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Share Name | Share Symbol | Market | Type |
---|---|---|---|
KB Home | NYSE:KBH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.41 | 2.19% | 65.68 | 66.27 | 64.68 | 64.93 | 717,433 | 01:00:00 |
Diluted Earnings Per Share Rises 83% to $.42
Net Orders Increase 16% to 2,508; Net Order Value Up 20% to $930 Million
KB Home (NYSE: KBH) today reported results for its third quarter ended August 31, 2016.
“We are very pleased with our third quarter results, as we continued our trajectory of solid earnings performance for the year,” said Jeffrey Mezger, chairman, president and chief executive officer. “Our execution on our core strategies was the primary catalyst for our double-digit growth in deliveries and housing revenues, and our significantly improved operating income margin, all of which helped drive an 83% increase in earnings per share. Moving forward, we intend to maintain our balanced approach centered on expanding our revenues and operating income margin, while sharpening our focus on increasing our asset efficiency in order to generate higher returns on invested capital.”
“Housing market conditions remain healthy, with positive employment, higher household income and economic trends supporting steady consumer demand amid constrained supply,” said Mezger. “In this environment, we believe we have the strategies in place to strengthen and leverage our growth platform to expand our business and increase market share across our current geographic footprint.”
Three Months Ended August 31, 2016 (comparisons on a year-over-year basis)
Nine Months Ended August 31, 2016 (comparisons on a year-over-year basis)
Backlog and Net Orders (comparisons on a year-over-year basis)
Balance Sheet (as of August 31, 2016)
Earnings Conference Call
The conference call to discuss the Company’s third quarter 2016 earnings will be broadcast live TODAY at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. To listen, please go to the Investor Relations section of the Company’s website at www.kbhome.com.
About KB Home
KB Home (NYSE: KBH) is one of the largest and most recognized homebuilders in the United States and an industry leader in sustainability, building innovative and highly energy- and water-efficient new homes. Founded in 1957 and the first homebuilder listed on the New York Stock Exchange, the Company has built nearly 600,000 homes for families from coast to coast. Distinguished by its personalized homebuilding approach, KB Home lets each buyer choose their lot location, floor plan, décor choices, design features and other special touches that matter most to them. To learn more about KB Home, call 888-KB-HOMES, visit www.kbhome.com or connect on Facebook.com/KBHome or Twitter.com/KBHome.
Forward-Looking and Cautionary Statements
Certain matters discussed in this press release, including any statements that are predictive in nature or concern future market and economic conditions, business and prospects, our future financial and operational performance, or our future actions and their expected results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and projections about future events and 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; material and trade costs and availability; changes in interest rates; 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; volatility in the market price of our common stock; 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, including the severe prolonged drought and related water-constrained conditions in the southwest United States and California; government actions, policies, programs and regulations directed at or affecting the housing market (including the Dodd-Frank Act, 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; the availability and cost of land in desirable areas; 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 (including our plans to transition out of the Metro Washington, D.C. area), gaining share and scale in our served 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 strategic and operational initiatives that will enable us to expand revenues and our operating income margin, increase our asset efficiency and generate higher returns on invested capital; the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services; the performance of mortgage lenders to our homebuyers; completing the wind-down of Home Community Mortgage as planned, and the management of its assets and operations during the wind-down process; whether we can establish a joint venture or other relationship with a mortgage banking services provider; information technology failures and data security breaches; 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.
KB HOME
CONSOLIDATED STATEMENTS OF OPERATIONSFor the Nine Months and Three Months Ended August 31, 2016 and 2015
(In Thousands, Except Per Share Amounts — Unaudited)
Nine Months Ended August 31, Three Months Ended August 31, 2016 2015 2016 2015 Total revenues $ 2,402,704 $ 2,046,247 $ 913,283 $ 843,157 Homebuilding: Revenues $ 2,394,315 $ 2,038,896 $ 910,111 $ 840,204 Costs and expenses (2,297,908 ) (1,970,654 ) (858,634 ) (804,222 ) Operating income 96,407 68,242 51,477 35,982 Interest income 395 342 109 87 Interest expense (5,667 ) (17,850 ) — (4,394 ) Equity in loss of unconsolidated joint ventures (1,964 ) (1,180 ) (536 ) (422 ) Homebuilding pretax income 89,171 49,554 51,050 31,253 Financial services: Revenues 8,389 7,351 3,172 2,953 Expenses (2,621 ) (2,802 ) (891 ) (910 ) Equity in income (loss) of unconsolidated joint ventures (652 ) 3,023 132 658 Financial services pretax income 5,116 7,572 2,413 2,701 Total pretax income 94,287 57,126 53,463 33,954 Income tax expense (26,200 ) (16,500 ) (14,100 ) (10,700 ) Net income $ 68,087 $ 40,626 $ 39,363 $ 23,254 Earnings per share: Basic $ .79 $ .44 $ .46 $ .25 Diluted $ .72 $ .42 $ .42 $ .23 Weighted average shares outstanding: Basic 85,952 92,005 84,457 92,065 Diluted 96,437 101,605 95,203 101,874 KB HOME CONSOLIDATED BALANCE SHEETS(In Thousands — Unaudited)
August 31,2016 November 30,2015 Assets Homebuilding: Cash and cash equivalents $ 334,669 $ 559,042 Restricted cash 602 9,344 Receivables 149,219 152,682 Inventories 3,597,673 3,313,747 Investments in unconsolidated joint ventures 61,526 71,558 Deferred tax assets, net 756,596 782,196 Other assets 113,341 112,774 5,013,626 5,001,343 Financial services 14,135 14,028 Total assets $ 5,027,761 $ 5,015,371 Liabilities and stockholders’ equity Homebuilding: Accounts payable $ 195,785 $ 183,770 Accrued expenses and other liabilities 471,295 513,414 Notes payable 2,674,795 2,625,536 3,341,875 3,322,720 Financial services 3,436 1,817 Stockholders’ equity 1,682,450 1,690,834 Total liabilities and stockholders’ equity $ 5,027,761 $ 5,015,371 KB HOME SUPPLEMENTAL INFORMATIONFor the Nine Months and Three Months Ended August 31, 2016 and 2015
(In Thousands, Except Average Selling Price — Unaudited)
Nine Months Ended August 31, Three Months Ended August 31, 2016 2015 2016 2015 Homebuilding revenues: Housing $ 2,390,165 $ 1,928,395 $ 910,111 $ 798,633 Land 4,150 110,501 — 41,571 Total $ 2,394,315 $ 2,038,896 $ 910,111 $ 840,204 Homebuilding costs and expenses: Construction and land costs Housing $ 2,007,621 $ 1,622,530 $ 760,490 $ 668,871 Land 10,401 103,446 — 40,277 Subtotal 2,018,022 1,725,976 760,490 709,148 Selling, general and administrative expenses 279,886 244,678 98,144 95,074 Total $ 2,297,908 $ 1,970,654 $ 858,634 $ 804,222 Interest expense: Interest incurred $ 138,994 $ 140,789 $ 46,485 $ 46,587 Interest capitalized (133,327 ) (122,939 ) (46,485 ) (42,193 ) Total $ 5,667 $ 17,850 $ — $ 4,394 Other information: Depreciation and amortization $ 8,431 $ 8,413 $ 2,829 $ 2,853 Amortization of previously capitalized interest 106,663 99,488 40,424 51,752 Average selling price: West Coast $ 572,100 $ 571,500 $ 583,300 $ 579,800 Southwest 286,400 279,500 287,800 285,200 Central 265,900 244,600 272,100 256,000 Southeast 279,700 278,100 287,600 287,300 Total $ 353,100 $ 343,400 $ 365,900 $ 357,200 KB HOME SUPPLEMENTAL INFORMATIONFor the Nine Months and Three Months Ended August 31, 2016 and 2015
(Dollars in Thousands — Unaudited)
Nine Months Ended August 31, Three Months Ended August 31, 2016 2015 2016 2015 Homes delivered: West Coast 1,799 1,498 710 625 Southwest 1,111 888 369 372 Central 2,647 2,212 976 822 Southeast 1,212 1,018 432 417 Total 6,769 5,616 2,487 2,236 Net orders: West Coast 2,325 1,886 775 564 Southwest 1,337 1,305 437 384 Central 3,042 2,864 931 818 Southeast 1,325 1,316 365 401 Total 8,029 7,371 2,508 2,167 Net order value: West Coast $ 1,346,091 $ 1,088,175 $ 435,598 $ 331,864 Southwest 385,501 368,394 122,876 110,181 Central 845,164 758,592 263,707 223,168 Southeast 380,509 364,169 107,408 108,075 Total $ 2,957,265 $ 2,579,330 $ 929,589 $ 773,288 August 31, 2016 August 31, 2015 Backlog Homes Backlog Value Backlog Homes Backlog Value Backlog data: West Coast 1,264 $ 724,795 981 $ 586,862 Southwest 831 234,736 741 204,802 Central 2,237 636,234 2,141 571,433 Southeast 894 252,815 801 222,381 Total 5,226 $ 1,848,580 4,664 $ 1,585,478KB HOMERECONCILIATION OF NON-GAAP FINANCIAL MEASURESFor the Nine Months and Three Months Ended August 31, 2016 and 2015(In Thousands, Except Percentages — Unaudited)
This press release contains, and Company management’s discussion of the results presented in this press release may include, information about the Company’s adjusted housing gross profit margin and ratio of net debt to capital, both of which are not calculated in accordance with generally accepted accounting principles (“GAAP”). The Company believes these non-GAAP financial measures are relevant and useful to investors in understanding its operations and the leverage employed in its operations, and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. However, because the adjusted housing gross profit margin and the ratio of net debt to capital are not calculated in accordance with GAAP, these financial measures may not be completely comparable to other companies in the homebuilding industry and, therefore, should not be considered in isolation or as an alternative to operating performance and/or financial measures prescribed by GAAP. Rather, these non-GAAP financial measures should be used to supplement their respective most directly comparable GAAP financial measures in order to provide a greater understanding of the factors and trends affecting the Company’s operations.
Adjusted Housing Gross Profit Margin
The following table reconciles the Company’s housing gross profit margin calculated in accordance with GAAP to the non-GAAP financial measure of the Company’s adjusted housing gross profit margin:
Nine Months Ended August 31, Three Months Ended August 31, 2016 2015 2016 2015 Housing revenues $ 2,390,165 $ 1,928,395 $ 910,111 $ 798,633 Housing construction and land costs (2,007,621 ) (1,622,530 ) (760,490 ) (668,871 ) Housing gross profits 382,544 305,865 149,621 129,762 Add: Amortization of previously capitalized interest (a) 106,181 83,050 40,424 35,314 Inventory-related charges (b) 10,615 4,516 3,052 3,532 Adjusted housing gross profits $ 499,340 $ 393,431 $ 193,097 $ 168,608 Housing gross profit margin as a percentage of housing revenues 16.0 % 15.9 % 16.4 % 16.2 % Adjusted housing gross profit margin as a percentage of housing revenues 20.9 % 20.4 % 21.2 % 21.1 %(a) Represents the amortization of previously capitalized interest associated with housing operations.
(b) Represents inventory impairment and land option contract abandonment charges associated with housing operations.
Adjusted housing gross profit margin is a non-GAAP financial measure, which the Company calculates by dividing housing revenues less housing construction and land costs excluding (1) amortization of previously capitalized interest associated with housing operations and (2) housing inventory impairment and land option contract abandonment charges recorded during a given period, by housing revenues. The most directly comparable GAAP financial measure is housing gross profit margin. The Company believes adjusted housing gross profit margin is a relevant and useful financial measure to investors in evaluating the Company’s performance as it measures the gross profits the Company generated specifically on the homes delivered during a given period. This non-GAAP financial measure isolates the impact that the amortization of previously capitalized interest associated with housing operations, and housing inventory impairment and land option contract abandonment charges have on housing gross profit margins, and allows investors to make comparisons with the Company’s competitors that adjust housing gross profit margins in a similar manner. The Company also believes investors will find adjusted housing gross profit margin relevant and useful because it represents a profitability measure that may be compared to a prior period without regard to variability of amortization of previously capitalized interest associated with housing operations, and housing inventory impairment and land option contract abandonment charges. This financial measure assists management in making strategic decisions regarding community location and product mix, product pricing and construction pace.
KB HOMERECONCILIATION OF NON-GAAP FINANCIAL MEASURES(In Thousands, Except Percentages — Unaudited)
Ratio of Net Debt to Capital
The following table reconciles the Company’s ratio of debt to capital calculated in accordance with GAAP to the non-GAAP financial measure of the Company’s ratio of net debt to capital:
August 31,2016 November 30,2015 Notes payable $ 2,674,795 $ 2,625,536 Stockholders’ equity 1,682,450 1,690,834 Total capital $ 4,357,245 $ 4,316,370 Ratio of debt to capital 61.4 % 60.8 % Notes payable $ 2,674,795 $ 2,625,536 Less: Cash and cash equivalents and restricted cash (335,271 ) (568,386 ) Net debt 2,339,524 2,057,150 Stockholders’ equity 1,682,450 1,690,834 Total capital $ 4,021,974 $ 3,747,984 Ratio of net debt to capital 58.2 % 54.9 %The ratio of net debt to capital is a non-GAAP financial measure, which the Company calculates by dividing notes payable, net of homebuilding cash and cash equivalents and restricted cash, by capital (notes payable, net of homebuilding cash and cash equivalents and restricted cash, plus stockholders’ equity). The most directly comparable GAAP financial measure is the ratio of debt to capital. The Company believes the ratio of net debt to capital is a relevant and useful financial measure to investors in understanding the leverage employed in the Company’s operations.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160920006816/en/
KB HomeInvestor Relations:Jill Peters310-893-7456jpeters@kbhome.comorMedia:Susan Martin310-231-4142smartin@kbhome.com
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