KB Home : Q4 2022 Investor presentation

Investor Presentation

Fourth Quarter 2022

Forward-Looking Statements

Items in this presentation, and statements by KB Home management in relation to this presentation or otherwise, may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current (at the time made) expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our operations, economic and market factors, and the homebuilding industry, among other things. These statements are not guarantees of future performance. We do not have a specific policy or intent of updating or revising forward-looking statements. Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to the following: general economic, employment and business conditions; population growth, household formations and demographic trends; conditions in the capital, credit and financial markets; our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms; the execution of any securities repurchases pursuant to our board of directors' authorization; material and trade costs and availability, including building materials and appliances, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages; consumer and producer price inflation; changes in interest rates, including those set by the Federal Reserve, which the Federal Reserve has increased sharply in the past few quarters and signaled an intention to aggressively further increase to moderate inflation, available in the capital markets or from financial institutions and other lenders, and applicable to mortgage loans; our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule; our compliance with the terms of our revolving credit facility and the Term Loan; volatility in the market price of our common stock; home selling prices, including our homes' selling prices, being unaffordable relative to consumer incomes; weak or declining consumer confidence, either generally or specifically with respect to purchasing homes; competition from other sellers of new and resale homes; weather events, significant natural disasters and other climate and environmental factors; any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government's operations, and financial markets' and businesses' reactions to any such failure; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government- sponsored enterprises and government agencies), the homebuilding industry, or construction activities; changes in existing tax laws or enacted corporate income tax rates, including those resulting from regulatory guidance and interpretations issued with respect thereto; changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; disruptions in world and regional trade flows, economic activity and supply chains due to the military conflict in Ukraine, including those stemming from wide-ranging sanctions the U.S. and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials, the impact of which may, among other things, increase our operational costs, exacerbate building materials and appliance shortages and/or reduce our revenues and earnings; the adoption of new or amended financial accounting standards and the guidance and/or interpretations with respect thereto; the availability and cost of land in desirable areas and our ability to timely and efficiently develop acquired land parcels and open new communities; impairment, land option contract abandonment or other inventory-related charges, including any stemming from decreases in the value of our land assets; our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred; costs and/or charges arising from regulatory compliance requirements or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals; our ability to use/realize the net deferred tax assets we have generated; our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets and in entering into new markets; our operational and investment concentration in markets in California; consumer interest in our new home communities and products, particularly from first-time homebuyers and higher-income consumers; our ability to generate orders and convert our backlog of orders to home deliveries and revenues, particularly in key markets in California; our ability to successfully implement our business strategies and achieve any associated financial and operational targets and objectives, including those discussed in this release or in any of our other public filings, presentations or disclosures; income tax expense volatility associated with stock-based compensation; the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services; the performance of mortgage lenders to our homebuyers; the performance of KBHS; information technology failures and data security breaches; an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the control response measures that international (including China), federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; and other events outside of our control. Please see our periodic reports and other filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to our business.

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© 2022 KB Home

Built to Order Model Is a Key Differentiator

Advantages of Built to Order ("BTO")

Mitigates Risk

Aligns business to demand, as we build to our sales pace, not to a targeted delivery goal, which minimizes speculative inventory and margin variability associated with carrying a large number of finished, but unsold, homes in inventory

Operationally Efficient

Working from a large backlog of sold homes, we can manage starts to achieve even-flow production at the community level, generating efficiencies in overhead and cost to build

Higher Visibility

Even-flow production reinforces our preferred position with subcontractors and provides greater predictability on deliveries

Margin Enhancer

Opportunities for incremental revenue as well as margin enhancement through lot premiums, structural options and design studio upgrades

Drives Absorption

Selling and building the home the customer values helps drive absorption and customer satisfaction

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Monthly Absorption Rate per Community

		6.3
4.3	4.6	4.1	4.1
4.0
3.0			3.0

2019	2020	2021	2022
		KBH		Peer Group Average*

* Includes DHI, LEN, MDC, MTH, NVR, PHM, TMHC, TOL, TPH. Source: Wolfe Research.

© 2022 KB Home

Built to Order Model Attracts Largest Demand Segments of Market

A Leader in the 1st Time Buyer Segment While Drawing a Mix of Buyers to Our Communities

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Q4 2022 Buyer Profile

(Based on Homes Delivered)

15%

11%

50%

24%

1st Time		2nd Move-Up
1st Move-Up		Active Adult

		BTO enhances
	Position our product	value through
Invest in land	choice of lot,
to target the	square footage,
positions within
median household	floor plan and
prime growth
income in each	elevation, and then
submarkets
submarket	the ability to
		personalize in our
		Design Studios

While we primarily target the 1st time and affordable 1st move-up buyers, our model also appeals to 2nd move-up buyers and empty nesters who can make a different set of choices in the same community

© 2022 KB Home

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Dedicated to Providing World Class Customer Service

• KB Home's personalized, customer-centricBuilt-to-Order business model enables us to develop long-term relationships with our customers
• Our community teams partner with customers through each major step of their purchase of a KB home: sale - mortgage - studio - construction - closing
  - post closing
• Customers recognize the value of our partnership. Recent customer surveys conducted by independent, third-party sources such as TrustBuilder® and ConsumerAffairs have given KB Home exceptional customer satisfaction ratings.

TrustBuilder® data as of January 3, 2023.

© 2022 KB Home