What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-09 compared with 2026-04-09 · 283 added, 216 removed, 408 unchanged (55% of the section changed)

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

Three Months Ended February 28,

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

2026 2025 Variance

Homebuilding $ 1,107,107 $ 1,524,716 (27) % $ 2,179,166 $ 2,911,757 (25) %

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$ .43 $ 1.50 (71) % $ .96 $ 3.00 (68) %

Market conditions in the 2026 first quarter remained challenging, as persistent affordability pressures, cautious buyer sentiment, heightened macroeconomic uncertainties and geopolitical tensions tempered demand.

While these factors softened overall housing market activity in the current period, with the conflict in the Middle East that began on the last day of our fiscal quarter introducing additional uncertainty for already wary consumers, the longer-term outlook continues to be favorable, supported by positive demographic trends and an ongoing undersupply of homes.

Within this operating environment, we experienced healthy traffic at our communities in the quarter, as we continued the simplified sales approach we implemented a year ago.

With this strategy, we provide a straightforward, transparent base price with limited, if any, concessions or incentives, designed to offer customers a compelling value competitive with area resale home prices.

We believe our approach has resonated with consumers.

In the 2026 first quarter, with a steady conversion of traffic to sales, the lowest cancellation rate we have experienced in the past four years and our higher average community count, we generated 2,846 net orders, a 3% increase year over year, with a monthly net order pace per community of 3.5, nearly even with the year‑earlier quarter.

Our average community count rose 7% year over year to 274, and our ending community count increased 8% to 276, reflecting our continued investments in land and land development to support future growth.

The value of net orders for the 2026 first quarter was $1.36 billion, about the same as the year-earlier quarter, with the higher net order volume partly offset by a slight decrease in the average selling price of those net orders to $479,400.

During the quarter, while selling through our existing inventory, we emphasized sales of our Built to Order homes, which are a key industry differentiator for us and typically generate higher gross margins than inventory homes.

In the 2026 second quarter, the housing market continued to be negatively affected by a combination of persistent affordability pressures, elevated mortgage interest rates, and cautious buyer sentiment, which softened further during the period due to rising inflation, heightened macroeconomic uncertainties and geopolitical tensions, including the military conflict in the Middle East.

At the same time, underlying demand drivers, such as favorable demographic trends, an ongoing structural undersupply of homes, and the appeal of new, personalized energy‑efficient homes, drove healthy traffic at our communities and interest in our product offerings.

We generated 3,317 net orders in the 2026 second quarter, a 4% decrease from the year-earlier quarter, with a monthly net order pace per community of 4.0, compared to 4.5 for the prior-year period.

Our average community count increased 9% year over year to 278, and our ending community count rose 11% to 280, reflecting our continued investments in land and land development to support future growth.

The value of net orders for the quarter was $1.55 billion, down 4% from the year-earlier period, reflecting the lower net order volume, as their $466,800 average selling price was nearly even with the year-ago quarter.

Within this operating environment during the 2026 first half, we maintained the simplified sales approach we implemented more than a year ago.

With this approach, we provide a straightforward, transparent base price with limited, if any, concessions or incentives, designed to offer customers a compelling value competitive with area resale home prices.

Additionally, while selling through our existing inventory, we continued to emphasize sales of our Built to Order ® homes, which are a key industry differentiator for us and typically generate higher gross margins than inventory homes.

Our goal is to bring the mix of Built to Order homes delivered to within our historical range of 60% to 70%, compared to approximately 55% in 2025.

Supported by demand for personalized homes and a 22% year-over-year improvement in our build times, our mix of net orders in the quarter was predominantly Built to Order, which we believe will enable us to achieve 70% Built to Order deliveries in the 2026 second half.

Although our overall backlog declined year over year, the number of homes in backlog increased 15% sequentially from November 30, 2025, reflecting the higher net orders in the 2026 first quarter.

Homebuilding revenues for the three months ended February 28, 2026 consisted of housing revenues and nominal land sale revenues.

For the corresponding period of 2025, homebuilding revenues were generated solely from housing operations.

Housing revenues for the 2026 first quarter decreased 23% year over year to $1.07 billion, due to a 14% decrease in the number of homes delivered to 2,370 and a 10% decline in their average selling price to $452,100.

Approximately 50% of our homes delivered in the 2026 first quarter were to first-time homebuyers.

Our homes delivered as a percentage of backlog at the

beginning of the quarter grew to 76% for the 2026 first quarter, from 62% for the year-earlier quarter, mainly due to our improved build times and a greater percentage of homes sold and delivered in the same quarter.

Homebuilding operating income for the three months ended February 28, 2026 was $33.0 million, compared to $127.3 million for the year-earlier period.

As a percentage of revenues, homebuilding operating income was 3.1% for the 2026 first quarter, compared to 9.2% for the corresponding 2025 period, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of revenues.

Inventory-related charges totaled $2.2 million for the current quarter and $1.5 million for the year-earlier quarter.

Our housing gross profit margin was 15.3%, compared to 20.2% for the year-earlier quarter, primarily due to price reductions we implemented in conjunction with our simplified sales strategy to stimulate demand, higher relative land costs, product and geographic mix, and reduced operating leverage.

Our selling, general and administrative expenses as a percentage of housing revenues increased 120 basis points year over year to 12.2%, mainly due to a decrease in operating leverage from lower housing revenues, partly offset by $8.0 million of insurance recoveries.

Net income and diluted earnings per share for the three months ended February 28, 2026 were $33.4 million and $.52, respectively, compared to $109.6 million and $1.49, respectively, for the three months ended February 28, 2025.

Our diluted earnings per share for the 2026 first quarter reflected lower net income, partly offset by the favorable impact of our common stock repurchases over the past several quarters .

Our Built to Order homes are our core competency and their value proposition to prospective customers has increased with the meaningful reduction in our build times over the past few years.

Reflecting this demand – and supported in part by our achieving year-over-year build time improvements for Built to Order homes of 22% in the 2026 first quarter and 24% in the 2026 second quarter – we generated predominantly Built to Order net orders in both quarters of our 2026 first half.

We believe this momentum will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond.

While our ending backlog at May 31, 2026 was down 5% on a year-over-year basis, our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes at May 31, 2026 up 45% from November 30, 2025.

Among other benefits, our larger backlog of Built to Order homes generally provides us with greater visibility into future deliveries and enhanced predictability of housing gross profit margins compared to inventory homes, as the selling price and cost to build are usually known prior to starting the home.

Our strategic shift toward a higher mix of Built to Order home sales contributed to an anticipated temporary trough in deliveries during the 2026 first half, partly due to both the inherent time between sale and delivery of Built to Order homes and our intentional moderation of inventory starts.

We expect the higher level of Built to Order sales generated during this period to

benefit our homes delivered and housing gross profit margins in the third and fourth quarters of the year as well as position us to be a stronger company.

Homebuilding revenues for the three months ended May 31, 2026 were generated from housing operations and nominal land sales.

For the three months ended May 31, 2025, homebuilding revenues were generated solely from housing operations.

Housing revenues for the 2026 second quarter decreased 27% year over year to $1.11 billion, due to a 23% decrease in the number of homes delivered to 2,395 and a 5% decline in their average selling price to $461,900.

Approximately 50% of our homes delivered in the 2026 second quarter were to first-time homebuyers.

Our homes delivered as a percentage of backlog at the beginning of the quarter were 66% for the 2026 second quarter, compared to 70% for the year-earlier quarter.

This decrease reflects growth in our backlog since the beginning of the year, as well as a lower percentage of homes sold and delivered within the same quarter.

Homebuilding operating income for the three months ended May 31, 2026 was $28.2 million, compared to $131.5 million for the year-earlier period.

As a percentage of revenues, homebuilding operating income was 2.5% for the 2026 second quarter, compared to 8.6% for the corresponding 2025 period, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of revenues.

Operating income in both periods included $5.6 million of inventory-related charges.

Our housing gross profit margin was 15.2%, compared to 19.3% for the year-earlier quarter, primarily due to price reductions we implemented in conjunction with our simplified sales strategy to stimulate demand, higher relative land costs and reduced operating leverage.

Selling, general and administrative expenses as a percentage of housing revenues increased 200 basis points year over year to 12.7%, mainly due to a decrease in operating leverage from lower housing revenues.

Net income and diluted earnings per share for the three months ended May 31, 2026 were $27.3 million and $.43, respectively, compared to $107.9 million and $1.50, respectively, for the three months ended May 31, 2025.

Our diluted earnings per share for the 2026 second quarter reflected lower net income, partly offset by a 12% reduction in our weighted-average diluted share count reflecting the impact of our common stock repurchases over the past several quarters .

We continue to take a balanced approach to capital allocation, guided by market conditions and our priorities of investing in land and land development to support future growth and returning capital to our stockholders.

Our investments in land and land development for the 2026 first quarter totaled $567.2 million, a 38% decrease compared to the year-earlier quarter;

the prior period included the purchase of two sizable land parcels in our Southwest homebuilding reporting segment.

During the 2026 first quarter, we repurchased 843,339 shares of our common stock at a total cost of $50.0 million, compared to 753,939 shares at a total cost of $50.0 million in the year-earlier quarter.

We ended the 2026 first quarter with total liquidity of approximately $1.20 billion, including cash and cash equivalents and $998.4 million of available capacity under the Credit Facility.

We had $200.0 million of cash borrowings outstanding under the Credit Facility at February 28, 2026.

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

Our investments in land and land development for the 2026 second quarter totaled $495.8 million, a 4% decrease compared to the year-earlier quarter.

During the 2026 second quarter, we repurchased 1.4 million shares of our common stock at a total cost of $75.0 million, compared to 3.7 million shares at a total cost of $200.0 million in the year-earlier quarter.

For the 2026 first half, we invested $1.06 billion in land and land development, representing a 26% decrease from the corresponding year-earlier period, and repurchased 2.2 million shares of our common stock at a total cost of $125.0 million.

We ended the 2026 second quarter with total liquidity of $1.12 billion, including cash and cash equivalents and $923.4 million of available capacity under the Credit Facility.

We had $275.0 million of cash borrowings outstanding under the Credit Facility at May 31, 2026.

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

Financial Results .

The following table presents a summary of certain financial and operational data for our homebuilding operations (dollars in thousands, except average selling price):

Three Months Ended February 28,

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

2026 2025 2026 2025

Housing $ 1,106,252 $ 1,524,716 $ 2,177,726 $ 2,911,757

Land 855 — 1,440 —

Total 1,107,107 1,524,716 2,179,166 2,911,757

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Housing (937,629) (1,230,055) (1,845,142) (2,337,469)

Land (780) — (1,296) —

Total (938,409) (1,230,055) (1,846,438) (2,337,469)

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Operating income 28,151 131,463 61,137 258,802

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

2026 2025 2026 2025

Interest income

1,164 1,679 2,445 3,758

Equity in income of unconsolidated joint ventures

1,269 1,080 1,791 3,493

Homebuilding pretax income $ 30,584 $ 134,222 $ 65,373 $ 266,053

Three Months Ended February 28,

Homes delivered 2,395 3,120 4,765 5,890

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Operating income as a percentage of revenues 2.5 % 8.6 % 2.8 % 8.9 %

Homebuilding revenues for the three months ended February 28, 2026 consisted of housing revenues and nominal land sale revenues.

In the three months ended February 28, 2025, homebuilding revenues were generated solely from housing operations.

Housing revenues for the 2026 first quarter declined 23% from the year-earlier quarter, driven by a 14% decrease in the number of homes delivered and a 10% decline in their overall average selling price.

Our 2026 first-quarter housing revenues included year-over-year decreases of 25% in our West Coast homebuilding reporting segment, 42% in our Southwest segment and 19% in our Central segment, partially offset by an 11% increase in our Southeast segment.

The decline in the number of homes delivered largely resulted from our having 29% fewer homes in backlog at the beginning of the 2026 first quarter, as compared to the year-earlier quarter.

The lower average selling price primarily reflected a combination of product and geographic mix factors and the price reductions we implemented in 2025 in conjunction with our simplified sales strategy to stimulate demand.

Land sale revenues for the three months ended February 28, 2026 totaled $.6 million.

There were no land sales during the three months ended February 28, 2025.

Homebuilding revenues for the three months ended May 31, 2026 consisted of housing revenues and nominal land sale revenues.

In the three months ended May 31, 2025, homebuilding revenues were generated solely from housing operations.

Housing revenues for the 2026 second quarter declined 27% from the year-earlier quarter due to decreases of 23% in the number of homes delivered and 5% in their overall average selling price.

Each of our homebuilding reporting segments posted year-over-year decreases in second quarter housing revenues, ranging from 17% in our Southeast segment to 47% in our Southwest segment.

The decline in the overall number of homes delivered primarily resulted from our having 19% fewer homes in backlog at the beginning of the 2026 second quarter compared to the year-earlier period, as well as our strategic shift toward a higher mix of Built to Order sales in the 2026 first half.

The lower average selling price mainly reflected a combination of product and geographic mix factors and the price reductions we implemented in conjunction with our simplified sales strategy to stimulate demand.

For the six months ended May 31, 2026, homebuilding revenues consisted of housing revenues and land sale revenues.

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

Housing revenues for the six months ended May 31, 2026 decreased 25% from the corresponding 2025 period due to a 19% decline in the number of homes delivered and an 8% decrease in their average selling price.

Land sale revenues for the three-month and six-month periods ended May 31, 2026 totaled $.9 million and $1.4 million, respectively.

There were no land sales during the three-month and six-month periods ended May 31, 2025.

Generally, land sale revenues fluctuate with our decisions to maintain or decrease our land ownership position in certain markets based upon the volume of our holdings, our business strategy, the strength and number of developers and other land buyers in particular markets at given points in time, the availability of opportunities to sell land at acceptable prices and prevailing market conditions.

Operating Income .

Our homebuilding operating income for the three months ended February 28, 2026 decreased 74% from the prior-year period, reflecting lower housing gross profits, partly offset by lower selling, general and administrative expenses.

Operating income for the 2026 first quarter included inventory-related charges of $2.2 million, compared to $1.5 million in the year-earlier quarter.

As a percentage of revenues, our operating income for the three months ended February 28, 2026 was 3.1%, compared to 9.2% for the corresponding 2025 period, mainly due to a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of housing revenues.

• Housing Gross Profits – Housing gross profits of $164.0 million for the three months ended February 28, 2026 were down 41% year over year, reflecting lower housing revenues and a 490 basis-point decrease in our housing gross profit margin to 15.3%.

The decline in the housing gross profit margin primarily reflected the price reductions we implemented a year ago, higher relative land costs, product and geographic mix, and reduced operating leverage.

As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations, which is included in construction and land costs, was 1.8% and 1.7% for the three months ended February 28, 2026 and 2025, respectively.

Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.5% for the 2026 first quarter decreased 480 basis points year over year.

Our homebuilding operating income for the three months ended May 31, 2026 decreased 79% from the prior-year period, reflecting lower housing gross profits, partly offset by lower selling, general and administrative expenses.

Operating income for both periods included $5.6 million of inventory-related charges.

As a percentage of revenues, our operating income for the three months ended May 31, 2026 was 2.5%, compared to 8.6% for the corresponding 2025 period, due to a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of housing revenues.

Excluding inventory-related charges, our operating income as a percentage of revenues was 3.0% for the three months ended May 31, 2026, compared to 9.0% for the year-earlier period.

For the six months ended May 31, 2026, our homebuilding operating income declined 76% from the year-earlier period mainly due to a decrease in housing gross profits, partly offset by lower selling, general and administrative expenses.

Operating income for the six months ended May 31, 2026 included inventory-related charges of $7.7 million, compared to $7.0 million of such charges for the corresponding 2025 period.

As a percentage of revenues, our operating income for the six months ended May 31, 2026 decreased 610 basis points year over year to 2.8%, mainly reflecting a lower housing gross profit margin and higher selling, general and administrative expenses as a percentage of revenues.

Excluding inventory-related charges, our operating income as a percentage of revenues declined 590 basis points to 3.2% for the six months ended May 31, 2026 from 9.1% for the corresponding year-earlier period.

• Housing Gross Profits – Housing gross profits of $168.6 million for the three months ended May 31, 2026 were down 43% year over year, reflecting lower housing revenues and a 410 basis-point decrease in our housing gross profit margin to 15.2%.

The decline in the housing gross profit margin primarily reflected the price reductions we implemented a year ago, higher relative land costs and reduced operating leverage.

As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations, which is included in construction and land costs, was 1.7% for both the three months ended May 31, 2026 and 2025.

Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.7% for the 2026 second quarter decreased 400 basis points year over year.

For the six months ended May 31, 2026, our housing gross profits of $332.6 million decreased from $574.3 million for the year-earlier period due to lower housing revenues and a 440 basis-point decline in our housing gross profit margin.

The housing gross profit margin decrease primarily reflected the same factors described above for the three months ended May 31, 2026.

As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations was 1.7% for both the six months ended May 31, 2026 and 2025.

Excluding the above-mentioned inventory-related charges, all of which were associated with housing operations, our adjusted housing gross profit margin of 15.6% for the six months ended May 31, 2026 decreased 440 basis points year over year.

The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.”

• Land Sale Profits – Land sales generated essentially break-even results for the three months ended February 28, 2026.

There were no land sales during the three months ended February 28, 2025.

• Land Sale Profits – Land sales generated nominal results for the three-month and six-month periods ended May 31, 2026.

There were no land sales during the three-month and six-month periods ended May 31, 2025.

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

Three Months Ended February 28,

2026 % of Housing Revenues 2025 % of Housing Revenues

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

2026 % of Housing Revenues 2025 % of Housing Revenues 2026 % of Housing Revenues 2025 % of Housing Revenues

Marketing expenses $ 39,062 3.5 % $ 42,602 2.8 % $ 77,777 3.6 % $ 82,265 2.8 %

Commission expenses (a) 40,161 3.6 52,514 3.4 79,741 3.7 99,680 3.4

General and administrative expenses 52,749 4.9 65,459 4.7

General and administrative expenses (b) 61,324 5.6 68,082 4.5 114,073 5.2 133,541 4.6

Total $ 140,547 12.7 % $ 163,198 10.7 % $ 271,591 12.5 % $ 315,486 10.8 %

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

Our selling, general and administrative expenses for the three months ended February 28, 2026 decreased 14% compared to the year-earlier period, largely reflecting the favorable impact of $8.0 million in insurance recoveries and a decrease in commission expenses as a result of fewer homes delivered in the 2026 period.

As a percentage of housing revenues, our selling, general and administrative expenses for the three months ended February 28, 2026 increased 120 basis points year over year, mainly due to a decrease in operating leverage from lower housing revenues, partly offset by insurance recoveries.

(b) General and administrative expenses for both the three months and six months ended May 31, 2026 included $1.5 million of costs associated with the planned relocation of our corporate headquarters office, as discussed in Note 21 – Relocation of Corporate Headquarters in the Notes to Consolidated Financial Statements in this report.

Our selling, general and administrative expenses for the three months ended May 31, 2026 decreased 14% compared to the year-earlier period, primarily reflecting a decrease in commission expenses resulting from fewer homes delivered in the 2026 period and a reduction in general and administrative expenses largely due to lower performance-based compensation costs.

As a percentage of housing revenues, our selling, general and administrative expenses for the three months ended May 31, 2026 increased 200 basis points year over year, mainly due to a decrease in operating leverage from lower housing revenues.

For the six months ended May 31, 2026, selling, general and administrative expenses decreased 14% year over year, primarily due to the same factors described above for the three months ended May 31, 2026 as well as the favorable impact of $8.0 million in insurance recoveries.

As a percentage of housing revenues, selling, general and administrative expenses for the six months ended May 31, 2026 increased 170 basis points, primarily reflecting decreased operating leverage from lower housing revenues, partly offset by the insurance recoveries.

Interest Income/Expense .

Interest income, which is generated from short-term investments, was $1.3 million for the three months ended February 28, 2026, compared to $2.1 million for the year-earlier quarter.

The year-over-year decrease for the three months ended February 28, 2026 reflected our lower average balance of cash equivalents and a lower interest rate in the 2026 period.

Interest income, which is generated from short-term investments, was $1.2 million for the three months ended May 31, 2026, compared to $1.7 million for the year-earlier quarter.

For the six months ended May 31, 2026, interest income was $2.4 million, compared to $3.8 million for the corresponding 2025 period.

The year-over-year decreases for the three-month and six-month periods ended May 31, 2026 reflected our lower average balance of cash equivalents and a lower interest rate in the 2026 periods.

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

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

All interest incurred during the three-month periods ended February 28, 2026 and 2025 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for each period.

All interest incurred during the three-month and six-month periods ended May 31, 2026 and 2025 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for each period.

Accordingly, we had no interest expense for these periods.

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Equity in Income of Unconsolidated Joint Ventures .

Our equity in income of unconsolidated joint ventures was $.5 million for the three months ended February 28, 2026, compared to $2.4 million for the year-earlier period, mainly reflecting a decrease in the number of homes delivered by an unconsolidated joint venture in California.

Our equity in income of unconsolidated joint ventures was $1.3 million for the three months ended May 31, 2026, compared to $1.1 million for the year-earlier period.

For the six months ended May 31, 2026, our equity in income of unconsolidated joint ventures was $1.8 million, compared to $3.5 million for the corresponding 2025 period, mainly due to a decrease in the number of homes delivered by an unconsolidated joint venture in California.

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

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

Three Months Ended February 28,

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

2026 2025 2026 2025

Net orders 3,317 3,460 6,163 6,232

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(b) Cancellation rate represents the total number of contracts for new homes cancelled during a period divided by the total (gross) orders for new homes generated during the same period.

Net orders for the 2026 first quarter increased 3% compared to the year-earlier quarter, reflecting growth of 12% in our West Coast homebuilding reporting segment and 10% in our Southwest segment, partially offset by declines of 6% and 8% in our Southwest and Central segments, respectively.

The pace of monthly net orders per community was 3.5 in the 2026 first quarter, nearly even with 3.6 for the corresponding 2025 quarter, as the increase in net orders was more than offset by the impact of a higher average community count.

The value of net orders for the 2026 first quarter was $1.36 billion, relatively even with the year-earlier quarter, as the higher net order volume was partly offset by a slight decrease in the average selling price of those net orders to $479,400.

Our cancellation rate as a percentage of gross orders for the three months ended February 28, 2026 was 12%, compared to 16% for the year-earlier period.

In the 2026 first quarter, we continued the simplified sales approach we implemented a year ago.

In addition, while selling through our existing inventory, we emphasized sales of our Built to Order homes, which are a key industry differentiator for us and typically generate higher gross margins than inventory homes.

Net orders for the 2026 second quarter decreased 4% compared to the year-earlier quarter, driven by declines of 6% and 22% in our Southwest and Central homebuilding reporting segments, respectively, partly offset by growth of 9% in our West Coast segment and 2% in our Southeast segment.

The pace of monthly net orders per community was 4.0 in the 2026 second quarter, compared to 4.5 for the corresponding 2025 quarter, reflecting the lower net order volume and our higher average community count.

The value of net orders for the 2026 second quarter was $1.55 billion, a decline of 4% from year-earlier quarter, reflecting the lower net order volume, as the average selling price of those net orders was nearly even with the year-earlier quarter at $466,800.

Our cancellation rate as a percentage of gross orders for the three months ended May 31, 2026 was 12%, compared to 16% for the year-earlier period.

In the 2026 first half, we maintained the simplified sales approach we implemented more than a year ago.

Additionally, while selling through our existing inventory, we continued to emphasize sales of our Built to Order homes, which are a key industry differentiator for us and typically generate higher gross margins than inventory homes.

Our goal is to bring the mix of Built to Order homes delivered to within our historical range of 60% to 70%, compared to approximately 55% in 2025.

Supported by demand for personalized homes and a 22% year-over-year improvement in our build times, our mix of net orders in the quarter was predominantly Built to Order.

The number of homes in our backlog at February 28, 2026 decreased 19% compared to February 28, 2025.

Our overall backlog value at February 28, 2026 declined 23% year over year due to the lower number of homes in backlog and a 5% decrease in their average selling price, reflecting the price reductions implemented during 2025 as well as product and geographic mix.

Backlog value was down year over year in each of our homebuilding reporting segments, with decreases ranging from 11% in our West Coast segment to 46% in our Southwest segment.

Our Built to Order homes are our core competency and their value proposition to prospective customers has increased with the meaningful reduction in our build times over the past few years.

Reflecting demand for our personalized homes, supported in part by our achieving ongoing year-over-year build time improvements, we generated predominantly Built to Order net orders in both the 2026 first and second quarters, momentum that we believe will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond.

The number of homes in our backlog at May 31, 2026 decreased 5% compared to May 31, 2025.

Our overall backlog value at May 31, 2026 declined 7% year over year due to the lower number of homes in backlog and a slight decrease in their

average selling price.

Backlog value was down year over year in three of our homebuilding reporting segments, with decreases ranging from 11% in our Southeast segment to 27% in our Southwest segment, partially offset by a 10% increase in our West Coast segment.

Based on our historical experience, a portion of the homes in backlog will not result in homes delivered due to cancellations.

Although our overall backlog declined year over year, the number of homes in backlog increased 15% sequentially from November 30, 2025, reflecting the higher net orders in the 2026 first quarter.

Our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes in backlog at May 31, 2026 up 45% from November 30, 2025.

Community Count .

We use the term “community count” to refer to the number of communities open for sale with at least five homes left to sell at the end of a reporting period.

Our ending community count for the 2026 first quarter grew 8% and our average community count increased 7%, each as compared to the year-earlier quarter.

Our ending community count for the 2026 second quarter grew 11% and our average community count increased 9%, each as compared to the year-earlier quarter.

HOMEBUILDING REPORTING SEGMENTS

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The following tables present information about our homes delivered, net orders, cancellation rates as a percentage of gross orders, net order value, average community count and ending backlog (number of homes and value) by homebuilding reporting segment (dollars in thousands):

Three Months Ended February 28,

Three Months Ended May 31,

Homes Delivered Net Orders Cancellation Rates

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Total 2,395 3,120 3,317 3,460 12 % 16 %

Three Months Ended February 28,

Net Order Value Average Community Count

5 unchanged sentences

Total $ 1,548,396 $ 1,611,014 (4) % 278 254 9 %

Six Months Ended May 31,

Homes Delivered Net Orders Cancellation Rates

Segment 2026 2025 2026 2025 2026 2025

West Coast 1,528 1,817 2,205 2,002 11 % 14 %

Southwest 753 1,339 1,037 1,102 10 14

Central 1,271 1,562 1,463 1,750 14 16

Southeast 1,213 1,172 1,458 1,378 12 20

Total 4,765 5,890 6,163 6,232 12 % 16 %

Six Months Ended May 31,

Net Order Value Average Community Count

Segment 2026 2025 Variance 2026 2025 Variance

West Coast $ 1,429,004 $ 1,335,320 7 % 103 88 17 %

Southwest 449,900 538,143 (16) 39 38 3

Central 503,436 568,339 (11) 67 66 2

Southeast 530,368 515,279 3 67 63 6

Total $ 2,912,708 $ 2,957,081 (2) % 276 255 8 %

Backlog – Homes Backlog – Value

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In addition to the results of our homebuilding reporting segments presented below, our consolidated homebuilding operating income includes the results of Corporate and other, a non-operating segment.

Corporate and other had operating losses of $33.8 million and $36.5 million in the three months ended February 28, 2026 and 2025, respectively.

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

Corporate and other had operating losses of $36.8 million and $40.4 million in the three months ended May 31, 2026 and 2025, respectively.

For the six months ended May 31, 2026, Corporate and other had an operating loss of $70.5 million, compared to $76.9 million for the corresponding year-earlier period.

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

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

Three Months Ended February 28,

2026 2025 Variance

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

2026 2025 Variance 2026 2025 Variance

Revenues $ 511,493 $ 660,193 (23) % $ 960,702 $ 1,261,842 (24) %

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Operating income $ 26,673 $ 75,594 (65) % $ 51,892 $ 142,086 (63) %

Three Months Ended February 28,

2026 2025 Variance

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

2026 2025 Variance 2026 2025 Variance

Homes delivered 818 968 (15) % 1,528 1,817 (16) %

Average selling price $ 624,300 $ 682,000 (8) % $ 628,200 $ 694,500 (10) %

Operating income as a percentage of revenues 5.6 % 11.1 % (550) bps

This segment’s revenues for each of the three months ended February 28, 2026 and 2025 were generated solely from housing operations.

Housing revenues for the three months ended February 28, 2026 declined from the year-earlier period, reflecting decreases in both the number of homes delivered and their average selling price.

Operating income for the three months ended February 28, 2026 declined year over year due to lower housing gross profits, partly offset by lower selling, general and administrative expenses.

Operating income as a percentage of revenues for the 2026 first quarter decreased from the year-earlier quarter due to a 400 basis-point decline in the housing gross profit margin to 14.4% and a 150 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.8%.

The year-over-year decrease in the housing gross profit margin was primarily due to price reductions, higher relative construction and land costs, product and geographic mix, and reduced operating leverage.

For the three months ended February 28, 2026, inventory-related charges associated with housing operations were $.6 million, essentially the same as in the year-earlier period.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 28, 2026 was mainly due to higher marketing and other expenses associated with our expanded community count in this segment and a decrease in operating leverage from lower housing revenues, partly offset by insurance recoveries.

Operating income as a percentage of revenues 5.2 % 11.5 % (630) bps 5.4 % 11.3 % (590) bps

This segment’s revenues for the three-month and six-month periods ended May 31, 2026 consisted of housing revenues and nominal land sale revenues.

For the three-month and six-month periods ended May 31, 2025, this segment’s revenues were generated solely from housing operations.

Housing revenues for the three months and six months ended May 31, 2026 declined from the corresponding year-earlier periods, reflecting decreases in both the number of homes delivered and their average selling price.

Operating income for the three months and six months ended May 31, 2026 declined year over year due to lower housing gross profits, partly offset by lower selling, general and administrative expenses.

Operating income as a percentage of revenues for the 2026 second quarter decreased from the year-earlier quarter due to a 430 basis-point decline in the housing gross profit margin to 14.0% and a 190 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.7%.

For the six months ended May 31, 2026, operating income as a percentage of revenues declined from the corresponding 2025 period, mainly reflecting a 420 basis-point decrease in the housing gross profit margin to 14.2% and a 170 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.8%.

The year-over-year decrease in the housing gross profit margin for the three months and six months ended May 31, 2026 was primarily due to price reductions, higher relative construction and land costs, increased inventory-related charges, product and geographic mix, and reduced operating leverage.

For the three months ended May 31, 2026, inventory-related charges associated with housing operations were $4.3 million, compared to $1.2 million for the year-earlier period.

For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $5.0 million, compared to $1.8 million for the year-earlier period.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months and six months ended May 31, 2026 was mainly due to higher marketing and other expenses associated with our expanded community count in this segment as well as a decrease in operating leverage from lower housing revenues.

For the six months ended May 31, 2026, these impacts were partly offset by insurance recoveries.

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

Three Months Ended February 28,

2026 2025 Variance

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

2026 2025 Variance 2026 2025 Variance

Revenues $ 166,625 $ 314,102 (47) % $ 346,857 $ 626,981 (45) %

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Average selling price $ 444,300 $ 475,200 (7) % $ 460,600 $ 468,200 (2) %

Operating income as a percentage of revenues 12.5 % 18.8 % (630) bps

In each of the three-month periods ended February 28, 2026 and 2025, this segment’s revenues were generated solely from housing operations.

This segment’s housing revenues for the three months ended February 28, 2026 decreased year over year, driven by a decrease in the number of homes delivered, partly offset by an increase in their average selling price.

Operating income for the three months ended February 28, 2026 decreased year over year due to lower housing gross profits, partially offset by lower selling, general and administrative expenses.

As a percentage of revenues, this segment’s operating income for the 2026 first quarter declined from the year-earlier quarter, reflecting a 430 basis-point decrease in the housing gross profit margin to 21.3% and a 200 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.7%.

The year-over-year decrease in the housing gross profit margin for the three months ended February 28, 2026 primarily reflected higher relative land costs and decreased operating leverage on lower housing revenues, partly offset by lower construction costs.

There were no inventory-related charges associated with housing operations for the three months ended February 28, 2026, compared to $.3 million of such charges for the year-earlier period.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended February 28, 2026 was mainly due to a decrease in operating leverage from lower housing revenues.

Operating income as a percentage of revenues 11.0 % 17.6 % (660) bps 11.8 % 18.2 % (640) bps

In the three-month and six-month periods ended May 31, 2026 and 2025, this segment’s revenues were generated solely from housing operations.

This segment’s housing revenues for the three months and six months ended May 31, 2026 declined year over year, driven by decreases in both the number of homes delivered and their average selling price.

Operating income for both periods decreased year over year due to lower housing gross profits, partially offset by lower selling, general and administrative expenses.

As a percentage of revenues, this segment’s operating income for the 2026 second quarter declined from the year-earlier quarter, reflecting a 450 basis-point decrease in the housing gross profit margin to 20.2% and a 210 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 9.1%.

For the six months ended May 31, 2026, operating income as a percentage of revenues decreased year over year, mainly reflecting a 450 basis-point decrease in the housing gross profit margin to 20.7% and a 190 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 8.9%.

The year-over-year decrease in the housing gross profit margin for the three months and six months ended May 31, 2026 primarily reflected higher relative land costs and decreased operating leverage on lower housing revenues, partly offset by lower construction costs.

There were $.4 million of inventory-related charges associated with housing operations for the three months and six months ended May 31, 2026, compared to $.8 million and $1.1 million, respectively, of such charges for the corresponding year-earlier periods.

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

Three Months Ended February 28,

2026 2025 Variance

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

2026 2025 Variance 2026 2025 Variance

Revenues $ 205,829 $ 282,966 (27) % $ 429,437 $ 558,579 (23) %

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Average selling price $ 345,400 $ 348,900 (1) % $ 337,900 $ 357,600 (6) %

Operating income as a percentage of revenues 4.5 % 9.2 % (470) bps

In each of the three months ended February 28, 2026 and 2025, this segment’s revenues were generated solely from housing operations.

Housing revenues for the three months ended February 28, 2026 were down from the year-earlier period due to decreases in both the number of homes delivered and their average selling price.

Operating income for the three months ended February 28, 2026 declined from the corresponding year-earlier period mainly due to lower housing gross profits, partly offset by lower selling, general and administrative expenses.

This segment’s operating income as a percentage of revenues for the 2026 first quarter decreased from the year-earlier period due to a 540 basis-point decline in the housing gross profit margin to 14.8%, partly offset by a 70 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 10.3%.

The housing gross profit margin for the three months ended February 28, 2026 declined year over year mainly due to price reductions, higher relative construction and land costs, and product and geographic mix.

Inventory-related charges associated with housing operations for the three months ended February 28, 2026 were $.6 million, compared to $.3 million for the year-earlier period.

For the three months ended February 28, 2026, the year-over-year improvement in selling, general and administrative expenses as a percentage of housing revenues was mainly due to the favorable impact of insurance recoveries, partly offset by decreased operating leverage from lower housing revenues.

Operating income as a percentage of revenues 3.9 % 7.3 % (340) bps 4.2 % 8.3 % (410) bps

This segment’s revenues for the three-month and six-month periods ended May 31, 2026 and 2025 were generated solely from housing operations.

Housing revenues for the three months and six months ended May 31, 2026 were down from the corresponding year-earlier periods due to decreases in both the number of homes delivered and their average selling price.

Operating income for the three-month and six-month periods ended May 31, 2026 declined from the corresponding year-earlier periods mainly due to lower housing gross profits, partly offset by lower selling, general and administrative expenses.

This segment’s operating income as a percentage of revenues for the 2026 second quarter decreased from the year-earlier period due to a 270 basis-point decline in the housing gross profit margin to 15.6% and a 70 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 11.8%.

For the six months ended May 31, 2026, operating income as a percentage of revenues decreased year over year, reflecting a 400 basis-point decrease in the housing gross profit margin to 15.2%, and a 10 basis-point increase in selling, general and administrative expenses as a percentage of housing revenues to 11.0%.

The housing gross profit margin declined year over year for both the three-month and six-month periods ended May 31, 2026, mainly due to price reductions, higher relative construction and land costs, and product and geographic mix.

Inventory-related charges associated with housing operations for the three months ended May 31, 2026 were $.4 million, compared to $1.8 million for the year-earlier period.

For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $1.0 million, compared to $2.1 million for the year-earlier period.

The year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues for the three months ended May 31, 2026 primarily reflected decreased operating leverage from lower housing revenues.

For the six months ended May 31, 2026, the year-over-year increase in selling, general and administrative expenses as a percentage of housing revenues was mainly due to decreased operating leverage, largely offset by the favorable impact of insurance recoveries.

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

Three Months Ended February 28,

2026 2025 Variance

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

2026 2025 Variance 2026 2025 Variance

Revenues $ 223,160 $ 267,455 (17) % $ 442,170 $ 464,355 (5) %

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Operating income $ 11,869 $ 20,230 (41) % $ 20,706 $ 33,307 (38) %

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

2026 2025 Variance 2026 2025 Variance

Homes delivered 606 680 (11) % 1,213 1,172 3 %

Average selling price $ 368,300 $ 393,300 (6) % $ 364,000 $ 396,200 (8) %

Operating income as a percentage of revenues 4.0 % 6.6 % (260) bps

This segment’s revenues for the three months ended February 28, 2026 were comprised of housing revenues and nominal land sale revenues.

For the three months ended February 28, 2025, this segment’s revenues were generated solely from housing operations.

Housing revenues for the three months ended February 28, 2026 rose from the year-earlier period to $218.4 million due to an increase in the number of homes delivered, partly offset by a decrease in their average selling price.

Operating income for the three months ended February 28, 2026 was down year over year, mainly reflecting lower housing gross profits.

As a percentage of revenues, operating income for the 2026 first quarter declined from the year-earlier quarter due to a 400 basis-point decrease in the housing gross profit margin to 13.7%, partly offset by a 140 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.7%.

The year-over-year decrease in the housing gross profit margin for the three months ended February 28, 2026 mainly reflected price reductions, higher construction and land costs, product and geographic mix, and an increase in inventory-related charges, partly offset by an increase in operating leverage.

Inventory-related charges associated with housing operations for the three months ended February 28, 2026 were $.9 million, compared to $.2 million for the year-earlier quarter.

The year-over-year improvement in selling, general and

administrative expenses as a percentage of housing revenues for the three months ended February 28, 2026 was mainly due to an increase in operating leverage from higher housing revenues.

Operating income as a percentage of revenues 5.3 % 7.6 % (230) bps 4.7 % 7.2 % (250) bps

This segment’s revenues for the three months ended May 31, 2026 and the three months and six months ended May 31, 2025 were generated solely from housing operations.

For the six months ended May 31, 2026, this segment’s revenues were comprised of housing revenues and nominal land sale revenues.

Housing revenues for the three months ended May 31, 2026 were down year over year due to decreases in both the number of homes delivered and their average selling price.

For the six months ended May 31, 2026, housing revenues declined from the corresponding year-earlier period to $441.6 million, reflecting a decrease in the average selling price of homes delivered, partly offset by an increase in the number of homes delivered.

Operating income for the three months and six months ended May 31, 2026 declined from the corresponding year-earlier periods as a result of lower housing gross profits, partially offset by lower selling, general and administrative expenses.

As a percentage of revenues, operating income for the 2026 second quarter declined from the year-earlier quarter primarily due to a 230 basis-point decrease in the housing gross profit margin to 15.0%, partly offset by a 20 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.6%.

Operating income as a percentage of revenues for the six months ended May 31, 2026 declined from the year-earlier period due to a 320 basis-point decrease in the housing gross profit margin to 14.3%, partly offset by a 70 basis-point improvement in selling, general and administrative expenses as a percentage of housing revenues to 9.7%.

The year-over-year decrease in the housing gross profit margin for the three months and six months ended May 31, 2026 mainly reflected price reductions, higher construction and land costs, and product and geographic mix.

Inventory-related charges associated with housing operations for the three months ended May 31, 2026 were $.5 million, compared to $1.7 million for the year-earlier quarter.

For the six months ended May 31, 2026, inventory-related charges associated with housing operations were $1.3 million, compared to $1.9 million for the corresponding 2025 period.

The year-over-year improvement in selling, general and administrative expenses as a percentage of housing revenues for both the three months and six months ended May 31, 2026 was mainly due to a decrease in sales commissions.

FINANCIAL SERVICES REPORTING SEGMENT

The following table presents a summary of selected financial and operational data for our financial services reporting segment (dollars in thousands):

Three Months Ended February 28,

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

2026 2025 2026 2025

Revenues $ 5,328 $ 4,869 $ 10,280 $ 9,605

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Equity in income of unconsolidated joint venture

2,830 4,862 4,963 9,191

Pretax income $ 6,665 $ 8,161 $ 12,200 $ 15,687

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(a) Loan originations and sales occurred within KBHS.

Financial services revenues for the three months ended February 28, 2026 grew 5% from the corresponding year-earlier period, reflecting higher insurance commission revenues, partly offset by lower title services revenues.

The year-over-year increase in insurance commission revenues was primarily due to higher estimated future renewal commissions.

Title services revenues decreased mainly due to fewer homes delivered in the 2026 period.

Financial services revenues for the three-month and six-month periods ended May 31, 2026 grew 9% and 7%, respectively, from the corresponding year-earlier periods, reflecting higher insurance commission revenues, partly offset by lower title services revenues.

The year-over-year increase in insurance commission revenues in the 2026 periods was primarily due to higher estimated future renewal commissions.

Title services revenues decreased mainly due to fewer homes delivered in the 2026 periods.

Pretax income.

Financial services pretax income for the three months ended February 28, 2026 decreased 26% from the year-earlier period, primarily due to lower equity in income of our unconsolidated joint venture, KBHS.

The equity in income of KBHS declined 51% year over year, reflecting a decrease in KBHS’ income.

This was mainly due to fewer loans originated as a result of both a decrease in the number of homes we delivered and a lower percentage of our homebuyers using KBHS.

The impact of the lower loan volume on KBHS’ income was partially offset by a $.2 million gain in the fair value of IRLCs in the three months ended February 28, 2026, compared to a $1.5 million loss for the year‑earlier period.

Financial services pretax income for the three-month and six-month periods ended May 31, 2026 decreased 18% and 22%, respectively, from the corresponding year-earlier periods, primarily due to lower equity in income of our unconsolidated joint venture, KBHS.

For the 2026 second quarter, our equity in income of KBHS declined 42% year over year, reflecting a decrease in KBHS’ income mainly due to fewer loans originated as a result of both the lower number of homes we delivered and a lower percentage of our homebuyers using KBHS.

The impact of the lower loan volume on KBHS’ income was partially offset by a $.9 million gain in the fair value of IRLCs in the three months ended May 31, 2026, compared to a $2.1 million loss for the year‑earlier period.

For the six months ended May 31, 2026, our equity in income of KBHS decreased 46% from the corresponding year-earlier period, due to a decline in KBHS’ income that primarily reflected the same factors described above for the three months ended May 31, 2026.

The impact of the lower loan volume for the six months ended May 31, 2026 was partly offset by a $1.0 million gain in the fair value of IRLCs, compared to a $3.6 million loss in the corresponding period of 2025.

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

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

Three Months Ended February 28,

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

2026 2025 2026 2025

Income tax expense $ 9,900 $ 34,500 $ 16,800 $ 64,300

Effective tax rate 26.6 % 24.2 % 21.7 % 22.8 %

Our effective tax rate for the three months ended February 28, 2026 decreased from the year-earlier period, primarily due to the higher impact of excess tax benefits related to stock-based compensation relative to the lower pretax income we generated for the 2026 period.

Our effective tax rate for the three months ended May 31, 2026 increased from the year-earlier period, primarily due to the lower pretax income we generated for the 2026 period, which heightened the relative impact of non-deductible executive compensation expense.

For the six months ended May 31, 2026, our effective tax rate decreased from the year-earlier period, mainly due to the lower pretax income, which resulted in a higher relative impact of excess tax benefits from stock-based compensation in the 2026 period, partly offset by a higher relative impact of non-deductible executive compensation expense.

On July 4, 2025, the OBBBA was signed into law.

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The following table reconciles our housing gross profit margin calculated in accordance with GAAP to the non-GAAP financial measure of our adjusted housing gross profit margin (dollars in thousands):

Three Months Ended February 28,

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

2026 2025 2026 2025

Housing revenues $ 1,106,252 $ 1,524,716 $ 2,177,726 $ 2,911,757

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Inventory-related charges (a)

5,579 5,558 7,734 7,013

Adjusted housing gross profits $ 174,202 $ 300,219 $ 340,318 $ 581,301

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• repurchases of our common stock.

We ended the 2026 first quarter with total liquidity of approximately $1.20 billion, including cash and cash equivalents and $998.4 million of available capacity under the Credit Facility, with $200.0 million of cash borrowings outstanding.

Cash and cash equivalents totaled $200.5 million at February 28, 2026, compared to $228.6 million at November 30, 2025.

Cash equivalents included in the total were $45.0 million at February 28, 2026 and $152.6 million at November 30, 2025, and were mainly invested in interest-bearing bank deposit accounts and money market funds.

Based on our financial position as of February 28, 2026, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity.

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

We ended the 2026 second quarter with total liquidity of $1.12 billion, including cash and cash equivalents and $923.4 million of available capacity under the Credit Facility, with $275.0 million of cash borrowings outstanding.

Cash and cash equivalents totaled $199.8 million at May 31, 2026, compared to $228.6 million at November 30, 2025.

Cash equivalents included in the total were $63.3 million at May 31, 2026 and $152.6 million at November 30, 2025, and were mainly invested in interest-bearing bank deposit accounts and money market funds.

Based on our financial position as of May 31, 2026, and our business forecast as discussed below under “Outlook,” we have no material concerns related to our liquidity.

We believe that our

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

Cash Requirements .

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

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

Investments in Land and Land Development.

Our investments in land and land development for the 2026 first quarter totaled $567.2 million, a 38% decrease compared to the year-earlier period;

Our investments in land and land development for the six months ended May 31, 2026 totaled $1.06 billion, a 26% decrease compared to the year-earlier period;

the prior period included our purchase of two sizable land parcels in our Southwest homebuilding reporting segment.

In the three months ended February 28, 2026, land acquisition expenditures, which are included in our investments in land and land development, decreased to $234.3 million, or 41% of our total investments, compared to $538.0 million, or approximately 58% of our total investments, in the corresponding period of 2025.

While we made investments in land and land development in each of our homebuilding reporting segments during the three months ended February 28, 2026 and 2025, approximately 44% and 47%, respectively, of these investments for each period were made in our West Coast homebuilding reporting segment.

In the six months ended May 31, 2026, land acquisition expenditures, which are included in our investments in land and land development, decreased to $353.1 million, or 33% of our total investments, compared to $661.9 million, or 46% of our total investments, in the corresponding period of 2025.

While land and land development investments were made in all of our homebuilding reporting segments during the six months ended May 31, 2026 and 2025, our West Coast segment comprised 44% and 49%, respectively, of our total investments.

For the remainder of 2026, we intend to continue to invest in and develop land positions within attractive submarkets and selectively acquire or control additional land that meets our investment standards, depending significantly on market conditions and available opportunities that meet our investment return standards.

The following table presents the number of lots we owned or controlled under land option contracts and other similar contracts and the carrying value of inventory by homebuilding reporting segment (dollars in thousands):

February 28, 2026 November 30, 2025 Variance

May 31, 2026 November 30, 2025 Variance

Segment Lots Carrying Value Lots Carrying Value Lots Carrying Value

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Total 59,106 $ 5,732,557 64,612 $ 5,670,802 (5,506) $ 61,755

The carrying value of lots we owned or controlled under land option contracts and other similar contracts at February 28, 2026 increased slightly from November 30, 2025, mainly due to land and land development investments during the three months ended February 28, 2026.

The number of lots we owned or controlled as of February 28, 2026 decreased 2% from November 30, 2025, largely reflecting homes delivered and our strategic abandonment of 3,423 previously controlled lots, partly offset by newly optioned lots during the period.

The number of lots in inventory as of February 28, 2026 included 7,787 lots under contract where the associated deposits were refundable at our discretion, compared to 7,715 of such lots at

November 30, 2025.

Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 41% at February 28, 2026, compared to 43% at November 30, 2025.

The carrying value of lots we owned or controlled under land option contracts and other similar contracts at May 31, 2026 increased slightly from November 30, 2025, mainly due to land and land development investments during the six months ended May 31, 2026.

The number of lots we owned or controlled as of May 31, 2026 decreased 9% from November 30, 2025, largely reflecting homes delivered and our strategic abandonment of 7,301 previously controlled lots, partly offset by newly optioned lots during the period.

The number of lots in inventory as of May 31, 2026 included 6,319 lots under contract where the associated deposits were refundable at our discretion, compared to 7,715 of such lots at November 30, 2025.

Our lots controlled under land option contracts and other similar contracts as a percentage of total lots was 38% at May 31, 2026, compared to 43% at November 30, 2025.

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

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We typically have the ability not to exercise our rights to the underlying land for any reason and, if applicable, forfeit our deposits without further penalty or obligation to the sellers.

If we were to acquire all the land we had under land option contracts and other similar contracts at February 28, 2026, we estimate the remaining purchase price to be paid would be as follows:

If we were to acquire all the land we had under land option contracts and other similar contracts at May 31, 2026, we estimate the remaining purchase price to be paid would be as follows:

2026 – $652.1 million;

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$ 1,968,714 $ 1,692,977 $ 275,737

Our financial leverage, as measured by the ratio of debt to capital, increased 260 basis points to 32.9% at February 28, 2026, compared to 30.3% at November 30, 2025 due to cash borrowings outstanding under the Credit Facility.

Our financial leverage, as measured by the ratio of debt to capital, increased 380 basis points to 34.1% at May 31, 2026, compared to 30.3% at November 30, 2025 due to cash borrowings outstanding under the Credit Facility.

The ratio of debt to capital is calculated by dividing notes payable by capital (notes payable plus stockholders’ equity).

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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, 2026 and November 30, 2025, we had letters of credit outstanding under the LOC Facility of $57.3 million and $68.2 million, respectively.

As of May 31, 2026 and November 30, 2025, we had letters of credit outstanding under the LOC Facility of $55.4 million and $68.2 million, respectively.

Performance Bonds .

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

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

Unsecured Revolving Credit Facility .

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The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount of available loans can be increased to a maximum of $1.70 billion under certain conditions, including obtaining additional bank commitments.

The amount of the Credit Facility available for cash borrowings and the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the

Credit Facility.

As of February 28, 2026, we had $200.0 million of cash borrowings and $1.6 million of letters of credit outstanding under the Credit Facility.

As of May 31, 2026, we had $275.0 million of cash borrowings and $1.6 million of letters of credit outstanding under the Credit Facility.

The Credit Facility is further described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

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The covenants and other requirements under the Credit Facility and the Term Loan represent the most restrictive covenants that we are subject to with respect to our notes payable.

The following table summarizes the financial covenants and other requirements under the Credit Facility and the Term Loan, and our actual levels or ratios (as applicable) with respect to those covenants and other requirements, in each case as of February 28, 2026:

Financial Covenants and Other Requirements Covenant Requirement Actual

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Interest Coverage Ratio (a) > 1.500 4.601

Minimum liquidity (a) > $109.1 million $1,198.9 million

Minimum liquidity (a) > $109.9 million $1.12 billion

Investments in joint ventures and non-guarantor subsidiaries < $855.8 million $480.6 million

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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.

As of May 31, 2026, we were in compliance with the applicable terms of all of our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility and the mortgages and land contracts due to land sellers and other loans.

Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance.

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Depending on available terms, we finance certain land acquisitions with purchase-money financing from land sellers or with other forms of financing from third parties.

At February 28, 2026, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $2.8 million, secured primarily by the underlying property, which had an aggregate carrying value of $20.7 million.

At May 31, 2026, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $2.6 million, secured primarily by the underlying property, which had an aggregate carrying value of $20.8 million.

Senior Unsecured Term Loan .

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As discussed in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report, we have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located.

As of February 28, 2026, one of our unconsolidated joint ventures had borrowings outstanding under a term loan with a third-party lender and secured by the underlying property and related project assets.

None of our other homebuilding unconsolidated joint ventures had outstanding debt at February 28, 2026.

As of May 31, 2026, one of our unconsolidated joint ventures had borrowings outstanding under a term loan with a third-party lender and secured by the underlying property and related project assets.

None of our other homebuilding unconsolidated joint ventures had outstanding debt at May 31, 2026.

Consolidated Cash Flows .

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

Three Months Ended February 28,

Six Months Ended May 31,

Net cash provided by (used in):

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

Our net cash used by operating activities for the three months ended February 28, 2026 mainly reflected a net decrease in accounts payable, accrued expenses and other liabilities of $148.1 million and a net increase in inventories of $38.0 million, partly offset by net income of $33.4 million and a net decrease in receivables of $2.8 million.

In the three months ended February 28, 2025, our net cash used by operating activities primarily reflected a net increase in inventories of $416.4 million and a net decrease in accounts payable, accrued expenses and other liabilities of $99.0 million, partly offset by net income of $109.6 million and a net decrease in receivables of $39.3 million.

Our net cash used by operating activities for the six months ended May 31, 2026 mainly reflected a net decrease in accounts payable, accrued expenses and other liabilities of $93.3 million, a net increase in inventories of $73.6 million and a net increase in receivables of $25.1 million, partly offset by net income of $60.8 million.

In the six months ended May 31, 2025, our net cash used by operating activities primarily reflected a net increase in inventories of $390.6 million and a net decrease in accounts payable, accrued expenses and other liabilities of $68.3 million, partly offset by net income of $217.4 million and a net decrease in receivables of $20.7 million.

Investing Activities .

In the three months ended February 28, 2026, our net cash used in investing activities consisted of $13.2 million for net purchases of property and equipment and $4.7 million of contributions to unconsolidated joint ventures.

In the three months ended February 28, 2025, the net cash used in investing activities included $11.2 million for net purchases of property and equipment, partly offset by a $.6 million return of investments in unconsolidated joint ventures.

In the six months ended May 31, 2026, net cash used in investing activities consisted of $22.9 million for net purchases of property and equipment and $8.9 million of contributions to unconsolidated joint ventures, partially offset by a return of investments in unconsolidated joint ventures of $1.6 million.

In the six months ended May 31, 2025, the net cash used in investing activities included $22.7 million for net purchases of property and equipment, partly offset by a $2.3 million return of investments in unconsolidated joint ventures.

Financing Activities .

In the three months ended February 28, 2026, cash was provided by $200.0 million of net borrowings under the Credit Facility and $.5 million of issuances of common stock under employee stock plans.

The cash provided was partly offset by stock repurchases of $50.0 million, tax payments associated with stock-based compensation awards of $18.2 million, and dividend payments on our common stock of $17.3 million.

In the three months ended February 28, 2025, cash was provided by $100.0 million of net borrowings under the Credit Facility and $.4 million of issuances of common stock under employee stock plans.

The cash provided was partly offset by stock repurchases of $50.0 million, dividend payments on our common stock of $19.3 million and tax payments associated with stock-based compensation awards of $15.9 million.

In the 2026 and 2025 first quarters, our board of directors declared, and we paid, a quarterly cash dividend of $.25 per share.

In the six months ended May 31, 2026, cash was provided by $275.0 million of net borrowings under the Credit Facility and $.6 million of issuances of common stock under employee stock plans.

The cash provided was partly offset by stock repurchases and excise taxes paid of $130.1 million, dividend payments on our common stock of $32.6 million, and tax payments associated with stock-based compensation awards of $18.3 million.

In the six months ended May 31, 2025, our uses of cash included stock repurchases of $250.0 million, dividend payments on our common stock of $36.5 million and tax payments associated with stock-based compensation awards of $15.9 million.

The cash used was partially offset by $200.0 million of net borrowings under the Credit Facility and $.4 million of issuances of common stock under employee stock plans.

In the 2026 and 2025 second quarters, our board of directors declared, and we paid, a quarterly cash dividend of $.25 per share.

Quarterly dividends declared and paid during each of the six-month periods ended May 31, 2026 and 2025 totaled $.50 per share.

The declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our board of directors, and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions.

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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.

In the six months ended May 31, 2026, we repurchased 2,216,336 shares of our common stock at a total cost of $125.0 million.

Repurchases under the authorization may occur periodically through open market purchases, privately negotiated transactions or otherwise, with the timing and amount at management’s discretion and dependent on market, business and other conditions.

This share repurchase authorization will continue in effect until fully used or earlier terminated or suspended by our board of directors, and does not obligate us to purchase any shares.

As of February 28, 2026, there was $850.0 million of remaining availability under this share repurchase authorization.

This share repurchase authorization will continue in effect until fully used or earlier

terminated or suspended by our board of directors, and does not obligate us to purchase any shares.

As of May 31, 2026, there was $775.0 million of remaining availability under this share repurchase authorization.

As stated above, we believe we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business.

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Supplemental Guarantor Financial Information

As of February 28, 2026, we had $1.34 billion in aggregate principal amount of outstanding senior notes, $200.0 million of borrowings outstanding under the Credit Facility and $360.0 million in aggregate principal amount of borrowings outstanding under the Term Loan.

As of May 31, 2026, we had $1.34 billion in aggregate principal amount of outstanding senior notes, $275.0 million of borrowings outstanding under the Credit Facility and $360.0 million in aggregate principal amount of borrowings outstanding under the Term Loan.

Our obligations to pay principal and interest on the senior notes and borrowings, if any, under the Credit Facility and the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries.

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Total assets 6,465,046 6,360,871

2026 November 30,

Summarized Balance Sheet Data (in thousands)

Liabilities and Stockholders’ Equity

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Stockholders’ equity 3,410,182 3,528,938

Summarized Statement of Operations Data (in thousands) Three Months Ended

February 28, 2026

Summarized Statement of Operations Data (in thousands) Six Months Ended

Revenues $ 1,974,877

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The preparation of our consolidated financial statements requires the use of judgment in the application of accounting policies and estimates of uncertain matters.

There have been no significant changes to our critical accounting policies and estimates during the three months ended February 28, 2026 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended November 30, 2025.

There have been no significant changes to our critical accounting policies and estimates during the three months ended May 31, 2026 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended November 30, 2025.

Recent Accounting Pronouncements

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

We continue to view the long‑term outlook for the housing market favorably, supported by positive demographic trends and the ongoing undersupply of homes.

However, we expect the challenging market conditions we experienced in the 2026 first quarter – marked by persistent affordability pressures, cautious buyer sentiment, heightened macroeconomic uncertainties and geopolitical tensions softening demand – to continue in the near term.

The conflict in the Middle East, which began on the last day of our fiscal quarter, has introduced additional uncertainty for already wary consumers, with the related capital and credit market volatility along with rising fuel prices and mortgage interest rates weighing on economic sentiment and negatively affecting affordability.

We began to experience these impacts in our business in March with softer‑than‑expected net order activity in the month.

To the extent the conflict and the associated trends continue or worsen, net order activity could remain subdued, including net orders for our Built to Order homes.

Within this operating environment, we plan to maintain our simplified sales approach we implemented one year ago.

We expect this approach, together with our current community count, to support steady buyer activity, subject to typical seasonal patterns and headwinds associated with the conflict in the Middle East.

In addition, while selling through our existing inventory, we will continue to emphasize sales of our Built to Order homes, with the goal of bringing the Built to Order mix of homes delivered closer to our historical average of 60% to 70%.

We were encouraged that our mix of net orders in the 2026 first quarter was predominantly Built to Order, which

supports our belief we will achieve 70% Built to Order deliveries in the 2026 second half.

Net orders for the quarter increased 3% year over year, contributing to a sequential 15% increase in our backlog from November 30, 2025, despite a 19% year‑over‑year decline.

With the inherent lag between sale and delivery for Built to Order homes, we expect to continue growing our backlog.

A larger backlog of Built to Order homes is expected to provide many benefits, including higher gross margins than we typically generate on inventory sales.

We continue to view the long‑term outlook for the housing market favorably, supported by positive demographic trends and an ongoing structural undersupply of homes.

However, we expect the challenging market conditions we experienced in the 2026 second quarter – marked by persistent affordability pressures, elevated mortgage interest rates, and cautious buyer sentiment, which softened further during the period due to rising inflation, heightened macroeconomic uncertainties and geopolitical tensions, including the military conflict in the Middle East – to continue in the near term.

To the extent these trends continue or worsen, net order activity could remain subdued, including net orders for our Built to Order homes.

As we move into the 2026 second half, we plan to maintain our simplified sales approach we implemented more than a year ago.

Additionally, while selling through our existing inventory, we will continue to emphasize sales of our Built to Order homes, with the goal of bringing the mix closer to our historical average of 60% to 70% of homes delivered.

Our mix of net orders in both the 2026 first and second quarters was predominantly Built to Order, momentum that we believe will enable us to accomplish our homes delivered mix goal in the 2026 second half and beyond.

Although the number of homes in our backlog at May 31, 2026 was down 5% year over year, our renewed focus on Built to Order contributed to sequential growth in our ending backlog for both the 2026 first and second quarters, with the number of homes in backlog at May 31, 2026 up 45% from November 30, 2025.

We expect our year-over-year ending backlog comparison to turn positive in the 2026 third quarter.

Among other benefits, a larger backlog of Built to Order homes generally provides us greater visibility into future deliveries and higher gross margins than we typically generate on inventory sales.

We also intend to continue focusing on improving our build times and tightly managing our direct construction costs.

While our shift toward Built to Order homes will contribute to a temporary trough in the number of homes delivered during the 2026 first half, as the higher level of Built to Order homes we are selling now is expected to benefit third‑ and fourth‑quarter deliveries, and we have intentionally slowed our inventory starts, it is a purposeful reset that we believe positions us to be a stronger company in the second half of the year and beyond.

We also anticipate a more favorable regional mix of homes delivered during the 2026 second half, particularly a greater proportion from our Northern California operations, which have historically generated higher average selling prices and higher margins.

In addition, we believe that both our housing gross profit margin and our selling, general and administrative expenses as a percentage of housing revenues will benefit in the 2026 second half from an expected increase in operating leverage.

While our strategic shift toward a higher mix of Built to Order homes and our intentional moderation of inventory starts contributed to an anticipated temporary trough in the number of homes delivered during the 2026 first half, we expect the higher level of Built to Order sales generated during this period to produce sequential improvement in our homes delivered and

housing gross profit margins during the 2026 second half, although each is projected to be lower on a year-over-year basis in the third and fourth quarters.

Specifically as to our housing gross profit margin, we anticipate more pronounced sequential improvement as the year progresses, supported by increased operating leverage and a favorable mix of homes delivered, including a growing proportion of Built to Order homes and a greater share from our Northern California operations, which have historically generated relatively high average selling prices and margins.

In addition, we believe that our selling, general and administrative expenses as a percentage of housing revenues will benefit in the 2026 second half from an expected increase in operating leverage.

We have maintained a strong financial position and financial flexibility, supported by our Credit Facility, which we expanded at the end of our 2025 fiscal year.

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We also plan to continue to develop land we own in a manner that prioritizes capital efficiency, including developing lots where possible in smaller phases and aligning development with our starts pace to optimally manage our inventory of finished lots.

Reflecting our ongoing investments in land and land development, our ending community count for the 2026 first quarter increased 8% year over year to 276.

We expect to reach our peak community count for the year within the second quarter at the height of the Spring selling season, which enhances our ability to drive net orders.

Reflecting our ongoing investments in land and land development, our ending community count for the 2026 second quarter increased 11% year over year to 280.

Consistent with our balanced approach to capital allocation, we plan to continue returning capital to our stockholders, primarily through additional share repurchases.

As of February 28, 2026, we had $850.0 million remaining under our current board of directors share repurchase authorization.

This provides us the opportunity to repurchase our common stock in the remainder of 2026, with the pace, volume and timing based on considerations of our operating cash flow, liquidity outlook, land investment opportunities and needs, the market price of our common stock, and the housing market and general economic conditions.

In considering the foregoing and that our 2026 first quarter net orders were below the level we anticipated for our prior full-year delivery guidance, we have lowered our range for the year.

While we anticipate refining our full-year guidance and providing additional details as we gain further clarity on the Spring selling season, our present outlook for the 2026 second quarter and full year as to certain metrics is as follows:

2026 Second Quarter

• We expect deliveries to be in the range of 2,250 to 2,450, compared to 3,120 for the 2025 second quarter.

As of May 31, 2026, we had $775.0 million remaining under our current board of directors share repurchase authorization.

This provides us with the opportunity to repurchase our common stock in the remainder of 2026, with the pace, volume and timing based on considerations of our operating cash flow, liquidity outlook, land investment opportunities and needs, the market price of our common stock, and the housing market and general economic conditions.

Based on the factors discussed above, we have updated our 2026 projections.

We are providing our current projections for the 2026 third quarter, reaffirming, with narrower ranges, the 2026 full‑year projections for deliveries and housing revenues previously disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2026, and providing additional details on our present 2026 full‑year outlook for certain metrics, as follows:

2026 Third Quarter

• We expect deliveries to be in the range of 2,600 to 2,800, compared to 3,393 for the 2025 third quarter.

• We expect to generate housing revenues in the range of $1.20 billion to $1.35 billion, compared to $1.61 billion for the corresponding 2025 period.

• We expect our housing gross profit margin will be in the range of 16.0% to 16.6%, assuming no inventory-related charges, compared to 18.9% for the corresponding 2025 quarter.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 12.4% to 13.0%, compared to 10.7% for the 2025 second quarter.

• We expect our effective tax rate will be approximately 19.0%, compared to 24.2% for the year-earlier quarter.

• We expect our ending community count to be in the range of 265 to 275, compared to 253 for the corresponding 2025 quarter.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 11.3% to 11.9%, compared to 10.0% for the 2025 third quarter.

• We expect our effective tax rate will be in the range of 19.0% to 21.0%, compared to 23.3% for the year-earlier quarter.

• We expect our ending community count will be in the range of 270 to 280, compared to 264 for the 2025 third quarter.

• We expect our common stock repurchases to be in the range of $50.0 million to $100.0 million.

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• We expect our housing revenues to be in the range of $4.90 billion to $5.30 billion, compared to $6.21 billion for 2025.

• We expect our housing gross profit margin will be in the range of 16.1% to 16.5%, assuming no inventory-related charges, compared to 19.1% for 2025.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 11.4% to 11.8%, compared to 10.4% for 2025.

• We expect our effective tax rate will be in the range of 22.0% to 24.0%, compared to 22.6% for 2025.

In addition to factors discussed elsewhere in this report, our future performance and the strategies we implement (and adjust or refine as necessary or appropriate) will depend significantly on economic, employment, homebuilding industry and capital, credit and financial market conditions, as well as a fairly stable and constructive political and regulatory environment, particularly in regard to housing and mortgage loan financing policies.

credit and financial market conditions, as well as a fairly stable and constructive political and regulatory environment, particularly in regard to housing and mortgage loan financing policies.

This includes U.S.

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Additionally, while the Federal Reserve reduced interest rates in 2025 and may lower rates further in 2026 or later periods, there is no assurance it will do so, or that any reduction(s), or other monetary policy changes, will meaningfully lower mortgage interest rates or positively affect demand or our business, results of operations or consolidated financial statements.

The potential extent and effect of these and other factors on our business is highly uncertain, unpredictable and outside our control, and our past performance, including in the three months ended February 28, 2026, should not be considered indicative of our future results on any metric or set of metrics, including, but not limited to, our net orders, backlog, revenues, margins and returns.

The potential extent and effect of these and other factors on our business is highly uncertain, unpredictable and outside our control, and our past performance, including in the three months ended May 31, 2026, should not be considered indicative of our future results on any metric or set of metrics, including, but not limited to, our net orders, backlog, revenues, margins and returns.

Forward-Looking Statements

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the success, performance, effectiveness and/or relative positioning of our strategies, initiatives or operational activities;

and other matters, may be based in whole or in part on general observations or opinions of

our management, limited or anecdotal evidence and/or business or industry experience without in-depth or any particular empirical investigation, inquiry or analysis and are not intended, and do not express, factual assertions about past events.

and other matters, may be based in whole or in part on general observations or opinions of our management, limited or anecdotal evidence and/or business or industry experience without in-depth or any particular empirical investigation, inquiry or analysis and are not intended, and do not express, factual assertions about past events.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors.

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• general economic, employment and business conditions;

• population growth, household formations and demographic trends;

• population growth or decline, household formations and demographic trends;

• conditions in the capital, credit and financial markets;

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• the execution of any securities repurchases pursuant to our board of directors’ authorization;

• material and trade costs and availability, including the greater costs associated with achieving current and expected higher standards for ENERGY STAR certified homes, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages;

• consumer and producer price inflation;

• material and trade costs and availability, including the costs associated with achieving the current standards for ENERGY STAR certified homes, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages;

• rising consumer and producer price inflation;

• changes in interest rates, including those set by the Federal Reserve, and those available in the capital markets or from financial institutions and other lenders, and applicable to mortgage loans;

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• weak or declining consumer confidence, either generally or specifically with respect to purchasing homes;

• competition from other sellers of new and resale homes;

• competition from other sellers of new and resale homes, particularly homebuilders with significant unsold inventory;

• weather events, significant natural disasters and other climate and environmental factors, such as a lack of adequate water supply to permit new home communities in certain areas;

• lingering economic and financial market impacts from the prolonged shutdown of the federal government’s operations in October and November 2025, and any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government’s operations (also known as a government shutdown) or significant portion thereof, and financial markets’ and businesses’ reactions to any such failure;

• potential instability associated with the regulatory and executive policies, proposals and orders of the U.S.

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• our operational and investment concentration in markets in California;

• consumer interest in and responsiveness to our new home communities, products and simplified selling process and transparent pricing initiatives, particularly from first-time homebuyers and higher-income consumers;

• consumer interest in and responsiveness to our new home communities, products and simplified selling process with transparent pricing and limited initiatives, particularly from first-time homebuyers and higher-income consumers;

• our ability to generate orders and convert our backlog of orders to home deliveries and revenues, particularly in key markets in California;

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• income tax expense volatility associated with stock-based compensation;

• the costs we incur in connection with relocating our corporate headquarters office from Los Angeles, California to Tempe, Arizona in 2027, including costs for employee-related severance, retention and relocation, as well as recruitment and onboarding;

• the ability of our homebuyers to obtain homeowners and flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis