Revenues Grew 19% to $2.00 Billion; Diluted
Earnings Per Share Increased 36% to $2.52
Repurchased $100.0 Million of Common
Stock
KB Home (NYSE: KBH) today reported results for its fourth
quarter and year ended November 30, 2024.
“We had a strong finish to 2024, with significant year-over-year
growth in our fourth-quarter revenues and diluted earnings per
share. Our higher revenues reflected an increase in deliveries,
which were driven by faster build times. Net orders rose roughly
40% year over year, as buyers continued to demonstrate a desire for
homeownership and housing market conditions improved relative to
last year, despite ongoing mortgage interest rate headwinds,” said
Jeffrey Mezger, Chairman and Chief Executive Officer. “Our
performance in the quarter contributed to a healthy outcome for
2024, as we generated nearly $7.0 billion in total revenues and
$8.45 in diluted earnings per share. Operationally, we executed
well, opening 106 new communities, significantly reducing our build
times and achieving the highest level of customer satisfaction in
our Company’s history.”
“In 2025, we will remain focused on expanding our scale,
profitability and returns. We believe we are poised for growth
having invested over $2.8 billion in land acquisition and
development in 2024, and we plan to increase our investment again
in 2025. These investments will contribute to future community
count growth and, together with our affordably priced personalized
homes that our Built to Order model offers, we believe we are well
positioned to meet buyer demand. In addition, as in 2024, during
which we returned over $420 million to our shareholders through
both repurchases and dividends, we intend to continue our balanced
capital allocation approach,” concluded Mezger.
Three Months Ended November 30, 2024
(comparisons on a year-over-year basis)
- Revenues up 19% to $2.00 billion.
- Homes delivered increased 17% to 3,978.
- Average selling price rose 3% to $501,000.
- Homebuilding operating income increased 27% to $229.1 million.
The homebuilding operating income margin expanded 60 basis points
to 11.5%, reflecting improvements in both the housing gross profit
margin and the selling, general and administrative expenses ratio.
Inventory-related charges totaled $.9 million for the current
quarter and $1.2 million for the year-earlier quarter.
- The Company’s housing gross profit margin increased to 20.9%,
compared to 20.7%. Excluding the above-mentioned inventory-related
charges, the housing gross profit margin was 20.9%, compared to
20.8%.
- Selling, general and administrative expenses as a percentage of
housing revenues improved 50 basis points to 9.4%, mainly due to
increased operating leverage from higher housing revenues.
- Financial services pretax income grew 8% to $13.1 million due
to increased equity in income of the Company’s mortgage banking
joint venture. The mortgage banking joint venture’s results
reflected a greater volume of loan originations, largely due to an
increase in the number of homes delivered.
- Net income rose 27% to $190.6 million. Diluted earnings per
share grew 36% to $2.52, driven by higher net income and the
favorable impact of the Company’s common stock repurchases.
- The effective tax rate was 23.1%, compared to 24.7%.
Twelve Months Ended November 30, 2024
(comparisons on a year-over-year basis)
- Revenues increased 8% to $6.93 billion.
- Homes delivered were up 7% to 14,169.
- Average selling price rose slightly to $486,900.
- Net income grew 11% to $655.0 million.
- Diluted earnings per share increased 20% to $8.45.
Backlog and Net Orders (comparisons on
a year-over-year basis, except as noted)
- Net orders and net order value for the quarter both increased
by 41%, reaching 2,688 and $1.32 billion, respectively. Net order
value grew in each of the Company’s four regions, with increases
ranging from 21% in the Southwest to 60% in the Central region.
- Monthly net orders per community rose to 3.5, compared to
2.7.
- The cancellation rate as a percentage of gross orders improved
to 17% from 28%.
- Ending backlog homes totaled 4,434, compared to 5,510. Ending
backlog value was $2.24 billion, compared to $2.67 billion.
- The Company’s ending community count grew 7% to 258, and the
average community count for the quarter increased 8% to 256.
Balance Sheet as of November 30, 2024
(comparisons to November 30, 2023, except as noted)
- The Company had total liquidity of $1.68 billion, including
$598.0 million of cash and cash equivalents and $1.08 billion of
available capacity under its unsecured revolving credit facility,
with no cash borrowings outstanding.
- Inventories grew by $394.4 million, or 8%, to $5.53 billion.
- The Company’s investments in land and land development for the
twelve months ended November 30, 2024 increased 58% to $2.84
billion, compared to $1.80 billion for the year-earlier
period.
- The Company’s lots owned or under contract grew 37% to 76,703,
of which approximately 51% were owned and 49% were under contract.
By comparison, approximately 73% of the Company’s total lots were
owned and 27% were under contract as of November 30, 2023.
- Notes payable of $1.69 billion were approximately the same. The
Company’s debt to capital ratio improved 130 basis points to 29.4%,
compared to 30.7%.
- Stockholders’ equity increased to $4.06 billion, compared to
$3.81 billion, primarily reflecting higher net income that was
partially offset by common stock repurchases and cash dividends.
- In the 2024 fourth quarter, the Company repurchased 1,264,484
shares of its outstanding common stock at a cost of $100.0 million,
bringing its total repurchases in 2024 to 4,725,181 shares at a
cost of $350.0 million, or $74.07 per share. As of November 30,
2024, the Company had $700.0 million remaining under its current
common stock repurchase authorization.
- The total repurchases represented approximately 6% of the
Company’s outstanding common stock as of the beginning of the 2024
fiscal year.
- Based on the Company’s 72.2 million outstanding shares as of
November 30, 2024, book value per share of $56.27 expanded
12%.
- Return on equity was 16.6%, compared to 15.7%.
Guidance
The Company is providing the following guidance for its 2025
full year:
- Housing revenues in the range of $7.00 billion to $7.50
billion.
- Average selling price in the range of $488,000 to
$498,000.
- Homebuilding operating income as a percentage of revenues of
approximately 10.7%, assuming no inventory-related charges.
- Housing gross profit margin in the range of 20.0% to 21.0%,
assuming no inventory-related charges.
- Selling, general and administrative expenses as a percentage of
housing revenues in the range of 9.6% to 10.0%.
- Effective tax rate of approximately 24%.
- Ending community count of approximately 250.
The Company plans to also provide guidance for its 2025 first
quarter on its conference call today.
Conference Call
The conference call to discuss the Company’s 2024 fourth 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 is one of the largest and most trusted homebuilders in
the United States. We operate in 47 markets, have built over
680,000 quality homes in our more than 65-year history, and are
honored to be the #1 customer-ranked national homebuilder based on
third-party buyer surveys. What sets KB Home apart is building
strong, personal relationships with every customer and creating an
exceptional homebuying experience that offers our homebuyers the
ability to personalize their home based on what they value at a
price they can afford. As the industry leader in sustainability, KB
Home has achieved one of the highest residential energy-efficiency
ratings and delivered more ENERGY STAR® certified homes than any
other builder, helping to lower the total cost of homeownership.
For more information, visit 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. If we update or revise any
such statement(s), no assumption should be made that we will
further update or revise that statement(s) or update or revise any
other such statement(s). 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 securities
repurchases pursuant to our board of directors’ authorization;
material and trade costs and availability, including the greater
costs associated with achieving current and expected higher
standards for ENERGY STAR certified homes, and delays related to
state and municipal construction, permitting, inspection and
utility processes, which have been disrupted by key equipment
shortages; consumer and producer price inflation; changes in
interest rates, including those set by the Federal Reserve, which
the Federal Reserve may increase to moderate inflation, as it did
in 2022 and 2023, and those available in the capital markets or
from financial institutions and other lenders, and applicable to
mortgage loans; 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 and our senior unsecured term loan; the ability and
willingness of the applicable lenders and financial institutions,
or any substitute or additional lenders and financial institutions,
to meet their commitments or fund borrowings, extend credit or
provide payment guarantees to or for us under our revolving credit
facility or unsecured letter of credit facility; volatility in the
market price of our common stock; home selling prices, including
our homes’ selling prices, being unaffordable relative to consumer
incomes; 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, such
as a lack of adequate water supply to permit new home communities
in certain areas; any failure of lawmakers to agree on a budget or
appropriation legislation to fund the federal government’s
operations (also known as a government shutdown), and financial
markets’ and businesses’ reactions to any such failure; potential
regulatory instability associated with the upcoming change in the
U.S. presidential administrations; government actions, policies,
programs and regulations directed at or affecting the housing
market (including the 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, such as Internal Revenue Service guidance
regarding heightened qualification requirements for federal tax
credits for building energy-efficient homes; 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; disruptions
in world and regional trade flows, economic activity and supply
chains due to the military conflict and other attacks in the Middle
East region and military conflict in Ukraine, including those
stemming from wide-ranging sanctions the U.S. and other countries
have imposed or may further impose on Russian business sectors,
financial organizations, individuals and raw materials, the impact
of which may, among other things, increase our operational costs,
exacerbate building materials and appliance shortages and/or reduce
our revenues and earnings; 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 and efficiently develop acquired
land parcels and open new home communities; impairment, land option
contract abandonment or other inventory-related charges, including
any stemming from decreases in the value of our land assets; our
warranty claims experience with respect to homes previously
delivered and actual warranty costs incurred; costs and/or charges
arising from regulatory compliance requirements, including the
costs to implement recent federal and state climate-related
disclosure rules, 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, through, among other things,
our making substantial investments in land and land development,
which, in some cases, involves putting significant capital over
several years into large projects in one location, 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 any of our other
public filings, presentations or disclosures; income tax expense
volatility associated with stock-based compensation; the ability of
our homebuyers to obtain homeowners and flood insurance policies,
and/or typical or lender-required policies for other hazards or
events, for their homes, which may depend on the ability and
willingness of insurers or government-funded or -sponsored programs
to offer coverage at an affordable price or at all; the ability of
our homebuyers to obtain residential mortgage loans and mortgage
banking services, which may depend on the ability and willingness
of lenders and financial institutions to offer such loans and
services to our homebuyers; the performance of mortgage lenders to
our homebuyers; the performance of KBHS Home Loans, LLC (“KBHS”);
the ability and willingness of lenders and financial institutions
to extend credit facilities to KBHS to fund its originated mortgage
loans; information technology failures and data security breaches;
an epidemic, pandemic or significant seasonal or other disease
outbreak, 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
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;
widespread protests and/or civil unrest, whether due to political
events, social movements or other reasons; 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 and Twelve
Months Ended November 30, 2024 and 2023
(In Thousands, Except Per Share
Amounts)
Three Months Ended November
30,
Twelve Months Ended November
30,
2024
2023
2024
2023
Total revenues
$
1,999,899
$
1,673,988
$
6,930,086
$
6,410,629
Homebuilding:
Revenues
$
1,993,050
$
1,665,004
$
6,902,239
$
6,381,106
Costs and expenses
(1,763,951
)
(1,484,100
)
(6,138,331
)
(5,662,369
)
Operating income
229,099
180,904
763,908
718,737
Interest income and other
2,722
6,071
32,101
13,759
Equity in income (loss) of unconsolidated
joint ventures
2,787
469
6,019
(713
)
Homebuilding pretax income
234,608
187,444
802,028
731,783
Financial services:
Revenues
6,849
8,984
27,847
29,523
Expenses
(1,506
)
(1,366
)
(6,133
)
(5,726
)
Equity in income of unconsolidated joint
venture
7,754
4,540
27,176
15,697
Financial services pretax income
13,097
12,158
48,890
39,494
Total pretax income
247,705
199,602
850,918
771,277
Income tax expense
(57,100
)
(49,300
)
(195,900
)
(181,100
)
Net income
$
190,605
$
150,302
$
655,018
$
590,177
Earnings per share:
Basic
$
2.59
$
1.91
$
8.70
$
7.25
Diluted
$
2.52
$
1.85
$
8.45
$
7.03
Weighted average shares
outstanding:
Basic
72,983
77,986
74,753
80,842
Diluted
75,114
80,511
76,955
83,380
KB HOME
CONSOLIDATED BALANCE
SHEETS
(In Thousands)
November 30, 2024
November 30, 2023
Assets
Homebuilding:
Cash and cash equivalents
$
597,973
$
727,076
Receivables
377,533
366,862
Inventories
5,528,020
5,133,646
Investments in unconsolidated joint
ventures
67,020
59,128
Property and equipment, net
90,359
88,309
Deferred tax assets, net
102,421
119,475
Other assets
105,920
96,987
6,869,246
6,591,483
Financial services
66,923
56,879
Total assets
$
6,936,169
$
6,648,362
Liabilities and stockholders’
equity
Homebuilding:
Accounts payable
$
384,894
$
388,452
Accrued expenses and other liabilities
796,261
758,227
Notes payable
1,691,679
1,689,898
2,872,834
2,836,577
Financial services
2,719
1,645
Stockholders’ equity
4,060,616
3,810,140
Total liabilities and stockholders’
equity
$
6,936,169
$
6,648,362
KB HOME
SUPPLEMENTAL
INFORMATION
For the Three Months and Twelve
Months Ended November 30, 2024 and 2023
(In Thousands, Except Average
Selling Price)
Three Months Ended November
30,
Twelve Months Ended November
30,
2024
2023
2024
2023
Homebuilding revenues:
Housing
$
1,993,050
$
1,660,354
$
6,898,667
$
6,370,421
Land
—
4,650
3,572
10,685
Total
$
1,993,050
$
1,665,004
$
6,902,239
$
6,381,106
Homebuilding costs and
expenses:
Construction and land costs
Housing
$
1,577,290
$
1,315,935
$
5,449,382
$
5,020,783
Land
—
4,581
2,101
9,492
Subtotal
1,577,290
1,320,516
5,451,483
5,030,275
Selling, general and administrative
expenses
186,661
163,584
686,848
632,094
Total
$
1,763,951
$
1,484,100
$
6,138,331
$
5,662,369
Interest expense:
Interest incurred
$
25,977
$
26,477
$
105,642
$
107,086
Interest capitalized
(25,977
)
(26,477
)
(105,642
)
(107,086
)
Total
$
—
$
—
$
—
$
—
Other information:
Amortization of previously capitalized
interest
$
33,758
$
30,832
$
117,630
$
118,205
Depreciation and amortization
9,894
10,283
40,755
39,794
Average selling price:
West Coast
$
706,300
$
679,400
$
679,300
$
689,800
Southwest
455,600
431,500
453,300
431,200
Central
355,200
381,300
357,800
405,500
Southeast
412,300
405,200
414,600
396,900
Total
$
501,000
$
487,300
$
486,900
$
481,300
KB HOME
SUPPLEMENTAL
INFORMATION
For the Three Months and Twelve
Months Ended November 30, 2024 and 2023
(Dollars in Thousands)
Three Months Ended November
30,
Twelve Months Ended November
30,
2024
2023
2024
2023
Homes delivered:
West Coast
1,295
1,045
4,316
3,365
Southwest
780
668
2,890
2,699
Central
1,080
1,011
4,051
4,506
Southeast
823
683
2,912
2,666
Total
3,978
3,407
14,169
13,236
Net orders:
West Coast
848
561
3,982
3,623
Southwest
546
471
2,645
2,386
Central
729
466
3,917
2,784
Southeast
565
411
2,549
2,291
Total
2,688
1,909
13,093
11,084
Net order value:
West Coast
$
565,965
$
379,128
$
2,780,631
$
2,423,459
Southwest
257,724
212,791
1,225,604
1,032,334
Central
264,277
165,058
1,427,132
965,994
Southeast
228,687
175,667
1,040,528
924,754
Total
$
1,316,653
$
932,644
$
6,473,895
$
5,346,541
November 30, 2024
November 30, 2023
Homes
Value
Homes
Value
Backlog data:
West Coast
1,211
$
874,364
1,545
$
1,025,381
Southwest
1,134
532,371
1,379
616,717
Central
1,133
436,093
1,267
458,593
Southeast
956
400,079
1,319
566,988
Total
4,434
$
2,242,907
5,510
$
2,667,679
KB HOME RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (In Thousands, Except Percentages)
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, which is not calculated in accordance with generally
accepted accounting principles (“GAAP”). The Company believes this
non-GAAP financial measure is relevant and useful to investors in
understanding 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 it is not
calculated in accordance with GAAP, this non-GAAP financial measure
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, this non-GAAP
financial measure should be used to supplement the most directly
comparable GAAP financial measure 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 November
30,
Twelve Months Ended November
30,
2024
2023
2024
2023
Housing revenues
$
1,993,050
$
1,660,354
$
6,898,667
$
6,370,421
Housing construction and land costs
(1,577,290
)
(1,315,935
)
(5,449,382
)
(5,020,783
)
Housing gross profits
415,760
344,419
1,449,285
1,349,638
Add: Inventory-related charges (a)
912
1,217
4,597
11,424
Adjusted housing gross profits
$
416,672
$
345,636
$
1,453,882
$
1,361,062
Housing gross profit margin
20.9
%
20.7
%
21.0
%
21.2
%
Adjusted housing gross profit margin
20.9
%
20.8
%
21.1
%
21.4
%
(a) 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 housing
inventory impairment and land option contract abandonment charges
(as applicable) 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 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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250113858540/en/
For Further Information: Jill Peters, Investor Relations
Contact (310) 893-7456 or jpeters@kbhome.com Cara Kane, Media
Contact (321) 299-6844 or ckane@kbhome.com
KB Home (NYSE:KBH)
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KB Home (NYSE:KBH)
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