Total Revenues Up 30% to $811 Million; Net
Income Increases 63% to $16 Million
Net Order Value Increases 14% to $1.20
Billion
KB Home (NYSE: KBH) today reported results for its second
quarter ended May 31, 2016.
“We delivered a strong second quarter performance,” said Jeffrey
Mezger, president and chief executive officer. “We generated
considerable increases in deliveries and revenues, and posted a
substantial improvement in earnings, despite charges related to our
strategic decision to transition out of the Metro Washington, D.C.
area. Our second quarter results reflect the success of our
targeted positioning in attractive growth markets and the
distinctive home-buying experience we offer to consumers.”
“We are encouraged by the continued improvement in housing
market conditions across the country and by the recent increase in
participation from first-time homebuyers, historically our primary
customer segment,” said Mezger. “We believe we are particularly
well-positioned to leverage our strength in serving the demand from
this demographic with dynamic product offerings. With favorable
market trends and our financial and operational progress in the
first half of the year, we have positive momentum in our business
heading into the remainder of 2016.”
Three Months Ended May 31, 2016
(comparisons on a year-over-year basis)
- Total revenues rose 30% to $811.1
million.
- Housing revenues increased 33% to
$807.4 million.
- Deliveries grew 30% to 2,329 homes,
reflecting double-digit increases in all four of the Company’s
regions.
- Average selling price increased 2% to
$346,700.
- Housing gross profit margin decreased
50 basis points to 15.5%, reflecting approximately 80 basis points
of inventory-related charges.
- Adjusted housing gross profit margin,
which excludes the amortization of previously capitalized interest
and inventory-related charges, improved 40 basis points to
20.7%.
- Selling, general and administrative
expenses improved 140 basis points to 11.6% of housing
revenues.
- Homebuilding operating income increased
45% to $25.9 million despite total inventory impairment and land
option contract abandonment charges of $11.7 million, of which $6.8
million related to the Company’s wind down of its Metro Washington,
D.C. operations. Inventory-related charges in the year-earlier
quarter totaled $.5 million.
- Homebuilding operating income margin
improved 30 basis points to 3.2%. Excluding inventory-related
charges, homebuilding operating income margin rose 170 basis points
to 4.7%.
- Pretax income increased 96% to $24.8
million.
- Income tax expense of $9.2 million was
favorably impacted by $.4 million of federal energy tax credits
earned from building energy-efficient homes and represented an
effective tax rate of 37.1%.
- Net income rose 63% to $15.6 million
and earnings per diluted share increased to $.17, with both metrics
unfavorably impacted by inventory-related charges.
Six Months Ended May 31, 2016
(comparisons on a year-over-year basis)
- Total revenues increased 24% to $1.49
billion.
- Deliveries rose 27% to 4,282
homes.
- Average selling price increased 3% to
$345,600.
- Land sale revenues totaled $4.2
million, compared to $68.9 million.
- Homebuilding operating income rose 39%
to $44.9 million.
- Net income increased 65% to $28.7
million and earnings per diluted share advanced to $.31 from
$.18.
Backlog and Net Orders (comparisons on
a year-over-year basis)
- Ending backlog value grew 14% to $1.83
billion, reflecting increases in all regions.
- Homes in backlog rose 10% to
5,205.
- Net order value for the quarter grew
14% to $1.20 billion.
- Net orders for the quarter increased 8%
to 3,249.
- The cancellation rate as a percentage
of beginning backlog for the quarter improved to 21% from 25%, and
as a percentage of gross orders improved to 21% from 22%.
- Average community count for the quarter
decreased 2% to 242.
Balance Sheet (as of May 31,
2016)
- Cash, cash equivalents and restricted
cash totaled $278.4 million.
- Inventories totaled $3.53 billion, with
investments in land acquisition and development totaling $702.6
million for the six months ended May 31, 2016.
- Lots owned or controlled totaled
47,283, of which 82% were owned.
- There were no cash borrowings
outstanding under the unsecured revolving credit facility.
- Average diluted shares outstanding for
the quarter were reduced 7% from the year-earlier quarter to 94.7
million, reflecting repurchases of nearly 8.4 million shares of
common stock during the 2016 first quarter at a total cost of $85.9
million. No shares were repurchased in the 2016 second
quarter.
Earnings Conference Call
The conference call to discuss the Company’s second quarter 2016
earnings will be broadcast live TODAY at 2:00 p.m. Pacific Daylight
Time, 5:00 p.m. Eastern Daylight Time. To listen, please go to the
Investor Relations section of the Company’s website at www.kbhome.com.
About KB Home
KB Home is one of the largest and most recognized homebuilders
in the United States and an industry leader in sustainability,
building innovative and highly energy- and water-efficient new
homes. Founded in 1957 and the first NYSE-listed homebuilder
(ticker symbol: KBH), the company has built nearly 600,000 homes
for families from coast to coast. Distinguished by its personalized
homebuilding approach, KB Home lets each buyer choose their lot
location, floor plan, décor choices, design features and other
special touches that matter most to them. To learn more about KB
Home, call 888-KB-HOMES, visit www.kbhome.com or connect on Facebook.com/KBHome or Twitter.com/KBHome.
Forward-Looking and Cautionary
Statements
Certain matters discussed in this press release, including any
statements that are predictive in nature or concern future market
and economic conditions, business and prospects, our future
financial and operational performance, or our future actions and
their expected results are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on current expectations and
projections about future events and are not guarantees of future
performance. We do not have a specific policy or intent of updating
or revising forward-looking statements. Actual events and results
may differ materially from those expressed or forecasted in
forward-looking statements due to a number of factors. The most
important risk factors that could cause our actual performance and
future events and actions to differ materially from such
forward-looking statements include, but are not limited to the
following: general economic, employment and business conditions;
population growth, household formations and demographic trends;
conditions in the capital, credit and financial markets; our
ability to access external financing sources and raise capital
through the issuance of common stock, debt or other securities,
and/or project financing, on favorable terms; material and trade
costs and availability; changes in interest rates; our debt level,
including our ratio of debt to capital, and our ability to adjust
our debt level and maturity schedule; our compliance with the terms
of our revolving credit facility; volatility in the market price of
our common stock; weak or declining consumer confidence, either
generally or specifically with respect to purchasing homes;
competition from other sellers of new and resale homes; weather
events, significant natural disasters and other climate and
environmental factors, including the severe prolonged drought and
related water-constrained conditions in the southwest United States
and California; government actions, policies, programs and
regulations directed at or affecting the housing market (including
the Dodd-Frank Act, tax benefits associated with purchasing and
owning a home, and the standards, fees and size limits applicable
to the purchase or insuring of mortgage loans by
government-sponsored enterprises and government agencies), the
homebuilding industry, or construction activities; the availability
and cost of land in desirable areas; our warranty claims experience
with respect to homes previously delivered and actual warranty
costs incurred; costs and/or charges arising from regulatory
compliance requirements or from legal, arbitral or regulatory
proceedings, investigations, claims or settlements, including
unfavorable outcomes in any such matters resulting in actual or
potential monetary damage awards, penalties, fines or other direct
or indirect payments, or injunctions, consent decrees or other
voluntary or involuntary restrictions or adjustments to our
business operations or practices that are beyond our current
expectations and/or accruals; our ability to use/realize the net
deferred tax assets we have generated; our ability to successfully
implement our current and planned strategies and initiatives
related to our product, geographic and market positioning
(including our transition out of the Metro Washington, D.C. area),
gaining share and scale in our served markets, and increasing our
housing gross profit margins and profitability; our operational and
investment concentration in markets in California; consumer
interest in our new home communities and products, particularly
from first-time homebuyers and higher-income consumers; our ability
to generate orders and convert our backlog of orders to home
deliveries and revenues, particularly in key markets in California;
our ability to generate cash from our operations, enhance our asset
efficiency, increase our operating income margin and improve our
return on invested capital; the ability of our homebuyers to obtain
residential mortgage loans and mortgage banking services, including
from Home Community Mortgage; the performance of Home Community
Mortgage; information technology failures and data security
breaches; and other events outside of our control. Please see our
periodic reports and other filings with the Securities and Exchange
Commission for a further discussion of these and other risks and
uncertainties applicable to our business.
KB HOME
CONSOLIDATED STATEMENTS OF
OPERATIONS
For the Six Months and Three Months Ended
May 31, 2016 and 2015
(In Thousands, Except Per Share Amounts —
Unaudited)
Six Months Ended May 31, Three Months Ended May 31, 2016
2015 2016 2015
Total revenues $ 1,489,421
$ 1,203,090 $ 811,050 $ 622,969
Homebuilding: Revenues $ 1,484,204 $ 1,198,692 $ 808,462 $
620,804 Costs and expenses (1,439,274 ) (1,166,432 ) (782,524 )
(602,942 ) Operating income 44,930 32,260 25,938 17,862 Interest
income 286 255 134 152 Interest expense (5,667 ) (13,456 ) (1,970 )
(8,118 ) Equity in loss of unconsolidated joint ventures (1,428 )
(758 ) (825 ) (411 ) Homebuilding pretax income 38,121
18,301 23,277 9,485
Financial services:
Revenues 5,217 4,398 2,588 2,165 Expenses (1,730 ) (1,892 ) (871 )
(928 ) Equity in income (loss) of unconsolidated joint ventures
(784 ) 2,365 (197 ) 1,951 Financial services pretax
income 2,703 4,871 1,520 3,188
Total
pretax income 40,824 23,172 24,797 12,673 Income tax expense
(12,100 ) (5,800 ) (9,200 ) (3,100 )
Net income $ 28,724
$ 17,372 $ 15,597 $ 9,573
Earnings
per share: Basic $ .33 $ .19 $ .18
$ .10
Diluted $ .31 $ .18 $ .17
$ .10
Weighted average shares outstanding:
Basic 86,704 91,974 84,196 91,995
Diluted 97,060 101,470 94,720
101,544
KB HOME
CONSOLIDATED BALANCE SHEETS
(In Thousands — Unaudited)
May 31,2016 November 30,2015
Assets
Homebuilding: Cash and cash equivalents $ 274,849 $ 559,042
Restricted cash 3,517 9,344 Receivables 151,066 152,682 Inventories
3,525,089 3,313,747 Investments in unconsolidated joint ventures
65,213 71,558 Deferred tax assets, net 770,396 782,196 Other assets
112,790 112,774 4,902,920 5,001,343
Financial
services 12,923 14,028
Total assets $ 4,915,843
$ 5,015,371
Liabilities and stockholders’
equity Homebuilding: Accounts payable $ 190,327 $
183,770 Accrued expenses and other liabilities 456,645 513,414
Notes payable 2,632,127 2,625,536 3,279,099 3,322,720
Financial services 1,575 1,817
Stockholders’ equity
1,635,169 1,690,834
Total liabilities and stockholders’
equity $ 4,915,843 $ 5,015,371
KB HOME
SUPPLEMENTAL INFORMATION
For the Six Months and Three Months Ended
May 31, 2016 and 2015
(In Thousands, Except Average Selling
Price — Unaudited)
Six Months Ended May 31, Three Months Ended
May 31, 2016 2015 2016 2015
Homebuilding revenues: Housing $
1,480,054 $ 1,129,762 $ 807,408 $ 604,921 Land 4,150 68,930
1,054 15,883 Total $ 1,484,204 $
1,198,692 $ 808,462 $ 620,804
Homebuilding costs and expenses: Construction and land costs
Housing $ 1,247,131 $ 953,659 $ 682,303 $ 508,276 Land 10,401
63,169 6,411 16,134 Subtotal 1,257,532
1,016,828 688,714 524,410 Selling, general and administrative
expenses 181,742 149,604 93,810 78,532
Total $ 1,439,274 $ 1,166,432 $ 782,524 $
602,942
Interest expense: Interest
incurred $ 92,509 $ 94,202 $ 46,258 $ 49,199 Interest capitalized
(86,842 ) (80,746 ) (44,288 ) (41,081 ) Total $ 5,667 $
13,456 $ 1,970 $ 8,118
Other
information: Depreciation and amortization $ 5,602 $ 5,560 $
2,821 $ 2,835 Amortization of previously capitalized interest
66,239 47,736 35,557 25,443
Average selling price: West Coast $ 564,800 $ 565,500
$ 570,200 $ 579,000 Southwest 285,700 275,400 284,900 275,800
Central 262,300 237,900 264,000 237,800 Southeast 275,200
271,800 278,400 278,800 Total $ 345,600
$ 334,200 $ 346,700 $ 338,500
KB
HOME
SUPPLEMENTAL INFORMATION
For the Six Months and Three Months Ended
May 31, 2016 and 2015
(Dollars in Thousands — Unaudited)
Six Months Ended May 31, Three Months Ended May 31, 2016
2015 2016 2015
Homes delivered: West Coast
1,089 873 581 459 Southwest 742 516 392 279 Central 1,671 1,390 906
737 Southeast 780 601 450 312 Total 4,282
3,380 2,329 1,787
Net
orders: West Coast 1,550 1,322 995 770 Southwest 900 921 541
532 Central 2,111 2,046 1,210 1,176 Southeast 960 915
503 537 Total 5,521 5,204 3,249 3,015
Net order value: West Coast $ 910,493 $
756,311 $ 572,882 $ 438,754 Southwest 262,625 258,213 155,337
149,555 Central 581,457 535,424 328,242 308,381 Southeast 273,101
256,094 146,541 156,176 Total $ 2,027,676
$ 1,806,042 $ 1,203,002 $ 1,052,866
May 31, 2016 May 31, 2015 Backlog Homes Backlog Value
Backlog Homes Backlog Value
Backlog data: West Coast 1,199 $
703,346 1,042 $ 617,354 Southwest 763 218,047 729 200,697 Central
2,282 638,052 2,145 558,681 Southeast 961 269,657 817
234,091 Total 5,205 $ 1,829,102 4,733 $
1,610,823
KB HOMERECONCILIATION OF NON-GAAP
FINANCIAL MEASURESFor the Six Months and Three Months Ended
May 31, 2016 and 2015(In Thousands, Except Percentages —
Unaudited)
This press release contains, and Company management’s discussion
of the results presented in this press release may include,
information about the Company’s adjusted housing gross profit
margin and ratio of net debt to capital, both of which are not
calculated in accordance with generally accepted accounting
principles (“GAAP”). The Company believes these non-GAAP financial
measures are relevant and useful to investors in understanding its
operations and the leverage employed in its operations, and may be
helpful in comparing the Company with other companies in the
homebuilding industry to the extent they provide similar
information. However, because the adjusted housing gross profit
margin and the ratio of net debt to capital are not calculated in
accordance with GAAP, these financial measures may not be
completely comparable to other companies in the homebuilding
industry and, therefore, should not be considered in isolation or
as an alternative to operating performance and/or financial
measures prescribed by GAAP. Rather, these non-GAAP financial
measures should be used to supplement their respective most
directly comparable GAAP financial measures in order to provide a
greater understanding of the factors and trends affecting the
Company’s operations.
Adjusted Housing Gross Profit
Margin
The following table reconciles the Company’s housing gross
profit margin calculated in accordance with GAAP to the non-GAAP
financial measure of the Company’s adjusted housing gross profit
margin:
Six Months Ended May 31, Three Months Ended May 31, 2016
2015 2016 2015 Housing revenues $ 1,480,054 $
1,129,762 $ 807,408 $ 604,921 Housing construction and land costs
(1,247,131 ) (953,659 ) (682,303 ) (508,276 ) Housing gross profits
232,923 176,103 125,105 96,645 Add: Amortization of previously
capitalized interest (a) 65,757 47,736 35,551 25,443
Inventory-related charges (b) 7,563 984 6,384
536 Adjusted housing gross profits $ 306,243 $
224,823 $ 167,040 $ 122,624 Housing gross
profit margin as a percentage of housing revenues 15.7 % 15.6 %
15.5 % 16.0 % Adjusted housing gross profit margin as a percentage
of housing revenues 20.7 % 19.9 % 20.7 % 20.3 %
(a) Represents the amortization of previously capitalized
interest associated with housing operations.(b) Represents
inventory impairment and land option contract abandonment charges
associated with housing operations.
Adjusted housing gross profit margin is a non-GAAP financial
measure, which the Company calculates by dividing housing revenues
less housing construction and land costs excluding (1) amortization
of previously capitalized interest associated with housing
operations and (2) housing inventory impairment and land option
contract abandonment charges recorded during a given period, by
housing revenues. The most directly comparable GAAP financial
measure is housing gross profit margin. The Company believes
adjusted housing gross profit margin is a relevant and useful
financial measure to investors in evaluating the Company’s
performance as it measures the gross profits the Company generated
specifically on the homes delivered during a given period. This
non-GAAP financial measure isolates the impact that the
amortization of previously capitalized interest associated with
housing operations, and housing inventory impairment and land
option contract abandonment charges have on housing gross profit
margins, and allows investors to make comparisons with the
Company’s competitors that adjust housing gross profit margins in a
similar manner. The Company also believes investors will find
adjusted housing gross profit margin relevant and useful because it
represents a profitability measure that may be compared to a prior
period without regard to variability of amortization of previously
capitalized interest associated with housing operations, and
housing inventory impairment and land option contract abandonment
charges. This financial measure assists management in making
strategic decisions regarding community location and product mix,
product pricing and construction pace.
KB HOMERECONCILIATION OF NON-GAAP
FINANCIAL MEASURES(In Thousands, Except Percentages —
Unaudited)
Ratio of Net Debt to Capital
The following table reconciles the Company’s ratio of debt to
capital calculated in accordance with GAAP to the non-GAAP
financial measure of the Company’s ratio of net debt to
capital:
May 31,2016 November 30,2015 Notes payable $ 2,632,127 $
2,625,536 Stockholders’ equity 1,635,169 1,690,834
Total capital $ 4,267,296 $ 4,316,370 Ratio of debt
to capital 61.7 % 60.8 % Notes payable $ 2,632,127 $
2,625,536 Less: Cash and cash equivalents and restricted cash
(278,366 ) (568,386 ) Net debt 2,353,761 2,057,150 Stockholders’
equity 1,635,169 1,690,834 Total capital $ 3,988,930
$ 3,747,984 Ratio of net debt to capital 59.0 % 54.9
%
The ratio of net debt to capital is a non-GAAP financial
measure, which the Company calculates by dividing notes payable,
net of homebuilding cash and cash equivalents and restricted cash,
by capital (notes payable, net of homebuilding cash and cash
equivalents and restricted cash, plus stockholders’ equity). The
most directly comparable GAAP financial measure is the ratio of
debt to capital. The Company believes the ratio of net debt to
capital is a relevant and useful financial measure to investors in
understanding the leverage employed in the Company’s
operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160621006482/en/
KB HomeInvestor Relations Contact:Jill Peters,
310-893-7456jpeters@kbhome.comorMedia Contact:Susan Martin,
310-231-4142smartin@kbhome.com
KB Home (NYSE:KBH)
Historical Stock Chart
From Mar 2024 to Apr 2024
KB Home (NYSE:KBH)
Historical Stock Chart
From Apr 2023 to Apr 2024