Financial Data and Key Metrics Changes - Total revenues for the first quarter of fiscal 2026 were approximately $1.1 billion, with diluted earnings per share at $0.52, reflecting a 23% year-over-year decrease in housing revenues [5][28]. - Housing gross profit margin was reported at 15.3%, with an adjusted housing gross profit margin of 15.5%, down 480 basis points year-over-year due to pricing pressure and higher land costs [29][30]. - The company returned almost $70 million in capital to shareholders in the first quarter, including share repurchases and dividends [6][38]. Business Line Data and Key Metrics Changes - The company delivered 2,370 homes in the first quarter, which was near the midpoint of guidance but below expectations needed to maintain prior full-year delivery guidance [28][30]. - The average selling price (ASP) declined by 10% to $452,000, influenced by regional and product mix [29]. - Built to Order (BTO) homes represented 44% of net orders in October, increasing to 68% by February and above 70% in early March, which typically generates higher gross margins [12][13]. Market Data and Key Metrics Changes - The company ended the first quarter with 276 active communities, an 8% increase year-over-year, and achieved 37 grand openings [19]. - The company noted that consumer confidence remains tepid due to elevated mortgage rates and affordability pressures, compounded by geopolitical tensions [10][11]. - The company anticipates a more favorable regional mix in the second half of the year, particularly from Northern California, which has historically higher ASPs and margins [16][17]. Company Strategy and Development Direction - The company is refocusing on its core Built to Order strategy, which is expected to enhance predictability in deliveries and improve gross margins [4][12]. - The company plans to continue its share repurchase program, with $50 million to $100 million of repurchases planned for the second quarter [26][38]. - The long-term strategy includes managing capital effectively while expanding market share in existing markets, with a focus on land investments to support growth [25][36]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term housing market, citing favorable demographics and structural undersupply of homes, despite current market challenges [10][11]. - The company is lowering its full-year delivery guidance due to lower net orders in the first quarter and ongoing market uncertainties [6][30]. - Management highlighted the importance of operational execution and adherence to the Built to Order model to navigate market conditions effectively [22][26]. Other Important Information - The company has a favorable lot position, owning or controlling over 63,000 lots, with a balanced production of homes in process [25][36]. - The company has taken steps to reduce costs, including a 10% year-over-year headcount reduction, which is expected to positively impact the SG&A ratio in the second half of 2026 [23][30]. - The company maintains a strong balance sheet with total liquidity of $1.2 billion and no debt maturities until June 2027 [37][38]. Q&A Session Summary Question: What does the shift back to Built to Order do for the business? - Management indicated that the shift to Built to Order enhances predictability and allows for better cash management, as homes sold not started provide a consistent production cadence [41][43]. Question: What drove the guidance change for the year? - The guidance change was attributed to lower than expected orders and recent market shifts, including geopolitical tensions affecting consumer confidence [45][47]. Question: What is the outlook for gross margins in the second quarter? - Management expects gross margins to be under pressure in the second quarter but anticipates improvements in the second half due to a higher mix of Built to Order homes and favorable regional dynamics [49][53]. Question: How is the company managing pricing in the current market? - The company reported that about 70% of communities had stable or increasing prices, while 30% experienced price reductions to optimize sales [80]. Question: How is the company addressing potential risks from rising mortgage rates? - Management is evaluating customer deposits and may adjust them based on market conditions, emphasizing the value created through the personalized home buying process [68][70].

Company Overview - KB Home has built approximately 700,000 homes since its founding in 1957[5] - The company operates in 49 major markets across 9 states[8] - KB Home has returned over $1.9 billion to stockholders through repurchases and dividends since Q3 2021[11] Q4 2025 Financial Highlights - Housing revenues totaled $1.68 billion, a decrease of 16% compared to $1.99 billion in Q4 2024[52] - Deliveries decreased by 9% to 3,619 homes, compared to 3,978 homes in Q4 2024[52] - The average selling price decreased by 7% to $465,600, compared to $501,000 in Q4 2024[52] - Net orders decreased by 10% to 2,414, compared to 2,688 in Q4 2024[52] - Backlog value decreased by 37% to $1.40 billion, compared to $2.24 billion in Q4 2024[52] - Book value per share increased 10% to $61.75[52] Capital Allocation and Balance Sheet - The company repurchased approximately 1.6 million shares of its outstanding common stock at a total cost of $100 million during the quarter[52] - Total liquidity was $1.4 billion, including $228.6 million of cash and cash equivalents and nearly $1.2 billion of available capacity under the company's unsecured revolving credit facility[52] - Share repurchases totaled $538 million in 2025[41]