NVRNVR, Inc.

The Mid South East segment had an approximate $33,000, $186,100, or 13%, increase 48%, decrease in segment profit in 2024 2025 compared to 2023. 2024. The increase decrease in segment profit was driven primarily due to a decrease in the segment's gross profit margin percentage, a decrease in segment revenues and increases in SG&A expenses and the corporate capital allocation charge. The segment's gross profit margin percentage decreased to 18.3% in 2025 from 22.3% in 2024. Gross profit margins were negatively impacted primarily by higher lot costs, an increase in segment revenues of approximately $138,200, or 8%, coupled with certain operating costs, and an increase in gross profit margins lot deposit impairment charges year over year. Segment revenues increased in 2025 decreased by approximately $196,200, or 7%, due primarily to a 4% increase 6% decrease in settlements the number of units settled year over year, coupled with a 3% increase year. The decrease in the average settlement price. The increase in settlements resulted from a 7% higher number of units settled is primarily attributable to an 11% lower backlog unit balance entering 2024 2025 compared to backlog entering 2023, coupled with 2024, offset partially by a higher backlog turnover rate year over year. The SG&A expenses were 12% higher year over year, resulting primarily from higher personnel and marketing costs attributable to a 23% increase in the average settlement price is attributable to a 2% higher average price number of units in backlog entering 2024 compared to backlog entering 2023, coupled with a 5% higher average price of New Orders for the first six months of 2024 compared to the same period of 2023. The segment’s gross profit margin percentage increased to 22.3% in 2024 from 21.6% in 2023. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot costs and closing cost assistance active communities year over year.

Our mortgage banking operations may be responsible for losses associated with mortgage loans originated and sold to investors in the event of errors or omissions relating to certain representations and warranties that the loans sold meet certain requirements, including representations as to underwriting standards, the type of collateral, the existence of private mortgage insurance, and the validity of certain borrower representations in connection with the loan. The resolution of claims related to alleged breaches of these representations and warranties and repurchase claims could have a material adverse effect on our financial condition, cash flows and results of operations and could result in losses that exceed existing estimates and accruals. Because of the uncertainties inherent in estimating these matters, there can be no assurance that any amounts reserved will be adequate or that any potential inadequacies will not have a material adverse effect on our results of operations.