KB Home Reports 2025 First Quarter Results
Revenues of
Repurchased
“Consumers are working through affordability concerns and uncertainties related to macroeconomic and geopolitical issues, which are causing them to move slowly in their homebuying decisions,” said Jeffrey Mezger, Chairman and Chief Executive Officer. “Demand at the start of this Spring’s selling season was more muted than what we have seen historically, despite a healthy level of traffic in our communities. In mid-February, we took steps to reposition our communities to offer the most compelling value, and buyers responded favorably to these adjustments. Although we missed our sales goals for the first quarter, we are encouraged by the significant improvement in weekly sales and normalizing absorption pace over the last five weeks.”
“While our sales trends have improved, we are reducing our revenue guidance for fiscal 2025 primarily to reflect the lower level of net orders we generated in the first quarter. I am confident that our experienced team will effectively navigate the variability in market conditions and execute on our objectives for this year, while continuing to deliver high levels of customer satisfaction,” concluded Mezger.
Three Months Ended February 28, 2025 (comparisons on a year-over-year basis)
-
Revenues of
were down$1.39 billion 5% , compared to .$1.47 billion -
Homes delivered decreased
9% to 2,770. -
Average selling price rose
4% to .$500,700 -
Homebuilding operating income was
, compared to$127.3 million . The homebuilding operating income margin was$157.7 million 9.2% , compared to10.8% , primarily reflecting a lower housing gross profit margin. Inventory-related charges totaled for the current quarter and$1.5 million for the year-earlier quarter.$1.3 million -
The Company’s housing gross profit margin decreased to
20.2% , compared to21.5% , mainly due to higher relative land costs and homebuyer concessions, as well as reduced operating leverage. -
Selling, general and administrative expenses as a percentage of housing revenues were
11.0% , compared to10.8% .
-
The Company’s housing gross profit margin decreased to
-
Financial services pretax income declined
35% to , primarily due to decreased equity in income of the Company’s mortgage banking joint venture. The mortgage banking joint venture’s results reflected a lower volume of loan originations, largely due to fewer homes delivered.$7.5 million -
Net income decreased
21% to . Diluted earnings per share was down$109.6 million 15% to , reflecting current quarter net income, partly offset by the favorable impact of the Company’s common stock repurchases.$1.49 -
The effective tax rate was
21.4% , compared to20.6% .
-
The effective tax rate was
Net Orders and Backlog (comparisons on a year-over-year basis, except as noted)
-
Net orders of 2,772 were down
17% , contributing to a decrease in ending backlog homes to 4,436. Ending backlog value declined21% to .$2.20 billion - Monthly net orders per community decreased to 3.6, compared to 4.6.
-
The cancellation rate as a percentage of gross orders was
16% , compared to14% .
-
The Company’s average community count for the quarter reached 257, while the ending community count expanded to 255, both representing a
7% increase.
Balance Sheet as of February 28, 2025 (comparisons to November 30, 2024, except as noted)
-
The Company had total liquidity of
, including$1.25 billion of cash and cash equivalents and$267.8 million of available capacity under its unsecured revolving credit facility, with$981.7 million of cash borrowings outstanding.$100.0 million -
Inventories increased
7% to . On a year-over-year basis, inventories grew$5.94 billion 13% .-
The Company’s investments in land and land development increased
57% to , compared to$920.3 million for the year-earlier quarter.$587.1 million -
The Company’s lots owned or under contract expanded slightly to 78,233, of which approximately
54% were owned and46% were under contract. Year over year, the Company’s lot portfolio grew41% , up from 55,509.
-
The Company’s investments in land and land development increased
-
Notes payable were
, compared to$1.79 billion , reflecting cash borrowings outstanding under the Company’s unsecured revolving credit facility. The Company’s debt to capital ratio was$1.69 billion 30.5% , compared to29.4% . -
Stockholders’ equity grew to
, compared to$4.09 billion , mainly due to current quarter net income, partly offset by common stock repurchases and cash dividends.$4.06 billion -
In the 2025 first quarter, the Company repurchased 753,939 shares of its outstanding common stock at a cost of
, or$50.0 million per share. As of February 28, 2025, the Company had$66.32 remaining under its current common stock repurchase authorization.$650.0 million -
Based on the Company’s 71.7 million outstanding shares as of February 28, 2025, book value per share of
increased$57.05 12% year over year.
-
In the 2025 first quarter, the Company repurchased 753,939 shares of its outstanding common stock at a cost of
Guidance
The Company is providing the following guidance for its 2025 full year:
-
Housing revenues in the range of
to$6.60 billion .$7.00 billion -
Average selling price in the range of
to$480,000 .$495,000 -
Homebuilding operating income as a percentage of revenues of approximately
9.4% , assuming no inventory-related charges.-
Housing gross profit margin in the range of
19.2% to20.0% , assuming no inventory-related charges. -
Selling, general and administrative expenses as a percentage of housing revenues in the range of
10.0% to10.4% .
-
Housing gross profit margin in the range of
-
Effective tax rate of approximately
24% . - Ending community count of approximately 250.
The Company plans to also provide guidance for its 2025 second quarter on its conference call today.
Conference Call
The conference call to discuss the Company’s 2025 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 is one of the largest and most trusted homebuilders in
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; our obtaining adequate levels of affordable insurance for our business and our ability to cover any incurred costs, liabilities or losses that are not covered by the insurance we have procured; 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; regulatory instability associated with the current
KB HOME |
|||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
For the Three Months Ended February 28, 2025 and February 29, 2024 |
|||||||
(In Thousands, Except Per Share Amounts – Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
February 28, 2025 |
|
February 29, 2024 |
||||
Total revenues |
$ |
1,391,777 |
|
|
$ |
1,467,766 |
|
Homebuilding: |
|
|
|
||||
Revenues |
$ |
1,387,041 |
|
|
$ |
1,461,698 |
|
Costs and expenses |
|
(1,259,702 |
) |
|
|
(1,304,022 |
) |
Operating income |
|
127,339 |
|
|
|
157,676 |
|
Interest income |
|
2,079 |
|
|
|
5,857 |
|
Equity in income (loss) of unconsolidated joint ventures |
|
2,413 |
|
|
|
(445 |
) |
Homebuilding pretax income |
|
131,831 |
|
|
|
163,088 |
|
Financial services: |
|
|
|
||||
Revenues |
|
4,736 |
|
|
|
6,068 |
|
Expenses |
|
(1,539 |
) |
|
|
(1,546 |
) |
Equity in income of unconsolidated joint venture |
|
4,329 |
|
|
|
7,055 |
|
Financial services pretax income |
|
7,526 |
|
|
|
11,577 |
|
Total pretax income |
|
139,357 |
|
|
|
174,665 |
|
Income tax expense |
|
(29,800 |
) |
|
|
(36,000 |
) |
Net income |
$ |
109,557 |
|
|
$ |
138,665 |
|
Earnings per share: |
|
|
|
||||
Basic |
$ |
1.52 |
|
|
$ |
1.81 |
|
Diluted |
$ |
1.49 |
|
|
$ |
1.76 |
|
Weighted average shares outstanding: |
|
|
|
||||
Basic |
|
71,537 |
|
|
|
75,894 |
|
Diluted |
|
73,012 |
|
|
|
78,264 |
|
KB HOME |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(In Thousands – Unaudited) |
|||||||
|
February 28,
|
|
November 30,
|
||||
Assets |
|
|
|
||||
Homebuilding: |
|
|
|
||||
Cash and cash equivalents |
$ |
267,833 |
|
$ |
597,973 |
||
Receivables |
|
347,774 |
|
|
377,533 |
||
Inventories |
|
5,942,547 |
|
|
5,528,020 |
||
Investments in unconsolidated joint ventures |
|
61,269 |
|
|
67,020 |
||
Property and equipment, net |
|
92,764 |
|
|
90,359 |
||
Deferred tax assets, net |
|
102,421 |
|
|
102,421 |
||
Other assets |
|
102,512 |
|
|
105,920 |
||
|
|
6,917,120 |
|
|
6,869,246 |
||
Financial services |
|
62,140 |
|
|
66,923 |
||
Total assets |
$ |
6,979,260 |
|
$ |
6,936,169 |
||
|
|
|
|
||||
Liabilities and stockholders’ equity |
|
|
|
||||
Homebuilding: |
|
|
|
||||
Accounts payable |
$ |
364,039 |
|
$ |
384,894 |
||
Accrued expenses and other liabilities |
|
727,950 |
|
|
796,261 |
||
Notes payable |
|
1,792,307 |
|
|
1,691,679 |
||
|
|
2,884,296 |
|
|
2,872,834 |
||
Financial services |
|
2,286 |
|
|
2,719 |
||
Stockholders’ equity |
|
4,092,678 |
|
|
4,060,616 |
||
Total liabilities and stockholders’ equity |
$ |
6,979,260 |
|
$ |
6,936,169 |
KB HOME |
|||||||
SUPPLEMENTAL INFORMATION |
|||||||
For the Three Months Ended February 28, 2025 and February 29, 2024 |
|||||||
(In Thousands, Except Average Selling Price – Unaudited) |
|||||||
|
|
|
|
||||
|
Three Months Ended |
||||||
|
February 28, 2025 |
|
February 29, 2024 |
||||
Homebuilding revenues: |
|
|
|
||||
Housing |
$ |
1,387,041 |
|
|
$ |
1,458,126 |
|
Land |
|
— |
|
|
|
3,572 |
|
Total |
$ |
1,387,041 |
|
|
$ |
1,461,698 |
|
|
|
|
|
||||
|
|
|
|
||||
Homebuilding costs and expenses: |
|
|
|
||||
Construction and land costs |
|
|
|
||||
Housing |
$ |
1,107,414 |
|
|
$ |
1,144,427 |
|
Land |
|
— |
|
|
|
2,101 |
|
Subtotal |
|
1,107,414 |
|
|
|
1,146,528 |
|
Selling, general and administrative expenses |
|
152,288 |
|
|
|
157,494 |
|
Total |
$ |
1,259,702 |
|
|
$ |
1,304,022 |
|
|
|
|
|
||||
|
|
|
|
||||
Interest expense: |
|
|
|
||||
Interest incurred |
$ |
26,392 |
|
|
$ |
26,505 |
|
Interest capitalized |
|
(26,392 |
) |
|
|
(26,505 |
) |
Total |
$ |
— |
|
|
$ |
— |
|
|
|
|
|
||||
|
|
|
|
||||
Other information: |
|
|
|
||||
Amortization of previously capitalized interest |
$ |
23,423 |
|
|
$ |
26,503 |
|
Depreciation and amortization |
|
9,704 |
|
|
|
10,195 |
|
|
|
|
|
||||
|
|
|
|
||||
Average selling price: |
|
|
|
||||
West Coast |
$ |
708,700 |
|
|
$ |
673,800 |
|
Southwest |
|
461,500 |
|
|
|
450,700 |
|
Central |
|
367,000 |
|
|
|
364,700 |
|
Southeast |
|
400,200 |
|
|
|
417,700 |
|
Total |
$ |
500,700 |
|
|
$ |
480,100 |
|
|
||||||||||
KB HOME |
||||||||||
SUPPLEMENTAL INFORMATION |
||||||||||
For the Three Months Ended February 28, 2025 and February 29, 2024 |
||||||||||
(Dollars in Thousands – Unaudited) |
||||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Three Months Ended |
|||||
|
|
|
|
|
February 28, 2025 |
|
February 29, 2024 |
|||
Homes delivered: |
|
|
|
|
|
|
|
|||
West Coast |
|
|
|
|
|
849 |
|
|
828 |
|
Southwest |
|
|
|
|
|
678 |
|
|
717 |
|
Central |
|
|
|
|
|
751 |
|
|
870 |
|
Southeast |
|
|
|
|
|
492 |
|
|
622 |
|
Total |
|
|
|
|
|
2,770 |
|
|
3,037 |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Net orders: |
|
|
|
|
|
|
|
|||
West Coast |
|
|
|
|
|
898 |
|
|
950 |
|
Southwest |
|
|
|
|
|
545 |
|
|
698 |
|
Central |
|
|
|
|
|
720 |
|
|
1,017 |
|
Southeast |
|
|
|
|
|
609 |
|
|
658 |
|
Total |
|
|
|
|
|
2,772 |
|
|
3,323 |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Net order value: |
|
|
|
|
|
|
|
|||
West Coast |
|
|
|
|
$ |
607,179 |
|
$ |
633,400 |
|
Southwest |
|
|
|
|
|
269,222 |
|
|
314,863 |
|
Central |
|
|
|
|
|
239,725 |
|
|
363,923 |
|
Southeast |
|
|
|
|
|
229,941 |
|
|
270,005 |
|
Total |
|
|
|
|
$ |
1,346,067 |
|
$ |
1,582,191 |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
February 28, 2025 |
|
February 29, 2024 |
|||||||
|
Homes |
|
Value |
|
Homes |
|
Value |
|||
Backlog data: |
|
|
|
|
|
|
|
|||
West Coast |
1,260 |
|
$ |
879,894 |
|
|
1,667 |
|
$ |
1,100,889 |
Southwest |
1,001 |
|
|
488,714 |
|
|
1,360 |
|
|
608,455 |
Central |
1,102 |
|
|
400,205 |
|
|
1,414 |
|
|
505,194 |
Southeast |
1,073 |
|
|
433,120 |
|
|
1,355 |
|
|
577,206 |
Total |
4,436 |
|
$ |
2,201,933 |
|
|
5,796 |
|
$ |
2,791,744 |
KB HOME
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In Thousands, Except Percentages – Unaudited)
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 |
||||||
|
February 28, 2025 |
|
February 29, 2024 |
||||
Housing revenues |
$ |
1,387,041 |
|
|
$ |
1,458,126 |
|
Housing construction and land costs |
|
(1,107,414 |
) |
|
|
(1,144,427 |
) |
Housing gross profits |
|
279,627 |
|
|
|
313,699 |
|
Add: Inventory-related charges (a) |
|
1,455 |
|
|
|
1,298 |
|
Adjusted housing gross profits |
$ |
281,082 |
|
|
$ |
314,997 |
|
Housing gross profit margin |
|
20.2 |
% |
|
|
21.5 |
% |
Adjusted housing gross profit margin |
|
20.3 |
% |
|
|
21.6 |
% |
(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/20250324735648/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
Source: KB Home