Risk Factors Dashboard
Once a year, publicly traded companies issue a comprehensive report of their business, called a 10-K. A component mandated in the 10-K is the ‘Risk Factors’ section, where companies disclose any major potential risks that they may face. This dashboard highlights all major changes and additions in new 10K reports, allowing investors to quickly identify new potential risks and opportunities.
View risk factors by ticker
Search filings by term
Risk Factors - KBH
-New additions in green
-Changes in blue
-Hover to see similar sentence in last filing
$KBH Risk Factor changes from 00/01/24/25/2025 to 00/01/23/26/2026
Item 1A.RISK FACTORSAlthough we have operated through a number of varying economic cycles, there are several risks that could affect our ability to conduct our business, which we discuss below. If any of these risks materialize, they could, among other things, (a) materially and adversely impact our results of operations and consolidated financial statements; and (b) cause our results to differ materially from the forward-looking and other statements we make in our SEC filings; in our news releases and other public reports and communications, including those we post on or make available through our websites or other electronic channels; or orally through our personnel and representatives. These risks, and other factors outside of our control, could also create or increase volatility in our common stock’s market price. The order in which we discuss the risks below should not be taken as any indication of their relative importance, likelihood or impact.Consumer Demand Risks.16 Consumer Demand Risks. The following could negatively affect consumer demand for our products, thereby unfavorably impacting our net orders, homes delivered, average selling prices, revenues and/or profitability:•Soft or negative economic or housing market conditions. Adverse conditions in our served markets or nationally could be caused or worsened by factors outside of our control, including slow or negative economic growth, or growth concentrated in a few business sectors outside of housing; sustained elevated mortgage interest rates and inflation; high consumer debt levels; and other macroeconomic and geopolitical concerns, such as the military conflict in Ukraine, lingering economic and financial market impacts from the prolonged shutdown of the federal government’s operations in October and November 2025, which may be compounded if Congress cannot agree on, or the President does not approve, a budget to fully fund the government beyond January 30, 2026, as well as the delay or cancellation of federal funding to certain states, particularly California. Among other impacts, a severe or sustained economic contraction may negatively impact housing demand, exacerbate ongoing housing affordability challenges, decrease traffic at our communities and/or trigger a rise in home sales contract cancellations, resulting in fewer net orders as compared to corresponding year-earlier periods. Among other impacts, a severe or sustained economic contraction may trigger a rise in home sales contract cancellations, which we and the homebuilding industry experienced in our 2022 second half and 2023 first quarter, resulting in significantly lower net orders as compared to corresponding year-earlier periods. In addition, these conditions, along with heightened competition from other homebuilders and sellers and landlords of existing homes, as discussed below, may lead us to reduce our home selling prices or offer other concessions (such as mortgage interest rate buydowns) to attract or retain buyers. In addition, these conditions, along with heightened competition from other homebuilders and sellers and landlords of existing homes, as discussed below, may lead us to reduce our home selling prices or offer other concessions to attract or retain buyers, which we did selectively in 2024 and 2023 (particularly, mortgage-related concessions such as interest rate buydowns), and expect to continue doing in 2025 to varying degrees, negatively affecting our revenues and margins and, to the extent the concessions we offer are not sufficient to attract and retain buyers, our net orders. Since mid-February 2025, we have focused on delivering the most compelling value to our buyers through pricing transparency and a simplified sales approach to help stimulate demand. We both reduced selling prices relative to applicable market conditions and lowered or eliminated other homebuyer concessions. While we believe this approach drove higher traffic to our communities and stabilized demand after its implementation relative to the start of our 2025 fiscal year, an extended downturn in the U.S. housing market could result in an oversupply of new home and resale 17 inventory and greater foreclosure activity, which would further impair our ability to sell homes at the same volume, prices and margins as in prior periods. housing market could result in an oversupply of new home and resale inventory and greater foreclosure activity, which would further impair our ability to sell homes at the same volume, prices and margins as in prior periods. Additionally, we can offer no assurance that our current pricing strategy, and any changes we may implement thereto, including whether we offer or increase any concessions to homebuyers, will improve or sustain demand relative to 2025 levels or our expectations for 2026 and beyond.•Reduced employment levels and job and wage growth. While unemployment rates remained steady in 2024 and through the 2025 first half, the 2025 second half was marked by slower job and wage growth, as well as a gradual rise in the unemployment rate, which may be indicative of a cooling labor market. An increase in unemployment levels, as well as buyers hesitating on making purchase decisions due to, among other things, tepid consumer confidence, may lead to an increase in loan delinquencies and foreclosures, more resale homes on the market and diminished demand for new homes, including our homes. If it does, our core first-time and first move-up homebuyer segments could be particularly affected, impacting us more severely than homebuilders targeting a different buyer demographic.•Lower population growth, household formations or other unfavorable demographic changes. We continue to view the long-term outlook for the housing market favorably, based largely on demographic trends and the continued undersupply of homes. However, if there is less population growth or demographic trends are not as positive as we expect, potentially driven by, among other things, birth rate changes, economic factors or U.S. immigration policies, demand for new homes, including our homes, could be below the long-term forecasts in our business plans and/or result in our not achieving the same or better growth and financial performance in 2026 and beyond as we did in prior periods.•Lack of available affordable housing. Elevated mortgage loan interest rates in 2024 and 2025, and the extended undersupply of homes, among other factors, have strained housing affordability and raised demand for lower-priced homes. In response, we introduced smaller floor plans and offer attached homes, townhomes, and condominiums, especially in our in-fill communities, to provide more affordable options. However, continued affordability challenges, particularly among entry-level homebuyers who are our primary customers, may require us to lower selling prices or offer other concessions to generate net orders, potentially reducing our revenues and profit margins.•Diminished consumer confidence, whether generally or as to purchasing a home. Consumers may be reluctant to purchase a home compared to housing alternatives (such as renting apartments or homes, or remaining in their existing home) due to location or lifestyle preferences, affordability and home selling price perceptions (particularly in markets that experienced rapid home price appreciation), employment instability or otherwise. Consumers may also decide not to search for a new home, or cancel their home sales contracts with us, due to economic or personal financial uncertainty. The combination of elevated mortgage interest rates, several years of rising housing prices, volatility across financial markets, persistent inflation, including for essential consumer expenses (e.g., food, gasoline, electricity, trash, water), and various other macroeconomic and geopolitical concerns have weighed on consumer budgets and confidence throughout 2024 and 2025 and may continue to do so in 2026. In addition, homeowners who purchased their home with a relatively low mortgage interest rate may be reluctant to move given the current higher interest rate levels. In addition, homeowners who purchased their home with a relatively low mortgage interest rate, as was generally the case from mid-2020 to mid-2022, may be reluctant to move given the current higher interest rate levels. With strained housing affordability, these conditions are expected to remain, and may worsen, in 2026, negatively impacting demand and potentially requiring us to lower selling prices or offer other concessions to stimulate net orders, adversely affecting our revenues and margins. We also face an uncertain solar power system provider environment largely due to changes in California net metering regulations that created significant instability in the solar power industry, with several providers going out of business or entering bankruptcy. •Tightened availability or affordability of mortgage loans and homeowner insurance coverage. Most of our buyers need a mortgage loan to purchase their home. Their ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the Federal Housing Administration, the Veterans Administration, Federal National Mortgage Association (also known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (also known as Freddie Mac). While mortgage interest rates began to moderate in the 2025 second half, if mortgage interest rates increase and/or become more volatile, credit standards are tightened, appraisals for our homes are lowered or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing to be able to purchase a home from us. Further, we cannot provide any assurance that any interest rate reduction(s) or other monetary policy changes will positively affect demand for homes or our results of operations.Since 2022, insurance companies have discontinued, or significantly reduced, underwriting new homeowner insurance policies in areas that have experienced, or are thought to be at risk of experiencing, significant wildfires, hurricanes, flooding or other natural disasters, such as in California, Florida and certain Texas markets. If potential homebuyers are unable to obtain affordable homeowner insurance coverage, a challenge which became more widespread in California and Florida during 2024 and was exacerbated by wildfires and various significant weather events in 2025, they may not be able to or decide not to pursue purchasing a home or may cancel a home sales contract with us. If potential homebuyers are unable to obtain affordable homeowner insurance coverage, which became more widespread during 2024 and is expected to be exacerbated by the unprecedented wildfires in the Los Angeles County area in January 2025, they may not be able to or decide not to pursue purchasing a home or may cancel a home sales contract with us. 18 •Poor lender performance.•Poor lender performance. We depend on third-party lenders, including GR Alliance Ventures, LLC (“GR Alliance”), a subsidiary of Guaranteed Rate, Inc. and our third-party partner in KBHS, to provide mortgage loans to our homebuyers, unlike homebuilders with a wholly-owned mortgage lender. These lenders may be unable or unwilling to complete, timely or at all, the loan originations they start for our homebuyers, including if adequate homeowner insurance is not available. These lenders may be unable or unwilling to 17 complete, timely or at all, the loan originations they start for our homebuyers, including if adequate homeowner insurance is not available. Poorly or non-performing lenders can significantly delay home closings, disrupting our production schedules and delivery forecasts, or cause home sales contract cancellations. In addition, if GR Alliance or KBHS perform poorly and our customers use another lender, the income from and value of our KBHS equity interest would decline.•Adverse tax law changes. If federal or state laws are changed to eliminate or reduce the income tax benefits associated with homeownership, such as personal tax deductions for mortgage interest costs and real estate taxes, the after-tax cost of homeownership could measurably increase and diminish consumer interest in buying a home, as could increases in personal income tax rates. At the same time, favorable tax law changes will not necessarily increase demand or allow for higher selling prices for homes generally or for the homes we sell.•Competition. We face significant competition for customers from other homebuilders, sellers of resale homes and other housing industry participants, including single-family and other rental-housing operators. Relative to the 2021-2023 period, since mid-2024, the supply of resale properties available for sale has generally risen in our served markets, and there has been a higher supply of rental units in some of our served markets. This competitive environment may, among other things, cause us to reduce our home selling prices or offer other concessions to attract or retain buyers. This competitive environment may, among other things, cause us to reduce our home selling prices or offer other concessions to attract or retain buyers. Additionally, unpredictable buyer demand since 2022 has amplified competitive pressures and is likely to remain a factor in 2026.•Seasonality. As discussed above under Item 1 – Business in this report, we historically have experienced fluctuations in our quarterly operating results with measurably more homes delivered and revenues generated in our third and fourth fiscal quarters. However, as was the case in recent years, this pattern may not continue in the future at all or to the same degree as in the past.•Inflation. Since 2021, product and labor costs and general inflation in the economy have increased and remained elevated compared to the prior decade. In turn, we experienced rising land and construction costs, particularly for building materials and construction service providers’ rates, warranty repair costs, and compensation and benefit expenses to attract and retain talent. These trends are expected to continue to an extent in 2026, though they may worsen compared to prior years. Inflation has also tempered consumer demand for homes, disrupted credit and lending markets and may increase our financing costs, as borrowings, if any, under our new, larger unsecured revolving credit facility with various banks (“Credit Facility”) and our recently amended senior unsecured term loan with the lenders party thereto (“Term Loan”) typically accrue interest at a variable rate based on short-term Secured Overnight Financing Rate (“SOFR”). Inflation has also tempered consumer demand for homes, disrupted credit and lending markets and may increase our financing costs, as borrowings, if any, under our unsecured revolving credit facility with various banks (“Credit Facility”) and our senior unsecured term loan with the lenders party thereto (“Term Loan”) typically accrue interest at a variable rate based on short-term Secured Overnight Financing Rate (“SOFR”). While we attempt to pass on increases in our costs through increased selling prices, including for design choices and options, market forces and buyer affordability constraints can limit our ability to do so. While we attempt to pass on increases in our costs through increased selling prices, including for design choices and options, market forces and buyer affordability constraints can limit our ability to do so. If we are unable to raise selling prices enough to compensate for higher costs, or our borrowing costs increase significantly, our revenues, housing gross profit margin and net income could be adversely affected.Supply Risks. The following could negatively affect our ability to increase our owned and controlled lot inventory, community count, operational scale and market share, optimize returns on each of our assets, and grow our business, if at all:•Lack of available land; delayed community openings and home starts. The following could negatively affect our ability to increase our owned and controlled lot inventory, community count, operational scale and market share, and to grow our business, if at all:•Lack of available land. Securing sufficient developable land in our served markets, and, in some cases, in targeted submarkets that have relatively more favorable long-term economic and population growth prospects, that meets our investment return standards is critical for us to meet our strategic goals and profitably expand our business’ scale. Land availability depends on several factors, including geographical/topographical/governmental constraints, sellers’ business relationships and reputation within the residential real estate community, and competition from other parties, some of which can bid more for land. Reflecting housing market conditions, we and other homebuilders appreciably increased land investments in 2024 compared to 2023, which pressured both the availability and pricing of land. In 2025, however, we measurably reduced our land acquisition spending from 2024 levels to align with prevailing market conditions. While we began to see a more constructive land market as to terms and pricing at the beginning of the 2025 fourth quarter, we expect to continue to face competition for desirable land in our served markets in 2026 and beyond irrespective of whether we increase, decrease or maintain our current pace of land spend, which may limit our ability to profitably develop communities and sell homes on such land. Even if we are successful in acquiring attractive land parcels, we cannot assure that we will be able to generate the returns from developing and selling homes on such parcels expected at the time of acquisition, or positive returns.19 Timely development of the land we acquire is critical to achieving our net order, homes delivered and revenue objectives for a given period. Our land development activities have been delayed by supply chain issues, as described below, slow governmental approval and/or utility activation processes, and other factors, including those outside of our control and similar delays will likely occur in future periods. Beyond negatively affecting our community count, our failure to meet our anticipated community grand opening dates has caused, and may in the future cause us, to generate fewer net orders, including lost orders, and incur higher costs, including carrying costs, adversely impacting our margins and inventory turns. Similarly, our failure to timely start and complete new homes in an open new home community has caused, and may in the future cause us, to incur higher costs and experience home sales contract cancellations, as well as impair our ability to realize the benefits of faster build times, as discussed below.•Supply chain challenges. Our business relies on a network of suppliers and trade partners to source materials and services to build homes. In 2025, our supply chain faced cost pressures and constrained availability of several home construction items due to varying tariffs, duties, sanctions and/or trade restrictions the federal government and other countries (sometimes in retaliation) imposed on materials, parts and goods imported into the U.S., including steel, aluminum and lumber, and we experienced continued significant delays with respect to state and municipal construction permitting, inspections and utility processes. In addition, shortages or rising prices of building materials have, and may in the future, ensue from manufacturing defects that result in building material recalls or the need to undertake prolonged on-site repairs or other remediation measures. Such cost pressures, supply constraints, processing delays and, to a lesser degree, manufacturing defects have increased our input costs and reduced our revenues in certain reporting periods, and in some instances, led to home sales contract cancellations or lower customer satisfaction. While we were able to keep our overall costs steady for 2025 through value engineering and other cost-saving measures, as well as negotiations with our suppliers, we expect these economic and trade-related trends will continue to create headwinds into 2026 that, along with general inflationary pressures, we may not be able to mitigate, negatively impacting our margins. Additionally, while we have taken steps to engage with state and local officials and utilities, both public and private, to reduce processing delays, we can provide no assurance that the delays we experienced in 2025 will improve to any degree, if at all, in 2026 or beyond. In an effort to accelerate our build times and the delivery of homes to our homebuyers, which improves customer satisfaction, inventory turns and revenue generation, and the competitiveness of our value proposition to customers relative to other new homebuilders, since 2020 we, among other things, have expanded our supplier base and added new construction service providers; worked with our national suppliers to get products and materials; ordered items in advance of starting homes; implemented construction process workarounds; simplified our design options; paced lot releases to align with our production capacity; and balanced pace, price and construction starts to enhance margins. While we have health and safety protocols in place for our construction sites and take steps to safeguard our administrative functions, including our IT resources, as described below under “Information Technology and Information Security Risks,” we can provide no assurance that we or our suppliers or trade partners can successfully operate in areas experiencing frequent or persistent adverse climate-related conditions, and we or they may be more impacted and take longer, and with higher costs, to resume operations in an affected location than other homebuilders or businesses, depending on the nature of the conditions or other circumstances. Beginning in the 2023 second quarter, we achieved meaningful sequential improvements in our build times and by the end of the 2025 fourth quarter, even with disrupted trade flows and state/municipal/utility processing delays, our company-wide build times returned to approximately their historical average. However, we believe the challenging environment described above, particularly trade restrictions on imported materials, may persist to a certain degree into and potentially throughout 2026, which may slow or prevent additional progress in reducing our build times, and could cause them to increase. We may also face increased home warranty and construction defect claims associated with replacing or servicing substitute products or materials used in some instances to address supply shortages due to trade restrictions or other factors in certain served markets or communities.” We may also face increased home warranty and construction defect claims associated with replacing or servicing substitute products or materials used in some instances to address supply shortages in certain served markets or communities. •Insufficient financial resources. Our business needs considerable cash to, among other things, acquire and develop land, build homes and provide customer service. We expect to meet our needs with existing cash, future operational cash flow, our Credit Facility and unsecured letter of credit facility with certain financial institutions (“LOC Facility”), or outside sources, including loans that are specifically obtained for, or secured by, particular communities or other inventory assets, which we refer to as “project financing.” However, outside financing may be unavailable, costly and/or considerably dilute stockholders. For instance:◦Tight or volatile capital or financial market conditions may hinder our ability to obtain external financing or performance bonds, or use or expand our Credit Facility and LOC Facility, on favorable terms or at all. Also, if a rating agency downgrades our credit rating or outlook, external financing may be difficult and costly for us to obtain. ◦Noncompliance with our Credit Facility, Term Loan and senior notes covenants may restrict our ability to borrow; accelerate repayment of our debt, which may not be feasible for us; or cause our lenders to impose significant fees or cease lending to us. 20 ◦As described in Note 15 – Notes Payable in the Notes to Consolidated Financial Statements in this report, if a change of control or fundamental change occurs before our senior notes mature, we may need to offer to purchase certain of them. ◦As described in Note 15 – Notes Payable in the Notes to Consolidated Financial Statements in this report, if a change of control or fundamental change occurs before our senior notes mature, we may need to offer to purchase certain of them. This may require us to refinance or restructure our debt, which we may be unable to do on favorable terms or at all. ◦Our debt and ratio of debt to capital levels could require us to dedicate substantial cash flow to debt service; inhibit our ability to respond to business changes or adjust our debt maturity schedule; curb execution on our current strategies; and/or make us more vulnerable in a downturn than our less-leveraged competitors. Our next senior note maturity is our $300.0 million in aggregate principal amount of 6.875% senior notes due June 15, 2027 (“6.875% Senior Notes due 2027”). •Decreased land inventory value. Our land inventory’s value depends on market conditions, including our estimates of applicable future demand and revenue generation. If conditions deteriorate during the typically significant amount of time between our acquiring ownership/control of land and delivering homes on that land; if we cannot sell land held for sale at its estimated fair value; or if we make strategic changes, we may need to record inventory-related charges. We may also record charges if we decide to sell land at a loss or activate or sell land held for future development.In addition, our business could be negatively affected if our net orders, homes delivered or backlog-to-homes delivered conversion rate fall; if often-volatile building materials prices or construction services costs increase, which has been the trend over the past few years; or if our community openings are delayed due to, among other things, prolonged development from supply chain disruptions, construction services shortages or otherwise, our strategic adjustments, or protracted government approvals or utility service activations from staff or resource cuts or reallocations for public safety priorities (e.g., earthquakes, wildfires, flooding, hurricanes or other natural disasters). •Poor contractor availability and performance. Independent contractors perform essentially all of our land development and home construction work. Though we schedule and oversee such activities at our community sites, we have no control over our independent contractors’ availability or work methods. If qualified contractors are not available (due to general shortages in a tight labor market, competition from other builders or otherwise), or do not timely perform, we may incur production delays and other inefficiencies, or higher costs for substitute services. Also, if our trade partners’ work or materials quality does not meet our standards, we could face more home warranty and construction defect claims, and they or their insurers may not be able to cover the associated repair costs. •Potential expansion of employment-related obligations. Governmental agencies or others might assert that we should be subjected to California law and associated regulations that, in certain circumstances, impose responsibility upon direct contractors for certain wages and benefits that subcontractors of the direct contractor have failed to pay to their employees. It might also be alleged that California law and regulations impose other liabilities upon us with respect to the employees of our trade partners. Further efforts in California or elsewhere to impose such external labor-related obligations on us could create substantial exposure for us in situations beyond our control.Strategy Risks. Our strategies, and any related initiatives or actions, and any changes thereto, including as to the land we acquire and develop and the markets we decide to serve, may not be successful in achieving our goals or generate any growth, earnings or returns, particularly in the highly volatile business environment of the past few years and as may occur in 2026, due to inflation, interest rate and financial market volatility, or political or social distress. Our strategies, and any related initiatives or actions, and any changes thereto, may not be successful in achieving our goals or generate any growth, earnings or returns, particularly in the highly volatile business environment of the past few years and as may occur in 2025, due to significant inflation, interest rate and financial market volatility, or political or social distress. In 2025, around 55% of our homes delivered were Built to Order, largely reflecting strategies to navigate supply chain disruptions that substantially lengthened our average build time and hindered our even-flow home production process, and market dynamics in areas with then-low resale home inventory. Our intent for 2026 is to bring our mix of homes delivered closer to our historical average. However, we may not achieve positive operational or financial results from implementing this or other business strategies, or results equal to or better than we did in any prior period or in comparison to other homebuilders. We may also incur higher costs, or experience sourcing or supply chain disruptions that result in extended times to build our homes, as compared to other homebuilders due to our commitment to sustainability. At the same time, we expect there could be an unfavorable reputational impact if we do not maintain our sustainability programs; or if we fail to meet our sustainability objectives. Among other strategic risks, our business is presently concentrated in California, Florida, Nevada and Texas. Poor conditions in any of those markets could have a measurable negative impact on our results, and the impact could be larger for us than for other less-concentrated homebuilders. Adverse conditions in California would have particular significance to our business. We generate the highest proportion of our revenues from and make significant inventory investments in our California operations. However, we may be constrained or delayed in entitling land and selling and delivering homes in California, and incur higher development or construction costs, from water conservation or wildfire protection measures (including precautionary and event-induced electricity blackouts, temporary or extended local or regional evacuations, development moratoriums in high-risk areas, and community resiliency 21 design requirements) that are intended to address severe drought and climate conditions that have arisen in recent years. In addition, to the extent large-scale wildfires and flooding, as well as hurricanes, heavy rains and other climate change-driven natural disasters in our served markets become more frequent and intense, as discussed below under “Climate Risk,” we may experience greater disruption to our land development and homebuilding activities, delaying orders and homes delivered, among other impacts. In addition, as large-scale wildfires and flooding, as well as hurricanes, heavy rains and other climate change-driven natural disasters in our served markets become more frequent and intense, as discussed below under “Climate Risk,” we may experience greater disruption to our land development and homebuilding activities, delaying orders and homes delivered, among other impacts. Also, California’s highly regulated and litigious business environment has made the state an increasingly difficult place for us to operate. This includes implementing regulations under the state’s Global Warming Solutions Act of 2006 intended to lower GHG emissions. For instance, we have and will continue to incur higher construction costs because of a state law requirement that effectively requires that all newly-built homes have solar power systems, and we may be unable to offset (through customer leases) or cover such costs through selling price increases due to competition and consumer affordability concerns. We also faced an uncertain solar power system provider environment in 2025 and 2024 largely due to the federal government’s repealing and/or accelerating the expiration of related tax credits, as described below, and changes in California net metering regulations that created significant instability in the solar power industry, with several providers going out of business or entering bankruptcy. This has disrupted the supply and installation of solar power systems, causing delays in system completions and permissions to operate and, in turn, home deliveries. The federal government’s repeal and/or accelerated expiration of tax credits for solar power systems has also caused lease financing providers to exit the market, pressuring the availability of leases for customers in California.Effective in 2026, California’s new energy efficiency standards will require all new residences to be electric-ready for heating, cooling, cooking, clothes drying and water heating systems. In addition, California and certain of its local governments have implemented restrictions on or disincentives for new suburban and exurban residential communities, generally in favor of higher-density, urban developments that can be attractive to some buyers, but in many cases are on smaller parcels with higher building costs and more complicated entitlement requirements and may be subject to affordable housing mandates, prevailing wage requirements, greater local opposition and/or additional site remediation work. California and certain of its local governments have implemented restrictions on or disincentives for new suburban and exurban residential communities, generally in favor of higher-density, urban developments that can be attractive to some buyers, but in many cases are on smaller parcels with higher building costs and more complicated entitlement requirements and may be subject to affordable housing mandates, prevailing wage requirements, greater local opposition and/or additional site remediation work. These efforts have and could further significantly increase our land acquisition and development costs and, along with competition from other homebuilders and investors for available developable land, limit our California operations’ growth, while making new homes less affordable to potential buyers in the state, including as a result of its public utilities commission’s decision to significantly reduce net metering payments to homeowners for the rooftop solar power they export to the grid from systems installed. These efforts have and could further significantly increase our land acquisition and development costs and, along with competition from other homebuilders and investors for available developable land, limit our California operations’ growth, while making new homes less affordable to potential buyers in the state, including as a result of its public utilities commission’s decision to significantly reduce net metering payments to homeowners for the rooftop solar power they export to the grid from systems installed. Climate Risk. While there is considerable debate over its drivers and magnitude, and about the physical, regulatory and/or technical/scientific mitigation or adaptation measures, if any, that should be implemented, global climate change and responses to it present potential risks to our operations, ranging from extreme weather events to extensive governmental policy developments and shifts in consumer preferences, which could individually or collectively significantly disrupt our business as well as negatively affect our suppliers, independent contractors and customers. While there is considerable debate over its drivers and magnitude, and about the physical, regulatory and/or technical/scientific mitigation or adaptation measures, if any, that should be implemented, global climate change and responses to it present potential risks to our operations, ranging from more frequent extreme weather events to extensive governmental policy developments and shifts in consumer preferences, which could individually or collectively significantly disrupt our business as well as negatively affect our suppliers, independent contractors and customers. Experiencing or addressing these various risks may significantly reduce our revenues and profitability, or cause us to generate losses. Experiencing or addressing the various risks from climate change may significantly reduce our revenues and profitability, or cause us to generate losses. For instance, incorporating greater resource efficiency into our home designs to comply with upgraded building codes often raises our costs to construct homes. In evaluating whether to implement voluntary improvements, we consider that choosing not to enhance our homes’ resource efficiency can make them less attractive to municipalities, and increase the vulnerability of residents in our communities to rising energy and water expenses and use restrictions. In evaluating whether to implement voluntary improvements, we also consider that choosing not to enhance our homes’ resource efficiency can make them less attractive to municipalities, and increase the vulnerability of residents in our communities to rising energy and water expenses and use restrictions. We balance these costs against our goals of profitability and affordability for first-time and first move-up buyers, while considering potential homeowner insurance challenges in certain areas due to local environmental conditions, historical events and/or the regulatory environment for insurance providers. We may determine we need to absorb most or all the additional operating costs that come with making our homes more efficient and/or from operating in areas with more extensive regulatory requirements, such as California, or certain climates. In balancing these objectives, we may determine we need to absorb most or all the additional operating costs that come with making our homes more efficient and/or from operating in areas with more extensive regulatory requirements, such as California, or certain climates. While our years of experience in sustainable homebuilding, as discussed above under “Sustainability Principles and Practices,” may give us an advantage over other homebuilders in managing these absorbed costs, they may be substantial for us. While our years of experience in sustainable homebuilding, as discussed above under “Sustainability Principles and Practices,” and ability to leverage economies of scale may give us an advantage over other homebuilders in managing these absorbed costs, they may be substantial for us. Our operations in any of our served markets may face potential adverse physical effects, especially in California, our largest market, that has historically experienced, and is projected to continue to experience, climate-related events at an increasing frequency including drought, water scarcity, heat waves, wildfires, and resultant air quality impacts and power shutoffs associated with wildfire prevention. For example, California, our largest market, has historically experienced, and is projected to continue to experience, climate-related events at an increasing frequency including drought, water scarcity, heat waves, wildfires (such as the unprecedented wildfires in the Los Angeles County area in January 2025), and resultant air quality impacts and power shutoffs associated with wildfire prevention. In addition, as we develop land and open more communities in less populated areas, new housing subdivisions may be subject to potential development moratoriums and not be permitted unless developers secure alternative water supplies, among other conditions. While we have health and safety protocols in place for our construction sites and take steps to safeguard our administrative functions, including our IT resources, as described below under “Information Technology and Information Security Risks,” we can provide no assurance that we or our suppliers or trade partners can successfully operate in areas experiencing frequent or persistent adverse climate-related conditions, and we or they may be more impacted and take longer, and with higher costs, to resume operations in an affected location than other homebuilders or businesses, depending on the nature of the conditions or other circumstances.22 As discussed above under “Strategy Risks,” and below under “Legal and Compliance Risks,” various government and legislative bodies have aimed to restrict, moderate or promote activities consistent with resource conservation, GHG emission reduction, environmental protection or other climate-related objectives. These initiatives could increase our costs, such as with California’s requirement that all new homes have solar power systems, agency requirements for all-electric readiness and higher efficiency standards, including the use of zero-emission alternatives, beginning in 2026; delay or complicate home construction, for example, due to a need to reformulate or redesign building materials or components, or source updated or upgraded items or equipment, or specially trained or certified independent contractors, in limited or restricted supply, which has been a challenge for us in certain cases in the past few years; or diminish consumer interest in homes mandated to include or omit certain features, amenities or appliances, particularly if home prices increase as a result.Adapting to or transitioning from the use of certain items or methods in home construction, or adjusting the products we offer to our buyers, whether due to climate-related governmental rules affecting home construction or our supply chain, market dynamics or consumer preferences, can negatively affect our costs and profitability, production operations in affected markets and customer satisfaction during the transition period, which could be prolonged.21 Adapting to or transitioning from the use of certain items or methods in home construction, or adjusting the products we offer to our buyers, whether due to climate-related governmental rules affecting home construction or our supply chain, market dynamics or consumer preferences, can negatively affect our costs and profitability, production operations in affected markets and customer satisfaction during the transition period, which could be prolonged. For instance, in certain local markets in California where natural gas use is banned in new homes, we have faced some disruptions in reorienting our purchase order, independent contractor engagement, design studio and home construction processes and have implemented certain architectural design changes for all-electric homes. For instance, in certain local markets in California where natural gas use is banned in new homes, we have faced some disruptions in reorienting our purchase order, independent contractor engagement, design studio and home construction processes to accommodate the restriction and, longer term, have implemented certain architectural design changes for all-electric homes. To the extent other jurisdictions or the state adopt such bans and as we implement the state’s all-electric readiness requirements, as discussed above, we will face similar issues.Though practically available technology and resources allow us only to make certain estimates, and not definitive measurements, of the effectiveness and overall impact of our longstanding and broad-based environmental sustainability initiatives described above under “Sustainability Principles and Practices,” we feel these initiatives and their evolution over time represent how we can best address climate change risks in the context of our business, industry and the wider, and rapidly changing, economic, social and political environment. However, climate change is an intrinsically complex global phenomenon with inherent residual risks across its physical, regulatory and adaptation/transition dimensions that cannot be mitigated given their wide-ranging, (sometimes unexpectedly) interdependent and largely unpredictable potential scope, nature, timing or duration. Therefore, though we have not as of the date of this report identified or experienced any particular material impact, whether singular or in combination, to our consolidated financial statements from climate change or the associated regulatory, physical, transition and other risks discussed above, we cannot provide any assurance that we have or can successfully prepare for, or are or will be able to reduce or manage any of them to the extent they may arise. Further, we expect that as concerns about climate change and other environmental issues continue to increase, homebuilders will be required to comply with new and extensive laws and regulations, including recently enacted climate disclosure laws in California as well as any climate-related disclosure rules that may be adopted by the SEC, each of which we anticipate will result in additional significant compliance costs. In October 2023, California enacted the Climate Corporate Data Accountability Act (“SB-253”), which mandates the disclosure of GHG emissions, including Scope 1, Scope 2 and Scope 3 emissions; and the Climate-Related Financial Risk Act (“SB-261”), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks. California has delayed formal rulemaking for SB-253 to at least late February 2026. We expect to file an initial Scope 1 and Scope 2 GHG emissions report later in the year under SB-253, pending finalization of the regulations. As of the date of this report, SB-261 is subject to a court injunction on its implementation. Whether we file a climate-related financial risk report under SB-261 in 2026 depends on the outcome of the legal process affecting that statute and any regulations California adopts. We may also experience substantial negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our operations or those of our suppliers or independent contractors in our primary markets, such as in California, Florida, Nevada and Texas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements. Such severe weather events could delay home construction, increase construction costs, reduce the availability of building materials, and damage roads and/or cause transportation delays that stress our supply chain and negatively impact the demand for new homes in affected areas, as well as slow down or otherwise impair the ability of utilities and local government agencies to provide approvals and service to new communities. With respect to environmental laws, in addition to the risks and potential operational costs discussed above, we have been, and we may in the future be, involved in federal, state and local air and water quality agency investigations or proceedings for potential noncompliance with their rules, including rules governing discharges of materials into the air and waterways; stormwater discharges from community sites; and wetlands and listed species habitat protection. Further, if our insurance does not fully cover our costs and other losses from such events, our earnings, liquidity, or capital resources could be adversely impacted. Warranty and Insurance Risks. Our homebuilding business is subject to warranty and construction defect claims. Though we have insurance coverage to partially reduce our exposure, it is limited and costly, in part due to a shrinking provider market, and we have high self-insured retentions that are expected to increase. We self-insure some of our risk through a wholly-owned insurance subsidiary. Because we do not maintain insurance coverage to cover all claims or liabilities that may arise in our business, and have high self-insured retentions with the insurance coverages we do maintain, we may need to use a significant amount of our then-existing liquidity, or obtain external financing, to satisfy any such claims and liabilities.23 Due to our dependence on the performance of independent suppliers and contractors to provide products and materials and carry out our homebuilding activities, and the associated risks described above under “Inflation,” “Supply chain challenges” and “Poor contractor availability and performance,” as well as inherent uncertainties, including obtaining recoveries from responsible parties and/or their or our insurers, our recorded warranty and other liabilities may be inadequate to address future claims, which, among other things, could require us to record charges to increase such liabilities.Due to our dependence on the performance of independent suppliers and contractors to provide products and materials and carry out our homebuilding activities, and the associated risks described above under “Inflation,” “Supply chain and construction services shortages” and “Poor contractor availability and performance,” as well as inherent uncertainties, including obtaining recoveries from responsible parties and/or their or our insurers, our recorded warranty and other liabilities may be inadequate to address future claims, which, among other things, could require us to record charges to increase such liabilities. We may also record charges to reflect our then-current claims experience, including the actual costs incurred. We may also record charges to reflect our then-current claims experience, including the actual costs incurred. Home warranty and other construction defect issues may also generate negative publicity, including on social media and the internet, that detracts from our reputation and efforts to sell homes.Tax-Related Risks.22 Tax-Related Risks. Our future income tax rates and expense can fluctuate or be adversely affected due to legislative and regulatory changes; government or court interpretations of new or existing tax laws and regulations; changes in available tax credits; adjustments to estimated taxes in finalizing our tax returns and/or due to new regulatory guidance; changes in non-deductible expenses, particularly those associated with compensation; tax benefits related to stock-based compensation; the realization of our deferred tax assets; and the resolution of tax audits with federal or state tax authorities based on, among other things, tax positions we have taken. Our future income tax rates and expense can fluctuate or be adversely affected due to legislative and regulatory changes; government or court interpretations of new or existing tax laws and regulations; changes in available tax credits; adjustments to estimated taxes in finalizing our tax returns and/or due to new regulatory guidance, as occurred in our 2023 fourth quarter; changes in non-deductible expenses, particularly those associated with compensation; tax benefits related to stock-based compensation; the realization of our deferred tax assets; and the resolution of tax audits with federal or state tax authorities based on, among other things, tax positions we have taken. In 2025 and prior years, we have recognized federal tax credits under Internal Revenue Code Section 45L (“Section 45L”) from our building energy-efficient new homes, when such credits were available to us. In July 2025, H.R.1, the One Big Beautiful Bill Act (“OBBBA”) repealed the Section 45L credit for homes delivered after June 30, 2026. As a result, beginning in our 2026 third quarter, our income tax expense and effective tax rate will no longer reflect a benefit from such tax credits as to homes delivered after that date. Our realization of our deferred tax assets depends on our generating sufficient future taxable income, which may not occur.Our realization of our deferred tax assets depends on our generating sufficient future taxable income, which may not occur. Also, our deferred tax assets’ value can increase or decrease with: (a) changes in the federal corporate income tax rate; (b) our undergoing a “change of ownership” under federal tax rules, which would significantly reduce and possibly eliminate their value; and (c) adjustments in statutory or taxing authority treatment of such assets. We have filed our tax returns based on certain positions we believe are appropriate, and we may owe additional taxes if taxing authorities disagree with those positions. Human Capital Risks. Our directors, officers and employees are important resources. If we cannot attract, retain and develop talent at reasonable pay and benefits levels, or, alternatively, if we need to implement personnel or compensation reductions, our performance, profitability and ability to achieve our strategic goals could be significantly impaired. While we have developed extensive leadership development programs and succession plans, as discussed above, we cannot assure that our programs and plans, and their future iterations, will ensure that employees in key leadership positions who depart will be replaced by equally or more effective successors. In addition, in many of our served markets, we need to have personnel with certain professional licenses, including building contractor and real estate brokerage licenses. Our home selling and construction activities may be severely disrupted or delayed if we do not have sufficient licensed individuals in our workforce.Information Technology and Information Security Risks. We use IT resources to carry out important operational activities and maintain our business records. Third parties provide and maintain many of our IT resources, including disaster recovery and business continuity services intended to safeguard access to and use of our IT resources during a general or local network outage, under agreements with evolving security and service level standards. Our senior IT executives also periodically update the audit and compliance committee of our board of directors on our cybersecurity practices and risks, most recently in January 2026. A reporting process has been established, and periodically tested and refined with the assistance of outside experts, to escalate notice within our organization of and coordinate our response to IT security events. Depending on the severity of an event, our incident reporting process includes informing as early as practicable our senior corporate management and members of our board of directors. If a cybersecurity incident is determined to be material, we are subject to additional SEC reporting requirements. Our cybersecurity policies and procedures are further described below under Item 1C – Cybersecurity in this report.Our systems have faced a variety of phishing, denial-of-service and other attacks and occasional theft of encrypted employee laptops. To help counter the growing volume and sophistication of cyberattacks and other attempts to gain unauthorized access to sensitive business or individuals’ personal information, including the potential of fraudulent schemes inducing our employees, customers, trade partners, or other third parties to disclose information or unknowingly provide access to systems or data, whether in our sales offices or elsewhere, and considering the use of artificial intelligence and other technology to compromise our user access protocols, we have implemented administrative, physical and multi-layered technical controls and processes. To help counter the growing volume and sophistication of cyberattacks, including the potential of fraudulently inducing our employees, customers, trade partners and other third parties to disclose information or unknowingly provide access to systems or data, as well as state and other actors using artificial intelligence technology, we have implemented administrative, physical and multi-layered technical controls and processes to help address and mitigate cybersecurity risks and protect our IT resources, including employee education and awareness training, as well as third-party assessments. These measures are designed to help address and mitigate cybersecurity risks and protect our IT resources and sensitive information, and include employee education and awareness training, as well as assessments conducted by external third parties. Our technical defense layers are designed to provide multiple, overlapping measures to establish appropriate system security configurations and protect against exploitation of a vulnerability that may arise or if a security 24 control fails. Our technical defense layers are designed to provide multiple, overlapping measures to protect against exploitation of a vulnerability that may arise or if a security control fails. For these defenses, we rely on third parties that we believe, but cannot guarantee, are capable of performing the protective service for which we have engaged them. We conduct periodic incident response tabletop exercises, with third-party support and reviews, and we perform an annual cybersecurity risk assessment to identify potential areas of focus. Our IT security costs, including cybersecurity insurance, are significant and will likely rise in tandem with the sophistication and frequency of system attacks. We also depend on our service providers, GR Alliance and other mortgage lenders, with whom we share some personal identifying and confidential information, to secure our data and the homebuyer information they collect from us. We also depend on our service providers, GR Alliance and other mortgage lenders with whom we share some personal identifying and confidential information to secure our information and the homebuyer information they collect from us. However, our, GR Alliance’s and our service providers’ measures may be inadequate and possibly have operational or security vulnerabilities that could go undetected for some period of time. However, our, GR Alliance’s and our service providers’ measures may be inadequate and possibly have operational or security vulnerabilities that could go undetected for some period of time. If our IT resources are compromised, we may be severely limited in conducting our business and achieving our strategic goals for an extended period, experience internal control failures or lose access to operational assets or funds. A substantial disruption, or security breach suffered by us, GR Alliance/KBHS or a service provider, particularly our cloud service provider which hosts many of our IT resources, could damage our reputation and result in the loss of customers or revenues, in sensitive personal information being publicly disclosed or misused and/or regulatory or legal proceedings against us. A substantial disruption, or security breach suffered by GR Alliance/KBHS or a service provider, particularly our cloud service provider which hosts many of our IT resources, could damage our reputation and result in the loss of customers or revenues, in sensitive personal information being publicly disclosed or misused and/or legal proceedings against us. We may incur significant expenses to resolve such issues. While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or consolidated financial statements, there can be no assurance our efforts to maintain the security and integrity of these systems will be effective or that attempted security breaches, cyber-attack, data theft or disruptions would not occur in the future, be successful or damaging.Beyond our service providers, we depend on independent third parties to handle certain processes required to complete land purchases and home closings, including title insurers and escrow/settlement companies. Should these third parties, as well as independent mortgage lenders and other firms involved in real property transactions, experience their own cybersecurity incidents or IT resource failures that disrupt or prevent their performance of necessary real estate transaction services, our ability to close on land transactions or our customers’ ability to close on their homes, as well as our production schedules and delivery forecasts, may be significantly disrupted and have a material impact on our operations or consolidated financial statements, including by causing home sales contract cancellations. Legal and Compliance Risks. As discussed above under Item 1 – Business in this report, our operations are subject to myriad legal and regulatory requirements, which can delay our operational activities, raise our costs and/or prohibit or restrict homebuilding in some areas. These requirements often provide broad discretion to government authorities, and they could be interpreted or revised in ways unfavorable to us. The costs to comply, or associated with any noncompliance, are, or can be, significant and variable from period to period. With respect to environmental laws, in addition to the risks and potential operational costs discussed above, we have been, and we may in the future be, involved in federal, state and local air and water quality agency investigations or proceedings for potential noncompliance with their rules, including rules governing discharges of materials into the air and waterways; stormwater discharges from community sites; wetlands and listed species habitat protection; and governmental health and safety rules and requirements, such as those enforced by the federal Occupational Safety and Health Administration and similar state agencies. With respect to environmental laws, in addition to the risks and potential operational costs discussed above, we have been, and we may in the future be, involved in federal, state and local air and water quality agency investigations or proceedings for potential noncompliance with their rules, including rules governing discharges of materials into the air and waterways; stormwater discharges from community sites; and wetlands and listed species habitat protection. We could incur penalties and/or be restricted from developing or building at certain community locations during or as a result of such agencies’ investigations or findings.Additionally, we are involved in legal, arbitral or regulatory proceedings or investigations incidental to our business, the outcome or settlement of which could result in material claims, losses, monetary damage awards, penalties, or other direct or indirect payments recorded against our earnings, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices. Any adverse results could be beyond our expectations, insurance coverages and/or accruals at particular points in time. Unfavorable outcomes, as well as unfavorable investor, analyst or news reports related to our industry, company, personnel, governance or operations, may also generate negative publicity, including on social media and the internet, damaging our reputation and resulting in the loss of customers or revenues. We may also face similar reputational impacts if our sustainability initiatives or objectives and/or our social or governance practices do not meet the standards set by investors or third-party rating services. Additionally, low third-party ratings could result in our common stock being excluded from certain indexes or not being recommended for or selected by investors with certain mandates or priorities. To reduce the risks and expected significant costs of defending intra-corporate proceedings in multiple venues and to help ensure that such matters are considered within a well-established body of law, our By-Laws provide that, subject to certain exceptions, Delaware state courts are the exclusive forum for specified internal corporate affairs actions and federal courts are the exclusive forum for any action asserting a claim arising under the Securities Act of 1933, as amended. These provisions may limit a stockholder’s ability to bring a claim in their favored forum. At the same time, if a court were to allow for an alternative forum, or we waive the provision’s application, for a particular matter, we may incur additional costs associated with resolving an otherwise relevant action in another jurisdiction(s).The European Union and state governments, notably California, Colorado, Delaware and Nevada, have enacted or enhanced data privacy regulations, and other governments are considering establishing similar or stronger protections.24 The European Union and state governments, notably California and Nevada, have enacted or enhanced data privacy regulations, and other governments are considering establishing similar or stronger protections. These 25 regulations impose certain obligations for securing, and potentially removing, specified personal information in our systems, and for apprising individuals of the information we have collected about them. These regulations impose certain obligations for securing, and potentially removing, specified personal information in our systems, and for apprising individuals of the information we have collected about them. We have incurred costs in an effort to address these data privacy risks and requirements, and our costs may increase significantly as risks become increasingly complex or if new or changing requirements are enacted, and based on how individuals exercise their rights. Despite our efforts, any noncompliance could result in our incurring substantial penalties and reputational damage. KBHS’ operations are heavily regulated. If GR Alliance, which oversees KBHS’ operations, or KBHS is found to have violated regulations, or mortgage investors demand KBHS repurchase mortgage loans it has sold to them, or cover their losses, for claimed contract breaches, KBHS could face significant liabilities, which, if they exceed its reserves, could result in our recognizing losses on our KBHS equity interest.Our financial results may be materially affected by our use of critical accounting estimates and the adoption of new or amended financial accounting standards, as well as regulatory or outside auditor guidance or interpretations.Our financial results may be materially affected by the adoption of new or amended financial accounting standards, and regulatory or outside auditor guidance or interpretations. In addition, to the extent we expand our disclosures on our sustainability initiatives in line with certain private reporting frameworks and investor requests, our failure to report accurately or achieve progress on our metrics on a timely basis, or at all, could adversely affect our reputation, business, financial performance and growth. In addition, to the extent we expand our disclosures on our sustainability initiatives in line with certain private reporting frameworks and investor requests, or the proposed SEC rules mentioned above, if adopted, our failure to report accurately or achieve progress on our metrics on a timely basis, or at all, could adversely affect our reputation, business, financial performance and growth. Other Risks. The risk factors described above are not our only salient risks. Political events, war, terrorism, weather or other natural/environmental disasters, and other risks that are currently unknown or are currently or may initially be seen as immaterial, could also have a material adverse impact on our business, consolidated financial statements and/or common stock’s market price.Item 1B.UNRESOLVED STAFF COMMENTSNone.Item 1C.CYBERSECURITYRisk Management and Strategy. We have policies and procedures for identifying, assessing and managing material risks associated with cybersecurity threats. To help protect our IT resources, we have instituted administrative, physical and technical controls and processes and commissioned third-party assessments. The technical defense measures we have implemented are designed to address vulnerabilities that may arise, including from a security control failure. These measures currently involve a combination of artificial intelligence; machine learning computer network monitoring; malware and antivirus resources; firewall systems; and endpoint detection and response. We also utilize cloud service defenses; Internet address and content filtering monitoring software intended to secure against known malicious websites and potential data exfiltration; and enterprise gateway security for workforce mobile devices and applications. Additionally, a variety of cyber intelligence and threat monitoring sources provide us with ongoing updates on potential or emerging risks. For all these measures we rely on third-party providers that we believe are capable of performing the service for which they have been engaged or on certain governmental agencies. Before we engage a third-party provider for these types of services and resources, we typically conduct a security review involving, as relevant to the service or resource, discussions with the provider’s security personnel, evaluation of auditor reports, and other requested information and documentation. When engaging a third party for these types of services and resources, we typically conduct a security review involving, as relevant to the service or resource, discussions with the firm’s security personnel, evaluation of auditor reports, and other requested information and documentation. We evaluate, and adjust as determined appropriate, our cybersecurity strategies and measures based on the above-noted threat monitoring sources, learnings from periodic incident response tabletop exercises in which members of senior management participate; penetration tests and scanning exercises; and an annual cybersecurity and/or cloud security risk assessment conducted with help from outside experts informed by the National Institute of Standards and Technology Cybersecurity framework. Our IT function also undertakes a specific risk review, assisted in part by independent consultants and other third parties, that is integrated into the overall annual enterprise risk management assessment the board of directors’ audit and compliance committee oversees. Our internal audit department incorporates the results from this risk review, and cybersecurity-related enhancements identified through the review, in designing and conducting its IT function audits, in some cases with a third-party firm’s assistance.To support the ongoing identification and management of cybersecurity issues, all employees are required to complete cybersecurity awareness training, including social engineering, password best practices, data classification and phishing awareness, with additional training for handling of customer personal information. We also publish a monthly security awareness newsletter along with performing ongoing internal phishing assessments. We also consider and evaluate cybersecurity risks associated with KBHS and third-party service providers that we have identified as having the greatest potential to expose us to cybersecurity threats. We have established due diligence procedures with KBHS and such third-party service providers, as well as communication channels as part of their breach and incident response processes. We also review annually the System and Organization Controls reports of third-party vendors hosting our data to ensure they maintain adequate access management controls including physical safeguards, disaster recovery capabilities, 26 data privacy and notification processes, onboarding processes, incident response procedures and periodic independent testing of the vendor capabilities. We also review annually the System and Organization Controls reports of third-party vendors hosting our 25 data to ensure they maintain adequate access management controls including physical safeguards, disaster recovery capabilities, data privacy and notification processes, onboarding processes, incident response procedures and periodic independent testing of the vendor capabilities. We depend on our third-party service providers, KBHS and outside service providers to our customers with whom we share some personal identifying and confidential information to secure the information they receive from us. Our business strategy, results of operations, or financial condition may be materially affected if our IT resources are compromised, whether by an intentional attack, natural or man-made disaster, electricity blackout, IT/cybersecurity failure, systems misconfiguration, denial-of-service attacks, service provider error, mismanaged user access protocols, personnel action, or otherwise. Our business strategy, results of operations, or financial condition may be materially affected if our IT resources are compromised, whether by an intentional attack, natural or man-made disaster, electricity blackout, IT/cybersecurity failure, systems misconfiguration, denial-of-service attacks, service provider error, mismanaged user access protocols, personnel action, or otherwise, as we may be severely limited in conducting operations for an extended period, experience internal control failures, be cut off from assets or funds, face reputational damage, lose customers and related revenues and/or have private party or governmental legal proceedings instituted against us, and incur significant expenses to resolve any such issues. Depending on source or severity, among other factors, should any such compromise(s) occur, we may be severely limited in conducting operations for an extended period, experience internal control failures, be cut off from assets or funds, face reputational damage, lose customers and related revenues and/or have private party or governmental legal proceedings instituted against us, and incur significant expenses to resolve any such issues. We may also experience substantial negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our operations or those of our suppliers or independent contractors in our primary markets, such as in California, Florida, Nevada and Texas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements. Similar impacts may result from a substantial disruption, or security incident or breach, suffered by KBHS or an outside service provider to our customers, which could also result in sensitive personal information being publicly disclosed or misused. Similar impacts may result from a substantial disruption, or security incident or breach KBHS or an outside service provider to our customers suffers, which could also result in sensitive personal information being publicly disclosed or misused. Governance. Our management is responsible for the ongoing assessment of, and for developing and implementing our strategies and measures to address, material cybersecurity risks. Our board of directors through its audit and compliance committee oversees management’s cybersecurity assessment activities and protective strategies and measures. This includes engaging in periodic reviews with management covering, among other things, our cybersecurity practices and risks. Several of our directors have experience with overseeing cybersecurity practices and incident management. Our chief information officer (“CIO”) periodically provides this review to the audit and compliance committee, with the most recent review conducted in January 2026. The CIO, who has more than 35 years of experience in IT and cybersecurity, is supported by a chief information security officer, who has more than 30 years of experience in IT and cybersecurity, and various employees and dedicated contract personnel experienced with IT and cybersecurity matters who are responsible for procuring, using, maintaining, updating and evaluating the cybersecurity measures detailed above. The CIO, who has more than 34 years of experience in IT and cybersecurity, is supported by a chief information security officer and various employees and dedicated contract personnel experienced with IT and cybersecurity matters who are responsible for procuring, using, maintaining, updating and evaluating the cybersecurity measures detailed above. These individuals also hold numerous cloud, security and privacy certifications. We have a cybersecurity incident response plan (“CIRP”) that, among other things. defines roles and responsibilities, outlines steps for managing a cybersecurity event that is assessed to be a cybersecurity incident, including determining whether such an incident is material and required to be publicly disclosed per SEC rules, and specifies internal and external communication channels with respect to a cybersecurity incident. Our IT function, which is led by the CIO, maintains and is initially responsible for executing on our CIRP and specific runbooks, which describe processes for evaluating and escalating, depending on severity, within the enterprise and up to our senior executive management and board of directors the cybersecurity threats and incidents, or potential threats or incidents, identified through our cybersecurity measures. This team also maintains other policies and procedures concerning cybersecurity matters, such as encryption standards, antivirus protection, remote access, multifactor authentication, data classification, confidential information and the use of the internet, social media, email and wireless devices. We also maintain insurance coverage for cybersecurity insurance as part of our overall insurance portfolio. Our IT systems have faced a variety of phishing, denial-of-service and other attacks. Although we have not identified any cybersecurity incidents during the fiscal years covered by this report that have materially affected or are reasonably likely to materially affect our business strategy, consolidated results of operations or consolidated financial condition, we can provide no assurance that our security measures will be successful and therefore we may experience a cybersecurity incident that materially affects our business strategy, consolidated results of operations, consolidated financial condition or reputation, including, but not limited to those described above. For more information about the cybersecurity risks we face, see Item 1A – Risk Factors. .
Recently Filed
Click on a ticker to see risk factors
| Ticker * | File Date |
|---|---|
| RBB | 1 day, 2 hours ago |
| TETEF | 1 day, 2 hours ago |
| CHGG | 1 day, 2 hours ago |
| SABS | 1 day, 3 hours ago |
| TREE | 1 day, 3 hours ago |
| CHRS | 1 day, 3 hours ago |
| ACIC | 1 day, 3 hours ago |
| EDIT | 1 day, 3 hours ago |
| AMPY | 1 day, 3 hours ago |
| GLRE | 1 day, 3 hours ago |
| NL | 1 day, 3 hours ago |
| FSP | 1 day, 3 hours ago |
| OYSE | 1 day, 3 hours ago |
| OWLT | 1 day, 3 hours ago |
| RAIL | 1 day, 3 hours ago |
| SVCC | 1 day, 3 hours ago |
| HTBK | 1 day, 3 hours ago |
| FIGX | 1 day, 3 hours ago |
| OSUR | 1 day, 3 hours ago |
| ACCO | 1 day, 3 hours ago |
| NPWR | 1 day, 3 hours ago |
| ZVRA | 1 day, 3 hours ago |
| MYO | 1 day, 3 hours ago |
| CRBP | 1 day, 3 hours ago |
| RBOT | 1 day, 3 hours ago |
| RPAY | 1 day, 3 hours ago |
| SEPN | 1 day, 4 hours ago |
| KRO | 1 day, 4 hours ago |
| MGNX | 1 day, 4 hours ago |
| DSGN | 1 day, 4 hours ago |
| EGBN | 1 day, 4 hours ago |
| FISI | 1 day, 4 hours ago |
| BOX | 1 day, 4 hours ago |
| CTM | 1 day, 4 hours ago |
| ALXO | 1 day, 4 hours ago |
| DDD | 1 day, 4 hours ago |
| TIPT | 1 day, 4 hours ago |
| VYGR | 1 day, 4 hours ago |
| EBMT | 1 day, 4 hours ago |
| BCBP | 1 day, 6 hours ago |
| BETA | 1 day, 10 hours ago |
| CRCL | 1 day, 11 hours ago |
| DY | 1 day, 11 hours ago |
| GBTG | 1 day, 11 hours ago |
| SPRB | 1 day, 12 hours ago |
| DNTH | 1 day, 12 hours ago |
| BOLD | 1 day, 13 hours ago |
| RNAC | 1 day, 13 hours ago |
| CCRN | 1 day, 13 hours ago |
| MASS | 1 day, 14 hours ago |
