Latest news with #Mezger
Yahoo
24-06-2025
- Business
- Yahoo
KB Home Cuts Full-Year Outlook Amid Consumer Uncertainty
KB Home on Monday topped analysts' estimates for the second quarter, while lowering its full-year outlook. The homebuilder lowered its fiscal 2025 revenue forecast after a weaker-than-expected spring selling season. CEO Jeffrey Mezger said that "consumers are continuing to demonstrate a lack of confidence about the short term" housing Home (KBH) topped second-quarter revenue and profit estimates after the bell Monday, but cut its full-year sales forecast as the housing market remains sluggish. Revenue fell more than 10% year-over-year to $1.53 billion but came in narrowly above Visible Alpha consensus. Earnings per share of $1.50 dropped from $2.15 a year ago but also topped analysts' projections. Still, KB Home lowered its housing revenue forecast for the second straight quarter to $6.30 billion to $6.50 billion, down from the $6.60 billion to $7.00 billion range the company laid out in March and below analysts' expectations of $6.57 billion. "While longer term the outlook for the housing market remains favorable driven by demographics and an undersupply of homes, consumers are continuing to demonstrate a lack of confidence about the short term, which has impacted their home purchase decisions," CEO Jeffrey Mezger said in Monday's earnings call, according to a transcript from AlphaSense. Mezger said the company saw "more subdued demand" in the spring selling season as Americans faced affordability challenges, persistently high mortgage rates, and other macro and geopolitical uncertainty. CFO Rob Dillard said KB Home expects to generate $1.5 billion to $1.7 billion in revenue for the third quarter, below the $1.8 billion analyst consensus, with an average home selling price of $470,000 to $480,000, below its full-year average projection of $480,000 to $490,000. In a note following the report, UBS analysts cut their price target for KB Home to $80 from $86 while keeping their "buy" rating. "Despite choppy market conditions, we believe the setup for homebuilder stocks remains favorable, given reset expectations and the group's tendency to bounce ahead of a bottom," the analysts wrote. KB Home shares, which entered Tuesday down nearly 20% since the start of this year, are down a further 1.7% an hour before the opening bell. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
24-06-2025
- Business
- Business Insider
KBH Earnings: KB Home's Stock Falls on Weak Forward Guidance
The stock of KB Home (KBH) is down about 3% after the U.S. homebuilder lowered its full-year guidance, saying it expects further weakness in the real estate market. Confident Investing Starts Here: The disappointing outlook overshadowed what was otherwise a strong print from KB Home. The Los Angeles, California-based company announced Fiscal second-quarter earnings per share (EPS) of $1.50, which beat the consensus estimate of $1.47. Revenue for the quarter ended May 31 was $1.53 billion, beating the $1.51 billion expected on Wall Street. However, both the top and bottom line numbers reported for Fiscal Q2 were lower than a year ago, when the company's EPS came in at $2.15 and its sales totaled $1.71 billion. KB Home also lowered its full-year Fiscal 2025 guidance, saying it now expects revenue of $6.30 billion to $6.50 billion, down from $6.60 billion to $7 billion previously. Homebuilding operating income declined to $131.5 million from $188.2 million a year ago, while the company's homebuilding operating margin fell 9% from 11.1% a year earlier in the latest quarter. Also, housing gross profit fell to 19.3% from 21.1% a year ago, mainly due to price reductions and homebuyer concessions. KB Home's net income. Source: Main Street Data Stock Buybacks In the company's earnings release, KB Home's CEO Jeffrey Mezger said, 'In this environment and given our strong existing land pipeline, we are scaling back our land acquisition and development investments while increasing share repurchases.' KB Home bought back $200 million worth of common stock at an average price of $54 per share in the just completed quarter. Mezger said the company plans to continue repurchasing shares during the rest of this year. The average selling price of a KB Home property was $488,700 during the recent quarter, down from $500,700 in the previous quarter amid ongoing softness in the real estate market. Net orders decline 13% year-over-year to 3,460, while net order value fell 21% to $1.61 billion. KBH stock has declined 18% this year. Is KBH Stock a Buy? The stock of KB Home has a consensus Hold rating among 14 Wall Street analysts. That rating is based on four Buy, eight Hold, and two Sell recommendations issued in the last three months. The average KBH price target of $66 implies 23.78% upside from current levels. These ratings are likely to change after the company's financial results.
Yahoo
23-06-2025
- Business
- Yahoo
KB Home Reports 2025 Second Quarter Results
Revenues of $1.53 Billion; Diluted Earnings Per Share of $1.50 Repurchased $200.0 Million of Common Stock LOS ANGELES, June 23, 2025--(BUSINESS WIRE)--KB Home (NYSE: KBH) today reported results for its second quarter ended May 31, 2025. "Our second quarter financial performance was solid, with results meeting or exceeding our guidance ranges, as we continue to navigate the current environment. Our team is producing improvements in two key areas, lowering our build times and reducing direct construction costs, helping to strengthen our business," said Jeffrey Mezger, Chairman and Chief Executive Officer. "Though market conditions have softened, we remain consistent in our focus on optimizing our assets to offer the most compelling value to our buyers, maintaining pricing transparency and enhancing margins and returns." "We continue to take a balanced approach in allocating capital, adapting to prevailing market conditions while maintaining our priorities of future growth and returns to our stockholders. In this environment and given our strong existing land pipeline, we are scaling back our land acquisition and development investments while increasing share repurchases. In our second quarter, we repurchased $200 million of our outstanding common stock at an average price of approximately $54 per share, which is below our current book value, providing an excellent return on our capital. We expect to continue to repurchase our shares in the remainder of fiscal 2025 aligned with our commitment to enhancing long-term stockholder value," concluded Mezger. Three Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $1.53 billion, compared to $1.71 billion. Homes delivered decreased 11% to 3,120. Average selling price increased slightly to $488,700. Homebuilding operating income was $131.5 million, compared to $188.2 million. The homebuilding operating income margin was 8.6%, compared to 11.1%, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses ratio. Excluding total inventory-related charges of $5.6 million for the current quarter and $1.2 million for the year-earlier quarter, the homebuilding operating income margin was 9.0%, compared to 11.1%. The Company's housing gross profit margin was 19.3%, compared to 21.1%. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 19.7%, compared to 21.2%, due to price reductions and other homebuyer concessions, higher relative land costs, geographic mix, and reduced operating leverage, partly offset by lower construction costs. Selling, general and administrative expenses as a percentage of housing revenues were 10.7%, compared to 10.1%, primarily due to higher marketing expenses and decreased operating leverage. Financial services pretax income totaled $8.2 million, compared to $13.3 million, mainly due to decreases in both insurance commissions revenues and equity in income of the Company's mortgage banking joint venture. The mortgage banking joint venture's results reflected a decrease in interest rate lock commitments and a lower volume of loan originations, largely due to fewer homes delivered. Total pretax income was $142.4 million or 9.3% of total revenues. This compared to $221.1 million, which included a $12.5 million gain in interest income and other associated with the sale of a privately held technology company in which the Company had an ownership interest. Net income decreased 36% to $107.9 million. Diluted earnings per share declined 30% to $1.50, reflecting current quarter net income, partly offset by the favorable impact of the Company's common stock repurchases. The effective tax rate was 24.2%, compared to 23.8%. Six Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $2.92 billion, compared to $3.18 billion. Homes delivered of 5,890 were down 10%. Average selling price increased 3% to $494,400. Net income decreased 29% to $217.4 million. Diluted earnings per share declined 23% to $3.00. Net Orders and Backlog (comparisons on a year-over-year basis, except as noted) Net orders of 3,460 decreased 13%. The Company's ending backlog homes totaled 4,776, compared to 6,270. Ending backlog value was down 27% to $2.29 billion. Monthly net orders per community decreased to 4.5, compared to 5.5. The cancellation rate as a percentage of gross orders was 16%, compared to 13%. The average community count for the quarter increased 5% to 254, and the ending community count rose 2% to 253. Balance Sheet as of May 31, 2025 (comparisons to November 30, 2024, except as noted) The Company had total liquidity of $1.19 billion, including $308.9 million of cash and cash equivalents and $881.7 million of available capacity under its unsecured revolving credit facility, with $200.0 million of cash borrowings outstanding. Inventories increased 7% to $5.91 billion. On a year-over-year basis, inventories grew 11%. Investments in land and land development for the 2025 second quarter decreased 23% from the prior-year quarter to $513.9 million. For the six months ended May 31, 2025, total land-related investments increased 14% to $1.43 billion, compared to $1.26 billion for the year-earlier period. The Company's lots owned or under contract decreased slightly to 74,837, of which approximately 53% were owned and 47% were under contract. Year over year, the total lot portfolio grew 14%, up from 65,533. Notes payable were $1.89 billion, compared to $1.69 billion, reflecting cash borrowings outstanding under the Company's unsecured revolving credit facility. The debt to capital ratio was 32.2%, compared to 29.4%. Stockholders' equity totaled $3.99 billion, compared to $4.06 billion, primarily due to common stock repurchases and cash dividends in the 2025 first half, largely offset by net income for the same period. In the 2025 second quarter, the Company repurchased 3,734,675 shares of its outstanding common stock at a cost of $200.0 million, or $53.55 per share, bringing its total repurchases in the 2025 first half to 4,488,614 shares at a total cost of $250.0 million, or $55.70 per share. As of May 31, 2025, the Company had $450.0 million remaining under its current common stock repurchase authorization. Based on the Company's 68.1 million outstanding shares as of May 31, 2025, book value per share of $58.64 increased 10% year over year. Guidance The Company is providing the following guidance for its 2025 full year: Housing revenues in the range of $6.30 billion to $6.50 billion. Average selling price in the range of $480,000 to $490,000. Homebuilding operating income as a percentage of revenues in the range of 8.6% to 9.0%, assuming no inventory-related charges. Housing gross profit margin in the range of 19.0% to 19.4%, assuming no inventory-related charges. Selling, general and administrative expenses as a percentage of housing revenues in the range of 10.2% to 10.6%. Effective tax rate of approximately 24%. Ending community count of approximately 250. The Company plans to also provide guidance for its 2025 third quarter on its conference call today. Conference Call The conference call to discuss the Company's 2025 second 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 About KB Home KB Home is one of the largest and most trusted homebuilders in the United States. We operate in 49 markets, have built nearly 700,000 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 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, 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 or that are due to our deciding not to procure certain types or amounts of insurance coverage; 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 U.S. presidential administration, and the impact on the economy or financial markets therefrom; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies, and the potential significant scaling back or ending of the federal conservatorship of the government-sponsored enterprises), 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, and the potential accelerated phaseout of such tax credits in 2026; 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, and financial markets' and businesses' reactions to any such policies; 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 implementing 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, and the costs and margin impact we incur from the incentives or concessions we may provide to buyers to do so; 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 or afford 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 Six Months Ended May 31, 2025 and 2024 (In Thousands, Except Per Share Amounts – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Total revenues $ 1,529,585 $ 1,709,813 $ 2,921,362 $ 3,177,579 Homebuilding: Revenues $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,163,210 Costs and expenses (1,393,253 ) (1,513,329 ) (2,652,955 ) (2,817,351 ) Operating income 131,463 188,183 258,802 345,859 Interest income and other 1,679 19,449 3,758 25,306 Equity in income (loss) of unconsolidated joint ventures 1,080 224 3,493 (221 ) Homebuilding pretax income 134,222 207,856 266,053 370,944 Financial services: Revenues 4,869 8,301 9,605 14,369 Expenses (1,570 ) (1,473 ) (3,109 ) (3,019 ) Equity in income of unconsolidated joint venture 4,862 6,435 9,191 13,490 Financial services pretax income 8,161 13,263 15,687 24,840 Total pretax income 142,383 221,119 281,740 395,784 Income tax expense (34,500 ) (52,700 ) (64,300 ) (88,700 ) Net income $ 107,883 $ 168,419 $ 217,440 $ 307,084 Earnings per share: Basic $ 1.53 $ 2.21 $ 3.05 $ 4.02 Diluted $ 1.50 $ 2.15 $ 3.00 $ 3.91 Weighted average shares outstanding: Basic 69,976 75,653 70,745 75,773 Diluted 71,226 77,806 72,108 78,034 KB HOME CONSOLIDATED BALANCE SHEETS (In Thousands – Unaudited) May 31,2025 November 30,2024 Assets Homebuilding: Cash and cash equivalents $ 308,861 $ 597,973 Receivables 371,354 377,533 Inventories 5,913,348 5,528,020 Investments in unconsolidated joint ventures 57,597 67,020 Property and equipment, net 95,054 90,359 Deferred tax assets, net 102,421 102,421 Other assets 107,530 105,920 6,956,165 6,869,246 Financial services 61,431 66,923 Total assets $ 7,017,596 $ 6,936,169 Liabilities and stockholders' equity Homebuilding: Accounts payable $ 359,323 $ 384,894 Accrued expenses and other liabilities 771,840 796,261 Notes payable 1,892,941 1,691,679 3,024,104 2,872,834 Financial services 2,954 2,719 Stockholders' equity 3,990,538 4,060,616 Total liabilities and stockholders' equity $ 7,017,596 $ 6,936,169 KB HOME SUPPLEMENTAL INFORMATION For the Three Months and Six Months Ended May 31, 2025 and 2024 (In Thousands, Except Average Selling Price – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Homebuilding revenues: Housing $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,159,638 Land — — — 3,572 Total $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,163,210 Homebuilding costs and expenses: Construction and land costs Housing $ 1,230,055 $ 1,342,102 $ 2,337,469 $ 2,486,529 Land — — — 2,101 Subtotal 1,230,055 1,342,102 2,337,469 2,488,630 Selling, general and administrative expenses 163,198 171,227 315,486 328,721 Total $ 1,393,253 $ 1,513,329 $ 2,652,955 $ 2,817,351 Interest expense: Interest incurred $ 28,626 $ 26,577 $ 55,018 $ 53,082 Interest capitalized (28,626 ) (26,577 ) (55,018 ) (53,082 ) Total $ — $ — $ — $ — Other information: Amortization of previously capitalized interest $ 25,306 $ 29,189 $ 48,729 $ 55,692 Depreciation and amortization 10,114 10,377 19,818 20,572 Average selling price: West Coast $ 682,000 $ 669,600 $ 694,500 $ 671,500 Southwest 475,200 447,600 468,200 449,100 Central 348,900 365,600 357,600 365,200 Southeast 393,300 417,100 396,200 417,300 Total $ 488,700 $ 483,000 $ 494,400 $ 481,700 KB HOME SUPPLEMENTAL INFORMATION For the Three Months and Six Months Ended May 31, 2025 and 2024 (Dollars in Thousands – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Homes delivered: West Coast 968 1,043 1,817 1,871 Southwest 661 712 1,339 1,429 Central 811 1,028 1,562 1,898 Southeast 680 740 1,172 1,362 Total 3,120 3,523 5,890 6,560 Net orders: West Coast 1,104 1,226 2,002 2,176 Southwest 557 785 1,102 1,483 Central 1,030 1,300 1,750 2,317 Southeast 769 686 1,378 1,344 Total 3,460 3,997 6,232 7,320 Net order value: West Coast $ 728,141 $ 902,483 $ 1,335,320 $ 1,535,883 Southwest 268,921 362,788 538,143 677,651 Central 328,614 485,824 568,339 849,747 Southeast 285,338 280,808 515,279 550,813 Total $ 1,611,014 $ 2,031,903 $ 2,957,081 $ 3,614,094 May 31, 2025 May 31, 2024 Homes Value Homes Value Backlog data: West Coast 1,396 $ 947,842 1,850 $ 1,304,955 Southwest 897 443,533 1,433 652,578 Central 1,321 445,853 1,686 615,228 Southeast 1,162 451,003 1,301 549,374 Total 4,776 $ 2,288,231 6,270 $ 3,122,135 KB HOMERECONCILIATION 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 May 31, Six Months Ended May 31, 2025 2024 2025 2024 Housing revenues $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,159,638 Housing construction and land costs (1,230,055 ) (1,342,102 ) (2,337,469 ) (2,486,529 ) Housing gross profits 294,661 359,410 574,288 673,109 Add: Inventory-related charges (a) 5,558 1,210 7,013 2,508 Adjusted housing gross profits $ 300,219 $ 360,620 $ 581,301 $ 675,617 Housing gross profit margin 19.3 % 21.1 % 19.7 % 21.3 % Adjusted housing gross profit margin 19.7 % 21.2 % 20.0 % 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 Contacts For Further Information: Jill Peters, Investor Relations Contact(310) 893-7456 or jpeters@ Cara Kane, Media Contact(321) 299-6844 or ckane@
Yahoo
23-06-2025
- Business
- Yahoo
KB Home Reports 2025 Second Quarter Results
Revenues of $1.53 Billion; Diluted Earnings Per Share of $1.50 Repurchased $200.0 Million of Common Stock LOS ANGELES, June 23, 2025--(BUSINESS WIRE)--KB Home (NYSE: KBH) today reported results for its second quarter ended May 31, 2025. "Our second quarter financial performance was solid, with results meeting or exceeding our guidance ranges, as we continue to navigate the current environment. Our team is producing improvements in two key areas, lowering our build times and reducing direct construction costs, helping to strengthen our business," said Jeffrey Mezger, Chairman and Chief Executive Officer. "Though market conditions have softened, we remain consistent in our focus on optimizing our assets to offer the most compelling value to our buyers, maintaining pricing transparency and enhancing margins and returns." "We continue to take a balanced approach in allocating capital, adapting to prevailing market conditions while maintaining our priorities of future growth and returns to our stockholders. In this environment and given our strong existing land pipeline, we are scaling back our land acquisition and development investments while increasing share repurchases. In our second quarter, we repurchased $200 million of our outstanding common stock at an average price of approximately $54 per share, which is below our current book value, providing an excellent return on our capital. We expect to continue to repurchase our shares in the remainder of fiscal 2025 aligned with our commitment to enhancing long-term stockholder value," concluded Mezger. Three Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $1.53 billion, compared to $1.71 billion. Homes delivered decreased 11% to 3,120. Average selling price increased slightly to $488,700. Homebuilding operating income was $131.5 million, compared to $188.2 million. The homebuilding operating income margin was 8.6%, compared to 11.1%, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses ratio. Excluding total inventory-related charges of $5.6 million for the current quarter and $1.2 million for the year-earlier quarter, the homebuilding operating income margin was 9.0%, compared to 11.1%. The Company's housing gross profit margin was 19.3%, compared to 21.1%. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 19.7%, compared to 21.2%, due to price reductions and other homebuyer concessions, higher relative land costs, geographic mix, and reduced operating leverage, partly offset by lower construction costs. Selling, general and administrative expenses as a percentage of housing revenues were 10.7%, compared to 10.1%, primarily due to higher marketing expenses and decreased operating leverage. Financial services pretax income totaled $8.2 million, compared to $13.3 million, mainly due to decreases in both insurance commissions revenues and equity in income of the Company's mortgage banking joint venture. The mortgage banking joint venture's results reflected a decrease in interest rate lock commitments and a lower volume of loan originations, largely due to fewer homes delivered. Total pretax income was $142.4 million or 9.3% of total revenues. This compared to $221.1 million, which included a $12.5 million gain in interest income and other associated with the sale of a privately held technology company in which the Company had an ownership interest. Net income decreased 36% to $107.9 million. Diluted earnings per share declined 30% to $1.50, reflecting current quarter net income, partly offset by the favorable impact of the Company's common stock repurchases. The effective tax rate was 24.2%, compared to 23.8%. Six Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $2.92 billion, compared to $3.18 billion. Homes delivered of 5,890 were down 10%. Average selling price increased 3% to $494,400. Net income decreased 29% to $217.4 million. Diluted earnings per share declined 23% to $3.00. Net Orders and Backlog (comparisons on a year-over-year basis, except as noted) Net orders of 3,460 decreased 13%. The Company's ending backlog homes totaled 4,776, compared to 6,270. Ending backlog value was down 27% to $2.29 billion. Monthly net orders per community decreased to 4.5, compared to 5.5. The cancellation rate as a percentage of gross orders was 16%, compared to 13%. The average community count for the quarter increased 5% to 254, and the ending community count rose 2% to 253. Balance Sheet as of May 31, 2025 (comparisons to November 30, 2024, except as noted) The Company had total liquidity of $1.19 billion, including $308.9 million of cash and cash equivalents and $881.7 million of available capacity under its unsecured revolving credit facility, with $200.0 million of cash borrowings outstanding. Inventories increased 7% to $5.91 billion. On a year-over-year basis, inventories grew 11%. Investments in land and land development for the 2025 second quarter decreased 23% from the prior-year quarter to $513.9 million. For the six months ended May 31, 2025, total land-related investments increased 14% to $1.43 billion, compared to $1.26 billion for the year-earlier period. The Company's lots owned or under contract decreased slightly to 74,837, of which approximately 53% were owned and 47% were under contract. Year over year, the total lot portfolio grew 14%, up from 65,533. Notes payable were $1.89 billion, compared to $1.69 billion, reflecting cash borrowings outstanding under the Company's unsecured revolving credit facility. The debt to capital ratio was 32.2%, compared to 29.4%. Stockholders' equity totaled $3.99 billion, compared to $4.06 billion, primarily due to common stock repurchases and cash dividends in the 2025 first half, largely offset by net income for the same period. In the 2025 second quarter, the Company repurchased 3,734,675 shares of its outstanding common stock at a cost of $200.0 million, or $53.55 per share, bringing its total repurchases in the 2025 first half to 4,488,614 shares at a total cost of $250.0 million, or $55.70 per share. As of May 31, 2025, the Company had $450.0 million remaining under its current common stock repurchase authorization. Based on the Company's 68.1 million outstanding shares as of May 31, 2025, book value per share of $58.64 increased 10% year over year. Guidance The Company is providing the following guidance for its 2025 full year: Housing revenues in the range of $6.30 billion to $6.50 billion. Average selling price in the range of $480,000 to $490,000. Homebuilding operating income as a percentage of revenues in the range of 8.6% to 9.0%, assuming no inventory-related charges. Housing gross profit margin in the range of 19.0% to 19.4%, assuming no inventory-related charges. Selling, general and administrative expenses as a percentage of housing revenues in the range of 10.2% to 10.6%. Effective tax rate of approximately 24%. Ending community count of approximately 250. The Company plans to also provide guidance for its 2025 third quarter on its conference call today. Conference Call The conference call to discuss the Company's 2025 second 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 About KB Home KB Home is one of the largest and most trusted homebuilders in the United States. We operate in 49 markets, have built nearly 700,000 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 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, 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 or that are due to our deciding not to procure certain types or amounts of insurance coverage; 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 U.S. presidential administration, and the impact on the economy or financial markets therefrom; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies, and the potential significant scaling back or ending of the federal conservatorship of the government-sponsored enterprises), 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, and the potential accelerated phaseout of such tax credits in 2026; 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, and financial markets' and businesses' reactions to any such policies; 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 implementing 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, and the costs and margin impact we incur from the incentives or concessions we may provide to buyers to do so; 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 or afford 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 Six Months Ended May 31, 2025 and 2024 (In Thousands, Except Per Share Amounts – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Total revenues $ 1,529,585 $ 1,709,813 $ 2,921,362 $ 3,177,579 Homebuilding: Revenues $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,163,210 Costs and expenses (1,393,253 ) (1,513,329 ) (2,652,955 ) (2,817,351 ) Operating income 131,463 188,183 258,802 345,859 Interest income and other 1,679 19,449 3,758 25,306 Equity in income (loss) of unconsolidated joint ventures 1,080 224 3,493 (221 ) Homebuilding pretax income 134,222 207,856 266,053 370,944 Financial services: Revenues 4,869 8,301 9,605 14,369 Expenses (1,570 ) (1,473 ) (3,109 ) (3,019 ) Equity in income of unconsolidated joint venture 4,862 6,435 9,191 13,490 Financial services pretax income 8,161 13,263 15,687 24,840 Total pretax income 142,383 221,119 281,740 395,784 Income tax expense (34,500 ) (52,700 ) (64,300 ) (88,700 ) Net income $ 107,883 $ 168,419 $ 217,440 $ 307,084 Earnings per share: Basic $ 1.53 $ 2.21 $ 3.05 $ 4.02 Diluted $ 1.50 $ 2.15 $ 3.00 $ 3.91 Weighted average shares outstanding: Basic 69,976 75,653 70,745 75,773 Diluted 71,226 77,806 72,108 78,034 KB HOME CONSOLIDATED BALANCE SHEETS (In Thousands – Unaudited) May 31,2025 November 30,2024 Assets Homebuilding: Cash and cash equivalents $ 308,861 $ 597,973 Receivables 371,354 377,533 Inventories 5,913,348 5,528,020 Investments in unconsolidated joint ventures 57,597 67,020 Property and equipment, net 95,054 90,359 Deferred tax assets, net 102,421 102,421 Other assets 107,530 105,920 6,956,165 6,869,246 Financial services 61,431 66,923 Total assets $ 7,017,596 $ 6,936,169 Liabilities and stockholders' equity Homebuilding: Accounts payable $ 359,323 $ 384,894 Accrued expenses and other liabilities 771,840 796,261 Notes payable 1,892,941 1,691,679 3,024,104 2,872,834 Financial services 2,954 2,719 Stockholders' equity 3,990,538 4,060,616 Total liabilities and stockholders' equity $ 7,017,596 $ 6,936,169 KB HOME SUPPLEMENTAL INFORMATION For the Three Months and Six Months Ended May 31, 2025 and 2024 (In Thousands, Except Average Selling Price – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Homebuilding revenues: Housing $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,159,638 Land — — — 3,572 Total $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,163,210 Homebuilding costs and expenses: Construction and land costs Housing $ 1,230,055 $ 1,342,102 $ 2,337,469 $ 2,486,529 Land — — — 2,101 Subtotal 1,230,055 1,342,102 2,337,469 2,488,630 Selling, general and administrative expenses 163,198 171,227 315,486 328,721 Total $ 1,393,253 $ 1,513,329 $ 2,652,955 $ 2,817,351 Interest expense: Interest incurred $ 28,626 $ 26,577 $ 55,018 $ 53,082 Interest capitalized (28,626 ) (26,577 ) (55,018 ) (53,082 ) Total $ — $ — $ — $ — Other information: Amortization of previously capitalized interest $ 25,306 $ 29,189 $ 48,729 $ 55,692 Depreciation and amortization 10,114 10,377 19,818 20,572 Average selling price: West Coast $ 682,000 $ 669,600 $ 694,500 $ 671,500 Southwest 475,200 447,600 468,200 449,100 Central 348,900 365,600 357,600 365,200 Southeast 393,300 417,100 396,200 417,300 Total $ 488,700 $ 483,000 $ 494,400 $ 481,700 KB HOME SUPPLEMENTAL INFORMATION For the Three Months and Six Months Ended May 31, 2025 and 2024 (Dollars in Thousands – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Homes delivered: West Coast 968 1,043 1,817 1,871 Southwest 661 712 1,339 1,429 Central 811 1,028 1,562 1,898 Southeast 680 740 1,172 1,362 Total 3,120 3,523 5,890 6,560 Net orders: West Coast 1,104 1,226 2,002 2,176 Southwest 557 785 1,102 1,483 Central 1,030 1,300 1,750 2,317 Southeast 769 686 1,378 1,344 Total 3,460 3,997 6,232 7,320 Net order value: West Coast $ 728,141 $ 902,483 $ 1,335,320 $ 1,535,883 Southwest 268,921 362,788 538,143 677,651 Central 328,614 485,824 568,339 849,747 Southeast 285,338 280,808 515,279 550,813 Total $ 1,611,014 $ 2,031,903 $ 2,957,081 $ 3,614,094 May 31, 2025 May 31, 2024 Homes Value Homes Value Backlog data: West Coast 1,396 $ 947,842 1,850 $ 1,304,955 Southwest 897 443,533 1,433 652,578 Central 1,321 445,853 1,686 615,228 Southeast 1,162 451,003 1,301 549,374 Total 4,776 $ 2,288,231 6,270 $ 3,122,135 KB HOMERECONCILIATION 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 May 31, Six Months Ended May 31, 2025 2024 2025 2024 Housing revenues $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,159,638 Housing construction and land costs (1,230,055 ) (1,342,102 ) (2,337,469 ) (2,486,529 ) Housing gross profits 294,661 359,410 574,288 673,109 Add: Inventory-related charges (a) 5,558 1,210 7,013 2,508 Adjusted housing gross profits $ 300,219 $ 360,620 $ 581,301 $ 675,617 Housing gross profit margin 19.3 % 21.1 % 19.7 % 21.3 % Adjusted housing gross profit margin 19.7 % 21.2 % 20.0 % 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 Contacts For Further Information: Jill Peters, Investor Relations Contact(310) 893-7456 or jpeters@ Cara Kane, Media Contact(321) 299-6844 or ckane@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
23-06-2025
- Business
- Business Wire
KB Home Reports 2025 Second Quarter Results
LOS ANGELES--(BUSINESS WIRE)--KB Home (NYSE: KBH) today reported results for its second quarter ended May 31, 2025. 'Our second quarter financial performance was solid, with results meeting or exceeding our guidance ranges, as we continue to navigate the current environment. Our team is producing improvements in two key areas, lowering our build times and reducing direct construction costs, helping to strengthen our business,' said Jeffrey Mezger, Chairman and Chief Executive Officer. 'Though market conditions have softened, we remain consistent in our focus on optimizing our assets to offer the most compelling value to our buyers, maintaining pricing transparency and enhancing margins and returns.' 'We continue to take a balanced approach in allocating capital, adapting to prevailing market conditions while maintaining our priorities of future growth and returns to our stockholders. In this environment and given our strong existing land pipeline, we are scaling back our land acquisition and development investments while increasing share repurchases. In our second quarter, we repurchased $200 million of our outstanding common stock at an average price of approximately $54 per share, which is below our current book value, providing an excellent return on our capital. We expect to continue to repurchase our shares in the remainder of fiscal 2025 aligned with our commitment to enhancing long-term stockholder value,' concluded Mezger. Three Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $1.53 billion, compared to $1.71 billion. Homes delivered decreased 11% to 3,120. Average selling price increased slightly to $488,700. Homebuilding operating income was $131.5 million, compared to $188.2 million. The homebuilding operating income margin was 8.6%, compared to 11.1%, reflecting a lower housing gross profit margin and higher selling, general and administrative expenses ratio. Excluding total inventory-related charges of $5.6 million for the current quarter and $1.2 million for the year-earlier quarter, the homebuilding operating income margin was 9.0%, compared to 11.1%. The Company's housing gross profit margin was 19.3%, compared to 21.1%. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 19.7%, compared to 21.2%, due to price reductions and other homebuyer concessions, higher relative land costs, geographic mix, and reduced operating leverage, partly offset by lower construction costs. Selling, general and administrative expenses as a percentage of housing revenues were 10.7%, compared to 10.1%, primarily due to higher marketing expenses and decreased operating leverage. Financial services pretax income totaled $8.2 million, compared to $13.3 million, mainly due to decreases in both insurance commissions revenues and equity in income of the Company's mortgage banking joint venture. The mortgage banking joint venture's results reflected a decrease in interest rate lock commitments and a lower volume of loan originations, largely due to fewer homes delivered. Total pretax income was $142.4 million or 9.3% of total revenues. This compared to $221.1 million, which included a $12.5 million gain in interest income and other associated with the sale of a privately held technology company in which the Company had an ownership interest. Net income decreased 36% to $107.9 million. Diluted earnings per share declined 30% to $1.50, reflecting current quarter net income, partly offset by the favorable impact of the Company's common stock repurchases. The effective tax rate was 24.2%, compared to 23.8%. Six Months Ended May 31, 2025 (comparisons on a year-over-year basis) Revenues totaled $2.92 billion, compared to $3.18 billion. Homes delivered of 5,890 were down 10%. Average selling price increased 3% to $494,400. Net income decreased 29% to $217.4 million. Diluted earnings per share declined 23% to $3.00. Net Orders and Backlog (comparisons on a year-over-year basis, except as noted) Net orders of 3,460 decreased 13%. The Company's ending backlog homes totaled 4,776, compared to 6,270. Ending backlog value was down 27% to $2.29 billion. Monthly net orders per community decreased to 4.5, compared to 5.5. The cancellation rate as a percentage of gross orders was 16%, compared to 13%. The average community count for the quarter increased 5% to 254, and the ending community count rose 2% to 253. Balance Sheet as of May 31, 2025 (comparisons to November 30, 2024, except as noted) The Company had total liquidity of $1.19 billion, including $308.9 million of cash and cash equivalents and $881.7 million of available capacity under its unsecured revolving credit facility, with $200.0 million of cash borrowings outstanding. Inventories increased 7% to $5.91 billion. On a year-over-year basis, inventories grew 11%. Investments in land and land development for the 2025 second quarter decreased 23% from the prior-year quarter to $513.9 million. For the six months ended May 31, 2025, total land-related investments increased 14% to $1.43 billion, compared to $1.26 billion for the year-earlier period. The Company's lots owned or under contract decreased slightly to 74,837, of which approximately 53% were owned and 47% were under contract. Year over year, the total lot portfolio grew 14%, up from 65,533. Notes payable were $1.89 billion, compared to $1.69 billion, reflecting cash borrowings outstanding under the Company's unsecured revolving credit facility. The debt to capital ratio was 32.2%, compared to 29.4%. Stockholders' equity totaled $3.99 billion, compared to $4.06 billion, primarily due to common stock repurchases and cash dividends in the 2025 first half, largely offset by net income for the same period. In the 2025 second quarter, the Company repurchased 3,734,675 shares of its outstanding common stock at a cost of $200.0 million, or $53.55 per share, bringing its total repurchases in the 2025 first half to 4,488,614 shares at a total cost of $250.0 million, or $55.70 per share. As of May 31, 2025, the Company had $450.0 million remaining under its current common stock repurchase authorization. Based on the Company's 68.1 million outstanding shares as of May 31, 2025, book value per share of $58.64 increased 10% year over year. Guidance The Company is providing the following guidance for its 2025 full year: Housing revenues in the range of $6.30 billion to $6.50 billion. Average selling price in the range of $480,000 to $490,000. Homebuilding operating income as a percentage of revenues in the range of 8.6% to 9.0%, assuming no inventory-related charges. Housing gross profit margin in the range of 19.0% to 19.4%, assuming no inventory-related charges. Selling, general and administrative expenses as a percentage of housing revenues in the range of 10.2% to 10.6%. Effective tax rate of approximately 24%. Ending community count of approximately 250. The Company plans to also provide guidance for its 2025 third quarter on its conference call today. Conference Call The conference call to discuss the Company's 2025 second 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 About KB Home KB Home is one of the largest and most trusted homebuilders in the United States. We operate in 49 markets, have built nearly 700,000 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 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, 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 or that are due to our deciding not to procure certain types or amounts of insurance coverage; 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 U.S. presidential administration, and the impact on the economy or financial markets therefrom; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies, and the potential significant scaling back or ending of the federal conservatorship of the government-sponsored enterprises), 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, and the potential accelerated phaseout of such tax credits in 2026; 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, and financial markets' and businesses' reactions to any such policies; 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 implementing 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, and the costs and margin impact we incur from the incentives or concessions we may provide to buyers to do so; 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 or afford 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 SUPPLEMENTAL INFORMATION For the Three Months and Six Months Ended May 31, 2025 and 2024 (In Thousands, Except Average Selling Price – Unaudited) Three Months Ended May 31, Six Months Ended May 31, 2025 2024 2025 2024 Homebuilding revenues: Land — — — 3,572 Homebuilding costs and expenses: Construction and land costs Housing $ 1,230,055 $ 1,342,102 $ 2,337,469 $ 2,486,529 Land — — — 2,101 Subtotal 1,230,055 1,342,102 2,337,469 2,488,630 Selling, general and administrative expenses 163,198 171,227 315,486 328,721 Interest expense: Interest incurred $ 28,626 $ 26,577 $ 55,018 $ 53,082 Interest capitalized (28,626 ) (26,577 ) (55,018 ) (53,082 ) Total $ — $ — $ — $ — Other information: Amortization of previously capitalized interest $ 25,306 $ 29,189 $ 48,729 $ 55,692 Depreciation and amortization 10,114 10,377 19,818 20,572 Average selling price: West Coast $ 682,000 $ 669,600 $ 694,500 $ 671,500 Southwest 475,200 447,600 468,200 449,100 Central 348,900 365,600 357,600 365,200 Southeast 393,300 417,100 396,200 417,300 Total $ 488,700 $ 483,000 $ 494,400 $ 481,700 Expand 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 May 31, Six Months Ended May 31, 2025 2024 2025 2024 Housing revenues $ 1,524,716 $ 1,701,512 $ 2,911,757 $ 3,159,638 Housing construction and land costs (1,230,055 ) (1,342,102 ) (2,337,469 ) (2,486,529 ) Housing gross profits 294,661 359,410 574,288 673,109 Add: Inventory-related charges (a) 5,558 1,210 7,013 2,508 Adjusted housing gross profits $ 300,219 $ 360,620 $ 581,301 $ 675,617 Housing gross profit margin 19.3 % 21.1 % 19.7 % 21.3 % Adjusted housing gross profit margin 19.7 % 21.2 % 20.0 % 21.4 % (a) Represents inventory impairment and land option contract abandonment charges associated with housing operations. Expand 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.
