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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 Grew 62% to $1.02 Gross Margin Expanded to 20.8%, Up 340 Basis Points Net Order Value Rose 35%; Backlog Value Increased 74% to $3.7 Billion
KB Home (NYSE: KBH) today reported results for its first quarter ended February 28, 2021.
“We begin 2021 with positive momentum continuing across our business. We achieved a 62% increase in our first quarter diluted earnings per share primarily driven by substantial growth in our gross margin to 21.1%, excluding inventory-related charges. Multiple factors contributed to our significantly higher profitability, in particular, our effective management of order pace, price and starts to optimize our assets and generate a strong return on each community,” said Jeffrey Mezger, Chairman, President and Chief Executive Officer. “The combination of healthy housing market conditions and our customer-centric approach produced a 23% year-over-year increase in our net orders to nearly 4,300 homes. The ongoing strength in our order activity reflects the favorable demographics underlying demand. Millennials, the largest adult population in the U.S., are now in their prime homebuying years and continue to represent our largest cohort of buyers, underscoring our competitive advantage in serving first-time buyers and success in building homes in desirable locations at affordable price points.”
“With our full year coming into better view, supported by a 74% year-over-year increase in our backlog value and our ability to match housing starts to net orders, we believe we are now even better positioned for meaningful growth in 2021,” continued Mezger. “We are executing on our plan to expand our scale while driving both margins and returns higher.”
Three Months Ended February 28, 2021 (comparisons on a year-over-year basis)
Backlog and Net Orders (comparisons on a year-over-year basis)
Balance Sheet as of February 28, 2021 (comparisons to November 30, 2020)
Conference Call
The conference call to discuss the Company’s 2021 first quarter 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 kbhome.com.
About KB Home
KB Home (NYSE: KBH) is one of the largest and most recognized homebuilders in the United States and has been building quality homes for over 60 years. Today, KB Home operates in 45 markets across eight states, serving a wide array of buyer groups. What sets us apart is how we give our customers the ability to personalize their homes from homesites and floor plans to cabinets and countertops, at a price that fits their budget. We are the first builder to make every home we build ENERGY STAR® certified. In fact, we go beyond the EPA requirements by ensuring every ENERGY STAR certified KB home has been tested and verified by a third-party inspector to meet the EPA’s strict certification standards, which helps lower the cost of ownership and to make our new homes healthier and more comfortable than new ones without certification. We also work with our customers every step of the way, building strong personal relationships so they have a real partner in the homebuying process, and the experience is as simple and easy as possible. Learn more about how we build homes built on relationships by visiting kbhome.com.
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; the execution of any share repurchases pursuant to our board of directors’ authorization; material and trade costs and availability, particularly lumber; 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; home selling prices, including our homes’ selling prices, increasing at a faster rate than consumer incomes; 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 Coronavirus Aid, Relief, and Economic Security Act relief provisions for outstanding mortgage loans and any extensions or broadening thereof, 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; 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 develop acquired land parcels and open new home communities; 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 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, our mortgage banking joint venture with Stearns Ventures, LLC; 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, 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; a continuation of widespread protests and civil unrest related to efforts to institute law enforcement and other social and political reforms, and the impacts of implementing or failing to implement any such reforms; 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 OPERATIONS For the Three Months Ended February 28, 2021 and February 29, 2020 (In Thousands, Except Per Share Amounts - Unaudited)
Three Months Ended
February 28, 2021
February 29, 2020
Total revenues
$
1,141,738
$
1,075,935
Homebuilding:
Revenues
$
1,138,008
$
1,072,382
Costs and expenses
(1,023,914
)
(1,012,187
)
Operating income
114,094
60,195
Interest income
653
935
Equity in income of unconsolidated joint ventures
304
1,905
Homebuilding pretax income
115,051
63,035
Financial services:
Revenues
3,730
3,553
Expenses
(1,200
)
(962
)
Equity in income of unconsolidated joint ventures
5,970
3,222
Financial services pretax income
8,500
5,813
Total pretax income
123,551
68,848
Income tax expense
(26,500
)
(9,100
)
Net income
$
97,051
$
59,748
Earnings per share:
Basic
$
1.05
$
.66
Diluted
$
1.02
$
.63
Weighted average shares outstanding:
Basic
91,716
89,842
Diluted
94,903
94,205
KB HOME CONSOLIDATED BALANCE SHEETS (In Thousands - Unaudited)
February 28, 2021
November 30, 2020
Assets
Homebuilding:
Cash and cash equivalents
$
569,793
$
681,190
Receivables
249,234
272,659
Inventories
4,123,953
3,897,482
Investments in unconsolidated joint ventures
46,453
46,785
Property and equipment, net
67,558
65,547
Deferred tax assets, net
215,145
231,067
Other assets
118,306
125,510
5,390,442
5,320,240
Financial services
36,342
36,202
Total assets
$
5,426,784
$
5,356,442
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable
$
280,541
$
273,368
Accrued expenses and other liabilities
649,110
667,501
Notes payable
1,747,007
1,747,175
2,676,658
2,688,044
Financial services
1,942
2,629
Stockholders’ equity
2,748,184
2,665,769
Total liabilities and stockholders’ equity
$
5,426,784
$
5,356,442
KB HOME SUPPLEMENTAL INFORMATION For the Three Months Ended February 28, 2021 and February 29, 2020 (In Thousands, Except Average Selling Price - Unaudited)
Three Months Ended
February 28, 2021
February 29, 2020
Homebuilding revenues:
Housing
$
1,137,353
$
1,071,810
Land
655
572
Total
$
1,138,008
$
1,072,382
Homebuilding costs and expenses:
Construction and land costs
Housing
$
901,178
$
885,481
Land
731
572
Subtotal
901,909
886,053
Selling, general and administrative expenses
122,005
126,134
Total
$
1,023,914
$
1,012,187
Interest expense:
Interest incurred
$
31,092
$
30,962
Interest capitalized
(31,092
)
(30,962
)
Total
$
—
$
—
Other information:
Amortization of previously capitalized interest
$
32,650
$
34,575
Depreciation and amortization
7,724
7,929
Average selling price:
West Coast
$
582,000
$
610,200
Southwest
351,500
316,400
Central
306,300
292,900
Southeast
288,400
292,000
Total
$
397,100
$
389,500
KB HOME SUPPLEMENTAL INFORMATION For the Three Months Ended February 28, 2021 and February 29, 2020 (Dollars in Thousands - Unaudited)
Three Months Ended
February 28, 2021
February 29, 2020
Homes delivered:
West Coast
884
794
Southwest
534
603
Central
1,011
968
Southeast
435
387
Total
2,864
2,752
Net orders:
West Coast
1,160
979
Southwest
867
765
Central
1,598
1,217
Southeast
667
534
Total
4,292
3,495
Net order value:
West Coast
$
779,551
$
598,416
Southwest
333,919
257,220
Central
552,941
373,481
Southeast
202,657
153,537
Total
$
1,869,068
$
1,382,654
February 28, 2021
February 29, 2020
Homes
Value
Homes
Value
Backlog data:
West Coast
2,300
$
1,417,644
1,228
$
712,218
Southwest
1,854
669,939
1,400
456,024
Central
3,624
1,176,047
2,237
680,904
Southeast
1,460
430,488
956
275,405
Total
9,238
$
3,694,118
5,821
$
2,124,551
KB HOME RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (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, neither of which is 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 they are not calculated in accordance with GAAP, these non-GAAP financial measures may not be completely comparable to other companies in the homebuilding industry and, thus, 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:
Three Months Ended
February 28, 2021
February 29, 2020
Housing revenues
$
1,137,353
$
1,071,810
Housing construction and land costs
(901,178
)
(885,481
)
Housing gross profits
236,175
186,329
Add: Inventory-related charges (a)
4,064
5,672
Housing gross profits excluding inventory-related charges
240,239
192,001
Add: Amortization of previously capitalized interest (b)
32,496
34,575
Adjusted housing gross profits
$
272,735
$
226,576
Housing gross profit margin
20.8
%
17.4
%
Housing gross profit margin excluding inventory-related charges
21.1
%
17.9
%
Adjusted housing gross profit margin
24.0
%
21.1
%
(a) Represents inventory impairment and land option contract abandonment charges associated with housing operations.
(b) Represents the amortization of previously capitalized interest 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) housing inventory impairment and land option contract abandonment charges (as applicable) recorded during a given period and (2) amortization of previously capitalized interest associated with housing operations, 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 housing inventory impairment and land option contract abandonment charges, and the amortization of previously capitalized interest associated with housing operations, 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 housing inventory impairment and land option contract abandonment charges, and amortization of previously capitalized interest associated with housing operations. This financial measure assists management in making strategic decisions regarding community location and product mix, product pricing and construction pace.
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:
February 28, 2021
November 30, 2020
Notes payable
$
1,747,007
$
1,747,175
Stockholders’ equity
2,748,184
2,665,769
Total capital
$
4,495,191
$
4,412,944
Ratio of debt to capital
38.9
%
39.6
%
Notes payable
$
1,747,007
$
1,747,175
Less: Cash and cash equivalents
(569,793
)
(681,190
)
Net debt
1,177,214
1,065,985
Stockholders’ equity
2,748,184
2,665,769
Total capital
$
3,925,398
$
3,731,754
Ratio of net debt to capital
30.0
%
28.6
%
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, by capital (notes payable, net of homebuilding cash and cash equivalents, 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: https://www.businesswire.com/news/home/20210324005268/en/
Jill Peters, Investor Relations Contact (310) 893-7456 or jpeters@kbhome.com
Cara Kane, Media Contact (321) 299-6844 or ckane@kbhome.com
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