A month has gone by since the last earnings report for KB Home (KBH) . Shares have added about 1.7% in that time frame, underperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is KB Home due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.KBH Q3 Earnings & Revenues B ...

Core Viewpoint - The housing market is facing challenges due to a perceived demand problem rather than a supply problem, which could negatively impact housing companies like KB Home [2][4] Company Analysis - KB Home has been downgraded by analysts amid concerns about the housing market and government policies aimed at increasing supply [2][3] - Despite the downgrade, there is a belief that housing stocks, including KB Home, could trade at higher multiples in the long term due to improved operations and competitive advantages [3][4] Industry Insights - Analysts argue that the current focus on supply-side solutions by the government may not address the underlying demand issues in the housing market [2] - The performance of builders like KB Home is being compared to peers, with the expectation that they will eventually receive a revaluation to higher multiples due to their operational improvements [4]

Group 1 - The October reading on home builder sentiment from the National Association of Home Builders (NAHB) reached its highest level since April [1] - Builder expectations for future sales significantly increased, indicating a positive outlook for the housing market [1] Group 2 - The Housing Market Index (HMI) components reveal a more detailed narrative about builder sentiment and market conditions [1]

Core Insights - DRZ Investment Advisors has established a new ownership stake in KB Home, holding 931,823 shares valued at $59.30 million as of September 30, 2025, indicating a strategic investment decision [1][10] - KB Home shares have decreased by 27.27% over the past year, with a negative one-year alpha of 19.42 percentage points compared to the S&P 500, suggesting underperformance relative to the market [2][10] - The company reported a revenue of $1.62 billion for the fiscal third quarter, down from $1.75 billion in the previous year, and anticipates housing revenue for the upcoming fiscal year to be between $6.1 billion and $6.2 billion, a decline from $6.9 billion [10][11] Company Overview - KB Home is a U.S. homebuilder that operates across multiple regions, focusing on first-time and move-up buyers, and offers a range of home designs and personalized options [4][7] - The company generates revenue primarily through the construction and sale of single-family homes, townhomes, and condominiums, along with additional income from financial services [6][10] - As of October 16, 2025, KB Home's stock price was $61.32, with a dividend yield of 1.62% [3][13] Investment Considerations - The potential for increased home sales due to anticipated Federal Reserve interest rate cuts may positively impact KB Home's performance, making it an attractive investment opportunity [11][13] - The company has been actively repurchasing its stock, having bought back $188.5 million worth of shares in fiscal Q3, which reflects management's confidence in the company's future [12][13]

Core Insights - Generative AI is viewed as a transformative technology by Amazon's leadership, with potential to significantly enhance customer experiences [1][2] - Elon Musk predicts a future with 10 billion humanoid robots, suggesting a market value of $250 trillion by 2040, indicating a massive shift in the global economy driven by AI [2][4] - Major consulting firms like PwC and McKinsey recognize the multi-trillion-dollar potential of AI, reinforcing the optimistic outlook on the technology's impact [3] Company and Industry Analysis - A specific under-owned company is highlighted as pivotal to the AI revolution, with its affordable AI technology posing a threat to competitors [4][6] - Prominent investors and tech leaders, including Bill Gates and Warren Buffett, are positioning themselves around AI, emphasizing its potential to drive significant social and economic change [8] - The article suggests that the current investment landscape is ripe for opportunities in AI, with a focus on a smaller company that is making substantial advancements in the field [6][9]

Core Points - KB Home has announced the grand opening of its newest community in Denton, Texas [1] Company Summary - The new community represents KB Home's continued expansion efforts in the Texas market [1]

BUCKEYE, Ariz.--(BUSINESS WIRE)-- #BuiltOnRelationships--KB Home (NYSE: KBH), one of the largest and most trusted homebuilders in the U.S., today announced the grand opening of The Traditions, a new neighborhood situated within the highly anticipated Teravalis community. The new master plan is located between the stunning High Sonoran Desert landscapes of the White Tank and Belmont Mountains in Buckeye, Arizona, a growing city that offers the perfect blend of small-town charm, outdoor adventure and pictures ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents KB Home's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements, notes, and a general decline in revenues and net income are presented [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Details revenues, net income, and diluted EPS for three and nine months ended August 31, 2025 and 2024 Total Revenues | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 3 Months | $1,620,474 | $1,752,608 | (8)% | | 9 Months | $4,541,836 | $4,930,187 | (8)% | Net Income | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 3 Months | $109,828 | $157,329 | (30)% | | 9 Months | $327,268 | $464,413 | (30)% | Diluted EPS | Period | 2025 | 2024 | YoY Change | | :----- | :--- | :--- | :--------- | | 3 Months | $1.61 | $2.04 | (21)% | | 9 Months | $4.60 | $5.94 | (23)% | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Snapshot of assets, liabilities, and stockholders' equity as of August 31, 2025, and November 30, 2024 Total Assets | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $6,985,572 | | Nov 30, 2024 | $6,936,169 | Cash and Cash Equivalents (Homebuilding) | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $330,586 | | Nov 30, 2024 | $597,973 | Notes Payable | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $1,943,582 | | Nov 30, 2024 | $1,691,679 | Total Stockholders' Equity | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $3,902,363 | | Nov 30, 2024 | $4,060,616 | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%27%20Equity) Outlines changes in equity, including net income, dividends, and stock repurchases, for nine months Net Income (9 Months) | Period | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | 9 Months | $327,268 | $464,413 | Dividends on Common Stock (9 Months) | Period | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | 9 Months | $(52,806) | $(53,537) | Stock Repurchases (9 Months) | Period | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | 9 Months | $(442,614) | $(251,941) | Total Stockholders' Equity (End of Period) | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $3,902,363 | | Aug 31, 2024 | $3,987,094 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Presents cash flows from operating, investing, and financing activities for nine months Net Cash Provided by Operating Activities | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 9 Months | $31,840 | $81 | Significant Increase | Net Cash Used in Investing Activities | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 9 Months | $(42,237) | $(38,138) | (11)% increase in outflow | Net Cash Used in Financing Activities | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 9 Months | $(256,498) | $(313,592) | 18% decrease in outflow | Net Decrease in Cash and Cash Equivalents | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 9 Months | $(266,895) | $(351,649) | 24% decrease in outflow | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations supporting financial statements, covering policies, segments, and specific line items [1. Basis of Presentation and Significant Accounting Policies](index=7&type=section&id=1.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Describes financial statement preparation, key accounting policies, and new pronouncement evaluations - Cash equivalents totaled **$164.7 million** at August 31, 2025, down from **$385.1 million** at November 30, 2024, primarily invested in interest-bearing bank deposit accounts and money market funds[19](index=19&type=chunk) - Comprehensive income for the nine months ended August 31, 2025, was **$327.3 million**, equal to net income for the period, down from **$464.4 million** in 2024[20](index=20&type=chunk) - The company is evaluating the potential impact of new FASB guidance on segment reporting (ASU 2023-07), income tax disclosures (ASU 2023-09), and expense disaggregation (ASU 2024-03)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [2. Segment Information](index=8&type=section&id=2.%20Segment%20Information) Provides financial data for homebuilding and financial services segments, including revenues and pretax income - KB Home operates five reporting segments: four homebuilding segments (West Coast, Southwest, Central, Southeast) and one financial services segment[25](index=25&type=chunk) Homebuilding Revenues (Nine Months Ended August 31) | Segment | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :-------- | :--------------- | :--------------- | :--------- | | West Coast | $1,926,722 | $2,017,336 | (4.5)% | | Southwest | $962,486 | $954,602 | 0.8% | | Central | $869,182 | $1,069,136 | (18.7)% | | Southeast | $767,829 | $868,115 | (11.5)% | | **Total** | **$4,526,219** | **$4,909,189** | **(7.8)%** | Homebuilding Pretax Income (Nine Months Ended August 31) | Segment | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :-------- | :--------------- | :--------------- | :--------- | | West Coast | $216,925 | $252,099 | (13.9)% | | Southwest | $171,432 | $165,302 | 3.7% | | Central | $64,387 | $128,446 | (49.9)% | | Southeast | $55,529 | $103,827 | (46.5)% | | Corporate & Other | $(107,678) | $(82,254) | (30.9)% | | **Total** | **$400,595** | **$567,420** | **(29.5)%** | Inventory Impairment and Land Option Contract Abandonment Charges (Nine Months Ended August 31) | Segment | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :-------- | :--------------- | :--------------- | :--------- | | West Coast | $2,973 | $2,441 | 21.8% | | Southwest | $1,642 | $116 | 1315.5% | | Central | $9,372 | $725 | 1192.7% | | Southeast | $4,364 | $403 | 983.0% | | **Total** | **$18,351** | **$3,685** | **397.9%** | [3. Financial Services](index=9&type=section&id=3.%20Financial%20Services) Details financial performance and assets of the financial services segment, including revenues and pretax income Financial Services Revenues (Nine Months Ended August 31) | Category | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :---------------- | :--------------- | :--------------- | :--------- | | Insurance commissions | $8,268 | $12,685 | (34.8)% | | Title services | $7,349 | $8,313 | (11.6)% | | **Total** | **$15,617** | **$20,998** | **(25.6)%** | Financial Services Pretax Income (Nine Months Ended August 31) | Period | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :----- | :--------------- | :--------------- | :--------- | | 9 Months | $24,373 | $35,793 | (31.9)% | - Total assets for the financial services segment were **$59.8 million** at August 31, 2025, a decrease from **$66.9 million** at November 30, 2024[31](index=31&type=chunk) [4. Earnings Per Share](index=10&type=section&id=4.%20Earnings%20Per%20Share) Presents basic and diluted earnings per share calculations and weighted average shares outstanding Basic Earnings Per Share | Period | 2025 | 2024 | YoY Change | | :----- | :--- | :--- | :--------- | | 3 Months | $1.64 | $2.10 | (21.9)% | | 9 Months | $4.69 | $6.12 | (23.3)% | Diluted Earnings Per Share | Period | 2025 | 2024 | YoY Change | | :----- | :--- | :--- | :--------- | | 3 Months | $1.61 | $2.04 | (21.1)% | | 9 Months | $4.60 | $5.94 | (22.6)% | - Weighted average diluted shares outstanding for the nine months ended August 31, 2025, decreased to **70,643 thousand** from **77,565 thousand** in the prior year[32](index=32&type=chunk) [5. Receivables](index=11&type=section&id=5.%20Receivables) Breakdown of receivables, including amounts from utility companies and for self-insurance claims Total Receivables | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $386,486 | | Nov 30, 2024 | $377,533 | - Key components of receivables at August 31, 2025, include **$186.2 million** due from utility companies and **$151.9 million** for self-insurance and other legal claims[34](index=34&type=chunk) [6. Inventories](index=11&type=section&id=6.%20Inventories) Details inventory composition, including land under development and capitalized interest Total Inventories | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $5,838,816 | | Nov 30, 2024 | $5,528,020 | - Land under development increased to **$3.79 billion** at August 31, 2025, from **$3.54 billion** at November 30, 2024[35](index=35&type=chunk) Interest Incurred and Amortized (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :------------------------------------ | :--------------- | :--------------- | | Interest incurred | $84,676 | $79,665 | | Interest amortized to construction and land costs | $(75,755) | $(83,872) | [7. Inventory Impairments and Land Option Contract Abandonments](index=11&type=section&id=7.%20Inventory%20Impairments%20and%20Land%20Option%20Contract%20Abandonments) Discusses charges related to inventory impairments and land option contract abandonments - Inventory impairment charges of **$7.3 million** were recognized for the nine months ended August 31, 2025, primarily related to one community due to increased costs and a change in operational strategy[40](index=40&type=chunk) - Land option contract abandonment charges increased to **$11.0 million** for the nine months ended August 31, 2025, from **$3.7 million** in the prior year[42](index=42&type=chunk) - As of August 31, 2025, **14 active communities** or land parcels with a carrying value of **$168.7 million** were evaluated for recoverability[39](index=39&type=chunk) [8. Variable Interest Entities](index=12&type=section&id=8.%20Variable%20Interest%20Entities) Describes involvement with VIEs and interests in land option contracts - One joint venture was identified as a Variable Interest Entity (VIE), but KB Home was not the primary beneficiary, so it remained unconsolidated[45](index=45&type=chunk) Interests in Land Option Contracts (August 31, 2025) | Category | Cash Deposits (Thousands) | Aggregate Purchase Price (Thousands) | | :------------------------------------ | :------------------------ | :----------------------------------- | | Unconsolidated VIEs | $46,642 | $1,203,536 | | Other land option contracts and similar contracts | $29,871 | $749,024 | | **Total** | **$76,513** | **$1,952,560** | - Inventories of **$20.2 million** were recorded with corresponding financing obligations for land option contracts considered financing arrangements at August 31, 2025[48](index=48&type=chunk) [9. Investments in Unconsolidated Joint Ventures](index=13&type=section&id=9.%20Investments%20in%20Unconsolidated%20Joint%20Ventures) Financial information for unconsolidated joint ventures in homebuilding and financial services Homebuilding Unconsolidated Joint Ventures (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :---------------- | :--------------- | :--------------- | :--------- | | Revenues | $58,767 | $37,539 | 56.6% | | Income | $10,117 | $6,594 | 53.4% | Financial Services Unconsolidated Joint Venture (KBHS) (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :------- | :--------------- | :--------------- | :--------- | | Revenues | $79,326 | $93,485 | (15.1)% | | Income | $26,889 | $38,844 | (30.8)% | - KBHS's mortgage loans held for sale increased to **$174.9 million** at August 31, 2025, from **$122.8 million** at November 30, 2024[55](index=55&type=chunk) - Changes in the fair value of Interest Rate Lock Commitments (IRLCs) resulted in a loss of **$6.6 million** for the nine months ended August 31, 2025, compared to a gain of **$3.8 million** in the prior year[57](index=57&type=chunk) [10. Other Assets](index=16&type=section&id=10.%20Other%20Assets) Details components of other assets, including equity securities without readily determinable fair values Total Other Assets | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $102,880 | | Nov 30, 2024 | $105,920 | - Other assets include **$15.2 million** in equity securities without readily determinable fair values at August 31, 2025, stemming from a March 2024 sale that recognized a **$12.5 million** gain in 2024[61](index=61&type=chunk) [11. Accrued Expenses and Other Liabilities](index=16&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Liabilities) Breakdown of accrued expenses and other liabilities, including self-insurance and employee compensation Total Accrued Expenses and Other Liabilities | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $770,450 | | Nov 30, 2024 | $796,261 | - Self-insurance and other legal liabilities increased to **$341.1 million** at August 31, 2025, from **$315.9 million** at November 30, 2024[62](index=62&type=chunk) - Employee compensation and related benefits decreased to **$146.0 million** at August 31, 2025, from **$182.5 million** at November 30, 2024[62](index=62&type=chunk) [12. Leases](index=17&type=section&id=12.%20Leases) Outlines lease-related financial information, including expense, right-of-use assets, and liabilities - Total lease expense for the nine months ended August 31, 2025, was **$15.4 million**, consistent with the prior year[64](index=64&type=chunk) Lease Right-of-Use Assets and Liabilities | Metric | Aug 31, 2025 (Thousands) | Nov 30, 2024 (Thousands) | | :---------------------- | :----------------------- | :----------------------- | | Lease right-of-use assets | $18,278 | $18,734 | | Lease liabilities | $20,772 | $20,887 | [13. Income Taxes](index=17&type=section&id=13.%20Income%20Taxes) Details income tax expense, effective tax rates, and the impact of tax credits and deferred tax assets Income Tax Expense and Effective Tax Rate (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :---------------- | :--------------- | :--------------- | | Income tax expense | $97,700 | $138,800 | | Effective tax rate | 23.0% | 23.0% | - Section 45L tax credits decreased year-over-year for the nine months ended August 31, 2025, due to heightened qualification standards and a strategic decision to build highly energy-efficient homes that do not qualify for these credits[67](index=67&type=chunk)[68](index=68&type=chunk) - The One Big Beautiful Bill Act (OBBBA) repeals Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026[69](index=69&type=chunk) - Deferred tax assets were **$119.2 million** at August 31, 2025, partly offset by a **$16.8 million** valuation allowance, primarily related to state net operating losses[71](index=71&type=chunk) [14. Notes Payable](index=18&type=section&id=14.%20Notes%20Payable) Breakdown of notes payable, including credit facility borrowings and senior notes, and covenant compliance Notes Payable | Category | Aug 31, 2025 (Thousands) | Nov 30, 2024 (Thousands) | | :------------------------------------ | :----------------------- | :----------------------- | | Unsecured revolving credit facility | $250,000 | $0 | | Senior unsecured term loan due August 25, 2026 | $359,329 | $358,826 | | Senior notes (various maturities) | $1,331,104 | $1,329,704 | | Mortgages and land contracts due to land sellers and other loans | $3,149 | $3,149 | | **Total** | **$1,943,582** | **$1,691,679** | - As of August 31, 2025, **$250.0 million** of cash borrowings and **$8.3 million** of letters of credit were outstanding under the **$1.09 billion** Credit Facility, leaving **$831.7 million** available for cash borrowings[75](index=75&type=chunk) - The company was in compliance with all applicable terms and covenants under its Credit Facility, Term Loan, senior notes, and other debt instruments as of August 31, 2025[80](index=80&type=chunk) [15. Fair Value Disclosures](index=19&type=section&id=15.%20Fair%20Value%20Disclosures) Presents fair value measurements for inventories and senior notes, categorized by hierarchy Inventories Measured at Fair Value (Nonrecurring, Nine Months Ended August 31, 2025) | Description | Fair Value Hierarchy | Pre Impairment Value (Thousands) | Impairment Charges (Thousands) | Fair Value (Thousands) | | :---------- | :------------------- | :------------------------------- | :----------------------------- | :--------------------- | | Inventories | Level 3 | $24,268 | $(7,341) | $16,927 | - The estimated fair value of senior notes was **$1.32 billion** at August 31, 2025, compared to a carrying value of **$1.33 billion**[85](index=85&type=chunk) [16. Commitments and Contingencies](index=20&type=section&id=16.%20Commitments%20and%20Contingencies) Details warranty and self-insurance liabilities, legal claims, performance bonds, and land option commitments Warranty Liability | Metric | Aug 31, 2025 (Thousands) | Nov 30, 2024 (Thousands) | | :---------------------- | :----------------------- | :----------------------- | | Balance at end of period | $98,598 | $96,026 | Self-Insurance Liability | Metric | Aug 31, 2025 (Thousands) | Nov 30, 2024 (Thousands) | | :---------------------- | :----------------------- | :----------------------- | | Balance at end of period | $188,749 | $185,428 | - Approximately **269 outstanding noticed claims** under Florida Chapter 558 were present at August 31, 2025, primarily related to stucco and water-intrusion issues[101](index=101&type=chunk) - Performance bonds outstanding increased to **$1.39 billion** at August 31, 2025, from **$1.33 billion** at November 30, 2024, while letters of credit decreased to **$70.7 million** from **$81.6 million**[102](index=102&type=chunk) - Total cash deposits for land option contracts were **$76.5 million** to purchase land with an aggregate price of **$1.95 billion** at August 31, 2025[103](index=103&type=chunk) [17. Legal Matters](index=23&type=section&id=17.%20Legal%20Matters) Discusses ongoing legal proceedings, including a DOJ subpoena, and related accruals - The company received a civil subpoena from the U.S. Department of Justice Civil Division on October 2, 2023, regarding the inspection, rating, marketing, and advertising of its ENERGY STAR certified homes, with an uncertain outcome not considered probable or estimable for loss or penalty[104](index=104&type=chunk) - Accruals for probable and reasonably estimable losses related to litigation and regulatory proceedings are deemed adequate[105](index=105&type=chunk) [18. Stockholders' Equity](index=24&type=section&id=18.%20Stockholders'%27%20Equity) Information on stock repurchases and cash dividends declared and paid, impacting equity - The board authorized repurchases of up to **$1.00 billion** of common stock on April 18, 2024, with **$261.5 million** remaining availability as of August 31, 2025[108](index=108&type=chunk) - In the nine months ended August 31, 2025, the company repurchased **7,788,113 shares** of common stock at a total cost of **$438.5 million**[108](index=108&type=chunk) - Quarterly cash dividends declared and paid totaled **$0.75 per share** for the nine months ended August 31, 2025, up from **$0.70 per share** in 2024[110](index=110&type=chunk) [19. Stock-Based Compensation](index=24&type=section&id=19.%20Stock-Based%20Compensation) Details stock options, restricted stock, and performance share unit compensation expenses - As of August 31, 2025, **376,641 stock options** were outstanding with a weighted average exercise price of **$16.21**, with no stock-based compensation expense associated as all are fully vested[111](index=111&type=chunk) - Total compensation expense for restricted stock and PSUs was **$25.1 million** for the nine months ended August 31, 2025, compared to **$25.3 million** in 2024[111](index=111&type=chunk) [20. Supplemental Disclosure to Consolidated Statements of Cash Flows](index=25&type=section&id=20.%20Supplemental%20Disclosure%20to%20Consolidated%20Statements%20of%20Cash%20Flows) Additional details on cash and cash equivalents by segment and income taxes paid Cash and Cash Equivalents at End of Period (Nine Months Ended August 31) | Segment | 2025 (Thousands) | 2024 (Thousands) | | :---------- | :--------------- | :--------------- | | Homebuilding | $330,586 | $374,911 | | Financial services | $1,712 | $782 | | **Total** | **$332,298** | **$375,693** | - Income taxes paid for the nine months ended August 31, 2025, decreased to **$88.9 million** from **$145.9 million** in the prior year[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on financial condition, operations, market responses, and revised projections for 2025 [OVERVIEW](index=26&type=section&id=OVERVIEW) Summarizes consolidated financial performance, market conditions, and key operational metrics for fiscal 2025 Consolidated Financial Summary (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | Variance | | :---------------- | :--------------- | :--------------- | :------- | | Total revenues | $4,541,836 | $4,930,187 | (8)% | | Net income | $327,268 | $464,413 | (30)% | | Diluted earnings per share | $4.60 | $5.94 | (23)% | - The housing market environment was softer in the first nine months of fiscal 2025 due to affordability concerns and tepid consumer confidence, though demand stabilized in Q3 with moderating mortgage rates[114](index=114&type=chunk)[115](index=115&type=chunk) - Net orders for Q3 2025 decreased **4%** year-over-year to **2,950**, with the average selling price of net orders down **11%** to **$445,600** due to price reductions and a simplified sales approach[115](index=115&type=chunk)[116](index=116&type=chunk) - Total liquidity at August 31, 2025, was **$1.16 billion**, including cash and cash equivalents and available capacity under the Credit Facility[119](index=119&type=chunk) - Ending backlog value at August 31, 2025, decreased **32%** year-over-year to approximately **$1.99 billion**[120](index=120&type=chunk) [HOMEBUILDING](index=27&type=section&id=HOMEBUILDING) Details financial and operational performance of the homebuilding segment, including revenues, homes, margins, and backlog Homebuilding Financial and Operational Data (Nine Months Ended August 31) | Metric | 2025 | 2024 | YoY Change | | :------------------------------------ | :--- | :--- | :--------- | | Housing revenues (Thousands) | $4,525,732 | $4,905,617 | (8)% | | Homes delivered | 9,283 | 10,191 | (9)% | | Average selling price | $487,500 | $481,400 | 1.3% | | Housing gross profit margin | 19.2% | 21.1% | (190) bps | | Adjusted housing gross profit margin | 19.6% | 21.1% | (150) bps | | SG&A as % of housing revenues | 10.6% | 10.2% | 40 bps | | Operating income (Thousands) | $389,965 | $534,809 | (27)% | - Homebuilding operating income for the nine months ended August 31, 2025, declined **27%** year-over-year, primarily due to lower housing gross profits and the absence of land sale profits, partly offset by lower selling, general and administrative expenses[125](index=125&type=chunk) - Inventory-related charges increased significantly to **$18.4 million** for the nine months ended August 31, 2025, from **$3.7 million** in the prior year[125](index=125&type=chunk) Net Orders and Backlog (Nine Months Ended August 31) | Metric | 2025 | 2024 | YoY Change | | :-------------------- | :--- | :--- | :--------- | | Net orders | 9,182 | 10,405 | (12)% | | Cancellation rate | 16% | 14% | 200 bps | | Ending backlog – homes | 4,333 | 5,724 | (24)% | | Ending community count | 264 | 254 | 4% | [HOMEBUILDING REPORTING SEGMENTS](index=31&type=section&id=HOMEBUILDING%20REPORTING%20SEGMENTS) Detailed breakdown of financial and operational performance across four homebuilding reporting segments West Coast Segment (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :------------------------------------ | :--------------- | :--------------- | :--------- | | Revenues | $1,926,722 | $2,017,336 | (4)% | | Homes delivered | 2,789 | 3,021 | (8)% | | Average selling price | $690,800 | $667,600 | 3% | | Operating income | $211,735 | $248,689 | (15)% | | Operating income as % of revenues | 11.0% | 12.3% | (130) bps | Southwest Segment (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :------------------------------------ | :--------------- | :--------------- | :--------- | | Revenues | $962,486 | $954,602 | 1% | | Homes delivered | 2,020 | 2,110 | (4)% | | Average selling price | $476,500 | $452,400 | 5% | | Operating income | $171,602 | $165,489 | 4% | | Operating income as % of revenues | 17.8% | 17.3% | 50 bps | Central Segment (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :------------------------------------ | :--------------- | :--------------- | :--------- | | Revenues | $869,182 | $1,069,136 | (19)% | | Homes delivered | 2,505 | 2,971 | (16)% | | Average selling price | $347,000 | $358,800 | (3)% | | Operating income | $64,375 | $128,426 | (50)% | | Operating income as % of revenues | 7.4% | 12.0% | (460) bps | Southeast Segment (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :------------------------------------ | :--------------- | :--------------- | :--------- | | Revenues | $767,829 | $868,115 | (12)% | | Homes delivered | 1,969 | 2,089 | (6)% | | Average selling price | $389,700 | $415,600 | (6)% | | Operating income | $55,532 | $103,805 | (47)% | | Operating income as % of revenues | 7.2% | 12.0% | (480) bps | [FINANCIAL SERVICES REPORTING SEGMENT](index=35&type=section&id=FINANCIAL%20SERVICES%20REPORTING%20SEGMENT) Analyzes financial performance of the financial services segment, including revenues, pretax income, and loan originations Financial Services Segment Performance (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | YoY Change | | :---------------- | :--------------- | :--------------- | :--------- | | Revenues | $15,617 | $20,998 | (26)% | | Pretax income | $24,373 | $35,793 | (32)% | | Equity in income of unconsolidated joint venture | $13,445 | $19,422 | (31)% | KBHS Loan Originations (Nine Months Ended August 31) | Metric | 2025 | 2024 | YoY Change | | :---------------- | :--- | :--- | :--------- | | Loans | 6,630 | 7,332 | (9.6)% | | Principal (Thousands) | $2,717,138 | $2,916,804 | (6.8)% | | % of homebuyers using KBHS | 86% | 87% | (100) bps | - The decline in financial services pretax income was due to decreases in insurance commissions, title services revenues, and reduced income from the unconsolidated joint venture, KBHS, which experienced a loss in the fair value of IRLCs[159](index=159&type=chunk)[160](index=160&type=chunk) [INCOME TAXES](index=37&type=section&id=INCOME%20TAXES) Discusses income tax expense, effective tax rate, and the impact of tax credits and legislative changes Income Tax Expense and Effective Tax Rate (Nine Months Ended August 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :---------------- | :--------------- | :--------------- | | Income tax expense | $97,700 | $138,800 | | Effective tax rate | 23.0% | 23.0% | - The effective tax rate for the nine months ended August 31, 2025, remained consistent with the prior year, despite a decrease in Section 45L tax credits due to heightened qualification standards and strategic decisions[163](index=163&type=chunk)[164](index=164&type=chunk) - The repeal of Section 45L tax credits by the OBBBA will eliminate this benefit for homes delivered after June 30, 2026[165](index=165&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=37&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Reconciles GAAP and non-GAAP financial measures, focusing on adjusted housing gross profit margin Housing Gross Profit Margin Reconciliation (Nine Months Ended August 31) | Metric | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Housing gross profit margin (GAAP) | 19.2% | 21.1% | | Adjusted housing gross profit margin (Non-GAAP) | 19.6% | 21.1% | - Adjusted housing gross profit margin, which excludes inventory impairment and land option contract abandonment charges, decreased by **150 basis points** year-over-year for the nine months ended August 31, 2025[168](index=168&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses liquidity, capital resources, debt levels, and cash flow activities, including investments and repurchases Total Liquidity | Date | Amount (Thousands) | | :--- | :----------------- | | Aug 31, 2025 | $1,162,326 | | Nov 30, 2024 | $1,679,713 | - Cash and cash equivalents decreased to **$330.6 million** at August 31, 2025, from **$598.0 million** at November 30, 2024[171](index=171&type=chunk) - Investments in land and land development for the nine months ended August 31, 2025, declined **7%** year-over-year to **$1.95 billion**, with land acquisition expenditures representing **40%** of total investments[173](index=173&type=chunk) - The number of lots owned or controlled decreased by **15%** to **65,251** at August 31, 2025, largely due to homes delivered and strategic abandonment of **21,054** previously controlled lots[177](index=177&type=chunk) - The ratio of debt to capital increased to **33.2%** at August 31, 2025, from **29.4%** at November 30, 2024, due to cash borrowings under the Credit Facility[180](index=180&type=chunk) - The company was in compliance with all financial covenants under the Credit Facility and Term Loan as of August 31, 2025[188](index=188&type=chunk)[190](index=190&type=chunk) - Net cash provided by operating activities for the nine months ended August 31, 2025, was **$31.8 million**, a significant increase from **$81 thousand** in the prior year[195](index=195&type=chunk) - Stock repurchases totaled **$438.5 million** and dividend payments were **$52.8 million** for the nine months ended August 31, 2025[197](index=197&type=chunk) [Supplemental Guarantor Financial Information](index=43&type=section&id=Supplemental%20Guarantor%20Financial%20Information) Summarized financial data for guarantor subsidiaries, backing senior notes and credit facilities - Senior notes, Credit Facility borrowings, and Term Loan borrowings are guaranteed on a joint and several basis by Guarantor Subsidiaries, which are **100% owned** by KB Home[203](index=203&type=chunk)[204](index=204&type=chunk) Summarized Balance Sheet Data (Guarantor Subsidiaries, in Thousands) | Metric | Aug 31, 2025 | Nov 30, 2024 | | :-------------------------------- | :----------- | :----------- | | Cash | $274,523 | $543,233 | | Inventories | $5,240,220 | $4,981,097 | | Notes payable | $1,943,582 | $1,691,679 | | Stockholders' equity | $3,539,212 | $3,729,310 | Summarized Statement of Operations Data (Guarantor Subsidiaries, Nine Months Ended August 31, 2025, in Thousands) | Metric | Amount | | :-------------------------------- | :----- | | Revenues | $4,107,293 | | Pretax income | $399,679 | | Net income | $307,879 | [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Confirms no significant changes to critical accounting policies and estimates since the last annual report - There have been no significant changes to critical accounting policies and estimates during the nine months ended August 31, 2025, from those disclosed in the Annual Report on Form 10-K for the year ended November 30, 2024[210](index=210&type=chunk) [Recent Accounting Pronouncements](index=44&type=section&id=Recent%20Accounting%20Pronouncements) Discusses the expected impact of recent accounting pronouncements on consolidated financial statements - No recent accounting pronouncements are expected to have a material impact on the consolidated financial statements[212](index=212&type=chunk) [Outlook](index=44&type=section&id=Outlook) Company's perspective on housing market, strategic priorities, capital allocation, and financial projections for 2025 - The long-term outlook for the housing market remains favorable due to demographic trends and undersupply, despite near-term affordability concerns and cautious consumer sentiment[214](index=214&type=chunk) - The company plans to remain nimble, balancing pace and price, focusing on Built to Order homes, and managing inventory of finished lots to optimize returns and cash flow[216](index=216&type=chunk)[217](index=217&type=chunk) - Capital allocation priorities include continued investment in land and land development, scaled back to align with current conditions, and returning capital to stockholders through share repurchases[217](index=217&type=chunk)[218](index=218&type=chunk) 2025 Fourth Quarter Projections | Metric | Range | | :------------------------------------ | :-------------------- | | Housing Revenues | $1.60 billion - $1.70 billion | | Average Selling Price | $465,000 - $475,000 | | Homebuilding Operating Income Margin (excl. charges) | 8.5% - 8.9% | | Housing Gross Profit Margin (excl. charges) | 18.0% - 18.4% | | SG&A as % of Housing Revenues | 9.3% - 9.7% | | Effective Tax Rate | ~23.0% | 2025 Full Year Projections | Metric | Range/Estimate | | :------------------------------------ | :------------- | | Housing Revenues | $6.10 billion - $6.20 billion | | Average Selling Price | ~$483,000 | | Homebuilding Operating Income Margin (excl. charges) | ~8.9% | | Housing Gross Profit Margin (excl. charges) | 19.2% - 19.3% | | SG&A as % of Housing Revenues | 10.2% - 10.3% | | Effective Tax Rate | ~23.0% | | Ending Community Count | ~260 | - The company expects to repurchase between **$50.0 million** and **$150.0 million** of common stock in Q4 2025, with **$261.5 million** remaining under the current authorization[219](index=219&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk since November 30, 2024, except for Credit Facility borrowings - No material changes in market risk since November 30, 2024, except for **$250.0 million** cash borrowings outstanding under the Credit Facility[229](index=229&type=chunk) - The Credit Facility borrowing rates are subject to interest rate changes based on adjusted term SOFR or a base rate, plus a spread dependent on the consolidated leverage ratio[229](index=229&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective, and no material changes in internal control over financial reporting occurred - Disclosure controls and procedures were evaluated and deemed effective as of August 31, 2025[230](index=230&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended August 31, 2025[231](index=231&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity security sales, other information, and a list of exhibits [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 17 for a discussion of the company's legal proceedings - For a discussion of legal proceedings, refer to Note 17 – Legal Matters in the Notes to Consolidated Financial Statements[232](index=232&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended November 30, 2024[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Summarizes common stock repurchases during the three months ended August 31, 2025 Summary of Equity Securities Purchases (Three Months Ended August 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Dollar Value of Shares Purchased (Thousands) | | :----- | :----------------------------- | :--------------------------- | :----------------------------------------- | | July 1-31 | 2,135,092 | $56.20 | $119,999 | | Aug 1-31 | 1,164,407 | $58.79 | $68,461 | | **Total** | **3,299,499** | **$57.12** | **$188,460** | - As of August 31, 2025, **$261.5 million** of remaining availability existed under the **$1.00 billion** share repurchase authorization approved on April 18, 2024[236](index=236&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements adopted or terminated by directors, officers, or the company - No directors, executive officers, or the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended August 31, 2025[235](index=235&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including equity incentive plans and certifications - Exhibits include Amended and Restated KB Home 2014 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement (2025) and Restricted Stock Award Agreement (2025)[237](index=237&type=chunk)[238](index=238&type=chunk) - Certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 are included[238](index=238&type=chunk) - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents are filed[238](index=238&type=chunk) [SIGNATURES](index=51&type=section&id=SIGNATURES) Contains the required signatures for the filing of the Form 10-Q

Bill Pulte, the head of the oversight agency for Fannie Mae and Freddie Mac, signaled that he will be taking steps to follow up on President Trump's call for them to put a new focus on home construction companies.One step will involve tracking megabuilders' business, Federal Housing Finance Agency Director Pulte indicated in an X post. Pulte, who also refers to the FHFA as US Federal Housing, and Trump both frequently used social media posts to provide early hints at policy intentions.  Fannie and Freddie ...

Group 1: Company Updates - Nvidia CEO Jensen Huang will participate in the Investing Club's October Monthly Meeting, discussing topics from OpenAI to hyperscaler spending [1] - Goldman Sachs upgraded Emcor to a hold rating from neutral, raising the price target to $675 from $495, citing accelerating data center revenue [2] - Jefferies downgraded Dollar Tree to a sell rating from hold, attributing the complexity of its business to inflation, management decisions, and tariffs [4] - Evercore downgraded several homebuilder stocks, including D.R. Horton and KB Home, due to a lack of observed homebuying demand despite previous optimism [5] - Citi downgraded GE Healthcare to hold from buy, cutting the price target to $83 from $93, citing concerns over mid-single-digit revenue growth [6] - Citi rated AppLovin a buy following a 14% decline in shares due to an SEC probe, with the stock still up over 80% year-to-date [7] - Wells Fargo raised the price target for Meta Platforms to $837 from $811, driven by strong ad sales prospects [8] - JPMorgan upgraded Brinker to a buy from hold after a sell-off, although the price target was reduced to $175 from $180 [10] Group 2: Market Conditions - Stocks are expected to open little changed as the federal government shutdown continues, with President Trump open to discussions with Democrats regarding healthcare subsidies [3] - There is ongoing buying activity in Palantir, with notable interest from Robinhood and Circle, indicating a buy-everything market trend [9]