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Relative to the guidance we provided in January, we came in at the high-end of our revenue range and exceeded our guidance on both operating and gross margins. Our performance together with our ongoing share repurchases, drove our book value per share higher to $44.80, up 27% year-over-year. Although KB Home is perceived to be a California builder, our business is becoming more diversified and we like the balance of our geographic footprint. Our Southeast region has grown into a larger business, approaching 20% of our revenues this year as compared to only 11% five years ago. This region has significantly improved its profitability and returns over this timeframe, and we look forward to its continued growth. During the quarter, we achieved our first deliveries in Charlotte, which is a dynamic and growing top 10 housing market.

We are currently selling homes in two communities in Charlotte, with four additional communities scheduled to open this year. We expect Charlotte to further enhance the growth we are achieving in our Southeast region. We also produced our first deliveries in Boise during the quarter. Boise has been one of the fastest growing areas in the country, which created strong demand amid limited supply, and as a result, home prices appreciated rapidly. The market is now adjusting and we will remain selective with additional land investments until we see stability in pricing. Over time, we believe Boise will be a growth market for our company. The long-term outlook for the housing market remains favorable. As we have said in the past, the demographics of the millennials and Gen Zs are advantageous for our business as our primary buyer segments are first-time and first move-up buyers.

While these demographics are a strong underpinning for demand, we are also still facing low levels of inventory, especially at our price points. Just yesterday, February resales were reported, representing the first sequential increase in activity in 13 months, leaving resale inventory levels at 2.6 months supply. At the same time, new home inventory continues to be limited. As to our orders, demand in the back half of our first quarter improved significantly with a sequential increase in net orders in both January and February. This was in line with the expectation we shared with you on our last earnings call. We generated net orders of 2,142 for the quarter, down 49% year-over-year as compared to our projected range of down between 50% and 60%.

As I did on our last call, let me discuss gross orders and cancellation separately. We have continuously worked to balance pace and price to optimize each asset. With a sensitivity to our large backlog in many communities, we held off on adjusting pricing until more of that backlog was delivered. In the first quarter, we continued to convert our backlog to deliveries while now also reducing prices in many of our communities or offering other concessions. The timing for these actions was favorable given the seasonally stronger selling period. In addition, a more stable mortgage rate environment during January and February where rates had settled in to a low-to-mid 6% range was also beneficial in moving potential homebuyers off the sidelines.

Buyers seem to be acknowledging that these higher rates are the new normal as they return to the market. Our gross orders improved significantly on a sequential basis with January's orders increasing 64% relative to December and February increasing 58% versus January. For the quarter, our gross orders were 3,357, a year-over-year decline of 29%. On a per community basis, our gross absorption pace reached 6.6 orders per month in February above our long-term average for that month, contributing to an overall monthly pace of 4.5 gross orders per community for the quarter. We had a number of divisions that outperform this average, including Inland Empire, Sacramento, Las Vegas, Phoenix, and Orlando. For the quarter, our total cancellations moderated sequentially and generally homes and backlog are closing when they are completed.

As we continue to deliver out the backlog of orders failed that were written last summer during a lower interest rate environment, our cancellation rate should decline further. In the early weeks of March, our net orders have remained strong. For the first two and a half weeks of our 2023 second quarter, our net orders were down 24% against a very strong comparable prior year period. Although we do not typically provide an intra-quarter update on this call or a projected range for net orders because we are only a few weeks into the quarter, we believe it is helpful for investors due to the volatility in market conditions. While interest rate and economic uncertainties pose a large risk to the near-term demand, we are encouraged with our recent order trends.

Our strategic goal continues to be a monthly absorption pace of between four and five net orders per community, which we think we will achieve for the second quarter, resulting in a projected range of between three-thousand and thirty-seven hundred net orders. At the midpoint, this will represent a net order decline of 14% year-over-year. Our backlog at the end of the first quarter stood at over 7,000 homes valued at over $3.3 billion. This position will continue to provide consistency in deliveries and margins and supports our revenue projection for the year. During the quarter, we started 1,500 homes and ended the quarter with roughly 7,400 homes in production of which 77% are sold. We are ramping up our starts in the second quarter, as we continue to balance starts with sales, and as we look ahead to year-end deliveries.

We are committed to our built-to-order model, which is defined by the choice that we offer to buyers, including the selection of the floor plan, lots, square footage and personalized finishes. An important compliment to this offering of choice is the availability of quick moving homes in each of our communities to serve the buyer who prioritizes a near-term move-in date over personalization. In this regard, we always have some inventory available in each community. During the quarter, approximately 37% of our deliveries were from inventory sales, whether a speculative start, a rewrite of a cancellation or a model sale. At the end of the quarter, we had roughly 640 finished and unsold homes available, the majority of which we expect to sell and deliver in our second quarter.

We know buyers value our built-to-order approach as we achieve high customer satisfaction scores and typically one of the highest absorption rates per community in the industry. At the same time, there are some key financial benefits to this approach as we can capture incremental lot premiums and studio revenues. As a result, our gross margins are higher on our built-to-order sales. In the first quarter, we generated nearly $52,000 per delivery in lot premium and studio revenues consistent with our quarterly average in 2022, representing about 11% of our housing revenues. With that, let me pause for a moment and ask Rob to provide some color with respect to our sales approach as well as an operational update. Rob?

Robert McGibney: Thank you, Jeff. We are encouraged by the improvement in both demand and our sales results since early January. The initiatives we are utilizing are working and potential buyers that have moved to the sidelines are returning to the market. On our last earnings call, we shared with you two different sales strategies that we had implemented based primarily on how many homes we had in backlog in a community. For our high backlog communities with more homes already sold than remaining to sell, the emphasis was on our interest rate buy-down and lock programs to support sales as opposed to cutting price and putting our backlog at risk. For communities with either smaller backlogs or were only a small percentage of the backlog would be impacted, we adjusted prices to find the market.

During the first quarter, we continue to utilize these strategies and reduce prices at about one half of our communities. At the same time, considering the results that previous pricing actions generated together with an improving demand environment, we increased prices in some of our other communities as they were selling at a faster than targeted pace. As Jeff spoke to earlier, buyers responded to our actions as we saw a sequential improvement in our orders in January and February. As to build times, we continue to make progress on the front-end of the construction cycle, although we, along with most other new homebuilders, again, experienced delays in the latter stages of construction due to the large volume of homes in construction that are nearing completion in our served markets.

As to our deliveries in the quarter, build times were up seven days sequentially, but for new starts during the quarter, our build times improved by over one month between slab start and hanging drywall. We anticipate the improvement we are seeing in the front half of the construction schedule to flow through to our deliveries by the end of this year as we work to return to historical levels. Supply chain volatility continued to impact us in the later stages of construction. For example, appliance availability improved, but has not yet fully resolved. At the peak of the supply chain disruption, we had about 400 loaner appliances in place across our system due to back orders or delivery delays, and by the end of the first quarter, we had less than 20.

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In addition, ongoing municipal delays and the availability of transformers and electrical equipment contributed to delays in finalizing homes. We have many completed homes with loan approved buyers waiting on transformers and estimate that over a 100 additional homes would likely have closed in our first quarter and transformers been installed, a situation that was exacerbated by the hurricanes in Florida. While supply chain disruptions will likely continue at some level for the foreseeable future with ongoing shortages and flooring, heating and cooling materials and insulation, we are encouraged by the improvements we are seeing in many areas, which we believe will provide greater predictability for our business and for our customers. Another critical area of focus of our operations is driving direct cost reductions.

As we analyze the data, we continue to recognize savings on new starts, which are down relative to their peak last August by about $19,000 per unit, helping to offset the price decreases we took. Although we are working to reduce trade labor costs, they are proving to be sticky, and the market improvement in early 2023 is resulting in increasing starts across the industry that may slow our progress, but we remain committed to driving additional savings as we progress through the year. While we negotiate lower costs on our existing product array, we continue to focus on offering smaller floor plans with simplified and value engineered elevations and interiors that live bigger for less, providing a more affordable product that meets the needs of our customers and leveraging our scale and consistency in starts.

And with that, I will turn the call back over to Jeff. Jeff?

Jeffrey Mezger: Thanks, Rob. Buyers were about 80% of the loans funded during the first quarter financed their homes through our mortgage joint venture, KBHS Home Loans and their credit profile continues to be strong. About 66% of these customers qualified for a conventional mortgage and the vast majority of KBHS customers are using fixed rate products. The average cash down payment was 15%, which equates to over $74,000. At the income levels, the average household income of these buyers was over 130,000 and their FICO score was 733. While we target the median household income in our submarket, we continue to attract buyers above that income level with healthy credit who can qualify at higher mortgage rates and make a significant down payment.

As to our land investment activity during the quarter, we maintain our conservative approach with investments in new land purchases of only $50 million, down 86% year-over-year. We expect to stay highly selective with respect to additional land investments until markets settle and there's clarity in pricing to gain confidence in achieving our required returns. We continue to develop land that we already own, investing $317 million in development and related fees. As part of a regular review of our land portfolio, we have been active in renegotiating land contracts to reduce purchase prices and extend closing timelines. We are also canceling contracts that no longer meet our financial criteria, including contracts of purchase approximately 3,800 lots during the first quarter.

-: We like our current land and lot position and believe we can afford to be patient waiting until the time is right to be opportunistic with our capital. With a healthy level of cash generated from our operations, we increased the amount of cash that we returned to shareholders during the quarter with repurchases of $75 million or 2% of our shares outstanding. Over the past 24 months, we have now repurchased about 12% of our shares at an average price of $35.74, returning a total of over $515 million to shareholders, including our quarterly dividends. The repurchases are accretive to our earnings and book value per share and will support a higher return on equity in the future without compromising our growth. We also announced today that our Board of Directors authorized the repurchase of up to $500 million of our common stock.

This new authorization provides us with the flexibility to continue to repurchase our shares on an opportunistic basis. With our stock currently trading at a significant discount to our book value, the buybacks provide an extremely attractive return on the investment. In closing, we are off to a solid start for the year, and although there are some key unknowns with respect to interest rates and the economy, we are confident in our ability to navigate market conditions. As a result, we've resumed providing guidance for the full-year highlighted by expected revenues of about $5.5 billion and a healthy gross margin of roughly 21%. We look forward to continuing to update you on the progress of our business as we move throughout the year. With that, I'll turn the call over to Jeff for the financial review.

Jeff?

Jeff Kaminski: Thank you, Jeff, and good afternoon, everyone. I will now cover highlights of our 2023 first quarter financial performance as well as provide our second quarter and full-year outlooks. Given the challenging housing market environment, we are pleased with our execution during the first quarter. With our revenues essentially even with the prior year period, our healthy gross profit margin and expense containment efforts produced over $125 million of net income, down only $9 million as compared to our strong result in the year earlier quarter. In addition, we are providing an expanded full-year outlook rather than the limited guidance we provided in January. In the first quarter, our housing revenues of $1.38 billion were basically the same as a year-ago, as a 3% decrease in the number of homes delivered was mostly offset by a 2% increase in the overall average selling price of those homes.

From a regional perspective, an 18% decline in our West Coast region's housing revenues was largely offset by double-digit growth in our other three regions with the Southeast region generating the largest increase of 23%. Looking ahead to the 2023 second quarter, we expect to continue to successfully navigate the improving albeit still challenging supply chain conditions and generate housing revenues in the range of $1.35 billion to $1.5 billion. For the full-year, we are narrowing a range of expected housing revenues to $5.2 billion to $5.9 billion. We believe we are well positioned to achieve this topline performance supported by our first quarter ending backlog value of approximately $3.3 billion, our higher community count, and our assumption of current housing market conditions continuing for the remainder of the year along with expected improvement in supply chain performance and build times.

In the first quarter, our overall average selling price of homes delivered increased 2% year-over-year to approximately $495,000 as increases of 10% to 12% across three of our regions were mostly offset by a 5% decrease in our West Coast region due to a community mix shift in our Southern California business where several communities with $1 million plus selling prices delivered out in 2022. For the 2023 second quarter, we are projecting an average selling price of approximately $480,000 as we expect a mix shift composed of a lower proportion of deliveries in our higher priced West Coast region. We believe our overall average selling price for the full-year will be in a range of $480,000 to $490,000. Homebuilding operating income for the first quarter was $156.5 million compared to $169.6 million for the year earlier quarter.

The current quarter included abandonment charges of $5.3 million versus $0.2 million a year-ago. Our homebuilding operating income margin decreased to 11.4% compared to 12.2% for the 2022 first quarter, reflecting a lower gross margin, partly offset by a slight improvement in the SG&A expense ratio. Excluding inventory-related charges, our operating margin for the current quarter of 11.7% decreased 50 basis points year-over-year. For the 2023 second quarter, we anticipate our homebuilding operating income margin, excluding the impact of any inventory-related charges, will be in the range of 9.5% to 10.5%. For the full-year, we expect this metric to be in a range of 10% to 11%. Our 2023 first quarter housing gross profit margin was 21.5% as compared to 22.4% in the year earlier quarter.

Excluding inventory-related charges in both periods, our gross margin decreased by 60 basis points to 21.8%. The decline was mainly driven by slightly higher construction costs and an increase in homebuyer concessions. Assuming no inventory-related charges, we are forecasting a 2023 second quarter housing gross profit margin in a range of 20% to 21%. We anticipate quarterly gross margins will be relatively consistent sequentially for the last two quarters of the year, resulting in an expected full-year margin, excluding inventory-related charges in a range of 20.5% to 21.5%. Our selling, general and administrative expense ratio of 10.1% for the first quarter improved 10 basis points from a year-ago, reflecting slightly lower expenses on approximately the same topline revenue.

We are forecasting our 2023 second quarter SG&A ratio to be in the range of 10.3% to 10.8% and expect our full-year ratio will be approximately 10% to 11%. Our income tax expense of $36.7 million for the first quarter represented an effective tax rate of approximately 23%, an improvement from roughly 25% in the year earlier quarter. We continue to expect our effective tax rate for both the 2023 second quarter and full-year to be approximately 24%. Overall, we generated net income of $125.5 million or $1.45 per diluted share for the first quarter compared to $134.3 million or $1.47 per diluted share for the prior year period. The stock repurchases over the past two years favorably impacted the first quarter earnings per share by approximately $0.15 or 10%.

Turning now to community count. Our first quarter average of 251 was up 18% from the corresponding 2022 quarter. In the current quarter, we opened 24 communities and had fewer sellouts as compared to the prior year. We ended the quarter with 256 communities, up 23% from a year-ago with increases in all four regions. We believe our second quarter average community count will be up in the range of 15% to 20% year-over-year, and the full-year average will be up in the low double-digit percentage range. This larger portfolio of active selling communities will help offset the impact of weaker housing market conditions as compared to last year. Due to the soft market conditions in our healthy existing land pipeline, we continued to moderate our investments in land acquisitions and development during the first quarter with our total expenditures down 48% to $367 million.

As Jeff mentioned, land acquisitions represented only $50 million of the total first quarter investment, an 86% decrease. At quarter-end, our total liquidity was approximately $1.24 billion, including over $983 million of available capacity under our unsecured revolving credit facility and $260 million of cash. During the quarter, we repurchased nearly 2 million shares of our common stock at an average price of $38.16, which is 15% below our quarter-end book value per share. With our Board's recent $500 million repurchase authorization, we intend to continue to repurchase shares with the pace, volume and timing based on considerations of our cash flow, liquidity outlook, land investment opportunities and needs, the market price of our shares in the housing market and general economic environment.

Our quarter-end stakeholders' equity was $3.7 billion, and our book value per share was up 27% year-over-year to $44.80. In conclusion, we plan to continue to execute on our operational priorities throughout the remainder of the year, focusing on improving build times, reducing cost, driving net orders across our footprint and generating and deploying cash in line with our capital allocation strategy. As I mentioned earlier, we plan to continue our measured approach to share repurchases supported by our strong balance sheet and expected operating cash flow. We expect this repurchase strategy to continue to generate a tailwind to our financial results incrementally improving our EPS book value per share and returns. Driven by our anticipated operating performance in 2023, we expect further accretion in our book value per share as well as a low double-digit return on equity for the year as we continue to focus on stockholder value creation.

We will now take your questions. John, please open the lines.

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