Shares of KB Home (NYSE: KBH ) have been an extremely poor performer over the past year, losing 27% of their value, as concerns about the housing market have mounted. With its focus on first-time homebuyers, KBH’s business isOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me know!Analyst’s Di ...

Core Viewpoint - KB Home reported quarterly earnings of $1.50 per share, exceeding the Zacks Consensus Estimate of $1.45 per share, but down from $2.15 per share a year ago, indicating a decline in profitability [1] - The company posted revenues of $1.53 billion for the quarter, surpassing the Zacks Consensus Estimate by 2.30%, but down from $1.71 billion year-over-year [2] Earnings Performance - The earnings surprise for the recent quarter was +3.45%, while the previous quarter saw a surprise of -4.49% [1][2] - Over the last four quarters, KB Home has surpassed consensus EPS estimates two times and revenue estimates three times [2] Stock Performance - KB Home shares have declined approximately 21.3% since the beginning of the year, contrasting with the S&P 500's gain of 1.5% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates of $1.90 for the upcoming quarter and $7.05 for the current fiscal year [7] - The Zacks Rank for KB Home is currently 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Building Products - Home Builders industry is currently ranked in the bottom 9% of over 250 Zacks industries, suggesting a challenging environment for companies in this sector [8]

Financial Data and Key Metrics Changes - The company reported total revenues of $1.5 billion and diluted earnings per share of $1.5 for the second quarter, exceeding delivery expectations due to improved build times [9][32] - Gross margin was 19.7%, excluding inventory-related charges, which was above guidance [9][33] - Book value per share increased to nearly $59, reflecting a 10% year-over-year increase [9][42] Business Line Data and Key Metrics Changes - The company generated 3,460 net orders in the second quarter, with a monthly absorption pace of 4.5 net orders per community, down from 5.5 in the previous year [10][19] - Average selling price increased to approximately $489,000 year-over-year, despite mixed performance across regions [32] - Homebuilding revenues decreased by 10% from the prior year, totaling $1.52 billion [32] Market Data and Key Metrics Changes - The housing market outlook remains favorable long-term, driven by demographics and an undersupply of homes, but short-term consumer confidence is low due to affordability challenges and high mortgage rates [7][8] - The company experienced a decline in net orders in April and May, which did not follow the typical spring trajectory [10][18] - Active communities increased by 2% year-over-year, contributing to a backlog of 4,776 homes valued at $2.3 billion [19] Company Strategy and Development Direction - The company is focusing on optimizing assets to generate higher returns by balancing pace and price on a community-by-community basis [11][12] - A shift back to a built-to-order model is planned, aiming to enhance customer choice and satisfaction [13][14] - The company is scaling back land-related investments to align with current market conditions while maintaining a healthy lot pipeline for future growth [28][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the need to adjust guidance for fiscal 2025 due to softer market conditions and net order results [14][35] - The company is committed to managing costs and improving build times, with a goal of achieving a 120-day build time [21][22] - Management expressed confidence in navigating current market conditions and supporting affordability for buyers [25][30] Other Important Information - The company repurchased $200 million of shares in the second quarter, with plans to continue repurchases in the third quarter [6][29] - Total liquidity at quarter-end was $1.2 billion, including $309 million in cash [40][41] - The company has returned over $1.59 billion to shareholders in the form of dividends and share repurchases over the past four years [42][43] Q&A Session Summary Question: What steps are being taken to reduce SG&A costs? - Management is adjusting headcount to align with new revenue projections and exploring various cost-saving measures [45][46][47] Question: What are the drivers behind the gross margin outlook? - The reduction in gross margin is attributed to operating leverage, land costs, and regional mix, with some offset from lower construction costs [48][49][50] Question: How will backlog turnover and absorption be managed? - Management aims for high backlog turnover ratios and expects to cover inventory through sales, similar to previous years [56][58][59] Question: What impact did community delays have on order pace? - Delays in community openings likely resulted in missing a couple hundred sales, affecting overall order pace [62][63] Question: How is the company addressing land inflation and pricing? - Management noted that land inflation is influenced by various factors, including entitlement and improvement costs, and is monitoring market conditions for potential relief [97][98]

Financial Data and Key Metrics Changes - The company reported total revenues of $1.5 billion and diluted earnings per share of $1.5 for the second quarter, exceeding delivery expectations due to faster build times [7][30] - Gross margin was 19.7%, excluding inventory-related charges, which was above the guidance range [7][31] - Book value per share increased to nearly $59, reflecting a 10% year-over-year increase [7][40] Business Line Data and Key Metrics Changes - The company generated 3,460 net orders in the second quarter, with a monthly absorption pace of 4.5 net orders per community, down from 5.5 in the previous year [8][18] - Average selling price increased to approximately $489,000 year-over-year, despite mixed performance across regions [30][31] - Homebuilding operating income decreased to $131 million, with a margin of 9% [33] Market Data and Key Metrics Changes - The housing market outlook remains favorable long-term, driven by demographics and an undersupply of homes, but short-term consumer confidence is low due to economic uncertainties [6][12] - The company experienced a decline in net orders in April and May, attributed to rising mortgage rates and geopolitical tensions [6][15] - Active communities increased by 2% year-over-year, contributing to a backlog of 4,776 homes valued at $2.3 billion [18] Company Strategy and Development Direction - The company is focusing on optimizing assets to balance pace and price on a community-by-community basis, aiming for a built-to-order model to enhance customer choice and satisfaction [10][12] - A strategic shift towards reducing land investment spend was noted, with a focus on returning capital to shareholders through share repurchases [26][28] - The company plans to maintain approximately 250 active communities for the remainder of fiscal 2025, with a goal to return to a historical mix of built-to-order homes [12][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the need to adjust guidance for fiscal 2025 due to softer market conditions and lower net order results [13][34] - The company is committed to managing costs and improving build times, with expectations for a third-quarter average selling price between $470,000 and $480,000 [34][35] - The management expressed confidence in navigating current market conditions while supporting affordability for buyers [23][28] Other Important Information - The company repurchased $200 million of shares in the second quarter, with plans to repurchase an additional $100 million to $200 million in the third quarter [27][40] - The company maintained a strong balance sheet with total liquidity of $1.2 billion, including cash and available credit [38][39] - The average cash down payment from buyers remained stable at 16%, with a household income of about $136,000 [23] Q&A Session Summary Question: What steps is the company taking to reduce fixed overhead costs? - The company is adjusting headcount to align with new revenue projections and exploring various cost-saving measures to bring the SG&A ratio back below 10% [43][44] Question: What are the drivers behind the gross margin outlook? - The gross margin outlook was impacted by operating leverage, land costs, and regional mix, with construction cost reductions partially offsetting pricing pressures [46][48] Question: How does the company view the backlog and its implications for growth? - The company expects to grow the backlog and hit an inflection point, with strategies in place to optimize sales and deliveries [78][79] Question: How is the company addressing community delays and their impact on orders? - Community delays significantly impacted order pace, with management noting that they missed a couple of hundred sales due to these delays [60][61] Question: What is the company's strategy regarding pricing and incentives? - The company is focused on optimizing base prices rather than relying on incentives, aiming to provide transparent value to customers [86][88]

[Financial & Operational Highlights](index=1&type=section&id=KB%20HOME%20REPORTS%202025%20SECOND%20QUARTER%20RESULTS) KB Home reported solid Q2 2025 results, meeting guidance, with strategic focus on operational efficiency and capital allocation shifts towards share repurchases Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Revenues** | $1.53 billion | $1.71 billion | | **Homes Delivered** | 3,120 | 3,523 | | **Average Selling Price** | $488,700 | $483,000 | | **Diluted EPS** | $1.50 | $2.15 | [CEO Commentary and Strategy](index=1&type=section&id=CEO%20Commentary%20and%20Strategy) Management reported solid Q2 2025 results, focusing on operational efficiency and shifting capital allocation towards share repurchases amid softer market conditions - The company is navigating a softer market by focusing on lowering **build times** and reducing **direct construction costs** to strengthen the business[3](index=3&type=chunk) - In response to market conditions and a strong land pipeline, the company is shifting its capital allocation strategy to reduce **land acquisition and development investments** while increasing **share repurchases**[3](index=3&type=chunk) - The company repurchased **$200 million** of common stock in Q2 at an average price of approximately **$54 per share**, below its current book value[3](index=3&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company experienced year-over-year declines in Q2 and H1 2025 revenues, net income, and homes delivered, alongside a decrease in net orders and backlog value [Second Quarter 2025 Results (vs. Q2 2024)](index=1&type=section&id=Three%20Months%20Ended%20May%2031%2C%202025) Q2 2025 saw year-over-year declines in revenues, homes delivered, and net income, driven by lower housing gross profit margin and higher SG&A expenses Q2 2025 Financial Performance Overview | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $1.53B | $1.71B | -10.5% | | Homes Delivered | 3,120 | 3,523 | -11% | | Homebuilding Operating Income | $131.5M | $188.2M | -30.1% | | Net Income | $107.9M | $168.4M | -36% | | Diluted EPS | $1.50 | $2.15 | -30% | - The housing gross profit margin decreased to **19.3%** from **21.1%** year-over-year, with the adjusted margin at **19.7%** due to price reductions and higher land costs[4](index=4&type=chunk) - Financial services pretax income fell to **$8.2 million** from **$13.3 million**, primarily due to lower income from the mortgage banking joint venture[8](index=8&type=chunk) [Six Months Ended 2025 Results (vs. 2024)](index=2&type=section&id=Six%20Months%20Ended%20May%2031%2C%202025) H1 2025 revenues decreased to $2.92 billion, with homes delivered down 10%, while net income and diluted EPS declined by 29% and 23% respectively H1 2025 Financial Performance Overview | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $2.92B | $3.18B | -8.2% | | Homes Delivered | 5,890 | 6,560 | -10% | | Average Selling Price | $494,400 | $481,700 | +3% | | Net Income | $217.4M | $307.1M | -29% | | Diluted EPS | $3.00 | $3.91 | -23% | [Net Orders and Backlog](index=2&type=section&id=Net%20Orders%20and%20Backlog) Q2 net orders decreased 13% year-over-year, with ending backlog value down 27% to $2.29 billion and cancellation rate increasing to 16% Net Orders and Backlog Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Orders (Units) | 3,460 | 3,997 | -13% | | Ending Backlog (Units) | 4,776 | 6,270 | -24% | | Ending Backlog Value | $2.29B | $3.12B | -27% | | Cancellation Rate | 16% | 13% | +3 p.p. | - The average community count increased **5%** to **254**, while monthly net orders per community decreased to **4.5** from **5.5** year-over-year[8](index=8&type=chunk) [Financial Position & Capital Allocation](index=2&type=section&id=Financial%20Position%20%26%20Capital%20Allocation) This section details the company's balance sheet, liquidity, and strategic capital allocation, including significant share repurchases and land investments [Balance Sheet Highlights](index=2&type=section&id=Balance%20Sheet%20as%20of%20May%2031%2C%202025) As of May 31, 2025, total liquidity was $1.19 billion, inventories grew 7% to $5.91 billion, and the debt-to-capital ratio increased to 32.2% Balance Sheet Summary | Balance Sheet Metric | May 31, 2025 | Nov 30, 2024 | | :--- | :--- | :--- | | Total Liquidity | $1.19B | N/A | | Cash and Cash Equivalents | $308.9M | $598.0M | | Inventories | $5.91B | $5.53B | | Notes Payable | $1.89B | $1.69B | | Debt to Capital Ratio | 32.2% | 29.4% | - The company's total lots owned or under contract increased **14%** year-over-year to **74,837**, with **53%** owned and **47%** under contract[8](index=8&type=chunk) [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) The company demonstrated strong commitment to shareholder returns in H1 2025, repurchasing $200 million of stock in Q2 and increasing book value per share by 10% - In Q2 2025, the company repurchased **3.7 million shares** for **$200.0 million** at an average price of **$53.55 per share**[13](index=13&type=chunk) - For the first half of 2025, total repurchases amounted to **4.5 million shares** at a cost of **$250.0 million**[13](index=13&type=chunk) - As of May 31, 2025, **$450.0 million** remained available under the stock repurchase authorization, and book value per share increased **10%** year-over-year to **$58.64**[13](index=13&type=chunk) [Business Outlook (Full Year 2025)](index=3&type=section&id=Guidance) This section provides the company's full-year 2025 guidance for key financial and operational metrics, including revenues, margins, and community count Full Year 2025 Guidance | FY 2025 Guidance | Range | | :--- | :--- | | **Housing Revenues** | $6.30B - $6.50B | | **Average Selling Price** | $480,000 - $490,000 | | **Homebuilding Operating Margin** | 8.6% - 9.0% | | **Housing Gross Profit Margin** | 19.0% - 19.4% | | **SG&A as % of Housing Revenues** | 10.2% - 10.6% | | **Effective Tax Rate** | Approx. 24% | | **Ending Community Count** | Approx. 250 | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated financial statements, including detailed statements of operations and balance sheets for the reported periods [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated statements of operations detail Q2 2025 financial performance, showing total revenues of $1.53 billion and net income of $107.9 million, both declining year-over-year Consolidated Statements of Operations (In Thousands) | (In Thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | $1,529,585 | $1,709,813 | | **Total pretax income** | $142,383 | $221,119 | | **Net income** | $107,883 | $168,419 | | **Diluted EPS** | $1.50 | $2.15 | [Consolidated Balance Sheets](index=6&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of May 31, 2025, total assets were $7.02 billion, driven by increased inventories and notes payable, while cash and equivalents decreased Consolidated Balance Sheets (In Thousands) | (In Thousands) | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | **Total assets** | $7,017,596 | $6,936,169 | | Cash and cash equivalents | $308,861 | $597,973 | | Inventories | $5,913,348 | $5,528,020 | | **Total liabilities** | $3,027,058 | $2,875,553 | | Notes payable | $1,892,941 | $1,691,679 | | **Total stockholders' equity** | $3,990,538 | $4,060,616 | [Supplemental Information](index=7&type=section&id=SUPPLEMENTAL%20INFORMATION) This section provides supplemental operational metrics broken down by region, highlighting varied performance across different geographic areas [Operational Metrics by Region](index=7&type=section&id=Operational%20Metrics%20by%20Region) Q2 2025 regional data shows varied performance, with West Coast having highest ASP, Central delivering most homes, and Southeast being the only region with increased net orders Homes Delivered by Region (Q2) | Homes Delivered (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | West Coast | 968 | 1,043 | | Southwest | 661 | 712 | | Central | 811 | 1,028 | | Southeast | 680 | 740 | Net Orders by Region (Q2) | Net Orders (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | West Coast | 1,104 | 1,226 | | Southwest | 557 | 785 | | Central | 1,030 | 1,300 | | Southeast | 769 | 686 | Backlog Value by Region (as of May 31) | Backlog Value (as of May 31) | 2025 | 2024 | | :--- | :--- | :--- | | Total | $2.29B | $3.12B | [Non-GAAP Financial Measures Reconciliation](index=9&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section provides reconciliations of non-GAAP financial measures, specifically adjusted housing gross profit margin, to their most directly comparable GAAP measures [Adjusted Housing Gross Profit Margin](index=9&type=section&id=Adjusted%20Housing%20Gross%20Profit%20Margin) The adjusted housing gross profit margin, a non-GAAP measure, was 19.7% in Q2 2025, excluding inventory-related charges, providing insight into core operational profitability - The company calculates adjusted housing gross profit margin by excluding **inventory impairment** and **land option contract abandonment charges** to better measure profits and aid competitor comparison[26](index=26&type=chunk) Adjusted Housing Gross Profit Margin Reconciliation | Margin Reconciliation | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :--- | :--- | :--- | | Housing gross profit margin (GAAP) | 19.3% | 21.1% | | Inventory-related charges | +0.4% | +0.1% | | **Adjusted housing gross profit margin (Non-GAAP)** | **19.7%** | **21.2%** |

In the latest trading session, KB Home (KBH) closed at $50.61, marking a -4.49% move from the previous day. The stock trailed the S&P 500, which registered a daily loss of 0.84%. Meanwhile, the Dow lost 0.7%, and the Nasdaq, a tech-heavy index, lost 0.91%. Heading into today, shares of the homebuilder had lost 3.74% over the past month, outpacing the Construction sector's loss of 0% and lagging the S&P 500's gain of 1.44%.The investment community will be closely monitoring the performance of KB Home in its ...

Core Viewpoint - Analysts forecast a significant decline in KB Home's quarterly earnings and revenues, indicating potential challenges for the company in the upcoming earnings release [1]. Group 1: Earnings and Revenue Estimates - KB Home is expected to report earnings of $1.45 per share, reflecting a year-over-year decline of 32.6% [1]. - Anticipated revenues are projected at $1.5 billion, which represents a decline of 12.6% compared to the same quarter last year [1]. - The estimate for 'Total Revenues- Homebuilding' is $1.49 billion, indicating a year-over-year change of -12.6% [4]. - 'Total Revenues- Financial services' is expected to be $6.65 million, suggesting a year-over-year decline of 19.9% [5]. Group 2: Key Metrics and Performance Indicators - Analysts predict 'Backlog - Units' to reach 5,089, down from 6,270 a year ago [5]. - The 'Average selling price' is estimated at $487.12 million, slightly up from $483 million in the same quarter last year [6]. - 'Net orders - Units' are forecasted to be 3,723, compared to 3,997 in the previous year [6]. - 'Unit deliveries - Total Homes' are projected at 3,070, down from 3,523 in the same quarter last year [6]. Group 3: Income and Financial Metrics - 'Operating Income- Homebuilding' is expected to be $124.01 million, down from $188.18 million in the same quarter last year [8]. - 'Homebuilding pretax income' is estimated at $130.44 million, compared to $207.86 million a year ago [8]. - The consensus estimate for 'Financial services pretax income' stands at $10.19 million, down from $13.26 million in the same quarter last year [7]. Group 4: Market Performance - KB Home shares have decreased by 3.7% over the past month, contrasting with a 1.4% increase in the Zacks S&P 500 composite [8]. - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near future [8].

Core Viewpoint - Investors in KB Home should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the January 16, 2026 $35 Call option [1] Group 1: Implied Volatility - Implied volatility indicates the market's expectation of future price movement, with high levels suggesting a potential significant move or an upcoming event that could lead to a rally or sell-off [2] - The current high implied volatility for KB Home options may signal a developing trading opportunity, as options traders often seek to sell premium on such options [4] Group 2: Analyst Sentiment - KB Home currently holds a Zacks Rank of 3 (Hold) within the Building Products - Home Builders industry, which is in the bottom 10% of the Zacks Industry Rank [3] - Over the past 60 days, no analysts have increased earnings estimates for the current quarter, while two have lowered their estimates, resulting in a decrease of the Zacks Consensus Estimate from $1.58 to $1.45 per share [3]

Core Viewpoint - KB Home shares have declined approximately 8.4% since the last earnings report, although this performance has outpaced the S&P 500 [1] Group 1: Earnings Report and Estimates - Fresh estimates for KB Home have trended downward over the past month, with the consensus estimate decreasing by 25.3% [2] - The overall outlook indicates a downward shift in estimates, leading to a Zacks Rank of 4 (Sell) for KB Home, suggesting expectations of below-average returns in the coming months [4] Group 2: VGM Scores - KB Home currently holds a subpar Growth Score of D and a Momentum Score of F, while achieving a Value Score of B, placing it in the top 40% for this investment strategy [3] - The aggregate VGM Score for KB Home is C, which is relevant for investors not focused on a single strategy [3]

Financial Performance - Homebuilding revenues for Q1 2025 decreased by 5% year over year to $1.39 billion, with a 9% decrease in homes delivered to 2,770[107]. - Net income for Q1 2025 was $109.6 million, down 21% from the previous year, and diluted earnings per share decreased by 15% to $1.49[107]. - Operating income for Q1 2025 was $127.3 million, down 19% year over year, with operating income as a percentage of revenues at 9.2% compared to 10.8% in the prior year[110]. - Interest income for Q1 2025 was $2.1 million, a decrease from $5.9 million in the same quarter last year, due to lower average balances and interest rates[121]. - Financial services revenues decreased by 22% year-over-year to $4.7 million, primarily due to declines in insurance commissions and title services revenues[140]. - The equity in income of the unconsolidated joint venture for financial services was $4.3 million, down from $7.1 million in the prior year, reflecting a loss in fair value of IRLCs[141]. - In the first quarter of 2025, the company reported revenues of $1.28 billion, with a net income of $106.8 million, reflecting a pretax income of $136.4 million[182]. Sales and Orders - The company experienced a 17% year-over-year decline in net orders, totaling 2,772 for Q1 2025, with a monthly net order pace per community of 3.6 compared to 4.6[108]. - Net orders for Q1 2025 decreased by 17% year-over-year, totaling 2,772, compared to 3,323 in Q1 2024[124]. - The net order value for Q1 2025 was $1,346,067, reflecting a 15% decline from $1,582,191 in Q1 2024[127]. - The cancellation rate increased to 16% in Q1 2025 from 14% in Q1 2024, indicating a slight rise in contract cancellations[130]. - The company implemented targeted sales strategies, including mortgage-related concessions and selective price reductions, to stimulate demand[109]. - The company implemented targeted sales strategies, including mortgage-related concessions, to improve affordability and stimulate demand[125]. Backlog and Inventory - The ending backlog value decreased by 21% year over year to approximately $2.20 billion, reflecting a soft start to the Spring selling season[113]. - Ending backlog of homes decreased by 23% year-over-year to 4,436 homes, with a backlog value of $2,201,933, down 21% from $2,791,744[128]. - The ending community count grew by 7% year-over-year to 255, with an average community count also increasing by 7%[129]. Market Segments - Revenues for the West Coast segment increased by 8% to $601,649, while operating income remained nearly flat at $66,492[134]. - The Southwest segment reported a 3% decline in revenues to $312,879, but operating income increased by 5% to $58,775[135]. - Central segment revenues for the three months ended February 28, 2025, were $275.6 million, a 14% decrease from $320.5 million in the prior year[136]. - Southeast segment revenues for the same period were $196.9 million, down 24% from $259.8 million year-over-year[137]. - The backlog value decline was observed across all homebuilding reporting segments, with the Southeast segment experiencing a 25% decrease[128]. - Operating income for the Central segment declined 34% to $25.5 million, while the Southeast segment's operating income fell 59% to $13.1 million[136][137]. - The average selling price in the Central segment increased by 1% to $367,000, while in the Southeast segment, it decreased by 4% to $400,200[136][137]. Investments and Liquidity - Investments in land and land development increased by 57% year over year to $920.3 million, while share repurchases totaled 753,939 shares at a cost of $50 million[112]. - Cash and cash equivalents totaled $267.8 million as of February 28, 2025, down from $598.0 million at November 30, 2024[149]. - Total liquidity decreased to $1,249,573 thousand as of February 28, 2025, compared to $1,679,713 thousand on November 30, 2024[157]. - The company plans to continue investing in land positions within attractive submarkets throughout 2025, depending on market conditions[154]. - The carrying value of lots owned or controlled under land option contracts increased by 7% to $5,942,547 thousand as of February 28, 2025, compared to $5,528,020 thousand on November 30, 2024[155]. - The total number of lots owned or controlled increased by 2% to 78,233 lots as of February 28, 2025, from 76,703 lots on November 30, 2024[155]. - The company had $100.0 million in cash borrowings under the Credit Facility as of February 28, 2025[160]. Future Outlook - The company expects housing revenues for the second quarter of 2025 to be between $1.45 billion and $1.55 billion, compared to $1.70 billion in the same quarter of 2024[195]. - The anticipated average selling price for homes in the second quarter of 2025 is approximately $488,000, compared to $483,000 in the prior year[195]. - The company projects a homebuilding operating income margin of approximately 8.5% for the second quarter of 2025, down from 11.1% in the same quarter of 2024[195]. - For the full year 2025, the company expects housing revenues to range from $6.60 billion to $7.00 billion, compared to $6.90 billion in 2024[195]. - The company plans to continue investing in land positions while anticipating a sequential decrease in land-related investments in the second quarter of 2025[191]. - The effective tax rate for the second quarter of 2025 is expected to be approximately 24.0%, compared to 23.8% in the same quarter of 2024[195]. Risks and Challenges - The company is subject to risks including general economic conditions, population growth, and conditions in capital markets[199]. - The company faces potential increases in material and trade costs, particularly for ENERGY STAR certified homes[199]. - The company is impacted by changes in interest rates set by the Federal Reserve, which may affect mortgage loans[200]. - The company must navigate competition from other sellers of new and resale homes[200]. - The company is exposed to risks from regulatory instability and changes in government policies affecting the housing market[200]. - The company has to manage the availability and cost of land in desirable areas for new home developments[200]. - The company is at risk from disruptions in supply chains due to geopolitical conflicts and sanctions[200]. - The company has to comply with regulatory requirements that may incur additional costs or liabilities[200].