures: West Coast $ 72,018 $ 68,708 Southwest 2,272 1,180 Central — — Southeast 2,545 2,548 Total $ 76,835 $ 72,436 Assets: West Coast $ 3,365,518 $ 3,300,212 Southwest 1,105,748 1,019,475 Central 879,742 910,307 Southeast 902,916 943,846 Corporate and other 391,481 446,603 Total $ 6,645,405 $ 6,620,443 3. Financial Services The following tables present financial information relating to our financial services reporting segment (in thousands): Three Months Ended February 28, 2026 2025 Revenues Insurance commissions $ 3,127 $ 2,561 Title services 1,825 2,175 Total 4,952 4,736 Expenses General and administrative ( 1,550 ) ( 1,539 ) Operating income 3,402 3,197 Equity in income of unconsolidated joint venture 2,133 4,329 Pretax income $ 5,535 $ 7,526 February 28, 2026 November 30, 2025 Assets Cash and cash equivalents $ 1,272 $ 1,829 Receivables 2,968 5,569 Investment in unconsolidated joint venture 13,364 13,231 Other assets (a) 39,828 39,180 Total assets $ 57,432 $ 59,809 Liabilities Accounts payable and accrued expenses $ 1,929 $ 3,210 Total liabilities $ 1,929 $ 3,210 (a) Other assets at February 28, 2026 and November 30, 2025 included $ 39.8 million and $ 39.1 million, respectively, of contract assets for estimated future renewal commissions. 11 4. Earnings Per Share Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts): Three Months Ended February 28, 2026 2025 Numerator: Net income $ 33,424 $ 109,557 Less: Distributed earnings allocated to participating securities ( 74 ) ( 113 ) Less: Undistributed earnings allocated to participating securities ( 76 ) ( 567 ) Numerator for basic earnings per share 33,274 108,877 Effect of dilutive securities: Add: Undistributed earnings allocated to participating securities 76 567 Less: Undistributed earnings reallocated to participating securities ( 75 ) ( 555 ) Numerator for diluted earnings per share $ 33,275 $ 108,889 Denominator: Weighted average shares outstanding — basic 62,663 71,537 Effect of dilutive securities: Share-based payments 1,067 1,475 Weighted average shares outstanding — diluted 63,730 73,012 Basic earnings per share $ .53 $ 1.52 Diluted earnings per share $ .52 $ 1.49 We compute earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders. 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, 2026 and 2025. For the three-month periods ended February 28, 2026 and 2025, 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. 5. Receivables Receivables consisted of the following (in thousands): February 28, 2026 November 30, 2025 Due from utility companies, improvement districts and municipalities $ 190,336 $ 184,924 Recoveries related to self-insurance and other legal claims 116,804 115,210 Refundable deposits and bonds 13,680 9,468 Income taxes receivable 5,535 12,108 Other 34,939 33,473 Subtotal 361,294 355,183 Allowance for doubtful accounts ( 4,284 ) ( 4,547 ) Total $ 357,010 $ 350,636 12 6. Inventories Inventories consisted of the following (in thousands): February 28, 2026 November 30, 2025 Homes completed or under construction $ 1,418,752 $ 1,571,793 Land under development 4,285,218 4,099,009 Total $ 5,703,970 $ 5,670,802 Land under development at February 28, 2026 and November 30, 2025 included land held for future development of $ 27.5 million and $ 27.3 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). 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, 2026 2025 Capitalized interest at beginning of period $ 125,627 $ 122,387 Interest incurred 28,134 26,392 Interest amortized to construction and land costs ( 18,857 ) ( 23,423 ) Capitalized interest at end of period $ 134,904 $ 125,356 7. Inventory Impairments and Land Option Contract Abandonments Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. 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. 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 16 active communities or land parcels for recoverability as of February 28, 2026 with a carrying value of $ 196.1 million. As of November 30, 2025, we evaluated 11 active communities or land parcels for recoverability with a carrying value of $ 154.1 million. In addition, we evaluated land held for future development for recoverability as of both February 28, 2026 and November 30, 2025. Based on the results of our evaluations, we recognized no inventory impairment charges for the three-month periods ended February 28, 2026 and 2025. As of February 28, 2026, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 23.9 million, representing six communities and various other land parcels. As of November 30, 2025, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 38.0 million, representing seven communities and various other land parcels. Our inventory controlled under land option contracts and other similar contracts is assessed on a quarterly basis to determine whether it continues to meet our investment return standards. 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 $ 2.2 million and $ 1.5 million for the three-month periods ended February 28, 2026 and 2025, respectively. 13 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, especially in periods of volatile housing market or broader economic conditions. 8. Variable Interest Entities Unconsolidated Joint Ventures. We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. 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, 2026 and November 30, 2025 was a VIE, but we were not the primary beneficiary of the VIE. Therefore, all of our joint ventures at February 28, 2026 and November 30, 2025 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. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. 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, 2026 and November 30, 2025, 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, 2026 November 30, 2025 Cash Deposits Aggregate Purchase Price Cash Deposits Aggregate Purchase Price Unconsolidated VIEs $ 38,757 $ 1,154,392 $ 51,872 $ 1,320,433 Other land option contracts and other similar contracts 32,732 741,668 29,014 742,861 Total $ 71,489 $ 1,896,060 $ 80,886 $ 2,063,294 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 $ 64.0 million at February 28, 2026 and $ 62.8 million at November 30, 2025. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. 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 $ 13.8 million at February 28, 2026 and $ 15.4 million at November 30, 2025. 14 9. Investments in Unconsolidated Joint Ventures Homebuilding. We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. 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, 2026 and November 30, 2025. 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, 2026 2025 Revenues $ 11,056 $ 25,369 Construction and land costs ( 8,663 ) ( 19,002 ) Other expense, net ( 1,325 ) ( 1,552 ) Income $ 1,068 $ 4,815 All the combined revenues and most of the construction and land costs for the three-month periods ended February 28, 2026 and 2025 related to homes delivered by an unconsolidated joint venture in California. The following table presents combined condensed balance sheet information for our homebuilding unconsolidated joint ventures (in thousands): February 28, 2026 November 30, 2025 Assets Cash $ 13,765 $ 14,347 Receivables 9,814 5,517 Inventories 156,952 155,015 Other assets 451 620 Total assets $ 180,982 $ 175,499 Liabilities and equity Accounts payable and other liabilities $ 12,889 $ 10,063 Notes payable (a) 38,034 40,216 Equity 130,059 125,220 Total liabilities and equity $ 180,982 $ 175,499 (a) As of both February 28, 2026 and November 30, 2025, the unconsolidated joint venture in California that delivered homes in the three-month periods ended February 28, 2026 and 2025 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. Pursuant to the amendment, the aggregate commitment was reduced to $ 55.2 million on August 31, 2025, and to $ 40.0 million on February 28, 2026. This term loan is scheduled to mature on April 19, 2026 , unless extended or terminated pursuant to its applicable terms. If the term loan is extended, the aggregate commitment would be reduced to $ 28.0 million effective April 19, 2026. 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, 2026 or November 30, 2025 . 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; a guaranty to complete the construction of phases of the improvements for the project 15 as such phases are commenced; a guaranty against losses suffered due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity from environmental issues. Except to the extent related to the foregoing guarantees and indemnities, we do not have a guaranty or any other obligation to repay borrowings under the term loan or to support the value of the underlying collateral. However, various financial and non-financial covenants apply under the term loan and with respect to the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations. As of the date of this report, we were in compliance with the relevant covenants. We do not believe that our existing exposure under our guaranty and indemnity obligations related to outstanding borrowings under the term loan is material to our consolidated financial statements. Financial Services. 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, 2026 2025 Revenues $ 18,559 $ 25,615 Expenses ( 14,294 ) ( 16,957 ) Income $ 4,265 $ 8,658 Revenues are primarily generated from fees earned on mortgage loan originations, interest earned for the period loans are held by KBHS, and gains on the sales of mortgage loans held for sale. Gains on the sales of mortgage loans held for sale include the realized and unrealized gains and losses associated with changes in the fair value of such loans and any related derivative financial instruments. The following table presents combined condensed balance sheet information for our financial services unconsolidated joint venture (in thousands): February 28, 2026 November 30, 2025 Assets Cash and cash equivalents (a) $ 24,344 $ 23,393 Mortgage loans held for sale 141,886 177,068 Other assets 7,789 8,104 Total assets $ 174,019 $ 208,565 Liabilities and equity Accounts payable and other liabilities $ 11,334 $ 13,394 Funding facilities 135,957 168,709 Equity 26,728 26,462 Total liabilities and equity $ 174,019 $ 208,565 (a) Cash and cash equivalents included restricted cash of $ .9 million at both February 28, 2026 and November 30, 2025 . Mortgage loans held for sale . Originated mortgage loans expected to be sold into the secondary market in the foreseeable future are reported as mortgage loans held for sale and carried in KBHS’ balance sheets at fair value, with changes in fair value recognized within revenues in KBHS’ statements of operations. Interest Rate Lock Commitments (“IRLCs”) . KBHS enters into IRLCs in connection with originating certain mortgage loans held for sale, at specified interest rates and within a specified period of time, with customers who have applied for a mortgage loan and meet certain credit and underwriting criteria. KBHS accounts for IRLCs as free-standing derivatives and does not designate any for hedge accounting. As a result, IRLCs are recognized in KBHS’ balance sheets at fair value, and gains or losses resulting from changes in fair value are recognized within revenues in KBHS’ statements of operations. 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 $ 4.8 million at February 28, 2026 and $ 4.6 million at November 30, 2025. The changes in the fair 16 value of IRLCs, which were reported in revenues for the applicable periods, were a gain of $ .2 million for the three months ended February 28, 2026 and a loss of $ 1.5 million for the three months ended February 28, 2025. 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. These best efforts forward sale commitments do not meet the definition of derivative financial instruments and are therefore not recorded in KBHS’ balance sheets. If the mortgage loans underlying the IRLCs do not fund, KBHS does not have an obligation to fulfill the secondary market investor commitments. Funding facilities . KBHS maintains warehouse lines of credit and master repurchase agreements with various financial institutions to fund its originated mortgage loans, with its mortgage loans held for sale pledged as collateral under these agreements. 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, 2026. 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. KBHS intends to renew these facilities when they expire at various dates in 2026 and 2027. The warehouse lines of credit and master repurchase agreements are not guaranteed by us or any of the subsidiaries that guarantee our senior notes, unsecured revolving credit facility with various banks (“Credit Facility”) and senior unsecured term loan agreement (“Term Loan”) (collectively, “Guarantor Subsidiaries”). 10. Other Assets Other assets consisted of the following (in thousands): February 28, 2026 November 30, 2025 Cash surrender value of corporate-owned life insurance contracts $ 50,694 $ 51,182 Lease right-of-use assets 25,869 17,494 Prepaid expenses 13,548 14,982 Other (a) 23,721 24,175 Total $ 113,832 $ 107,833 (a) Other includes investments in equity securities without readily determinable fair values of $ 15.2 million at February 28, 2026 and November 30, 2025 . 11. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): February 28, 2026 November 30, 2025 Self-insurance and other legal liabilities $ 291,853 $ 290,107 Warranty liability 102,539 101,245 Employee compensation and related benefits 98,390 157,170 Inventory-related obligations (a) 43,731 48,243 Lease liabilities 28,453 19,775 Customer deposits 27,330 28,033 Accrued interest payable 17,998 29,219 Real estate and business taxes 11,999 13,612 Other 44,427 44,542 Total $ 666,720 $ 731,946 17 (a) Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature. 12. Leases We lease certain property and equipment for use in our operations. We recognize lease expense for these leases generally on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Lease right-of-use assets and lease liabilities are recorded in our consolidated balance sheets for leases with an expected term at the commencement date of more than 12 months. 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, 2026 and 2025 was $ 5.2 million and $ 4.8 million, respectively , and included short-term lease costs of $ 1.8 million and $ 1.5 million, respectively. Variable lease costs and external sublease income for the three-month periods ended February 28, 2026 and 2025 were immaterial. The following table presents our lease right-of-use assets and lease liabilities (in thousands): February 28, 2026 November 30, 2025 Lease right-of-use assets $ 25,888 $ 17,519 Lease liabilities 28,473 19,801 Lease right-of-use assets and lease liabilities are predominately within our homebuilding operations, with nominal amounts in our financial services operations. 13. Income Taxes Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands): Three Months Ended February 28, 2026 2025 Income tax expense $ 6,900 $ 29,800 Effective tax rate 17.1 % 21.4 % Our income tax expense and effective tax rate for the three months ended February 28, 2026 included the favorable impact of $ 3.8 million of excess tax benefits related to stock-based compensation and $ .4 million of Internal Revenue Code Section 45L (“Section 45L”) tax credits we recognized primarily from building energy-efficient homes, partly offset by $ 1.1 million of non-deductible executive compensation expense. Our income tax expense and effective tax rate for the three months ended February 28, 2025 reflected the favorable impact of $ 5.4 million of excess tax benefits related to stock-based compensation and $ 1.7 million of Section 45L tax credits, partly offset by $ 2.4 million of non-deductible executive compensation expense. On July 4, 2025, H.R.1, the One Big Beautiful Bill Act (“OBBBA”), was signed into law. Among its provisions is the repeal of Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, our income tax expense and effective tax rate take into account the anticipated lower Section 45L benefit for the homes delivered after the effective date. The other tax-related provisions of the OBBBA did not have a material impact on our consolidated financial statements. Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates. 18 As of both February 28, 2026 and November 30, 2025, we had deferred tax assets of $ 104.2 million that were partly offset by valuation allowances of $ 15.5 million. The deferred tax asset valuation allowances at February 28, 2026 and November 30, 2025 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, 2026, 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, 2026. 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. 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. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time. 14. Notes Payable Notes payable consisted of the following (in thousands): February 28, 2026 November 30, 2025 Unsecured revolving credit facility $ 200,000 $ — Senior unsecured term loan due November 12, 2029 358,425 358,317 6.875 % Senior notes due June 15, 2027 299,236 299,096 4.80 % Senior notes due November 15, 2029 298,406 298,309 7.25 % Senior notes due July 15, 2030 347,218 347,084 4.00 % Senior notes due June 15, 2031 387,212 387,095 Mortgages and land contracts due to land sellers and other loans 2,761 3,076 Total $ 1,893,258 $ 1,692,977 The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, which totaled $ 9.5 million at February 28, 2026 and $ 10.1 million at November 30, 2025. Unsecured Revolving Credit Facility. We have a $ 1.20 billion Credit Facility that will mature on November 12, 2030 . The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount of available loans can be increased to a maximum of $ 1.70 billion under certain conditions, including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $ 250.0 million for the issuance of letters of credit. Interest on amounts borrowed under the Credit Facility accrues at a term Secured Overnight Financing Rate (“SOFR”), daily SOFR or a base rate, plus a spread that depends on our consolidated leverage ratio (“Leverage Ratio”), as defined under the Credit Facility. Interest is payable monthly (base rate or daily SOFR borrowings) or each month or three months (term SOFR borrowings). The Credit Facility also requires the payment of a commitment fee at a per annum rate ranging from .15 % to .35 % of the unused commitment, based on our Leverage Ratio. Under the terms of the Credit Facility, we are required, among other things, to maintain compliance with various covenants, including financial covenants relating to our consolidated tangible net worth, Leverage Ratio, and either a consolidated interest coverage ratio (“Interest Coverage Ratio”) or minimum level of liquidity, each as defined therein. Our obligations to pay borrowings under the Credit Facility are guaranteed on a joint and several basis by our Guarantor Subsidiaries. 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, 2026, we had $ 200.0 million of cash borrowings and $ 1.6 million of letters of credit outstanding under the Credit Facility. Therefore, as of February 28, 2026, we had $ 998.4 million available for cash borrowings under the Credit Facility, with up to $ 248.4 million of that amount available for the issuance of letters of credit. As of February 28, 2026, the weighted average annual interest rate on our outstanding borrowings under the Credit Facility was 5.0 %. Senior Unsecured Term Loan. We have a $ 360.0 million Term Loan with the lenders party thereto. The Term Loan will mature on November 12, 2029 . Interest under the Term Loan accrues at a term SOFR, daily SOFR or a base rate, plus a spread that depends on our Leverage Ratio. Interest is payable quarterly (base rate borrowings), monthly (daily SOFR borrowings), or each month or three months (term SOFR borrowings). The Term Loan contains various covenants that are substantially the same as those under the Credit Facility. The proceeds drawn under the Term Loan are guaranteed on a 19 joint and several basis by our Guarantor Subsidiaries. As of February 28, 2026, the weighted average annual interest rate on our outstanding borrowings under the Term Loan was 5.1 %. Letter of Credit Facility. We maintain an unsecured letter of credit agreement with a financial institution (“LOC Facility”) to obtain letters of credit from time to time in the ordinary course of operating our business. Under the LOC Facility, which expires on February 13, 2028 , we may issue up to $ 100.0 million of letters of credit. As of February 28, 2026 and November 30, 2025, we had letters of credit outstanding under the LOC Facility of $ 57.3 million and $ 68.2 million, respectively. Senior Notes. All the senior notes outstanding at February 28, 2026 and November 30, 2025 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. Interest on each of these senior notes is payable semi-annually. 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 and 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 28, 2026, we were in compliance with the applicable terms of all of our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. Our ability to access the Credit Facility’s full borrowing capacity, as well as the LOC Facility’s full issuance capacity, also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to meet their commitments to fund loans, extend credit or provide payment guarantees to or for us under those instruments. Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of February 28, 2026, inventories having a carrying value of $ 20.7 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans. As of February 28, 2026, 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: 2026 – $ .5 million; 2027 – $ 301.1 million; 2028 – $ .8 million; 2029 – $ 660.3 million; 2030 – $ 350.0 million and thereafter – $ 390.0 million. 15. Fair Value Disclosures Fair value measurements of assets and liabilities are categorized based on the following hierarchy: Level 1 Fair value determined based on quoted prices in active markets for identical assets or liabilities. Level 2 Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means. Level 3 Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques. Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value hierarchy and our assets measured at fair value on a nonrecurring basis for the three months ended February 28, 2026 and the year ended November 30, 2025 (in thousands): February 28, 2026 November 30, 2025 Description Fair Value Hierarchy Pre-Impairment Value Inventory Impairment Charges Fair Value (a) Pre-Impairment Value Inventory Impairment Charges Fair Value (a) Inventories Level 3 $ — $ — $ — $ 54,095 $ ( 15,531 ) $ 38,564 20 (a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period, as of the date that the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. The fair values for inventories that were determined using Level 3 inputs were based on the estimated future net cash flows discounted for inherent risk associated with each underlying asset. 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, 2026 November 30, 2025 Description Fair Value Hierarchy Carrying Value (a) Estimated Fair Value Carrying Value (a) Estimated Fair Value Financial Liabilities: Senior notes Level 2 $ 1,332,072 $ 1,328,563 $ 1,331,584 $ 1,333,188 (a) The carrying value for the senior notes, as presented, includes unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes. 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. 16. Commitments and Contingencies Commitments and contingencies include typical obligations of homebuilders for the completion of contracts and those incurred in the ordinary course of business. Warranty . We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years, a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two to five years based on geographic market and state law, and a warranty of one year for other components of the home. 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 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. We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. 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 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. 21 The changes in our warranty liability were as follows (in thousands): Three Months Ended February 28, 2026 2025 Balance at beginning of period $ 101,245 $ 96,026 Warranties issued 7,330 8,972 Payments ( 6,036 ) ( 8,931 ) Balance at end of period $ 102,539 $ 96,067 Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements. Self-Insurance. We maintain, and require the majority of our independent contractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. Costs associated with our self-insurance programs are included in selling, general and administrative expenses. In Arizona, California, Colorado and Nevada, our contractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent contractors are enrolled as insureds on each community. Enrolled contractors generally contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled contractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance. We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims: • Construction defect : Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or homeowners’ association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable. • Bodily injury : Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations. • Property damage : Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities. Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of products we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. 22 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 $ 22.2 million and $ 22.3 million are included in receivables in our consolidated balance sheets at February 28, 2026 and November 30, 2025, 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. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. The changes in our self-insurance liability were as follows (in thousands): Three Months Ended February 28, 2026 2025 Balance at beginning of period $ 179,247 $ 185,428 Self-insurance provided 3,780 4,213 Payments ( 3,327 ) ( 9,732 ) Adjustments (a) ( 70 ) 344 Balance at end of period $ 179,630 $ 180,253 (a) Represents net changes in the portion of our self-insurance liability estimated to be recoverable from our insurers or other parties, and/or actual recoveries funded directly by our insurers or other parties, if any. For most of our claims, there is no interaction between our warranty liability and self-insurance liability. Typically, if a matter is identified at its outset as either a warranty or self-insurance claim, it remains as such through its resolution. However, there can be instances of interaction between the liabilities, such as where individual homeowners in a community separately request warranty repairs to their homes to address a similar condition or issue and subsequently join together to initiate, or potentially initiate, a legal process with respect to that condition or issue and/or the repair work we have undertaken. 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, and are within the scope of coverage provided by, 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. Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable. In addition to the risk that is effectively self-insured through our captive insurance subsidiary, we often obtain project-specific insurance coverage for construction defect risk on attached projects (e.g., condominiums or townhomes) with self-insured retentions generally ranging from $ 50,000 to $ 250,000 . We record estimated liabilities and recoveries for projected losses related to these projects on a gross basis, including for known claims as well as estimates for claims incurred but not yet reported, to the extent such amounts are considered probable and estimable. Performance Bonds and Letters of Credit . 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, 2026, we had $ 1.36 billion of performance bonds and $ 58.9 million of letters of credit outstanding. At November 30, 2025, we had $ 1.37 billion of performance bonds and $ 69.8 million of letters of credit outstanding. If any such performance bonds or letters of credit are called, we would be obligated to reimburse the issuer of the performance bond or letter of credit. We do not believe that a material amount of any currently outstanding performance bonds or letters of credit will be called. Performance bonds do not have stated expiration dates. Rather, we are released from the performance bonds as the underlying performance is completed. The expiration dates of some letters of credit issued in connection with community improvements coincide with the expected completion dates of the related projects or obligations. Most letters of credit, however, are issued with an initial term of one year and are typically extended on a year-to-year basis until the related performance obligations are completed. 23 Land Option Contracts and Other Similar Contracts . 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, 2026, we had total cash deposits of $ 71.5 million to purchase land having an aggregate purchase price of $ 1.90 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance. Civil Subpoena . 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. 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. We are cooperating with the government and have produced documents and information. As of the date of this report, we are unable to predict what actions the government will take, if any; the timing or nature of the ultimate outcome in this matter; or the impact, if any, such outcome may have on our business or consolidated financial statements. As a result, while a loss or penalty, if any, is reasonably possible in this matter, it is not considered to be probable or estimable . 17. Legal Matters 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, 2026, 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; (b) the advice and analyses of counsel; and (c) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. Our accruals for litigation and regulatory proceedings are presented on a gross basis without consideration of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. Based on our experience, we believe the amounts that may be claimed or alleged against us in these proceedings are not a meaningful indicator of our potential liability. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if an accrual has not been made, could be material to our consolidated financial statements. Pursuant to SEC rules, we will disclose any proceeding in which a governmental authority is a party and that arises under any federal, state or local provisions enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment only where we believe that such proceeding will result in monetary sanctions on us, exclusive of interest and costs, above $1.0 million or is otherwise material to our consolidated financial statements . 18. Stockholders’ Equity On February 20, 2026, the management development and compensation committee of our board of directors approved the payout of 568,696 shares of our common stock in connection with the vesting of PSUs that were granted to certain employees on November 14, 2022. The shares paid out under the PSUs reflected our achievement of certain performance measures that were based on cumulative earnings per share, average return on invested capital, and revenue growth relative to a peer group of high-production public homebuilding companies over the three-year period from December 1, 2022 through November 30, 2025. Of the shares of common stock paid out, 261,364 shares, or $ 17.1 million, were purchased by us in the 2026 first quarter to satisfy the recipients’ withholding taxes on the vesting of the PSUs. The shares purchased were not considered repurchases under the authorizations described below. On October 9, 2025, our board of directors authorized us to repurchase up to $ 1.00 billion of our outstanding common stock. As of November 30, 2025, there was $ 900.0 million of remaining availability under this share repurchase authorization. In the three months ended February 28, 2026, we repurchased 843,339 shares of our common stock at a total cost of $ 50.0 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, 24 2026, there was $ 850.0 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, 2026 and 2025, 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 2026 and 2025 first quarters, our board of directors declared, and we paid, a quarterly cash dividend of $ .25 per share. 19. Stock-Based Compensation Stock Options. At February 28, 2026 and November 30, 2025, we had 321,378 and 350,864 stock options outstanding, each with a weighted average exercise price of $ 16.21 . We have not granted any stock option awards since 2016. During the three months ended February 28, 2026, a total of 29,486 stock options with a weighted average exercise price of $ 16.21 were exercised. As of February 28, 2026, stock options outstanding and stock options exercisable each had a weighted average remaining contractual life of .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-month periods ended February 28, 2026 and 2025. Stock options outstanding and stock options exercisable each had an aggregate intrinsic value of $ 15.2 million at February 28, 2026. (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.) Other Stock-Based Awards. From time to time, we grant restricted stock and PSUs to various employees as a compensation benefit. We recognized total compensation expense of $ 6.0 million and $ 7.6 million for the three months ended February 28, 2026 and 2025, respectively, related to restricted stock and PSUs. 20. 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, 2026 2025 Summary of cash and cash equivalents at end of period: Homebuilding $ 200,526 $ 267,833 Financial services 1,272 1,625 Total $ 201,798 $ 269,458 Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized $ 11,221 $ 11,769 Income taxes paid 327 660 Supplemental disclosures of non-cash activities: Decrease in consolidated inventories not owned ( 1,521 ) ( 2,545 ) Increase in inventories due to distributions of land and land development from an unconsolidated joint venture 753 2,164 21. Subsequent Event On April 8, 2026, we announced that we will relocate our corporate headquarters office from Los Angeles, California to Tempe, Arizona in 2027. The relocation is intended to bring executive leadership and corporate functions together in a more central location and is expected to reduce our cost structure over time. In connection with the relocation, we expect to incur certain one‑time transition costs, including employee-related severance, retention, and relocation, as well as recruitment and onboarding, and other costs. We are currently evaluating the potential impact of these costs, which may be material to our consolidated financial statements. 25