KB Home Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rafe Jadrosich - Bofa Merrill Lynch Asset Holdings Inc - Analyst : If we move historically on this third-quarter call, you've sort of given an outlook on the out here revenue, at least like a preliminary view. I understand that that's a pretty volatile environment. So it might be a little bit tougher right now. But can you maybe just help us and maybe puts and takes like kind of going into next year as you shift back to BTO, just how we might think about the revenue outlook for next year? Or if you're still providing that?

Question: Rafe Jadrosich - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. And then just on the fourth quarter, the guidance implies, I think, pretty good leverage on SG&A or at least better than normal seasonality. Can you talk about when -- do I have that right? And then maybe what's driving some of that improvement sequentially as you go into the fourth quarter?

Question: Alan Ratner - Zelman & Associates - Analyst : Thanks for all the detail so far and nice performance in a tough market. I would love to chat a little bit about the goal or the target to get back to your more historical BTO share. I think this is a market where a lot of builders that have historically been more heavy on BTO have seen that share decline and there's a lot of spec inventory out there that you're competing with. And I'm just curious, as you move towards that pivot, have you made any headway there yet either throughout this quarter or maybe even thus far in September in terms of the mix of your orders? Is it skewed a little bit more towards BTO? And I guess from a profitability perspective, can you talk about the current margin differentials between your BTO business specs today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 9:00PM, KBH.N - Q3 2025 KB Home Earnings Call

Question: Alan Ratner - Zelman & Associates - Analyst : Got it. That's really helpful, Rob. And then in terms of the 4Q margin guide, I think if I'm doing the math, it's down about 70 bps sequentially. Given your comments about pricing being pretty stable through the quarter in the majority of your communities, should I interpret that sequential decline as more kind of flushing through some of the remaining spec you have and that mix headwind? And then hopefully, as you get into '26, that reverses?

Question: Elizabeth Langan - Barclays Services Corp - Analyst : You have Elizabeth Langan for Matt today. I was wondering if you could touch -- you mentioned that you've had success in lowering direct costs. I was wondering if you could touch on what those direct costs are? And like if there are any categories that you would call out where you're having a little bit more success with that?

Question: Elizabeth Langan - Barclays Services Corp - Analyst : Okay, thank you. And just to kind of follow up on the general dynamics of those negotiations, is that something that would carry on into 2026 in terms of seeing those benefits? Or is it something worth more real time and so you might see depending on the demand and if there's a recovery in starts next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 9:00PM, KBH.N - Q3 2025 KB Home Earnings Call

Question: Andrew Azzi - JPMorgan Chase & Co - Analyst : This is Andrew Azzi on for Michael. I'll start to drill down a little bit in terms of the inventory charges and such. If you could comment on the land environment and your ability to find new lots for future growth, especially as the industry is kind of developing a much stronger appetite for the land-light model?

Question: Andrew Azzi - JPMorgan Chase & Co - Analyst : That makes a lot of sense. I appreciate that. And are there any kind of markets where you're seeing -- I'd love to kind of drill down to see how things are progressing by markets, if you can make a few call-outs, and if you're seeing any -- specifically any increased competition from resale or anything like that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 9:00PM, KBH.N - Q3 2025 KB Home Earnings Call

Question: Trevor Allinson - Wolfe Research LLC - Analyst : I want to ask a question about the Southeast region, specifically, order prices were down almost 6% sequentially, but volumes are actually quite good. They were up about 7% quarter over quarter, Rob, I think you were just referring to some of that in Florida. It's quite a bit better than normal seasonality. You've talked about not chasing volume, but was the strategy different in the Southeast in the quarter just to liquidate some inventory? Or what drove the order ramp there, but a pretty big ASP decline sequentially?

Question: Trevor Allinson - Wolfe Research LLC - Analyst : Okay. Makes a lot of sense. And then Jeff, I wanted to follow up on your comment about starting to see land prices soften. Can you just talk about how widespread that is? Any specific geographies where that's most common? And can you help us with some sort of number on the magnitude of the declines that you're seeing in the market (inaudible)?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : My first question is on the design studios. As you think about the shift back to more BTO, can you talk about how you can position the design studios? Is there anything that you're focused on from that element of the business in order to help drive that shift and attract the consumer back to that side of the business relative to the specs that are out there.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yes. Okay. That's helpful. And then maybe turning to capital allocation. You mentioned the continued focus on shareholder returns, especially the share repurchases. Just any thoughts on how we should be thinking about the magnitude and what we can expect there as we finish up this year and look to the next year and how you're balancing that relative to the budget that you've put out for land development and acquisitions?