Inventory Impairments and Land Option Contract Abandonments

9 Months Ended

Aug. 31, 2025

Inventory Impairments and Land Option Contract Abandonments [Abstract]

Inventory Impairments and Land Option Contract Abandonments

Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held

for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information.

We evaluated 14 active communities or land parcels for recoverability as of August 31, 2025 with a carrying value of $168.7 million. As of November 30, 2024, we evaluated eight active communities or land parcels for recoverability with a carrying value of $139.5 million. In addition, we evaluated land held for future development for recoverability as of both August 31, 2025 and November 30, 2024.

Based on the results of our evaluations, we recognized inventory impairment charges of $7.3 million for the three-month and nine-month periods ended August 31, 2025 primarily related to one community. These charges were principally driven by both increased costs imposed by a municipality affecting the community, and our decision to make changes in our operational strategy aimed at more quickly monetizing our investment in this community, mainly by accelerating the overall pace for selling, building and delivering homes therein. For the three-month and nine-month periods ended August 31, 2024, we recognized no inventory impairment charges. If we change our strategy or if there are changes in market conditions for any given asset, we may recognize additional impairment charges.

The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value:


	Three Months Ended August 31,		Nine Months Ended August 31,
Unobservable Input (a)	2025	2024	2025	2024
Average selling price	$394,500 - $578,900	n/a	$394,500 - $578,900	n/a
Deliveries per month	2 - 3	n/a	2 - 3	n/a
Discount rate	17% - 20%	n/a	17% - 20%	n/a

(a)Ranges of inputs presented primarily reflect differences between the housing markets where each impacted community is located, rather than fluctuations in prevailing market rates.

As of August 31, 2025, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $26.7 million, representing six communities and various other land parcels. As of November 30, 2024, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $32.1 million, representing four communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed on a quarterly basis to determine whether it continues to meet our investment return standards. When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the related inventory costs, including non-refundable deposits and unrecoverable pre-acquisition costs. Based on the results of our assessments, we recognized land option contract abandonment charges of $4.0 million and $11.0 million for the three-month and nine-month periods ended August 31, 2025, respectively. For the three-month and nine-month periods ended August 31, 2024, we recognized land option contract abandonment charges of $1.2 million and $3.7 million, respectively.

Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, and in our estimations of the remaining operating lives of our inventory assets and the realization of our inventory balances, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated.

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